Thursday, August 25, 2016

NY false advertising law lacks rigid false/misleading distinction

Classic Liquor Importers, Ltd. v. Spirits International B.V., --- F. Supp. 3d ----, 2016 WL 4419457, No. 15 Civ. 6503  (S.D.N.Y. 2016)

Classic Liquor is a newcomer to the liquor business that recently launched a line of vodkas under the mark ROYAL ELITE.  It brought a declaratory judgment claim against SPI based on SPI’s “elit by Stolichnaya” vodka brand. The court declined to grant summary judgment on non-infringement, but dismissed most of SPI’s false advertising-based counterclaims.  The state-law claims that survived indicate the importance of state-law claims where competitors are allowed to sue; state laws may not follow the calcified false/misleading distinction made under the Lanham Act.

Several ROYAL ELITE marks have been approved for publication, and SPI has opposed two of them.  SPI has four relevant registered marks, STOLICHNAYA ELIT and three figurative/stylized:
One stylized mark

Another stylized mark

The most recently registered stylized mark

Plaintiff made changes to the bottle during the course of the litigation: “ROYAL” is now close to the same font size as the word “ELITE”; a label bearing the ROYAL ELITE mark around the neck of the bottle was replaced with a sticker bearing the mark vertically; and there were other changes, all of which the court deemed immaterial to the matter at hand.
Royal Elite bottle

Stoli elit bottle

The false advertising counterclaims were based on: (1) the inclusion of the ® symbol next to the word “ROYAL” (falsely signifying that plaintiff owns a trademark registration in ROYAL or ROYAL ELITE) and (2) the inclusion of the words “Since 1867” on the front of plaintiff’ s bottle.

SPI failed to bring an infringement claim, even though that’s generally a compulsory counterclaim in a declaratory action for non-infringement. But that didn’t entitle Classic Liquor to a default judgment of non-infringement; instead, the burden still rested on SPI to prove infringement, and if SPI did so, it could still get an injunction.  Starter Corp. v. Converse, Inc., 170 F.3d 286 (2d Cir. 1999).

Strength: while two of SPI’s marks were incontestably distinctive, that didn’t “make every component of those marks irrefutably strong for purposes of the Polaroid analysis.” SPI didn’t have a word mark in ELIT, but rather it had registrations for stylized versions of ELIT, a word mark in STOLICHNAYA ELIT, and variations on the stylized versions plus other stuff.  SPI’s confusion theory depended only on ELIT.  The court brushed aside SPI’s implausible argument that ELIT was a coined term; “[a] slight misspelling of a word will not generally turn a descriptive word into a nondescriptive mark,” especially given SPI’s positioning of ELIT as “ultra-luxury” and its argument that ELITE and ELIT had the same commercial impression.  Self-laudatory terms are usually deemed descriptive, but a weird outlier case in the Second Circuit says they’re suggestive. Estee Lauder Inc. v. The Gap, Inc., 108 F.3d 1503, 1509 (2d Cir. 1997), so district courts make case by case determinations.  Here, that didn’t save ELIT from descriptiveness. SPI argued that “elite” wasn’t an adjective describing a quality or characteristic, but rather a noun that “normally designates a group or class of persons in society.” Fortunately, the Eighth Circuit has already spoken on this precise issue:

Our dictionary defines “elite,” when used as an adjective, to be synonymous with “choice, superior, select.” Webster’s Third International Dictionary 736 (1976) (citing “an [elite] brand of coffee” as example of usage). Although plaintiff contends, based on another dictionary, that “elite” may refer only to persons, we conclude that the word may be used to describe objects as well. Because the word “elite” indicates superior quality, as used here it is a “self-laudatory” mark. ... Because “elite” is descriptive, plaintiff must show that the mark has acquired secondary meaning to obtain protection.

Jeld-Wen, Inc. v. Dalco Indus., Inc., 198 F.3d 250, 1999 WL 1024002, at *3 (8th Cir. 1999) (unpublished per curiam) (footnote omitted).

The court then found disputed issues of fact over whether ELIT had developed secondary meaning, despite an April 2015 market research report that SPI commissioned finding that “overall awareness of elit remains very low” and that “[t]he main reason to try elit by Stolichnaya is due to a desire to experiment with new brands.” An SPI internal marketing document states that “[t]he correct full name is: elit by Stolichnaya” and instructs, “[n]ever use: elit by Stoli, or Stoli elit. Wherever possible ‘elit by Stolichnaya’ should be written on one line.” The product had only $6.6 million and $5 million in sales in 2014 and 2015, respectively, and numerous other spirits brands that use variations of ELITE in trademark registrations and to market liquor products.

However, elit was supported by an annual marketing budget in the range of $3 million per year. Awareness of elit significantly increased since July 2014; the brand enjoys strong retention rates; and the brand’s recognition on social media has substantially improved. There was also some evidence that the product is colloquially referred to as “elit.” SPI further argued that the exclusive, high-end vodka market is by definition small, and that marks for luxury brands can achieve secondary meaning without having meaningful market share. Moreover, SPI argued that many of the registrations identified by Classic Liquor had been cancelled or abandoned, and that those that have not were easily distinguishable from the ELIT Marks.  Drawing all reasonable inferences in favor of SPI, this was enough to find a genuine factual dispute over protectability/strength.

Similarity weighed slightly in favor of SPI.  The court declined to defer to the USPTO’s “implied view—by virtue of having approved plaintiff’s applications for publication—that plaintiff’s marks do not give rise to a likelihood of confusion.”  The publication decision wasn’t accompanied by any analysis of the issues raised here, and the TTAB opposition proceedings are stayed.

The parties competed directly, favoring SPI.

There was “some evidence of confusion in the marketplace” in that “a lounge in New York City known as Vandal lists both ‘Royal Elit’ (sic) and ‘Stoli Elit’ on its nightclub’s bottle menu.” [Although it could just be that nobody can spell, which is part of the reason for the usual rule about minor misspellings.] “It is at least plausible that customers viewing this menu would be likely to mistakenly believe that the two products are affiliated.” Similarly, a brand promoter hired by Classic Liquor referred to “Royal Elite” as “Royal Elit” in correspondence with Classic Liquor. These “isolated instances of actual confusion” didn’t show actual consumer confusion, but were “probative of how easily consumers might do so,” and slightly favored SPI.

The court did reject SPI’s argument that confusion was shown because a search for “elite” and “vodka” on Pinterest returned photos of both Royal Elite and elit by Stolichnaya. “Given the contrived nature of the search, the Court does not find the results to constitute evidence of actual confusion. The results do, however, reinforce the Court’s determination, discussed above, that ELIT is a descriptive, self-laudatory term.”

Good faith/bad faith: Another genuine issue. Based on the timeline, Classic Liquor’s argument that the ROYAL ELITE mark was inspired by the legend of Tamerlane’s “Royal Elite” brigade and by the fact that the vodka is consumed primarily by upper-crust Uzbeks was flatly contradicted by the record. “Whether plaintiff’s apparent misrepresentation is an inadvertent (or immaterial) one or whether plaintiff is attempting to mask a bad-faith motive for adopting the ROYAL ELITE mark is a factual issue that cannot be resolved on summary judgment.”  The court pointed to other evidence that could indicate bad faith: Classic Liquor’s national sales director instructed an employee that the preferred placement for Royal Elite products was to the left of SPI’s Stolichnaya products.

Consumers: SPI argued that “desire for luxury products and status symbols does not imply a sophisticated consumer,” but its internal marketing documents revealed that it catered to “a more sophisticated segment of the vodka market,” so this factor favored Classic Liquor.

Overall, summary judgment was inappropriate.

False advertising: ® wasn’t a misrepresentation of an “inherent quality or characteristic” of the goods.  SPI responded that this language is just the Second Circuit’s way of saying “materiality,” and that, because ® was literally false, materiality was presumed.  But the court of appeals has said: “Falsity alone does not make a false advertising claim viable; ‘[u]nder either theory [of falsity], the plaintiff must also demonstrate that the false or misleading representation involved an inherent or material quality of the product.’” Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 63 (2d Cir. 2016).  The court here reasoned: “The purpose of federal registration is to put the public on notice of the registrant’s ownership of the mark; the goods or services to which the mark pertains are entirely irrelevant.”  Thus, the false marking was not actionable as a matter of law.

As for Classic Liquor’s use of “Since 1867” on its vodka bottles, this wasn’t an unambiguous falsity.  SPI argued that, if the claim meant selling vodka since 1867, it was false; if it meant that the same product had been sold by others since 1867, it was false; and if it meant that its Tashkent distillery could trace its roots to a distillery founded in 1867, that too was false. But this very list showed ambiguity, and there was no extrinsic evidence of consumer deception.  (One of Classic Liquor’s witnesses testified that some distributorship customers have asked about the significance of “Since 1867,” “a fact which further demonstrates that the message of the designation is ambiguous.”)

The district court then addressed the argument that “it would be illogical to require extrinsic evidence of consumer deception if it were the case that each possible message conveyed by an ambiguous statement was indisputably false.”  [Note from RT: This argument was implicitly accepted by an older Second Circuit case finding each of three possible meanings false and thus finding literal falsity. Johnson & Johnson v. GAC Intern., Inc., 862 F.2d 975, 979 (2d Cir. 1988).]  However, Classic Liquor provided an additional, non-false potential meaning: “Since 1867” refers to the fact that the distillery was founded in 1867, not that the vodka has been produced in the exact, same building using the exact same equipment that was in use in 1867.

Consumers might very well be misled by “Since 1867,” deeming it to refer to the product or to Classic Liquor itself rather than to the distillery that manufactures Royal Elite vodka. But that possibility, without extrinsic evidence, wasn’t enough.  Thus, Classic Liquor won summary judgment on the Lanham Act claim, which also kicked out the coordinate common-law unfair competition claims.

SPI’s counterclaims brought under §§ 349 and 350 of the New York General Business Law “are not mere Lanham Act analogues.”  They require (1) consumer oriented conduct, (2) that was misleading in a material way, and (3) that injured the plaintiff.  “The inclusion of this symbol on plaintiff’s vodka bottles—which, again, serves to put potential infringers of a mark on constructive notice that the mark is owned—was not consumer-oriented as a matter of law.”

However, the “Since 1867”-based claims survived, because state law doesn’t make the rigid false/misleading distinction requiring extrinsic evidence of deception for all ambiguous claims. “[T]he inquiry under §§ 349 and 350 of the New York General Business Law is objective in nature, requiring courts to assess whether a given practice or advertisement is “likely to mislead a reasonable consumer acting reasonably under the circumstances.”  Whether the misrepresentation caused SPI damage was a disputed issue of fact.  [And materiality?]

Pictures from Canada

Canada, like many other countries, considers "taking unfair advantage" of a trademark to be a distinct problem, making it less favorable to parody and other uses than the U.S. as a matter of formal law.  What difference does that make in practice?  From what I've seen, it means that grocery stores/pharmacies don't carry house brands that tell you they're comparable to national brands.  However, it doesn't seem to affect the T-shirt offerings of tourist traps.  (Side note: there was also more overt misogyny on offer than I would have expected.  Really, Canada?)
Not quite Rolls Royce

One of many John Deere alternatives--Canada also uses "fuck" more liberally at standard tourist stores

MasterCard and Red Bull, sexualized

Red Moose/Red Bull and Star Wars

John Moose instead of John Deere; Star Wars again; and what do we think of the Montreal logo v. Adidas?  This one was everywhere

Mountain Dude

This one is more consumer/contract law: "no contract" is also a thing in Canada; I wonder what the law is about that

Right of publicity claim for the Michael Jackson estate?

Snoop Dogg or just a dog?

Lady PurrPurr?

Queen size?

A little tramp?

Too close to Superman?

An entire province devoted to Pokemon

Pizza Pot, Zig-Zag, Addicted, Kick Ass, Fuma

National Pornographic, another John Fucking Deere, sex-based "I'm Lovin' It" and some of the aforementioned misogyny

Lord of the Rinks

Straight Outta Quebec

Starbear logo?

iTunes trade dress

Canada, Coke style

Angry Moose

Angry Beaver

Inconceivable: allegedly made-up price comparison allows consumer suit

Chester v. TJX Cos., 2016 WL 4414768, No 5:15-cv-01437 (C.D. Cal. Aug. 18, 2016)

When an opinion begins with the quote, “You keep using that word. I don’t think it means what you think it means,” it’s not going to go well for the false advertising defendant.

Plaintiffs brought the usual California claims against three off-price retailers under the TJX umbrella: TJ Maxx, Marshalls, and HomeGoods.  TJX’s price tags list (1) the price the retailer is selling the item for; and (2) a higher, comparative reference price accompanied by the phrase, “Compare At.” Neither tags nor ads define the term “Compare At” or otherwise offer context for the pricing provided. Some of defendants’ products also have a second price tag noting a purported manufacturer’s suggested retail price, or “MSRP,” for an item.  Where is “compare at” defined?  A page on the TJ Maxx website, found by searching the fine print, and a sign near the customer service/returns counter at one retailer store.  It says:

The “compare at” price is our buying staff’s estimate of the regular, retail price at which a comparable item in finer catalogs, specialty or department stores may have been sold. We buy products from thousands of vendors worldwide, so the item may not be offered by other retailers at the “compare at” price at any particular time or location. We encourage you to do your own comparison shopping as another way to see what great value we offer.

Plaintiffs alleged that they, like other reasonable consumers, expect that the “Compare At” tags listed “prices at which the ‘principal retail outlets’ in California have sold, or are selling, those products in any ‘substantial volume.’” This picks up on the FTC’s preferred means of substantiating such a claim.  Using the term for unverified estimates of possible prices, they argued, was deceptive.

The court quickly disposed of TJX’s standing challenges, including its challenge to plaintiffs’ standing to seek injunctive relief.  “It is inconceivable to think prospective relief in the false advertising context is bound by the rules of ‘fool me once, shame on you; fool me twice shame on me.’”  Accepting the no-standing argument would “eviscerate” California’s consumer protection laws.

TJX argued that plaintiffs hadn’t alleged sufficient facts about why the tags were deceptive to a reasonable consumer.  It argued that the FTC guidelines allowed it to offer price comparisons between one item and another of comparable value, and that those comparisons could be based on good faith estimates. However, the FTC specifies that comparison prices cannot “appreciably exceed the price at which substantial sales of the article are being made in the area.”  Comparisons must thus be based on actual prices, not “estimates” of prices at which “a comparable item” in another store or catalog “may” have been sold.  By contrast, TJX’s definition says outright that an item “may not be offered by other retailers at the ‘compare at’ price at any particular time or location.” “If Defendants believe that ‘estimates’ are the same as ‘comparisons with actual merchandise,’ then the Court is here to say that this word does not mean what you think it means.”  The court referred to TXJ’s practice as looking at “what a fictitious retailer may charge.”  Ulp.

Moreover, the FTC had more limits; the FTC Guidelines require retailers who use reference pricing to make “clear to the consumer that a comparison is being made with other merchandise.”  This TXJ failed to do: “a link at the bottom of a webpage and a sign near the return counter, not the sales counter, will not suffice” given the predominance and prominence of the “compare at” claims. “[I]t is unrealistic for Defendants to expect consumers to pull out their smart phones and search the retailer’s website for a definition of the seemingly clear phrase, or chance that they see a sign offering insight before they reach the check-out counter.” The tags and ads therefore didn’t clearly communicate a comparison between “like” items rather than with the same item.

As the court pointed out, there’s a reason that retailers use reference pricing: “it makes consumers think they are getting a deal.” Relying on the plain meaning of “compare at” to draw in consumers while also using an unrecognizable internal defintion of that phrase “is not very sportsmanlike. Anyone who says differently is selling something.”

Friday, August 19, 2016

Cthulhu the functional?

Jake Linford has recently expounded in detail about the descriptive or even functional characteristics of certain sounds, making certain "coined" words more useful in marketing.  Here's a great example from Michael Saler, As If: Modern Enchantment and the Literary Prehistory of Virtual Reality (2012): "Some critics found these names ridiculous, but Lovecraft countered that 'a coined word which has been shaped with great care from just the right associational sources' could be effective, evoking sensations from Symbolist poetry. 'Cthulhu' was self-evidently le mot juste."

Thursday, August 18, 2016

Fashion weak: fashion show fails to enjoin New York Fashion Week name

Fashion Week, Inc. v. Council of Fashion Designers of America, Inc., 2016 WL 4367990, No. 16-cv-5079 (S.D.N.Y. Aug. 12, 2016)

FWI sued CFDA for trademark dilution, unfair competition and false designation of origin, and trademark infringement based on use of of “NEW YORK FASHION WEEK” and its acronym “NYFW” (“NYFW THE RUNWAY SHOWS” was also theoretically at issue, but not really pressed; the court didn’t think FWI had a protectable mark in that phrase).  On June 28, FWI sought a TRO and a preliminary injunction against the use of these terms in connection with live semi-annual events in New York during which fashion designers launch new clothing lines. The court denied these requests.

CFDA’s showcase events date back to 1943 when “Press Week” was launched, an event dedicated to promoting American designers of women’s fashion. The semi-annual week-long events in New York “are recognized as one of the four major fashion weeks in the world.” From 1993-2015, they were formally named after their location or sponsor, such as “Olympus Fashion Week” and “Mercedes-Benz Fashion Week,” but in the press and the industry, they were widely referred to as “New York Fashion Week” from at least 1993 onwards. In 2015, CFDA went with “New York Fashion Week,” “NYFW,” and “NYFW The Shows,” in promotion and production of the fashion events, as well as a new domain name,

FWI produces fashion shows and sells tickets to “consumers and fashion aficionados,” positioned as “publicly accessible alternatives to [CFDA] fashion events which are restricted to members of the fashion industry and media only.” FWI shows are one day long and coincide with the defendants’ semi-annual schedule.  FWI registered NEW YORK FASHION SHOWS in 2012, and produced three fashion shows under that name, then in 2013 renamed itself Fashion Week Inc. and applied for NEW YORK FASHION WEEK on the Supplemental Register.  The application was granted for online entertainment ticket agency services in 2014. FWI produced and sold tickets to two fashion shows under the NEW YORK FASHION WEEK mark—a show in September 2014 and a show in September 2015. Both sold five hundred tickets and earned $25,000-30,000 in profit. 

FWI applied to register NYFW for online ticket sales for entertainment and fashion shows in May 2015, after defendants announced their intention to use NYFW online to promote their fashion events.  The mark issued on the Principal Register in December 2015.  In August 2015, defendants sent FWI a C&D “requesting that FWI cease promoting its fashion shows online in a manner that might mislead consumers into thinking they were purchasing tickets to the [CFDA] events.”  In ensuing discussions, FWI offered to transfer its marks and sponsors to defendants “and threatened litigation, delay, and bad press.” FWI subsequently filed trademark applications for the marks NEW YORK FASHION WEEK THE RUNWAY SHOWS, NYFW THE RUNWAY SHOWS, NYFW and NEW YORK FASHION WEEK for organization of fashion shows for entertainment purposes.

In July 2015, CFDA organized and produced the September 2015 and February 2016 fashion events. In April and June 2016, FWI sent cease and desist letters to defendants about the marks.  This litigation resulted. CFDA’s next fashion events were scheduled to begin on September 8, while FWI didn’t have any fashion shows presently scheduled; plans to hold an event in February 2017 had been put on indefinite hold after FWI’s anticipated sponsors severed ties with FWI.

The district court began by assuming that eBay and Salinger required it to reject any presumption of irreparable injury based on likely success on the merits, even in a trademark case.  This change also changed the significance of delay, once used to rebut such a presumption.  Now it’s just a “significant” factor to consider in determining irreparable harm.  Here, FWI’s delay in suing and moving for an injunction “argues strongly against granting the preliminary injunction.”  In January 2015, after all, CFDA had filed a petition to cancel the NEW YORK FASHION WEEK mark, and the petition included CFDA’s representation that it had made continuous use of the trademark since at least 1994.  Plus, there was the April 2015 announcement that CFDA would be using NYFW as part of its domain name and on social media platforms. In its moving papers, FWI even included a news article from January 2015, reporting that the defendants’ event in September 2015 would be called “New York Fashion Week.”

FWI argued that its delay was due to investigation and settlement discussions, but there was no evidence that defendants ever considered reverting back to a sponsor-based title.  In light of the public announcements, at least by August 2015, FWI’s belief that CFDA would reverse course was unreasonable. After the shows in September 2015 and February 2016, FWI knew that CFDA wasusing the marks it claimed a right to use, but FWI continued to do nothing.There was no evidence that settlement discussions continued into 2016, but even if they had, the time between their alleged collapse in January and June 2016 was too long.

In addition, FWI failed to show actual irreparable harm.  Loss of control over one’s reputation is irreparable because this loss “is neither calculable nor precisely compensable.”  [Note that if this is really true, we’re back to the presumption of irreparable injury, because courts have told us that lost control is what confusion means.  If courts acknowledge that, in fact, what they call confusion is often unlikely to pose significant risks to the plaintiff’s reputation—perhaps because of the demonstrated resilience of strong brands—then this claim makes some sense even in a world without presumptions of irreparable injury, but it does call into question why “confusion” is defined so broadly.]

Here, FWI didn’t provide sufficient evidence of goodwill that it could lose.  It only presented evidence that it used the NEW YORK FASHION WEEK mark in connection with the September 2015 fashion show, and it didn’t submit evidence of brand loyalty or recognition in the industry.

Separately, FWI failed to show likely success on the merits—you can tell from this discussion that there are serious doubts about the validity of its asserted marks or their extension beyond “online entertainment ticket agency services.” FWI argued that consumer confusion, evidenced by emails to FWI seeking to buy tickets to the CFDA events, showed secondary meaning and harm.  The court thought otherwise—CFDA, not FWI, was likely to show secondary meaning in these descriptive marks.  Though CFDA didn’t use “NEW YORK FASHION WEEK” to describe itself until recently, the press and industry did, and it could claim trademark rights in nicknames.  (Industry evidence included a declaration from Anna Wintour, FWIW.)

Unsurprisingly, the balance of equities and the public interest also argued against any injunction.  An injunction would disrupt the upcoming New York Fashion Week, which was “an important asset to the New York economy,” and would deprive the public of a useful term by which to describe the events.

Cookie crumbles: court refuses to dismiss (c) claim based on facts of plaintiff's life

Eggleston v. Daniels, No. 15-11893, 2016 WL 4363013 (E.D. Mich. Aug. 16, 2016)

Sophia Eggleston alleged that her self-characterization in her 2009 memoir The Hidden Hand was the uncredited inspiration for the character Loretha “Cookie” Lyon on the FOX television series Empire, and sued for copyright infringement (and violation of her right of publicity). The Hidden Hand recounts “many significant events” in Eggleston’s life, including “the attempted kidnapping of her youngest daughter, and coming to terms with her brother’s homosexuality, which he revealed to her while she was in prison,” as well as numerous gun threats and the murder of her two sisters.  The memoir also covers her romantic relationship with a man in the music business.

In Empire, Cookie Lyon, the imprisoned, drug-dealing ex-wife of the man in control of Empire Entertainment, gains release and demands her share of the company.  “Thus begins the struggle for control of Empire Entertainment between Lucious, Cookie, and their three sons: Andre, a married businessman with bipolar disorder, Jamal, a gay singer rejected by his homophobic father, and Hakeem, a talented but unfocused rapper.”  Eggleston alleged that there were many striking similarities between her self-depiction and Cookie Lyon’s character: they’re “both light-skinned African-American women who wear expensive clothing, lead gangs, have placed hits on men and sold drugs, have gay family members, have two family members who were murdered, have served prison sentences, and are known for their ‘vicious insults’ and propensity to slap people.” They’ve both “shielded others by stepping in front of a loaded gun, have endured the kidnapping or attempted kidnapping of one of their children, lost their lovers while in prison, and attacked their former lovers’ new lovers upon release from prison,” as well as making liberal use of “hoe” and “bitch.”  Fox, understandably, contended that these were stock features, which seems correct.

However, the court refused to dismiss the copyright infringement claim.  Copyright in facts is thin, but selection and arrangement of facts are protectable.  [But if your selection principle is “this happened to me,” that can’t be a protectable selection method, any more than alphabetical ordering is protectable even though some methods of ordering (top 10 books) may be.]  The court took back all its statements about filtering by agreeing with Eggleston that the appropriate comparison was between “copyrightable elements of her self-portrayal in The Hidden Hand” and copyrightable elements of the Cookie Lyon character.

The court agreed that the twenty-three elements Eggleston listed in her complaint “represent a protectable compilation of experiences and traits,” and constituted more than the sum of its parts.  Though at first glance, many of these elements seemed typical to “stories about those involved in drugs and violence.”  But featuring a woman “in the dominant role as drug dealer, gang leader, and perpetrator of violence. This is not the stock and trade of the average drug gangster potboiler.”  The court commented that “Defense counsel could not offer examples of other works in this narrative genre that featured female characters in the ‘drug or organized crime boss-like’ role,” and that the court found only the 2011 telenovela series La reina del Sur produced by Telemundo or the 1999 Jorge Franco novel Rosario Tijeras. 

[Not Savages, the Don Winslow book/Blake Lively vehicle with Salma Hayek in the boss role?  Animal Kingdom, the 2010 Aussie crime movie resurrected as a TNT series?  WeedsQueen Pin (this seems exactly on point)?  Megan Abbott’s QueenpinNot to mention the history, or, as Joanna Russ might say, How To Suppress Women’s Criming.  She did it, but she’s the only one!]

[Separately, this reasoning would still be wrong without these examples.  It may be unusual, but implementing the idea “the surgeon was the child’s mother!” is not unknown.  And it’s also just an idea, no matter what profession it’s applied to.  The scenes a faire that follow may gain new resonance because of the audience’s reaction to the gender-swap, but they’re still scenes a faire.  Moreover, the court’s explanation reveals the far deeper flaw: copyright is for expression, but the characteristics plaintiff alleged were copied are—according to plaintiff herself—facts, and there is no protection for facts no matter how difficult they were to produce or live through.  By saying that the similarities are between plaintiff and Cookie Lyon, rather than between a character plaintiff created and Cookie Lyon, the court reveals the fundamental error here.]

[And the court makes it worse by allowing plaintiff to carve up the work any way she wants and claiming protection only in the “character,” instead of treating the memoir as the expressive work protected by copyright.  Once you slice out the “character” (who actually only exists in conjunction with the plot, sequence of events, mood, etc.—try to imagine James Bond hosting a cooking show and see if there’s still “James Bond” there), then all other dissimilarities in the works can be ignored, even though they are crucial to any actual audience’s perception of the character.  Justin Hughes did great work warning about this, but it still happens.]

The court found that some elements [facts about Eggleston] were “also not obviously of the stock-standard variety, regardless of a character’s gender.”  For example, both Eggleston and Lyon had a gay family member.  [Okay, if you have ten people in your close family, it would appear that the odds are actually pretty good that you are closely related to a gay person.  True, previous generations would have been somewhat less likely to write about it, but so what?]  Other “unusual” commonalities between Eggleston and Lyon were that they both “experienced the kidnapping of one of their children, have had two close family members murdered, have lost their lovers while serving time in jail, and have shielded others by stepping between them and a loaded gun. Taken together, these elements are arguably original and substantially similar.”  [To put the objection another way, these elements aren’t original to Eggleston.  She didn’t, I take it, make her brother gay, kill her lover while she was in jail, or point a loaded gun at someone she cared about.  Stepping in front of the gun, while brave, is not a creative act even though the precise words she used to describe that event might be copyrightable.]

Eggleston’s copyright claim survived the motion to dismiss.  Her right of publicity claim didn’t, because she didn’t plausibly allege a pecuniary interest or any commercial value in her identity.

Wednesday, August 17, 2016

6th Circuit rejects college players' Lanham Act, ROP claims

Marshall v. ESPN, No. 15-5753 (6th Cir. August 17, 2016)

Plaintiffs claimed that, as college football and basketball players, they had publicity rights in their names and images as used in TV broadcasts.  “Whether referees, assistant coaches, and perhaps even spectators have the same rights as putative licensors is unclear from the plaintiffs’ briefs.”  Tennessee’s right of publicity statute, however, explicitly excluded any “sports broadcast,” and Tennessee refused to recognize any common-law right of publicity.  This also killed a Sherman Act claim, since there could be no conspiracy to control a non-existent right.

Plaintiffs’ Lanham Act claims failed because—well:

The theory here is that if, say, ESPN shows a banner for ‘Tostitos’ at the bottom of the screen during a football game, then consumers might become confused as to whether all the players on the screen endorse Tostitos. Suffice it to say that ordinary consumers have more sense than the theory itself does.

But honestly, is this theory (which was justly rejected) any more ridiculous than the theory that consumers might think that a fast food restaurant endorsed a movie about beauty queens?  That consumers might think that Jose Cuervo had partnered with a whiskey company because both used red wax seals among many other packaging devices?  That Budweiser might have endorsed a parody ad for Budweiser Oily?  And, if we have nothing but common sense to guide us here, on what basis exactly is the players’ theory so easily distinguishable from those successful claims that it doesn’t even reach plausibility?

ISP fails to dismiss (c) and CMI claims based on watermarked photo

Goldstein v. Metropolitan Regional Information Systems, Inc., 2016 WL 4257457, No. TDC-15-2400 (D. Md. Aug. 11, 2016)

Goldstein is a professional photographer who registered a copyright in a 2007 photograph he took of the Silver Spring Metro Station, which appears on his website with the watermark “©” centered at the bottom of the image.  Defendant MRIS runs an online real estate listing service that allows subscribers, mainly real estate brokers, to post listings for available properties for a fee. Subscribers agree to assign to MRIS the copyright in any photograph they upload to the database.  In 2014, Goldstein learned that his Metro Photograph had been uploaded to the MRIS database, still with Goldstein’s original watermark, but also the additional watermark “© 2013 MRIS” or “© 2014 MRIS,” depending on the year the image was uploaded.  Despite notice from Goldstein’s attorney, the photo allegedly continued to be displayed on/uploaded to the MRIS site during 2014 and continuing into 2015, at which point the MRIS watermark was updated to “© 2015 MRIS.” Goldstein alleged that, as a result, the Metro Photograph was uploaded to additional real estate websites and used in additional real estate promotional materials without his permission.

Goldstein sued for infringement, contributory infringement, violation of the DMCA’s CMI provisions, and violation of the Lanham Act. Easiest bit first: Goldstein alleged that MRIS’s addition of its own copyright watermark to the Metro Photograph was a false representation under the Lanham Act. Although this sounds like a false advertising claim, the court found it Dastar-barred: Dastar held that “claims of false advertising and trademark infringement under the Lanham Act do not overlap with copyright claims” because “origin” means physical origin, and because otherwise plaintiffs could create a kind of perpetual copyright or patent.  “Thus, ‘creative’ works, those artistic creations that fall within the ambit of copyright law, necessarily fall outside the scope of the Lanham Act.”  This is overstated in some significant ways, but query whether anyone’s found a way to say it better.

Direct infringement: MRIS argued that Goldstein didn’t allege “volitional conduct” by MRIS, relying on Costar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004). Direct infringement requires “actual infringing conduct with a nexus sufficiently close and causal to the illegal copying that one could conclude that the machine owner himself trespassed on the exclusive domain of the copyright owner.”  In Costar, LoopNet was a passive ISP that could not be held liable for direct infringement of Costar’s copyright when Costar’s unmarked photographs appeared on its website, even though it engaged in cursory screening of photos.  The court here, however, distinguished Costar as having been decided on summary judgment.  Goldstein alleged that MRIS or an agent of MRIS uploaded the Metro Photograph.   In one exhibit, the photo appears in a slide in a slideshow that was available on the MRIS website, which didn’t contain any reference to a particular real estate agent or broker, or to a particular property. “Drawing all inferences in Goldstein’s favor, this Exhibit, particularly with the markings added by MRIS, supports the reasonable inference that MRIS or its agent, rather than an outside user of MRIS, engaged in direct infringement by copying Goldstein’s copyrighted photograph to its website.”

So far, so good, but the court goes on to say more things that ought to be disturbing.  The court also distinguished Costar because “(1) when MRIS received it, the Metro Photograph, on its face, was marked as copyrighted by Goldstein; (2) MRIS, unlike LoopNet, took the affirmative step of marking the Metro Photograph as subject to its own copyright; and (3) MRIS then copyrighted its entire website, including the Metro Photograph.”  [The court here means “registered” for (3), and this conflation pervades the opinion, including the treatment of (1)—after 1978, all original works are “born” copyrighted, so if you see a modern photo you know it’s “copyrighted,” though you may not know who owns the copyright or whether it has been licensed or whether a fair use is being made.]   (2) is probably bad business practice, but it’s likely as automatic as many other activities that have been held not to strip ISPs of the DMCA safe harbor, when the court gets around to that.  Anyway, I’m not sure why any of these three facts makes MRIS’s conduct “volitional” if Loopnet’s wasn’t.  The court said that “MRIS doubly asserted a copyright in the Metro Photograph by stamping that facially copyrighted photograph with its own copyright markings and then copyrighting the entire website containing that photograph,” but that’s still not “volitional” conduct implicating the rights protected by copyright, under Costar.

Further comment: It seems really, really unlikely that MRIS uploaded the photos, as opposed to a MRIS user.  Should my prediction prove true, should MRIS get its attorneys’ fees for defending the direct infringement claim?

Contributory/vicarious infringement: contributory sufficiently pled; vicarious not.  MRIS knew or had reason to know of Goldstein’s copyright, because “[w]here works contain copyright notices within them, as here, it is difficult to argue that a defendant did not know that the works were copyrighted,” and when MRIS got Goldstein’s C&D, it knew or had reason to know of the infringing use.  And

MRIS’s practice of adding its own copyright to the Metro Photograph, a practice it continued even after being placed on notice that the Metro Photograph was being used on its website without Goldstein’s permission, can reasonably be considered ‘conduct that encourages or assists the infringement.’ For example, the addition of the MRIS copyright markings could lead MRIS users to believe that they had a license to use the Metro Photograph in their listings as part of their subscription to the MRIS service.

Though MRIS asserted that it promptly removed each reappearance of the photo, that wasn’t enough on a motion to dismiss, and its continued reappearance was enough for contributory infringement [in the absence of the DMCA].

Vicarious infringement/inducement: MRIS likely had the right and ability to control the infringing activity and charged a fee to post listings on its website, “the website has as its main purpose the posting of real estate listings, a purpose distinct from trafficking in infringing material. It is therefore not reasonable to conclude that the availability of infringing photographs such as the Metro Photograph drew customers to subscribe to the MRIS service.” The inducement claim failed for similar reasons.

Compliance with the DMCA, the court further held, was an affirmative defense not suitable for resolution on a motion to dismiss.  And here it gets even worse, though presumably the court could at least fix this on summary judgment: the court suggests that the copyright notice on the photo might trigger actual knowledge that using the photo would infringe “a copyright.”  How is that actual notice, especially given an automated upload?  Moreover, the statutory provision that noncompliant DMCA notices don’t give actual knowledge would seem to preclude this reasoning, since a watermark is a far cry from a DMCA notice with all the relevant information.  And again, the court suggested that MRIS’s addition of its own watermark went beyond “storage at the direction of a user of material that resides on a system or network” to “affirmative appropriation of another’s copyright.”

CMI violations: Goldstein alleged violations of § 1202(a) and (b). §1202(a)  makes it unlawful for a person to “knowingly and with the intent to induce, enable, facilitate or conceal infringement provide copyright management information that is false.” §1202(b) prohibits a person, “without the authority of the copyright owner or the law,” either to “intentionally remove or alter any copyright management information” or to “distribute” work “knowing that copyright management information has been removed or altered …knowing or ... having reasonable grounds to know that it will induce, enable, facilitate, or conceal an infringement.”  Again, the complaint adequately stated a claim, though the court commented that Goldstein could only recover once for a §1202 violation.

MRIS unconvincingly argued that the watermark wasn’t CMI because it didn’t meet the requirements for a full copyright “notice.” §1202 doesn’t require that.  §1202(a)’s requirements were satisfied because MRIS allegedly added its own copyright watermark to the photo without owning the copyright.  MRIS argued that it had a copyright in the database as a whole, thus had a good faith belief that its watermark wasn’t false.  That didn’t work because of (1) Goldstein’s watermark and (2) the procedural posture of a motion to dismiss.  MRIS argued that its watermark wasn’t added knowingly and with the intent to facilitate infringement, because it was added “automatically” to all images uploaded to their site, but again that’s not an argument that works on a motion to dismiss, and anyway Goldstein’s C&D provided actual knowledge.

§1202(b): MRIS argued that it didn’t “intentionally remove or alter any copyright management information,” since Goldstein’s watermark was left intact.  The court, however, declined to dismiss Goldstein’s claim that adding CMI was “constructive” alteration of his own CMI, since it had “more visual impact” and “undercut[]” the message that Goldstein owned the copyright. There was no case law either way on constructive alteration of CMI, but, “[p]articularly where MRIS’s copyright mark was placed immediately before Goldstein’s copyright mark and used more recent dates, that mark could be construed as trumping, diluting, or superseding, and thus altering, Goldstein’s CMI.”

Amicus in LV v. My Other Bag

Chris Sprigman and I organized a law professors' brief supporting My Other Bag in LV's appeal from the well-reasoned district court opinion.  Open call for anyone defending against a dilution claim: it's time for the straight-up First Amendment challenge, and I am interested in providing amicus support for anyone who wants to do that.

Tuesday, August 16, 2016

Reading list: Rothman on (c)/right of publicity conflicts

Jennifer Rothman, The Other Side of Garcia: The Right of Publicity and Copyright Preemption, Columbia Journal of Law & the Arts, Vol. 39, No. 3, 2016. Abstract:
This essay is adapted from a talk that I gave on October 2, 2015 at Columbia Law School’s annual Kernochan Center Symposium. The all-day conference focused on Copyright Outside the Box. The essay considers the aftermath of Garcia v. Google, Inc., and the Ninth Circuit’s suggestion in that case that Garcia might have a right of publicity claim against the filmmakers, even though her copyright claim failed. The essay provides a partial update of my prior work, Copyright Preemption and the Right of Publicity, 36 U.C. Davis L. Rev. 199 (2002), and suggests that despite numerous cases over the last decade, the law remains mired in confusion and contradictory decisions. Courts continue to apply the unworkable Section 301 from the Copyright Act, instead of applying broader principles of conflict preemption for which I have long advocated. Worst of all, the right of publicity remains on a collision course with copyright law with insufficient guidance as to when it should be preempted.

Monday, August 15, 2016

CustomMade doesn't know about USOC's anti-free-speech stance

Or has taken Nick Fury's excellent approach.  Consider this email below: pure truth, from all that appears.  Even assuming SFAA is still good law, shouldn't the First Amendment protect this speech?

From the Olympics to the jeweler's bench: Nana Smith competed in the Olympics, now makes jewelry

Trump hotel fails in suit against unionizers

Trump Ruffin Commercial, LLC v. Local Joint Executive Board Las Vegas, Culinary Workers Union Local 226, No. 15-cv-01984, 2016 WL 4208437 (D. Nev. Aug. 8, 2016)

Plaintiff corporations own and operate Trump Hotel Las Vegas. Defendants are labor unions attempting to unionize Trump Hotel Las Vegas employees. On October 8, 2015, Trump gave a speech in Las Vegas; Trump Hotel Las Vegas does not have a large enough space to host the event, so Trump’s speech took place at the Treasure Island Hotel.

Plaintiffs alleged that defendants circulated a flyer with a photo of people carrying picket signs with the words “No Contract No Peace” and a banner reading “MAKE AMERICA GREAT AGAIN! MR. TRUMP, START HERE” above Defendants’ names and logos. It continued:

Donald Trump is in Las Vegas this evening. Even though he owns a hotel here, he is staying at the Treasure Island Hotel & Casino (TI). Workers at the TI are members of the Culinary Union. They make an average of $3.33 more per hour than Trump workers, have affordable health insurance, and a secure retirement. Meanwhile, Donald Trump has refused to agree to a fair process for workers at his hotel to form a union. If Trump chooses to stay in a union hotel, why can’t Trump Hotel workers choose to form a union?

The Flyer encouraged its readers to “[t]alk to your committee leaders about your right to participate in Union activities[.]”

Plaintiffs sued for violation of the Lanham Act and deceptive trade practices under Nevada law.  Though plaintiffs adequately alleged falsity, they didn’t allege “commercial advertising or promotion.”  The court cited a definition that included “commercial competition with plaintiff,” but that didn’t matter to its analysis, which is good because of the unlikelihood that competition is required post-Lexmark.  Instead, the court concluded that the alleged statements weren’t commercial speech. They were, according to the complaint, “designed to call attention to the [labor] dispute” and “intended to, and would have the tendency to cause, harm to the reputation of Trump Hotel Las Vegas.” That didn’t make the statements advertisements for a product or service, nor a proposal for commercial transactions nor did that allege that the statements were motivated by defendants’ commercial interests. Further, “[n]egative commentary ... does more than propose a commercial transaction and is, therefore, non-commercial.”

The dismissal was without prejudice, and the court also dismissed the state-law claims as a matter of its discretion.

Burr Shot First

Hamilton/Star Wars crossover: what IP rights, if any, are implicated?  Does it matter whether the ad copy mentions Hamilton?

Cheerios Protein name might be more bluff than buff

Coe v. General Mills, Inc., No. 15-cv-05112, 2016 WL 4208287 (N.D. Cal. Aug. 10, 2016)

Plaintiffs alleged the name “Cheerios Protein” was misleading because it implied that the product is essentially the same as Cheerios, only with added protein. Cheerios Protein does have more protein than regular Cheerios (7 grams per serving versus 3 grams per serving), but plaintiffs alleged that the amount of additional protein wasn’t material, particularly considering the larger serving size and calories per serving of Cheerios Protein. Plaintiffs calculated that 200 [grams?] of Cheerios contained 6 grams of protein, whereas 200 grams of Cheerios Protein contained 6.4 or 6.7 grams of protein, depending on the flavor (Oats & Honey or Cinnamon Almond).  Moreover, “Cheerios Protein” was allegedly misleading because it said nothing about added sugar. A single serving of Cheerios contains only 1 gram of sugar, but a single serving of Cheerios Protein contains 16 or 17 grams of sugar.  Plaintiffs also challenged certain label statements: that the product provides “a great start to your day,” enables you to “start your school day right,” and allows you to “kick-start your day.” And they challenged a “Fuel Up” ad, in which a NASCAR driver picks up a child and races him to school, where “he is fed Cheerios Protein pit-stop style.” They brought California and New York claims.

GM argued FDCA preemption, and plaintiffs argued that their claims were “identical to the federal labeling requirements.”  They alleged violations of some specific regulations about food naming, which the court found were inapplicable because “Cheerios” is not the common or usual name of the food or of an ingredient.  However, the FDCA also calls a food “misbranded” if its “labeling is false or misleading in any particular.”  “By its terms, the express preemption provision does not bar the enforcement of state laws imposing requirements of that type – that is, a state-law mirror of the requirement in § 343(a)(1) addressing false or misleading labels.”  The only limit is that a claim under this provision would be barred if the challenged aspects of the label complied with a specific federal regulation. A statement cannot be “false or misleading” “where challenged conduct is expressly required or permitted by FDA regulations.”

GM argued that “Cheerios Protein” was a permissible implied nutrient content claim under FDA regulations that allow certain statements about the amount or percentage of a nutrient.  But “Cheerios Protein” didn’t imply that the product contains any certain amount or percentage, or make a “good source” claim (also regulated). Plaintiffs’ claims fell under the catch-all provision and weren’t preempted.

The court also dismissed a few statements as puffery, but found that the factual status of most were not suitable for resolution on a motion to dismiss.  Though the box disclosed the sugar content and said “sweetened,” those were less prominent than other components of the label, including the “Cheerios Protein” name and the number of grams of protein in each serving.  “While the Court is skeptical that a reasonable consumer would be misled by the labeling of Cheerios Protein, it cannot say, construing the allegations in a light most favorable to Plaintiffs, that it would be impossible for Plaintiffs ‘to prove that a reasonable consumer was likely to be deceived.’”  The other label statements were also not subject to dismissal because they might contribute to the deceptiveness of the package as a whole.

However, the “fuel up” claims in the TV ad were  “too general to constitute an actionable statement. The advertisement’s claims that eating Cheerios Protein is akin to ‘fueling up’ a race car driver are ‘so exaggerated as to preclude reliance by consumers,’ and ‘a reasonable consumer would not interpret the statement as a reliably factual claim.’”

The court also agreed with “the majority view...that a plaintiff must allege the intent to purchase a product in the future in order to have standing to seek prospective injunctive relief.” The injunctive relief request was dismissed with leave to amend.

Friday, August 12, 2016

IPSC: Closing Plenary Session

The Nature of Sequential Innovation
Christopher Sprigman, Christopher Buccafusco & Stefan Bechtold

How to pick between innovating or borrowing.  “Cinderella Man” is harder to develop than another movie about Rocky.  Risky, as is question about whether to develop another erectile dysfunction drug.  Differently risky.  In our framework, innovation is not always optimal, either privately or socially. Innovation doesn’t produce novelty by necessary; borrowing isn’t necessarily a change from stasis. 

Literature on innovation and the firm; literature on IP and sequential creativity.  There’s a rich literature on innovative firms, but what about borrowing firms?  Factors that influence sequential innovation. Literature has looked at legal factors, esp. IP law.  We want to broaden that focus to consider not just legal factors but others—market, behavioral, tech/artistic.

IP laws affect the scope of available innovation space.  For example, blocking patents allow more room for sequential innovation than ©’s derivative works rights.  But also: administrative law, tort law, tax law—differentially treats innovation v. borrowing.  Nonlegal factors: maturity of the field.  Borrowing expands until a certain point and then leapfrog innovations redefine/expand the innovation space.  In smartphone, innovation is highly dependent on borrowing, as opposed to painting. Tacit knowledge: difficult to convey; can reduce borrowing.  Market factors: consumers’ taste for innovation in a particular field v. borrowing.  Low tolerance for borrowing in paintings; high tolerance for borrowing in pharmaceuticals. Market participant/intermediaries: PROs lead to a lot of borrowing of musical compositions.

Behavioral factors: risk/uncertainty tolerance (innovation has greater risk profile); optimism bias (sanguine about ability to create/invent around); creativity effects (upstream creators may overprice inputs to downstream).  Much more complicated than changing the law to create a clear fix.  Policy levers: if you try to shift pharma from borrowing to innovation, will there be factors in market/tech that push against this or are legal factors from other areas, such as tax, much cheaper way to shift mix of innovation and borrowing in a particular field?

Lemley: innovation often goes along w/having to take a license b/c of patent threats.  How does that affect your space?  The story for innovating v. borrowing assumes that I put in the uncertain, risky work but may get a valuable reward, one part of which is insulation from control by other people. That might be more true in ©, but not true in patent.  May drive people in a curious, ironic way towards borrowing.

Sprigman: in patent, b/c independent invention isn’t a defense, part of risk of innovation is info risk, and that might not be fixed by search. 

Q: overlap in rights?

Sprigman: location/negotiation of lots of rightsholders can be a problem. Smartphones = tons of transaction costs.

Rosenblatt: I could imagine exactly the opposite story—if creators are risk and uncertainty averse, they’re less likely to borrow b/c they don’t know what the law will do (uncertain about legal effects of their actions), so they’ll go away as far as possible. Optimism bias could drive them to think they won’t be sued or that they won’t be found to be infringing.

Buccafusco: there are probabilities on both sides of the equation, so it’s really hard. You can’t be uncertainty averse to both; what matters is relative salience; whether people treat those as losses v. gains, etc.

Q: what about people who just decide not to take either risk?  [People v. firms? One might decide to be an employee, but can a firm decide this?]

Buccafusco: theory of the firm literature does assume that you plan to act. What decisions will you make and how?  You’re right that you could ask why people decide to act in the market at all, but we are taking a different temporal slice.

Copyright and Distributive Justice
Justin Hughes & Robert Merges

Distributive justice: where does the money go?  Claims in IP scholarship are that copyright has mostly enriched big corporations.  Copyright could improve distribution of wealth in terms of money and property. © offers significant benefits of wealth to individuals at all levels, which should not be overlooked. © is particularly important in allowing African-Americans to convert labor and talent into money and wealth.  Rawls: arguably the most important part of his framework is the difference principle. Inequalities are permissible if they have the greatest benefit to the least advantaged.  But Rawls’ actual difference principle isn’t just concerned w/the bottom—should be concerned with society, from the bottom up.  It’s fine to improve the middle and the top as long as you don’t worsen conditions for those at the bottom.

© improves wealth distribution to middle class. Peter DiCola’s money for music study: pro musicians derive 10% of income on average from ©; we think that undercounts what’s happening.  Collecting societies distribute enormous amounts of money to creative professionals.  Five years, two PROs collecting only for compositions only for public performance distributed $4.1 billion to individuals. Also should include amounts distributed under Hollywood’s collective bargaining system.

Procedural protections for individual authors to make their rights sticky.  The most powerful but glorious and beautiful mystery—the statutory termination of transfer right.  If we wanted to strengthen © as a distributive tool for creative professionals, we’d look more at these bells and whistles.

Second principle: inequalities are permissible only if attached to offices/positions open to all under conditions of equal opportunity. True meritocracy. American society has failed to provide equal opportunity, and no group has suffered more than African-Americans. But this is a bright spot for © distribution.  ©, warts and all, arguably provides the most robust mechanism for the most disadvantaged group in American society. We say this acknowledging tremendous problems w/actually ensuring that African-Americans receive the full benefits of ©. Fumi Arewa, K.J. Greene, others, have written about this. But their typical diagnosis is not weaker rights but broader or better enforcement. And despite all those problems, list of wealthiest Af-Ams almost all derive from ©-based industries, principally music and broadcasting rights.  In an era when tech seems to be weakening middle class incomes, we should pay att’n to ability for © to protect individuals. 

Does © exacerbate or ameliorate the skewed distribution of wealth in our society? The latter; we should focus on strengthening income from ©.

Q: © can channel individual rewards, but does favor superstar imbalances b/t individuals. Winner-take-all: worse overall?

Merges: long tail distribution issues; very unfair and averages hide the unfairness. But when you look at distribution from BMI/ASCAP, have to compare that to research talking about income of average musicians. 

Dan Burk: If I don’t buy Rawls and instead like Nash, do I have to buy your paper?

Merges: It’s a good way to analyze copyright in a rigorous way. You don’t have to ask if the least well off are rigorously compensated, but you can ask if © contributes to the wellbeing of non-superstars in a meaningful way.  We think it’s even easier to meet that standard.

Buccafusco: you tell a story about a few people, which is odd in a paper about distribution.  There’s no counterfactual showing that distribution would be different in another © world.  But more importantly, your story is about the people at the bottom and middle but your evidence is about people at the top.  Do you have evidence that in making the top better off you’re not making the bottom worse off?

Merges: nor is there any evidence they are worse off.  No reason to believe that © has made them worse off w/o rewarding/compensating them w/ entertainment value.  That’s just our assumption and we’re going with it. [OK then.  It is a condition of Rawlsian justice and therefore of the premise of your paper, but ok.]

Buccafusco: Term of transfer rewards currently wealthy at the expense of the currently poor.  People who are selling rights now = less valuable contracts because they can be terminated if they’re successful, and those people starting out are poor now.

Hughes: most people who know the industry think that’s dumb b/c no one goes into a contract thinking that any record will have value in 29 years. Termination benefits 10,000 songwriters you’ve never heard of and they’re just as important as Bruce Springsteen. [Is that how many terminations there have been?  I’m pretty sure there haven’t been.]

Rosenblatt: is this exclusivity based?  Mix tapes, sampling—a good deal of innovative copying. Worth taking into account.

Merges: Voluntary decisions to waive rights to build market share can be very effective. But once you cross a threshold © is valuable to protect your rights. [I don’t think that was the point, but ok.]

Anupam Chander: Income makes people better off, which is great. The other side is monopoly rents, and those rents are being paid by someone. What’s the distributional effect of the monopoly rents?  You said this was good for the middle class, but your example was 25 people for whom © is very good.  What is happening w/people at the bottom? Are you relying implicitly on violations of © by people at the bottom?

Hughes: We were certain that people would think we were talking about distribution of wealth to Af-Am community as a whole. [Possibly because that’s what distributional discussions usually entail and what Rawls seeks with his first principle, which you discussed at the beginning?  Or possibly because of these sentences from the opening paragraph of the paper: "Is our copyright system basically fair? Does it exacerbate or ameliorate the skewed distribution of wealth in our society? Does it do anything at all for disempowered people, people at the bottom of the socio-economic hierarchy? In this Article we engage these questions."  Stupid readers!] Rawls = equal access to stations and offices. For Af-Am community, access to highest offices of wealth is through ©. We aren’t talking about distribution to other groups or within the Af-Am community. [Not clear what distributive justice has to do with the claims, then; you might be making a claim about openness to talent, but that actually is only one part the overall Rawlsian framework--the way that inequality is justified within a society that has adhered to the minimax principle.]  Access to Madonna isn’t the same thing as access to medicine, anyway.

[There is a plausible narrative here that has appeal: because of lower capital costs of entry, entertainment has been one of the easier ways for some extremely talented African-Americans to make lots of money, whereas other methods of discovering and exploiting talent often require capital—cf. Bill Gates and Steve Jobs’ access to significant social and physical capital, including their ability to trespass and break things, which could have proved lethal to African-American boys.  However, the implication of putting it that way would not seem to be “© should be stronger” but rather “hey, that’s terrible; other means of exercising great talent ought to be equally open to African-Americans too.”  If anything, the relative disparity feeds into a critique that American culture too readily channels African-American talents into entertainment and sports fields; the solution to inequality is not to close off those opportunities, but neither is it to double the number of NFL teams and have the government fund a lot of music purchases, nor to mandate Content ID for all websites.]

IP, Privacy Harms and other Fundamental Values
Jessica Silbey

Misalignment of law with values of creators. Many described liability problems; problems w/trustworthy help such as studio assistants, business managers.  These aren’t IP problems most of the time. Sometimes they’d be fit into IP, but not a good fit. 

Equality, privacy, and distributive justice are the values that creators seek, but typically not a lot of place in our conversations about IP levers, efficiencies, markets, and entitlements.  We need a theory of what Progress is. Not necessarily about wealth aggregation/more stuff.  Some may consider some of the problems to be IP overreach, but that begs the question of what IP is for and what fundamental values ordinary creators want to use IP to protect.

Rough project: equality, privacy, fairer uses, abuses.  Here, focus on privacy.  Five clusters that explain different privacy interests and harms. Goal: understand in broader cultural way.  Constitutional concerns: privacy as condition of spaces & things (houses etc.); bodily privacy; mind and relationships (religion, speech).  Nonconstitutional: info privacy: public disclosure of private facts; misappropriation; false light; intrustion on seclusion.  Three things we care about: independent thought (ability to formulate one’s own ideas); fortifying relationships (bodies and privacy among communities); flourishing culture and science (allows public realm to succeed).

Cases brought by heirs: copyright war over Duchamp chess set.  JD Salinger, Ted Hughes, James Joyce. These cases are really about nostalgia for family relationships. They aren’t literary reputation cases; they’re about family memories trying to preserve them w/o interference of others. Owning memories is futile, though.

Authors and owners enjoining publication of previously unpublished works. Intrusion into seclusion; spatial privacy as well as intellectual privacy. Willa Cather didn’t want anything published after her death—free from constraint of oversight of others.

Limited publication: breach of confidential relations/trust.  Snapchat, FB, email.  Digitally, these limited publications don’t really exist any more. IP claims are tempting to punish a breach of confidentiality.

Fair use cases: recontextualization of works that have already been published.  NYT sued David Shields for thumbnail images in a book criticizing NYT photos; graffit artists objecting to being used as backdrop for ads.  His lawyer: if they didn’t want to work with him, they could fuck themselves and find someone else—he wasn’t interested in licensing.

Last case: suit is brought by subject of work. Copyright suit through assignment. 

Except for unpublished work cases, process/purpose of creation is largely irrelevant in these cases. These are claims about identity and affiliation being inseparable. Privacy claims are bilateral—their contours are always defined by the interests of others.  And so is IP as a balance b/t ownership and access. Privacy requires intrusion; authorship requires public domain.

Most of these cases involve privacy losing; IP claims are much more disputed. If the interests are similar and the claims are similar, culturally and values-wise, they probably should rise and fall in a similar way. 

Payoff: (1) rethink progress; (2) rethink value of rule of law, given blending of different types of claims; if we care about that, we should think about alignment; (3) discursive shift asks us to think about moral narratives; economic claims are moral narratives but so are these. Language wars are policy wars, says George Lakoff.

Linford: privacy claims can be stalking horse for much less plausible claim. Is there a proper way to police against this?  Monge v. Maya.  P wins, suppressing wedding photos.  Argument: Hurts them as celebrities. 

A: that’s an unpublished works case; it’s a strong privacy claim and for copyright. Should be in the control of author/owner, just as intrusion into seclusion is strong interest. My views have also changed about heirs’ restricting access to unpublished (and unarchived) works.

Heymann: Law as communicated by judges v. law as understood on the ground.  What does the feedback look like here in terms of internalizing how the law should be used?

A: trying to figure out recursive nature of law is sociological project. Giddens’ work on structuration has levels of feedback loops. Just beginning to figure out how meaning is shaped in different ways by different voices. Methodologically: what’s the data here?  Anxious about that—need to be clear about where the claims about domestication are coming from.

Q: have we seen anything like this before w/r/t complicated legal framework w/ strong moral narratives among general public and strong distributive justice components, that is, w/tax? Is there an account of tax history that you could draw lessons from?

A: Not so many studies; there are studies of bankruptcy practice. 

What’s the Harm of Trademark Infringement?
Rebecca Tushnet

Have to say something outrageous to justify your hanging around for the very last speaker. I thought about saying that I’d developed a new and coherent justification for trademark dilution, but then I thought that even in the craziness 2016 has brought us that still wasn’t credible.  So instead I will challenge the basic function of trademark and the crucial rule that I learned at my managing partner’s knee: the remedy for trademark infringement is an injunction.

My challenge is both casually empirical and more seriously normative: eBay asks us to rearticulate why the remedy for infringement ought to be an injunction, and it turns out that the reasons for granting injunctions in TM don’t make much sense outside the core purchase substitution situation that so many trademark cases no longer resemble.  And it turns out that when plaintiffs are asked to particularize their harm stories, explaining why this confusion is specifically likely to cause the plaintiff harm, they often aren’t very good at it.

Old perspective, articulated by Jeffrey Sanchez: “The basis for the presumption of irreparable harm in trademark law is the known or proven fact that monetary relief from trademark infringement is ‘inherently “inadequate” and injury is “irreparable.”’”  But by whom is this known and how was it proven?

eBay rejected near-absolute presumptions in favor of a patent owner, or plaintiffs generally, requiring a plaintiff to show irreparable harm to get an injunction. Okay then: What is irreparable harm?  Easy case: the defendant has no money to pay damages. Might be reparable under other circumstances, but not on these particular facts.  Counterfeiting cases may fall into this category.  Medium cases: we’re convinced that there is harm, but we don’t think it will be possible to measure the amount. This is a relatively common justification for irreparability in TM cases, but it has a real weakness: we need to distinguish between lack of certainty about whether there is harm and certainty that there is harm plus uncertainty about its amount, and that’s pretty hard to do with current techniques in TM cases.

How have TM owners traditionally gotten around this problem?  By claiming harm to the intangible value of their goodwill.  Related question: What is goodwill?  TM owners tend to treat it as a word to conjure with. But it faces the same problem as lost sales: if it’s a business asset, it can usually be measured, because accountants and investors like that. If it can be measured, harm to it ought to be measurable, which means it can at least sometimes be cashed out in damages. 

Even if infringement leads to lost customers and not just lost sales, it is possible to calculate the present discounted value of a customer, not just a lost sale.  And of course lost customers are a big if, in many cases—we say that disappointment in an infringing product may turn customers away forever, but as Mark McKenna has painstakingly documented and I’ve also written about, that’s really not likely to be true in most cases.  Strong brands are extremely resistant to change, and we know this even in other TM contexts. My favorite example: courts and the
Trademark Trial and Appeal Board have found that university mascots and names have retained
trademark significance despite uncontrolled use by others for decades and, in one case, for nearly two centuries.  People just have terrible incident memories and usually substitute general impressions to form their opinions about brands, which also leads them to make mistakes about, say, who’s sponsoring the Olympics.  People think about prominent brands when you cue them with the product area pretty much no matter what, which, first, causes noise in confusion determinations, but second and more importantly for my topic, throws doubt on the basic theory of harm from non-counterfeiting infringement: people are walking around confused about the relationships between famous brands and others all the time, and the brands stay famous and profitable.

Often, what might be lost by infringement, instead of “reputation,” is licensing revenue, which we know from patent and copyright cases is usually reparable by damages.

Intermediate conclusion: Goodwill is intangible but not generally unmeasurable outside of TM cases. Perhaps notably, the one intangible harm that the SCt has been really clear is irreparable is suppression of First Amendment rights, which is not an irrelevant consideration in TM cases.

But suppose we accepted that these negative effects on reputation could really occur from bad infringing products.  Would that be irreparable harm under eBay?  Even if we required the plaintiff to prove a quality difference, the risk of harm to any particular trademark owner would still be low. When we wait for evidence of such harm it may fail to appear. At most, a poor quality brand extension makes consumers less likely to be interested in a different, related brand extension in the future. This is a market preclusion argument, not an argument for ongoing harm, and it’s particularly unlikely to reflect an immediate risk to a trademark plaintiff, which is what eBay supposedly looks for.  And the weakness of the reputation argument also threatens another traditional argument in TM, which is that lost control over one’s own reputation is inherently irreparable. That’s just a misperception about risk, or a sub rosa lowering of the standard from likely to theoretically possible.

The paper discusses a few cases that demand more than just cursory statements about goodwill, reputation, and control, and I’m largely in agreement with them. There are still plenty of the traditional cases too, but their rationales are increasingly creaky and come down to “we’ll let the district judge decide there’s irreparable harm because lost control can be the basis of a finding of irreparable harm even if it doesn’t have to be,” which I don’t find very persuasive.  

One interesting example: Uber Promotions, Inc. v. Uber Technologies, Inc. In this case, the well-known national brand Uber Technologies was found to have caused actual confusion with the transportation business of local senior user Uber Promotions in Gainesville, Florida. In finding irreparable harm to Uber Promotions, the court noted Uber Technologies’ extremely controversial and often downright bad reputation. For example, the court pointed out that, as of the time it wrote its opinion, top news stories for “uber florida” included numerous stories about Uber Technologies’ exposure of a driver’s personal information, including her social security number. It concluded: “With all due respect to Tech, Promotions has every reason not to want potential customers and other members of the public to associate it with a company that has inspired protests in cities around the world.” Bad product extensions are one thing” confusion about an association with poorly performing products isn’t likely to be harmful. Confusion with a brand that triggers riots and boycotts could reasonably be predicted to be substantially more harmful.

What next?  I think greater attention to the harm stories of particular kinds of infringements could help courts understand what academics have been saying about the overexpansion of infringement liability to situations where there’s no real benefit to consumers and potentially severe harm to competition or free expression.  My usual hobby horse: materiality is also useful in figuring out which cases might involve irreparable harm.

Q: What about harm to the consumer?

A: (1) Doctrinally, separate factor. (2) Turns out that w/o harm to TM owner, it’s hard to explain how consumers would be harmed either.

Lemley: Not doctrinally separate for sure except in 9th Circuit, and they’re weird.  [True.] Why shouldn’t it be a balancing test?  Why shouldn’t we enjoin when there is harm to public even if $ would redress the TM owner’s injury?

A: I am persuadable on whether there should be a balancing test, esp. with factors (1) and (2)—if there is no adequate remedy at law I would often want to call that irreparable. However, I’m not convinced that TM owners are good proxies for harm to consumers.  If consumers are harmed, they should (or consumer protection authorities should) act on their own behalf; we generally ask plaintiffs to have standing by showing harm to themselves, and so too here.

McKenna: Throwing consumers into balance weakens argument for injunctive relief: evidence suggests that consumers can adapt to new marketplace if they learn they can’t rely on this as a signal—they just create sub-brands, excepting cases where the products are really close.

A: thanks; should also consider people benefited by D’s conduct.

Ramsey: when likely confusion is found, court shifts into anti free riding mentality, lets TM owner control uses. Makes sense that they’d instinctively grant injunctions.

A: Interestingly, eBay says you’re not supposed to do that even for “property” rights—as we’ve seen in other papers, property/liability isn’t that simple a split and it’s a lot more complicated than enjoining “property” violations.

Rosenblatt: Isn’t part of the concern durational—the longer confusion persists, the more likely irreparable harm is?

A: Except I think the evidence for that is poor.  Confusion may be harmless and stay harmless even if it doesn’t dissipate.  Suppose the D’s product isn’t yet crappy but might theoretically become so—that’s not likely irreparable harm, just possible harm; it doesn’t meet the standard set out.