Monday, July 31, 2017

Seen around town(s), TM and right of publicity issues

From Cambridge:
Cola scented stickers in Coke-shaped bottle

Pies that make even the tiniest hands feel huge
 Also, I didn't manage to grab a picture of the "Legally Brunette" shirt in the Law School Coop, but I wonder about that one too.

And eagle-eyed correspondent DM sent this one in from NYC:
F*ck Amazon, Fishs Eddy is prime! with prime in Amazon font/arrow

When life gives you Lemonade: court preserves copyright complaint against Beyoncé

Estate of Barré v. Carter, No. 17-1057, 2017 WL 3188489 (E.D. La. Jul. 25, 2017)

Plaintiffs alleged that they owned in the copyright in two YouTube videos created by Anthony Barré, a performance comedian and music artist from New Orleans whose voice “was a unique instrument and inextricably linked to his performance art.”  Defendants released the song “Formation,” which used three phrases from Anthony Barré’s works, “What happened at the New Orleans,” “Bitch I’m back, by popular demand,” and “Oh yeah baby. I like that.”  Barré’s voice, performance, and words were also allegedly “used and exploited” during the “Formation World Tour,” for example, “Oh yeah baby, I like that” was used during the introductory performance of “Formation,” and defendants allegedly utilized other performers to imitate Anthony Barré’s voice and cadence in saying, “Bitch I’m Back by Popular Demand” before defendant Carter appeared onstage.  Plaintiffs sued for copyright infringement, false endorsements under the Lanham Act, violations of the Louisiana Unfair Trade Practices Act (“LUTPA”), and unjust enrichment under Louisiana law.  Here, the district court understandably refuses to dismiss the copyright claim on the pleadings, and inexplicably refuses to dismiss the other claims as preempted/precluded by Dastar/barred by the First Amendment.

Defendants argued that their purpose was transformative, using the short clips to “create the tone, mood, setting and location of the New Orleans-themed ‘Formation.’ ”  Defendants disagreed that this could be transformative, and that the original work wasn’t altered as in previous “appropriation” art cases where fair use is found ((a) hunh? (b) taking little bits and mixing them with others is alteration in my book, (c) I wouldn’t call this an appropriation art case unless you want to merge that subset with transformative use cases in general).  Other bobbles aside, the court concludes that enough has been pled to go forward on the question of transformativeness and of fair use.  And it correctly rejects plaintiffs’ bizarre idea that fair use doesn’t apply in sound recording cases because of Bridgeport Films.

False endorsement: Plaintiffs pointed to Facenda v. NFL Films, arguing that the court allowed a false endorsement case over use of a voice “ when the promotional video and video game at issue were used for commercial purposes.”  [Here we see part of the problem of the chaos of false endorsement/publicity claims: the plaintiff, however misleadingly, gets to ignore the distinction between advertising and non-advertising uses.]  The court found that such a claim could be viable. [But that’s not the relevant question.  False endorsement is a potentially viable claim; the question is, however, whether copying an author’s work, especially outside an ad and as part of another creative work, can itself constitute the relevant act supporting a false endorsement claim.  Dastar and other cases indicate that it can’t.  It’s also worth noting that the Copyright Act deliberately allows imitation of sound recordings, which isn’t within the scope of the sound recording reproduction right, so allowing a claim based on soundalikes not used in advertising (as alleged here) also creates a direct conflict with the Copyright Act.]  The court held that it was enough to allege that Barré’s voice and words were distinctive and recognized by consumers and the media, which “caused consumer confusion regarding involvement or approval of his estate” in “Formation,” the “Lemonade” album, and the “Formation World Tour.”

The court distinguished Oliveira v. Frito-Lay because plaintiffs alleged (1) that defendants imitated Barré’s voice, and (2) that defendants used Barré’s voice in a way that created consumer confusion about endorsement.  (2) of course merely restates the theory rejected in Oliveira and doesn’t distinguish the case at all; (1) doesn’t really address why a performance can be a trademark for itself, which is the basic problem of such claims—again, especially as applied to non-ad uses (which just multiplies the copyright conflicts).

Defendants correctly noted that, under Rogers, only an explicitly misleading non-advertising use escaped First Amendment protection, and that explicit means explicit.  The court disagreed with the latter part of this argument.  “For example, Plaintiffs allege in the amended complaint that the ‘conduct of Defendants has been willful from the inception of the creation of “Formation” and “Lemonade.”’ ” [That’s not what “explicit” means.  It is not a synonym for “intentional.”  Otherwise Rogers would have come out very differently.  “Explicit” means falsely claiming authorization, not remaining silent, which at most could be an implicit claim.]  The allegations that defendants “intentionally and unlawfully copied the unique and original voice and words of Anthony Barré” to use as the “defining introduction of the song ‘Formation,’ ” “used and exploited” Anthony Barré’s voice and words during the live performances by having another person imitate his voice and cadence, and “failed to give credit or compensation in an ‘unethical, misleading, false, unfair and deceptive’ manner” somehow substituted for explicitness.

Given this ruling, it’s not surprising that the Louisiana Unfair Trade Practices Claim also survived, though of course it also has copyright preemption/First Amendment problems that match up with the Dastar/Rogers problems of the federal claims.  Plaintiffs alleged misappropriation that went beyond copyright because defendants acted “unethically, wrongfully and fraudulently.”  [The “going beyond” alleged consists entirely of the copying and its inherent effects.  “Profit” isn’t an extra element, nor are all those adverbs, and the alleged misrepresentation is again based solely on the copying as misrepresentation.] 

An unjust enrichment claim was dismissed as duplicative.

Friday, July 28, 2017

When state consumer protection is narrower than federal

Natreon, Inc. v. Ixoreal Biomed, Inc., 2017 WL 3131975, No. 16-4735 (D.N.J. Jul. 21, 2017)

Natron sued defendant/counterclaimant/third-party plaintiff SKP and defendant Ixoreal, alleging false advertising and unfair competition in connection with an extract used in holistic and alternative medicines: KSM-66, which is derived from the root of the ashwagandha plant. SKP filed three counterclaims, alleging that Natreon also engaged in false advertising and unfair competition in selling its competing product. SKP also filed a complaint against third-party defendant NutraGenesis. Natreon successfully moved to dismiss SKP’s Counterclaim for violation of the New Jersey Consumer Fraud Act.

SKP’s counterclaims alleged a number of false statements about Natreon’s product, patent protection, and production processes.  In addition, SKP alleged that Natreon tried to recruit SKP into engaging in price collusion and engaged in unfair competition by threatening meritless litigation on several occasions.  SKP also alleged that both Natreon and NutraGenesis engaged in deceptive acts in an attempt to obtain confidential information, by posing as prospective customers.

Natreon successfully argued that SKP didn’t allege that it suffered a consumer-like injury, as required for an NJCFA violation.  While neither “the statute nor the New Jersey Supreme Court has explained with any precision who constitutes a consumer,” the Third Circuit has advised that “the entire thrust of the [statute] is pointed to products and services sold to consumers in the popular sense.” Thus, the NJCFA has only been applied to business entities “who purchase goods and services for use in their business operations,” as, for example, desk chairs.  The alleged wrongdoing here wasn’t consumer-oriented and the harm was not consumer-like.

The court also struck SKP’s affirmative defense of failure to mitigate damages, which wasn’t a recognized defense to a Lanham Act claim or the coordinate common-law claims.

SDNY declines to extend ONY to press releases about studies

Mimedx Group, Inc. v. Osiris Therapeutics, Inc., No. 16 Civ. 3645, 2017 WL 3129799 (S.D.N.Y. Jul. 21, 2017)

The parties compete in the wound care biologics market for tissue-graft products.  Mimedx makes “EpiFix,” “a tissue graft processed from [a dehydrated] human amniotic membrane that is derived from donated placentas using [Plaintiff’s] proprietary technology, including its Purion process.” EpiFix is designed to help “reduce inflammation, enhance healing, and reduce scar tissue formation.” Osiris (cool name), its direct competitor, makes Grafix, “a cryopreserved placental membrane” used to treat acute and chronic wounds.

A comparative study conducted in Montana was eventually published in the peer-reviewed journal Wound Repair and Regeneration. Osiris published a press release on its website touting the results of the study.  Mimedx argued that statements in this press release, as well as in an Osiris brochure, violated the Lanham Act and New York G.B.L. §§249, 250.

First, the court found that the press release and the brochure were properly alleged to be “commercial advertising or promotion.”  Osiris argued that its statements weren’t commercial speech under ONY, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490 (2d Cir. 2013).  ONY held that a medical article’s “contents [we]re not actionable under the Lanham Act” because statements in scientific literature “are more closely akin to matters of opinion, and are so understood by the relevant scientific communities.” But here, Mimedx wasn’t challenging the study, but rather the press release, which allegedly misrepresented the study, and the brochure, which wasn’t even reporting on the study. These were “statements in commercial materials directed principally to consumers, not statements in scientific materials directed to scientists.”  In ONY, the court of appeals highlighted that the plaintiff there didn’t allege that the defendant’s promotional materials misstated the relevant article’s conclusions. The plaintiff here did.  The “mere fact that the Press Release and the Brochure touch on topics of scientific debate does not trigger ONY immunity and disqualify them as commercial speech.”  Were that so, the Lanham Act would hardly ever be enforceable.

Likewise, Mimedx adequately pled sufficient dissemination to the relevant public, even though it didn’t plead the number of copies distributed or the exact scope of the target market.  “The touchstone of whether a defendant’s actions may be considered ‘commercial advertising or promotion’ under the Lanham Act is that the contested representations are part of an organized campaign to penetrate the relevant market.”  Mimedx identified the relevant market as “the wound biologics market,” and alleged distribution of the press release to current and prospective customers, including specific wound treatment centers.  Many of the further details would be difficult to identify without discovery; Mimedx had done enough to plead plausibly.

Finally, for the most part, Mimedx plausibly alleged falsity or misleadingness.  In terms of the press release’s claims that the study showed “that Grafix has demonstrated superior outcomes to EpiFix,” the study itself indicated that, “as to certain types of ulcer wounds, EpiFix closed the same number as or slightly more than did Grafix; that is, for some wounds EpiFix is arguably equally if not slightly superior to Grafix, according to this metric.”  Whether the press release statement was in fact deceptive because of the overstatement couldn’t be resolved at this stage.

Similarly, the brochure claimed that (i) “A Chronic Wound Needs: ... Viable Cells”; (ii) EpiFix’s Purion process “destroys endogenous tissue viable cells” and lacks the “presence of viable cells”; and (iii) “Grafix provides everything you need for treating chronic wounds” such as “viable cells.”  Mimedx claimed that these statements were misleading because, “[w]hile viable cells can be beneficial for wound healing, viable cells in a placental derived tissue graft like Grafix are not necessary for effective wound healing,” and indeed, “viable cells added to a chronic wound through an allograft die quickly upon introduction to the wound or migrate away from the wound site,” and thus have a “minimal contribution on the effectiveness of the allograft.” A reasonable consumer could understand the brochure to be claiming that viable cells played an important, even vital, role in the efficacy of tissue grafts and that EpiFix lacks such cells while Grafix contains them.  Assuming the truth of Mimedx’s allegations, this could deceive consumers.  Similar reasoning applied to the brochure’s claims that EpiFix had a “high level” of Matrix Metaloproteases (MMPs) while Grafix had low levels, and that MMPs were “not … desirable” for wound repair.  Mimedx alleged that the MMPs in EpiFix were inactive and thus harmful, making the claim of deceptiveness plausible.

Finally, the brochure claimed that EpiFix’s Purion process “ ‘causes significant alterations’ to the extracellular structural matrix (‘ECM’) of the amniotic cells, such that the ECM is no longer ‘intact,’ ” which Mimedx alleged was literally false.  Osiris argued that, to plead literal falsity, Mimedx was required to identify “studies, literature, or other [scientific] bas[e]s” for its factual assertion. The court declined to impose such a requirement.

Similarly, the motion to dismiss §§ 349 and 350 G.B.L. claims was denied. You might wonder whether this conduct was “consumer-oriented,” but the parties agreed that this was basically the same question as “commercial advertising or promotion” (sort of weird), so that was that at this stage.  Still, to the extent that the end users are members of the general public, I can see an impact on the public from falsity about these medical products.

Purple haze: court declines to recognize contributory false advertising claim

Purple Innovations, LLC v. Honest Reviews, LLC, No. 2:17-cv-138, 2017 WL 3172810 (D. Utah Jul. 25, 2017)

Mostly a jurisdiction case, but defendant GhostBed also successfully moved to dismiss Purple Innovations’ claim for contributory false association and false advertising.  Although the court acknowledged that (1) other circuits have recognized contributory liability under §43(a)(1)(B) and that (2) courts in Utah have recognized contributory infringement liability, it nonetheless declined “to extend” the Lanham Act to allow such an action, with no further analysis.  Look, someone’s got to be the first—or at least should make an argument about why there shouldn’t be contributory liability for false advertising when the rest of the surrounding apparatus is the same as for infringement.

Thursday, July 27, 2017

The hymn of Axiom: failure to disclose in FX trades doesn't violate consumer protection law

Axiom Investment Advisors, LLC v. Deutsche Bank AG, 2017 WL 590320, No. 15 Civ. 9945 (S.D.N.Y. Feb. 13, 2017)

Deutsche Bank allegedly delayed execution of electronically matched trade orders in the foreign exchange (FX) market in order to benefit from market movements, known as “Last Look.”  Axiom sued for breach of contract, breach of the implied covenant of good faith and fair dealing, violations of N.Y. General Business Law §§ 349 and 350, and unjust enrichment.

The FX market is “the largest and most actively traded financial market in the world, with global trades averaging $5.3 trillion per day.” It mostly works through bilateral contracts, in which large banks such as Deutsche Bank represent the “sell side” and act as liquidity providers or market makers. Most FX trades occur on electronic trading platforms, with price and quantity data reflecting limit orders placed by liquidity providers.  This data stream is constantly updated—limit orders are filled or withdrawn within milliseconds.  Deutsche Bank trades on both single-dealer and multi-dealer platforms; on the latter, it’s only one of many liquidity providers.  Its single-dealer platform is called Autobahn, which claims to provide “competitive and reliable prices in over 200 currency pairs” with “dynamically priced executable streaming prices customized to suit each client’s requirements.”

Beginning in 2003, Deutsche Bank allegedly arranged for the matching algorithms used by Autobahn and other networks to include an unnecessary delay of anywhere from several hundred milliseconds to several seconds. During this time, Deutsche Bank monitored the market movement and if it moved against Deutsche Bank too much, Deutsche Bank would either reject the matched order or execute it at the new price. Deutsche Bank allegedly never directly disclosed Last Look to buy-side FX market participants. The process of matching orders is undisclosed to market participants; “buy-side market participants have no way of knowing whether any of their trades were delayed by Deutsche Bank’s use of Last Look or whether Deutsche Bank reneged on any of their matched orders.” Although reports about this practice surfaced “several years ago,” the liquidity providers “said at that time that Last Look was necessary to ensure that multiple trades were not executed on a single order,” which the complaint alleged was pretextual and misleading.

The complaint stated a claim for breach of contract arising out of transactions on Autobahn because the contract between the parties didn’t unambiguously permit Last Look; so too with transactions on other networks (for which there was no express contract between the parties).  The claim for breach of the implied covenant of good faith and fair dealing was dismissed as redundant.  The court dismissed the claim for unjust enrichment relating to the Autobahn transactions (because of the existence of the contract) but not for the multi-dealer transactions.

The state consumer protection claims under N.Y. Gen. Bus. Law §§ 349, 350 were dismissed because FX trading wasn’t consumer-oriented conduct.  Conduct is consumer oriented if it has “a broader impact on consumers at large,” and consumers are “those who purchase goods and services for personal, family or household use.” “Transactions between businesses or sophisticated parties that do not affect average consumers do not constitute consumer-oriented conduct.” Similar to securities, FX is traded “as investments, not as goods to be ‘consumed’ or ‘used.’ ” 

Deceive, inveigle, obfuscate--false discount claims still don't cause cognizable injury

Mulder v. Kohl’s Department Stores, Inc., --- F.3d ----, 2017 WL 3167620, No. 16-1238 (1st Cir. Jul. 26, 2017)

Mulder bought several items that listed both purchase prices and significantly higher “comparison prices.” Mulder alleged that these comparison prices were inflated and invented, and that Kohl’s misled unsuspecting consumers about the quality of its products. The court of appeals affirmed the district court’s grant of a motion to dismiss.  She simply didn’t suffer relevant injury under Massachusetts Chapter 93A.  Even allegations that Mulder was “induced” to travel to a Kohl’s store by false advertising and that she therefore suffered a resulting economic injury in the form of travel expenses wasn’t good enough.  She didn’t explain how deceptive statements on a price tag could have caused her to travel to Kohl’s in the first place, and didn’t identify other deceptive ads with the requisite specificity.

A false sense of value isn’t the requisite identifiable injury, distinct from the claimed deceptive conduct itself, required by Massachusetts law. “[A]bsent allegations of real loss grounded in some objective measure, [an] ‘induced purchase’ theory of injury is simply the ‘per se’ theory of injury in new clothing.”  So too with the “induced travel” theory, which, if accepted, “would render meaningless the SJC’s clear rule against ‘per se’ or ‘deception-as-injury’ claims.”

The same conclusions are also provided in Shaulis v. Nordstrom, Inc., -- F.3d --, 2017 WL 3167619, No. 15-2354 (1st Cir. Jul. 26, 2017). Shaulis argued that the sweater she bought, allegedly due to the price misrepresentation, was “worth nothing at all to [her] since she never would have bought it” absent Nordstrom’s deception. But she received the benefit of her bargain, and didn’t allege that there were flaws in the sweater that made it worth less than what she paid.  Subjective belief in value isn’t a legally cognizable injury under Chapter 93A.

Of possible interest: the court of appeals rejected Shaulis’ analogy to “fake-Rolex hawking” because “falsely advertising a watch as a ‘Rolex’ is a material misstatement about the watch’s quality.”  But this is obviously insufficient as a distinction!  According to Shaulis’ complaint, so was the discount claim—and the court of appeals supposedly accepts her claim that she was materially misled (that is, that she changed her behavior because of the misrepresentation).  Why then is not a factual inquiry required to determine whether the fake Rolex-buyer received the benefit of her bargain?  Arguably there is a drop in resale price once the fakery is revealed—but if the initial price were low enough, that shouldn’t matter.  The point being that the court of appeals carefully distinguishes deception from injury when it comes to the price representations, but not when it comes to the fake Rolex, because trademark is different.

The court of appeals did note that Shaulis might well have inferred greater value from the deceptive price tag, and that Nordstrom could have hoped that consumers would make that inference.  “Indeed, it is presumably just this kind of erroneous inference that Massachusetts seeks to prevent by regulation.”  Still, that doesn’t mean there was injury under Chapter 93A. This essentially means that there is no private cause of action, because without injury there can’t be injunctive relief either, for conduct banned by Massachusetts consumer protection law.  But the AG can still enforce the law.

Shaulis’s common law claims -- for fraud, unjust enrichment, and breach of contract – failed for basically the same reasons.

OJ may be guilty ... of adding ingredients without disclosure

In re: Simply Orange Orange Juice Marketing & Sales Practices Litig., MDL No. 2361, 2017 WL 3142095 (W.D. Mo. Jul. 24, 2017)

Plaintiffs alleged that Coca-Cola sold Simply Orange, Minute Maid Pure Squeezed, and Minute Maid Pure Premium without disclosing its use of added flavors in these products, as required by federal labeling regulations, leading consumers in seven states to pay a price premium. Coca-Cola argued that it didn’t add flavoring in need of disclosure, because the “add-backs” it uses are 100% made-from-the-orange products.  Also, Simply Orange and Minute Maid Pure Squeezed don’t consistently use add-backs year round, meaning that there was no injury/standing. Further, Coca-Cola maintained that only 1 in 25 consumers care about the add backs, according to its survey expert, and therefore plaintiffs couldn’t demonstrate reliance on a class-wide basis.  The court partially certified the proposed class.

The first hint of what will happen comes from the court’s characterization of Coca-Cola’s standing argument: “that its own inconsistent and un-labelled use of add-backs means that certain consumers purchased orange juice not containing add-backs, and those consumers were not injured.”  First, every container of Minute Maid Premium had add-backs, and thus those consumers had standing.  Second, the existing discovery suggested that approximately 70 percent of the time, purchasers of Simply Orange and MMPS would be receiving drinks that included add-back; for certain years, nearly every container sold included add-back. The plaintiffs alleged that they were regular purchasers of juice throughout the year, and thus “undoubtedly purchased juice containing add-backs.”  That was enough to show standing, as required by Spokeo v. Robins, for the named plaintiffs who represented the class.

Ascertainability: the court was concerned about the privacy implications of getting purchaser information from merchants/customer loyalty cards, but the proposed class included all purchasers of the specified products under each state’s laws.  Self-identification would work, given that the odds were that most class members had purchased an orange juice product containing add-back. “[I]n low-value consumer goods cases, there may be no better means of identifying members of a class in circumstances such as these.” If unrebutted consumer testimony “would be sufficient to establish injury in an individual suit, it follows that similar testimony in the form of an affidavit or declaration would be sufficient in a class action.” In re Nexium Antitrust Litig., 777 F.3d 9, 20 (1st Cir. 2015).
Commonality: the court was concerned about whether plaintiffs will be able to provide common proof as to reliance, materiality, and/or causation, but several of plaintiffs’ issues were susceptible to common proof: whether the orange juice products contain added flavors not permitted by federal law; whether the orange juice products omit disclosure of added flavors as required by federal labeling laws; whether the orange juice products conformed to the representations on the labels of the products; whether the orange juice products omitted material information from the products’ labels; whether defendant warranted that the orange juice products would conform to the label representations; and whether defendant breached these warranties.  The predominance requirement was likewise satisfied with respect to some elements of the state law claims, but not others, particularly requirements to prove reliance, materiality, and/or causation, as well as damages.  (Plaintiffs’ proposed damages model was based on a flawed survey that measured consumers preference for juice with “added flavoring,” vs. no “added flavoring,” with wording that suggested inferiority, even though current FDA regulations allow some amount of added flavoring.)  An issues class was therefore appropriate.

However, plaintiffs lacked standing to pursue injunctive relief.

Tuesday, July 25, 2017

"Local" can be falsifiable representation of fact

Bimbo Bakeries USA, Inc. v. Sycamore, No. 13-cv-00749, 2017 WL 3089011 (D. Utah Apr. 28, 2017)

Leland Sycamore invented the process and formula for making Grandma Sycamore’s Home-Maid Bread and subsequently received federal trademark protection for part of the packaging’s design.  Leland ultimately sold Grandma Sycamore’s to Bimbo.  Bimbo sued Leland’s son and related entities for misappropriation of trade secrets, trademark infringement, and false advertising based on their sales of Grandma Emilie’s bread.  Though the recipe changed in 2013, Bimbo alleged that a person involved in developing the new recipe (now sold under a new brand name) learned the secret from Leland. In July 2012, defendant U.S. Bakery adopted a new tagline for its products, “Fresh. Local. Quality,” which provided the basis for the false advertising claims.

Among other things, the court held that U.S. Bakery’s use of additional ingredients not included in the Grandma Sycamore’s recipe didn’t absolve it from misappropriation liability.  Still, whether it used Bimbo’s purported trade secret was disputed.  Infringement claims also avoided summary judgment.

False advertising: Bimbo argued that the U.S. Bakery tagline “Fresh. Local. Quality” was false in Utah because U.S. Bakery neither maintained a baking facility in the state of Utah nor contracted with a Utah facility to manufacture its bread products. U.S. Bakery argued that the tagline wasn’t sufficiently definite to be a false designation of origin and wasn’t attributable to the relevant product. 

The court disagreed.  While the US Department of Agriculture has concluded “[t]hough ‘local’ has a geographic connotation, there is no consensus on a definition in terms of the distance between production and consumption,” Bimbo has provided surveys showing that the tagline “local” was misleading and material to potential purchasers. “Because the term local does not carry a set definition, whether the term is false or misleading is a question appropriate for the fact finder.”  [This really skips over the key question: does the term have a sufficiently consistent definition among the relevant consumers to measure its truth or falsity?  “Good” doesn’t have a set definition either—but it’s nonactionable puffery.]

As for whether the tagline was actually used on relevant products, U.S. Bakery argued that shelf-liners saying “Freshly Baked in Utah” were only used for products that were not baked in Utah once, when a product was mis-shelved (there are apparently U.S. Bakery buns baked in Utah for which the slogan was not problematic).  U.S. Bakery argued that Bimbo couldn’t prove that this was “systematic” (which would be “advertising or promotion”).  However, Bimbo’s sales director testified that he saw the shelf liners used in Utah in 2014 during a time that he understood that U.S. Bakery did not have a bakery in the state, creating a genuine factual issue.

Pictures of premium cuts of meat on pet food are ambiguous, court says

Wysong Corp. v. APN, Inc., Nos. 16-11823, 16-11825, 16-11826, 16-11827, 16-11832 (E.D. Mich. Jul. 20, 2017)

Wysong, a pet food manufacturer, sued six competitors, alleging that their packages used images of “premium meats, poultry, fish, and vegetables” that “do not fairly represent the actual ingredients of the packages.” The court dismissed the complaint without further leave to amend.

Wysong offered three theories of falsity/deceptiveness: (1) Defendants’ packaging used images of “premium cuts” such as “lamb chops, chicken breasts, [ ] steak, or salmon fillets” that consumers “would feed [their] famil[ies],” when, in fact, the food is actually made of the “lower cost parts of the animal left over after all the parts a human finds appetizing have been removed.”  (2) Some pacakging used images of “premium cuts from a particular animal when the primary animal ingredient in the product is not only of a lower cost, it is from a completely different species of animal.” (3) Some packaging used images of premium cuts even though the actual “primary animal ingredient is a low cost and low grade animal ‘by-product’ … derived from the cheapest part of the animal” – such “as stomachs, intestines, bone, [and] blood.”  These misrepresentations allegedly manipulated “the natural inclination among pet caretakers to purchase the highest quality, premium foods that are in accordance with their own sensibilities.”

However, the court concluded that Wysong didn’t explain how any particular image was false or misleading in context, but just attached photos of hundreds of defendants’ packages to its complaint and broadly alleged that every image was false and/or misleading in at least one of the three ways identified above.  But the packages varied widely: Some used large images of premium ingredients, while others used smaller images; some put premium ingredients in the center, while others tucked the images in a bottom corner; some used words or names that highlighted or identified the depicted premium ingredients while others didn’t; some depicted a single image of a premium ingredient, while some used more than one; some came in large bags, others in small cans.

The court found that the images weren’t literally false.  An image of a premium ingredient on a pet food package, standing alone, didn’t “unambiguously,” “necessarily,” and “unavoidably,” convey that the food in the package contained the exact cut or grade of the ingredient pictured, because a reasonable consumer could understand the image as merely identifying the type of ingredients in the product.

Likewise, it is possible that consumers viewing Defendants’ packaging would understand that the images of premium ingredients on Defendants’ packages are for “identification purposes only” and are used to help consumers determine the types of meats, poultry, fish, and/or vegetables included in, or the flavors of, the pet food they are purchasing. Thus, as in Scotts Co., Wysong’s literal falsity claim fails.  So too with the “primary species” theory—an image of an animal doesn’t unambiguously communicate that meat from that animal is the primary animal ingredient.  And so too with the animal by-product theory.

Although misleadingness is often a question of fact, it can also be resolved on a motion to dismiss where appropriate.  The court found Wysong’s theories deficient because they didn’t account for context. The court found it implausible that every image of a premium ingredient – no matter its characteristics or context – conveyed the same misleading message about the product’s contents.  By contrast, complaints about food packaging that survived a motion to dismiss provided details about specific images, their placement on the packaging, their relationship to the product names/slogans/verbal claims/other advertising, etc.

Friday, July 21, 2017

Transformative work of the year (so far): To tell my story, showing near DC now

Runs until July 30

Although the structuring conceit is a loose retelling of Hamlet, with a modern-day fangirl as the tragic protagonist Elsie, there are a number of other fandoms represented, most obviously Harry Potter, secondarily Twilight (though only identified as “vampire” in the promo materials, grrr), MCU (similar, grr), LoTR, Sherlock, and Historical RPF (Abraham Lincoln).  Some observations:

1.     Just as Ready Player One hails as its ideal reader an 80s fanboy, this play hails a 21st-century fangirl.  I laughed a lot. 
2.     Me, a pedant: Technically, this isn’t a “fanfic,” but a “fandrama” or “fanwork,” though I understand why they used the more well-recognized term.
3.     For a number of reasons, commercial “fanworks,” if you accept the application of that term to them—and for this play at least I think we should—tend to be metafictions, interested in the mechanisms of storytelling (see, e.g., Jasper Fforde’s series, Dumas père’s Kean as remixed by Sartre, Supernatural’s Fan Fiction and Slash Fiction episodes), especially if you include in the metafiction category retellings from the perspective of a character whose experience is elided from the original (see, e.g., Wide Sargasso Sea, Lo’s Diary, The Wind Done Gone, Jacqueline Carey’s retelling of LoTR).  This play is no exception, as the title indicates, and I also sense a reference to Hamilton’s “who lives, who dies, who tells your story”—especially since Petri’s play, much more than Shakespeare’s, emphasizes that you (the character) have little to no control over those things.  In Petri’s version, Elsie is not able to orchestrate the narrative for Horatio to repeat.

4.     The program fascinated me because the format is very specifically taken from the Archive of Our Own, with its major tags, additional tags and kudos count, as well as fandom categorizations.  And I’m pretty sure all the additional tags are canonical, even though some of them are not what we envisioned when we set up the additional tags field.  That’s folksonomy for you.  Anyway, obviously I don’t think there’s any trademark problem, and wouldn’t be for a creative work even if it used more of the Archive’s trade dress, but it’s notable that the AO3 now provides some standard formatting choices.

FFrom outside, a wall inviting audience members to share their fandoms.  I recognized maybe half?

Tuesday, July 18, 2017

9th Circuit burps up a correction to recent Gerber case

Bruton v. Gerber Prods. Co., No. 15-15174, 2017 WL 3016740, -- Fed. Appx. --- (9th Cir. Jul. 17, 2017)

On a petition for rehearing, the previous panel opinion and partial dissent were withdrawn and replaced with the following, still partially reviving plaintiff’s consumer protection class action but getting rid of a deception theory, as the dissent had wanted.

Bruton filed a putative class action against Gerber, alleging that labels on certain Gerber baby food products included claims about nutrient and sugar content that violated FDA regulations as incorporated into California law.

Again, the court of appeals rejected the district court’s ruling that the class wasn’t ascertainable. There is no separate “administrative feasibility” requirement for class certification.

However, there was no genuine dispute of material fact on Bruton’s claims that the labels were deceptive in violation of the UCL, FAL, and CLRA.  Her theory of deception was that the combination of “healthy” claims on Gerber’s products, in violation of FDA regulations, and the lack of claims on legally compliant competitors’ products made Gerber’s labeling likely to mislead the public into believing that Gerber’s products were of a higher quality than its competitors’ products.

This theory “may be viable,” since even technically correct labels can be misleading under California law.  However, Bruton didn’t produce enough evidence to survive summary judgment; her own vague, uncorroborated, and self-serving testimony was insufficient.  Further, the record included Gerber’s and some competitors’ labels, but it showed that those competitors made many of the same allegedly illegal claims. “A reasonable jury comparing the labels side by side could not rationally conclude that Gerber’s labels were likely to deceive members of the public into thinking that Gerber’s products were of a higher quality than its competitors’ products that made the same type of claims.”  Likewise, FDA warning letters (informal and non-binding) didn’t indicate that competitors complied with the law.

However, the district court erred in granting summary judgment to Gerber on Bruton’s claims that the labels were unlawful under the UCL. The unlawfulness prong “borrows” predicate legal violations and treats them as independently actionable under the UCL. “The best reading of California precedent is that the reasonable consumer test is a requirement under the UCL’s unlawful prong only when it is an element of the predicate violation.” The predicate violation here was of California’s Sherman Law, which itself incorporates standards set by FDA regulations, and those standards didn’t include any requirement of likely deception. (Though query how that works with modern First Amendment jurisprudence.)

Park claim fails to fly: formerly well-known mark lacks current secondary meaning

Parks LLC v. Tyson Foods, Inc., 2017 WL 3014273, -- F.3d --, No. 16-2768 (3d Cir. Jul. 6, 2017)

District court opinion discussed previously here. Since the 1950s, Parks Sausage Company has manufactured or licensed sausage under the brand name “PARKS,” though its registration expired in the early 2000s.  In 2014, Tyson, the owners of the frankfurter brand BALL PARK, which is responsible for 23% of the revenue of all franks sold in the US, launched the super-premium line PARK’S FINEST, and Parks sued for trademark infringement and false advertising.  Here, the court of appeals affirms the rejection of both claims.

“False advertising claims do not require proof of secondary meaning, so litigants may be tempted to frame a false association claim as a false advertising claim, to ease their evidentiary burden.”  That’s what seems to have happened here, so the court tried to clarify the distinction between §43(a)(1)(A) and §43(a)(1)(B) claims, holding that the false advertsing claim here failed because it was “essentially a false association claim in disguise.”

False advertising requires a misrepresentation of “the nature, characteristics, qualities, or geographic origin” of a product.  “PARK’S FINEST is only misleading in the way that Parks suggests if a consumer makes the connection between PARK’S FINEST and PARKS and has in mind a pre-existing association between PARKS and high quality products. This is a false association claim and nothing more.”  Even the argument that the name would misleadingly imply that the product was a sausage when it’s really an inferior frankfurter depended on the consumer knowing that PARKS was a mark for sausages and making a false association.

Even if Parks argued that “PARK’S FINEST” was misleading for blurring the distinction between frankfurters and sausages, the packaging was unambiguous that the product was frankfurters and the rest of the label couldn’t confuse consumers; plus Parks repeatedly took the position that a frankfurter is a kind of a sausage, meaning that there was no misleadingness by its own lights.

Parks contended that PARK’S FINEST was misleading with regard to “origin,” but that didn’t work both for the reasons given above and because §43(a)(1)(B) is about geographic origin, not other types of false designations of origin.  It’s not the right vehicle “for addressing claims of false designation of origin that are not concerned specifically with geographic origin.” “Geographic origin” “refers solely to the place of origin and not to the creator, manufacturer, or any broader conception of the term ‘origin.’”  (In a footnote, the court commented that it wasn’t resolving the issue of whether a term had to be a “geographically distinctive trademark” before a manufacturer could be found liable for falsely advertising the geographic origin of its goods.  Here “trademark” seems to mean something like “common-law certification or collective mark.”)  Because the name PARK’S FINEST says nothing about the product’s “geographic origin,” there was no valid §43(a)(1)(B) claim.

The false association claim then failed for want of a showing of secondary meaning.  As a surname-based mark, PARKS was required to show acquired distinctiveness; it didn’t have that any more.  Parks argued that inherent distinctiveness should have been a jury question because “parks” is also the plural of “park,” as in recreational land, and therefore could be seen as an “arbitrary” mark. “But it is undisputed that Parks was named after its founder, someone who Parks describes with justifiable pride as ‘an important figure in the history of American Business,’ and Parks’s reputation is closely linked to its founder,” so no reasonable juror could conclude that PARKS was anything other than a reference to the founder. (Isn’t there a logical problem here?  If in fact PARKS lacks acquired distinctiveness, why wouldn’t the hypothetical reasonable consumer encounter the mark in ignorance of its history, and thus not make the “link” as described, leaving her to figure out what was going on?)

Of note in the secondary meaning discussion, Parks tried to use its confusion survey to show secondary meaning; that didn’t work well.  An Ever-Ready survey shows consumers only the potentially-infringing product and asks open-ended questions to determine whether they believe the product is associated with the senior mark; it can also provide evidence of secondary meaning. This kind of survey works best for commercially strong marks.  “Holders of weaker marks more frequently employ a Squirt survey,” as here.  A Squirt survey puts two products side by side and asks consumers about their beliefs about source.  “[A] well-designed Squirt survey may show a likelihood of confusion. What it does not do or even purport to do, however, is prove secondary meaning.”  Because of how the survey is conducted, “a consumer who had never heard of PARKS could still conclude that the two products were affiliated.” Follow-up questions might have allowed participants to identify the source of PARKS or PARK’S FINEST, which could have shed light on secondary meaning, but the survey didn’t ask them.

Parks argued that proof of likely confusion proved secondary meaning, but that’s just wrong.  The evidence sometimes overlaps, but not always. “Establishing that two marks are similar does not necessarily lead to any valid conclusion about whether either of the two has secondary meaning.”

Bee aggressive: Copied ad leads to grab bag of claims

Fischer v. Forrest, 2017 WL 2992663, -- F. Supp. 3d –, 14 Civ. 1307 (S.D.N.Y. Jul. 14, 2017) (report and recommendation)

Fischer invented Fischer’s Bee-Quick, a product used to facilitate honey harvesting, and marketed it using, among other things, the following four phrases:
a) “Are you tired of your spouse making you sleep in the garage after using Butyric Anhydride?”
b) “Are you tired of using a hazardous product on the bees you love?”
c) “Fischer’s Bee-Quick is a safe, gentle, and pleasant way to harvest your honey”
d) “A Natural, Non-Toxic Blend Of Oils and Herbal Extracts”

Defendants were in some way involved with Brushy Mountain Bee Farm, which initially resold Fischer’s product, using the text (whose authorship was disputed):
This 100% Natural, non-toxic blend of oils and herb extracts works just like Bee Go and it smells good! Fischer’s Bee Quick is a safe, gentle, and pleasant way to harvest your honey. Are you tired of your spouse making you sleep in the garage after using Bee Go? Are you tired of using a hazardous product on the bees you love? Then this is the product for you!

Around 2010, Brushy Mountain decided to sell a comparable product that performed the same function; Brushy Mountan bought a third party product and labeled it as “Natural Honey Harvester,” but continued to use nearly the same promotional text.  A 2011 Brushy Mountain catalog used the phrases as follows:
For years we have promoted the use of a natural product to harvest honey but an unreliable supply of such a product has forced us to come out with our own. This 100% Natural, non-toxic blend of oils and herb extracts works just like Bee Go® and it smells good! Natural Honey Harvester™ is a safe, gentle, and pleasant way to harvest your honey. Are you tired of your spouse making you sleep in the garage after using Bee Go®? Are you tired of using hazardous products on the bees you love? Then this is the product for you!

Fischer also alleged that defendants intentionally removed copyright management information (“CMI”) from Fischer’s promotional brochure and the Fischer’s Bee-Quick bottle photos. Defendants changed the textual reference in one of the phrases from “Fischer’s Bee-Quick” to “Natural Honey Harvester,” and allegedly also stripped the metadata from Fischer’s original Fischer’s Bee-Quick bottle photo displayed on Brushy Mountain’s website, and overlaid the photo with a watermark of the Brushy Mountain Bee Farm logo.

There were lots of factual disputes; the magistrate recommended not granting summary judgment on the ground that Fischer’s copyright registration was invalid, even though the first submission (of several) to the Copyright Office didn’t contain the brochure at the heart of the case.  The magistrate also recommended finding the brochure as a whole copyrightable, and concluded that the relevant portions evinced enough originality to be protected, at least as a whole. The “rhetorical questions that play on the worries of beekeepers” were unique and the whole of the brochure was greater than the sum of its parts, although the phrase “A Natural, Non-Toxic Blend Of Oils and Herbal Extracts” was merely descriptive of the product ingredients. Even in isolation, though, most if not all of the rhetorical questions were long enough for copyright protection, particularly the “sleep in the garage” bit.

Unfortunately for Fischer, the copyright claim still had fatal problems.  (1) He did not register before the infringement began, so he was not eligible for statutory damages or attorneys’ fees.  (As an aside, the magistrate analyzed the relevance of secondary liability to the rule that infringements that continue past the date of registration don’t provide eligibility for statutory damages—although two of the vendors for  which Brushy Mountain was allegedly secondarily liable began their infringing activities after the registration, their infringements were republications of the initial ad, and thus part of an ongoing series of infringing acts that didn’t restart the clock.)  (2) Fischer elected statutory damages and declined to submit evidence of actual damages (which probably would have been hard to prove; this is not the type of work for which there is a licensing market in which money changes hands).  (3) Defendants agreed to remove the challenged text, mooting the claim for injunctive relief.  With nothing left for a court to do, the magistrate recommended granting summary judgment to defendants on the copyright claim.

DMCA claim:  Fischer alleged that defendants stripped the metadata from Fischer’s original Fischer’s Bee-Quick bottle photo displayed on Brushy Mountain’s website, but the magistrate recommended rejecting that argument because he submitted no evidence that the metadata included CMI; not all metadata is CMI. Fischer also argued that the allegedly infringing ad had CMI stripped from it because defendants changed the phrase, “Fischer’s Bee-Quick™ is a safe, gentle, and pleasant way to harvest your honey,” by replacing “Fischer’s Bee-Quick™” with “Natural Honey Harvester”:
side by side comparison
Fischer argued that the product’s name, because it had Fischer’s name in it, was CMI.  To prevail on a §1202 claim, Fischer had to show that defendants “intentionally remove[d]” CMI that was “conveyed in connection with copies ... of [his] work or ... displays of [his] work.” The relevant “work” here was the the brochure, while defendants created derivative works of the brochure. The creation of infringing derivative works didn’t qualify as the “removal” of CMI from the original work. 

The magistrate was also skeptical that even more direct “extraction” of phrases from a larger work could constitute “removal” of CMI, since the statute contemplates “copies” of a work and extraction of “distinct elements” of a work doesn’t constitute a “copy.” 
If, for example, someone extracted and reproduced several sentences from a copyrighted Sherlock Holmes story, without crediting the Conan Doyle Estate, it would stretch the definition of “removal” to say that CMI had been “removed” from the copyrighted “work.” It might be copyright infringement, but it would not be a DMCA violation.
This conclusion makes total sense—otherwise Blurred Lines should also have been the basis of a §1202 claim—but it requires a bit of fancy footwork to reconcile with the idea that substantial similarity can constitute a violation of the reproduction right, further strengthening my view that the derivative works right should be where such claims live.

Even assuming that the relevant “work” was the four key phrases collectively, Fischer didn’t show that the phrases contained CMI.  “The DMCA’s expansive definition of CMI cannot trigger liability any time a person’s name is contained in a copyrighted work without reference to how that information was used and displayed on the work itself.”  The name of the product discussed in the work is not CMI for the work; such a name, even if includes the author’s name, “does not have any CMI significance—it simply is part of the product’s name (just like Kellogg’s Corn Flakes or Wrigley’s Chewing Gum).”

Fischer didn’t plead a trademark infringement claim, the magistrate reasoned, because he consistently alleged only “counterfeiting,” even when represented by counsel. 

Fischer’s §43(a) false endorsement claim also failed.  This claim was based on Brushy Mountain’s use of URLs that, even after they switched products, still contained “fischer” as part of the address string, e.g.,
page for Fischer replacement, with Fischer's name still in URL post-domain path
The judge applied the multifactor confusion test, and found that the claimed strength of the mark, mark similarity, and product similarity all favored Fischer.  But there was no evidence of actual confusion or bad faith, which the judge found to be the most significant under these circumstances.  This wasn’t a domain name case; the use of “” or “” to sell a competing product would support a false endorsement claim. But a name “buried in the post-domain paths of the Brushy Mountain web pages” wasn’t likely to confuse consumers about Fischer’s endorsement or approval. “No consumers are likely to believe that Fischer has somehow endorsed or approved Natural Honey Harvester when viewing the post-domain portion of the URL, if they even see it at all.”  Likewise, consumer sophistication favored defendants.  “Whether defined as the typical consumer of beekeeping products, or internet users writ large, no ordinary consumer is likely to see Fischer’s name in the post-domain path of the URL and wonder if that signified his endorsement of a completely different product in the accompanying web page.”  Nor did Fischer provide evidence that, as he contended, the use of his name in the address led Brushy Mountain’s pages to appear higher in search results, or that, even if that were true, that fact would have any bearing on consumer confusion..

Fischer’s only evidence of actual confusion was an undated review on the Brushy Mountain website complaining: “The first bottle I bought last year worked well but this new stuff was a complete waste of time and money.” But there was no evidence that the commenter ever bought Fischer’s product, as opposed to two different bottles of the replacement product; defendants submitted an affidavit stating that the review was posted two and a half years after Brushy Mountain stopped selling Fischer’s product.

The New York unfair competition claim is like a §43(a) claim, but requires “‘either actual confusion or a likelihood of confusion, and there must be ‘some showing of bad faith’ on the part of the defendants.” So that was a no-go too.

Note: why not a right of publicity claim?  Would the court’s CMI reasoning “this is a product name, not an author name” also apply there?  Would there be any other defense?

The magistrate also recommended tossing out Fischer’s false advertising claim, which was based on the statement, “For years we have promoted the use of a natural product to harvest honey but an unreliable supply of such a product has forced us to come out with our own. This 100% Natural, non-toxic blend of oils and herb extracts works just like Bee Go® and it smells good!”  Fischer primarily argued that “our own” was false, because they bought a third-party product, though he also claimed that “the third-party manufacturer makes nothing but cleaning products, calling into question if the product is even food-grade, let alone ‘100% Natural”’  Furthermore, the only thing one defendant said about whether the product was “actually natural” in deposition was “I assume so.”  Given where the burden of proof lies in a private false advertising claim, this wasn’t enough to proceed on the 100% natural claim, even though it was material.

As for “our own,” that wasn’t literally false; while it could mean that defendants selected the ingredients and personally created the product, but “another reasonable interpretation is that defendants marketed a natural honey harvesting product, from whatever source, under their brand name,” which was true. There was no evidence of consumer deception, even though Fischer testified that unnamed competitors had responded to the ad by making their own knockoffs—even if knockoffs emerged, that didn’t mean the ad caused them, or that consumers were deceived.

Thursday, July 13, 2017

Court gags on Utah's ag-gag law

Animal Legal Defense Fund v. Herbert, No. 13-cv-00679 (D. Utah Jul. 7, 2017)

The court strikes down Utah’s ag-gag law, relying on Alvarez, Reed, and the idea that not all access procured by lying is “trespass” or “harmful.” H/T James Grimmelmann, who thinks the reasoning doesn’t quite work, perhaps because of the court’s reluctance to rely on the legislature’s obvious speech-suppressive intent.

A series of high-profile investigations into agricultural facilities in the mid- to late 2000s spurred a new round of ag-gag laws. While one might once have thought that film of workers jabbing sick cows in the eye, grinding up live chicks, and skinning calves alive might have led to increased protections against animal abuse, it instead mostly led to increased protections against investigation of agricultural facilities. (One wonders what Upton Sinclair would have thought: the animal rights organizations aimed for the heart, and apparently hit the public in the eye.) Utah’s law was introduced, according to its sponsor, because of “a trend nationally of some propaganda groups . . . with a stated objective of undoing animal agriculture in the United States.” Another representative, a farmer, stated that the bill was targeted at “a group of people that want to put us out of business,” and noted that farmers “don’t want some jack wagon coming in taking a picture of them.” The sponsor of the Senate bill said that the bill was meant to address the “vegetarian people that [are] trying to kill the animal industry” by “hiding cameras and trying to . . . modify the films and stuff like that.”

Utah’s law criminalized “obtain[ing] access to an agricultural operation under false pretenses,” as well as (1) bugging an agricultural operation; (2) filming an agricultural operation after applying for a position with the intent to film; and (3) filming an agricultural operation while trespassing.

In 2013, Amy Meyer became the first person to be charged under the law—apparently the only person ever charged under an ag-gag law nationwide. She was arrested while filming what appeared to be a bulldozer moving a sick cow at a slaughterhouse, though she was on public property at the time and thus not subject to the law. She was actually charged, though the State dismissed the case without prejudice (!). This is an interesting case study not of chilling effects (of which more below) but of licensing effects—the police, whose acts are likely to be far more important than those of prosecutors, and harder to constrain, felt empowered to suppress her recording because they had a general sense that some kinds of recording were illegal, and prosecutors backed them up.

Meyer, joined by ALDF and PETA, sued. The state challenged their standing. Allegations of subjective chill aren’t injury in fact, but “a plaintiff need not expose himself to actual arrest or prosecution to be entitled to challenge a statute.” In the Tenth Circuit, standing requires (1) that in the past, the plaintiff engaged in the kind of speech implicated by the statute; (2) that the plaintiff has a desire, but no specific plans, to engage in the speech; and (3) that the plaintiff presently has no intention of engaging in the speech because of a credible threat the statute will be enforced.  This test was satisfied by all three plaintiffs.  No concrete plans to violate the law were required.

The state argued that lying and recording without permission weren’t protected by the First Amendment at all.  Starting with lying: lying is speech, but some speech is outside the First Amendment categorically.  Alvarez, however, says that “lies are not categorically unprotectable by the First Amendment,” though lies that cause “legally cognizable harm” are outside of First Amendment protection.  Do the lies targeted here—“obtain[ing] access to an agricultural operation under false pretenses”—cause legally cognizable harm?

The state identified two kinds of harm from such lies: (1) danger to animals and employees, and (2) trespass. The first is (no pun intended) bullshit.  There was no evidence of it, and no evidence that it motivated the law’s enactment.  Plus, even though some lies could endanger animals or employees, not all would, e.g., “the applicant who says he has always dreamed of working at a slaughterhouse, that he doesn’t mind commuting, that the hiring manager has a nice tie.”  These are interesting examples because they’re all, in some way, unfalsifiable.  There are falsifiable lies that also wouldn’t inherently pose dangers, though they might be somewhat more correlated with various risks—e.g., the applicant who claims to have a college degree but doesn’t; the applicant who fails to report a conviction twenty years ago; and so on.  Query what the fate of a more specific law targeted at lying about qualifications ought to be where the job itself doesn’t actually require a particular qualification.

On to trespass: the state argued that access to private property procured through misrepresentation is trespassing, and trespassing is inherently legally cognizable harm.  But misrepresentation doesn’t always negate consent, and with consent there is no trespass.  Courts to consider the issue have concluded that it depends on the type of harm, if any, the liar causes. “[I]f the person causes harm of the type the tort of trespass seeks to protect—interference with ownership or possession of the land—then her consent to enter becomes invalid, and from that point on she is not merely a liar, but a trespasser as well.”  This is where James Grimmelmann objects, as I understand it; trespass can also be about interference with the right to exclude, which is why we teach Jacque v. Steenberg Homes, and that is inherent in the tort.  But there is still physical trespass that harms only dignitary interests—as in Jacque—and dignitary interests have at best a mixed track record against First Amendment interests (note that I am doing the usual slip/slide between coverage and protection here, sorry).  Anyway, without interference with ownership or possession, the consent given to the liar remains valid even if procured through misrepresentation. 

“Thus, a competitor who enters a business to steal secrets while posing as a customer is a trespasser, as is the man who is invited into a home while posing as a repairman, but is in fact just a busybody looking to snoop around (because both have interfered with ownership or possession of the property).” 

Okay, that’s a little harder to explain, because the secret-stealer may cause economic harm, but not to the land, and the busybody may not cause any economic harm (and we may have to default to the concept of high-risk categories, since someone who will lie to get into your house poses obvious dangers to you and your property).  Contrast those people with the court’s examples of liars who don’t cause trespass-type harm: “the restaurant critic who conceals his identity, the dinner guest who falsely claims to admire his host, or the job applicant whose resume falsely represents an interest in volunteering.”  These seem to be, respectively, socially productive, social, and hard-to-see-how-a-jury-could-judge-harm lies.  It’s not clear to me that the concept of “possession” helps much here in figuring out the difference between lies that are generally recognized as causing more harm than they’re worth and lies that aren’t.  It seems that trespass doctrine itself may encode the same “lies that cause harm” category as Alvarez, with all the resulting questions about when the inquiry should be retail or wholesale.  I can’t say that feels wrong to me, but it does expose the structure of Alvarez’s consequentialism. 

Back to the court’s reasoning: “the Act here is immune from First Amendment scrutiny under the State’s trespass theory only if those who gain access to an agricultural operation under false pretenses subsequently cause trespass-type harm.”  Because such people don’t necessarily cause harm, and the law sweeps in trivial, harmless lies—“an applicant’s false statement during a job interview that he is a born-again Christian, that he is married with kids, that he is a fan of the local sports team,” or the use of a local address for an applicant who’s out of town—the law is subject to First Amendment scrutiny.

The state argued that the court should construe “false pretenses” to exclude harmless white lies and cover only lies material to a person’s access.  That had vagueness implications, and might cover the applicant who’s really a fan of the crosstown rival rather than the local team, but regardless, the lie’s materiality to the owner does not itself make a liar into a trespasser, as several cases about undercover investigations have held.  So when is an invited guest a trespasser? The court offered the example of a landscaper who gets a contract by misrepresenting his previous experience, then does a great job—has he committed a trespass?  The court found the “trespass-type harm” standard to be the most persuasive.  The materiality of the lie might render it harmful, but not in a legally cognizable way.  Ultimately, absent a further showing of harm, at least some of the lies criminalized by the law were protected by the First Amendment.

The state then argued that obtaining a job under false pretenses causes legally cognizable harm.  Alvarez says: “Where false claims are made to effect a fraud or secure moneys or other valuable considerations, say offers of employment, it is well established that the Government may restrict speech without affronting the First Amendment.” This might work if the law were limited to obtaining employment under false pretenses, but instead it covered “access,” which would include “lying about wanting to take a tour, lying about an interest in acquiring the facility, or lying about wanting to write an article about the facility for Modern Farmer.”

The First Amendment also applied to the recording provisions, even though the state argued that the act of recording wasn’t speech.  But we know that speech-suppressive laws can operate at different points in the speech process.  The government can’t circumvent the right to disseminate a video by regulating the making of that recording instead.  The state can regulate the act of recording, but the regulation must be justified and tailored appropriately.

Finally, the state argued that the First Amendment wasn’t implicated because the law applied only to speech on private property, to which the First Amendment didn’t apply. The state’s argument conflated “a landowner’s ability to exclude from her property someone who wishes to speak” with “the government’s ability to jail the person for that speech.” The First Amendment is not itself a license to trespass on private property, or a defense to a private trespass claim.  (But isn’t that exactly what it is here, run through a concept of consent?  After all, the state is involved in the enforcement of the private trespass claim, as it was in NYT v. Sullivan.  One way to think about it, tentatively: what we are really talking about is the idea of consent, and how some lies don’t vitiate consent; it might be a different question if the state explicitly legislated to make clear that a particular lie vitiated consent, but absent that there is a common-law background against which relevant harm is defined.  Framed like that, this implicates the question of standing/legislative competence to identify harm, but at least provides a roadmap for how one might alter the definition of harm by finding something new and cognizable.) 

Generally, a landowner can remove someone from her land even when that person wishes to exercise First Amendment rights. But the question here was whether the state could prosecute a person based on her speech on private property, without even justifying or tailoring the law.  It can’t.  The state certainly couldn’t criminalize any criticism of the government on private property.  (Could it criminalize political discussions without the consent of the property owner on whose property the discussions were held?  This hypothetical has some relevance to various proposals about whether, for example, Delaware ought to change its corporate law so that shareholders should have to affirmatively vote to allow corporations to give political donations.)

What level of scrutiny applies?  Under Reed, a law is content-based “if determining whether someone violated the law requires looking at what was said.”  Still, it’s not entirely clear what level of scrutiny is applied to anti-lying laws after Alvarez, in which a plurality applied strict scrutiny and two other Justices applied “proportionality review,” seemingly a variant of intermediate scrutiny.  The court wasn’t sure what the “narrowest” ground in Alvarez was, because it characterized the disagreement among justices as “one of kind—whether to apply strict or proportional scrutiny—not of breadth.”  That seems odd to me; ordinarily we’d say intermediate scrutiny was the narrower ground, but in any event, lower courts have generally applied strict scrutiny to laws implicating lies post-Alvarez.

Here’s where everything would be much simpler if we just admitted this was a viewpoint-based law; there’s a reason they’re called “ag-gag” laws.  But instead, the court reasoned that the law was content-based because determining whether there’s been a lie requires scrutinizing what the person said.  The state argued that an anti-lying provision is content-neutral because it barred all persons, regardless of the message they intend to disseminate, from lying to gain access to agricultural operations.  But that’s not the test under Reed.  As for the recording provisions, the question was whether criminalizing the recording of a particular location was a content-based restriction.  It was, because the law criminalizes the recording “of” the operation, not merely any recording “at” the operation.  “[A] person standing on agricultural operation property who films a passing flock of geese is certainly at an agricultural operation, but nobody watching the film would contend it was a recording ‘of an agricultural operation.’ … In short, if a person walks off an agricultural facility with a recording, the only way to know whether she is criminally liable under the Act is to view the recording.”  That’s content-based.

The court’s reading of Reed is readily defensible (though it doesn’t address the internal contradictions of Reed, as it has no reason to do so).  Essentially, at least outside of commercial speech, only time/place/manner restrictions are exempt from strict scrutiny.  One might wonder what is left for the concept of viewpoint-based laws.  In a pre-Reed world where content-based meant “not time, place and manner, but covering broad categories in some way that doesn’t inherently suggest that a government attempt to distort debate is afoot,” the concept of viewpoint-based regulation did useful work in identifying government attempts to distort debate that would get scrutiny that was strict in theory and fatal in fact.  Post-Reed, who knows?

Unsurprisingly, the law didn’t survive strict scrutiny.  The court didn’t have to wade too far into “complex policy questions” because of the breadth of the law.  The government identified four allegedly compelling interests: (1) the law protects animals from diseases brought into the facility by workers; (2) it protects animals from injury resulting from unqualified or inattentive workers; (3) it protects workers from exposure to zoonotic diseases; and (4) it protects workers from injury resulting from unqualified or inattentive workers. The state explicitly disclaimed reliance on privacy or property interests.  As the court noted, there’s no mention of worker or animal safety in the legislative history, which was instead “rife with discussion of the need to address harm caused by ‘national propaganda groups,’ and by ‘the vegetarian people’ who are ‘trying to kill the animal industry.”

Even assuming that animal and worker safety were actually the reasons for the law, there was no evidence that the law advanced those interests.  The targeted harm was entirely speculative, and that can’t establish a compelling state interest. 

At most, there was “some evidence in the record of Plaintiffs’ undercover operatives perhaps prolonging suffering of animals by not reporting abuse in a timely manner.” The state didn’t claim that the law furthered the interest of quickly addressing animal abuse by agricultural operations, but even had it done so, the law wasn’t “remotely” tailored to that goal.  Several states require employees who record abuse to turn over the recording to authorities within a certain time period.  While not opining on the constitutionality of such a provision, that would be both more narrowly tailored to and more effective at addressing delays in reporting animal abuse.

Even if the state had shown a compelling interest in animal and employee safety, it hadn’t shown narrow tailoring.  Narrow tailoring requires that a law be “actually necessary” to achieve the state’s interests, and may not be over or underinclusive.  The record didn’t show necessity, and was both hugely overinclusive, criminalizing “the most diligent well-trained undercover employees, and underinclusive because “it does nothing to address the exact same allegedly harmful conduct when undertaken by anyone other than an undercover investigator.”  What the law was perfectly tailored to do was preventing undercover investigators from exposing agricultural facility abuses. ß We are apparently having a general debate over whether, or in what circumstances, courts can look at what the government officials responsible for a policy were actually trying to do, based both on what they said and on what they wrote into the policy.  If you think that the analysis above was too much work for an obvious conclusion, or that it may have unintended consequences for much less pernicious laws, as I do, then it may be useful to rely more heavily on the objectively manifested indicia of intent: who was targeted?  There’s often no separate need to ask “why.”

Anyway, as the state didn’t contend that preventing such exposure was a compelling state interest, that was the end of the analysis, and of the law.

Documents from my ICE suit

Available here, via Public Citizen. From what we have, I think it's fair to say that most seizures are legitimate counterfeits, so to speak.  That doesn't excuse ICE or the brand owners who supply them with information from the obligation to comply with the law, of course, especially when the exceptions are particularly likely to serve free speech values.  But it's much better than the alternative.

Wednesday, July 05, 2017

Another thought on ICE's statements

This isn’t specifically IP-related, but I’m pondering the part of my FOIA suit requesting training materials for ICE agents relying on case law, etc.  Initially, the ICE spokesperson who responded to my inquiry said that ICE based its seizure decisions on consultation with agency and Department of Justice attorneys, including consideration of “potential fair use provisions and federal circuit-specific case law.”  When ICE didn’t produce any documents relating to any of that, we used the initial statement as evidence that ICE hadn’t met its FOIA obligations.  The court found it perfectly plausible that all ICE used to determine counterfeit status were manufacturers’ guides, rather than materials of its own.

Now, I will admit that I too suspected that the initial claims were bullshit, in the specific sense of being made with complete indifference to their truth or falsity in order to achieve a non-truth-related conversational aim, that of getting me to shut up and go away.  (That worked really well, as you can see.)  But it’s depressing—I wish I could say extraordinary—that the court didn’t even count that statement as evidence that such guidance existed.  What does it mean for a democracy when a court tells us we shouldn’t take official statements seriously, even—maybe especially—statements made at such a low level about matters that are relatively low-stakes?  Is government only to be trusted when it's under oath?

Today in likely unlicensed goods

These Joker fireworks:
And just because the typo is awesome--not a portmanteau word you see that often, or usually want to have go together:
"open cap to explose the fuse"

NFL is advising ICE to seize obvious parodies, my FOIA suit reveals

When last I reported on this, the judge had ordered ICE to unredact materials showing company advice to ICE to seize parody merchandise, since such merchandise wasn't counterfeit and there could be no legitimate law enforcement interest in keeping this advice from the public.  Indeed, ICE's subsequent production showed that, like the NHL, the NFL has instructed ICE that obvious parodies/nonconfusing uses are counterfeit:
From NFL manual: Dallas Sucks shirt is counterfeit because "NFL licensed merchandise will never favor one Club over another or make derogatory use of another Club's marks"

Another supposedly counterfeit shirt showing Minnesota player urinating on Green Bay Packers logo inside outline of Wisconsin
So, what do we know?  (1) Despite ICE's initial claims to me via its spokesperson and a lawyer, ICE relies only on industry guides to identify counterfeits, not on any independent sources.  (2) Those industry guides identify what they don't like, not what is within the scope of counterfeit goods.  (3) Most of what ICE seizes is truly counterfeit, but when it seizes parody merchandise, it implicates First Amendment interests in free speech.

What next?  (1) ICE should improve its guidance to agents, though I'm not sure how that is best to be accomplished.  (2) Industry guides should limit themselves to true counterfeits.  I will note that thus far it doesn't seem that clothing brands, which also provided guides to ICE, overreached in the same way, so it can be done.  Calling the NFL/NHL!

a few misrepresentations aren't commercial advertising or promotion

Solmetex, LLC v. Dental Recycling, Inc., No. 17-cv-860, 2017 WL 2840282 (S.D.N.Y. Jun. 26, 2017)

The parties compete in the market for devices for removing particulate from dental office wastewater. (Did I mention how much I love learning about market niches I never even considered? This job is the best job.) The court here dismisses defendant DR’s amended counterclaims against Solmetex.  In 2009, DR entered into an exclusive marketing contract and licensing agreement with the Michigan Dental Association and its subsidiary; MDA agreed to promote DR’s product to its members. Solmetex, upon learning of a 2017 promotion, allegedly made two kinds of misrepresentations about DR’s product to MDA and another third party.  Solmetex allegedly told representatives from MDA that DR’s product hadn’t been tested by a relevant organization, wasn’t compliant with safety standards, and couldn’t replace Solmetex’s product, and repeated these statements in a C&D to MDA.  DR alleged that these statements were false, but MDA nonetheless terminated its marketing and licensing agreements with DR as a result.  Solmetex also allegedly contacted an unknown representative of the dental distributor Henry Schein and stated that DR’s devices “were not approved by the EPA ..., and infringed a patent.” In reality, the relevant EPA rule had been put “on hold” by the Trump administration, and Solmetex had no patents on its devices, but DR lost at least one sale as a result.

Solmetex sued DR for allegedly unlawfully marketing its device as equivalent to Solmetex’s product, which among other things produced counterclaims and then amended counterclaims.  The court found that DR didn’t sufficiently allege “commercial advertising or promotion” for its Lanham Act claim—it didn’t plausibly allege that Solmetex’s isolated misrepresentations were disseminated to the wider purchasing public. Though DR alleged that Solmetex requested that MDA disseminate the alleged misrepresentations to its members, it didn’t allege that this actually happened.  So too with similar allegations about Schein.  Although DR could plead based on information and belief, “such allegations must be accompanied by a statement of the facts upon which the belief is founded.” DR’s sole factual support for alleging that the statements were widely disseminated is that a single representative from Schein told a single member of the purchasing public that DR’s product was not EPA-approved and had infringed upon a patent. Even assuming that Solmetex was plausibly the source of Schein’s misrepresentation, this allegation didn’t support the inference that Solmetex conducted “a wide-reaching false advertising campaign disseminated to the wider purchasing public,” as required.

The common law unfair competition counterclaim also failed.  In New York, that’s misappropriation.  Product disparagement generally involves no misappropriation and therefore must be plead as a claim for trade libel, which it was not here.  Alleged violations of Delaware and Massachusetts consumer protection statutes also failed. Delaware’s Deceptive Trade Practices Act required a “pattern [ ] of deceptive conduct,” not alleged here; two instances of deceptive conduct weren’t enough.  Massachusetts Gen. Laws c. 93A requires that the conduct “(1) fall within at least the penumbra of some common-law, statutory, or other established concept of unfairness, (2) it must be unethical or unscrupulous, and (3) it must cause substantial injury to a consumer or another businessman.” But DR didn’t get past the first element because it hadn’t successfully alleged another wrong.

Tortious interference: DR alleged that Solmetex’s false representations caused MDA to terminate its marketing and licensing agreements with DR, but didn’t allege that MDA breached a contract by doing so. DR also failed to plead that Solmetex acted solely out of malice, or used dishonest, unfair, or improper means, as required for a tortious interference claim. While misrepresentations can constitute dishonest, unfair, or improper means, they must rise to the level of an independent tort to do so.

Trade libel/slander: disparaging DR’s product allowed only a claim for trade libel, not slander.  The trade libel claim failed on the merits.  Trade libel requires both malice and special damages.  Special damages requires the victim to name the individuals “who ceased to be customers, or who refused to purchase,” and itemize “the exact damages.” The counterclaims itemized damages only with regard to one lost sale as a result of misrepresentations by Schein. Assuming that Solmetex was the source of these false statements, DR didn’t plead allegations that the unnamed Solmetex representative knew the statements were false, entertained serious doubts as to the statements’ truth, or spoke solely out of spite or ill will, as required for malice. DR admitted that the representation that its device was not EPA-approved was true (albeit misleading), and didn’t allege that Solmetex’s employees were generally familiar with the company’s patents (or lack thereof). (An interesting variation on corporate knowledge or the lack thereof, since a corporation can only act through its agents; if the right hand doesn’t know what the left hand has patented, then apparently there can’t be malice.)