Rebecca Tushnet

better bank battle: false use of (R) can’t support false advertising claim

Posted on February 13, 2019 by rtushnet

San Diego County Credit Union v. Citizens Equity First
Credit Union, No. 18cv967-GPC(RBB), 2019 WL 446475 (S.D. Cal. Feb. 5, 2019)

SDCCU sued CEFCU, its competitor in the credit union market,
seeking a declaratory judgment of non-infringement and invalidity of the federally
registered mark CEFCU. NOT A BANK. BETTER. (issued 2011) and the asserted
common-law mark NOT A BANK. BETTER, as well as for false registration and
unfair competition. SDCCU itself has a 2014
federal registration for IT’S NOT BIG BANK BANKING. IT’S BETTER. Several
third-party credit unions use similar trademarks such as “NOT A BANK –
BETTER!”, “BETTER THAN A BANK”, and “IT’S NOT A BANK.” [We
are running out of trademarks.]

SDCCU’s customers are primarily located in Southern
California while CEFCU’s customers are primarily located in Peoria, Illinois
and Northern California. [CEFCU bought a credit union in Northern California in
2008, but didn’t start advertising its mark outside Illinois until 2011.] In early 2016, a CEFCU employee saw the SDCCU
mark on a billboard in San Diego, and in May 2017, CEFCU filed a petition to
cancel the SDCCU registration based on its registered and claimed common-law
marks.

The complaint alleged that the CEFCU mark was more similar
to the third party marks than to the SDCCU mark, and that if CEFCU asserted
rights broad enough to encompass the SDCCU Mark, it therefore materially
misrepresented to the USPTO that the CEFCU Mark was not confusingly similar to
any of the third-party marks. In the alternative,
its confusion claim was unjustified.
Also, CEFCU allegedly uses ® on its common-law variant.

Under the Lanham Act, “Any person who shall procure
registration in the Patent and Trademark Office of a mark by a false or
fraudulent declaration or representation, oral or in writing, or by any false
means, shall be liable in a civil action by any person injured thereby for any
damages sustained in consequence thereof.” 15 U.S.C. § 1120. The alleged
falsities were (1) lack of use in interstate commerce, given that it wasn’t using
the mark outside Illinois when it declared the mark was being used in commerce
and (2) lack of confusion with preexisting marks such as the “IT’S NOT A BANK”
mark of Warren Federal Credit Union, “BETTER THAN A BANK” mark of ABNB Federal
Credit Union and “NOT A BANK-BETTER!” mark of United 1st Federal Credit Union.

This was sufficiently pled on a motion to dismiss—whether there
was actually use in commerce outside Illinois at the relevant time, or whether
use in Illinois by a federally regulated credit union was sufficient for “use
in commerce,” was not for the court to resolve on a motion to dismiss. Likewise,
though SDCCU can’t assert others’ rights, it sufficiently alleged that the
existence of those rights meant that CEFCU made a false statement in its registration
application.

SDCCU also alleged damages in the form of company resources
expended to fight the claim. The harm must be proximately caused by the
fraudulent registration; CEFCU argued that its rights were not dependent on the
date of the registration and that this dispute would be happening anyway, thus
there was no proximate causation. That
again was a factual dispute not appropriate for a motion to dismiss.

The court also dismissed claims based on false use of ®. As to the actually (but allegedly fraudulently)
registered mark, use of ® was literally true; SDCCU’s remedy was to be found in
§1120, not in a false advertising claim.
As to the unregistered mark, the use might be literally false, but a ®
symbol didn’t relate to the “nature, characteristics, qualities or geographic
origin” of CEFCU’s services, as required.

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Allegedly rigged “review” site was commercial speech, but falsity still not pled

Posted on February 13, 2019 by rtushnet

GOLO, LLC v. Higher Health Network, LLC, No. 18-cv-2434-GPC-MSB,
2019 WL 446251 (S.D. Cal. Feb. 5, 2019)

GOLO sells a weight loss program and a proprietary
supplement to help promote weight loss. HHN defendants published a review of this
supplement, allegedly with inaccuracies, misleading statements, and blatant
falsehoods, which led to this lawsuit. HHN moved to dismiss and moved to strike
the state law trade libel claim under California’s anti-SLAPP law. The court
granted the motion to dismiss but denied the special motion to strike because
HHN make a prima facie showing that GOLO’s claim arose from an act in
furtherance of HHN’s right of petition or free speech in connection with a
public issue.

HHN (and its founder Shanks) allegedly compete with GOLO in
the diet and weight-loss industry. Shanks specializes in SEO, and he and HHN
allegedly bought and created dozens of information websites that generate
revenue exclusively through advertising sales. One such website, SupplementPolice.com,
claims to be a “product review website” aiming to introduce “honesty and
transparency to the world of online reviews” through “detailed reviews of
popular products.” Supplement Police states that it “doesn’t currently accept
affiliate income from any company in exchange for favorable reviews – instead,
it makes it money exclusively from [Google] AdSense revenue.”

GOLO alleged that the reviews were “predominantly bogus,”
not based on any testing or analysis conducted by Supplement Police, biased,
and designed solely to benefit HHN rather than the public. Supplement Police
allegedly promotes and links to products the defendants are affiliated with,
manufacture, and/or sell. Specifically, Supplement Police positively reviewed SilaLive
Silica, giving it “an overall score of 4.6 out of 5” and said that it is “clearly
a product that works for a lot of people.”
SP provided multiple links to the SilaLive website, which offers the
product for sale, but doesn’t disclose that Shanks and HHN are affiliated with,
and manufacture, distribute, and/or sell SilaLive, and own and/or operate the
SilaLive website. Further, the review allegedly contains false statements,
including that SilaLive is “formulated with the greatest quartz crystals” and
that its main ingredient will help fight common health problems “from the
inside,” giving a healthier more permanent solution that artificial cures
cannot promise.

SP’s GOLO review allegedly inaccurately describes how GOLO
was created, as well as what GOLO “promises,” and allegedly falsely states that
the supplement should be taken “30 minutes before a meal” in order to “enjoy
health benefits while also purportedly normalizing your insulin levels.” It
further says: “Out of all of the ingredients listed [in the Release Supplement],
only Salacia bark has been linked to reduced diabetes symptoms…Meanwhile,
none of the other ingredients in Release have been linked to weight loss or
normalized insulin levels.” And its bolded headlines allegedly “pose misleading
questions which would cause readers to doubt GOLO’s effectiveness and/or decide
not to purchase GOLO.”

Lanham Act claims: The specific falsities alleged were as
above—non-obviously, GOLO alleged that it was false to say GOLO made any “promises”
to consumers. The court found that Rule
9(b) applied and that GOLO failed to plead why these statements were false and
misleading. GOLO didn’t explain how GOLO was actually created or why it was
false to say they made “promises,” nor about why it was false to make the
statements about recommended intake time or about the ingredients. As for the bolded headlines, “GOLO – Insulin
Resistance for Weight Loss?” and “How Does GOLO Claim to Work?” the court found
it unlikely that a question could be an actionable “statement,” but even if it
could be, the complaint didn’t plead how those specific questions would mislead
or confuse consumers, rather than simply framing the review.

As for the SilaLive review, GOLO likewise didn’t adequately
allege the falsity of “formulated with
the greatest quartz crystals” or “will help you fight [common health] problems
from the inside and thus give you a healthier, more permanent solution that
artificial cures cannot promise you.”

Standing: Under Lexmark,
“a plaintiff must allege an injury to a commercial interest in reputation or
sales” proximately caused by violations of the Lanham Act. HHN argued that this
claim failed because SilaLive is not a weight-loss product and does not compete
with GOLO; nor does the GOLO review mention SilaLive. But Lexmark makes direct competition unnecessary. The complaint alleged
competition between the parties in the diet & weight loss industry
generally, and alleged that SilaLive was promoted as a supplement that could “help
detox or kickstart[ ] a diet.” It also sufficiently alleged “economic or
reputational injury flowing directly from the deception wrought by the
defendant’s advertising” including foregone sales. Although the GOLO review, in
fact, called the GOLO diet a “cost-effective” program, the court nonetheless
accepted GOLO’s allegations of lost sales as factual for purposes of the motion
to dismiss—which is a take on plausibility that not every judge would have.

Was the GOLO review commercial speech? HHN argued that the review didn’t mention
SilaLive or direct readers to the page hosting the SilaLive review. So was it a consumer review or an ad? GOLO
alleged that the review was “surrounded by advertisements and links to products
and websites unrelated to but, in many cases, in direct competition with GOLO,”
and that Supplement Police was affiliated with and/or received compensation
from sales of “some or all” of the linked products. Moreover, the positive review of SilaLive
also allegedly generated sales/diverted sales from GOLO. Thus, GOLO successfully alleged that defendants’
speech was an ad for competing products, and that the review was meant to
discourage use of GOLO products and use products defendants promoted instead.

GOLO, LLC v. HighYa, LLC, 310 F. Supp. 3d 499 (E.D. Pa.
2018), dismissed a claim that GOLO reviews were commercial speech, but the
court here found HighYa
distinguishable. First, in that case, when the plaintiff objected to the
review, the defendants amended the review and advised its readers that changes
to the review were made based on additional information provided by GOLO. Under
those circumstances, the facts didn’t plausibly support an inference that the
review was meant to create an economic advantage for competing products. Here, however, defendants removed the GOLO
review after receiving a C&D, without attempting to correct the alleged
misrepresentations. [Ugh. Talk about creating seriously bad incentives. Plus, I
just don’t see how this connects to commerciality. Why isn’t “wanted to avoid
the hassle of litigation”/ “had its speech chilled” at least as plausible as “wanted
not to say anything nice about the competition,” especially given that the
review doesn’t seem to have been particularly harsh in the first place?]

Also, “defendants disclosed a commercial relationship with
another fitness product negating any indication that it was engaged in covert
competition.” But covertness has never been an element of the commercial speech
test. A clear ad should not deceive
about whether it is an ad, and that’s
important (and indeed where the only alleged falsity is the appearance of lack
of financial interest, disclosure may be all that’s needed to avoid liability),
but we still need to know whether it is
an ad. Anyway, the court also found
it important that Supplement Police allegedly doesn’t disclose the identity of
its owners and actively hides its association with SilaLive. HighYa said that “liability can arise
under the Lanham Act if websites purporting to offer reviews are in reality
stealth operations intended to disparage a competitor’s product while posing as
a neutral third party.” This was sufficiently alleged.

The trade libel claim failed for want of sufficient
allegations of special damages, which usually requires identification of
specific lost sales/customers or (in Pennsylvania, whose law GOLO sought to use)
really clear evidence of a sales decline traceable only to the disparagement,
including allegations about sales for a substantial period before the
challenged publication and sales after. The same falsity problems as with the
Lanham Act claim also justified dismissal of this claim as well.

The anti-SLAPP laws of California differ from those of
Pennsylvania (transferring district) and Delaware (another potentially
interested state). California’s law is
broader, and California has a strong interest in protecting its speakers. “ ‘California
would appear to object strongly to the absence of a robust anti-SLAPP regime.’ On
the other hand, Pennsylvania’s or Delaware’s interests would be less harmed by
the use of California law.” So the court applied California’s law, but it still
didn’t help HHN.

An “act in furtherance of a person’s right of petition or
free speech under the United States or California Constitution in connection
with a public issue” triggering anti-SLAPP protection includes “any written or
oral statement or writing made in a place open to the public or a public forum
in connection with an issue of public interest.” HHN argued that the reviews
were a matter of public interest because GOLO itself described its product as a
“leading weight loss and wellness program,” “the top-searched diet on Google in
2016,” and “endorsed, and even used by, multiple doctors.” In Wong v. Jing, 189
Cal. App. 4th 1354 (2010), the court reasoned that a negative review of a
dentist’s services on the rating website Yelp.com constituted an issue of
public interest because “consumer information that goes beyond a particular
interaction between the parties and implicates matters of public concern that
can affect many people is generally deemed to involve an issue of public
interest for purposes of the anti-SLAPP statute.”

The court distinguished Wong
because “it dealt with the more general issue of the effects of dentists’ use
of certain products, not just a highly critical opinion of a particular
dentist.” It implicitly dealt with the more general issues of whether it was ok
to use nitrous oxide and mercury in dental treatments for children, and wasn’t
just about one dentist. Also, “[i]t is
well established that commercial speech that does nothing but promote a
commercial product or service is not speech protected under the anti-SLAPP
statute.” Consumer Justice Ctr. v. Trimedica Int’l, Inc., 107 Cal. App. 4th 595
(2003) concluded that “speech about a specific product was not a matter of
public interest because the speech was not about herbal dietary supplements in
general, but about the specific properties and efficacy of a particular
product.” So too here. Even if GOLO was popular, it’s not true that “simply
because a lawsuit affects a large number of consumers and involves a
life-threatening illness, it will satisfy the public interest requirement of
the statute.” Scott v. Metabolife Int’l, Inc., 115 Cal. App. 4th 404 (2004). HHN
thus failed to make a prima facie case that the GOLO’s suit arose from an act in
furtherance of its rights of petition or free speech.

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

Allegedly rigged “review” site was commercial speech, but falsity still not pled

Posted on February 12, 2019 by rtushnet

GOLO, LLC v. Higher Health Network, LLC, No. 18-cv-2434-GPC-MSB,
2019 WL 446251 (S.D. Cal. Feb. 5, 2019)

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

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Neighboring farmers have Lanham Act standing where false ads allegedly prompted pesticide use

Posted on February 12, 2019 by rtushnet

In re Dicamba Herbicides Litig., MDL No. 2820, 2019 WL
460500 (E.D. Mo. Feb. 6, 2019)

Plaintiffs, twenty-one soybean farmers from eight states (Arkansas,
Illinois, Kansas, Mississippi, Missouri, Nebraska, South Dakota, and Tennessee),
alleged that their soybean crops were damaged by the herbicide dicamba when
neighboring farmers planted genetically modified dicamba-resistant seeds and sprayed
that crop with dicamba. USDA permitted the sale of the dicamba-resistant seeds
in January 2015, but the plaintiffs argue that commercial sale was wrongful
because the EPA hadn’t yet approved a dicamba herbicide for use over the top of
crops grown from those seeds. (The seeds could allegedly tolerate other
herbicides, like Monsanto’s Roundup.) Allegedly,
the amount of dispersal of an herbicide varies and there are other herbicides
that wouldn’t have drifted in the same way; dicamba had previously been a
problem because of its volatility and propensity to drift, sometimes taking
other herbicides with it. In 2017, the EPA approved new low-volality dicamba
herbicides for over-the-top crop use during the growing season, XtendiMax and
Engenia.

However, the plaintiffs alleged that the new herbicides are “unsuitable
for in-crop use because they too, like the earlier versions of dicamba, are
volatile and prone to move off-target and damage nearby, sensitive crops.” This
is allegedly a further win for defendants insofar as it
induces farmers to defensively purchase dicamba-resistant seed to avoid
damages.

I’m here for the Lanham Act claim, though the other claims
are also interesting. On causation, Monsanto argued that it wasn’t the source
of the old, pre-2017 herbicide, but the causation theory was that “Monsanto
marketed and sold its dicamba-resistant seed to third-party farmers knowing
that they would spray dicamba that may harm nearby, non-resistant crops.” The
only reason to buy and plant the seeds, the plaintiffs alleged, was to use it
with dicamba herbicides, whether new or old.
The manufacturer of the herbicide wasn’t the key to causation.

Defendants challenged plaintiffs’ Lanham Act standing. The
alleged false advertising was that the Xtend seeds could be safely employed
utilizing over-the-top application of dicamba herbicides and that the dicamba
would not drift. Lexmark requires a plaintiff to plead: (1) an injury within the
“zone-of-interest,” that is, “to a commercial interest in sales or business
reputation,” (2) that was “proximately caused by the defendant’s
misrepresentations.” Plaintiffs need not be defendants’ competitors to state a
claim. The plaintiff must be a commercial actor suffering commercial injuries
instead of being a “consumer who is hoodwinked into purchasing a disappointing
product.” That was sufficiently pled here: the plaintiffs were commercial
actors, not consumers of defendants’ products, and thus they fell within the Lanham
Act’s zone of interest.

Monsanto argued that there was no standing for 2016 claims
because it was illegal for third party farmers to use dicamba herbicides with
its Xtend seeds in 2016, so the intervening criminal conduct severed the causal
chain connecting Monsanto’s misrepresentations to any wrongdoing. That is not an
automatic Article III rule; standing was sufficiently alleged.

Proximate cause: Monsanto argued that the plaintiffs were at
best indirect victims of the allegedly false advertising. But consumer
deception is always an intervening step before the harm materializes in a false
advertising case (and in a Lanham Act case it materializes to a third party,
usually the competitor who’s lost a sale as a result, even if it also
materializes as harm to the consumer). Monsanto argued that there had to be harm
to a consumer for there to be proximate cause, but the court recognized that
this made no sense. (The Lanham Act should
be triggered where there is false advertising that changes consumer behavior—if
the plaintiff’s product was exactly the same as the defendant’s and exactly the
same price and there was nothing better on the market, a misrepresentation of
superiority that diverted purchasers to the defendant wouldn’t necessarily harm
those purchasers in a tangible way, setting aside the moral disrespect of fraud,
but it distorts the competitive environment and harms other market actors, who
are the targets of the Lanham Act’s solicitude per Lexmark.) Even if the direct
victims of Monsanto’s fraud ended up with crops that were fine, plaintiffs
still alleged commercial injury because Monsanto’s misrepresentations caused
third parties to use dicamba that destroyed plaintiffs’ crop, so plaintiffs had no soybeans to sell.

Interestingly, the fact that plaintiffs successfully pled a
Lanham Act claim seemed to comfort the court in concluding that they couldn’t
bring tort claims based on ultrahazardous activity—that concept usually involves
only the actual use of the product in question, not promotion of its use. “Ultimately, plaintiffs’ claim is that
“lying” about the safety of an ultrahazardous activity—the spraying of
dicamba—is itself an ultrahazardous activity. That claim is certainly
actionable, but not under the ultrahazardous activity doctrine.”

So too with trespass and nuisance—Monsanto’s extensive seed
licensing agreement with farmers did not allow it to terminate the agreement
for misuse of dicamba, so they didn’t control whether the dicamba particles migrated
to plaintiffs’ land. There was no “ongoing” promotion, aiding, abetting,
assisting, or contributing to the trespass/nuisance, and no need to hybridize a
cause of action using trespass/nuisance plus misrepresentation theories.

Failure to warn claims/consumer fraud act claims under the
laws of Illinois and Nebraska: Monsanto argued that FIFRA preempted these
claims. Plaintiffs argued that FIFRA
preempts labeling-based claims, but that their claims were based in part on
non-labeling material, such as in-person discussion and websites (Facebook,
Twitter, Instagram, YouTube, Snapchat, Pinterest, and Linked In). (Today I learned that Monsanto or its agents
allegedly use Snapchat.) Though a few
cases hold otherwise, the court approved a more literal reading of the preemption
statute, limiting its reach to labeling and packaging.

Second, plaintiffs argued that they weren’t seeking requirements
that are “in addition to or different from” FIFRA, as required for preemption. FIFRA
bars “misbranding,” which occurs if a label contains a “false or misleading”
statement or if it “does not contain adequate instructions for use, or if its
label omits necessary warnings or cautionary statements.” Although FIFRA doesn’t
provide a private cause of action for misbranding, states are allowed to do
so. The state law requirement need only
be substantively identical; it need not be phrased in the identical language. To the extent that plaintiffs alleged that
the labels failed to contain instructions that would, if followed “prevent harm
to the environment,” that did go beyond FIFRA, which only requires instructions
that will, if followed, prevent “unreasonable harm,” so their claim was
preempted to a tiny extent, but there was still room for their failure to warn
claims.

The court reached a similar result on Nebraska Consumer
Protection Act and Illinois Consumer Fraud Act claims. However, the court
dismissed the Nebraska statutory claim because of its regulatory state harbor.
Both states’ laws have safe harbors; Illinois says: “Nothing in this Act shall
apply to any of the following: (1) Actions or transactions specifically
authorized by laws administered by any regulatory body or officer acting under
statutory authority of this State or the United States.” Although Monsanto’s advertising claims were
submitted to the EPA as part of EPA registration procedures, “exemption is not
available for statements that manage to be in technical compliance with federal
regulations, but which are so misleading or deceptive in context that federal
law itself might not regard them as adequate.”

However, Nebraska’s exemption was broader: “the Consumer Protection Act shall
not apply to actions or transactions otherwise permitted, prohibited, or
regulated under laws administered by the Director of Insurance, the Public
Service Commission, the Federal Energy Regulatory Commission, or any other
regulatory body or officer acting under statutory authority of this state or
the United States.” Being “regulated” is
enough, rather than being “specifically authorized.” Thus plaintiffs’ statutory
claim failed. I think this reading doesn’t make much sense, insofar as the FTCA
and other federal statutes regulate pretty much any commerce you can think of;
in this interpretation, the only commercial transactions covered by Nebraska’s
consumer protection law would be those that did not arise “in commerce” for
purposes of allowing the federal government to exercise its Commerce Clause
authority—what is likely a null set even after the ACA case. I have my doubts that Nebraska could have meant
to negate its law entirely in this way. But
since EPA regulates pesticide ads under FIFRA, Monsanto’s conduct was within
the safe harbor. [What about seed ads? I
thought those were the real problem.]

The Illinois Consumer Fraud Act protects “any person who
suffers actual damages as a result of a violation of the Act.” Non-consumers
“may sue under the ICFA if they allege (and ultimately prove) the nexus between
the objectionable conduct and the consumer injury or harm.” A non-consumer has
standing to sue under the ICFA where the “conduct involves trade practices
addressed to the market generally or otherwise implicates consumer protection
concerns.” The allegedly unfair and deceptive conduct—the publishing of false
information to cause farmers to defensively buy dicamba-resistant seed—sufficiently
implicated consumer protection concerns. The complaint also satisfied Rule 9(b), whether
or not that was required for all ICFA claims.

Breach of warranty claims met varying fates depending on the
state. In Kansas, a non-purchasing, non-using third party can only recover for
breach if they’re (1) “expected to use, consume or be affected by the goods,”
and (2) “injured in person by breach of the warranty.” That didn’t happen
here. Arkansas, South Dakota, and
Tennessee gave effect to defendants’ prominent disclaimers of implied
warranties of fitness and merchantability, even though plaintiffs, as
nonpurchasers, couldn’t have read those disclaimers. “[T]o give the non-purchasing
plaintiffs more rights than purchasers themselves would have is an untenable
result.”

The Magnuson-Moss Warranty Act prohibits disclaimers of
implied warranties when an express warranty is provided, but only applies to
consumer products, not agricultural products.

Also, Missouri has a law protecting crops, who knew? It is unlawful for anyone intentionally to
cause the loss of any crop. Further, “any person or entity who knowingly
damages or destroys any field crop product that is grown for personal or
commercial purposes…shall be liable for double damages.” A claim under this law
was properly alleged, as was a design defect claim.

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Alkaline water false advertising claim is unappetizing, court rules

Posted on February 12, 2019 by rtushnet

Weiss v. Trader Joe’s Co., No. 8:18-cv-01130-JLS-GJS, 2018
WL 6340758 (C.D. Cal. Nov. 20, 2018)

Trader Joe’s sells Alkaline Water, whose label includes:

• “pH 9.5 +”

• “Our Alkaline Water + Electrolytes is ionized to pH 9.5+.”

• “pH is the measure of acidity and alkalinity. The higher
the pH, the greater the alkalinity.”

• “ionized to achieve the perfect balance”

• “refresh & hydrate”

• “hundreds of plus symbols” on the label

Trader Joe’s flyer touting Alkaline Water said:

• “Whether you’ve just eaten an abundance of corn or
cranberries (foods high in acid); or you’ve been sweating profusely; and/or
you’ve been reading this Flyer (because obviously that would make you thirsty)
our Alkaline Water + Electrolytes is a drink that can satisfy.”

• “The mineralized water is purified through reverse
osmosis, then run through electric currents (electrolysis), which changes the structure
of the water and raises the pH to 9.5+ (neutral pH of water is 7).”

• “Trader Joe’s Alkaline Water + Electrolytes is water and
then some.”

Weiss alleged that the label misled her to believe that the
Water was a “superior source of hydration” and could help “balance pH
internally.” She further alleged that the Alkaline Water does not actually have
a 9.5 pH balance and that “the actual pH at the time of purchase and
consumption was far less on the pH scale.” She brought the usual California
claims.

The court found that this was all puffery except the “not 9.5 pH” part, and
that wasn’t sufficiently pled, a holding I find dubious.

Initially, some of the complaint alleged lack of
substantiation of the purported health benefits, which isn’t actionable by
private parties under California law. The label and marketing also didn’t make the
health claims she identified, because it was mostly mere puffery. E.g., “refresh”
was “a vague, generalized assertion incapable of being proved false or of being
reasonably interpreted as a statement of objective fact,” as were the plus symbols.
Nor did the label claim to be a superior source of hydration, just a source. The
“ionized to achieve the perfect balance” claim didn’t claim that consumers
would become perfectly balanced or tout any health benefits from the perfect balance.

As for the flyer touting the water as good “[w]hether you’ve
just eaten an abundance of corn or cranberries (foods high in acid); or you’ve
been sweating profusely,” there was still no health benefit claim. I think this ignores the effects of implicature.
Why would it be relevant to whether you should choose this water that you’ve
been eating foods high in acid? There’s
no reason to mention that other than to imply that the water you drink should “balance”
your acidity (an impossible task in my case, I fear). But because the flyer
finished by claiming to “satisfy,” it was mere puffery. As for “water and then
some,” it followed the description of the water as containing 0.1% “minerals
(electrolytes), harvested from the lake region of Utah.”

The 9.5 pH claim was factual and falsifiable. However, Weiss
failed to plead with particularity “how she came to believe that the
representation is false.” That’s a diversion, mostly corrected in the court’s
ultimate analysis. We really don’t care how she came to believe that it’s
false, or even if she did come to believe that—her belief in falsity is not an
element of her claim. We care whether the statement was false.

And as with so many Twiqbal
issues this is all about the court’s common sense: pleading that the pH was not
9.5 is a factual allegation. Is that plausible? Sure, why couldn’t water not
have pH 9.5? Apparently much water
doesn’t, according to TJ’s itself. However, the court wants a “basis” for the
assertion of falsity. “Even assuming that viewing videos on the internet or personally
testing the pH balance of the Water is enough to support her claim,” that
wasn’t in the complaint, and the complaint needed to specify when the pH wasn’t
9.5—at bottling, at purchase, or at consumption. In a footnote, the court warned: “The Court seriously
questions Plaintiff’s decision to bring this suit if the only support she has
for this claim is what she has seen on the internet, or her own rudimentary
testing. Further, the Court reminds Plaintiff’s counsel that attorneys are
subject to sanctions under Rule 11 when they present ‘factual contentions
[that] have [no] evidentiary support or … will [not] likely have evidentiary
support after a reasonable opportunity for further investigation or
discovery[.]’”

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WIPIP 2019, Plenary (designs)

Posted on February 12, 2019 by rtushnet

Whole Designs, Sarah Burstein

What is a “design for a useful article”? TLDR: it’s a whole article. Egyptian
Goddess said the infringement test has to be sameness of appearance. Must
appear substantially the same to the ordinary observer.

Worst design patent claim ever: Caffeinate Labs v. Vante:
multitool shaped like a monkey; the accused design is not shaped like a monkey.
(Withdrawn when D correctly filed a motion for sanctions.) Richardson v. Stanley works: claimed &
accused designs were hammer tools w/things in the same places but didn’t look
the same. We don’t have fragmented
literal similarity as in ©; you have to look at the design as a whole.

But: the whole what? Three long-recognized types of designs. A design for the shape of an article of
manufacture, like a dryer ball shaped like a hedgehog. A design for the surface ornamentation of an
article. Or a combination of both (grab
bars covered with leopard spots).

Then came Zahn,
where the CCPA said that the old rule of claiming the whole was out; the design
is whatever the patentee says it is.
Dotted lines disclaim portions of a complete design. Now you can claim anything, including daisy
chaining so you keep an application pending and target what your competitors
are doing. Apple had a bunch of
noninfringed whole shape patents that it didn’t assert against Samsung; you can
also claim components; you can claim fragments. There’s at least three types:
intact fragments, where only the part in solid lines is claimed—never exists separately
in real life, such as the rounded edge of one side of a laptop. Apple has mastered this—there are still
pending applications from the original iPhone at the PTO. There are also fragments that are voids:
holes. Apple claims the hole where you
plug in your Lightning connector. There
are also variable fragments (she wanted to call them mutilations) where you can’t
see them by looking at the product.
E.g., a pink interior with dotted lines around the round holes in the
interior. Is that claiming an interior
with no holes? With star-shaped holes? No one knows.

Fragment design conflicts w/ the statutory text, which
refers to “an article of manufacture” not multiple articles. [This would be a good issue to try to get
cert on at this particular juncture in time.] Conflicts w/long-standing
practice. It distorts the total profits
remedy, making a not great situation worse.
And it provides protection for minor, immaterial, and/or functional
parts. Creates doctrinal incoherence: if
everything is a design, then it is difficult to apply the other rules about, e.g.,
prior art and how to deal with parent/child applications. Anticompetitive.

As a design school graduate, was trained that design is the
whole—it’s not just shape but color and all other elements. Not simply a hodgepodge of discrete elements
but a cohesive and integrated whole.
Also there is positive space/negative space in art theory: when you draw
on a piece of paper, there is a part that is perceived as ground/empty
space. Even when it’s colored and the figure
is not colored, you perceive the background as negative space and the figure as
positive space. This is important
because negative space is as important as positive space in creating the
design.

A new theory: a configuration design for an article of manufacture
would be a design that dictates the entire shape of that article, including
positive and negative spaces; a surface design would dictate the entire
surface, including positive and negative spaces; and a combination design would
be both. Thus a single image for fabric
would be a different design than that image repeated multiple times in a
pattern on fabric.

If a piece is made and sold separately, that can be a separate
design. So there can be handle design
patents.

Lemley: what happens to dotted lines under your proposal?

A: have served different purposes over time—not the same
meaning in the 19^th c. Do we
protect designs per se or tether them to a particular product? It can’t be in the abstract, but the Fed.
Cir. might screw it up. The key is that the uncertainty adds more complexity.

Lemley: then we need a standard that is something other than
infringement standard that uses dotted lines for something. When you have a
swirl for the screw top of a bottle depicted in solid lines and dotted lines to
indicate the rest of the shape of the bottle, right now courts say that the
accused design has to have some kind of a bottle shape; you wouldn’t be able to
win an infringement claim for a similar screw top configuration on a car.

A: under my rule you just don’t use solid lines for that
purpose. [I guess under her rule at
least you could try to get the grooves as part of a design for a bottle cap, to
the extent that’s a separate article; maybe a bottle cap can go on many
different things, but the problem would be diminished and you wouldn’t be
worried about dotted lines.]

The Laws of Design, Christopher Buccafusco:

Legal and nonlegal mechanisms that promote or fail to
promote disabled access in the environment. Fits into non-IP motivations for
innovation. There’s lots of important work on access and innovation, including
in access to texts, access to the internet, deafness/blindness. Will focus on physical environment and opportunities
to move around in it.

1920s/30s after WWI, medical innovation lets people
w/serious spinal cord injuries survive when they wouldn’t have before. That
creates a new population, further affected by polio epidemic which also increases
portion of population that survives into adulthood w/a major disability.
Medicalized, rehabilitationist model of disability: how to be productive
laborers in society, which typically involves lots of things disabled people
don’t actually have as goals.
Institutionalization v. preferences for independence. GI Bill then
provides a not inconsiderable amount of $ to buy accessible technology; March
of Dimes and similar things also increase ability to pay/demand side. Oldsmobile Valiant: a car driveable with two
arms and no use of legs. But veterans’ payments only allowed them to buy a
certain set of cars, e.g., a regular Chevy, then sell it and buy the Valiant. A huge amount of user innovation is going on.
Users’ language of inventorship seems to provide ways to claim continuing
community membership.

Case study: wheelchair development. One company dominated the market; it had
patents that helped. In addition, as the patents began to expire, they began to
engage in anticompetitive practices such as deals w/foreign companies to prevent
imports. Same wheelchair cost $400 in US in 1975$, but cost $100 in England.
Worked with Medicare/VA to specify which chairs would be insurable, and those
just happened to be the Everest & Jennings chair and no others. Disabled
people begin to protest the increased prices and depressed innovation. Nader
& his raiders took on the company and began to publish findings. Eventually
Justice Dep’t began an antitrust case, which was settled in 1979. Almost
immediately the market expanded, though not a ton. OTA in 1984 studied the market and found some
innovation but many of the new manufacturers suggested they were anxious about
producing new innovation b/c they were worried about products liability law if
they did more than tweak the Everest & Jennings chair. Whether this is true or not, we see a claim
about innovation drivers.

VA/Medicare as buyer has other problems: if the buyer is not
the user, that skews things. VA/Medicare cared more about initial cost than total
operational costs, for example. Ralf Hotchkiss, wheelchair innovator, argued
against patents as inhibiting progress/access in the area.

Once wheelchairs spread, people start to notice that the
built environment is hostile to them and thus to their users. That changes the
site of innovation—from innovation at the individual/product level to
innovation at the environment level. Section 504 of the Rehabilitation Act of
1973 produces a civil rights/antidiscrimination approach that has a demand-forcing
effect, creating willingness to pay on the part of institutions.

Lessons: innovation regulation is really complicated; when
users aren’t purchasers, incentives can be skewed.

Grynberg: cognitive access?

A: deliberately focused so far on physical access.

Q: FDA piece should be a bigger part: there are regulations
for wheelchairs and for wheelchair accessories [shades of the phone and the
Hush-a-Phone].

Ebrahim: firms w/different strategies?

A: user innovation sometimes gets users to start
commercializing; sometimes firms buy out the innovation but sometimes they get
shut down. Federal gov’t encouraged accessible
buses when GM wasn’t making accessible buses and had 85% market share. GM just ran out the clock until Reagan took
over and kept its market share.

Q: each of these stories can be its own paper.

A: rather tell them together—focused on a product and wants
to tell the story of that product. [The
recent book Temp by Louis Hyman is an
interesting example of how to bring together narrative threads in a really
productive way, though I’m not sure you could do exactly the same here.]

Privacy When Form Doesn’t Follow Function, Roger Ford

Design patent: for stuff that’s seen. Taco Cabana: designs and shapes are
protectable if nonfunctional. Privacy law does something very different: “privacy
by design,” which is about process. Building privacy into design specs from the
beginning, to get better results.

For physical design, people learn to infer functionality
from particular features, e.g., olive oil bottles are dark because the oil will
deteriorate in light otherwise, so dark bottles are likely to contain sensitive
liquids. Things with multiple spikes on
them may dig down into dirt. Security
cameras signal surveillance and thus send messages; even one-way mirrors affect
the design of space. Because companies know consumers make these inferences, online
they use those signals to send messages: e.g., the image of a padlock and a secure
website. But this signal is also manipulable b/c the connection b/t form and
function is not as tight. Or phone apps
can track your movements without telling you that’s happening. This will be a bigger problem over time. Now there are padlocks that look like padlocks
but are run by software and not physical keys; consumers can be misled by the
form they recognize about how easy it is to open, so one of these broadcast its
key unencrypted and anyone with the right software could open it, while another
was secure at the software level but had screws that could simply be opened w/a
screwdriver. 22 services track you on
USA Today’s homepage, but nothing on the browser/URL line shows anything to
make you think that there’s anything other than a link b/t you and the USA Today
server.

Williams Sonoma case: zip code as personally identifiable
information—that’s a legal rule designed to solve the mismatch b/t perception
and reality: the law is designed to deal w/the fact that retailers are asking
the info in a context that looks like it’s for security purposes but is really
for marketing purposes. When Apple does
the same thing, though, the court said security is more important online so it’s
ok, without inquiring whether Apple was actually using the info for security or
marketing. Thus he thinks the courts/ regulators should look more at intentional
attempts to exploit consumer expectations.

Said: Compliance as a goal might be a different framing than
design: external constraints as something you better be designing towards.

A: Compliance oriented might avoid unexpected problems but
doesn’t necessarily avoid expected problems—manipulation of what the consumer
would expect based on the design.

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WIPIP 2019, Trademark panel

Posted on February 12, 2019 by rtushnet

On Gripe Sites and Trademark Rights: Taking Stock of Cooperstock,
Carys Craig

United Airlines v. Cooperstock, Untied.com: United complaint
site with an altered/sadface logo and a popup disclaimer. Sued for © and TM
infringement, and initially held liable for infringement of both—couldn’t have
lost the case more emphatically. He represented himself; it’s now on appeal
with actual representation and intervention by civil liberties groups.

TM use: services is to be interpreted broadly, and includes
providing info to the public. Even if they were noncommercial, there’s no
requirement of monetary/commercial element for info services to be covered. D
argued he hadn’t used it as a mark, but the position of the logo on the website
is where the consumer would expect it to be. There was evidence of actual
confusion: one witness had lodged a complaint on the website, thinking it went to
United, and that was enough. Also, confusion
was likely because the services were the same: “post-flight engagement services”
and the market was identical: the services were both offered through the
internet. And they were similar because the D wanted people to recognize the
subject matter. Parody and satire aren’t defenses. An obvious spoof is still cashing in on the
goodwill of the mark.

Dilution/depreciation of goodwill: United invested and
Cooperstock used the mark to disparage the company so it was depreciation of the
mark. No internal limits. The court also
dismisses external limits—freedom of speech—out of hand. Each step of analysis
leads inexorably to the conclusion that use of a mark to criticize the mark
owner leads to an injunction.

Property right/right of the owner to reap profits from use
without interference. That’s where we
are in Canada: Michelin & Cie v. CAW (1997): © is private property and so
there’s no right to use it in the service of freedom of expression (but even
that found no TM infringement b/c no commercial use). Source Perrier v. Fira-Less (1983) says the
same thing for TM.

Lessons: Canada needs explicit statutory limitations and exceptions.
Could be clarifying of infringement provisions or (better) standalone fair use
provisions. The absence of explicit exceptions/user rights creates an
invitation for overreach/lack of cues to courts to constrain scope of “use” of
TM.

Need a real account of “user rights” transcending the
boundaries of IP. Established for © in
Canada; TM shouldn’t override them, preventing exactly what fair dealing is
designed to protect. The user is central to TM law but appears only in shape of
consumer; need fuller conception of public as consumers and citizens.

Lesson for TM theory: we need to change how we think about
TM. The communicative function provides both the justification for TM rights
and their necessary limits. Dialogism:
the mark is a textual utterance, which always invites a response. The mark as
text is never static/stable/univocal. The mark owner is privileged in the
public discourse but does not have a monopoly on meaning-making.

RT: Carol Rose: real property communicates too: keep off—so the
response from TM owners at a theoretical level may well be that dialogue =
invitation to bargain/create one’s own mark to intervene in the flow of meaning,
not invitation to act w/o consent.

A: Property based methodology can still be used to disrupt
the notion of control over the property.
Dev Ganjee: notion of property in the brand v. property in the mark
implies and relies on consumer sociality/communities of brands built through
public discourse. Then there’s a sort of appropriation/co-ownership of the
brand [but maybe that’s just the voluntary allowance of the brand owner for us
to hang out there; we can always be kicked out]. The property paradigm may be
pretty hostile to real understanding of TM.

Lunney: how bad is it? Would unitedsucks have been ok? Is there
any way to avoid the need to spend lots of $ on lawyers to figure out what you
can and can’t do?

A: Answer unclear; try again later.

Protectable Trademark Subject Matter in Common Law Countries
and the Problem with Flexibility, Lisa
Ramsey

Nontraditional TMs: colors, sounds, positions, etc. Lanham Act’s
provision on the supplemental register goes into more detail about what can be
on the SR than the Principal: configuration of goods, packaging, etc. but doesn’t
mention sound or smell (or taste). Canada
has the most detailed provision that would allow sound, scent, taste, texture,
positioning of a sign. All of these
lists are nonexclusive—e.g., hand gestures. Benefits for potential registrants:
you can look at what you’re doing and almost any part of it could be a TM so
you go from there.

Not every common law country has functionality (e.g.,
NZ). TM examiners often use lack of
distinctiveness instead but that can be defeated w/evidence of secondary
meaning, so that’s a problem.

Flexibility’s costs: uncertainty about the scope of the
resulting right. TM registration for
vodka in the shape of a skull=successful threats against sale of tequila (and
more disturbingly, hot sauce) in similar bottles. Nontraditional subject matter may make determining
scope less clear. [The example I use: does registration for the texture of velvet
on a wine bottle—a real US registration—give rights to preclude the use of RED
VELVET as a word mark for wine? What
about the sale of bourbon in a velvet sack?]

Lunney: Congress tried to prevent the Lanham Act from
allowing registration of trade dress, and courts and PTO just ignored that.
What makes you think it could be more successful now?

A: would have to be very clear: no smells. (Another factor
here is anticompetitive nature of the operation—big firms are better at getting
over the hurdles to register nontraditional marks and there are competitive concerns.)

Rosenblatt: scents are potentially infinite (though you wouldn’t
want to use all of them); are you treating all nontraditional marks the same?

A: No, wants nuance in different classes.

Fromer: one of the problems is acquired distinctiveness: it
is less likely that the person using them is thinking of the arrangement of
features as having a specific defined nature when initially adopted; the fact
that it’s chosen/defined later is a problem of its own.

Abdul-Khalik: mandate for a chemical listing or other
definitive description in order to claim the mark to limit scent? Another concern: even if you exclude
things/have an exclusive list in the statute, courts will want to provide common
law protection, exactly as California did w/its right of publicity.

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WIPIP 2019, University of Houston, Copyright panel

Posted on February 12, 2019 by rtushnet

Abandoning Copyrights, Aaron Perzanowski & Dave Fagundes:
Unilateral transfer of rights. W/personal property you think about transfer to
unknown but discrete third party, but in © abandoned rights are not up for
grabs by some new claimant, but rather in the public domain. We expect abandonment
when subjective assessment of costs of maintaining and storage outweigh the
benefits of continued possession. That calculus shifts with © b/c w/o
formalities and renewal requirements there are no meaningful costs w/a massive
trove of low value © works. Unlike your
old couch/unworn shoes, a PD work has a potentially infinite number of users
and uses—archival efforts, machine learning, general accessibility and enjoyment—so
potential value to public is potentially much higher even as incentives to
abandon are essentially nonexistent. There are altruistic/reputation based attempts
to abandoned. But there is not a lot of clarity about how abandonment is accomplished/works.

320 cases meaningfully discuss abandonment; we’ve read 25%
so far. They stretch back to mid-1850s and the issue comes up more often than
you may have thought. Lack of clarity about terminology: courts tend to
conflate abandonment (unilateral and intentional decision to relinquish) with
forfeiture (failure to comply w/formality): both get referred to as dedications
to the public domain; implied license and waiver and estoppel all get drawn in
as well. Lack of clarity is in part b/c in the old notice regime forfeiture and
abandonment were pretty similar, but more recent cases call out abandonment as
its own thing, with a test drawn from personal property: they say abandonment
requires an intent to surrender all or some rights in a work; need some overt
act that evidences that intent. Some cases allow partial abandonment.

To encourage: clarified law; simple, centralized process for
filing a notice of abandonment. Tax treatment could also matter. Some TM cases
talk about potential tax benefits of abandoning a mark. (Nonprofit donation: For works you created yourself,
you can deduct cost of creation; for works you acquire from others, you can
deduct market value.)

Q: moral rights?

A: Hasn’t yet come up for us, but intersects w/questions
around termination. Can you abandon at or around time of termination? If there’s a tax benefit to the institutional
© holder, that could be a risk to the potential terminating author/heir.

Lemley: We treat abandonment in very odd ways in TM, which
can help get at the Q of whether what we want is for someone else to grab the
rights or for no one to do so.

A: There’s a fair Q whether we want to call it abandonment
at all given the public domain aspect.

Q: why not give more attention to laches, estoppel, negligently
failing to take care of the work?

A: courts aren’t always clear and so one of our aims is to
create a taxonomy.

Rosenblatt: one challenge is that abandonment is an
affirmative defense, so we won’t see it unless there’s a fight; there may be
abandonment everywhere we don’t see. Are you more concerned w/dedication to the
public domain? Analogy to what patentees
can do as a way around real/personal property issues and implied license issues?

A: difficulty is that it’s unclear whether there is a
mechanism for dedicating to the public domain as there is in patent (but maybe
there should be).

Uniform Jury Instructions in Copyright Law, Zahr Said

© is jury unfriendly but jury reliant, which creates
policy-relevant risks of error, affecting not just any given case but the scope
of ©. Instructions are low-hanging fruit b/c they’re so bad right now.
Distributional concerns: in the cases, often one party proposes a lot of jury
instructions and the other doesn’t.

Moral divergence b/t anticopying ethos and © law. Linguistic
divergence: fair, similar, author, derivative, building, owner—they don’t
actually have the meaning that the jury may think. Deep indeterminacy, which may be where a
gap-filling jury is needed, but that layers on to the other problems; often
there’s an ontological indeterminacy where it’s not even clear what the “work”
is and the jury is supposed to figure that out without being clear that
plagiarism and infringement aren’t the same thing. 9^th Cir. threw its hands up when revising
its jury instructions and took out everything on substantial similarity. Yet © has
a higher percentage of trials than other areas of law—2/3 to 70% of litigated
cases go to a full dress trial, relating to traditions about the lay observer/reader. Risks incorporating things into ©, like
ideas, that we are trying to exclude (and may risk excluding creativity in
things like selection and arrangement).

Quid pro quo: © gives you rights that are indeterminate and
really easy to get; we trust litigation to sort out the boundaries. But that
means you can’t come in claiming that you have a full blanket but rather a shawl
with unpredictable holes (as a knitter this metaphor really isn’t working for
me).

Possibilities: rely less on juries? She doesn’t like that b/c they have a profound
role to play. But jury instructions are just so bad right now that they’re a good
place to start. Trial transcripts often feature comments by a judge: I don’t
know what to do here. That’s true even
w/more senior judges. The parties often propose conflicting instructions and
the judge picks neither; in the Led Zepplin case the judge just got reversed for
doing that. Level the playing field: where a more moneyed party removes a
reference to copying of protected expression,
leaving it just copying of expression, that’s bad. Should discourage minor tweaks to the
instructions—a waste of the docket.

You also have to address moral intuitions—even a good jury
instruction might not be complied w/. Debias
w/ respect to foreseeable jury errors, and standardize debiasing. Fogerty has good instructions about how
copying facts and ideas may seem unfair, but you can’t consider in it. Linguistic divergence: address the meaning of
derivative work: derived from, not trivial/not creative. Trim instructional clutter and statutory
bloat, like eliminating references to choreography in non-dance cases. Group
exclusive rights rather than scattering references and definitions throughout. Accurate and nonpartisan jury instructions could
be developed abstractly.

Bartow: are you going to separate out music? Always been her sense that music is the
disaster area.

A: less about works than about training attention on the
proper Q.

Lemley: plain meaning patent jury instructions are a thing
in some jurisdictions –SDNY/CD Cal might be interested, and you could get immediate
adoption. Broader Q: how sure are we that it matters? There are lots of reasons
juries might screw up © cases, and it’s not clear that it’s jury instructions
v. constructing their own good guy/bad guy narrative.

A: Plain meaning is sometimes oversimplified—you can make
the jury think their job is super easy, so you don’t want to do that. Flowcharts,
images, other things could be played w/ if you involved psychologists/social
scientists. The social science literature suggests that jury instructions do
matter.

Ramsey: use AIPLA or INTA—more likely to be adopted by judges
if institutions are involved.

Lunney: fighting against jury’s moral intuitions is an
uphill battle, and the parties have no interest in model instructions in their
own case—so can you get a model that the judge will follow even in the face of
pressure from the parties?

Copyright’s Arc, Martin Skladany: © should vary across the globe.
In poor and rich countries, we should reduce © dramatically and in middle
income countries it’s doing the right job. Lunney: we have a group of elites
making a lot of $; his concern is for the average artist. Skladany is concerned
for the average consumer, who in the US consumes 10 hours of entertainment not
counting social media, which is too much. Developing country side: incentives
are working well for elites in a broken context—they’re not producing enough content
within developing countries. They don’t have enough content; let’s get them
content. The barrier isn’t primarily © but it’s part of the equation. We’ve
attacked that educationally with A2K, but not with entertainment. Telenovels
from Brazil can make social changes in Iran.

Q: 10 hours?

A: Varies; elderly people watch more TV; Nielsen counts
things like listening to the radio as you drive as time spent consuming media.

Fagundes: if the appetite for content is so great then 10
hours stays the same. If people’s demand is for content, not for new content,
then you don’t get the result of decreased elite production.

A: doesn’t need to be complete or immediate to solve
overconsumption.

Q: is encouraging people to watch telenovelas from another
country/watch Who’s the Boss really a good idea? Isn’t it another imperializing move?

A: but Brazil didn’t colonize Iran—looking for all content
across the world. Appreciate the spirit, but right now © helps only the elite
of a poor country. Promotion of civil and gender equality has faltered; media
showing people living free lives seems like it might help.

Q: what if it only decreases the quality of content and not
the amount? With new tech people are willing to produce a lot of content, even
for 6 months of ©.

A: big companies are using fMRI and other increasingly
sophisticated techniques to manipulate us; decreasing the incentive to do that
(e.g., weaponizing games into making them addictive) would be good. [Though
with control over the server, you don’t need much © if you’ve addicted
someone.]

Rosenblatt: risks sounding colonialist even if you aren’t.
Skeptical that reducing term will meaningfully reduce demand or production even
of expensive goods; you only need to look at K-pop to see that widespread short
terms of exclusivity have not reduced production pace or investment. Instead
people go for a short big splash.

A: if we don’t believe that © motivates creativity, what are
we doing here? Nollywood has more piracy; production values and production
scope aren’t as great. The problem is rural access; even piracy in cities doesn’t
get media to the least developed areas, and NGOs can’t afford licensing.

Q: why do the rich countries need less consumption?

A: Correlation b/t consumption and poor health. But every
American should be creating and we’re not doing that (dad had to work in a
factory instead of as a chef to get health insurance).

Tear Down the Stairway? Copyright Injunctions and the Public
Interest, Tim McFarlin

Comes out of interest in determining authorship: some cases
say contribution to audience appeal is a factor in who’s an author. So where
else does audience impact come into © doctrine? After Petrella, it’s easy for claimants to come out of the woodwork; the Stairway
to Heaven case is an example, using requests for injunctive relief and even impoundment/destruction. Rear
Window case mentioned the denial of the opportunity to the public to
experience a classic could be a factor in the remedy analysis. But where’s the
line b/t a classic and a nonclassic (12 Monkeys (preliminary injunction
granted), Blurred Lines?). Is the
nature/genesis of the infringement relevant?
Willfulness? Percentage of infringing content? Distance from fair use? Gilden argues that a
stronger injunctive remedy might pressure judges to find fair use more often. If
we don’t presume that every infringing derivative work might become a classic,
then are we favoring authors who already have a track record?

We already use audience reaction to measure damages—the contribution
of the infringement to the work—so can we use that to answer some of these
questions?

Buccafusco: an injunction won’t matter very much in terms of
access to truly valuable works [and 12 Monkeys]; will just shift the bargaining
b/t plaintiff and defendant.

A: yes, but can add additional uncertainty esp. with things
like new technological uses

Lunney: relative value
of contribution, or relative cost of
contribution? Cost-based returns are
what happen in competitive markets. Can
we do a Rawlsian analysis? E.g., would
Led Zepplin have created Stairway to Heaven if they’d known that the rights
would subsequently be divided (though I think you’d have to know whether the
rights would be divided in an ordinary percentage before they were famous or
whether the rights would be divided treating Led Zepplin as a famous
infringer).

Gilden: flip the Q: when the audience might want an injunction—when they wouldn’t want
to experience an infringing work.

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100% Natural chicken claims might mislead about antibiotics and other features

Posted on February 5, 2019 by rtushnet

Friends of the Earth v. Sanderson Farms, Inc., 2018 WL
7197394, No. 17-cv-03592-RS (N.D. Cal. Dec. 2, 2018)

FOE sued Sanderson, alleging FAL and UCL claims against Sanderson’s
“100% Natural” advertising for its chicken, in particular that that the ads falsely
and misleadingly suggest that its process and resulting product meet reasonable
consumer expectations for “natural” poultry, including: (1) no pharmaceutical
residues remain in the product; (2) pharmaceuticals, including antibiotics, are
not routinely administered to the chickens during the majority of their lives;
(3) Sanderson is not contributing to the spread of antibiotic-resistant
bacteria; and (4) Sanderson chickens were raised in natural conditions, such as
going outdoors.

The court found the complaint sufficient insofar as it
alleged that Sanderson’s advertisements and statements describe “natural” “in a
way that confuses consumers as to whether the chicken product was raised
without antibiotics versus raised with antibiotics and subsequently cleared of
it prior to sale, … taking advantage of consumer expectations that a ‘natural’
food product has never been exposed to antibiotics and the attendant consumer
willingness to spend more for such products.”

Sanderson argued that the ads’ full context dispelled any
potential confusion, pointing to: (1) the infographic on Sanderson’s “100%
Natural” webpage, (2) Sanderson’s “How We Grow Our Chicken” video, and (3)
Sanderson’s “Bob
and Dale” commercials.
Sanderson argued that the infographic had only true statements about
what’s not added to the chicken and says nothing about antibiotic use or
nonuse. The court didn’t accept
Sanderson’s expressio unius argument “that because antibiotics are not included
in the list of excluded artificial ingredients, a reasonable consumer could not
conclude that antibiotics are also excluded.”
Statements about the nonuse of hormones, steroids, seaweed, etc., didn’t
provide sufficient context for a reasonable consumer to conclude that “100%
Natural” chicken had been treated with antibiotics as part of the production
process. Instead, a reasonable consumer, considering the “100% Natural” slogan,
“could plausibly believe that the infographic’s ‘no additives or artificial
ingredients’ statement means no synthetic pharmaceuticals.” There was no
unequivocal disclosure about the use of antibiotics, and “the infographic’s
silence on the issue is not a disclosure.” The affirmative representations “100%
Natural” and “no additives or artificial ingredients” were plausibly contrary
to the undisclosed characteristic of antibiotic treatment. (Likewise, the
entire webpage claimed that there were “no unpronounceable ingredients” in Sanderson
chicken and that its feed is “corn and soy-based,” which plausibly implied that
there were no antibiotics/their names would be easily pronounced, “a stretched
argument at best.”)

A link on the webpage went to the FAQ, which disclosed the
use of antibiotics. But the entire context of the website need not be
considered—review is limited to the four corners of the page. “No authority suggests a reasonable consumer
is expected to search a company’s entire website (or certainly all of a
company’s statements across all forms of advertisements) to find all possible
disclaimers.” The reasonable consumer
standard doesn’t require them to be “private investigators.”

The “Bob and Dale” ads said “all chickens must be cleared of
antibiotics before they leave the farm.” Sanderson argued that this could not
plausibly leave a reasonable consumer with the impression that Sanderson does
not use antibiotics, because “if the process was devoid of antibiotics, surely
there would be nothing to ‘clear’ before the birds left the farm.” Not so. “A lawyer may well catch this turn of
phrase, but the reasonable consumer standard does not demand that consumers
interpret advertisements the same way a judge interprets statutes.” This
negative inference isn’t required of a reasonable consumer, any more than she’s
expected to use ingredient lists on the back of a box to contradict claims on
the front. The ad didn’t focus on the fact that Sanderson uses antibiotics and
then clears its chickens of the drugs before sale, nor was it merely making
literally true statements regarding federal law requiring all chicken to be
clear of antibiotics before point of sale. Instead, the ad focused on
Sanderson’s competitors, and their use of phrases “no antibiotics ever” or
“raised without antibiotics” as essentially being redundant in light of federal
law requiring no chicken products contain antibiotics at point of sale. “By
criticizing its competitor’s advertising as misleading to consumers,
Sanderson’s commercial is likely to mislead reasonable consumers into believing
that Sanderson products were no different than its competitors who never used
antibiotics in their chicken production.” This was plausibly misleading to
consumers who were willing to pay a premium for chicken that had never been
exposed to antibiotics.

As to allegations about chicken cultivation, plaintiffs
cited surveys indicating that at least
half of consumers understand “natural” to mean the animal roamed outdoors. This,
plus the allegation that Sanderson chickens don’t roam, sufficiently alleged
misleadingness.

Allegations about Sanderson’s contribution to antibiotic
resistance were also sufficient at the pleading stage. Plaintiffs alleged that
Sanderson’s process contributes to the build-up of unnatural
antibiotic-resistant bacteria, and “100% Natural” thereby misleads the public
regarding the threat to public health the product entails. Sanderson argued
that it never said anything about antibiotic resistance. However, plaintiffs sufficiently alleged that
the ads “mask the difference between Sanderson’s products—which are raised with
antibiotics and cleared of the drugs before point of sale—and competitors’
products which never encounter antibiotics,” misleading consumers into thinking
the key concern is whether antibiotics residues remain on the product, and not
how the use of antibiotics in the production of chicken can contribute to
antibiotic resistance even after the drugs are cleared from the animal’s
system. Plaintiffs sufficiently alleged falsehood by citing numerous studies
and reports about how the overuse of antibiotics in agriculture contributes to
antibiotic resistance and alleging that Sanderson chickens do in fact contain
antibiotic-resistant bacteria when they leave their facilities.

The video “How We Grow Our Chicken” allegedly didn’t disclose
the full extent of Sanderson’s antibiotic use. Sanderson’s statements that the
“only time we inject antibiotics” is a single time under the shell and that
broiler chickens are not injected with anything were true standing alone, but
together their combined message was potentially misleading. “Injection is not
the only means of administering antibiotics to chickens, and Plaintiffs aver
Sanderson routinely feeds antibiotics to its broiler chickens.”

from Blogger http://bit.ly/2RGey6X

Posted in Uncategorized | Tagged 100% Natural chicken claims might mislead about antibiotics and other features california, consumer protection, false advertising | Leave a comment

En banc court again strikes down sugar-sweetened beverages warning, with divided and divisive reasoning

Posted on February 5, 2019 by rtushnet

American Beverage Ass’ v. City & County of San Francisco,
No. 16-16072 (9^th Cir. Jan. 31, 2019)

After the panel
opinion striking down SF’s sugar-sweetened beverages (SSB)
disclosure was reheard by the en banc court in light of National Institute of
Family & Life Advocates v. Becerra (NIFLA), 138 S. Ct. 2361 (2018), the en
banc court again struck it down, though not with enough force for a vigorous
special concurrence in the judgment. To
the majority, the disclosure was an “unjustified or unduly burdensome disclosure
requirement[] [that] might offend the First Amendment by chilling protected
commercial speech” under Zauderer v. Office of Disciplinary Counsel, 471 U.S.
626 (1985).

The ordinance required certain SSB ads within the city to
state: “WARNING: Drinking beverages with added sugar(s) contributes to obesity,
diabetes, and tooth decay. This is a message from the City and County of San
Francisco.” Traditional media ads and some other things, like small logos, were
excluded. The warning had to occupy at least 20% of the advertisement and be
set off with a rectangular border.

Under Zauderer,
the government may compel truthful disclosure in commercial speech as long as
the compelled disclosure is “reasonably related” to a substantial governmental
interest. The Supreme Court vacated and remanded CTIA–The Wireless Ass’n v.
City of Berkeley, 854 F.3d 1105 (9th Cir. 2017), in light of NIFLA, but that didn’t make a difference
to this case. CTIA “examined a similar health and safety warning and held
squarely that Zauderer provides the
proper analytical framework for considering required warnings on commercial
products,” and is not limited to disclosures that correct falsity.

“NIFLA did not
address, and a fortiori did not disapprove, the circuits’ precedents, including
CTIA, which have unanimously held
that Zauderer applies outside the context of misleading advertisements.”

Indeed, “NIFLA
preserved the exception to heightened scrutiny for health and safety warnings.
The Supreme Court made clear that it was not calling into ‘question the
legality of health and safety warnings long considered permissible.’” Judge
Ikuta’s special concurrence read this language to mean that only health and
safety warnings of ancient origin could avoid heightened scrutiny, but “the
most natural reading of this passage” was as a reference to health and safety
warnings in general, especially given that the NIFLA majority was answering Justice Breyer’s dissent listing
examples such as warnings about seat belts and about the availability of whooping
cough vaccine. “There is no indication that either of those required
disclosures is of ancient origin or that the majority intended some health and
safety warnings (if accurate, uncontroversial, and not unduly burdensome) to be
precluded merely because the knowledge that the warnings convey is new.”

Under Zauderer, a
compelled notice must be (1) purely factual, (2) noncontroversial, and (3) not
unjustified or unduly burdensome. SF failed to meet its burden on (3). SF’s
argument that the border and 20% size requirements adhered to best practices
for health and safety warnings was unpersuasive. Some tobacco and prescription
warnings must occupy at least 20% of those products’ labels or advertisements,
and SF’s expert concluded that larger warnings are more effective. But the
record here showed that a smaller warning would achieve SF’s stated goals; SF’s
expert cited and discussed a study that examined a warning similar to that
required by the ordinance, but covered only 10% of the ad. SF failed to show
that the contrasting rectangular border containing a warning that covers 20% of
the advertisement didn’t “drown[] out” Plaintiffs’ messages and “effectively
rule[] out the possibility of having [an advertisement] in the first place.” A 10% warning wouldn’t necessarily be valid,
and a 20% warning isn’t necessarily invalid, but on this record, SF didn’t
carry its burden.

Judge Ikuta dissented from most of the reasoning. NIFLA superseded Zauderer by holding that government-compelled speech is a
content-based regulation of speech. (The majority is obviously right that this
isn’t new; what’s relatively new is the suggestion that there are some
commercial speech regulations that are other than content-based, always contrasted
with the content-based commercial speech regulation actually before the court
in a given case, combining poisonously with the post-Reed idea that all content based regulations are the same variety
of bad.) Content-based regulations are
presumptively unconstitutional. After NIFLA,
governments may not “impose content-based restrictions on speech without
persuasive evidence of a long (if heretofore unrecognized) tradition to that
effect.”

Zauderer now only
applies to “some laws that require professionals to disclose factual,
noncontroversial information in their ‘commercial speech.’” Anyway, the factual accuracy of this warning
wasn’t undisputed. (Will it ever be?)
The FDA says that added sugars are “generally recognized as safe,” and
“can be a part of a healthy dietary pattern” when not consumed in excess
amounts. The disclosure was also not
“uncontroversial” (will it ever be?) because the record showed this was a
controversial topic. Nor did the warning
“relate to the terms on which the advertisers provide their services,” which
Judge Ikuda took to be a NIFLA-added
limit on the reach of Zauderer,
because soda is a product and not a service and the warning doesn’t address the
terms of the deal. [This reasoning is just bad; (1) there is no reason to
distinguish disclosures for services from disclosures for products for
constitutional purposes (I think for Judge Ikuda this is a collateral
consequence of the idea that Zauderer
is now only for professional speech and not for ordinary commercial speech, but
professionals can sell you products as well as services), and (2) the “terms”
here should include “what you’re getting for your money,” and the disclosure
relates to the components of SSBs.] Judge Ikuda did agree that the warning was
too burdensome, as well.

And the majority here was wrong to say that “NIFLA preserved the exception to
heightened scrutiny for health and safety warnings,” because only “health and
safety warnings long considered permissible” were excepted. “NIFLA did not specify what sorts of
health and safety warnings date back to 1791, but warnings about
sugar-sweetened beverages are clearly not among them.” [Look, the majority
clearly has the better of this argument; the sensible meaning is that health
and safety warnings have long been considered permissible, not that warnings
about poxy air would be ok because they’re old but warnings about PCBs would be
problematic because they’re new. Even Justice Scalia was very clear (in his Lucas v. South Carolina Coastal Council
opinion) that newly discovered facts about the nature of the physical world can
trigger old doctrines allowing regulation.
However, the not unrelated question about what constitutes a “factual
and uncontroversial” disclosure may thwart the majority’s attempt to preserve
health and safety warnings, insofar as it’s usually possible to find someone to
contest any factual proposition. [But of
course, when it comes to abortion/ “informed consent,” the government can
require the disclosure of all sorts of things, without a “factual/uncontroversial”
requirement, because that’s different.]]

Without Zauderer’s
cover, the mandatory disclosure flunked intermediate scrutiny because the
warming wasn’t sufficiently tailored to the government interest in warning of
the public health dangers from drinking SSBs.
It was underinclusive—it didn’t apply to all SSBs, much less all
sugar-sweetened products, and it didn’t apply to many ads for covered SSBs.
Moreover, “San Francisco could disseminate health information by other, less
burdensome means, such as a less intrusive notice or a public health campaign.”

Judge Ikuda also objected that the majority failed “to provide any guidance
regarding when a warning is unjustified or unduly burdensome.” Instead of
considering the “totality” of the requirements, the majority considered only
whether a smaller warning would accomplish the city’s stated goals. It should
have tested the regulation against Central
Hudson scrutiny, rather than reasoning that if it couldn’t meet Zauderer’s exception then it couldn’t
pass Central Hudson.

Judge Christen and Chief Judge Thomas concurred in part and
in the judgment. They would apply Zauderer,
but would have reasoned that SF couldn’t show that the speech at issue was
“purely factual.”

“[W]here, as here,
the parties disagree about the veracity of compelled speech, the court should
begin by asking whether the government’s message is objectively true,” because
an assessment of controversiality or burdensomeness will often entail much more
subjective judgments.

To the concurrence, there was no evidence that SSBs “contribute[]
to” obesity, diabetes, and tooth decay, because “diabetes” is an umbrella term
referring to both type 1 diabetes and type 2 diabetes and the causes of type 1
diabetes are unknown, so the research linking SSBs to type 2 diabetes is
irrelevant. [This reasoning is
unimpressive. Drinking and driving
contributes to car accidents even though it doesn’t contribute to every car
accident or even every kind of car accident.]
The message was therefore also controversial. That provided a more
objective basis for invalidating the law than its burden. [The concurrence doesn’t notice that its
subjectivity comes in when interpreting the semantic meaning of the required
disclosure—a weakness that also came up in the case invalidating the initial
tobacco warning images for putatively conveying a factual message that smoking
always causes autopsies.]

SF argued that a reasonable person would understand the
reference to diabetes as “the kind of diabetes that can be caused by
overconsumption of sugar,” but that argument was “in tension with the goal of
having a public health message understood by the maximum number of consumers,
not just those with sophisticated levels of health literacy. Because the
message would be conveyed to sophisticated and unsophisticated consumers, we
must read it literally.” [I guess in the
next round of this we get to debate whether “contributes to” communicates
something like “always causes” or “uniformly raises everyone’s risks the same
amount” or something like that. The
point of the message was not to educate consumers about the different types of
diabetes; it was to provide them with actionable information about the
relationship between SSBs and the disease state of diabetes. If they end up knowing the latter without
being aware of the former, they’re not misled.
I find it odd to treat the warning as a purely abstract item of
information rather than information that might affect actions, as was its
point.]

The concurrence defends its “persnickety” insistence on
factuality not only because of the constitutional rules, but because of the
social consequences of government-mandated messages, given the pervasive
stigmatization of people with type 1 diabetes as having a disease that is the
result of a lack of personal responsibility.
[Again, it’s completely unclear to me how the warning would worsen this
problem; assume it said (correctly, as far as the concurrence is concerned)
that SSBs are associated with type 2 diabetes.
People would still need to learn the difference between type 1 and type
2 independently of the warning. Unless
the thought is that the mandatory warning should also educate them about type 1
diabetes and perhaps caution them against shaming anyone with diabetes?]

Further, the warning was “problematic” because it suggested
that sugar was always dangerous for diabetics, whereas consuming SSBs can be
medically indicated for a type 1 diabetic when there are signs of hypoglycemia,
to raise blood sugar levels quickly.

Judge Nguyen concurred also, arguing that Zauderer is only for disclosures that
correct false/misleading speech and that SF’s warning flunked Central Hudson. Applying Zauderer
was particularly bad because the SSB warning was a content-based
regulation. [Sigh.]

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

Posted in Uncategorized | Tagged disclosures, En banc court again strikes down sugar-sweetened beverages warning, first amendment, with divided and divisive reasoning advertising | Leave a comment

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100% Natural chicken claims might mislead about antibiotics and other features

En banc court again strikes down sugar-sweetened beverages warning, with divided and divisive reasoning

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