false claims of patent invalidity may be false advertising

Posted on February 4, 2020 by rtushnet

Willis Electric Co. v. Polygroup Macau Limited (BVI), 2020
WL 522441, No. 15-cv-3443 (WMW/KMM) (D. Minn. Feb. 3, 2020)
The parties compete in the market for artificial Christmas
trees. (The parties apparently say “holiday,” but come on.) Willis allegedly
innovated in the pre-lit tree category, introducing a “One Plug Tree that was
unlike anything the holiday tree market had ever seen before.” Willis filed a
patent application, and Polygroup allegedly subsequently began selling a
“knockoff design” and applied for its own patent.  (Here’s a video of the Willis product.)
Willis sued for patent infringement and other claims,
including antitrust violations (based on alleged bid-rigging and predatory
pricing) and false advertising. The court refused to dismiss the Lanham Act and
state law false advertising claims.
False statement of fact: allegedly false statements  “about the validity of Willis Electric’s
patents and the functionality of Willis Electric’s products” were actionable. Willis
alleged that Polygroup “told at least one major retailer that its patents in
this area invalidated Willis Electric’s patents,” which is “impossible, because
Willis Electric’s [patents] predate Polygroup’s [patents].” Willis Electric
also alleges that, although its patented design “always has had 360-degree
movement,” Polygroup falsely or misleadingly told a manufacturer that Willis
Electric’s product “is not 360 degrees,” and told a retailer that Polygroup’s
design has 360-degree movement in contrast to Willis Electric’s “original design”
that did not have 360-degree movement. This was sufficient. [Note that lawyers’
statements about patent validity are often held to be non-actionable opinion;
query what “invalidated” might mean in this context.]
Also, on commercial advertising or promotion: Polygroup
allegedly made false or misleading statements on at least five separate
occasions to at least one manufacturer and three retailers. “Significantly,
Willis Electric does not sell to the public directly, and its market generally
is confined to a limited group of retailers.” This was enough at the pleading
stage—though it’s not clear from the court’s discussion that the same false
statements were made to each of the targets.
Defamation: Polygroup argued that the statements about
Willis’s patents and products were subjective assertions of quality.  But “[s]tatements as to whether a patent is
valid, or whether a product includes a certain feature, are not subjective
statements of opinion or general assertions of quality.” And questions about
whether the statements would harm Willis’s reputation in the “sophisticated
buying community” couldn’t be resolved on a motion to dismiss.

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Second Circuit summarily affirms fair use in “Jimmy Smith Rap” case

Posted on February 3, 2020 by rtushnet

Estate of Smith v. Graham, No. 19-28 (2d Cir. Feb. 3, 2020)
The court of appeals affirmed the grant of summary judgment
on a fair use defense (I filed an amicus brief on behalf of IP professors in support of defendants).
Defendants sampled (with a license for the sound recording) a spoken word
peformance known as the “Jimmy Smith Rap” by jazz musician Jimmy Smith for Drake
(feat. Jay-Z)’s rap “Pound Cake.” The court of appeals agreed that the four
factors supported fair use. First, the use was transformative because JSR was
about “the supremacy of jazz to the derogation of other types of music,
which—unlike jazz—will not last,” while Pound Cake
sends a counter message—that it is
not jazz music that reigns supreme, but rather all “real music,” regardless of
genre. Beyond the text of the lyrics themselves, “Pound Cake” situates its
sampling of approximately thirty-five seconds of the “Jimmy Smith Rap” at the
beginning of an approximately seven-minute-long hip-hop song in which Drake and
… Jay-Z[] rap about the greatness and authenticity of their work.
The alteration and additional material argue “that it is not
the genre but the authenticity of the music that matters,” thus criticizing JSR’s
“jazz-elitism,” giving Pound Cake a different purpose and message.
Nature of the copyrighted work: doesn’t matter much in a
transformative use case. Amount: This is not a “no more than necessary” standard;
the amount taken here was reasonable. Market effect: there was no evidence of
usurped demand for JSR or other negative market effect. Pound Cake, “a piece by
a hip-hop artist about rap and hip-hop music, appeals to a much different
audience” than JSR, “a piece by a jazz musician on a jazz album about jazz
music.” And here’s an interesting statement: “Nor is there evidence of the
existence of an active market for ‘Jimmy Smith Rap,’ which is vital for
defeating Defendants’ fair use defense.” There are other strands in the caselaw
that say otherwise (at least about the “vitality” of such evidence), but this appears
to be one way that the court might manage its expanded transformativeness
definition—and interestingly, it’s consistent with the Eleventh Circuit’s
treatment of market effect in the Georgia State litigation, which also looks to
whether the specific work at issue is being licensed.

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Meat industry compares meat substitutes to dog food

Posted on January 30, 2020 by rtushnet

I’d be interested in the legal opinion clearing this full-page NYT ad: with a case out there saying that people expect dog food to be less appealing than human food, and other disparagement related precedents, this is an aggressive strategy.  (And seems a little desperate to me, but then again I’ve been a vegetarian for decades.)

Spoiler: the meat substitute is on the left. My spouse got it because of the beet juice added to the meat substitute; I got it because of the minerals added to the dog food.

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One may quote and quote and be a false advertiser: accurate quotation isn’t enough if the use is misleading

Posted on January 27, 2020 by rtushnet

CareDx, Inc. v. Natera, Inc., 2020 WL 401773, No.
19-662-CFC-CJB (D. Del. Jan. 24, 2020)
Previous
opinion by magistrate; the district court agrees that statutory Lanham Act
standing exists when future harm is likely and that CareDx successfully pled
falsity by challenging the quality and relevance of Natera’s study while not
challenging the accuracy of its quotations from the study.
Reminder: The language of the Lanham Act “expressly
authorizes suit by a plaintiff ‘who believes that he or she is or is likely to
be damaged by’ a defendant’s false advertising.”
Natera also argued that the complaint didn’t allege that
Natera “misquoted or misrepresented any of the figures set forth in the
relevant studies, or that Natera failed to correctly cite the publicly
available scientific studies.” The district court correctly recognized a “red
herring.” The complaint turns on CareDx’s allegation that Natera falsely and
misleadingly suggested that those studies proved superiority to CareDx’s
product, when “(1) the studies are not head-to-head studies that would support
comparisons of the two competing products and (2) the Natera study is flawed
and unreliable.” Neither of those bases of falsity requires misquoting. Rather
than taking issue with any particular statement in the Natera Study (or any
other study), CareDx alleged that the Natera study was flawed and that, “[e]ven
putting aside” the question of its validity, the study’s “methodology …
differs so significantly [from the methodology employed by the CareDx study]
that it is entirely improper to draw meaningful or reliable comparisons between
the performance of the two products” that were tested respectively in the two
studies.
Natera then argued that it hadn’t suggested that there was a
head-to-head study, but, for example, the complaint alleged that a Natera press
release stated that “the performance data” from the study of Natera’s product
“compares favorably against the competition [citation to the CareDx Study].”
That was an explicit comparison. This was not just “a disagreement in how the
science was conducted.” It was the use of the science—to draw superiority
conclusions—that was at issue.  A very
clear distinction, well stated.  [And clearly a (correct) response to arguments based on the Second Circuit’s decision in ONY, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490 (2d Cir. 2013), though that case is not mentioned by name in the judge’s opinion.]

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Judge Alsup seems to think cosmetic mask claims are false

Posted on January 24, 2020 by rtushnet

Miller v. Peter Thomas Roth, LLC, 2020 WL 363045, No. C
19-00698 WHA (N.D. Cal. Jan. 22, 2020)
OK, he doesn’t say so outright, but wait for the bit about
the in-court demonstration he expects.
Defendants PTR Labs sell “specialty skincare products,” here
the Rose Stem Cell and Water Drench product lines. PTR Labs advertised the Rose
Stem Cell line with the “buzzwords” “bio repair,” “reparative,” “rejuvenates,”
and “regenerates,” and the Water Drench Products as “containing hyaluronic acid
which attracts and retains one thousand times its weight in water from moisture
in the atmosphere.” Plaintiffs sued for false advertising under the UCL, among
other things. Class certification was denied as moot without prejudice because
the court could resolve a liability determination and potentially enter a statewide
injunction against PTR Labs’ challenged ads without certifying a class. The court
would revisit whether there was a need for a class to distribute restitution if
plaintiffs succeed individually on the merits.
Here, the court denied defendants’ motion for summary
judgment, finding issues of fact on deceptiveness to a reasonable consumer. For
the Rose Stem Cell Products, the labels “rose stem cells,” “cutting edge
bio-technology,” “bio-repair,” and at times “regenerates” and “rejuvenates” could
cause the reasonable consumer to “believe that the Rose Stem Cell Mask is
capable of repairing skin.” While “[s]ome reasonable consumers might interpret
this as mere puffery, … others could sensibly conclude that rose stem cells
actually repair human skin.”  For the
Water Drench ad, a reasonable consumer could believe that hyaluronic acid
actually can attract and retain one thousand times its weight in water, despite
the use of “up to” to soften the claim. The court noted that “the plain focus
of the ad was one thousand times its weight in water. … Subtle qualifications
do not overcome the thrust of the ad.” Since the plaintiffs offered reasonable
interpretations of the ad claims, the court turned to evidence of falsity.
Plaintiffs’ expert, an organic chemist with experience in
human embryonic stem cell research, offered a “helpful declaration” that
created a genuine question as to falsity. For the Rose Stem Cell product, he
explained, among other things, that “[a] plant cell cannot become a human cell”
and that “[a]ny cell (animal or plant, stem cell or not) in a topically applied
cosmetic cannot affect cells in the skin, because the barrier function of the
skin prevents those cells from penetrating to the level of living cells.” The
jury would simply be asked to resolve whether the divergence between consumers’
reasonable interpretations of the ads and the truth was deceptive. It was
unnecessary for the falsity expert to discuss the specific ad language at
issue.
As to the “up to one thousand times its weight in water”
claim, the expert explained that the claim is “incredible on its face,” citing “[p]ublished
data from actual studies by real chemists establish[ing] that hyaluronic acid
binds a small amount of water, equivalent to about half the weight of the
hyaluronic acid.” As the court commented:
Our jury will look forward to an
in-court demonstration in which a certain amount of hyaluronic acid is placed
in a beaker, one thousand times that weight in water is placed in another
beaker, and the contents are combined, all watching to see if all the water
will be absorbed. Both parties’ experts would be well advised to prepare for
such a demonstration. [Query whether visual inspection could actually disclose
this, but still!]
However, plaintiffs didn’t submit evidence as to whether
hyaluronic acid draws in atmospheric vapor and provides long lasting
moisturizing benefits, so the court did grant summary judgment as to those
statements.
On standing, the Rose Stem Cell plaintiff couldn’t remember
when she saw the ad for the product, but she testified that she did rely on it
when she made a later purchase. That was ok. “When a manufacturer promotes a
lie about its products, those who were misled by the lie may well continue to
rely on the lie even after the manufacturer has withdrawn the lie from
circulation. Admittedly, [the plaintiff] will have to explain away a lot of
memory snafus at trial. Our jury may possibly think she is the liar. But all of
that goes to the weight, not admissibility, of her evidence.”

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Call for Papers: Yale/Stanford/Harvard Junior Faculty Forum

Posted on January 20, 2020 by rtushnet

2020 Junior Faculty Forum

Hosted
by Stanford, Harvard, and Yale Law Schools
Request
for Submissions
Stanford, Yale,
and Harvard Law Schools announce the 21st session
of the Junior Faculty Forum to be held at Stanford Law School
on June 1-2, 2020 and seek submissions for
its meeting.
The Forum’s objective is to encourage the work of scholars
recently appointed to a tenure- track
position by providing experience in the pursuit of scholarship and the nature
of the scholarly exchange. Meetings are held each year, rotating at
Stanford, Yale, and Harvard.

Twelve to twenty scholars (with
one to seven years in teaching) will be chosen on a blind basis from
among those submitting papers to present. One or more senior scholars, not necessarily
from Stanford, Yale, or Harvard, will comment on each paper. The audience will
include the participating junior faculty, faculty from the host
institutions, and invited guests. The
goal is discourse both on the merits of particular papers and on appropriate methodologies for doing work
in that genre. We hope that comment and discussion will communicate
what counts as good work among successful senior scholars and will also challenge
and improve the standards that now obtain. The Forum also hopes to increase the sense of community among
American legal scholars generally, particularly among new and veteran professors.
TOPICS: Each year the Forum
invites submissions on selected legal topics. For the upcoming 2020
meeting, the topics will cover the following areas of the law:
Administrative Law
Constitutional Law—theoretical foundations Constitutional Law—historical foundations
Criminal Law
Critical Legal Studies Environmental Law 
Family Law
Jurisprudence and Philosophy 
Law and Humanities
Legislation and Statutory Interpretation 
Public International Law
Race/Gender Studies/Antidiscrimination Workplace Law
and Social Welfare Policy
A
jury of accomplished scholars, again
not necessarily from Yale, Stanford
or Harvard, with expertise
in the particular topic will choose the papers to be presented. There is no publication
commitment. Stanford, Yale, or
Harvard will pay presenters’ and
commentators’ travel expenses, though international flights may be only partially reimbursed.
QUALIFICATIONS: Authors who
teach law in the U.S. in a tenured or tenure-track position and have not
been teaching at either of those ranks for a total of more than seven years are eligible to submit their work. American citizens or
permanent residents teaching abroad are also eligible
provided that they have held a faculty
position or the equivalent, including positions comparable to junior
faculty positions in research institutions, for less than seven years
and that they earned their last degree after 2010. We accept jointly authored
submissions, but each of the coauthors must be individually eligible to
participate in the Forum. Papers
that will be published prior to Forum are not eligible. There is no limit
on the number of submissions by any individual author. Faculty from
Stanford, Yale, and Harvard Law Schools are not eligible.
PAPER SUBMISSION PROCEDURE:
Electronic submissions should be uploaded via
our online Submission Form. The deadline for
submissions is Friday, February 14, 2020. Please remove all references
to the author(s) in the paper. Each paper may only be considered under one
topic. Any questions about the submission procedure should be directed both to Professor
Norman Spaulding (nspaulding@law.stanford.edu) and the forum conference coordinator, Stephanie Basso (jff@law.stanford.edu)
FURTHER INFORMATION: Inquiries
concerning the Forum should be sent to Norman
Spaulding (nspaulding@law.stanford.edu) at Stanford Law School, Christine Jolls (christine.jolls@yale.edu)
or Yair Listokin (yair.listokin@yale.edu) at Yale Law  School,
or Matthew Stephenson (mstephen@law.harvard.edu) or Rebecca Tushnet (rtushnet@law.harvard.edu)
at Harvard Law School.

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post-complaint changes prevent finding of irreparable harm

Posted on January 15, 2020 by rtushnet

Pegasystems, Inc. v. Appian Corp., 2020 WL 137301, No. 19-11461-PBS (D. Mass. Jan. 13, 2020)

Following on its denial
of a motion to dismiss, the court denied a motion for preliminary
injunction in this false advertising case. Because the alleged falsity depended
on a supposedly independent review being paid for and on overstating the number
of responses to the survey, the motion had to be evaluated “in light of the
post-complaint changes Appian has made to the challenged statements.”
Specifically, Appian removed the phrase “Through approximately 500 responses”
and added language regarding the Report’s sample size. Appian also added text
on both pages of its website reading, “While all projects are different, we
encourage you to read the report and assess what relevance [the surveyed]
businesses’ experiences may have for your business” and acknowledged that
“Appian commissioned BPM.com” to conduct the survey contained in the Report. A
“Preface from Appian” was inserted as the first page of the Report disclosing
Appian’s commission.
Although the delightfully named Pegasystems alleged that
other parts of the report were false or misleading, including flaws in methodology,
the court didn’t find likely success on those other allegations. Appian admitted
that it “reviewed and provided input on drafts” of the Report, but denied that
the results were manipulated to favor Appian. Factual issues remained to be resolved.

Because of the post-report
changes, Pegasystems couldn’t show continuing harm from the initial misrepresentations
of independence and sample size.

No irreparable harm/likely success, no injunction.

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labeling grandfathered drug in standard format doesn’t misrepresent it as FDA-approved

Posted on January 14, 2020 by rtushnet

Belcher Pharms., LLC v. Hospira, Inc., — F. Supp. 3d –,
No. 8:17-cv-2353-T-30AAS, 2020 WL 102744 (M.D. Fla. Jan. 7, 2020)
“Epinephrine—a drug that is a medical necessity—has been in
short supply on and off for nearly a decade.” Hospira has made epinephrine since
before 1938, so Hospira is “arguably” grandfathered under the FDCA and has
never received FDA approval.  Regardless,
“the FDA asked Hospira to ramp up manufacturing to manage the epinephrine
shortage in 2010, which Hospira did.”   
Belcher launched an FDA-approved epinephrine ampule (it does
not sell a prefilled syringe, as Hospira does), in 2015. By early 2017, there
was no longer a shortage of epinephrine ampules, so the FDA asked Hospira to
discontinue its unapproved ampule, but to continue manufacturing its
still-scarce prefilled epinephrine syringe. Hospira complied, and Belcher saw
an increase in the sales of its epinephrine ampule.  After this, the FDA asked Hospira about
extending the expiration dates of the prefilled syringe, and the FDA then told
healthcare providers that the expiration dates were extended by 9 months past
the earlier 21-month expiration date.  
Becker sued Hospira for false advertising and for common law
unfair competition, for allegedly marketing its epinephrine products—both the
ampule and prefilled syringe—as FDA-approved. 
The court granted Hospira, “which did everything the FDA requested to
manage a severe shortage of a medically necessary drug,” summary judgment.    After the FDA told Hospira to discontinue its
epinephrine ampules, the FDA asked Hospira about extending the expiration dates
of its prefilled syringe. Hospira sent the FDA its shelf-life analysis, and
shortly thereafter the FDA told healthcare providers that the expiration dates
for Hospira’s prefilled syringe were extended for 9 months past their 21-month
expiration date. Hospira’s ampules had a 24-month expiration date, while
Belcher’s ampule had an expiration date of 12 months, which the FDA later
extended to 17 months.   Belcher alleged the following as false
advertising:  
1. Hospira’s product labels, which include as indications
for use that the epinephrine products (a) can treat cardiac arrest, (b) can be
administered intravenously, and (c) can prolong the effects of anesthesia; 2.
Hospira’s misleading advertisements as to its epinephrine products’ shelf life
on its packaging; and 3. Hospira’s comparison of its epinephrine products to [FDA-approved]
Adrenalin, which conveyed the message that its products were generic Adrenalin.
The court found that placing the products on the market with
indications for use and shelf life on product labels and packaging, in standard
format for FDA-approved drugs, could not, in itself, be a misleading claim of
FDA approval. It was too great a stretch to argue that presence on the market
in this was a representation of FDA approval. 
 
That left the comparison claim: Hospira compared its
products to FDA-approved Adrenalin, thus allegedly implying that it was a
FDA-approved generic.
First, internal Pfizer emails and an email response to a
drug distributor who inquired if Hospira was marketing the generic version of
Adrenalin were not “commercial advertising or promotion.”   An
Injectables Product Availability Report on its website did qualify, but
couldn’t be shown to be material. Even if the court assumed it was misleading,
that didn’t connect up to Belcher’s evidence that consumers believed Hospira’s
epinephrine products were a generic version of Adrenalin approved by the FDA. “Belcher
has not shown that a single consumer ever viewed the Injectables Product
Availability Report or was misled by it. Without evidence that a consumer
viewed the Injectables Product Availability Report, Belcher cannot show that
the misleading statements had a material effect on purchasing decisions.”   

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Reading list: Pam Samuelson on legal writing

Posted on January 14, 2020 by rtushnet

Pamela Samuelson, Good Legal Writing: of Orwell and WindowPanes 
From the archives: Excellent short piece on legal writing, for students and other
legal writers of all kinds.  In itself,
interesting to see how a groundbreaking female academic framed things in 1984,
including the advice not to use “she” as the generic third person singular
pronoun; it was “too cute.”

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confusion is not irreparable harm in false advertising case

Posted on January 14, 2020 by rtushnet

AMETEK CTS US, Inc. v. Advanced Test Equipment Corp., No.19-cv-02348-H-AHG,
2020 WL 133888 (S.D. Cal. Jan. 13, 2020)
The parties operate in the market for “sophisticated
electronic instruments in the automotive, telecommunications, energy,
aerospace, power, research, medical and industrial markets.” AMETEK sells
directly to consumers and also distributes its products through commercial
partners, while defendant ATEC has been a distributor of AMETEK’s products. In
late 2019, AMETEK informed ATEC that it would have to “decline the opportunity
for non-warranty service requests on behalf of ATEC going forward.” “Defendant
responded negatively to this development.” ATEC issued a press release titled
“AMETEK CTS No Longer Calibrating or Repairing Equipment After The Warranty
Expires,” disseminated through its website, social media, and email. AMETEK
began to receive inquiries about this from various customers and distributors. Although
ATEC offered to publish a retraction prepared by AMETEK, AMETEK instead sued
and sought a TRO, which the court here denied. ATEC represented to the Court
that “the press release with the allegedly false statements at issue in the
complaint had been taken down from ATEC’s website and that ATEC would not
disseminate similar statements” during the course of this litigation.
The court held that AMETEK failed to show both irreparable
harm and likely success on the merits. “Although loss of goodwill may
constitute irreparable injury, the loss must be based on factual allegations
and not be purely speculative.” Here, the evidence offered by AMETEK showed, “at
most, that some consumers were confused by ATEC’s press release. However, the
Ninth Circuit has explained that customer confusion is not the same thing as
irreparable harm.” None of the customers stated that they now had a negative
impression of AMETEK or that they’d refuse to deal with it in the future—these weren’t
like “numerous and persistent complaints from would-be customers” or actual
product complaints as a result of the disputed conduct.  Likewise, a VP’s declaration asserting that “AMETEK’s
reputation in the marketplace has been harmed by ATEC’s false statements” and
that “AMETEK expects to lose future sales” as result of ATEC’s conduct was too
conclusory.
Success on the merits: AMETEK argued that ATEC’s statements
about the scope of AMETEK’s post-service warranty were literally false, because
“AMETEK CTS No Longer Calibrating Or Repairing Equipment After The Warranty
Expires” indicated that it was no longer calibrating or repairing equipment
after the warranty for any purchaser. The body of the press release said that
“AMETEK CTS has notified [ATEC] that they would no longer be supporting their
products after the warranty period has expired.” In fact, AMETEK argued, it was
still supporting these product lines after warranty as long as the relevant
machines were not purchased by ATEC. ATEC argued that its contested statements were
true in the context of the entire press release.  The court found numerous disputed issues of
fact precluding a finding of likely success—both parties’ arguments were reasonable.
The argument that the subject line was misleading was “not without merit,” but
ATEC’s reference to the context of the full release was “also compelling.”
However, the case was not moot simply because ATEC removed
the offending statements from public view. ATEC made no argument that its
behavior “could not reasonably be expected to recur.”

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