commercial advertising & promotion post-Lexmark: 10th Circuit preserves old test

Posted on March 10, 2020 by rtushnet

Strauss v. Angie’s
List, Inc., — F.3d —-, 2020 WL 1126523, No. 19-3025 (10th Cir. Mar. 9,
2020)
Lexmark, most courts have recognized, changed prong
2 of the standard Gordon & Breach test for “commercial advertising
or promotion.” Unfortunately, the Tenth Circuit casts unwarranted doubt on that
change, potentially rendering meaningless Lexmark’s rejection of a direct
competition requirement, despite the fact that the textualist arguments behind Lexmark
apply equally to the meaning of “commercial advertising or promotion” as to the
specific requirement of direct competition. And it wasn’t even necessary to
affirm the dismissal of these claims!
Strauss sued Angie’s
list for Lanham Act violations (all that’s at issue on appeal). During the
relevant period, Strauss owned a tree trimming/removal business, Classic Tree Care.
Angie’s List is a consumer ratings forum “on which fee-paying members can view
and share reviews of local businesses.” Strauss alleged that “the membership
agreement between Angie’s List and its members leads members to believe that
businesses are ranked by Angie’s List according to unedited consumer
commentaries and endorsements when, in reality, the order in which businesses
are ranked is actually based on the amount of advertising the business buys
from Angie’s List.” Over about ten years, Strauss paid $200,000 to Angie’s List
“in an effort to appear higher” in search results. But Strauss alleged he
failed to appear in search results for a three-month period and then was
“buried” in search-result listings even though he had numerous favorable
reviews and a high rating from consumers.
The only non
time-barred claims were based on three statements Angie’s List made in 2016. Straus
alleged that Angie’s List stated that his business (1) had no consumer ratings
or reviews; (2) had not met the criteria set by Angie’s List for inclusion on
its website; and (3) had no local offers to extend to consumers.  
The Tenth Circuit
adopted Gordon & Breach’s four-part test for commercial advertising
or promotion in its own P&G case: “(1) commercial speech; (2) by a
defendant who is in commercial competition with plaintiff; (3) for the purpose
of influencing consumers to buy defendant’s goods or services … [and] (4)
must be disseminated sufficiently to the relevant purchasing public to
constitute ‘advertising’ or ‘promotion’ within that industry.” The district
court concluded Strauss’s complaint failed to plausibly allege that the 2016 statements
were made for the purpose of influencing consumers to buy Angie’s List’s goods
or services.
Strauss argued that Lexmark
abrogated P&G. I think he’s right that it altered prong (2), but not
prong (3), which the district court found was part of his problem. The Tenth
Circuit noted that Lexmark has a footnote expressing no opinion on the
commercial advertising or promotion issue and found that P&G remains
the law of the circuit. Of course, the reason the statements in Lexmark might
still not have been commercial advertising or promotion was that they were made
to Lexmark’s competitors, which is still a problem under prong (3)—it’s
not super plausible that they were designed to directly generate sales of
Lexmark’s products, though they could have decreased the supply of competing
products indirectly. Given the rationale of Lexmark, the Gordon &
Breach test should really be: “(1) commercial speech; (2) by a defendant
whose relationship to the plaintiff puts the plaintiff within the statute’s
zone of interests [or, to use Scalia’s disfavored but useful summary term, ‘as
to which the plaintiff has standing’]; (3) for the purpose of influencing
consumers to buy defendant’s goods or services … [and] (4) must be
disseminated sufficiently to the relevant purchasing public to constitute
‘advertising’ or ‘promotion’ within that industry.”
Anyway, P&G
remains the law of the circuit—the court doesn’t clarify whether it thinks
prong (2)’s commercial competition requirement remains unaltered.  I strongly believe that it doesn’t, and this
case doesn’t really hold otherwise, but it sure can and will be cited that way,
especially given the footnote that two other circuits post-Lexmark have
adopted only prongs (1), (3), and (4) but that P&G still binds 10th
Circuit panels.

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“complete” vitamin is plausibly deceptive where essential nutrients are lacking

Posted on March 10, 2020 by rtushnet

Devane v. Church
& Dwight Co., No. 3:19-cv-09899-BRM-LHG, 2020 WL 998946 (D.N.J. Feb. 28,
2020)
Plaintiffs brought
consumer protection claims based on Church & Dwight’s purportedly false
labelling of several multivitamins, including L’il Critters Multivitamins,
Vitafusion Women’s Complete Multivitamins, and Vitafusion Men’s Complete
Multivitamins, which allegedly lacked at least three essential vitamins
identified by the FDA as being “necessary for human health” (vitamin K,
thiamin, riboflavin, and, in one case, niacin) but were nonetheless marketed as
a “complete multivitamin” containing all “essential nutrients.”  They brought claims under New Jersey and
Florida law.
The court first
rejected the doctrine of primary jurisdiction; there were no relevant proceedings
or FDA rulings that would justify deference. C&D argued that defining the
term “complete” in regard to a dietary supplement is “squarely within the FDA’s
particular filed of expertise and discretion.” But the claim here didn’t
require a general definition of “complete,” but rather a determination of whether
labeling the products as “complete multivitamins” was misleading. Misleadingness
is “within the conventional experience of district courts.”  Next, the court found that plaintiffs had
Article III standing for past injury, but not for injunctive relief.
Plaintiffs
adequately pled they were deceived by the labeling plus the alleged fact that
at least three essential nutrients were missing. They also adequately alleged
ascertainable loss as required for NJCFA claims. Because the product couldn’t
function as a “complete multivitamin,” it was plausibly “entirely valueless” for
that purpose.  Although reliance isn’t
required, loss must be suffered “as a result of” the defendant’s unlawful
conduct, which can occur when people “saw the challenged advertisements” and
“would not have purchased the [product] but for the challenged advertisements.”
This was adequately alleged. Similar FDUTPA claims also survived.  New Jersey warranty claims, but not Florida
warranty claims, also survived.

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discovery of trade secrets in a false advertising case

Posted on March 10, 2020 by rtushnet

Monster Energy Co. v.
Vital Pharm., Inc., 2019 WL 8112506, No. 5:18-cv-01882-JGB (SHKx) (C.D. Cal.
Oct. 16, 2019)
I don’t cover many
discovery disputes, but this one has some passing interest for the substance of
false advertising law. Monster & Vital filed a stipulated protective order
providing two tiers of protection, allowing a producing party to designate
documents or information it provides as either “Confidential” or “Highly
Confidential – Attorney’s Eyes Only.” The latter was to be “limited to such
documents, testimony, information or other things that the Designating Party
believes, in good faith, contain information the disclosure of which is likely
to cause substantial harm to the competitive position of the Designating Party,
contain information subject to the right of privacy of any person, or contain
information alleged to be a trade secret. None of the restrictions set forth in
this Stipulated Protective Order shall apply to any documents or other
information that are or become public knowledge by means not in violation of
the provisions of this Stipulated Protective Order, or any law or statute.”  Unless otherwise ordered by the court or
permitted in writing by the Designating Party, a Receiving Party could disclose
such material only to outside counsel, experts/consultants to whom disclosure
was reasonably necessary and who had signed a confidentiality agreement, court-
or mediation-related people, and people who already had the information.
Now the parties
disputed what should be disclosed. “There is no absolute privilege for trade
secrets and similar confidential information,” but trade secret status is to be
weighed in the analysis. Monster sought disclosure of VPX’s energy drink
formula, including the amount of each ingredient.  The core dispute is about claims about creatine,
an ingredient (or creatyl-L-leucine, the ingredient in VPX’s BANG products,
known as Super Creatine—previous
blogging on the case). VPX refused on the grounds that the formula was a
trade secret and noted that Monster just introduced a competitive energy drink.
At this stage of the
case, the court wasn’t going to make a judicial finding that the formulation
for BANG was a trade secret, but did consider the extent to which VPX treated
it as one.  VPX apparently disclosed the entire
ingredient list and quantities of ingredients in its Red Line beverage, and the
amount of CoQ10 in BANG, it didn’t seem to have publicly disclosed the entire
ingredient list or their quantities for BANG. That was enough to meet VPX’s burden
at this stage.
Monster argued that
the formulations of BANG were relevant and necessary to prosecute several of
its claims, specifically that, even if creatyl-L-leucine were potent, “there is
not enough of it in BANG for it to materially impact the body.” VPX rejoined
that Monster didn’t allege that customers chose BANG over Monster products
because VPX claimed any particular quantity of any ingredient. But that goes to
the merits, not to relevancy in discovery. The formulations of at least those
BANG drinks advertised to contain “creatine” or “Super Creatine” were relevant
because “relevancy should be construed ‘liberally and with common sense’ and
discovery should be allowed unless the information sought has no conceivable
bearing on the case.” In addition, the information being sought appeared “necessary”
for Monster to prove its case that VPX was misrepresenting the contents of BANG
drinks advertised to contain “creatine” or “Super Creatine.”
This need had to be
balanced against the need for protection against injury caused by disclosure;
the balance “virtually always” tilts in favor of disclosure once relevance and
necessity have been shown. However, “courts have routinely recognized that
disclosure to a competitor is more harmful that to a noncompetitor.” But the
court had no reason to believe that counsel would disregard the restrictions in
the “letter and spirit” of the protective order. Although it wasn’t expressly
stated in the protective order, the court understood that “this type of
information received by outside counsel cannot be used in any way to assist
Plaintiff in formulating or otherwise advising Plaintiff with respect to any
current or future products.”
Nor was it
sufficient to tell Monster to engage in reverse engineering instead. “Defendants
do not claim and do not provide any information to show that producing this
information, under strict controls, would be difficult, time consuming, or
expensive. Comparatively, the testing, and any likely subsequent questioning of
that testing, would be unnecessarily time consuming and is not warranted, with
the controls that are in place.”
In return, VPX
sought the formulation of Monster’s competing REIGN in order to evaluate Monster’s
claims and VPX’s defenses, including unclean hands and a lack of damages. But
merely reciting “unclean hands” in an answer doesn’t put a plaintiff on notice
that a defendant intends to raise unclean hands allegations regarding plaintiff’s
labeling as a whole. The “misconduct that forms the basis for the unclean hands
must be directly related to plaintiff’s use or acquisition of the right in
suit.” Here, the relevant allegations were about creatine and “Super Creatine.”
VPX didn’t show that the overall formulation, not having to do with that ingredient,
was relevant or necessary. Thus, VPX’s motion to compel was denied. [I am
somewhat persuaded by VPX’s argument that, if Monster is arguing that there are
ingredients whose presence in an energy drink is too minimal to justify
advertising their benefits, then Monster’s own practices with respect to
touting ingredients versus the reality of their amounts in Monster’s products are
relevant, but I see the court’s point in terms of proper notice. Something for
the next defendant to keep in mind.]

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FDA/FTC Workshop on a Competitive Marketplace for Biosimilars

Posted on March 9, 2020 by rtushnet

FDA Licensure Process
and U.S. Biosimilar Markets   [I entered in media res]
· Eva Temkin, Acting Director for Policy, Office of Therapeutic Biologics
and Biosimilars,  CDER, FDA  
· Christine Simmon, Executive Director, Biosimilars Council, AAM: barriers
to entry for biosimilars: exclusionary contracts, rebates, stakeholder
misinformation. misinformation can include explicit and implicit, including
policies such as naming conventions and the very existence of the interchangeable
category, which is unique to the US.  [I
think she was saying that the existence of the interchangeable category may
mislead consumers about the suitability of the existing approved biosimilars;
right now all approved biosimilars are approved for substitution but not for
interchangeability, the latter of which means that there’s evidence that
patients can go back and forth between the drugs as opposed to switching once.]  
· Molly Burich, Director of Public Policy, Boehringer Ingelheim   
· Surya Singh, President, Singh Healthcare Advisors, LLC  
Moderated Panel Discussion
 
Meredyth Andrus, Attorney,
Health Care Division, Bureau of Competition, FTC
Does the designation
of interchangeability still have value in the US?
[I don’t think I can
attribute statements given where I am in the room and what I can see.] Depends
on the product. Primary draw: automatic substitution that can occur at pharmacy
level. If the drug isn’t distributed that way, then there isn’t much point. All
15 approved/in use products are physician administered. There are several
approved self-administered biosimilars, but none actually launched; have some
time before we see products where interchangeability would make a difference.
Have heard from
pharmacists that a different name may deter them from switching/may deter
patients. Some state laws on this may also have to be addressed.
Why are 11 of 26 biosimilars
approved not actively marketed in the US?
Singh: (1) patent
thickets. One drug has over 100 patents, 89 of which filed after the drug was
launched. (2) commercial & contracting issues. Same manufacturers/partners
are innovator/originator of biologic and also of biosimilar. (3) Rebates.
Different on medical benefit (physician-administered) side from pharmacy
benefit side. If a few major entities are doing most of the contracting on the
pharmacy benefit side, bundling is more common compared to more splintered
market for doctor-administered drugs. Manufacturers are waiting to see if the
rebate trap is going to be addressed.
Susan Collins introduced
bill to require patents to be listed in Purple Book for biosimilars. Would help
litigation, clarity. $3 million to litigate a patent, which is a big expense. Humira:
5 biosimilars approved, none on the market; some will be entering, but only b/c
of patent settlement agreements. 11 years earlier than otherwise might be
possible. FTC has done a lot to ensure that patent settlement agreements are
pro-competitive; put the rest the idea of pay for delay. Inter partes review is
good but is under threat.
Singh: [discussion
of market structure/treatment modalities] doesn’t think that misinformation
influences providers’ decisions. Survey data, leaders at large practices: there’s
no more reluctance to use biosimilars. The market is being driven by economics.
[One way to read this is as a terrific indictment of our broken health care
system.]  Explanation of how contracts
can limit doctors from using the drug of choice for patients: specialty
pharmacy delivers drug to practice despite what they have chosen for inventory.
“Fail first” policies are used extensively and increasingly for medical benefit
(doctor delivered) drugs to ensure use of their preferred drugs. When a practice
chooses what biosimilar to prescribe, it’s in inventory and interchangeability
doesn’t matter. Pharmacy benefit side: now interchangeability does matter—the pharmacy
needs the right to substitute w/o going back to prescriber, and the only way to
get that right is interchangeability.
FDA and FTC
Approaches to Help Ensure Truthful and Non‐misleading Advertising and
Promotional
Communications



Lowell Schiller,
Principal Associate Commissioner for Policy, FDA: have seen troubling
communications suggesting biosimilars are less safe/less effective than
reference products or that there may be clinically meaningful differences b/t
them when biosimilars can’t be approved unless there are no clinically
meaningful differences. Even absence of explicit falsity can be misleading
overall and potentially harmful to public health by series of statements each
true on its own but misleading overall in combination w/omissions. Seen this
before w/Hatch-Waxman w/communications about generics suggesting they were
outdated or less effective.
Dominic Cirincione,
Regulatory Counsel, Office of Prescription Drug Promotion, CDER,
FDA: Fair balance is
required in labeling/ads. FDA relies on statutory authority to regulate
labeling/ads. OPDP: Surveillance/communication program, including response to
voluntary requests for comment on draft materials; industry guidance; social
science research program (researches issues on DTC and advertising to physicians—learn
about studies on their website);
review of disseminated materials/ “BadAd” program/warning or untitled letters;
work with DOJ to pursue enforcement actions.
Common issues
observed by OPDP in prescription drug ads & promotional labeling: omission
of risk; minimization of risk; overstating effectiveness (unsupported
claims/misrepresent data from clinical studies); misleading drug comparisons
(e.g., comparing two different studies that may have different patient
populations or methodologies). Warning letters 2015-2020: omissions/minimization
of risk are largest share of letters, but false/misleading comparative/benefit
claims are also taken seriously.
Richard Cleland,
Assistant Director, Advertising Practices, Bureau of Consumer Protection, FTC: FTC
covers only commercial speech. Looks to content (promoting demand for a
product/service or denigrating competitor’s product; specific product references;
information about type, price, quality or other attributes, including health
benefits); means used to publish the speech (would it be recognized as
advertising); and speaker’s economic motivation for disseminating speech. Peer
reviewed scientific article or press release may or may not be commercial
speech depending on how disseminated/used.
Falsity/misleadingess
is covered including failure to disclose that is misleading. Companies are
responsible for both express and implied claims. Net impression is what
matters, to a reasonable person in target audience. Thus net impression may
differ as between an ad targeted to a diabetes patient or a doctor treating
diabetes. Reasonable consumers don’t read an entire ad; a footnote will rarely
alter the net impression. Reasonable doesn’t have to mean majority; if a significant
number of consumers would take a message away then the advertiser is responsible
for that message.  Can be liable for
misleading interpretation even though a nonmisleading interpretation is
possible. A consumer might interpret the use of “not interchangeable” in a
misleading way—to mean that a biosimilar couldn’t be prescribed in place of the
reference product.
Specific claims:
clinically meaningful differences b/t reference product & biosimilar; “there’s
still a chance the patient may react differently”; claims about greater safety
of reference product. Could all be false, unsubstantiated, and failing to
disclose material information.
FDA Draft Guidance
for Industry: Promotional Labeling and Advertising Considerations for
Prescription
Biological Reference and Biosimilar Products Questions and Answers
Catherine Gray,
Staff Director, Office of Prescription Drug Promotion, CDER, FDA
Elizabeth Pepinsky, Health
Science Policy Analyst, Office of Prescription Drug Promotion,
CDER, FDA: Draft
guidance issued by OPDP in consultation w/other groups focusing on biosimilars.
The basic rules are the same: truthful and nonmisleading, risk/benefit balance,
and disclose material facts. Companies should specifically identify the
product/products to which the information applies: e.g., if it applies to reference
product & biosimilars, say that; if promo materials use studies referencing
non US licensed comparator, then that status should be accurately identified in
the materials.  If presenting info from
studies on reference product that are relevant to conditions of use for
biosimilar, should refer to biosimilar’s FDA-approved labeling for information
about the biosimilar. Data from studies conducted to support biosimilarity that
aren’t included in the FDA-approved labeling should, if presented, be truthful,
nonmisleading, and consistent w/FDA-approved labeling. Statements implying
superiority where the differences in adverse reactions are not clinically
meaningful would be misleading. Individual statements of accurate information
could contribute to a misleading presentation when provided in comparative
context. E.g., if biosimilar is licensed for fewer indications than reference
product, a comparative presentation suggesting less safety in the licensed
indications would be misleading.  
Dominic Cirincione,
Regulatory Counsel, Office of Prescription Drug Promotion, CDER,
FDA: Examples of
presentations that conform w/guidance. Scenario: promo materials say that one
drug in a clinical study had a numerically higher overall response rate than
another drug, but it’s not clinically significant: touting the numerically
higher response rate would be misleading. Looking forward to stakeholder input
on draft guidance, especially about how to convey interchangeable information.
Pepinsky: keep net
impression in mind: individual claims aren’t enough to be nonmisleading about
safety and efficacy, not just for comparative claims but for all claims.
What’s at Stake?  The Benefits of Competition
Alison Falb,
Regulatory Counsel, Office of Therapeutic Biologics and Biosimilars, CDER,
FDA 
• Murray Aitken,
Executive Director, IQVIA Institute: Many dynamics in market. Biologics=growing
share of market with significant growth over 5 yrs relative to small molecule.
42% of total medicine market by price in 2018, up from 30% in 2014; represents almost
all of the growth; adjusting for inflation and population growth/per capita
spending, small molecules declined 12% while biologics increased 50%. R&D
pipeline suggests growth will continue across most disease areas, including
those traditionally based on small molecules. Reach market through multiple
channels & pay times, each w/own payment dynamics, including private
insurance, Medicare types (both pharmacy and physician provided), Medicaid
(ditto), fee for service, cash, commercial office/physician sites. Different
incentives, reimbursement levels for each segment. Largest originator brands
have significant sales since launch: each of the top 10 has cumulative sales of
over $40 billion since launch, on market more than 17 years.
About 40% of small molecule
market sales are accessible to generics. By 2019, 17% of biologics market is
accessible to biosimilars, which have 20% market share. Including approved but
not launched, 50% of biologic market sales could face biosimilar competition
(that won’t happen until 2023 at the earliest).
[I think] David R.
Schmidt, Assistant Director, Applied Research and Outreach, FTC  It’s early days for biosimilars, and early to
be analyzing these markets. Look at whether different payors (and dispensing
location) are treating biosimilars differently from the small molecule drugs
those payors handle.
Andreas Schick,
Director, Economics, Office of Program and Strategic Analysis, CDER, FDA: Also
lessons in comparing different biologics. W/generics, we don’t see wide
disparities by payor type. Reasonable to think that there shouldn’t be. Would
be concerned if saw very different behaviors in Medicaid and non-Medicaid markets.
• Inma Hernandez,
Assistant Professor of Pharmacy and Therapeutics, University of Pittsburgh
School of Pharmacy: W/o interchangeability, we can’t pay for biosimilars the
way we’ve been paying for generics. 
Discounts are proprietary so we have trouble knowing what payors
actually pay. Have some data from SSR Health; calculating average revenue for
unit of product, net of discounts including rebates and other discounts
including cards given to patients. Can separately estimate for Medicaid and
other payors. Have showed robustness of data in paper in JAMA. One example of
biosimilar entry: List and net prices increased in parallel until 2013; net
prices started to decrease in 2015 when competition began, driven by increasing
discounts to payors other than Medicaid. Another three examples: similar story,
sometimes net prices begin to drift down before entry. Sometimes there are
factors other than biosimilars (here: in-class competition by non-biosimilar
drugs), also including public pressure over insulin prices for one of the
examples, insulin glargine. List prices stagnated after competition, but net
prices decreased due to discounts.  Unclear whether decreases related to number of
biosimilars or only number of years post-biosimilar entry.  
What about rebates for
drugs covered under Medicaid managed care organizations, collected by states pursuant
to ACA? Market share of Basaglar (biosimilar to initial version of insulin
glargine) is basically zero unless states have MCOs with no preferred drug lists
(there are several other possible models). Preferred drug lists prevented
uptake by listing it as non-preferred; results reflect strong financial
incentives of rebates. More states are implementing preferred drug lists, so
this is a timely result.  Competition is
happening in discount, not in list price.
Comment by someone:
seeing very different behavior for reference products in biologics space v.
responses to generics in small molecules.
Aitken: we should
get beyond saying they’re different from small molecules and say that fee for
service Medicaid is different from managed care Medicaid and so on.
Alex Brill, Resident
Fellow, American Enterprise Institute: Barriers to competition can be good and
bad, big and small. Barriers to biosimilar entry: some are appropriate to
protect innovator/producers and consumers (patents, exclusivity periods, approval
process); others thwart healthy competition. Barriers to biosimilar utilization
once entry occurs are uniformly bad. Bad barriers: myopic contracting practices
by payors that discourage maturing of biosimilar marketplace; rebate traps;
frivolous late-stage patents; inadequate physician and patient education not
comparable to education that has taken place for small molecule generics.
Undue barriers to
biosimilar entry/utilization: extends excessive monopoly rents; higher patient cost;
less biosimilar discounting; fewer biosimilar competitors. Uncertainty
associated w/ the viability of the market is a barrier: uncertainty of
reference product price; legislative/legal/regulatory uncertainty; competitor
biosimilar behavior—many of these are natural in a free market and will resolve
over time w/experience, but we can strive to mitigate them. Exclusivity periods
are specific and clear w/clear duration; patent thickets lack predictability. Regulators
should try to minimize costs related to approval. Should be willing to incentivize
participants to stop waiting—manufacturers, prescribers waiting for more
information. Worth considering goosing the system to get over initial hurdle.
Improving
Stakeholder Engagement:  Education and
Understanding
Sarah Ikenberry,
Senior Communication Advisor, Office of Therapeutic Biologics and Biosimilars,
CDER, FDA
FDA has health care
provider materials/fact sheets. Biosimilar basics for patients. Working on
additional materials. Highlights similarities of biosimilars and reference biologics,
benefits of increased access; urges patients to find out more from doctors/FDA.
Going to create fact sheet for health care providers to address misconceptions,
as well as teaching resources for medical/pharmacy/nursing schools.
Elizabeth Jex,
Attorney Advisor, Office of Policy Planning, FTC
• Cheryl Koehn,
Founder & President, Arthritis Consumer Experts: emphasizes importance of
disclosure of material connections. Patients have seen white noise about
safety/efficacy/lack of identicality/lack of interchangeability from
originators: contributes to nocebo effect. Nocebo effect is real. Negative
words, body language, subtle or not-so-subtle words are import and
strategically deployed. Canada is ahead in switching: several provinces have switched
most patients to biosimilars, with about 1% requesting exemptions and 1%
granted. Can buy a lot of health care for $2 billion Canadian.
• Sameer Awsare,
Associate Executive Director, The Permanente Medical Group: 12 million
patients, $8 billion on pharma. Business model for drug use management is
predicated on ability to move market share. Leverage exists b/c KP can deliver
more than 90% of given market in short time; 12.2 million members are aout 4%
of covered lives. Physician & pharmacist driven drug selection allows KP to
promise & deliver, moving market w/99% physician compliance. Education of
physicians & pharmacists with general biosimilar education; biosimilar
data; then were able to show that KP patients did well. 80% of KP patients
using Remicade successfully switched to biosimilar Inflectra; used medical
records to guide the switch and to show outcomes. Found no increased risk of
disease worsening in IBD patients switched to Inflectra. Similar experiences
w/two other biosimilars. Once doctors were comfortable with the first biosimilar
they were more willing to switch to others.
• Michele Andwele,
Editorial Director for Health Content, Arthritis Foundation: key concerns:
effectiveness? Could switching from reference product make me flare up? Are they
safe? Will I pay less? Can a pharmacist substitute w/o doctor’s approval?  One patient: I pay $35/month; don’t have a
financial incentive to switch if it’s working for me.  Language matters: inconsistent terminology
use/unconscious bias in communication w/patients. Need provider
consensus/patient advocacy group consensus on how products are described.
Provider concerns: time constraints in discussing biosimilars in short time w/patients
who may have many issues. Insurance coverage/patient assistance programs are
issues; liability exposure in absence of interchangeability designation.  Educational initiatives shouldn’t be
influenced by industry; learn from partners in Canada and Europe.
• Hillel P. Cohen,
Executive Director, Scientific Affairs, Sandoz (trade group rep for Biosimilars
Forum): has seen several types of disparagement. Information that is technically
correct but omits info; negative framing of factual statements that matters to
consumers. Sometimes factually incorrect claims. Safety, quality, and
regulatory messages. E.g., efficacy is not fully proven, or may not be as good
as the reference product. Seen comments about extrapolation: some doctors/patients
say extrapolation is inappropriate. Seen safety not fully proven, or potential
for more bad effects. Switching: there are comments that we don’t have enough data
to conclude that switching is safe, implying that it may be unsafe. Doctors can
already prescribe the appropriate product; you don’t need interchangeability
for that. Quality: that it may not be the same as the reference product/it’s
only similar or highly similar, not identical, even though differences aren’t
clinically relevant—that’s difficult to understand. Statements that
interchangeability is a higher standard, implying that biosimilars are of lower
quality than interchangeable biologics, even though they are structurally
identical. Regulatory pathway has created some of the problem: “abbreviated”
pathway. Some people say it’s not as rigorous as pathway for reference products,
despite rigor.
Recommendations:
truthful & complete information should be required. Positive framing of
benefits; easy to understand messages. Messages should be based on FDA
documents but tailored to their audiences. Large orgs and patient advocacy groups
have done the research and are on board w/biosimilars, but the average patient
is not knowledgeable. Need to educate them, via educating physicians—rheumatologists
know more than gastroenterologists right now. 
FDA should prevent disparagement/misinformation. Incorporate biosimilar
education into educational curriculum for doctors, nurses, pharmacists. Patient
groups should disclose funding & conflicts of interests—it’s fine to speak
your positions, but full disclosure is important.
Koehn: on language,
biosimilars are biologics; if you use two different terms people think
they’re not the same thing.
Andwele: Also need
an influencer strategy: patients as peers.
Cohen: highlight the
rigor of the process used to approve the biosimilar. Sound scientific policy.
Doctors are used to clinical trials; it’s a different methodology, but does
assure safety & efficacy. Coordinated effort w/professional societies and
patient groups is necessary.
Andwele: message
segmentation. Treatment-naïve patients v. someone stable on a biologic.
Biosimilar
Disparagement as an Antitrust or Consumer Protection Cause of Action
• Richard Cleland,
Assistant Director, Advertising Practices, Bureau of Consumer
Protection, FTC
• Randall Weinsten,
Attorney, Health Care Division, Bureau of Competition, FTC
Michael A. Carrier,
Distinguished Professor, Rutgers Law School: statements like “we need to
proceed cautiously so we don’t end up with another thalidomide, or all the things
that happen when safety isn’t considered”; claims that it would disrupt
continuity of care/could put patient in ER/could bring patient out of
remission. Not appropriate given definition of biosimilars.
More subtle: claims
that the biosimilar is not identical to, or acts differently from, reference
product. Pfizer citizen petition contains many claims: it’s not just apples to
apples; patient may react differently. Genentech says: the FDA requires highly
similar but not identical. FDA is good at taking on these misrepresentations.
Another category:
interchangeability. There are some intimations that not interchangeable = not
meeting highest standards of safety & efficacy.
Most subtly: company
says the drug acts “similarly.” Jansen says “you may be asked to switch to a drug
that acts similar to Remicade.”  FDA’s
guidance addresses that.
  
Rebecca Tushnet,
Frank Stanton Professor of First Amendment Law, Harvard Law School 
Elements of a Lanham
Act claim: key elements are falsity or misleadingness, materiality to a
reasonable consumer’s purchase decision, and likelihood of harm to the
plaintiff.
Mostly unique to the
Lanham Act cause of action, compared to an FTC or state consumer protection law
claim: the sharp doctrinal difference between false and misleading claims.
Although both falsity and misleadingness are actionable, the burden on the
challenger is much greater if a claim is misleading than if it is literally
false. That puts a premium on distinguishing falsity from misleadingness. How
does a plaintiff establish a claim is false? Courts ask: What is the explicit
meaning of a claim. Once you know the explicit meaning, you can then determine
whether that factual claim is false. However, sometimes courts are willing to
make general inferences from disparagement. Also important to distinguish lay
audiences and expert audiences: dictionary meaning may not be as important as
what people are likely to understand.
How does a plaintiff
establish a claim is misleading? Relevant when the claim is ambiguous and has
potentially true and potentially false meanings; the question is what message
reasonable consumers receive. Usually through surveys of the relevant
consumers. If 15% or more of consumers, net of control, receive a false message,
then P is likely to prevail.
When is empirical
evidence of consumer reaction necessary? Not in literal falsity cases; literal
falsity is presumed to reach a substantial number of reasonable consumers. Basically
always required in misleadingness cases. [Intent, direct testimony from
deceived consumers as possible but unlikely substitutes] 7th Circuit case, Eli
Lilly v. Arla Foods (2018): Eli Lilly sued over images portraying rBST, a
hormone given to cows to increase milk production, as a scary toothed monster
with electric fur. The 7th Circuit finds there’s no literal falsity, but still
affirms an injunction: “The use of monster imagery, ‘weird stuff’ language, and
child actors combine to colorfully communicate the message that responsible
consumers should be concerned about rbST-derived dairy products.”
Impact of First
Amendment: Courts have generally said that the Lanham Act false advertising
cause of action raises no constitutional issues because by definition it
targets only false or misleading commercial speech, which can constitutionally
be banned.
According to Supreme
Court doctrine, when it comes to direct gov’t regulation of speech, there is a
distinction between inherently or actually misleading v. potentially
misleading: Whether the speech can just be banned or whether instead a
disclosure must be added to try to draw the sting of the misleadingness. This
isn’t well worked out and has largely been done by courts guessing, or worse,
about what’s inherently or actually misleading versus correctable and only
potentially misleading. Much room for presenting courts with facts about
misleadingness.  Not the same distinction
as is made in Lanham Act cases, where misleadingness is grouped into one
category distinct from falsity.
Relationship between
private and public enforcement: Courts in private litigation often defer to the
FDA’s factual findings about what is true but without a lot of explanation
about why they’re deferring.
First Amendment may
also bear on the question of de novo review of agency determinations: what are
the medical facts versus what are consumers’ perceptions of the messages they
receive?  The former—the facts of safety
and efficacy—may as a practical matter receive more deference than agency determinations
about misleadingness, even though both are subject to ordinary mechanisms of
proof.
Q: role of consumer
protection claims?
RT: likely to be
limited b/c of barriers to class actions.
Cleland: POM case:
DC Circuit said deceptive = no First Amendment protection. Should go into
relief ordered, not into whether it is actionable.
RT: agree, but
courts are often not great at signaling their order of operations.
Cleland: materiality
to competitors?
RT: to consumers,
which then affects competitors when consumers’ decisions are affected. [in
response to Q] Could be patients or doctors; both have substantial influence on
what drugs are prescribed.
Carrier:
monopolization claims: these are highly concentrated markets, w/few
substitutes. Liability requires monopoly power + exclusionary conduct. Some courts
have rejected any liability for disparagement; others have made it very hard/impossible
to find liability; others say it’s case by case. In the first bucket, 5th &
7th circuits say that false advertising is pro-competitive by increasing
competition in the market for advertising. This is nonsense. It’s at least
possible to get/maintain monopoly power by disparaging rivals. Rivals can’t fix
it; can have significant effect on overall market.
Second approach: de
minimis rule: assumes disparagement is de minimis without a showing of lots of
things: clearly false, clearly material, clearly likely to induce reasonable
reliance, made to buyers w/o knowledge, continued for prolonged periods, not
subject to neutralization. The bar is just too high—taken from leading
Areeda/Hovenkamp treatise. Was adopted at a time when the standards for false
advertsing weren’t clear. There are a lot of instances of false advertising that
aren’t monopolization, but false advertising in a monopoly context can harm
markets.
Clearly false: you
can have deceptive statements even if they aren’t clearly false, as has been
delineated here. That standard is too high. 
Clearly material: yes, deals with safety/health; would induce reasonable
reliance for that reason. Knowledge of subject matter: the drug companies have
better knowledge. These drug monopolies go on for years. It’s hard to
neutralize: biologic company says “you could go to the ER” and that’s tough to
rebut.
Third bucket: case
by case approach of 3d, 8th, and DC. False statements can be so unfair as to
constitute an unreasonable restraint: e.g., does it lock in decisionmaking? Does
it make it harder for competitor to get financing? Hard to get financing if you’re
subject to claims about safety/efficacy. Relevant also: the regulatory setting.
Wonderful to see FDA/FTC working on this, but the agencies might not be able to
solve the problem on their own. Drug companies think it’s in their bottom line
interest to get away w/slap on wrist, maintain monopoly power. Role for courts
to police barriers to entry, especially given other barriers to entry like
trade secrets, patent thickets, etc. Bundling existing and new patients makes
it harder for new patients to get the biosimilar.
Weinstein: do we
need private antitrust enforcement?
Carrier: we need all
three: private antitrust, false advertising, and regulatory enforcement. No
matter what agencies can do, bad actors may be able to cross the line and
commit antitrust violations. The benefit is that it focuses on market effects:
increased price, reduced output—antitrust is uniquely able to deal with that.
It has treble damages, attorneys’ fees, injunctions: it can consider all kinds
of anticompetitive conduct in their full context and interactions. Suboxone: an
overall course of conduct can violate the law. The companies aren’t doing just
one thing, they’re pursuing many strategies.
Weinstein: would a consumer
class action work here?
Carrier: courts aren’t
always receptive, especially given the nuanced role of the misinformation here.
FTC uniquely has §5 power to go after unfair/deceptive acts or practices, with
more leeway than private antitrust.
RT: Right now some
courts do a “heads I win, tails you lose” approach: Becton Dickinson in the 5th
Circuit, P lost its antitrust claim because false advertising couldn’t affect
the market in general, then lost its false advertising claim b/c it affected the
market in general and P couldn’t show which of the sales it had lost v. its
rivals.
Carrier: our
forthcoming article (watch this space) lays out how you should think about presuming
anticompetitive effect when false advertising is done by a monopolist. Our test
applies to monopolists, and it doesn’t make all false advertising into an antitrust
problem. We take the learning from false advertising law and apply it to
antitrust: a well developed body of law.
We’d need to figure
out what it takes to have real competition in biologics.
Q: how do you
establish competitive harm? Is deception enough?
Carrier: for a
biologic w/monopoly power, I think that’s enough. Biosimilars are injured;
regulatory scheme is impaired b/c biosimilars are supposed to play a crucial
role in lowering price. Competitor harm = consumer harm.
Q: belief that it
would be hard to deceive prescribing physicians about safety/effectiveness. If
true, is there still a role here for harm to competition?
Carrier: yes, b/c we
have a price disconnect. Not like any other market where price/quality
determination is made by any one party. Doctors, payors/insurers, consumers:
lots of room for anticompetitive conduct w/r/t patients and pharmacy benefit
managers.  Pharma gives us whack a mole
all the time: every time you think you’ve figured out what is going on, there’s
something else. Gilead case: new combination of settlements and product hopping
we haven’t seen any more. Transferred patents to Native American tribe to try
to avoid PTO review. This is just the next stage in that process of invention.
Antitrust is well equipped to deal w/variety of shenanigans.
Q: rulemaking as a
possibility. Comm’r Chopra wants more FTC rulemaking.
Carrier: may well be
useful. Yes to rulemaking and yes to enforcement in the courts. Could shed
light on the problem, as does the guidance FDA has offered. Make clear you can’t
hide behind clear falsity: deception/misleadingness is a problem. 
Q: gov’t v. private
actors?

Carrier: sometimes this conduct is nuanced. Safety intimations; an ideal recipe
for FTC action.
RT: at some point
companies should step up and go to court to defend their own interests if they’re
losing millions. But public harm also matters and can justify gov’t intervention.
Antitrust prides itself on its hard-headed empiricism but the majority tests presently
ignore all the learning we have about false advertising’s effects. That should
change.
Carrier: Pfizer is
suing J&J; it is possible, b/c entering the market w/ a biosimilar requires
lots of resources.
Open Public
Comment  
• Sarah Ikenberry,
Senior Communication Advisor, Office of Therapeutic Biologics and Biosimilars,
CDER, FDA 
• Eva Temkin, Acting
Director for Policy, Office of Therapeutic Biologics and Biosimilars, CDER,
FDA 
• Catherine Gray,
Staff Director, Office of Prescription Drug Promotion, CDER, FDA
• Antara Dutta,
Economist, Bureau of Economics, FTC 
• Armine Black, Attorney,
Health Care Division, Bureau of Competition, FTC
Juliana Reed, Pfizer/
Biosimilars Forum: continued problems of misleadingness, but that’s not the
only barrier.
U Pitt pharmacy
school professor: Europeans are fine prescribing biosimilars b/c of nearly 2
decades of experience. Physician confidence is high uniformly but uptake varies
by country, which probably reflects other factors including payor practices.
Health care practitioners in the US are also not skeptical; they are enthusiastic
about biosimilars.
Marilyn Feldman, Alliance
for Safe Biologic Medicines: rheumatologists were willing to prescribe, but
clinicians are often hesitant to change b/c it can take years to stabilize a
patient. And they’ve become sensitized to non-medical changes based on
formularies that have changed patients’ medicines every 6 months in order to
make higher profits. They even switch patients to completely different
biologics. So doctors are leery of a great switching experiment. Biosimilars
are behind the 8-ball because of financial incentives. Incentives that benefit
the physician can undermine trust in doctors. Considering the perception that
US lags behind Europe, 5 years out there were 11 products but we have 26: FDA
deserves thanks for building out approval so quickly.
Sundar Raman [sp],
biosimilar company: Data for biosimilarity should also suffice for interchangeability;
no more is required and practically they are already interchangeable. But the
difference allows anticompetitive behavior by originators, including misrepresentations
and payment practices.
Andrew Spiegel, GCCA,
Alliance for Safe Biologic Medicines: Unaware of any attempt to undermine
confidence of patients & doctors in biosimilars. Patients & providers
have accepted biosimilars as part of health care.
Kim Caldwell,
pharmacist, PCMA (pharm benefit manager ass’n): 270 million Americans in
covered plans. Patent thickets are bad; product substitution is good—should lower
barriers to substitutions. Patients & clinicians may be uncertain about switching/substitution.
Andrew Greenspan,
Jansen Pharm./J&J: patients should have data on alternating before that
happens; implying that alteration/interchangeability is fine for a biosimilar
is misleading w/o data. Some molecules are more immunogenic than others; patients
may face switching every 6 months and need good info.
Ad compliance guy:
Dr. Google is often the driver of patients to particular sites. FDA Warning
letter last month specific to search ads on Google: request that final guidance
documents specifically get into how biosimilar guidance applies to marketing
platforms w/character space limits, and to brand-connected ads: ads that don’t
mention a brand themselves and then link directly to a brand website.
Rheumatologist: hasn’t
seen disparagement in educational materials, offices, etc. Don’t believe that’s
responsible for impaired patient access. The access problem, which exists, lies
elsewhere. Manipulations designed to maximize profits from fees, rebates, and
other schemes. Don’t address those and access won’t happen; far outweigh the
effects of deceptive marketing. Formulary decisions are rarely if ever based on
medical outcomes. Overly consolidated industry of unregulated middlemen with
unfettered power demanding ever increasing tolls from patients and pharmacos.
Major driver of rising costs. Should not be allowed to continue. Insurers,
large pharmacies, and PBM conglomerates are main barriers to access for biosimilars
and indeed all pharmaceuticals.
Laura Brandt (sp),
Amgen: US market is emerging but robust; the current market structure is good.
Andre Barlow (sp) on
behalf of Coalition to Protect Patient Choice: highlights the role of rebate walls:
agencies should prohibit rebate policies that block biosimilar competition.
Such policies raise the cost of drugs overall. Go to PBMs rather than
consumers; perverse incentives to negotiate higher list prices, requiring
higher coinsurance payments from patients b/c of higher list costs. Rebate
wall/trap: use existing market power to secure formulary access w/volume based
rebates on condition that they deny formulary access to rival drugs, bundled across
drugs for many conditions that can’t be matched by new entrants—even if the
biosimilar is offered at greater discount or for free. Most PBMs require
patients to fail first on the more expensive branded drugs, instead of the
historical fail first on generic requirements. Step therapy rules used to
foreclose competition.
PhRMA rep: Physician
education is good. Meaningful rebate reform would promote access and competition.
Corey Greenblatt
(sp) Global Health & Living Foundation: nonprofit for chronically ill
patients. Pricing is the key. Nonmedical switching needs to be defined;
patients/doctors should be able to nonmedically switch when it benefits them,
not when it benefits the PBM. Forced nonmedical switching only profits PBMs/insurers.
Patient is the only one who shows up w/a checkbook and no power. You can change
this by strictly regulating insurance practices & creating market
incentives for uptake.
Laura McKinley,
Pfizer: Should be able to extrapolate for additional indications even in the
absence of clinical data, speed up approvals. Biosimilar exclusion contracts withholding
rebates for both current and future patients exclude biosimilars. Prevents doctors/patients
from trying biosimilars.

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“better lives for hens” was puffery, but hen living conditions claims weren’t

Posted on March 3, 2020 by rtushnet

Lugones v. Pete & Gerry’s Organic, LLC, No. 19 Civ. 2097
(KPF), 2020 WL 871521  (S.D.N.Y. Feb. 21,
2020
Plaintiffs alleged that they bought defendant’s eggs,
branded as Nellie’s Free Range Eggs, based on false advertisements indicating
that the hens were loved and are given ample access to open, green spaces in
which they can peck, perch, and play. Instead, (i) defendant’s hens are
allegedly kept in tightly constricted spaces, with no real access to the
outdoors; they are crammed “into sheds up to 20,000 at a time … prevent[ing]
them from extending their wings, foraging or making their way to the outdoor
space [Defendant] advertises so prominently”, and (ii) the hens are subject to
numerous husbandry practices that plaintiffs oppose, such as beak-cutting and culling
for slaughter when they’re calcium-depleted.
The containers used slogans like “we love our hens, you’ll
love our eggs”; “we love our hens”; “better lives for hens mean better eggs for
you!”; and “outdoor forage.” The container also claimed that “[m]ost hens don’t
have it as good as Nellie’s,” because Nellie’s hens “can peck, perch, and play
on plenty of green grass.” The containers all included imagery highlighting
young children playing with hens in an open field.
Plaintiffs alleged they “would only consider purchasing
Nellie’s eggs in the future if Defendant[ ] were to treat chickens in a manner
consistent with [its] advertising.” The court held this conditional intent wasn’t
enough to give them standing to pursue injunctive relief.
However, plaintiffs did state claims under GBL §§ 349 and
350, based only on statements and images they claimed to have viewed before
purchase: the statements and images on the container, including this paragraph:
Most hens don’t have it as good as
Nellie’s. 9 out of 10 hens in the U.S. are kept in tiny cages at giant egg
factories housing millions of birds. Sadly, even “cage-free” is now being used
to describe hens that are crowded into large, stacked cages on factory farms,
who never see the sun. Nellie’s small family farms are all Certified Humane
Free-Range. Our hens can peck, perch, and play on plenty of green grass.
Statements on the website, however, were non-actionable
because plaintiffs didn’t allege that they viewed the website before purchasing
and thus they couldn’t have relied on those statements.
Also, many of the challenged parts of the container were not
actionable.  “We love our hens, you’ll
love our eggs” and “better lives for hens mean better eggs for you” were “paradigmatic
examples of puffery.” It was unreasonable to interpret such statements to mean
that the hens were free “from chick culling, beak-cutting, calcium depletion[,]
and sale to commercial slaughterhouses and live markets.”  But “[m]ost hens don’t have it as good as
Nellie’s. … Our hens can peck, perch, and play on plenty of green grass” was
factual, reinforced by references to “OUTDOOR FORAGE” and images of hens
frolicking in elysian pastures. There was enough specificity to go beyond
puffery and into potential materiality. Defendants argued that reasonable
consumers wouldn’t rely on these claims, but that wasn’t a good argument on a
motion to dismiss: the court wasn’t willing to find as a matter of law that
consumers wouldn’t look at these claims and the associated iamges “and not
believe that Defendant’s hens have significant access to the outdoors.”
Fraud/fraudulent misrepresentation claims likewise survived.
When it came to reasonable reliance, “Plaintiffs would have had no independent means
of ascertaining the truth of Defendant’s misrepresentations — short of driving
themselves to Defendant’s facilities and sleuthing about the grounds for the
truth. Such an effort would go far beyond the ‘minimal diligence’” required.”
But breach of express warranty claims failed.   

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Cal. court says “controversial” claim is therefore not factual

Posted on March 3, 2020 by rtushnet

Serova v. Sony Music Entertainment, 44 Cal.App.5th 103 (2020)
Hard to believe the reasoning
in this case could get worse, but they may have achieved it. The California
Supreme Court told the court of appeals to reconsider its earlier decision in
light of FilmOn.com Inc. v. DoubleVerify Inc., 439 P.3d 1156 (Cal. 2019).  Same result, slightly different reasoning: Because
there is a dispute over the vocalist on certain recordings advertised as
“Michael Jackson” recordings, this is a “controversial” question that therefore
cannot be factual for purposes of commercial speech doctrine. In fairness to
the court of appeals, this is a known problem of using “controversial” as a
standard in a lawsuit over compelled commercial speech, where there is by
definition a controversy. I’m not even strongly committed to this decision
being wrong on the merits given the special context of an entertainment product.
But it is a bad sign of where First Amendment cases are going: disclosure cases are now contaminating ordinary falsity cases.
Serova alleged that the album cover and a promotional video
wrongly represented that Jackson was the lead singer on each of the 10 vocal
tracks on the album, when in fact he was not the lead singer on three of those
tracks. Previously, the court of appeals held that: (1) Serova’s claims arose from
conduct furthering Appellants’ right of free speech “in connection with a
public issue” under the anti-SLAPP law; and (2) Serova did not show a
probability that her claims under the UCL and the CLRA would succeed because
the claims concern noncommercial speech that is not actionable under those
statutes.   
Reaffirming its earlier reasoning, the court of appeals
concluded that FilmOn concerned only the first step of the anti-SLAPP analysis,
i.e., whether particular claims arise from conduct that the anti-SLAPP statute
protects. Specifically, FilmOn considered “whether the commercial nature of a
defendant’s speech is relevant in determining whether that speech merits
protection” under the anti-SLAPP law, and concluded that the context of a statement—including
“the identity of the speaker, the audience, and the purpose of the speech” —is
“relevant, though not dispositive, in analyzing whether the statement was made
‘in furtherance of’ free speech ‘in connection with’ a public issue.”
Here, the representations that Michael Jackson was the lead
singer on the three disputed tracks “did not simply promote sale of the album,
but also stated a position on a disputed issue of public interest.” Before the
album was released, “certain Jackson family members and others publicly claimed
that Jackson was not the lead singer,” while the Estate made a public statement
about the authenticity, making the identity of the artist “a controversial
issue of interest to Michael Jackson fans and others who care about his musical
legacy.”  Sony’s financial interest in authenticity
didn’t change that.
This case arguably falls within an exception to an exception:
the legislature amended the anti-SLAPP law to exclude commercial speech, but then
excluded ads for “any dramatic, literary, musical, political, or artistic work”
from that exclusion. Still, the court reasoned, that didn’t mean that all such
ads were necessarily within the scope of the anti-SLAPP law. There still needs
to be some connection to a “public issue” or an “issue of public interest”;
otherwise, an ad falsely claiming that a musical album contains a particular
song would be covered by the anti-SLAPP law.
In FilmOn, the state Supreme Court held that a court
must consider the context as well [as] the content of a statement in
determining whether that statement furthers the exercise of constitutional
speech rights in connection with a matter of public interest.” FilmOn alleged
disparaging statements about the Web-based entertainment programming
distributed by FilmOn.com by defendant’s confidential reports to paying clients
classifying FilmOn Web sites under categories of sites that engage in copyright
infringement and contain “adult content.” The court held that these reports
were not “ ‘in connection with’ ” an issue of public interest. It was “ ‘not
enough that the statement refer to a subject of widespread public interest; the
statement must in some manner itself contribute to the public debate.’ ”
Here, the issue of public interest was whether Michael Jackson
was in fact the singer on the three tracks. And the issue doesn’t simply
concern some trivial fact about his life, but relates to his artistic legacy;
the dispute was of widespread interest among Michael Jackson fans. This public
controversy distinguished this case from other cases about allegedly misleading
descriptions of a particular commercial product or service.
The connection between the issue and the speech is also
relevant. The speaker and the audience for the statements at issue suggested a
commercial purpose: appellants sell the album, and they made the statement to
an audience of potential purchasers. But the content still was not merely
commercial speech, and anyway FilmOn was clear that “[s]ome commercially
oriented speech will, in fact, merit anti-SLAPP protection.” The content of the
statements related directly to the issue of public interest, rather than being
tangentially connected through a generalization of the statements’ subject
matter (the  “‘synedoche theory’ of public interest”); cf.
Commonwealth Energy Corp. v. Investor Data Exchange, Inc. (2003) 110
Cal.App.4th 26, 34, 1 Cal.Rptr.3d 390 [“The part is not synonymous with the
whole. Selling an herbal breast enlargement product is not a disquisition on alternative
medicine”].)   Even though the challenged statements didn’t
refer to the controversy, they took a position on that controversy.  Unlike the statements in FilmOn, the
statements here were public and contributed to the public conversation.  
It was also relevant that Sony wasn’t selling “a typical
consumer product” but rather a product that is itself subject to First
Amendment protection. “[T]he challenged conduct in this case helped shape the
experience of the music that consumers purchased,” which was indeed the basis for
Serova’s complaint. Without anti-SLAPP protection, Sony might have decided not
to sell the disputed tracks at all; others might decide not to include songs or
other artistic works with disputed provenance in a collection “rather than
either (1) risk the expense of consumer litigation, or (2) dilute their marketing
by acknowledging doubts about the provenance of the work that they do not
share.” That would discourage protected speech.   
Then, Serova couldn’t show a probability of success because
the UCL and CLRA apply only to commercial speech. Again, the speaker and the
intended audience suggested a commercial purpose. But the content of the
challenged speech was “critically different” from purely commercial speech for
two reasons: (1) Sony’s statements “concerned a publicly disputed issue about
which they had no personal knowledge” and (2) “the statements were directly
connected to music that itself enjoyed full protection under the First
Amendment.”
Personal knowledge matters because one reason commercial
speech receives less constitutional protection than political speech is its
greater verifiability. In Nike v. Kasky, the California Supreme Court “ascribed
great significance to the fact that, ‘[i]n describing its own labor policies,
and the practices and working conditions in factories where its products are
made, Nike was making factual representations about its own business
operations.”” Thus, “Nike was in a position to readily verify the truth of any
factual assertions it made on these topics,” and that commercial regulation was
“unlikely to deter Nike from speaking truthfully or at all about the conditions
in its factories.” [Important note: not its factories. The factories were owned
by subcontractors.] Here, by contrast, Sony’s representations about the
identity of the lead singer didn’t concern its own business operations or a
fact of which it had personal knowledge. Other defendants, not the Sony defendants,
allegedly “jointly created, produced, and recorded the initial versions” of the
tracks, so the vital element of personal knowledge was missing. The court of
appeals commented that Kasky might well have come out differently “if
the statements at issue concerned the labor practices of an independent commercial
supplier who simply sold products to Nike for resale,” whereas the Kasky court
specifically noted that Nike had entered into a memorandum of understanding
assuming responsibility for its subcontractors’ compliance with local labor
laws. [Assuming responsibility is not the same thing as having personal
knowledge, by the way.]
Without personal knowledge, Sony’s statements didn’t fit
into the definition of speech that is “ ‘less likely to be chilled by proper
regulation,’ ” given the strict liability of consumer protection law.  Personal knowledge about the content of
speech is “an important feature” in determining whether speech is commercial. Without
direct involvement in the recording, from Sony’s perspective, its statements
about the identity of the lead singer “were therefore necessarily opinion.”
Appellants “could only draw a conclusion about that issue from their own
research and the available evidence.” Thus, Sony’s representations about the
identity of the singer were just statements of opinion. 
To avoid potential liability, it would have had to put a
disclaimer on the album or leave the songs off entirely. The second option
shows a chilling effect, and the first option is also constitutionally dubious
because compelled commercial speech is a First Amendment problem, as shown by National
Institute of Family & Life Advocates v. Becerra, ––– U.S. –––  (2018), which in response to Breyer’s dissent
stated that it accepted [only] “the legality of … purely factual and
uncontroversial disclosures about commercial products.” Here, any compelled
disclosure would not be “uncontroversial” by definition because “controversy
has surrounded” the disputed tracks, and it wouldn’t be “purely factual” from
Sony’s perspective because it lacked personal knowledge of the facts. Forcing
Sony to put a claim in its advertising materials with which it doesn’t agree would
be bad compelled commercial speech. Even a statement about uncertainty “implies
the existence of real controversy or doubt about the identity of the singer
even though Appellants might not believe that any reasonable doubt exists.” [Although
Sony doesn’t actually know, according to the court of appeals, so the basis of
its certainty is … an interesting question.]
Aaaaaaaaargh. The epistemological confusion here is so deep it’s
more like rot.  Sony doesn’t have “personal”
knowledge because it is a corporation and does not “know” anything. Imputing
knowledge to a corporation serves many functions, but it’s distracting rather
than helpful here.  If we took this
concept seriously for commercial speech purposes—which, to be clear, we
absolutely should not—then the companies selling quack autism cures are exempt
from regulation precisely to the extent that they are ignorantly or avariciously
parroting claims from bogus anti-scientific literature and didn’t do the
research themselves.
This whole thing is not even a correct description of Kasky!
Nike didn’t have “personal knowledge” of conditions in the factories of its
subcontractors because it had made the business decision to set itself up in a
way that offloaded risk and control to its subcontractors. Subcontractors are
independent third parties. That was the point.  Nike had hired other third parties to
monitor, but even if those third parties had “personal knowledge” of the conditions,
Nike still didn’t, by the exact same logic that is in play in this decision.
The imposition of strict liability for factual claims made
to sell products should not depend on—and never has before depended upon—the
corporate form a company has chosen to adopt, which by the way is usually unknown to
consumers.  Nike and Sony both decided to
have certain tasks performed outside the boundaries of the corporation; they
did so for reasons that are doubtless well-founded in economics, but should not
be encouraged by the structure of false advertising law—especially since, if
corporations do take advantage of this new rule, there will often be no one to hold
liable for resulting falsity. For example, ingredient suppliers don’t engage in
“advertising” to the public, and the sellers of the final product won’t have
personal knowledge of whether the ingredients are truly the ingredients. The
ingredients list on the product will therefore, according to the reasoning of the
court of appeals here, merely be the seller’s “opinion” about the ingredients.  Contrary to what the court of appeals says,
what is “purely factual” should not be and never before has been measured by
the “perspective” of the advertiser.
That’s not even getting into the invited error around
controversiality/disclosure precedents. Under this interpretation, an
advertiser seems to get to create controversy by disagreeing with the
regulator, at least if the advertiser has enough market power to get its voice
heard.
But even if you think that “controversial” serves an
important purpose in mandatory disclosure situations, the court of appeals’
reasoning here has turned every deception case into a mandatory disclosure case,
which makes no sense.  Consider: the
shark cartilage seller wants to advertise that shark cartilage cures cancer.
The regulator says: no, that’s false.  The
seller says: now my choices are to not sell shark cartilage or to put a disclaimer
on my shark cartilage saying it doesn’t cure cancer, and that’s bad compelled
speech about a controversial subject!  Those
are the exact choices Sony has. But if a commercial speaker is saying something
false, those are legitimate choices to put it to—shut up and stop fooling
people, or say something true instead—even if it believes its own claims.  
All the real work in this case is being done by the idea
that the factuality of “Michael Jackson sang this” is of a different order/regulability
than the factuality of “shark cartilage cures cancer” because of the former’s
connection to an expressive work. Making other arguments than that just screws
up First Amendment doctrine for everyone.
The court of appeals does go on to say that there’s a deep
connection between the challenged statements and the First Amendment-protected
art they promote.  Unlike the foregoing,
this is actually a legitimate argument. As long as there is a distinction
between speech that is sold and other things that are sold that happen to have
speech on them (e.g., cans of corn), this rationale will not destroy false
advertising law generally.
The court of appeals notes that “[t]he identity of a singer,
composer, or artist can be an important component of understanding the art
itself. No one could reasonably dispute that knowing whether a piece of music
was composed by Johann Sebastian Bach or a picture was painted by Leonardo Da
Vinci informs the historical understanding of the work.” I think that’s true,
but it’s interesting to consider the ideological work being done here: “Thus,
the marketing statements at issue here are unlike the purely factual product or
service descriptions constituting commercial speech in cases that Serova cites.”
There’s nothing “thus” about it!  There
is a ground truth about who was the lead vocalist on these songs, at least as
much as there is about a “representation that products were manufactured in the
United States” and about an “attorney’s certification as an expert,” two of the
cited cases.  Indeed, what counts as “made
in the USA” once you know the historical facts is often substantially more
subject to debate than how to decide who’s the lead singer on a song once you
know the historical facts, as far as I can tell.  The implications to the consumer of the
“purely factual” question of who sang a song may be complex—but then again, so are
the effects on the consumer of “made in the USA,” and of knowing how much alcohol
is in a can of beer. And there are a lot of factual statements that are, because
of how science works, provisional: right now, we think some things about aspirin
are true because that’s what the scientific consensus is; false
advertising law should rely on scientific consensus even though the ground
truths it seeks are subject to revision.
Anyway, the court continued, some statements about art could
be commercial speech—like film ads featuring fictional endorsements from a
nonexistent critic, or a statement falsely stating that a particular song is
included in an album. But not these statements, where (1) the identity of the
artist was itself an issue of public discussion and interest; and (2) Sony had
no personal knowledge of the issue.
Final note: this standard is out of whack with the usual
First Amendment rules for defamation, which are usually thought of as pretty
strong. Defamation of a public figure requires malice—knowledge or reckless
disregard for a high probability of falsity. Even if the court of appeals was
right that Sony’s scienter should matter, why shouldn’t it be enough to allege
that Sony was reckless about the truth?  Suppose, for example, that a non-Sony defendant had privately acknowledged to Sony that MJ probably wasn’t the singer. 

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YouTube’s terms of service/content policies aren’t commercial advertising or promotion

Posted on March 2, 2020 by rtushnet

Prager Univ. v. Google LLC, No. 18-15712 (9th Cir. Feb. 26,
2020)
YouTube isn’t a public forum and didn’t engage in false
advertising by telling users it supported freedom of expression. Prager “University”
(it’s not) complained that YT was discriminating against its conservative
viewpoints by putting some PragerU content in Restricted Mode, which makes it
unavailable to 1.5-2% of users. YT’s guidelines say that videos that contain
potentially mature content—such as videos about “[d]rugs and alcohol,”
“[s]exual situations,” “[v]iolence,” and other “[m]ature subjects”— may become unavailable
in Restricted Mode. The restriction is done either by an automated algorithm
that examines certain signals like “the video’s metadata, title, and the
language used in the video,” or manually by a user; there is an appeals process
that involves human review. YT tagged several dozen of PragerU’s videos for Restricted
Mode and demonetized some videos.  PragerU
appealed but was not entirely successful.
The ubiquity of YT didn’t make it public. Marsh v.
Alabama is about a company town where the private actor “perform[s] the
full spectrum of municipal powers,” which YT is not. And even if YT has said
that it’s committed to freedom of expression and an Alphabet executive stated before
a congressional committee that she considers YT a “neutral public for[um],”
private companies can’t self-designate as public fora. The First Amendment is
not opt-in.
The Lanham Act false advertising claim also failed. YT’s
statements about its content moderation policies weren’t “commercial
advertising or promotion.”  Its
statements “were made to explain a user tool, not for a promotional purpose to ‘penetrate
the relevant market’ of the viewing public.  Not all commercial speech is promotional.” Likewise,
the designation of PragerU videos for Restricted Mode wasn’t advertising or
promotion, and it also wasn’t a representation. The designation, and the reason
therefor, are not made available to the public. And the fact that some PragerU
videos were tagged to be unavailable in Restricted Mode didn’t imply any
specific representation. Even implied falsity must be specific and communicated
to a substantial number of consumers.
Likewise, YT’s “braggadocio about its commitment to free
speech” was puffery/opinion, not an actionable factual representation. Statements
that YT believes that “people should be able to speak freely, share opinions,
foster open dialogue, and that creative freedom leads to new voices, formats
and possibilities” and statements that the platform will “help [one] grow,”
“discover what works best,” and “giv[e] [one] tools, insights and best
practices” for using YouTube’s products were unquantifiable puffery.

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Trademark Scholars Roundtable, Stanford part 3

Posted on March 2, 2020 by rtushnet

Session 3: Remedies in Trademark and Unfair Competition
Cases  
Introduction: Mark Lemley, Leah Chan Grinvald Discussant: Laura
Heymann, Eric Goldman  
[I had another conference in the morning so came in late.]
Discussion of eBay’s effects. Burrell: In other countries the trend has to been
add more and more remedies, extension of jurisdiction over intermediaries, etc.—US
trend is not recognizable elsewhere.
McKenna: Lack of unfair competition has limited our
flexibility w/r/t remedies; injunctive relief could be limited to font,
presentation, other concerns.
Lemley: Increased use of counterfeiting claims may also be
response to limit on remedies: a way to get out of eBay (maybe) and to get out
of limits on damages/disgorgement.  Disgorgement
other than replacing damages is a windfall to P: it’s money it wouldn’t have
earned (b/c you can’t have double recovery) unless it is in practice just
recovery for unprovable actual damages. Disgorgement as deterrence: if not
limited to willful infringers, will deter some amount of lawful conduct.
Heymann: may also be for damage to reputation that we don’t
think we can measure. [Though there’s no reason to think this actually happens
in terms of reputational harm.]
Burrell: there are people who say that giving up wrongfully
acquired profits isn’t punishment, so willfulness shouldn’t be required.
Lemley: it’s a differently calculated form of punishment.
Treble damages might be more punitive, though they also may be less punitive than
the gains from unlawful conduct, as in antitrust/drug cases.
RT: Irreparable injury: I see it these days often used as
quick way out of a PI analysis when the underlying claim is weak. Analogy to
230: does it matter what the rationale  if the P was going to lose anyway? I think a
reasonable answer is yes, but how it matters is up for debate. Making a bad
case cheaper to fight actually has some value where otherwise costs will deter
assertion of valid defenses. Cf. Lunney, etc.
Goldman: Equitable remedies: all facts are in play; Ps may
not immediately and easily be able to gauge whether they will be able to establish
all the requirements for injunctive relief, which makes it different and worse
as a sorting tool than 230.
Mid-Point Discussants: Bill McGeveran: Notable that
intermediaries will stand up for users in some circumstances, e.g., Fourth
Amendment issues/tell police to get a warrant. [Though it’s less risky in that they
don’t face severe financial penalties as long as they merely seek confirmation from
a court about that, and they also may think that law enforcement demands/burdens
on the platforms can be made more predictable this way.] Privacy by design as a
potential model for TM remedies, remedial modesty. Easier online to find the
people who need corrective advertising than if the ad had been a billboard. UX
can be targeted. Also greater ability to monitor compliance, which could give
courts more ease in ordering targeted remedies.
Jessica Silbey: remedies as ends of stories. They can tell
us the moral of the story or what the story was about. Confusion in remedies
signals confusion in what we’re trying to do w/TM law. Injunctions tend to
broaden TM rights when they are broad. But no injunction at all seems like a
gutting of the benefit. So how to inform courts/ think more specifically and concretely
on choices w/in the scope of the injunction? Help them think about what they
mean by goodwill. Money and control are the options: why is money not good
enough/why do we go to control? Particularly relevant to TM. In patent/© money
matters a lot; is it b/c there’s a consumer interest where the consumer doesn’t
benefit if $ changes hands? If it’s about control, that’s a different way of
thinking about the moral. Compulsory licensing remedy? Why is that uncomfortable
for TM? What would a reasonable royalty be? Would a licensing remedy be likely
to broaden the scope of TM rights in ways we don’t like, as w/the arguments
over fair use?  Role of attorneys’ fees.
In © cases, there are a lot of settlements that look like reasonable royalties
+ fees, b/c lawyers assume that fee shifting will happen if they get past sj.
Need more empirical work on remedies to inform courts/policies.
In teaching, we could frontload remedies/teach them as front
and center to help students understand their practical importance. We could
help out w/amicus work only on remedies: think about the stakeholders who aren’t
represented.
Dinwoodie: Old Kellogg litigation ended up being very much
about remedies: there were multiple cases about what had to be on the box, what
shape the biscuit could be and still absorb milk, and so on. Satellite
litigation is a real thing when we talk about the burden of monitoring.
McKenna: compulsory licensing isn’t that different; look at
how little we actually require for quality control in a licensing relationship.
A lot of stuff that’s licensed, there isn’t any quality to control: these aren’t
products/services w/any expertise in the licensor co. The value the licensee is
getting is the value of exclusivity. It’s not about quality control, which
could be baked into a compulsory license. It’s about the value of exclusivity.
Gangjee: Coexistence agreements as self-help remedies. Ends
up working along similar lines, but may fool the public even though we allow
it.
Heymann: property concepts: the affront of unauthorized use
demands something of the remedy. Not just control of property but control of
reputation/identity, at least for some TM owners.
Lemley: in real TM cases, cases going to what TM is supposed
to be about, reputational interest and consumer interest align and should be
protected by injunction. Not w/confusion w/o materiality. Rather not have those
latter cases at all, but $ is less disruptive than control, so a halfway step
would be to refuse injunction. Should we limit the alienability of those injunctions,
then? Settling by allowing D into the market in exchange for $ suggests that it’s
not really about control/reputation but really just about $.
RT: false advertising remedies are not always but sometimes
tailored to figure out what the defendant actually can say. The solution space
seems wider to courts as does the defendant’s interest in speaking truthfully. Look
at those analogies.
Silbey: trade secret cases can require losing party to pay
ongoing monitoring fees; maybe there’s a workable parallel there. Can imagine
compulsory licenses as a reasonable thing if we’re worried about
anticompetitive market exclusivity, but they could end up just extending the TM
owner’s footprint. Tying losses to infringement: we estimate damages all the
time. Why worry more about causation in TM than in other cases? Estimable v.
irreparable seems like another axis worth thinking about, as does discrete v.
ongoing behavior. Remedies should be as specific as possible.
Burrell: TRIPS prohibits compulsory licensing of TMs, though
of course the US may no longer care.
Fromer: Gucci allowed Gucci Ghost to infringe: makes Gucci
more cool by allowing it (though not allowing certain others). Uncontrolled use
can sometimes be good for brand owners.
Diamond: Monitoring isn’t realistic in many cases. Go to Blinded
Veterans website: there’s no disclosure. Is it b/c they just gave up b/c disclaimer
wasn’t enough? Or is it that they’re now ok with the market and there’s no
confusion/overlap problem?
Silbey: TM owners build monitoring into their own practices;
the question is whether there are creative ways of shifting costs. TM owners
get a lot of feedback from clients about possible infringements—monitoring is a
partnership b/t audiences and owners. In some cases, Ds had to submit ongoing
evidence of uses and how they change over time. So a T-shirt maker might have
to submit new designs for approval. But she only found that in merchandising
cases. Costs of monitoring might be different across types of cases.
Diamond: Across cases, the Q is whether people think it’s
worth doing.
Silbey: there’s an expressive component to a judge saying it
should be done. Trade secret monitoring doesn’t seem to be much enforced but
hangs over employees’ heads.
McKenna: monitoring is a normal part of complete injunction,
which says don’t use mark X or anything too similar. What is too similar is an
ongoing Q. So court needs to pay attention to how it’s writing the injunction.
There’s a difference b/t requiring “reasonable prominence” and requiring this
font/this size. Happens all the time with settlements too. It’s a marginal
additional cost.
Silbey: we could add clarity/predictability.
Gangjee: also happens with parallel imports/repackaging
& rebranding required: you have to submit samples. So it’s already built
into the system.

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Trademark Scholars Roundtable, Stanford part 2

Posted on March 2, 2020 by rtushnet

Session 2: A Forward-Looking Perspective  
To what extent should trademark or unfair competition law
reflect consumer expectations or seek to shape or set them?
Introduction: Rebecca Tushnet
One consideration in how we should structure the regime is
that casual empiricism is a pervasive and possibly unsolvable problem because
courts don’t notice when they’re making empirical claims: SCt cases (even in
Tam, on registration as endorsement). Necessary for PTO given volume: TMEP
assumptions about functioning as a mark. Heymann: it is indisputably true, as
Graeme Dinwoodie has noted (What Linguistics Can Do for Trademark Law), that
trademark law must of necessity take certain shortcuts to ensure that
litigation does not devolve into a morass of evidentiary issues; true, too,
that in a field (law) that depends on precedent for efficient private ordering,
there must be certain general rules that can be derived and followed.
So at the outset we should just work on clarifying our
understanding of to what extent empirical claims are truly our best guesses
about a wide range of consumers and to what extent they are normative claims
about how reasonable consumers should act. Cost benefit analysis &
consideration of error costs have a role to play in our legal tests: what if
we’re wrong about the empirics, how easily can consumers/competition recover
from our error?  See this in Qualitex and
a bit in Wal-Mart—if we’re wrong about distinctiveness, producers will usually
have discrete symbols they can use instead to identify source.  Potential justification for “limping marks”
concept as well.
One thing we don’t know yet in law is how consumers learn in
response to broad market changes—while a flood of counterfeits seems likely to
change consumers’ reliance on branding alone, what pathways are amenable to
change and what will remain persistently confused? Much research suggests that demographic
characteristics are far more important to consumers’ orientation towards belief
than any particular thing they see in the market. [Possiblity of consumer intuitions
about right and wrong/free riding, as with promotional goods, encouraging
beliefs about the factual state of the world? Motivated cognition—though the
research suggests that many more consumers think copying is unfair than think
that the trademark owner definitely produced promotional goods.]
But: What messes us up is not what we don’t know, it’s the
stuff that we know that just ain’t so: consider dilution and Sprigman et al.’s
work about how it’s the surprise that causes people to hesitate—there’s no
connection w/ a particular brand, so the response that we see when people
confront supposedly diluting marks is not the brand-specific mechanism that we
thought that it was.
Many claims made in the reading were (perhaps
unsurprisingly) persuasive to me, but striking how little empirical basis there
is for so many of them: For example, The Constructive Role of Confusion in
Trademark, Alfred C. Yen, makes a great point: our theory of secondary meaning
requires consumer learning over time: initial impression is supposedly
descriptive, later learning is that the mark source-indicating. The consumer is
not necessarily mistaken either time, but responding to market. If that’s what
really happens, which we have some reason to doubt!  We all cite the Lee et al study on
identifying terms as trademarks by their placement on the package, but what
about replicability? That study tells us something that seems intuitively
powerful, but how far does it extend? Can it tell us anything about images,
fonts, slogans?  In the state of
empirical uncertainty, do we have any choice but to use our own intuitions as
the model of reasonable consumers’ reactions?
Here’s a hypothesis: Maybe our big doctrines seek to shape
producer behavior and only indirectly affect consumer expectations, and maybe
that is exactly where we should focus. Examples. (1) Genericity/functionality: we
tell producers that they need to develop a signifier that is nonfunctional and
not the only thing to call they product. (2) Abercrombie: producers should choose
an inherently distinctive term for greater certainty. (3) Free speech limits:
don’t bother to try to control certain kinds of speech/convince consumers that
your authorization is required because we won’t enforce that.  That might be an approach we could be more
confident would actually work than trying to shape consumer expectations
because producers are somewhat more likely to change behavior in direct
response to legal rules.
Consider the story of keyword
advertising: judicial opinion started out w/skepticism and then rapidly came
around to endorsement as its utility became more apparent. But how did
consumers learn that keyword advertising didn’t always produce only
searched-for trademarks? The studies show that they mostly expect that now, but
did they always? Was the legal doctrine just the reactions of educated judges
and their clerks to the increasingly apparent benefits? [Cf. Heymann on
less-educated consumers and the difficulty of judges entering into their
perspectives.]  It was producers who
pushed back and kept using the tactic because it made so much economic sense,
and they were not turned into pirates and counterfeiters; instead they largely
won the day.
Consider also the
example of private label goods imitating house brands. Several early cases found
infringement by house brands that imitated national brands; Yen’s article says
that opinions now “generally” state that consumers are not confused because
they have learned from prior experience to distinguish private-label goods from
their name-brand referents, and I think he reflects the consensus position on
this. Which is notable, because, in fact, there are only two significant cases blessing
the practice, and one of those cases found infringement by one of the house
brands. Yen says consumers learned; Dinwoodie says the same: “consumers in the
United States have clearly become accustomed to private label practices in
supermarkets. Beside every branded product, there is a store brand lookalike, labeled
with the house brand. As a result, following evolving social understandings
about marks in such settings, courts have cut back on the ability of large
brand owners to prevent the sale of competing store-branded look-alikes.” But
was it truly “as a result”?
Why did sellers
persist in this technique given the early losses (not to mention the fact that
you can’t do it in many other countries)? Talked to May Department Stores’
lawyer.  In general: Copy testing was not
part of the process for approving the labeling of a house brand.  Stores took the risk despite initial
unfavorable precedents, similar to search engine advertising, presumably
because it was likely to prove very profitable if successful, and also because
they believed they could successfully distinguish the products from the national
brands in consumers’ minds. (Also, some sources suggest, because they believed
that most retailers would be too nervous about disrupting relationships to
challenge the practice.) Courts eventually accepted that they were right—though
notably without too much empirical evidence; note casual empiricism also on
display in Conopco and Food Lion cases.
If stores successfully
bet on courts’ acceptance of consumers’ ability to distinguish, suggests more consumer
perception invariance than we might have assumed—at least w/r/t things
consumers already care about. Compare to the TM forfeiture cases allowing universities
to reclaim control despite hundreds of years of nonenforcement: consumers can stay
stubborn in making associations (or not making them, in the case of house
brands), regardless of whether we think they are confused about
something relevant. 
Possible responses:
(1) commit to real engagement w/ marketing literature; (2) commit to telling
producers what we want them to do; (3) commit to normative vision of
consumer glancingly informed by empirical intuitions; (4) overarchingly, talk
explicitly about which of those paths is important and when. Normative vision
may be particularly important for competition/free speech concerns.  But it’s also worth asking claimants like the
CYOA plaintiff and the Honey Badger plaintiff to prove up their claims with
real empirical evidence rather than relying on proxies, given that there is no
history of clear consumer reliance on content of speech to make decisions about
whether trademark owners sponsored that speech. I really don’t like the
false/misleading distinction in advertising law but there is a point to
requiring surveys sometimes as a way of managing courts’ epistemological
hubris.
Jeanne Fromer: Relying
on empirical evidence requires answering prior empirical questions: what we
want to ask for as evidence of “confusion.” Which answers matter? TM as encouraging
businesses to follow certain rules makes sense but we have to be clear about
the normative goals so our empirics match up to them.
Two different roles:
Empirical evidence can help us establish standards and rules and then there are
the further empirics we would want in individual cases. Surveys, testimony,
observing online behavior are all different sources of empirical evidence:
searches originating on Amazon v. searches originating on Google.
How do we get there?
Consumer construct. What kinds of confused consumer count? Hasn’t been empirically
grounded at all.
Distinctiveness: how
grounded in consumer perception do we want to be? Should we require secondary
meaning before protecting anything at all? Any well resourced business will be
able to generate secondary meaning, while new entrants will find it harder. That
perspective’s not anti-empirical but it’s differently empirical: TM law
should encourage entrants to choose specific types of marks; we could do a
better job of encouraging choice of truly inherently distinctive marks.
Law might become
less stable and more fact intensive if we did all this given that marketplaces
are dynamic. Changing meaning of words.  Consumer
behavior changes over time. Do platforms change the roles of TMs? NYT story on unpronounceable marks on Amazon.
One story: everything else is taken; another: trademark semantic content is no
longer as important. Fromer thinks one reason is to take advantage of lack of
memory: the seller can easily disappear from Amazon and loses nothing by doing
so/switching names. Empirics will make law less stable as we have to reevaluate
what consumers are doing.

Discussant: Jake Linford: how to measure consumer
expectations? One possibility: corpora. Harder to game than 3d party surveys? Could
we measure fame by looking for a certain amount of use/a certain frequency? You’d
have to hire real empiricists to do it right, not just ask the court to do it
itself. Constitutional interpretation folks are trying to convince judges to
run with it on their own. No strong commitment to whether this is a good idea
or not. Online surveys are getting cheaper; ATurk surveys are at this point no
worse than other surveys; survey as a costly screen may not stay true for a
while.
Robert Burrell: Consider In ‘n Out Burger: they sell an Animal
Style burger. Defendant in Australia started Down ‘n Out Burger w/ a red and
yellow arrow pointing down. Marketing played off of In ‘n Out: “Also sell
animal style for those of you who want a heart attack on a plate.” Pretty clear
that there was no likely confusion; P scoured the internet for evidence of
confusion and the most it could find was 7 posts, one ambiguous; another one said
“these are pretty close to In ‘n Out” which was strong evidence of no
confusion; in 2019 the most recent was 2016. Nevertheless the court found infringement.
Why? Court rolled out the idea that confusion can arise when consumers assume a
licensing arrangement. Second, court said no high number was required; a few was
sufficient. Third, burgers are cheap and people pay little attention. Fourth,
imperfect recollection means consumers may misremember the mark. Finally: we
must remember that we’re dealing with a registered trademark. The fact that circumstances
might mitigate against confusion didn’t matter. Seems that if we want to do
better than that, there are a number of things we need to do.
First, the rules that have emerged about how you compare
marks for similarity: although it’s supposedly factual, there are rules, e.g.,
pay attention to the start of words; mechanistic applications should be
unpacked. Have to accept that w/in the context of registration, reining TM in
will require embracing double identity, accepting the core property style
protection where we don’t pretend it’s about confusion. Also, talking about
confusion instead of talking about harm is a problem: In ‘n Out has no prospect
of opening in Australia any time soon. Registered since 1990s, but only one pop
up per year; sold 938 burgers in 7 years.  If we had a real nonuse doctrine, this would
have been cancelled. Can’t talk about these issues in isolation. Lost context
of consumer response: why are we keeping marks on the register?
McKenna: what default do we have in the absence of empirical
evidence? Law is full of assumptions from circumstantial evidence/proxies.
Whose burden is it to displace the things baked into the law? More generally,
what counts as empirical evidence? Courts rely on proxies for all kinds of elements
of a TM case: secondary meaning; likely confusion. Mechanisms about which parts
of marks to focus on may or may not be empirical. So we could ask whether these
proxies do approximate empirical judgments. The proxies for secondary meaning
are really weak. Also possible that these are not proxies, but actually just
decisionmaking guides not attempting to get at empirical reality, in part b/c
of the instability that would be introduced into the law if it really did
respond to consumer behavior. Could we do better at the wholesale level to make
these proxies correspond to what they say they represent, or should we be
explicit about our desire not to do that? Abercrombie: for
arbitrary/suggestive, we could just say we’re not making assumptions about
source designation but rather about competitive need.
Dinwoodie: Notable that there are few reported decisions
about trade dress, but how do we prove what actually happened in the market?
Not a slew of decisions but nonenforcement in the wake of Conopco. Enforcers,
juries, private ordering mediate between consumers and their understanding. Maybe
rules about the penalties for bringing/not bringing lawsuits may have to be
rejiggered to give them the right incentives.
Sheff: Fromer’s point about well resourced firms being able
to buy the proxies for secondary meaning: seems like this is by design.
Producers are content to undertake the costs of search as long as they got the
opportunity to persuade consumers. Has argued that producers take advantage of
cognitive bias. The law is designed to reflect those biases, even if not
rational. Trusts consumers to find what they want, in a nonrational way; give
producers an incentive to set up a market for works for those consumers.
Grynberg: what does it mean that there are weak marks on Amazon?
Possible offloading search to platforms. TM work is being done by “Amazon” but
the marks there are weak, suggesting that something is going on w/TM value. [He
says related to doctrine that allows Amazon to use TMs in search, but it may
not be since these seems designed to surface particular sellers when there’s a
search on generic terms.] Even if we were to declare the marks on Amazon not
marks for failure to function, that wouldn’t change how Amazon works. It’s no
longer a TM problem and now a consumer protection problem. Note that Amazon’s control takes some influence away from
TM owners but concentrates it in ways that may be a separate problem [and that’s
also true of complaints about house brands.]
Focusing on influencing sellers is not in tension with
having a normative ideal of the consumer—that normative conception is one way the
law has to tell sellers what to do.
Dogan: In ‘n Out is using confusion as a mask for fairness.
If we’re thinking about empirical support for features of TM analysis, this is
where we need empirical support for the countervailing values. Make salient the
effects of not respecting the competing values. Studies by medical researchers
showing that especially elderly people rely on color and shape to take medications:
that is valuable in not just talking about the values but demonstrating the value
to consumers of restricting TM rights in particular ways.
Burrell: Australia is willing to recognize that consumers
will more readily perceive differences when marks are stronger, so it was
important for In ‘n Out not to argue that it was a well known brand.
RT: just starting to work on house brands but interesting
that I haven’t yet found empirical work on copycat house brands as such until
after 1995. Before: brand names, other determinants of confusion. After:
increasing interest in the marketing literature. Can’t (currently) reject the
hypothesis that consumers were never confused; if that was true, there was not
really a learning period.
Litman: even after 1995 there were cases that were filed but
not litigated when the D changed the label. 
Some casual empirical evidence that consumer perceptions changed; when
she used to show lookalike trade dress to students, they used to say “how is
that possible?” [though it may be relevant that unfairness is one reaction and
confusion is another] and now they say “that’s a house brand.” This was the
first year that they were unanimous that it wasn’t confusing. The trend over
30-40 years has been pretty steady.
Nonsense brands on Amazon are doing the same work as old
style house brand in pre 1995 US—no one remembered the house brand/paid
attention to it, it was just the brand that was in Safeway or Kroger or
whatever. They weren’t exactly TMs that failed to function, but they did
indicate “this is made by the company that makes stuff for this store.”
Lemley: market structure expectations is what we’re really
talking about. Should TM seek to preserve existing markets? Should we allow new
forms of competition enabled by actors like Amazon?  Suppose the claim is: by having a “store” page
on Amazon, that creates the impression that it is authorized by the manufacturer.
Consumers may not have a well formed set of opinions about a new process that
hasn’t existed before, which might also be true of house brands. TM has to, in
that case, serve as a norm entrepreneur one way or another as it reacts to
these new forays. Doesn’t mean it can’t change in one direction or another, but
the trend he’s seen is to impermissibility. 
Could mean that survey evidence is more useful when
consumers have experience w/something than when they don’t. Keyword cases:
consumers understood that this was a search result, but were deeply confused
about whether it’s an ad or not. [They’re still confused about that!] He thinks
consumers got better and better about IDing ads and Google responded by making
it harder to tell the difference. Broader point: more reliable evidence when we
have experience with a thing.
Silbey: picking winners in an uncertain situation: we can
talk about what the default rule should be.
McKenna: many of us have told the story that consumers
adapted to private label goods; another possibility is that consumers had no
expectations one way or another and they would have adapted to whatever the
rule turned out to be. Proxies: had we relied on ordinary proxies like
similarity of marks, we might have decided to bar the practice as confusing;
sometimes in new circumstances the proxies are especially bad and we should be
more suspicious of how well they track.  [A
really good example of this is the constant use of the Twitter, FB, Instagram etc.
logos and fonts by various people. Traditional nominative fair use doctrine
would tell us that the logos/fonts convert the uses from fair to confusing, but
no one would be confused about whether Twitter endorsed your local hot dog
stand.]
Mid-Point Discussants: Bob Bone: Which side should you err
on if uncertain about empirics in a given case? Depends on whether you think
there are good alternatives with same benefits for D; maybe on whether there is
harm to P, which there often might not be.
Incentives are central to law. We design rules to affect ex
ante incentives in contracts, torts, etc. Why not in TM? Maybe they’re not an
effective target because of heterogeneity, changeability, etc. Is it easier to affect
producers? Maybe they’re more homogenous, stable, but that’s questionable too,
though relative to consumers that’s plausible. A moral framework would be a
different matter. But given that goodwill is itself dynamic and changeable, how
can/should a moral analysis take into account that goodwill might shrink in the
future anyway for other reasons?
Jessica Litman: fertile ground to nudge law is found in marketing
literature—we don’t need to do all the empirical research ourselves.  Also, focusing on the harm is another way
into this question of what the wrong is, if there is any. Nature of incumbency:
upstarts lack clout, almost by definition. They can’t get Congress or INTA on
their side. Big successful upstarts can’t stand in for the new ones; we can’t
either b/c we can’t necessarily imagine who they are. It’s a limit on our
ability to advocate for flexible markets.
Secondary meaning: booking.com suggests difficulty with
empirical evidence. It’s possible for generic terms to have secondary meaning,
and if we’re committed to the policy justification for genericity then we
shouldn’t rely on that.
Lisa Ramsey: Trademark WatchDawgs has been doing letters of
protest. Sell T-shirts and similar goods; trying to get PTO to pay more attention
to failure to function/distinctiveness. First Amendment arguments may also be
available to shape TM laws. Need more work on validity stage, to get more marks
rejected.  Amazon took down romance books
with “Cocky” in the title on the basis of a claim based on a registration that
was actually descriptive. More rigor is needed. Should be using common sense to
refuse to register.
Sheff: the market is deliberately set up to encourage
concentration—it saves consumers from having to think more by encouraging
consolidation. Means that not every purchase presents us with the paradox of
choice [though it’s not doing a great job on toothpaste]. Only when the
alternative serves a significant interest making significant resources available
to press back on the expansion of TM claims do we see resistance to rules that
increase bigness.
Linford: we don’t ordinarily change liability now at T1 b/c
we think the conduct will not be tortious at T2 (e.g. self driving cars may
eventually be good, but are they doing harm now?).
Gangjee: reminder that providing detailed information to
consumers is often just not possible: they can’t process too much. May need
competition authorities to intervene in such cases.
Fromer: defends role of academics in helping little guy.
Work w/Congress on TM registration—they tell us they’re interested in the
little guy. Can be effective way to get Congressional ear. And sometimes small
and large business interests align. Large businesses can be trying to enter the
market again and again and again: Target was concerned with fraudulent TM
filings; willing to bear the costs to fight it.
McKenna: Amazon’s TM procedures will displace a lot of TM
law even if we get the cases perfect, given how easy it is to register. Sheff’s
comment: not clear that the system decreases consumer info: we’re awash in
signifiers, differentiation, multiple brands, same producer making lots of
brands at multiple price points. We might be better off with classic competition.
Sheff: maybe represents some actual segmentation in the
market.
McKenna: possible but we all know often there aren’t actual
differences. Open Q whether this is any simpler than the alternative.
Silbey: opportunities to push back against Amazon program
versus pushback that happened against Content ID? Models to be found?  Are we assuming a policy of equal
opportunity/do we want to say that incumbency bias is a problem? Is it bad that
having predictable winners and losers based on market share is a thing in TM?
If we think so, what would the responses be? E.g., embracing reverse confusion,
rejecting IIC, strengthening Tea Rose doctrine, value inherent distinctiveness
over secondary meaning, something else?
Grynberg: you don’t need all that much TM law to get an incumbency
bias. Ralph Brown was already complaining about incumbency bias when the scope
was much smaller. Secondary meaning alone did that. Not necessarily tied to
extensions of TM; exogenous forces did the work.
Goldman: TM law already ignores shaping of meaning by
intermediaries, e.g. grocery stores who decide where to stock things even if
they don’t have house brands. There are pronounced problems w/intermediaries
but it’s not just Amazon.
Fromer: EDNY case, 2 weeks ago: unregistered TM; sold goods
on Amazon. Chinese individual got a registration using a photo of one of P’s
goods & went to Amazon and got a takedown. TM trolling/extortion to the
next level. Eradicated P’s business. Sought injunction to get Amazon to
reinstate them; injunction granted even though Amazon isn’t a party. Law is not
willing to step back fully but motivated parties [not to mention court’s willingness
to ignore the terms of the contract w/Amazon!] will have to involve it. TM bar
has thought for too long that registrations impose no costs on others; clearer
than ever this isn’t true. Amazon is a good place to look for these arguments.
Lemley: To say that TM is a small part of incumbency is not
to say it’s not a part. TM law has a role in worsening the problem. The problem
is worse now than it was in Brown’s time: every market is more concentrated now
than through most of the 20th century: fewer and fewer winners across a wide
range of industries. This was not inevitable and Europe is going in the
opposite direction: US is now less competitive than Europe, reversing the
historic pattern. Blame on antitrust, but also on IP and other tort law wielded
against disruptive challengers to incumbents. Another potential step: intermediaries
as allies, advocates pushing back against expanding IP. The reason we still
have an internet, for as long as we still do, is that a couple of big tech
companies lined up ten million people to fight SOPA/PIPA and stop fragmentation
of internet. They are dangerous allies b/c their interests may not align; they
can be coopted; they are easier targets for legislation. But if you’re a small
print on demand company, one way to fight back against brand bullies is to
enlist Amazon. The risk is that they cut a deal and back away, but they’re at
least provisionally a complicating factor: a big guy with incentives notionally
aligned with selling more varied stuff. Also grocery stores!
McGeveran: Ratchet effect of rights accretion may give
courts pause: if we have reason to believe that consumers are guessing at what
the rule is rather than reporting their own perceptions, that could be reason
for courts to be consumer-shaping rather than reactive.
Heymann: could do that with surveys. Ask consumers “why do
you think that?”
McGeveran: though there are reasons to question that.
Heymann agrees: people don’t always know what their reasons are.
Silbey: TM law isn’t usually thought of as having an equal
opportunity to compete component, but maybe it should.
Diamond: what exactly is common sense?
Lemley: poor man’s survey: me and my friends. Patent law
flirted with ignoring common sense when you couldn’t find a written connection,
and it was a disaster. We do give the jury/factfinder a lot of discretion when
we use common sense as a standard, but there are different structural regimes
and it does let you weed out lousy claims on both sides w/o requiring a survey.
Dinwoodie: French rulings are almost purely common sense;
they don’t tell you much about their reasoning so they are hard to refute.

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Trademark Scholars Roundtable, Stanford

Posted on March 2, 2020 by rtushnet

Trademark Scholars Roundtable
Session 1: The Current Framework  
To what extent does current trademark or unfair competition
law reflect consumer expectations or seek to shape or set them?
Introduction: Stacey Dogan
Categorize rules as norm shaping v. norm following. To what
extent are courts taking into account other values that may relate in some ways
to consumer expectations but are often independent of them—speech, competition?
Almost everything that is supposed to shape consumer expectations actually
belongs on the final axis: courts not reflecting expectations of consumer perception,
but decisions made recognizing some other value intrinsic to competition law or
complementary/independent like deference to patent law, speech considerations.
Malleable notion of consumer confusion/distortion of economic
concept allows courts to dress up anti-free riding in the language of
confusion. They’re saying they’re shaping the law to intervene when consumers
will be confused, but there are many doctrines like the merchandising right and
early internet cases that use language of confusion to shape the market where
courts think it’s just not fair for D to take advantage of economic value of P’s
mark. They are often unmindful of the consequences. Might shape consumer
expectations de facto in a way that disserves speech values/competition values/deference
to patent law and other values.
Discussant: Mike Grynberg: one entry point may be reasonably
prudent consumer; a construct the court can’t avoid. 9th Circuit moved from
consumer as fool to consumer as reasonably sophisticated in internet cases.
Consider consequences of cases like MTM for persuadability of consumers: allows
Amazon to serve as a platform, but a different one that subjects us to
algorithmic nudging; allows deemphasis on TMs online. If you use Amazon as your
agent, it can mask the effect of the TM/make you less vulnerable to persuasion
that Beebe talks about but does allow access to search/information. One consequence:
system level effect of overall rule; people tend to start searches at Amazon.
Dev Gangjee: quality function. Consider that clothes were
made in same factory for major brands; building collapse killed a thousand, but
the brands were never blamed for that. Outsourcing allows them to say this has
nothing to do w/me: prevents the shaping of consumer expectations. Meanwhile,
Corona beer’s sales have been harmed by the virus: TM has limited amount of control.
House brand space: What’s happening there is interesting; recognizes
both the power of brands but also the policy of allowing competition.
Dinwoodie: is there symmetry b/t situations in which courts
find confusion because of non-perception-based reasons versus when they find
confusion unlikely for non-perception based reasons/values? Are there reasons
they might behave asymmetrically around articulating their reasons?  
Dogan: Sometimes, in the face of confusion; we need to think
about consumers’ interests, not just their expectations. Those other factors
come into play in consumers’ interests.  Wal-Mart frames itself as about consumer
expectations, but it’s really about policy; KP Permanent explicitly says it’s
about rules even in the face of confusion.
Fromer: consumer doing the rhetorical work as the author in ©;
the consumer is invoked but has no control in TM litigation; used by two
businesses to advance their own interests. Public perception of TM is not what
TM is: Sussex Royal conflict; public perception is either “ this is not right”
or “they can do what they want because they are royals,” whereas TM doctrine
wouldn’t care whether they are in fact royal.  Broader public understanding of TM as
something they can believe in, but what that means for policy is unclear.
Linford: Tendency to speak about consumers as people who can’t
figure out what they want or don’t know what they want; consumers as Trojan
horse for market manipulation. That’s troubling to him. Is it appropriate to
think of competition as divorced from consumer needs in a market? Can
competition be divorced from how consumers see the world? [If consumers are
heterogeneous, then yes v. the consumers whose confusion is given priority in
many of the troubling cases.]  Do we
think that litigation reaches consumers or do consumers ignore the ripples from
that litigation? If we think that consumers don’t react, then TM will create a mismatch
b/t law & consumers’ use of TMs as we try to refine it.  Note that TM does not require the TM owner to
keep consistent quality; you can’t forfeit the mark by just changing composition,
as w/Twinkies. Then it becomes unclear why you can abandon the mark by
transferring it and changing composition.
Lemley: hears the claim that norm entrepreneur version of TM
is anti-consumer but that’s wrong. TM doctrine isn’t driven by consumers, it’s
driven by [P characterization of] a small subset of the least sophisticated
consumers—easy to have a one way ratchet when 10-15% confusion is enough. Neglects
interests of nonconfused consumers.  How
the law feeds into consumer decisionmaking: true that it rarely does so directly.
But what it does is mediate in the forms of product choices that are available
or not available. If the law decides that only university licensees can sell
university Ts, then consumers can’t readily access non-licensed T shirts. If Amazon
v. MTM comes out the other way, consumers get different choices and behave
differently b/c product mix is now different. What Lemley sees is not just a
battle over reasonable consumers but increasing move away from focus on consumers
at all: TM is not paying attention to consumers’ interest: dilution,
merchandising right, free riding, counterfeit cases. Even in classic consumer
protection cases, the thing we’d theoretically care about—surveys—play a small
and lessening role over time in deciding cases. Increasingly determined by
judge’s perception of right answer.
Litman: consumers don’t need to make the relevant legal
distinctions but that does mean it’s hard to formulate the proper question to
consumers, for whom law is an undifferentiated cloud. If we took consumer
reaction seriously, we have to start asking different questions.
Burrell: are there situations where courts genuinely set out
to try and shape consumer expectations? A degree of consumer stupidity we’re
not prepared to tolerate. Seems to come up in random ways. We’ve been told that
anyone who thinks McDonald’s makes Big Mac wine is so stupid we can ignore
them. But why that and not other cases when courts protect the “moron in a
hurry”? Court just doesn’t like this group of consumers, is that really the
reason?  Historically and to this day in
EU, there is a positive dimension to trying to shape the consumer: attempt to
build a European consumer as a nationbuilding exercise. [Shari Diamond: how is
that done?] We have a court that takes a certain view of the linguistic
competence of the average European consumers; in some way consumers in
Spain/Germany are supposed to be equated. Pushing not just uniform TM but a
notion of European-ness.
Gangjee: reasonably observant consumer traces back to
labeling cases/free movement of goods cases: a consumer is supposed to pay
enough attention to see that pasta is produced in Germany and not Italy: that’s
a conscious creation of standard to enhance free movement of goods.
Dinwoodie: Explicit policy: we want to allow the capacity
for businesses to be Europe-wide. The consumer is used to further a policy
about businesses.
Ramsey: First Amendment goals: does regulation directly
advance gov’t goal without suppressing too much speech.
RT: (1) Natural for courts to want to have their cake and
eat it too in terms of saying “our policy rule won’t cause much real confusion”;
not clear we want to take them that seriously, though they probably are saying
something about their expectations of consumers versus the error costs of litigation.
(2) Double identity/counterfeiting mean that courts don’t have to articulate
their policy reasons when they’re finding actionable conduct. Maybe an argument
in favor of those doctrines so courts don’t have to make up rationales that are
then extended in weird ways?
Session 1, Cont’d Mid-Point Discussants: Shari Diamond, Mark
McKenna, Alex Roberts, Jeremy Sheff
I had to teach so missed a bunch!
Notes from Alex Roberts:
Original prompt was about current tm law and how it reflects
or seeks to shape consumer perception
Discussion has been predominantly about courts
[Linford] mentioned “consumers as the trojan horse that
motivates brand manipulation of markets” –I want to talk more about that brand
manipulation
b/c tm law isn’t just courts, it’s C&Ds, it’s disputes
negotiated behind closed doors, it’s TM decisions made in the shadow of the law
brands can be remarkably effective in shaping consumer
expectations and thus nudging the law in the direction they want
Best example is super bowl policing
We all know that in principle, NFU says it’s ok to mention
an event (boston marathon case, but more commercial)—get your wings and pizza
for SB, etc
BUT NFL has policed so aggressively that brands are
terrified and won’t use it, pushing consumers to believe that the only co’s who
can utter the words are SB are the official sponsors
When/if a court goes to enforce a claim, if it looks to
consumer perception, it may find NFL has changed consumers’ minds and
expectations
Another example is genericide—when brands like xerox really
actively deploy an anti-gen campaign, do consumers change understanding? Does
that budge the law? Maybe not in the same way
Another is look-for advertising
Trade dress may not seem to be used as a mark but co’s
drawing attention to it can be persuasive both to courts and consumers
Recent ex this week when it came out that apple doesn’t let
movie villains use iphones or apple computers
Whether by product placement agreements or just market
pressure
Will that have an effect on consumers? Expectations about
product placement seem to be all over the place
Oullette: why is it so hard to have good data in trademark
cases? Outside experts thinking about how to conduct surveys, validate
methodologies—could do it as distinct from any given case, test against major
brands in market. [Those brands would hate that.]
Lemley: courts are surprisingly sophisticated analyzing the
limits of surveys, compared to how we treat other evidence. The broader Q is
whether the survey is really getting at the thing we want to get at, a tougher
issue. Both sides hire survey experts whose job is to design a survey that will
get the desired result to the greatest extent possible—not cheating, but
shading. Neutral technical expert? Might be interesting.
McKenna: There are so many different theories of confusion
it’s impossible to design a survey to capture them all; the survey is wonky
because the parties are gaming their theories of confusion. Who are the
relevant consumers? Also a key question that is manipulated; can’t be
standardized.  Doctrinal complexity can’t
be fixed by surveys.
Diamond: may be able to get more consensus, e.g. on who to
survey. Such a strong adversary system that it’s hard to intervene in that. In
Teflon surveys, the reports never report who flunked the test. Those people are
gone and ignored in our analysis, but we shouldn’t do this—merely taking them
out seems bizarre unless we just don’t care about them [which might make sense
in a confusion case but not a genericity case]. 
Posner says that cases go to juries only when the judge can’t figure it
out (and therefore when it doesn’t really matter who wins).
Heymann: surveys don’t separate out source, sponsorship, or
approval, but those aren’t the same things. Could encourage a model survey that
would test these things differently. For distinctiveness surveys, we’re not asking
the right questions either—compare to Roberts on failure to function.
Association w/company is not necessarily identifying and distinguishing the
source of goods & services (e.g., Gene Simmons hand gesture). More nuanced
questions should be about whether a particular feature is acting as a TM.
Bone: there’s a point in between shaping consumer perception
and trying to follow it: I have a view of what consumers should think and I
make a decision in line with that view, hoping consumers will follow. If we
thought about harm and not just confusion, a lot of the problems we’re identifying,
though not all, would be framed differently/would go away.  TM is funny b/c we do focus on the consumer.
We have a market based view of social value. If the consumer wants it, it
matters from a social perspective. Compare ©, where we don’t do surveys about what
authors think. We instead have a concept of authorship and of a good society
that has authorship, regardless of what consumers might want. Prevents us in TM
from asking similar Q about a good society and things like Veblen goods.
Sheff: Veblen goods is more complicated: for me to win a
positional competition, you have to lose. So giving some consumers what they
want means giving other consumers what they don’t want. And maybe more of TM
than we would like to think is like that.
Grinvald: other structural institutions that shape the
market: to produce a movie, you need insurance. The insurer demands all IP be
cleared. That affects what gets on the screen (see recent reporting on bad guys
not using iPhones
in movies) and then that affects consumer perception.
Gangjee: how do you use empirical evidence to construct an
abstract model of the consumer? Positional signalling: where a symbol appears
on a product affects whether it functions as a mark. German case about hashtag
phrase on T-shirt: the initial decision is that it’s informational, but if it’s
not in use how do you know where it will be put on the T-shirt? Court
ultimately says that as long as a TM use (on label) is foreseeable even if it’s
not the most likely then it’s inherently distinctive, which is an easy path for
TM registrants.  Lionel Messi/Massi case:
if a significant proportion of the public is not confused, registration should
be allowed: now at the ECJ; the lower court decision reversed the traditional
rule and we need to decide which public we care about.
McKenna: In subsets of cases, we could discount consumer expectations
altogether or we could weigh it with other things; consider whether we do it
wholesale or retail, which connects to Fromer’s earlier point about the role of
the jury. In the world of technical TMs, the proof structure was technical TM +
competing goods = liability. The rules were formal and not functional. No room
for jury in most cases. To the extent we want similar rules, they are likely to
be best implemented on sj and similarly. Unfair competition was equity and not
for a jury at all.

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