Three little words make a fair use

Oyewole v. Ora, 291 F.Supp.3d 422 (S.D.N.Y. 2018)
This case grants a motion to dismiss on fair use grounds,
though it should have been on lack of substantial similarity in protected
expression.
Oyewole is a founding member of the spoken-word group The
Last Poets who created the song “When the Revolution Comes” in 1968. The song
warns of a coming revolution when “guns and rifles will be taking the place of
poems and essays,” with a back track of a drum beat and chants. Also: “When the
revolution comes/ Transit cops will be crushed by the trains after losing their
guns and blood will run through the streets of Harlem drowning anything without
substance.” At the end of the song, the performers chant, “When the revolution
comes (3x)/But until then you know and I know n*****s will party and bullshit
and party and bullshit and party and bullshit and party and bullshit and
party… Some might even die before the revolution comes” (ellipsis in
original). Oyewole indicated that the “sole purpose” of the lyrics is to
“challenge[ ] and encourage[ ] people to NOT waste time with ‘party and
bullshit,’ but to move towards success.”
In 1993, The Notorious B.I.G. released the song “Party and
Bullshit” celebrating his “hip hop lifestyle.” It begins: “I was a terror since
the public school era / Bathroom passes, cuttin’ classes, squeezing asses / …”
The chorus is: “Dumbing out, just me and my crew / Cause all we want to do
is… / Party… and bullshit, and… (9x)” (ellipses in original). In 2012,
Rita Ora released the pop song “How We Do (Party),” which begins, “And party
and bullshit / And party and bullshit / And party and bullshit / And party, and
party.” Further lyrics include “I get that drunk sex feeling/Yeah, when I’m
with you/So put your arms around me, baby/We’re tearing up the town/‘Cause
that’s just how we do.”  The opening
lines recur several times throughout the song. 
Oyewole alleged that the uses here “contrravened” the original purpose of
the phrase as used in “When the Revolution Comes,” which was to discourage
people from partaking in “party and bullshit.”
Understandably, the defendants maintained that “party and bullshit”
was not protectable, but, following a pattern I find somewhat depressing, the
court assumed otherwise and instead resolved the infringement issue as a matter
of fair use.  Both songs transformed the
purpose of the phrase “party and bullshit” “from one of condemnation to one of
glorification,” … “in neither secondary work does it evince criticism or
foreboding.” The Poets suggest that, as a result of the partying and bullshit,
“[s]ome might even die before the revolution comes.” The phrase is “an
expression of disgust and disappointment in those who are not readying
themselves for the revolution.”  Not so
for the accused songs, which embrace and exalt “party and bullshit” culture.
Even the complaint recognized this by accusing the songs of contradicting Oyewole’s
original purpose, which was to “encourage[e] people to NOT waste time with ‘party
and bullshit.’ ”
Nature of the work: creative, which weighs against fair use,
also published, which favors fair use.
Amount and substantiality of the portion used: one phrase. As
for substantiality, “although the background track’s cutting out when the Last
Poets chant ‘party and bullshit’ adds a level of gravity and importance to the
phrase, the expression is not critically important to the song’s message.
Instead, the song focuses on the upcoming revolution.”  [This seems like a pretty good reading, by
the way; I just think it’s detrimental to the robust analysis of copyrightability/substantial
similarity to do this as a matter of fair use.]
Market effect: transformativeness made market effect
unlikely. Given the character and purpose from the original work, the target
audiences were unlikely to be the same, and even if they were, the songs wouldn’t
substitute for the original. [Note no explicit consideration of derivative
markets, implicitly encompassed in the transformativeness discussion.]

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Second Circuit rejects falsity by necessary implication claim for UL certification

Board-Tech Electronic Co. v. Eaton Corporation, Cooper
Wiring Devices, Inc., — Fed.Appx. —-, 2018 WL 2901336, No. 17-3829-cv (2d
Cir. Jun. 11, 2018)
Board-Tech and Eaton compete in the market for decorative
light switches. Underwriters Laboratories (UL) is an independent entity that
tests, verifies, and endorses the safety of various electronic products; its
imprimatur is commercially necessary for light switches in the US.  UL licenses the “UL 20” certification mark to
products that meet its safety standards. Manufacturers must submit
“representative samples” of their product to UL; if the samples pass the tests,
UL authorizes the manufacturer to advertise and label its products as “UL 20”
compliant.
Eaton markets its light switches as UL 20 compliant. Board-Tech
alleged that its in-house engineers independently tested UL 20 compliance of
eight sets of six light switches and that each of the 48 light switch units
failed. Thus, it alleged false advertising, despite Eaton’s authorization from
UL to use “UL 20.” Board-Tech didn’t send its test results to UL, and UL has
taken no relevant action.
Board-Tech’s allegations couldn’t establish literal falsity,
because they didn’t negate the fact that the product was indeed certified by
UL.  Board-Tech argued falsity by
necessary implication: UL 20 certification necessarily implies that the product
purchased will hold up to the UL 20 standard.  But UL certification represents that a sampling
of products complied with UL standards when UL tested the products, not that
every single unit will perform the same way when tested by different entities. “To
satisfy literal falsity under a theory of necessary implication, Board-Tech
needs to allege sufficient facts to show that Underwriters Laboratories
considers Eaton’s products non-compliant—not just that someone else does…. Board-Tech’s
testing, absent additional indicia of non-compliance, does not render Eaton’s
use of the UL 20 mark literally false.”  This
contrasted to a previous case where the competitor’s product was altered and
found on retesting by UL to be non-compliant. 
In that case, “[h]olding [a product] out to be UL approved” after
materially changing it “constituted a false representation.” “Without any
indication that UL decertified the defendant’s product—or (perhaps) that the
defendant’s product had materially changed since certification—there would be
no plausible allegation of a false statement.” This has a Twiqbal twist: “To merit discovery into its competitor’s product
lines and tradecraft, Board-Tech must ‘raise a reasonable expectation that
discovery will reveal evidence’ tending to show UL would find Eaton’s products
non-compliant.”
[Query: would Volkswagen’s defeat devices for emissions
tests satisfy the court’s qualifications? 
I can see it argued either way. 
The problem is what it would mean for UL to “consider[]” (present tense)
products non-compliant.  Is it literally
false once you allege facts that, if true, would establish that no reasonable
entity could consider its standards satisfied? That seems to be one reading of
the “additional indicia” line. Or do you have to allege that the entity has
come to a decision on the matter? I think the court wants to preserve space for
the Volkswagen situation to be literally false by necessary implication, but it’s
a bit tricky to do! Certainly the VW product didn’t materially change since
certification; it just acquired that certification through falsehood.]
What about misleadingness? That requires extrinsic evidence,
and the complaint didn’t offer other than conclusory allegations that consumers
had been misled or confused.

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Right of Publicity, Litigating the Claims

Litigating the Claims
Rick Kurnit: told the story of litigating the White case, in which the author of the
panel opinion didn’t know what a letter-turner was. Had to go to trial with a
jury, all of which regularly watched Wheel of Fortune.  Jury found that robot was Vanna White, and
that she was endorsing the TV being advertised. 
Awarded more on the Lanham Act claim than on the ROP claim.  What about parody?  Spent no time on that, parody wouldn’t help b/c
parody just means they’re the same [parity].
Panelists:        
Nathan Siegel, Davis Wright Tremaine LLP: Cultural trend
favoring celebrities, and willingness to view a celebrity’s “story” as quasi-property
of the celebrity. This has become pervasive, so more judges go into cases w/ a
presumption, almost incredible to 1A advocates, that people have a right to
control the marketing of their story. Cardtoons case: additional inducement for
achievement from ROP often inconsequential, b/c most personalities are
adequately compensated. Even w/o ROP, the rate of return in entertainment &
sports is high enough.  I agree, but that’s
not a shared sentiment today. People don’t seem bothered by a billionaire like
Michael Jordan winning $10 million for a congratulations taken out in Sports Illustrated.  Opposing speech interests are discounted more
often than 20 years ago.
Cultural backlash against the media. In this genre we’re
seeing a particular tendency to view sports/entertainment as fluffy and
avaricious.  Exploitative in some fundamental
sense. Not really worthy of deference in the same way as news & political
speech. Judges issuing the worst decisions in this area, such as trial court in
de Havilland, Porco, NCAA—relatively liberal judges. Feels like, in an era
where people feel the need to attest to their anti media bona fides, that’s one
way it happens on the liberal side.
Things to think about: temptation is to argue w/intellectual
abstractions, such as transformative use. Need to frame in appealing, common
sense way. Why does the breadth of the right not make sense?  Pitch it as a matter of control before the
fact. The cases always come up after the speech, so it looks like we’re arguing
over “why didn’t they get paid?” But the right is a right of personal control
before the fact, and that looks a lot different. Everyone shown in a clip could
control the right to broadcast the clip ever again. [This was an important point
in the FanDuel amicus that Mark McKenna & I recently wrote.] Rarely just
about the P; usually there’s a significant group of people involved who could
theoretically bring the same claims. How could every single person have an
individual right of control? [aka anti-commons property] If everyone had a
right to control how their image was going to be depicted in advance, that’s a
veto for everyone.  De Havilland isn’t
just about de Havilland. If you have two people feuding, should each one be
able to say “you can depict the feud as long as I win it”? Seems to be a notion
among some judges that docudramas are icky—neither fish nor fowl, taking
documentaries one step too far by quasi-fictionalizing them.  Just a modern TV version of historical
fiction, a genre that’s been around for 100 years. 
We should think of the 1A as the last resort, not the first
resort.  It’s an extremely defensive way
to frame the case. The 1A only comes into play if there is a right under state
law. So we are conceding that the states are saying that celebrities do have
that right, and we’re asking for special protection. That’s generally
unnecessary b/c most state cts w/common law or state laws didn’t intend to call
docudramas and sports programming into question, whether or not they put a
specific exemption in. Think first about pushing back on scope.  Copyright preemption is another potentially
successful argument.
Push back on the notion that this is an IP right.  Take all the Nobel prize winners for science
& ask what the value of their ROP and match that against the ROP of Al
Capone’s estate—the latter is more valuable, though he didn’t contribute
anything creative or useful. ROP doesn’t award effort, just fame.
In the long run, need to push that Zacchini wasn’t a ROP
case. Confusion in the case itself and subsequently.  It’s a common-law © case: broadcast rights of
event producers.  Not in the short run,
that’s the best chance to cut the legs out of this area.
David Schulz, Ballard Spahr LLP: what judges lack is clarity
about a structure for the theory: what is protected and why. Most judges think
they’re working w/in the law and want to do justice. Start to be very clear
about the structure we’re building and the societal interests at stake. Should
frame things in Rogers/Gugliemi terms: how we describe what’s
being challenged here. Is it something that can be fairly called public
discourse, news, entertainment—things intended to convey information—or is it an
effort to sell/advertise a product. Whichever world you’re in, 1A principles
differ but also state law principles differ.
Spahn: case in
which P alleged that a book about him was fiction despite being advertised as
fact; similar to Eastwood case in
California.  Can justify a claim under this
as a kind of “sham petition” claim—not really nonfiction as advertised.  Subsequent case law (Arrington) about using
pictures to illustrate articles: Is there a reasonable relationship b/t the
picture and the content?  If so, no claim.  Messenger case: girl sued for use of her
picture in an article about a letter writer who’d gotten drunk & had sex
w/men. Court agrees, but the P argued that it was more like Spahn—Court of Appeals doesn’t want to
say Spahn got it wrong so it adds bad
language to distinguish them; Spahn holds
that ROP applies to totally invented biography, as if that was a special
category, and was only trading on the persona, but then adds loose language:
Sec. 50 applies when an article purporting to be newsworthy is so
embellished/fictionalized that it can’t be said to fulfill the purpose of
newsworthiness.  Porco: movie about a young man who killed his father/tried to kill
his mother—sued b/c they used his real name and argued that he had a claim b/c it
was substantially fictionalized. 
Appellate court allowed that to proceed to discovery. Would be better to
start w/asking if something was for purposes of public discourse, not purposes
of trade; if so, no NY right. We know total fiction is protected, as is total
truth; there’s no sense and no predictability in saying that somewhere in the
middle there is a claim.
Annie Pell, NFL
Dryer case:
building a record on newsworthiness. Experts opining that NFL Films weren’t
ads.  Survey of consumers showing that
more than 90% saw these programs as sports/entertainment and not as
ads/infomercials. Marketing prof opined they weren’t ads—longer, no explicit
sales message, not paid spots, listed in TV Guides, won Emmys for TV and not
awards for ads. Branding and advertising are two very different things—enhancing
the value/brand was no different than the way in which a celebrity bio enhances
value of brand. Like pre-game and post-game shows, always treated like that by
networks. Sports marketing agent for ROP licensing who said they weren’t
recognized w/in the industry as ads or endorsements and that players don’t
expect compensation for these types of appearances.
How to deal w/handful of internal NFL docs produced in
discovery that Ps argued showed that the NFL’s intent was to build brand?  Value derived was as great as a big ad
budget.  Sports Illustrated described NFL
Films as a really effective propaganda arm. 
But they were so not b/c they proposed a commercial transaction but b/c
they were really good content.
Finally, distinguishing Facenda,
which 3d Cir found to be commercial speech: separate product references, countdown
to release of the game described in the “infomercial.”
Spiegel: Fictionalization doesn’t fit within Section 50/51,
but it’s hard to go before a court & say we have a right to fictionalize
(where a state, like NY, lacks a false light claim).  Easier to focus on disclaimers: show that it’s
based on a true story. As w/ Messenger, where defamation claim failed b/c the
letter was signed “Anonymous” and reasonable readers would not think that the
depicted model was the author of the letter; no reason to override that
conclusion w/a ROP claim.

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Right of Publicity panel, Abrams Institute for Freedom of Expression

From Yale Law School’s Abrams Institute for Freedom of
Expression
Commercial Speech and the First Amendment: Does the Right of
Publicity Transcend Commercial Speech?
Jennifer Rothman: Right of Publicity? Right of Privacy?
Rothman gave a keynote summarizing highlights of her
excellent book on the right of publicity. The key shift, she argues, is not
from privacy to property (she says it was understood as property by many from
the beginning) but from personal right to transferable right and thus to “IP”
right.  1A scrutiny has been limited by
IP analogy; deeming works to be less original/expressive because they use
another’s image, even though that doesn’t make sense.
Big 1A challenges: The video game cases’ emphasis on realism
as a reason that there’s no 1A protection for depictions.  Sarver v. Chartier, which looks like a win
for movies but which she doesn’t like because its emphasis was on the lack of
commercial value in the plaintiff’s identity—the very public figures we most
need to talk about will have commercial value, and those are the ones that the
9th Cir. said had the strongest IP right that could overwhelm 1A
rights. Thus Olivia de Havilland’s claim in Feud
was no surprise—it combined realism + celebrity value. The trial court accepted
de Havilland’s realism claim, though the court of appeals didn’t. Now seeking
review by Cal. SCt; she expects affirmance of court of appeals but the grounds could
be better or worse.
Panel discussion:
Moderator:   Jeremy
Feigelson, Debevoise & Plimpton
Panelists:     Robert
C. Post, Sterling Professor of Law, Yale Law School: different interests need
to be broken out and analyzed. Protection for performance: Zacchini.  Dignity: a violation of dignity to take
someone’s image. Right to control one’s image: the right to be forgotten, the
GDPR—right to control information about you. 
Essence is control as an interest in itself.  Trademark: the right to preserve the mark
against disparagement, dilution. 
Trademark: false endorsement/roughly akin to false light. Each interest
would define damages differently; assignability would vary across these interests.  Different interest would get different shape
tort, but we don’t, which is an indicator of how confused things are and which
makes 1A analysis difficult. 
1A: many complicated tests; more like the IRS code. But when
you get down to it, your job as lawyers is to say what’s moving the court.  Transformativeness test makes so little sense
on its own terms it can’t possibly be moving the court; what are the actual
social dimensions of what speech gets protected?  Different kinds of speech acts & the 1A
value the court sees.  (1) Public speech
acts. The SCt protects speech because of your right to form public opinion,
which makes the government responsive—highest form of protection.  (2) Commercial speech: not about forming
public opinion but about selling goods—a normative distinction w/gigantic consequences,
though the court is beginning to lose track of those consequences.  You couldn’t regulate misleading editorials,
but the FTC regulates misleading ads. Compelled speech is allowed in commercial
speech, as are prior restraints. Fundamental, pervasive doctrinal distinctions
controlled by this on/off switch.  Matal v. Tam (makes very little sense in
this context).  (3) Comedy III: one question is whether this is art? Or is it a
T-shirt/merchandise w/an image on it?  [That’s
the same thing said two ways, in my opinion.] 
If that same artist had put it in a frame, court would have seen it as
art/public discourse; transformativeness was beside the point.
Early Prosser tort of appropriation: in many forms, seen as
an autonomy right the way the Europeans write about personal information.  Right to control information in public
discourse is contrary to the basic premise of the First Amendment.  To protect the ROP for that reason is ruled
out from the get-go.  That’s why the RTBF/GDPR
doesn’t have a 1A prayer in the US. That’s distinct from falsity/disclosure of
private facts; that’s not control, but the dignitary harm of disgrace. That’s a
protectable interest, albeit a narrow one. Right to control info in commercial
speech: an almanac of baseball players & their statistics—I do it around
gum. The court says it’s protecting commercial speech to protect dissemination
of information. Insofar as the court says that, commercial speech is protected
for listeners to receive accurate information. Is there a true interest in preventing
listeners from receiving accurate information? 
Why would using the image instead of the stats change anything?
Atavistic feeling that the image is more of a dignitary harm. Need to clearly articulate
the interest that the 1A is protecting as well as the ROP.
Rebecca Tushnet, Frank Stanton Professor of the First
Amendment, Harvard Law School    
Comedy III
involved lithographs: I have owned two copies of the Three Stooges lithograph.      
Some things that courts have accepted, at least at the
pleading stage, as ROP violations: a lawyer listing his clients on his website;
references to a company that is named for its founder and allegedly inherently
associated with its founder; Wikipedia edits about the history of a product;
and a whole range of expressive works with de Havilland only the most prominent
recent example.  One caution: as long as
you can call anything “confusing” under TM law, the idea of false endorsement
won’t produce much of a limit. Solved in TM by fiat—declaring certain things
nonconfusing. 
Rothman: all the tests are trying to get at the same thing—balancing
interests—but we need to be more clear about what we’re interested in.  Years later, as we have different “tests,” we’ve
lost sight of what they were about to begin with.  If transformativeness means you can’t depict de
Havilland realistically, then transformativeness doesn’t work; the court of appeals
dropped a footnote indicating potential agreement w/that.
Feigelson: all the types of works we’re talking about get vetted;
lawyer wants to know whether a motion to dismiss will succeed. Do any tests
give clarity?
Post: as a practical matter, you can always sue and draw a
judge who won’t do the right thing. Ultimately, are you going to win?  It’s extremely important to know movie v. ad
v. merchandise. If it’s a disparagement case it might be more determinative.  But
courts are uncertain about how to treat many media, including video games.
RT: Justice Stevens’ old test for commercial speech
regulation: is the regulation designed
to protect consumer in transaction?  In
that case, we should give it more relaxed scrutiny.  If the regulation is trying to do something else,
it has to meet more stringent standards. That may be better than trying to say
whether a particular speech act is “commercial speech.”  And in practice the SCt has been working its
way towards that result at least w/r/t nonmisleading commercial speech. 
Rothman: remember that courts use commercial in different
ways: sometimes they use it to mean “for profit” and sometimes “advertising.”
Courts do treat merchandise differently even though merchandise is not
commercial speech.  She thinks merchandise
can be very expressive—MLK Jr. bust. 
Rosa Parks plaque sold by Target. 
Expressive merchandise. But commercial advertising is also very
expressive.  Patagonia fighting Trump on
environmental regulations, etc. There’s a lot of convergence b/t politics,
cultural identity expressed by product choice, etc.  In terms of predictions: Traditional
content/media: you should not worry too much about ROP.  If you’re selling merchandise: worry.
Nontraditional media: less safe. Commercial advertising: even less safe. Not
sure it should be that way. Eventually the simplicity of the
commercial/noncommercial divide will break down.
Thinks that putting an image on a mug will violate ROP but a
little bit of commentary will be enough to take it out of the merchandise box—even
TRUMP SUCKS would be enough. Potential substitutionary effect for potential
market for the plaintiff is also relevant. With Reese Witherspoon, she might
want to sell her own mugs/jewelry.  More
akin to performance—undercutting of professional opportunities. Merchandise
cases are substitution cases. [But see Moore v. UA where the court concludes
that the work is transformative, but that still doesn’t it allow it to be put
on a mug or calendar.]
Post: coverage and protection—Court sees mugs as not covered
[though note that if a public employee were fired for having a “Hillary Clinton”
mug that would be treated as a speech issue; Post indicates that the mug would
be evidence of the impermissible motive and not the thing itself (but the
reason that the ROP would regulate the mug itself is also because of the reason
for the regulation)].
Does not see how a simple name or image on a mug impairs
dignity, though there is a false endorsement question under modern
circumstances. 
Rothman: less troubled by limits on the use of private
figures—they are often substitutable—in fictional depictions (though thinks
that the Hurt Locker case clearly comes
out the right way).
Feigelson informed us of the existence of a Lego recreation of the Zacchini case, including Hugo Z
telling the Lego reporter not to film.
Rothman: hard to imagine that Zacchini would sue in 2018
because of brand promotion issues; still thinks the case was wrongly decided. 
Some discussion of the case filed by Muhammad Ali’s estate
against Fox for its pre-Superbowl ad/mini-documentary linking Ali’s greatness
with that of the NFL.  I thought it was
commercial speech [is that off-brand or on for me?]

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isn’t it good? mahogany wood isn’t always mahogany

Golden v. Home Depot, U.S.A, Inc., 2018 WL 2441580, No. 18-cv-00033-LJO-JLT
(E.D. Cal. May 31, 2018)
According to the complaint, authentic mahogany is prized for
its beauty, durability, color, and ease of use in woodworking. It has a
reddish-brown color, darkens over time, and displays a reddish sheen when
polished, and is the wood of several species of trees in the Meliaceae family.
Home Depot advertises, markets, and sells as mahogany some species of
eucalyptus from the Myrtaceae family, commonly known as “Swamp mahogany.” Swamp
mahogany is denser and more difficult to work with than authentic mahogany.
Home Depot also markets Ecualyptus resinifera wood as “Red mahogany” and wood
of the Myroxylon balsamum, a tree in the Fabaceae family, as “Santos mahogany,”
and this is heavier than authentic mahogany and more difficult to work with.
Home Depot discloses the species of some types of wood that
it sells online, but not the species of its mahogany products. “Knowing the
species is important in determining the quality of the wood, and influences
factors including workability, durability, and resistance to rot.” Home Depot instead
advertises that the mahogany board it sells online and in stores is “premium”
and “finest grade.”
Golden bought wood sold as mahogany board. Unnamed employees
of Home Depot told him that he was purchasing “authentic, genuine mahogany,” but
they were in fact made of less valuable Swamp mahogany. He brought the usual
California claims.
The court declined to take judicial notice of definitions
used in various websites submitted by Home Depot.  Although the complaint quoted Woodworkers
Source, a website primarily selling mahogany and other hardwoods and also
hosting FAQs, a blog, and other informational resources for lumber buyers,
citing one page of that site didn’t open the door to treating unrelated
portions of the website as subject to judicial notice.  “The meaning of a disputed term in trade or
common usage is precisely the factual question that is at the heart of this
matter, that is, whether Defendant’s lumber labeling practices were false or
misleading to consumers.”  At the motion
to dismiss stage, the court declined to look to dictionaries or trade and
industry usage to determine the meaning of words.
The court found that the complaint satisfied Rule 9(b) with
sufficiently detailed allegations about the characteristics of wood from
different trees to conclude that genuine mahogany was a different product in
important ways from Swamp, Santos, and Red mahogany; thus, labeling such
species as “mahogany” was false.  The
allegations of oral representations were also specific enough; a plaintiff
alleging fraud “need not name the specific employee who made the misleading
representation when it would be unrealistic to expect a customer to recall that
detail,” and he alleged the approximate time and place of the transaction, as
well as the nature of the misrepresentation.  He also alleged reliance on written
representations in stores and online.  He
was not required to allege justifiable reliance, which is an element of common
law fraud but not consumer protection claims, defeating Home Depot’s argument
that the wood was too cheap for him to have believed he was buying real
mahogany.
Home Depot argued no law or regulation required it to label
its wood otheriwse, that its use of the word conformed with common usage, and
that the lumber industry commonly labels and sells a variety of woods as
mahogany. And its descriptions of its lumber as “premium” and “finest grade” were,
it argued, mere puffery.
But the alleged differences between genuine mahogany and
Swamp, Santos, and Red mahogany were extensive, and it was plausible that a reasonable
consumer could be deceived.  As for “premium”
and “finest grade,” they might be puffery in some contexts, but Golden wasn’t
claiming deception based only on the use of those adjectives. His argument was
that, in this context, the words “premium” and “finest grade” supported
consumers’ impressions that they were purchasing a more valuable or useful type
of wood than they actually did, which could have misled a reasonable consumer.
Likewise, Golden pled an actionable omission under the CLRA
because of the related affirmative representation that the products were
mahogany, without disclosing the actual species. However, negligent
misrepresentation claims failed because those require more than economic loss,
which was all that Golden pled.
The court also rejected Home Depot’s argument that Golden
lacked standing as to unpurchased products made of other species but also
labeled mahogany. The court applied a “substantially similar” standard, as the
majority of 9th Circuit courts do. 
“Even though Swamp, Santos, and Red mahoganies are alleged to come from
different trees, and the purchased and unpurchased products are therefore not
identical in composition, the type of misrepresentation alleged is common to
all three products. The types of harm are also the same for all of the named
products.” Thus, Golden had standing.

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5th Circuit requires use as a mark, but finds Krusty Krab restaurant in SpongeBob qualifies

Viacom Int’l, Inc. v. IJR Capital Investments, L.L.C., No.
17-20334 (5th Cir. May 22, 2018)
The Fifth Circuit here adopts a “use as a mark” requirement,
though not a very vigorous one, indicating once again that the concept is too
useful to abandon, however much the Second Circuit might like us to think
otherwise (at least, when it’s not using the concept itself, as in the
Louboutin case).
Viacom sued IJR for infringing its common law trademark of
The Krusty Krab— a fictional restaurant in the popular “SpongeBob SquarePants”
animated television series—by taking steps to open seafood restaurants using
the same name. The court of appeals affirmed summary judgment for Viacom.
SpongeBob SquarePants is “a sea sponge that wears square
shorts, lives in an underwater pineapple, and works at the fictional [you don’t
say] The Krusty Krab restaurant as a fry cook.” His show has been the
most-watched animated television series for 15 consecutive years, with over 73
million viewers in the second quarter of 2016 alone. One-third of all viewers
are 18 or older.  The Krusty Krab “played
a prominent role in the pilot episode of the series and has appeared in 166 of
203 episodes,” as well as in two feature films, Viacom’s mobile app “SpongeBob
Moves In” (seven million global downloads), a play called The SpongeBob Musical,
and ads and online outreach (about seven million page views per week). The
press has also referenced The Krusty Krab many times when discussing the show.
The Krusty Krab is also licensed to third parties, including
for Krusty Krab playsets ($1.4 million in royalties since 2009), the video game
“SpongeBob SquarePants Creature from The Krusty Krab” (over one million units),
The Krusty Krab aquarium accessories (187,000 units), and The Krusty Krab
shirts sold at The SpongeBob Store at Universal Studios in Florida. Viacom has
never attempted to license The Krusty Krab mark to a restaurant, though its
subsidiary did license Bubba Gump Shrimp Co. for seafood restaurants based on
the fictional business from the 1994 movie “Forrest Gump.”
In 2014, IJR’s owner decided to open seafood restaurants in
California and Texas. He claimed that he was describing the crusted glaze
applied to cooked seafood when he chose The Krusty Krab. Nonetheless, an IJR investor
mentioned SpongeBob “out of the blue” while discussing the restaurant.  Though the owner became aware of the fictional
Krusty Krab, he didn’t find an actual restaurant using the mark, and IJR filed
an ITU trademark application, which was allowed.  IJR’s business plan makes no reference to the
SpongeBob franchise or the fictional restaurant The Krusty Krab. IJR postponed
its plans during this lawsuit.
Viacom’s survey found that 30% of respondents thought The
Krusty Krab was connected with Viacom and 35% of respondents associated the hypothetical
restaurant with Viacom.
Viacom, the court reasoned, would have a protectable mark “if
it establishes ownership by demonstrating that it uses The Krusty Krab as a
source identifier. Often this court has bypassed the use inquiry and conducted
only a distinctiveness analysis. However, the two issues are separate questions,”
since the Lanham Act requires that a symbol be used or intended to be used “to
identify and distinguish” goods and services; use as a mark is a question of fact.  It was clear that The Krusty Krab appeared on
goods in the market. The question was whether Viacom used The Krusty Krab “to
indicate origin.”
Elements from within a television show can be valid
marks.  The court pointed to an earlier
case affirming a judgment against the junior use of Conan the Barbarian—the
title character of a comic book series—in a restaurant concept, as well as to
the Second Circuit’s Warner Bros., Inc. v. GayToys, protecting the General
Lee—an orange muscle car with a Confederate flag emblem that was “prominently
featured” on the “The Dukes of Hazzard.” 
[Just some good ol’ boys, celebrating treason.]
If a TV show element serves as a source identifier, then
protecting it serves the purposes of trademark, which are to protect goodwill/producer
investment against free riding and “to protect consumers against confusion and
monopoly.”  Still, use within a popular
TV series isn’t necessarily use as a source identifier.
If the matter “creates a separate and distinct commercial
impression…[it] performs the trademark function of identifying the source.”
Thus, the role of the element in the show must be evaluated, not the overall
success or recognition of the show itself. “When an element only occasionally
appears in a successful television series, the indication-of-origin requirement
may not be met.” The court gave the example of Paramount Pictures Corp.v. Romulan
Invasions, which declined to protect “Romulan” for a fictional alien race in
the “Star Trek” series that was featured in episodes, movies, books, licensed
plastic spaceship models and dolls, puzzles, games, etc. The TTAB reasoned that
the term was “only” used “from time to time” and held that Paramount “failed to
establish any use of the term Romulan…as a mark to distinguish its services.”
The court here commented that “Star Trek fans may vehemently disagree with this
analysis as a factual matter.” [No, no we don’t!]
Elements playing a more central role can “ordinarily” get
trademark protection.  The example here
was “The Daily Planet,” which “has over the years become inextricably woven
into thefabric of the Superman story.” So too with Kryptonite, “a staple of the
Superman character and story,” which “is immediately recognized or associated
with the character Superman.”

The court found The Krusty Krab analogous to these protected marks, deeming it
“integral” and “central” to SpongeBob,
given its prominence in the material. This centrality was itself “strong
evidence” that “The Krusty Krab” was “recognized in itself as an indication of
origin for Viacom’s licensed goods and television services.” Viacom’s
licensing, which has generated millions of dollars, “provides further evidence
that Viacom uses The Krusty Krab as a source identifier and therefore owns the
mark.” Even though it typically appears alongside the SpongeBob mark, that
didn’t prevent it from being a mark too because it created a distinct
commercial impression, “signifying to consumers that products like Krusty Krab
playsets or aquarium ornaments originate from the famous fictional restaurant that
employs their beloved sea sponge character.” 
Nor did it matter that the term was used in varying styles, fonts, and
sizes on the licensed products, because the mark was a word mark, not a design
mark, “so the focus is whether the words themselves are consistently used as an
indicator of source.”
It’s interesting that this factual question seems in the
court’s view to be completely about what Viacom does, not what consumers
perceive in response.  This is perhaps
the only way to distinguish use as a mark from distinctiveness, but does it
make sense?
Speaking of distinctiveness, the evidence showed
distinctiveness, even without a survey or direct consumer testimony.
Confusion: given the standard for summary judgment, the
evidence of intent couldn’t be weighed against IJR, but there was still enough
to find confusion as a matter of law.  Strength
and similarity easily favored Viacom for any reasonable jury, as did
relatedness of goods/services.  For
relatedness, the court of appeals compared the fictional hamburger restaurant,
not a TV show/aquarium accessories/playsets, to the planned seafood restaurant.  This seems technically erroneous but
practically understandable. “While there is little evidence of thematic overlap
between the restaurants, IJR nevertheless plans to open a restaurant, and given
the success of SpongeBob, that indicates a likelihood of confusion.”  Plus, affiliation or sponsorship confusion are
more likely “when the junior user’s services are in a market that is one into
which the senior user would naturally expand.” The Conan case said that
“today’s consumers expect [cartoon character] endorsements and act favorably
toward them” in the restaurant setting, and “Viacom could naturally develop a
real The Krusty Krab restaurant based on the fictional eatery, as its
subsidiary did when it licensed Bubba Gump Shrimp Co.”
Identity of retail outlets and purchasers: IJR intended to
target “the general public,” particularly “families, singles, and students . .
. as well as the area’s work force.” “At this general level of abstraction,
Viacom also targets the general public,” but though the district court found
that this factor favored Viacom, there were “substantial differences in the
retail outlets and the predominant purchasers that mitigate the possibility of
confusion.”  Viacom “presumably” targeted
TV viewers, toy stores, and online retailers, versus brick-and-mortar
restaurants.  There was some overlap in
purchasers, since one third of SpongeBob viewers are “technically” adults
[ouch], but the core consumers were dissimilar. Though it was reasonable to
infer that some SpongeBob fan children would influence decisions to eat at a
Krusty Krab restaurant, and that adult fans “might well dine at a Krusty Krab restaurant,
at least once, due to the name,” the extent of the overlap wasn’t clear on the
record.  Likewise, similarity of
advertising media couldn’t be judged on this record.
The district court specifically erred in weighing intent
against IJR, even after acknowledging that it was “not clear” whether IJR intended
to derive benefits from Viacom’s reputation, because a principal “associated”
the phrase with SpongeBob and IJR’s owner was aware of Viacom’s use before he
applied to register the mark. Word association, without more (such as using
more elements of the show, rather than just one unregistered term), couldn’t
establish bad faith at summary judgment, and “‘mere awareness’ of the senior
user’s mark does not ‘establish[]…bad intent.’” There was enough to create a
genuine issue, but it didn’t matter.
Evidence of actual confusion: the survey plus anecdotal
evidence of association by principals/investors. The key question was whether
the survey was “substantially defective”; there was no problem of the
representativeness of the sample, but “parts of the survey resembled a word-association
test. … [T]he survey asked if ‘THE KRUSTY KRAB restaurant [is] affiliated or
connected with any other company or organization.’ This invites word
association, and ‘a mere word-association test is entitled to little weight.’”
But this went only to weight, so the district court didn’t err in admitting the
survey.  The bar on actual confusion is
low; the probative value of the survey plus the anecdotal evidence [of word
association] weighed in favor of finding confusion. [Interestingly, the court
of appeals doesn’t say that a reasonable jury would have to so find—and I would
think it wouldn’t have to.]
Overall, there was no genuine issue of material fact on likelihood
of confusion.

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Is this “diet” soda script too close to Diet Coke’s?

I have to admit, I might expect it to be a Coca-Cola product.  What’s more, it’s made in the US, not Brazil, and seems to be a copy of Guarana Antarctica, a Brazilian beverage.

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