robust TX anti-SLAPP law protects critic despite arguments that she was partly competing

ADB Interest, LLC v.
Wallace, 606 S.W.3d 413 (Tex. Ct. App. 2020)

This is an
anti-SLAPP case about statements by a disgruntled customer/alleged competitor.

Black, the managing
member of ADB, invented the FasciaBlaster, which is marketed by ADB. The user is
supposed to roll the product vigorously over his or her body. ADB claimed
benefits for pain reduction, flexibility, joint function, circulation, muscle
definition and performance, nerve activity, posture, and enhanced beauty, “including
the virtual elimination of cellulite.” The product allegedly works by “opening
the fascia,” which is a layer of tissue that encloses muscles and organs.

Blac published a
book that is “an instructional guide to ‘FasciaBlasting’ ” that identifies numerous risks associated with using
the FasciaBlaster, including to people with any history of deep vein thrombosis
or a blood clot (“the consequences could be deadly”), or people with a “severe
connective tissue problem such as fibromyalgia, Ehlers-Danlos Syndrome, or any
issues that makes skin sensitive.” The book lists other symptoms including “
changes in menstrual cycles, spotting, swelling, strange-colored
bruises, hot skin, flu-like symptoms, and in some extreme cases, vomiting….
This is not an all-inclusive list, and to be honest, the product is fairly new
and every day someone experiences something new…. Please check with your
doctor for any issues that set off alarm bells.” The FasciaBlaster
website also had similar (and some additional) warnings.

The FasciaBlaster
has fans and detractors, including in private FB groups; defendant Wallace “is
only one of many people claiming on social media that the FasciaBlaster causes
serious, adverse side effects.”

Wallace “owns a spa
in Corpus Christi, Texas that provides a variety of skin care services to its
clients, including massages.” She bought several FasciaBlasters for personal
use also used the FasciaBlaster on one or more of her clients as part of her
rendition of skin care services. She initially recommended the FasciaBlaster to
her friends, family, and clients, but changed her mind, as announced on FB:

After my own experience and after seeing results from doctors and
specialist[s] [and] [c]ompleting tests and extensive blood work, the tests are
showing that extended use of these products can cause a chain reaction in the
body that starts with inflammation. That inflammation leads to raised cortisol
levels in the body. That raised cortisol causes eventual thyroid dysfunction,
hormone imbalance, increased estrogen, extreme detox, and cellular shutdown in
your body. [etc.]

… So any endorsements I gave this product in the past I sincerely
apologize for without knowing the long term or adverse effects it may be
causing people. As it has caused these adverse effects in myself by using it
long term[,] I HAVE to warn anyone who is using it [o]r anyone who might be
thinking of using it for esthetic reasons to use EXTREME caution.

She became a frequent critical poster on FasciaBlaster-related websites and Facebook groups. She attributed her fibromyalgia diagnosis, other problems, and two miscarriages
on her use of the FasciaBlaster (the last because of high cortisol levels).

In response,
ADB/Black’s social media/cybersecurity firm publicly named Wallace as one of
the “professional trollers” who had written “bad reviews” on Black’s page and
were making “false claims and [using] fake profiles.” Its employee also urged
these Facebook pages to block the named individuals. Black also left a
voicemail for a critic stating, inter alia, “I will prosecute you if this
continues.” Two months before Wallace posted her allegedly defamatory and
disparaging statements on FB, their attorney contacted another critic, stating
that “while the company recognizes that consumers have First Amendment rights
and other consumer rights provided by the Federal Trade Commission (FTC), those
rights are limited by the company’s rights to not be defamed through slander or
libelous actions that include actual malice or negligence regarding the truth of
the statement.” The company also posted on its FB group that “While we welcome
the opportunity to hear from people who feel they have experienced negative
effects from using the FasciaBlaster device, we also need our audience to be
aware that knowingly making false or fraudulent injury or defect claims is
illegal and may subject you to criminal and civil liability.”

Black and ADB then sued
Wallace for business disparagement, defamation and defamation per se, invasion
of privacy, intentional infliction of emotional distress, and violations of the
Lanham Act. Within days of filing suit, the company sent messages to other
participants in the FB groups pointing to the lawsuit.

Side note: the FDA investigated ADB and the FasciaBlaster after it became aware of “over 70 [Medical Device Reporting (MDR) ] reportable
complaints and 04 consumer complaints, filed in the last 12 months (June
2016-June 2017), alleging injury due to your Class I medical device,
FasciaBlaster.” The FDA’s report revealed failures to create procedures for
reviewing and evaluating complaints, despite several specific complaints of
serious bodily injury allegedly caused by the device. Although ADB’s attorney
initially told the FDA inspector that it had evidence of internal
investigations—supposedly represented by pdf attachments to a spreadsheet ADB
provided to the FDA—when the inspector asked for a sample of the attachments, “[i]t
was later determined that these files (investigation results) did not exist.” The court doesn’t explicitly connect this to the legal analysis, but it seems relevant.

Wallace moved to
dismiss the claims based on the Texas anti-SLAPP law (the Texas Citizens
Participation Act); the trial court granted the motion and awarded Wallace
attorney’s fees and imposed sanctions against ADB and Black. Under the TCPA, if
the trial court grants a motion to dismiss, it must award costs, reasonable
attorney’s fees, and other expenses of defending against the action “as justice
and equity may require.” The trial court must sanction the plaintiff in an
amount “sufficient to deter the party who brought the legal action from
bringing similar actions.”

First, ADB/Black
argued that the commercial speech exemption applied to their claims. Not so. The
TCPA does not apply:

to a legal action brought against a person primarily engaged in the
business of selling or leasing goods or services, if the statement or conduct
arises out of the sale or lease of goods, services, or an insurance product,
insurance services, or a commercial transaction in which the intended audience
is an actual or potential buyer or customer.

The Texas Supreme Court
explained that “[c]onstruing the TCPA liberally means construing its exemptions
narrowly,” in part because of “the legislature’s clear instruction to construe
the TCPA liberally to protect citizens’ rights to participate in government.” It
was plaintiffs’ burden to show that the exemption applied. It does when:

(1) the defendant was primarily engaged in the business of selling or
leasing goods [or services], (2) the defendant made the statement or engaged in
the conduct on which the claim is based in the defendant’s capacity as a seller
or lessor of those goods or services, (3) the statement or conduct at issue
arose out of a commercial transaction involving the kind of goods or services
the defendant provides, and (4) the intended audience of the statement or
conduct were actual or potential customers of the defendant for the kind of
goods or services the defendant provides.

The exemption does
not apply when a defendant “speaks of other goods or services in the marketplace,”
i.e., goods or services that the speaker does not sell or lease.

The record showed
that Wallace’s statements were primarily aimed at two overlapping but
nonidentical audiences: ADB’s and Wallace’s actual or potential customers—Wallace
didn’t provide services outside of a limited geographic area, but posted to
reach everyone. To the extent that her statements were directed at her clients,
they could be subject to exemption from the TCPA if the other requirements were
met. But they weren’t. Under the circumstances, her statements about ADB’s
product “cannot reasonably be considered statements about the services that
Wallace provides.” Even though she directed readers to her business FB page to
read her statements about the FasciaBlaster and mentioned that she provides
skincare services in some of her posts, “it is not reasonable to infer from the
record that Wallace was intending to promote her services or enhance her
business by making the allegedly defamatory and disparaging statements about
FasciaBlaster.”  There was “no evidence
of a commercial purpose or motive behind Wallace’s posts.”

Given this,
ADB/Black had to show, by “clear and specific evidence,” a prima facie case on
their causes of action. The TCPA doesn’t “require direct evidence of each essential
element of the underlying claim to avoid dismissal.” For example, pleadings and
evidence that establish “the facts of when, where, and what was said, the
defamatory nature of the statements, and how they damaged the plaintiff should
be sufficient to resist a TCPA motion to dismiss.”

Defamation: Note
that in Texas, corporations can bring defamation claims, since “corporations,
like people, have reputations and may recover for harm inflicted on them.” Plaintiffs
conceded that they were limited-purpose public figures here.

Actual malice
requires knowledge of falsity or reckless disregard for truth. The Texas
Supreme Court has held: “A failure to investigate fully is not evidence of
actual malice; a purposeful avoidance of the truth is.” Also: “[A]ctual malice in defamation is
a term of art that does not include ill will, evil motive, or spite”; none of
that is enough because “the constitutional focus is on the defendant’s attitude
toward the truth, not his attitude toward the plaintiff.”

ADB/Black argued
that they submitted the only medical evidence in the record, allegedly establishing
that there is no biological mechanism by which the FasciaBlaster could have
caused Wallace’s medical issues, and thus the only rational inference from this
evidence is that no medical professional would have told Wallace that the
FasciaBlaster caused her to have two miscarriages and led to the onset of lupus
and fibromyalgia. Therefore, they continued, one could rationally infer that
Wallace knew that her statements were false. This wasn’t enough to infer that
Wallace knew of the falsity or acted with reckless disregard for the truth.
There was no “established body of scientific or medical evidence” about the
FasciaBlaster for Wallace to ignore or proceed in reckless disregard of. ADB’s
proof was an affidavit not available until after the litigation began; it, and
the research it recorded, had not yet occurred when Wallace spoke.

ADB/Black argued
that it was reckless disregard for the truth for Wallace to make statements
about the source of her symptoms “based on self-administered tests she is not
qualified to perform,” and that it was obviously dubious to blame “a simple
massage tool.” Again, this wasn’t a case involving “a wealth of scientific
literature that is widely available to the medical community, much less the
general public.” Indeed, when Wallace made her allegedly defamatory statements,
“there were no scientific studies addressing whether there was a link between
FasciaBlasting and any of Wallace’s illnesses or symptoms.” It hadn’t been
reviewed or tested by any physician [and one thus has to wonder about whether
those disease claims are ok with the FDA], and based on the statements in ADB’s
terms and conditions, they “had no intention at that time to subject their
product to meaningful scientific or medical review.” An understandable
misinterpretation of ambiguous facts does not show actual malice, even if
Wallace was mad at Black.

Nor are Wallace’s
claims  “inherently improbable” “considering
the fact that ADB acknowledges that the FasciaBlaster’s effects are more than
skin deep.” ADB’s own warnings reinforced that impression; indeed, “Wallace did
what Black advised her book readers to do if they experienced any alarming
symptoms while using the FasciaBlaster—consult a physician.” No actual malice,
no defamation.

Business
disparagement: Although the Restatement isn’t sure this is constitutional,
malice in Texas business disparagement differs from defamation malice because it
can be proved by demonstrating “ill will, evil motive, gross indifference, or
reckless disregard, of the rights of others.” Here the key problem was special
damages. ADB argued that in at least two instances in the record, women stated
that they were going to return their products in response to Wallace’s posts
(e.g., “I watched your videos and heard your story and it convinced me to send
mine back and not let this thing ever touch my body because of what you are
going through.”), along with other instances in which women promised to quit
using the products they’d already purchased. Black also averred that this all the
coincided with a decline in ADB’s sales.

However, neither the
video that attracted these comments nor a transcript was in the record, so we
don’t know what specific statements Wallace made, much less if any of these
statements were defamatory or disparaging. Nor was there any other record
showing of economic damage from returned or lost sales. Likewise, there was no
specicfic evidence that the avowed no-longer-users would otherwise have
purchased related specialty massage creams and ointments from ADB. As for the
general sales decline, it was clear that Wallace’s statements “were not made in
a vacuum,” and no specific evidence supported the inference that her
posts were solely, or even principally, responsible for decreased sales.

Lanham Act: Not
commercial advertising or promotion, given the mismatch between ADB’s business
and Wallace’s.

The court also
upheld the award of attorneys’ fees and $125,000 in sanctions under the TCPA.
“Although the award of sanctions is mandatory, the trial court has broad
discretion with respect to the amount of sanctions awarded.” Relevant factors
include: (1) the plaintiff’s annual net profits; (2) the amount of attorney’s
fees incurred; (3) the plaintiff’s history of filing similar suits; and (4) any
aggravating misconduct, among other factors.

Wallace argued for a
large sanctions award “because both parties were self-described millionaires
who have taken aggressive responses to quiet their online critics,” including
advertising the lawsuit against Wallace.  Along with the measures described above, ADB
subsequently sued at least two other critics who posted negative comments about
the FasciaBlaster on the same Facebook group that Wallace used. ADB sought
between $2,000,000 and $5,000,000, plus injunctive relief requiring both women
to “remove disparaging and defamatory comments,” though it ultimately dismissed
those suits.

ADB/Black argued
that no deterrence was necessary because Black was not party to either of these
suits, Wallace didn’t prove that ADB’s other lawsuits were unsound; and it
non-suited its claims anyway, making sanctions unnecessary. It also argued
that, unlike Wallace, the other two “voluntarily participated in ADB-sponsored
studies, signed contracts that included non-disclosure agreements, and then
breached those agreements by publicly complaining about ADB’s products.”
[Query: were these contract provisions federally illegal under the Consumer
Review Fairness Act?]

But even
disregarding those lawsuits, the other evidence of “a deliberate plan to
discredit and quiet their detractors, prevent or remove negative reviews of
ADB’s products, and threaten those who made negative comments” sufficed to
avoid any abuse of discretion.

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lack of irreparable harm dooms injunction against false advertising of drug disposal product

In re C2R Global
Manufacturing, Inc., No. 18-30182-beh, 2020 WL 5941330 (E.D. Wisc. Bkcy Oct. 6,
2020)

Verde sought a preliminary
injunction against C2R, its direct competitor in the drug disposal market, from
engaging in false and misleading advertising in violation of the Lanham Act,
and an order requiring corrective advertising. Despite likely success on the
merits, lack of irreparable injury precluded an injunction. The court applied eBay,
as it predicted the Seventh Circuit would, and also relied on Verde’s delay.

Verde sued C2R in
March 2018 for false advertising and patent infringement; a few months later,
C2R filed for Chapter 11 protection, and Verde timely filed a nearly $7 million
proof of claim. After a Markman hearing and decision, the parties settled their
patent claims. In February 2020, Verde sought both preliminary and permanent
injunctive relief; the court considers only the former.

The technical
details are complex, but the core of the claim is that C2R falsely advertised
how much drug content its products could render inert. Although it removed
specific pill number claims from its website, at the time of the motion it
still included the statement that its containers could be filled until contents
are two inches from the cap, which was allegedly false. C2R based its claims on
various analogies/evidence about the product components/similar competitors; Verde’s tests of C2R’s product yielded at most a 30% adsorption rate, and its experts persuasively critiqued the assumptions on which C2R’s claims relied.

After Verde sued,
C2R commissioned independent testing that found that the Rx Destroyer
deactivated 90-99% of the pills in his experiments. Among other criticisms, however, Verde’s expert critiqued the testing
methodology, which included filtering out material that included drug residue
(paste), which (Verde’s expert argued) improperly altered the drug deactivation
conclusion, and critiqued C2R’s expert’s technique of constant agitation, which
was both not realistic and not consistent with the product use instructions.

Verde argued that,
based on the testimony of its Chairman and CEO, “if unused
drugs are tossed in the trash, they risk being inadvertently diverted by
neighbors, children or pets,” and that the “toilet flushing of drugs is now
also discouraged, owing to environmental contamination risk to the nation’s
watershed.” He asserted that customers purchase C2R’s product over Verde’s
because the Rx Destroyer cost-per-pill appears lower due to C2R’s capacity
representations compared to its price point. In addition, he opined that “when
C2R advertises a product using activated carbon that does not work as
represented, that casts doubt on all products using activated carbon.”

C2R, by contrast,
argued that Verde wasn’t its primary competitor, though it acknowledged that
the fact that Rx Destroyer has a larger capacity is a competitive advantage
over Verde, or over anything else on the market. C2R has advertised Rx
Destroyer as being more affordable on a cost-per-pill basis. The parties also
submitted dueling declarations about whether the damages were merely financial
and not irreparable. C2R’s expert, for example, found
no
meaningful customer overlap, “noting that Verde does not offer product data
sheets that are required by many hospitals, and thus cannot sell to those
entities, while C2R does provide such data sheets and has such hospitals as
customers.” Plus, he indicated that “Verde has enjoyed faster growth and higher
annual revenues than C2R during the relevant time period,” suggesting lack of
harm.

Verde’s expert
disagreed that financial evidence enabling partial quantification of the
damages was the same as an adequate remedy at law. [Can a company in bankruptcy
be assumed to be able to provide an adequate remedy at law?] Verde identified
twenty-five customers to which both Verde and C2R sell. And Verde’s growth
could have been greater: the entire market for drug disposal products offered
by these parties “dramatically increased during the 2015-2019 period.”

On the merits, when
advertising explicitly or implicitly represents that tests prove the claim, a
plaintiff can prevail by showing that the tests did not establish the
proposition for which they were cited. Even if there is no industry standard
test for deactivation capacity, “when advertisements purport to rely on
testing, the presence or absence of a government certified test is not
relevant.” Predicting capacity for drug disposal products may be challenging, “that
does not absolve the manufacturer—here, C2R—from fashioning truthful
advertising statements, even if on relatively short notice.” Verde showed
likely success on the merits.

Irreparable harm:
First, no presumption applies; the Seventh Circuit has yet to say so in the
Lanham Act context but likely would apply eBay, given that it has
already done so in copyright cases. “But certainly, all of the cases cited
above recognize the particular difficulty in assessing harm when a competitor
engages in false advertising.”

Verde argued: (1)
the parties compete directly; (2) effectiveness and cost are two of the most
important factors in a purchase decision; and (3) the false representations
were “critical” to effectiveness and cost. However, the Chair/CEO’s testimony
didn’t identify specific facts such as survey data or sales reports to show
lost sales, and if his opinions were based on statements made to him by
customers, those statements would be inadmissible hearsay. “Courts in this
circuit consistently have rejected vague summaries of hearsay statements by
unidentified consumers.”  His testimony
didn’t meet the requirements of Rule 701 for non-expert testimony.

The fact that the
parties compete didn’t prove harm. This wasn’t express comparative advertising,
and the record didn’t show a two-party market. Trademark cases are different
because confusion about source can show irreparable harm because of lost
control over reputation; harm to reputation is inherently intangible/impossible
to quantify. [Sigh.]

Verde’s expert
couldn’t help because he didn’t provide alternative evidence of harm, just
criticized C2R’s expert. It wasn’t enough to infer that any customers who knew
of both companies would purchase more from Verde absent C2R’s advertising.

Separately, delay
proved lack of irreparable harm. The pertinent measurement is from the time the
plaintiff discovers the trademark infringement (or false advertising) until the
injunctive relief motion is filed, or from the time plaintiff first sent its
cease-and-desist letter until filing its motion. “Here, that time frame would
be June 2014 to January 2020, or 67 months.” Verde argued that, while it had
experimental evidence undermining C2R’s capacity claims prior to filing suit,
it had not yet conducted any discovery, and it moved promptly but prudently
only after completing that discovery. Verde also argued that “it was not in a
position at the time of its earlier testing to expend significant funds on
legal fees in pursuit of litigation.”

But this delay was “longer
than prudence can bear.” Verde had test results for years. “[T]he span of time
during which Verde at least possessed test results discrediting C2R’s website
statements is far beyond any duration accepted by courts as reasonable and
could well have allowed C2R to relax its defenses and continue its advertising
expenditures.” Its reference to the costs of litigation was “an internal
cost-benefit assessment Verde made, and when weighed against the amount of time
between the first testing in 2014 and the motion in 2020, does not justify the
substantial delay in seeking a preliminary injunction.”

Belt and suspenders:
It hadn’t been shown that Verde lacked an adequate remedy at law [which I still
wonder about—C2R is in bankruptcy!]. Also, harm to the environment or public
safety “is not of a degree warranting a preliminary injunction.” Indeed,
official websites say that putting unused medications in the trash is not ideal
but don’t definitely nix it, mitigating the public interest at this stage.

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omitting “all” or “every” can avoid literal falsity of general claim

SkyHawke
Technologies, LLC v. GolfzonDeca, Inc., No. SACV 19-1692-GW-PLAx, 2020 WL
6115095 (C.D. Cal. Aug. 3, 2020)

A limited preliminary
injunction turning on the difference between literal falsity and implicit
falsity: claims that human beings walked each golf course at issue to chart it
were literally false, but more general claims of human walking were not.

Plaintiffs sought to
stop defendants from advertising that their GolfBuddy products use information
“based on walking courses” and that therefore they are the “most accurate.” Defendants
contented (in patent litigation) that “[DECA System, the entity responsible for
the maps,] primarily uses publicly available Google Earth map data as the
course for the geographical data used to create its course data…. in some
instances [Deca] may hire a third party contractor to manually survey the
course.” Defendants conceded that Deca does not walk every course.

However, most of the
statements plaintiffs challenge weren’t literally false. E.g., “GolfBuddy
specializes purely in the manufacture of golf distance measuring devices and
walks golf courses to create ground-verified accurate maps, which increases the
supreme accuracy of their GPS devices over competitors who simply use satellite
imagery”; “GolfBuddy … used teams of expert mappers to walk courses and create
ground-verified data maps that give precision accuracy and they promise
precision accuracy for over 36,000 courses”; “GolfBuddy is … the only company
that focuses 100% on golf, maps courses on foot for added accuracy, and
provides completely fee-free access to its extensive worldwide database of courses.”
[I do wonder what a survey would show about this and what a non-leading way to
ask about it would be—this might well be a case where consumers are left with
an impression of fully walked courses but prodding them to think about the
statement would lead them to realize the ambiguity.] Plaintiffs didn’t convince
the court that the necessary implication was that defendants walk every course.

In addition, “ground-verified
accurate maps,” “precision accuracy,” and “added accuracy” were puffery.

However, one
statement by a GolfBuddy marketing coordinator was literally false: “So
GolfBuddy, our motto is Accuracy Matters. And the reason we say that is because
every single course that’s in our database out of the 48,000 are walked by
foot. So that means we send mappers to that course and they walk every single
hole by foot with our own GPS devices.”

The court applied a
presumption of irreparable harm to literal falsity, even without an explicit
comparison. “[G]iven the small market for golf rangefinder devices, the obvious
falsity, and the very narrow scope of the proposed injunction, the Court finds
that ‘traditional principles of equity’ warrant a finding of irreparable harm.”
The remaining factors also supported a preliminary injunction precluding defendants
from claiming that they walk every course in their map library “(until they do
walk every course).”

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funny survey typo doesn’t invalidate confusion survey

Pinder v. 4716 Inc.,
2020 WL 6081498, No. CV-18-02503-RCC (D. Ariz. Oct. 15, 2020)

This strip club
right of publicity-etc. case is mostly as plaintiff-favorable as
others coming out of Arizona. The notable thing: the court says the
survey here is fine, despite various criticisms leveled in similar cases, and
despite a possibly significant spelling error: “The question asked the
participant to indicate his or her strangest impression about the
advertisements, when it should have asked for the participant’s strongest
impression” (emphasis added). This was merely a challenge to “technical
inadequacies,” not to admissibility.

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another G v. O preview, shorter

IPLAC/CBA (Chicago) panel

Intro by Adam Wolek, Taft Law

Chris Mohr, GC/VP for IP, Software
& Information Indus. Ass’n.: Didn’t participate in this case b/c we have
members on both sides. Tension b/t © protection of expression and functionality
historically protected by patent. Always been true, including in runup to 1976
Act. Sec. 117 added protections for possessors of lawful copies; rental
protections came later; provisions for machine repair. 102(b) polices two
important boundaries: patent (functionality, e.g. recipes) v. (c) and First
Amendment freedom of ideas. If APIs are protected by (c), then you must
consider fair use and SCt hasn’t spoken on that for over 25 years, so that’s
attracted a lot of amicus focus.

Charles Sanders, outside
counsel, Songwriters Guild of America:

When elephants fight, mice
get trampled; the mice provide the lifeblood through which the elephants run.
There’s a value gap. FAANG are worth billions, even trillions. Meanwhile, 80%
of songwriters lost their jobs as staff writers, other ways of relying on
creative output for living. Same is true for novelists and journalists. There
are many reasons, but unfair and unbalanced marketplace is responsible in large
part. This isn’t what the Framers intended. 12 of 13 original colonies had
copyright laws [that protected neither journalists nor musicians]. Berne
Convention, Human Rights conventions, EU directive recognize cultural and
economic value of ©.

We are hoping SCT will not
continue trend of imbalance. Of course tech advances aren’t hurting creators—creators
love tech advances. It’s predatory market practices of corporations that run
tech that are the problem. Silicon Valley has to realize that the ability to make
trillions gives it a responsibility to the people who supply the raw materials
on which their businesses are built. Spotify is $50 billion on the backs of
music creators solely, and they don’t want to pay market royalties. The concept
that shareholders dictate what boards must do ignores the fact that if you
destroy those who provide you with raw materials to wring short term profits,
you destroy the industry long term. Google is trying to stop the CASE Act,
despite congressional support. They didn’t want to pay market royalties to the
publishers in Google books, and they’re trying to expand fair use around the
world. They’ve received billions of DMCA notices, full albums posted, and they
say that it’s none of their business. [Um, they do have both Content ID and
robust takedown practices.] Infringement isn’t a “permissionless innovation”
technique.

Nation v. Harper & Row: ©
protection was and will always remain the engine of free expression, but 30
years later the 9th Circuit of Silicon Valley [and Hollywood] decide in Lenz
that you have to consider fair use before sending a takedown.

[For really interesting
writing on Spotify and the techniques used by the labels using their deals with
Spotify to cut artists out of the payment loop, I recommend Kristelia Garcia’s excellent
work.]

Peter Menell, Berkeley Law: If
this were Grokster, he’d be more in line with Sanders.

Baker v. Selden:
process/method for accomplishing a task can be protected by patent, not by ©.
Idea/expression frames the dividing line, including methods, even as their implementation
through code is protectable. Thus while detailed code is protectable
potentially, algorithms, function names, and other things necessary to operate
a machine are not. When idea & expression merge, © gives way to avoid monopolistic
protection of functionality.

A car manufacturer could use
a rigid pattern with sculptural qualities as a key to the car, but couldn’t use
© to prevent others from using the same cut pattern for a key to start the car.
The same is true if the ignition switch is digital and turned on with a haiku:
it’s an unprotected purpose. The digital key can be copied as necessary to
start the car because it’s functional. Another example: a beautiful cash
register, with gears/levers essential to functionality unprotected so far as
other cash registers are concerned. Though separable features are protectable—nonmerged
implementing code—only utility patent law can protect features necessary to
operate the machine; indeed this case began as a © case.

Oracle doesn’t dispute that
Google independently implemented the specifications at issue. It did so in a
clean room, using no code from Oracle. This is different from the qwerty
keyboard b/c Java is complicated—you need 1000s of declarations to implement
the API—but that just makes it a very complicated key. Google looked at
publicly available declarations to implement them when negotiations failed,
like hiring a locksmith to make you a new key when you’re locked out.

RT (shorter version of last
week
, based on this
amicus
): At its core, the fair use argument for Google is about why fair
use is a multifactor test and why there are different kinds of fair uses.

Fair use has four
nonexclusive statutory factors: the purpose of the use, the nature of the
accusing work, the amount of the original work taken, and the effect on the
market for the original work.

Beginning as usual with
factor one: The extent to which a new work has a new meaning, message, or
purpose—transformativeness—is often and rightly prioritized in the fair use
analysis. But what constitutes transformativeness is often contentious. Here,
the new purpose of Google’s new code implementing the declarations was the
creation of a new computing environment in which Java programmers could readily
create programs on multiple platforms, which required the use of limited
portions of highly functional declarations. This type of purpose has been
recognized as transformative because of its role in furthering competition and
innovation. A computer interface supports the creation of other creative works,
and in such situations, it is important to avoid locking in third parties to
specific platforms.

Factors two and three of the
fair use test help define the boundaries of this type of fair use.

The jury heard evidence that
the declarations and classes of the Java SE API were functional, not merely in
the way that all computer code performs a function, but specifically in that
these particular declarations perform their mini-duties in noncreative ways.
The Federal Circuit acknowledged the thinness of the copyright, but it stated
that the second factor never has much weight. But the reasons that factor two
favored Google are highly relevant to the overall fair use analysis. No matter
how much work and how many choices went into producing Java SE, the highly utilitarian
nature of declarations means that copyright grants them thin scope at best.
This thinner scope of protection naturally leads to a broader scope for fair
use, especially in conjunction with factor three.

On factor three, amount, as
the jury heard and evidently credited, Google took an amount from Java SE
considered in the industry to be reasonable in light of its purpose of
developing new, compatible works. In a fair use analysis, it is vitally
important to identify the allegedly infringed work or works. As the statute
commands, the proper inquiry considers the amount taken “in relation to the
copyrighted work as a whole.” As Justin Hughes has written, “If our goal is to
create special incentives for the building of houses, we do not necessarily need
special incentives for the making of bricks or the mixing of mortar. . . ..”

So what was the work at
issue? Both the copyright registrations and industry practice were clear: the
work is Java SE, which had about 5 million lines of code; Google’s implementation
expressing the declarations at issue totals about 11,500 lines. As a
quantitative matter, what was copied was a rounding error.

What’s more, a large number
of books have been published that set forth the Java SE API, in whole or in
part, including the declarations and class structures. Numerous witnesses,
including Sun’s then-CEO who was there when it developed Java, testified that
Google behaved according to industry practice: write your own implementing code
but APIs are for everyone to use. Contrary to what you might have taken away
from the intro, the evidence showed that reimplementing APIs was standard
practice in the industry including
by Oracle
.

In this way, the thinness of
the copyright—factor two—interacts with factor three: even if APIs as a whole
cross the line into copyrightability, Google should be able to use declarations
(and the organization they necessarily reflected) that were reasonably
necessary to pursue its legitimate goal of enabling the creation of an
environment accessible to Java programmers.

Which leads to factor four:
By downplaying the relevance of the nature of the work and the amount taken,
the Federal Circuit fell into the well-known trap of circularity: reasoning
that, because Oracle could have charged a license fee for this type of use if
fair use were unavailable, Oracle therefore suffered cognizable market harm.

A thin copyright for
software, including Java SE, provides software copyright owners with meaningful
protection against copying of significant amounts of expression, but meaningful
protection does not require the expansive rights that the Federal Circuit
granted.

Q: what about derivative
works/what do we do about market harm?

RT: Traditional, reasonable,
or likely to be developed is important constraint, and traditional/reasonable
behavior here was something jury heard testimony on. Derivative work right does
not extend to every use, especially when the © is by necessity thin b/c of its
functionality. Same issue comes up with maps and charts, which have thin ©.

Q about scope of what was
taken.

Menell: 11,500 definitions
were taken but those are button labels. They’re not lines from a JK Rowling novel
but names of functions; “ProtectionDomain,” and “Add,” etc. They had to be
included to let someone write a program for Android that would use features
that were part of the Java programming environment. They specified actions
& their interrelationship. That’s why the definitions circulated freely for
programmers, including on Sun/Oracle’s website.

Q: why did so many entities
weigh in? If this wasn’t the right way to protect Oracle’s IP, what should it
have done?

Mohr: Not going to answer #2,
but you see concern from open source companies worried about when they use a
variety of APIs in their language that they will step into a liability
minefield if it’s affirmed; other software companies want to license like
Oracle wants. The other side of it is about avoiding collateral damage—MPAA and
Copyright Alliance, library and user groups. When the SCt says thing about fair
use, it’s so infrequent that it sticks for a while. Language in the Nation
case, about acquiring rightful access to the work. That required some cleanup
and Judge Leval has a long lecture about exactly this point. Thus there’s
concern about how this decision plays out in other areas if the API is found to
be protectable.

Q: is this a good case to
provide guidance?

RT: when the SCt encounters a
multifactor test it almost never leaves things less confusing. Star Athletica
at least went from seven contradictory tests to only one internally contradictory
test, but that wasn’t even a multifactor test.

Sanders: we want the SCt to
issue a narrow decision and not speak carelessly in a way that could haunt the
creative industries for decades.

Q: predictions?

Menell:
not good at those. Breyer will be interested in Google’s position, but SCt
doesn’t see itself as clarifying law or dealing w/fragmentation of law; in IP
they have an instinct for the capillary. They get caught up in issues of stare
decisis and what they call textualism [this is why I’m worried about what they’ll
do with the jury questions]. 102(b) is about as clear as you can get, and it’s
based on one of the greatest cases ever, Baker v. Selden, but the Fed Cir didn’t
see it that way. Asking for supplemental briefing is also a signal—the Court
may not want to overrule a jury finding lightly. There was a big trial, at the
Fed Cir’s direction. This could sidestep the (c)ability issues and that might
be the result.

 

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Google v. Oracle argument preview

Chicago-Kent College of Law 2020 Supreme Court IP Review:
Google v. Oracle

Copyrightability issue: Pam Samuelson: Supreme Court has 2x
decided that functionality defeats ©ability for certain words/symbols when they
constitute a system/method for accomplishing a useful result. Paris v. Heximer,
a claim of infringement over D’s copying of a symbol system for ID’ing
different types of buildings for fire insurance maps. Baker v. Selden too. Didn’t
matter how original symbols/words were or what other choices were possible at
the time of creation. Promotes progress of knowledge by allowing authors to
build on existing knowledge and promotes useful arts by preventing © from being
misused to give protection to patent-like inventions that didn’t satisfy patent
standards. Dozens of cases on how shorthand systems, tax record systems, games
are unprotectable even when embodied in a © work. Codified in §102(b).
Codification came in order to deal w/fears about protecting computer programs as
literary works, per legislative history; Fed. Cir. instead ignored every word
in §102(b) except “idea” and ignored legis. history of concern for
overprotection.

Fed Cir never identified the relevant work of authorship or
asked what the scope of protection available to the work in light of Baker
& its codification in §102(b). The relevant work is Java SE, which has the
API and numerous other elements of the Java technologies created by Sun &
its engineers. The Q is whether the specific declarations Google interspersed
in 15 million lines of code are w/in the scope of protection for Java SE. Judge
Alsup made findings of fact that these were methods/systems, consistent w/9th
Cir. law which has twice held that program interfaces that enable interoperability
are unprotectable procedures under 102(b). Sun—developer of Java—participated
in an organizational brief in support of Borland in Lotus v. Borland,
committing to proposition that interfaces that enable interoperability should
be treated as a system.

Interfaces are fundamentally distinct from implementations:
everyone has to write their own reimplementations, but reimplementations
themselves are legitimate, which promotes interoperability and competition.

Merger doctrine leads to the same result. Once you decide to
adopt a certain system, that constrains potential implementations. Many cases
involving 102(b) thus use merger as an alternative argument.

Anne Capella (Weil): Programmer; represented computer
science professionals to talk about the underlying technical aspects. APIs are
tools for app developers to write applications. They are the audience for the
APIs. Try to make them easy to use and intuitive. Also explained: what is
declaring code? May look like a collection of random words, but there are a lot
of subjective decisions that have to go into designing those and that are not
completely dictated by function. There is original expression. Like a haiku:
there are constraints on the format, but also subjective decisionmaking and
creativity. API designer that would design declaring and implementation code
would be balancing functionality, flexibility, simplicity and trying to make
those attractive to app developers, requiring selection of which function to
present, how to organize. Not just a filing cabinet but hierarchies that are
important as to their locations. There are good APIs and APIs that are more
attractive than others; Java was known for being well designed and intuitive
which made it attractive to app developers. Better APIs have better expressions
for the same function, which are not dictated by the functions themselves.

You can also write your own programs to provide the same
functionality that wouldn’t have to use the same name, organization, design
choices for what would be in the declaring code. [Which seems a lot like games
and shorthand systems.]

Interoperability: there was no technical need to use the
declaring code. Programs written for Java SE can’t be used on Android w/o
modification and vice versa. Not all of the APIs are available in both. There
wasn’t a need to use them to create a new Java platform. Google could have
written its own declaring code but wanted the intuitive code and wanted to
attract programmers to their own platform. Programmers want to protect
expression in declaring code. If it’s protected, people might try to hold
interfaces proprietary, but Java had a license that Google chose not to use.]

RT: (based on this amicus)

At its core, the fair use argument for Google is about why fair
use is a multifactor test and why there are different kinds of fair uses. I
will touch on deference to the jury though I have plenty of other thoughts on
that for the question period.

Fair use has four nonexclusive statutory factors: the
purpose of the use, the nature of the accusing work, the amount of the original
work taken, and the effect on the market for the original work.

Beginning as usual with factor one: The extent to which a
new work has a new meaning, message, or purpose—transformativeness—is often and
rightly prioritized in the fair use analysis. But what constitutes transformativeness
is often contentious. Here, the new purpose of Google’s new code implementing
the declarations was the creation of a new computing environment in which Java
programmers could readily create programs on multiple platforms, which required
the use of limited portions of highly functional declarations. This “technical
interchange,” is a specific kind of creativity-promoting transformativeness.  It’s about the programmers, not whether the
program is “run once run anywhere,” which is a red herring. This type of purpose
has been recognized as transformative because of its role in furthering
competition and innovation. A computer interface supports the creation of other
creative works, and in such situations, it is important to avoid locking in
third parties to specific platforms.

By contrast, the Federal Circuit reasoned that factor one weighed
against Google because the intrinsic purpose of the parties’ declarations was
the same. But that reasoning creates a per se rule against copying any
interface elements or code in a computer program, and fails to appreciate the
interaction of factors two and three with transformativeness. The Federal
Circuit’s simplistic rationale suggests that a law review article that quoted
another law review article for support would infringe the earlier article,
because they both had the same “intrinsic purpose.” Without assessing the role
of the copied material in the parties’ works, this is a mistake.

Factors two and three of the fair use test help define the
boundaries of technical interchange fair use. The highly functional nature of the
copied declarations and the limited amount of the overall Java SE work used,
consistent with industry practices, support the conclusion that Google’s use
was a transformative use that served copyright’s basic goal of encouraging
creation of new works.

As to the nature of the original work: The jury heard
evidence that the declarations and classes of the Java SE API were functional,
not merely in the way that all computer code performs a function, but specifically
in that these particular declarations perform their mini-duties in noncreative
ways. The Federal Circuit acknowledged the thinness of the copyright, but it
failed to put this factor in proper context and thus to give it actual weight,
instead reasoning that the second factor did not matter to fair use determinations
generally, a proposition for which it cited only cases involving highly creative
works like songs. But there are four factors because various fair uses can be
fair for different reasons, and the factors may thus differ in relevance across
types of cases.

Here, the reasons that factor two favored Google are highly
relevant to the overall fair use analysis. No matter how much work and how many
choices went into producing Java SE, the highly utilitarian nature of
declarations means that copyright grants them thin scope at best. This thinner
scope of protection naturally leads to a broader scope for fair use, especially
in conjunction with factor three.

On factor three, amount, the question is not whether, in
judicial hindsight, the defendant took more than absolutely necessary, but
whether the amount taken was “reasonable in relation to the purpose of the
copying.” As the jury heard and evidently credited, Google took an amount from Java
SE considered in the industry to be reasonable in light of its purpose of
developing new, compatible works.

One aspect of the Federal Circuit’s error was its emphasis
on the 37 packages that Google copied in “entirety.” In a fair use analysis, it
is vitally important to identify the allegedly infringed work or works. As the
statute commands, the proper inquiry considers the amount taken “in relation to
the copyrighted work as a whole.” Without careful attention to the boundaries
of works, especially unfamiliar works such as software, plaintiffs can
manipulate their claims to artificially increase the relative size of what was
taken. As Justin Hughes has written, “If our goal is to create special incentives
for the building of houses, we do not necessarily need special incentives for
the making of bricks or the mixing of mortar. . . ..”

So what was the work at issue? Both the copyright registrations
and industry practice were clear: the work is Java SE, which had about 5
million lines of code; Android was three times bigger. Google’s implementation
expressing the declarations at issue totals about 11,500 lines. As a
quantitative matter, what was copied was a rounding error. Yet the Federal
Circuit characterized Google as “taking a copyrighted work verbatim,” as if the
fractional part were the whole.

As the district court detailed, the jury could have found
that Google used highly limited portions of Java SE’s APIs as part of an
innovative mobile device platform. The jury heard testimony that portions of
Java SE that Google reimplemented preserved consistency of use within the
larger Java developer community. What’s more, a large number of books have been
published that set forth the Java SE API, in whole or in part, including the
declarations and class structures. Numerous witnesses, including Sun’s then-CEO
who was there when it developed Java, testified that Google behaved according
to industry practice: write your own implementing code but APIs are for
everyone to use.

Where others were freely copying large parts or the entirety
of the API, the jury could have found that Google’s far more limited copying strongly
favored Google. In this way, the thinness of the copyright—factor two—interacts
with factor three: even if APIs as a whole cross the line into
copyrightability, Google should be able to use declarations (and the organization
they necessarily reflected) that were reasonably necessary to pursue its
legitimate goal of enabling the creation of an environment accessible to Java
programmers.

Which leads to factor four: By downplaying the relevance of
the nature of the work and the amount taken, the Federal Circuit fell into the
well-known trap of circularity: reasoning that, because Oracle could have
charged a license fee for this type of use if fair use were unavailable, Oracle
therefore suffered cognizable market harm.

Because such claims can be made for any fair use, which by
definition is not paid for, this reasoning cannot distinguish fair and unfair uses.
In some situations involving traditional creative works with “thick”
copyrights, experience and normative commitments to free speech break the
circle: the markets for criticism, educational uses, and parody are not
legitimate even if a specific copyright owner evinces a willingness to license
particular instances.

When it comes to software, the benefits of interoperability
and allowing third parties to avoid lock-in to particular platforms similarly
explain why licensing interface reimplementation in newly written code is likewise
not a legitimate copyright market.  Here,
factors two and three can help identify when crediting claimed market harm
would be inconsistent with copyright’s overall balance between past and future
creators.

In reversing the jury’s verdict, the Federal Circuit wrongly
relied on the circular claim that Google could have taken a license for the
precise use it made and that this possibility established market harm. But the
evidence did not establish harm to the market for “the work,” Java SE, or even
the existence of a market for a limited number of highly functional
declarations.

A thin copyright for software, including Java SE, provides
software copyright owners with meaningful protection against copying of
significant amounts of expression, but meaningful protection does not require the
expansive rights that the Federal Circuit granted.

Elizabeth Brannen, Stris & Maher: Nothing is free.
[Other than this webinar?]

What Google copied was expression that was popular with Java
developers and that cost lots of resources to create. Those packages covered
6000 separate methods that Google didn’t have to write itself. Those packages
are in executable form on countless Android devices.

Interfaces v implementation is a false dichotomy. We need to
look at what was copied and was it expression. The haiku is a good analogy.
Best interfaces are concise and intuitive, which are hallmarks of good writing
in any context. Google copied b/c 6 million programmers knew and liked the Java
interfaces to call the prewritten methods. It copied what it did because of the
expressive value of that code. Most computer code is zeros and ones. Google
copied what’s meaningful to developers, the expressive part. It didn’t copy for
technical reasons. Wrote its own versions for many Android declarations. Copied
not b/c of technical impossibility but b/c didn’t want to require Java
developers to learn new calls, so it helped itself to the ones they already
knew and liked. Google made a lucrative business decision. To call the © thin
is to say functional works should receive second-class protection. [We have
thin and thick © for a reason—of course it’s about scope. It’s not second-class
to rece] Google didn’t transform. It’s not fair to replace and supersede the
original.

Transformative use changes something about the
message/content—parody, commentary. Google killed Java SE for mobile. There was
unrebutted evidence that they designed Android to be incompatible w/Java. No
court has found fair use where there was an incompatible software product. [Connectix
found fair use where there wasn’t full compatibility, as here.] Google took a
shortcut and made money. Fair use would undermine the incentive to create new works.
People only take licenses because they have to. Expressive aspects of code need
© to incentivize investment and making code available under unrestrictive
licensing terms.

Ned Snow, South Carolina Law: The only Q the Supreme Court
will care about: In the late 1700s, did the issue of fair use determine whether
a defendant had infringed the legal right of copyright? The test isn’t which
court was the first to decide, equity or law. Not whether fair use more
frequently arose in a court of low or equity; that depends on what remedy is
sought (injunctive relief or damages). Also not whether a ct of equity would
have granted a D’s request for a court of law. Not whether a court of equity
states that judges should detrmine the issue. He argues that two cases
determine the answer. [This is no way to run a railroad, which is not Prof. Snow’s
fault at all, but his explication trying to extract fair use from a pre-modern
system convinces me of the disutility of the enterprise.]

Sayre v. Moore, Lord Mansfield, fourteen lines of legal
analysis. Mansfield recognizes value in correcting errors in faulty sea charts.
Charges the jury to find whether D corrected errors or servilely copying: value
and purpose of D’s use. Points to allegation that alterations are “very
material” which points to transformation. Also encourages jury to consider
whether D’s work enables or worsens navigation, which points to nature of
work.  If you think so, he tells the
jury, you find for the D; if you find mere servile imitation, you should find
for P. Shows that jury determined the infringement of the legal right. Neither Mansfield
nor jury was concerned with independent creation, or fact/expression dichotomy.
Lockean labor theory/no reason to think that factual works had less protection
than expressive works. Even if we inferred that, the inference would support
using fair use which considers fact/expression in factor two.

Next question: what is the review standard for mixed
questions of law and fact. Descriptive argument: what’s going on? Take a raft
of case-specific historical facts, balances them, and produces a result. That’s
pretty factual sounding, per J. Kagan in US Bank v. Village at Lakeridge.  When an issue falls b/t pristine legal
standard and simple historical fact, standard of reivew reflects which judicial
actor is best positioned; juries have a variety of life experience, suggesting
deference to them, though judges can issue general principles.

William Jay, Goodwin Procter: Bottom line: accepting Google’s
argument in its strongest form, fair use is a four factor test and not only is
each factor grounded in the facts, but the balancing is itself a factual
question. That’s the key assertion here. If the Ct agreed, it would circumscribe
JMOL review, but would also make summary judgment all but impossible even on an
undisputed factual record. Skeptical the Court will go there in its strongest
form. There was a jury trial! So this is a case about the appellate standard of
review. Oracle does say there was no right to a jury trial anyway, so the 7th
Amendment is irrelevant, but at the end of the day the Fed Cir was reviewing a
JMOL verdict after a jury trial. Everyone pretty much agrees that the standard
of review is in a sense de novo, but de novo review of what? Oracle’s position
is grounded in Harper & Row, which was a bench trial; J. O’Connor said that
the appellate court didn’t need to remand but could conclude no fair use as a
matter of law.

How should that work here? At a minimum, jury’s job is to
find historical facts: how much of the work was taken? Those historical facts
need to be taken in the light most favorable to the prevailing party. But many
Qs are Qs of degree, along with the final balancing of factors. Is that final
balancing factual? Harper & Row didn’t remand for a new finding, but
instead said that it was important to have historical facts determined and then
the reviewing court could make its own determination. The remainder of the
analysis is the province of the courts in a non-bench trial case.

If Google is right, there’s no work for judges to do after
jury verdict, b/c it’s always possible that some kind of weighing favors the
verdict. But the Court likely won’t reach that; Oracle agreed to a jury trial and
there’s no need to decide how much of a right to a jury trial there is to
decide the standard for JNOV.

Tomas Gomez-Arostegui, Lewis & Clark Law: 7th Amendment
test is historical, turning on English authorities circa 1791. But Ct often not
clear about what precisely it seeks from the record. Analogues work but how
analogous they need to be is unclear. Feltner for example didn’t deal w/statutory
damages. We’re looking for “established practice” but neither of those words are
defined—Feltner cited two cases in which juries awarded nominal damages.

© litigation before 1800 was mostly in equity; ordinary
damages were difficult to prove and even penalties were hard to obtain; there
was no provision for discovery in law courts and P & D couldn’t even
testify. Equity was easier! Chancellor could determine law and facts. Equity
wasn’t obligated to send © suits to law. If Chancery did push a case to law, it
was typically for a sticky legal interpretation Q. If they did go to law, there
were lots of issues that were sent to the jury.

What about fair abridgement? 18th-c analogue to fair use?
Oracle stresses it’s an equitable doctrine, w/no right to jury, and also argues
that it’s not the same as fair use. Fair abridgement raised in equity from
1680s through 18th c, but no case at law before 1800 of which he was aware adjudicated
fair abridgement. That doesn’t make it a purely equitable doctrine, esp. since
it came from a statute that would apply equally at law and equity. One of
the  most visible fair abridgement cases
in 1870s, Lord Hardwick, influential, said that the doctrine was part of the Statute
of Anne.  Fair abridgement = create a new
book. Not an excuse: if fair abridgement, then no infringement. Amount taken;
effect on market; added as developed. Not modern fair use but close in some respects.
Considered this to be a Q of fact, though difficult for a common jury. He preferred
to adjudicate the issue in chancery, aided by experts appointed by parties, but
didn’t rule no jury could hear it. Partisan expert testimony became more common
in courts of law just as he was leaving. He specifically said that his job was
to interpret the statute in equity the same way it would be interpreted at law.

Elephant in the room: no known fair abridgement cases at law
before 1800. So what do we do? In 1791, nothing prevented a P from raising the
issue in law and having a jury determine it, since it came from the statute, was
a component of the infringement analysis, and had been called an issue of fact.
Maybe the law courts would have rejected Lord Hardwick’s interpretation, but
they didn’t reject it in 1807 when they got the chance.

Discussion period

Samuelson: Haiku? Popularity? It’s not popularity, but use
of your learning as a programmer v. having to learn a new language or dialect
in order to write for the platform.

Compatibility: there are programs in Java that run on
Android and vice versa. It’s true they’re not fully interoperable but that’s
not necessary. Oracle is arguing that you have to copy the whole thing for
interoperability and that’s not a sound analysis. The 83 software engineers’
brief is a really good explanation.

Capella: New languages are common; programmers are used to
switching. That’s where a lot of innovation can come from. APIs are a tool/part
of the overall system: would be more relevant to look at APIs themselves.
[which is why these are highly functional!]

Samuelson: Fed Cir rejects six other appellate decisions
that say interfaces are uncopyrightable to the extent they facilitate/enable
interoperability. Fed Cir didn’t just distinguish those decisions as being
about “true” compatibility (and Connectix is about replacing the other guy’s
platform and is only partly compatible)—it’s a rejection of every other
decision except Jaslow.

Capella: There’s different types of interfaces. APIs are
tools that programmer can use. Interfaces to platforms are very different
types. Declaring code isn’t just for APIs, but even for internal modules that can
be called. Slippery slope.

Brannen: A lot of cases interpret 102(b) to codify
idea/expression. Is there any way to give effect to the words of the statute
w/o having the exception swallow the rule. Worried about second class
citizenship for software. 102(b): should you just ask yourself, did they copy expression
that had merged?

Samuelson: It’s correct that the Fed Cir said you can’t take
102(b) completely literally b/c it would prevent all (c) for computer programs.
But it’s not correct to say that all the words in that statutory provision but “idea”
should be ignored. There is a clean distinction b/t things that are the method/system
versus explanation/expression. Not everything creative in a work is protectable
by (c) law.

Q: size Q: 11,500 lines/less than .5% of code in Java and
.1% in

RT: look at the work registered. APIs are tools; the whole work,
Java SE, is protectable but parts of it aren’t.

Brannen: Qualitatively: they could have written it differently?
They didn’t b/c what they copied was popular w/the developer base they wanted
it to court

RT: That’s not what Fed Cir said; they said it was qualitatively
important b/c Google took it which was circular/inherently anti-fair use.

Actually, some things are free: 107 says so! It even says
that “multiple copies for classroom use” are examples of fair use, not just
criticism.

Popularity is one way to say it; utility is another. QWERTY
keyboard isn’t popular because people like the expression; it’s popular b/c it
makes transferring between keyboards easy. If I can read your shorthand b/c we
both trained on the same system, that’s different from both of us liking Harry
Potter.

Cappella: it was popular because it was elegant and people
used it.

Samuelson: if you read the lower court opinion, you can see
that what this was about was that Java was originally developed for enterprise
systems. Smartphone was going to be a different kind of computing environment;
needed new APIs, but for things like comparing two numbers and seeing which was
larger, those things needed to be done on both environments and should be kept
together.

Brannen: there was expression; troubling if they could pick
what they wanted w/o paying and kill Java for mobile.

Q: does the SCt need to understand all this to resolve it?
Google describes it as functional and Oracle as expressive.

Samuelson: that’s one reason many of us are nervous about
this case. By comparison w/Lotus v Borland, this is more technically
complicated.  Some of the big players
really want the copyrightability issue decided so they’re doing the best they
can to explain what’s at stake. Only Breyer has followed the issues; would expect
him to try to take the lead on that.

Capella: Q of who should evaluate this—it’s important to
look at it from the audience’s viewpoint, which is the app developers. Trying
to evaluate expressivity in a foreign language, which is difficult.

RT: There was testimony that both the trial judge and the
jury relied on about what professionals thought about protectability—which is
one reason this case may be tempting for the Court to see as a standard of
review case. This could be another Inwood v. Ives, which is an important TM
case but at the Court is decided as standard of review. And the Court may be
better at getting that right, given what it knows, than at evaluating the
technical details of ©ability [or, as Jay suggests, at evaluating the history].

Brennan: does gov’t’s position matter?

Jay: Maybe, but has been more pro-© claimant in a number of
cases than the Court has been. The fact the gov’t thinks it’s © eligible is not
going to be institutionally persuasive.

Samuelson: SG’s position in Georgia v. PublicResource was
rejected; doesn’t think it’s hugely impactful.

Q: standard of review/7th Amendment?

Gomez-Arogstegui: The appellate standard of review is de
novo; that’s easy. The rule 50(b) standard the trial court is supposed to apply
is also easy—it’s deferential. What’s tricky is that 50(b) assumes that an
issue of fact has been properly assigned to the jury, which is in doubt given
Harper & Row.  You can’t call fair
use a mixed Q of fact and law if it turns out you have a constitutional right
to all issues relating to fair use—would have to either overrule Harper & Row
or distinguish it as involving a bench trial.

Snow: Harper & Row is the final twist in this unusual
case. History until H&R rarely involved SJ in fair use cases; 9th Circuit
starts to in the early 1980s, and H&R then produces Fisher v. Dees in which
9th Cir. says it’s pure law. 2d Circuit stays reluctant, but in 1990s everyone
starts granting SJ, including Second Circuit in Castle Rock (Sotomayor).
Key Q: Does the court want to go back to when fair use couldn’t be decided on
SJ? May seem like lesser evil v. wading into the tech, but then all these cases
have to go to trial. It’s a bit silly to have so much turn on 14 sentences from
hundreds of years ago in one case. But it could be good to clarify that Harper
& Row
’s language was referring to a bench trial; jury verdicts post
Harper & Row are still reviewed on a deferential standard.

Jay: review of jury verdicts is deferential, but as to what?
If a pure legal Q surrounds why the issue goes to the jury, everyone agrees
that in the JNOV decision the judge can reexamine the legal Q and decide it
wasn’t legally sufficient to go to the jury. Might be able to avoid judge/jury
issue if they resolve the law/fact issue in certain ways; not all mixed Qs are
alike.

Snow: we can’t dodge the constitutional issue if the
inferences from the facts have historically been sent to the jury and so
history shows there’s a right to have the jury make the inferences.

Samuelson: most unsatisfactory about the fair use reasoning:
it said there are only 2 facts we’re willing to recognize—whether there was
good/bad faith and whether it was more functional than expression. If you look
at Alsup’s opinion, there were a number of other factual issues where the jury
was presented with evidence on the parties’ positions. If the SCt goes in the
fair use direction, hopes they’ll broaden the set of issues considered “fact”
issues. How you can possibly say market harm is a purely legal issue is a Q!

RT: slightly different take b/c there are areas of
normative/legal concern where, for example, we just don’t consider the © owner’s
claim that it was willing to license parodies as evidence of market harm. So for
each factor there can be normative components and factual components.

Josh Sarnoff: hard to reach fair use w/o finding protectability
of what was copied [and yet courts do it regularly by using thinness of © in
the fair use factors; that’s treated an amicus I filed in the pending 2d Cir.
Warhol case]. US Bank is fundamentally incoherent: the mixed Q is “does the law
apply to these facts?” But giving the overall fair use Q to juries makes no sense
at all. The Court could explain this properly, though it wouldn’t solve “what
conduct is fair or not fair?” The Q of what conduct is illegal under the
statute—that’s a judge question.

Snow: thinks it’s more like negligence/reasonability of
conduct.

Sarnoff: thinks it’s more like obviousness in patent; among
other things was always a statutory question and not a common law question.

Q re arguments

Jay: J. Thomas has historically written IP opinions but not
asked questions; the new format allows him to ask questions that can be
agenda-setting, while J. Breyer will have a time limit which is also new.

Q: there were 60 amicus briefs filed, many focused on
innovation/software industry. We’ve seen Court punt on policy issues to
Congress and say it was just applying the statute. Will the Court engage
w/arguments about innovation?

Samuelson: thinks Court will care about industry structure,
but it’s hard to get attention for one particular brief if there are so many.
Clerks will try to identify a relatively small number of briefs for Justices to
read. Microsoft/IBM briefs are likely to get attention, and computer science
briefs on both sides. Comparison to eBay v. MercExchange, where innovation was
something the Court took seriously.

Brennan: even if they don’t address it explicitly, hopefully
they’re thinking about it given the outpouring of concern. Some of the
companies on Google’s side have shifted to a nonproprietary model where they
give software to people for “free,” but remember that nothing’s really free. Proprietary
software still matters and we shouldn’t destroy that model.

Q: For Capella: how does she think about the patent/©
interface for software, as a former software programmer? Patent trolls have
been a problem, but © lasts so long.

A: Original expression should be protected; there wasn’t a
lot of open source when she was practicing, but even open source involves
tradeoffs depending on the license. You’re not getting something for free. If
you use and build on innovation of others, many licenses have obligation to
give back. Some companies have chosen to go that direction. Have to abide by
the law.

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low-quality lead generation leads to deceptive marketing claims

In re HomeAdvisor, Inc. Litig., No. 16-cv-01849-PAB-KLM, 2020
WL 5798515 (D. Colo. Sept. 29, 2020)

HomeAdvisor “is an online marketplace that helps connect
persons providing home improvement services, i.e., home service professionals (‘HSPs’),
with homeowners in need of such services.” It’s a subsidiary of defendant IAC, a
media and internet company that owns over 20 operating businesses comprising
over 150 brands and products. Defendant ANGI is the holding company for
HomeAdvisor and non-party Angie’s List.

Plaintiffs are home service professionals who paid for memberships
with HomeAdvisor in order to receive homeowners’ service requests or “leads.” The
HSPs must pay $8-140 for each lead depending on type and location; the cost isn’t
included in membership fees.

Plaintiffs alleged that HomeAdvisor misrepresents that its
leads are connected to high quality, project-ready customers, but instead the
leads often directed HSPs to “wrong or disconnected phone numbers,” “wrong
contact information,” “persons who never even heard of HomeAdvisor” or “persons
who are not homeowners,” “stale Leads, including for projects that homeowners
completed months or years prior to the Lead being sent,” or “contacts for
vacant or non-existent residences,” among other things.

HomeAdvisor allegedly contracts with over 100 lead generator
companies, including the “Venture defendants” and defendant CraftJack. HomeAdvisor’s
parent company IAC allegedly exercised control over the terms of the lead
generation agreements that HomeAdvisor entered into with these third-party lead
generators.

Some third-party lead generators, such as CraftJack, are allegedly
HomeAdvisor’s direct competitors and,

in many instances, sell the same
leads provided to HomeAdvisor to their own networks of home service
contractors, a fact which HomeAdvisor did not disclose to plaintiffs.  HomeAdvisor does not exercise any quality
control over the leads it purchases from these third party lead generators, for
which it pays a “nominal” amount, and plaintiffs claim that HomeAdvisor is
aware that a low number of its leads result in actual home service projects for
the HSPs.

CraftJack supplied HomeAdvisor with over 1.15 million leads
from 2012 until mid-2017; these were allegedly poor quality, with low contact
and win rates. HomeAdvisor’s internal tracking allegedly demonstrates that
certain leads generated by CraftJack only have a 24 percent chance of ever
making contact with the homeowner. Likewise, plaintiffs alleged that Venture
defendants’ leads are exclusively generated through websites they owned and
operated; the Venture defendants and HomeAdvisor were allegedly aware that
robots were generating fake leads through the websites, but the Venture
defendants failed to include a CAPTCHA5 to prevent this abuse.

From 2012-2017, HomeAdvisor’s quality filter allegedly “flagged
approximately four to five percent of the leads received, and in most cases,
HomeAdvisor ignored the fact that the lead was flagged by the filter.” Indeed, “more
than 98 percent of the leads obtained by HomeAdvisor from this five-year period
were inserted into HomeAdvisor’s lead database without any significant
screening or verification,” including any validation of the accuracy of the
address, phone number, or homeowner name associated with its leads.

In addition to this allegedly deceptive conduct, the complaint
alleged that the HomeAdvisor entities diverted business away from HSPs by
co-opting, using, and exploiting the identities of current and former HSPs:

When an HSP becomes a HomeAdvisor
member, HomeAdvisor creates an online profile page based on information gathered
during the enrollment process and extracted from the HSPs’ websites and other
online sources. … Plaintiffs allege that HomeAdvisor’s “online marketing and
search engine optimization (‘SEO’) capabilities are employed to rank the HSPs’
HomeAdvisor Online Profile Pages at the top of internet search results,
outranking even the HSPs’ own websites, paid adwords, and other listings.”
Plaintiffs allege that, once an HSP’s HomeAdvisor membership is terminated or
expires, HomeAdvisor does not remove the HSP’s profile page, but continues to
manipulate internet traffic to route homeowners away from HSPs’ websites and
toward a HomeAdvisor-related domain. …

For example, plaintiff Hans Hass
performed an internet search for terms related to his business – “Alpine
Roofing” and “Alpine Roofing Sidney.” His company’s website was listed between
a Google ad for roofing.zone/Alpine domain and his business’s HomeAdvisor
profile page. When he clicked the roofing.zone link, Hass completed a form
asking for his contact information and details about his home improvement
project. He was then contacted by other HomeAdvisor roofing HSPs who had
received Hass’s contact information in the form of a HomeAdvisor lead.  When Hass complained to HomeAdvisor, he was
told that the issue would be reviewed and that HomeAdvisor would follow up with
him about the website hijacking.

The RICO claims failed because they were RICO claims.

Lanham Act/unfair competition/trademark infringement claims:
HomeAdvisor sought to get rid of these claims to the extent they were premised
on “website hijacking,” which here just means infringing uses on websites. Claims
under the Colorado Consumer Protection Act, Florida Deceptive and Unfair Trade
Practices Act, Idaho Consumer Protection Act, and most of their common law
unfair competition claims “are entirely supported by allegations of other
misappropriation by Defendants,” so the court didn’t dismiss those.

Lanham Act/NY common law unfair competition: HomeAdvisor allegedly
used various website domains, such as roofing.zone, to redirect legitimate
internet traffic away from the HSPs’ own websites or businesses by using
current and former HSPs’ company names on these domains, as with the
Hass/Alpine Roofing example above. However, the complaint failed to allege that
HomeAdvisor “owned the allegedly problematic domains or had any control over or
affiliation with the owners of those domains.” Plaintiffs argued that they had
a valid contributory infringement claim because the complaint alleges that
HomeAdvisor “suggested that it could resolve the problem” when Hass complained
about his information being on the roofing.info domain.

But contributory infringement requires that “a defendant
must have (1) ‘intentionally induced’ the primary infringer to infringe, or (2)
continued to supply an infringing product to an infringer with knowledge that
the infringer is mislabeling the particular product supplied.” “Allegations of
‘[d]irect control and monitoring of the instrumentality used by a third party
to infringe the plaintiff’s mark’ could suggest contributory infringement.” However,
the complaint failed to plead intentional inducement, and the lone allegation
about Hass didn’t “sufficiently demonstrate a degree of control over the
roofing.zone domain by HomeAdvisor so as to allege a contributory infringement
theory”; it wasn’t even clear who told him that HomeAdvisor would do something.
  

Defendant IAC sought to dismiss aiding and abetting unfair
practices claims against it; the court considered the arguments only as to
Colorado law, since it only cited a Colorado case stating that aiding and
abetting under Colorado law requires proving a “substantial assistance element”
that requires a showing that “the secondary party proximately caused the
violation, or…that the encouragement or assistance be a substantial factor in
causing the tort.”  For aiding and
abetting fraud under Colorado law, a plaintiff must (1) allege the elements of
common law fraud and (2) allege that the defendant “knowingly participate[d] in
the underlying breach or violation.”

Plaintiffs alleged that IAC “was aware that the leads it was
receiving from third-party lead generators were low quality and resulted in poor
win-rates, but that IAC made the business decision to increase the number of
leads it acquired rather than improve the quality of leads,” and that it was
aware of HSPs’ frequent complaints over the quality of leads and requests for
refunds. The complaint also alleged that IAC exercised control over
HomeAdvisor: IAC was involved in the day-to-day operations; had “the ultimate
say” on whether HomeAdvisor should cut poor-quality leads; initiated and drove
internal discussions concerning how to grow HomeAdvisor’s market share and
HomeAdvisor’s branding strategy; and “exerted operational control over
HomeAdvisor and its business.”

However, knowledge alone is insufficient to state an aiding
and abetting claim. Merely exerting control over HomeAdvisor, the source of the
alleged false representations, without any allegations setting forth “the ‘who,
what, when, where and how’ of the alleged fraud,” was insufficient.

Likewise, the California UCL, FAL, and Florida FDUPTA each
require “an affirmative deceptive act by the defendant.”  The complaint didn’t plead facts that IAC had
control over HomeAdvisor’s marketing or that IAC and HomeAdvisor had common
marketing procedures or personnel, beyond alleging that IAC “drove internal
discussions” over HomeAdvisor’s branding strategy. That wasn’t sufficiently
connected to any of the allegations about the alleged misrepresentations. Those
claims went too.

Unjust enrichment: The defendants didn’t have to take money
directly from plaintiffs for unjust enrichment. The court accepted the theory
that “the leads provided to HomeAdvisor by the Venture defendants were
fraudulently sold to plaintiffs and that the monies plaintiffs paid to
HomeAdvisor made its way to the Venture defendants through the Venture
defendants’ and HomeAdvisor’s profit-sharing agreement.” Plaintiffs plausibly
alleged that the Venture defendants and CraftJack received a benefit conferred
by plaintiffs in the form of profits arising from leads purchased by
plaintiffs.

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Georgia Supreme Court revives some false advertising claims against sperm bank

Norman v. Xytex Corp., — S.E.2d —-, 2020 WL 5752325,
S19G1486 (Ga. Sept. 28, 2020)

Reversing
the court of appeals
, the Georgia Supreme Court allows plaintiffs to bring
false advertising claims against a sperm bank that supplied allegedly falsely
advertised sperm. Even though Georgia rejects any damages in tort “that
necessarily presume that life itself can ever be an injury,” that was not the
plaintiffs’ sole claim. The Normans alleged that Xytex “sold them human sperm
under false pretenses about the characteristics of its donor, and that the
child conceived with that sperm now suffers from a variety of impairments
inherited from the sperm donor.” Result: “claims arising from the very
existence of the child are barred, but claims arising from specific impairments
caused or exacerbated by defendants’ alleged wrongs may proceed, as may other
claims that essentially amount to ordinary consumer fraud.”

Xytex allegedly misrepresented the donor’s educational,
medical, and criminal history, while representing  that it carefully screened the personal
health, criminal history, and family history of all donors; that donors were
put through rigorous physical exams and interviews to confirm the accuracy of
the information donors provided; and that because of its thorough screening
process, fewer than five percent of candidates became donors. Xytex also
represented that it required sperm donors to update their medical history every
six months; that the company would update the donors’ profiles with any new
information; and that, if the company received “medically significant”
information about a donor, it would notify patients who used that donor’s
sperm.  Xytex promoted the donor as one
of its “best” sperm donors “on account of his profile in which he represented
that he was a Ph.D. candidate with an IQ of 160 and had no history of mental
health issues or criminal activity.”

Xytex’s employee allegedly told the donor on his initial
visit that intelligent donors with high levels of education were more popular
sperm donors and encouraged him to exaggerate his IQ and education. Before he
began selling his sperm to Xytex, he had been hospitalized for mental health
treatment and diagnosed with psychotic schizophrenia, narcissistic personality
disorder, and significant grandiose delusions. The child conceived with his
sperm has various medical conditions, including “suicidal and homicidal
ideations, requiring multiple periods of extended hospitalizations.”

Under Georgia law, damages that “categorize life as the
injury” are not cognizable. Claims for the expense of raising a child—even one
with profound disabilities requiring expensive care—are not cognizable because
such damages would have to be premised on the child’s life as the injury. However,
claims for tortious injury sustained prenatally are cognizable, and sometimes
that’s true even for pre-conception injuries.

Some of the damages claimed by plaintiffs were cognizable;
others weren’t. The core theory that they wouldn’t have purchased sperm from
the donor had Xytex revealed the true facts was “a classic wrongful birth claim
because the necessary and direct result of not buying Donor #9623’s sperm is
that A.A. would not exist”; this was barred. [This strikes me as inconsistent
with allowing some claims for pre-conception injuries, but I guess genetic
determinism might do the work here of distinguishing those if you handwave
causation problems (that is: a person who didn’t have teratogenic chemical
exposure before conceiving a child also might not have had sex at the same time
or with the same person, or the specific gametes might have been different, but
they can still make a claim under Georgia law for damage done by that chemical
exposure).]

In addition, other claims deriving from the child’s life are
also barred, such as the costs of pregnancy and raising the child. However,
some damages would be available as long as there was sufficient proof of
causation other than the child’s life. Some damages might stem from plaintiffs’
alleged reliance on Xytex’s representations that it screened the medical and
mental health history of its donors and that it would notify patients who used donor
sperm if the company received any “medically significant” information about the
donor.  “[W]e must accept at this
procedural stage that there may exist some evidence that the Normans relied on
Xytex’s representations in failing to obtain a diagnosis or treatment sooner.”
That could have “exacerbated pain and other symptoms suffered” by the child.

There could also be damages “for the difference in price
between the cost of the sperm they received and the fair market value of the
sperm that Xytex told them they were getting.”  Also, the consumer protection claim “does not
depend on life as an injury.” Georgia’s Fair Business Practice Act prohibits
unfair or deceptive trade practices that harm consumers. “An individual
bringing suit under the FBPA may seek injunctive relief and general damages, as
well as exemplary damages for intentional violations of the Act.” Given the
alleged misrepresentations about the quality of Xytex’s product (sperm) and
services (screening process) to the public, plaintiffs may have suffered
cognizable injury—at a minimum, paying more for the sperm than it was worth.
[Was it worth zero dollars? Could it have been worth negative $100,000?] And
they might be able to enjoin Xytex, or get punitive damages based on the
allegations that a Xytex employee’s “encouraged, if not aided,” the donor to
falsify his background.  

 

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inability to rely on claims provides standing to seek injunctive relief in 9th Circuit

Milan v. Clif Bar & Co., 2020 WL 5760450, No.
18-cv-02354-JD (N.D. Cal. Sept. 28, 2020)

Plaintiffs brought the usual California claims against the
“health and wellness message[s]” on defendant Clif Bar & Company’s “Kid
Zbars” and “ ‘Classic’ Clif Bars,” alleging that they were “deceptive because
they are incompatible with the dangers of the excessive sugar consumption to
which the Products contribute.” Clif moved to dismiss (after losing a previous
motion to dismiss on failure to state a claim), arguing that (1) plaintiffs
lacked Article III standing for injunctive relief, and (2) the governing
choice-of-law analysis didn’t permit application of California law to a
nationwide class. The court denied the motion.

Even assuming that Clif was ok to raise (1) now, after a
previous motion to dismiss, which the court deemed “questionable litigation
conduct,” the argument failed on the merits. Under Davidson v. Kimberly-Clark
Corp., 889 F.3d 956 (9th Cir. 2018), plaintiffs had standing to seek injunctive
relief. Clif relied on the following statement from Davidson:

In some cases, the threat of future
harm may be the consumer’s plausible allegations that she will be unable to
rely on the product’s advertising or labeling in the future, and so will not
purchase the product although she would like to. In other cases, the threat of
future harm may be the consumer’s plausible allegations that she might purchase
the product in the future, despite the fact it was once marred by false
advertising or labeling, as she may reasonably, but incorrectly, assume the
product was improved.

This quote, however, did not set out “a two-test method,” but
rather “two illustrations of how a plaintiff who has learned the hard way that
a company’s statements were deceptive can have standing under Article III to
enjoin the deceptive practice.” The question was still whether plaintiffs
adequately alleged future injury. The complaint alleged that plaintiffs
“continue to desire to purchase healthy nutrition bars, and continue to see the
Clif Products when they shop”; plaintiffs “would purchase the challenged Clif
Products in the future if they were in fact healthy”; and they “would likely
purchase the challenged Clif Products if they could trust that the health and
wellness claims were not false or misleading.” This was “indistinguishable” in
substance from the acceptable Davidson allegations.

Clif suggested that, knowing the truth, named plaintiffs can
now just read the nutrition label. “The problem for Clif Bar is that plaintiffs
have called into plausible question all of its health and nutrition
representations, and have alleged that they ‘will be unable to trust the
representations on the Clif Products’ absent an injunction. Consequently, the
Court declines at this pleadings stage of the case to conclude that plaintiffs
cannot, as a matter of law, ever be deceived again by Clif Bar.”

What about (2), the rule of Mazza v. American Honda Motor
Co., Inc., 666 F.3d 581 (9th Cir. 2012), on nationwide classes? This challenge
was premature. The court would wait for certification briefing, which was well
underway.

 

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it’s difficult to show injury from false patent marking

John Bean Technologies Corporation v. Morris &
Associates, Inc., 2020 WL 5666898, — Fed.Appx. —-, 2020-1035, 2020-1081
(Fed. Cir. Sept. 24, 2020)

District
court ruling that false patent marking doesn’t presumptively cause injury even
in a two-player market discussed here
. The court of appeals affirmed the
grant of summary judgment.

The key allegation of the complaint is the asserted falsity
of Morris’s representations, in product markings or advertisements, that certain
Morris products for poultry processors are covered by three Morris patents.

False patent marking, Lanham Act false advertising, and coordinate
state law claims all require competitive injury. “We need not and do not decide
whether, for any of the causes of action at issue, a presumption applies in the
circumstances of this case.” This is a puzzling statement, because it does seem like a presumption of injury in a two-player market would have led to the claims surviving summary judgment, unless you think that John Bean’s production of some (inadmissible) evidence should be weighed against it because it didn’t produce more. 

John Bean’s evidence of injury with
respect to one product was “limited to a single incident—which involved John
Bean’s sale of a chiller system to Perdue Farms.” But the only evidence of
causation was “a declaration from a past John Bean employee stating that a
Perdue employee mentioned Morris’s patent marking as a reason that Perdue
initially declined to buy John Bean’s auger chiller with ‘water flow reliefs’
that might infringe the ’529 patent, only to later accept the feature as a
no-charge modification—a process that John Bean says subjected it to some
injury.” The district court didn’t abuse its discretion in ruling that
this statement was inadmissible hearsay and also developed too late in the
litigation.

With respect to other
products, one relevant patent read on them, so Morris’s statements weren’t
false. Even assuming that the other one was, there was no evidence that being
marked with two patent numbers mattered given that one was truthful. When a
product is “properly marked with other patents,” as here, the competitor “must
show that the falsely marked patent[ ]” caused its injury and “that—for some
reason—the properly marked patent[ ] did not.”  

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