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

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

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

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Court says shoo to Scat’s infringement claim against Dodge

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

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

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

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

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

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Tick tick boom: Lyme-blocking claim avoids preliminary injunction

Merial, Inc. v. Zoetis, Inc., 2017 WL 4466471, No. 1:17-CV-1624
(N.D. Ga. Jun. 6, 2017)
Thorough discussions of the effect of disclaimers on literal
falsity/misleadingness are rare, so this one is useful. Merial makes NexGard, flea-and-tick
removal treatments; the latter was the first U.S. prescription monthly
flea-and-tick medication for dogs that could be administered orally. Zoetis
launched its own oral flea-and-tick product, Simparica. The parties’ products
are only dispensed by licensed vets. 
Zoetis ran a TV ad with a display banner stating: “In a
study, Simparica blocked Lyme disease transmission.” A disclosure continues:
“In a study, Simparica killed >98% of deer ticks in existing infestations
within 12 hours, while Lyme disease is typically transmitted in 24-48 hours. In
another study, Simparica was shown to block Lyme transmission from deer ticks.”

A voice-over later states: “Studies show that at the end of
the month, Simparica killed more ticks in less time than both Frontline and
NexGard,” while an animated dog uses its back paws to kick dirt over boxes of
Frontline Plus and NexGard.  The
disclosure on screen: “Studies showed that at the end of the month, 24 hours
after infestation, Simparica killed more deer ticks than Frontline and more
Lone Star, Gulf Coast, brown dog, and deer ticks than NexGard.”

Merial alleged that the first claim relating to blocking
Lyme disease is literally false because Simparica does not “block” Lyme disease,
and that the second claim of killing ticks faster was literally false because
the studies on which Zoetis relied didn’t demonstrate that at the end of the
month Simparica kills “more ticks in less time” as compared to Frontline Plus
and NexGard.
First, Merial argued that no study supports the conclusion
that Simparica worked similar to a vaccine and could completely block Lyme
disease itself. Rather, Simparica at most reduces opportunities for ticks
carrying the Lyme disease-causing pathogen to bite dogs by killing the ticks themselves.  Zoetis responded that killing ticks
effectively blocked the transmission of the disease-causing pathogen, which was
sufficient, and that the “clarifying text” informed the interpretation of the
ad.  Merial responded that the text was
too small and difficult for consumers to read.
“A disclosure is adequate if it is actually communicated to
consumers.”  Zoetis offered an affidavit
that the disclosure was “compliant with network advertising guidelines, which
means that the network compliance attorneys have … confirmed that the
[Clarifying Text is] on screen for a sufficient amount of time to be
comprehensible by viewers.” Zoetis also offered evidence that it conducted
testing and displayed the Clarifying Text for a sufficient length of time for a
consumer to read the information. The court determined that it was appropriate
to consider the disclosure as part of its falsity analysis, because the claim “primes
the viewer to look to the Clarifying Text by stating ‘[i]n a study, Simparica
blocked Lyme disease transmission,’” and the disclosure explains how Simparica blocked Lyme disease.  The disclosure was also part of the full
context of the ad, especially because it appeared simultaneously with the ad,
and Zoetis provided evidence that the text was sufficient to reach consumers.  For purposes of a preliminary injunction,
Merial didn’t show that the disclosure should not be considered.
Merial then didn’t show that, taken together, the claims
were likely literally false.  Merial
argued that Zoetis’s studies didn’t actually test for Lyme disease; only one
study tested for the presence of the pathogen; and only five to ten percent of
dogs exposed to the pathogen exhibit symptoms of Lyme disease.  But the study that didn’t test for the
pathogen still tested for deer ticks, which are the main vectors of Lyme
disease in the United States, and the other study showed that the drug
interfered with the pathogen.  Even
without the disclosure, “block” wasn’t likely literally false, because “block”
can mean to hinder/interpose an obstruction according to the dictionary, and
the drug could arguably do that.  Zoetis’s
interpretation was also reasonable because others use “block” in the same way,
such as an NIH article, “Tick Talk: Block Tick Bites and Lyme Disease” that
noted that “the best way to avoid Lyme and other tick-borne illnesses is to
prevent tick bites in the first place.”  Also, in the context of the entire ad, which showed
Simparica working by killing ticks before they transmit diseases, there was no
claim that Simparica is a vaccine that acts directly on pathogens.
Merial’s challenge to the “faster killing” claims also
failed at this stage.  Merial argued
that, even if Simparica killed more ticks after twenty-four hours, the results
were mixed on whether Simparica killed more ticks at eight or twelve hours. But
the disclosure indicated that the 8/12 hour marks weren’t relevant, because it
specified that “[s]tudies show that at the end of the month, 24 hours after
infestation, Simparica killed more ticks” than Frontline Plus and NexGard.  Also, even on its own, the faster killing
claim hadn’t been shown to be literally false. 
Because the 8 and 12 hour marks were, on the whole, inconclusive as to
which medicine killed more ticks, it was okay to look to the twenty-four hour
mark (the only other mark tested) to determine who killed more ticks in less
time. (The court also found that “killed more ticks in less time” could have
multiple meanings, depending on when the kill rate was measured.)

Merial also argued that the Lyme Disease Claim wrongly went
beyond the studies to claim that Simparica was superior to Frontline Plus and
NexGard across all types of dogs, ticks, and geographies. The parties offered
conflicting affidavits on whether studies mainly using Beagles and certain tick
types could be used in support of broader claims, but that wasn’t enough at
this stage. 

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showing falsity of a noncomparative “tests prove” claim

Strategic Partners Inc. v. Vestagen Protective Techs., Inc.,
2017 WL 5897711, No. 16-CV-05900 (C.D. Cal. Jul. 31, 2017)
Vestagen sells specialty textiles for healthcare
applications, while SPI sells medical apparel; their medical garments with
antimicrobial fabrics compete.  Vestagen
alleged the falsity of SPI’s statement in its website FAQ that the
antimicrobial technologies it uses on its Certainty and Certainty Plus “start[
] to work upon contact with unwanted bacteria,” rendering bacteria “ineffective
immediately.”  Vestagen argued that this statement
literally false because SPI only had test data taken twenty-four hours after
the fabrics were inoculated with bacteria. SPI offered four declarations
asserting that the statement was true, creating a material issue of fact. 
Vestagen argued that the lack of test data directly
supporting the statement showed literal falsity.  While literal falsity can be shown by showing
that product testing is “not sufficiently reliable to permit one to conclude
with reasonable certainty that [it] established the claim made,” those cases
involve comparative superiority claims, but this statement wasn’t a comparative
claim, and there was no legal authority that such an ad needed proof through
test data.
The inventiveness of lawyers is legendary, but this distinction
makes no sense.  The rationale for the
rule about showing the falsity of “tests prove” statements has nothing to do
with comparative advertising.  It’s about
scientific evidence and its greater credibility with customers; when consumers
see a statement apparently based on scientific rather than anecdotal data, they
have more reason to credit it.  Thus,
“tests prove X” can be proved false either by showing “not X,” or by showing
“tests don’t prove X”; either one will falsify the claim actually made by the
defendant.
Regardless, the court ruled in addition that, based on the
definition of “ineffective” and justifiable inferences in SPI’s favor, “rendering
a bacteria cell ineffective immediately is not necessarily inconsistent with an
inability to stop germs instantaneously.” The fabric could immediately render
the cell incapable of replicating efficiently, or of not remaining viable as
expected, even without killing it immediately. 
Vestagen couldn’t prevail on this evidence at this stage.

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reasonable consumers expect real estate agents to be licensed, but remedies are still limited by the 1A

People ex rel. Flippo v. Silva, 2017 WL 5712601, No. H041209
(Cal. Ct. App. Nov. 28, 2017)
Susana Silva operated Estates on the Bay, which advertised
itself as a professional real estate company, while her real estate broker’s
license was revoked. Defendants’ activities included grossly overstating a
borrower’s income on mortgage loan applications.  After a bench trial, the court found violations
of the FAL and UCL and awarded civil penalties, restitution, and injunctive
relief. The court of appeals upheld the liability finding but remanded on the
remedies.
Defendants argued that Estates on the Bay’s website wouldn’t
confuse reasonable consumers into thinking Silva had a valid real estate
license, as she was required to do in order out to carry out real estate brokerage
or selling.  The website had a page
entitled “My Resume,” and the top of the webpage stated, “Estates on the Bay –
A Professional Real Estate Company.” The body included: “Our experience in the
Real Estate industry will provide you the knowledge and expertise that you need
throughout the entire buying or selling process. As you choose one of our real
estate agents, and/or loan agents our job to you is to price your home
effectively from day one ….”  Defendants
argued that there was no reference to Silva, and that even if “the use of the
first-person-plural to refer to a corporation and its agents is somehow flawed,
it is at most the mildest of innocuous puffery posing none of the risks the
[false advertising law] protects against.”
Likely deception is generally a question of fact.  The court of appeals found that the website wasn’t
too vague to be actionable: “a reasonable consumer would expect that a
corporate entity holding itself out as a professional real estate company and
offering real estate services requiring a license would in fact have the
necessary license(s) to carry out those services, and specifically that all its
agents/employees who were carrying out those services would be licensed to the
extent necessary to lawfully conduct those services.”  Given the trial court’s findings that Silva
violated the licensing law, and that Estates on the Bay permitted this,
substantial evidence supported the liability finding.
As for the UCL, the violation was in connection two mortgage
loans that they brokered for one borrower, Rosa, by deliberately and knowingly
overstating Rosa’s income on mortgage loan applications to induce the lenders
to fund the loans. These overstatements unjustly enriched defendants at Rosa’s
expense, and that the practices were “a repeat by Silva of the very conduct
which led the [Department of Real Estate] to revoke her license.” However, the
court apparently imposed a separate penalty for every day the sales were
pending, for a total of $21,500.  The UCL
allows the People to ask for “a civil penalty not to exceed two thousand five
hundred dollars ($2,500) for each violation.” “In assessing the amount of the
civil penalty, the court shall consider any one or more of the relevant
circumstances presented by any of the parties to the case, including, but not
limited to, the following: the nature and seriousness of the misconduct, the number
of violations, the persistence of the misconduct, the length of time over which
the misconduct occurred, the willfulness of the defendant’s misconduct, and the
defendant’s assets, liabilities, and net worth.”
What a “violation” is must be determined case by case, and
can be calculated per victim or per act. The amount is reviewed for abuse of
discretion.  The court assumed that it
would have been proper for the court to determine that there were two
violations based on income misrepresentations in loan applications that induced
the funding of two loans, or that there were three violations based on three
victims (Rosa and the two lenders), or that there were four violations based on
income misrepresentations affecting Rosa and a lender as to each of the two
properties.  However, the evidence didn’t
support the conclusion that false income representations were made to one or
more victims on a daily basis for 86 days. Thus, the court remanded for
recalculation.
An order of restitution to Rosa was affirmed, in the amount
of $29,575, based on the commissions defendants received for brokering the
loans and for a “yield spread premium” they received for getting her to take a
higher interest rate than her credit entitled her to. Though defendants argued
that she got what she paid for—refinancing—the court accepted the argument that
the loans were only issued because of the misrepresentations.  However, Rosa was not entitled to recovery of
a prepayment penalty in connection with paying off the existing mortgage that
she refinanced through defendants.  The
UCL allows recovery of restitution, not compensatory damages, and the
prepayment penalty went to the bank, not to the defendants.  However, the court pointed out that this
could potentially be considered in setting the amount of the civil penalty.
In terms of injunctive relief, the court of appeals affirmed
the imposition of recordkeeping requirements on defendants.  The court also ordered “Silva and [her codefendant
and sister] Gobert shall not jointly engage in the sale (this specifically
includes acting as real estate agents or brokers) or financing (specifically
including, but not limited to, originating, negotiating or soliciting loans) of
real estate.” Defendants argued that this interfered with their constitutional
rights to engage in lawful work and their constitutional rights to association as
sisters.  But they didn’t have a constitutional
or statutory right to work with each other in real estate. They could
individually work in real estate, if they complied with the rest of the
injunction, and they could associate with each other; along with the ability to
modify the injunction over time, that was enough.  Defendants’ argument that they’d already
dissolved the business didn’t matter, given their past behavior of violating
the law after Silva’s license revocation (of which Gobert knew).  Even assuming that the injunction burdened
the constitutional right of association, it was no more than necessary to serve
the compelling interest in protecting the public.

Defendants also challenged two aspects of the injunction as
unconstitutional prior restraints: (1) a requirement that they use their best
efforts to remove any reference to Silva’s broker’s license from all media,
including electronic media and social or business websites, such as LinkedIn,
Facebook and Google and (2) a requirement that they submit any real
estate-related advertising to the Monterey County District Attorney’s Office at
least 15 days in advance of publication. 
“[A]n injunctive order prohibiting the repetition of expression that ha[s]
been judicially determined to be unlawful [does] not constitute a prohibited
prior restraint of speech,” but such an order must be in the narrowest terms
that will accomplish a permissible goal. 
Under this standard, the ban on any advertising about real estate
services, property management, or real estate financing without first obtaining
written consent from the district attorney or a court order was too broad: the injunction
required preapproval of (1) advertising that could be unrelated to activities
requiring a real estate license, and (2) advertising that didn’t contain any
reference, express or implied, to Silva’s licensing status. The court of appeals
remanded for tailoring more closely to the unlawful conduct in this case. Likewise,
requiring the removal of any reference to Silva’s broker’s license from all
media also was broader than necessary. “For example, to the extent the
reference to her license includes the start and end dates of her licensure, the
representation might not be false or misleading depending on the context.” 

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AIPLA scholarships & contests for students

Sidney B. Williams scholarship for law students from underrepresented minority groups interested in IP law.


Jan Jancin award for law students with a demonstrated record in the study of IP.

Moot Court on patent issues.


Robert C. Watson award for best student paper on IP.

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