Fair use is the fifth season in Jersey Boys case

Posted on June 15, 2017 by rtushnet
Corbello v. DeVito, No. 08-cv-00867 (D. Nev. Jun. 14,
2017) 
One reason fair use jurisprudence can be frustrating is that it has become the place to store many conclusions that the defendant didn’t copy enough of what was protectable in the accusing work to infringe.  Because the de minimis doctrine is itself so tiny (without good reason), and because courts are so reluctant to say that nothing protectable was copied, judges reconsider those issues in the multifactor fair use test, and unsurprisingly the fact of minimal copying of expression leads to favorable findings on the other factors.  I would still favor a more robust standard for finding copying so that we didn’t have to waste so much time on the other factors, some of which (as the court here notes) may not be appropriate when the issue is minimal copying.
Corbello is the widow and heir of Rex Woodard, who assisted Tommy
DeVito in writing his unpublished autobiography Tommy DeVito — Then and Now,
telling the story of his career with the musical group The Four Seasons. Woodard
and DeVito tried to find a publisher for the book, and provided an outline to
actor Joe Pesci to explore adaptation to a screenplay. But nothing worked out,
given waning interest in The Four Seasons. 
DeVito falsely represented that he was the sole author, and used the
work to develop the screenplay for Jersey Boys, a hit musical.  After lots of back and forth, a jury found defendants
liable for infringement, found that there was no fair use, and found that 10%
of the success of the play was attributable to infringement of the work.
During trial, the court stated it believed that defendants
were entitled to a directed verdict on the fair use issue but did not want to
risk a retrial in the case of reversal. 
True to its word, the court here explains why, though fair use is often
a jury question, the record here entitled defendants to judgment as a matter of
law.
Market effect was the most important, so the court started
there. Before the play debuted, the work had no market value, as various people
had tried to get it published from 1990-2005, to no avail because of lack of
public interest.  Any profit potential
today is almost certainly because of the play, which itself was over half
musical performance by running time, and the remainder of which used less than
1% of the work.
Factor one: Commercial use weighed against a finding of fair
use.
Factor two: The biographical, factual nature of the work
favored fair use. The unpublished status of the work would ordinarily disfavor
fair use, but here the publication of (small parts of) the work did not
diminish its value by preempting plaintiff’s right of first publication.  The reason the work hadn’t been published was
that it was unpublishable, despite years of effort, creating an atypical
situation in which there was no deliberate choice to withhold the work from the
public. Thus, the biographical nature of the work predominated, favoring fair
use.
Factor three: After discounting similarities due to
unprotectable elements of the work, the jury was permitted to consider 12
similarities between the work and the play. The amount of protectable, creative
material potentially copied in relation to the work as a whole was less than
1%.  The extent of the similarity was
minimal, as two examples indicate: a discussion about the song title and
subject matter “Walk Like a Man” had very similar dialogue, though with
different characters and tone. “Assuming the jury believed the dialogue was not
a historical recounting but a creation of DeVito and Woodard—a finding that is
unlikely and perhaps not even permissible given the Work’s claim of historical
accuracy—the closely copied dialogue consists of about 65 words.”  Similarly, the work said, “[T]he Beatles come
to represent a whole social movement. We never aspire to be more than
entertainers,” and the “social movement” line was “arguably protectable as
original expression beyond bare historical fact.”  The play said,  “We weren’t a social movement like the
Beatles. Our fans didn’t sit and put flowers in their hair and try to levitate
the Pentagon.…”  And so on.
At most, the jury could have found about 145 creative words
to have been copied, whether as dialogue or creative descriptions of events, or
about 0.2% of the approximately 68,500 words in the work.  This factor strongly favored fair use, if the
“heart” of the work wasn’t infringed. 
Here, the “heart” of the work was unprotectable facts.  “Woodard’s writing style, which is the only
aspect of the Work producing protectable elements, although necessary to
production of the Work, was not the heart of the Work.”  A biographer’s writing style could maybe be
the “heart” of a biographical work “in an extreme case, for example where the
facts of the subject’s life were already known to the reader or mostly
uninteresting but where a highly skilled writer celebrated for his wit and
commentary had written the biography.” 
(I just finished Patricia Lockwood’s Priestdaddy,
which I think would qualify easily.)  But
that wasn’t the case here. There was no evidence that there was any market for Woodard’s
writing in and of itself; the attraction was the historical information he had
to convey.
The court considered transformation separately, and found
both a change of purpose and a change of character.  Purpose changed when the script, most of
which wasn’t from the work, was incorporated into musical performances in order
to entertain, whereas the purpose of the work was primarily to inform, to
vindicate DeVito’s perspective, and to reveal hidden truths. Even if the
purpose of the play were primarily to inform, the play would still have a
different character because it incorporated DeVito’s “singular” perspective “into
a more complete and balanced description of events based on competing
perspectives of all four band members.” 
In fact, the play was structured around this concept, with the four key characters
each in turn narrating the play from their own perspectives during the Spring,
Summer, Fall, and Winter portions of the play. 
The Four Seasons, get it?  This
additional creative expression was significantly transformative.
Thus, the first factor weighed against fair use “as in any
typical case of commercial use,” the second factor weighed in favor of fair
use, the third factor weighed “heavily” in favor of fair use, the fourth and
most important factor weighed heavily in favor of fair use, and the
transformative use “diminishes the significance of the sole factor weighing
against fair use.”  To permit a finding
of no fair use based solely on commerciality, when the other factors including
transformativeness favored fair use, “would be to impermissibly treat the first
factor as conclusive” and would hinder copyright’s purposes with respect to
biographical works.

If this were overturned on appeal, the court would still
grant a new trial on the issue of an implied nonexclusive license and on the
damages award.  The jury’s verdict on the
contribution of the copying of protected elements of the work to the play was
against the clear weight of the evidence. The 12 similarities considered by the
jury constituted approximately 0.4% of the playscript, which itself accounted
for less than half of the play’s running time, the rest of which was music. Assuming
that the music accounted for roughly half of the play’s success, a finding of
10% implied that the few words copied from the work accounted for roughly 20%
of the success of the play attributable to the dialogue. Although the jury’s
job is not to make a strict, mathematical calculation, the verdict must be
supported by sufficient evidence, and it wasn’t.  There was instead substantial evidence that
many additional elements contributed to the worldwide success and profits of
the play, including the additional inventive material in the script; the
stagecraft; the use of music; the employment of world-renowned writers,
directors, and producers; and advertising and promotion efforts. 

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Long review: of land (and other) registration

Posted on June 14, 2017 by rtushnet
Benito Arruñada, Institutional
Foundations of Impersonal Exchange: Theory and Policy of Contractual
Registries: This book’s only significant weakness is the extremely dry and
abstract way in which it’s written; theoretically it is extremely helpful in
explaining the special functions of property registries.  At the core, a registry allows public
knowledge of who owns what.  This enables
third parties to understand who has the power to transfer property, encouraging
the ability to contract with strangers. 
When a registry or other similar publicity mechanism (the law of agency
is his prime example, along with the corporate form) is in force, then it is
possible to switch from the common-law rule of nemo dat to a rule that protects
the interests of bona fide purchasers without notice (BFPs).  In other words, the true but
unrecorded/unpublicized owner in a case of a transfer to a BFP by a perfidious
agent, or by a perfidious land seller, is no longer protected by a property
rule entitling her to the return of the wrongly transferred property, but
instead by a contract rule entitling her to damages from the wrongdoer. 
If principals want a property rule, they must publicize
their claims.  Contract rules that favor
acquirers are then applied only when property owners consent, or are deemed to
consent, to them by appointing agents or by not using the recording
system.  The registry therefore serves as
an enabler of modern, impersonal transactions—not the nightwatchman-state, but the recorder/register state
as a key foundation of a well-functioning free market where the system
substitutes for trust based on personal knowledge.  Unless registration or recordation is
required, one always has a choice about keeping information private, but
subject to risks of losing property to good-faith purchasers without
notice.  Reciprocally, these improved
mechanisms for assessing risk enable the end of debtors’
prisons and the allowance of personal bankruptcy, as the harsh consequences of
never releasing a person from individual liability become less important to incentivize
performance when creditors know which assets they can attach.
The book’s historical comparisons provide some color.  When Arruñada discusses the use of symbolic marking to claim
ownership, he mentions its use on “valuable movables such as livestock, automobiles, and books,” but
also “for
spouses,”
with the wedding ring used to give notice of marital status.  Also, in ancient Athens, a slab (horos) could
be posted on the land itself, “to be removed only by releasing the encumbrance”—the
horoi included a statement of the nature of the horos as security and often the
creditor’s
name and amount of the debt.  Arruñada
identifies this as one of the first systems to enable use of land as collateral
without transferring ownership or possession to the lender.  Later, I was fascinated by the initial
reaction to public company registries (a prerequisite for limited liability) in
France, when judges in Paris failed to understand the advantages of impersonal
transactions and insisted that traders must know their trading partners.
Arruñada draws a number of provocative lessons from this basic
framework, including that policies directed at formalizing land title may not
be appropriate, or pro-development, in countries lacking other preconditions
for impersonal transactions such as a functioning, neutral judiciary for
enforcement of contracts.  Registries and
recorders (distinguished because the former evaluates the quality of the claim,
and the latter simply records all claims that meet its formal standards) are
expensive, and not always worth the costs. 
They may be necessary, but they aren’t sufficient for a modern economy.  Arruñada argues that public demand for registries is the best
signal of their appropriateness (meaning that subsidizing them to spur
development is probably a bad idea), and thus that recording should generally
be voluntary, especially in the early stages. 
Attempts to formalize titling have often foundered when people stop
recording transactions after the initial, subsidized formalization, and Arruñada
believes that owners aren’t underestimating the value of title but rather title
suppliers are overestimating it.
To work, registries have to be independent of all the
parties involved.  This means that the
state is the appropriate manager, assuming it is not corrupt.  And registries must be public or at least
open to potential third parties.  But Arruñada, in
classic libertarian mode, tells us that registries have inherent limits because
they’re
run by public organizations (he advocates performance-based pay to combat this
tendency, which seems odd given his acknowledgement of the role played by
private short-termism in the 2008 crisis), and because they reduce transaction
costs, thus threatening the livelihoods of lawyers, notaries, and other people
involved in the conveyance process, who often succeed in fighting registries
politically.  Among other things, Arruñada
doesn’t
like professional monopolies, such as requirements to have lawyers or notaries
involved in land transactions; he contends that sufficiently well-functioning
registries can substitute for them, especially when backed up by the ingenuity
of the private sector, which will offer services that help owners navigate the
registries.  (Cf. Deborah Gerhardt’s work
on the role of lawyers in trademark registration applications.)
Arruñada argues that one should not see local forms of property,
ones that rely on personal transactions, as mere customary versions of
impersonal property regimes—customary regimes cannot easily be adapted into impersonal
regimes.  Even developed market
economies, he argues, often have outdated law that treats personal exchanges as
the rule and impersonal ones as the exception, to the detriment of impersonal
exchanges.  As for less developed market
economies, their local legal orders can’t support transactions outside of the locality—the
very thing that makes them legitimate as between locals makes them biased when
a local and an outsider transact.  One
example: in urban Ecuador, having a man in a household makes land harder to
sell than when female-only households try to sell; he posits that this is
because “buyers
fear that [male-present households] might be able to claim the land back.”  At the same time, those households can rent
more easily, because they rely on self-enforcement and men are (expected to be)
more violent. 
Arruñada advocates that titling programs therefore “should
be targeted at communities with weak informal legal orders” and “young”
communities.  The big difference in who
resists law supporting impersonal transactions, he says, is that in less
developed economies it’s “general social or economic classes—tribal
chiefs, the nobility, land tenants, and current debtors”—while
in more developed economies it’s the professionals who specialize in providing “palliative”
services to facilitate impersonal exchange—mainly lawyers and conveyancers who draw up formal documents.  These are presented as artisan solutions,
whereas impersonal exchange requires industrial, mass-produced contracts,
default contract rules, and registries.  Thus,
“colonial
powers such as France and the United Kingdom in Africa, as well as the United
States in the Phillipines, introduced land registration in their colonies while
keeping more traditional systems of privacy and recordation in their homelands.
Apparently, colonies had stronger bureaucracies and weaker professions.”  But professionals aren’t the
only ones to blame; so is simple legal inertia and path-dependency.
Solutions should be situational: markets need institutions
that match their scope.  Another example:
Cattlemen in the US West could enforce their rights locally, but needed
government intervention to make branding effective because cattle were traded
across long distances; they thus pressured government to create brand
registries, to ban driving unbranded cattle from a range, and to regulate and
inspect cattle sales.  Thus, a larger
market requires larger authorities, which may constrain local jurisdictions
through common rules (which also sounds like a description of the evolution of
international trade).  “For
land, this often also means introducing a numerus clausus
that nullifies or degrades some customary and communitarian property rights.”
Without political authority, private parties may try to
develop institutions to do nearly the same thing, such as networks involving
collective responsibility (usually among ethnic groups, for example with small
groups of borrowers in microcredit schemes) or private registries (as with the
US mortgage market).  Collective
responsibility, however, relies on personal ties that tend to weaken just as
trade and development increase.  And
partipants in the US mortgage market developed MERS, which purported to be a
national registry but didn’t impose sufficient controls to actually track things.
Arruñada’s arguments about the 2008 crisis were the weakest part of
the book—he
blamed it on “the
fact that the United States has poor institutions for publicly recording land
transactions. They are plagued by the obsolete design of public recording
offices, the poor incentives of the bureaucrats in charge of them, and the
vested interests of conveyancers and title insurers.” I
would not have put those entities in the list of top ten causes.  The lack of a legal mandate to record a
transaction in the name of the owner definitely was a problem, but I find it
hard to blame the clerks for that. 
Later, he says that the crisis “was at least partly caused by bad incentives and poor
performance by MERS and the mortgage industry’s members, as well as their apparent oblivion of the
judicial and political risks ever remaining on the enforcement of home
foreclosures against apparently ‘weak’ parties…. [L]ocal courts took a narrow legalistic position against
MERS in order to protect local interests—those of borrowers.” 
I can only read that last part as suggesting that
contributors to the crisis were that (1) judges might actually enforce the law
as written, and (2) politicians might object to massive foreclosures (although
in fact they mostly intervened to “foam the runway” for the banks, with individual homes/homeowners playing the
role of bubbles crushed to protect the bank-plane and its
investor-passengers).  But neither (1)
nor (2) helped start or worsen the crisis; financialization and the ultimate
end of the rise of home prices did that—and by the way, the more foreclosures there are, the lower
home prices go.  Speeding foreclosures
would not have restored the banks to health because there would still be no one
to sell the homes to at inflated prices. 
Arruñada
frames anti-MERS rulings as “conflict between local and wider legal orders, respectively,
supporting local and wider markets,” without considering whether MERS actually supported wider
markets or merely wider rent extraction.
Arruñada also notes that registration is hard to make
complete.  Among other things, tax
authorities resist having to record/risking destruction of their interests,
people who benefit from complex systems like lawyers have an incentive to press
for protection of unrecorded interests, and judges may feel the pull of equity
(what Carol Rose calls the problem of crystals and mud). Arruñada also
cautions that the government may want to use the register as a useful database
for other things: “enforcement of land use regulation substantially increased
in Spain after a 1986 law ordered the land registry to check for building
licenses as a requirement for registration.”  But tax authorities
have different incentives—they want a complete register of ownership when it might not
be efficient to do that.  Similarly, Arruñada is
a bit worried about making registries completely public, as opposed to
available only to people with a good reason to ask, because of the possibility
of big data aggregation (he’s not really clear on what harms he thinks might follow, but
I guess we can all insert our own). 
Arruñada likes registries that are financed by user fees and that
allow the administrators to keep any surplus (subject to personal liability for
problems).  Fixed salaries lead to
sluggishness, because Homo Economicus. 
(Except that he does believe in deferring compensation by paying below
market in early years on the job—this would motivate people with a lower subjective discount
rate to self-select for the job; such people are “likely to be relatively averse to fraud”; so
Homo Economicus has varying exogenous preferences.)  But it doesn’t often work that way—instead public sector jobs pay relatively low salaries, and
then with more experience workers may leave for the private sector, fully
trained, leading to increased risks of agency capture.  To solve these problems, Arruñada
advocates linking pay to performance and funding the registry through user fees
that can’t
be raided by the larger government.
Arruñada also points out that effective registries need to
identify individuals in order to make them legible—impersonal
trade requires being able to figure out how reliable the counterparty is,
whether through public enforcement or using “palliatives based mainly on private records of reputational
assets.”
 (So, seeing like a state may be also
inherently seeing like an impersonal economy.)  Still, enforcing contract rights through
public means requires an independent, effective judiciary, which is often
unavailable.  So, Arruñada
reasons, identification of individuals may be most important in countries
without such a judiciary, to allow private parties to keep records of
reputations.  In fact, if it’s hard
to foreclose on a family farm but easy to penalize a reputation in private
records of a default, “developing credit records for individuals might often be a
more viable strategy than allowing them to use their assets as collateral,
especially for the poor,” because even when they have such assets, “enforcing
repossession after debtor default is often impossible for an outsider.”  Titling systems may thus not be that helpful
in increasing access to credit; banks remain more interested in salary and
other income streams, which implies that better enforcement of contract rights
might be more useful than better definition of real property rights. 
Likewise, developing or reforming contractual registries
should occur before or along with developing courts.  Right now, for example, India’s land
administration services are highly corrupt, making their records unreliable;
judges naturally will not predictably rely on them.  “This uncertainty, in itself and whatever the prevalence of
corruption, considerably reduces the value of the registered information for
transacting parties.”  In fact, judges are
a key target of registry reform: the register should be reliable enough for
judges to have confidence in it, because the weight judges give the registry
will ultimately determine its value to market participants.  Unfortunately, Arruñada
says, current titling projects often focus only on registry filers and not on
the understandings and interests of third parties like judges.
Arruñada ends on a rather sour note, pointing out that
governments have struggled for almost a thousand years to make real property
registries reliable, and “though most countries have now been running property and
company registries for more than a century, only a few have succeeded in making
them fully functional, as shown by the fact that in most countries adding a
mortgage guarantee to a loan does not significantly reduce its interest rate.”
Though he doesn’t talk about trademarks, Arruñada does make some claims about patent registration as
analogous to a first registration for land. 
Publicity provides for those whose rights are affected by the grant to
challenge it.  Like land conveyancers, “patent
lawyers gain from bad granting decisions that increase demand for litigation.”  However, patents are more uncertain in terms
of legal enforcement because judges can invalidate them.  This makes sense to Arruñada
because of the possibly incomplete nature of initial patent examination.  Unfortunately, the PTO’s “political
masters seem to hold a mistaken assumption as to its main users, wrongly
believing that the PTO must serve only patent applications and not the public.”  Thus, (pre-AIA) the PTO had turned into a de
facto recording system, not a true registry, even though the presumption of
validity was still being afforded.  The
resulting uncertainty generates litigation and “provides a paradigm of registry mismanagement by showing how
registration systems can be transformed into recordation”
through poor decisions.  Cheaper
registration means more litigation later. 
Arruñada
advocated “stronger
incentives for examiners, giving more weight to variable compensation and
introducing …
examiners’
liability for mistaken decisions,” which he also thought would reduce the length of the
examination period.  Query whether the
fixes actually attempted by the AIA would meet his approval.
I haven’t tried to recast the book’s insights in terms of trademark registration, which (like
patent granting) is supposed to be a type of true registration system,
involving examination to avoid conflict with other rights.  Trademark registration is voluntary, and
looks to remain so, indicating that there may be no evolution towards requiring
recording/registration when there are good enough reasons to protect unrecorded
interests—but
of course that makes the register less reliable.  There might be an interesting comparison between
the Supplemental and Principal Register in terms of the ability to choose
between land registration and land recording, as was possible in Cook County
until 1997—apparently
rightsholders with more valuable land self-selected into the registration
system.  Relatedly, Arruñada
argues that “legal
palliatives”
often offer versions of one system inside the other: “recordation
systems often provide a simplified judicial procedure to clear title …, a
solution to underassurance of the most valuable land. Conversely, registration
systems usually allow some kind of inexpensive filing with lesser, or
provisional, legal effects. [Possessors are often allowed] to enter their
claims in the register so that they are automatically upgraded to ownership if
nobody has opposed them after a certain number of years.” 
As between the two types, Arruñada concludes that at least in Europe registration, which is
more reliabile at establishing priority of claims, outperforms recordation due
to lower prices for mortgages, which result from faster and safer
repossession.  There are regions in
France and Italy that have registries, while the other regions have recording
systems, and apparently both French and Italian authors consider registries
superior but attempts to expand them have failed.  Registries, though they require substantive
examination, also have lower legal transaction costs/needs for lawyers’ and
conveyancers’
assistance than recording systems—the cost of conveying real property is roughly halved.  (I really wonder whether this holds up with
trademarks, where the boundaries are very hard to fix without legal
intervention—Europe
is closer to a recording system, but are its legal transaction costs any
lower?)  Consistent with his general leave-demand-to-the-market
orientation, however, Arruñada says that doesn’t mean that a system that spends less on registration and
more on private due diligence is necessarily inefficient; it depends.

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false advertising claim based on (c) ownership not preempted, court rules

Posted on June 14, 2017 by rtushnet
Carter v. Pallante, 2017 WL 2506419, No. 16 C 6786 (N.D.
Ill. Jun. 9, 2017)
Tollie Carter has sued Maria A. Pallante (now acting
Register Karyn Temple Claggett) in her capacity as the Register of Copyrights,
as well as ARC/Conrad Music and related companies. The present motion dealt
with Carter’s allegations that the publisher defendants infringed his
copyrights in certain songs by selling unauthorized licenses to third parties,
who in turn publicly performed the songs.  Carter’s father and uncle were songwriters;
Carter is the heir of their copyrights; they assigned rights in many songs to
ARC, but Carter asserted rights in the renewal terms/terminated transfers.  Despite this, Carter alleged that the
publisher defendants “represented to numerous third parties it could
license—and did license to those third parties—the performance rights and other
rights to [Carter’s songs],” and collected royalties for doing so.
Carter gets a very favorable set of results, predicated in
part on the court’s misunderstanding of the difference between copyright rights
and individual copies.  The court found
that Carter had plausibly alleged direct infringement of the distribution right
by alleging unauthorized licensing. But the distribution right is not the
“distribution right” right, and licensing performance and other rights is not a
distribution “by sale or other transfer of ownership, or by rental, lease, or
lending.”  Nor did Rule 8 require Carter
to specify who the third parties are, which songs were licensed, or when the
licenses were sold.  This is what
discovery is for.  The same analysis held
for his claims of contributory and vicarious infringement (which I would have
found correctly pleaded, unlike the direct infringement claims).  Any time-barred claims could be figured out
on factual development.
DMCA §1202 CMI claim: Again, a favorable result.  First, the DMCA doesn’t require any
relationship with digital distribution or internet commerce, just the provision
of false copyright management information with the intent to facilitate
infringement. And “Carter unmistakably alleges that false copyright information
was conveyed with copies of the work by way of the licensing agreements he
claims the Publisher Defendants entered into with third parties.” Comment: And
here the court’s initial misunderstanding compounds itself: the license
agreements didn’t necessarily physically convey copies of the works, only the
right to make/perform copies of the works.
The court did find many of Carter’s state law claims
preempted; it seems to me that all of them should have gone.  Unjust enrichment was easy: the alleged
conduct was the same as the alleged infringing conduct. Failing to pay
royalties/licensing revenues is not an extra element in the absence of a
contract between the parties.
Deceptive trade practices under state law: The IUDTPA lists
“pass[ing] off goods or services as those of another” and “caus[ing] likelihood
of confusion or of misunderstanding as to the source … of goods” as deceptive
trade practices.  Generally, reverse
passing off claims are preempted.  If
third parties are misled by the defendants’ misrepresentations and take
licenses from them instead of Carter, that’s Copyright Act territory.  However, the court accepted Carter’s argument
that the publisher defendants “could have” misrepresented that they owned the
copyrighted songs in advertising material without infringing copyrights to the
songs.  Comment: But the whole point of
advertising would have been to exercise the rights of the copyright owner—this
is silly, even if the Copyright Act lacks the “offer to sell” language in the
Patent Act.  See also Dastar; if the claim would be precluded
under Dastar, as it would according to many courts, it
should likewise be preempted when asserted as a state-law claim.  Separately, to the extent that most states—I believe
Illinois among them—interpret their trademark laws to be in pari materia with
federal law, the Dastar holding should
apply on the merits to block the claim.
Because making misrepresentations about a copyrighted work
in advertising, “short of licensing the copyrighted works at issue or taking
any other action in connection with a copyright owner’s exclusive rights” isn’t
among the exclusive rights in §106, the claim wasn’t preempted.  Comment: There’s also a deeper conflict
here—at a minimum, the mention of “authorize” in §106 covers secondary
liability, which is properly pleaded even on my interpretation.  The advertising is inherently bound up with
the authorization, even if the authorization isn’t completed until someone
agrees.
Tortious interference: again, this was based on the
publisher defendants’ claims that they could license the songs, not
qualitatively different from the alleged infringement. Carter alleged that
there was an extra element of false representations, but (1) that isn’t an
element of a tortious interference claim, and (2) that doesn’t create a
difference in kind from copyright infringement, “because the false statements
of ownership at issue were part and parcel of selling an unauthorized license
in order to deprive Carter of a business opportunity.”  Comment: How is this consistent with the false
advertising holding?  Just because the
statements may have been made in “advertising” doesn’t mean they weren’t
fundamentally connected with the thing being sold.

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Oh, the Lawsuits You’ll Lose! Court rejects TM claim against Seuss/Trek mashup, signals (c) likely to go too

Posted on June 14, 2017 by rtushnet
Dr. Seuss Enters., L.P. v. Comicmix LLC, 2017 WL 2505007,
No. 16cv2779 (C.D. Cal. Jun. 9, 2017)
Plaintiff owns the rights to Seuss’s Oh, the Places You’ll
Go! (Go!).  Defendants created a
Kickstarter for Oh, the Places You’ll Boldly Go! (Boldly), which combines aspects
of various Dr. Seuss works with “certain characters, imagery, and other
elements from Star Trek, the well-known science fiction entertainment franchise
created by Gene Roddenberry.” Boldly’s copyright page both states that “[t]his
is a work of parody, and is not associated with or endorsed by CBS Studios or
Dr. Seuss Enterprises, L.P.”
On the copyright claim, the court found that the only issue
where material facts would be necessary to resolve the fair use question was
market harm.  The sole allegation of
market harm was alleged usurpation of licensing opportunities.
In the Ninth Circuit, “an allegedly infringing work is
typically viewed as transformative as long as new expressive content or message
is apparent,” even without comment on the original, though “the degree to which
the new user exploits the copyright for commercial gain—as opposed to
incidental use as part of a commercial enterprise”—affects the overall balance
of this factor.  The court rejected
defendants’ argument that Boldly was a parody, which is a question of law.  Boldly was more appropriately labeled a
“mash-up.”  Mash-ups can be parodies when
they juxtapose the underlying works in such a way that it creates “comic effect
or ridicule,” but here “Boldly merely uses Go!’s illustration style and story
format as a means of conveying particular adventures and tropes from the Star
Trek canon.”
Despite that, Boldly was “no doubt transformative” by
creating a “completely unique work” (!!) from the two disparate worlds of Dr.
Seuss and Star Trek.
Go! tells the tale of a young boy
setting out on adventure and discovering and confronting many strange beings
and circumstances along his path. Boldly tells the tale of the similarly strange
beings and circumstances encountered during the voyages of the Star Trek
Enterprise, and it does so through Go!’s communicative style and method. Go!’s
rhyming lines and striking images, as well as other Dr. Seuss works, are often
copied by Boldly, but the copied elements are always interspersed with original
writing and illustrations that transform Go!’s pages into repurposed,
Star-Trek–centric ones.
Commerciality weighed against defendants, but on balance
this factor favored fair use.  Factor two:
not terribly significant, but the fact that the work was previously published
and highly successful weighed in favor of fair use, so the factor as a whole
tilted only slightly in the plaintiff’s favor. Factor three didn’t weigh
against defendants: many aspects of Go! and other Dr. Seuss works were used,
but none in their entirety. “Nor does Boldly copy more than is necessary to
accomplish its transformative purpose”:
The final image comparison in
Plaintiff’s Complaint is illustrative. Plaintiff’s work depicts two
similar-looking, fanciful “Zax” creatures arguing in the middle of a desert,
with footprints to mark their arrival. Boldlytakes the same desert landscape
and footprints, and in the fanciful creatures’ place puts two similar-looking
beings of seemingly Vulcan descent—one of which is drawn in the same position
as his Dr. Seuss counterpart and one of which is transformed from the Dr. Seuss
creatures’ aggressive stance into a contemplative pose—deep in the midst of
playing some type of alien board game.  Additionally,
Boldly’s text reveals that the two Vulcan creatures are, in fact, the same
person, unlike Go!’s distinct “North-Going” and “South-Going” Zaxes. Boldly
therefore transforms the argumentative Zaxes and their corresponding depiction
into a cloned Vulcan matching wits with himself over an alien boardgame. One
Vulcan is positioned almost identically to his Zax counterpart to “conjure up”
the Dr. Seuss work, while the other Vulcan is drawn anew and a board-game added
in order to fully accomplish the work’s overall transformative purpose.
Market effect: defendants are at a disadvantage in this
procedural posture, given plaintiff’s allegations that it commonly licensed its
works.  Thus harm could be presumed at
this stage, though that was neutralized some by Boldly’s lack of substitution
due to its transformativeness.  “Boldly’s
market relies on consumers who have already read and greatly appreciated Go!
and Dr. Seuss’s other works, and who simultaneously have a strong working
knowledge of the Star Trek series. It is therefore unlikely that Boldly would
severely impact the market for Dr. Seuss’s works.”
Ultimately, “if fair use was not viable in a case such as
this, an entire body of highly creative work would be effectively foreclosed,”
though each case must be analyzed on its own merits.  The court decided that defendants couldn’t win
on this issue as a matter of law—though its discussion suggested that it might
be hard for plaintiff to develop actual evidence of market harm.
Trademark and unfair competition claims were based on (1)
the title Oh, the Places You’ll Go!; (2) “the stylized font” used in Dr.
Seuss’s books; and (3) “the unique illustration style of the characters and
backgrounds” of Dr. Seuss’s books.
Defendants argued for the application of Rogers v. Grimaldi as a matter of First
Amendment doctrine.  Plaintiff argued
that Rogers itself required a
determination of consumer confusion, but that’s not so. There was no question
that use of the alleged trademarks was relevant to Boldly’s artistic purpose:
the point was to be a mash-up, so “Go!’s title, font, and Dr. Seuss’s
illustration style must be employed to evoke Go! and the other Dr. Seuss works
here at issue.” Nor did Boldly explicitly mislead as to source or content.  Aside from changing the cover imagery and
title to invoke Star Trek characters and the famous, split-infinitive opening
line, Boldly “explicitly announces on its cover that it is authored not by Dr.
Seuss but instead ‘by David Gerrold & Ty Templeton.’” The copyright page
even includes an explicit disclaimer that “[t]his is a work of parody, and is
not associated with or endorsed by CBS Studios or Dr. Seuss Enterprises, L.P.”
Defendants didn’t like Rogers,
attacking its inflexibility, but the Ninth Circuit thinks that’s the point
(quoting Brown v. EA):
[A] balance need not be designed to
find each of the sides weightier with equal frequency. The language in Rogers is clear. “[T]hat balance will
normally not support application of the [Lanham] Act unless the [use of the
trademark or other identifying material] has no artistic relevance to the
underlying work whatsoever….” The Rogers
test is applicable when First Amendment rights are at their height—when
expressive works are involved—so it is no surprise that the test puts such
emphasis on even the slightest artistic relevance. “Intellectual property
rights aren’t free: They’re imposed at the expense of future creators and of
the public at large,” and the Rogers
test applies when this expense is most significant.
However, Rogers
explicitly incorporates an exception for “misleading titles that are
confusingly similar to other titles.” Thus, Rogers
didn’t justify dismissing claims related to the alleged trademark in Go!’s
title.

Fortunately, nominative fair use was there to beam
defendants out of danger.  Plaintiff
argued that this couldn’t be decided on a motion to dismiss, but it can.  Defendants satisfied each element of the
test.  Plaintiff argued that the third
factor (do nothing else to cause confusion) required an assessment of likely
confusion, but the Ninth Circuit has clearly indicated that nominative fair use
replaces the usual multifactor test. The third factor does not analyze likelihood of confusion, but instead simply requires
“that the user do ‘nothing that would, in conjunction with the mark, suggest
sponsorship or endorsement by the trademark holder.’ ” Plaintiff’s allegations
of willful trading on Dr. Seuss’s goodwill didn’t matter—“a defendant may
intend to or willfully use a mark without any desire to explicitly mislead
consumers.”  Allegations of a deliberate
intent to deceive the public were “no more than [a] conclusion[ ]…not
entitled to the assumption of truth.” 

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Oh, the Lawsuits You’ll Lose! Court rejects TM claim against Seuss/Trek mashup, signals (c) likely to go too

Posted on June 14, 2017 by rtushnet
Dr. Seuss Enters., L.P. v. Comicmix LLC, 2017 WL 2505007,
No. 16cv2779 (C.D. Cal. Jun. 9, 2017)
Plaintiff owns the rights to Seuss’s Oh, the Places You’ll
Go! (Go!).  Defendants created a
Kickstarter for Oh, the Places You’ll Boldly Go! (Boldly), which combines aspects
of various Dr. Seuss works with “certain characters, imagery, and other
elements from Star Trek, the well-known science fiction entertainment franchise
created by Gene Roddenberry.” Boldly’s copyright page both states that “[t]his
is a work of parody, and is not associated with or endorsed by CBS Studios or
Dr. Seuss Enterprises, L.P.”
On the copyright claim, the court found that the only issue
where material facts would be necessary to resolve the fair use question was
market harm.  The sole allegation of
market harm was alleged usurpation of licensing opportunities.
In the Ninth Circuit, “an allegedly infringing work is
typically viewed as transformative as long as new expressive content or message
is apparent,” even without comment on the original, though “the degree to which
the new user exploits the copyright for commercial gain—as opposed to
incidental use as part of a commercial enterprise”—affects the overall balance
of this factor.  The court rejected
defendants’ argument that Boldly was a parody, which is a question of law.  Boldly was more appropriately labeled a
“mash-up.”  Mash-ups can be parodies when
they juxtapose the underlying works in such a way that it creates “comic effect
or ridicule,” but here “Boldly merely uses Go!’s illustration style and story
format as a means of conveying particular adventures and tropes from the Star
Trek canon.”
Despite that, Boldly was “no doubt transformative” by
creating a “completely unique work” (!!) from the two disparate worlds of Dr.
Seuss and Star Trek.
Go! tells the tale of a young boy
setting out on adventure and discovering and confronting many strange beings
and circumstances along his path. Boldly tells the tale of the similarly strange
beings and circumstances encountered during the voyages of the Star Trek
Enterprise, and it does so through Go!’s communicative style and method. Go!’s
rhyming lines and striking images, as well as other Dr. Seuss works, are often
copied by Boldly, but the copied elements are always interspersed with original
writing and illustrations that transform Go!’s pages into repurposed,
Star-Trek–centric ones.
Commerciality weighed against defendants, but on balance
this factor favored fair use.  Factor two:
not terribly significant, but the fact that the work was previously published
and highly successful weighed in favor of fair use, so the factor as a whole
tilted only slightly in the plaintiff’s favor. Factor three didn’t weigh
against defendants: many aspects of Go! and other Dr. Seuss works were used,
but none in their entirety. “Nor does Boldly copy more than is necessary to
accomplish its transformative purpose”:
The final image comparison in
Plaintiff’s Complaint is illustrative. Plaintiff’s work depicts two
similar-looking, fanciful “Zax” creatures arguing in the middle of a desert,
with footprints to mark their arrival. Boldlytakes the same desert landscape
and footprints, and in the fanciful creatures’ place puts two similar-looking
beings of seemingly Vulcan descent—one of which is drawn in the same position
as his Dr. Seuss counterpart and one of which is transformed from the Dr. Seuss
creatures’ aggressive stance into a contemplative pose—deep in the midst of
playing some type of alien board game.  Additionally,
Boldly’s text reveals that the two Vulcan creatures are, in fact, the same
person, unlike Go!’s distinct “North-Going” and “South-Going” Zaxes. Boldly
therefore transforms the argumentative Zaxes and their corresponding depiction
into a cloned Vulcan matching wits with himself over an alien boardgame. One
Vulcan is positioned almost identically to his Zax counterpart to “conjure up”
the Dr. Seuss work, while the other Vulcan is drawn anew and a board-game added
in order to fully accomplish the work’s overall transformative purpose.
Market effect: defendants are at a disadvantage in this
procedural posture, given plaintiff’s allegations that it commonly licensed its
works.  Thus harm could be presumed at
this stage, though that was neutralized some by Boldly’s lack of substitution
due to its transformativeness.  “Boldly’s
market relies on consumers who have already read and greatly appreciated Go!
and Dr. Seuss’s other works, and who simultaneously have a strong working
knowledge of the Star Trek series. It is therefore unlikely that Boldly would
severely impact the market for Dr. Seuss’s works.”
Ultimately, “if fair use was not viable in a case such as
this, an entire body of highly creative work would be effectively foreclosed,”
though each case must be analyzed on its own merits.  The court decided that defendants couldn’t win
on this issue as a matter of law—though its discussion suggested that it might
be hard for plaintiff to develop actual evidence of market harm.
Trademark and unfair competition claims were based on (1)
the title Oh, the Places You’ll Go!; (2) “the stylized font” used in Dr.
Seuss’s books; and (3) “the unique illustration style of the characters and
backgrounds” of Dr. Seuss’s books.
Defendants argued for the application of Rogers v. Grimaldi as a matter of First
Amendment doctrine.  Plaintiff argued
that Rogers itself required a
determination of consumer confusion, but that’s not so. There was no question
that use of the alleged trademarks was relevant to Boldly’s artistic purpose:
the point was to be a mash-up, so “Go!’s title, font, and Dr. Seuss’s
illustration style must be employed to evoke Go! and the other Dr. Seuss works
here at issue.” Nor did Boldly explicitly mislead as to source or content.  Aside from changing the cover imagery and
title to invoke Star Trek characters and the famous, split-infinitive opening
line, Boldly “explicitly announces on its cover that it is authored not by Dr.
Seuss but instead ‘by David Gerrold & Ty Templeton.’” The copyright page
even includes an explicit disclaimer that “[t]his is a work of parody, and is
not associated with or endorsed by CBS Studios or Dr. Seuss Enterprises, L.P.”
Defendants didn’t like Rogers,
attacking its inflexibility, but the Ninth Circuit thinks that’s the point
(quoting Brown v. EA):
[A] balance need not be designed to
find each of the sides weightier with equal frequency. The language in Rogers is clear. “[T]hat balance will
normally not support application of the [Lanham] Act unless the [use of the
trademark or other identifying material] has no artistic relevance to the
underlying work whatsoever….” The Rogers
test is applicable when First Amendment rights are at their height—when
expressive works are involved—so it is no surprise that the test puts such
emphasis on even the slightest artistic relevance. “Intellectual property
rights aren’t free: They’re imposed at the expense of future creators and of
the public at large,” and the Rogers
test applies when this expense is most significant.
However, Rogers
explicitly incorporates an exception for “misleading titles that are
confusingly similar to other titles.” Thus, Rogers
didn’t justify dismissing claims related to the alleged trademark in Go!’s
title.

Fortunately, nominative fair use was there to beam
defendants out of danger.  Plaintiff
argued that this couldn’t be decided on a motion to dismiss, but it can.  Defendants satisfied each element of the
test.  Plaintiff argued that the third
factor (do nothing else to cause confusion) required an assessment of likely
confusion, but the Ninth Circuit has clearly indicated that nominative fair use
replaces the usual multifactor test. The third factor does not analyze likelihood of confusion, but instead simply requires
“that the user do ‘nothing that would, in conjunction with the mark, suggest
sponsorship or endorsement by the trademark holder.’ ” Plaintiff’s allegations
of willful trading on Dr. Seuss’s goodwill didn’t matter—“a defendant may
intend to or willfully use a mark without any desire to explicitly mislead
consumers.”  Allegations of a deliberate
intent to deceive the public were “no more than [a] conclusion[ ]…not
entitled to the assumption of truth.” 

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Proposed amicus brief in Zenimax v. Oculus

Posted on June 14, 2017 by rtushnet

Mark McKenna and I put together an amicus brief in this case, arguing that the false designation of origin verdict based on claims about who invented certain technology was precluded by Dastar (and nominative fair use, to the extent it was based on a slide deck showing that a game could be played with the relevant technology).

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“unapproved drug” claims fail post-Pom, but not challenge to “natural” claim

Posted on June 12, 2017 by rtushnet
Hi-Tech Pharmaceuticals, Inc. v. Hodges Consulting, Inc., 2016
WL 8856671, No. 16-cv-00906 (N.D. Ga. Dec. 13, 2016)
Hi-Tech and Hodges compete in the dietary supplement market
for body builders.  Hi-Tech sued for
patent infringement, as well as for false advertising. Hodges allegedly put
“designer steroids” in its products; if the allegations were true, then those
products likely contained a Schedule III controlled substance.  Hi-Tech further alleged that the relevant
product should be considered a “new drug” under the FDCA, not a dietary
supplement.
The court found that some of Hi-Tech’s claims were
precluded, though not all.  Even after Pom Wonderful, there is preclusion “when
a Lanham Act claim would require a court to make determinations about the
safety, legality, and classification of new drugs that are more properly within
the exclusive purview of the FDA.”  Thus,
Hi-Tech’s allegations that Hodges improperly sold a “new drug” and a
“prescription drug” without FDA approval. 
The FDA must determine this issue in the first instance. The
“determination of whether a drug is ‘new,’ and whether it can be lawfully
marketed under the FDCA, involves complex issues of history, public safety, and
administrative priorities that Congress has delegated exclusively to the FDA.”
However, Hi-Tech also alleged that Hodges falsely marketed
its products as “natural dietary supplements when, in fact they contain …
Schedule III designer steroids.” Labeling a product a “dietary supplement” or
“natural dietary supplement” without providing any warning that it contains a
Schedule III substance or designer steroid might constitute false or misleading
advertising.  The court pointed out that
pro athletes have claimed to have accidentally ingested steroids. This wouldn’t
require determining whether the product shold have through the new drug
approval process (or some other regulatory process): regardless of whether it
was a supplement or a drug, Hodges couldn’t falsely or deceptively market it.

Hi-Tech’s Georgia Uniform Deceptive Trade Practices Act and
unfair competition claims survived to the precise extent that its Lanham Act
claims did.

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New piece on the right of publicity and its limits

Posted on June 10, 2017 by rtushnet

Rebecca Tushnet, Raising Walls Against Overlapping Rights: Preemption and the Right of Publicity, 92 NOTRE DAME L. REV. 1549 (2017).

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Even where irreparable harm is “logical” you still need more than assertions

Posted on June 8, 2017 by rtushnet
Rann Pharmacy, Inc. v. Shree Navdurga LLC, 2017 WL 2442975,
No. 17-1893 (E.D. Pa. Jun. 6, 2017)
Previously, the court enjoined defendants from using the
service mark RAMS PHARMACY in Lansdale, Pennsylvania, because it was likely to cause
confusion with the registered service mark RANN PHARMACY, which was used on a
pharmacy approximately six miles away, in Harleysville, Pennsylvania. Defendants
responded with a name change to RAMSRX PHARMACY. Rann sued again and moved for
a preliminary injunction, which the court this time denied.
Rann Pharmacy claimed that between December 22, 2016, and
January 31, 2017, eight prescriptions meant for four different patients of
RamsRX Pharmacy were mistakenly sent to Rann Pharmacy. The allegedly erroneous
prescriptions were all sent electronically from health care providers. Defendants
denied that any of the allegedly erroneous prescriptions were actually sent
erroneously, and asserted that all four patients chose to use Rann Pharmacy as
new patients. They supported their allegations with two patient affidavits and
a prescriber letter, as well as records showing that the doctors in question
had previously sent prescriptions to RamsRX Pharmacy, indicating that they had
previously been able to distinguish between the two.
Although the presumption of irreparable injury was gone in the
Third Circuit, its logic “can, and does, inform” how the court exercises its
equitable discretion: an owner’s loss of control over her mark creates the
potential for damage to the product or brand’s reputation, a harm that is
difficult to quantify. These damages “include loss of control of reputation,
loss of trade, and loss of good will.” “Potential damage to reputation”
constitutes “irreparable injury for the purpose of granting a preliminary
injunction in a trademark case,” “so long as the plaintiff makes a clear
showing” of the damage. 

However, Rann simply argued that its “loss of control of
reputation, loss of reputation, loss of trade, and loss of goodwill—as
demonstrated by the actual confusion that has taken place—demonstrates
irreparable harm.” “But this rote recitation of the types of irreparable harm
often suffered in trademark infringement lawsuits” wasn’t  the requisite “ ‘clear showing’ ”
of actual, or even potential, damage. Nor did the allegations of actual
confusion. There could be no preliminary injunction without satisfying the
“threshold” factor of irreparable harm.

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Transformative work of the day, you don’t stop edition

Posted on June 8, 2017 by rtushnet
40
Years of Hip Hop, condensed into 4 minutes.

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