TM scholars’ roundtable, part 4

Posted on April 14, 2018 by rtushnet

Session 2, Cont’d
Mid-Point Discussants: 
                    
Mike Grynberg
Belmora may do very little. 
But: Belmora may be bad if it discards important checks, one of which
might be territoriality.  Another idea:
arguably undermines systematicity of TM, its existence as an autonomous body of
law that courts apply. Casually discarding territoriality is problematic in
itself and also in understanding what TM is—Jeremy Waldron on the importance of
being able to see how a change ripples through a system.  Belmora undermines the idea that consequences
flow from not having a TM/not having a registration.  We don’t know what happens when 32 and 43(a)
are not equivalent [and I would argue that there’s a hydraulic push—TM owners
then claim that they shouldn’t be worse off b/c they don’t have a TM, so 32 has
to be at least as broad as 43(a)].  By
throwing more up for grabs in inchoate unfair competition, that undermines
pro-D thinking in TM law that hasn’t been systematized, such as the 7th
Circuit style/plausibility analysis. 
Tabari: 9th Circuit talks about what people expect when they
see TMs in domain names.  Handwaving
about consumer sophistication—but will Belmora allow a second bite at the apple
in terms of unfairness claims.  MTM:
court says no one thinks there’s a connection w/Amazon b/c of Amazon search
results, but would Belmora undermine that by allowing a rump unfair competition
claim.
Finally, Belmora exacerbates the problem of TM scope.
Jeanne Fromer: trade secret might provide some insights
about unfair competition and its path. 
TC starts out as common law in the courts; turns into a multifactor test
in Restatement, and then gets codified in a way that offers guidance about what
us be found. Uniform Trade Secret Act is more regimented than 43(a), though “improper
means” creates uncertainty.
Belmora: the more it’s not applied, the more it will not be
applied. Possible to push back on how this is a very limited exception
[thinking here of INS v. AP].  Backdoor
protection of TM-excluded matter: do we want to understand UC as a matter of not
wanting to go beyond TM’s internal limitations, or is it just that TM stops and
some other regime starts?  We have ways
of thinking about doctrinal overlaps in other areas, such as TM/patent, trade
secret/patent.  One of her worries about
Belmora: remedies. When TM wouldn’t give a remedy, shouldn’t give that remedy
through UC. That might be one way to think about the interface.
McKenna: what’s unusual about Belmora v. old style cases:
the latter were things that couldn’t be marks b/c of their nature. That was a
recognition that they weren’t susceptible of ownership.  We basically said hands off those things as
such, even though they might have caused some confusion. Belmora’s not like
that: Flanax can be and is a mark, it’s just not owned by the entity asserting rights
in the mark.  You can’t avoid the
ownership Q in that case; it’s not about using the TM component v. the nonTM
component. You have to confront whether UC will provide a remedy not b/c TM law
is silent but b/c TM law has affirmatively said there’s no right.

Fears Lanham Act language that will be cited is that sentence that says that 43
doesn’t require a mark used in the US.  W/o
discussion of the reason that someone doesn’t have TM rights.
Dinwoodie: is TM law silent about genericity?  He thinks that’s affirmative too.
McKenna: Generic is a tough one.  Takes the point.  How you understand what the decision is—but still
Belmora is about some content unambiguously w/in the scope of TM.  Could be used to argue that, if you have a
fanciful mark and no likely confusion, a remedy is still available.
Dogan: Antitrust as a road not taken: choosing between
balancing pro and anticompetitive aspects of behavior v. using subjective motivation
of the actor.  If a product “improvement”
has anticompetitive effects w/o being a better product, there’s no social
value. Implicitly, Belmora etc. are courts saying “you’re not necessarily violating
rights but going further means you’re not engaging in behavior w/any social
value.”  Tea Rose/Rectanus also looks at
good faith/reason for adoption; protects the innocent.
McGeveran: reminder that court in Blinded Veterans talks
about how the remedy could include requiring a different name as long as “blinded”
and “veterans” are part of it.  Allows D
to appeal fairly to the desire of the public to aid blinded veterans—the policy
reasons why genericness exists.  But still
talks about the goodwill P has built up, when generic terms maybe shouldn’t
have goodwill b/c they’re not marks. 
[McKenna says that’s not necessarily true b/c generic terms could have
minority secondary meaning for a subset. Not a mark is not the same thing as
lacks source-designating meaning.]
Bone: wants to say that it’s still all TM; where a term has
secondary meaning for only a minority of consumers, it’s still a mark and it’s
still owned but the remedies change. The cost of separation is that all the
remedial flexibility goes to UC, and the breadth of remedy may be unwarranted
for every TM instance.  If you said it
was all one big thing, called TM for argument’s sake, then you have a series of
competing policies to look for a remedy in a given case.  Maybe you have rules of thumb, but at least
it’s being done in the same box.
McKenna: haven’t you just mooted the point of validity
analysis?
Bone: no, b/c at some point it will make sense for policy
reasons that the costs of tinkering w/remedy are greater than benefits in
avoiding consumer confusion and you should just have a no-remedy.
McKenna: so you always have a valid mark?
Bone: until the very endpoint where no relief is available—where
there is no entitlement to relief, there’s no mark.  Or we could say you still have a mark, but no
remedy.  The former communicates freedom
to use more clearly. [This really has no room for registration, does it?]
Ramsey: chilling effect of demand letters, but that’s all
about notice.
Dinwoodie: you’re making normative choices about security/predictability.
Bone: I’m just not separating into 2 boxes.
Sheff: non-consumer welfare/efficiency based perspectives:
Blinded Veterans presents a bit of a problem b/c we have a conflict b/t access to
generic concepts and consumer confusion. 
That’s a distribution problem, not an efficiency problem, and consumer
welfare can’t answer the question of what we should do. We could look at it as
a Kaldor-Hicks problem—could try to compensate losers for what they lose from
the result we arrive at.  Or we could
look at who is good and who is bad—relationships among producers, not just
relationships b/t consumers and producers. TM and especially UC should be understood as being (also) about
relationships b/t producers and what they owe each other. One reaction is to
say that confused consumers will just have to learn; they aren’t thinking about
it in the way they should be, and that’s a moral judgment. Or we could consider
them vulnerable and in need of protection, and those of us who can tell the
difference will just have to accommodate them by giving up the non source
identifying meaning to protect those who do see it as source identification. Or
we could try to accommodate both to the extent we can. On the producer side,
there has to be independent normative content to figure out what producers owe each
other. Belmora: easier case that the D is doing something wrong, which doesn’t
have to be filtered through what Belmora is doing to consumers.  If we thought more about duties, we might
have an easier time thinking about Belmora, though maybe it just collapses into
naked misappropriation reasoning.
Burrell: Unconvinced that remedy is problem in Belmora.  Bodybuilding company wants to register
Superman for bodybuilding products in Australia; DC opposition initially
rejected b/c has no blanket rights in Superman, but when the product is released
has a big stylized S on it.  Bad faith is
clear and the mark is cancelled on appeal; barring all uses of Superman by this
bad faith actor is not a problem, though he understands the problem with
slippery slopes/courts losing sight of the nuance.
McKenna: if evidence of bad faith is just that they’re using
a mark that’s owned by someone else, that’s still a problem.
McGeveran: presumably there is a robust UC claim, in false
advertising or otherwise, if Belmora falsely pretended to be a headache drug
that was unavailable in the US.  Having
said that, why do we get in a twist if the nature of the bad faith deception
has to do with misleading around source? 
RT: because bad faith isn’t an element of false advertising
and shouldn’t be.
McKenna: the content of the false statement about the drug
ingredient isn’t ownable by anyone else. 
But if you admit that there is the possibility of ownership and that
ownership has territorial boundaries, we’re artificially dividing up the world.
McGeveran: but what if Unilever, which produces Nuprin, sues
instead? Surely we don’t think their false advertising claim is a problem.
Sheff: who is the victim and what is the evidence?  Either the consumer is the victim and the
harm to the mfgr is the evidence, or vice versa.
Litman: but that’s not what the 4th Circuit said.
It said that if you sue under 43(a) we don’t pay any attention to longstanding
rules b/c this section doesn’t mention them. Erosion of territoriality and the
idea of evading pesky doctrinal limitations by switching sections. 
Sheff: if the victim is people in the US, that’s a false
advertising harm. If the victim is in Mexico but the evidence is in the US,
maybe not. 
Dinwoodie: no reason to think that UC claims should be
territorial—10bis indicates that the standard is an international one.

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TM Scholars’ roundtable, part 3

Posted on April 13, 2018 by rtushnet

Session 2:  The Policy
and Doctrine of Unfair Competition Claims
Introduction:  Jake Linford: Hoping for a sharper line b/t UC
and TM, much as we have a relatively sharp statutory line b/t TM infringement
and dilution to the extent we can define dilution.  Can you sensibly plead all 3 causes of action.
If you think Kellogg/Blinded Veterans is the right kind of UC w/a limited
remedy (ct said unnecessary in Kellogg—Ginsburg points out in BV that the dct should
consider whether that’s necessary). A release valve for the hydraulic pressure
where there is confusion, and remedies are then cabined. We don’t have that
world.
Belmora seems ok from a consumer protection perspective,
though it pushes hard on territoriality. 
[The existence of a false advertising claim, with its stronger limits on
what is actionable in the form of commercial advertising/promotion and
materiality, is also important here.]  Checking
judges’ work and Beebe on factors: not every multifactor test does balancing
for us, and LOC test doesn’t.  On the Q
of release valves: Belmora opens some room for arguments that haven’t succeeded
and some that have, e.g. DC Comics v. Daily Planet—an unfair competition/free
riding claim.  Limited remedy against a
bike lock manufacturer or a TV program. 
[But the remedy granted these days isn’t limited.]

Belmora’s subsequent use: restatement that 43 claims are supposed to look like
32 claims, but appears to help people get past the motion to dismiss stage.
Jessica Litman: Lanham Act drafters assumed unreflectively
that unregistered TMs would continue to be actionable as they had been before
the Act, rather than changing what they meant; that’s why they included
nationwide priority and incontestability, as a bribe, b/c registration wasn’t
required.  Unfair competition crept in
late, in 44(h), b/c Congress believed we’d signed a treaty requiring it.  44(i) extended that protection to US citizens
at the last minute b/c it was unfair to protect only foreigners. When Congress
was passing the statute, it didn’t think of 43(a) as the source of protection
for unregistered marks or unfair competition. Envisioned as early as 1920 as a
distinct provision about intentionally deceptive marketing rather than as a
home for unregistered mark infringement. Less about passing off and more about
marking cotton as wool.
We are all vulnerable to the delusion that the law we first
learned makes more sense than the law as it has later developed.  Litman was in law school b/t Inwood and Two
Pesos.  In the 1980s, the legal system
was the system McKenna suggested was sensible: 32 was registered marks w/presumptions
of validity and ownership; had started to recognize common law TM infringement
under 43(a), but then you had to prove ownership, distinctiveness, secondary
meaning (even for inherently distinctive marks), geographic and temporal
priority. Before false advertising got complicated (literal falsity/implicit
falsity) it was just independently actionable deceptive marketing. The standing
requirements were loose—if you could plausibly allege damage from the false
marketing, lack of direct competition wasn’t a standing problem.  Two Pesos mucked it all up.  Then false advertising developed epicycles
and complications.  But if you look at 43(a)
through that lens—2 distinctly different things actionable—then Belmora is
surely wrong as a matter of common law TM infringement but it is really
understandable as false advertising, intentional deception of consumers.  More useful to understand Belmora as a
species of false representation law than a massive expansion of common law TM infringement
law destroying territoriality.  Which raises
questions about the appropriate remedy: remedy based on the word Flanax would
be a TM remedy.
McKenna: but if the remedy against the word comes from (and against)
someone who owns TM rights in the word, then it’s a TM back door.
Litman: intentional deceptive marketing. [Though intent is
currently not a requirement for Lanham Act false advertising liability.]
Discussant:                  Barton
Beebe 
Belmora was
shocking at first, then got used to it, then became shocking again primarily
b/c of its rejection of simple territoriality. 
A global Tea Rose/Rectanus
doctrine in which rights extend as far as reputation does, even without use?
Important footnote 8; impression is that it was added later.  Plaintiffs who rely only on foreign activity
may have proof difficulties. A few isolated consumers who are confused isn’t
enough; a case w/o other misleading conduct would face difficulty. It’s
different where the cornerstone of the D’s business model is passing off.
If Belmora catches on, is there any reason to hold onto
well-known marks/Grupo Gigante?  The
latter has a heightened secondary meaning requirement, whereas Belmora
apparently gives you a path to success if there’s more than a few isolated
consumers.  A few follow-up cases: DC dct
suggests Belmora, even if applicable, wouldn’t matter b/c no proximately caused
harm; Md. case saying that there are two elements to a claim, proximate cause +
injury—the case that motivates the worry that courts will lose track of the
details, history becoming legend/myth. 
All of the contextual cues could be loss. Another NJ case finding
Belmora plausible, though obstacles of proof may exist.  DSC: domestic dispute, no foreign mark—treat
false designation the same as infringement, but see Belmora: though not
directly relevant here, UC claims don’t always require ownership of a valid
mark b/c 43(a) goes beyond TM, citing Belmora/Blinded Veterans.  Already we’re starting to see the details
wearing away. What will be left could be bad black-letter law. Optimistic
version: Following the European example, appellate courts might treat the
distinction w/more sensitivity.
Bone: Nothing much turns on calling Belmora a TM case.  ITC v. Punchgini: not a lost sales case, so
it would have to be a reputation case, which then turns on how broadly
reputation harms are conceived.  Bad literalism,
invoking Lexmark: interpreting the Lanham Act w/o recognizing that it was
enacted against a backdrop of common law principles that should be read into
the statute, but aren’t.
Ramsey: not as troubled by Belmora b/c has taught well-known
marks. It’s an exception to territoriality for the TM owner, but not for the consumers
who are confused. 
Sheff: the US registrant in Belmora is using their US
property in ways that harm someone else over the border.  Maybe a way to think about it. 
Two Pesos: held that inherent distinctiveness as a question for
the jury (where as Litman points out the jury was instructed that a mark is
inherently distinctive if it’s not descriptive) and that might not be right.
The fact/law distinction might do some work here.
McKenna: Likes Litman’s description of Belmora until the
end.  Need a body of law in which the
claim is recognizable. Hard to tell in 4th Circuit’s description whether
this is a TM case or a false advertising case. Extraordinarily likely that the
details will be lost w/o vocabulary to articulate it as a distinct form.  Saying that remedy can cover the mark itself
invites everything to be sucked into Belmora. 
Reminds me of early version of the Rogers
test where TM owners would say “it’s explicitly misleading because it causes
confusion”—only in the last 10 years did courts explicitly reject that argument.
[As they have meanwhile created that same problem with nominative fair use,
turning factor three “do nothing else” into factor three “isn’t confusing.”]  If the evidence that it’s false advertising
is the use of the mark itself, then plaintiffs will argue that nothing else
mattered (intent, other deceptive acts, nature of the packaging).  If the court made clear that it’s hands off
the word, that risk would diminish.
Litman: cancellation is available for marks used to mislead
about source.
McKenna: Q is whether use of the mark alone, w/nothing else,
ought to be able to satisfy that standard. 
RT: [Others’ approval of Belmora makes more sense for me as
a story about source confusion but when I think about IIC and other extensions
of confusion theory I get very nervous: another version of Mark’s concern.  What if it had been “if you like Flanax, you’ll
love our Forex”?]
I want to talk about 43(a)’s non-exclusion of functional
matter: 43(a)(3) says “In a civil action for trade dress infringement under
this chapter for trade dress not registered on the principal register, the
person who asserts trade dress protection has the burden of proving that the
matter sought to be protected is not functional.”  But it doesn’t say what happens if the
claimant fails to meet that burden. 
Blinded Veterans/Kellogg remedy still available?  And yet everyone has generally assumed that
the result is no protection at all, for pretty good reasons from a TM
perspective.  First, should we provide
limited remedies for functional matter under 43(a)?  Second, could we infer from the opposite
conclusion, the availability of limited relief under 43(a) for functional
matter, that relief under 43(a) should be presumptively
limited?  If not, and if all of 43(a) is
just unfair competition, what function does the language in 43(a)(3) serve?
Dinwoodie: language was inserted at a time when 43(a) was understood
to be more limited [though I haven’t decided which way I think that cuts].
Notion of use has expanded internationally in the US.
Doesn’t think that using Lexmark
will compress the factors in confusion when it’s actually on remand.
Litman: Thinks Tam
rejects Two Pesos: registration is
substantive, it makes a difference; unregistered marks are not the same as
registered marks. Tam doesn’t fill out what it means by that, but if it’s true
it’s not the case that unregistered and registered marks are the same, as Two
Pesos said.
Sheff: could be substantive in some ways and not in
others. 
Dinwoodie: Two Pesos on distinctiveness could be the same,
while other aspects could be different.
Litman: but cf. Beebe’s argument about how details get washed
away. She’s predicting.
McGeveran: FTC also uses “unfair” and that helps you think
about it.  Would Belmora’s acts have been
enforceable by FTC/AGs as deceptive/unfair trade practices harmful to consumers?
Obviously yes: they were misrepresenting their heritage to bodegas/Latino
customers. Unfairness has a three part test: practices that cause substantial
consumer harm not outweighed by benefits to consumers and competition, and
consumers can’t avoid the injury by themselves. A different approach to understanding
marketplace behavior. Remedy will often be remedial, not penalty.  What bothers us about Belmora is why Bayer gets
to be the enforcer.  Unjust leg up b/c
Bayer sells Aleve—but that’s not the court’s primary theory [of false
designation; it is the theory of false advertising]; it’s instead that Mexican
customers won’t buy in Mexico and will for some reason wait to buy in the US,
because that’s totally plausible as how people buy headache relief
medicine.  We’re offering up unfair
competition if TM theory doesn’t reach consumer harm, but he thinks that false
advertising/non-TM sources of consumer protection law can take care of that w/o
needing free floating UC.
Linford: Zechariah Chafee writes in 1940 about what unfair
competition might be—looks at Keeble, also at FTC.  Sorts out ways of thinking about UC.  Holmesian/Whigmore tort about harm, harm causation,
excuse/justification.  Most of the work
occurs at the last part.  There’s a
presumption in that presentation that P is entitled to something (if you think
about TM as property).  Be careful: if I
don’t have rights in the US, I don’t have property.  I haven’t secured rights in the space against
metaphorical infringement.  Perhaps,
Chafee says, we’re trying to figure out how to weight individual and social
interests—perhaps what looks unfair is actually beneficial to consumers.  Belmora: not so much b/c there are plenty of
sources for this drug.
Bone: Chafee’s restatement of Whigmore is that competition
is presumptively harmful & tortious, but it’s allowed b/c it’s
privileged.  First Restatement of Unfair Competition
therefore speaks of a privilege to compete, not a right, b/c it requires a policy
justification.
Ramsey: Analogous to Rogers, you can’t find UC based solely
on the use of the TM-unprotectable matter.
Bone: Elegant distinction that doesn’t hold up. Why draw
this distinction? Just describes a doctrinal pattern.
Ramsey: competition, free speech.
RT: my problem is the realist objection/nominative fair use
problem—an action/inaction distinction is unsustainable when P’s lawyers are
routinely so creative.  True, Belmora did
a number of things, but it’s hard to imagine Bayer being cool with an orange
box; it is plausible that putting Flanax on headache medicine is the core of the confusing conduct and
that nothing more is required.
Dinwoodie: institutional Q re FTC: is the existence of
another institution to deal w/ conduct evidence that we should leave them alone
to do so, or is it evidence that the conduct is nasty enough that we should
suppress the conduct at the behest of someone else?  Can argue it either way.
Grynberg: is it really a slam dunk?  Having a new brand in the US, where there is
no US owner/the mark is up for grabs, is a consumer benefit.

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TM scholars’ roundtable, part 2

Posted on April 13, 2018 by rtushnet

Session 1, Cont’d
Mid-Point Discussants:                      
Stacey Dogan: pre-20th c, very few cases of
claims based on noncompeting goods, and even fewer with actual harm
stories.  Can be characterized as chance
or as the functions of the markets of the day, but either way courts were confronted
w/very few claims.  Hard therefore to
describe trade diversion as a principled commitment to a normative concept of TM
law. When these cases began to appear, courts used the tools available to them
creatively and expanded the doctrine. The blending of UC/TM infringement was creativity
in response to what they perceived as the equities of the cases before them.
Doctrinal v. normative: trade diversion is not a normative
concept in itself. The normative concept in McKenna’s Normative Foundation
piece is Lockean natural rights.  The
natural rights to which merchants have claim are rights to their repeated trade,
but I’m not sure that if we view Locke/natural rights as the governing
normative concept that it has a natural limit. If people are entitled to the
fruits of their labor there’s no reason to limit that to expected repeated transactions
with existing customers.  Threatens even
more expansiveness: the only limiting principles are Locke’s enough and as good;
no internal inherent limits.
Role of judicial intuition in definition/lack thereof.  Harm as a defining/limiting principle. That harm-based
conception could be based on trade diversion, misinformation that causes
consumers to be materially misinformed, or we could think about more attenuated
reputational harm that theoretically can result. Judicial intuitions vary in
idiosyncratic ways, but at least we could talk about what that harm might be.
[Is it really idiosyncratic?  Seems that
intuitions have changed a lot over the century.]  But “unfair” isn’t just harm-based. Some
versions reflect misappropriation oriented approach. Similar trends in late 19th/20th
c. in antitrust, which also lacks vigorous, robust contours for “unreasonable” or
“unfair” restraints on trade.  Loose and
manipulable.  [But also changed in
systematic ways over that period as a result of different underlying theories.]  Opportunities for courts to cloak personal
intuitions in what on the surface looks like some kind of formulaic doctrinal
standard. 
Leads back to the question of whether we can define UC in a
way that has inherent limits.  Confusion
doesn’t have those limits, but neither does natural rights.  Two possibilities, which could both be
pursued: (1) Shift or insist on a more harms based approach and try to define
the harms that the law ought to be concerned w/.  Materiality can be a part. (2) Focus more on
limits.  Focus on why some unauthorized uses
are good.  Room for more attention to
whether we can think of these justifications as providing more limitations on
this unconstrained cause of action.  [I
teach this as courts wanting to have their cake and eat it: they routinely
assert both normative and descriptive limits, e.g., in justifying Rogers v. Grimaldi and nominative fair
use.]
Jeremy Sheff: UC/TM discourse happens in the shadow of ideas
about property.  Keeble v. Hickeringill—early
reports of this 1707 case were that it was ratione soli—he owns the land so he
owns the ducks.  A more reliable report,
a century later, talks about the livelihood of catching ducks; it’s a lawful
way of gaining a livelihood, and D unproductively/wrongly interfered with that
livelihood. Diversion through competition is legit, but not what D did.  Innovation in Hickeringill was that in
earlier cases, the act wasn’t independently wrongful (as hiring highwaymen to
terrorize schoolchildren would have been). 
What is it that makes firing on one’s own land wrongful? It’s a period
of transition in thinking about rights in things.  Property theory: Harm inheres in disturbing
baseline w/o consent of person who has endowment; endowments can be justified
on the merits of the endowed.  But the later
report in Hickeringill emerges from Hobbes: we start from a baseline of
equality, and the rights we have are as expansive as they can be consistent
w/equal rights in others.  Constraints in
right to carry out a line of business are those that can be imposed on everyone
equally.  That doesn’t get us as far as
modern concept of confusion, but fairness is always parasitic on some other
legal standard, whether that’s threats of violence or something else.  In Hickeringill, the independently wrongful part
isn’t conduct but motive—acting on spite. 
“Promising” can provide independent normative content. The
kinds of things that everyone carrying out business should be able to rely on
is things that signal a promise. What’s wrongful: uses that make a promise that
the promisor can’t perform w/o cooperation of others who are under no duty to
perform, or interfering w/ others’ ability to credibly make or perform promises
they could otherwise have fulfilled. 
This is consistent w/a beginning premise of equality for all.
Bob Bone: Why don’t we have the same remedial flexibility
with TM as with UC?  From
normative/analytic perspective, this doesn’t make any sense.  Abandoned marks: using UC to deal w/remaining
source ID meaning—we could do that, but instead we treat them like TMs and are
willing to grant full relief.  Belmora just deepened his confusion, b/c
put UC up against territoriality.
Does it make sense to have a category of broad protection/injunctive
relief for TMs?  What do we do with the
rest of them?
RT says: we could have double identity—property like.  You could justify it by saying enforcement
costs etc. justify a conclusive presumption of consumer confusion.  Or you could say that what’s going on is
unfair to sellers—an equity problem not really about consumers.  But if you do that, it makes sense to have
those marks registered—you want to make sure that others have notice of this
broad protection.
The problem with the rest of it is how much flexibility
there should be. How much do we want to use rules v. standards? What scope for
remedies? But practically the first category comes under hydraulic pressure to
allow more of “the rest” into the more-protected category.  So he finds it hard to justify even having
that first category where harm doesn’t have to be shown, though he kindly
allows that my arguments are among the strongest on the other side.
Dinwoodie: Industrial property/metes and bounds claiming/notice
functions—needs a right that’s relatively fixed and static. But one of the
harms we’re interested in is an intangible that is very dynamic, consumer
understanding, which means we want a second regime, tort-like. We then have to
worry about the circumvention of the rule-based static regime by the flexible
regime.
McKenna: Some early TM cases cite Keeble—productive use of
your own property v. destructive use. Analogy that TM cases make: lying to
divert isn’t productive use of your own property, it’s destructive of someone
else’s property.  Equal rights theory
works for this Lockean reasoning too. 
Two threads in conversation: realist—rules don’t matter b/c
market pressure will change results—and rule-based: we need rules to cabin some
expansions. We have to think that doctrine matters in some meaningful way to
limit claims. Though nothing violates antitrust law any more, everything is UC
over on our side.
Blinded Veterans
is a perfectly sensible case if you understand that UC intervenes precisely
when someone does not have a TM. The whole point of the remedies is that UC
would only have something to say w/o a TM; the nature of the remedy has to
account for the fact that you don’t have a TM; you can’t get any injunction on
the use of the words Blinded Veterans, but only about the manner of use.
Problem: b/c we’re so used to emptying UC’s contents into TM, every P wants the
benefits of TM—no proof of harm requirements, no constraints on remedies—without
the constraints of having to demonstrate that it has a TM.  Why do we have that dynamic?  UC needs to be
limited and distinct or it’s a second bite at the apple for a failed TM claim.
Dinwoodie: do you want this to be about
registered/unregistered?
McKenna: pretty hard—have to also decide what registrable
should mean to answer that question.
Dinwoodie: European solution strongly encourages
registration, but w/o limiting very much what is a registrable mark.
RT: Theory matters/does theory matter?  (1) Evolution of the law is not just random, even if it has been path
dependent.  Consider treatment of
comparative advertising in the US and Europe. Antitrust point: change in theory
changes/narrows what’s actionable. (2) But in TM/UC can we do better than intuition
at the edge cases?  Why do so many of us
find the 7th Circuit cases rightly decided but wrongly/unreasoned?  (Is it fair to say that the 7th
Circuit is actually always only deciding UC cases?) What if anything is the
matter w/plausibility instead of nominative fair use etc., which have their own
difficulties with definition. Is my objection merely aesthetic?
Dinwoodie: Derek Visser interviewed Dutch judges who do
pretty much what the 7th Circuit does.  Not just aesthetic, but about structuring
affairs predictably.  [But has it
worked?]  If they’d reason a little more,
then the doctrines could work—Beebe’s empirical work.
McKenna: 7th Cir. hides the normative ball: makes
a determination that some things are plausible or not, but implicitly limiting
the things about which they ask the questions. Court says there’s no risk of
passing off but doesn’t talk about the other things TM law now covers (sponsorship/affiliation)
and doesn’t say why it’s not talking about them.
Dinwoodie: a lot of these cases aren’t close.  [I think this is a matter of excellent legal
writing on the judges’ part—I don’t see the 7th Circuit getting
different kinds of cases than the 6th or 4th.]
Beebe: a tiny part of it is strong judges.  They all want to write like old English
judges.
Litman: they also write their own opinions. If you won’t let
clerks write, you’ll be [less doctrinal?]
Beebe: not consistent w/ the rule of law!
Dinwoodie: They’re so far away from 50/50 cases that he’s
comfortable with that kind of thing.
Ramsey: we want certainty, which is why we’re attracted to
registration, and to inherently distinctive marks that don’t need secondary
meaning.  Double identity, but that
creates needs for things like exceptions for comparative advertising. Vagueness
is a big concern in free speech law. 
Definitional balancing in 1A could be used for “TMs” and then messy case
by case analysis for everything else.
Grynberg: Not just do rules matter, but what exactly is the
source of the rule?  The reason Belmora looks so weird is that it discards
what we’d thought is a systematic rule of TM, helping make TM coherent—you only
have rights when you use a mark in a territory. 
UC: consider the kinds of rules that we think are defining this discrete
concept. 7th Cir. and Belmora:
does it interfere w/courts’ ability to engage in hand-waving that is often
aesthetically displeasing but helps them get to the right result?  Going to the jury as the same kind of thing.
Linford: does the idea of unproductive use open up a space
for policing what’s unproductive, as in ©’s fair use analysis? 
Burrell: Do we want to confine TMs to a more limited
category?  History in the UK, where we
experimented w/ TM that had to be invented/fancy word. Series of really ugly
cases on what that meant—don’t underestimate the costs of linedrawing. Geog. place
names: Phoenix—is that geographic? 
Stone?  Eureka?  If they’re in b/c they have other strong
meanings, where do you go from there?  Political
economy of proposed solutions: McKenna’s solution is not going to happen b/c
offices aren’t going to lose ½ their revenue and we aren’t going back to unharmonized
rights in Europe.  Maybe think about
TRIPS?
RT: ISSCC in 2d Cir. as opposite of 7th Circuit: you have to
consider all the factors and all the types of confusion that might exist—a
useless/counterproductive formalism.  If
those are the choices, maybe I need to reconsider my opposition.  Can we hope for McKenna’s ideal of discussion
of the reasons for rejecting a theory in a given instance?
Mark Janis: ISSCC is like the 7th Cir, but in
more words—at the end you’re told to consider a whole garbage can of elements
and not told how to balance them.
RT: not sure that’s true: 2d Circuit is sending it back for
more factfinding, while the 7th Circuit has seen everything it needs
to give you an answer. They’re both unsatisfying for sure but for different
reasons!
Bone: doesn’t like Sheff’s promissory theory.  The seller doesn’t think it’s an enforceable
promise, and the buyer’s opinion is usually not enough to make a promise,
unless it’s a normative conclusion about an implied promise.
Sheff: that’s a concern, but to the extent the promise is
often/always implied, that’s something you could replace w/the word reliance,
aligning w/materiality proposals by others. 
Empirically, when are consumers relying on aspects of marketing in
forming beliefs about what a product or service will do for them?
Dinwoodie: the problem with, e.g., geographic terms kicked
out of TM, is less problematic if there’s no cliff (if there’s still UC
protection).  TRIPS does allow some
flexibility as long as what you’re doing is protection.  Registration on basis of secondary meaning:
could put on presumptions/burdens that were different for registered inherently
distinctive marks.  If you could show
PHOENIX is being used nongeographically, you could get the higher level of
protection [at least as against geographic uses]. 
Beebe: thinks that the multifactor test is good v. global
plausibility reasoning, especially in the age of Trump.  It’s not great that judges write their own
opinions.  7th Cir. could go
out of control very easily in another set of circumstances; that’s why statutes
& technical TMs are more attractive.
Dinwoodie: but one of the strongest points from your article
is that they aren’t following black letter law!
Beebe: it at least exerts a general background discipline.
The judge can’t get away with as much.  Belmora reduces everything to two elements
where it used to be five (falling w/in the general terms of the statute +
proximate cause), which itself just reduces to proximate cause.  Seems risky when we take out elements and
reduce the issues to less analytical ways of proceeding.
Dogan: Rules & legal realism can complement each other.
McKenna: at least it allows us to criticize the decisions.
Dinwoodie: and yet Beebe has shown that they’re not telling
the truth about using the multifactor test.
Litman: the rules are way more expensive. If you’re in the 7th
Circuit you don’t need a survey unless the judge says s/he wants one.
Jeanne Fromer: why has
UC not swallowed everything up?  Is it
judicial discretion?  Lawyers/clients
limiting the claims they bring?  Or is
there some internal limit we haven’t seen?
McGeveran: it has, it’s just changed its name to TM law.  UC may mostly be vestigial.
Beebe: how do we teach 43(a) differently from 32?
Grynberg: didn’t spend much time on the difference until Belmora.
[RT: I teach 43(a) mostly as trade dress where you get to pick
the contours of what you’re claiming based on what the defendant is doing.]
Shari Seidman Diamond: Cognitive consistency argument:
interprets factors in line w/what the ultimate decision is. One would like the
7th Cir. to use the factors just so it can go back and forth in its
reasoning (reflective equilibrium!). 
Easterbrook was very frustrated b/c he couldn’t get them to print the
pictures of the Top cans in color b/c then the obvious lack of confusion would
be even more obvious to all.
Sheff: could collect evidence on subject matter, etc. for 32
v. 43(a) claims.  Belmora is a weird
43(a) case precisely because it is a word mark.
McKenna: need to distinguish b/t UC as a mode of reasoning or
UC as a doctrine/body of law.  The
former, which is what we are doing now, is very different from and broader than
what UC as a body of law was.  We shouldn’t
use the term UC to describe the mode of reasoning.  Belmora
is problematic, but at least the paragraph at the end emphasizes that a remedy
should take into account traditional TM principles relating to Belmora’s
ownership of the mark.  They should have
said from the beginning that this is an UC case not a TM case, and they can’t
until they get to the remedy case b/c they don’t have the language to do so.
Dinwoodie: complicating factor is that the cancellation
action goes forward in Belmora too
and w/o a registration they may not have a mark.
McGeveran: so much similar language in Blinded Veterans.  Specific
actions increasing likely confusion, but not b/c of a “mark” as such.  Intent, confusion, skullduggery; remand to
figure out a remedy.  They sound like appellate
judges trying to not grow the territory.

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TM Scholars’ roundtable, part 1

Posted on April 13, 2018 by rtushnet

Trademark Scholars’ Roundtable, 10th year!
Session 1:  The
Distinction Between Trademark and Unfair Competition Law
Introduction:   Mark
McKenna: Until mid 20th c, could have said that TM and UC were
distinct legal claims that vindicated the same right; thus cts said that TM was
a species of UC.  All UC aimed at
dishonest trade diversion. Use of another’s TM was an egregious example, but
other things w/the same dishonest effect fit under the broader UC
umbrella.  TM was a more limited category,
not conceived of purely in source designating capacity: it was an ontological
category of words/symbols that unambiguously indicated source, arbitrary/fanciful.
Descriptive terms weren’t TMs; you could bring an UC claim against second users
and the nature of the argument was the same, passing off, but not by copying a
TM.  A subject matter distinction.
UC cases did involve uses that might have had legit
explanations—e.g., descriptive use—so they had add’l proof requirements, such
as secondary meaning and in most circumstances an intent to pass off.  UC was also usually characterized by more
limited remedies.  Kellogg—SCt contemplated
remedy directed not at name or shape but packaging, but here Kellogg had
adequately distinguished its products.  Injunctions
were highly tailored and would often include long verbal descriptions of who
was making what and courts found them adequate (maybe just normatively
adequate).
First federal laws were TM by definition—only technical
TMs.  TM and UC then became
jurisdictional—TM could be under federal statute, but UC common law.  Pre-Erie, would have been general law of UC,
but post-Erie they had to admit that it was common law, so that was a big
motivation for the Lanham Act.  Over the
20th c., some significant trends. First, we lost the idea that trade
diversion was a central concern of UC, fundamentally altering the conceptual integrity
of the whole system, b/c unified concept of nature of harm was lost.  Once TM covered non-diversion, UC became a
slop bucket of ideas about things people were doing that we thought were bad.
When Congress first started having hearings about child labor and convict made
goods, some people suggested that a hook for Congress was unfair competition—producers
in other states were at a cost disadvantage to those who were child labor
users.  At first hearings (1916), that was
dismissed out of hand b/c it’s not passing off, but those theories got more credence
as the years went on and unfair competition is increasingly mentioned in the
legislative responses (1930s).  Suspects,
though doesn’t know, that you’d see same evolving thinking about narrowness of
UC to a term that we apply to things we don’t like in hearings about FTC.
Problem: no new concept is put into place to substitute for
trade diversion.
Second: we gave up on subject matter limits to TM
proper.  Some of that is about
registrable matter.  Unregistered marks
become enforceable as marks under the Lanham Act.  Courts interpret Lanham Act more broadly than
drafters expected.  Disuniformity concerns:
courts invented the idea that the law reached unregistered and unregistrable matter; assimilated UC
into TM.  Abercrombie mashes up categories of TM law with proof requirements
for things that aren’t TMs.  Secondary
meaning = requirement for TMs, when it began as a proof requirement for things
that weren’t TMs.
Those two together leave us w/free floating doctrine, as in Blinded
Veterans, that would be sensible under another system, but look strange in the
modern scheme. We used to have a property-like system of TM as such, with UC as
an equity system.  These days there’s a
lot more pressure in identifying subject matter; the things we’re especially
bad at IDing the boundaries of, like trade dress & complex marks, wouldn’t
have been in TM at all in the past.
Belmora: once upon
a time, it would have been entirely natural to think that even though Bayer lacks
TM in Flanax, it had a right for a limited remedy for things like packaging and
labeling. The reason Belmora strikes
people as such a strange case is that it draws on concepts that no longer fit
our system. B/c so much has been pushed into TM, the Q of rights you might have
in non-TM matter is hard to ask.
Most of this is in motion in the 1920s-1940s.
Lionel Bently: The UK didn’t embrace the UC language/concept
at all. Why not and what effects did not doing so have compared to the US?  Worth starting w/observation that language of
UC becomes widespread from 1890s (or earlier). 
US cts cite lots of case law from England in developing this distinction—buses
using the same livery; 1843 case about boot polish, using label & name;
Stone Ale for beer where Stone is a place in Staffordshire, but had secondary
meaning and was protected.  So US doctrine
is citing all these British cases to establish distinction b/t TM and UC, but
British didn’t see it that way at all. British saw it as one big melange called
passing off.  Engagement w/foreign
countries, trying to develop bilateral relations was part of this, as well as
potential multilateral treaties.  1883
Paris Convention: one British commentator thought that TM had to be defined
before any progress could be made. 
Ontological distinctions of Americans never really stuck in the UK.
Why not: Lots of reasons. 
Has come up w/11, but won’t go through them all.  TM registration in 1875 allowed registration
of only a narrow set, not even word marks. 
1883: invented marks; 1905 became a general definition w/some exclusions,
e.g. of geographic marks.  The effect was
huge—significant uptake, and developed same disinction b/t technical TMs and
UC, except done as registered TM infringement v. passing off, where there was “fraud.”  If you wanted non-fraud protection, you
needed registration. 
Also, there was a House of Lords decision in 1891, Mobil v.
McGregor, a combination b/t traders from which someone was excluded.  Lower ct had said that courts can’t distinguish
b/t fair and unfair competition, and that was reflected in the House of Lords
decision—a big signal from the top that UC wasn’t fit for purpose (at least for
an imperial legal system).  Related circumspection
about courts’ definition of broad legal concepts.  Fear of conflict with existing statutory
regimes, e.g., copyright and patent.  Australian
High Court’s rejection of INS v. AP—someone overlooking a racecourse can
broadcast what occurs at the races: we have all these statutes and we shouldn’t
undermine the legislature. 
Also, Germany & France had UC laws in the 1890s/1900s,
and thus might well have contributed to a higher level of skepticism in the UK.  In the 1800s, Germany didn’t protect TM well,
and there was a lot of counterfeiting; the US didn’t protect copyrights.  Towards the end of the century in both
countries, there was a sense of a need to present the country as moral, and its
businesses as moral.  Herbert Spencer was
a big author for this purpose, especially in the US.  You see in American literature and case law a
surprising level of pride in embracing the notion of UC.  Dennis v. Thomas, 1899 Delaware case—principles
of high business morality gives “luster” to the system.  A sense that the law needs to control
business behavior and also express a moral vision of US capitalism.  The British didn’t seem to need that; cases in
Britain at the same time say (in case about competing seed companies that both
used prizes and one copied language from the other) that the court doesn’t sit
to judge “according to any high standard of honor” what should be allowed—“everything
is fair in trade, as it is in war.” Totally different view.  [Talk about an imperialist legal system!]
Did it matter: Variation in US from 1920 through the Lanham
Act, sometimes the UC label had effects on outcomes and sometimes less so.  In the UK, we can see more expansive
tendencies from time to time even w/o UC. 
We find deception in all sorts of places a right thinking human wouldn’t
find deception, as a means of expansion. 
There are a lot of commentaries that say UC is just the
American term for passing off—a mere terminological difference? But other
people are building big conceptual frameworks to explain the relationship b/t
UC in the sense of passing off and all these other laws like anti-monopoly laws
more generally. Callman in the 1940s etc. start to elaborate ambitious systems
for fitting these things together within a principled notion of regulation of
competition.  Read first 120 pages of
Callman’s 1945 book! It’s amazing, though obviously wrong.  He has an idea of competition as a
relationship—very Germanic, duty of care based. You have to abide by the rules
of the game—lots of sport analogies.  The
umpire is the consumer, so you mustn’t mislead the consumer.  You must compete on your own feet, rather
than misappropriating. 
He thinks that UC was sometimes just passing off and
sometimes not, at different times/jurisdictions.  INS v. AP is the big point for misappropriation.
Most INS commentary says it was a one-off and everyone just distinguished
it.  But more contemporary commentary wasn’t
sure—some very broad statements of the rule. 
When we all leap quickly to Cheney Bros. and later cases, remember that
at the time it seemed to signal some big shift. 
That is a shift away from UC as passing off to UC as any form of
misappropriation.  Erie, and even before
Erie, INS was a casualty of the legal realists.
In the UK: noncompeting goods. 1898, Kodak bicycles
infringed Kodak cameras, as passing off. Walter v. Ashton, the Times newspaper was
infringed by Times for bicycles (again). 
Showing the flexibility of passing off to expand well beyond what we’d
think of as diversion of primary markets. 
Having said that, 1947 we see a case on personality merchandising,
McCulloch v. May, the High Court says that a radio presenter’s name isn’t
infringed by use on breakfast cereal—you need a common field of activity for
there to be passing off.
Discussant:                  Robert
Burrell
Differing legal climates. Rise of legal realism in the US. Affects
culture in which Schecter was writing, as Beebe has written: problematized the
idea that you could throw around the label of property. It’s a conclusion, not
a reason.  Never had the same influence
in Commonwealth jurisdictions.  Earlier
years of 20th c—passing off as protecting property in goodwill was
taken very seriously by commentators. 
That’s one reason why UK didn’t embrace UC—they thought they were
protecting property.  However, bear in
mind that these things were often close calls. 
We now think of an Australian High Court case [Victoria Park, 1930s?] as
the final rejection of UC in the Commonwealth, but it was a 3-2 decision.
We tend to write out of legal history: there might be a
significant element of chance.  1891 McGregor
case says there’s no law of UC in the Commonwealth, but a load of unregistered
TM cases where you want to find the D liable. 
You have to reach for some other theory. 
If the House of Lords had dealt with a bad guy in 1890 maybe we would
have embraced UC.  By the time the Australian
High Court decides against UC, INS has fallen out of favor even in the US.
UC as nation-building: INS had an idea about nation-building.  Commonwealth had a similar dynamic, there
about ensuring that other bits of the Commonwealth remained in the fold.  Imperial control, and leverage in
international negotiations to create a law of the Empire.  1890s: clear imperial policy to ensure TM law
uniformity, but that was when relations b/t imperial gov’t and self-governing
dominions was becoming increasingly fraught. W/TM, though, happy to follow UK
lead, so there was no need for Privy Council to try to harmonize through
development of the common law—the self-governing dominions were playing nice
and adopting UK law; no point in inflaming things w/massive expansion of
law.  There was also possibly a concern
about being overwhelmed: if there’s a broad law of UC, will courts throughout
the empire keep coming back to the Privy Council for further instruction about
what that means—a docket control concern.
Parliamentary sovereignty: no limit on what it could do. Not
unimportant that in Australia, which did have those considerations, Victoria
Park was in the 1930s/after the 1920s, a key moment of Australian law in which
there was a massive expansion in what the federal parliament could actually do.
There would have been no impediment to federal regulation of things like UC.
Bob Bone: Why create a category of technical TM
infringement? Why did trade diversion drop out? 
His answer to #1 involves a particular conception of property rights;
sometimes concerns about difficulty with granting rights w/nontechnical
TMs. 
Second, trade diversion was never a normative component, it
was a standing requirement so that the firms had a reason to enforce consumer
harms.  If you drop trade diversion as a
normative requirement, you get reasons to protect technical and nontechnical TMs
(w/more proof for the latter), but that distinction isn’t stable as soon as you
start to Q the assumptions of technical TM infringement. And that begins to
happen very early in the 20th c., even in the late 19th.  People recognize that once you drop out the
property theory, TM and UC look very similar. 
A lot of folks saying that UC is about fair dealing in the competitive
market, as well as a leftover idea of UC as passing off.  That latter is largely doctrinal.  People are struggling to see how much further
it can be pushed, and they recognize that UC is exactly what it says: fairness in
the marketplace [but not competition?], and those principles have normative
extensions, such as INS v. AP.  It’s a
matter of overcoming 19th c conceptualism, which becomes legal
realism; you see the boundary b/t TM and UC is porous/disappearing, and then
you have the normative justification (fairness in market) for a further
extension. 
Graeme Dinwoodie: Q of judicial role: extent to which courts
in UK felt constrained by the statutory monopoly.  In the 1970s, in passing off cases, court
says it can take inspiration from what the legislature is doing and protect
under passing off.  In the US context,
there’s a more developed sense of the Lanham Act as encompassing the broader
subject matter—something like a delegation statute allowing the judiciary to
develop the scope of rights.  Is the line
b/t infringing a registered mark and UC the same as the line b/t registered
& unregistered marks?  Related goods
as a line?  Is any case against an
unrelated good part of the slop bucket, or can they be trade diversion, given
the development of businesses over the 20th c.?
McKenna: The problem was abandoning trade diversion and
putting nothing solid in its place. Searching for a way to understand a theory
of protection against noncompeting goods that is not limitless.  Closely related goods: he thinks that’s ok,
not just vague sponsorship/affiliation. 
Dinwoodie: once late 20th c. becomes all about endorsement,
that’s hard.
Beebe: confusion isn’t a limit?
McKenna: confusion about what?  You need a theory about which forms of
confusion and among whom are relevant.
Bently: thinks the registration system was much more
ambitious initially—designed to replace passing off.

Burrell: agrees, 1875-1900, people were speculating about whether registration
was an absolute precondition.
Stacey Dogan: but it’s also important if there were no cases
saying that.  We think the 20th
c showed a big change, but many of the old cases rejected broad claims b/c
there was an interest on the other side—the D wanted to use a geog term or their
surname. There aren’t a lot of cases from the 1800s where the court says there’s
a lot of confusion and no justification for the D but nonetheless we won’t
intervene. Part of it is changes in commercial context through the 20th
c.
Jake Linford:  Path
dependence/hydraulic pressure.  Could be
caused by good D’s att’ys, but cts don’t like leaving harms that they see
unaddressed.  [Depends on whose,
right?  Poor Joshua!]  Somewhat persuaded by affiliation/sponsorship
confusion as a response to hydraulic pressure: competition could mean more than
it used to mean, and that’s why such confusion is actionable. There are reasons
to be troubled by that, but it is a plausible story for how expansion
happened.  If trade diversion is just
makeweight/standing, why can’t consumers sue for their own confusion?  Path dependence keeping consumers out of
court?  Why shouldn’t consumers have more
power in this space? But trying to vindicate that, w/o carefully defining confusion,
leaves a lot of room for rights overexpansion.
Lisa Ramsey: Is it even possible to have a TM theory that
isn’t limitless/supplies the necessary rules? 
One option is a theory that guides most issues, but uses other
considerations to limit it, such as free speech/competition.
Jessica Litman: in the original and 1988 legislative
history, there is significant evidence that Congress (some members at least)
thought that consumers could go to court, but courts slammed it down—all but
unanimously didn’t want it in the courtroom. 
Ramsey: California state law.
Bill McGeveran: Almost all UDAP laws allow consumer
standing.
McKenna: in a bunch of old cases, cts say TM/UC is about
harm to competitors, while consumers have their own claims in fraud & deceit.  There are even a pair of parallel English
cases with consumer/competitor Ps.
Bently: there are different accounts of what’s supposedly the
first TM case; some accounts say it’s brought by the customer and others by the
competing trader.
Dinwoodie: it might be possible to hollow out the concept of
competing goods in the same way so it also doesn’t do work.
McKenna: competition is in UC for a reason.
Ramsey: “deceptive” trade diversion does more work.
McKenna: that’s another thing that happened: “deceptive” is
a lot more limiting than “confusing.”
Bone: we know the theory; the problem is that it becomes
really weak, if supported at all, as we push it, and the empirical basis of the
theory may not be very strong. But the theory of reputational harms from
association is perfectly cromulent.
Dinwoodie: once you accept that the claimant has the
possibility of expansion, it’s not just lost sales but lost potential sales
that matter.
Bone: all that fits the core theory; it just goes too far.
McGeveran: the content of what courts substitute in for
direct competition/other traditional limits is much more inchoate than what
went before: makes it easier for the next bout of hydraulic pressure to lead to
expansion.
Beebe: material conditions change; the rise of brands.  Current analogy: globalization and
Googlization—tech and social conditions change, and perhaps that helps explain Belmora.  Political conditions also matter: the Depression,
the New Deal, concepts of antitrust/trust—how this affects concepts of TM
law.  They trickle down into the law,
just as current conditions do.  We’ve analyzed
TM through a democratic system, which affects why we ask why consumers don’t
have standing.  What would a
communist/authoritarian TM system look like, where the individual serves the
state and we don’t care about consumers, it’s just secondary.  How would you articulate that version of TM
law or unfair competition outside a liberal democratic system?  [China?] [There’s also a really interesting
book covering Nazi copyright law with a similar set of Qs.]

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can investigating claims bind you to arbitration?

Posted on April 13, 2018 by rtushnet

LegalForce RAPC Worldwide, P.C. v. LegalZoom.com, Inc., 2018
WL 1738135, No. 17-cv-07194-MMC (N.D. Cal. Apr. 10, 2018)
LegalZoom, which advertises its ability to help people
register trademarks, allegedly makes “false comparisons to attorney led
services” and engages in the unauthorized practice of law. The court dismissed
Lanham Act false advertising claims because LegalForce (which offers “law firm
automation and free trademark search services through its website
Trademarkia.com”) failed to allege any injury proximately caused by the
allegedly false advertising.  LegalForce even
alleged that it “makes no revenue from [the] preparation and filing [of] U.S.
trademark applications.” The same problem doomed the California state claims,
there under the heading of “lost money or property.”
LegalForce RAPC Worldwide, P.C. v. LegalZoom.com, Inc., 2018
WL 1730333, No. 17-cv-07194-MMC (N.D. Cal. Apr. 10, 2018)
The court enforced LegalZoom’s arbitration clause against
LegalForce RAPC and an individual owner, though not against plaintiff/related
company LegalForce (see above), on various false advertising-type claims
because in the course of investigating LegalZoom’s conduct LegalForce RAPC
assented to its website TOS, which has a broad arbitration clause. 
LegalForce RAPC is a law firm that “practices patent and
trademark law before the USPTO [United States Patent and Trademark Office]” and
is the “sole provider of legal services through the website Trademarkia.com
with respect to trademark filings before the USPTO.”
LegalZoom allegedly “surreptitiously practices law,” as
demonstrated when plaintiffs filed two applications through its site and
“LegalZoom provided legal advice to [p]laintiffs by selecting [a trademark]
classification and modifying the goods and services description from [a]
template thereby applying specific fact to law.”  Further, with one application, “LegalZoom
provided legal advice as to which trademarks found in [a] search report may
conflict with [plaintiffs’ mark].” Plaintiffs also alleged that LegalZoom bought
law-related search terms such as “trademark attorney” and “trademark lawyer,”
and that the “advertising copy in the resulting advertisements is highly
misleading, causing a consumer to believe that he or she will be represented by
an attorney.”
Plaintiffs didn’t dispute that, in order for a customer to
use LegalZoom’s services on its website, the customer must agree to LegalZoom’s
TOS, whose arbitration agreement states:
LegalZoom and you agree to
arbitrate all disputes and claims between us before a single arbitrator. The
types of disputes and claims we agree to arbitrate are intended to be broadly
interpreted. It applies, without limitation, to:
· claims arising out of or relating
to any aspect of the relationship between us, whether based in contract, tort,
statute, fraud, misrepresentation, or any other legal theory;
· claims that arose before these or
any prior Terms (including, but not limited to, claims relating to
advertising); · claims that are currently the subject of purported class action
litigation in which you are not a member of a certified class; and
· claims that may arise after the
termination of these Terms.
It was undisputed that plaintiff Raj Abhyanker and LegalForce
RAPC employee Ryan Bethell assented to the terms, thus binding them both, even
if Ryan Bethell didn’t intend to bind LegalForce RAPC when he acted on its
behalf.  However, there was no showing
that LegalForce was an agent of Abhyanker or LegalForce RAPC as to the
transactions with LegalZoom, and thus LegalForce wasn’t bound.
The validity of the TOS was for the arbitrator; all the
claims were within the scope of the contract, including claims for declaratory
relief and the Lanham Act false advertising claim given the coverage of “claims
relating to advertising.”
So, it seems that doing online investigation of an alleged
infringement might send you to binding arbitration if the alleged infringer’s
site is set up properly.  Can this be
avoided by using an outside investigator? 
Courts will hold such investigators’ solicitation of copies to be
“unauthorized” when they’re sent by a copyright owner, but that doesn’t really
answer the question about agency; an independent contractor plausibly wouldn’t
bind the IP owner, but I wonder.

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1201 exemption hearing: filmmaking and ebooks

Posted on April 12, 2018 by rtushnet

PROPOSED CLASS 1: Audiovisual Works—Criticism and
Comment—E-Books and Filmmaking
Michael C. Donaldson, FilmIndependent, International
Documentary Association, Kartemquin Educational Films, Inc., Independent
Filmmaker Project, University of Film and Video Association, The Alliance for
Media Arts+Culture (“Joint Filmmakers”): Discusses use of film as fair use in
other films, even nondocumentaries (like Jersey
Boys).  Question: is that criticism
& commentary? [My answer would have been yes, and that the Jersey Boys court didn’t need to reach
that specifically because fair use is more capacious, but historical
verification and contextualization certainly counts as commentary for purposes
of fair use.]  Answer: Yes, the exception
is more limited than fair use but we will work with our clients to come within
its confines.  [CO questioner seems
focused on commentary; says Register said previously that developing a
character/situation isn’t inherently commentary and criticism.  Q: what is your best example of
fiction/multimedia ebook that’s used for comment and criticism?]
Heidi Tandy, Organization for Transformative Works:
Something we’d like to make. It’s possible to take content from DVD, Blu-Ray,
etc. and make a fanvid. The minute you want to make a linear, choose your own
adventure style in the format of a game, or ebook that includes different kinds
of content, such as video and stills.  Q:
would this be commercial or noncommercial? 
A: there isn’t a stable and perfect definition of what’s commercial.  If you have a Patreon, is that
commercial?  Hasbro’s guidelines don’t
consider that commercial, but others may disagree.  Trying to leave commerciality out of the
conversation.  Q: would be hard for CO to
say that commerciality isn’t part of fair use. 
A: But what’s your definition?  If
Google puts ads on the side of your work and you aren’t getting revenue, is
that commercial?  CO Q: Doesn’t want to
get away from fiction/nonfiction in this discussion.
Q: what is your best example?
A: things people want to create for mise-en-scene or to show
what happened in the past. Tech doesn’t make it easy but it is getting
there.  VR is also coming.
Q: we need to see concrete examples because we can’t
evaluate fair use in a vacuum.  People
who want to create for comment & criticism.
A: see prepared remarks/submission statement. Using the TV
show Supernatural, 14th season—the fictional world has a series of
novels.  My proposal was for a group of
fans w/in the world creating a YT series—using the show to illustrate things
that fans are creating. The only way right now is a video, not the ability to
scroll through to get the experience of being in the fandom—an ebook or PDF
would give a better ability to access, different visual and personalizable
experience.
Q: why is circumvention necessary?
A: to create the content necessary, I need some of the show
itself and some of the images in the DVDs of behind the scenes activity.
Q: why wouldn’t screencapture work?
A: the screencapture would be a static element.  Looks bad versus having the proper flow,
especially in VR.  Like in a wedding
slideshow, where an element is out of sync with the rest of the video—same with
newscasts. 
Q: why wouldn’t licensing work?
A: for larger scale shows, the owners don’t necessarily have
time or energy for someone to communicate with millions of fans. Sometimes
Hasbro gives a blanket license for certain things, but that’s not always the
case.  [In fact, it’s basically never the
case that they license use of the footage
rather than creative elements as such; I can’t think of an example other than
the limited BSG space-fight footage that BSG allowed specific uses of in a
contest.]  Some companies can’t do quick
turnaround—e.g., the Simpsons episode last week about the problem of Apu.  Even if I only had to wait a business day, I
wouldn’t be able to react within the news cycle.
J. Matthew Williams, Joint Creators II: Doesn’t believe he’s
heard about criticism and commentary. In his view, some of tthe examples seem
infringing (without knowing the context) and some not.  Clients are willing to do some licensing or
some no-action (which doesn’t mean that it’s not circumvention).  It’s difficult to do same-day licensing.  Doesn’t think that fan fiction as a class is
noninfringing.  Cases mentioned in
opposition—things like unauthorized prequels or sequels held to be
infringing.  No cases in record on
fanworks being noninfringing.  Not saying
that they are always infringing, there probably are some that aren’t. 
Q: you’re not necessarily disagreeing about license
availability.
A: no record showing unwillingness to license to
individuals. Fox testified it would issue licenses to individuals, but the cost
is a different question. Doesn’t know price and it would differ for different
uses. Might issue no cost licenses, as they do with education.  No record that someone came to his clients
and was denied.
Brianna Schofield, Authors Alliance: Jonathan Grey, Show
Sold Separately—critiques interaction of audience w/works based on prerelease
exposures to the work.  Available online
and uses video clips embedded in ebook. 
This goes beyond film analysis, which is one aspect of the
exemption.  Video Dubliners: a guide to
Joyce’s Dublin, uses film clips for context for understanding the book.
Q: were the clips licensed?
A: no first hand knowledge.
Blake Reid, Angel Antkers, and Susan Miller,
Samuelson-Glushko Technology Law and Policy Clinic
Jack Lerner (with students Brian Tamsut, Cristen Fletcher,
Jovan C. Ardy, Lauren Wertheimer, and Shaia Araghi), UCI Intellectual Property,
Arts, and Technology Clinic: The CO has already made presumptive determinations
to renew the existing exemption. Some of this discussion feels like an attempt
to relitigate the accepted record, in particular the notion of seeking out
licenses as a viable noncircumventing alternative. In both the video and ebooks
exemptions, the only requirement is that the person engaging in the
circumvention reasonably believes there’s not a noncircumventing alternative.
The idea that we need a lengthy record of folks seeking a license for every
clip goes beyond the existing rules and the record that led to them.
Tandy’s proposed project would clearly be w/in noncommercial
video. Where it would make more creative sense to distribute as an ebook, that
should be possible.  That’s why we want a
unitary exemption for this type of use.
Q: if the Register recommends an expansion for noncommercial
use, including fiction, would that be reasonable.
Reid: CO has already recommended multimedia ebook w/o such
limits.
Q: but if we added noncommercial fictional ebooks?
Reid: that’s better than nothing, but the Q the Office
should grapple with is how that impacts the fair use analysis. There are legit
fair uses out there—Jack Lerner can address that in more depth.
Lerner: criticism and commentary can’t be done as a living,
or as an incentive, under a noncommercial model. That’s not a good idea and the
vast majority of [litigated] fair use is commercial, not just in being on YT
but in being sold on the market.  What
you’d be doing is taking the incentive away from a large group of creators.
Williams: mischaracterizing our position.  Don’t require everyone to seek a license. But
don’t use the idea that my clients are unwilling to license without evidence.
[The evidence is among other things in the nondisparagement clauses that are in
every license we’ve seen, where such a license can even be acquired, and those
are in the record; the sites that the Opponents suggest people use are also
nightmares to navigate to even tell whether a licenses are available—take a
look at how often their poster site, Universal’s, throws up “unknown” results.  If one wanted to make an argument about
George Clooney, for example, Universal will determine whether a film in which
Clooney appeared is “available for licensing,” Jt. Creators Opp’n at 13, on a
blanket basis; if the film is not available for licensing, the critic is
apparently out of luck.  (Actually, given
the operation of Universal’s internal search engine, searching for George
Clooney will also return results for Rosemary Clooney, Curious George, and
George Burns, so the would-be licensor needs some time on her hands.  One will also encounter numerous works in the
database marked “unknown,” e.g.,
https://ift.tt/2qu5Wo6%5D  We also don’t think that fair use is
impossible in a fictional motion picture. 
The MPAA often asserts fair use. 
We just haven’t seen the standard met for large amounts of fair use
being suppressed.  Having a low budget
doesn’t make your use fair; if there’s a potential market and the © owner is
likely to exploit it, then there’s harm regardless of whether an individual
user says they can’t afford it.
Susan Miller: The SPN example: it’s a critique of the
characters often involving society as a whole—commenting on specific characters
& elements—that counts too.  Fan
fiction often critiques and comments on society as a whole—that should count
too.
Q: that’s the issue—does it need to critique & comment
on the work itself? That affects the first and maybe the fourth factor.  [BTW, Bruce Keller & I wrote a whole
article on this back in the day—there’s really never been evidence that ©
owners are more ready to license satirical uses than parodic ones; even the
tuggable “blanket” licenses with nondisparagement clauses let them reject uses
where they don’t like the context. Thus there’s no effect on the fourth
factor.] We’re looking for examples of criticism of the © work.  [But why? That formulation raises the problem
of why the CO has decided to exclude an entire kind of fair use.]
Tandy: goes into history of fanworks. How people started
writing (e.g., Frances Hodgson Burnett of Secret Garden/Little Princess fame
started with Sherlock Holmes). Inherently a commentary: if something wasn’t
missing from the original, you wouldn’t have written your version.
Q: that seems to encompass a lot of derivative works too.
Tandy: can see situations where, e.g., cosplay, might not be
making a commentary. Say you want to do a steampunk Justice League—the
costumes, content and structure would be different. But that’s not what we’re
talking about here. Focusing on an ebook/choose your own adventure, it’s
inherently a commentary where people are being given choices about how to read
the story.
Patricia Aufderheide, American University: You can
distinguish documentary and fiction, but that’s one of many ways to slice a
unitary form; virtually everything is shared between the forms—structure,
reenactments, audio/video and other aesthetics. Many kinds of fiction don’t
make criticism and then some do; then there are hybrids in which documentary
characters are real-life people who dream of being gangsters in a gangster
movie and stage a gangster movie.  It is
very hard to say “here’s an example” when people know they can’t add this stuff
without enormous complications. As someone who’s worked w/documentarians for 40
years, the complaints never stop about never hearing back from requests to
studios/potentially licensors. Beyonce’s Lemonade
is an example of a work that refers critically to many real
incidents/situations. It’s not hard to see parody/satire in SNL
skits—incorporating and referring to and creating commentary on real
copyrighted things.  There’s no reason we
shouldn’t be encouraging this.  Good Night and Good Luck and other
dramas—we should be able to show what they were describing when they quote the
description of TV as a “vast wasteland.”
Q: Not trying to make aesthetic judgments, but whether it’s
likely to be noninfringing use.  The last
rulemaking: there was enough of a record to say that it was likely to be
noninfringing for documentaries, and we’re now being asked to extend that to
all films.  Biopic as a line? Everyone
thought that was unsatisfactory before. 
How would that work for you?  Is
there a way to exclude types of films that are less likely to be fair use,
instead?
A: I don’t understand your task. You’re being pretty clear:
commentary and criticism of the thing itself. Wouldn’t it be up to the person
to be sure they’re coloring within the lines, and if not they pay the
penalty?  Letting people have the option
of using that across the form, where you’ve already said that an exception for
one part of the form (whose boundaries are themselves fuzzy) is
acceptable.  There are situations where a
documentary could infringe, which is why we do review and licensing where
appropriate.  There’s a whole explanation of which clips they
licensed for Refrigerator Mother and
which they didn’t and why.
Q: To opponents: wouldn’t a limitation to comment and
criticism then be sufficient?
Williams: Harder to see fair use in fiction. Showing what it
was like to be present in a moment in history is not commenting on that
footage.  [Why not?  The effect that it had on the people
experiencing it as reality is an important part of criticism and commentary.]    Fan fiction choose your own adventure ebook
example—that doesn’t involve criticism or commentary, even if involves
additional expression; Axanar and Salinger cases haven’t found such uses to be
fair.  Nor would noncommercial be ok.
Just the fact that something isn’t for sale doesn’t make it noncommercial,
because paying the customary price is part of the analysis so all kinds of
noncommercial uses would still cause harm. 
The examples I did see were very small. 
Showing Kennedy assassination reaction may be important to the story,
but that’s not criticism and commentary; they have been able to license some
clips, and if you have 60 clips of Cesar Chavez and pick the most engaging, the
fact that you don’t want to pay to license it doesn’t make it fair use.

David Taylor: no real concrete examples, particularly in the ebook situation.
Sounds more like interactive games. 
That’s not an ebook, he thinks. Archival clips aren’t distributed on
protected DVDs.  [I think that’s
factually wrong in many cases, given the usual archival sources.  I don’t think he has a record on that, though
I may have missed something in the opponents’ submissions.]
Michael Donaldson: A few examples: In Search of Fellini,
about a woman obsessed with Fellini; clips shown to comment on the power of
Fellini’s films—w/o seeing the film you can’t see how impactful they are, and
recreating them doesn’t work.  Scripted
film about Christine, a Florida news anchor who shot herself on the news. The
commentary is: this is what the TV audience saw, not a redo.  [You can’t meaningfully comment on what they
saw by telling the story that surrounded it without access to what they saw;
your audience has no reason to believe your commentary unless they can compare
the recorded footage to what you’re saying about that footage.]
Low budgets: that isn’t why they don’t license.  Insurance companies put real skin in the game
even for these low budget films; they insure when they believe it’s fair use.
We’ve had pushback from insurers more on risk than on actual fair use,
especially for clips surrounding Trump where he’s perceived as litigious.
Lerner: criticism and commentary: you aren’t required to say
“here is my criticism and commentary.” 
Showing a reaction of a person to a contemporary event is
commentary.  Also, there hasn’t been a
previous limitation to “criticism and commentary about the work” and we shouldn’t put it in. Fair use cases include
the Wind Done Gone.  Also, the noncommercial remix exemption
includes fictional use; it is clearly a set of fair use works.
Also, 8 years after documentary exemption exists, lifting
the “documentary” limit clearly creates no real risk of infringement/piracy.
Q: would the licensing market be affected?
A: no, we’re talking about the market for fair use.  The © owner has no right to a license to a
fair use. What we have now is filmmakers who aren’t doing fair use that they
want to do, or they get licenses because they can’t access the material.
There’s no dispute that there is a large amount of fair use in the
nondocumentary context, but it may be licensed when it doesn’t need to be.
Q: any examples where 1201 caused licensing despite 107?
A: Nearly 70 different films where people wanted to make
fair use but didn’t.  Can supplement the
record further.  Also remember that
Register already said that needn’t opine on the fairness of any given use, but
rather that there is a class of works likely to be fair use.  There’s no real dispute that broad, robust,
burgeoning fair use exists in the nondocumentary context—the question is
whether it will be chilled/allowed to go forward.
Reid: this RM takes place every three years. 1201 makes the
creation of these films, where licensing and screencapture aren’t reasonable
alternatives, illegal, with the prospect of statutory damages and criminal
charges.  It’s understandable that people
aren’t coming out of the woodwork with scripts.
Q: we need to look at whether the market has changed; need
to tie it to what people would actually do. Difficult to say w/o looking at
tangible examples.  It’s been feasible
for prior class 1 categories.  [Welllll,
our examples had all been created under legal threat, until we got our first
exemption.  That seems undesirable.]
Reid: Then we do have specific examples, and then we’re
being asked to divide them by genre, prove they’re noninfringing, prove what
subgenre (e.g. biopic) they fall into. Sketching out real plans for 3 years in
advance is not what the statute requires.
Q: Why in ebook sense didn’t you go for the broader category
of mixed video or fan fiction/cosplay? 
Is it because the clips they’re using they’re lengthier and not very
edited?  The Digital Dubliner seemed like
a sophisticated blog.  Why do you really
need high quality?
Tandy: high quality is important across all media.  One reason we haven’t talked about fan
fiction/fanart is that doesn’t involve circumventing AV locks. This is the
other kind of fanworks. Fan films go back to the 1960s.  Now we have quality that no one could achieve
before, and if you want to participate in the conversation you need to match
the visual sophistication of the other participants.
Q: expanding what we thought an ebook was?
Tandy: yes, though it doesn’t necessarily include text in
the way we think about copying and pasting it—can be jpgs and video clips mixed
together, with the words embedded in the jpg to create a specific visual expression.
Q: if someone steps over the line, why can’t the Joint
Creators just sue? Why do we need more limitations?
Williams: Lerner says no infringement has resulted from
exemptions and thus no expansion will infringe. 
Our position is that there’s a lot of infringement; a lot of these
videos are infringing; we’ve identified examples we think are infringing. We’ve
chosen not to continue to oppose those exemptions b/c we’re not going to fight
City Hall, but that’s not a concession of no harm.  [No harm from
the exemption?  They’ve never shown
any evidence of that, which I think was the point of the question.  As we’ve repeatedly noted—and I’m very happy
to hear the CO focus on this—1201 itself has virtually no effect on initial
creative behavior; most of this is about what will happen when you have to
interact with an institution like a school or a traditional publisher who has
less incentive to facilitate any given individual creative work, or when you
have to talk to a lawyer, whether it’s responding to a takedown or trying to
get insured.]  1201 created a new right
over and above 106. Saying that litigation should sort it out isn’t very
comforting because litigation is expensive.
Q: but if there’s a quantum of likely noninfringing films
with short portions etc., why isn’t that reasonable to go to 106?
Williams: it wouldn’t be one or two.  Seen very few noninfringing fictional
examples, and even in the nonfictional space. Digital Dubliners could have some
good fair use arguments, but he doesn’t know how the clips were selected. Would
be seen as CO endorsing a broad swath of content and endorsing misuse. The
Office has already said that it thinks a lot in the record is infringing, and
yet proponents keep saying the Office has already decided it’s infringing. 
Q: if we still had the comment & criticism, short
portion, etc. and added noncommercial, that’s not sufficient?
A: Noncommercial in & of itself is only a factor.  It has layers.  [I initially mistyped this as “it has
lawyers.”]  Do you pay the customary
licensing fee? If not, that’s commercial use. 
Does the CO intend to rely on case law meaning or lay meaning?  Either way, it’s just one factor, as is short
portion, and comment & criticism; but none of those add to slam dunk. Even Campbell remanded for analysis of fourth
factor in that specific instance.
Q: talk about licensing.
A: links in our comments to websites that provide easy
access to contact points for licensing. CNN: you can go on & say I’m
looking for a clip from X period of Y person. 
You can say “I want to use this in fiction” or education or documentary
and they give you different pricing and it pops up almost immediately.
Q: proponents’ reponse to licensing arguments?
Donaldson: It is easier to find out whether they claim to
own it, but not whether they will actually license it. Now it’s almost
impossible to get to a human, for example to negotiate the posted price for a
small film/niche film. 
Wertheimer: a lot of licensing agreements have
nondisparagement clauses—can’t make critical use of the clip. Even with a
license, that’s not fair use.
Q: Opponents, what have you to say about that?
Williams: you didn’t accept that before.  Not all © owners include nondisparagement
clauses—Warner Bros. didn’t have such clauses. 
[How nice of them.] A lot of them do. But there’s no examples of actual
criticism of the studio or any of the actors or really in this record of the
films themselves. Those wouldn’t prevent licensing of the works.  [You can’t speak for the licensors and what
they think of a use, can you, though?] These are more about disparagement of
the talent and he hasn’t heard anything about that.  [I’d love to see that contractual argument
tried by the licensee if the licensor declined to approve a use on grounds that
the licensor thought it was disparaging of something other than the actors.  Not that they’d explain their reasoning!  But of course we never get there anyway because
the license deters people from trying.]
Q: the Steve Jobs example, where the family didn’t like the
use—they rejected that.
A: Universal relied on fair use.
Q: that’s an example of license refusal, though.
A: sure, not going to claim that some © owners don’t like
criticism. 
Q: how is licensing a feasible alternative then?
A: it isn’t always. 
The examples of that in this record and all prior records are very few
and far between.  [And the justification
for denying the exemption is….] Has heard that it’s unacceptable to condition
exemption on those who’ve asked and been denied.  Proponents don’t want to go ask.
Q: You’ve said there’s no market for multimedia ebooks. If
that’s true, how could there be an adverse effect on the clip licensing market?
David J.Taylor, DVD CCA: if you believe there is a market or
that one will develop, our argument is that it’s ours and should be licensed
just like documentaries are licensed.
Q: is it the studios’ view that this is a traditional,
reasonable, or likely to be developed market?
Williams: it’s potential/likely to be developed.  Simon Swart from Fox last cycle testified
they’d be willing to license multimedia ebooks, and Ben Sheffner from MPAA will
testify in LA on issues related to licensing as well as the importance of
access controls.
Josh Welsh, FilmIndependent:
Documentary/nondocumentary—there is a growing trend to blurring the lines.
These aren’t just one off but a growing hybrid genre.  A new award: the Heterodox award at a major
event to deal w/unclassifiable films. 
The Looming Towers—a mix of traditional documentary and scripted
fiction, where the elements play off each other.  Errol Morris’s Wormwood: scripted actors
intercut with documentary.
Q: are they comment & criticism?
Welsh: I’m showing why granting or denying an exemption
based on a genre is a bad idea given how porous the genre boundaries are. This
is an exciting growth area for film. Doesn’t make sense to limit by genre.
Aufderheide: has developed a category of thinking: imagination
foregone (see report
based on fair use-free Australia). What do you not do if you think something’s
prohibited?  Instance after instance of
people excluding entire categories of behavior, which is why she is concerned
about looking for current practices—a lot of people are not imagining
thinks.  Topical dramas like Roseanne,
Black-ish etc. can easily incorporated criticism and commentary.
Taylor: they just haven’t shown the need for a larger
exemption. The problem with going back to 106 is that the RM is tasked with
creating an exemption based on the evidence produced. [This seems like a carefully
misleading claim about the definition of “evidence.”  Evidence can include (as it does here) expert
testimony about the practices of the relevant creative communities, and about
the affordances of technology when it is or isn’t encumbered by 1201 without an
exemption.]
Bruce Turnbull, AACSLA: In the past, the focus was on the
much more elaborate nature of the ebook. None of what was promised 3 years ago
has actually appeared.  Also, the
platforms are limited. 
Q: trends about fictional works—proponents say the trend is
increasing. Is that enough for evidence?
A: you need the evidence for that. For the ebook, we have a
number of things 3 years ago that didn’t happen.  Discussion of platforms’ restraints—those
have inhibitions [I think this means they can’t use the tech?].  If the idea was noncommercial video/people
don’t view what they did as a “video,” it may be that is the place to look at whether something could be included to
facilitate some of the fan fiction kinds of things.
Williams: Donaldson identified a trend of people wanting fair
use in fictional films in his own practice. But his starting premise was that
people weren’t using clips in fictional films before that, and that’s not true,
e.g., Oliver Stone films.  Major studios
were probably licensing clips.
Tandy: defers to tech expert on the tech, but the widget
doesn’t let you get the effects.
Q: it doesn’t stutter, drop frames. What would you have seen
that you didn’t?
Tandy: I don’t know what was lost or how these clips were
created.
Q: does the eye lose anything?
Tandy: linking the content together [seamlessly?] you need
more capacity—you have to be able to obtain additional software, which people
may not be able to do.  Couldn’t do it in
Windows Movie Maker though maybe it’s possible in pro software. 
[The real ridiculousness of this is opponents’ contradictory
insistence that (1) the quality of (noncircumvention) screen capture is amazing
but (2) 1201 is super, super necessary to prevent piracy so exemptions should
be guarded like state secrets.  Both of
these things can’t be true, and they aren’t. 
The key reason people need to be able to use whatever makes sense to
them to make their fair use clips is that almost no one knows that this is
currently legally important. The main reason 1201 is a barrier is because when
you encounter a gatekeeper it can turn out what you’ve done is illegal even when it would have been perfectly
legal had you used a different program. Also, since we usually don’t know
whether any given program is
circumvention, the uncertainty created serves no valid purpose in limiting the
exemption to the class of noninfringing uses.
Turnbull: Screencap quality is accepted by Apple for
publication.
Q: would this be enough for a film festival/distribution?
Jim Morrissette, Kartemquin Educational Films,Inc.: Nope.
More gatekeepers than ever before. The current exemption works really well for
documentarians. Blu-Ray has made the difference for even using fair use any
more. Abacus, about a small bank in NY; wanted a clip from It’s a Wonderful
Life.  Blu-Ray enabled that.
Turnbull: Screencap limit is good because it prevents widespread
removal of TPMs.  [I’d love to see the
record evidence on that.]
Q: do you violate 1201 by using screencap?
Nobody is willing to answer that, because we don’t know.
Williams: there appear to be screencap that captures after
lawful description.  But I won’t answer
your question. The current exemption addresses the concern that people might
not know, so accidental circumvention isn’t illegal.  Basically gives proponents comfort and
encourages people to use only the tech that they need for the quality they
need.  [And here is the complete gap in
the evidence.  What’s the encouragement
effect?  If you-the-creator even know
about the exemption, you still have to deal with the uncertainty created by the
question of whether a court (or a copyright owner, even, in its threats and
allegations) would disagree with your assessment of needing to make the jump
from one kind of software to another for quality reasons.  There’s a good reason that courts prefer to shy
away from making aesthetic judgments and defer to creators on that question,
including the aesthetic judgment of just how sharp an image “needs” to be.
Adding that into the exemption creates a non-fair use related standard whose
main function would be to trip people up, if & when they encountered it.]
Q: but is there any specific tech that people are worried
about?  Apple allows screencap. Does the
current exemption with two stages serve a real purpose?
Peter Midgley, Brigham Young University: Provides zero
comfort, only confusion. Suggests screen cap is by default unlawful.
Q: would expanding the exemption increase infringing
distribution of works? Should we require them to put DRM on fictional uses?
Lerner: problematic—how do you define that?  More fundamentally, you’d be really requiring
people to change their straightforward fair use to additional restrictions on
access. When I make fair use, that’s my speech.
Reid: We’d object to a distribution scheme b/c it transforms
an exemption that’s supposed to look at the moment of circumvention (unless post
circumvention behavior is probative of intent) into a regulatory regime for
downstream distribution. Far beyond what Congress intended to delegate to CO.
Raises 1A concerns too—conditioning distribution of speech on further tech
restrictions.
A: Congress has said for 110 that tech protections are
required. Evidenced a willingness to go that far.
Reid: no evidence in the record. If you’re thinking about
that, we need more opportunity.
Midgley: we need to think about this but really shouldn’t
put a mini 110 in this exemption.  [Yeah,
no kidding.  110 is for uses that might
be otherwise outside the scope of 107 or need extra certainty because of the
institutional features of face to face teaching. This exemption isn’t sought to
implement 110, in which case compliance with 110 would be reasonable as a
requirement.  Instead the exemption is
sought to implement 107, and you actually have a right to distribute a fair use
(indeed, it’s hard to think of a fair use case that didn’t involve both
reproduction and distribution).]
Donaldson: See the negative effects of the current regime
heartbreakingly w/editors and directors who move from doc to not and want to do
what they did last month and all of a sudden it’s a criminal act.  It’s one thing to have a marketing definition
of a documentary. But acts legal in May are now illegal in June when the person
switches to a different project and that’s bad.
Antkers: will respond to the demo in LA.  [My reaction, not being able to comment on
quality given the fact that I was watching a YT stream of a camera recording of
a screen, is that the demo missed the most important step, which was the
creation of the clip in the first place; I’d sure like to know how exactly that
clip was created before it was incorporated into an ebook.]
Lerner: Bobbette Buster, client of UCI. Can confirm she’s
still working on her book. Others have personal delays, but evidence doesn’t
need to include examples for every possible issue. Evidence can also include
evidence from experts about creative practices. That’s more than sufficient to
meet our burden especially given the utter absence of concern about piracy or
increased unauthorized sharing as a result of changing the exemption.

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Brief notes on 1201 space-shifting exemption hearings

Posted on April 12, 2018 by rtushnet

PROPOSED CLASS 3: Space-shifting
Keith Chatfield SolaByte: Electronic new media solution
developers: method for space-shifting based on licensed transactions, not
moving the files.  Support OmniQ’s proposal
on behalf of consumer—can convert content to more robust security, devices.
Future-proof content against platform obsolescence. Can watermark optical media
like DVD and Blu-Ray—can be used to disable disc in the field. These create the
capability to enable a controlled licensing transaction where you can trade in
a disc.  Allows consumer to move to new
media. Patent stage, now licensing it in the market.  It doesn’t involve TPM circumvention.  DVDs are sunsetting; 13 billion are in
circulation. We’d like to allow consumers to archive their content into a more
permanent library after we authenticate the disc.  OmniQ’s aim is similar with another type of
tech. 
John Mitchell OmniQ
Restore benefits of first sale, including the opportunity
for unlicensed resale. OmniQ’s process destroys the DVD while it transfers to a
hard drive w/one encryption key that the consumer has and we don’t.  There’s never more than one copy, as opposed
to previous technologies. 
They fought about the meaning of “copy” under the statute, Cablevision, etc.  Also about whether licensing was possible
given the size of the demands of guaranteed revenues up front/the variety of
content sources.

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Consumer class action fails for failure to survey on the exact statements challenged

Posted on April 10, 2018 by rtushnet

Townsend v. Monster Beverage Corp., — F.Supp.3d —-, 2018
WL 1662131, No. 12–2188–VAP (KKx) (C.D. Cal. Mar. 20, 2018)
The Ninth Circuit remanded this case on UCL, FAL, and CLRA
claims insofar as they challenge four specific on-label representations of
certain Monster Rehab drinks, holding that even if they weren’t strictly false,
it was plausible that the statements were misleading.  The four statements were: “Hydrates Like a
Sports Drink”; “Re-hydrate”; Consume Responsibly—Max 1 can every 4 hours, with
limit 3 cans per day. Not recommended for children, people sensitive to
caffeine, pregnant women or women who are nursing.”; and “It’s an ideal combo
of the right ingredients in the right proportion to deliver the big bad buzz
that only Monster can.”
Plaintiffs argued that,“[t]o the extent that energy drinks,
including Monster Drinks, have any hydrating qualities, they do not hydrate
like a sports drink. Sports drinks contain water, salt and sugar, and are
designed to replenish the electrolytes and energy one’s body loses during
exercise.” In addition, the Hydrates and Re-hydrate statements were allegedly
misleading because “consumption of [Monster Rehab drinks] as prescribed on the
label could cause severe dehydration because the combination of caffeine and
guarana in energy drinks acts as a diuretic.” The consume responsibly/ideal
combo statements were allegedly misleading because of “potential health risks
associated with frequent consumption of Monster Drinks.”
Plaintiffs’ claims suffered numerous setbacks.  First, there was Stefan Boedeker, plaintiffs’
economic damages expert who conducted a consumer survey and choice-based
conjoint analysis to determine how much, if at all, the representations at
issue contributed to the price of the product.  However, with one exception, the phrases he
tested weren’t identical to the challenged statements and thus they were
unreliable/irrelevant.  He tested: (1)
“Long Lasting Energy;” (2) “RE–HYDRATE to Bring You Back;” (3) “Hydrates like a
Sports Drink;” (4) “Ideal Combo of the Right Ingredients in the Right
Proportion;” and (5) “Safe level of consumption incorrectly specified on label”
or “Safe level of consumption correctly specified on label.”
“In order for Plaintiffs to meet the Rule 23(b)(3)
requirement of predominance, they must show that the same representations were
specifically made to each class member. The exact wording of each statement is
thus critical to Plaintiffs’ claims and class certification.”  By substituting his own interpretations for
the exact wording, the expert rendered his tests unreliable.  For example, shortening “It’s the ideal combo
of the right ingredients in the right proportion to deliver the big bad buzz
that only Monster can” to “Ideal combo of the right ingredients in the right
proportion” wasn’t just eliminating the puffery part.  Whether that part was puffery was a legal
conclusion he wasn’t qualified to make, and the court didn’t accept his
conclusory assertion that he’d captured the essence of the claim, since his
expertise wasn’t in interpreting words and his survey didn’t measure
respondents’ understanding or interpretation of the statements. Moreover, the
second half of the statement was essential to understanding its meaning because
it informed the consumer what purpose the phrase “right ingredients in the
right proportion” serves. “Without the latter half of this statement, the
consumer is left guessing whether the ingredients are the ‘ideal combo’ for
energy, hydration, flavor, or any other possible attributes an energy drink
might tout.”
Similarly, by adding a reason to re-hydrate—“to bring you
back”—the survey became unreliable; the phrase became focused on energy rather
than hydration. “[A]dding language that confuses the re-hydrates and hydration
attributes with energy may be particularly critical to the analysis since Mr.
Boedeker’s survey shows that the energy attribute of a drink is a much stronger
market driver than the hydration attribute.”
The survey didn’t test “consume responsibly,” but rather described
in broad terms the type of statement that might be on such a label by providing
the options: “safe level of consumption incorrectly specified;” “safe level of
consumption correctly specified;” “no information on label regarding safe level
of consumption;” or nothing at all.  This
analysis was untethered to plaintiffs’ theory of liability. “Comparing the
price impact of a correct, rather than an incorrect, safety statement is
irrelevant; only a label perceived as being correct is at issue here. Further,
assigning a safety label the descriptor of ‘correct’ or ‘incorrect’ presumes
that a consumer is making this determination at all, as well as potentially
influencing such a statement’s weight.” And “safe consumption” was materially
different from “consume responsibly.” The survey thus didn’t assess the premium
paid for “consume responsibly.”
The court additionally excluded a survey that plaintiffs’
survey expert submitted in response to earlier criticisms; by providing new
data including a different survey population, not just re-analysis of existing
results, the survey became new evidence that needed to have been disclosed
earlier.
However, his earlier survey was not inadmissible just
because he didn’t ask survey participants about why they purchased Monster energy
drinks; he asked only their understanding of each statement. How reasonable
consumers perceive and interpret the statements was relevant to whether they’d
find their truth or falsity material.  One set of conclusions was unreliable,
however, because he accidentally omitted the word “bad” from the “big bad buzz”
portion of the ideal combo statement, and there was no way to tell whether this
made a difference to consumer responses. 
The specific representations are key in false advertising cases, and,
since the burden on plaintiffs was to show admissibility, they failed.
The court was equally rigorous as to defendant’s survey
expert, who was qualified to opine on the reliability/design of a consumer
survey about materiality, but not to opine on the quantitative analysis (which
he argued produced an unrealistically large damages number) because he lacked
the relevant statistical background.
The motion for class certification failed mostly because plaintiffs
failed to show that a presumption of reliance was justified. The admissible
parts of plaintiffs’ survey showed how respondents understood the Hydrates,
Re-hydrate, and Consume Responsibly statements, but didn’t provide insight into
their purchasing decisions; the survey didn’t even target people who bought
Monster branded energy drinks.  [No role
for common sense, apparently.]  “While a
challenged statement need not be the sole or even dominant factor in consumers’
purchasing decisions, a survey needs ‘to assess whether the challenged
statements were in fact material to [consumers’] purchases, as opposed to, or
in addition to, price, promotions, retail positioning, taste, texture or brand
recognition.’”
The conjoint analysis could potentially show materiality by
determining the statements’ value to consumers. But it was only admissible as
to the Hydrates claim.  And plaintiffs
didn’t show that the Hydrates statement had a common meaning.  The survey asked “What does the statement
that Monster Rehab is a ‘… triple threat that quenches thirst, hydrates like
a sports drink, and brings you back after a hard day’s night’ mean?” and “Does
the statement that Monster Rehab Energy Drink ‘Rehydrates’ or that it ‘…
hydrates like a sports drink’ say or suggest that Monster Rehab has the same
level of electrolytes as a sports drink?” But no question showed how consumers
understand the Hydrates statement alone.
Consumers’ responses also didn’t support the deceptiveness
theory.  For the first question, 24.2% of
respondents stated they understood the statement to mean “energizes;” 24.2%
said “rehydrates/aids rehydration;” 15.9% stated “thirst quenching;” 5.1%
replied “electrolytes mention/additives;” and 47.8% provided miscellaneous
responses. Plaintiffs’ misleadingness theory, that the Monster product does not
contain electrolytes like a sports drink, was only mentioned by 5% of
respondents.  Also, their answers didn’t
support any single common understanding of the Hydrates statement across the class;
“this indicates that claims related to this statement require an individual
inquiry.”
In response to a specific question asking consumers to compare
the electrolyte content of a sports drink versus a Monster Rehab Energy drink,
80.6% of respondents stated that Monster Rehab definitely or probably has the
same amount of electrolytes as a sports drink. Still, the court considered the
unprompted responses more important, and also it was unclear whether the
Re-hydrate statement or the Hydrates statement led consumers to this
conclusion. Answers to the open-ended questions indicated that electrolytes were
more often associated with the Re-hydrate statement than the Hydrates
statement.  
Nor did plaintiffs show that the Hydrates statement was
material to all class members. When their survey expert asked in an open-ended
format why respondents chose defendants’ energy drinks as opposed to another
brand, so few respondents listed hydration as a purchase driver that he didn’t
it as a quantifiable reason. Even when respondents were prompted, only 25.2% of
respondents selected hydration as a purchase motivator.  In Boedeker’s survey, only 7.3% of respondents
selected the Hydrates statement as a factor in their purchasing decision, out
of a list of 16 attributes.  Thus,
plaintiffs didn’t show the existence of a common answer to the question of
whether a reasonable consumer would consider any of the challenged statements a
material misrepresentation.
Plaintiffs also didn’t present a damages model consistent
with their theory of liability. They tried to rely on Boedeker’s model, but his
survey suffered from focalism bias, “rendering it useless for the purpose of
determining price premiums attributable to the challenged statements.”  In the list of 16 attributes driving
purchase, respondents chose flavor most often (42.8% of respondents); then
price (25.9%); then energy (25.3%); then brand (23.8%); Re-hydrates came in at 8.7%
and Hydrates like a Sports Drink at 7.3%. 
But in determining price premium, Boedeker examined only flavor, the
challenged statements, the ingredients label, and the price.  The court agreed that presenting the claims
out of context and failing to include other important attributes artificially
inflated the importance of the challenged claims. The court didn’t believe the
conclusion that “the attributes that ranked 8th, 9th, 10th, and 11th out of 16
attributes, with less than 10% of all survey respondents even mentioning each
attribute as important to their purchasing decision, constitute approximately
81% of the value of the overall product …. At the maximum price point …, the
challenged statements would constitute 52% of the value of the beverage. These
incongruous results support Defendants’ complaint that Mr. Boedeker’s survey
fatally suffers from focalism bias.” 
Plaintiffs failed to justify the selection of attributes; the court
suggested that the expert could have reproduced the conjoint analysis with
different variable attributes to see if the estimated price premium is
reliable, controlled for other highly-valued attributes, or tried to price
these other attributes.
Finally, the failure to show that Hydrates statement had a
common, deceptive meaning compounded the problem.  “In order to tie a damages model for a
misleading statement to a theory of liability, a plaintiff must show that the
price premium paid was for the attribute consumers believed the product
contained. In other words, Plaintiffs here would have to show that consumers
paid a price premium for a drink they believe contained electrolytes in order
for it to align with their theory of liability.”

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we said the meal was a “value,” we just didn’t say to whom

Posted on April 10, 2018 by rtushnet

Killeen v. McDonald’s Corp., 2018 WL 1695366, No. 17 CV 874
(N.D. Ill. Apr. 6, 2018)
Courts will only rarely protect consumers against their
inability in the moment to do math; this is not one of those times. Killeen
alleged that some of McDonald’s “Extra Value” meals were actually more
expensive than ordering the same items separately, and that this was deceptive.
For example, Killeen bought a Sausage Burrito Extra Value Meal at a Chicago
McDonald’s for $5.08 when she would have paid only $4.97 had she ordered the
individual items a la carte. “[C]ommon experience favors her assertion that
consumers expect to pay less for items bundled together and billed as a ‘value’
package than they would pay if they purchased the items separately.” But there
can be no deception where other information is readily available to dispel the
tendency to believe in savings:
[A]nyone familiar with fast-food
restaurants such as McDonald’s surely knows that prices are typically displayed
on menus located near the registers. Understandably, plaintiff may not have
wished to take the time to compare prices, but there is no question that doing
so would have dispelled the deception on which her claims are based.
Accordingly, this is not a case in which consumers would have to consult an
ingredients list or other fine print to determine whether prominent images or
labels a defendant uses in connection with its product accurately reflect the
product’s true nature or quality.

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Recent acquisitions: really bad court decisions edition

Posted on April 10, 2018 by rtushnet

Tarkay and Patricia Govezensky posters, from Romm Art Creations v. Simcha Int’l, Inc., 786 F.Supp. 1126 (E.D.N.Y. 1992), an absolutely terrible decision finding that the “Women and Cafes” style was inherently distinctive and thus had secondary meaning and high strength because they were artistic and imaginative (sigh); they were also therefore presumptively nonfunctional.  Defendant was enjoined.  If you ever wonder why Wal-Mart rejected so much of Taco Cabana, this case is a good reminder.

P.S. I ended up with a few extra Patricia posters, if anyone wants one for their own display purposes.

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