IPSC: Copyright History

Bruce Boyden, Marquette University Law School

Substantial Similarity, from Equity to Legal Process

Multistep tests as recent inventions. Test for infringement was created in a very different legal environment and many of its current problems stem from the fact that the environment is quite different today.  Arnstein: copying in fact + wrongful appropriation (aka substantial similarity). Trial court can determine copying in fact, but jury mostly has to determine wrongful appropriation.  Many have criticized incomplete separation of copying and infringement.

Arnstein was attempt to bring order to disjointed set of opinions for deciding infringement in the Second Circuit, which was deciding the vast majority of © cases.  New flood of nonliteral infringement cases based on new tech/media. One test: was the sequence of events the same; another test: whether ordinary audience would recognize accused work as having been taken from the other. Arnstein combines these two.  There’s a dissent saying that there wasn’t a two part test in previous cases, which is true.  You get copying in fact out of the sequence of events test, and wrongful appropriation from the audience test. Judge Frank is skeptical of the jury, but more skeptical of judges, especially in ©. Opinion is written to send stuff to the jury. Why does Learned Hand sign on? He’s not a judicial skeptic. Jury trials were rare at time; they were almost always equity cases that had no right to a jury and that were seeking injunctions.  Hand’s concern was that judges were deciding cases based on prepared synopses by the parties; he wanted to make sure that courts were first deciding whether actual copying had occurred before evaluating infringement.

Arnstein was pretty much ignored through the 1950s; not cited by other Second Circuit cases; regarded as a test for music infringement. Generational turnover in judges; shift comes in 1960s. Consistent w/shift to Legal Process. 3 key values: Institutional settlement: each institution has its role, including trial court v. court of appeals.  Suspicion of standardless discretion used to achieve policy as close to totalitarianism. “Reasoned elaboration”: judges should explain their decisions and give basis for reviewing that decision. 5 years after Hand dies, 2d Cir adopts Arnstein as the general infringement test, explaining that it’s copying plus substantial similarity. That’s not a normative search for wrongfulness, but for whether the average observer would recognize the appropriation from the © work. But that looks a lot like the test for copying in fact, which seems to get rid of “substantial” too, in theory if not in fact.  Where did they get this idea? Probably from Nimmer’s reading of Arnstein, his first © treatise in 1963, which read improper out almost entirely.  He told the 9^th Circuit this was the test too in Sid & Marty Krofft. 

Increasing rationalization in the courts: opinions get much longer in the 1980s as courts work through each doctrine/subdoctrine in detail. Courts become more attentive to the trial/appellate distinction.  Alan Latman writes an article; Second Circuit becomes aware that Arnstein was supposed to have two parts.  Laureyssens v. Idea Group, 1992, “restate” or really change everything and go back to its original formulation of copying plus wrongful appropriation. But resurrecting Arnstein in this area, with suspicion of judicial discretion and trial/appellate divide, leads to the issue of uncopyrightable elements being entirely dropped from the analysis.  How do you do substantial similarity when there are uncopyrightable elements? Maybe a more discerning inquiry? No, total concept and feel.  There’s also a big shift to jury trials. © lawyers had continued to request bench trials until the late 90s. Hard as it might be for judges to both filter out uncopyrightable material and measure total concept and feel, it’s much harder for juries.  Jury instruction in Blurred Lines case: terrible; didn’t define substantial similarity.

No complete solutions, but jury can’t do better unless it has better instructions, and juries need to be brought under control.  Nguyen’s dissent in Blurred Lines: we should do more deciding issues as a matter of law, even after a jury trial, though majority correctly points out that they don’t do that in © cases (or other cases) now.

Buccafusco: some old cases in the 20s: courts do copying in fact, then move into fair use—the two step inquiry existed as access/similarity, but after that direct move into fair use. 

A: that’s one way to do it.  [I don’t like this when it happens in cases that should be lack of substantial similarity cases, but I guess you could lean in more heavily to fair use, though many think it’s overstuffed.]

Carys Craig: sounds like an English case. Unconscious copying case, but the point is: access is required no matter how similar the works are; otherwise it’s just coincidence.

Q: Zahr Said has been thinking about jury instructions.  Juries are better representatives of the public than judges.  Wants to make them simpler.

A: Simpler may be inconsistent with what he wants, which is more detailed.

Rebecca Curtin: why the change in jury trials?

A: no clear answer; may be that until the 90s there was a stable © bar; after that you get Silicon Valley lawyers and other players.  [I suspect it’s plaintiff-driven though I’d be interested in the data; it may have something to do with the increasing idea that creativity is behind most value generated.]

Yvette Liebsman: rather take chances with uninformed jury?  Judges now have access to Westlaw and word processing (which also helps explain their opinions getting longer).

Rebecca Curtin, Suffolk University Law School

Locke’s (Own) Literary Property

May 1689, Locke negotiated a contract for Essay Concerning Human Understanding.  At age 56, he’d published little, and less under his own name.  He’d just returned to England from exile in Holland after death of his patron; his anxieties over close brush w/prosecution for treason by James II. His correspondence had been full of initials and other workarounds to shield his opinions. Publishing in England must have required a significant shift. Complained about how hard it is to wait for the press, to deal w/the whole process. Writing and publishing are not the same thing. Nonetheless, w/in a year of his return, 3 major works appear in print, Treatises of Gov’t, Letter Concerning Toleration, but only the Essay was signed. Locke destroyed the correspondence relating to the first two.  Only the documents around the Essay survive. Emerging sense of authorial rights; case study in how sophisticated author of the day who knew theory and also practice managed “literary property.”  Not a full record, but still an antidote to canonizing authors as if they didn’t have any engagement with the real market for their work (e.g., Lord Camden’s speech in Donaldson v. Becket, where he says it wasn’t for “gain that Bacon, Newton, Milton, Locke instructed and delighted the world; it would be unworthy for such men to traffic with a dirty bookseller…”).

His entry point into the Licensing Act debate is about the ownership of literary property: care for book buyers as well as book sellers: the effects of perpetual © on buyers.  Avoid fairer and more correct editions; ignorant and lazy booksellers benefit (despite not having labored). He that prints them best deserves best and should have the sale of them. Focus on printing privileges, but the same concerns arise from perpetual © on the Stationers Register.  Discusses both censorship and need for monopoly termination after 50 years, as well as the problem of titles that lie dormant, leading many good books to be lost.  What about authors who write and sell copies to booksellers? He’s keeping in mind that living authors want to get paid—that’s different, but it’s absurd that any person should have title to Livy’s works.  Suggests death of the author/first printing + 50 or 70 years.

Commenting on a draft bill requiring permission to print the name of any person as author or publisher: he says: to secure the author’s property, that will do, joined with (1) a term of protection for the author to have the right to authorize additional publication, apparently conditioned on author/publisher taking on credit/liability for the initial work, or (2) deposit of copies w/specific libraries that confers a privilege of reprinting/publishing book for a term of years (an opt in regime).

Locke’s contract for the Essay is a pretty standard contract. Very specific: narrowly defines what bookseller can do, specifying good paper and size of a comparator book that was well-done, which was a common.  Printer is required to print at least 4 sheets a week—he’s learned from past frustration to control how printing happens.  Paid 10 shilling/sheet, counting what’s on a sheet as a specific book comparator counted.  10 shillings/sheet was not real money to him, so Camden wasn’t wrong about his motivations; the money was desired to make the printer take care with every page.  Locke learned for later editions that he’d transferred full right and title and it passed through bankruptcy to other printers.  Later contracts: copyright returned to Locke after first edition was published. Opposite of common form of receipts of the day, which typically said that the publisher got sole right & title of the complete copy. 

Another contract: 5 pounds for every impression of a book and 10 shilling per sheet for all additions; not to exceed 1400 books; 24 books bound copies provided to him.  Covenants not to dispose of right or title to work w/o his consent—so there’s a transfer, but a certain amount of remaining control.  He limits the claims of his estate, which is interesting in light of his discussion of the deleterious effects of perpetual ©.

Betsy Rosenblatt: what presumptions would have surrounded these contracts? We now expect a contract to leave silent what is presumed, but some of these contracts say this is a transfer and others say this isn’t a transfer. 

A: expectations of publisher were certainly to get title.  She isn’t sure that Locke understood that consequence about control of reprints. Publisher did ask him to do a deal on the second edition of the Essay with additions; a blurring of the lines about whether permission was required for a second edition, but on the Stationers rules probably not if nothing new from Locke was added.

Boyden: is Locke anticipating exclusive rights in author, or limiting rights of printers?

A: His best known writing is the latter, but comments on a draft bill propose to secure property in the copy for the author.

Craig: why do we care what Locke thinks about his contracts or about the licensing law?  It’s the theory that matters.  What he did in his contracts is neither here nor there unless you use it to modify/discredit the theory as applied to authorship.

A: history for history’s sake is a fine thing! 

IPSC: Trademark Doctrine

Jorge Contreras, University of Utah SJ Quinney College of Law

Sui-Genericide

1940s: Proprietary Ass’n & AMA opposed foreign registrations of common drug names (ANTACID, VITAMIN, etc.). Late 40s-80s: DOC generic word program: words submitted by firms to INTA’s predecessor, then to Dep’t of Commerce, which would protest to foreign gov’ts.  Successes: elastic, satin, tractor, bacon, etc.

Today drug naming is fairly systematized: proprietary name, common name, chemical name. Perhaps surprising: There’s no formal deference at PTO to int’l bodies and their naming of generics: WHO int’l nonproprietary names & US adopted names council. There are a couple of other bodies that do this: pesticide common names; synthetic fibers used for garment content labels (FTC; done by committees including chemists coming up w/names).  Technical standards: USB as the common generic term for a computer port used to connect various devices, according to the USB Interoperability Forum.  W3C designated terms as generic: ACSS, CSS, DOM, DSig, HTML, HTTP, JEP, MathML, Metadata, PICS, PICSRules, RDF, SMIL, SVG, WebFonts, XENC, XHTLM, XML, XMLDSIG and XSL.

Why have generic terms? Firm-level benefits: baseline for entire industry; protection against competitor capture; enables brand names to be simpler/more distinctive; enables competition among brands.  Market benefits: consumer info; comparison shopping; less consumer confusion; enables generic competition.

Today, genericism is determined in adversarial proceedings: examination; opposition; cancellation.  Legal effect of unilateral declarations?  Self-serving: deserve little credence. May bind the promisor, but not outsiders.  But should we give more deference to standards bodies?  It’s possible to dedicate research to the public to make results unpatentable. It’s possible to abandon ©. But a TM-able symbol may not have protection against being scooped out of the public domain. Should we create such a framework?

Proposal: alert examiner to consensus lists developed through industry bodies w/due process, right to contest. Should be a rebuttable presumption of genericism.  So too w/litigation/cancellation.

Mark McKenna: is there a big problem here?

A: there are a few, like USB House.  Relying on courts is costly. 

Deborah Gerhardt: Office Actions could help you isolate the problem.  Curious to see what kind of evidence the examiner is citing.  She’s seen citations of use in patent names; unit of food in nutrition label.

Justin Hughes: the PTO doesn’t need to worry about prescription drugs b/c the FDA will do it for them.  Would worry about Linux people using this proposed structure on Windows.

Michael Grynberg, DePaul University College of Law

Living with the Merchandising Right

Hates it too, but it’s not going anywhere: protecting the mark as the most desirable feature of the product; source designation functions are either irrelevant or distinctly less important.  Boston Hockey: protection of the feature qua feature; likely confusion exists because people recognize it. Later cases claim that merchandising is an application of confusion over source/sponsorship, but if you read them there’s still a presumption of ownership/rewarding people who create valuable things. 

Familiar critiques/responses to those critiques: it’s not confusing about source (but courts see approval/sponsorship confusion); it’s functional (but courts don’t like aesthetic functionality); etc.  Judicial intuitions support this right; they don’t like free riding even if there’s no there there philosophically.  Matthew Kugler study: consumers don’t care for themselves but think there’s a moral component/desert.  In TM class, he starts at the beginning of class asking about merchandising rights (McD’s T-shirts w/logo) and asks again at the end; almost 100% believe in the merchandising right at the beginning of class and almost 100% believe at the end of the term.

Fine, but the merchandising right destabilizes infringement more generally. Different factors are emphasized than in typical source confusion cases, like heavy weight given to D’s intent (Smack Apparel) and the idea that free riding is probative of confusion. Downplaying of distinguishing content like disclaimers in Automotive Gold. Danger is feedback to general infringement analysis.  Another potential issue: copyright overlap. Honey Badger case (sigh)—copying Gordon’s expression, not his “mark.”  Merchandise claim pressures Dastar policy, protects Gordon as the “origin” of the theme that Honey Badger don’t care.  Similarly, exacerbates tension on First Amendment interests b/c we have a merchandising claim at work—Court’s intuition that he should win does real damage to Rogers by finding the use artistically relevant, but also finding that b/c we’re in the same (merchandising) market, it might be explicitly misleading even though the defendant isn’t doing anything explicitly misleading.

Porous markets: Excelled Sheepskin v. Oregon Brewing Co. Brewer used ROGUE mark for promotional clothing; Leval finds that this promotional use gives it priority over clothes maker in department and clothing stores. Leverages priority into market you weren’t intending to enter/were entering for merchandising only; exacerbates mark depletion issues. 

TM holder free riding/trolling: pressure on mark exclusions/defenses.  How we deal with the free rider being the TM owner—Packman v. Chicago Tribune, where there’s a TM registration for JOY OF SIX and the person who gets this registration sends letters to newspapers suggesting they use it; Chicago Tribune uses it on a headline and merchandises its own front pages, and the troll emerges and tries to sue.  Intuitively, we know that Packman should and must use. The question is why.  The court goes to classic nominative fair use.  YMMV, but that’s not the easiest fit in this situation.  It’s not describing the CT’s own goods/services, but the fair use analysis focuses on P’s lack of secondary meaning. This is true but not evidently part of the analysis—reflects court’s strong sense that Ps are the free riders here.  But it makes it more difficult for Ds who don’t fit the perfect model.  Oprah Winfrey’s O: Own Your Power events.  Louboutinish move that ends up resolving the case in favor of Winfrey: there’s not a real mark here.

This situation also adds to pressure on §2 exclusions. 

Is there a role for a formal right, akin to ACPA?  Channeling cases into set doctrinal moves?  Tailored test for approval confusion to be evaluated in the merchandising context?

What’s in it for us?  Protect TM doctrine/simplify the analysis.  E.g., use confusing similarity in merchandising cases, limit spillover.  Raise standard for protection: require substantial acquired distinctiveness to limit P free riding.  Address market overlaps: define merchandise market as distinct, reduce congestion pressure.  Also have to handle defenses.

Betsy Rosenblatt: worried that this would just end up creating two overlapping merchandising rights and making it worse.

A: it’s a risk. Brookfield was really horrible and then the 9^th Circuit ended up moving back.  In part ACPA changed that, creating space for Tabari/nominative fair use [hunh, but all the Brookfield spillover was really in keyword ads which is where the change really ended up happening; hard to attribute that judicial learning to ACPA]

Gerhardt: use as a mark is what’s screwing stuff up. If that weren’t an eliminating factor for descriptive fair use, then these cases would be a ton easier; they didn’t intend to use Own Your Power as a mark.

A: worries that goes too far—gets rid of reverse confusion as a doctrine. [but does it? Big O Tires would still exist]

Jennifer Rothman: if we embrace the merchandising right, can we adopt the perspective of those who feel the moral pull to figure out what the internal limits on that would be that would accord with judicial intuitions? 

A: enhanced distinctiveness requirement would be a place for that intuition about desert to play a formal role.

RT: what’s your evidence of spillover? How do you define merchandise? Proposal sounds a bit like double identity, but note that ACPA doesn’t manage to be formalist—it considers bad intent, website content.  Why not require substantial acquired distinctiveness for most if not all stuff put on merchandise?  Cf. Lisa Ramsey’s proposals to increase the distinctiveness bars by a lot.

Laura A. Heymann, William & Mary Law School

Trademark Law and the Strategic Consumer

Courts are often rather blanket in their treatment of consumers.  Knockoff perfume case: court quotes from the papers in saying that could be argued that D’s target demographic, lower-income, sometimes ethnic consumers are less sophisticated and more easily confused, while a skincare case discusses older, educated consumers are less likely to be confused. The underlying message is blaming/shaming. These intuitions aren’t true in many cases: those w/fewer financial resources can make more careful decisions even w/r/t lower cost items, while those w/more may pay less attention. Hard for most judges to imagine what it’s like not to have a car; not to have reliable internet access.  Also should think about how communications policy shapes what kind of phones we can buy, etc.  No group is monolithic, of course.

Paper: asks courts to pay more attention to socioeconomic class, intersection w/education, and strategies of consumers in purchasing in ways that influence the infringement analysis.  If we did that, we might see that LOC analysis assesses the overall buying experience.  The term “sophistication of the buyer” is just not an apt term and has had some bad effects.  It’s really about motivation to pay attention/level of attention in a transaction.  Thinking about purchasers in dollar stores: their exposure to brands and number of brands may be different; thinking about purchasers who are likely to access the internet through their phones. Not aware of any cases that ask how something looks on a phone v. how it looks on a computer.  Cognitive processing, literacy levels interact and matter. If a word is represented more as a visual unit than a lexical one in memory, that might affect how similarity should be analyzed. Encoding for low-literacy consumers can be very specific—even small changes/clutter may change how it’s coded.  Study: Lower-SES parents: food can serve as a symbolic antidote to deprivation: branded food products can communicate love and support as well as dignity where larger purchases are unaffordable. Higher SES parents, by contrast, use denial of child’s request for branded item to teach delayed gratification and to show good parenting techniques.  This interacts w/time/attention given to the purchase.

Post-sale confusion: should think about the ways in which access to goods that resemble high-status goods can be a way of accessing things like jobs, not just group membership—can signal trustworthiness. High-SES consumers often prefer more subtle, hidden marks: conveys association with a smaller group.  Other groups have a higher need to demonstrate outwardly the ability to conform. Tressie McMillam Cotton has written eloquently on this.

Implications: lack of monolithic consumers makes things more complicated; might point in different directions. IIC may even matter more for consumers w/fewer opportunities to correct; post-sale confusion might be less important.  TM can be a way of preserving dignity for a family.  Respect individual autonomy but also protect consumers w/fewer resources.

Q: you’ve convinced me that this factor is bullshit, except for people who specialize in buying a particular thing or for really really high priced items like cars; everything else is too complicated to realistically weigh.  Ann Bartow has said similar things.

McKenna: is your payoff at the retail level or wholesale in terms of thinking of the structure of TM law—hard to imagine lawyers invoking SES successfully.

[Variation in consumers, including attention and preference for cognition, is true but how important is it for this part of the doctrine to acknowledge if the standard for likely confusion is probabalistic? Even if there’s some other set of consumers who are actively benefited by the challenged behavior, that might be better taken into account separately. [FTC disclosure guides have an extensive section on how something looks on a phone!]

Rosenblatt: Maybe the factor should matter more for social justice purposes.

Alexandra Mogyoros, University of Oxford, St. Peter’s College

Pseudo-Certification Marks

Mark politicization: Absolut’s homepage looks like it’s a UN member and asks you to join its movement, which means sending you emails about sustainable cocktails.  UK: certification marks is not about source identification but about certifying that goods/services are certified by the proprietor of the mark in respect of some characteristic.  Her interest is marks that are registered as TM, but appear to be performing “certifying function”—generally a credence attribute about goods/services.

Fairtrade Foundation: It is third-party owned, so they have their own standards.  Cocoa Life: again looks like a certification mark, existing next to other brands, but its function is proprietary: wholly owned by Mondelez and used only on its products, but looks third-party.  B Corp Certified: owned by a nonprofit; certifies the using corporation’s own organization form. 

TM owners fear lack of power/control: you can’t use it yourself if you own a certification mark (limited exception in Australia).  Potential anticompetitive effects (Jeanne Fromer’s article).  Requires more registry oversight, but that may just be a rubber stamp in practice, but lawyers still worry about it.

Is there something about certification marks that is unfavorable to owners? Maggie Chon has been skeptical about incentives to maintain a mark you can’t yourself use and that you can only license (and you may be subject to nondiscrimination measures).

McKenna: what are the consequences/costs of confusing the two? Standard TM theory would tell you the certification of characteristics of a product is part of what we get out of many TMs. So components of certification are embedded in TMs but the opposite is not true (source identification).  They’re also pretty vulnerable to not being valid as TMs because they don’t signify source. 

Heymann: self-certification is part of the confusion. Why do consumers rely on Good Housekeeping? 

[RT: (1) part of what you’re doing seems like a subset of the issue of preferences for processes (great article by Doug Kysar)—from what it sounds like including your initial discussion of Absolut, it’s not so much that you’re worried about certification but about certification of features that are more abstract than other previous certifications like geographic origin.  But if those things matter to consumers, why isn’t that a legitimate way for participants to distinguish themselves?  (2) Cocoa Life: one of these things is not like the others—it seems different because of the misleading appearance of independence.  Why not use false advertising law?  There are some cases on self-certification as false advertising. SC Johnson greenlist case. (3) relevance of competition in the market for e.g. green certification—incentives may be very different if you’re competing w/other certifiers. Which raises the issue of greenwashing which I didn’t see in the paper but might be a place to go: maybe there shouldn’t be very many certification marks.

Zahr Said: Craft beer might be a good example: 2017 certification exists. Arose partly b/c of fear that major brands were calling themselve craft beer and weren’t.

McGeveran: the product being marketed is the endorsement of some entity.  If that is a legit way of thinking about it, then what are the implications?  Maybe they are housed comfortably as TMs, just for a different product.  Greenwashing: is the attention cost of clutter also relevant?

IPSC: Fair Use

Matthew Sag, Loyola University Chicago School of Law

The Missing Theoretical Foundation of Transformative Use

Campbell v. Acuff Rose had lots of changes to the work and explicit critical stance v. original—the only reason the Sixth Circuit held not fair use was the prejudices of old white men. But then things get interesting. Cases w/no textual transformation at all—image search, plagiarism detection, HathiTrust. Some people start saying transformative use has gone too far; we need to jettison the whole thing. Doesn’t agree, but thinks that Campbell and Judge Leval’s foundational essay leave open important questions. There’s no theory of what transformative use should mean. There’s a good argument for why we need it but no argument for what its contours are. This is particularly problematic when we need to figure out how much change is enough and what kind of changes are enough—how to distinguish transformative works from derivative works.

What’s the theory? Leval: transformative use furthers copyright’s utilitarian objectives by balancing authorial incentives with freedom to generate new meanings from existing works.  Souter says basically the same.  But this is really a why, not a what.  Utilitarianism is a goal, not a decision rule in individual cases (except for perhaps the most obvious like Campbell). Bespoke cost benefit analysis in every case can’t be done: judges lack the info and the skills. Even if they could, that’s not a good idea b/c litigated cases don’t just resolve conflict b/t the parties; they’re supposed to tell us how to shape our future actions, and if it’s individualized CBA then there’s functionally no precedent because of changes in markets, individuals. Also, why use this lever to optimize © rather than the other possible levers?

Leval wasn’t himself suggesting individual CBA; that’s not the critique.  It’s useful to understand why fair use can’t work this way to see that the utilitarian imperative doesn’t explain much—Leval is interested in broad categorical rules too.

His friendly amendment: fair use should work in harmony with ©’s utilitarian objectives, but also with its means.  But then: is there a deeper structure to © law other than interest group negotiation?  You can’t posit a single theory of © that explains every detail of the Act, but there is a deeper, more fundamental theory, and part of our obligation as scholars is to try to figure that out.

What makes something copyrightable, what determines authorship attribution, what determines whether infringement occurred in substantial similarity cases: all of these show a concern with not the technical act of copying but the communication of original expression to the public. Screenplay cases: courts say that they don’t care about intermediate drafts if the final work wasn’t substantially similar.  In Tasini: court doesn’t care how the database works, only how it appears to the public. Primary purpose of fair use is to allow technical acts of copying in ways that don’t interfere with the author’s interest in communication of original expression to the public.

Nonexpressive uses like big data mining don’t communicate original expression to the public and obviously don’t interfere with the author’s interest.  Well-supported by HathiTrust and Google Books. Expressive uses: the same explanation, essentially: transformative if content/purpose change is sufficient that they pose no real threat of substituting for the author’s own communication of her original expression to the public.

Thus, we have to ask what was the new author’s purpose?  Was the amount reasonable in light of that purpose?  Is expressive substitution likely?  The factors are not independent: factor 4 (factor two is omitted b/c it’s meaningless) depends a lot on factors 1 and 3.  Not a question of complements and substitutes in product markets.  Look for uses that are beyond/outside the intrinsic purpose of the work. Commentary on the original clearly satisfies, subject to amount reasonable in context; debate will be over whether there is commentary. Otherwise new expressive uses are not likely to be transformative, unless radical transformation essentially negates substantial similarity.  He thinks many of these fair use cases should be “no substantial similarity” cases.

Q: Your proposal could get rid of classist stuff that appears in some of the cases about the original author v. the famous appropriator.

A: does think that courts may get star-struck, as in the Green Day case. [The likelihood that Article III judges thought that Green Day were worthy celebrities seems to me to be low, though I make no such statements about their attitude towards the lawyers for the parties.]

RT: This presentation confirms my sense that complaints about Google Books are best at destabilizing support for cases like Cariou, a completely different set of cases—it’s just easier to argue about whethercontent transformation is enough than to argue that the purpose is the same for big data than for individual works. But are you just moving the uncertainty around by stuffing it into “sufficient change to pose no real threat”? Dorling Kindersley/I think you will be forced to determine the original author’s purpose as a matter of law v. matter of fact, like contracts.

A: He thinks he’s reducing uncertainty but also that DK is the kind of case that should always have to go to a jury [which doesn’t sound uncertainty reducing to me].

Q: 2d Cir treated Sony as a transformative use case: was that right?

A: He isn’t saying that transformative use + nonexpressive use are the sum total; other things can also be fair use. Everything the Second Circuit said about transformativeness in TVEyes was garbage, though.

Mehtab Khan, UC Berkeley School of Law

Fair Use and Educational Uses: Commercial Endeavors for Public Interest

Interested in intermediary uses.  Intermediaries have been important in pushing boundaries of fair use. Open access/Creative Commons; controlled digital lending by the Internet Archive; mass digitizaiton under Google Books and HathiTrust.  The threshold set by those cases isn’t achievable by individual users, though: it’s not possible for an individual to create a database and then ask a court to find that’s fair use. Thus, we need to rethink relationship b/t intermediary and end user. Tiered approach: look at what the end user is doing with the copy, not just at what the commercial intermediary is doing.

TVEyes criticism: licensing as a barrier to public interest (note that Fox would delete certain clips that ended up not furthering the Fox narrative, so there was no access to them even through licensing).  Court should have considered users’ (lack of) other options due to Fox licensing practices, not just that TVEyes was a commercially successful endeavor.  Great Minds v. FedEx: there might be some commercial activity involved in an ultimately noncommercial use, so a copying company could make money if the end user was noncommercial (for purposes of a CC noncommercial license).  Implications beyond the US: India Delhi High Court case finding that textbooks are necessary for public education.

Betsy Rosenblatt: fits w/in larger issue of how we treat commerciality generally. Is the initial owner making commercial use?  Is the intermediary?  Is the end user?  If you push it all the way to the end, do you gobble up all of ©? 

A: not black and white, especially w/digital technologies.

Rub: if the end user has money, why shouldn’t the © owner have a claim on it? At least that’s the reasoning.

A: if they make money the should have to show transformative fair use. But sometimes the commercial activity arises along the line.

RT: Agree w/ Rosenblatt--when I watch a movie for pleasure, I’m making a noncommercial use. Probably not enough!  Another place to look is Canada’s UGC exemption—even though it’s called the YouTube exception in public discussions, equivocation about what noncommerciality means when an intermediary is involved makes the provision itself very hard to parse.

Cathay Y. N. Smith, University of Montana Blewett School of Law

Political Fair Use

Peterman v. RNC: photo of candidate appeared in attack ad on candidate: lost on sj on fair use grounds. There haven’t been many fully litigated cases, but once the court determines a secondary use was political, the court’s balancing of the factors changes. Similar to what happens when a court determines that a work was a parody. Makes it easier to find fair use, in political as well as parody cases.  Factor two (Sag’s nonfactor) seems to be key: if the original work at issue was politically related, e.g. a headshot taken for a campaign ad, the court is more likely to find fair use. Affects other factors, e.g., market harm: if you made a photo for one campaign, you’re unlikely to authorize use by the other side. If the original work was unrelated to politics, such as an engagement photo or a song, the political use leans away from fair use.  This seems to trump even new meaning added by the new use. Courts seem interested in moral rights arguments in here, but find market harm.

Questions: how broadly should this project define “political”? How far into the con law abyss should it go?  How should we think about moral rights/dignity rights concerns? Does it deserve treatment alongside false endorsement/Lanham Act type concerns?

Rosenblatt: European students in particular often are surprised that the original author’s objection makes it more likely to be a fair use (both b/c of factor one, reuse in unapproved ways/unapproved changes, and because of factor four—there’s no market b/c author would never allow such a market).

Jennifer Rothman: is this really about moral rights? These authors are objecting not b/c they want to be paid but b/c they object to the underlying politics. That fits into a story told in recent papers by Shyam Balganesh about “censorial” copyright/privacy interests, or Andrew Gilden’s work on nonmarket harms. You could fit this story into those stories and think about nonmarket functions of © law. Something more empirical might ask: is something funky going on with these political © cases in that it makes factor two matter? You could do case counting.   Not sure you can fully extricate Lanham Act/RoP claims b/c they indicate what’s really at stake when brought alongside ©.

Q: lawsuits as performative: showing the world that you don’t endorse this—though that strategy is more effective for musicians than for photographers.

Roberta Kwall: there are other categories that are similar, like religious uses. Religion and politics go together; related dignity based harms.  USCO’s recent report on moral rights gave no indication that it’s concerned about objectionable contextual uses—a gap in our law. [Or, you know, a distinctive First Amendment tradition.]

Q: is an underlying work ever not political?  Artists are political.  [In some ways this is the standard question of transformativeness/criticism—every work has its politics, but the interaction of that politics with the challenged use may not be that obvious or direct.]

Gilden: distinction in what motivated the initial work is really interesting—© misuse may come into this. But should © care about what motivated the initial work?

A: also shows the flexibility of fair use—changes the normal operation as soon as you find a political work.  [I’m not sure this is the right characterization. The presentation itself said that it’s exactly what happens when you find a parody—or, these days, a transformative use in general.]

Christopher Yoo, University of Pennsylvania Law School

The Transformation of Transformative Use: The Infiltration of Functionality into Copyright

Original formulation of Leval/Campbell assumed that new material would be added as well as a different purpose.  The Google Books type cases take away the requirement of adding new content. Reformulate Campbell to make that possible; not a big deal b/c that’s how interpretation works. The 9^th Circuit introduced utility/functionality as a defining feature of fair use, but that’s more a patent idea. Purpose is now overdrawn.  General sense that fair use protects valuable uses. Is that factually true?  Is boiling transformative use down to a single purpose a good idea?

Kelly v. Arriba Soft/Perfect 10 ask whether the use benefits the public. That’s an incomplete question: fair use isn’t required just b/c there’s a public benefit.  Hathitrust rejects value and utility as a basis for transformativeness—not enough to provide more access to the work for, e.g., disability access.  Focus is on whether use has a different purpose, and snippet view has different purpose and provides access to different information about the works and not the works themselves.  Leval says don’t take transformative literally—a translation is a derivative work.  The fact that a collateral tech will make works more accessible is not properly a © consideration.  And we shouldn’t assume that you won’t get the use if it’s not fair use.  In the original Google Books settlement, Google was going to pay—so you could have gotten the Google Books settlement [if class action doctrine were completely different than it is].

Requiring new content would be a better idea.  Authors have incentives to license for other purposes. Fair use requires an explanation for why authors won’t license; fair use when authors have incentives to license is just a wealth transfer, not a legitimate use for fair use.  Private ordering should be preferred. 

Precedent: contributory infringement has obscured things like the influence of Sony, which is about who made the copy [though also and pretty famously it is about fair use].  We have precedents for this idea in trademark—permitting references to names, titles.  You have to be able to refer to works by their titles in order to have meaningful discourse.  That could count as a nonexpressive use.

RT: Your argument is that you could have gotten the Google Books settlement but that’s only true if class action doctrine were completely different than it is, but it’s not different. Also [and not unrelatedly] class action settlement is not private ordering!  It’s extended collective licensing which is just a different kind of wealth transfer, and notably not to authors in many circumstanes.

[Boiling down fair use to one purpose is not how I read the big data cases; the Perfect 10 circuit is the Green Day/Jersey Boys circuit; they don’t seem super committed to a single purpose for fair use.]

TVEyes: there was evidence that Fox discriminated politically in what clips it made available for licensing and in its licensing terms—you couldn’t criticize.  That is characteristic of supposedly blanket licensing schemes.  Is that ok?

A: The revealed preference of Google was willingness to pay.  [But there was no one they could legally pay in the absence of extended collective licensing, which is not private ordering.]

Boiling down fair use: yeah, but that language has been influential.

Blanket licensing: we are seeing one-off licensing, showing the existence of a market.  [A market for what, though? For licensing that supports Fox political positions?]

Sag: the settlement was not on fair use; the settlement also allowed Google to sell books. You can’t use the settlement the way you are.  Also doesn’t deal w/concerns of people w/o Google’s cash, like HathiTrust or other text miners.  (Plagiarism detection.)

A: one actor can monetize something, another can’t—the question is whether Google should transfer some of the value it’s creating to others [something about property rights].

Holdout is a normal part of property rights.  But there has to be a framing about why the system isn’t working; if you gave people full entitlements, they still have high powered incentives to contract.

Buccafusco: the claim is that © doesn’t extend legitimate rights to control nonexpressive uses like big data uses. What is your answer to that?

A: copyright owners desire monetization.  [Well, I too would like a million dollars.]  Perfect 10 is outrageous in folding factor four into factor one analysis.

on 12(b)(6), court holds that "blockchain" could be distinctive for one co's digital wallets

Blockchain Luxembourg S.A. v. Paymium, SAS, No. 18 Civ. 8612 (GBD) (S.D.N.Y. Aug. 7, 2019)

The Second Circuit really doesn’t want to kick out trademark claims early.  I can easily imagine a court in the Seventh Circuit using the flexibility offered by Twiqbal and its own common sense to kick out these trademark claims, based in significant part on claimed rights in “blockchain” for … you guessed it.

Plaintiff BLK sued Paymium for trademark infringement, unfair competition, and false advertising under the Lanham Act, along with New York state law claims for deceptive acts and practices, false advertising, injury to business reputation, and dilution, and New York state common law claims for unfair competition and misappropriation. Almost everything survived.

BLK purports to be “one of the world’s leading providers of digital currency services.” It claims to own rights to five word marks: (1) BLOCKCHAIN (first use 2011), (2) BLOCKCHAIN.INFO (2011), (3) BLOCKCHAIN.COM (2013), (4) BLOCKCHAIN MERCHANT (2012), and (5) BLOCKCHAIN PRINCIPAL STRATEGIES (2018) for varying combinations of digital wallet services, mobile application services, website services, and suite services [involving blockchain]. It also has a registered design + word mark that disclaims “blockchain” (first use 2017; color not claimed as a feature).

When it applied to register BLOCKCHAIN COMPASS FUND and BLOCKCHAIN ASCENT FUND, it received office actions requiring disclaimer of “blockchain” as merely descriptive, and it added the required disclaimers.

 

logo as used

registration (color not claimed as a feature)

BLK claims to be “the most popular digital wallet in the world and the United States” with “more than 32 million BLOCKCHAIN-branded wallets in 140 countries around the globe, including more than 4.5 million wallets in the United States alone.”

In 2018, Paymium announced that “it would launch www.blockchain.io as a new platform for its digital currency services and that it would provide those services not under its prior brands, but under the mark BLOCKCHAIN.IO” and a design mark incorporating the word. It launched an initial coin offering in September 2018.  BLK alleged likely consumer confusion.

At this stage, the court refused to find that the alleged marks were inherently descriptive.  Disclaimer of the term at the PTO doesn’t bar an argument that the term is, or has become, distinctive of the plaintiff’s marks. And anyway even disclaimed terms have to be considered in a likely confusion analysis. Although BLK’s complaint states that blockchain describes “the technology underlying cryptocurrencies, such as bitcoin, and used for virtually limitless other applications and by many industries,” it also alleged that “digital currency is only a small subset” of the products supported by blockchain technology.  [But so what?  “Red” is descriptive of a variety of products, from lipstick to cab companies; it’s descriptive when it’s used to describe.  Although it’s true that courts have suggested otherwise, it’s fundamentally inconsistent with Abercrombie to think that terms are only descriptive if they uniquely describe the goods/services at issue.]  It was sufficient to allege that the Blockchain marks were “inherently distinctive and/or have acquired distinctiveness for the [BLK] Products.” Likewise, though defendants argued that BLK didn’t sufficiently allege secondary meaning, that’s a fact-intensive inquiry that requires a robust evidentiary record.  [Instead of just being wrong like the previous reasoning, this is a matter of how you think about Twiqbal.  Facially implausible claims—like claims to own the term “blockchain” for digital wallets, which is how everyone knows about blockchain even if it has other possible applications—reasonably require greater factual specificity in pleading to make them plausible. When it comes to product design trade dress, for example, many (not all) courts require more specifics than just pleading acquired distinctiveness.]

Here, it was enough to allege provision of digital wallet and website services since 2011, mobile app services since 2012, and suite services since 2018, along with strong sales of its digital wallets under the marks, half a million wallets sold in December 2017 and more than one million wallets sold prior to February 2018. BLK also attached numerous examples of unsolicited publicity for its products as early as October 2014. These allegations plausibly established secondary meaning.

Defendants argued that, in the context of blockchain—where many third parties also use the term to describe similar products—the allegations were implausible. But this was a factual dispute unsuited for a motion to dismiss. [Query whether given the third-party uses, if the claims ultimately fail a fee shift should be warranted given the extremity of claiming to own “blockchain” for digital wallets. But with precedent like the My Other Bag case in the Second Circuit, that will be a hard sell.]

Unsurprisingly, BLK also adequately alleged that its design + word mark and the Blockchain.IO design + word mark were confusingly similar, especially given that no single factor is dispositive in the multifactor confusion test. BLK alleged that “[t]he BLOCKCHAIN.IO Design Mark mimics the BLOCKCHAIN Design Mark” because both Design Marks are “made up of smaller geometric shapes” and “are followed by the Blockchain name in dark blue.” “Given the similar design elements, it cannot be determined that, as a matter of law, the marks are so dissimilar that there is absolutely no possibility of confusion.” [As far as I can see, the marks are made up of smaller geometric shapes in the same way that words are made up of letters, similarity-wise.]

Two of the allegedly false advertising statements were non-actionable because not false. The allegedly false advertising was that Paymium claimed that (1) “it has been operating hack-free since 2013,” (2) “[a]t Blockchain.io, we are using a combination of centralized and decentralized features to make atomic swaps simpler, easier, and more efficient to use,” and (3) “[it is] pleased to announce [its] filing has been accepted and [it is] now registered with the SEC!” The alleged consumer harm was that “Paymium has a history of being negligent with consumer information and security protocols. As a result, its services have been subject to major hackings and thefts.”

BLK alleged that “hack-free since 2013” was literally false because Paymium “was hacked several times in 2013,” and thus Paymium was hacked after midnight, Dec. 31, 2012. But Paymium didn’t specify the exact day or month of its last hacking incident, and it was equally reasonable to read the claim as meaning that Paymium hadn’t been hacked since before midnight on December 31, 2013. Nor did it misleadingly imply that “Paymium has had no hacking incidents whatsoever since it became operational in 2011.” “This interpretation is nonsensical because the words ‘since 2013’ cannot mean ‘never’ or ‘since 2011.’” The statement was thus, as a matter of law, not impliedly false.  [The court skips over the middle option, apparently because BLK didn’t argue it—if a reasonable consumer could believe that the claim was based on an Dec. 31, 2012 end date for hacking incidents, the statement could be impliedly false.  I have no idea what a reasonable consumer would believe, though I would probably incline to the “none since midnight on Dec. 31, 2013” interpretation. And a survey to figure out the truth might have a Mead Johnson problem about the meaning of “since 2013,” though Mead Johnson isn’t binding on the SDNY and hasn’t been relied on as persuasive authority in the Second Circuit as far as I recall.]

Likewise, “[a]t Blockchain.io, we are using a combination of centralized and decentralized features to make atomic swaps simpler, easier, and more efficient to use,” was allegedly literally false because “Paymium does not offer atomic swaps because they are not yet a viable technology.” But, although, one reasonable interpretation was that Paymium already has the atomic swaps technology, “an equally reasonable and more literal interpretation is that Paymium is in the process of developing atomic swaps technology that is simpler, easier, and more efficient.” It couldn’t be literally false, especially as the sentences surrounding that statement were “explicitly and unmistakably forward-looking as they state that users of [Paymium’s] exchange ‘will be able to use atomic swaps’ and the exchange ‘order book will be centralized.”

However, BLK sufficiently pled that Paymium’s statement that “[its] filing has been accepted and [it is] now registered with the SEC!” was false because Paymium simply filed a Form D with the SEC, and “[t]he filing of a Form D does not mean that a security is ‘registered’ or that it has been in any way scrutinized or approved by the SEC.” The court found that this statement was sufficiently pled to be “commercial advertising or promotion.” BLK alleged that the statement was “designed to promote Paymiurn’s services as more transparent and secure than those of its competitors,” thus influencing potential purchasers, and alleged that it was widely disseminated online, including on Paymium’s Twitter account and Telegram chat.  

Further, BLK plausibly alleged injury/proximate cause. According to BLK, its products “are of the utmost quality and enjoy a strong reputation for their security, safety, and reliability,” whereas “Paymium has a reputation of offering unstable, unreliable, and unsafe products.” BLK alleged that “[d]ue to Paymium’s bad acts, consumers already have actually confused the source of Paymium ‘s products offered under the [BLOCKCHAIN.IO Marks] with the [BLK’s] Products offered under the BLOCKCHAIN Marks,” harming its reputation and diverting investors who might otherwise have bought its products.  Um.  That is definitely a decently pled trademark infringement proximate cause analysis.  It is not a decently pled false advertising proximate cause analysis, which would address the question: how did the SEC statement proximately cause harm to BLK?

The NY GBL §§349, 360-L claims also survived; though §349 requires consumer harm beyond that inherent in trademark infringement, that requirement was satisfied by alleging that Paymium’s products were inferior because Paymium has a long “history of being negligent with consumer information and security protocols. As a result, its services have been subject to major hackings and thefts.”  §360-L is state dilution, which doesn’t require fame, so the claim survived.  For similar reasons, common law misappropriation and unfair competition claims survived—these require bad faith, but BLK adequately alleged that Paymium willingly and knowingly adopted the BLOCKCHAIN.IO marks “in a bad faith effort to mask its long history of security issues by unfairly usurping BLK’s acquired goodwill in its BLOCKCHAIN Marks.”

As Bloomberg's Matt Levine says almost every day, blockchain blockchain blockchain.

storage container promise of "optimal environment" to keep produce fresh isn't puffery

Zearfoss v. Rubbermaid, Inc., 2019 WL 2902495, No. 18-cv-06392-AB (ASx) (C.D. Cal. Apr. 18, 2019)

Rubbermaid sells a line of food storage containers called FreshWorks Produce Saver Products, advertising on the outside packaging in large bold print “Keeps Produce Fresh Up to 80% LONGER.*” The container displays an assortment of produce including leafy green vegetables, strawberries, and blueberries. The fine print disclaimer in “faint and small typeface” on the bottom center of the label says, “Based on strawberries in FreshWorksTM containers vs. store packaging.” The package also says: “FreshVentTM patented membrane naturally regulates the flow of O2 and CO2 to create the optimal environment so your produce stays farm fresh.” Some products also compare moldy and rotten-looking strawberries, purportedly contained in store-brand packaging, with pristine fresh-looking strawberries, purportedly stored in Rubbermaid containers, for 21 days.

From ad on YouTube

Plaintiffs alleged that, in fact, the products are no better than store packaging.  Rubbermaid’s “up to 80%” claim was allegedly based on its undisclosed standard that, when up to 49% of the strawberries in a container are moldy, spotted, or indented, they are no longer fresh. NAD allegedly raised substantial questions about Rubbermaid’s methodology and concerns over whether consumers would agree that 49% rotten was the standard.  A Consumer Reports test also allegedly found that the Rubbermaid products performed worse than store packaging and another product at keeping raspberries fresh. In addition, despite Rubbermaid’s admission that “there is no single environment that will be the perfect storage environment for all types of produce[,]” it allegedly continued to make the optimal environment claim.  Plaintiffs brought assorted consumer protection claims; this is an evaluation of the amended complaint.

In dismissing the original complaint, the court expressed concern with the absence of any metric to measure freshness. This time, plaintiffs pled that they determined freshness by observing the color, appearance, texture, and smell of the produce, that they promptly transferred produce from store containers to the products, and that the products performed on par with store packaging. Rubbermaid said that wasn’t enough; the court thought it was.  “[T]he external appearance of the produce, its smell, and its edibility” was a reasonable measure of freshness, especially given that Rubbermaid uses a similar metric in its own ads, which depict a shriveling, molding, and dulling strawberry next to a robust, firm, and bright red strawberry. “Above the comparison is the telling sentence: ‘Keeps produce fresh up to 80% longer* - a difference you can see.’” Using not only the same visual cues Rubbermaid relied on but also olfactory cues was sufficient.

Rubbermaid argued that “up to” couldn’t be deceptive to a reasonable consumer, since any reasonable consumer would be on notice that their results may fall short of the maximum performance. But in Maloney v. Verizon Internet Servs., Inc., No. CV 08-1885-SGL (AGRx), 2009 WL 8129871 (C.D. Cal. Oct. 4, 2009), which accepted a similar argument about ads for internet speed “up to 3 Mbps,” defendants’ TOS explained that bandwidth would vary depending on listed customer-specific factors, which Rubbermaid’s ads didn’t.  “Plaintiffs do not allege that they expected each item of produce to stay fresh 80% longer on each use of the Products, rather Plaintiffs allege that it was reasonable for them to expect some produce on some occasions would remain fresh longer than they would have in the store packaging. Plaintiffs allege this was not the case.”  That was reasonable.

Rubbermaid argued that “optimal environment” was puffery. The court disagreed. The packages claimed that a “[p]atented membrane” regulates the flow of O2 and CO2 “to create the optimal environment so [consumers’] produce stays farm fresh.” Though courts have rejected language similar to “optimal” as mere puffery, reasonable consumers could plausibly receive a specific message here, given the reference to the use of a scientific method “to determine how best to ‘naturally regulate’ the flow of natural gasses for produce.”  [It does indeed seem like the kind of thing that people involved in perishable food storage/sales would study and try to control, rather than leaving it up to chance; since it seems reasonable to laypeople that this situation could be scientifically studied, a claim of success shouldn’t be mere puffery.]  However, the “up to 80% longer” and “optimal environment” claims couldn’t support breach of warranty claims; they didn’t have enough of a “concrete, discernable meaning” and there was no allegation that the products were bought for a particular purpose more specific than produce storage.

In addition, Rubbermaid had no independent obligation to disclose its 49% rotten testing standard to the consuming public.

Statement that advertiser is "2.0" version of competitor is puffery

GeoMetWatch Corp. v. Hall, 2019 WL 3537297, No. 1:14-cv-60 (D. Utah Aug. 2, 2019)

GeoMet and Advanced Weather Systems Foundation (AWSF) negotiated to create a joint venture for the purpose of constructing and deploying a satellite-hosted weather sensor system and commercially exploiting the data derived therefrom, but the incipient agreement collapsed. Defendant Tempus, and associated individuals and entities, allegedly colluded with AWSF and others to deprive GeoMet of its business opportunity. The court here gets rid of a false advertising claim.

The alleged falsities included: (1) In response to a question from a representative of a prominent American defense contractor about whether Tempus would be “assum[ing] the role of [GeoMet]” in the STORM project, Alan Hall (an owner of Tempus) stated that “yes we are replacing the roles and duties of [GeoMet]. We will own and manage the relationships of all entities in the consortium.” Copies were sent to representatives of AWSF—the putative manufacturer of the proposed sensor.  The court thought it wasn’t clear that a statement to a single defense contractor could be “commercial advertising or promotion” in the absence of facts about how many entities were in the relevant market.  But even setting that side, with the arguable exception of the statement “we are replacing the roles and duties of [GeoMet],” “the statements are all clearly forward-looking” and weren’t literally false: the court found that Tempus had a plan to do these things.  And they couldn’t be misleading to a reasonable business development executive at a multi-billion-dollar defense contractor, who “would not interpret these statements of future intent as ‘representations of fact.’” As for “replacing the roles and duties,” that indicated an ongoing activity, which was true—Tempus was preparing to do this.

Emails among Tempus- and AWSF-associated people also couldn’t ground a Lanham Act claim. Statements to co-venturers aren’t “commercial advertising or promotion.” 

GeoMet challenged Tempus’s website representations that it “designs, manufactures and operates environmental and weather monitoring instruments, known as STORM ... on a global scale.... From our sensors we gather the most sophisticated weather data ever produced and sell it to sovereign governments and commercial entities.” When this was published on the website, Tempus allegedly “had no means of gathering, producing, [or] selling weather data.”  This was thus a literally false statement.  But there was no evidence that this false statement ever confused anyone.  Although Tempus proved that, at the relevant time, “some individuals in the aerospace defense contractor space were confused about whether GeoMet or Tempus would be partnering with AWSF to construct and launch STORM, this confusion is wholly disconnected from Tempus’s false statement that, in April of 2014, Tempus had the ability to gather and sell weather data derived from an operational STORM sensor.”

In a demonstration of how much more rigorous false advertising doctrine is than trademark doctrine, statements that Tempus was “GeoMetWatch 2.0” were also not actionable. Given that the statement was made to a member of Congress—and Mark Twain’s quip on that topic notwithstanding—it wasn’t false or misleading. It didn’t convey the message that Tempus was literally “GeoMetWatch 2.0.” “Rather, any reasonable person—and certainly any reasonable member of the defense, satellite, or meteorological industries—would interpret this statement to mean that Tempus was a newer, better version of GeoMetWatch. In other words, this statement was mere puffery ….”  GeoMet argued that the statement falsely implied that GeoMet was out of the venture, but it didn’t; to the extent that the statement indicated that GeoMet couldn’t compete with Tempus, “that implication is likely to have been expressed and received as mere puffery.”

pharma databases as commercial speech? court says maybe

Alfasigma USA, Inc. v. First Databank, Inc., 2019 WL 3532844, No. 18-cv-06924-HSG (N.D. Cal. Aug. 2, 2019)

Alfasigma sued First Databank for state and federal false advertising after it re-classified Alfasigma medical food products from Class F (prescription) to Class O (over-the-counter) in its widely-used MedKnowledge database. First Databank moved to strike under California’s anti-SLAPP statute and to dismiss; it failed in the first but was partially successful in the second.

Federal law defines a medical food as “a food which is formulated to be consumed or administered enterally under the supervision of a physician and which is intended for the specific dietary management of a disease or condition for which distinctive nutritional requirements, based on recognized scientific principles, are established by medical evaluation.” Alfasigma markets its medical foods “directly to physicians.”

MedKnowledge is the largest and most widely used drug database, and insurers rely on it to decide which products to cover.  It uses F and O codes to divide the products in its database between Rx and OTC.  Subscribers allegedly “universally understand[ ] that a product designated ‘O’ is an OTC drug, available over-the-counter and without physician supervision.” The Alfasigma Products were allegedly “historically and correctly” designated as F-Class, meaning that “their cost was often covered by insurance plans that limit coverage to prescription products,” which improved usage and compliance.

In 2016, First Databank reclassified the Alfasigma products to Class O, allegedly “falsely representing that these products are available OTC, when in fact they are available by prescription, and should not be taken by a patient without physician supervision.” First Databank claimed that it moved the Alfasigma Products from the F-Class to the O-Class to be “in alignment with [ ] FDA standards.” But this was allegedly not based on any FDA request or advice, and the FDA’s Medical Director for the Infant Formula and Medical Foods Staff allegedly told it that “[m]edical foods are not OTC drugs” and that its “misinterpretation of FDA’s position and policies on medical foods” was leading to patients losing insurance coverage because “their insurance providers belie[ve] that the [Alfasigma Products] are over-the-counter (OTC) drugs.” The reclassification allegedly caused confusion in the marketplace, including causing physicians to stop prescribing the products and pharmacies to not stock them.

In 2018, First Databank announced that it was creating a new Q-Class for the MedKnowledge database, in order to “distinguish” medical foods “from over-the-counter drugs and devices.” Class Q will include products “that are neither drugs nor devices, such as dietary supplements (including prenatal and other vitamins), medical foods, herbal preparations, and bulk flavorings or colorants.” But Alfasigma argued that “[n]one of these products are regulated as medical foods, and none of them carry a federal requirement that they be used under physician supervision.” It thus alleged that putting its foods into the Q-Class “will cause further confusion among physicians and other prescribers, pharmaceutical wholesalers and distributors, pharmacies, pharmacists, and insurers, to Alfasigma’s continuing injury.” [This allegation reads like it involves some fancy footwork: is there really a “federal requirement” in the sense that one violates the law by providing medical foods to someone who is not currently under physician supervision?  How would one even check that this was so?]

Anti-SLAPP law: First Databank’s reclassification was a speech act about matters in the public interest within the scope of the anti-SLAPP statute. To survive an anti-SLAPP motion, the plaintiff must “show a reasonable probability of prevailing in its claims,” and “the trial court does not weigh the evidence or determine questions of credibility; instead the court accepts as true all of the evidence favorable to the plaintiff.”

First Databank argued that the information in its database was pure noncommercial speech and thus outside the scope of the UCL/FAL and unfair competition common law.  But the database was at “the heart of every pharmacist claims processing system,” and was in fact designed and marketed to be that vital to reimbursement. First Databank cited Dex Media West, Inc. v. City of Seattle, 696 F.3d 952 (9th Cir. 2012), in which the Ninth Circuit held that “telephone listings and community information contained in [a yellow pages phone book directory] constitute noncommercial speech.” The court thought that case was sufficiently different in procedural (and perhaps factual) posture. Nor was the database equivalent to consumer-posted reviews. Alfasigma’s allegations, including that First Databank customers “rely on the information drug databases provide to make decisions about which products to prescribe, purchase, dispense, and reimburse,” created a reasonable probability that Alfasigma would be able to show that First Databank engaged in commercial speech. [I’m not sure that the argument that the audience uses the speech for self-regarding commercial purposes makes the speech itself commercial—the question of whose motives need to be commercial here is an interesting one.]

Alfasigma also adequately alleged falsity. Misleadingness: First Databank argued that its database was entirely accurate: “the ‘O’ Class value explicitly includes medical foods” because “the products do not require a prescription under federal law.” But Alfasigma sufficiently pled that MedKnowledge database subscribers “universally understand[ ] that a product designated ‘O’ is an OTC drug, available over-the-counter and without physician supervision,” making the classification of the Alfasigma products as OTC drugs false or misleading.  [This suggests that the previous classification was also false, albeit not harmful to Alfasigma.] “Even if First Databank has redefined Class O to expressly include medical foods, the understanding and expectations of its subscribers based on an earlier, stable definition may override a subtle definitional change, particularly when Alfasigma has pled that consumers are confused.”

Alfasigma also argued that First Databank misled its subscribers when it claimed that “the source of its information” about the classes was Alfasigma and the FDA. “Taken at face value, the FDA’s statements, as relayed by Alfasigma, tend to support Alfasigma’s inference that First Databank could not be telling the truth when it said that it decided to reclassify the Products based on information received from the FDA.” [Though harm causation might be a problem here; the reclassification itself, and not its source, seems like the key issue .]

Motion to dismiss: as above, commercial speech was sufficiently pled.  But not “commercial advertising and promotion.” The Ninth Circuit uses the Gordon & Breach test (though the court indicated its approval of the consensus that Lexmark deleted the competition prong).  Alfasigma didn’t plausibly allege that First Databank’s representations were made “for the purpose of influencing customers to purchase” First Databank’s services. Influincing decisions that consumers made to buy Alfasigma’s goods wasn’t enough.  Alfasigma argued at oral argument that the second alleged falsity—claiming data came from the FDA—was made to encourage consumers to buy subscriptions, but the complaint didn’t allege that with respect to the false advertising causes of action. Alfasigma was given leave to amend. 

Note: state law claims survived, as did what the court described as “false description” claims under the Lanham Act, though I don’t see the basis for a §43(a)(1)(A) unfair competition claim here.  It might mean just theory two of the falsity claims? 

7th Cir: descriptive component of distinctive slogan can be descriptive fair use

SportFuel, Inc. v. PepsiCo., Inc., No. 18‐3010 (7th Cir. Aug. 2, 2019)

SportFuel, which among other things sells dietary supplements, sued Gatorade after Gatorade rebranded itself with the slogan, “Gatorade The Sports Fuel Company.” The court of appeals affirmed a finding of descriptive fair use. SportFuel has an incontestable registration for “SportFuel” for “food nutrition consultation, nutrition counseling, and providing information about dietary supplements and nutrition” and a registration for “goods and services related to dietary supplements and sports drinks enhanced with vitamins.”

“In addition to its traditional sports drinks, Gatorade now customizes its sports drink line by selling formulas that are tailored to the nutritional needs of individual professional athletes,” and sells other sports nutrition products. “It began to publicly describe its products as sports fuels in 2013” and registered “Gatorade The Sports Fuel Company” in 2016, with “The Sports Fuel Company” disclaimed after the PTO said that was merely descriptive.

(1) Was the use other than as a mark?  SportFuel argued that Gatorade used the slogan as an “attention getting symbol,” it placed a trademark symbol after the slogan, and it sought to register the slogan.  “[M]ultiple factors” are relevant to whether there was use as a mark.  “Gatorade is Thirst Aid” was found to be a slogan in an earlier case where Gatorade featured the term “Thirst Aid” even more prominently on its product packaging than the Gatorade mark, and where the term rhymed with Gatorade and was used as an “attention‐getting symbol.” The visuals here didn’t support the claim of use as a source indicator.  Gatorade’s word mark and G Bolt logo were more prominent, and “Gatorade rarely uses the term ‘Sports Fuel’ directly on product packaging, except for where the company labeled a ‘Sports Fuel Drink’ with the term. Instead, it primarily features the slogan on in‐store displays and other advertisements—appearing almost as a subtitle to the house mark.” Also, “Sports Fuel” “lacks the catchy, rhyming play‐on‐words at issue in Quaker Oats. Nothing about Gatorade’s use in this context suggests that consumers would view ‘Sports Fuel’ as a source indicator.”  [I have to admit, I don't get why the difference should matter to the descriptive fair use analysis.  Gatorade wasn't trying to replace its Gatorade mark with "Thirst Aid"; instead it was trying to create a catchy overall slogan that paired the two.  I think this may boil down to how source-y and distinct from the unadorned Gatorade mark the two slogans seemed to the court, but why? The distinctive weakness of Seventh Circuit opinions is that they list facts that seem like they might matter, but don't tell you how to identify a principle that will help decide cases with different facts.]

Nor did use of the TM symbol or the registration change the result. The slogan included Gatorade’s trademark-protected Gatorade mark, and Gatorade specifically disclaimed “The Sports Fuel Company”; the PTO specifically told Gatorade that “Sports Fuel” was descriptive. Gatorade’s chief marketing officer stated in his deposition that he viewed the whole phrase as the mark.  [So, use of a descriptive term within an overall nondescriptive mark can be nontrademark use.]

(2) Was the use descriptive, rather than suggestive?  Yes. “Descriptive phrases refer to a characteristic of the product. But they need not be common phrases.” Both market use and the imagination test supported this conclusion.  “First, producers of nutritional products for athletes regularly invoke the ‘Sports Fuel’ terminology to describe the products they sell.”  Second, no mental leap was required to deduce that the company is really selling athletic nutrition products. SportFuel argued that Gatorade’s consumers were mostly not high‐performance athletes, but that didn’t mean the products weren’t designed for athletes. “Just as the pervasive use of yoga pants and other activewear as casual clothing does not change the athletic characteristics of those products, the fact that Gatorade sells more sports drinks to average joes who limit their rigorous exercise to lawn mowing does not change the athletic characteristics of Gatorade’s products.”

(3) Was the use fair and in good faith?  The key here is subjective purpose, which is an interesting thing for the Seventh Circuit in particular to focus on. SportFuel’s evidence of subjective bad faith was: (1) Gatorade’s knowledge of the mark because of a previous working relationship a SportFuel principal; (2) continued use of the term after SportFuel sued; (3) Gatorade didn’t account in detail for how it came up with the slogan; (4) Gatorade’s purported bad blood with the SportFuel principal, “suggesting that Gatorade adopted the new slogan to settle an old score.”

Knowledge of the plaintiff’s mark, without other evidence of subjective bad faith, is insufficient, as is continued use of a term after suit is filed, since intentional use of a term one has every right to use is not bad faith.  Nor was SportFuel entitled to an adverse inference based on the argument that Gatorade produced no documentation related to high-level approval of the slogan, which must have occurred—speculation isn’t enough on summary judgment.  Maybe SportFuel could have pursued this argument further in discovery, but it didn’t, and it was too late.  Likewise, there wasn’t evidence that the falling out with SportFuel’s principal related to the adoption of the slogan. Her relationship with Gatorade ended more than a decade before the alleged infringement began. “And the idea that a new slogan for a nation‐wide rebranding campaign and stale antipathy towards [her] are connected is facially incredible when otherwise unsupported by the record.”

In addition, SportFuel argued that Gatorade acted in bad faith by not taking the risk of reverse confusion into account.  But “intent is largely irrelevant in reverse confusion cases because ‘the defendant by definition is not palming off or otherwise attempting to create confusion as to the source of his product.’” Anyway, Gatorade provided evidence of its intent: “it adopted the slogan to reflect its various types of sports fuel products.”  Not thinking of SportFuel’s interests isn’t bad faith.

Nor was it bad faith to incorporate a descriptive term into a slogan that, as a whole, functioned as a mark (at least when the whole included Gatorade’s core mark). Gatorade produced evidence of fairness and good faith: its stated purpose was to describe its business/products better, and its evidence showed that “the company and its employees view themselves as producers of sports fuels.” [Such a weird formulation, no pun intended: how can the company have a mental state distinct from that of its employees?]

London sights for TM aficionados

Pictures taken while traveling. The geographic attractiveness of the "American" carwash is enhanced by the slogan "The Cadillac of London car washes."

Adidas/marijuana leaf in center.

false advertising trolling, consumer protection, or both

I wrote about a couple of cases filed by a supplement maker, Outlaw, against retailers that sold allegedly unlawful “male enhancement” supplements that the FDA has issued warnings on—sometimes the “supplements” illegally contain pharmaceuticals like sildenafil (active ingredient in Viagra).  Vice made a short film about the cases, highly sympathetic to the small business defendants.  My reaction is decidedly more mixed.  On the one hand, Outlaw’s tactics suggest a kind of false advertising trolling—threatening a lot of small businesses and trying to get payouts from them.  On the other, Outlaw points out that the manufacturers of these supplements are shady and hard to find, meaning that it’s not particularly easy to go after them (and, not for nothing, that the retailers are themselves being rather careless about what they stock—carrying Tiger Male Enhancement pills is really not the same thing as carrying Diet Coke).  The film points out that these products are often made with identical packaging but filled with different substances by different people, so sometimes you get sildenafil and sometimes you get random non-drug substances.  This certainly does make it difficult to show that the stuff sold at any given bodega had pharmaceuticals in it, but at the same time it makes the falsity of the advertising, and the danger to consumers, even more clear.  Ultimately, it’s far easier to conclude that Outlaw’s enforcement model is a bad one than that these small businesses should be left alone to sell whatever they can get consumers to buy.