NYT on FTC case against internet marketer

Nice long story, including quotes from my colleague David Vladeck, now returned to Georgetown.

Typicality defeats a food class action

Major v. Ocean Spray Cranberries, Inc., 2013 WL 2558125 (N.D. Cal.)

Major sued Ocean Spray alleging that she bought several Ocean Spray juices/drinks “unlawfully labeled ‘No Sugar Added’ or bearing improper nutrient content claims, or false representations that the products are free from artificial colors, flavors or preservatives.”  She alleged that she bought five flavors, Blueberry Juice Cocktail, 100% Juice Cranberry & Pomegranate, Diet Sparkling Pomegranate Blueberry, Light Cranberry, and Ruby Cherry.  She asserted the usual California claims, including warranty claims. 

Her complaint defined the putative class as California purchasers who bought Ocean Spray products (1) labeled “No Sugar Added” but which contained concentrated fruit juice and/or provided enough calories to trigger a disclosure requirement; (2) falsely represented to contain no artificial colors, flavors or preservatives; (3) represented to be “healthy” or a source of an antioxidant/nutrient in violation of nutrient standards.  The class certification motion reformulated the putative class as purchasers who bought any products from Ocean Spray’s 100% Juice, Juice Drinks, Sparkling, and Cherry products, in any flavors.

The court found that Major failed to show typicality.  A district court must “ensure that the named plaintiffs have incentives that align with those of absent class members so as to assure that the absentees' interests will be fairly represented.” Typicality isn’t satisfied “where the evidence needed to prove at least one of the named plaintiff's claims is not probative of the other class members' claims.” When cases involve several products, typicality isn’t met when the named plaintiff bought a different product than that purchased by unnamed plaintiffs. 

And that was true because Major’s proposed classes encompassed products she didn’t herself purchase.  For example, Major sought to cover any product from the Sparkling line, based on the purchase of Diet Sparkling Pomegranate Blueberry drink.  But the motion failed to link any of those products to any alleged misbranding. 

Major failed to explain why every flavor in the Sparkling line was misbranded.  The labels and nutrition claims on each product may be unique.  Major based her claims with respect to the Sparkling line in part on the claims made on the Diet Pomegranate Blueberry label, but because that language includes specific claims about blueberries, it would only be applicable to drinks containing blueberries.  The evidence needed to prove that the blueberry claims were false wouldn’t be probative of the claims of unnamed class members who bought non-blueberry Sparkling products.

(This is not an unexpected result.  But I wonder how strongly it follows from the rationale for the typicality requirement. In what way would including other products provide plaintiff with the wrong incentives to represent the entire class?  Is the thought that she might wrongly give up claims based on other products in order to achieve a more favorable result with respect to products she bought?)

Copyright in real estate listings survives Lanham Act counterclaim

Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc., --- F. Supp. 2d ----, 2013 WL 2477260 (D. Md.)

MRIS sued AHRN and its CEO for copyright infringement, violations of the Lanham Act, conversion, and unjust enrichment based on AHRN’s alleged reproduction of real estate listing content from MRIS’s database onto AHRN’s website, neighborcity.com. The court previously granted a preliminary injunction against unauthorized copying etc. of copyighted content from the MRIS database, and now gave further consideration to the case.

AHRN, a five-year old real estate brokerage referral services and technology company, provides information to home buyers and sellers nationwide by identifying appropriate real estate agents for them, using data on real estate listings etc.  MRIS provides multiple listing services (MLS): it maintains a database of property listings and related information.  Real estate brokers and agents must subscribe to the service; they agree to upload their listings to the database and get the right to display MRIS listings on their own websites via a licensed data feed. Counterclaim-defendant NAR is a trade organization for real estate brokers and agents; its 1600 state and local member boards control about 80% of the roughly 1000 MLSs in the US. 

AHRN counterclaimed, alleging that the counterclaim defendants began a scheme to register sham compilation copyrights in MLS listings, enforced them against AHRN, made false and misleading statements about their copyrights and about AHRN, and passed anticompetitive MLS rules to drive AHRN and similar innovators out of the market. 

The story begins with a 2005/2006 guidance paper from MRIS, “Strengthening the Foundation: The Real Estate Listing Content Copyright FAQ and An Updated Program to Administer, Secure, and Enhance the Value of Real Estate Listing Content.”  The paper invited the MLS industry to join MRIS’s copyright program, whose purpose was to defeat “the emergence of several high profile initiatives proclaiming ‘new’ and ‘improved’ alternative business models that they propose will dramatically change the real estate industry.”  MRIS heavily publicized the paper at industry conferences.  The paper allegedly encouraged claiming and enforcing copyright in uncopyrightable listing data consisting of facts assembled in compilations.  It urged the industry to stop using the term “listing data” and replace it with “listing content” to improve the aura of copyrightability.  And it urged making each listing a joint work owned by the broker and the MLS, claiming copyright both in individual listings and in the compilation of automated databases.

Registration was obviously something of a hurdle, given how often the listings change, so the paper argued that the MLS industry should characterize the databases as “unpublished,” allowing it to use quarterly registrations, forego registering photos in group registrations, and save huge amounts of money in registration fees.  The MLS adopted the copyright program, allegedly under NAR’s encouragement, at a meeting that allegedly featured discussions of the perceived threat AHRN posed to the industry and what the industry could do to “shut down” AHRN.  NAR instructed member MLSs in how to fill out their compilation copyright applications and published “MLS Registration Tips.”

In November 2011, AHRN began to receive a torrent of C&Ds from brokers and MLSs, mainly threatening copyright infringement lawsuits; AHRN alleged that the timing was connected to the NAR meeting about to occur.  AHRN was copied on an email from another entity, Northstar, stating that MLSs across the country had dropped C&Ds “on the head of the bad fellow,” AHRN’s CEO Cardella.  It continued,

How do we connect the dots between all of the MLS's [sic] that have been abused so that we can act collectively, either in cost sharing and/or strategically by taking an action against Mr. Cardella that has the desired outcomes of:

1. Getting all of our listings off of his site[.]
2. Discovering where he has been getting the listings[.]
3. Throwing a world of hurt on both[.]
4. Sending a message that our copyrights are enforceable and we are serious about punishing anyone who doesn't take us seriously.

NAR’s general counsel then allegedly advised local MLSs to send C&Ds.

AHRN responded to each letter with an offer to negotiate a license, but these were generally rebuffed, always in the same format and in essentially the same language. When agreements were reached or negotiations commenced, brokers repudiated these agreements in January 2012, allegedly in response to pressure from MLSs, again using identical/near-identical language.

AHRN alleged that MRIS’s lawsuit and Northstar’s similar lawsuit were direct and concerted action constituting sham litigation, part of an anticompetitive scheme to suppress independent companies’ profile pages for real estate agents.  NAR allegedly funded the lawsuits, and also promulgated rules governing MLSs that bar or strongly discourage them from licensing listing databases to third parties, inhibiting the development of new services.  (AHRN will of course lose its antitrust claims, but this sure sounds like something the FTC might ask about.)

MRIS’s allegedly false and misleading statements were about the validity of its copyrights and copyright program, including claims to acquire copyright in submitted photos and listings by a clickwrap agreement and claims that listings could be copyrightable if MLSs only called them “content,” and also covered the use of false and misleading copyright notices on photos on MRIS's website and third party websites to which it syndicates the data.  NAR allegedly republished or encouraged members to republish these false and misleading statements, and used words like “thief,” “theft,” “pirate,” “pirating,” and “piracy” to describe AHRN; a NAR member accused NeighborCity of stealing listing data and called them “Data pirates of the year.”

After noting that it hadn’t made a final determination on the validity of the copyrights at issue, despite issuing a preliminary injunction, the court turned to the counterclaims and found AHRN failed to state a plausible Lanham Act violation.  Statements about the copyrightability of MLS data were nonverifiable, nonactionable legal opinions.  Even if they were verifiable, the only logical conclusion would be that the statements about copyrightability/registrabilty were true, given that the Copyright Office routinely grants MLSs registrations and courts have found that compilation copyright protection exists for MLS compilations.

In addition, none of the statements at issue were made in commercial advertising or promotion.  Statements in the copyright paper were directed to MLSs, and the paper wasn’t an ad promoting MRIS as an MLS or likely to influence a purchasing decision. Likewise, statements made to the Copyright Office weren’t advertising or promotion.

As for NAR, AHRN made only conclusory allegations that NAR republished or encouraged members to republish false or misleading statements on its website, without identifying which statements were republished or their nature and context.  NAR’s “Registration Tips” weren’t false or misleading and weren’t ads.

Allegations of disparaging statements were also insufficient—AHRN identified a single disparaging statement by a NAR member, but that wasn’t sufficiently connected to these counterclaim defendants.  Nor were these accusations of theft or piracy alleged to be in commercial advertising or promotion, and anyway they’d be nonactionable legal opinions.

The Sherman Act counterclaims didn’t plausibly plead fraud on the Copyright Office, which meant that defendants were entitled to Noerr-Pennington immunity from the Sherman Act claims to the extent that they were based on the filing of this copyright lawsuit.  However, AHRN could file amended counterclaims specifying the allegedly unlawful agreement outside the lawsuit and how it affected competition.

AHRN’s Maryland unfair competition claims failed for the same reason the Lanham and Sherman Act claims failed.  There was nothing unfair about expressing legal opinions about copyrightability, seeking registrations, or filing suit.  And refusal to license AHRN couldn’t be the basis for an unfair competition claim, since copyright owners generally have the right to exclude others.  (Though copyright misuse remains as a defense, albeit not a separate cause of action.  If there were real antitrust law, I would find this somewhat odd: assuming that a defendant could prove copyright misuse, disentitling plaintiff from enforcing its copyright, then couldn’t the same misuse found a violation of the antitrust laws despite a copyright owner’s ordinary right to exclude?)

The California unfair competition claims also failed, for similar reasons and because the only conduct alleged to have occurred in California was a 2011 NAR meeting and MRIS’s presentation of its copyright paper in 2005 (which predated AHRN’s existence by two years).  The allegations around the 2011 meeting were insufficient, and AHRN failed to plead harm suffered in California, which couldn’t be inferred simply because its principal place of business was in the state.

The court also dismissed the Maryland barratry counterclaim.  Under Maryland law, “a person may not, for personal gain, solicit another person to sue or to retain a lawyer to represent the other person in a lawsuit.” However, this was a criminal statute providing no private right of action; also, AHRN didn’t successfully plead the required “officious meddling” and “personal gain.”

Court misapplies Dastar because customers buy photo to show love of subject

Masck v. Sports Illustrated, No. 13-10226 (E.D. Mich. June 11, 2013)

I know the year’s not even half over, but I am tentatively declaring a winner in the “year’s worst misunderstanding of Dastar” category.  Other contenders will have to work hard.

Plaintiff Masck took an “iconic” photo of defendant Desmond Howard, who was running back a punt for a touchdown in a football game where the University of Michigan “soundly defeated” their archrival Ohio State.  He made the “Heisman pose” by lifting his left leg up and stretching out his left arm, and Masck alleged that he was the only photographer who got a “sharp” shot of the pose.  It was included in a Sports Illustrated article, crediting him.  He didn’t register the photo until August 2011.

Masck negotiated with Howard’s agent and Howard, but was unable to reach an agreement about joint sales.  He alleged that he sent a slightly altered photo to Howard to track unauthorized use, which was then uploaded to Howard’s website.  Masck identified numerous instances of infringing use, including a copy in a book about Howard, I Wore 21: The Legend of Desmond Howard. Howard’s website also had a reproduction of the photo at one time.  Reproductions of the photo were offered for sale on Amazon.  In September 2012, Masck requested Amazon to stop selling unauthorized copies, but Amazon continued to sell them. 

Masck sued many, many entities for infringement, violation of the Lanham Act, state unfair competition, tortious interference, and unjust enrichment.

Lanham Act: The Supreme Court held that “origin” of “goods” in the Lanham Act refers only to “tangible goods” and not “communicative products.” The court even quotes the correct standard: “[T]aking tangible goods and reselling them as your own constitutes a Lanham Act violation; taking the intellectual property contained in those goods and incorporating it into your own goods does not.” Nat'l Bus. Dev. Servs., Inc. v. Am. Credit Educ. & Consulting Inc., 299 F. App'x 509, 511 (6th Cir. 2008).

However, the court wasn’t ready “at this time” to conclude that the photo was an intangible item.  (No, the intellectual property embodied in the photo is an intangible item; each physical photo is tangible, but defendants allegedly produced each one in suit, as in Dastar.)  Masck sells his own copies of the photo, “making him a producer of tangible goods.”  (And if defendants had resold his copies, that could be a relevant fact.)  He alleged that some of the infringing activity involved “the copying of a physical copy of plaintiff’s photograph and then placing their trademark on the item.” Here, unlike in National Business, “the infringing activity involved wholesale copying of Plaintiff’s photo rather than incorporating elements of his materials into their own works.”

Okay: Whether there was wholesale copying or not was a standard explicitly rejected in Dastar.  If Masck made the copies, then reverse passing off is possible (but copyright infringement isn’t, given first sale).  If defendants made the copies, as Masck alleges, then there’s no Lanham Act claim.  That’s what it means to distinguish between the source of physical copies (within the subject matter of the Lanham Act) and the source of intangible expression embodied in each copy (not within the subject matter of the Lanham Act).

The court continued that Masck claimed to have the only sharp photo of the event, and that “since not all pictures taken that day were of the same quality, the source of the photo is important.”  But in the same sentence, the court says that consumers can judge quality for themselves, making clear that the court has misunderstood the legal meaning of “source.”  If consumers are interested in the quality of the photo, they don’t care who took it or whether all copies came from the same entity, which is what “source” means for §43(a) purposes. The photo does not gain any value because Masck took it (as it might had Ansel Adams taken it); this discussion concedes that its value comes from being a good picture, not from its photographer-identifying significance.  But, the court concludes, “reproductions of the photo may lead to confusion about the source of the photograph and dilute Plaintiff’s sales.”  (Because what this discussion really needs is use of the term “dilution.”) 

True, Agence France Presse v. Morel, 769 F. Supp. 2d 295 (S.D.N.Y. 2011), reached the correct, contrary result.  But, though Masck’s photo has “a communicative aspect,” “it is not as easily reduced to simply an ‘idea, concept, or communication’ as other photos”:

Consumers do not purchase the photo simply for its communicative properties, they purchase it as a token of their fandom for the University of Michigan, or Desmond Howard. As much is clear by the fact that consumers purchase and retain the photo in its physical form. So, unlike other photographs, the physical nature of the photo remains an inalienable characteristic.

I don’t really know where to start here.  How about: if consumers are purchasing the photo as a token of their fandom for two different entities who aren’t Masck, the Lanham Act claim must fail, since Masck has no source identification claims?  Or: it doesn’t matter what the mystical content of this particular photo is, since Dastar sets out a blanket rule?  The court denied the motion to dismiss without prejudice.

The state law claims were preempted under 17 USC § 301 for lack of an extra element.  Masck claimed that the publisher of the book about Howard, Champions Press, committed tortious interference by intentionally interfering with Masck’s business relationship with Howard, because it knew that there were ongoing negotiations about buying the rights to the photo, yet Champions published the photo without permission.  The “interference” here was unauthorized copying, not anything different from infringement. Nor was Masck’s Michigan Consumer Protection Act claim qualitatively different.  Masck “tried to make the two claims sound different by describing the basis of the consumer protection claim to be confusion over the source of the photo. However, the underlying conduct complained of is the unauthorized copy of Plaintiff’s photo.”  And unjust enrichment was preempted, since there were no allegations of an implied in fact contract/promise to pay.

The court granted Howard’s motion to kick out the statutory damages and attorneys’ fees claims (for all defendants alleged to have infringed before registration).  In the Sixth Circuit, “infringement ‘commences’ for the purposes of § 412 when the first act in a series of acts constituting continuing infringement occurs.” Johnson v. Jones, 149 F.3d 494 (6th Cir. 1998)—here, February 2010.  Masck didn’t dispute this, but argued that Howard engaged in separate post-registration acts of infringement, because of his use of the altered photo in August 2012.  No dice—as Johnson held, the purpose of Section 412 “would be thwarted by holding that infringement is ‘commenced’ for the purposes of § 412 each time an infringer commits another in an ongoing series of infringing acts.” 

Even if the series of infringing acts should be chopped up, the differences between the photos weren’t significant enough that using the second one was a new act of infringement—the alterations were designed to be so slight that they would not “appear to the untrained eye.” “Given the purpose of the alterations and Plaintiff’s own assessment that the differences are not easily discernable, the altered photo is not a new work.”  And putting the altered photo on the website wasn’t a new act.  It was effectively the same photo, on the same website, by the same defendant.

The court also granted Amazon’s motion to dismiss the vicarious infringement claim against it, but not the contributory infringement claim.  Amazon, as an e-commerce platform provider, argued that it had no practical ability to control what occurred on its site (and no direct financial interest in infringement). The court agreed that Amazon couldn’t be expected to examine every third party product for infringement.  “Copyright infringement . . . lends itself readily to abusive litigation . . . Therefore, greater particularity in pleading, through showing ‘plausible grounds,’ is required.” Merely pleading that Amazon had the right and ability to control the content of its website, without factual allegations, was insufficient to show that Amazon could plausibly verify the copyright status of each and every piece of merchandise it lists from third-party sellers.  (While I agree with the result, note that the court’s reasoning is special to copyright vicarious liability; true vicarious liability, in for example an employer-employee relationship, asks about the right and ability to control the employee’s conduct, not about whether the employer could reasonably have known about the specific act of infringement or infringement in general.  But given the metastasized idea of "right and ability to control" far beyond traditional agency that has occurred in copyright, it is unsurprising that courts have incorporated other fault-based concepts to rein it in a bit.)

The contributory infringement claim wasn’t dismissed, because Masck requested Amazon to remove the allegedly infringing merchandise, giving Amazon knowledge of the infringing activity.  (Interesting factual question: if there are multiple photos of this event, what constitutes sufficient knowledge that a particular item has a copy of Masck’s photo rather than some other photo, and that Masck has a legitimate claim rather than an anticompetitive one?)  Because Amazon continued to sell the merchandise, and selling infringing merchandise materially contributes to infringement, Masck stated a plausible contributory infringement claim.  Amazon argued that Sony v. Universal should protect it, but “the product in question is not Amazon’s website, but the merchandise sold on its website.”  Sony was therefore inapplicable, and anyway Sony was about limiting the imputation of culpable intent as a matter of law from the characteristics or uses of a distributed product.  “There is no need to impute culpable intent since the products sold by Amazon already possessed their infringing characteristics,” and because Amazon knew about the alleged infringement. (The court is conflating Amazon’s service with the products sold through its service—like conflating the VCR with the videotapes made by end users.  Even the swap meet cases do better than this applying Sony to services.) 

Long, unhappy post on Hart v. EA

Hart v. Electronic Arts, Inc., No. 11-3750 (3d Cir. May 21, 2013)

Hart, a former Rutgers football player who saw significant success on the field, appealed EA’s district court win against his right of publicity claim based on EA’s use of his likeness and biographical information (size, weight, jersey number, typical attire of visor and armband) in its NCAA Football videogames. The court of appeals reversed.

Unsurprisingly, the court began with reference to the NCAA’s amateurism rules, which precluded Hart from making any money from his status, but didn’t stop the NCAA from monetizing his popularity.

NCAA Football comes out every year, and allows users “to experience the excitement and challenge of college football” by interacting with “over 100 virtual teams and thousands of virtual players.”  Users typically play by choosing two teams to compete against each other.  The game “assigns a stadium for the match-up and populates it with players, coaches, referees, mascots, cheerleaders and fans.”  There are also multi-game play modes.  Dynasty Mode allows users to control a college program for up to thirty seasons, allowing players to recruit high school players from a randomly generated pool. Race for the Heisman/Campus Legend mode allows users to control a single user-made virtual player from high school through college, making choices about practices, academics and social activities.  EA licenses rights to team-related content from the NCAA, but does not license likeness and identity rights for collegiate players—unlike some of its other franchises.  The game’s success depends on its focus on realism and detail, “from realistic sounds, to game mechanics, to team mascots. This focus on realism also ensures that the ‘over 100 virtual teams’ in the game are populated by digital avatars that resemble their real-life counterparts and share their vital and biographical information.” This included a Rutgers avatar that resembled Hart.  While users can change avatars’ appearances and vital statistics, certain details were immutable: the player’s home state, home town, team, and class year.  

Hart sued based on the use of his likeness/biographical and career statistics in the game, and also over the use of an actual photo of him in a photo montage visible only when players select Rutgers as their team.  Preview: This last was held transformative and fair because it’s a montage, while the rest is not transformative because it’s a realistic videogame.  If those becauses don’t make any sense to you, welcome to the club!

As you know, Bob, videogames are fully protected by the First Amendment.  Brown v. Entm’t Merchs. Ass’n, 131 S. Ct. 2729 (2011).  However, such protection can be trumped by other protected rights.  EA conceded for purposes of the appeal that it misappropriated his identity for commercial exploitation; this required balancing the interests underlying the right to free expression with the interests in protecting the right of publicity. Zacchini v. Scripps-Howard Broad. Co., 433 U.S. 562 (1977) (also a cite to Eldred and to defamation law).

The court then engaged in a review of existing case law.  The basic theory of the right of publicity is that people have the right to enjoy the fruits of their own industry; it’s unfair to allow others to commercialize, exploit, or capitalize on another’s name or reputation.  People’s names and likenesses belong to them as property because they are things of value. New Jersey follows the Restatement (Second) of Torts approach that “[o]ne who appropriates to his own use or benefit the name or likeness of another is subject to liability to the other for invasion of privacy,” and that this is a property right.  The Third Restatement adopted a freestanding right of publicity claim, but New Jersey has yet to adopt it.

In New Jersey, name, likeness, and endorsement therefore carry value, and unauthorized use harms the person by “diluting the value of the name and depriving that individual of compensation.”  The goal of the right of publicity is therefore to protect an individual’s property interest in their identity gained through labor and effort, and to encourage further investment in this property interest.  See Zacchini (“[T]he State’s interest in permitting a right of publicity. . . . is closely analogous to the goals of patent and copyright law, focusing on the right of the individual to reap the reward of his endeavors . . . .”).  Relatedly, the court rejected the idea that no right of publicity was necessary because players are financially rewarded through endorsement, sponsorship, and the like—this doesn’t apply to college athletes, and the NCAA most recently estimated that “[l]ess than [two] in 100, or 1.6 percent, of NCAA senior football players will get drafted by a National Football League (NFL) team.” Ryan Hart was in the nearly 99%.  (So does that mean that in our future case-by-case balancing we do get to count those other economic opportunities against granting control to celebrities who are getting paid?)

Zacchini called for balancing of First Amendment interests, but didn’t set forth a systematic analytic framework for doing so.  Lower courts have tried several approaches.  The court identified three as of interest: the execrable Doe v. TCI “predominant use” test, the trademark-based Rogers test, and the copyright-based transformative use test.  It picked the transformative use test as the most appropriate.

As for Doe v. TCI, asking whether the predominant use of a celebrity’s identity is commercial is “subjective at best, arbitrary at worst, and in either case calls upon judges to act as both impartial jurists and discerning art critics. These two roles cannot co-exist.”  The court declined to get into whether using Hart’s identity added anything to the “First Amendment expressiveness” of the game:

Such reasoning, however, leads down a dangerous and rightly-shunned road: adopting Appellant’s suggested analysis would be tantamount to admitting that it is proper for courts to analyze select elements of a work to determine how much they contribute to the entire work’s expressiveness. Moreover, as a necessary (and insidious) consequence, the Appellant’s approach would suppose that there exists a broad range of seemingly expressive speech that has no First Amendment value.”

(This criticism is also true of transformative use, especially as applied here, but hey!)

The court then rejected Rogers because it would “potentially immunize a broad swath of tortious activity.”  (You know, like New York Times v. Sullivan.)  The Restatement (Third) of Unfair Competition restricts the right of publicity to “use for purposes of trade,” which does not “ordinarily include the use of a person’s identity in news reporting, commentary, entertainment, works of fiction or nonfiction, or in advertising that is incidental to such uses” unless a name or likeness is used solely to attract attention to an unrelated work.  The Restatement specifically mentions uses in articles in fan magazines, feature stories on entertainment programs, unauthorized biographies, novels, plays, and motion pictures. 

The court didn’t find the cases (allegedly) adopting Rogers persuasive.  Parks v. LaFace, for example, was in tension with the transformative use test applied in ETW v. Jireh, decided by another Sixth Circuit panel a month later.  And the Third Circuit had already, in dicta, expressed doubt that Rogers could apply beyond a title.  Facenda v. N.F.L. Films, Inc., 542 F.3d 1007 (3d Cir. 2008).  Though Rogers may be useful in “trademark-like” right of publicity cases, whatever that means, it wasn’t appropriate here (since it would mean that EA won).  Rogers is a “blunt instrument” that doesn’t carefully calibrate the balancing of “two fundamental protections: the right of free expression and the right to control, manage, and profit from one’s own identity.”  (Although the last time I checked, only one of those was in the Bill of Rights.  Also, categorical balancing is often used in First Amendment cases, to avoid chilling effects—case by case determination of “transformativeness” has significant costs that have to be balanced while we’re balancing.)

The problem the court had with Rogers was demonstrated by EA’s argument, which was that Hart’s likeness wasn’t wholly unrelated to NCAA football, and the game wasn’t an ad for an unrelated product, therefore EA won.  EA argued that Hart “should be unable to assert a claim for appropriating his likeness as a football player precisely because his likeness was used for a game about football. Adopting this line of reasoning threatens to turn the right of publicity on its head.”  (That presupposes exactly the question to be answered, which is how far the right of publicity may constitutionally extend.  Also, imagine this statement made about a conventional print biography.  Or about a news photograph accompanying a story about the Rutgers football team.  Or Joyce Carol Oates’ next roman a clef about a college football player who sues a video game company. Etc.)  You see, Hart’s career means that the target audience for his “merchandise and performances” would be sports fans, so products “appropriating and exploiting his identity” would do best with them.  But under Rogers, all products (and here we mean “expressive works protected by the First Amendment”) targeting the sports fan market would, as a matter of course, relate to Hart and fall outside his right of publicity.  “It cannot be that the very activity by which Appellant achieved his renown now prevents him from protecting his hard-won celebrity.”  (No, but it can be that engaging in speech about the very activity by which Hart achieved his renown prevents him from maintaining a successful claim against the speakers; what we have here is a failure to define the scope of the right, or explain why it should trump the interest in engaging in nondefamatory noncommercial speech.)

For these reasons, Rogers was inapplicable, though the Rogers court was right to note that the right of publicity doesn’t have consumer confusion as an element and was therefore “potentially broader” than trademark.  Of course, this is a reason why the right of publicity does less well in any balancing test than trademark—deceptive speech is easier to regulate than nondeceptive speech, at least when it does harm (Alvarez)—not a reason why a right of publicity claim trumps freedom of speech when an equivalent trademark claim, supposedly protecting both the public and the trademark owner, wouldn’t be sufficiently weighty to do so.  But that’s not what the Hart court says, since we are in topsy-turvy land: “the right of publicity is broader and, by extension, protects a greater swath of property interests. Thus, it would be unwise for us to adopt a test that hews so closely to traditional trademark principles.”  (Traditional pre-Sullivan defamation law protected a “greater swath” of personality interests than current defamation law; that made it unconstitutional.  And one could say, as Justice Rehnquist once did, that the US flag is the “property” of the American people, and yet flagburning statutes are still unconstitutional.  Calling an interest “property” doesn’t make it First Amendment-immune.  Even Eldred and Golan don’t go that far—not that any legislature adopting a right of publicity has engaged in even the token factfinding backing up the CTEA.)

So, the court turned to a “broader, more nuanced test,” transformative use.  Copyright was a better analogy than trademark, because the right of publicity is an economic right against misappropriation.  It applies to noncommercial speech too, offering “protection to a form of intellectual property that society deems to have social utility.”  Therefore, taking transformativeness from copyright’s fair use test was appropriate, especially since transformative uses are less likely to interfere with the economic interests implicated by the right of publicity.  Of course, transformativeness may include factual reporting and fictionalized portrayal along with parody and satire.  The inquiry, as Comedy III v. Saderup said, was “in a sense more quantitative than qualitative, asking whether the literal and imitative or the creative elements predominate in the work.”  (Wasn’t that the test the court just rightly rejected from Doe v. TCI?) 

If the marketability of the challenged work doesn’t derive primarily from the fame of the celebrity depicted, there’s generally no violation of the right of publicity.  However, even if the work’s marketability does derive from the celebrity’s fame, it can still be transformative.  The question is whether the celebrity likeness is one of the “raw materials” from which an original work is synthesized, or whether the depiction is the “very sum and substance” of the work. (But of course biographies and news reporting are fine!  The reason why is … left as an exercise for the reader.)  So the question is whether the celebrity’s likeness “has become primarily the defendant’s own expression rather than the celebrity’s likeness,” and “expression” has to be “expression of something other than the likeness of the celebrity.” 

(Not that word portraits will never be in jeopardy.  The thing about medium discrimination is that it’s invisible to the people engaging in it.  The work of portraying a celebrity in a textual biography is so self-evidently transformative creative “work” of the writer's "own" that the court feels no need to explain why it’s qualitatively different from the work of a portraitist.  The work required to create a realistic video game, which involves extensive programming and creative design, by contrast appears to the court mere reproductive labor.  I would still think this was dumb, but I wouldn’t be as aggravated if courts would outright say “the right of publicity, though in theory having something to do with ‘name,’ is only a right in images, at least as applied outside the context of false endorsement.”)

Winter v. DC Comics, 69 P.3d 473 (Cal. 2003) expanded on the California rule: “[a]n artist depicting a celebrity must contribute something more than a ‘merely trivial’ variation, [but must create] something recognizably ‘his own’ in order to qualify for legal protection.”  ETW v. Jireh decided that a painting was transformative because it was a collage of Tiger Woods with other golf greats. 

The Hart court, inexplicably, calls the painting in question “a photograph of Tiger Woods set among a collage of other, golf-related photographs.”  ETW, the court said, was “somewhere in the middle …, given that it focuses on the use of photographs (literal depictions of celebrities), but adds a transformative aspect to the work, thereby altering the meaning behind the use of the celebrity’s likeness.”  Winter was at the far end of the spectrum—depicting Johnny and Edgar Winter as half-worm comic book villains was obviously transformative—while Comedy III  was clearly nontransformative: mere literal depictions of celebrities in a different medium.

This leads to Kirby v. Sega of America, Inc., 50 Cal. Rptr. 3d 607 (Cal. Ct. App. 2006), finding transformative use of a musician’s image to create a video game character who was “a reporter in the far flung future.”  Sega seemed to have copied Kirby’s signature phrases, hair style, and clothing choice, but differences in appearances and movement also existed.  This additional new expression was enough to be transformative, even without a particular meaning or message.

In No Doubt v. Activision Publishing, Inc., 122 Cal. Rptr. 3d 397 (Cal. Ct. App. 2011), by contrast, the court found a violation of the right of publicity when the video game at issue used “immutable” images of the “real” musicians and didn’t transform their context, instead having them perform rock songs as they did in life.  Even though the avatars could be manipulated to perform at fanciful venues or to sing songs the real band wouldn’t ever sing, and even though the game had many other creative elements, they were still “exact depictions” of the musicians doing their thing.  The use of highly realistic digital depictions “was motivated by a desire to capitalize on the band’s fan-base,” so there was a violation of the right of publicity. (But fan magazines and entertainment programs are fine!  Because … they’re not video games?)

The Hart court concluded that transformative use struck the best balance between the interests at issue “because it provides courts with a flexible — yet uniformly applicable — analytical framework.”  Unlike Rogers, transformativeness allows courts “to account for the fact that misappropriation can occur in any market segment, including those related to the celebrity.”  (And to ignore the difference between commercial and noncommercial speech, and deceptive and nondeceptive speech.  No big deal.)  But, unlike Doe v. TCI, transformativeness is “more circumscribed,” focusing on specific aspects of a work “that speak to whether it was merely created to exploit a celebrity’s likeness.”  Transformativeness “recognizes that if First Amendment protections are to mean anything in right of publicity claims, courts must begin by considering the extent to which a work is the creator’s own expression.”  The marketing power of the celebrity identity is a secondary question, since the balancing suggested by Zacchini can’t begin and end with commercial purpose or value.  Transformative use “effectively restricts right of publicity claims to a very narrow universe of expressive works.”  (Categorical balancing, with a focus on avoiding chilling effects on protected speech, might ask whether this game, no pun intended, is worth the candle.) 

And the test was consistent with the outcomes of other cases, including Estate of Presley v. Russen, 513 F. Supp. 1339 (D.N.J. 1981), which held that an Elvis impersonator’s act was subject to right of publicity claims because “entertainment that is merely a copy or imitation, even if skillfully and accurately carried out, does not really have its own creative component and does not have a significant value as pure entertainment.”  (Which totally explains why people go to see impersonators instead of watching video of the original!  Oh, wait, it doesn’t.  Also, Tina Fey would like a word.)  As in Zacchini, the Elvis impersonator “appropriated the ‘very activity [live stage show] by which [Presley initially] acquired his reputation.”   Where a work contains “‘merely a copy or imitation’ of the celebrity’s identity … there can be no First Amendment impediment to a right of publicity claim.”  (Except for biographies and news reports/photography.) 

Transformativeness was also, in the court’s view, consistent with the Restatement test, because the examples listed as protected in the comments to the Restatement “all exemplify the sort of transformative uses that would generally pass the analysis set forth in Comedy III.”  Thus, “already-existing First Amendment protections in right of publicity cases apply to video games with the same force as to ‘biographies, documentaries, docudramas, and other expressive works depicting real-life figures.’”  Except that they win and EA loses; other than that, totally the same.

Here, Hart’s protected “identity” included not only his likeness but also his biographical information; it was the combination that identified the digital avatar at issue as an in-game recreation of Hart:

This joint focus on both likeness and identifying information avoids a conflict with C.B.C. Distribution & Mktg., Inc. v. Major League Baseball Advanced Media, L.P., 505 F.3d 818 (8th Cir. 2007), which held that use of major league baseball players’ records in a fantasy baseball game was protected by the First Amendment even against right of publicity claims because such information was publicly available. The presence of a digital avatar that recreates Appellant in a digital medium differentiates this matter from C.B.C.  

Okay, I lied: this is still aggravating.  Why does the presence of his image make a difference to the First Amendment issues?  Why do celebrities have more rights in pictures of them than in facts about them?  A case could, I imagine, be made having to do with “if value then right” and the greater value of the image in present-day society, but it’s being assumed rather than articulated. 

The court’s focus on visual representation causes it some uncertainty about the scope of its holding: “It remains an open question ... whether right of publicity claims can extend into the bygone days of 8-bit graphics and pixilated representations.”  Here, though, the digital avatar closely resembled the “genuine article” in hair color, hair style, skin tone, accessories, vital information, and biographical details.  “And while the inexorable march of technological progress may make some of the graphics in earlier editions of NCAA Football look dated or overly-computerized, we do not believe that video game graphics must reach (let alone cross) the uncanny valley to support a right of publicity claim.” 

Digitization was not itself transformative.  Recreating a likeness in a medium other than photographs or video can’t in itself satisfy the test, or the test wouldn’t make enough uses liable.  (A couple of things going on here—on top of the initial disregard of the work involved in creating photos and video as creative, contra copyright, there’s a different erasure of creative labor in video game design/programming, portraiture, and other non-reprographic methods of depicting people. Except words, of course.  Missing here and throughout is any explanation of why biographies etc. are transformative; this is what makes the opinion so clearly non-medium neutral.)

The next question was whether the context was transformative.  Here, digital Hart did what actual Hart did at Rutgers: he played football.  (*cough*Unauthorized biographies*cough*.)  Though users could alter the avatar’s appearance, and though EA created a game in which users could make those kinds of decisions, that wasn’t enough.  All games are interactive. 

True, video games have First Amendment protection because they’re interactive.  (Here I thought it was because they were expressive.)  But the balancing test isn’t about whether a work loses First Amendment protection in the abstract.  Rather, it’s about whether “the interests protected by the right of publicity are sufficient to surmount the already-existing First Amendment protections. As Zacchini demonstrated, the right of publicity can triumph even when an essential element for First Amendment protection is present.”  And “[i]f the mere presence of [the ability to alter an avatar] were enough, video game companies could commit the most blatant acts of misappropriation only to absolve themselves by including a feature that allows users to modify the digital likenesses.”  In a footnote, the court cautioned that interactivity wasn’t necessary for transformativeness, even for videogames.  Placing avatars of the Dalai Lama and the Pope in a violent “shoot-em-up” game with a mechanism for manipulating their characteristics wouldn’t automatically satisfy the test, though the court didn’t “discount the possibility” that such a juxtaposition of spiritual leaders and hyperviolence could be transformative “on other grounds.” 

Here, the interactivity was insufficient to transform Hart’s likeness into EA’s own expression.  NCAA Football sought to create a realistic depiction of college football, including realistic representations of players, seeking to capitalize on teams’ and players’ fan bases. This heightened realism made the games more enjoyable and thus more valuable.  Realistic depictions were the “sum and substance” of the digital players.  Since Hart’s unaltered likeness was “central to the core of the game experience,” the ability to change the digital avatars wasn’t important.  The ability to make minor alterations in the avatar, such as changes in his hair style, face, accessories, basic biographical information, or playing statistics, was insufficient, because an artist depicting a celebrity has to contribute more than a trivial variation. 

“[T]he ability to modify the avatar counts for little where the appeal of the game lies in users’ ability to play ‘as, or alongside’ their preferred players or team.”  Thus, even avatars with “superficial modifications” were suitable proxies or market subsitutes for the original.  And once a user made major changes to the avatar, it wasn’t a “use” of his identity and was irrelevant to the question of how his likeness was used in the game.

Also, it didn’t matter that Hart was a tiny part of the overall game.  Consideration of the other creative elements was improper, because transformativeness is about “how the celebrity’s identity is used in or is altered by other aspects of a work,” without consideration of “[w]holly unrelated elements.”  (Forrest Gump is looking pretty problematic!)  Consideration of the broader context of a work should be aimed at “whether this context acted upon the celebrity identity in a way that transformed it or imbued it with some added creativity beyond providing a ‘merely trivial variation.’”  So, you’d better have a good creative reason for your celebrity reference in your book, movie, etc.  Or just your video game.

An alternative holding, considering the creativity of the rest of the work, would allow “[a]cts of blatant misappropriation” as long as “the larger work, on balance, contained highly creative elements in great abundance. This concern is particularly acute in the case of media that lend themselves to easy partition such as video games.”  (Calling Gawker and the Huffington Post—those short celebrity stories and pictures, so easily partitionable from the rest of the site, are now going to get you in trouble!  Or would, if this were a medium-neutral decision.)

Just to make clear that video games are special, the court held that the photo of Hart that appeared in the 2009 edition of NCAA Football was not actionable.  It was a fleeting component of a montage, and was transformative under ETW: putting the photo in the context of a Rutgers montage “imbue[d] the image with additional meaning beyond simply being a representation of the player.” (Emphasis added—note the slippage between the celebrity and a particular image of the celebrity, which contributes to the medium discrimination at work here.  The photo puts Hart in the context of the Rutgers team, and that’s transformative.  But the avatar, which plays on the digital Rutgers team, is not.)  The use of the photo was protected by the First Amendment.

Judge Ambro dissented.  He agreed that EA took Hart’s identity and used it for commercial success, and that realism was key to the franchise’s profitability.  And he agreed that student athletes are exploited, and that this seemed unfair.  Further, he agreed that transformativeness was the proper test.  However, he interpreted and applied it differently.  (Not for nothing, giving further credence to the objection that transformativeness too requires judges to be art critics.)

Transformativeness balanced “an individual’s right to benefit financially when others use his identifiable persona for their own commercial benefit [with] the First Amendment interest in insulating from liability a creator’s decision to interweave real-life figures into its expressive work.”  But the inquiry couldn’t be limited to Hart’s identity alone, and EA shouldn’t be penalized for its commercial success or its realism, given “First Amendment protections traditionally afforded to true-to-life depictions of real figures and works produced for profit.”

First, the work should be evaluated in its entirety to figure out whether a work is “literal” or a celebrity likeness is simply one of the “raw materials” from which an original work is synthesized, as stated in Comedy III and reemphasized in Winter, which noted that the Autumn brothers were placed in a larger storyline with plenty of creativity of its own.  (In a footnote, the dissent pointed out that the use here wasn’t harming Hart’s commercial value—if anything, ticket sales for college football games and the value of Hart’s endorsement would have been augmented by the popularity of EA’s games.  This gets to the core of “misappropriation”—what is it we think counts as such?  To say that a person is harmed by not getting payment for a “use” presupposes the proper scope of the right.)

The majority erred in disregarding the non-Hart creative elements of the video game, conflicting with other courts’ approaches, such as that taken by ETW.  “My colleagues do not—and, in my view, cannot—explain how the photographic images of Woods were transformed if they limit their analysis to ‘how the celebrity’s identity is used.’” The use here, “creating digital avatars of football teams and placing them in an interactive medium designed for user interaction and manipulation” was “significantly more ‘transformative’ than the use in ETW, which simply combined several photographs into a photomontage.” (Who was reading the actual cases?  Of course I don’t think it matters legally that Rick Rush is a painter and not a collage artist, but this is embarrassing.)  To Judge Ambro, a narrow focus on an individual’s likeness, rather than on how it was incorporated into and transformed by the work as a whole, was flawed.  The whole was the better baseline.

Judge Ambro reminded us that the First Amendment protects “biographies, documentaries, docudramas, and other expressive works depicting real-life figures, whether the accounts are factual or fictional.”  And it protects them when they’re sold for profit.  Thus, using a celebrity name or likeness to increase an expressive work’s value and marketability doesn’t diminish its First Amendment protection.

The majority nodded in the direction of medium neutrality, but wasn’t medium neutral in its application of the test.  “EA’s use of real-life likenesses as ‘characters’ in its NCAA Football video game should be as protected as portrayals (fictional or nonfictional) of individuals in movies and books.”  Not all digital portrayals should be entitled to First Amendment protection, but they should be when a likeness, as part of a creative composition, “has been transformed into something more or different than what it was before.”  The majority further erred in focusing on the marketability of the game; the “effect on the market” factor of copyright fair use is not part of the right of publicity test as promulgated by Comedy III.  And even if it were appropriately considered, there was no argument that EA’s use decreased the commercial value of Hart’s identity or persona.  The majority wrongly equated the use of realism to increase profits with misappropriation.  “This approach is at odds with the First Amendment protection afforded to expressive works incorporating real-life figures. That protection does not depend on whether the characters are depicted realistically or whether their inclusion increases profits.” 

Judge Ambro therefore concluded that EA’s use of realistic avatars was entitled to First Amendment protection.  Hart’s mere likeness had been transformed into an avatar that, “along with the rest of a digitally created college football team, users can direct and manipulate in fictional football games.”  The many original graphics, videos, sound effects, and game scenarios allowed users to direct the play of a college football team with many different players.  Users weren’t reenacting real games, but directing the avatars in invented games and seasons.  Campus Legend/Dynasty Mode also allowed users to control players and teams across multiple seasons, allowing them to generate their own narratives. These were “imaginative transformations of the games played by real players.”  The permutations allowed for each player image added to this transformative interactivity.  These elements were not “[w]holly unrelated” to the use of Hart’s likeness, as the majority contended.  Users who selected the 2005 Rutgers team and didn’t change the avatar’s characteristics would experience the numerous creative elements of the game as part of every fictional play.  Thus, his likeness was one of the raw materials from which a new work was synthesized, rather than the sum and substance of the work in question.

Cute rephrasing of Prince v. Cariou

I belatedly found Shane Ferro's take, via the Art Law Blog.  Worth reading in its (short) entirety, but:

You got yourself in a lot of trouble with this Canal Zone thing. Actually, you got yourself in a lot of trouble when you got sued and then you didn’t take the legal proceedings seriously, which really pissed off the district court judge. That was unappreciated.

However, the system can’t just go overturning current copyright jurisprudence because you were obnoxious under oath. Since you apparently don’t want to or are otherwise unable to argue transformative intent, I’m going to do that on your behalf right now (thank your lawyer). It’s pretty clear from looking at your artwork that the series is totally different from the underlying Cariou works. I get that feeling because they mostly seem to make fun of said works.

It’s not the usual way to defend fair use, but I can’t really argue with the work itself. Cariou’s photos are clearly meant to document, while yours seem to be intended to piss people off (including the artist being appropriated). That is, in fact, one way of being transformative. I find that your complete lack of regard for the meaning of the original works is decent evidence you weren’t stealing them outright.

#sincere? Slate on sponsored tweets and disclosure

Along with a roundup of recent events, the story provides food for thought about what might happen if the default becomes flipped and people assume that celebrity tweets are like 30-second ads: sponsored by default.  How then will celebrities disclose that they aren't getting paid for expressing an opinion?  #unspon is possible, but a little dull.  #unpaid?

What does it take to plead bad faith assertion of patent claims?

E.I. Du Pont de Nemours and Co. v. Heraeus Precious Metals North America Conshohocken LLC, 2013 WL 2468257 (D. Or.) (magistrate judge)

DuPoint sued defendants alleging patent infringement. Heraeus counterclaimed for violation of the Lanham Act based on a July 2012 press release. The court granted DuPont’s motion to dismiss for failure to allege that Du Pont acted in bad faith.  Heraeus amended its counterclaim, partially successfully. To start with, the court took judicial notice that Hereaus’s former head of R&D had been criminally indicted for stealing trade secrets.

The counterclaims alleged that DuPont misrepresented the legitimacy of Heraus’s products.  The press release was titled, “DuPont Addresses Patent Protection at Solarbuzz China Conference; Intellectual Property Theft Growing in Competitive Climate of Photovoltaics.”  It described “IP theft” in the industry, mentioned DuPont’s patent suit against Heraeus, and said that IP theft was bad.  Hereaus alleged that the intimation that Hereaus committed “IP theft” and patent infringement was false.  It further alleged that DuPont knew or should have known that its accusations were false, because “theft” requires intent and DuPont’s patent infringement suit didn’t allege theft or even intentional/willful infringement; DuPont allegedly knew that Heraeus couldn’t have intended to “steal” that which Heraeus did not know existed.

Hereaus also alleged that DuPont made knowingly false statements to certain of Heraeus’s Taiwan customers about the US patent lawsuit, including about DuPont’s confidence that it would prevail and about the customers’ potential liability if they bought from Heraeus.

In addition to the ordinary elements of a Lanham Act claim, a false advertising claim based on statements about patents has to be made in bad faith. DuPont argued that Heraeus failed to plead fraud with particularity (side note: since bad faith/intent is ordinarily not a part of a Lanham Act claim, it doesn’t ordinarily sound in fraud; but some courts have not noticed this).  Of course, even under Rule 9(b), state of mind may be generally averred.  The magistrate judge found that Heraeus identified the who, what, when, where, why, and how of its bad faith claim, including the reasons why DuPont knew or should have known of the invalidity of its asserted patent and of Heraeus’s noninfringement thereof.  DuPont’s arguments generally went more to the merits than to pleading standards.

DuPont argued that the indictment of the R&D head made its statements true, but the indictment didn’t indicate that the defendant took his actions on behalf of or to benefit Hereaus; rather, the indictment alleges actions in direct violation of Heraeus’s employment agreement, making Heraeus a possible victim rather than a beneficiary.

As to the statements to the Taiwan customers, DuPont argued that Heraeus failed to plead a substantial effect on commerce within the scope of Congress’s power to regulate. Hereaus responded that its allegations shouldn’t be taken in isolation—rather, they showed that DuPont engaged in widespread dissemination to the relevant marketplace. The court agreed.  The allegations sufficiently indicated that DuPont’s statements were an organized campaign of commercial advertising and promotion for the relevant market.

However, the allegations regarding communications with Taiwan customers failed to meet Rule 9(b)’s requirements because they weren’t specific enough (they didn’t identify the customers or the exact statements).  Heraeus said it was worried about “confidentiality.”  It could have filed a pleading in redacted for with an unredacted version under seal if its worries were legitimate.

Second Circuit makes descriptive fair use more confusing

Kelly-Brown v. Winfrey, No. 12-1207-cv (2d Cir. May 31, 2013)

Kelly-Brown owns a motivational services business, Own Your Power Communications, Inc., that holds events and puts out publications under the registered service mark “Own Your Power,” which promote the concept of “owning” one’s power. The main defendants were involved in producing a magazine, event, and website also using that phrase. The district court dismissed her claims as barred by descriptive fair use; the court of appeals reversed, though it upheld the dismissal of her claims for vicarious and contributory infringement against various collateral defendants. (You can find the images available online at the Second Circuit’s site too.)

Her registered mark (design/color claimed as part of the mark):

About the same time Kelly-Brown sought registration, the Oprah Winfrey-related defendants sought to register a mark for the Oprah Winfrey Network, to be known as “OWN.” Winfrey’s production company “arranged for the transfer” of a mark in “OWN ONYX WOMAN NETWORK” to avoid an infringement action. Kelly-Brown pled that defendants would have been aware of the pending application for “Own Your Power” since they’d have to have searched to find the other mark.

Kelly-Brown alleged infringement based on a “bevy” of publications, events, and online content. For example, an issue of O, Winfrey’s magazine, featured “Own Your Power” on its front cover:

Underneath those words were subheadings, “How to Tap Into Your Strength”; “Focus Your Energy”; and “Let Your Best Self Shine,” and on the right side, “THE 20O POWER LIST! Women Who Are Rocking the World.” Each person on the list exemplified a “kind” of power, such as the power of “living large.”

In another instance, O, along with other businesses (including the other defendants), held an “Own Your Power” event at which celebrities posed for promotional photographs in front of an “Own Your Power” backdrop that also contained trademarks for Chico’s, Wells Fargo, Clinique, and O magazine. The event featured a seminar and workshop with motivational advice using the theme “Own Your Power.” It was described in a later issue of O as the “FIRST-EVER OWN YOUR POWER EVENT.” Defendants’ website also had video clips of the event and used “Own Your Power” banners and content on several different individual webpages:

The banner had “Own Your Power!” in large font, surrounded by circles containing text: “The Power of . . .” “. . . heart,” “. . . vision,” “. . . one voice,” and “. . . seizing the moment.” The October issue had pages with a similar format: “the power of . . .” surrounded by various concepts written in colored circles, each beginning with an ellipsis.  Webpages with the “Own Your Power” banner included articles such as, “How to Tap Into Your True Power,” “Motivation: One Entrepreneur’s Fabulous Story,” and “The Secrets of Success.” The event and the cover of the October issue were also displayed/promoted in other ways by Winfrey.

Kelly-Brown alleged that she received numerous inquiries from people who confused her services with Winfrey’s.

The district court held that Winfrey’s use of “Own Your Power” was descriptive because it described an action that it hoped that Magazine readers would take after reading the Magazine, and that Kelly-Brown hadn’t plausibly pleaded bad faith intent to capitalize on her good will.  In addition, there was no likelihood of consumer confusion because the font, color, and formatting of the defendants’ use was significantly different from that protected by Kelly-Brown’s registered service mark.

The court of appeals reversed, noting first that this was a reverse confusion case.  Then it rejected defendants’ argument that trademark use was a threshold requirement for infringement.  See, in the Second Circuit, unlike in the Sixth, plaintiffs only have to show “use in commerce,” not “use as a mark,” even though both are called “trademark use.”  And defendants definitely used “Own Your Power” in commerce, which happens when the mark is affixed to the goods “in any manner.”  (Now, explain the rationale in Louboutin without using the phrase “use as a mark.”  I’ll wait.  Of course, this case does not mention Louboutin, because that would be awkward.)

The analysis of use in commerce is not the same as whether defendant used a competitor’s mark “as a mark.”  (N.B. Or a noncompetitor’s, which is why this decision is, as the concurrence partially recognizes, such terrible news.)  Analyzing use “as a mark” asks whether the defendant is using the “term as a symbol to attract public attention.”  JA Apparel involved an eponymous clothing line where the designer sold the line, then started a new one and ran ads for the new line that included his name.  The Second Circuit “suggested, without deciding, that our conclusion as to whether defendant was using his own name as a mark would differ depending on the content of the ad he ran.”  Thus, use of his name in small text as part of a description of the product wouldn’t be use as a mark, whereas putting his name in larger text than the name of the new brand would be.  Use “as a mark” requires “a close examination of the content and context of the use,” which is a more detailed determination than use in commerce.  While showing use in commerce is a plaintiff’s threshold burden, “use as a mark” is not. 

The Sixth Circuit has decided that consumers won’t be confused without use as a mark, but that’s not how the Second Circuit multifactor test works, since it’s “a fact-intensive inquiry that depends greatly on the particulars of each case. To elevate one particular consideration, which is not even one of the eight Polaroid factors, above all of the other factors would be inconsistent with this Circuit’s approach to Lanham Act cases.”  And the Second Circuit has allowed claims to proceed even without use as a mark. EMI Catalogue P’ship v. Hill, Holliday, Connors, Cosmopulos Inc., 228 F.3d 56 (2d Cir. 2000) (holding that material issues of fact existed as to whether use of the slogan “Swing Swing Swing,” playing off of the trademarked song title “Sing Sing Sing (with a Swing),” was fair use, notwithstanding holding that the slogan was not used as a mark); Louis Vuitton Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532 (2d Cir. 2005) (holding that defendant’s handbag meant to evoke Louis Vuitton’s trademarked handbags could create consumer confusion even in the absence of an allegation that the defendant was attempting to establish its design as a competing mark).  Mark McKenna will love this: “The Sixth Circuit’s test would lead to the dismissal of these claims without addressing what is beyond doubt the central question in considering consumer confusion: whether consumers were actually confused by the allegedly infringing product.”  Well, yes, that’s tautological.  But the Lanham Act prohibits trademark infringement, not consumer confusion; the question to be decided is what that means (and relatedly what kind of presumptions, rebuttable and not, make sense).

Turning now to fair use, this requires the defendant to prove use (1) other than as a mark, (2) in a descriptive sense, and (3) in good faith.  As an affirmative defense, it will often require consideration of facts outside the complaint, though sometimes it can be resolved on a motion to dismiss.  Plaintiffs must simply plausibly plead infringement to proceed.

Kelly-Brown plausibly alleged that defendants used “Own Your Power” “as a symbol to attract public attention,” because they used it “in several unique instances” that “collectively constitute use as a mark.” These included the use on the October cover; the “first ever” Own Your Power event; promotion of the event through social media; and the online video from the Event and other motivational articles provided on an “Own Your Power” section of Winfrey’s website.  At this stage of the case, these uses were enough to infer a “pattern of use,” plausibly alleging that Winfrey was attempting to “build a new segment of her media empire around the theme or catchphrase ‘Own Your Power,’ beginning with the October Issue and expanding outward from there.”  After all, trademarks and sub-brands can coexist.

Defendants argued that Packman v. Chicago Tribune Co., 267 F.3d 628 (7th Cir. 2001), should control.  The Chicago Tribune published the headline “The Joy of Six” after the Bulls won their sixth NBA championship, and then reproduced this front page on various promotional items.  The court concluded that this was use as a headline, not use as a mark, because the masthead clearly identified the source and the memorabilia at issue was more readily identifiable with the Tribune brand name than with “Joy of Six.”  But here, the use of “Own Your Power” “was far more wide-ranging and varied.” The website content wasn’t merely derivative of the October issue the way that the promotional items in the Tribune case were derivative of the original headline by directly reproducing the front page at issue.  Here, the website contained unique content not previously published in the October issue of the Magazine, and didn’t even directly reference it.  A viewer could read the webpages without realizing that the Magazine had ever used the phrase. 

As for the event, it was called the “first-ever,” “suggesting that it was not directly tied to a particular issue of the Magazine, but instead was to be a recurring enterprise within the Oprah media empire.”  Recurring themes or devices are more likely to be entitled to protection as a mark.  “Repetition is important because it forges an association in the minds of consumers between a marketing device and a product. When consumers hear a successful slogan, for example, they immediately think of a particular product without even being prompted by the product’s actual name.”  So too with titles. The complaint adequately alleged that defendants were trying to create, through repetition across media, a similar association between Winfrey and “Own Your Power.” Each of the uses involved separate content and context, “and thus it is plausible that the defendants were attempting to build up a line of wide-ranging content all denoted by the phrase ‘Own Your Power.’”  Further information might undermine Kelly-Brown’s theory that Winfrey was trying to create a sub-brand, but the allegations were sufficient to survive a motion to dismiss.

It wasn’t enough that Winfrey’s name was also attached to all the content, because slogans and brands can serve as co-existing marks. True, the Second Circuit has previously given weight to the prominent use of a defendant’s own mark. Cosmetically Sealed Indus., Inc. v. Chesebrough-Pond’s USA Co., 125 F.3d 28 (2d Cir. 1997) (finding “Seal it with a Kiss!!” descriptive on a display for lipsticks with complimentary postcards used to test the lipsticks).  But there’s no rule that all use is other than “as a mark” if the defendants also use their own mark in close proximity; it’s a fact-intensive analysis.  It was also crucial there that “[t]he challenged phrase [did] not appear on the lipstick itself, on its packaging, or in any other advertising or promotional materials related to [the defendant’s] product,” so it was limited to a single ad campaign, while the use here wasn’t similarly “tangential.”

The next element of descriptive fair use is use in a descriptive sense.  Defendants argued that “Own Your Power” was descriptive of the publications’ content; for example, on the magazine it “served as an exhortation for readers to take action to own their power and described a desired benefit of reading the Magazine Issue.”  The court first noted that this wasn’t an ordinary descriptive phrase; phrases are more readily found descriptive when they’re in common use.  “Sealed with a kiss,” for example, is a fixture of the language, and “The Joy of Six” was a play on “The Joy of Sex” and had been used to describe positive feelings associated with six of anything.  “Swing, swing, swing,” by contrast, wasn’t descriptive because golfers swing their clubs, not “swing, swing, swing” them.  Discovery might reveal that “own your power” has wider currency than apparent from the complaint. And there’s no requirement that a use must be immediately recognizable as a popular phrase to be descriptive.  But here, “Own Your Power” didn’t describe the contents of the Magazine. They were prominently displayed in the center of the cover with subtitles, and specific headlines for articles along the side.  “Own Your Power” wasn’t meant to describe the contents of a particular item.  The “Power List” didn’t provide specific advice about how readers could become more powerful.  The table of contents didn’t list any article corresponding to the phrase.  At this stage, defendants didn’t meet their burden of showing descriptiveness.

Finally, defendants didn’t meet their burden of showing good faith. Lack of good faith is usually an intent to trade on the good will of the trademark owner by creating confusion.  Defendants argued that it was implausible that Oprah Winfrey would attempt to trade on the goodwill of a relative unknown, and that the use of the Winfrey marks meant no consumer would be confused as to the origin of Winfrey’s goods.  True, the Second Circuit has found good faith where a defendant prominently displayed its own marks.

But good faith may also be absent when a junior user had knowledge or constructive knowledge of the senior user’s mark and chose to adopt a similar mark.  Kelly-Brown plausibly alleged that defendants must have searched for “Own” because they bought the rights to a different “Own” mark for Winfrey’s broadcast endeavor, and that such a search would have turned up her then-pending service mark application.  “We agree that these allegations do plausibly suggest that the defendants had knowledge of Kelly-Brown’s mark, liked it, and decided to use it as their own.”  (This wouldn’t bother me so much if false advertising plaintiffs got the same benefit of the doubt.  Even if an application gave constructive knowledge, the same as a registration does, different parts of a media empire are doing different things; I have no doubt that there was an “Own” search, but also find it implausible that the editorial staff of the Magazine would have been involved with that.)  So a lack of intent to trade on Kelly-Brown’s goodwill wouldn’t be enough to preclude a finding of bad faith.  At the very least, this couldn’t be resolved on a motion to dismiss.

Finally, the court declined to consider defendants’ First Amendment defense in the first instance, because what really avoids chilling effects is extended litigation.

The secondary trademark infringement claims against the sponsors of the Own Your Power event didn’t survive, however.  Kelly-Brown didn’t properly allege a partnership or agency relationship as required for vicarious infringement.  Nor did allegations that the sponsor defendants were sponsors plausibly suggest intentional inducement of infringement.  And the complaint didn’t allege that they supplied a product to an infringer with the knowledge that the infringer was mislabeling the product, so the dismissal of the contributory infringement claims was also affirmed.

Likewise, the counterfeiting claims had properly been dismissed.  A counterfeit is “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” The font of Winfrey’s uses was different, and differently capitalized, from Kelly-Brown’s stylized powder-blue letters. Kelly-Brown argued that, because she had a service mark, ordinary consumers would have less contact with the physical logo than with the sound of the mark.  That didn’t work with the website and the Magazine, since consumers would interact with them visually and would recognize the differences “from a cursory visual inspection.”  True, an audience member at the “Own Your Power” event might encounter the phrase aurally, but Kelly-Brown alleged that the logo figured prominently in displays featured at the event.  Plus, most audience members weren’t present at the invitation-only event; most encountered it only later through video clips on the website, with its obvious visual differences. There was no plausible counterfeiting claim.

Judge Sack concurred in the result, writing separately in the fear, which he hoped was groundless,

that the Court’s opinion may be misconstrued to suggest a general limitation upon the ability of a publisher in any medium to use a trademarked term, in good faith, to indicate the contents of its own communication -- whether by magazine cover, newspaper headline, “blog” heading, or otherwise.  Allowing a person or entity’s property right arbitrarily to trump the ability of the initiator of a communication effectively to transmit news, information, thoughts, and the like, using vernacular words and phrases that are recognizable because they are also used as trademarks, would be, in my view, legally unwarranted and 99 and 44/100 percent foolish.

(He noted that the Ivory slogan’s Wikipedia entry included references to several uses of the slogan by third parties “for parody, entertainment, communications, and similar purposes under the heading ‘In mass media.’”)

Fair use is animated, at least in part, by the principle that a plaintiff who chooses a mark with descriptive qualities can’t entirely exclude some competing uses; others have as good a right to descriptive uses as the trademark owner.  “It would cripple publishers’ effectiveness if trademark holders could obtain exclusive rights to parts of the language for use as language.”  The balancing of sellers’ needs for identification with society’s need for free communication and discussion is an important principle.

Judge Sack continued by highlighting the allusive meaning of “Own Your Power”:

Taken literally and using the term “own” in [its] traditional sense, … the invocation to “Own Your Power” borders on the absurd. If the “Power” is mine, do I not by definition already “Own” it? What am I being told to do? Or what are the parties telling me that they can do -- doubtless at some price -- to help me?

It was clear that both parties used “own” in a sense closer to “embrace and employ” than to “possess or have legal ownership.”  This sense was hardly novel.  Examples included the final scene of The Birdcage, in which Robin Williams’ character urges Gene Hackman’s character to “Work it. Sell it. Own it.” In that sense, “Own Your Power” was much more common than plaintiffs admitted in their complaint.  “Writers have employed the word ‘own’ in similarly figurative, if not necessarily identical, senses for many years”; Virginia Woolf did so in To the Lighthouse.  “Own Your Power” in particular has an easily findable meaning, and Judge Sack cited a number of examples in the press, online and off.

As a result, the use of “Own Your Power” on the Magazine cover, without more, was plainly and legally fair.  “I have little doubt, more generally, that the use of a trademarked phrase on the cover of a magazine to refer in a general way to its contents is, standing by itself and in most cases, entirely legitimate -- a straightforward and significant case of fair use.” To the extent that the majority analysis implied otherwise, he could not agree.  However, he believed that both he and the majority were reading the complaint not to attack that single use standing alone.  It was only “a campaign of recurring uses, across different media, designed to appropriate the defendants’ source-identifier, or without regard for a high likelihood of that occurring, that defeats their fair use defense.”

He emphasized that the uses together might also constitute fair use, but that this was not an appropriate determination on a motion to dismiss.

Were the case limited to the Magazine cover, Kelly-Brown couldn’t plausibly plead an intent to create on her goodwill by creating confusion about source or sponsorship. But she alleged that the cover use was “only the beginning of a pattern of deliberate and systematic unauthorized use by Defendants and a malicious intent to identify the [Defendants] as the source for the [Plaintiffs’] Services.” The facts alleged raised the plausible inference that the use of the phrase on the Magazine cover was part of a “careful plan” that included the event and the website, and sought to appropriate the “Own Your Power” mark from Kelly-Brown in the knowledge that she owned it. Thus, a finding of good faith with respect to use of the phrase on the Magazine cover was inappropriate on the pleadings.  The evidence, of course, might show something different, such as a reasonable belief on defendants’ part that using “Own Your Power” on the cover or elsewhere wouldn’t be confusing or would be fair, or that there was no calculated plan of appropriation; Second Circuit case law also holds that prior knowledge of a senior user’s mark doesn’t necessarily give rise to an inference of bad faith.

On the pleadings alone, Judge Sack would conclude that “Own Your Power” was used descriptively in connection with the Magazine’s content as a matter of law.  “Seal it with a kiss” was descriptive for lipstick, “even though it in no way described the color, consistency, or long wear of the defendant’s lip gloss.”  Rather, it described “an action that the sellers hope consumers will take, using their product.” Similarly, the court in B & L Sales Associates v. H. Daroff & Sons, Inc., 421 F.2d 352 (2d Cir. 1970), concluded that “Come on Strong” was used in a descriptive sense by ads for a men’s clothing line. The phrase communicated that the defendant’s clothing “would assist the purchaser in projecting a commanding, confident, ‘strong’ image to his friends and admirers.”  Other circuits, Judge Sack noted, may have a more limited view of what counts as “descriptive.” 

But under Second Circuit precedent, “Own Your Power” on the Magazine cover was easily descriptive.  The “Power List” honored celebrities “who embody certain characteristics of power”; the Magazine also had several shorter articles relating to this them, including Dr. Phil’s Personal Power: Rules for How to Harness Yours (providing “strategies for tapping your inner power reserves”) and How to Light Up a Room (theorizing that charisma is the “X factor” possessed by all of the people featured on the 20O Power List). “The descriptive connection is obvious -- indeed, it is difficult to see how any potential reader with whom the defendants are trying to communicate, upon picking up the Magazine and reading the coverline, would not expect to find just these sort of articles inside.” It was implausible that “Own Your Power” was not used in a descriptive sense.  The majority found to the contrary because it thought that the articles inside didn’t contain specific advice about gaining power.  “Even if this were a fair characterization of the Magazine’s contents -- and I doubt that it is -- our law has never required a connection as close and absolute as the majority demands.”  “Fortunately,” the majority allowed for the possibility that the defendants could show the requisite descriptive connection, perhaps either by providing a fuller understanding of likely consumer reception or showing that the phrase or similar phrases were commonly used.  Judge Sack, however, thought neither further showing was necessary.

As for use other than as a mark, if the court were considering individually “the size, location, and context of the defendants’ use of ‘Own Your Power!’ on the cover of the Magazine,” as Judge Sack read the cases to dictate, it would be clear that the defendants didn’t use the phrase as a mark.  The most prominent items on the cover were the O the Oprah Magazine mark and the full-page photo of Winfrey herself.  This was a strong indication of use other than as a mark, as was the size and location of the phrase in the context of a magazine cover.  “A reasonable consumer would therefore expect the phrase to explain something about the nature of the contents of this particular issue, not to denote the source of those contents.”

The majority, however, didn’t consider the use individually, but rather collectively.  “Perhaps this somewhat novel theory is useful at this stage in determining the plausibility of the plaintiffs’ factual allegations,” but it was in some tension with JA Apparel, which called for individualized consideration of each particular use.  The authorities on which the majority relied were writing in an entirely different context: whether a term claimed to be a mark was functioning as a source identifier.  “So although it may be true that the concept is helpful at this stage, when our only task is to identify factual plausibility, I would caution against reading the majority opinion to mean that in all cases and at all stages of litigation unique uses are to be considered ‘collectively.’”

Judge Sack didn’t, however, read the majority to mean that “mere coincidence” of several uses precluded the possibility of use “other than as a mark.”  Rather, if use of “Own Your Power” on the cover was part of an overall plan to appropriate Kelly-Brown’s mark, the use on the Magazine could be actionable.  To prevail as to the Magazine, Kelly-Brown would have to prove this allegation with evidence.

With respect to the website and the event, Judge Sack agreed with the majority that Kelly-Brown pleaded sufficient plausible facts to block the fair use defense on a motion to dismiss.  He simply wanted to emphasize that the allegations relating to the Magazine cover alone couldn’t be read plausibly to describe a use that wasn’t fair as a matter of law.  “A holding to the contrary might endanger the ability of publishers of all stripes accurately and artfully to describe their publications. But I, like the majority, understand the complaint not to attack the defendants’ use of ‘Own Your Power!’ on the Magazine’s cover alone, but as part of an overall campaign by the defendants in several media to wrest from the plaintiffs their rights in the mark.”  The case should be remanded to determine on a full record whether any or all of the multiple uses were fair.