Legal Applications of Marketing Theory, part 3

Posted on May 3, 2019 by rtushnet

Lorin Hitt, Vildan Altuglu, Samid Hussain, & Matteo Li
Bergolis, Wharton & Cornerstone Research, Cornerstone Research, Cornerstone
Research, Valuation of Privacy: Assessing Potential Harm from Unauthorized Access
and Misuse of Private Information in Consumer Class Actions: Disputes over use
of data allegedly beyond consented use and over data breaches. Need a method for
computing damages classwide if you’re going to have a class action.  Reliable, feasible, and common is required. 
Different methods have been proposed. Reliability is
determined by ability to address variation across consumers in nature of
private info and preferences about this info; ability to address unique aspects
of privacy (privacy paradox).
What is misuse of private info?  Consumers mostly don’t even look at their
contracts. Should it be dependent on what the contract says?  So should we do a cost-benefit tradeoff? Look
at expected uses v. unexpected uses? Consumers have different preferences over
things like retail loyalty cards in return for tracking, office surveillance
(54% would accept a camera on them to prevent theft), free social media (33%
think it’s acceptable in exchange for targeted ads even though 80% are on FB
which is that).
Theory 1: intrinsic value of privacy: inherent value to
society. Independent of consumer and type of info. As a nonmarket good, you’d
estimate value from surveys (e.g., contingent valuation). Issues: it’s an old
school concept, not so consistent w/class actions where harm is alleged to class.
Inconsistent w/heterogeneity in preferences & info; ignores cost-benefit
tradeoffs. Expressed preferences methods are especially unreliable for privacy
(privacy paradox).
Q: why isn’t there a market for this information?
A: it’s been tried and failed.  A lot of people will just give you permission
if asked, it turns out. You could try secondary markets as well (e.g., value to
landlords, to info aggregation services). Another answer: Other markets for
personal info do exist, but the big ones aren’t legal.  On the dark web, you can use secondary market
data to value privacy.  Highly volatile,
though in persistence, quality, price.
Data breaches have same problem with heterogeneity, but there’s
no compensating benefit to consumer. Weirdly, consumers sometimes feel safer
after learning of breach. But causality is difficult b/c there are so many
breaches—even if you experience identity theft, which breach led to that theft?
Possibilities: difference-in-difference analysis of rate of
identity theft incidences before and after breach; same for changes in credit
scores, credit lines, bankruptcies. There doesn’t seem to be much effect &
it’s shortlived; financial loss is small. 
But most studies have looked at small data breaches, not 140 million
people as w/Equifax.  Still remains a Q:
life cycle of effects.  Alternatives:
hedonic models.  Contingent/conjoint
valuation.  Q: is privacy actually an
attribute? (focalism bias; the privacy paradox) 
What is the price of a zero price good (given that zero price is
special)?  Privacy paradox makes expressed
preference methods unreliable. Existing studies show widely, perhaps implausibly,
varying results.
Increased consumer vigilance following breach is an
issue.  Studies also show that PII can be
inferred from other info: I can guess your SSN with reasonable accuracy if I
have other significant info about you. Main point: the research here is just
starting. In doing research must be mindful of heterogeneity/accounting for it.
Orly Lobel, Samuel Becher, & Yuval Feldman, San Diego,
Victoria University of Wellington & 
Bar Ilan University, Poor Consumer(s) Law: The Case of High Cost Credit
and Payday Loans
Marshmallow test/delayed gratification as predictor of
success. Revisited recently (w/more emphasis on what child’s world has already
taught them about trusting promises about the future).  What is poverty?  Hard to compare different countries. A
billion people by one metric count as wealthy (over $32/day, adjusted by cost
of living by country), while 2 billion are $8-32/day, 3 billion $2-8, 1 billion
less than $2 and in extreme poverty.  46
million people in the US.  Experience of
poverty has effects on the brain: poor mothers predictably have less emotional
regulation in response to baby’s cries. 
There are 5,500 Walmarts in the US, 14,000 McDonald’s, and 18,000 payday
loan places in the US. 12 million borrowers in the US w/ave. interest rate of
391% compared to credit card average of 15%. $9 billion in fees alone. 80% of
the loans are rolled over.
Bertrand et al.: a photo of attractive woman has the same effects
on demand for bank loan offers in an ad as reducing the interest rate by 5% in
the ad. Overoptimism can be a significant driver of excessive borrowing, but
poor people are less overoptimistic than non-poor people. Present bias: poor
suffer more from that—give too much weight to the present at the expense of the
future—they are very stressed.  Behavioral
economics: info overload as a problem; confirmation bias; the ostrich effect/information
avoidance.  [The Fyre Festival is a
prominent example of all of this happening, with the difference that a bunch of
people participating in the marketing or trying to attend weren’t poor and
therefore didn’t suffer catastrophic consequences—though the workers who were unpaid
suffered more and differently.] Financial worries, time pressure, negative
stereotypes, and emotional distress all take up cognitive resources leaving less
for evaluating offers. Poverty is punishment for a crime you didn’t commit.
Poor children also hear 30 million fewer words than wealthy kids—affects brain
development.  Poverty does not grant vacations,
so you don’t get a break.  And poverty is
expensive: fees and interest rates paid (or consider Desmond’s Evicted, which notes that rents in poor
areas are often about equal in dollars to rents in rich areas nearby, but the
properties rented are much different). 
Self-control in and of itself can’t overcome economic & social disadvantages.
Farmers in India: IQ test results were correlated with the harvest—after the
harvest they “gained” 9-10 points, a big difference.
We don’t argue that payday loans should be outlawed, as in
12 states.  Balance: these loans may
indeed offer some aid in extreme circumstances, especially with no other source
of credit. But: 70% of people who take payday loans don’t use it for
extreme/unforeseen circumstances, but for everyday bills.  Industry claims that these loans are
expensive b/c of low repayment, though some states already cap extensively w/no
real problem, as in Colorado.
Recommendation options: (1) Large scale policies like ex
ante fixes (e.g., Universal Basic Income); raising minimum wages. (2) Lender
regulation for responsible lending. (3) Improving borrowers’ financial decisionmaking.  We can try to manipulate system 1 with nudges,
encourage use of system 2. Personalization/differentiated regulation a
possibility. Nudges: default requiring payment of whole amount & not
rollover; to rollover requires counseling; or rollover that defaults to paying
80% of the whole next time.  Bank apps
offer reminders about saving—we could do the same with payday loans. Could
present information in other ways, not just interest rate but “dollars owed” to
evoke loss aversion.  Can compare the
rates to alternatives, e.g., credit cards or postal banking. System 2: one main
reason people say they choose payday loans is the ease: there’s little paperwork.
[This reminds me so much of Tressie McMillan Cottom’s Lower Ed.] But if it’s
too easy they don’t think about it enough. Create more roadblocks: video
tutorials, repayment plans that people would have to fill out, vanishing option
test (if you didn’t have this, what would you do?).
Q: how is this going to work for people who already are
stressed and depleted?
A: the point is to get them to stop and not just use system
1. We’re not expanding their bandwidth, but directing them to use whatever they
have in this situation. Can also test readability of disclosures.  Disclosure of rollover risks; ask people why
they think they’re different or what they’ll do if they have to roll over the
loan.
Marshmallow test: it wasn’t the ability to delay gratification
that predicted success, but environment and background of tested children.  Those who didn’t fear that it was now or never
for the marshmallow, who were confident that two marshmallows would appear
later, were more willing to wait. Without changes, people will not be able to
think clearly about taking payday loans.
Q: Why aren’t businesses competing with lower interest rates
to take market share?
A: the market is not competitive; these businesses are
centered around poor, minority consumers. 
Q: one of the options: offer people alternatives (online lenders)—make
that available.
A: Yes; sometimes people prioritize ease of getting the
money over searching.
Q: unfair to blame poor people for being stupid. People at
our income level are giving away trillions of dollars. It’s irrational for rich
people to vote, or to pick stocks instead of investing in Vanguard. Rich people
go to church, which is irrational.  [I
feel that the presenter was not blaming poor people for being stupid.]  We look at others’ bad choices. Why play on
our guilt by ignoring rich people’s errors? 
[Because rich people’s errors don’t immiserate them?]
A: I’m not saying that we’re smarter than them. There are
enormous positive benefits from getting poor people out of poverty, which is
hard to get out of without structures. 
Other market failures grounded on irrational behavior exist, but in this
case, even rich people should endorse helping poor people get not poor.
Q: but it has nothing to do with payday loans.  They have payday loans because no one will
sell them stocks. [?]
A: Payday loans are reinforcing poverty by trapping people
into loans they can’t pay. Let’s solve other problems too!
Q: Colorado example: what happened to the supply side in
Colorado?
A: many branches closed, but people still have access to
credit, with less interest and fees. 
Q: was there displacement into other states?
A: doesn’t know. 
Online lending is also a Q.  But
payday loans are still available in Colorado, capped at 35%.
Q: predatory practices generally are a problem: studies
about microloans in India & interest rates being quite high given low default
rates.
Tom Wesson, Mark Pelofsky, David Heller, & Erich
Schaeffer, York University, Global Business Experts Group, Voluble Insights,
Voluble Insights, Social Media Evidence in Commercial Litigation
Social media are useful for lots of reasons: (1) contemporaneous
reactions, not harmed by decay of memory; (2) don’t have to distort the
environment with a survey question.  You
can also risk losing control of a narrative where the other side uses social
media evidence and you don’t.  Complements
consumer surveys. Already being used by attys and experts in all kinds of
cases; courts are still figuring out how to make sense of it, but most courts
have found it probative. USPS sued Lance Armstrong for violating his agreement
by using performance enhancing drugs.  Harmed the Post Office instead of helping.  Challenge: show that goals of partnership, which
ended in 2004, were harmed by 2014 confession. 
We looked at social media (Twitter) for posts that talked about
Armstrong & doping, and found spikes corresponding to timing of events. Can
also get data for industry-specific bulletin boards. For Armstrong, peak
activity was much more than for Alex Rodriguez & Maria Sharapova who had
similar scandals.
Do people connect that to USPS?  Some do—and it’s timestamped.  Even two and three years after the interview,
people are still mentioning USPS in connection w/his doping.
Q: [but does it matter how many people talk about Armstrong
& doping without mentioning the
USPS?  OK, it turns out I misinterpreted
that question, which I now have.]  The
question asked was really whether there was any connection to negative events and the mention of the
USPS. For example, if he has a new girlfriend, does that cause a spike in
attention?  And do people mention USPS
when talking about that?
A: could look. But there are also memes featuring Armstrong
in USPS gear, so the negative association continues to be enforced.
Social media evidence from both sides: pink slime, or lean
finely textured beef, made by centrifuging beef trimmings.  Safe, leaner, cheaper and gets 20 lbs more
meat per cow; or a cheap filler used only in dog food at first that didn’t
belong in people food.  Spring 2012: ABC
ran a bunch of stories about it.  BPI,
the major maker of pink slime, took exception and sued for defamation, claiming
$1.9 billion in damages subject to trebling because of South Dakota’s Agricultural
Food Products Disparagement Act.  Blamed
ABC for the term “pink slime.”
Social media for BPI: very clear increase of use of the term
b/c of ABC’s reporting. Stories on ABC’s FB page received a lot of consumer engagement;
they were very popular ABC stories in terms of number of comments received
relative to other ABC stories.  Allegedly
false claims: not nutritious; not meat or beef; BPI committed fraud/impropriety
in acts w/USDA; not safe for consumption. 
All these claims were repeated/discussed 1000s of times on social
media. 
However, before ABC news mentioned pink slime, there were
more than 18,000 posts in the first three months of the year mentioning the term,
such as when McDonald’s and other restaurants announced they weren’t using it.
The line starts to go up the day before ABC’s report, b/c a number of other
outlets reported that USDA bought 7 million pounds of pink slime for use in
school lunches.  Hard to say all the
negative attitudes were driven by ABC’s reporting. Nor was an alternative for
the phrase: LFTB wasn’t used to identify this product in social media before;
98% of mentions used “pink slime.”
Q: correlation w/sales?
A: BPI closed 3 of 4 plants.
We work to clean the data: false positives, spam, irrelevant
posts, duplicates. Standards are evolving. Newness of field offers us
opportunity to apply cutting edge techniques.
One issue: expert may equate social media w/survey evidence,
but there are important differences. Not asking the same Qs, like what percentage
of overall population is confused—represents people on social media.  Other challenges: distinguish sarcasm from
truth; you have to read them.  Social
media is heterogeneous in a lot of ways.
RT: I wonder about the relationship between the use of this data
and courts’ already troubling tendencies to rely on anecdotes over data. Consider
for example the Armstrong fans or antifans or Armstrong-indifferent people who
don’t tweet even if they aren’t mad at the Post Office; how many people talk
about Armstrong & doping without
mentioning the USPS; and related baseline questions seem to me to make this
stuff extra risky, which is not in any way to say it shouldn’t be done.  Teach people the differences from surveys!
A: look for correspondences w/other evidence.  And sometimes using search with words won’t
work given how much is done online w/images.
Scott Hemphill & Jacob Gersen, NYU Law School &
Harvard Law School, Evergreening and the Coca-Cola Bottle
Bottle was introduced in 1917 when CC was really struggling
with copycats/fraud like Coke-Ola, Koke, etc. 
Sold at the pharmacy soda fountain, the syrup was often replaced
w/something cheaper/sweeter.  First, they
go to court a lot—it created and distributed three volumes that look like court
reporters of the Coca-Cola cases! 
Inherent vulnerability was the initially descriptive name from the coca
leaf and kola nut, which appeared on the label at first.  By 1903-05, the cocaine had mostly been
removed and the kola nut was only used in trace amounts.  So the suit against Koke led to claims of
unclean hands.
The bottle might help—Coke’s legal department came up with that,
not the marketing department, so go legal! 
There used to be just a diamond-shaped label, which was easy to emulate.  Contest chose a new bottle in 1915, then they
used a bunch of design patents in 1915 (ungainly and prone to tip), 1923, 1937
(looks more like a modern Coke bottle).  According to lore, they decided to use cocoa
pods to inspire the ridged/bulgy design. 
If true, sort of misdescriptive. 
1915 design patent and production 1916 model


Eventually, 1960, PTO allows registration of container shape as a mark.  Two forms of evergreening: additional patents
w/later expiration dates; trade dress protection as an end run around patent
protection.  May be either bad or good.
There are some additional design patents of doubtful validity.  1916 production bottle looks a lot more like
the 1923 patent than the 1915 design, so is the 1923 patent valid? (see this great article on tracking
the shape of the bottle from which the pictures above are taken).  It’s
possible, though also a stretch, to think that the 1916 bottle would infringe
the 1915 design if unauthorized.  But
once that 1915 patent expired, shouldn’t folks have been free to sell their own
bottles in that shape?  [I was expecting
a discussion of the on sale bar, maybe anticipation; that 1916 bottle sure
looks like it ought to trigger the on sale bar for the 1923 bottle.]
Evergreening is a common strategy in other areas, such as
pharma. Is there a link?  It may depend
on what we think we’re protecting. Aesthetic features of a bottle? Brand investment/source
identification? Exclusivity on attractive design?
Should Kellogg
treatment for functionality be applied to expired design patents as well as expired
utility patents?  Courts have
unhesitatingly said no, but perhaps they should hesitate.
Q: we have no idea what optimal incentives are in any IP
field.  Better to say: isn’t it interesting
to look at how law evolves when it has no idea what the welfare answer is?
Perpetual exclusivity was probably not what Congress wanted
under utility patent system; what about design/TM systems?
RT: [Role of incontestability is really significant here.  If you convince the PTO once to register your
design and wait five years, you can get perpetual protection even without actual
secondary meaning persisting over time. 
Congress wasn’t thinking about trade dress & incontestability’s
interactions (in part b/c it’s pretty clear they didn’t expect registration of
trade dress) and that creates a significant “perpetual patent” problem.] [And
by the way, you can get a registration through a presumption of secondary
meaning from showing five years of substantially exclusive use … which a design
patent will have given you, plus more years beside.  The PTO need not accept exclusive use as sufficient
evidence of secondary meaning, and it does not necessarily apply the
presumption in all product design cases, but the statute gives it a bunch of
freedom.]
[my love of TerraCycle as an example: TerraCycle puts its
fertilizer in recycled bottles, including recycled Coca-Cola bottles.  It’s an example of defendant-side
functionality; even if the bottle isn’t functional for people who are making
their own new bottles, it is for the business model that incorporates
recycling.]
Q: from this morning: look at internal and external evidence
about their intent to create secondary meaning and their success in doing so.
Q: possible rule providing that you can’t register a TM for
a design patent for five years after the expiration of patent protection?  [Also would have to know, as Sarah Burstein
has emphasized: What is the patented design?]
A: yes, that would affect incentives. The hesitation is that
maybe it’s ok to allow registrations. 
Source identification is often a good thing. The anxiety is that one form
of transient/temporary protection turns into something else.
Q: the problem is strategic behavior where a party seeks the
first right (design patent) to secure the second (TM).
A: does it distort claims made about the product during the
period you’re seeking protection? That would be a reason to try to avoid this
behavior.
Q: related to whether there’s intent—are firms trying to
earn a return on investment on brand? 
One should perhaps not be allowed to fall into trade dress protection,
but should have to show investments were made. 
[This would be an easier rule for courts to tolerate if we recognized a separate
role for unfair competition.]

from Blogger http://bit.ly/2GU5Crc

Posted in Uncategorized | Tagged , , , , , | Leave a comment

Student writing competition on tech law

Posted on May 3, 2019 by rtushnet
Georgetown Law’s Institute for Technology Law & Policy and The Georgetown Law Technology Review are pleased to announce a new student writing competition to encourage original writing in the field of tech law and policy.

2018-2019 TOPIC

Entrants are invited to submit papers addressing a legal or public policy question relating to artificial intelligence, machine learning, the use of data analytics and/or algorithmic decision-making. Example topics include: questions of data ownership, questions relating to transparency or testability, questions relating to intellectual property, privacy, consumer protection, competition, issues of bias and discrimination, or product liability; or subject-matter- specific legal issues arising from various applications of a technology. Preference will be given to papers that are relevant to current legal and public policy debates or present an original perspective.

PRIZE

Up to three winners will be selected, with a First Prize of $4,000, a Second Prize of $2,000, and a Third Prize of $1,000.
Winning papers may be selected for publication in The Georgetown Law Technology Review.



QUESTIONS?

from Blogger http://bit.ly/2Vfo8UU

Posted in Uncategorized | Tagged | Leave a comment

Commercial Speech and the First Amendment, NYC, June 3 (invitation)

Posted on May 3, 2019 by rtushnet

Register at this link.

From Yale Law School’s Abrams Institute for Freedom of Speech – The 4th Commercial Speech and Commercial Speech Conference
COMMERCIAL SPEECH POST-NIFLA v. BECERRA: LEGITIMATE CHECK ON COMPELLED SPEECH OR WEAPONIZATION OF THE FIRST AMENDMENT?
Panelists:
  • Robert Post – Sterling Professor of Law at Yale Law School, New Haven, CT
  • Coleen Klasmeier – Partner and Global Coordinator of the Food, Drug and Medical Device Regulatory Practice Area Team at Sidley & Austin LLP, Washington, D.C.
  • Jane Bambauer, Professor of Law, James E. Rogers College of Law, The University of Arizona, Tucson, AZ
Moderator:
  • Joel Kurtzberg – Partner, Cahill Gordon & Reindel LLP, New York, NY
While the United States Supreme Court’s recent decision in National Institute of Family and Life Advocates v. Becerra is technically not a commercial speech case, the decision is part of a recent trend of cases applying strict scrutiny, with few exceptions, to “content-based regulations of speech,” defined broadly as any law that targets speech based on its communicative content. Assuming the Supreme Court means what it says in NIFLA and other recent decisions, how far are the Justices willing to go in undoing government regulation of speech? Does NIFLA mark the death-knell of Central Hudson? Will strict scrutiny apply to most future regulations of commercial speech? Is the future one filled with challenges to the vast array of governmental regulation that engages speech?
THE CONSUMER “RIGHT TO KNOW” VERSUS THE FIRST AMENDMENT
Panelists:
  • – Johan Verheij Memorial Professor of Law and Director, Center for Business Law and Regulation, Case Western Reserve University School of Law, Cleveland OH
  • Rebecca Tushnet – Frank Stanton Professor of the First Amendment, Harvard Law School, Cambridge, MA
  • – Partner, Appellate and Constitutional Law Group and Co-Chair, Administrative Law and Regulatory Practice Group, Gibson, Dunn & Crutcher LLP, Washington, D.C.
Moderator:
  • Jonah Knobler, Partner, Patterson Belknap Webb & Tyler, New York, NY
Increasingly, governments at all levels are requiring product manufacturers to disclose information in their labeling or advertising, and plaintiffs are seeking to hold manufacturers liable in tort on the theory that the failure to disclose such information is “misleading” or “unfair.” Meanwhile, the subject matter of these disclosure requirements (or asserted requirements) continues to expand beyond traditional health-and-safety warnings to include information about, e.g., country of origin, inclusion of GMO ingredients, and use of ingredients or materials “tainted” by unfair labor practices or international conflicts.
This panel will address the tension—if any—between such mandatory disclosure regimes and manufacturers’ First Amendment right to refrain from compelled speech.
DRAWING THE LINE BETWEEN “NEWS” AND COMMERCIAL SPEECH
Panelists:
  • Mary Engle – Associate Director, Division of Advertising Practices, Federal Trade Commission, Washington, D.C.
  • Paul Safier – Of Counsel, Ballard Spahr LLP, Philadelphia, PA
Moderator:
  • Terri Seligman – Partner and Co-Chair of the Advertising, Marketing & Public Relations Group, Frankfurt Kurnit Klein & Selz, New York, NY
This panel will focus on recent decisions defining what is and is not commercial speech from the broad perspective of newsworthiness. Recently, there have been several decisions in which the courts and National Advertising Division have been forced to distinguish between news and commercial speech. Are we seeing a trend toward more liberal interpretations of “news” or “newsworthiness”? What implications does this line-drawing have for the right of publicity, native advertising, and custom content? Where will the increasing use and monetization of data fall on the news/commercial speech divide?
Hosted by
Patterson Belknap Webb & Tyler1133 Avenue of the Americas
New York, NY 10036
Additional sponsors: Ballard Spahr LLP, Davis Wright Tremaine LLP, Frankfurt Kurnit Klein & Selz PC
Application for New York accreditation of this program is currently pending.

from Blogger http://bit.ly/2V1uIJu

Posted in Uncategorized | Tagged , , , , , | Leave a comment

Commercial Speech and the First Amendment, NYC, June 3 (invitation)

Posted on May 3, 2019 by rtushnet

Register at this link.

From Yale Law School’s Abrams Institute for Freedom of Speech – The 4th Commercial Speech and Commercial Speech Conference
COMMERCIAL SPEECH POST-NIFLA v. BECERRA: LEGITIMATE CHECK ON COMPELLED SPEECH OR WEAPONIZATION OF THE FIRST AMENDMENT?
Panelists:
  • Robert Post – Sterling Professor of Law at Yale Law School, New Haven, CT
  • Coleen Klasmeier – Partner and Global Coordinator of the Food, Drug and Medical Device Regulatory Practice Area Team at Sidley & Austin LLP, Washington, D.C.
  • Jane Bambauer, Professor of Law, James E. Rogers College of Law, The University of Arizona, Tucson, AZ
Moderator:
  • Joel Kurtzberg – Partner, Cahill Gordon & Reindel LLP, New York, NY
While the United States Supreme Court’s recent decision in National Institute of Family and Life Advocates v. Becerra is technically not a commercial speech case, the decision is part of a recent trend of cases applying strict scrutiny, with few exceptions, to “content-based regulations of speech,” defined broadly as any law that targets speech based on its communicative content. Assuming the Supreme Court means what it says in NIFLA and other recent decisions, how far are the Justices willing to go in undoing government regulation of speech? Does NIFLA mark the death-knell of Central Hudson? Will strict scrutiny apply to most future regulations of commercial speech? Is the future one filled with challenges to the vast array of governmental regulation that engages speech?
THE CONSUMER “RIGHT TO KNOW” VERSUS THE FIRST AMENDMENT
Panelists:
  • – Johan Verheij Memorial Professor of Law and Director, Center for Business Law and Regulation, Case Western Reserve University School of Law, Cleveland OH
  • Rebecca Tushnet – Frank Stanton Professor of the First Amendment, Harvard Law School, Cambridge, MA
  • – Partner, Appellate and Constitutional Law Group and Co-Chair, Administrative Law and Regulatory Practice Group, Gibson, Dunn & Crutcher LLP, Washington, D.C.
Moderator:
  • Jonah Knobler, Partner, Patterson Belknap Webb & Tyler, New York, NY
Increasingly, governments at all levels are requiring product manufacturers to disclose information in their labeling or advertising, and plaintiffs are seeking to hold manufacturers liable in tort on the theory that the failure to disclose such information is “misleading” or “unfair.” Meanwhile, the subject matter of these disclosure requirements (or asserted requirements) continues to expand beyond traditional health-and-safety warnings to include information about, e.g., country of origin, inclusion of GMO ingredients, and use of ingredients or materials “tainted” by unfair labor practices or international conflicts.
This panel will address the tension—if any—between such mandatory disclosure regimes and manufacturers’ First Amendment right to refrain from compelled speech.
DRAWING THE LINE BETWEEN “NEWS” AND COMMERCIAL SPEECH
Panelists:
  • Mary Engle – Associate Director, Division of Advertising Practices, Federal Trade Commission, Washington, D.C.
  • Paul Safier – Of Counsel, Ballard Spahr LLP, Philadelphia, PA
Moderator:
  • Terri Seligman – Partner and Co-Chair of the Advertising, Marketing & Public Relations Group, Frankfurt Kurnit Klein & Selz, New York, NY
This panel will focus on recent decisions defining what is and is not commercial speech from the broad perspective of newsworthiness. Recently, there have been several decisions in which the courts and National Advertising Division have been forced to distinguish between news and commercial speech. Are we seeing a trend toward more liberal interpretations of “news” or “newsworthiness”? What implications does this line-drawing have for the right of publicity, native advertising, and custom content? Where will the increasing use and monetization of data fall on the news/commercial speech divide?
Hosted by
Patterson Belknap Webb & Tyler1133 Avenue of the Americas
New York, NY 10036
Additional sponsors: Ballard Spahr LLP, Davis Wright Tremaine LLP, Frankfurt Kurnit Klein & Selz PC
Application for New York accreditation of this program is currently pending.

from Blogger http://bit.ly/2V1uIJu

Posted in Uncategorized | Tagged , , , , , | Leave a comment

Legal Applications of Marketing Theory, part 2

Posted on May 3, 2019 by rtushnet

Dominique Hanssens, Natalie Mizik, & Lorenzo Michelozzi,
UCLA Anderson, Univ of Washington, Cornerstone Research, Brand Value, Marketing
Spending and Royalty Rates
Brands can create value, but require ongoing marketing. When
licensed, disputes can arise about royalty rates and marketing
support/maintenance effort. Can we measure the financial value of a brand? Quantify
relative impact of brand and ongoing marketing spending?
Lots of effort goes into valuing brands. Five major brand
value entitities: Interbrand (top 100); Millward Brown, Brand Finance (top
500), Forbes, Eurobrand (top 100 corporate parents). What methods? Only two
major methodologies for economic use value. (1) Earnings split: NPV of
brand-specific earnings of the business. 
(2) Relief from royalty: NPV of notional licensing fee that a company
would have to pay for the use of brand. 
In principle, both should yield approximately the same estimate. Significant
differences between the various list reflect differences in assumptions of
respective models, not differences in methodology.
In the top 30, only 5 brands are common in the top 30 to all
sources in 4 2018 valuations.  Amazon,
Apple, & Google occupy the top spots. 
Only 35 brands are common to all 4 lists. Amazon’s valuation varies from
70-150 billion.  Aggregate value of 100
brands on Millward Brown’s list $4.83 trillion is more than 2.2x Interbrand’s $2.02
trillion.  There’s not even consensus on
direction of change in brand value for the majority—18 of 35—common brands
featured on all 4 lists. 
Why is valuation difficult? Brands have multiple effects on
different groups.  Consumers aren’t the
only audience.  Employees (some evidence
of motivation/effect on firm costs), investors (cost of capital), regulators
(better contracts, concessions on infrastructure), competitors, business
partners.  Demand-shifting effects and
cost-shifting effects.
Pessimistic view of current state of art.  What can be done?
IRS is very interested in brand valuation, especially w/US
companies with overseas affiliates that pay royalties into the US.
Brands require constant marketing investment.  They may have different returns to marketing
investment—A brand that has to keep marketing to generate sales has a weaker “brand
effect” than one that would not lose many sales if it stopped marketing.  Probability of choice w/o marketing stimulus:
brand effect.  Helps us understand which
sales come from marketing versus from brand. 
Q: do you equate brand and product?  Do they have to be same quality?
A: that’s another variable; have to control for that.  Case-specific.  If it’s product level you have to do it for
each product separately. A company may rely more on marketing for one division
than for another, or in South America than in Europe.  Product effects tend to be heterogeneous.  Nivea is bottom tier face cream in France, higher
in other countries. The rest is all accounting; base royalty rates on that part
of the revenue generation that can be attributed to the brand. 
Extensions: brand might not just influence final
consumers.  Can you get a product on the
shelf in various stores? Is it brand strength/promise of marketing dollars for
the brand?  Car dealerships work this way
in the US.  Questions of persistence: how
long will they last?  They do need some
maintenance at least w/the presence of the product/service.  Perrier was off the market for 4 months for
having traces of benzene; 3 years later, they still hadn’t recovered.  Careful about inferring long term impacts of
brand effect.
Q: what’s the best way of dealing w/price?
A: it’s a variable that you control for. Price may be
function of brand strength, but always control for it.
Q: it has to be a thought experiment though (the intercept point
that’s # sales w/o marketing) b/c you can’t set things like distribution to
zero (which was what happened with Perrier when it left the market).
Fit into legal dispute: in principle, many such disputes are
possible. Any situation in which brand is monetized by someone who doesn’t own
it: licensing, franchising, royalty rates/marketing support disputes,
intracompany transfer pricing agreements w/tax consequences. Company argues
that the brand valuation is lower than the tax commissioner thinks b/c of the
marketing investment in local jurisdictions and so low royalty payments back
into the US are justified.  Qs relate to
duration of effects, how the brand itself is perceived/built in various markets.  Judges can be very sophisticated about how
marketing works. Challenge: the model that courts use is grounded in tangible
assets w/certain depreciation rates. You have to recast that in the light of
marketing and branding, which are different.
My Q: how if at all do these standard approaches work for a
small business that doesn’t trade in multiple countries?  A business that targets a subset of
consumers, e.g., doctors?  Easier or
harder to calculate?
A: There is no validated methodology for small business. You
need the data of a publicly traded company. You can do something but can’t get
an ultimate number for the value b/c experts have to make assumptions, which
end up controlling the outcome (e.g., what’s the useful lifetime of a brand?).
Even with the public companies you’re getting ranges like $600 million to $3 billion.
For a small business: You can use something like a multiplier and find
comparables that scale them up. It’s just not feasible with a sufficient degree
of precision.  [It strikes me that this
answer is super helpful to proponents of injunctive relief in cases of
infringement that don’t involve global brands. 
So I might aim this kind of expert at an irreparable harm finding.]
Q: why not ask what would happen if all other brands’
marketing went to zero too?
A: looking for a differential.
Q: sure, but you’d get a different answer. You need an
answer to the Q of what an appropriate benchmark is, which is an issue with operational
definitions of brand value.
A: yes, to do it, you inevitably rely on assumptions. 
Q: sure, and if I’m opposing you I argue that you taking all
competitors down to zero is a better construct.
Anindya Ghose & Avigail Kifer, NYU Stern &
Cornerstone Research, Search Engine Advertising, Trademark Building, and
Consumer Intent
SEO advertising is competitive and lucrative. Search engines
are two-sided markets.  TM bidding: using
keyword ads for TMs you don’t own can in theory increase exposure of lesser
known brands and benefit consumers using the TM as a generic term (e.g., Kleenex)
[or using it as a shorthand because it’s top of mind even though they have no
particular preference for that brand]. But TM bidding might also in theory
prevent/delay consumers from reaching the TM owner’s site or create confusion.
Antitrust Qs: Does TM bidding contribute to consumer
confusion? (It depends on what the resulting ad looks like). Does restricting
TM bidding inhibit consumer price search? Does it prevent the most relevant ads
from appearing in search results?  Would
consumer search costs be affected by restricting TM bidding? If you can’t see
ads from Costco, Wal-Mart, etc. when you search 1800 Contacts, then you may be
getting less relevant ads. But if you have to scroll through a zillion ads,
search costs may go up.
Lots of academic literature on related topics, including
effects of competitor’s ad on your ad and tradeoff effects of your ad on your
organic link. Type of device used can affect search costs and how you react to
them. Mobile search implies something different about intent of search as well.
Presence of ads can increase total clicks and coversions: Example:
Nike w/no ad at all gets 7.9 million clicks on its site; if Nike buys its
keyword, then 5 million clicks go to the ad and 8.1 million clicks go to the
organic result. Presence of ad changes consumer behavior.  Q: does it affect the competitors? A: It
depends.  Where does it come from? Either
from market expansion or from existing competitors.  Touches on differing intent of search
queries.
Navigational searches: what is the search for? Specific product
name: Samsung Galaxy S7 Edge—you may want different retailers but not competing
products (though you might want those too). 
TM—maybe different.  Look at click
distribution, click through rate (conditional on ad rank), conversion rate
(conditional on ad rank), bounce-back rates, dwell times—might give you a sense
of whether consumers realized they didn’t want the result very quickly.
1800 Contracts: 1800 got big companies to agree not to
advertise on 1800’s keywords and vice versa.  Did that violate antitrust law?  [Disclosure: I was FTC’s TM expert.  They were 1800’s search engine data people;
we have not previously interacted.]  We
had 10 years’ data for Google and 5 for Bing. 
We had granular metrics.  Very few
(less than 1%) of the ads had price information.  In response to Q: yes, consumers could click
and compare prices.  People who don’t
search “cheaper than 1800” are not looking for prices. [That is a weird assumption.]  You have to imagine a but-for world in which
these agreements didn’t exist.  What
would have been the results? You have to know Google’s algorithm/ranking.  Also, just b/c ads hypothetically would have
shown up doesn’t mean consumers would’ve engaged with those ads.  Nontrivial, easy to rebut assumptions.  [Which convinced a pretty hostile ALJ and
also the Commission, by the way!  Though
this is definitely not my area, I will point out that there was some data about
what happened when these agreements weren’t in effect with particular
competitors; those competitors did better in search/conversion.]
Regulators are taking on digital ads: EC fined Google $1.7
billion for digital ad restrictions. 
GDPR and its fundamental flaws: SMEs have nontrivial compliance costs
w/display advertising.  Algorithmic/data
divide is the new digital divide.  Is it the
savvy who monitor how and why they’re getting advertised to, or the marginalized?  [I just saw a tweet suggesting that GDPR use
in the US for Microsoft products is much higher than in the EU, since Microsoft
adopted a global rule.] 
Fake news: do consumers perceive FB/Instagram ads as having
been endorsed by the platform?  Must
Instagram influencers disclose relationships when endorsing products? Can consumers
differentiate b/t ads and other content? 2018 class action against Fyre media.
This will be an important issue. 
Distributional effects will be important. 
New tech by blockchain can help data quality.  Until 2017, we knew that the system had
limitations: a lot of fraud.  $30 million
every day for hackers arrested by FBI. Because of lack of transparency in
digital ecosystem, there are disputes b/t authorities, platforms,
intermediaries, ad agencies, consulting agencies like Accenture (which are now
ad agencies), etc. Blockchain introduces much needed transparency in the system.
Fraud and its magnitude would be hard to prove in past.  Now we have the data.
Q: price per click—is it long for this world? Paying for
clicks is uncomfortable for the advertiser. 
A: we’ve gone the other way. Ability online for firms to
identify, quantify path to purchase journeys has dramatically include. 
Q: why not bid for conversions?  [A: Some of it is.]  Why isn’t it all conversion?  [My related suggestion: Because marketing is
still fundamentally probabalistic in a lot of ways?]
A: many products, people don’t buy on the internet. Consumers
still want to go to your website, examine alternatives. Attribution issues are
getting easier but still exist.  If you’re
searching while you’re in the store, for example, we may be able to connect
those. 
Q: is there an argument to be made about keyword ads causing
dilution?  Even if the consumer isn’t
harmed, the brand is.
A: hasn’t looked at it. 
We had a branding expert.  [My
answer: US law specifically allows comparative advertising as an exception to
dilution; there is no legal support for the dilution argument here.]

from Blogger http://bit.ly/2ZUCecT

Posted in Uncategorized | Tagged , , , , , | Leave a comment

Legal Applications of Marketing Theory, part 1

Posted on May 3, 2019 by rtushnet

Jacob Gersen & Joel Steckel, Harvard Law & NYU Stern,
Conference Introduction
Steckel gave a talk on dilution years ago and RT tore him
apart (sorry!); since then, he’s done work with Chris Sprigman to answer some
of the Qs I raised and I was right (not sorry!).  Has stayed interested in legal applications
of marketing theory.
Saul Levmore, Chicago Law, Piece Problems: Component
Valuation in Marketing and in Patent and Tort Law
Marketing literature is more interesting than legal literature
here.  We have analogous problems in negligence:
if 3 people jointly cause harm, how do you value the harm of each?  For patent infringement: how important to the
value of the overall product is one ingredient that was found to infringe?  It’s a more interesting problem than it looks
b/c of worries about over- and underdeterrence. Or a case in which someone
patents playing a song on each floor of a parking garage so they can remember
which floor they’re on: if they don’t increase the cost of parking after
implementing this, how do you figure out what the damages are?  [He thinks costs saved in not helping people
find their cars.]
Paper discusses how some solutions in some areas transfer
well, and others don’t.  B/c the
contribution to the joint tort car accident is a one-off, it may not transfer
well. But valuation is a general problem: figuring out how valuable a third baseman
is to a particular team is actually the same problem, b/c a teammate might be
more or less valuable depending on who else is on the team.  The underlying relationship may not be
linear.  Our task: we should look to
other fields to see how they do or could solve the problem.  Though stresses that doesn’t mean the
solutions elsewhere work there, or would work here.
Q: how do you think about heterogeneity of preferences?
A: in some settings we don’t care: we’re trying to evaluate
a market solution. In others, he hopes it’s not a serious problem b/c mostly we
can look to market solutions or ask individual people (surveying).  One possibility: ask people what it was about
the product they like, or ask them to pick among products. People may not be
able to name what they like, but that’s a signal it might not be
important.  But he doesn’t yet know what
to do with what happens if only 4 of 50 mention a feature is important to them;
that might help convince a court that it’s not important. 
Q: conjoint analysis could be meaningless where other
measurements of damage are better. If you have a broken fridge in a house it
could knock $4000 off the value of the house—but if it can be fixed for $50 that’s
what should happen instead.
A: agrees.
Q: reasonable consumer concept. Good marketers think
precisely the opposite: they segment markets, then go after a segment. The whole
point is the heterogeneity.  Groups do
have different valuations for different aspects of products.
A: there’s some doubt, but it’s not as silly as you make it
sound. General approach is to assume that law or the market is aimed at the
reasonable/average consumer; if you know you’re not normal, you should speak
up.  Other areas of law think that law
should pick extreme solutions, forcing information out of people who are “normal”—depends
on the costs and benefits of revelation. 
Sometimes you might pretend to be normal to avoid the costs of valuation
(e.g., you cut I pick). Usually law is unsympathetic to the non-average person,
e.g., a nuisance claim by a person who can’t stand music and lives near a
church.  Law is in part sensitive to the
probability of fraud here.
Q: often sees calculations of actual price compared to
but-for price—but what is the but-for price? 
Is it a price that would’ve kept the same market share?  A price that would reflect a Nash equilibrium
of a new market without the feature b/c competitors would also have reacted to
the absence of the feature? A price equivalent to average consumer’s WTP for
that attribute/its absence?
A: Law & econ answer: paper talks about this and he
thinks there’s no single right answer. 
B2B transactions would be very different from consumers.  General reaction: many ways to do it.  He wants to identify several different
methods and not tell people in advance which will be used; that prevents
strategic behavior. Uncertainty is a valuable part of the system though we make
believe we’re committed to treating like cases alike.
Q: what happens when it’s not 6 elements but 1000, as in a
cellphone? Then when you do the conjoint analysis it’s down to 6, distorting
the results.
A: when it’s 1000, the chance I could build the cellphone
without it is much greater, so the solution should be: if I’d known the problem
upfront, what would have been my cost to avoid it? That would be the best way
to go about measuring those damages—the beginning rather than the end
consumer.  That might also be true when
there are only 3 elements, but it’s more likely w/1000.
Peter Golder, Aaron Yeater, & Mike Schreck, Dartmouth
College, Analysis Group, & Analysis Group, Assessing Trademark Strength
without Surveys
Secondary meaning: in search of a more rigorous way to deal
with the qualitative aspects of an inquiry. Law makes claims about how
consumers perceive product designs that have implications for measurement. Secondary
meaning: “in the minds of the public, the primary significance is to identify
the source of the product rather than the product itself.”  Considers evidence that product features were
intended to indicate source and that the firm succeeded in doing this.  It’s not just that the design needs to be recognizable
but that it signal the specific purpose of identifying source, and that implies
an intentionality that can be assessed.  Wal-Mart: specific assertion about
consumer behavior: predisposition to equate a product design feature with a
source doesn’t exist. The SCt didn’t undertake extensive empirical analysis to
arrive at that conclusion, but it is the rule.
Barriers to secondary meaning: primary meaning of product
design features is to provide functional or aesthetic/ornamental elements.
Extent of advertising for functional benefits of features. Extent of
marketplace crowding and noise with historical or current uses by
competitors/third parties. Duration of existence in market.  Inconsistent use of product design features
in the market.  Documentary/archival
evidence can be important to these elements. 
What else?
RT: I’d add: what else is in use on the product to indicate
source. European concept of the limping mark that is recognized as going with,
e.g., a Kit Kat, but never used to pick candy. Response: in some ways that’s
about materiality.  [I agree!]
Comment: visibility/lack of visibility: consumers have
easier/harder times perceiving certain things as marks.  Identifiers inside a jacket versus inside
(including observability at the time of purchase, so a standard label on a
jacket may be doing source identification work).  How do consumers make categories?  If you’re categorizing “birds,” hollow bones
are perfectly predictive but not observable, so that’s not how ordinary people
implement the category “birds.”  [I really
like use of category theory though I think we’re still, as here, working out its
implications.]
Standard actions to create and maintain secondary meaning: Look
for internal planning documents about intent to make features source identifying;
look for documents w/clear communication objectives for attempting to establish
secondary meaning and measures progress; company carries out planned
communication (e.g., look for ads); advertising “famous,” “iconic,” “exclusive,”
“unique,” “signature”; aggressively policing asserted marks to protect
exclusivity.  Qs? [Also interestingly,
this framework would be consistent with Mark Lemley’s
argument that having—and thus allowing/not policing against—parodies should
be a requirement for fame, which would turn into media coverage rather than
competition.]
RT: This is a legal question: the doctrine right now
requires none of this, because the theory is always if there is consumer
confusion then there is something protectable. 
So you can have all this and it won’t cover the waterfront unless courts
also say that its absence is dispositive. 
There are cases/proceedings finding protection without any of these
things, e.g., the TTAB saying that the University of Wisconsin can fail to
police/“impliedly license” its marks for 70 years and then (re)claim its TM
rights.
Comment: but perhaps it’s just implausible that this creation
of secondary meaning will really happen without the marketers picking up on it
and talking about it internally so there will be documentation.
Marketplace outcomes related to secondary meaning: Complement
to surveys: media provide evidence of success or failure of calling out features
as source identifying. Traditional/social media.  Company websites (including past versions).
Online search behavior—if they are source identifiers, consumers should be
trying to search by them at least to some degree [which raises the limping mark
issue again]. Online reviews. % of sales w/product design features. Company
monitors and documents progress towards achieving communication objectives related
to creating or maintaining secondary meaning. 
[I like the suggestion, which I’m not sure has shown up in the cases,
that advertising functional features has a separate impact on secondary meaning—it’s
not just that it indicates
functionality; it also tells consumers that they shouldn’t rely on the touted
feature to indicate source.]
The law on what’s required for secondary meaning varies by
circuit.  [They categorized intentional
copying by D as an “outcome” but that doesn’t fit in their framework at all. The
missing concept: functionality—if there are good noninfringing reasons to copy,
then copying tells us nothing about secondary meaning. That factor shouldn’t be
in the legal tests, at least without requiring intentional efforts to confuse
in particular and not just to copy, and their framework helps explain why.]  If you can luck into secondary meaning, why
would courts care about “look for” advertising?
Cass Sunstein, Harvard Law School, Popcorn: Mandatory
Information Disclosure:
How to value the benefits of information? Pervasive unmet
challenge in policy all over.  Principal
focus is on regulatory agencies, but courts and private sector entities are also
trying to value info.  Toy/discussion
framework: people might want information for instrumental value—they can know
whether to buy a product, get health care, change their lives. Our primary
approach in the past. There’s also hedonic value: information might make you
happy or sad, and people might be willing to pay to get information that makes
them happy, or willing to pay to avoid information that makes them sad. Cognitive
value: learning may be something that people value. Maybe it’s just curiosity—how
far from the earth to the moon? Or maybe it will reinforce their model of the
world, or maybe it’s intriguing if it undermines their model of the world.  Sign issue: the valence of instrumental,
hedonic, cognitive value may be positive or negative.  Learning your client is guilty may have
negative value. 
Recent data: knowledge is not always preferred. Mesolimbic
reward circuitry selectively treats the opportunity to gain knowledge about
favorable but not favorable outcomes as a reward to be approached. WTP to
receive or avoid knowledge was tied to participants’ expectations about whether
info would be positive or negative.  Roughly
1/3 in trials chose ignorance.
Asking consumers whether they’d want to know: if they’ll get
Alzheimer’s, whether their partner cheats, year of death, number of calories,
whether there’s heaven (slightly lower percent wants to know whether there’s
hell), predisposition to get cancer.  Alzheimer’s:
47% want to know, $107 WTP (average; median is significantly lower). Cancer:
$115, 58%.  Spouse cheats: 57%, $121;
Death: 27%, $154; calories, 43%, $49 (annually, contingent on wanting to know);
weekly cost of appliance operation: 60%, $44. 
Safety ratings of tires: 67%, GMO, 60% $101, conflict minerals 55, $109,
Online performance of airlines, 57%, $105, GHG emissions from car, 57%, $110. Some
would pay not to receive calorie info, apparently for hedonic reasons.
On yes/no, a lot of heterogeneity out there. Usually around
55-65% even want to know, for typical disclosures. Two categories of not
wanting to know: sometimes it’s bad news, and many people don’t want bad news;
sometimes it is who cares. WTP numbers vary and are usually pretty low.
There are a lot of labels out there: calorie, fuel economy,
energy efficiency, conflict minerals, graphic warnings, country of origin, greenhouse
gass, nutrition, dolphin-safe tuna.
Doing CBA: Four approaches. (1) Benefits not feasibly quantifiable,
so silence is golden (fuel economy labels, conflict minerals).  Common but he hates it.  Q re actual behavior v. expressed WTP: there’s
limited evidence about this, but people who use calorie labels are likely to
have high self-control whereas people who don’t want calorie labels don’t have
high-self control.
Observation: WTP of those who want to know when they’ll die
is higher even though the percentage is low—preference intensity varies.  Payment willingness might be about how likely
it is you’ll get the information some other way.
Comment: hedonic value of information may be one-time
whereas cognitive is persistent. 
A: Hedonic damage of knowing the year you will die might be
long-term.  More generally, the toy model
here uses a rational actor model, but that’s not complete.  People don’t want exposure to info inconsistent
with their political beliefs. But on average people are mistaken in hedonic
forecasting: they aren’t as unhappy with getting inconsistent info as they
thought they’d be, in intensity and duration. Might be present bias or failure
to forecast adaptation. 
Q: why ask such self-directed questions? A lot of policy Qs
will be: do you want to know how many people will die in our next war?  You might not be WTP to know the capital of
New Zealand, but be WTP for everyone in the country to know that.
A: our labeling Qs are asking about whether you benefit from
a label.
Q: but if you asked “do you want your kids to know the
calories in their food,” the answer might be very different.
A: is that the right Q for info disclosure benefits?
Q: better than saying “do you want to know.”
A: you might want to know the benefits your children get
from that.
Q: research on organizations suggests organizations may have
special difficulties processing information they’re not set up to receive.
Some discussion about the “year you’ll die” question: did
they believe it? Did they think they could “fight” it once they knew? Sunstein
thinks the survey had an implicit “work with me here” message and that people
got it.  In Europe, Diet Pepsi is Pepsi
Max—Diet Pepsi was punitive, “good for me.” 
That maps onto a lot of an actual driver of responses.
He thinks the data quality of MTurk varies from excellent to
pretty good—if you compare results to nationally representative surveys, they’re
usually pretty close—he wouldn’t expect a huge variation though some percentage
variation wouldn’t be surprising.
Commenters: one had really bad MTurk experience; another has
had varying experiences. Depends on the kinds of Q you ask; these Qs were
interesting and meaningful and some marketing Qs would be less so.  Some evidence that MTurkers in some parts of
the world sit in the same rooms and consult on answers.
Q about relationship of answers to how optimistic people are
overall: e.g., date of your child’s death (he thinks learning it would always
be painful, though I don’t know—2115 might be a pretty impressive answer,
albeit an unlikely one).  Optimism bias, hedonic
forecasting error, illusion of control—distorting factors. Magnitude of effect
depends on Q.
For policy analysis, we’re trying to look at end states:
e.g., for energy efficiency labels, how much would society gain in reduced
emissions/particulate matter. That doesn’t capture all of the relevant values
if people are made sad by the information. 
Got interested in that when calorie labeling was extended to theaters
and he got the response “you ruined popcorn!” 
Marketers intuitively understand this—but there’s less understanding of
the relationship b/t instrumental and hedonic or of the malleability of the
hedonic.
Q: relationship between avoidability of info/display and
preferences?  E.g., calorie labels that
are impossible to miss [nothing is impossible to miss] versus on the back.  Home energy reports: a lot of people don’t like
them even if they will save money with them. 
Might suggest that you could respond to heterogeneity by differing
presentation/availability.

from Blogger http://bit.ly/2V17djQ

Posted in Uncategorized | Tagged , , , , | Leave a comment

false advertising claim based on alleged misbranding of drug as supplement fails

Posted on May 2, 2019 by rtushnet

Amarin Pharma, Inc. v. Int’l Trade Comm’n, Nos. 2018-1247,
2018-114, 2019 WL 1925649, — F.3d – (Fed. Cir. May 1, 2019)
The court of appeals upheld the ITC’s decision not to
institute an investigation into Amarin’s complaint of an unfair method of
competition or unfair act under 19 U.S.C. § 1337(a)(1)(A). Amarin sells
Vascepa, a prescription drug that consists of the omega-3 acid commonly known
as “EPA,” synthetically produced from fish oil. Vascepa is the only purified
ethyl ester E-EPA product sold in the United States as an FDA-approved drug
(for reducing triglyceride levels in adults with severe hypertriglyceridemia).
Amarin filed a complaint alleging violations under § 337 of
the Tariff Act of 1930, as amended. Specifically, certain companies were allegedly
falsely labeling and deceptively advertising their imported synthetically
produced omega-3 products as (or for use in) “dietary supplements,” where the
products are actually unapproved “new drugs” as defined in the FDCA.  This allegedly constituted an unfair act or
unfair method of competition under § 337 because it violated § 43(a) of the
Lanham Act, and also violated the Tariff Act “based upon the standards set
forth in the FDCA.” Amarin sought to exclude synthetically produced omega-3
products from entry into the United States.
The FDA submitted a letter urging the Commission not to
institute an investigation, arguing that the FDCA precludes any claim that
would “require[ ] the Commission to directly apply, enforce, or interpret the
FDCA.” In addition, it argued that the Commission should decline to institute
an investigation based on principles of comity (which I didn’t know was federally
a thing).  The ITC ultimately held that
Amarin’s allegations were precluded by the FDCA.
The Federal Circuit endorsed the Ninth Circuit’s view that,
“[b]ecause the FDCA forbids private rights of action under that statute, a
private action brought under the Lanham Act may not be pursued when, as here,
the claim would require litigation of the alleged underlying FDCA violation in
a circumstance where the FDA has not itself concluded that there was such a
violation.”
Here, the alleged violations of § 337 were “based entirely
on—and could not exist without—the FDCA.” For dietary supplements, affirmative
FDA approval isn’t required.  Whether
there’s been a violation should in the first instance be resolved by FDA
guidance about whether these products are “new drugs.” 
[The way I teach this is that a claim is precluded where it
can only exist—there can only be falsity—because the FDA exists and has
rules.  If, by contrast, there is alleged
falsity that could exist in a counterfactual world without the FDA, then the
claim should not be precluded.  That
doesn’t rule out using FDA standards to help judge falsity in the world we
actually have, though.  For example, FDA
requirements may well shape consumer understanding of what the word “generic”
means—but even without FDA requirements, the word could have a cognizable and
falsifiable meaning.  Here, however, the
drug/supplement distinction is allegedly created only because the FDCA
distinguishes them.  And reformulating
Amarin’s claim to avoid preclusion might be difficult—it’s perhaps plausible
that consumers think differently about the accused products because they’re
labeled supplements and not prescription drugs, but that difference seems
likely to favor the prescription pharmaceutical, though I can imagine situations in which consumers think supplements are “milder” or less likely to have side effects.]
Anyway, “Amarin’s claims are precluded at least until the
FDA has provided guidance as to whether the products at issue are dietary
supplements.”  That’s the ITC’s position;
the US as amicus apparently sought an even broader ruling of preclusion regardless
of whether the FDA has provided guidance, but the court of appeals declined to
reach the issue.
Pom Wonderful
didn’t change the analysis. The case “did not open the door to Lanham Act
claims that are based on proving FDCA violations.”
A dissent would have found lack of appellate jurisdiction
over a decision not to institute an investigation, and would have instead exercised
mandamus jurisdiction and concluded that Amarin didn’t show that the
“extraordinary remedy” of issuing a writ of mandamus was appropriate.

from Blogger http://bit.ly/2VDJQRF

Posted in Uncategorized | Tagged , , | Leave a comment

Recommended podcast on multilevel marketing

Posted on May 2, 2019 by rtushnet

The Dream by Stitcher.

Excellent look at how multilevel marketing companies succeed
at avoiding regulation and at convincing enough people to try them—and convincing
them that their subsequent failure is their own fault and not intrinsic to the
model—to make the people at the top a lot of money.  Both gender and the collapse of real economic
opportunity for many people in the U.S. play big roles—the American mythos of
success being a matter of wanting it enough, combined with women’s desire for
flexible work that will allow them to support their families in both economic
and noneconomic ways, makes MLMs seem like a plausible response to rather than a
symptom of toxic inequality.  There are
many striking moments, including the justifications that people in the “upline”
use to explain why it’s ok to take money from losers—I mean, from people who
lack sufficient motivation to succeed.  (Interestingly, the industry mouthpiece who
appears in the last episode does not push that line, contrary to all the
individual MLMs trying to recruit “sellers”—instead, he would prefer to
characterize most “sellers” as people who sign up because they like the product
and want a discount, even though he admits that almost all of them want to be
understood as sellers/businesspeople.) One woman with 150 people in her
“downline” makes (just) $42,000 a year—which raises the question of how much
money is going to the MLM, since that’s a small fraction of the money it takes
to buy enough product to get that kind of commission.  The podcast also spends a fair amount of time
on the FTC’s largely lost battle to regulate MLMs like Amway, and on
MLM-friendly proposed legislation that will define most MLMs as not pyramid
schemes no matter how large a percentage of their “sellers” lose money.

from Blogger http://bit.ly/2Lmfm2O

Posted in Uncategorized | Tagged , | Leave a comment

hijacking another’s webpage for competing service is bad

Posted on May 1, 2019 by rtushnet

Spy Dialer, Inc. v. Reya LLC, 2019 WL 1873296, No. ED CV
18-1178 FMO (SHKx) (C.D. Cal Mar. 18, 2019)
The parties compete in the market for reverse phone lookups.  When a user accessed plaintiff’s Spydialer.com,
malicious computer code allegedly inserted through ads placed by Reya would
cause the user’s browser to automatically scroll down to the bottom of the
webpage, where defendant’s ad was located. The user’s cursor would then be
placed in a search box located within the ad, instead of in the search box for
the Spy Dialer website. The ad’s search box was designed to look similar to Spy
Dialer’s search box. The malicious code allegedly prevented users from
scrolling back up the page to Spy Dialer’s search box. Users who typed a phone
number into the advertisement’s search box were redirected to defendant’s
website.
When Spy Dialer reached out to defendant, a manager claimed
that the malicious code was the result of a “coding error.” Spy Dialer
complained to Google, which conducted an investigation, concluded that
defendant’s ads “constituted a fraudulent business practice,” and banned the ads
from further use.  The ads allegedly
caused Spy Dialer’s website to lose “ranking in Google’s search engine results”
and led to lower traffic and resulting lower ad revenue.
CFAA: Defendant had limited authorization to access Spy Dialer’s
computers, because it submitted ads to platforms which would then place the
advertisements on Spy Dialer’s website. But it allegedly  exceeded the scope of this authorization by
causing the ads with malicious code to be placed on plaintiff’s site. However,
the complaint failed to plead that defendant obtained or altered information on
plaintiff’s computers that it wasn’t authorized to obtain or alter. For example,
there was no allegation that defendant continued to place ads on plaintiff’s
website even after permission had been revoked. “[M]erely submitting
advertisements through Google Ad Services[] does not state a CFAA violation.”
ECPA: 18 U.S.C. § 2511 provides a private right of action
against “any person who … intentionally intercepts, endeavors to intercept,
or procures any other person to intercept or endeavor to intercept, any wire,
oral, or electronic communication[.]” Here, when a visitor attempted to use Spy
Dialer’s website, defendant’s malicious ad would force the visitor’s browser to
automatically scroll to the bottom of the webpage. Even if the user realized
what was happening, the malicious code allegedly prevented them from scrolling
back up to the top of the webpage to use plaintiff’s own search box. This
“captured” and “redirected” traffic intended for Spy Dialer’s website (is that
the same as interception?).  And it was
plausibly alleged to be intentional, in that the code was sufficiently “sophisticated”
that it could not have come about through mistake or error.
California Penal Code § 502 creates liability against an
individual who “[k]nowingly accesses and without permission alters, damages,
deletes, destroys, or otherwise uses any data, computer, computer system, or
computer network in order to either (A) devise or execute any scheme or
artifice to defraud, deceive, or extort, or (B) wrongfully control or obtain
money, property, or data.” “Just as plaintiff’s CFAA claim fails … so too must
those aspects of plaintiff’s § 502 claim which depend on defendant having
accessed plaintiff’s computers.” But 502(c)(3) prohibits individuals from
“[k]nowingly and without permission us[ing] or caus[ing] to be used computer
services.” Subsection (c)(5) creates liability against a person who
“[k]nowingly and without permission disrupts or causes the disruption of computer
services or denies or causes the denial of computer services to an authorized
user of a computer, computer system, or computer network.” Subsection (c)(8)
bars “[k]nowingly introduc[ing] any computer contaminant into any computer,
computer system, or computer network.”
None of those provisions required access to Spy Dialer’s
computers, so those claims survived.
Lanham Act claim: based on defendant’s use of spydialer.org
(as opposed to plaintiff’s spydialer.com)—easily survives, as does an ACPA
claim.
However, a false advertising claim under California Business
& Professions Code § 17500 failed. That law makes it unlawful for any
person to “induce the public to enter into any obligation” by making “any
statement … which is untrue or misleading, and which is known, or which by
the exercise of reasonable care should be known, to be untrue or misleading.” The
use of the domain name “Spydialer.org” was not an actionable “statement” in connection
with the ad or the domain name.  This
seems inconsistent with the ordinary meaning of “statement”—when I wear a nametag
labeled “Prof. Tushnet,” I’m stating my name—but there are apparently cases so holding. Sensible Foods, LLC v. World Gourmet, Inc., 2012 WL
566304, *7 (N.D. Cal. 2012) (rejecting false advertising claim after concluding
that a heart symbol “is not a statement”); Parent v. MillerCoors LLC, 2015 WL
6455752, *7 (S.D. Cal. 2015) (“MillerCoors’ use of the BMBC trade name on the
label is not a ‘statement[.]’ ”).
But state law unfair competition claims survived under §
17200, since the “ultimate test for unfair competition is exactly the same as
for trademark infringement.”
However, there was no actionable conversion of web traffic.  In the Ninth Circuit, “First, there must be
an interest capable of precise definition; second, it must be capable of
exclusive possession or control; and third, the putative owner must have
established a legitimate claim to exclusivity.” Though web traffic is “an
interest capable of precise definition,” in that web traffic consists of the
number of Internet users who accessed a particular website within a given time
frame, it is not “capable of exclusive possession or control.” Unlike domain
names, “web traffic is distinctively ephemeral. Indeed, even the parties that
posted non-malicious banner advertisements on Spydialer.com were no doubt
hoping to redirect a portion of plaintiff’s web traffic from plaintiff’s
website to theirs.”
Fraud claims also failed because there was no allegation
that the plaintiff reasonably relied
on the ad, as opposed to third parties. 
A negligence claim survived, though, based on defendant’s denial of
intentional conduct.

from Blogger http://bit.ly/2GO2m0k

Posted in Uncategorized | Tagged , , , | Leave a comment

prisoner’s consumer protection claim against false advertising of music player should proceed

Posted on May 1, 2019 by rtushnet

Mendoza v. Inch, 2019 WL 1901811, No. 18cv66-RH/CAS (N.D.
Fla. Feb. 20, 2019) (report & recommendation)
Prisoners are an extremely vulnerable population; here a
consumer protection claim may offer some hope despite the usual barriers to
relief.  Mendoza alleged that the Florida
Department of Corrections and its vendors (Access, Trinity, and Keefe)
advertised an MP3 digital music player with various options and accessories. Buying
the player player supposedly included updates of the latest music releases and
the ability to own an unlimited amount of music. If the music player failed,
purchased music could be transferred to a new device and there was no “mortality”
date listed for the player. Mendoza bought a player and accessories, and as
well as music which, at the time the complaint was filed, totaled over six
hundred dollars.
Four years later, the DOC told inmates that it was ending
its contract with Keefe/Trinity/Access and was entering a new contract with
“JPay” to provide multimedia services. Inmates were told to mail out their
existing music players, and that they would be required to obtain a new tablet
to listen to music. Mendoza then learned that a “mortality timer” had been
installed on his music player and it would become non-operational on January
23, 2019.
The magistrate recommended rejecting most of the defendants’
motions to dismiss, including that “no degree of redressability within this
Court” because this “Court has no power to require a state agency to enter into
any specific contract or remain contractually obligated to a specific entity.” The
magistrate pointed out that it was far from clear that even injunctive relief
would interfere with a DOC contract—requiring Mendoza to surrender his own
property “appears to be a matter of DOC policy, not contract.” 
Eleventh Amendment immunity: Ex Parte Young allows injunctive relief, though not money damages,
against the DOC.  The defendants argued
that Mendoza wasn’t entitled “to any damages as he fails to state a physical
injury.”  But anti-prisoner laws reject claims
for mental or emotional injury; the relevant statute “does not specifically
preclude an inmate from seeking compensatory damages for an actual injury such
as the loss of property.”  A disparate
impact claim failed, though (based on the idea that requiring surrender of the
music player to someone outside the prison deprived inmates with longer/life
sentences of more property).
The Florida Deceptive and Unfair Trade Practices Act claim
was sufficiently pled, according to the magistrate. Defendants argued that
allegations of “bait and switch” alone, without pointing to any unfair or
deceptive practices, was insufficient to state a claim. But Mendoza alleged
that the defendants made false representations in their ads on which he relied,
including a promise that he could “own unlimited music” and Access Corrections
would store all purchased songs, including deleted songs, and “give them back”
to him whenever he desired “for free.” If the player ceased to function, the
music would “be transferable to a new device, and there was absolutely no
mortality (end) date advertised in advance.” This was sufficient.
The magistrate rejected Mendoza’s argument that he had a constitutional
right not to be defrauded by the government—the law establishes that law
enforcement is allowed to deceive people (though why that applies here, without
a law enforcement purpose in sight, is mysterious to me)—but fortunately for him,
he does have a statutory right not to
be defrauded of his money in a sale, even without a constitutional right to buy
a music player in the first place (as defendants argued).
Two of the private defendants argued that they weren’t
“state actors” for purposes of 42 U.S.C. § 1983. Mendoza argued that the State
“significantly encouraged the Defendant(s) to advertise and sell” him and other
prisoners mp3 players and music, and that the State and all defendants profited
from those sales; further, Florida allegedly “was a joint participant” with the
private companies and engaged in collusion to render his device
non-operational.  That was enough for “color
of state law” for now. “Plaintiff’s allegation of a conspiracy and joint action
distinguish this case from the cases cited by Defendants which hold that
private parties operating canteens or selling commissary items are not acting
under color of state law.”  [Again, the
law leaves prisoners very, very exposed here.]
The magistrate also recommended preserving Mendoza’s state-law
breach of contract claim.

from Blogger http://bit.ly/2Vek2MU

Posted in Uncategorized | Tagged , | Leave a comment