Guitar design authorship blues: delay and consent defeat (c), ROP, other claims

Posted on February 21, 2019 by rtushnet

Webster v. Abbott, 2018 WL 7352411, No.
8:17-cv-01795-T-02CPT (M.D. Fla. Nov. 30, 2018)
Webster is a luthier and guitar technician who goes by
“Buddy Blaze.” Around 1985, he modified a Dean ML guitar and had the guitar
painted blue with a lightning graphic. He gave the guitar to a friend, Darrell
Abbott, who called it “The Dean from Hell” (DFH) and then went on to become a
guitarist in the band Pantera known as “Dimebag Darrell.” In 2004, Abbott
signed an “endorsement-type” contract with Dean Guitars (and was then
murdered). Dean Guitars began to sell copies of the DFH. After Abbott’s funeral, the former owner of Dean Guitars contacted Abbott
about painting a copy of the DFH for release, but Webster explained that another person had painted the original version
at his direction. After he knew Dean Guitars was selling DFH replicas, Webster
also lent photographs to Dean Guitars for a display at the 2005 National
Association of Music Merchants tradeshow which linked Webster to Abbott and the
DFH. He testified, “I was okay with them displaying it at the booth during the
show.” 

The DFH/CFH

By 2006, Webster knew Dean Guitars was selling the DFH as a
“mass-market product” with several price points and versions. He was unhappy
that Dean Guitars was issuing a cheap, imported version of the DFH called
Cowboy From Hell or DFH/CFH. He told the then-CEO of Dean Guitars, “we’ve got
to work this out…. I’m not okay with what’s going on,” and “you can’t do that
without, you know, my blessing, without a release from me.” In 2007, the
then-CEO responded that “I have taken some time and spoken to several ‘people
in the know’ and the consensus concerning Dime’s graphic is that Dime’s estate
is the legal owner of it. With that said, I still would like to work with you
on a Dime project because I am not about making enemies but keeping friends.” Webster
objected; Dean Guitars told him to sue the estate as the owner/licensor of the
graphic. Webster continued to object.
In 2009, Webster worked on his own signature guitar, the
Buddy Blaze ML, produced and sold by Dean Guitars; he promoted the Buddy Blaze
ML alongside the then-CEO and provided a brief history of the DFH and compared
his model with the DFH. He’s appeared and been referenced in other videos
apparently produced by Dean Guitars, whose website at one time linked two
YouTube videos featuring interviews with Webster in which he gave the history
of DFH in front of the original DFH and promoted his own guitar and volunteered
information about Abbott and the DFH. Neither video made any mention of DFH
reissues.
 

Buddy Blaze ML

In 2016, he registered a copyright in the DFH lightning
graphic design and sued for copyright infringement, civil conspiracy and unfair
competition in 2017.
The court found the copyright infringement and civil
conspiracy claims time-barred. Though a copyright infringement claim separately
accrues with each infringing act, “[w]here the gravamen of a copyright
infringement suit is ownership, and a freestanding ownership claim would be
time-barred, any infringement claims are also barred.” Petrella v.
Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014) didn’t change the rule that the
an ownership claim accrues only once. In the Sixth and Ninth Circuits, such a
claim accrues “when plain and express repudiation of co-ownership is
communicated to the claimant.” In the First, Second, Fifth, and Seventh
Circuits, the clock starts “when the plaintiff learns, or should as a
reasonable person have learned, that the defendant was violating his rights.” Under
either test, the claim here was time-barred.
Dean Guitars’ “olive branch” offer of a separate relic DFH
with the possibility of royalties for Webster didn’t make its repudiation of Webster’s
claim to ownership any less express. The language was clear that any royalties
would have stemmed from Webster’s work with a possible future relic model, not from
the original DFH. Further, Dean Guitars told Webster to sue the estate.
Webster’s delay, allegedly out of respect for Abbott’s family following his
death and then because of Webster’s own family issues and the then-CEO’s
failing health, weren’t justifications that would pause the legal clock.
Although the unfair competition claims weren’t preempted
(they didn’t depend on ownership or infringement of the copyrighted design),
they also failed. Webster objected to the use image “for years in connection
with the historical fact of his creation of the Dean From Hell,” especially as
it relates to the reissues. As a result, he alleged, “people came to think that
[Plaintiff] was wealthy or had authorized these uses of his name and likeness”
and this association damaged his reputation. But his allegations and evidence
couldn’t support this claim.
Setting aside issues with proving
injury and a possible fair use defense, the most fundamental flaw in
Plaintiff’s argument is that Defendants’ statements were neither false nor
misleading. … Most of the statements at issue concerning the history of the DFH
and Plaintiff’s friendship with Mr. Abbott are made by Plaintiff himself.
Importantly, Defendants made no misleading statements with respect to any
endorsement or sponsorship of the DFH reissues, or even Dean Guitars itself. In
fact, there are no such statements or implicit suggestions linking Plaintiff to
the replicas at all.
A NAMM attendee also stated
in his declaration that “I heard Dean representatives using Buddy’s name when
selling the Dean From Hell copies. The gist of their statements was that Dean
was selling guitars like the one that Buddy Blaze re-built for Darrell.” But
there was nothing untrue or misleading about such statements.
“There is no suggestion in any material Plaintiff sets forth
that Defendants used Plaintiff’s name or likeness to sell or market the DFH
reissues, or any suggestion that Plaintiff endorsed or derives income from the
guitars.” Webster voluntarily participated in each video, and couldn’t identify
any harm therefrom.
Webster’s invasion of privacy by misappropriation claim (right
of publicity under Texas law) also failed. Texas requires that (1) the
defendant appropriated the plaintiff’s name or likeness for the value
associated with it; (2) the plaintiff can be identified from the publication;
and (3) there was some advantage or benefit to the defendant. Defendants
pointed out that Webster voluntarily participated in the videos, but Webster
argued that he permitted use as it related to the history of DFH, but not
reissues of the guitar. The court reasoned that Webster “certainly had some
idea of the extent of the publication of the interviews yet nonetheless
consented. Each video appears to have been filmed by Dean Guitars and,
moreover, at trade shows for music merchants. As for the reissues, Plaintiff no
doubt knew that the guitar Defendant Haney signed in one of the NAMM videos was
not the original DFH. Plaintiff nonetheless voluntarily related the history of
the DFH to the interviewer. Reissues do not appear and are not referenced in
any other video featuring Plaintiff.”
Ultimately, there was insufficient evidence that defendants
appropriated Webster’s name or likeness for the value associated with it. At
most, they used his name (when he wasn’t himself participating in a video) only to
provide historical background. In addition, the claims based on the videos were
“extracted from either an old Dean Guitars website, or from the vastness of the
internet” and there was no evidence that these old videos were even used as ads
to sell the reissues.

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Guitar design authorship blues: delay and consent defeat (c), ROP, other claims

Posted on February 21, 2019 by rtushnet

Webster v. Abbott, 2018 WL 7352411, No.
8:17-cv-01795-T-02CPT (M.D. Fla. Nov. 30, 2018)
Webster is a luthier and guitar technician who goes by
“Buddy Blaze.” Around 1985, he modified a Dean ML guitar and had the guitar
painted blue with a lightning graphic. He gave the guitar to a friend, Darrell
Abbott, who called it “The Dean from Hell” (DFH) and then went on to become a
guitarist in the band Pantera known as “Dimebag Darrell.” In 2004, Abbott
signed an “endorsement-type” contract with Dean Guitars (and was then
murdered). Dean Guitars began to sell copies of the DFH. After Abbott’s funeral, the former owner of Dean Guitars contacted Abbott
about painting a copy of the DFH for release, but Webster explained that another person had painted the original version
at his direction. After he knew Dean Guitars was selling DFH replicas, Webster
also lent photographs to Dean Guitars for a display at the 2005 National
Association of Music Merchants tradeshow which linked Webster to Abbott and the
DFH. He testified, “I was okay with them displaying it at the booth during the
show.” 

The DFH/CFH

By 2006, Webster knew Dean Guitars was selling the DFH as a
“mass-market product” with several price points and versions. He was unhappy
that Dean Guitars was issuing a cheap, imported version of the DFH called
Cowboy From Hell or DFH/CFH. He told the then-CEO of Dean Guitars, “we’ve got
to work this out…. I’m not okay with what’s going on,” and “you can’t do that
without, you know, my blessing, without a release from me.” In 2007, the
then-CEO responded that “I have taken some time and spoken to several ‘people
in the know’ and the consensus concerning Dime’s graphic is that Dime’s estate
is the legal owner of it. With that said, I still would like to work with you
on a Dime project because I am not about making enemies but keeping friends.” Webster
objected; Dean Guitars told him to sue the estate as the owner/licensor of the
graphic. Webster continued to object.
In 2009, Webster worked on his own signature guitar, the
Buddy Blaze ML, produced and sold by Dean Guitars; he promoted the Buddy Blaze
ML alongside the then-CEO and provided a brief history of the DFH and compared
his model with the DFH. He’s appeared and been referenced in other videos
apparently produced by Dean Guitars, whose website at one time linked two
YouTube videos featuring interviews with Webster in which he gave the history
of DFH in front of the original DFH and promoted his own guitar and volunteered
information about Abbott and the DFH. Neither video made any mention of DFH
reissues.
 

Buddy Blaze ML

In 2016, he registered a copyright in the DFH lightning
graphic design and sued for copyright infringement, civil conspiracy and unfair
competition in 2017.
The court found the copyright infringement and civil
conspiracy claims time-barred. Though a copyright infringement claim separately
accrues with each infringing act, “[w]here the gravamen of a copyright
infringement suit is ownership, and a freestanding ownership claim would be
time-barred, any infringement claims are also barred.” Petrella v.
Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014) didn’t change the rule that the
an ownership claim accrues only once. In the Sixth and Ninth Circuits, such a
claim accrues “when plain and express repudiation of co-ownership is
communicated to the claimant.” In the First, Second, Fifth, and Seventh
Circuits, the clock starts “when the plaintiff learns, or should as a
reasonable person have learned, that the defendant was violating his rights.” Under
either test, the claim here was time-barred.
Dean Guitars’ “olive branch” offer of a separate relic DFH
with the possibility of royalties for Webster didn’t make its repudiation of Webster’s
claim to ownership any less express. The language was clear that any royalties
would have stemmed from Webster’s work with a possible future relic model, not from
the original DFH. Further, Dean Guitars told Webster to sue the estate.
Webster’s delay, allegedly out of respect for Abbott’s family following his
death and then because of Webster’s own family issues and the then-CEO’s
failing health, weren’t justifications that would pause the legal clock.
Although the unfair competition claims weren’t preempted
(they didn’t depend on ownership or infringement of the copyrighted design),
they also failed. Webster objected to the use image “for years in connection
with the historical fact of his creation of the Dean From Hell,” especially as
it relates to the reissues. As a result, he alleged, “people came to think that
[Plaintiff] was wealthy or had authorized these uses of his name and likeness”
and this association damaged his reputation. But his allegations and evidence
couldn’t support this claim.
Setting aside issues with proving
injury and a possible fair use defense, the most fundamental flaw in
Plaintiff’s argument is that Defendants’ statements were neither false nor
misleading. … Most of the statements at issue concerning the history of the DFH
and Plaintiff’s friendship with Mr. Abbott are made by Plaintiff himself.
Importantly, Defendants made no misleading statements with respect to any
endorsement or sponsorship of the DFH reissues, or even Dean Guitars itself. In
fact, there are no such statements or implicit suggestions linking Plaintiff to
the replicas at all.
A NAMM attendee also stated
in his declaration that “I heard Dean representatives using Buddy’s name when
selling the Dean From Hell copies. The gist of their statements was that Dean
was selling guitars like the one that Buddy Blaze re-built for Darrell.” But
there was nothing untrue or misleading about such statements.
“There is no suggestion in any material Plaintiff sets forth
that Defendants used Plaintiff’s name or likeness to sell or market the DFH
reissues, or any suggestion that Plaintiff endorsed or derives income from the
guitars.” Webster voluntarily participated in each video, and couldn’t identify
any harm therefrom.
Webster’s invasion of privacy by misappropriation claim (right
of publicity under Texas law) also failed. Texas requires that (1) the
defendant appropriated the plaintiff’s name or likeness for the value
associated with it; (2) the plaintiff can be identified from the publication;
and (3) there was some advantage or benefit to the defendant. Defendants
pointed out that Webster voluntarily participated in the videos, but Webster
argued that he permitted use as it related to the history of DFH, but not
reissues of the guitar. The court reasoned that Webster “certainly had some
idea of the extent of the publication of the interviews yet nonetheless
consented. Each video appears to have been filmed by Dean Guitars and,
moreover, at trade shows for music merchants. As for the reissues, Plaintiff no
doubt knew that the guitar Defendant Haney signed in one of the NAMM videos was
not the original DFH. Plaintiff nonetheless voluntarily related the history of
the DFH to the interviewer. Reissues do not appear and are not referenced in
any other video featuring Plaintiff.”
Ultimately, there was insufficient evidence that defendants
appropriated Webster’s name or likeness for the value associated with it. At
most, they used his name (when he wasn’t himself participating in a video) only to
provide historical background. In addition, the claims based on the videos were
“extracted from either an old Dean Guitars website, or from the vastness of the
internet” and there was no evidence that these old videos were even used as ads
to sell the reissues.

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Competitor can’t stop allegedly false promotion of unapproved substances bearing CYA “not for human use” warnings

Posted on February 20, 2019 by rtushnet

Nutrition Distribution LLC v. Pep Research, LLC, 2019 WL
652391, No. 16cv2328-WQH-BLM (S.D. Cal. Feb. 15, 2019)
Nutrition Distribution sued Pep for false advertising under
the Lanham Act, alleging that its competitor, a supplement company, falsely
advertised certain prescription-only drugs and synthetic peptides as “research
peptides and chemicals” that are “not for human consumption” and “intended for
laboratory research only” while also marketing the products for personal use
and consumption by bodybuilders, which is misleading because Pep fails to
disclose that the [roducts are banned from sporting events and pose health and
safety risks. Pep’s website states, for example, that one product has
“undergone several recent studies … reveal[ing] rises in lean body mass and
decreases in body fat,” and “a considerable rise in strength, well being, along
with healing possibilities”; another product “enhance[s] bone toughness as well
as stop[s] weakening of bones”; and another product “decreases the risk and
severity of atherosclerosis.”
A page also states:
All customers represent and warrant
that through their own review and study that they are fully aware and
knowledgeable about the following:
The[] government regulations
regarding the importation, purchase, possession and use of research products
and other peptides.
The health and safety hazards
associated with the handling of our products in a research setting.
That our products are NOT intended
to be used as a food additive, drug, vitamin, supplement, cosmetic or any other
inappropriate application. Such a sale would be otherwise denied.
Other allegedly disingenuous pages state: “Safety
Information: For Research Use Only. Not Intended for Diagnostic or Human Use.
Information is for educational purposes and product is not intended to treat,
cure, or diagnose any condition or disease” and “All products are intended for
laboratory and research use only, unless otherwise explicitly stated. They are
not intended for human ingestion, use, or for use in products that may be
ingested.”
Somehow, however, ads for the products turned up on worldclassbodybuilding.com
and peakmuscle.com.  Moreover, the
products are allegedly intended for human consumption given that they’re “sold
in liquid form in dropper vials, for easy oral use, along with the amount of
liquid to take for an active oral dose.” Pep allegedly targets “bodybuilders,
athletes, and fitness enthusiasts,” using social media and terminology specific
to that audience. For example, an affiliate offered a free give away via social
media post, and one customer tagged an amateur bodybuilding competitor in the
post.
The court granted summary judgment to Pep for failure to
show literal falsity.  The problem here
seems to be a contradiction: the clear warnings against human consumption are
combined with marketing to human consumers, in a wink-wink-nudge-nudge fashion.
 Pep argued that failure to disclose safety
risks wasn’t false advertising (which is not the case, though it’s often harder
to show falsity by omission than to show affirmative falsity) and that use of a
particular advertising forum couldn’t constitute falsity (which I think is also
wrong as a blanket statement: use of a forum itself can make a representation
that the products advertised are appropriate for the target market).

The court seems to have answered a slightly different question, framing the issue
as whether the claims “for research purposes only” and “not for human
consumption” were literally false, and it then concluded that there was no
evidence that these statements were false. 
The fact that the products pose health risks to humans wasn’t
inconsistent with those statements. “To demonstrate falsity by necessary
implication, there must be evidence showing that a particular unambiguous
conclusion ‘necessarily flow[s]’ from the Representations in the context of the
Product marketing, and that the conclusion is false. There is no evidence in
the record demonstrating an unambiguous message necessarily implied by the
Representations in the context of the Product marketing.” There was also no
evidence submitted of a false implicit message. 
[It seems that one possibility here, other than consumer survey evidence,
would be expert evidence about how bodybuilders are induced to try unapproved
products.  Interesting question about how
to frame the survey: in some sense, you’re looking for bodybuilders/other
targets to explain how they’d react to seeing an ad for these products in a
bodybuilding context.  I am guessing they’d
infer that the products could be used by humans to improve performance, given
that the only point of advertising them to bodybuilders instead of to research
scientists is to suggest that bodybuilders try them.]
Without more, the record (viewed in the light most favorable
to plaintiff) showed only that defendants advertised to bodybuilders online,
described the products’ putative benefits, sold consumer-usable formulations,
and didn’t provide information about health risks or anti-doping bans.  That wasn’t enough to show falsity as a logically
necessary conclusion.  [I suspect a
government agency could get a different result on whether this combination
encourages unlawful use, if the use is in fact unlawful (those do sound like disease/drug
claims).]

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ICANN and the New Top-Level Domains: Feb. 25 conference at AU-WCL

Posted on February 19, 2019 by rtushnet

ICANN and the New Top-Level Domains
American
University Washington College of Law, Room NT01
Monday,
February 25, 2019
1:30-5:30pm
We are
in the midst of an historic expansion of internet domain names with more than
1200 new generic top-level domains (“gTLDs”) now competing with
<.com>. This 5000% increase in gTLDs is the biggest change to the
internet’s domain naming system in thirty years (and more are coming soon!). Accompanying
these new gTLDs, are new and innovative–but little known–IP rights protection
mechanisms. These developments could have a profound impact on the rights of IP
owners, domain name registrants, and the public, and on the architecture of the
internet.
1:30 Welcome, Christine Haight Farley,
American University Washington College of Law
1:40 Trademark Protections in the New
gTLDs
Brian Beckham, WIPO
(invited)
Michael Karanicolas,
University of Toronto
Brian King, MarkMonitor
(invited)
Rebecca Tushnet, Harvard Law
School
Brian Winterfeldt,
Winterfeldt IP Group (invited)
Mary Wong, ICANN (invited)
3:00 Break
3:15 “Walled Gardens:” Should gTLDs Become Private Platforms?
Becky Burr, ICANN Board
& Neustar
Sarah Deutsch, ICANN Board
Kathy Kleiman, Center for
Information Technology, Princeton University
Jeff Neuman,
Com Laude/Valideus
Mitch Stoltz, EFF
4:30 Closing, Patricia Aufderheide, American University, School of Communication
4:35-5:30 Reception
Sponsored by American
University Washington College of Law, American University School of
Communications, Program on Information Justice and Intellectual Property, and
Internet Governance Lab

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No Lanham Act liability for failure to correct another’s misstatement

Posted on February 15, 2019 by rtushnet

GeoMetWatch Corp. v. Hall, No. 1:14-cv-60, 2019 WL 578917
(D. Utah Feb. 12, 2019)
Business dispute; of interest here, GeoMet asserted false
advertising against defendant AWSF because of two statements about Tempus, with
which it was working.  However, both
statements about Tempus were made by Tempus, and thus couldn’t be the basis of
Lanham Act liability for AWSF.  GeoMet
argued that “AWSF assisted Hall in making misleading statements about
Tempus[,]” and that “AWSF did not correct, and continued to promote, the Hall
Defendants’ misleading representations that they were replacing GeoMetWatch.” The
statements were made in emails sent by Tempus employees that AWSF
representatives received (and thus knew of). 
The court stated that it had seen “no authority for the novel
proposition that the Lanham Act imposes liability on an entity that has in some
way assisted another in making false or misleading statements of fact.”  Stated this way, it’s too broad: secondary
liability is definitely a thing in Lanham Act false advertising cases.  But it seems reasonable to doubt the idea
that the Lanham Act “imposes a duty on third parties to correct another’s false
or misleading representation of fact,” at least outside of cases in which the
third party itself makes some contribution to the misleadingness.  So, merely receiving the emails couldn’t
trigger Lanham Act liability.

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Eyelash wars: court tosses counterfeiting claim, allows (c) claim to continue

Posted on February 15, 2019 by rtushnet

Boost Beauty, LLC v. Woo Signatures, LLC, 2019 WL 560277, No.
2:18-cv-02960-CAS(Ex) (C.D. Cal. Feb. 11, 2019)
Mark Lemley says that many businesses think the term “unfair
competition” is redundant; many trademark plaintiffs likewise think that “infringement”
means “counterfeiting.” Here, though the court allows other claims to continue,
it shoots down that idea where the alleged counterfeiting is AdWords purchases.
Boost sued Woo for copyright infringement, trademark
infringement, and related claims. “In brief, plaintiff alleges that defendants
engaged in a scheme to gain access to plaintiff’s confidential information and
thereby replicate the beauty product that plaintiff produces, markets, and
sells. Specifically, plaintiff alleges that defendants copied its signature
eyelash enhancement product by using plaintiff’s manufacturer, by unlawfully
copying plaintiff’s copyrighted online advertisement, and by unlawfully using
variations of the term ‘BoostLash,’ plaintiff’s trademarked product name, as a
search engine adword.” [Hey, it’s a generic use of “adword.”]
Plaintiff’s copyright registration application is pending.  Here’s the “work” at issue:

Boost alleged that defendants “word for word” “copied [ ]
plaintiff’s advertisement (but ran the advertisement only outside of California
in the hopes plaintiff would not become aware of it)” and that the ads “were
intentionally unlabeled and source-ambiguous in that an ordinary consumer of
the [p]roduct would not be able to tell, unless investigating closely, that the
advertisement did not belong to plaintiff.” 
[I can’t tell from the original
ad that the ad is from the plaintiff; this seems to be a self-generated problem.]

Defendants allegedly “purchased the Google AdWords ‘boost’
and ‘lash’ together in that order as a search engine advertisement to drive
traffic to their website,” constituting infringement, false advertising, and
counterfeiting.  [This nonsense is why
courts have ended up pretty aggressively protecting comparative keyword
advertising; even assuming that BoostLash crosses the threshold of protectability,
boost and lash should still be available to anyone to tout a product that improves
the appearance of eyelashes.]
Copyright: Boost sufficiently alleged that the copying was “word
for word.” Given how long it took Boost to provide the accused ad, the court
declined to address whether there was sufficient objective similarity under the
extrinsic test, reserving this for a motion for summary judgment.  Frankly, I hope the defendants get fees on this one.  Word for word?
Counterfeiting: Although the infringement claim survived a
motion to dismiss (which is sort of depressing in itself), the counterfeiting
claim didn’t.  Defendants pointed out
that the entire point of the claim is that defendants are selling their
differently named product, WooLash, using the accused ads.  Although a plaintiff may not need to allege
direct affixation to a product for counterfeiting, alleging AdWords use was
insufficient. “At the heart of counterfeiting … is a good that has been copied
and which has been sold, offered for sale, or distributed with a counterfeit
mark.” Here, there was no allegation that the BoostLash mark was displayed alongside
defendants’ product to trick consumers into believing they were getting
BoostLash instead of Woo’s product. Use of a mark as an internet search term
isn’t counterfeiting, as a matter of law. 
It is a use in commerce, but to extend counterfeiting this far would
risk turning all infringement claims into counterfeiting claims, with their
harsher penalties.

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TM Reading list: Legal Realism: Unfinished Business by Ramsi A. Woodcock

Posted on February 15, 2019 by rtushnet

Short and punchy:

For the realist, legal reasoning lacks the determinacy of mathematics because, looked at from the right angle, anything can be analogized to anything else. Trademarks are like easements in that they are both contingent on ownership of something else, but they are also like turtles in that they both start with the letter “T.” The only way to really win an argument through legal reasoning is therefore to assume your conclusion. Mossoff cannot argue that trademark is property because trademark rights happen to have a structure (existence contingent on ownership of a piece of property) that resembles the structure of some other rights that the law treats as genuine property rights. If the law does not actually say that trademark is property — and it cannot because Mossoff’s purpose is to fill that silence with his legal reasoning — then the fact that trademarks merely resemble rights that have been designated as property rights tells nothing about whether trademark rights should be treated as genuine property rights. The resemblance just poses the question whether there should be a rule saying that everything that resembles a property right is a property right. If the argument is that yes, there should be such a rule, then an argument must be made for why that rule should be adopted, returning the argument more or less to where it started, which was to find a way to argue from existing law to the need for recognition of a new rule of law that resolves the question whether trademark should be treated as property.

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Influencer’s laundry list complaint against PopSugar survives motion to dismiss

Posted on February 13, 2019 by rtushnet

Batra v. Popsugar, Inc., 2019 WL 482492, No. 18-cv-03752-HSG
(N.D. Cal. Feb. 7, 2018)
Batra sued Popsugar for removing the CMI of her photograph,
infringing her copyright, violating her right of publicity, intentionally
interfering with her contracts, engaging in false advertising, and violating California’s UCL. She alleged claims on behalf of a putative class of “persons with
large numbers of followers on social media,” also known as “influencers.” [That
ought to be a fun class definition.]  The
complaint alleged that Popsugar “copied thousands of influencers’ Instagram
images, removed the links in the original pages that allowed the influencers to
monetize their following, and reposted the images on its own website without
authorization with links that allowed POPSUGAR to profit when users clicked
through and purchased items.”
DMCA 1202(b): Popsugar alleged that Batra failed to plead
that Popsugar had the requisite mental state and that she failed to identify
the removed CMI. The court rejected both arguments. The 9th Circuit
has held that “the ‘induce, enable, facilitate or conceal’ requirement is
intended to limit liability in some fashion—specifically, to instances in which
the defendant knows or has a reasonable basis to know that the removal or
alteration of CMI or the distribution of works with CMI removed will aid
infringement.” Here, Batra alleged that Instagram posts show a photo on the
left and sidebar text on the right, with identifying information for the author
of the photo, including “his or her name and/or link(s) to personal website(s)
or other social media sites, such as a personal YouTube channel.” When Popsugar
copied the images, it omitted the sidebar, allegedly constituting the removal
or alteration of that CMI. This was sufficient, raising the plausible inference
that Popsugar knew that removing the CMI would help conceal the alleged
infringement. 
Lanham Act false endorsement/false advertising claim:
Popsugar argued that the only relevant goods or services were products bought
by users clicking on Popsugar links, and those weren’t falsely described/attributed
in any way. But Batra alleged that there was confusion over Popsugar’s own
service of posting “shoppable” images of influencers and products, which was
sufficient to state a claim.
Copyright Act preemption: Popsugar argued that copyright law
preempted the right of publicity, interference with contract, and UCL
claims.  For the right of publicity, this
argument failed because it was the use of the plaintiffs’ names, other identifying
information, and likenesses that was at issue, not the use of the photos as
such.  Contract:  The complaint alleges that, pursuant to a
contract between Batra and LIKEtoKNOW.it, Batra was “entitled to a portion of
the revenue that LIKEtoKNOW.it received from sales resulting from social media
users’ use of the app” in connection with her posts. The intentional removal of
these links allegedly interfered with her contract.  The court found that the allegation of
unauthorized removal of monetized links was an extra element that avoided
preemption.  This strikes me as a
mistaken extension of the law; it is playing with the definition of “removal”
to mean “not copying,” which means that what is alleged is really the
unauthorized copying + use of Popsugar’s own links.  But the use of Popsugar’s own links is the kind
of economic benefit that doesn’t constitute an extra element of the tort, which is what’s required to
avoid preemption. UCL: Not preempted for the same reasons.
Interference with contract: Batra alleged that Popsugar knew
of the contract between class members and LIKEtoKNOW.it and general knowledge
of the common industry practice of affiliate marketing, and that its removal of
links was intentional “in that Defendant intended to disrupt the performance of
the parties’ contract and/or knew that disruption of performance was certain or
substantially certain to occur.”  This
was enough to state a claim for intentional interference.  
The copyright infringement claim was also plausibly pled,
despite Popsugar’s argument that Batra didn’t identify the specific infringed
works or allege that she’d submitted a complete application for registration
before suing.  Batra didn’t plead herself
out of court; she alleged dates of infringement and that she had registrations/applications
(but not the dates thereof). To survive summary judgment on statutory damages/attorneys’
fees, she’d need the appropriate registration dates, but not yet.

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False advertising claim based on patent threats fails to overcome high hurdles for such a claim

Posted on February 13, 2019 by rtushnet

Globe Cotyarn Pvt. Ltd. v. Next Creations Holdings LLC, 2019
WL 498303, No. 18 Civ. 04208 (ER) (S.D.N.Y. Feb. 8, 2019)
Globe, a fabric manufacturer, sued a fabric patent holder,
AAVN, and its subsidiary, Next Creations, for falsely claiming that Globe had
sold infringing products. The court dismissed the complaint without prejudice. 
AAVN owns patents for the manufacture of high thread count
cotton-polyester blend fabric. In 2015, AAVN filed an ITC complaint alleging
that certain imported textiles violated a portion of one of its patents; it
settled with one respondent.  Another company,
AQT, filed a 2017 petition with the PTO to review two patents, later adding
another after the PTAB found that a trial was justified on the first two. The parties
settled.  
Defendants allegedly contacted
a number of Globe’s customers and falsely accused Globe of selling infringing
materials. Globe alleged that this was done in bad faith: defendants allegedly never
inspected Globe’s product or its production facilities and thus could not have
known whether their patents were infringed.
Lanham Act claims: there wasn’t a sufficient allegation of
commercial advertising or promotion.
Globe didn’t identify the size of the relevant purchasing
public, but alleged only two messages to one customer and a third to another
customer, with even vaguer allegations about messages to other, unnamed, unnumbered
customers. “[T]hree messages sent to two customers in a marketplace of an
unidentified size are not sufficiently disseminated to the relevant purchasing
public to fall within the Lanham Act’s coverage.”
Separately, under Federal Circuit law, “[t]o prevail on an
unfair-competition claim under section 43(a) of the Lanham Act stemming from a
patentee’s marketplace activity in support of his patent, the claimant must
first establish that the activity was undertaken in bad faith.” This requires a
showing that the claims were “objectively baseless, meaning no reasonable
litigant could realistically expect to prevail in a dispute over infringement
of the patent” and that the claims were also subjectively made in bad
faith. 
The court didn’t think that alleging that defendants claimed
infringement without having any idea how the allegedly infringing product was
made could satisfy that standard; doing so might show subjective bad faith, but
not objective baselessness. [I dunno; it seems to me that “having no reason to
think that the products were infringing” is kind of the definition of “baseless,”
not just for subjectivity but for an objective analysis.]  Globe also argued that the defendants asserted
a patent they knew was invalid. This too couldn’t show bad faith. The validity
of the patents was never finally determined; as far as we know, they’re still
valid.
Unfair competition, tortious interference, and deceptive
acts: under Federal Circuit precedent, “federal patent law preempts state-law
tort liability for a patentholder’s good faith conduct in communications
asserting infringement of its patent and warning about potential litigation.” Even
applying NY law alone, the court would reject the claims.  NY’s unfair competition law “closely
resembles” §43(a)(1)(B), so the absence of commercial advertising or promotion
doomed that claim too, as well as NY’s requirement of bad faith.  Disparagement: Globe failed to plead special
damages; the one named customer didn’t ever agree to purchase its product
anyway. Tortious interference: Again, Globe failed to do more than make
conclusory assertions about specific customers, and it also didn’t sufficiently
allege wrongful means.
Deceptive acts under N.Y. Gen. Bus. Law § 349: This wasn’t
consumer-directed harm, just a private dispute.

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FTC standards for “made in the USA” support competitor’s literal falsity claim

Posted on February 13, 2019 by rtushnet

BenShot, LLC v. Lucky Shot USA LLC, 2019 WL 527829, No.
18-C-1716 (E.D. Wis. Feb. 11, 2019)
“In 2015, BenShot began selling drinking
glasses with bullets embedded in the side via an insertion in the glass.”  In 2016, Lucky Shot followed suit; both parties
added more types of glasses over time. Lucky Shot’s logo contains the terms
“U.S.A.” and “HANDCRAFTED.”  [There are detailed allegations, but suffice it to say
that “Made in the USA” is allegedly a big part of the pitch on defendants’ own
websites and Instagram, on Amazon, in point-of-purchase displays, in Google ads, etc.]
On Alibaba.com, one defendant’s company profile states, “Our
products are designed and developed in the USA and contract manufactured in
China.” Lucky Shot’s manager allegedly admitted that the glass portions of at
least Lucky Shot USA’s shot and whiskey glasses were made in China. The bottom
of they whiskey glass packaging states, “Glass and packaging made in China.”
BenShot alleged federal and Wisconsin common law false
advertising claims. Lucky Shot argued that  BenShot failed to plead fraud with
particularity under Rule 9(b), because BenShot acknowledged that the packaging
says that the glass was made in China. The court disagreed.  The fact that one type of package says that
the glass and packaging is made in China doesn’t mean that the other
representations—including, crucially, the representations made in advertising for the glasses—were sufficiently
qualified.
BenShot also sufficiently alleged economic/reputational damages
by alleging direct competition + false advertising + BenShot’s own substantial
investment in making glasses in the US, which is important to customers +
resulting injury.
Defendants then argued that falsity wasn’t sufficiently alleged,
because they complied with FTC policy on “Made in USA” claims. See B. Sanfield,
Inc. v. Finlay Fine Jewelry Corp., 168 F.3d 967, 973 (7th Cir. 1999) (“[T]he
[FTC’s] assessment of what constitutes deceptive advertising commands deference
from the judiciary.”). The package claims “assembled in the USA,” and the FTC
says, “[t]o begin with, in order for a product to be considered ‘all or
virtually all’ made in the United States, the final assembly or processing of
the product must take place in the United States.”
That was a misreading of the FTC standard, which says, “when
a marketer makes an unqualified claim that a product is ‘Made in USA,’ it
should, at the time the representation is made, possess and rely upon a
reasonable basis that the product is in fact all or virtually all made in the
United States.” An unqualified “Made in USA” claim means that a product should “contain
only a de minimis, or negligible, amount of foreign content.” Final assembly/processing
in the US is necessary but not sufficient under the plain language of the FTC
statement.  In light of the FTC standard,
BenShot plausibly alleged literal falsity given that it alleged that the
defendants make the unqualified “Made in the USA” claim despite admitting that
this is not so. “While discovery is needed to better understand the defendants’
manufacturing process and costs, the allegations in the complaint do not
suggest that this is a case ‘[w]here the percentage of foreign content is very
low,’ or where ‘[f]oreign content … is incorporated further back in the
manufacturing process’ such that the foreign content does not constitute ‘a
direct input into the finished product’” (citing FTC standard).
Defendants argued that BenShot failed to allege
misleadingness, but literal falsity/misleadingness didn’t need to be sorted out
at this stage of the case.  Defendants
also argued that all of their statements had to be considered in the full
context of their offerings, including their qualified statement on the bottom
of their whiskey glass packaging.  The argument
that one disclosure cured all other falsehoods was, the court noted, “unconvincing.”
The common law claim for unfair competition also survived.

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