ad for a “true story” states an opinion, not a fact, when applied to an expressive work

Posted on August 7, 2018 by rtushnet

Incarcerated Entertainment, LLC v. CNBC LLC, No.
18-480, 2018 WL 3677918 (D. Del. Aug., 2, 2018)
Ads for TV shows aren’t immune from false
advertising law.  However, “[s]ummarizing
an argument or opinion offered within the show is different than a statement
made about a show as a product such as its length, characters or producers.” An
ad representing a show as the “true story” of disputed historical events was
commercial speech subject to the Lanham Act, but as long as the ad summarizes a
theory actually expressed in the show, there’s no Lanham Act violation.
As alleged: 18-year-old Efraim Diveroli owned a
defense contracting business, AEY, and in 2007 beat out more established
contractors like Northrop Grumman and Lockheed Martin to fulfill a $298M
weapons and munitions contract to arm the Afghan army/police.  Later, Diveroli pled guilty to conspiracy
after a federal fraud indictment; he served a 48-month sentence. While
incarcerated, Diveroli wrote a memoir entitled “Once a Gun Runner …” and
assigned the copyright to Incarcerated Entertainment, which also owned rights
to photographs of Diveroli, dating back to his early childhood, and to
Diveroli’s life story.
In 2016, Warner Bros. released War Dogs, which was promoted as being based on Diveroli’s life
story. In 2017, CNBC broadcasted an episode of American Greed entitled “The Real ‘War
Dogs’ ” [contrasting with the film] which similarly focused on Diveroli’s
experience as a government contractor. CNBC promoted American Greed as a “shocking true crime series [that] examines the
dark side of the American dream” and “tak[ing] you deep inside shocking true
stories of brazen con artists who thrive on stealing fortunes, ruining and even
taking lives.” An ad for the episode contained a video clip from an interview
included in the episode with a comment that Diveroli got rich selling “bad
ammunition while people the same age as him are taking the sacrifices.
Despicable.”
The court here resolved false advertising
claims.  CNBC argued that the ad accurately
represented the American Greed episode and therefore didn’t include an
actionable false statement. Diveroli argued that he didn’t sell “bad ammunition”
to the US, and that people seeking his true story were likely to watch American Greed instead of buying his
memoir.  Incarcerated conceded that “based
on a true story” would be non-actionable, but argued that the affirmative
representation of presenting the true story fell within the Lanham Act’s
prohibition.
CNBC first argued that the “true stories” statement
wasn’t commercial speech, and that the ads should get the same constitutional
protection as the underlying work. The court disagreed. The promo was an ad, as
defendants called it in their briefing; it referred to a specific product for
economic purposes. “Capturing the potential viewers’ attention and capitalizing
on the popularity of the film War Dogs, the advertisement attempted to attract
viewers to CNBC for economic gain” by telling them they’d get the true
story. 
Incarcerated’s claim failed at the next step: it
failed to plead a false or misleading statement of fact.  Advertising statements made to summarize an
argument or opinion within an expressive work are opinion, while statements
about the work as a product (e.g.,
who’s performing in it) are statements of fact. 
Incarcerated’s claim related to the former: a summary of the episode’s argumentative
content. The court declined to let Incarcerated relitigate the fraud and conspiracy
allegations of more than a decade ago in a Lanham Act trial.

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ad for a “true story” states an opinion, not a fact, when applied to an expressive work

Posted on August 7, 2018 by rtushnet

Incarcerated Entertainment, LLC v. CNBC LLC, No.
18-480, 2018 WL 3677918 (D. Del. Aug., 2, 2018)
Ads for TV shows aren’t immune from false
advertising law.  However, “[s]ummarizing
an argument or opinion offered within the show is different than a statement
made about a show as a product such as its length, characters or producers.” An
ad representing a show as the “true story” of disputed historical events was
commercial speech subject to the Lanham Act, but as long as the ad summarizes a
theory actually expressed in the show, there’s no Lanham Act violation.
As alleged: 18-year-old Efraim Diveroli owned a
defense contracting business, AEY, and in 2007 beat out more established
contractors like Northrop Grumman and Lockheed Martin to fulfill a $298M
weapons and munitions contract to arm the Afghan army/police.  Later, Diveroli pled guilty to conspiracy
after a federal fraud indictment; he served a 48-month sentence. While
incarcerated, Diveroli wrote a memoir entitled “Once a Gun Runner …” and
assigned the copyright to Incarcerated Entertainment, which also owned rights
to photographs of Diveroli, dating back to his early childhood, and to
Diveroli’s life story.
In 2016, Warner Bros. released War Dogs, which was promoted as being based on Diveroli’s life
story. In 2017, CNBC broadcasted an episode of American Greed entitled “The Real ‘War
Dogs’ ” [contrasting with the film] which similarly focused on Diveroli’s
experience as a government contractor. CNBC promoted American Greed as a “shocking true crime series [that] examines the
dark side of the American dream” and “tak[ing] you deep inside shocking true
stories of brazen con artists who thrive on stealing fortunes, ruining and even
taking lives.” An ad for the episode contained a video clip from an interview
included in the episode with a comment that Diveroli got rich selling “bad
ammunition while people the same age as him are taking the sacrifices.
Despicable.”
The court here resolved false advertising
claims.  CNBC argued that the ad accurately
represented the American Greed episode and therefore didn’t include an
actionable false statement. Diveroli argued that he didn’t sell “bad ammunition”
to the US, and that people seeking his true story were likely to watch American Greed instead of buying his
memoir.  Incarcerated conceded that “based
on a true story” would be non-actionable, but argued that the affirmative
representation of presenting the true story fell within the Lanham Act’s
prohibition.
CNBC first argued that the “true stories” statement
wasn’t commercial speech, and that the ads should get the same constitutional
protection as the underlying work. The court disagreed. The promo was an ad, as
defendants called it in their briefing; it referred to a specific product for
economic purposes. “Capturing the potential viewers’ attention and capitalizing
on the popularity of the film War Dogs, the advertisement attempted to attract
viewers to CNBC for economic gain” by telling them they’d get the true
story. 
Incarcerated’s claim failed at the next step: it
failed to plead a false or misleading statement of fact.  Advertising statements made to summarize an
argument or opinion within an expressive work are opinion, while statements
about the work as a product (e.g.,
who’s performing in it) are statements of fact. 
Incarcerated’s claim related to the former: a summary of the episode’s argumentative
content. The court declined to let Incarcerated relitigate the fraud and conspiracy
allegations of more than a decade ago in a Lanham Act trial.

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“designed for increased safety” and similar statements aren’t puffery on a motion to dismiss

Posted on August 7, 2018 by rtushnet

Universal Electric Corp. v. Baldwin, No. 17-cv-00842,
2018 WL 3707423 (W.D. Pa. Aug. 3, 2018)
UEC “designs and manufactures products for the
electrical power distribution industry” and “services the data center, retail,
health care, higher education, and industrial markets across the United States,”
including the Starline Track Busway and the Starline Plug-In Raceway product
lines. The Starline Track Busway includes the T5 Series and plug-in unit
options, such as the Starline Tap-Off Box. 
UEC and BTI (of which defendant Baldwin was president) allegedly had an
exclusive sales agreement for BTI’s territory including an agreement to hold
UEC’s confidential business information in confidence and a noncompete.  Then the parties ended their distribution
agreement and entered into a settlement prohibiting them from making
“disparaging or negative comments regarding the other party…to any person or
entity.”
Baldwin allegedly campaigned to impugn the safety of
UEC products. For example, PDU Cables announced that it would be the exclusive
distributor of BTI’s Busway Solutions tap-off boxes, a “safer and superior
tap-off box to the standard OEM6 plug-in’s offered for ‘U’ shaped open channel
track busway, like S[TARLINE]’s T5 Series Busway Track System.” The
announcement said that its boxes “are designed for increased safety, superior
performance, and easier installation.” UEC argued that, because Busway was the
only non-UEC manufacturer that made tap-off boxes that were compatible with the
T5 Series, the message was that Busway’s tap-off box was a safer alternative to
the Starline tap-off box.  Defendants also
allegedly made other false and disparaging representations about the relative
safety of the parties’ products.
Defendants argued that the challenged statements
were puffery, not fact. The court disagreed, at the motion to dismiss
stage.  Specificity is the key to the
fact/puffery line, and many of the statements made explicit references to specific
design features and drew implicit comparisons to/implicitly criticized the sole
competitor, e.g, “[t]ap-off box masts have always been a common culprit in
busway track system failures,” “[i]f the head is misaligned, it isn’t uncommon
to snap off the head during rotation,” and “when older style-tap-off boxes fail
it is typically because of the electrical mast,” coupled with the claim that
“[t]he Busway Solutions product improvement redesign resolved…these
manufacturing weaknesses resulting in a tap-off box that delivers a more
robust, safe and secure fault free load delivery.” These were not only specific,
but also objectively verifiable and comparatively measurable.
UEC also sufficiently pled likely injury given that
it alleged that every sale of a Busway tap-off box would likely have been a UEC
sale in the absence of the false advertising.
False designation of origin: This was based on an ad
stating that Busway offered a “two-year warranty on both the tap-off box and
the section of Starline T5 busbar it is plugged into,” allegedly misrepresenting
that Busway was an approved alternative source of Starline products.  The court found this implausible. There was no
allegation of any attempt on defendants’ part to substitute their names for UEC’s
with respect to Starline. “[T]he mere fact that one party offers to warrant,
repair, or replace another’s product[, alone,] is not sufficient as a matter of
law to establish a claim of false designation of origin.”
Trade disparagement: This requires (1) falsity; (2)
the publisher either intends the publication to cause pecuniary loss or
reasonably should recognize that publication will result in pecuniary loss; (3)
pecuniary loss does in fact result; and (4) the publisher either knows that the
statement is false or acts in reckless disregard of its truth or falsity. “The
defining hallmark of a trade disparagement claim is the requirement that a
plaintiff plead pecuniary loss with considerable specificity.” Specifically,
without specific named lost customers, the plaintiff must allege “facts showing
an established business, the amount of sales for a substantial period preceding
publication, and amount of sales subsequent to the publication, facts showing
that such loss in sales were the natural and probable result of such publication,
and facts showing the plaintiff could not allege the names of particular
customers who withdrew or withheld their custom.”  The complaint didn’t satisfy those requirements.
Even allegations that two customers initially placed purchase orders for
Busway, believing them to be Starline products, were insufficient in that UEC effectively
conceded that they ultimately bought Starline.

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Lanham Act covers ads that drug is FDA-approved/has ANDA

Posted on August 7, 2018 by rtushnet

Arbor Pharmaceuticals, LLC v. ANI Pharmaceuticals,
Inc., 2018 WL 3677923, No. 17-4910 (D. Minn. Aug. 2, 2018)
Arbor sells prescription erythromycin ethylsuccinate
for oral suspension, allegedly the only FDA-approved products of their kind on
the market. ANI announced the launch of its own erythromycin ethylsuccinate for
oral suspension, allegedly claiming to be a generic version of Arbor’s products
and falsely claiming FDA approval/AB-rating pursuant to an approved Abbreviated
New Drug Application (ANDA). A product similar to an NDA-approved drug may be
approved and marketed based on an ANDA, which requires a showing of therapeutic
equivalence; the resulting AB-rating communicates that the product is a true
generic.
Arbor alleged that ANI acquired an ANDA from another
pharmaceutical company for a discontinued product that had been manufactured
using a process that differs from that used by ANI, and that the FDA has
notified ANI that its application wasn’t approvable. ANI stated that the
relevant ANDA was originally approved in 1978 for Barr Pharmaceuticals, that
Barr stopped marketing the approved product in 2003, and that the ANDA was
discontinued. ANI said that it filed a supplement to the ANDA with the FDA,
detailing changes it made to the manufacturing process, and indicated its
intent to market the product if the FDA did not advise otherwise within 30
days. The FDA allegedly didn’t object, so it must know and be ok with it.  [Nice work if you can get it.]
ANI argued that Arbor’s claims were precluded under
the FDCA. Despite Pom, courts have
continued to find preclusion where a plaintiff’s claims would require a court
to interpret and apply the FDCA.  This
wasn’t such a case.  Arbor asserted
competitive injury and sought to enforce the Lanham Act’s prohibition on false
advertising, here false representations of FDA approval.  ANI stated that it owned an ANDA that couldn’t
be circumvented by Arbor’s pleadings, and that the FDA tacitly approved of ANI’s
actions, but those were just statements in a brief, whereas Arbor alleged that
the FDA considered the ANDA discontinued and had so notified ANI.  Also, the FDA has a list of approved
generics, and ANI’s product isn’t on the latest printing.  Because the allegations were that ANI falsely
promoted its product as a generic equivalent, no interpretation of the FDCA was
required.

For the same reason, the primary jurisdiction doctrine didn’t justify declining
to decide the case.  Likewise, state and
common-law claims weren’t preempted, though the unfair competition claim under
Minnesota law was dismissed as merely duplicative of the false advertising
claim.

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Keyword ad buys are fine for less expensive products too, court confirms

Posted on August 7, 2018 by rtushnet

Lasoff v. Amazon.com, Inc., 2018 WL 3720029, —
Fed.Appx. —-, 2018 WL 3720029, No. 17-35173 (9th Cir. Aug. 6, 2018)
Lasoff sued Amazon and appealed the grant of summary
judgment on his trademark infringement and false advertising claims.  He argued that Amazon infringed Lasoff’s
trademark Ingrass by buying it for keyword ads. 
“Amazon is permitted to use a trademarked search term to direct
consumers to competing products, as long as the search results are clearly
labeled.” There was no evidence of lack of clear labeling.  Lasoff argued that MTM was distinguishable because consumers are more discerning as to
watches than as to artificial turf, the product here. The court disagreed,
making clear that noises about sophistication with respect to the underlying
product have always been makeweight; the real issue is sophistication about
search.  “The question is whether
consumers are confused by the search results, and those results display the
trademarked product names. The display of names in a set of search results is
not made more or less confusing simply because the underlying products might be
watches or turf.”

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Allegations of “copycatting” in high tech industry plausibly accuse target of patent infringement

Posted on July 25, 2018 by rtushnet

Global Tubing LLC v. Tenaris Coiled Tubes LLC, No.
4:17-CV-3299, 2018 WL 3496739 (S.D. Tex. Jul. 20, 2018)
The parties compete in the market for coiled tubing products
for the oil and gas industry. They and one other company allegedly dominate the
“highly competitive” coiled tubing marketplace in the U.S. (Id.) Global Tubing
characterizes that market as “a small, close-knit community,” in which
“[e]verybody knows everybody.” Tenaris launched BlueCoil and Global Tubing
subsequently launched Duracoil, both using a similar manufacturing process.
Global Tubing alleged false advertising based on several
statements: (1) at “the primary industry trade show in Houston,” a Global
Tubing employee asked Tenaris’s Chief Technology Officer whether he had seen
Global Tubing’s product launch. He said he had, but could not speak with the
Global Tubing employee because, in his words, ‘I can tell you right now we’re
probably going to court.’ ” (2) At the trade show, attended by nearly all the
customer base, Tenaris allegedly represented to existing and prospective Global
Tubing customers that Duracoil was a “copycat” of BlueCoil. (3) A Tenaris
employee allegedly told a Tenaris customer that Global Tubing “stole” the Duracoil
name from Tenaris, which considered Duracoil as a possible name for the product
that it eventually chose to name BlueCoil. (4) Tenaris’s CTO allegedly told a
“coiled tubing sales representative”−not identified by name or employer that
Tenaris had a patent that covered Duracoil, which was allegedly false because
the relevant patent had not yet been issued. The rep allegedly responded by
asking whether Tenaris would be owed royalties. Global Tubing also alleged that
Tenaris accused Global Tubing of copying in filings to the PTO in responding to
non-obvoiusness issues raised by the examiner.
The court declined to dismiss the false advertising
claim.  Tenaris argued that the
statements weren’t made in “commercial advertising or promotion.”  The key was whether Tenaris’s alleged
statements were disseminated sufficiently to the relevant purchasing public,
and the Fifth Circuit has said that “[w]here the potential purchasers in the
market are relatively limited in number, even a single promotional presentation
to an individual purchaser may be enough to trigger the protections of the
Act.” Given the allegations, the complaint passed, though more specificity would
be needed for summary judgment.  (The
statements to the PTO weren’t “commercial advertising or promotion,” though.)
Tenaris argued that “copycat” was just puffery, which is
exaggerated or vague. For 12(b)(6) purposes, the court disagreed:
Made in relation to a
high-technology product used by a high-dollar industry, the suggestion of ‘copying’
could quite reasonably be interpreted as an insinuation of patent infringement.
That a third-party customer sales representative thought Global Tubing might
owe royalties to Tenaris indicates as much…. [T]he claim made here−that one
company copied another’s technology−is one resolved frequently through patent
litigation. It is therefore more appropriate to view the statement as one
admitting of falsification and verification, rather than as one amounting only
to bluster or opinion.
Tenaris argued that Global Tubing didn’t adequately plead
injury or causation, given that it alleged that has received “very positive”
feedback from customers.  Nonetheless, “[t]hough
general, Global Tubing’s allegations sufficiently assert a plausible
reputational injury from Tenaris’s statements.”

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Plastic not so fantastic: video shot in medical facility didn’t defame or infringe facility’s TM rights

Posted on July 20, 2018 by rtushnet

Weirton Medical Center, Inc. v. Introublezone, Inc., 2018 WL
3458261, J-A06003-18 (Pa. Super. Ct. Jul. 18, 2018)
Dr. Craig Richard Oser was a plastic surgeon with staff
privileges at plaintiff WMC from 2009 to 2014, making him an employee according
to WMC.  Dr. Oser entered into an
agreement with defendants to create a reality show, “Drastic Plastic,” “intended
to highlight the most salacious elements of Dr. Oser’s practice at WMC. Among
other things, the production dubbed Dr. Oser ‘The Vagician’ because of his
specialization in labiaplasty and vaginal reconstruction.”  A “sizzle reel” was filmed at WMC’s Medical
Office Building, and included statements by individuals who identified
themselves as Dr. Oser’s patients and employees. The video labeled the patients
“crazy” and included offensive references to Dr. Oser’s work in breast
augmentation, allegedly portraying the residents of West Virginia as uneducated
and willing to waste money on unnecessary plastic surgery. The video allegedly
appeared to include images of actual patient medical files. WMC alleged that it
did not consent or authorize the use of its facilities for this purpose. The
video was posted on Vimeo, as well as on Dr. Oser’s website and Facebook page.
WMC sued for defamation, violation of the Lanham Act, and
trespass.  The trial court watched the
Video “three times” and found “nothing defamatory. Poor taste, yes;
Defamation—No.” Nothing in nthe video identified WMC; plaques and pictures on
the wall were illegible.  “That Dr. Oser
is an employee of [WMC] is well known and [WMC] has advertised his employment
by it. Nevertheless, this connection does not give rise to a cause of action
for something he did, with others, that [WMC] doesn’t like but does not defame
it.” The trial court dismissed all the claims.
WMC appealed, arguing that the trial court shouldn’t have
watched the video when it wasn’t attached to the complaint. Under federal law,
this is easy: the video is a document essential to understanding the claims.  The court of appeals here agreed (over a
dissent): you can’t tell whether the video is capable of defamatory meaning without
viewing the video.  Anyway, there was no
prima facie case for defamation. Nothing in the video identified WMC.  WMC argued that the use of “WMC’s identifying
characteristics, medical professionals and employees (most notably Dr. Oser),
and facilities in the Video creates the reasonable likelihood that individuals
will believe that WMC is associated with or otherwise endorses Drastic
Plastic.” But WMC didn’t allege where in the video these uses were made, and
the other material surrounding the proposed show had no mention of WMC.  Even if WMC had been identified in the video,
WMC didn’t allege the defamatory character of the video as to WMC—defamation requires more than annoyance or embarrassment.
False association and/or false advertising under the Lanham
Act: WMC didn’t allege a relevant trademark, only use of “names and likenesses
of [WMC’s] medical professionals and employees (in particular, Dr. Oser),
facilities, and confidential patient information.” There were no allegedly
false statements about WMC’s medical services.
However, WMC did state a claim for trespass.  Dr. Oser’s apparent authority to authorize
defendants to enter was a factual issue not suited for dismissal.  [Hmm… Too bad there’s no anti-SLAPP law
here.] “WMC’s damages may be limited to two peppercorns, but it has pled a
sufficient claim to get past the preliminary objection stage.”

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non-lawyer’s purchase of “trademark attorney” as a keyword doesn’t itself plausibly deceive consumers

Posted on July 19, 2018 by rtushnet

LegalForce RAPC Worldwide P.C. v. Swyers, No.
17-cv-07318-MMC, 2018 WL 3439371 (N.D. Cal. Jul. 17, 2018)
LegalForce alleged that defendants operated “TTC Business
Solutions,” providing “trademark related services,” and that they “engag[ed] in
the unlawful practice of law” as well as in false advertising.  LegalForce further alleged that the USPTO
prevented LegalForce from competing with defendants by enforcing its
“regulations” and “rules” against LegalForce RAPC but not against defendants.
The false advertising claims had to satisfy Rule 9(b)
because they used the words “false” and “misleading” [pause to note my
disagreement with this idea, especially when trademark infringement claims don’t
have to do so, but this is certainly a common result], and they didn’t because
there wasn’t sufficient detail about where the statements were made (what part
of the defendants’ website), etc. This disposed of claims based on the allegedly false “Created by Former USPTO Attorneys,” “Trusted by Over 100,000 Businesses Since 2003,”  and  “As featured in Time, Yahoo! Finance, and CNNMoney.com.”
Additionally, the claim “#1 in Trademark Registrations,” absent
further context, was puffery: a “general assertion[ ] of superiority” that
lacks “the kind of detailed or specific factual assertions that are necessary
to state a false advertising cause of action.” 
Claims based on defendants’ purchase of keywords related to
the practice of trademark filing, including “trademark attorney” and “trademark
lawyers,” were also dismissed. 
Plaintiffs alleged that purchasing keywords including defendant’s
website name “Trademarkia” led consumers to believe that they’d receive the
same attorney-led trademark filing services from both parties. Again, the
claims failed to satisfy 9(b) by, among other things, failing to identify the
ad copy that allegedly misled consumers or falsely compared the parties.  Furthermore, plaintiffs’ theory that consumers
who ended up on defendants’ website after searches for “trademark attorney,”
“trademark lawyers,” or “Trademarkia” were likely to be deceived would require
a a showing that the website was “likely to mislead consumers” into believing the
website was affiliated with an attorney. But the complaint failed to allege
sufficient facts to support such a finding, particularly given plaintiffs’
acknowledgement that the website states that the website operator “is not a law
firm and,” that “its trademark filing service is not a legal service,” and that
it “may not perform services performed by an attorney.”
The same fate awaited allegations that the “design” of the
website has “substantially the same logo, look, feel, and trade dress” as a
related entity’s website, which entity was
a law firm, allegedly misleading consumers into “the false impression that the
two websites are run by the same or similar entities or lawyers.”
Claims against the USPTO for deprivation of due process also
failed.  Plaintiffs alleged that the
USPTO has deprived LegalForce RAPC of its “right to engage in [its] chosen
occupation,” which is “practicing trademark law,” by promulgating a number of
regulations, and requiring LegalForce RAPC, but not defendants, to comply with
them. Such a claim requires a plaintiff to show “first, that [it is] unable to
pursue an occupation in the [chosen field], and second, that this inability is
due to actions that were clearly arbitrary and unreasonable.” But LegalForce
RAPC didn’t allege that it was unable to pursue the practice of trademark law;
instead, plaintiffs alleged that it “has been the largest law firm filer of
trademarks before the USPTO for the past five years.” So too with equal
protection claims, which when based on an unequal enforcement theory require
that “the selection was deliberately based upon an unjustifiable standard such
as race, religion, or other arbitrary classification.” There were no such
allegations.

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Six-year prison sentence for false advertising online

Posted on July 19, 2018 by rtushnet

United States v. Arif, No. 17-1597, 2018 WL 3454467 (1st
Cir. Jul. 18, 2018)
A reminder that false advertising can be subject to criminal
penalties: Mustafa Hassan Arif sold non-prescription drug products that
purported to treat or cure hundreds of different diseases and medical
conditions from over 1,500 websites containing altered clinical studies,
fabricated testimonials, and false indicia of origin (designed to make
customers think they were buying from within their own Western countries,
rather than from Pakistan) and made more than $11 million in revenues. He
conditionally pled guilty to wire fraud in 2016 and was sentenced to
seventy-two months of imprisonment.  The
court of appeals affirmed the sentence.
Arif argued that he could only be prosecuted under the FTCA,
not the wire fraud statute. But the wire fraud statute, even assuming that it
was enacted before the FTCA (it was not, but it was based on the pre-FTCA mail
fraud statute), wasn’t impliedly repealed by the FTCA to the extent of any
overlap. The statutes addressed different activities—wire fraud, requiring the
use of “wires,” versus only false advertising, but in any medium. Overlap isn’t
enough to require the use of one statute instead of another where both are
clear, as here. United States v. Batchelder, 442 U.S. 114 (1979), held that
“when an act violates more than one criminal statute, the Government may
prosecute under either so long as it does not discriminate against any class of
defendants”:
This case provides a good example
for why Congress has vested discretion in the prosecutorial agencies as to
which statute to employ. The offense here was not a run-of-the-mill false advertising
of a single product. Arif, in order to make millions, mounted an elaborate
worldwide scheme to defraud: he deliberately posted numerous false and
misleading statements on over a thousand websites that he created and
maintained in order to gull those with medical ailments into purchasing his
products. The FTCA penalties for first or second offenders would hardly have
been an adequate deterrent for such egregious conduct. Crime must be made not
to pay.
Arif also argued that the court should have allowed his
defense that he did not commit wire fraud because he was pure of heart and mind
as to the efficacy of his products. But Arif was not being charged “with selling
drugs that did not work as intended … or for harming his customers.” Rather,
he was charged with “making misrepresentations on his websites,” which were
designed to give false comfort to buyers, in order to induce their purchases. Arif
knowingly misrepresented, among other things, that: (1) there was clinical
research showing outstanding results for the drugs he sold, including specific
cure rates; (2) actual customers attested to the efficacy of the drugs; and (3)
his businesses were operating from various western countries.  That was more than enough for intent.  False statements in service of a subjective
greater “truth” aren’t allowed.  [Ah, for
such a rule in politics.]  The falsities
here were material—indeed, they “went to the heart of his customer’s purchases.” 
Nor did the disclaimer on the third-party credit-card
processor’s website suffice: “[T]he product(s) purchased are not intended to
diagnose, mitigate, treat, cure or prevent any disease or health condition, and
I will not use any information or statements contained on the website through
which this product is purchased, or contained on or in such product(s), for
such purposes.  Arif argued that any
potential customer of “reasonable prudence” should have known not to rely on
the other statements on his website after reading this statement.  But reliance is not an element of wire fraud,
so that didn’t matter.

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New on Jotwell: reviewing Virginia Eubanks, Automating Inequality

Posted on July 18, 2018 by rtushnet

Rebecca Tushnet, The Difference Engine: Perpetuating Poverty Through Algorithms, JOTWELL (July 18, 2018) (reviewing Virginia Eubanks, Automating Inequality: How High-Tech Tools Profile, Police, and Punish the Poor (2018))

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