Sanderson can’t chicken out of false advertising claims

Posted on February 26, 2018 by rtushnet

Organic Consumers Assoc. v. Sanderson Farms, Inc., 2018 WL
922247, No. 17-cv-03592 (N.D. Cal. Feb. 9, 2018)
OCA sued Sanderson, a poultry processor, over ads that
allegedly mislead consumers about the nature of Sanderson’s chicken products
and farming practices. OCA and co-plaintiffs FoE, and CFS are non-profit
organizations that “work to safeguard the rights and promote the views and
interests of socially responsible consumers and farmers.”  OCA challenged claims that Sanderson’s
chicken is “100% Natural,” has no “hidden ingredients,” and that “at Sanderson
Farms, being 100% natural means there’s only chicken in our chicken.” In TV
ads, two men wearing Sanderson Farms baseball caps make comments such as, “no
antibiotics to worry about here” and “good, honest chicken.” But USDA testing found
49 instances in which Sanderson’s products tested positive for antibiotics,
pharmaceuticals, and other unnatural substance residues, causing the plaintiffs
to undertake efforts to warn customers and educate the public about the true
nature of Sanderson’s products and chicken raising practices.
The court found organizational standing under the UCL and
FAL, which is available where there is  “(1) frustration of [the plaintiff’s]
organizational mission; and (2) diversion of its resources” to combat the
challenged actions by defendant. OCA’s research into Sanderson’s farming practices
and advertising, preparation of internal memoranda, strategy meetings, and coordination
of a multi-organization consumer outreach plan diverted resources and staff
time away from OCA’s policy and consumer education work on other issues.  So too with the other organizational
plaintiffs.
The court also rejected Sanderson’s argument that state law
claims challenging its advertising were impliedly preempted by the Poultry
Products Inspection Act (PPIA) and Federal Meat Inspection Act (FMIA), given
the congressional intent to provide uniform national standards for monitoring
food producers and ensuring they do not mislead consumers as to the contents of
meat products. Also, the USDA approved the “100% Natural” language.
But consumer protection laws “are within the historic police
powers resting with the states and are therefore subject to the presumption
against preemption.” There was no manifest purpose to displace them, and
avoiding misleading advertising was consistent with the federal statutes’ aims
to ensure quality and proper labeling. And USDA approval wasn’t enough to avoid
misleadingness: “Label language is reviewed for technical and scientific
accuracy. Yet common sense suggests even ‘language that is technically and
scientifically accurate on a label can be manipulated in an advertisement to
create a message that is false and misleading to the consumer.’”  Also, Sanderson’s ads included “images,
representations, and language that go beyond what is included on the USDA
approved label.”
Plausibility: Sanderson argued that a reasonable consumer wouldn’t
interpret “natural” as stringently as the plaintiffs propose or be surprised to
learn that Sanderson’s products have trace amounts of synthetic materials like
antibiotics.  The court disagreed:
Plaintiffs alleged the existence of surveys indicating a majority of consumers
believe: a) a “natural” poultry product is produced without the use of
antibiotics or other drugs at any point; and b) it is important to reduce
antibiotic use in food production and improve the living conditions of animals.
The allegations were plausible.

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claiming to provide services then referring out can be false advertising, but P must still show harm

Posted on February 26, 2018 by rtushnet

Larry Pitt & Associates v. Lundy Law LLP, No.. 13-2398,
— F.Supp.3d —-, 2018 WL 925011 (E.D. Pa. Feb. 15, 2018)
The parties are Philadelphia-area law firms that advertise
for personal injury, social security, and workers’ compensation cases. Pitt
sued Lundy Law and its managing partner, L. Leonard Lundy (“Lundy), asserting
wrongful use of civil proceedings, false advertising, and trade secret
misappropriation. Lundy sought and received summary judgment.
“In Pennsylvania, unlike in many other jurisdictions, an
attorney or a law firm is permitted to refer a case to another attorney or law
firm and earn a portion of the clients’ fees without performing any work on the
case, so long as the arrangement is disclosed to the client and the fee is not
excessive. However, a law firm may not actively advertise in its own name for
certain categories of cases for the purpose of referring those cases to other
law firms.”  Lundy Law, a personal injury
law firm, has used the slogan “Remember this Name” and its mnemonic hotline
number 1-800-LUNDYLAW for years.
Lundy had agreements with other firms that they’d share in
the cost of Lundy Law’s advertising for social security disability cases in the
Philadelphia area, and Lundy Law would refer all of its potential social
security disability cases directly to the other firm in return for referral
fees; the most recent version of the agreement involved Lundy hiring a
part-time Social Security lawyer to handle up to five cases a month.  For workers’ comp, Lundy Law had a referral
agreement with the Law Offices of Lenard A. Cohen, P.C., under which Lundy Law
refers all its potential workers’ compensation cases in Pennsylvania to LOLAC
in exchange for a referral fee. Cohen himself has been covered under Lundy
Law’s liability insurance policy as “of counsel” to the firm since 2009 and
keeps Lundy Law business cards and a Lundy Law email address, as well as other
connections to Lundy Law.
Some Lundy Law ads featured 1-800-LUNDYLAW in large font
with the words “Injury and Disability Lawyers” or “Injury, Disability &
Workers’ Compensation lawyers,” in smaller font above or below the telephone
number. Some ads feature dtestimonials from purported social security
disability or workers compensation clients that they were glad they “remembered
the name.”  Some TV ads specifically promoted
workers’ compensation and social security disability services, e.g., “Lundy Law
gets you the social security benefits you deserve.”  Pitt asserts that all of these ads were false
and misleading because Lundy intended to refer, rather than handle, any
potential workers’ compensation and social security cases.
Separately, Lundy Law purchased ad space on SEPTA buses,
trains, and transportation stops for years, and throughout that time, Leonard
Lundy’s daughter, Sara Lundy, was an account executive at an ad firm. She
provided Lundy Law with photos of ads used by other law firms and information
on their locations as well as transit ridership information. Pitt alleged that
these disclosures constituted misappropriation of confidential information about
the advertising strategies of Lundy Law’s competitors, including Pitt.
False advertising, workers’ comp: Pitt didn’t raise a
genuine issue on material falsity/misleadingness.  Pitt didn’t show that the nature of Cohen’s
relationship with Lundy “differed materially from a consumer’s reasonable
understanding of the relationship between a law firm and its attorneys,” since
a potential client “would meet with an attorney physically present in the
office and would have recourse to Lundy Law’s malpractice insurance for the
attorney’s conduct, if necessary.”
Social Security: There was no evidence of consumer
deception, so Pitt had to rely on literal falsity. Most of Lundy’s statements
were too general/ambiguous to qualify, but there were a few more specific
statements in TV ads such as “Lundy Law gets you the social security benefits
you deserve. • We’ll help you through the process. That’s what we do.”  Although Lundy argued that the ads didn’t
indicate that Lundy employees would “themselves handle the viewers’ social
security disability claims from beginning to end,” “when a law firm releases a
commercial directed specifically at social security disability cases, and tells
viewers that it will help them through the process of obtaining social security
benefits because ‘that’s what [they] do,’ such a message necessarily implies
that lawyers within the law firm handle their clients’ social security claims.”
And if Lundy didn’t handle any aspect, that was literally false. So too with
Lundy’s listing “social security” among its “practice areas”: “it unambiguously
implies that attorneys at the firm handle cases within that practice area.”  Between late  2008 and late 2013, Lundy Law referred all of
its potential Social Security cases directly to other law firms, creating a
genuine issue on literal falsity.  But
after that, a part-time attorney came on to handle Social Security cases; even
if she handled only a few, the post-2013 ads didn’t “unambiguously represent
that the firm would take on more than five cases per month.”
But Pitt couldn’t show damages: it had to show a causal link
between its alleged injury and Lundy’s specific misrepresentations by showing
that Lundy’s statements actually deceived and influenced consumers. Evidence
that potential clients responded to Lundy Law’s advertisements wasn’t enough to
show that the clients relied on any of the specific false representations. And
there was no evidence linking an increased Social Security intake to the use of
any specific ads; it might have resulted from Lundy’s non-false advertising,
such as the firm’s more general “injury & disability lawyers” ads or its
personal injury ads. This defeated Pitt’s damages claim, and also its request
for disgorgement of profits and corrective advertising.  
There was no reason to proceed to trial for injunctive
relief; though Lundy could once again farm out all its Social Security cases
while misrepresenting that its attorneys handled those cases, there was no
evidence that Lundy intended to do so.

The same analysis applied to the state UCL deceptive marketing claim.
The trade secret claim failed because, while the nepotism
might concern Titan (the ad agency) and SEPTA, there was no evidence that any
of the information Sara Lundy shared with Leonard was confidential.  “[T]he content and location of a law firm’s
advertisements is generally intended to be public.”
The court concluded with a cautionary note: “In many
instances, a complaint to the state attorney disciplinary boards may be the
most effective means for quickly ending and sanctioning plainly unethical
conduct. Thus the Court’s decision should not be read to condone or excuse
Defendants’ alleged actions, but should instead serve as a reminder of the
burden that plaintiffs bear when they choose to seek relief against their
competitors in court.”

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When an author’s name isn’t CMI

Posted on February 26, 2018 by rtushnet

Fischer v. Forrest, Nos. 14 Civ. 1304, 1307, 2018 WL 948758
(S.D.N.Y. Feb. 16, 2018)
This very outdoorsily named and themed litigation arose out
of the termination of a longstanding business relationship between plaintiff
Fischer and defendants, including Brushy Mountain Bee Farm, alleging that they
used his likeness and proprietary text and images to promote their own
competing knock-off version of his product, Bee-Quick, a honey harvesting aid.  He sued for copyright infringement, 1202 CMI
violations, and false advertising/NY unfair competition. (Previous
discussion of report & recommendation here.)  The court adopted and elaborated on the “thorough
and persuasive Report and Recommendation.”
Fischer began using certain phrases in advertising on his
website in 2000. From 2002 onwards, Brushy used similar words to promote
Bee-Quick in advertisements. The parties disputed who wrote the ad copy. Around 2010, Brushy decided to sell its own version of the product,
Natural Honey Harvester, obtained from a third-party vendor. For purposes of
this lawsuit, the court then accepted that Brushy at that point no longer had any “right,”
“license,” or “permission” to use Fischer’s intellectual property, but Fischer
didn’t say that until April 2011, when he sent a C&D complaining about
copyright infringement.  Brushy responded
that “there [did] not seem to be grounds for [Fischer’s] request,” and that
Brushy would “review” Fischer’s concerns if he was more “specific.”
Photos of Bee-Quick remained on Brushy’s website until at
least January 2011, and images of Bee-Quick may have remained available on
Brushy’s website much longer (though it’s not clear whether any full pages used
those images).
In 2011, Brushy introduced its Natural Honey Harvester
product, using much the same language as before but with a different name, with
the intro “For years we have promoted the use of a natural product to harvest
honey but an unreliable supply of such a product has forced us to come out with
our own.” Fischer alleged that defendants removed CMI and that defendants’
alteration of their online and print advertisements altered CMI by replacing,
inter alia, the term “Fischer’s Bee-Quick” with “Natural Honey Harvester” in a
sentence describing the product.
Copyright: Fischer’s statutory damages claim failed as a
matter of law because his registration postdated the uncontested date of first
use of the allegedly infringing work. 
Fischer tried to get around this by arguing that Brushy didn’t lose its rights to use his works
when it announced to him its cessation of sales of Bee-Quick, but only until he
sent the C&D (which was after his registration).  But this argument wasn’t available at this
late date, when Fischer’s complaint pled directly contrary to that theory, and
it was too wasteful to allow a fully briefed and decided issue to be completely
changed now; “[a] proceeding before a magistrate judge is not a meaningless
dress rehearsal.”  The changed theory
would be even more wasteful because to decide it, the court would have to
figure out whether Brushy exceeded the scope of its license by using Fischer’s
material to promote Natural Honey Harvester, and thus infringed, before
2012.  And, the court noted, Fischer had
consistently contended that these acts by Brushy were unauthorized; the court
had already found it highly improbable “that Fischer[’s license] [would] allow[
] a competitor to repurpose original works he had created, copyrighted, and
continued to use to promote and sell his own product.”
Likewise, Fischer couldn’t claim statutory damages based on
secondary infringement based on the acts of third-party vendors. These
infringements were “part of a series of related infringements by defendants and
the [third parties] of the same copyrighted work” that predated Fischer’s
registration of his copyright. The fact that Fischer filed two separate
lawsuits, rather than consolidating his claims against Brushy into a single
lawsuit, didn’t change anything.
DMCA 1202: Fischer argued that Brushy removed CMI in
violation of § 1202 when, in revising its ads from promoting Bee-Quick to
promoting Natural Honey Harvester, it substituted, in a sentence, the term
“Natural Honey Harvester” for the term “Fischer’s Bee-Quick.”  CMI includes the name of the author or
copyright owner and can be “contained in the body of a work,” so “Fischer’s”
was capable of constituting CMI.  “But,
to qualify, the word or words said to constitute CMI must also be ‘conveyed in
connection with copies … of a work … or displays of a work ….’” and “[a]n
action for removal of copyright management information requires the information
to be removed from a plaintiff’s product or original work.” 
The works Fischer identified didn’t qualify.  Even assuming that the works Fischer
submitted in conjunction with his copyright registration were covered, no CMI
was removed from those or exact copies/displays of of them; instead, four
discrete phrases were allegedly copied.  
“In those cases where claims of removal of CMI have been held viable,
the underlying work has been substantially or entirely reproduced.” An ad “based
upon an earlier advertisement which in turn drew upon various materials Fischer
sent Brushy” is a kind of “composite” work not covered by 1202.  The four phrases themselves also couldn’t form
the basis of a DMCA claim.  “CMI exists
to inform the public that a work is copyrighted and by whom.” But the four
phrases weren’t CMI; only one even mentioned Fischer, and no reader would find
that “Fischer’s” as used in the phrase “Fischer’s Bee-Quick is a safe, gentle,
and pleasant way to harvest your honey” “speaks to copyright ownership” of that
phrase or the others:
Imagine that the back cover of the
Ian Fleming novel Dr. No. contained the following encomium: “In Ian Fleming’s
Dr. No, Fleming shows his mastery of Cold War spycraft.” Imagine then that a
person lifted language from that review to promote a different thriller,
writing: “In John Le Carré’s Tinker, Tailor, Soldier, Spy, Le Carré shows his
mastery of Cold War spycraft.” Whatever the other legal implications of such
conduct might be, it is inconceivable that a DMCA claim would lie from the
elimination of Fleming’s name. The expression at issue does not connote
Fleming’s copyright ownership of anything, much less the language common to the
two book-promoting blurbs. Fischer’s name—whose deletion Fischer’s DMCA claim
challenges—similarly has no CMI relevance as used in Defendants’ advertisement.
It neither informs the reader that Fischer wrote either the phrase to which
“Fischer’s” is attached or the surrounding text.
False endorsement: Fischer argued that defendants violated
the Lanham Act by including his name in the post-domain path of URLs that
linked to Defendants’ Natural Honey Harvester, e.g., http://brushymountainbeefarm.com/images/799fischers.jpg.  As a matter of law, Fischer couldn’t show
confusion. There was no evidence of actual confusion.  Fischer pointed to a review from Brushy’s
website stating that an later shipment of a product was not as good as an
earlier shipment, but there was no evidence that these were the parties’ respectively.  Fischer also failed to show that the
post-domain path names were the cause of Google search results, and his
evidence showed that Google provided mostly results for his product, which
would indicate that consumers wouldn’t be led astray.  His claims of initial interest confusion were
“factually threadbare” and failed to show intentional deception, which is
important online because consumers can so easily click back.
Bad faith: There was no evidence that the use of his name in
the post-domain URL was knowing; the use of existing URLs was inadvertent,
according to Brushy.  Although two
archived links on the website contain Fischer’s name, they don’t appear on any
webpage advertising Brushy’s products, and were retained to avoid spoliation
concerns.
Consumer sophistication: As the report indicated, “Whether
defined as the typical consumer of beekeeping products, or Internet users writ
large, no ordinary consumer is likely to see Fischer’s name in the post-domain
path of the URL and wonder if that signified his endorsement of a completely
different product in the accompanying web page.”  Plus, precedent indicates that post-domain
paths usually don’t signify source. 
Fischer argued that the continued use of a mark after the
termination of a licensing agreement should be a factor in his favor. Courts in
this district have indeed held that “[w]hen an ex-licensee continues to use a
mark after its license expires, likelihood of confusion is established as a
matter of law.” But here, Brushy hadn’t been using Fischer’s name as a
mark.  The per se rule of the former
licensee cases was inapplicable.
False advertising: Fischer argued that the “Come out with
our own” claim was false because Brushy bought its product from a third
party.   This statement wasn’t literally
false; it didn’t “unavoidably signify that the product offered by Brushy was
created in the first instance by Brushy.” Nor was there evidence of deliberate
deception or consumer confusion.

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Conference: administrative law/private law interface in IP

Posted on February 26, 2018 by rtushnet

The Administrative-Private Law Interface in IP,  March 29, 2018
A conference co-organized by the Project on the Foundations
of Private Law at Harvard
Law School and the University of Texas School of Law,
sponsored by Qualcomm Inc.

More info here.

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False endorsement: some bad questions to ask in a survey

Posted on February 23, 2018 by rtushnet

Gibson v. BTS North, Inc., 2018 WL 888872, No. 16-24548
(S.D. Fla. Feb. 14, 2018)
Plaintiffs are professional models, actresses, and/or
businesswoman who earn their livings by promoting her image, likeness, and/or
identity to select clients, commercial brands, media, and entertainment outlets
and carefully controlling their images. Defendants operate three “full friction
and full nudity” gentlemen’s clubs. Each plaintiff had one or more of her
images used on at least one of the Club’s Facebook pages without her consent.  Defendants’ corporate representative testified
that they never asked the plaintiffs for their consent, and that he assumed J
Dog Media, a separate company thad does the ads for the Clubs, created the
graphic designs, backed up by a declaration from the owner of J Dog.
He stated that “in procuring the images at issue, these
images were not altered in any way, and were located on other Facebook sites
and pages, none of which were Facebook pages associated with, or describing by
name, any Plaintiff, and all of which invited ‘sharing’ on the internet.” He
said he chose the images “solely because the images depicted attractive
females, and not on the basis of any person’s identity, celebrity, popularity,
or any personal basis or characteristic associated with any particular
Plaintiff.”
Plaintiffs alleged that the uses caused affiliation
confusion, and submitted a survey with three representative images from defendants’
ads, two of which featured a named plaintiff. The survey included only “adult
(21 and over) male Florida residents who had patronized a Bikini
Bar/Gentleman’s Club/Strip Club in the past two years.” The expert testified
that 94% of respondents thought the models in the advertisements had agreed to
be in the advertisements; 91% of respondents thought the models agreed to
promote the Club in the advertising; 9 out of 10 “thought the models represent
the lifestyle to which the Club is oriented” [query: how could this be verified
or falsified, ever?]; almost 4 out of 5 “thought the models enjoyed a lifestyle
like that reflected in the advertising and might participate in some of the
events described in the advertising” [mostly the same query]; 75% thought it
was “extremely likely” the models were used “to make them think they
represented the kind of women they would expect to see at the club,” and
another 20% thought it was “somewhat likely” [ditto].
Lanham Act false advertising: Plaintiffs argued literal
falsity in that the ads “necessarily conveyed or implied each Plaintiff’s
association with[,] endorsement of, and support for the Clubs.” They didn’t
show that the images were altered, and since they were actual images of the
plaintiffs, they weren’t literally false. “[A]n unauthorized use of a
photograph is not a literally false statement, even if the image was altered,”
without more. The ads could still be misleading, as shown by evidence of
deception.
Defendanted contest the validity of the survey based on the
fact that the survey had a small sample size, included images of other women
used by other clubs, and used only two of the 57 advertisements at issue in
this case representing only two (or possibly three) of the thirteen plaintiffs.
These “[c]hallenges to survey methodology go to the weight given the survey,
not its admissibility” and a reasonable juror could find the survey
unpersuasive, thus preventing summary judgment for plaintiffs.  Further, they didn’t explain how the alleged
deception had a material effect on purchasing decisions.  “While the survey found ‘[j]ust over 90%’ of
the participants were more likely to be interested in patronizing Defendants by
seeing the ads with Plaintiffs than they were from seeing the same
advertisements without Plaintiffs, viewed in the light most favorable to
Defendants, this does not mean consumers would actually be more likely to
frequent Defendants’ establishments based on seeing Plaintiffs in the
advertisements.”  [Yeah, not necessarily
the right control for materiality.] 
Finally, plaintiffs didn’t show how they’d been or were likely to be
injured—an alleged right to compensation for the fair market value of the use
of their image had “nothing to do” with whether the use was misleading and wasn’t
necessarily proximately caused by the misleadingness.
False endorsement: this is the same as TM infringement/false
association. Again, the court denied summary judgment to plaintiffs.  Plaintiffs argued that their images were “by
definition” inherently distinctive [this seems wrong under Wal-Mart; surely the
plaintiffs’ images were either product design or close enough to get the
benefit of the rule that in close cases courts should require secondary
meaning], or had acquired distinctiveness.
Defendants argued that plaintiffs weren’t celebrities, which
the court construed as an argument that their marks weren’t strong.  Interestingly, the court said that the
standard secondary meaning factors “do not lend themselves as easily to
Plaintiffs whose mark is their identity rather than their name,” which may be
to say that identity isn’t really the proper subject matter of a “mark” [paging
Mark McKenna], or in other words you can’t necessarily tell what in a
plaintiff’s metaphorical “image” is performing the source identification
function and what is just a non-trademark kind of distinctiveness (like my
distinctive writing quirks).  The court
didn’t require much definition from plaintiffs: “While Plaintiffs never
explicitly state what exactly their brands represent, Plaintiffs’ declarations
satisfy the first three factors [of length & nature of use, nature &
extent of advertising and promotion, and & efforts to promote a conscious
association between the mark and the business].”  But how can this be a coherent sentence?  What
have they used for so long?  What is the mark with which they promote
an association and what is the business, if not the “brand” itself?  Can a plaintiff be a mark for herself?
Regardless, plaintiffs provided no evidence of secondary
meaning/public recognition, meaning that this factor was neutral in the light
most favorable to defendants.
Similarity was “about as strong as can be.”  Similarity of goods/services, sales outlets,
and customer base: plaintiffs’ lawsuit was premised on the idea that they’d
never have endorsed these uses, leading service dissimilarity to weigh in
defendants’ favor.  But plaintiffs argued
that they vie for the same dollars as Defendants because “Defendants’ customers
also fall within a subset of the demographic that is interested in beautiful
women.” Plus the parties both use websites and social media such as Twitter and
Facebook to reach their target audience. [That is, they exist in 2018.]  So that weighed in plaintiffs’ favor.
Intent: it was difficult to determine whether defendants
intended to capitalize on plaintiffs’ goodwill. 
If they didn’t even create the ads, they couldn’t have had bad intent,
and J Dog’s owner said he chose the images because they were pretty, not on the
basis of identity/popularity; this favored defendants.
Actual confusion: see above about the survey, which didn’t
ask if respondents recognized the plaintiffs.
Statutory and common law misappropriation of likeness:
Although “[r]epublication of facts already publicized elsewhere cannot provide
a basis for an invasion of privacy claim,” the harm of misappropriation is
different; plaintiffs secured summary judgment on these claims. 
Civil theft and conversion: Plaintiffs didn’t show the
requisite intent to deprive them of the use of the images; at most there was a
fact issue about who created the images. A reasonable finder of fact could
determine that neither defendants nor J Dog intended to deprive plaintiffs of
their images or any rights to them. [Also, depriving plaintiffs of the right to
control all uses of their images is not the same thing as depriving them of
their own possession of copies of the images, which is what conversion
requires, especially to avoid copyright preemption. This should have been
summary judgment for defendants, though it’s not clear they moved for that.]
Unjust enrichment: plaintiffs didn’t argue that the use of
their images increased defendants’ customers or otherwise led to a gain, but
that use of their images constituted a voluntary acceptance and retention of
the benefit of using their photos without paying any fee.  The court wasn’t convinced that it would be
inequitable to let them retain this benefit, especially that the
misappropriation of likeness claims would provide compensation for the exact
same harm.
  
Damages for misappropriation of likeness: Plaintiffs claimed
they were entitled to the fair market value for the use of their images and
reasonable royalties, though the court found their expert’s report
problematic.  E.g., the expert valued one
plaintiff’s “working day rate” at $5,000 without explaining what it meant. The
court [wrongly I think] presumed that this was the fair market value for the
use of each image; the same image was used three times [which would be one
photo shoot, not three] but then the expert calculated actual damages as
$30,000. Another plaintiff was credited with a “working day rate” of $100,000;
for three different images and eight total uses, the expert calculated actual
damages at $900,000. The expert didn’t sufficiently explain his calculations to
avoid speculativeness.

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Zazzle injunction reversed: irreparable harm is hard to show

Posted on February 23, 2018 by rtushnet

Greg Young Pub’g, Inc. v. Zazzle, Inc., No. 16-cv-04587
(C.D. Cal. Feb. 8, 2018)
After a jury trial finding Zazzle liable for copyright
infringement for producing goods with user-uploaded images, the court granted a
preliminary injunction. Here, it vacates that injunction for failure to
consider material facts and to provide a sufficient record on the multifactor
test.
Irreparable harm: Plaintiff alleged harm to its “competitive
position” because Zazzle sold “unauthorized products,” and alleging “actual
loss of market share,” as well as “harm by loss of reputation.” But there was
no such evidence.  A conclusory
declaration from plaintiff’s owner was insufficient.  Although they alleged direct competition, no
evidence showed plaintiff’s products or those of licensees.  The fact of infringing sales and allegedly
poor quality of images weren’t sufficient alone to show loss of reputation attributable
to Zazzle without evidence about the quality of both parties’ images or a
causal connection between the quality and a loss of reputation.
Irreparable harm from “lost control” of copyrights was equally
insufficient. “After eBay, Plaintiffs cannot rely on the pure fact of
infringement in order to establish irreparable harm.”  Grokster,
involving similar arguments, had evidence of infringement on a huge scale, more
than Grokster could ever possibly redress with damages, as well as evidence
that plaintiffs’ copyrights were particularly vulnerable to repeat
infringement. No such evidence existed here.
Plaintiff argued irreparable harm from the threat of future
infringement and additional lawsuits, but the “mere likelihood of future
infringement by a defendant does not by itself allow for an inference of
irreparable harm.” There was no indication here that Zazzle would be unable to
pay statutory damages, or that any infringements would require dozens or
hundreds of future lawsuits. “The facts were uncontested that Zazzle promptly
removed any infringements brought to its attention.”
Nor did plaintiff show lack of adequate remedies at law. The
jury’s statutory damage award was more than adequate compensation: $351,100, compared
to licensing revenues for the artworks at issue of approximately $21,489 and
Zazzle’s sales of $5,622.  Nor was Zazzle
likely to repeat its infringement in bad faith, given the court’s previous
ruling that Zazzle wasn’t a wilful infringer and the de minimis infringing
sales since the lawsuit was filed.  Only
about $100 of infringing sales since the litigation began were to third
parties; more than 75% of the sales were to plaintiff/its straw buyers.  “Considering that Zazzle reviews millions of
images in a given year, Plaintiff has not been able to demonstrate that Zazzle is
likely to allow infringement to continue in bad faith. And even if some
infringement does continue, Plaintiff has not been able to show why the
statutory damages award would not adequately compensate for that injury.”
The proposed injunction was also too broad. The court never
decided whether Zazzle had a viable DMCA defense as to images only displayed on
Zazzle’s website and never physically manufactured, because the plaintiffs
withdrew its claims before trial. Thus, it was unclear whether the injunction
covered mere display, or required Zazzle to take “reasonable” steps to address
the display of images on its website as well as its manufacture of products.
Bye-bye injunction.

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The other Redbox case: the color may fade, but not the mark

Posted on February 23, 2018 by rtushnet

Redbox Automated Retail, LLC v. Xpress Retail LLC, 2018 WL
950098, No. 17 C 5596 (N.D. Ill. Feb. 20, 2018)
Redbox sued defendant DVDXpress alleging trademark
infringement and false advertising; DVDXpress moved to dismiss and asserted counterclaims/affirmative
defenses, some of which the court here rejects. The parties compete in the
market for DVD rental services through automated vending machines called
kiosks. Redbox has registered trademarks for its word mark and for the kiosks’ red
color scheme.
Redbox alleged that DVDXpress recently began using kiosks
that are entirely red in color, making them confusingly similar to Redbox’s
kiosks. Redbox also alleged infringement from DVDXPress’s use the term “redbox”
in the metadata for its website in order to capture searches for Redbox.  [Practice note: this use of metadata is
probably useless and though it’s unlikely to be confusing in practice, the case
law here is terrible. It is thus risky to use another’s trademark in metadata,
though the court here does better than most (while conflating descriptive and
nominative fair use).]  Finally, Redbox
alleged that DVDXpress falsely advertises that customers can rent movies
through DVDXpress twenty-eight days before the same movies become available
through Redbox.
  
DVDXpress counterclaimed for tortious interference with its contractual
relationship with Weis Markets, which signed a DVD Rental Kiosk Agreement with
DVDXpress in July 2017 and accordingly asked Redbox to remove its kiosks, but four
days after Redbox filed this suit, Redbox indicated that it wouldn’t remove its
kiosks “on Weis’s requested schedule.” Redbox removed the last of its kiosks
from Weis’s stores in late October 2017, after DVDXpress filed its
counterclaim.
The counterclaim plausibly alleged that the continued
presence of Redbox’s kiosks at Weis’s stores through late October caused Weis
to breach the contract for exclusive kiosk provision or made it impossible for
DVDXpress to perform by taking up the places for kiosks in the stores.  Delay, rather than total noncompliance, can
be just as malicious as outright refusal to act.  Given that Redbox informed Weis that Redbox
was seeking an injunction against DVDXpress and “would be concerned if more red
DVDXpress kiosks began to appear in the marketplace,” it was plausible that the
delay stemmed not from some independent logistical difficulty, but rather from
Redbox’s illegitimate “desire to stop (or at least slow) the expansion of
DVDXpress’s business.”
Acquiescence as an affirmative defense: According to
DVDXpress, Redbox has been aware since 2002 of DVDXpress’s use of the color red
on its kiosks, and in 2007, DVDXpress and Redbox were temporarily merged under
then-parent company Coinstar, Inc. “One can reasonably infer that, while the
two companies were merged, Redbox affirmatively approved DVDXpress’s use of the
red color scheme on its kiosks. That plausible scenario is sufficient for the
acquiescence defense to survive at the pleading stage.”
Fair use as an affirmative defense: “It is plausible that,
when DVDXpress included the term ‘redbox’ in the metadata for its website, it
did so ‘fairly and in good faith … to describe’ its own kiosks.”
Unclean hands: DVDXpress that Redbox deceptively advertised
“no late fees” and Blu-Ray quality discs, and falsely advertised that certain
DVDs would be available at Redbox kiosks on their release dates.  Unclean hands has to relate to the matter in
which the claimant seeks relief: if the claimant’s right wasn’t the result of
the alleged wrongdoing, then it’s unrelated to the litigation’s subject matter.
Also, unclean hands “is disfavored where a plaintiff seeks to enforce laws,
such as a false advertising prohibition, that protect the public,” especially
where the defendant could challenge the plaintiff’s conduct through a
counterclaim or separate suit. Here, the alleged misstatements had nothing to
do with Redbox’s allegations; even Redbox’s own allegedly false ads about
availability didn’t “help Redbox acquire the right (to enjoin DVDXpress’s
assertions that its kiosks have certain movies twenty-eight days before Redbox)
that it seeks to enforce here.”  A few
courts have allowed the defense in similar circumstances, but the court here
found that the “obvious hypocrisy in one company suing a competitor for doing
the very same thing it did in the past (and got away with) … does not warrant
denying an otherwise merited injunction or other relief, especially when the
relief would end a deceptive practice that is harmful to the public.”
DVDXpress also asserted an abandonment defense, alleging
only that “Redbox has discontinued its use of the color red on its kiosks in
the ordinary course of business, at least, with regard to certain locations,
namely at Walmart retail stores,” and that “Redbox has allowed a number of
their kiosks to fade to a color that could better be described as pink.” That’s
not enough to suggest discontinuance of red, and the court struck the defense.

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Reading list: global fair use

Posted on February 23, 2018 by rtushnet

Lionel Bently and Tanya Aplin, Whatever
Became of Global, Mandatory, Fair Use? A Case Study in Dysfunctional Pluralism

The international copyright system requires all participants
to recognise a freedom for fair quotation that covers much of the ground
encompassed by the notion of ‘fair use.’ The obligation derives from Article
10(1) of the Berne Convention and thus applies to some 174 countries (and,
because Article 10(1) must be complied with under TRIPS, is carried over into
the WTO Agreement). In contrast to other limitations in Berne, Article 10(1) is
not optional, it is mandatory. It creates an obligation, and thereby imposes a
ceiling on the freedom of action of Members of the Union. The breadth of the
obligatory exception is wide: as enacted in national law, it should not be
limited by work, nor by type of act, nor by purpose. The exception should not
be subjected to additional conditions beyond those recognised in Article 10: to
do so is to breach the obligation. Subject to those conditions, the freedom the
Article secures to users encompasses any and every act of quotation, the
meaning of which reflects how the term is ordinarily used across all cultural
forms. That includes free-standing uses, transformative uses and parodic uses.
Its breadth reflects, but is not limited by, the desire to give effect to the
fundamental freedom, freedom of expression. We have dubbed this ‘global,
mandatory, fair use’, or GMFU, for short.
 Yet, despite this obligation, there has been a
marginalisation of Article 10(1) and this paper explores how, and why, this
distortion of international obligations has occurred. It suggests the dangers
of pluralism in copyright when it comes to international obligations.

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WIPIP concurrent 3 (most of it)

Posted on February 17, 2018 by rtushnet

Annemarie Bridy, Fearless Girl Meets Charging Bull:
Copyright and the Regulation of Intertextuality
DiModica (who made Charging Bull) complained that Fearless
Girl’s placement created an unauthorized derivative work and violated VARA by
being a material alteration that prejudiced his honor—Charging Bull was no
longer optimistic but transformed into a threat. Turning a semiotic dispute
into a legal one.
Can © be leveraged to prevent confrontational dialogue
w/preexisting works? What role does copyright play in regulating text to text and
author to author interactions? And what can literary theory tell us?
Existing scholarship on role of romantic author: presupposes/valorizes
creative genius and possessive individualism. But US © has important
differences from European law. Bahktin/Gerard Genette: intertextuality views
works relationally rather than as closed systems—dialogism within & between
texts. Monologic discourse is poetic; dialogic discourse is associated w/the
novel. Monologism privileges unitary voice of author as autonomous; dialogue
has mix of voices that are layered in the work. Work is more open and porous.
Genette’s hypertextuality: secondary author targets preexisting text &
rewrites & completes it in a way original author might not have liked—hypertext
as unfaithful continuation of its hypotext.
Dimoda embraces aesthetic monologism, which is encoded in
author centric European © law. Strong moral rights, limited
exceptions/limitations. US © is hospitable to intertextuality by design, even
assumes it. Less author-centric and more focused on public interest in
production of creative works. © protects second degree works such as
compilations and derivative work, and also excepts a range of second degree
uses, including fair use which is flexible/unfaithful/murderous (Genette’s
term) and also compulsory license for musical work covers (less flexible but appreciates
artistic impulse to remake/reengage the work). Very narrow moral rights that
delayed US accession to Berne.
He can’t prevail: derivative work claim requires physical
incorporation of elements of the protected work [but consider the case from
yesterday finding that embedding was infringement]. Not every modification of a
work creates a derivative work, Mass MOCA, and altering the viewer’s experience
of a work doesn’t create a derivative work, Lewis Galoob v. Nintendo. Even if
the placement did result in a derivative work, the semiotically confrontational
nature of its relationship to Charging Bull would mean that it’s a fair use.
Rosenblatt: maybe if juxtaposition is fair use, the fact it’s
juxtaposition forces us to go straight to fair use & concedes it’s w/in the
scope of the right.
A: but physical incorporation is still necessary.
Ann Bartow, The Economics of Race and Gender in Art Law
Ownership disputes w/racial subtext. Control of Barnes
Foundation stolen from Lincoln University, a HBU in Pa.; art now controlled by
wealthy mostly white people in Philadelphia—thought the art should be in the
hands of nice white guys. Georgia O’Keefe donated art to Fisk Univ., an HBU in
Nashville; art now 50% owned and controlled by museum in Bentonville, Ark. founded
by Walmart heiress. Leveraged highly contestable claims of financial
mismanagement/lack of sophistication.
Georgia O’Keefe lost art theft based on statute of
limitation grounds; in the vast majority of art theft cases, by contrast,
courts found all kinds of ways around SoLs: possession as continuing crime;
demand and refusal rules before SoL restarts; sales reboot the SoL; etc. Nude
posing as a career strategy for O’Keefe—it was one of the only ways she could
be accepted in the arts community. She didn’t feel it was voluntary. Hazards: sexual
harassment, sexual assault, nonconsensual pornography, low pay and labor
abuses, gawkers & creeps.
Another example: Barbara Kruger: appropriation art; Hoepker
was the foreigner who didn’t comply with 104(a) so wasn’t able to enforce his
restored (c). She might not have prevailed on fair use; museum used the art as
an ad for the Kruger show, and put it on mugs and the like—she was exploited as
she was being accused of exploitation.
Prince and Cariou’s Yes Rasta: both whites dealing in
pictures of bodies of black men (and white women from soft-core porn for
Prince).
More women than men attend & graduate from art
schools/get art degrees. There’s no movement to get more men in art as women in
STEM; but men are at the top. Every artist in the top 100 sales in 2013 were
men. In 2014, no women in top 2104. Less than 4% of artists in Modern Art at
the Met are women, but 76% of the nudes are female. Don’t do as well at art fairs;
held only 24% of museum director positions and were underpaid compared to men. Art
galleries control value of art by manipulating two signals: price and who buys.
Too low and the perception is low quality and too high and the artists seem
overhyped. Manipulate the secondary market. Also try to sell to tastemakers. Control
value of art worldwide, b/c value is subjective and subject to signalling;
white men decide what’s good and valuable. Museums can make or break artists
with shows, deaccessioning, etc. Often in collusion with galleries, auction
houses and wealthy collectors. China has wealthy collectors in old, European
art which has also had an impact.
Antidiscrimination as a moral right. Attribution can
facilitate discrimination, esp. for gender. Artworks can be racialized or
gendered in ways that are perceptible and signaling, as w/software that can discern
gender of text authors. Integrity: has multiple meanings, including the quality
of being sound moral principle, uprightness, honesty and sincerity. Galleries,
auction houses and museums as sites of resistance and reform.
Q: Internal splits in Fisk and Barnes led to majorities to
surrender [Bartow notes that they required board takeovers] and there were
reasons to see them not as central to the missions of the school. When the
institution did try to monetize the collection, the AG limited Fisk’s ability
to do so—it was accomplished in a number of different ways, including by using
institutional power to threaten [Bartow notes threat to funding]. The capacity
to divest the collection once the decision was made was also limited &
cabined. [Sounds to me like the expropriation of black wealth or wealth
foundation described in Richard Rosenstein’s and Ta-Nehisi Coates’ recent
books.]
Rosenblatt: Compare appropriation art. Some are seen as
legit and others aren’t. But when I dig in to these problems, they feel more
like antitrust problems than IP problems. Why is IP the lever here?
A: there could be other things. And antitrust has a role to
play around auctions. But moral rights is more empowering to individual
artists. [CRT’s rights claims.]
Q: what if art is a male display behavior of taking attention-grabbing
risks making a biological basis for male dominance in the field?
Chien: Uber pays men more than women per hour, but it seems
to be b/c men drive faster and more dangerous routes. Correlated w/things that
are correlated w/value. Are there ways to quantify what would be the legitimate
basis for one thing to be displayed more? What are the right criteria?
Raymond Ku, The First Amendment Implications of Copyright’s
Double Standards: It’s More than Just Entertainment
Touting the value of P2P for distributing creativity/access w/o
deadweight loss. Reaction of former Register: what’s the big deal? It’s just
entertainment.  Debate b/t Justices
Stevens & Blackmun about ability to time shift popular entertainment: who
cares about Honey Boo Boo?  Stevens
struggled to find a political or educational use.  Sony makes more sense when you connect it to
Bleistein: why are we judging the value of the programming that’s being watched? 
But we judge that all the time. We’ve been discussing how
much creativity is sufficient for © protection and fair use.  When we do this, entertainment essentially
always loses.  SAT/Seinfeld Aptitude Test
case is the key example.  Interesting
doctrine: Protection of creative facts—less need to copy them.  In Hoehling, by contrast, the movie studio didn’t
need to justify its copying of Hoehling’s theory.  Case law suggests that for fair use, when we’re
dealing with entertainment, for fair use no amount of added creativity is
sufficient—Blurred Lines, 60 Years Later, The Harry Potter Lexicon. Even in
Cariou v. Prince, court goes out of its way to say that its broad definition of
transformativeness doesn’t cover entertainment.
We’re mixing up the idea of results and repetition. With
factual works we do want people to reach the same results hopefully.  With fanciful works, the options are infinite
and reaching the same result is not inevitable; repetition of results means
repetition of expression. Independent contributions are not repetition. [  For factual and fanciful works,
repetition is part of the process for learning for both; researching and
performing respectively are similar in their contributions to understanding.
Retyping Holmes’ common law is meaningless, but a musician that is able to
replay or emulate Yo-Yo Ma or paint in Van Gogh’s style is doing something
dramatically different, yet we say that copying in the latter circumstance is
less justified. For both fanciful and factual, incremental contributions may
not be recognized or appreciated as such; also, someone may say it better.
Factual: financial stakes are small in litigation, while for
fanciful works the stakes can be significant. 
For fanciful works in litigations, the work speaks for itself and
everyone’s an expert; there are no standards/informal voluntary standards. Factual
works litigation: there’s a practice of framing for the jury, governed by
agreed on standards and guidelines (my article tells you the contribution it’s
making; general, disciplinary, and institutional standards) whereas Fearless Girl
and Charging Bull stand by themselves; courts may defer to professional/expert
opinions.
RT: about results, what do you mean? I would have gone the other way, w/TS Eliot’s objective correlative—similar results can be achieved by multiple different expressions (compare romance novels or really any standardized genre, even the middle aged white male adultery novel).
A: When you’re trying to answer a Q, 2+2 has one answer but
literary Qs have multiple answers. [Like Barton Beebe on progress & Jeanne Fromer on problem finding.]
Rosenblatt: is this a problem of fictional works versus a
problem of ignoring SCt precedent in the form of Campbell’s dictate to consider
different meaning or message, not just purpose? Are courts ignoring this b/c
they disagree & think that entertainment is frivolous?
A: Easterbrook says he likes Cariou but it doesn’t explain
difference b/t me creating a derivative work and me making a fair use,
especially in entertainment where we often think it’s something the original
author should control. 

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WIPIP Concurrent 2

Posted on February 16, 2018 by rtushnet

Nancy Kim, The License v. Sale Puzzle after Impressions v.
Lexmark
Sales exhaust the patentee’s rights to any item regardless
of what the contract says. But restrictions on licensees are different because a
license doesn’t implicate the same concerns about restraints on alienation as a
sale.  Even if the contract is
enforceable, that doesn’t mean that the parties can’t contract about everything.
They can’t recharacterize the world—you can call a contract w/a worker an
independent contract, but if the facts establish an employment relationship you
have an employee.  Same with
license/sale.  “Authorized” sale is also
important.
Contract can give rise for breach and infringement claims,
but not for the same provision; not every breach exceeds the scope of the license
and constitutes infringement. Principles: if the first transaction by the
patentee is a sale, all subsequent transactions are sales. License agreement
may or many not be followed by sale. If license allows licensee to sell patent
items w/o restrictions, then the subsequent transactions to customers are sale.  If license imposes restrictive conditions on
licensees’ ability to sell, they’re sales only if the licensee required with
those conditions—e.g., limited to sales in North America, and then sales in
France are unauthorized.  If licensee has
obligation to impose restrictions on customers, then subsequent transactions
are sales.  If mfgr didn’t have customer
sign contract restricting use, mfgr might be in breach of contract, but it’s
still a sale. 
With a standard form contract/adhesion contract if the patentee/©
owner retains rights to reposess or control item, it should be considered a
license, but otherwise a sale.  If
negotiated or individual contract, distinction should depend on whether
contract limits one of the patentee/© owner’s exclusive rights (that is, does
it affect the scope of the license?).
Whether the purchaser/licensee infringed depends on whether
the contractual provision was a covenant or condition, which means did it limit
the scope of the license/implicate one of the exclusive rights of patentee/©
owner, but the ©/patent cases differ. 
Sale of © item may be treated as still having a license.  Example: a nonexclusive, nontransferable
license to make 2 copies. This is not conditional language; transferability is not
one of licensor’s exclusive rights as a © owner.  Also: Licensee agrees not to transfer, assign
or sell—that’s still drafted as a covenant not a condition.  “provided that licensee may not transfer,
assign, or sell … license is expressly conditioned upon compliance w/this
provision”: if result would be forfeiture, courts in contract law generally are
disinclined to find a condition.  How
about: if licensee attempts to transfer, assign or sell this software, the
license immediately terminates and is void: clearly a condition, and that’s
what it should take.
Lemley: How confident are we that 9th Circuit’s
condition/covenant distinction survives Lexmark?  Lexmark suggests © and patent are kin. 
A: she’s concerned about that.  Ct doesn’t directly address license v. sale
b/c they say it’s a sale. Also different exclusive rights: with ©, you can sell
the product and still not exhaust all the rights (e.g. public performance).
David Olson, Why Increasing IP Exhaustion Leads to
Decreasing Ownership of Goods
Information costs for servitudes on chattel property are
high; recording burden is high; may restrict resale/reuse of goods forcing
inefficient manufacture of new goods instead. 
With information goods/internet age cost of checking restrictions can be
very low relative to value of item.  IOT
goods that phone home/alert you as to any restrictions.  Cost of knowing them is just lower [depending
on what you mean by “knowledge” given human practices & functional capacities].  Digital copy of book can also be created more
cheaply; not much waste in idling/deleting my copy.  Allows for price discrimination, as does
monitoring via IOT/collection of $ for downstream uses.

Still, most goods are sold free/unconstrained. 
It’s often more profitable to simply make a first sale w/o monitoring or
transaction costs.  E.g., cars.  Other times it can help buyers who can’t
afford the total cost to give them only a partial right & have owner retain
residual value—rental cars, tuxedos, etc. 
For the IOT, your refrigerator can be shut down if you
violate a term.  HP is also licensing/renting
printers on this basis—rent charged based on amount of use, and they send you
the toner as you need it.  The
relationship no longer looks like a sale; it is ongoing and involves patches,
etc.  If your credit card expires, the
printer stops working.  Pretty effective
lockup through contract, and enforcement w/o any privity of contract necessary.  [Pretty good opportunities for fraud?]
Is this good/bad and how if at all should the law
respond?  B/c price discrimination can be
quite valuable to society, especially for cheap goods, the next move to
preserve ownership would have to be inroads into contract law to stop these
characterizations/prevent these restrictions being enforced via self-help.
Reasons to be cautious about making that move: now that exhaustion
is so strong, we’ll see the same attempts through contract law; we’d be better
off to allow experimentation and see how the market reacts. We’ve never seen
mfgr limit all use/control all aspects; it’s not profitable and there’s bad PR
from people not liking price discrim. Instead we’ll see monitoring and price
discrim w/customization for users’ needs. 
Consumer will not be able to see she’s being charged differently b/c the
good will not be exactly the same for each one. 
Like cars with different packages [this is a really disturbing example—we
know that the poor/women/minorities pay more]. 
Can charge people willing to pay more, more, and charge low prices to
those who can’t afford more b/c arbitrage will be impossible.  [When has this ever happened, compared to
poor paying more?]
Better to use antitrust law than sale/license law to deal
w/abuses such as market foreclosure.
RT: questions above. 
Tell me why you’re hopeful.
A: discrimination law would still apply, but he was talking
about standard packages; discrimination comes in at the overall price of the
car.  People could still create data
[unless contractually prohibited]; they might find that women are willing to
pay more, which could be a problem.  Women
sometimes are never offered a low enough price and they walk away; the
transaction fails.  AI, which has the
potential to lessen discrimination [do we know that?], means that if your goal
is profit maximization you will try to figure out what people will pay and get
past proxies like age and race.  [That does
not seem to me to describe how the current algorithms work—they absolutely use
your categories to be predictive about your characteristics, including WTP. Plus
your other non-race and gender characteristics are tightly correlated w/them,
so “non proxies” (e.g., where you live, whether you’ve gone to jail, how much
money you make) are also proxies.  And
then your reaction to the offers you get—which people in other groups won’t get—determines
what happens next, so the discrimination just gets baked further in.]
Rosenblatt: rich could be allowed to make remix, poor not.  If what people want to do is on-label, then
your logic makes sense. But if they want to do off-label stuff like remix,
reverse engineering, follow-on innovation, doesn’t this bar that?
A: if we restrict producers to one price, the Q is do poorer
consumers get to buy anything, or nothing?
Michael Burstein, Indiscrete Property
Information is often incompatible with the notion of
thingness in ways that go beyond the mere costs of defining the thing: it is
indiscrete and continuous, as opposed to discrete and separable as most
tangible goods are. While a stock tip is relatively discrete, more often info
conveys different value to different actors; info is more of a platform on
which transactions occur.  Thus value
depends less on definition than the structure of the underlying institution.  Should focus on rules that allow people to
structure info flows for best use.
Case for info as discrete property, from two parallel
movements suggesting strong IP to economize on use of info.  First, incentive/reward theory is
unsatisfying; market failure resulting in underproduction doesn’t dictate IP as
solution and other solutions could produce incentive w/less cost.  As empirical matter, it’s well understood
that in many situations the IP incentive, or any incentive, may not be
necessary for production of intellectual goods. 
Next move: commercialization theory, where IP is about the subsequent
use of creation/invention by giving incentive to solve market failure
structurally similar to the earlier market failure theory, or by serving as
beacon/signal/contracting device for people to come together and exchange info.
New private law is aimed at reclaiming centrality of tort/contract/property in
US law. Scholars offer info cost theory about economizing the cost of info
specifying use rights.  Thingness of property
matters b/c by defining a thing and marking it w/rough exclusion signals we
create relatively clear signals about what you can and can’t do with it. Use rights
in a car; you need no info about underlying owner of car to know not to steal
it.  You just need to know it’s not your
car.
Nonrivalrous info: inputs to info use are rivalrous, so we
want to manage them. New public law theorists like Henry Smith argue here’s a
benefit from reducing complexity of coordination, if the thing can be defined
easily and the uses cannot.  In such
cases, exclusion strategy is more economically justified than governance. Smith
argues that patent is more thing-y than ©. This is not uncontroversial or unproblematic.
Clarisa Long has made the exact opposite argument.
Problem: relies on thin concept of info such that all you
need to worry about in defining a good is the cost of delineating the good. But other characteristics make it
almost incoherent to talk about definition. Info is additive, communicative,
and layered.  Additive: info bits build
on one another so value is different depending on type or info.  “Data information knowledge wisdom”
framework: data is info asset that’s product of observation, relatively
discrete and objective; info is relevant or usable or significant—info uses
data to answer a Q; knowledge is usually knowhow, turning info into instructions/decisionmaking
aids, synthesizes across types of info.  Literature
usually ignores wisdom and so will I.  As
you move up, increasing correlation w/social meaning and value.  Info has value, but it exists in different
forms w/different sources of meaning and value.
Communicative: JP Barlow: information is a verb, not a
noun.  To have an effect in the world it
must be transmitted & create meaning for recipient.  Does this not through ethereal transmission,
but is contained in artifacts—physical manifestations that are vessels for the
info. Some artifacts are more self-revealing of the info than others.  Sometimes info can be sticky/tacit (Eric von
Hippel) and needs more than writing down. Info can be modulated
self-consciously, as w/software modularity so you can hide certain elements of
code & reveal others.
Layered: Heterogeneity—small molecule pharma—most direct way
to communicate info is to show its structure, but you could also talk about the
molecule/generate info about that.  You could
talk about chemical characteristics, biological effects, efficacy &
toxicity, all w/o revealing its structure.
Info exists in continuous indiscrete state in many cases.
In land, things are rough signals of value. But if info is
continuous then thingness may send wrong signals.  Lose out on ability to communicate across
users.  May be over and
underinclusive.  Answer to Smith’s
question about how you specify rights & duties up front may be “you don’t
have to.”  Spectrum of discreteness may also
help rationalize our intuitions, e.g. about patentable subject matter. If
abstract idea is relatively indiscrete, and open platform approach is most
efficient, that may help explain why IP doesn’t protect them. Likewise for
doctrines about timing of patentability such as utility/reduction to practice—when
the info becomes more discrete.
Rebecca Kai-Fang Lin, Artist’s Resale Right: Past, Present
and Future
What makes art so special? 
Work of art can be one of a kind; reproduction doesn’t create the same
thing.  Low price when first sold.  Resale right was exception to exhaustion
introduced in France.  Visual artists
usually earn less than average income; this allows recognition and fair
treatment and also helps them stay connected to the works.  Also can support cost of storage,
conservation and restoration.  No
evidence that resale right harms the art market.
Berne Convention introduced resale right in 1971 as reciprocal
right based on country of artists. 
Rightholder is author/authorized person. 
Covers original works of art/original manuscripts of writers and composers.  Nature: inalienable right; applies in any
resale.  Collecting societies should be
able to collect the royalty and should have a right to gain information.  US, China, France and UK are the main fine
art markets now, representing about ½ of global sales.
EU has harmonized: rightholder/authorized person though
member states can limit who those can be; liable person is generally the seller
but member states can diverge; the covered works are original works of graphic
or plastic art; must be physical but copies can be included.  Nonassignable and inalienable right; applies
in resales unless b/t private people or acting for nonprofit museum.  Sliding rate by sales price. Its share of the
art market grew over the past years. 
France: liable person is acquirer & law officials
jointly; applicable sales are those via a public auction or dealer.  Uniform 3% rate, and artists must publish in
Official Journal if they want the right. 
UK: seller and relevant person jointly & severally liable; copy of
work is generally excluded; collecting society and right to information exists;
sliding rate based on sale price. 55% of dealers not affected; average
processing time of 10 min. 81% of artists use the income to pay for living
expensives.
In US, only California—royalties of 5% of sale price, held
to violate dormant commerce clause.  Japan
lacks resale right.  Potential artist
benefit would be big on market of EUR 2.19 billion; 280,000 visual artists
could be covered; manga should also be included.  China has no resale right—proposal to cover
limited to auction sales and limited to increase in value.  Int’l treaty may be a good idea.
RT: Collecting societies have a bad reputation for not distributing
money fairly especially where the uses are varying and the market is thin (i.e.
especially outside music).  If you
require registration, what’s the point of a collecting society?
A: Tracking use is a big problem with other collecting
societies but discrete sales of physical objects are more identifiable, and
collecting societies can handle the administrative costs more easily than
individual artists.
Q: Why would we want to benefit successful artists and not
unsuccessful ones, when resale rights are only valuable to a very few?
A: mitigating inequality.
Chiang: What is the problem you’re trying to solve? It’s not
free riding.
A: musicians can make lots of money from sales of copies,
but visual artists can’t, especially for works sold early in their
lifetimes.  Sellers benefit from the
subsequent creations of the artists so artists should also benefit.  Unfair.

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