public access to published federally funded research

Here’s a petition to the US government to commit to free public access to the published results of federally funded research that I think is worth signing. The NIH, which accounts for about half of all federally funded nonclassified research expenditures, is already doing this.  If the petition gets 25,000 signatures within 30 days, the Administration will issue an official response.  The campaign’s website is http://access2research.org, also on Facebook and Twitter (@access2research). 
Here’s the petition text:
WE PETITION THE OBAMA ADMINISTRATION TO:
Require free, timely access over the Internet to journal articles arising from taxpayer-funded research.
We believe in the power of the Internet to foster innovation, research, and education.  Requiring the published results of taxpayer-funded research to be posted on the Internet in human and machine readable form would provide access to patients and caregivers, students and their teachers, researchers, entrepreneurs, and other taxpayers who paid for the research. Expanding access would speed the research process and increase the return on our investment in scientific research.
The highly successful Public Access Policy of the National Institutes of Health proves that this can be done without disrupting the research process, and we urge President Obama to act now to implement open access policies for all federal agencies that fund scientific research.
If you’re 13 years or older, you can sign the petition by going to whitehouse.gov, providing a name and email address, and validating the email address, then clicking to sign.
Further background from AU’s Michael Carroll:
After years of work on promoting policy change to make federally-funded research available on the Internet, and after winning the battle to implement a public access policy at NIH, it has become clear that being on the right side of the issue is necessary but not sufficient. We've had the meetings, done the hearings, replied to the requests for information.
If we can all come together to get the word out at once, and stay behind it for 30 days, we have a real chance to get access to taxpayer funded research across the entire government, and send a signal that the people have a voice in this debate, not just publishers and activists.

False advertising case succeeds as TM claim

Neighborhood Assistance Corp. of America v. First One Lending Corp., 2012 WL 1698368 (C.D. Cal.)

It is interesting to see how TM has become so much more muscular than other false advertising law that this case against odious defendants succeeds as a TM case, even though the core wrong is the fraud on the public (as the resulting injunction makes clear).  I don’t think TM should generally be used this way, primarily because real TM cases might cite it, which would be a mistake.  That’s what false advertising laws at the state and federal level are for, and they clearly cover all defendants’ misconduct, not just the TM confusion part.  That said, it’s hard to work up any sympathy for defendants whose deception proceeded in part by pretending to be affiliated with plaintiff.

NACA, a nonprofit community advocacy organization, sued First One and John Vescera for cheating homeowners by facing foreclosure, charging them $1000-$2000 based on false claims to provide mortgage modification services.  In fact, NACA provides these services for free as part of its activities originating loans and advocating for low and moderate income homeowners; after the financial crisis, it expanded its services to help homeowners facing foreclosure.  NACA has registered incontestable service marks for NACA; it also has a heavily promoted “Home Save Program” for homeowners with unaffordable mortgage payments, and uses “Save-the-Dream” events, held in large meeting spaces throughout the country, to promote its programs.

First One allegedly does business under a variety of different names such as National Mortgage Help Center (“NMHC”) and National Mortgage Assistance Center (“NMAC”), two “entities” with nearly identical websites and the same phone number.

First One made a number of allegedly misleading statements creating confusion over affiliation with NACA.  E.g., it claimed to be “a member of NAHCA.”  Other claims: “First One coordinates each client's financial analysis submission to the Home Save Program of the Neighborhood Assistance Network of HUD Housing Counselors to assist you with your lender to achieve a result. HUD (Dept. of Housing and Urban Development) Housing Counseling assistance is provided at no-charge and is not contingent on you hiring First One for any other service”; First One had been “Helping to Save the American Dream since 1995”; First One was a nonprofit organization that educates the general public and is “a Housing Counseling Public Benefit Corporation,” with the purpose of expanding “affordable housing opportunities to the public,” and providing “housing counseling services” and assistance to “homeowners to avoid default and foreclosures.; First One has a “national network of foreclosure prevention specialists” that will negotiate directly with the homeowner's bank to obtain lower monthly payments through a “Mortgage Modification Plan.”  First One falsely implied it was approved by HUD for counseling and mortgage modification services, claimed to have relationships with “all major lenders & loan servicers,” purported to obtain “Actual Modifications” through its “National Mortgage Help Center Program,” claimed already to have contacted the relevant lender, claimed to protect its customers’ personal information, and purported to offer free counseling. 

Other allegedly false and misleading statements on First One websites: “Only State approved attorneys may legally modify your loan with your lender”; “Do not give out your information with other Websites” (allegedly deterring direct contact with NACA); “Homeowners who have benefited from our services have received mortgage payment reductions that bring their mortgage payment debt ratio to within 31 % [of] their gross income. Mortgage principal balance reductions have also been achieved and are possible when your current mortgage balance exceeds the value of your home”; its staff was “comprised of case managers, loan processors, and housing counselors working on your behalf”; and so on.

NACA submitted five declarations from confused First One customers who stated they thought they were dealing with NACA and sent First One money (typically $1850 or $1450) but didn’t receive help.  One customer stated that, instead of contacting his lender, First One sent him a letter reinforcing his belief that First One was affiliated with NACA.  It stated his financial analysis had been submitted to his “Housing Counselor of the Neighborhood Assistance Network of HUD Housing Counselors,” and included a NACA identification number, a password, and directions to check the status online at NACA's website, www.naca.com.  After he was unable to log on, he went to NACA’s office, and then learned that First One wasn’t affiliated with NACA.  NACA alleged that over 240 homeowners fell for this scheme.

Apparently, what First One did was take customers’ money and then use their personal information—which it had promised not to share with third parties—to register a NACA account for the homeowner through NACA's website. Then it told customers that they should call the housing counselor assigned to their file at NACA.  When customers complained, First One took the position that it only provided documentation services, and NACA provided the “free of charge assistance phase of the service.”  On at least two occasions, employees allegedly responded to complaints by falsely stating or implying a NACA affiliation.  California’s Department of Real Estate sent a C&D to First One telling it to stop collecting advance fees for loan modification or forbearance services.

Defendants moved to dismiss, arguing that the complaint failed to allege use of NACA’s registered trademark, that there was no advertising or promotion, and that the parties didn’t compete because NACA doesn’t charge homeowners for its services.  The court found that NACA was bringing a false association claim, not a false advertising claim.  Such a claim doesn’t require use of NACA’s TM, as long as there’s a “word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which ... is likely cause confusion ... as to the affiliation ... or ... misrepresents the nature, characteristics, qualities ... of his or her ... services or commercial activities.”  Plus, NACA’s claim could be understood as one for reverse palming off: First One was marketing NACA’s services as its own, and that doesn’t require use of NACA’s mark.  Thus, NACA wasn’t required to plead any use of its registered or unregistered marks.

Also, a false association claim doesn’t need to be in “advertising or promotion” as a false advertising claim does.  Nor was NACA required to be a competitor to have standing.  “Defendants' rule would exclude from the Lanham Act those most deserving of its protection: non-profit organizations that help the neediest members of society and organizations whose operations are so beyond reproach that their reputations survive others' destructive schemes. Fortunately, the law is not as mean-spirited as Defendants would wish.”  The alleged damage to NACA’s goodwill was sufficient to satisfy the Lanham Act requirement that a commercial/competitive interest be harmed.  “Because consumers are likely to feel ripped off by Defendants and are likely to conflate Defendants and Plaintiff, Defendants' scheme damages and will continue to damage Plaintiff's reputation and good will with the public.”  In addition, NACA gets compensation from mortgage servicers for each successful Home Save, and harm to its reputation would likely diminish its ability to attract participants, resulting in lower revenue.

The court also rejected First One’s affirmative defenses that “facts” outside the complaint established the truth of three of the “numerous” false or misleading statements alleged in the complaint and that one defendant was immune from liability under the federal Volunteer Protection Act (one of those “news to me!” statutes).  The court refused to consider the claimed facts that First One was (1) a registered NACA referral agent; (2) a HUD approved lender; and (3) a not-for-profit 501(c) corporation, since these were not appropriate for judicial notice.  Even if the court could take judicial notice of the existence of certain documents (e.g., a letter from the IRS to First One), that wouldn’t justify judicial notice of the disputed facts in the documents.  And also, the documents didn’t even support the purported facts, which were themselves misleading!  For example, the printout from NACA’s website stating that First One was a “registered NACA referral agent for NACA” created a dispute over the meaning of “referral agent,” and seemed to confirm the allegation that First One used customers’ personal information to register NACA accounts in their names.  Likewise, a HUD letter showing that First One was approved as a lender doesn’t mean that HUD approved First One for counseling/foreclosure avoidance, an allegedly separate program, and thus First One’s claim of HUD approval might be misleading in the foreclosure avoidance context.  Even the 501(c)(3) claim was held up by the IRS’s official notice, stating that First One was a 501(c)(4), and the California Secretary of State has a record indicating that First One is “For Profit.”  Anyway, even if it’s all true, nothing would entitle First One “to create confusion in the marketplace by passing Plaintiff's services off as First One's services,” or to make the other alleged misrepresentations.

The court turned to NACA’s request for a preliminary injunction, which could be granted either using the Supreme Court’s Winter factors or the 9^th Circuit’s serious questions going to the merits/balance of hardships sharply favoring the plaintiff/irreparable injury/public interest test.  Under either test, NACA was entitled to a preliminary injunction; it was likely to succeed on the merits of its false association/reverse palming off claim.  The following words etc. were likely to mislead consumers into thinking First One was NACA: the acronym NAHCA; the acronym NMAC; the acronym NMHC; slogans such as “Helping to Save the American Dream since 1995” and “Helping Homeowners to Save Their Dream”; and phrases such as “Home Save Program of the Neighborhood Assistance Network of HUD Counselors.”  The acronyms were likely to be confused with NACA, and NACA’s phrase “Home Save Program” and full name “Neighborhood Assistance Corporation of America” was likely to be confused with First One’s “Home Save Program of the Neighborhood Assistance Network of HUD Counselors”  NACA’s slogan “Save–the–Dream” was likely to be confused with First One’s “Helping to Save the American Dream since 1995” and “Helping Homeowners to Save Their Dream.”  (This is why bad cases make bad law: these highly descriptive terms should generally be free for others to use, and ordinarily there’d be a strong fair use defense.  Oh, and also the court called NACA “the strongest kind of mark” because it’s registered and incontestable.)  The court found intent the “most telling[]” factor—First One’s use of all four of NACA’s marks, combined with its likely illegal conduct towards its customers, indicated bad faith.

Irreparable harm could be presumed from likely success on the merits, and was shown to be likely in any event because loss of good will or ability to control one’s reputation is irreparable harm.  (I’ve never understood why this second statement isn’t exactly the same as the first: what is there behind it other than a presumption?)  First One argued that there was no irreparable harm because NACA’s reputation remained good and because NACA, a nonprofit, by definition couldn’t suffer lost profits.  The court rejected these arguments as a matter of law.  Declarations from five homeowners who were confused about the relationship between the parties and angry at First One sufficed. 

Because First One charged money while NACA promotes its free program, “any perceived affiliation between First One and Plaintiff will give consumers the false impression that Plaintiff is being deceptive.”  Moreover, even if the homeowner eventually learns the truth, NACA still suffers.  “Homeowners who have paid a third party a fee before working with Plaintiff are much more likely to view the entire mortgage modification business, including Plaintiff's Home Save Program, as a scam.”

Unsurprisingly, the balance of the equities and the public interest favored a preliminary injunction:

All too frequently, intellectual property disputes between two faceless entities can make the judiciary appear to the public like a mere handmaiden to corporate interests, blessing corporations' efforts to commodify an ever-growing swath of the nation's intellectual capital. This case is a refreshing reminder that the policy justification for trademark law is to protect human beings, not corporations.

Here, a preliminary injunction would be “extremely beneficial” to the public.  First One’s scheme appeared to violate a number of consumer protection laws and had caused significant harm.  So the court granted the injunction, which notably covers both false association and false advertising type claims.  On the TM side, defendants were enjoined from: making any statements likely to create an impression of affiliation etc. between the parties; using the word NACA or its web address in any website, advertising or promotional materials, or written materials provided to customers or potential customers; using “Home Save,” “Home Save Program,” “Neighborhood Assistance”; or referring anyone to NACA or its phone number or registering anyone through NACA’s site.  On the false advertising side, the injunction also barred making any statements likely to create the impression that First One provides loan modification or housing counseling services, or that it’s approved by HUD to provide such services; advising consumers not to provide information to other websites or that only attorneys can provide loan modification services; or stating a consumer has been pre-qualified for a loan modification in the absence of a written statement from the lender to that effect.  These remedies, of course, are only justified by the false advertising, which was aided and abetted by the TM confusion but still distinct from it.

Hamlet in over 60 films

Including some quotations--The Lion King, Clueless--that add to the fun.

Brands, not trademarks?

The NYT has Adam Davidson on making choices in an information-oversaturated world.  It doesn’t use the word “trademark,” but recites the standard justifications for trademark protection, focusing on the signaling effect: a well-known brand or endorser supposedly guarantees that the producer invests in quality, or at least is successful enough that it has the money to spend on showy advertising, though as Davidson points out some of those signals can be easy to feign in the absence of investment in less visible actual quality.  Particularly interesting to me was that one of the instances of relying on brand signals involves using an aggregator—Amazon—as an indicator of quality, rather than a smaller site supposedly offering the underlying, most likely branded, product at a lower price.  I myself don’t know why fulfillment by Amazon would matter; I’ve gotten scratched DVDs from Amazon sellers (curse you, last disc of Season 2 of The Wire!), and a good aftermarket ceiling fan from an eBay seller (a high-rated one, true!) at a hundred dollars below other offers.  The incident Davidson reports also reinforces the point that high price is a (feignable) signal of high quality in itself. 

Plain tobacco packaging at Georgetown

Nicola Roxon, Australian AG, Why Are Plain Packs Making Big Tobacco So Angry?

If used correctly, tobacco kills, which makes it unique; still a leading cause of preventable death in Australia: 50,000/year.  Measures include restricting point of sale displays, and banning smoking in restaurants. One state outlawed smoking in cars with children.  Proportion of daily smokers has fallen from 30% to 15.1%, one of the lowest rates in the world; much more concentrated now in people in disadvantaged groups.  Various other plans: banning internet ads, reducing duty-free amount.

Key element of strategy: plain packaging: graphic health warnings will make up about ½ the front of the pack—idea is to make it impossible for you to look at anything but the warning.  Warning text is huge on front and sides; only differentiation will be the brand in standard font and color: no logos, no branded colors.  This takes away the last marketing tool.

Packaging is used to promote the brand: turns it into expensive, classy, desirable obect.  Meticulously designed to look and feel good, attracting new smokers.  Showed video of kids in the UK evaluating how nice cigarette packages looked—“red is nice, like a Ferrari; … I think it would be fun to play with.”  An ad message that smokers carry around with them all the time.

With the current conflicting branding, people can be distracted/get a misleading impression of the actual dangers of smoking.

Response: astroturfing—supposedly small retailers, funded by tobacco companies.  Claimed that would be very expensive to introduce plain packaging—half a billion cost to retailers claimed based on interviews with 6 retailers.  Slippery slope: could this happen to your soda?  Your candy?  But most manufacturers aren’t biting.  Next claim: will lead to illegal cigarettes which help the terrorists.  Donations to political opponents; ultimately unsuccessful.

Claim: the restriction on TMs creates a constitutional problem analogous to a US takings claim.  Comparison products: would paying for a required warning be comparable to requiring payment to mandate a warning on rat poison?  Notably, PM Australia changed ownership to be owned by a Hong Kong company, then instituted bilateral Australia-HK trade proceedings; similarly the Ukraine is claiming a trade violation (many other countries refused to take action on behalf of the tobacco companies). 

Change in tactics: one popular brand is now distributing metal tins (scroll down) with cigarettes, hoping people will use the tins once the plain packages come into effect.  This is evidence that they do think plain packaging will work.

Q: what about the viewpoint of people in indigenous communities?  Some see paternalism/deciding for them when there are other huge health problems; they see smoking as recreational and haven't been reached by previous campaigns.

A: we recognize the issue—for the first time in 2010 we had an campaign targeted at indigenous people created by indigenous designers: breaking the chain.  Taking advice from the communities themselves.  Smoking among aboriginal health workers is very high.

In response to another Q: the politics are very different—we didn’t face any serious opposition other than from the tobacco companies themselves.

Georgia State and copyright ownership

James Grimmelmann has a post highlighting what may be the biggest lesson from the case (I know, the fair use stuff is important too, but the inability to prove ownership of digital rights is highly relevant to fair use as well): a lot of times the publishers couldn't prove they actually owned the stuff in which they were claiming rights.

Homeopathic products don't dilute plaintiffs' litigiousness

Allen v. Hylands, Inc., 2012 WL 1656750 (C.D. Cal.)

Plaintiffs sued Hylands for the usual California claims, including breach of warranty, based on claims about defendants' homeopathic products.  The court did some housekeeping here: first, it rejected defendants’ argument that plaintiffs lacked standing because they weren't California citizens and their alleged injuries occurred out of state.  But Mazza didn’t hold that out of state plaintiffs’ claims must be brought under their own state laws.  Rather, it explicitly left open the possibility of certifying subclasses grouped around materially different bodies of law.  Defendants didn’t argue that Florida or Georgia, the states from which the named plaintiffs hailed, had materially different consumer protection laws, so there was no present basis to find that California law couldn’t be applied. 

And anyway, choice of law is not the same thing as standing; indeed, Mazza rejected the standing argument while still finding that class treatment was inappropriate.  (I understand why defendants are calling everything and the kitchen sink a “standing” challenge.  But they’re still wrong.)  As for standing, plaintiffs alleged that defendants advertised their homeopathic products as possessing certain benefits but in fact knew that their products contained no active ingredients in quantities that could deliver those benefits.  They also alleged reliance and sought monetary and injunctive relief.  That was sufficient for standing.

On the warranty claims, defendants contended that plaintiffs failed to identify any false affirmations of fact or promises.  Fact v. opinion can be indicated by a lack of specificity or an equivocal statement, though even statements of opinion can become warranties if they’re part of the basis of the bargain.  Defendants argued that there were two kinds of statements at issue: first, factual statements about the products themselves instead of intended use or effect, which were affirmations of fact but plaintiffs didn’t challenge.  (E.g., “Soft tablets dissolve instantly”; “100% natural”;“Quick dissolving tablets”; “Aspirin free”; “Gentle on Skin No Harsh Chemicals”; and “non-habit forming.”)  The court suggested that plaintiffs were in fact challenging the accuracy of these statements.

Second, there were statements about symptoms for which the products purportedly provided relief, which defendants argued weren’t promises.  E.g., “relief of simple nervous tension and occasional sleeplessness”; “sleep aid”; “for restless or wakeful sleep from exhaustion”; “for stress, nervousness or nervous headache”; “Relieve Pain and Irritability from Teething”; “Migraine Headache Relief”; “Natural Relief for Itching, Burning and Crusting Skin Due to Exposure to Poison Ivy or Oak”; “Symptomatic Relief for Colic in Children”; and “Temporarily relieves the symptoms of pain and cramps in lower body.”  The court was appropriately unimpressed: “there is no reason why statements such as ‘Migraine Headache Relief’ are any less factual in nature than statements that Defendants concede are factual, such as ‘Gentle on Skin No Harsh Chemicals.’  Both require a certain amount of contextualization to evaluate (e.g., How much migraine relief? How gentle on the skin?), yet this does not render them insusceptible to verification.”  A statement of fact doesn’t require a statement that the products “will work all the time for everyone” or “are guaranteed ‘cures’ for any ailments or illnesses.”  Rather, plaintiffs alleged that defendants wouldn’t work for anyone, because they either lacked ingredients that will produce the advertised relief or contained the ingredients in insufficient quantities to be effective.  That was enough for a motion to dismiss.

Defendants also argued that they complied with FDA regulations requiring a statement of intended use, and that the regulations don’t require OTC drugs to be 100% effective.  The court was puzzled by this argument: plaintiffs weren’t arguing 100% effectiveness as a standard, nor did defendants make a preemption argument, and the FDA prohibits mislabeling anyway.

The court find that plaintiffs were limited to making claims against products they’d purchased or were likely to purchase, not all homeopathic products in defendants’ line that had the same alleged problems: as to the others, they lacked standing because they had no redressable injury.  (Depending on the similarities between the products, this could be a mistake in the class action context, where the key is that the members’ claims have sufficient commonality.)

The court also refused to consolidate this case with a different one against defendants involving defendants’ homeopathic cold and flu remedies, which were not among the seven products identified by the plaintiffs here.  The court found that there might be little overlap in class membership, and that the other action raised federal and New Jersey claims that could complicate matters.

Brand dilution as a design patent theory of harm

Apple, Inc. v. Samsung Electronics Co., Ltd., --- F.3d ----, 2012 WL 1662048 (Fed. Cir.)

Apple sued Samsung for infringing three design patents and one utility patent, and the district court denied a preliminary injunction on all four.  The court of appeals reversed and remanded on one design patent.  I omit discussion of the utility patent. 

Apple’s D'087 and D'677 patents are minimalist smartphone designs “consisting of a large rectangular display occupying most of the phone's front face. The corners of the phone are rounded. Aside from a rectangular speaker slot above the display and a circular button below the display claimed in several figures of the patent, the design contains no ornamentation.” The D'087 patent claims a bezel surrounding the perimeter of the phone's front face and extending from the front of the phone partway down the phone's side.

The D'677 patent shows a black, highly polished, reflective surface over the entire front face of the phone, and disclaims the sides and back of the device:

The D'889 patent related to tablet design: “a rectangular tablet with a polished reflective surface extending to the edge of the front side of the device. Within that surface, broken lines delineate a slightly smaller rectangular display area. The front face of the patented design has rounded corners, and a thin bezel surrounds the front surface along its perimeter. The front surface has no ornamentation, buttons, speaker slots, holes, or raised surfaces. The back and sides of the design are also claimed; the figures depict a flat, unadorned back transitioning into the sides through a rounded-over edge.”

For the D'087 and D'889 patents, the district court found that Apple had failed to show likely success on the merits, while for the other patents the court found that Apple had failed to show that it would likely suffer irreparable harm from continuing infringement while the case was pending.  The court of appeals found that the district court hadn’t abused its discretion on the D'087 patent when it found substantial questions about the patent’s validity given anticipation by a Japanese patent showing “similar edges and rounded corners, a bezel, a similarly shaped speaker, and similar proportions of screen and border.” 

As for the D'677 patent, the court concluded that it was not anticipated since it wouldn’t have been obvious to a designer to adopt a “flat, black, translucent front screen.”  The court also found that an ordinary observer would find the overall design of the accused Samsung phones substantially the same as the claimed design, so infringement was likely.  However, the court rejected Apple’s irreparable harm arguments that Samsung's sales eroded Apple's design and brand distinctiveness, resulting in a loss of goodwill, and that Samsung cost Apple market share that would be difficult to quantify.  As to the former, Apple didn’t explain how erosion of design distinctiveness would cause irreparable harm, ruling that “[e]ven assuming that brand dilution could arise from design patent infringement, Apple has not met its burden to provide evidence that such brand dilution is likely to occur in this case.”  (Good luck figuring out what that evidence might be.) 

As to market share, the parties were directly competing for first-time smartphone buyers, so the potential for harm was strong, and initial purchase decisions can have long-term effects on downstream purchases.  Purchasers may be locked in, fearing to switch to a competitor because of the potential loss of previous digital purchases such as digital media and apps.  That could support a finding of irreparable harm.  However, Apple failed to establish a nexus between Apple’s harm and Samsung’s allegedly infringing conduct.  While product design is generally a factor influencing smartphone purchases, novelty and not design may also drive purchases, and smartphone buyers have numerous reasons to buy; the evidence suggested that only a small percentage found design dispositive.  Apple’s case was weakened further because its patents didn’t cover the entire smartphone.  This, coupled with Apple’s delay in seeking an injunction (it alleged that Samsung had been copying for years, but waited to sue until 2011), undercut its claim of irreparable harm.  Given all this, and in light of the presence of other smartphone manufacturers in the market, an injunction would substantially harm Samsung without necessarily benefiting Apple significantly.

The court of appeals rejected Apple’s two challenges to this analysis: that it need not show a nexus between infringement and market harm to establish irreparable injury, and that it had indeed shown such a nexus.  First, the district court was correct to require a showing of “some causal nexus” between the infringement and the alleged harm.  “Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature.”  (While I expect this conclusion will be much cited, it leaves open the question of ‘as opposed to what?’  Obviously, Samsung’s phone would have had some design no matter what, which implies that the proper comparator is a sort of generic design at least for design patents—but does this have any implications when there’s a utility patent?  Can we also assume that a product that infringes a utility patent would have used a noninfringing substitute, at least if the defendant proves there’s one available?  The court’s later language hints that this might be a special design patent rule, but it’s only a hint and that’s somewhat in conflict with the general idea that the utility and design rules should be similar.)

Anyway, i4i Limited Partnership v. Microsoft Corp., 598 F.3d 831 (Fed.Cir.2010), aff'd, 131 S.Ct. 2238 (2011), was not to the contrary. True, in that case Microsoft Word purchasers weren’t motivated to buy Word because of the inclusion of i4i’s patented software.  But there, the patented product was an add-on to Word, and Microsoft completely eradicated the market for the add-on.  The “narrow injunction” in that case protected the patented product from “obsolescence,” whereas here the district court found that the alleged infringements wouldn’t threaten any such dramatic effects on the market generally or on Apple’s share thereof.

Apple argued that it had shown a nexus between the infringing conduct and the alleged harm, but that was the district court’s call given the conflicting evidence.  Proof of consumer motivation won’t be a prerequisite to finding irreparable harm in every design patent case, but here the district court didn’t abuse its discretion in holding that Apple didn’t produce sufficient evidence of harm.  “A mere showing that Apple might lose some insubstantial market share as a result of Samsung's infringement is not enough.”

While a blanket rule against “design dilution” as a theory of irreparable harm would have been improper, here the district court found that Apple had offered only “conclusory statements and theoretical arguments” in support of its theory. Without “concrete evidence, … Apple has not yet established that this harm to its reputation for innovation is likely to occur.”  Nor did Apple show “brand dilution.”  Thus, the district court didn’t “categorically” reject the design dilution/brand dilution theories.  The court of appeals therefore affirmed.

The district court proceeded similarly on the Samsung Galaxy Tab tablet that allegedly infringed the D'889 patent, but found a likelihood of irreparable harm because the tablet market was dominated by only two manufacturers, Apple and Samsung.  Apple’s market share decreased in accordance with the increase in Samsung’s market share after it introduced the Galaxy Tab.  Also, the court concluded that design mattered more to consumers for tablets than for smartphones, and that Apple hadn’t delayed with respect to tablets.

But the district court denied a preliminary injunction because there were substantial questions about the validity of the D'889 patent given the prior art references.  According to the court, the broad, simple design created basically the same visual impression as a prototype tablet developed in 1994 by Roger Fidler. The Fidler tablet lacked a “flat glass-like surface,” but the court found that didn’t “detract from the fact that the ‘overall visual impression’ created by the D'889 patent is the same as the 1994 Fidler[ ] tablet.” 

And the flat glass screen showed up in the 2002 Hewlett–Packard Compaq Tablet TC1000. 

The district court found Apple’s evidence of industry skepticism and unexpected commercial success inconclusive and not related to the patented design, respectively.

The court of appeals found that the district court erred in its validity analysis.  For design patent obviousness, one must consider whether the design would have been obvious to a designer of ordinary skill who designs articles of the relevant type.  This requires starting with a single reference with a design basically the same as the claimed design.  Other references may be used to modify the primary reference, but only if they’re so related that the appearance of ornamental features in one would suggest the application of those features to the other.  The district court did this, and credited Samsung’s expert on the obviousness of the combination.

As usual, reviewing courts feel free to engage in de novo review of visual evidence.  (I personally think these create almost identical visual impressions, for what that’s worth.)  Here, the court of appeals found that a side-by-side comparison showed “substantial” differences in the overall visual appearance:

The Fidler tablet wasn’t symmetrical, and the frame created a “very different” impression than the “unframed” D'889 design; the Fidler design broke the continuity between the frame and the screen embedded within it, while the transparent glass-like front surface of the D'889 patent covered essentially the entire front face without breaks or interruptions, creating the visual impression of an unbroken slab of glass extending from edge to edge.  Also, the Fidler design didn’t have a thin bezel surrounding the edge on the front side, and the frame contained multiple perforations.  Its sides were neither smooth nor symmetrical, and the back also conveyed a different visual impression.  Fidler wasn’t a proper primary reference.

Even if Fidler had been a proper primary reference, the TC1000 secondary reference couldn’t “bridge the gap” between it and Apple’s design.  Its screen area was surrounded by a gray frame area and encircled by a metallic rim; it also had indicator lights in several places, unlike Apple’s minimalist design.  It wasn’t similar enough to Fidler to qualify as a comparison reference.  The district court looked at the designs “from too high a level of abstraction. Fidler does not qualify as a primary reference simply by disclosing a rectangular tablet with four evenly rounded corners and a flat back. Rather than looking to the ‘general concept’ of a tablet, the district court should have focused on the distinctive ‘visual appearances’ of the reference and the claimed design.”

Samsung offered several other tablet and tablet-like designs as references, but they too all either showed a thick surrounding frame or had extensive ornamentation on the front, creating different visual impressions.  Thus, on this record, there was no substantial question of validity.

The court of appeals remanded for findings on the balance of hardships and the public interest.  The partial dissent argued that, given the district court’s other findings (including that, if the patent was valid, Samsung likely infringed it), a remand was unnecessary, but the majority concluded that the district court should undertake an analysis of the potential harm to Samsung and weigh it against Apple’s irreparable harm.  If the district court’s findings in the smartphone part of the case prove readily transferable to the tablet part, then it can act quickly; if not, “then that is exactly the situation in which we would benefit from findings by the district court and in which the district court's greater familiarity with the record will be an important safeguard against precipitous action.”

My keen fashion sense: L'Oreal class action certified

Guido v. L'Oreal, USA, Inc., 2012 WL 1616912 (C.D. Cal.)

Plaintiffs sued on behalf of putative classes of California and New York residents who purchased  Garnier Fructis Sleek & Shine Anti-Frizz Serum, alleging that L’Oreal failed to properly label the product as being flammable or combustible near high heat producing styling appliances, and made affirmative misrepresentations that suggested it was safe to use the product in proximity to such appliances.  The court granted class certification for the California class (UCL, CLRA, and Song-Beverly warranty claims) and the NY class (GBL §§ 349-350).

At its initial launch in 2004, the product had a flammability warning: “Avoid Fire, Flame, Smoking and Heat (Except For Styling Appliances) During Application and Until Hair is Completely Dry.”  In 2006, L’Oreal removed denatured alcohol as an ingredient to comply with California’s Volatile Organic Compound regulations, and soon thereafter removed the flammability warning.  Plaintiffs argued that two other ingredients rendered the product flammable, while L’Oreal disputed that claim.  Before and after the warning was removed, the directions were identical: “Dispense 1 pump of serum, or as much as needed for your hair type, into the palms of your hands. Apply uniformly to towel-dried or dry hair. Do not rinse. For sleekest look, style using brush and blowdryer.”

L’Oreal first argued that plaintiffs were bringing product liability claims that weren’t amenable to class treatment.  Plaintiffs responded that their consumer protection claims were ideal candidates for certification; the classes excluded anyone who’d suffered physical injury from using the product, and sought redress for people who paid more for the Serum than they otherwise would have.  L’Oreal rejoined that, if so, they lacked Article III standing because they suffered no economic injury, and that each member of the class needed to demonstrate such standing.

The court found that plaintiffs adequately alleged economic injury (lost money or property) to satisfy Article III, and that they could represent the putative class since all that’s required is for a named plaintiff to have standing.  Both named plaintiffs testified that, had they known the product was flammable, they would have paid less than its retail price or would not have purchased it at all.  They also testified that they suffered a loss in value and usefulness of Serum—one specifically stopped using it after she discovered the problem.   Nor must each class member demonstrate reliance under the UCL; restitution is available to absent class members without individualized proof of deception, reliance, or injury.  As long as omissions or misrepresentations are material, a presumption or at least an inference of reliance arises on behalf of the class.

L’Oreal submitted a declaration from Dominique M. Hanssens, a marketing professor, opining that it was “speculative to conclude that the lack of a warning or the presence of a misleading warning on product packaging has the same impact on all consumers” and might “le [a]d to a buying decision.”  He also said that “one cannot conclude that the omission of a flammability warning has enabled L'Oreal to charge a premium for Serum.”  The court found this declaration not relevant to certification.  Materiality is an objective standard, so whether it might not have had the same impact on all consumers doesn’t matter.  The named plaintiffs testified that they would not have purchased, or would not have paid as much for, Serum had they known it was flammable. That was enough to raise a classwide inference of causation between the alleged wrongful conduct and alleged economic harm.

Turning to certification factors: numerosity was easy, as was adequacy.  Plaintiffs argued that there was commonality because the bottles had the same message across the nation, so the claims stemmed from the same source.  L’Oreal argued that the UCL required plaintiffs to show a connection between the alleged improper conduct and the unnamed class members, destroying commonality because the class included people who bought the product for reasons other than L’Oreal’s failure to disclose its flammability.  For example, one named plaintiff bought the product after reading ads promising sleekness, detangling, and low price, while another bought based on prior experience with the product and price. Thus, even the named plaintiffs weren’t concerned with flammability.

The court agreed with the plaintiffs.  There were numerous common factual and legal issues, including whether the packaging/ads were deceptive; whether a reasonable consumer would expect a warning given that the FDCA requires hazardous cosmetics to be appropriately labeled; whether L’Oreal had a duty to disclose the alleged flammability; whether the product is in fact flammable; and what the true market value of the product was.  Because the packaging was uniform nationwide, these central issues could be resolved on a classwide basis. 

L’Oreal’s arguments to the contrary were unpersuasive; both named plaintiffs testified that they would have behaved differently if they’d known about the flammability, which demonstrated materiality.  (It’s true that danger might not be the first thing on a consumer’s mind for many common purchasers; that doesn’t mean that an undisclosed danger is irrelevant, just that she doesn’t know it exists!)  In any event, UCL claims focus on the defendant’s conduct, and not on each class member’s reason for purchase.  Unlike in Mazza, where it was likely that many class members were never exposed to the allegedly misleading ads, the alleged misrepresentations weren’t in a limited set of ads but were on the bottle itself, necessarily exposing purchasers to them.

Typicality requires named plaintiffs’ claims to be reasonably coextensive with those of class members.  Plaintiffs argued that such was the case here; the claims all arose from the same alleged mislabeling.  L’Oreal responded that the named plaintiffs weren’t concerned with flammability didn’t pay a premium for the product, so they couldn’t represent others who did.  The court disagreed, given each plaintiff’s testimony on materiality; they suffered the same type of economic injury and sought the same redress as the putative class members.  Even if the amount of a price premium varied among class members, differences in damage amounts don’t preclude class certification.

Rule 23(b)(3)’s more stringent requirements were also satisfied.  On predominance, L’Oreal argued that no presumption of reliance was warranted for the class, making individual questions predominate; because L’Oreal made numerous representations about the product rather than just one, and because the issue here was an omission instead of an affirmative misrepresentation, reliance wouldn’t be uniform.  The court disagreed, since the UCL claims could be resolved by determining whether the alleged omissions and misrepresentations deceived the average reasonable consumer, without individualized proof of deception, reliance and injury, so long as the named plaintiffs demonstrated injury and causation.  The CLRA treats material omissions similarly.  And whether it was false to represent that the product was safe to leave in the hair while using heated appliances, in violation of the Song-Beverly Act ,was also a common question.  As for the NY claims, the standard for misleadingness was also an objective one.  A §349 claim doesn’t require reliance, though a § 350 claim does; but in the latter case there’s a presumption of reliance when the defendant controls the relevant information and a consumer of ordinary intelligence could not discover the true state of affairs.  Further, allegations that consumers paid a premium for the product based on marketing representations adequately alleged an injury under § 350.  Thus, there was also predominance for the NY claims.

With that out of the way, superiority was also readily established.  Consumer class actions are good ways of enforcing consumer protection laws, especially for products like this one selling at under $10 a bottle where there is no realistic alternative to a class action.

This fruit snack is neither fruity nor snacky

Lam v. General Mills, Inc., --- F. Supp. 2d ----, 2012 WL 1656731 (N.D. Cal.)

Lam brought a putative class action against General Mills based on allegedly misleading claims about the healthfulness of its fruit snacks such as Fruit Roll-Ups and Fruit by the Foot.  The court granted in part and denied in part GM’s motion to dismiss.  The products “resemble fruit leather” and the packages identify the products as “fruit flavored snack[s]”; the strawberry version says it’s “strawberry natural flavored.”  The side panel says “made with real fruit.”  The ingredients: Pears from Concentrate, Corn Syrup, Dried Corn Syrup, Sugar, Partially Hydrogenated Cottonseed Oil, Citric Acid, Acetylated Monoglycerides, Fruit Pectin, Dextrose, Malic Acid, Vitamin C (ascorbic acid), Natural Flavor, Color (red 40, yellows 5 & 6, blue 1).

Lam alleged that GM failed to properly disclose that the Fruit Snacks contained partially hydrogenated oil/trans fats.  In addition, the snacks have no significant amounts of real fruit, and “made with real fruit” allegedly deceptively describes the ingredients, since “pears from concentrate” isn’t the fruit indicated by the product name.  Strawberry-flavored Roll-Ups contain no strawberries.  Lam also objected to the terms “fruit flavored snacks,” “naturally flavored,” and “gluten free.”  She brought the usual California statutory law and warranty claims.

To the extent the complaint didn’t identify specific products but only targeted “similar” products, the court dismissed the complaint with leave to amend.

GM argued that the claims were preempted by the Nutrition Labeling and Education Act to the extent they are predicated on the “fruit flavored” and “naturally flavored” terms; Lam responded that claims of falsity/misleadingness in violation of the regulations were not preempted. 

The FDCA requires foods with artificial flavoring to be properly labeled, and the FDA has promulgated comprehensive regulations relating to such labeling.  The NLEA then preempted certain regulations that weren’t identical to various FDCA standards, including the relevant labeling requirements.  GM argued that “fruit flavored” and “naturally flavored” were expressly permitted by the regulations, which allow manufacturers to identify the “characterizing flavor” of a food in this way when the food doesn’t contain enough of the actual ingredient to justify a claim that it’s made with that ingredient.  Thus, it is possible under the regulations to label a product as “natural strawberry flavored” even if it has no strawberries. The court found the logic “troubling,” but no matter, as the regulations controlled.

Lam argued that she was seeking to enforce the FDCA’s ban on failure to disclose the presence of artificial flavors, and that “fruit flavored” and “naturally flavored” were false and misleading because the Fruit Snacks were flavored with “unnatural, non-fruit ingredients.”  These claims failed because the crux of her claim was that the labeling was deceptive because the ingredients, not the flavors, were unnatural.  But a product can be labeled “fruit flavored” or “naturally flavored” even if it doesn’t have fruit or natural ingredients, so long as it “contains natural flavor” which is “derived from” the “characterizing food ingredient.”  So her claims were preempted.

How about “gluten free” and “made with real fruit”?   “Gluten free” couldn’t support Lam’s claims, since the statement was objectively true and couldn’t be taken to convey anything other than gluten-related claims.  “Made with real fruit,” by contrast, could be misleading in the context of a product that is actually made with trans fats, is about half sugar, and has pears from concentrate instead of the fruit indicated by the product name.  This, along with the depiction of “imitation fruit leather” on the package could deceive consumers into thinking that the Fruit Snacks were healthful, natural, pressed-and-dried fruit products, “when, in fact, they are an amalgamation of artificial, non-fruit ingredients.”

GM argued that the statement was objectively true and that a reasonable consumer wouldn’t expect that certain fruits were present in a particular quantity or that a specific fruit was present. The court disagreed.  “A reasonable consumer might make certain assumptions about the type and quantity of fruit in the Fruit Snacks based on the statement ‘made with real fruit,’ along with other statements prominently featured on the products' packaging.”  Given the size and color of “made with real fruit” and the size of the word “strawberry,” which appeared multiple times on the package, a reasonable consumer might believe the product was made with real strawberries, not pears from concentrate.  Likewise, the names “Fruit Roll–Ups” and “Fruit by the Foot,” “along with the fanciful depiction of the products, which resemble fruit leather, may lead to further confusion about the Fruit Snacks' ingredients. After seeing these prominent aspects of the packaging, a reasonable consumer might be surprised to learn that a substantial portion of each serving of the Fruit Snacks consists of partially hydrogenated oil and sugars.”  The ingredient panel discloses the truth, but that’s not sufficient, especially at the pleading stage.  As the Ninth Circuit has ruled, “We do not think that the FDA requires an ingredient list so that manufacturers can mislead consumers and then rely on the ingredient list to correct those misinterpretations and provide a shield for liability for the deception.”

However, Lam failed to state a claim for breach of express or implied warranty.  There was no affirmative statement that the Fruit Snacks were healthful.

Sarah Tran on Worth a Thousand Words

Sarah Tran has written a short piece on my article Worth a Thousand Words.

No publicity is bad publicity for Facebook plaintiff

Greenspan v. Random House, Inc., --- F. Supp. 2d ----, 2012 WL 1630754 (D. Mass.)

Aaron Greenspan, pro se, sued defendants, including Columbia Pictures, over Benjamin Mezrich’s book The Accidental Billionaires: The Founding of Facebook: A Tale of Sex, Money, Genius, and Betrayal along with the movie The Social Network.  Greenspan, a 2004 Harvard grad, wrote Authoritas: One Student’s Harvard Admissions and the Founding of the Facebook Era, which he self-published in 2008.  Greenspan alleged copyright infringement, false advertising, unfair competition, and defamation.

Greenspan allegedly developed an original website called houseSYSTEM with a component website called The Facebook in 2003.  Mark Zuckerberg’s Facebook then incorporated some of Greenspan’s ideas, while Zuckerberg systematically excluded Greenspan from any recognition.  Adding insult to injury, Google refused to advertise Authoritas because the subtitle included the word Facebook (this seems to conflict with current policy; I wonder if he’d get a different result today).  Greenspan, evidently no shrinking violet, responded by petitioning to cancel two of FB’s registered marks.  In 2009, Greenspan reached a confidential settlement with Zuckerberg and FB.

Meanwhile, in 2008, Mezrich had contacted Greenspan for help with Mezrich’s own book.  Greenspan declined to help other than to point him to the Authoritas website.  When Mezrich’s book was published in 2009, Authoritas was listed as a secondary source.

All three works (Authoritas, Accidental Billionaires, and The Social Network) detail meetings between Larry Summers and Harvard students.  Authoritas describes a meeting involving Greenspan, while the others describe one with Cameron and Tyler Winklevoss. Greenspan alleged that similarities between the two accounts “including descriptions of the reception area, the receptionist's conduct, Summers' office, Summers' conduct and manner, the appearance and conduct of Summers' assistant, and the response of the students in the meetings” evidenced infringement.  He also identified similarities between the account of Zuckerberg's statement in an Administrative Board hearing in the movie and his account of his own frustrations in Authoritas.

Access was plainly not the issue.  Greenspan identified several other similarities in his attempt to identify actionable copying, including the dual use of “Founding of Facebook” in the book titles; chapter headings “[The Cars of] Harvard Yard” and “Veritas”; and so on.  According to Greenspan, Accidental Billionaires’s retelling of students waiting outside Summers’s office—“sitting next to each other on a couch that felt as old as Massachusetts Hall itself”... “[t]he entrance to the building was perpendicular to University Hall, where the legendary statute of John Harvard stood ...”—was similar to an account in Authoritas—“I was sitting on a plush beige sofa in an office in Massachusetts Hall, a small rectangular building lodged snugly next to Harvard Yard's Johnston Gate.”  Likewise, in Accidental Billionaires a receptionist says, “The president will see you now,” while in Authoritas she says, “The President will see you in a moment.”  The other “similarities” are of the same order.  The alleged similarities relating to Summers tend to show him in an unsympathetic light, though that is hardly news.  (Accidental Billionaires:  “The disdain in Summers’s voice was palpable”; “his chubby hand”; “He ... stared at the brothers with pure distaste in his eyes.  ‘Why are you here?’”; “‘So what do you want me to do about it?”  Authoritas: “I had never observed such palpable impatience before”; “he was fat, chubby, and slow”; “His tone indicated that I was already being ridiculed”; “‘Well, Aaron, what do you want me to do?’”)

The subtitles/chapter titles weren’t copyrightable; “founding of” is a cliché, “Harvard Yard” is the name of a location, and “Veritas” is simply the Latin translation of the word “truth.”  Similarly, “the president will see you,” was an uncopyrightable cliché used to convey the idea that an individual is ready for a meeting.  Nor were “palpable” and “chubby” protected, since copyright doesn’t protect fragmentary words and phrases or expression dictated by functional considerations.

Copyright won’t protect the idea of waiting for a meeting, the fact that Summers’s office was in Massachusetts Hall, or the fact that there was furniture therein, but would protect Greenspan’s original expression describing these things through the choice to include particular details.  Similarly, Greenspan had no claim to the ethnicity of Summers’s assistant, only to original expression describing her taking notes.  Fragmented phrases like “what do you want me to do?” were unprotected, but Greenspan’s original expression of Summers’s “unwelcoming manner and inability to see the students’ point of view” would enjoy copyright protection. And so on.

But even if these fragments could suggest that there was actual copying, that’s not enough for substantial similarity. The similarities here stemmed from ideas rather than expression.  For example, “the idea of an assistant taking notes and the fact of her ethnicity create the impression of similarity between the two works."  But no reasonable jury could conclude that enough expression had been sufficiently copied to infringe.  Both sides described the layout of Summers’s office by including certain pieces of furniture, but “the use of the desk, shelves, and computer fall within the doctrine of scenes a faire as inherent characteristics of an office and thus do not lead to a plausible inference of infringement. The defendants' choice additionally to include antique-looking side tables and an Oriental carpet as compared to the plaintiff's expression including dark African masks undercuts any notion that the copying was so extensive that an ordinary observer could conclude that there was unlawful appropriation.” 

Knocking on Summers was also noninfringing: “Although both Greenspan and the defendants use similar phrases to express the idea of Summers’ unwelcoming manner, his inability to see the students’ point of view, and the students being upset at the system …, the five sentences that convey these ideas are quantitatively and qualitatively insubstantial in the context of Authoritas as a whole. Any copying claimed … simply was not so extensive that an ordinary observer could conclude that the defendants unlawfully appropriated the plaintiff's original expressions.”  All those things are ideas, and “similar phrases” is just another way of saying that Greenspan was seeking protection for scattered words.

The court noted that the parties used “similar aspects” (of the world?) to express two different meetings with Summers, “including describing the reception area, Summers' office, Summers' conduct and manner, Summers' assistant's appearance and conduct, and the students' responses in the meetings.”  It seems to me that most of these things would naturally have stayed constant from meeting to meeting—even the student responses (speaking as someone who’s met with many students)—and thus the descriptions would be similar because the facts were the same.  But in any event, the court held, the meetings were “very minimal” parts of the works as a whole, so any similarity was quantitatively and qualitatively insignificant. No reasonable observer could find unlawful appropriation of original expression.  (Indeed, I do not see that the court has identified original expression in these fragments, as opposed to longer chunks of description which would be protectable.)

The court then turned to the Lanham Act claims, with a random statement that “facts supporting bad faith” must be alleged to state an unfair competition claim.  Greenspan alleged that defendants falsely called Accidental Billionaires nonfiction--which was wrong because it didn’t properly convey Greenspan’s role in the origins of Facebook--bought 5-star reviews of the book, and bulk-purchased it to put it on the bestseller list.  Citing answers.com, the court said that “nonfiction only means that the literature is based on true stories or events, not that every statement is in fact demonstrably true.”  Greenspan didn’t allege that Accidental Billionaires wasn’t based on true events.  He did list a bunch of errors in the book—the misuse of logarithm for algorithm, the attribution of the wrong House to Zuckerberg, a name misspelling, “there was no bookshelf behind the president's desk in Massachusetts Hall,” etc.  None of that made the book not nonfiction.  As the court pointed out, two books may both be nonfiction even if they have different accounts of the same events.

The other allegations were conclusory, and there was no allegation that buying 5-star reviews or boosting sales numbers would influence consumers’ buying decisions (though that’s likely true).  Finally (and many other courts would have started here), there were no allegations that the alleged misrepresentations harmed Greenspan’s business by causing him to lose sales or goodwill.

Greenspan finally claimed defamation based on statements in Accidental Billionaires, omissions in both works, and Mezrich’s statements in a C–SPAN interview.  He alleged that Accidental Billionaires called him “Grossman” rather than Greenspan, and used the pejorative terms “kid”/“some kid.”  The book’s statement that “hardly anyone had paid any attention to [Greenspan’s website] ... And Grossman’s site wasn't particularly slick,” allegedly implied that his work was irrelevant and of poor quality.  This selective omission of his role in the book and film, he alleged, withheld proper recognition from him, amplified by Mezrich’s repeated claims that the book was “true.”  (Greenspan had good reason to want his name corrected, and it does appear that the current edition of the book has his name right, according to Amazon’s “search inside the book” feature.)

The court held that the challenged statements in the book weren’t reasonably susceptible of defamatory meaning.  The use of the wrong name wouldn’t say anything about Greenspan’s role, or lack thereof, in Facebook’s origins; it wouldn’t tend to injure his reputation or subject him to scorn, hatred, ridicule or contempt.  Nor would “kid” do so.  Even an implication of immaturity or inexperience wouldn’t be defamatory, especially in the context of descriptions of college students.  Greenspan didn’t allege facts to show that the omission of his role in the origins of Facebook would lead a reasonable reader to conclude that he was irrelevant (hunh?), but even if that were a plausible inference, that still wouldn’t hold him up to scorn, hatred, ridicule or contempt. Being robbed of proper recognition doesn’t constitute a defamation claim.  Indeed, Greenspan didn’t claim that public unawareness damaged his reputation and career, but rather that the damage occurred when he tried to correct the record (and was shunted aside).

The statements in the book were also nonactionable opinion: “Then the Greenspan kid had gone on to develop something called houseSYSTEM that had some social elements involved in it. Greenspan had even added a Universal House Facebook into his site, which Mark had checked out; hardly anyone had paid any attention to it, as far as Eduardo knew ... And Greenspan's site wasn't particularly slick, and wasn't about pictures and profiles. Mark's idea was really different.”  Opinion based on disclosed or assumed nondefamatory facts is nonactionable, even if the opinion is unjustified and unreasonable.  The qualifier “as far as Eduardo knew” cautioned the reader that Eduardo might not know everything and prevented any implication of undisclosed defamatory facts.  “Merely because a person signed up on a website does not necessarily mean that the person was paying attention to the website; whether or not anyone paid attention to Greenspan's site is a subjective inquiry not amenable to an objective true or false resolution.”  Thus, no reasonable reader would receive an assertion of fact about the quality of Greenspan’s work.  Likewise, “wasn't particularly slick” was “a figurative and hyperbolic communication for which there is no objective evidence to prove or disprove its falsity.”

Nor were the C-SPAN statements defamatory: “There's been a lot of lawsuits, not just Eduardo and the Winklevosses. There's that other big one, there's this kid, who was involved in some sort of lawsuit, about the name ‘face book.’ I don't remember how that worked out. I stand by the books. And, you know, the things that people point out, like, this is a perfect example of it. It's a person who has a personal beef—with Zuckerberg or with Facebook, and they're bringing it out in the way they can in this conversation. It really has very little to do with my book.”  Reasonable listeners couldn’t conclude that Mezrich was implying an undisclosed defamatory fact about Greenspan’s motives. Mezrich disclosed that he knew about the lawsuit but couldn’t remember the outcome, and that was clearly the basis for his opinion about Greenspan’s motives for attacking Accidental Billionaires.  “Whether or not this was the plaintiff's motive cannot objectively be proven as true or false.”  The defamation claims, like everything else, were dismissed.

Out of joint: supplement case survives motion to dismiss

Cardenas v. NBTY, Inc., 2012 WL 1593196 (E.D. Cal.)

Cardenas brought a putative class action against NBTY and Rexall for selling Osteo-Bi Flex joint health supplements without support for the efficacy claims they made.  She alleged violations of the CLRA and UCL as well as breach of express warranty. The court denied defendants’ motion to dismiss.

Cardenas alleged that she read the front, back and sides of the package and, in reliance on the representations, bought the product for her joint pain.  But it didn’t help to promote mobility, renew cartilage, maintain healthy connective tissue, or improve joint comfort, as represented.  Defendants allegedly promote these benefits as a result of the products’ ingredients, especially the primary active ingredient, glucosamine hydrochloride.  This is an amino sugar that the body produces and distributes in cartilage and other connective tissue, but Cardenas alleged that there was no competent and reliable scientific evidence that taking glucosamine (especially orally) leads the body to metabolize it in a way that provides the promised benefits.  “Clinical cause and effect studies have found no causative link between glucosamine hydrochloride supplementation and joint renewal or rejuvenation.”  She made similar allegations about other ingredients (chondroitin, methylsulfonylmethane, hyaluronic acid, vitamin D, vitamin C, manganese, boron, or collagen).

Most Osteo Bi-Flex products also contain 5–LOXIN Advanced, a concentrated extract of Boswellia Serrata (“AKBA”). (Previous litigation related to the matter.)  Defendants claim that AKBA results in “improvement in joint comfort within 7 days,” but Cardenas alleged that there was no competent and reliable scientific evidence that taking AKBA (especially orally) provided the promised benefits, and that clinical cause and effect studies had been “unable to confirm” any relationship between AKBA supplementation and joint renewal or rejuvenation. 

The product packages say that two studies support the claim that Osteo Bi-Flex users “show[] improvement in joint comfort,” but don’t provide information on locating the studies.

Defendants argued that Cardenas lacked standing to bring claims about product varieties she didn’t buy and ads she didn’t view.  They also argued that claims of missing substantiation aren’t actionable, and that her allegations about clinical studies were conclusory and didn’t explain what representations were false or misleading.

On standing, the court found her allegations sufficed to allege injury in fact traceable to the defendants’ acts and redressable by a court decision.  She at least had standing as to the Regular Strength product she bought and the representations on its packaging.  These allegations also satisfied the UCL’s requirement of economic injury—she allegedly lost money on an ineffective product.

What about standing for other products/ads?  Some cases say there’s no standing to sue based on such things, but other cases take a different approach, asking in traditional class action style whether the claims have the same core factual allegations and causes of action.  This is right: if we both saw the same claim, it shouldn’t matter for standing that you saw it on TV and I saw it in the newspaper any more than it should matter if I saw it on my copy of the newspaper and you saw it in yours.  The treatises and the vast weight of authority are in agreement here: “whether a class representative may be allowed to present claims on behalf of others who have similar, but not identical, interests depends not on standing, but on an assessment of typicality and adequacy of representation.”  Thus, Cardenas had standing to assert her UCL and CLRA claims based on her purchase of Osteo Bi-Flex Regular Strength “and the product’s more general representations that its line of Osteo Bi-Flex products, which ostensibly share many similarities in ingredients, ‘improve mobility,’ ‘improve joint comfort,’ and ‘support[ ] renewal of cartilage.’”  Rule 23 analysis would determine whether she could present claims on behalf of purchasers of other Osteo Bi-Flex products.

Next, the court turned to Rule 9(b), which the Ninth Circuit has held applies to CLRA and UCL claims where a plaintiff alleges that a defendant engaged in fraudulent conduct.  Cardenas specifically asserted that defendants failed to disclose material facts when they knew or should have known that the representations were unsubstantiated, and these were allegations sounding in fraud.  Cardenas didn’t allege scienter as an inherent part of her UCL claim, but it was difficult for the court to distinguish which parts of her UCL claim sounded in fraud and the court ultimately found that the UCL claim as a whole also needed to meet Rule 9(b)’s standards, even though not all claims of false advertising are necessarily grounded in fraud.  In any event, the court found that the complaint sufficiently alleged nondisclosure and scienter, and she alleged justifiable reliance and resulting damage as well.  The allegation that clinical cause and effect studies had found no link between the individual ingredients and the purported benefits of Osteo Bi-Flex was sufficient on falsity, since defendants’ representations seemed to be based at least in part on the asserted efficacy of individual ingredients.  If Cardenas’s claims about the studies are true, “then it stands to reason that Defendants' representations that AKBA ‘help[s] with joint flare-ups’ are actually false.  Because Defendants bolster their overarching claims of joint benefits by referring to the importance and efficacy of a particular ingredient which, if Plaintiff is to be believed, has no actual joint benefits, then Defendants' overarching claims are most likely false as well.”  It was the same with the other ingredients.  The complaint provided defendants of sufficient notice of the alleged fraud, allowing them to prepare an adequate defense.