Knit-picking right of publicity question of the day

I’m learning to knit, and at the local store I encountered this charming pin:

Does Arnold Palmer have any recourse against the “yarnold palmer”?

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I’m a judge, not a media theorist, Jim: NFU doesn’t protect use of Dr. Seuss font in mashup case

Dr. Seuss Enterprises, L.P. v. ComicMix LLC, No. 16-CV-2779
(C.D. Cal. Dec. 7, 2017)
Though the court dismissed the first trademark/copyright
infringement complaint against this Star Trek/Dr. Seuss mashup, the amended
complaint survives.
Copyright: It’s still transformative, but the complaint
added information about the fourth fair use factor.  Dr. Seuss’s earlier complaint alleged that it
was not uncommon for it to license its works and collaborate with other rights
holders; the court presumed a potential harm to licensing opportunities, but
still found that Oh, The Places You’ll
Boldly Go
“does not substitute for the original and serves a different
market function” given that “Boldly’s market relies on consumers who  have already read and greatly appreciated Go!
and Dr. Seuss’s other works, and who 
simultaneously have a strong working knowledge of the Star Trek series.”  The amended complaint alleged that Dr. Seuss
had published derivative works of Go! such as Oh! The Places I’ll Go and other
works based on the Dr. Seuss IP such as Oh, The Things  You Can Do That Are Good for You!  “Dr. Seuss” doesn’t appear on the book covers,
which include names of other authors, even though they’re recognized by the
public as Dr. Seuss works.  ComicMix
argued that none of these were “crossover works that integrate pre-existing
characters or imagery from another 
entertainment franchise, such as Star Trek, with those of Dr. Seuss.” Dr.
Seuss argued that The Wubbulous World of Dr. Seuss, “a live action/puppet show
produced by the Jim Henson Company featuring Dr. Seuss’s well-known and
beloved  characters alongside new,
Muppet-like characters created by The Jim Henson Company,” showed that Boldly was the kind of derivative work
that Dr. Seuss had the right to develop and could develop or license others to
develop.
The court declined to presume market harm, because of the
transformativeness of Boldly.  Still, factor four weighed in Dr. Seuss’s
favor.  On the allegations of the
complaint, there’s a potential market for literary mash-ups, and such a market
wouldn’t be unlikely based on Dr. Seuss’s past licensing programs. Motion to
dismiss denied, as before.
Dr. Seuss secured an even better result on its
trademark/unfair competition claims, which had previously been dismissed. Dr.
Seuss claimed trademark rights to (1) the title Go!; (2)  “the stylized font used consistently on the
front and back covers, spine, and title page of 
the Dr. Seuss books such that this use of the styled font has come to be
recognized by  consumers as a source
identifier for Dr. Seuss,” and (3) “the unique illustration style of the  characters and backgrounds found throughout
Dr. Seuss books.”  Dr. Seuss also claimed
registrations for Go!; Go! 25th Anniversary, and for a trademark in connection
with downloadable digital children’s books, among other goods, as well as a
family of  common law trademarks deriving
from the title of Go!
Based on the allegations of the complaint, Dr. Seuss alleged
protectable marks in the Go! title, and it was unnecessary to determine whether
it could claim separate rights in the fonts used on other book covers or inside
the book.  Illustration style cannot be a
protectable mark, even if particular characters can be.
Nominative fair use (should have gone with Rogers, as this result illustrates, no
pun intended): The fact that defendants’ use wasn’t exact wasn’t disqualifying,
especially given the complaint’s allegations of misappropriation/use of the
marks. Likewise, NFU can apply as long a defendant uses the plaintiff’s mark to
describe the plaintiff’s product, even if the ultimate goal is to describe the
defendant’s own product, which is what happened year.  And the product (the underlying work) wasn’t
readily identifiable without use of the mark. 
And defendants didn’t do anything other than use the mark that would
suggest sponsorship or endorsement; people might not read the disclaimer on the
third page, but disclaimers aren’t required.
However, factor two was the problem: the use was more than
reasonably necessary (I think the court is saying that this is true for
purposes of the motion to dismiss, not definitively, but I’m not sure) because
defendants didn’t just use the words, but also the font of the original, “down
to the shape of the exclamation point. The Court finds it was unnecessary for
Defendants to use the distinctive font as used on Go! to communicate their
message (i.e., that Boldly is a mash-up of the Go! and Star Trek universes).”  Aviva USA Corp. v. Vazirani, 902 F. Supp. 2d
1246 (D. Ariz. 2012), applied NFU even though the defendant there used the
“distinctive colors and font” of plaintiff’s mark, but that was part of a “very
obvious negative  commentary directed
toward [plaintiff]” that could not lead to confusion.  [Again you see the benefit of Rogers.]

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DMCA exemption survey: for vidders and other remixers

Take an 8-minute survey and help make the #DMCA decryption exemptions more user-friendly for vidders: bit.ly/2nEfY8j

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Sazerac will pay fees for its buffalo stance

Sazerac Company, Inc. v. Fetzer Vineyards, Inc., 2017 WL
6059271, No. 15-cv-04618 (N.D. Cal. Dec. 7, 2017)
The court here awards defendants its fees for proceeding
past summary judgment in this trademark infringement case. “This was an
exceptionally weak case,” though Sazerac had a legitimate motive in bringing it—to
avoid “loss of control over its brand.” What made this case stand out was that “Sazerac
proceeded to trial—where the only available remedy was injunctive relief—with
zero evidence that it had been harmed in any way. Its decision to continue
litigation unnecessarily burdened the court and defendant.”  The court awarded fees incurred after the
summary judgment order, over half a million dollars.
Sazerac alleged that Fetzer’s 1000 Stories red zinfandel
buffalo mark and trade dress infringed Sazerac’s BUFFALO TRACE word mark,
Buffalo logos, and trade dress for its BUFFALO TRACE bourbon whiskey. The court
ultimately Fetzer’s request to preclude monetary damages because Sazerac failed
to disclose an expert to prove damages, as it indicated it would in its initial
disclosures, and the remaining injunctive relief claims were tried to the
court.

The basic claim sounded in trade dress; the buffalo depicted
on the Fetzer label wasn’t an imitation of the Sazerac buffalo, and Sazerac
consistently argued “that it was the combination of Fetzer’s buffalo with the
reference to ‘bourbon’ in ‘BOURBON BARREL AGED’ that confused consumers as to
the source of Fetzer’s 1000 Stories wine.” But Sazerac failed to provide any evidence of secondary meaning.  For belt-and-suspenders
purposes, the court also rejected the claim using the multifactor likely
confusion test.  Among other things,
Fetzer showed widespread use of buffalo marks in the alcohol market, while Sazerac
presented “no evidence of a single instance of actual confusion[,]” which the
court found quite compelling considering the products’ “extensive presence, coexistence,
and interaction with consumers” over three years, and “the fact that the
products even appeared two tables apart from each other at the 2016 Bourbon
Classic.”
The court rejected Sazerac’s argument that fees were only
available for improper motivation, litigation misconduct, or objective
unreasonableness. Under Octane Fitness,
the standard is more relaxed.
There was no allegation of improper motive, but the court
highlighted that there was “zero evidence of actual confusion,” which was especially
important given Sazerac’s reliance on confusion to establish harm.  Sazerac did introduce a survey, which the
court rejected, but the majority of respondents who falsely believed that the
products were connected “identified the buffalo logo as the source of their
confusion, as opposed to other options such as ‘label’ or ‘looks similar’” –
this might have supported a trademark infringement claim based on the large
buffalo mark, but not an independent claim for trade dress infringement.  Importantly, the main trade dress claim
failed both on protectability and on likely confusion, as well as on evidence
of harm, indicating the weakness of the case.
Sazerac maintained that its incontestable rights in the
Buffalo Logo obviated the need for it to establish that its trade dress had
secondary meaning, but that’s a misstatement of the law under Wal-Mart and blurred the line between
its trademark and trade dress infringement claims. It turned out that Fetzer
had been correct in its motion for summary judgment when it argued that “[t]his
case is about Sazerac’s improper efforts to exclude all others from using in
commerce the generic term ‘bourbon barrel aged’ in conjunction with any image
of a buffalo.” Indeed, one of the reasons Sazerac’s survey was “fatally flawed”
was because the control didn’t use the word “bourbon,” because the survey
expert indicated that it was his understanding that Fetzer’s use of the phrase
“Bourbon Barrel Aged” was somehow wrongful.  On summary judgment, the court concluded that Sazerac might
be able to prove a likelihood of confusion without asserting rights over
“bourbon.” But it became clear at trial that Sazerac could not do so.
The summary judgment motion didn’t address irreparable harm,
but after Sazerac survived that, it was required to present evidence to succeed
at trial, but instead it relied on the “meager” disputed facts that enabled it
to survive summary judgment and showed no evidence of harm. “These deficiencies
effectively render its entire manner of litigation wholly unreasonable.”  Though Sazerac was precluded from introducing
evidence of monetary damages, that was Sazerac’s own doing, and it didn’t
prevent Sazerac from presenting evidence of reputational damage, or any other
form of irreparable harm.
The case began for subjectively legitimate reasons, but “once
[Sazerac] forfeited the right to pursue damages and the case ‘officially’
became about injunctive relief, it was unreasonable for it not to present any
evidence of irreparable harm.” This also meant the case was litigated
exceptionally.  Evidence of harm would
have been uniquely within Sazerac’s possession, and it was required under Herb Reed.  Sazerac argued that it provided evidence of
harm in its loss of control over its brand. But that claim relied only on the
conclusory statements of its senior marketing director, and was completely
speculative.
And here, the court does something I’ve long wanted to see
(yay Judge Orrick): it walks through the harm scenario, showing its absurdity:
A consumer would have to purchase
1000 Stories wine—which … occupies a “double niche” market given its price
point and varietal—because s/he looks at the bottle and draws an association
with Sazerac’s Buffalo Trace bourbon. And, in envisioning this obscure
possibility, keep in mind that Buffalo Trace represents 0.5 percent of the
whiskey market. Now assume that this consumer is a bourbon drinker (because
that is 1000 Stories’ target demographic) who goes to the store looking for a
red zinfandel. S/he purchases 1000 Stories because s/he knows of Buffalo Trace
and associates 1000 Stories with it because of the 1000 Stories trade dress.
Then, for Sazerac to suffer damage to its good will, that consumer would have
to dislike 1000 Stories to the point that it would impact his or her
perspective of Buffalo Trace, and, by implication, Sazerac, who, as an aside,
owns over 350 brands.
Among the problems with this scenario, there were no
assertions that 1000 Stories was inferior, so the only potential harm to
Sazerac was a speculative and remote “loss of control” over one brand. “Accepting
this extremely unlikely scenario to arrive at a finding of any harm would still
have been insufficient for Sazerac to succeed, considering the other elements
required for a permanent injunction,” especially the harm Fetzer would suffer
if forced to change its label.

Brand owners may attempt to protect their rights, but they
must have “an objectively reasonable basis for believing that its rights are
under attack and consumers are at risk of being confused.” Moreover, Sazerac
needed to “demonstrate some harm— separate from the potential for confusion”—to
win. Exceptionality was shown by Sazerac’s failure to show evidence (1) that
1000 Stories was using any colorable imitation of any of Sazerac’s asserted
trademarks; (2) that it had any protectable trade dress; (3) on six of the
eight Sleekcraft factors; and (4) of any type of irreparable harm. 

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Roundtable: The Right of Publicity in New York, St. John’s University

An Academic Discussion of Policy Choices in
Designing a Publicity/Privacy Rights Regime: Rothman, Buccafusco, & Tushnet
The roundtable is on the proposed changes to NY’s ROP, which are very extensive.
[I didn’t take notes early on, sorry, but Prof. Rothman discussed issues like transferability,
postmortem rights/justifications thereof; Prof. Buccafusco worked through the
statutory text and showed that the exception to the exception to the exception
structure raised lots of questions such as the treatment of biopics]
Bankruptcy: freely transferrable rights can be transferred involuntarily in bankruptcy. OJ Simpson: faced forced
transfer of his IP, including his book, released under a cover that looked like
it said “I Did It” instead of “If I Did It”
Reed v. Town of Gilbert: Supreme Court announced a stringent
rule applying strict scrutiny for content-based distinctions and exceptions:
there has to be a compelling government interest justifying the regulation and any
exceptions also have to meet stringent tests—overbreadth will get the law
struck down, but so will exceptions that indicate that the law isn’t targeting
enough of the issue
Consider a biography of a literary figure that includes a
number of quotes from her writings that qualify as fair use, or that are
licensed by the copyright owner who isn’t the ROP holder—that seems to replicate
her professional activities—there seems to be different treatment for writers,
composers and artists than for other creators or public figures, and that could
generate first amendment problems as well as uncertainties.
Other lessons from recent challenges to new problems largely
generated by the digital age: revenge porn laws—where written broadly, risk
invalidation as overbroad—Anthony Weiner and now apparently a number of other
congresspeople are the usual examples: if you write a law that would prevent a
woman from speaking out about the explicit photo that a congressman sent her,
then your law is overbroad and will probably not survive First Amendment
scrutiny.
By contrast, narrow laws directed at unwanted disclosures of
ordinary people’s intimate photos shared in consensual contexts can and should
survive.
Publicity rights are different from revenge porn, but the
lesson about being clear about the goals, especially when you go beyond
regulating advertising, is very important
Recent case from the 9th Circuit: while the 9th
Circuit had previously approved very expansive rights of publicity, Hurt Locker
case it reversed course—applying ROP to a movie at all required the ROP to
survive strict scrutiny, which it could not do at least in the circumstance of
the Hurt Locker
Inextricably intertwined
w/the right of publicity
: definition? 
Completely new concept, not borrowed from other doctrines; there is a
related concept for determining what is commercial speech, but in that case
when the First Amendment protected content is inextricably intertwined with
unprotected content, the First Amendment wins, and this provision seems to be
designed to reverse that.
Agree with professor Buccafusco about the questions about
biopics.  Documentary about athlete’s sports
successes? 
Vagueness and uncertainty concerns—First Amendment doctrine
says that if you can’t readily determine what’s covered, the law will be void for
vagueness.  Here is where a more specific
labor right, similar to the special privacy rights now granted to police
officers in section 50, rather than an exception to the exception might be
better tailored to deal with what seems to be the concern
Another example where a court might find an invalid content
based exception under Reed is the exception for the use of an individual’s
right of publicity for fund- raising purposes by not-for-profit radio and TV
stations
Also raises copyright preemption issues: even if 1A doesn’t
preclude a use, the Copyright Act may do so if it interferes w/rights to reproduce
works that the performers or athletes consented to making—Dryer case in the 8th
Circuit, Maloney in the 9th Circuit, 7th Circuit also—2d
Circuit is unlikely to create a split by allowing a ROP claim to proceed
against a work even if it is subject to the exception to the exception—focusing
on the labor law components of a reanimation claim could be more likely to
avoid preemption
Part 3: A Discussion With Legislative Actors About The Goals
and Means of A8155-A/S5857-A: Sen. Savino, Bergin, Clenahan, & Maggs
Savino: Important to understand how we create
legislation.  W/o lots of input you end
up with bad law.  Fewer members of the
legislature now are lawyers; we rely on counsels/staff to draft laws.  History of ROP in NY started w/a girl who saw
her face on a bag of flour and sought redress. Beginning is an individual who
felt aggrieved and sought redress from her gov’t— “lobbyist” began in NY where
people waiting for legis. would sit in the lobby.  Views this as a labor issue—workers’ rights.  Time to update NY law.  Has heard from SAG-AFTRA and MPAA, but now
hearing from IP lawyers. We don’t want trolls.
Bryan Clenahan: 99 year old law needs to be updated for the
digital age. This is a fluid process w/ more drafts to come.
Robert Bergin: Represents the majority leader, lead sponsor
of bill.  1902 marked first case, and
also introduction of Brownie camera, opened up a new field.  Reanimation/computer generated images reach a
point where changes are needed.  Fairness
to deceased’s estates about benefiting from use v. other people w/no connection.
Amy Maggs: Central staff/drafter.  In the room where the inextricably
intertwined language happened.  [But gets
bonus points for Hamilton reference.]
Scavino: Suggestions for language changes to correct the
deficiencies identified?
Jeremy Sheff: lots of parts of the draft use language with a
history. But salient terms don’t have that pedigree, either not explicitly
defined or not found in statute on the books w/100 years of history.  What is the impetus for including those terms
in the draft?  Is there a way to either
define those terms or create legislative history for interpreting those terms?
Maggs: We know inextricably intertwined is imperfect—that’s
being negotiated among parties.  Partially
meant to deal w/avatars and digital recreations like those in Rogue One.  [But I’d even add talk about why you have proposed
protection for “gestures.”  Why is that
important for those objectives?]
Bergin: What we were looking at is existing law, grafting
onto it. Not trying to undo 100 years of experience.  We’re trying to add postmortem and dealing
w/new tech. Trying to keep purposes of trade.
Maggs: took out the misdemeanor, b/c we were asked to get
rid of that.
Scavino: Actual entities affected—what may appear to be
confusing is language they’ve agreed on to protect their interest; it made
sense to them.   [This isn’t a great justification for First
Amendment purposes.]
Maggs: some of the language was agreed to by all parties.
RT: Rogue One
wouldn’t be purposes of trade in current law. 
If you leave purposes of trade where it is in the current law you are
also clearly trying to cover Rogue One
and thereby creating a serious interpretive issue.  This is why you might want to leave purposes
of trade where it is and create a separate provision targeting avatars if that’s
the specific concern.
SAG-AFTRA and MPAA may understand the language, but if other
people don’t that’s still a problem. First Amendment cases are often brought by
outsiders who aren’t covered, and to design a system in which insiders are
protected and outsiders aren’t is pretty much a problem from the First Amendment
perspective.
Rothman: leave in place what you have which is working well
in most instances. Rather than complicating it with exceptions to exceptions,
affirmative descriptions of narrow, precise right is a smart approach. Tech
change: technical neutrality is important—need to think about whether current
law actually addresses this. Reanimation is new, but recasting is not.  There’s a lawsuit about Back to the Future
II, Crispin Glover sued because he was recast (they used existing footage and a
prosthetic mask); old law provided an opportunity to protect his rights.  Unintended consequences: think of people who
don’t have lobbyists who aren’t getting exemptions who might be affected. That’s
why she is specifically concerned about transferability of rights—young actors
(even minors) w/o bargaining power who will transfer their rights away.  Websites, journalists, ACLU—a more diverse
base consulted. 
Maggs: several unions support the bill.
Rothman: may not understand unintended consequences.
Clenahan: how have states dealt w/intestate transfer?
Rothman: 25 states don’t have intestate rights; Illinois
says creditors can’t get it; Nebraska said it’s not transferable; it’s an emerging
issue not litigated very much.  More
pressure likely to come.  (Bettie Page
transferred her rights to CGM when she was very old, windfall for CGM and not
much justification for it.)  There isn’t
a great model in a statutory postmortem right, but if we really care about
heirs it should be focused on inheritance by natural persons.  Could also do confusion about sponsorship
requirement as some states do.
Q: Lock down the substance first, then the language.  What does “transformative” mean in the ROP
context?  Borrowed from © where it’s been
the most enormous controversial issue in ©. 
Judicially made construct.  Would
Vanna White case come out the same way under transformative standard?  What is NY’s interest in protecting
noncitizens?  Only 5 states allow that, not
even California.
Maggs: If it’s wrong to exploit someone’s persona it’s
wrong. 
Q: what if it’s not wrong in the state where they lived their
whole life and died?
Scavino: Congress might be better, but we know that’s not
going to happen. States as incubators; maybe this will eventually percolate
up.  As NY goes, so goes the nation.
Maybe if NY says this, that will force a larger discussion.
Q: Live stage rights: Carole King, Frankie Valley/Jersey
Boys. The exception seems like it covers a musical, but the exception to the
exception seems to bring that back in. When clients ask whether ROP is
required, what is the answer?  Create and
write the musical, but the next step is reading—may be considered a
solicitation under the statute.
Maggs: Exception to exception is more about avatars/create
people after they’re dead.  [Then maybe
it should be written that way?]  That’s
part of the confusion.  That language has
to do w/Zacchini and taking away
someone’s job by taking whatever entity they’ve created and recreating it w/o
them—recreating their persona.  [Chris
Pine needs to worry about William Shatner, it seems to me!]
Q: Athletes and biopics: does the exception to the exception
come in if there are reenactments of big sports scenes?
Maggs: They had someone play “Who’s on First/What’s on
Second”—they’d gone too far [that’s a copyright case involving fair use—and I
note that the transformative use exception is subject to the exception to the
exception, so even a transformative use is unprotected if it is “inextricably intertwined”
w/ performance]. Depending on how it’s done—if you put a clip from a sports
event on stage v. you have someone pretending to be people, there’s a lot of
variations. [Seems to suggest that one of those should be illegal?]  She’s not sure how that biopic would come out.  [Ulp.]
Q: Active debate about whether we care about the likeness
being transformative or whether the work as a whole is transformative. The use
has a lot of baggage.  Remedies portion:
purposes of trade is in the remedies portion; is there a point of limiting the
remedy more than the scope of the right?
Maggs: want to change as little as possible in the case
law? 
Q: so you would have a right but you wouldn’t be able to get
damages if it wasn’t for purposes of trade?
Maggs: yes. A lot of the language like transformativeness comes
from other states’ legislation.
Q: if it’s wrong it’s wrong, then why would you deny this
right to the estate of someone who died 10 years ago?

Maggs: Rights have vested, estates have paid taxes, etc.

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Court says shoo to Scat’s infringement claim against Dodge

Scat Enterprises, Inc. v. FCA US LLC, 2017 WL 5896182, No.
CV 14-7995 (C.D. Cal. Jun. 8, 2017)
Scat, a maker of aftermarket car parts, sued over FCA’s use
of “Scat Pack” in connection with its Dodge Challenger and Dodge Charger “Scat
Pack”-edition cars, primarily alleging reverse confusion.  The court rejected its claims for money
remedies (disgorgement, corrective advertising, treble damages, or punitive
damages).  Scat sought disgorgement of
profits under an unjust enrichment theory rather than as a measure of lost
sales; this requires willful infringement in the Ninth Circuit.  And willfulness means actions “calculated to
exploit the advantage of an established mark.” 
As to Scat’s reverse confusion theory, there could be no such calculated
exploitation where the junior mark overwhelms the senior. Thus, there can be no
accounting “even if the defendant was willfully blind to the possibility of
infringement.”  
Nor could there be disgorgement under a forward confusion
theory, because top Dodge executives responsible for Dodge’s use of “Scat Pack”
in 1967, for the 2013 launch of “Scat Pack” for newer models of the Dodge
Charger and Challenger cars, and for Mopar’s use of “Scat Pack” for kits for older
models, all testified that they were unaware of Scat’s existence. In 2013, FCA’s
legal department conducted a trademark search for the phrase “Scat Pack” and
neither Scat nor any of its trademarks showed up in the search. Scat argued
that FCA’s search wasn’t sufficient because it didn’t search for the word “Scat”
alone, but that doesn’t translate into willful exploitation. Likewise, FCA’s
decision to continue using the “Scat Pack” mark after the USPTO refused
registration of the mark—one that FCA used for decades—also wasn’t willfulness.
Corrective advertising: To get this, a plaintiff must prove
that the alleged infringement resulted in actual lost value to its mark. There
was no such showing here.  Scat argued
that there was actual confusion shown by FCA’s survey; though this was
disputed, Scat didn’t submit its own survey, despite having the clear financial
means to do so, creating “an inference that the results of such a survey would
have been unfavorable to its position.” 
Plus, even actual confusion wouldn’t  itself show actual harm to its mark. Here,
there was no evidence demonstrating that FCA’s use of “Scat Pack” adversely
impacted Scat’s growth or caused it to lose any sales or business
opportunities.  Scat also waived its
claim for punitive damages.
But anyway, confusion was unlikely. The key factors: (1)
relatedness of goods; (2) similarity of marks; (3) consumers’ degree of care;
(4) marketing channels. Though the parties were both generally part of the automotive
industry, Scat makes “high-end performance aftermarket car parts which it
markets and sells to a sophisticated niche of car enthusiast consumers,” while
FCA used the “Scat Pack” mark to refer to two of its passenger cars that retail
for approximately $40,000 apiece. “Although the goods may inhabit the same
broad field, the automotive industry, they are markedly different.”  FCA sold parts/kits only for its own cars, and
only through authorized dealerships. Scat made parts for several car companies,
including Chevrolet, Ford, Pontiac, and Honda, and sold these parts through
aftermarket parts distributors or directly to end consumers. Relatedness plainly
favored FCA.
Similarity: While the parties both used the word “scat” to
signify speed and quick acceleration, FCA’s addition of “pack” distinguished
it.  In 1967, when FCA began using “Scat
Pack,” it was an umbrella marketing term for several of Defendant’s muscle cars,
and then in 2013 it was the tagline for the high performance versions of its
Dodge Charger and Dodge Challenger cars. The term “Pack” gave the meaning of a
group or club, e.g., “Run with the Dodge Scat Pack.” Moreover, the designs were
different: FCA used the “Scat Pack Racing Bee” character and its house marks,
while for Scat, generally the mark’s logo only contains the unitary word “Scat”
in different stylized fonts or there’s also a reference to a specific part,
e.g., “Scat Crankshafts.” Even though the marks sometimes appeared in plain
font when used on third-party websites such as eBay Motors and Amazon, they
generally appeared with their distinct logos. Advantage FCA.

“[B]ecause the typical consumers of the parties’ products
are relatively sophisticated, there is minimal chance of confusion.” Scat’s rotating
assemblies sold for over $2,000, while FCA’s cars retailed for approximately
$40,000 apiece, justifying greater care, and Scat’s customers in particular
were “a sophisticated niche of car enthusiast consumers. There is no question
that purchasing one of Plaintiff’s specialty automotive parts requires either a
considerable amount of research by a ‘casual’ consumer or, alternatively, the
knowledge already held by a sophisticated car enthusiast.”

And the parties’ marketing channels were distinct: FCA sold
to authorized independent dealerships, while Scat sold to aftermarket parts
distributors or directly to end consumers. FCA marketed its cars to the general
public primarily through mass media television and radio; Scat marketed to its through
its own website and catalogs, trade shows, and advertising in various industry
trade and consumer magazines. Occasional overlap at the same trade shows was
insufficient to increase the likelihood of confusion.

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Everything’s legal in Jersey: NJ SCt makes class certification harder in price disclosure case

Dugan v. TGI Fridays, Inc., 171 A.3d 620 (N.J. 2017)
Plaintiffs alleged that the defendants failed to fairly
disclose prices charged to customers for alcoholic and non-alcoholic beverages.
The New Jersey Supreme Court held that one set of plaintiffs failed to show
that common issues of law and fact predominated because they argued a price
inflation theory that New Jersey law didn’t support. However, other claims that
the restaurants violated New Jersey’s consumer protection law (the NJCFA) by
increasing the price charged to a customer for the same brand, type, and volume
of beverage in the course of the customer’s visit to the restaurant, without
notifying the customer of the change.  Consumers with that specific claim could
proceed with class certification.
The first set of plaintiffs alleged that TGIF had a practice
of offering certain beverages in New Jersey TGIF restaurants’ menus without
listing their prices of those beverages, violating the NJCFA as well as a
regulatory provision governing “merchandise that is not price marked at the
point of purchase.”  In the original
complaint, named plaintiff Dugan claimed that during a visit to a TGIF
restaurant she was charged $2.00 for a beer at the bar and later charged $3.59
for the same brand of beer after moving to a table.  Dugan admitted that during the visit to a TGIF
restaurant in which she paid different prices for two orders of identical
beverages at the bar and at the table, she did not read the beverage section of
the menu, though she later submitted she had looked at the TGIF menu on many
occasions and expected to pay the same price at the bar that she paid when she
sat at a table. Training materials for TGIF servers stated that servers seating
customers should hand opened menus to customers.  Plaintiffs also submitted a TGIF consultant’s
analysis of consumer behavior in the ordering of beverages in restaurants in
which customers informed of beverage prices spent an average of $1.72 less per
visit than the customers to whom the prices were not disclosed.
This group couldn’t show commonality; they didn’t claim what
they bought was defective, deficient, or worthless, but rather received what
they ordered.  However, they couldn’t
prove that every claimant in their multi-million-member class would have
purchased fewer or less expensive beverages, or none at all, had TGIF informed
him or her of the beverage prices. The research underlying the $1.72 per visit
damages claim wasn’t similar to anything else that had been accepted as a
method of proving ascertainable loss and causation in a CFA class action; it
was too similar to rejected “fraud on the market”/price inflation damages
calculations.
For the second group (the Bozzi class), there were common
questions of fact relating to the defendant’s pricing practices and “at least
one common question of law—whether increasing the price of a beverage during a
customer’s restaurant visit without informing the customer constitutes an
unlawful practice.”  Existing records
would apparently enable the parties to determine where and when each class
member was charged disparate prices for the same brand, type, and volume of
beverage on the same restaurant visit, allowing them to account for happy hours
and other restaurant-specific practices.
However, neither group could proceed under the Truth-in-Consumer
Contract, Warranty and Notice Act (TCCWNA), a statute enacted “to prevent
deceptive practices in consumer contracts” that contained unenforceable or
invalid terms that nonetheless deceived consumers into thinking the terms were
enforceable and deterred them from asserting their rights. Thus, covered
entities must not use “any provision that violates any clearly established
legal right of a consumer or responsibility of a seller ….” Plaintiffs argued
that by failing to list prices for beverages on the menus, the defendant
restaurants violated plaintiffs’ “clearly established” legal rights and
defendants failed to meet their “clearly established” legal responsibilities
requiring the prices to be plainly marked. However, there were too many
individual questions.  The TCCWNA
addressed “contract[s],” “warrant[ies],” “notice[s],” and “sign[s]” and didn’t apply
when a defendant failed to provide the consumer with a required writing. At a
minimum, a claimant would have to prove that he or she was presented with a
menu during his or her visit to the restaurant in order to establish liability,
which couldn’t be resolved by customer receipts or other documents. It wasn’t
enough to show evidence that TGIF servers were instructed to hand menus to
customers; that didn’t even prove that any individual consumer received a menu.  The majority thought that inferring that
servers complied with corporate policy would be to wrongly allow a claim
element to be proven for the class as a whole with a single piece of evidence; the
dissent would allow such an inference, but even the plaintiffs conceded that
not all customers received the menu at issue. 
The majority also doubted whether defendants violated a “clearly
established legal right” or a “clearly established … legal responsibility.” No
published opinion held that restaurants and other food service businesses couldn’t
offer food or beverages to customers without listing the prices for those items
on their menu. “Moreover, as plaintiffs acknowledge, many food-service
businesses in New Jersey—ranging in size from corporate chain restaurants to
family-owned delicatessens and diners—routinely offer customers food and
beverage specials and other items without designating in writing the prices for
those items.” Even if a menu lacking beverage prices were a relevant writing
within the meaning of TCCWNA, that was a dubious result because a penalty of
$100 per violation would lead to a total of more than a billion dollars.
Justice Albin dissented, arguing that the majority wrongly raised
barriers to class actions.  TGIF could
charge what it wanted, but it couldn’t fail to list beverage prices when it
knew through its own study that consumers would pay, on average, $1.72 more per
meal without such prices.  “TGIF does not
pretend to be in compliance with the law; rather, its defense is that a class
action is not a proper vehicle to be used by the patrons victimized by TGIF’s
practices. However, a single consumer, even if defrauded, cannot engage in
costly litigation over a sum involving, at most, several dollars. Only through
a class action that aggregates thousands of small claims of similarly defrauded
patrons can a viable lawsuit proceed.” 
Justice Albin pointed out that TGIF itself labeled the price
consumers were willing to pay the “fair” price, as opposed to the “think-twice”
price; “the beauty of not placing beverage prices on menus in violation of the
CFA is that uninformed patrons do not know when their purchases have exceeded
the ‘fair’ price and reached the ‘think-twice’ price. TGIF learned through the
study what is commonly known—that an informed consumer will make rational
pricing decisions.”  To prevent that,
TGIF made the corporate decision not to put alcohol prices on the menu: “TGIF
determined that it did not pay to conform to the law and that it was more
profitable to capitalize on the ignorance of its patrons. From TGIF’s own
statistical analysis comes the calculation of ascertainable loss to its patrons
and the gain to itself.” 
This common issue was qualitatively more important than the
others, and individual differences could be addressed later on; the statistical
evidence here was acceptable evidence of ascertainable loss.  Plaintiffs’ theory wasn’t “fraud on the
market.”  First, the CFA didn’t require
proof of reliance, but only a causal connection between the unlawful practice
and ascertainable loss. Second, plaintiffs weren’t trying to avoid their burden
of proving a causal nexus between TGIF’s statutory violation and the
ascertainable loss suffered by TGIF’s patrons. 
“Moreover, the majority is mistaken if it is suggesting that
the CFA does not protect consumers from price gouging.  The purpose of requiring that the price of
merchandise be listed at the point of sale … is to allow consumers to make
informed decisions in making purchases.”  Justice Albin also would have allowed the
TCCWNA claims to proceed. At the pleading stage, the fair inference was that
TGIF’s servers complied with corporate policy and that patrons received menus.  Moreover, “[t]he plain and simple statutory
language clearly indicates that TGIF is required to list beverage prices on its
menus”: the law prohibits the sale of “merchandise” without a price at the
point of sale; merchandise included goods; clearly, beverages were goods, and
at the very least, were included in “anything offered … to the public for
sale.” “TGIF did not have to wait for a published opinion by this Court to
reach this common-sense conclusion.”  The
majority hinted that the law might not apply to beverages on menus, meaning
that restaurants wouldn’t be required to post any prices, since there’s no difference between a hamburger and a
milkshake. Even if the Attorney General has never sued to enforce this
provision, the CFA vests individuals with the power to act as private attorneys
general as a separate enforcement mechanism. There’d be no point in remanding
the Bozzi class-certification case for further proceedings, as the majority
did, if there was still a question about whether restaurants must place
beverage prices on their menus.  Further,
the majority didn’t explain why in the Bozzi case it vacated the trial court’s
injunction, which mandated that the relevant defendant restaurants list
beverage prices on menus. If the law was too broad, the legislature could act
to fix it.  Now, however, any relief from
TGIF’s violation of consumer fraud law would have to come from the AG. 

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