Amicus brief in video game/trademark case

With the help of Phil Malone and Alyssa Picard at Stanford’s IP clinic, I and others submitted a law professors’ brief in this case involving Activision’s use of Humvees in depictions of military operations in the Call of Duty games.  AMG (which claims to own the trade dress at issue) has opposed the filing.  The brief argues that this is an easy Rogers case and also that renaming trademark claims with other labels, such as false advertising, shouldn’t be able to evade Rogers. In addition, it foregrounds the serious constitutional issues with dilution given recent First Amendment case law, including but not limited to Tam.

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Mock magazine cover doesn’t infringe, dilute, advertise falsely even if targeted at competitor

Ebony Media Operations, LLC v. Univision Communications
Inc., No. 18-cv-11434-AKH (S.D.N.Y. Jun. 3, 2019)
Judge Hellerstein called the question presented “interesting,”
but an even better adjective would be “easy”: “whether, in the case of a famous
magazine trademark, a competitor-magazine is guilty of infringing or diluting
the famous mark, and other wrongs, by publishing an image that prominently
displays the famous trademark to criticize the conduct of its owners.” The
answer is no.

Ebony Magazine alleged that defendants infringed, diluted,
and engaged in false advertising by running an article, Dear
Ebony Magazine: FU, Pay Your Writers! [Corrected
] with a mock Ebony cover
that used Ebony’s allegedly famous and definitely registered name. The mock
cover also featured a phtoto of owners Michael Gibson and Willard Jackson, and several
mock headlines:
           “Special
Deadbeat Edition: #EbonyStillOwes”
           “Cheat
your black writers by not paying? Ebony owners Michael Gibson & Willard
Jackson show us how!”
           “Ebony
100 Gala: Let Them Eat Cake! 101 Ways Ebony Doesn’t Pay Writers . . . But Holds
Gala Banquet w/ Chris Tucker”
           “New
Ebony Owners: Michael Gibson and Willard Jackson The Slow Play Kings of Black
Biz”
           “December
2018: Thousands in Back Pay”
Ebony sued for trademark infringement, unfair competition,
trademark dilution, and false advertising in violation of the Lanham Act; and
tortious interference, unfair and deceptive business practices, and unfair
competition under New York law.
As we know, “[t]he Lanham Act must be construed narrowly to
avoid conflict with First Amendment values.” And parody has value.  The central fact was that the accused image “uses
parody to enhance Ross’ s article, the primary purpose of which is to criticize
EBONY Magazine,” and that was fatal to each claim. “That Defendants compete
with Plaintiff, and allegedly published the article, in part, to harm Plaintiff
s business, is insufficient to overcome the protection to which Defendants’
parodic and critical expressions are entitled.”
Because Ebony is a mark for an expressive work, the court didn’t
use Rogers but did use the Polaroid factors with appropriate weight
to the First Amendment interests at stake. [Note that the Ninth Circuit just
uses Rogers even when the plaintiff’s
mark is for expressive works too; I think this is probably the better approach,
at the very least for the content of works as this use is—the picture appeared
in the middle of the story.]
Notably, nominative fair use was no help to defendants
because of the Second Circuit’s bizarre loading of the NFU factors into the
usual multifactor test in IISSCC. The district court reasoned:
[P]arody is ill-suited to analysis
under the three nominative fair use factors because the use rarely will be: (1)
necessary to describe plaintiff s product or service, since parody involves
distortion and alteration rather than description [probably not a good reading
of “necessary,” which is about whether people will know what you’re talking
about, and the use of Ebony’s mark in the parody is pretty necessary]; (2)
limited to what is necessary for identification, since the purpose of parody is
to evoke and mimic the original; or (3) true and accurate, in a literal sense,
about the relationship between the products, since parody often contains strong
elements of sarcasm and irony.
Nonetheless, there was no plausible allegation of a risk of
confusion that would outweigh the public interest in free expression. Strength of
mark: makes parody less likely to confuse. Similarity of marks: though the mark
was reproduced without significant alteration, the context “immediately removed
any semblance of true similarity. Each of the five headlines on the Accused
Image is harshly and unambiguously critical of EBONY Magazine…. It is difficult
to imagine any reader experiencing confusion as to whether or not EBONY
Magazine sponsored or endorsed a cover that portrays it in such a negative
light.” Proximity: there was no direct competition with Ebony’s products, and
it wasn’t plausible that Ebony would bridge the gap by “providing competing
coverage of its alleged underpayment of its contributing writers.” Actual
confusion: the complaint didn’t plead facts suggesting discovery would yield
any such evidence.  And though the
complaint pled bad faith as to accuracy, it didn’t plead bad faith as to
confusion. Quality of defendants’ product/sophistication of consumers: neutral.
“In sum, the substantial public interest in free expression
far outweighs any risk of confusion created by the Accused Image.”
Dilution: Two exceptions to federal dilution law clearly
applied, “[a]ll forms of news reporting and news commentary,” and fair use of a
mark in connection with “identifying and parodying, criticizing, or commenting upon
the famous mark owner or the goods or services of the famous mark owner.”
False advertising: this wasn’t “ ‘commercial speech,’ (2)
made ‘for the purpose of influencing consumers to buy defendant’s goods or
services,’ and (3) ‘. . . disseminated sufficiently to the relevant purchasing
public.’” Gmurzynska v. Hutton, 355 F.3d 206, 210 (2d Cir. 2004); also citing Croton
Watch Co. v. Nat’l Jeweler Magazine, Inc. , No. 06 Civ. 662 (GBD), 2006 WL
2254818, at *10 (S.D.N.Y. Aug. 7, 2006) (“The non-commercial nature of a
journalist’s article cannot be overcome by plaintiff claiming an improper
purpose motivated the publisher to run the article.”).  The accused image was a parody, “made by a
professional writer for inclusion in his article in Defendants’ online magazine;
it does not mention any of Defendant’s goods or services, much less promote
them; it pertains to an issue of public importance, i.e., a leading magazine’s
treatment of its contributing writers; and, although it may implicitly invite
comparison between how Plaintiff and Defendants treat their writers, the
central message of the Accused Image, and the article in which it appears, is
simply that Plaintiff should pay its writers in a timely fashion.”
The state law claims failed for the same reasons.

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Mock magazine cover doesn’t infringe, dilute, advertise falsely even if targeted at competitor

Ebony Media Operations, LLC v. Univision Communications
Inc., No. 18-cv-11434-AKH (S.D.N.Y. Jun. 3, 2019)
Judge Hellerstein called the question presented “interesting,”
but an even better adjective would be “easy”: “whether, in the case of a famous
magazine trademark, a competitor-magazine is guilty of infringing or diluting
the famous mark, and other wrongs, by publishing an image that prominently
displays the famous trademark to criticize the conduct of its owners.” The
answer is no.

Ebony Magazine alleged that defendants infringed, diluted,
and engaged in false advertising by running an article, Dear
Ebony Magazine: FU, Pay Your Writers! [Corrected
] with a mock Ebony cover
that used Ebony’s allegedly famous and definitely registered name. The mock
cover also featured a phtoto of owners Michael Gibson and Willard Jackson, and several
mock headlines:
           “Special
Deadbeat Edition: #EbonyStillOwes”
           “Cheat
your black writers by not paying? Ebony owners Michael Gibson & Willard
Jackson show us how!”
           “Ebony
100 Gala: Let Them Eat Cake! 101 Ways Ebony Doesn’t Pay Writers . . . But Holds
Gala Banquet w/ Chris Tucker”
           “New
Ebony Owners: Michael Gibson and Willard Jackson The Slow Play Kings of Black
Biz”
           “December
2018: Thousands in Back Pay”
Ebony sued for trademark infringement, unfair competition,
trademark dilution, and false advertising in violation of the Lanham Act; and
tortious interference, unfair and deceptive business practices, and unfair
competition under New York law.
As we know, “[t]he Lanham Act must be construed narrowly to
avoid conflict with First Amendment values.” And parody has value.  The central fact was that the accused image “uses
parody to enhance Ross’ s article, the primary purpose of which is to criticize
EBONY Magazine,” and that was fatal to each claim. “That Defendants compete
with Plaintiff, and allegedly published the article, in part, to harm Plaintiff
s business, is insufficient to overcome the protection to which Defendants’
parodic and critical expressions are entitled.”
Because Ebony is a mark for an expressive work, the court didn’t
use Rogers but did use the Polaroid factors with appropriate weight
to the First Amendment interests at stake. [Note that the Ninth Circuit just
uses Rogers even when the plaintiff’s
mark is for expressive works too; I think this is probably the better approach,
at the very least for the content of works as this use is—the picture appeared
in the middle of the story.]
Notably, nominative fair use was no help to defendants
because of the Second Circuit’s bizarre loading of the NFU factors into the
usual multifactor test in IISSCC. The district court reasoned:
[P]arody is ill-suited to analysis
under the three nominative fair use factors because the use rarely will be: (1)
necessary to describe plaintiff s product or service, since parody involves
distortion and alteration rather than description [probably not a good reading
of “necessary,” which is about whether people will know what you’re talking
about, and the use of Ebony’s mark in the parody is pretty necessary]; (2)
limited to what is necessary for identification, since the purpose of parody is
to evoke and mimic the original; or (3) true and accurate, in a literal sense,
about the relationship between the products, since parody often contains strong
elements of sarcasm and irony.
Nonetheless, there was no plausible allegation of a risk of
confusion that would outweigh the public interest in free expression. Strength of
mark: makes parody less likely to confuse. Similarity of marks: though the mark
was reproduced without significant alteration, the context “immediately removed
any semblance of true similarity. Each of the five headlines on the Accused
Image is harshly and unambiguously critical of EBONY Magazine…. It is difficult
to imagine any reader experiencing confusion as to whether or not EBONY
Magazine sponsored or endorsed a cover that portrays it in such a negative
light.” Proximity: there was no direct competition with Ebony’s products, and
it wasn’t plausible that Ebony would bridge the gap by “providing competing
coverage of its alleged underpayment of its contributing writers.” Actual
confusion: the complaint didn’t plead facts suggesting discovery would yield
any such evidence.  And though the
complaint pled bad faith as to accuracy, it didn’t plead bad faith as to
confusion. Quality of defendants’ product/sophistication of consumers: neutral.
“In sum, the substantial public interest in free expression
far outweighs any risk of confusion created by the Accused Image.”
Dilution: Two exceptions to federal dilution law clearly
applied, “[a]ll forms of news reporting and news commentary,” and fair use of a
mark in connection with “identifying and parodying, criticizing, or commenting upon
the famous mark owner or the goods or services of the famous mark owner.”
False advertising: this wasn’t “ ‘commercial speech,’ (2)
made ‘for the purpose of influencing consumers to buy defendant’s goods or
services,’ and (3) ‘. . . disseminated sufficiently to the relevant purchasing
public.’” Gmurzynska v. Hutton, 355 F.3d 206, 210 (2d Cir. 2004); also citing Croton
Watch Co. v. Nat’l Jeweler Magazine, Inc. , No. 06 Civ. 662 (GBD), 2006 WL
2254818, at *10 (S.D.N.Y. Aug. 7, 2006) (“The non-commercial nature of a
journalist’s article cannot be overcome by plaintiff claiming an improper
purpose motivated the publisher to run the article.”).  The accused image was a parody, “made by a
professional writer for inclusion in his article in Defendants’ online magazine;
it does not mention any of Defendant’s goods or services, much less promote
them; it pertains to an issue of public importance, i.e., a leading magazine’s
treatment of its contributing writers; and, although it may implicitly invite
comparison between how Plaintiff and Defendants treat their writers, the
central message of the Accused Image, and the article in which it appears, is
simply that Plaintiff should pay its writers in a timely fashion.”
The state law claims failed for the same reasons.

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Drawing the Line Between “News” and Commercial Speech

Panel 3 at the Abrams Institute conference
Moderator:  Terri
Seligman – Partner and Co-Chair of the Advertising, Marketing & Public
Relations Group, Frankfurt Kurnit Klein & Selz: newsworthiness/editorial
value when there’s a commercial component. As an advertising lawyer, thinks of
it this way: 1A provides scant protection for false/misleading speech or commercial
speech disguised as noncommercial.  But
what if the line is challenged? Fake news sites selling things; real sites
monetized through affiliate links; influencers.
Paul Safier – Of Counsel, Ballard Spahr LLP: Media/quasi
media cases where the court didn’t bite the bullet—looked at speech that could
have been categorized either way and called it noncommercial.  First, Daniels v. Fanduel: right of
publicity/fantasy sports.  It’s
information about real events, monetized in a new way.  Ps argued that it was newsworthy in most
contexts but not here: no one is going on these websites to get sports
analysis.  Indiana SCt: it’s newsworthy
in a newspaper so it’s newsworthy here.
EDPa: GoLo LLC v. Hyatt: A genre—consumer review sites, 1-3
people w/no real editorial staff.  Can be
very lucrative if you use SEO.  You can
buy traffic, not just w/keyword ads, if you’re clever about how you frame your
reviews, you can ensure you’ll be a top result when people search for whether X
diet works.  Vary in how they monetize,
but some have affiliate relationships. Almost all use Google AdSense for
clickthrough ads, using algorithms based on searches.  So Google will show ads for competitors next
to review for a particular diet, though the site had no control over which ad was
placed. 
P’s theory: this isn’t a real review website, but fake, and
thus not entitled to protection. Strong theory: website itself was really just
an undisclosed commercial site (which sometimes happens, but not w/his
client).  Judge rejected that theory as
inadequately pled under Twiqbal.
Weaker theory: nothing valuable, newsworthy, editorially protected, so it was
pled there was no research or analysis in reviews, which conveyed no useful
information at all but were just monetizing SEO.  Court rejected that theory too, accepting it
as accurate description: even if there was nothing valuable on the sites and
they were just clever SEO, that wasn’t commercial speech—they’re still
marketing the speech, not marketing a separate product.
Geitech East Bay v. Lutron, SDNY case: coming from a press
release about a lawsuit.  One company
sued the other for patent infringement & issued a press release about
it.  IP claims were dismissed &
defendant counterclaimed for false advertising based on the press release.  Court disagreed: it wasn’t commercial speech
b/c there were no buying terms in the press release.  [I read this case mostly as about Lanham Act “advertising
or promotion” but there’s undeniably a commercial speech component.]
Another case, involving songs sold as being by Michael
Jackson that allegedly weren’t: descriptions of songs/who performed the music
aren’t commercial speech b/c there’s a controversy about whether it was really
Michael Jackson performing. Obviously, that conflicts w/Kasky v. Nike on its
face.  Better argument: in Nike, speakers
knew the right answer—they knew that they weren’t complying w/labor
practices.  Jackson is dead, and the
speakers don’t know for sure; though this looks like a factual representation
about product, this is a disputed thesis about a matter of historical fact and
thus shouldn’t be considered commercial speech. 
[This doesn’t help distinguish Kasky, where the practices at issue were
carried out by subcontractors; what does help distinguish Kasky is that the
underlying work being sold is expressive and therefore the protections given to
expressive works can reasonably be extended to advertising that merely repeats
the content of the underlying work.]
Seligman: a different case on affiliate advertising came out
differently. What were the differences?
Safier: relations w/somewhat loosely related products
weren’t enough—no relation b/t specific content of challenged speech and the
products they were affiliated with, though reviews of those products w/which
site had business relationship might be commercial speech.
Mary Engle – Associate Director, Division of Advertising
Practices, Federal Trade Commission
Newsworthiness is not the axis we use to identify commercial
speech, though it could play a role.  FTC
challenged an RJR issue ad on cigarettes and science; FTC Commission overruled
ALJ and found it to be commercial speech. Pom Wonderful: also looked at
multiple factors about what constituted commercial speech.  Settlement with ADT, which paid experts to
promote its security system in media interviews and online; FTC challenged
misrepresentations as independent expert. Inside Publications/Creaxion:
publisher ran advertorials and social media promoting FIT Organic mosquito
repellant, pursuing to agreement w/PR firm promoting FIT Organic.  Got some athletes to highlight that, without
disclosure, as part of a regular feature in the magazine. Magazine did label
other paid ads as advertorials. Challenged as misleading.  Discussed Olympians’ use of repellant to
avoid Zika virus, so there was a newsworthiness hook, but it was marketing.  Similar acts on athletes’ social media. 
Business Guide: Sponsored non-promotional article where it’s
not promoting sponsor’s product doesn’t need disclosure, by contrast.  You don’t even have to say “presented by” to
avoid FTC scrutiny, but we expect that they will b/c otherwise it’s not getting
exposure.  Another example:
redistribution of third party review using 3d party widget on magazine site:
the article itself isn’t commercial speech, but redisseminated is advertising
and the advertiser is responsible for product claims communicated by the
article and if the redissemination is presented in a way that misleads
consumers to believe that the magazine endorses the advertiser’s product, that
is not ok.
Review sites: FTC has challenged sites that were indeed
fake, distinguished in the GoLo decision: shams where advertisers create a
review site to review all products but magically find that theirs is the
best.  That’s not hard (and the courts
agree, though Safier interjects to say that a big Q is how you have to plead
this).
Seligman: NAD is fearless about bringing cases against
publishers, while FTC seems more reticent. 
Hypothetical: were a network or publisher to be aware of the paid spokesperson
relationship, would that make a difference into whether that entity could be
subject to an enforcement action for nondisclosure?
Engle: would depend: if it wasn’t being paid, then that
wouldn’t concern us. If the publisher was being paid, that’s Inside
Publications: the publisher was formatting the ad to look like editorial
content; it wasn’t being held liable for being a publisher but for acting like
an ad agency. 
Seligman: so, less relevance to a talk show.
Engle: yes.
Rhonda Powell – General Counsel, Buzzfeed
NAD case: Says nice things about NAD inquiry. We have
shopping guides, and anyone who visits knows that we make lists.  Among those lists are often things you might
want to buy, or places you might want to travel.  Inquiry involved shopping guides, especially
a review of a moisturizer.  Underlying
assumption: something in a list has been positively reviewed. Separately, once
the decision had been made to include the product, our sales force reached out
and said to the manufacturer: would you like us to include a link to purchase
your product at the end of the review. 
Manufacturer said yes. They don’t do that for free.  Did the link inclusion convert it from
editorial content to commercial speech. 
Conclusion: No.  Many reasons,
including that there was no specific call to action in the guide itself for
someone to buy. The link was included as a convenience but there was no
requirement for access to the info or otherwise to buy the product, or that you
use that link to buy the product—it was widely available. The person who chose
the product for review and reviewed it had no relationship to and no knowledge
of the decision to include the link, which was separate and after. A different
decision would’ve been rough on us financially; we take pride in having our
reviews accurately represent the views of our editorial staff.
Seligman: this was a relatively easy case for NAD b/c
Buzzfeed could prove separation of church and state.  One of the things NAD said was that it found
that the primary economic motivation was editorial content, but if a publisher
created content w/intent to motivate consumers to buy through affiliate links,
that could be advertising w/in NAD jurisdiction b/c it’s like other
advertising.  If intent is what
matters—is that really so different from ordinary ad-supported content
creation?  You create shopping guides
knowing you will create affiliate links. 
Buzzfeed can separate church & state but will a 1 person shop be
able to do that?
Safier: if they place all your ads through Google, they have
no control/a mechanical way to create separation of church & state. Many of
them are unsophisticated—they slept on this mattress & it was great!  Those claims have to be sincere, but they
aren’t scientific.
Question: does newsworthiness require utility to the public?
[Newsworthiness seems like the wrong axis for
falsity/misleadingness regulation of commercial speech and Bolger I think clearly
so indicates. Newsworthiness is much more useful for privacy claims and
anything else that purports to extend its coverage to noncommercial speech.]
Seligman: Right of publicity concerns: publisher doesn’t
want its content to be deemed commercial so it can write about celebrities, but
the division isn’t quite the same when it comes to false/misleading
advertising.

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The Consumer “Right To Know” Versus the First Amendment

Panel II at the Abrams Institute’s conference
Moderator: Jonah Knobler, Partner, Patterson Belknap Webb
& Tyler: recent attempts to do things like require disclosure of child
labor in manufacturing process, and related consumer protection cases arguing
that failure to disclose was misleading. 
Kavanaugh, then-Judge: gov’t argued that there was a substantial
interest in providing info, but that would create endless potential burdens
since consumers might want to know political affiliation of business owners
etc. Consumer interest is not enough for a freewheeling power to mandate
compelled commercial disclosures.  So we
know what he thinks.
Panelists:
Rebecca Tushnet – Frank Stanton Professor of the First
Amendment, Harvard Law School
Amestoy/6th Circuit cases striking down competing
regulations of disclosure of rBGH, showing the current tensions in the
law.  Amestoy says that consumer interest
in a matter isn’t sufficient to compel disclosure and it’s just consumer
interest because the FDA says that rBGH has no effect on milk; the 6th
Circuit says that it’s not just consumer interest because research not accepted
by the FDA indicates there might be an effect on milk.
A few points, so that we can get to doubtless robust
discussion: Approaching strict scrutiny for regulations of nonfraudulent (as
Mr. Abrams put it) commercial speech while applying rational basis scrutiny for
regulations of false or misleading commercial speech puts incredible and I
think unworkable tension on the line between truthful and nonmisleading and false
or misleading speech, and we are beginning to see that tension manifest in
weird and conflicting decisions about disclosure, consistent with Professor
Post’s characterization of current doctrine as a hunting license.
Justice Stevens had it right in Central Hudson: where it’s a
regulation of the economic relations between the parties, disclosure regimes
should be subject to rational basis review as long as we don’t like Lochner. Of
course judges are increasingly friendly to a return of Lochner, but the real
justifications for that movement don’t distinguish compelled speech from
compelled payment of a minimum wage.
I also agree with Professor Post that MPG and emissions
labels for cars, nutrition labels, FDA regulation of drugs cannot be
distinguished in type from these other regulations, which is why even the cases
that strike disclosures down make the law more complex and hold out the
prospect of approving mandatory disclosures. This may eventually change but I
predict it will at least outlast Roe v. Wade—Central Hudson prong one (and
relatedly Zauderer) are hard to kill because they’re really the only way that
commercial deception stays actionable while false political speech is generally
protected.
But consider a few recent cases: Mississippi Bd. of
Engineers v. Tire Engineers: 5th Cir. case. New interpretation of
decades old precedent about the line between potentially misleading and
actually misleading speech.  The
background is that the Supreme Court said a bunch of things in lawyer
regulation cases about when you could ban speech versus when the regulator had
to mandate a disclosure instead—this line of cases treated disclosures as
speech protective and minimally invasive, and they haven’t been reconciled with
the anti-disclosure cases.  Anyway, those
cases say that the government can ban if the statement is false or actually
misleading, but the government has to use a disclosure—or at least start
there—if the statement is only potentially misleading.  This distinction doesn’t exist outside First
Amendment law. 
According to the Fifth Circuit panel in the Tire Engineers
case, surveys don’t show actual misleadingness, but an individual deceived
consumer might.  This is a terrible
distinction, wrong in both directions.  Given
the survey showing 55% net confusion
(an incredible number if you think about Lanham Act cases finding
misleadingness), the panel suggested, a disclosure might be justified, but it
could only be as minimal as necessary, which the panel thought meant it only
needed to be disclosed when a consumer was actually at the facility—a classic
bait and switch problem of sunk costs. 
The case also indicates a broader issue with trying to treat disclosure
as a separate issue from falsity: when a message is false or misleading, one
response is to try to ban it, but the other is to say “fix it.”  If there is a false message, then there
should also be a true message about the same thing.  And to say that you have to stick to the
truth is to compel speech, under the
current framework.
Another case worth noting: the Florida case barring
pediatricians from asking about whether there are guns in the house.  A panel said this survived strict scrutiny,
which I submit would be laughable if it weren’t a bellwether of where we are
going in judicial politics.  And with
abortion of course we’ve been there for decades: I agree with Professor
Bambauer is that the glaring contradiction in NIFLA is on the many burdensome
disclosures, neither factual nor uncontroversial, that the court has approved
for abortion providers.
NIFLA “health and safety warnings long considered
permissible.” We’ve already seen debate about that, and the quality of that
debate has been terrible.  One concurrence
in the American Beverage case thought that the specific health and safety
warnings at issue had to be of long standing, meaning that for example no
mandatory warnings about thalidomide would be constitutional because we didn’t
know about thalidomide at common law. Even Justice Scalia didn’t think that:
science can tell you things you didn’t know to which the common law principles
about harm can then be applied.  (Lucas
v. South Carolina Coastal Council, nuclear power plant that turns out to be on
an earthquake fault line can be shut down without constituting a taking.)  Similarly, the dispute in Am. Bev. about
whether the disclosure was “factual” b/c it only referenced “diabetes” without
distinguishing between type 1 and type 2 diabetes shows how easy it will be to argue
and hold that something isn’t factual.
Jonathan H. Adler – Johan Verheij Memorial Professor of Law
and Director, Center for Business Law and Regulation, Case Western Reserve
University School of Law
Zauderer should’ve been understood as a simple application
of Central Hudson, not a separate test. Result: mess, especially in terms of
explanation.  The rBGH cases from Sixth
and First Circuits are fully reconcilable: gov’t intervention in information in
the marketplace is something we should be skeptical of. Mandatory/conditional
disclosures (if you say A, you must also say B; A means X) require
justification, but should not be open season. 
Gov’t has to be explicit and express about what it’s doing and why,
which becomes a filter protecting against arbitrary gov’t action and against
rent-seeking, which was clearly what’s going on in the milk cases.  [And why this is about Lochner.]  Similarly with land regulation, floodgates
aren’t open [doubt Florida regulators would agree].  Fed gov’t will be able to defend the vast
majority of its disclosures.  The Court
hasn’t done a particularly good job of fleshing that out.  Nutritional labels: peanut allergy
disclosures are strongly justified—the gov’t has an interest in protecting the
uninformed consumer who can never know everything about a product from
suffering harm from that product. 
Probably satisfies both Central Hudson and strict scrutiny, provided
that it’s no more intrusive than necessary.
Securities disclosures can be justified too—an expert agency
can decide that consumers need to know that “you only pay fees if you win”
doesn’t include costs which will be owed regardless. [Quite notable that it was
the bar, not “experts” in the data collection/analysis sense, to which the SCt
deferred in Zauderer—preference for anecdotes over data.]  SEC disclosures on conflict minerals: telling
consumers to focus on this aspect of the product—he agrees the courts haven’t
been effective on fleshing out intuitive judgments they then rationalize.  Conflict mineral disclosure is meaningfully
different from other regulations on the books. 
GMO disclosure is materially different from ingredient labels.  [See Doug Kysar, Preferences for Processes:
this conclusion relies on paternalistic judgments about what consumers should care about, not what they do care
about.]
In sugar sweetened bev. case, the gov. can warn about these
things but it did more than necessary [unless you think that any of the
concurrences might add some votes if SF came back with a 10% warning]. 
Jacob Spencer –Gibson, Dunn & Crutcher LLP
CTIA is still ongoing (remanded in light of NIFLA, still
pending before 9th Circuit)—disclosure that cellphone retailers
would need to provide at point of sale. 
About RF exposure/exceeding FCC standards if you carry phone on and in
pocket/in bra.  Epistemology isn’t
litigated here: both parties appeal to what the FCC has determined about the
science, accepted it as an accurate account of science and of what FCC was
trying to do, and then disagreed about whether the message conveyed by
Berkeley’s ordinance was consistent with the FCC.  CTIA: if you read it as a normal consumer,
you would come away thinking there was a safety risk.  Uses “Safety” at beginning and end, and
“radiation” is scary.  FCC has said there
is no safety risk that’s scientifically provable from carrying cellphone.  Berkeley’s position: each sentence is true,
and this is factual and uncontroversial. 
SF did a sugar sweetened beverage disclosure that was struck
down as unduly burdensome. There was no definitive showing that SSBs uniquely contribute to obesity etc.  The parties didn’t have a fight about the
science, though.  Even without
controversy on facts, there’s a lot of disagreement. The trilogy of Zauderer,
Ibanez, and Milovetz were all about lawyer marketing, where the Court is very
confident about what it’s doing and what it knows about the facts.  Other cases, not so much.  [Which may say something about the judge as
data scientist regulating the FDA.]  They
were also all conditional disclosure cases: you say X, so you have to say
Y.  NIFLA is a noncommercial speech case,
and it’s weird to say stuff about Zauderer in that context—so none of these
cases deal with run of the mill compelled commercial speech.
Knobler: safety disclosures: lack of clarity over when
health and safety is a sufficiently important or substantial interest to
justify disclosure.  Vaccine/autism?  Adler thinks precautionary disclosure might
be allowable even if risks are hypothesized and not proven.  Tushnet thinks current epistemological
uncertainties about truth expressed in 1A cases should imply that courts can’t
rule on products liability cases, which is why the 1A cases are weird.
RT: [This is about scientific “proof” versus “proof.”]  It’s about probabalistic harm and whether regulators
can act on probabilities, which I think they can.  If past experience w/ a class of drugs has
indicated consumer misunderstanding (or safety problems), you should be able to
predict that with a new entrant.
Adler: factual/uncontroversial is not a good framing.  Substantial gov’t interest is where we should
be looking, and whether there are less burdensome ways of regulating.
Uncontroversial in particular is prone to so many interpretations, ultimately
incoherent and unhelpful.  We think that
agency transparency about decisionmaking has an effect on the quality of
decisionmaking. If you have a test that says the gov’t must explain why it’s
regulating, that helps constrain the gov’t. 
In Amestoy, the gov’t wasn’t willing to say it was protecting people’s
health, and it wasn’t willing to do that. 
In CFIA, the gov’t wasn’t willing to argue that it believed that there
was an actual safety risk against which it was protecting people.  Requiring the agency to put its reputation
behind things will discipline it some against rent-seeking.  [Except for abortion.]  The problem: how much scrutiny will we give
the gov’t’s claims.  Most cases have
tended to stay away from that question. Baltimore Gas, 1983 O’Connor opinion:
when the Q is one of science, we should be more deferential to admin agencies
than in any other context.  Judges know
this is not their comparative advantage. Allowing agencies to, as they must,
pick and choose b/t scientific research comes along w/having the agencies. But
1A context creates a tension that hasn’t been unpacked.  A candor rule relieves some of the
pressure. 
Cases that come out of the states: deference comes from
dealing w/expert agencies. But city council of SF may be different.  [so lying about federalism is part of the problem?]  A candor rule might be less effective with
legislatures than w/admin agencies. 
Courts have largely avoided this problem.
Knobler: most of these cases involve gov’t regulation, but
what about private lawsuits under state tort law seeking to impose these
disclosure requirements, and that’s even more problematic.
RT: I have a theory about this: argument made and ignored in
Nike v. Kasky because it’s inconsistent w/the 1A’s distrust of gov’t.  If we believe in (1) judicial competence to
find facts and (2) falsity/misleadingness, then these cases have to continue.  The California laws are not regulatory. They
use the same general language of falsity/misleadingness as core FTC §5 does.
Knobler: when there is a safety risk dispute, what kind of
evidence should be required to take it into the category
factual/uncontroversial?  In CTIA before
NIFLA, they said uncontroversial didn’t impose a separate requirement from
purely factual; has to be phrased as a fact. NIFLA involved true facts but the
Court still said it was controversial: on a subject that made people respond in
an emotional way.  [Like whether kids
should die of peanut allergies—and I’m not kidding about that.]
Spencer: Mistake to read Zauderer as distinct from Central
Hudson.  He would read “controversial”
very broadly. If it’s controversial: controversy in public; good faith
scientific disagreement—the consequence is that you should then apply Central
Hudson or heightened scrutiny to assess the gov’t’s reasoning. Level of gov’t
is important: federal regulator v. municipality; core competency of gov’t (SEC
lacks core competency on conflict minerals and whether disclosure would affect
violence in Africa); whether this is a standard warning (he’d look at whether
this is the sort of topic that looks like existing health and safety warnings).
Knobler: more exotic disclosure requirements: state
interests grounded in consumer’s right to know facts for their own sake or
facts of moral or ethical or aesthetic importance.  Can be phrased as economic harm (paid more
than I would) as well as moral/ethical harm. Adler has argued right to know is
not itself a consumer interest that justifies compelled speech, even if
consumers do in fact care more about identity of producer than the other
qualities of the product.  Where do you
draw the line between mere consumer curiosity and a legitimate state interest?
Adler: If ungrounded consumer right to know is justification
for compelling disclosure, without another gov’t interest, then there is no
protection against mandatory disclosure. The fact that gov’t, legisl. or admin,
has decided will always show that some nonzero number of consumers want to
know. There is an infinite amount of information consumers might want to know,
at least if prompted.  But these aren’t
commercial concerns, but concerns about values, how we see ourselves as
citizens of a polity.  This distinction
b/t citizens and consumers has been obliterated, if it ever was a line.  [Then I really don’t see why these concerns
should be distinguished from “commercial” concerns.]  Tilts the playing field to make decisions
more about question A than question B. That should worry us.  Instead, the gov’t should have to articulate
harms to people or property.  Squishier
when the gov’t has other interests it’s trying to carry out, like strengthening
a larger market, or AMI’s country of origin labeling.  These aren’t protecting consumers from harm
but groups trying to achieve through regulation what they can’t get through the
market: mandatory GMO labeling is about forcing producers to shame their own
products.  If Vermont really wants this
label on the milk, be willing to say up front that it thinks there’s a health
risk.
RT: Doug Kysar was right; the distinction reflects a
paternalistic view of what consumers ought to care about: the gov’t is already
making a value laden choice about which characteristics should matter and
Professor Adler’s point about the merger between commercial and political means
that telling people to stay in your lane and care only about calories is
already a political choice.  Another
takings case, Eastern Enterprises v. Apfel: it’s possible that a combination of
regulations would be so burdensome that you would go out of business.  That doesn’t make it ok for you to pick and
choose which you want to comply with to avoid a taking. [Or as Jack Balkin
says, the power to tax and the power to destroy can in fact be separated in
practice.]
GMO labeling: empirics on this seem less dangerous than
Prof. Adler make it sound. Consumers seem relatively welcoming.
Zauderer as application of Central Hudson: key difference is
whether the burden is on the gov’t to show that the disclosure achieves the
objective; since Zauderer our factual understanding of the world has changed
and that provides us with a choice.  Bambauer
and many others have noted that disclosures often don’t do what we want them to
(though it depends very much on the disclosure and on dynamic effects
especially effects on intermediaries). 
Judges like Kavanaugh think that a disclosure should inform and so
therefore it does, but that’s inconsistent with the evidentiary standards they
apply to everything else. Neither side has taken seriously enough the
objections to disclosure working: it would imply that many more speech bans
would be acceptable because there is no happy medium of disclosure while
preserving the truthful message, but many other regulations would fail unless
we accept a 10% increase in awareness through disclosure as sufficient to show
that the government has gone some way towards achieving its interest.
Adler: Kysar misses that consumers care about things but
producers can come forward and identify themselves to groups that care.  Econ literature is largely ignored in legal
literature: barring exceptional circumstances, where groups have strong
preferences about characteristics, there is disclosure by firms to match
preferences, and in a separating marketplace consumers tend to interpret
nondisclosure as confession.  USDA has
studied this for years.  It’s not that
consumers shouldn’t care or can’t care, but when they do, the marketplace takes
care of that.  If the requirement was
that the gov’t simply had to articulate why the consumer demand wasn’t being
met, that would eliminate the justification. Other areas of the law may make
companies somewhat reluctant to be aggressive in making direct comparative
claims [I don’t think this is true in the US]. If you want a GMO free product,
you can find it.  Mandatory disclosures
often differ from market disclosures; they get changed and less responsive to
what consumers are demanding, but rather to what lobbyists are demanding.
[RT: this would all be fine if preferences were fixed.]
Spencer: agrees w/ Adler. 
Right to know would be circular: always satisfied [unless we care
whether disclosure works].  We have a
separate set of standards for commercial speech b/c it deals only w/their
economic interests, though that has never really made sense, but if the
statement doesn’t deal w/consumers’ economic interests then it shouldn’t be
relevant.  That said, you never want to
be litigating whether the gov’t interest is substantial.
RT: if that were true, then you have to explain why it
should be constitutional to bar false explicit statements about ethical
practices because it’s not a commercial interest but instead is political.
Adler: that’s fraud.
RT: now we’re just debating price: what consumers understand
from the unadorned statement.

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Commercial Speech & the First Amendment

From Yale Law School’s Abrams Institute for Freedom of
Speech: Commercial Speech and the First Amendment
Floyd Abrams: does commercial speech protection affect
non-commercial speech law, for example by decreasing protection for political
speech?  We’ve found that political
speech proponents now cite commercial speech cases given how robust the
protection is.  So the concern about
defining scrutiny downwards for noncommercial speech hasn’t materialized.  SCt now believes that commercial speech is
more important than some thought, and that limitations on nonfraudulent speech
are more threatening than many thought.
Commercial Speech Post-NIFLA v. Becerra:  Legitimate Check on Compelled Speech or
Weaponization of the First Amendment?
Moderator: Joel Kurtzberg – Partner, Cahill Gordon &
Reindel LLP
Calls to overturn Central Hudson at least for
truthful/nonmisleading speech. Sorrell v. INS Health applied “heightened”
scrutiny. What does that mean?  Our part
of the bar argued for strict scrutiny. Sorrell went on to invalidate the law at
issue under Central Hudson, so it wasn’t clear. Content-based: not subject to
Central Hudson intermediate scrutiny? 
But what does that mean, given that commercial speech as a category is
content based?  Breyer issued the first
of many dissents: opened the floodgates to dangerous litigation.  Regulatory programs necessarily draw
distinctions based on content. 
Electricity regulators oversee company statements about electricity:
specific to content. The Federal Reserve regulates interest rate disclosures,
but only by financial institutions. The FDA oversees labeling and advertising
for drugs, but not furniture. It’s all content based. 
Reed v. Town of Gilbert: Reed found everything to be content
based and everything content based subject to strict scrutiny?  If law applies b/c of topic discussed, then
it’s content based according to Reed regardless of gov’t motive and content
neutrality of justification. Breyer concurred in judgment but warned again, you
can’t possibly mean this is true.  [It
just means the distinctions will be less predictable and more subject to
judicial reevaluation of the facts.]  The
entire regulatory state is built on laws that target specific content. [Which
is pretty much the point for some: they don’t like the regulatory state and
think that common law is enough.]
NIFLA: compelled speech case.  He litigated the graphic cigarette warning
cases.  Zauderer: rational basis,
essentially.  If Zauderer doesn’t apply
(purely factual/uncontroversial—calories on menus) what is the standard?  Strict scrutiny? Central Hudson? NIFLA
answers that question by saying Zauderer doesn’t apply when it’s content based
and it’s strict scrutiny. [This wouldn’t be my summary, but ok.]  Struck down California’s disclosures required
for anti-abortion clinics (licensed clinics had to post disclosures about
California’s own services for pregnant people; unlicensed clinics had to post
disclosure that it wasn’t a licensed medical clinic).  Court struck down both provisions: altered
the content of clinics’ speech and was therefore content based.  Rejected professional speech concept as to
the clinics b/c failed under intermediate scrutiny; no traditional exception of
lesser protection for professional speech. 
However, Court said it wasn’t calling into question legality of health
and safety warnings long considered permissible.
Panelists: Jane Bambauer, Professor of Law, James E. Rogers
College of Law, The University of Arizona: Zauderer apparently survives, but
strict scrutiny for everything else, and it’s an acidic test.  Any error of over or underinclusion will lead
to flunking even intermediate scrutiny. She’s more ok with that than others
are.
Two big limits of NIFLA: Zauderer. Not totally unambigous in
the opinion, but looks largely intact. The first thing the majority does is
acknowledge that these statements, while factual, are not uncontroversial.
Doesn’t explain why it’s not uncontroversial, but everything to do with
abortion is controversial.  [If it’s litigated,
it’s controversial in a trivial sense.] Court probably isn’t ready to define
controversial—her own work has begun to look at how this might be done.  This is probably not the right set of facts.
Second: informed consent in the medical context.  The majority treats it as so traditional that
it’s basically a mere conduct regulation. NIFLA does some damage to the work
the Court has been doing to clarify the separation between what’s speech and
what’s conduct.  “Talk therapy” as
conduct and not speech—older case.  Led
eventually to NIFLA; this Court seems to suggest you can’t take an entire
category of speakers and describe what they’re doing as conduct. At the same
time the Court characterized informed consent as regulating the conduct of
providing medical care.  Biggest internal
inconsistency is treatment of Casey:
Bambauer can’t see daylight b/t disclosures required of abortion providers
under Casey and disclosures
unconstitutional in NIFLA.  [Which is why
having courts decide what’s uncontroversial/factual is about arrogating
political power to them.]  The increased
scrutiny may turn out to be messy and subjective—a problem of epistemology:
which branch of gov’t is better at sifting messy evidence.  Often framed as whether courts are better
than legislatures; this is why Breyer cautions modesty.  Courts are interested in epistemic modesty,
but they think regulators and
legislatures
[RT: but not private parties] should be more modest and
commercial speech is a case study of why this might be.  Assumptions used by regulators in 1970s were
challenged and found to be lacking—limiting optometry offices from listing
prices was bad for consumers. Gov’t will mess up even the goals it intends to
pursue.  [… and we’re at Lochner.]  Regulation shouldn’t apply to information
transmission unless two branches of gov’t have looked at the same body of
evidence and agreed it would be good for consumers. Mandatory disclosures
haven’t been good for consumers and getting rid of that style of regulation may
be good for them. 
Kurtzburg: off-label promotion of drugs: is this truthful
and nonmisleading?  [Amarin, I think.]
The judge didn’t want to have to answer that question, but he did, and found
the FDA went too far.
Robert Post – Sterling Professor of Law at Yale Law School:
Why wasn’t commercial speech protected before Central Hudson? Because we had
free speech for a reason: to make the gov’t responsive to us, as required for a
democracy.  Trying to form public
opinion=state is responsive to us. That logic gives rise to speaker rights, b/c
we want state to be responsive to people who are talking. Why not approve
content discrimination? We want public opinion to set the agenda for the gov’t,
not the other way around in choosing this not that topic.  Content discrimination ban preserves that
priority. Often described in terms of marketplace of ideas, as Thomas does in
NIFLA. Epistemological justification. 
Any institution that produces truth does not have a
marketplace of ideas. That’s not how you run a university—any institution that
produces truth makes judgments about competence and incompetence. There are
better and worse ideas.  The notion that
there’s no such thing as a false idea implies that there’s no such thing as a
true idea, which is the opposite of the idea of truth winning a competition in
the market. The equality here is political, not epistemological: politically,
we are all equal, even though there is epistemological truth.
When Court extended protection to commercial speech, it was
an audience based justification.  Right
to receive information (as it is known in Europe).  Not a subordinate set of protections: a
different kind of right for different reasons, and the Court was very clear
about that b/c it had in the back of its mind Lochner. The Court has lost this distinction, putting autonomy into
the commercial speaker and back into Lochner, second-guessing any commercial
regulation.  This is cool if you like
Lochner, not cool if you don’t. Those are the stakes.
Does NIFLA make any sense in its own terms? Thomas says
content discrimination prevents a market for ideas in which truth will prevail,
so every mandatory disclosure is subject to strict scrutiny.  Imagine: you give a lousy opinion letter and
get sued for malpractice.  Is this
subject to strict scrutiny? Why isn’t this just a marketplace of ideas?  Doctor falsely tells you you don’t have
cancer: is this subject to strict scrutiny? Professional speech is supposed to
be governed by standards of competence of the profession.  Doesn’t make sense to say all compelled
speech is subject to strict scrutiny: in commercial real estate, endless
statutes require disclosures in leases. Under NIFLA, that’s subject to strict
scrutiny?  Does it make sense to have a
court epistemologically determining the truth of these disclosures?  Mandatory disclosure of latent defects
subject to strict scrutiny. The opinion is crudely written as “speech content
regulation bad.”   If you say there are exceptions,
the exceptions contradict the general logic. 
A hunting license for conservative judges to decide what social
regulations they don’t like.  It has
nothing to do with truth or self-government but with entrenchment of a
political party.  If courts are busy with
striking down the SEC, they will not be rigorous when the gov’t tries to lock
up terrorists.
Coleen Klasmeier – Partner and Global Coordinator of the
Food, Drug and Medical Device Regulatory Practice Area Team at Sidley &
Austin LLP
NIFLA’s antecedents: Sorrell, Reed [but not Casey!] have a
lot of resonance on the same intellectual level, and Central Hudson is still
being applied. Her expectation is that courts of appeal will continue to use
those rubrics. Not sure that Central Hudson or Zauderer were ever particularly
helpful analytical tools. Rules of thumb: gov’t’s view of what’s smart decision
doesn’t count (graphic tobacco disclosures). 
Don’t burden speech b/c you find it too persuasive (Sorrell).  Don’t manipulate consumers with neuroscience
(tobacco again) [which is totally fine for private sellers]. But there are
exceptions, historically accepted health/safety warnings—she has no idea what
that might include. Thomas might use that for FTC rules. Another rule of thumb:
Don’t create a stupid record—9th Cir. American Bev. case—had record
ev. that 10% of ad devoted to warning would be enough but required a 20%
warning. CMS proposed rule requiring disclosures of list price in TV ads: the
entire record says we’re doing this because we think it might work but we’re
not sure.  That’s a bad record.  [Having read the proposed rule, I disagree
with this characterization of the evidence and its characterization, but that’s
not surprising.]  Breyer understands that
FDA is threatened by the language in these cases.  All of the labeling rules raise these
issues.  There’s a drug warning on a
diabetes drug saying it causes thyroid cancer, but it’s not based on human
data. The FDA wants doctors to know of the risk; it works in judgments, not in
facts. The agency needs facts, but it judges
those facts.  Judges make decisions about
data all the time.  The epistemology
question does go to competence—FDA’s primary jurisdiction is an issue, but
judges do have a role b/c they’re good at judging too. 
Amarin: the FDA didn’t want offlabel marketing even though
pharmaco proved that its claim was accurate; not allowed on label and thus FDA
said marketing wasn’t allowed, b/c other drugs indicated that early data of the
type you generated don’t necessarily correspond to longterm cardio benefit that
consumers would expect from a drug of this type—an extrinsic factor having
nothing to do with the drug itself [um, that conclusion doesn’t logically
follow at all—especially if you believe in misleadingness]. You can debate
whether it’s sound public health policy, but it’s not a great rationale for a
speech regulation.  Hijacking labels for
the agency’s view of public health, which is a pathology.  Agency has now internalized some of the
lessons of the cases.
Kurtzburg: Why isn’t having exceptions enough?  Zauderer: Can compel if speech is factual, noncontroversial,
and not unduly burdensome?  Gov’t can
also regulate conduct w/incidental impact on speech.  Two other exceptions he think exists: under
precedents, gov’t may not impose content based restrictions w/o persuasive
evidence of a long, if heretofore unrecognized, tradition to that effect. If
there’s a long history of requiring disclosures in commercial real estate
transactions, that’s ok.  The opinion
says it’s not calling into question health and safety warnings long considered
permissible.  Emphasis on tradition, not
just about health and safety. Doesn’t the analysis of professional speech
suggest that if the gov’t could come forward and show the long tradition, it
would be ok?  Why is Post so
worried?  It can’t be that every
regulation is really going to be called in question.  [Which is also the hunting license point:
we’re now in the business of randomly targeting things.]
Post: he has a bridge he’d like to sell you.  How much work has “tradition” done in public
forum doctrine done?  None.  It depends on who gets to say what tradition
is.  Also, redefines Zauderer by putting
the burden on the state, which is not what Zauderer was. And changes the
meaning of “controversial.”  If it means
“can’t be about controversial subject” then it takes the disclosure away when
it is needed most.  How do you
distinguish between speech/conduct when regulating the language of a
contract?  We’ve tried that for 50 years
and failed. It’s an invitation to ad hoc judgments reflecting political
prejudices of courts.  SEC required
disclosures: is that a long enough tradition? 
Why shouldn’t the gov’t be able to experiment w/ new forms of
disclosure? This is about ending the development of regulation: command and
control wasn’t good, but information forcing disclosures became preferred. It’s
not traditional so you can’t do it: but why does that make any sense given
evolving knowledge?  Also, if you want to
talk tradition, commercial speech protection was unknown to the Framers; it’s
not traditional at all! 
Compelled speech serves the very constitutional value for
which we created commercial speech doctrine in the first place, and NIFLA
treats getting more information as a bad thing.
Health/safety as tradition: commercial leases and SEC
disclosures aren’t health/safety.  Is
that in the exception?  What does it
mean?  Thomas is just carving stuff
arbitrarily as it comes into his mind, not thinking about how markets are
formed and regulated in the US.  Amarin:
missed the main justification for why you’d want safety & effectiveness
data for offlabel use: that’s an information forcing device to require
producers to come forth with information. Judge had such a poor understanding
of basic foundations of regulatory scheme. Now, you can get safety &
effectiveness approval for one indication and market it for something
else—that’s law made by a judge who admits he can’t operate his own toaster.
Klasmeier: there is appropriately a burden on manufacturers
to substantiate safety/effectiveness for initial marketing. We don’t have fully
publicly funded research. Offlabel use has been allowed for decades; FDA has
accepted that. It can’t regulate doctors b/c they’re ungovernable; tried to
regulate manufacturer speech instead. Not a foundational principle of food
& drug law that it’s illegal to disseminate info: an artifact of 1970s
controversy.
Post: it was illegal to market to general public.  [What makes it a drug is how you advertise
it.]
Klasmeier: the policies are generally agnostic to audience.  [Certainly Amarin suggest you could market
directly to consumers.] Patients are entitled to receive information about
offlabel uses, so they can go to doctors. 
Consistent w/listener-oriented rationale.
Bambauer: Post said regulatory state used information as
better version of regulation.  80% agree
that more information is generally better, but that’s too facile.  It’s really hard to use facts to convince
people.  If you try to regulate directly,
like taxing soda, the politics show the public [or relevant interest groups]
isn’t ready, but a speech regulation can be slipped in w/o as much political
awareness.  That may be good or bad, but
it doesn’t mean that the 1A check is undemocratic.
Kurtzburg: en banc 9th Circuit American Bev.
Ass’n v. SF applied NIFLA to sugar-sweetened beverage warning.  Majority applied NIFLA.  Maybe NIFLA is much ado about nothing
(concurrence said it would have gone further, because health/safety didn’t
traditionally include any warnings about sugar sweetened beverages).
Bambauer: the issue is there are so many requirements that
you can go in any order and likely invalidate a regulation.  Makes more sense to look at
factual/uncontroversial as prerequisites for Zauderer, rather than undue
burden.  9th Cir. seems to say
that warning may be factual and uncontroversial; only the burden part indicates
that NIFLA might have put more teeth in the analysis. Worries that NIFLA will
be construed in a way that will always find a way for the gov’t regulation to
fail, but only in undue burden.  Case
suggests that factual/uncontroversial disclosures will often be ok.  [But see the weird discussion of diabetes,
where the argument is that it’s not “factual” b/c it doesn’t sufficiently
distinguish type 1 and type 2 diabetes.]
Post: DC Circuit has been at war w/Zauderer for a while
now.  Misleadingness correction
only?  DC Circuit recently went en banc
and said it wasn’t just for misleadingness, but was basically just Central
Hudson.  9th Circuit similarly
set up a situation where Zauderer can always be rejected in favor of strict
scrutiny. When you can’t predict how the opinion should be applied, and when
there is so much commercial speech regulation, you’re giving a hunting license
to courts.  Much less worried about the
difference b/t Central Hudson & strict scrutiny—not interested in
fetishizing strict v. intermediate scrutiny, which is an evasion of the central
Q: what constitutional values are you trying to protect?
Being forced to carry a calorie label is not being forced to
affirm that one believes “Live free or die.”  We now have gov’t speech doctrine saying gov’t
can say anything, no matter its falsity: how does that go along with this other
problem?
Klasmeier: A defendant in a wire fraud case was subject to a
DOJ press release that was concededly inaccurate. The defendant sued over DOJ’s
statutory authority; DC Circuit rejected idea that DOJ should have to account
for its falsehoods under Data Quality Act. We litigated it as a case about
fairness and equality; disappointing result.
Post: the gov’t is absolutely privileged to defame: Paul v.
Davis.
Kurtzburg: we normally defer to agencies w/in their area of
expertise.  Should we defer to FDA on
safety & effectiveness judgments? 
[Note how this is a Lochner Q.] 
Does the 1A tip too far in the other direction?
Klasmeier: trends seem to be converging against
deference.  A lot of these cases are
Chevron step 1 cases: deference is not appropriate.  Reluctant to live in apocalyptic world Post
describes because that’s awful, but Thomas may be trying to move towards idea
that we don’t know legislative motives of yore, while we have information about
today, and we see bad records from today [so yesterday’s bad decisions are fine
and can’t be changed, especially if they were from the common law, I guess].
Moving forward, can’t politicize questions of conscience and value [like
whether to defraud consumers?]—but doesn’t know what to make of Reed in that light, since that wasn’t a
bad record [or a question of conscience and value].
Kurtzburg: false/misleading can be regulated under
commercial speech: it’s a big carveout.  Consistent
w/NIFLA’s holding: there’s a long tradition of allowing the regulation of
commercial speech that is potentially false or misleading, and no one could
argue to the contrary. [Wait for it: I’m about to discuss a 5th
Circuit case that doesn’t just argue but holds to the contrary.]  It’s an exception to the ban on content
discrimination. 
Post: sign regulation was a longer tradition, and now
there’s Reed.  Street sign, house number,
those distinctions have been made at least as long as misleadingness.
Bambauer: whether we talk about long tradition or deference
to regulatory agencies, neither really make sense for constitutional law: we
had a long tradition of racial discrimination [and more to the point, of
defamation law]. The disagreement is more about what we’re trying to
accomplish. Even the libertarians seem to recognize that fraud and things close
to fraud are unprotected not just b/c of tradition but for actual substantive
reasons.
Post: but you could never have that for political speech:
false statements about Brexit. We do apply that rule to commercial speech. Why
would that distinction matter? Could it be that not all speech is the same?

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major beer battle turns on Mead (Johnson)

Long post, lots of stuff to cover in this opinion.
MillerCoors, LLC v. Anheuser-Busch Cos., No. 19-cv-218-wmc
(W.D. Wisc. May 24, 2019)
There’s an apocryphal ad story about a cannery stuck with
unmarketable pale salmon that turned its disadvantage around by labeling the
product as “Guaranteed not to turn pink in the can!” (The competitors supposedly
responded by advertising that their products contained no bleach.)  The point is that the advertising context
itself conveys a lot of meaning: in particular, aspects of one’s own product
that one presents proudly are good, while aspects of the competition’s product
that one brays loudly about are bad, even (or especially) if the consumer has
no other information about how to identify good/bad characteristics.  AB took advantage of this standard feature of
human communication, and got sued for it.
There’s a lot of detail here (and really good lawyering on
both sides), but: AB started an ad campaign highlighting MC’s use of corn syrup
in brewing Miller Lite and Coors Lite, whereas AB uses rice in Bud Light (but
corn syrup in various other AB beverages). 
MC sued for false advertising and trademark dilution; the court granted
a preliminary injunction limited to ads that indicated in some way that Miller
Lite and Coors Lite actually contained corn syrup when consumers drank it,
specifically: (1) Bud Light contains “100% less corn syrup”; (2) Bud Light in
direct reference to “no corn syrup” without any reference to “brewed with,”
“made with” or “uses”; (3) Miller Lite and/or Coors Light and “corn syrup”
without including any reference to “brewed with,” “made with” or “uses”; and
(4) describing “corn syrup” as an ingredient “in” the finished product.  In addition, “the court would strongly
encourage advance clearance before adopting any phrase or creative license in
an attempt to maneuver around the prohibitions.”
The most disappointing part of the opinion for me was the
court’s refusal to dismiss the trademark dilution claim because fair use is an
affirmative defense. First, that’s new law as far as I’m aware, and given the
First Amendment implications of applying dilution law to comparative
advertising, it’s not a well-justified decision.  (The Ninth Circuit has held that in nominative
fair use cases (which this is), the defendant’s only burden is to show that the
use is referential (which MC pled), after which the burden shifts back to the
plaintiff to show lack of entitlement to the defense.) Second, even so, the
complaint clearly pled itself out of court; there is no way that this is not
comparative advertising/nominative fair use.
On to the main event: The yeast that makes beer needs a
nutrient substrate with sugars.  Sugars
can come from malt, “or from a combination of malt and starchy grains like corn
or rice.” The parties agreed that the sugar source relates to style and taste
characteristics, though cost may also be a factor: corn syrup is cheaper than
rice.  “There is no meaningful difference
between using rice or corn syrup as an ingredient in terms of health or safety
of the resulting beer product.” 
Fermentation “converts the corn syrup sugars into ethanol, flavors,
aromas, carbon dioxide, heat and a next generation of yeast cells, leaving a
small amount of residual sugars.” No corn syrup remains in the Coors Light and
Miller Lite products at the end of fermentation, and none is added.
Nonetheless, AB launched a huge ad campaign featuring claims
that Miller Lite and Coors Light are “made with” or “brewed with” corn syrup. Here’s
one Super Bowl ad
.  Suffice it to say
that the gist—central to the ads and much repeated—is that Bud Light doesn’t
use corn syrup and Miller Lite/Coors Light do (“made with” and “brewed with”
are frequently repeated).  AB billboards
touted “100% less corn syrup” than the two competitors. An AB Twitter account posted
an image displaying a Miller Lite can next to a Karo corn syrup bottle as if in
a family portrait, and a Facebook user posted a similar image, referencing the
campaign:

Karo Lite (syrup) and Miller Lite “family portrait”

user-generated content matching BL/ML with ears of corn and Aunt Jemima syrup
Another ad showed the following frames:

“Corn syrup”/”No corn syrup” by bottles of the parties’ products

Another ad mocked MC for complaining and an AB character suggested
“also imitating us by putting an ingredients label on your packaging. People
want to know what ingredients are in their beer. But what do I know? I’m just
the king of a kingdom that doesn’t brew beer with corn syrup.”
Beer Business Daily reported that according to Andy Goeler, AB’s
head of marketing for Bud Light, “[Anheuser-Busch] did focus-group the heck out
of this [Special Delivery] ad, and found consumers generally don’t
differentiate between high fructose corn syrup and corn syrup, and that it is a
major triggering point in choosing brands to purchase, particularly among
women.”  In another interview, in response
to the question, “What is wrong with corn syrup?,” Goeler responded: “People
started to react to corn syrup, they started to react to no preservatives, and
they started to react to no artificial flavors. There are things that consumers
on their own had perceptions — for whatever reason — that there were ingredients
they preferred not to consume if they didn’t have to.”  The interviewer noted that AB focused on corn
syrup and not preservatives and asked why Goeler thought “consumers see corn
syrup as something they don’t want.” He called it “an ingredient some prefer
not to consume is the simple answer. . . . [S]ome consumers — for their own
personal reasons — have concluded that they prefer not putting something like
corn syrup, if they had a choice, into their body.” 
Though this is in one sense an ordinary bullshit nonanswer,
it contains the key conflation at issue here: treating the brewing substrate as
if it were what consumers “put[] … into their body,” which it is not.  Goeler’s answer recognizes the obvious fact
that consumers have no particular reason to think about the distinction between
beginning ingredients and the stuff in the can, and the ads are self-evidently
encouraging consumers to consider the stuff in the can as if it still contained
corn syrup, which is a reason to buy Bud Light instead.  What would be the point of the ads
otherwise?  [See discussion of Grice
below.]  Anyway, in another interview,
Goeler stated that AB would continue to focus on “ingredient transparency,” and
AB’s senior director of corporation communications echoed this, concluding that
“Knowing what is and isn’t in your beer — whether you paid for it or not —
can only be good for the beer industry overall.”  Again: there’s no corn syrup in MC beer, but of course that’s the
message; the use of “made with” and “brewed with” does not tell consumers
otherwise.
MC submitted a survey in which the control ad was the same as
the test ad, but with an added, prominent disclaimer: “While corn syrup is used
during the brewing of Miller Lite and Coors Light, there is NO corn syrup in
the Miller Lite and Coors Light you drink.” Its expert concluded that “61
percent of respondents who saw the test stimulus believe that corn syrup is in
the Miller Lite and/or Coors Light you drink,” compared to 26 percent in the
control, for 35% net confusion. The expert also concluded based on an analysis
of open-ended responses that the phrase “‘made with’ used in the Bud Light
commercial to describe the relationship between Miller Lite and/or Coors Light
and corn syrup is ambiguous.”
MC also argued that AB’s ads exploited or furthered
misconceptions about corn syrup and high fructose corn syrup (HFCS).  They are not the same thing, but MC’s industry
expert identified “a common point of confusion about corn syrup and HFCS,
despite the fact that they are very different products.” The survey expert
concluded that “more respondents who saw the test stimulus (24 percent) than
who saw the control stimulus (19 percent) believed that the commercial says,
suggests, or implies that corn syrup and high fructose corn syrup are the
same.”
Unsurprisingly, after the ad campaign was launched, MC received
a bunch of consumer communications related to corn syrup, up from basically
none. The survey expert also analyzed these, and found that 18% indicated that
the presence of corn syrup would end or decrease their purchases of MC beers
and 4% indicated they’d start or increase purchases.  Relatedly, social media responses indicated
that consumers were reacting to the ads as if corn syrup were a bad thing.  Of consumer posts that mentioned corn syrup
and at least one of the relevant brands, 22% expressed negative sentiments and
9.8% expressed positive sentiments. Similarly, 28.6% of consumer posts indicated
a mistaken belief that corn syrup used in brewing is present in the final
product (the beer itself), while only 6.9% of posts demonstrated understanding
that corn syrup wasn’t present in the final beverage.

Social media posts indicating that corn syrup is in the beer and that’s bad

For the misleadingness alleged here, at the preliminary
injunction stage, a consumer survey or other “hard evidence of actual consumer
confusion” is not required. Instead, the Seventh Circuit, consistent with its
self-understanding as a court of common-sense realists who are good at interpreting
the ordinary meaning of ads, instructs that district courts should analyze “the
ads themselves, the regulatory guidance, and the evidence of decreased demand.”
 The court mentioned using intent to deceive
as the basis of a presumption that the deception succeeded, but pointed out
that courts that list this possibility never seem to find the requisite
egregious intent, and it wasn’t going to be the first.  [The evidence here seems to me to support a
finding that MC intended consumers to take away the idea that “brewed with” and
“made with” is the same as “ingredient in the beverage.”  Is that “egregious”?  I think it’s about the natural meaning of an
advertising statement.]
Statements that Miller Lite and Coors Light “use” or are
“made with” or “brewed with” corn syrup were literally true, but allgedly
deceived consumers into believing that MC’s products actually contained corn
syrup and thus were unhealthy and inferior to Bud Light. MC relied on Abbott
Laboratories v. Mead Johnson & Company, 971 F.3d 6 (7th Cir. 1992), in which
the Seventh Circuit concluded that the name Ricelyte “implies more than the
permissible message that Ricelyte is produced from rice or contains rice syrup
solids derived from rice carbohydrates. It also implies that Ricelyte actually
contains rice and rice carbohydrates—or at least we can say that Abbott has
established a strong likelihood of so proving at trial.” 
But there is no affirmative duty to disclose or disclaim if
the advertisement at issue is not false or misleading. And, unlike in Abbott
Laboratories, the court thought that, viewing the “made with,” “brewed with” or
“uses” statements in their full context, there were no express or implicit
messages that the corn syrup is actually in the finished product. [So the court
rejects the survey finding that indeed this was the message received by
consumers from the ads.]  Specifically, the
ads using the “made with” or “brewed with” language didn’t show corn syrup
being added to the finished MC products.
MC also relied on Eli Lilly and Company v. Arla Foods, Inc.,
893 F.3d 375 (7th Cir. 2018), in which the Seventh Circuit affirmed a
preliminary injunction against a cheese manufacturer’s ads implying that milk
from recombinant bovine somatropin (“rbST”)-treated cows was unwholesome. The ads
stated that “Arla cheese contains no ‘weird stuff’ or ‘ingredients that you
can’t pronounce’—in particular, no milk from cows treated with [rbST],” and
depicted rbST as “a cartoon monster with razor sharp horns and electric fur.”  Though the explicit statements were true, the
campaign “centers on disparaging dairy products made from milk supplied by
rbST-treated cows” and drew “a clear contrast between Arla cheese (high
quality, nutritious) and cheese made from rbST-treated cows (impure,
unwholesome)” with monster imagery, “weird stuff” language, and child actors “to
colorfully communicate the message that responsible consumers should be
concerned about rbST- derived dairy products.”
But the ads here didn’t “disparage” corn syrup “or otherwise
expressly draw attention to any negative health consequences.” (Even so, the
court apparently agreed with MC that an express link “may have been unnecessary
here, since at least some consumers appear to associate corn syrup, and
particularly high fructose corn syrup, with harmful health consequences, or
certainly defendant hoped,” but apparently didn’t consider that to be enough.)  Instead of “analyzing the commercial or the
advertising campaign more broadly in order to demonstrate that these statements
are misleading,” MC relied on the responses to open-ended survey questions, and
that wasn’t enough.
The problem with using the survey to find the ads misleading
(even though misleadingness is, even in the Seventh Circuit, supposed to be shown with consumer
reaction evidence) is that surveys can’t be used to bring statements that are merely
“susceptible to misunderstanding” within the scope of the Lanham Act. Mead
Johnson & Company v. Abbott Laboratories, 201 F.3d 883 (7th Cir. 2000). In
that case, “the Seventh Circuit rejected an attempt to solely rely on survey evidence
to demonstrate that language is misleading.” On a petition for rehearing in Mead Johnson, the court of appeals stated
that “interpreting ‘misleading’ to include factual propositions that are
susceptible to misunderstanding would make consumers as a whole worse off by
suppressing truthful statements that will help many of them find superior
products.” The court of appeals also removed its initial statement that “[a]
‘misunderstood’ statement is not the same as one designed to mislead.” The
court here commented that this statement would have supported plaintiff’s
position that intent to deceive could be a basis for finding a statement
misleading, but it’s gone now.  [I find
it ironic that an amendment made to recognize that the Lanham Act is strict
liability is used here to contract liability; the district court’s reasoning
also makes a logical error about the contrapositive: the fact that intentional
deception isn’t required for liability doesn’t mean that intent to deceive isn’t
probative of whether an ad is misleading.]
“The court notes that Mead Johnson is not without its
critics, and understandably so: how does one draw the line between an
advertising statement that is susceptible to misunderstanding but not
misleading?”  The court cites me:
One scholar has suggested that this
holding requires materiality in addition to a misunderstanding for a claim to
be misleading. Rebecca Tushnet, Running the Gamut from A to B: Federal
Trademark and False Advertising Law, 159 U. Pa. L. 1305, 1349 (2011). To
illustrate, Tushnet explains, “One may misunderstand a fact in the abstract: I
could be wrong about the size of a computer’s hard drive. If I am misled,
however, I am being led: induced, or at least potentially induced, to change my
position based on my misunderstanding, as when I am more likely to buy a
computer because of my belief about the size of the hard drive.”
But even this formulation “suggests that something more
overt is required on the part of the advertiser to find a true statement misleading.”
[I respectfully disagree.  The “something
more” is materiality, which shouldn’t have to be “overtly” claimed in the ad,
but rather should be based on evidence about the kinds of things consumers care
about.  In my hard drive example, nothing
more should be required than a misstatement about the hard drive’s size plus
evidence that consumers care about the size of hard drive, rather than also
requiring the rest of the ad to say “you should care about hard drive size!”]
“The Third Circuit — the only court to discuss
substantively the Mead Johnson
decisions — described the Seventh Circuit’s essential holding as follows: ‘there
are circumstances under which the meaning of a factually accurate and facially
ambiguous statement is not open to attack through a consumer survey.’”  [But exactly what are those circumstances?  I obviously share the district court’s
frustration with the vagueness of the existing Seventh Circuit formulation.  The other possibility, besides materiality,
that I discuss in my advertising law class is cost-benefit analysis: given how
utilitarian the Seventh Circuit is, that might be even more plausible,
especially given its language in response to the petition for rehearing.  The difference between true but misleading
and true but misunderstood might be whether one can convey the truth some other,
less misleading way. If a statement is useful to some substantial number of
consumers and it can’t be appropriately qualified without confusing/failing to
inform that subset, then confusion among another subset ought to be accepted as
irreducable and unfortunate “misunderstanding.” 
But if there is a way to
convey the truth without also producing a big chunk of materially confused
consumers, then the consumer protection purpose of the Lanham Act demands that
we label the inefficient presentation of the truth “misleading.”  In that case, the survey here apparently shows
that the existing ads are misleading, not just misunderstood, given the
possibility shown by the control ad of conveying the truth without confusing
nearly as many consumers.  In other
words: some people may still misunderstand the control ad. But if it’s as good
as we can get while still allowing AB to convey the truth, for whoever cares
about it, then it’s the ad that should be used.]
The district court reasoned that “requiring plaintiff to
point to some other aspect of the ad besides a truthful statement” was
consistent with the caselaw—other cases finding misleadingness “consistently
seem to rely on disparaging or derogatory references to the ingredients in the
competitor’s product, or references that suggest a quality not present in a
product is in fact in the product.” The fact that AB made a bunch of noise
about corn syrup was not itself disparaging. 
MC relied on Grice’s “maxim of relevance,” H.P. Grice, Logic
and Conversation, in 3 Syntax and Semantics: Speech Acts, 47 (P. Cole and J.L.
Morgan, eds. 1975). As formulated by MC’s counsel:
if a speaker says something that is
capable of more than one meaning and knows that . . . one of those meanings is
something that’s relevant and meaningful information to the listener and that
the other meaning is something that is irrelevant and not meaningful to the
listener, the listener will assume that the speaker means the meaningful,
relevant statement because why would you be telling me something that’s not
important.
The court found this argument “[i]ntuitively” appealing,
despite AB’s argument that there are other reasons to highlight rice versus
corn syrup distinction, namely that consumers may align Bud Light with the
“farm-to-table” movement or using a “real ingredient versus a syrup.” The court
thought that was “counter to the weight of the evidence as to defendant’s
intent that associating Miller Lite and Coors Light with corn syrup would
motivate consumer’s health concerns with consuming corn syrup or worse, high
fructose corn syrup.”  But even so, the scale
of a campaign wasn’t enough to find a “neutral, truthful statement”
misleading. 
I think the court’s reasoning does not mesh with how
advertising actually works, and encourages pollution of the information environment.
As Eric Goldman and I have written in our text:
[W]hen an advertiser prominently
claims some feature for its product, we are likely to assume that the feature
is relevant and desirable. The advertiser is using the cooperative principle of
relevance to imply these things without stating them directly. The only direct
statement is that the feature exists. Researchers have studied irrelevant
claims used to tout brands, such as claims that instant coffee has flaked
crystals. When some consumers saw ads featuring relevant attributes and others
saw ads featuring irrelevant attributes, the latter group preferred the product
more. Even when the researchers told consumers which attributes were irrelevant
in advance, consumers still preferred the product more when shown ads using the
irrelevant attribute. See Gregory S. Carpenter et al., Meaningful Brands From
Meaningless Differentiation: The Dependence on Irrelevant Attributes, 31 J. Mktg.
Res. 339 (1994).
The fact that it’s in an ad instructs the viewer about the value
to be assigned to the advertised characteristic—and consumers know this.
MC had another possible argument: the “something else” might
come from the rest of the campaign—the
ads that didn’t limit themselves to “made with” or “brewed with” but were (otherwise)
focused on exactly the same message. “In other words, consumers could
reasonably interpret ‘made with’ and ‘brewed with’ to mean corn syrup is in the
final product because of defendant’s other ads describing Bud Light as having 100%
less corn syrup, or describing Miller Lite as ‘corn syrup’ and Bud Light as ‘no
corn syrup’ without reference to the brewing process.”  But the court was concerned that this was too
much of a stretch because most of the ads at issue, and the ones most widely
disseminated, used “made with,” “brewed with,” or “uses.”
The court also declined to follow FTC cases saying that
defendants can’t exploit preexisting misunderstandings, because FTC precedent “is
largely inapplicable to Lanham Act cases.” [While each of the district court’s
conclusions here is understandable on its own, I have to say that the net
impression is: MC needs to show “something more,” but the court systematically excludes
any possible “more” that is outside the four corners of a challenged ad—which does
not fit my understanding about how human communication works.]
Thus, there was no likelihood of success on the merits as to
ads solely using the language “brewed with,” “made with,” or “uses.”
Next, the court turned to ads touting that Bud Light has
“100% less corn syrup than Miller Lite or Coors Light” or that it has “no corn
syrup.” “[T]hese statements, while also literally true, support a reasonable
interpretation that Miller Lite and Coors Light contain corn syrup,” and MC
showed a likelihood of success on the merits.  AB argued that, given the other ads, consumers
would understand these to be shorthand references to brewing, but “a reasonable
jury could and likely would find that these ads encouraged consumers to draw
the wrong inference from the original ads.”
“Ingredient” claims: There aren’t labeling requirements for
beer ingredients, and it’s not clear what an “ingredient” is when it comes to
beer. For food, “ingredient” “appears to cover items that are used in the
production of a food product, even if not in the end product (e.g., leavening
items).” In the past (and apparently even now), MC has listed corn syrup as an
“ingredient” on its website, without any reference to it being used solely in
the brewing process and not present in the end product.  In context, in most of the ads, “ingredient”
was used in conjunction with the “made with” or “brewed with” language, except
for one ad, the one that says “Look if you’re this set on imitating our
kingdom, may I suggest also imitating us by putting an ingredients label on
your packaging. People want to know what ingredients are in their beer. But
what do I know? I’m just the king of a kingdom that doesn’t brew beer with corn
syrup.”  That language crossed the line “to
encourage a reasonable consumer to believe that corn syrup is actually
contained in the final product.”
MC also challenged AB’s statements that Miller Lite and
Coors Light selected corn syrup to “save money” or because it is “less
expensive.” The court refused to hold this misleading based on MC’s theory that
a consumer would conclude that cheaper substrates are less healthy—that was
just too much of a stretch.  [This result,
by the way, seems reasonably consistent with my proposed cost-benefit reading
of Mead Johnson.]
The court then returned to MC’s “strongest evidence,” AB’s
own statements of its intent that “it was both aware of and intended to exploit
consumer concerns about corn syrup (and high fructose corn syrup in particular).”
Though this evidence indicated AB’s hope that consumers would interpret
statements about “made with” or “brewed with” as meaning that corn syrup was
actually in the finished products, the court declined to presume
misleadingness, “though perhaps this evidence could serve to color the ‘made
with’ and ‘brewed with’ statements to push them across the line to allow a
reasonable finding that they are misleading, and not simply susceptible to misunderstanding.”
[Which suggests that a jury could consider the issue as to all the ads, though
the court then indicates that it’s most interested in guidance from the court
of appeals.  Again, one might be able to
fit evidence of intent into a cost-benefit analysis as well as into a
materiality analysis: an intent that consumers believe something beyond the
literal statement could itself suggest that there are other, less confusing
ways to convey the truth, and an intent that consumers be alarmed by a
statement is pretty good evidence that they might act on it, if we believe that
a major manufacturer like AB generally has some idea about what its consumers
care about.]
The court then, somewhat confusingly, turned to whether
there was evidence that a “substantial segment” of the audience was deceived by
the challenged ads: the survey, consumer communications to MC, and social media
evidence.  AB contested the survey and
the 35% net confusion finding.
First, it was ok to use a test commercial that wasn’t the ad
that launched the ad campaign and ran the most times/was seen by the most
people. Both ads compared the beers and highlighted corn syrup, and AB didn’t
articulate a basis for treating them differently.
AB argued that the questions were leading because a consumer
who chose the answer “made with corn syrup” to a communication/filter question
was then told: “Being “made with” corn syrup may mean a number of different
things” and then asked “Which, if any, of the following statements does the TV
commercial say, suggest, or imply …?” (The possible answers included used only
during brewing, in the beverage you drink, both, neither, and don’t know/unsure.)  AB argued that the follow-up improperly
instructed respondents that the term “made with” is ambiguous. This went to
weight, rather than admissibility, and there was “at least some likelihood of
persuading a reasonable jury of the risk of confusion.” Anyway, survey evidence
isn’t required for a preliminary injunction.
As for the consumer communications, there weren’t that many
of them—32 total, out of the approximately 100 million people who watched the
Super Bowl, and many accurately described use or brewing with corn syrup.
Viewed in isolation, these statements were insufficient to prove that a
substantial segment of consumers were likely to be deceived, “but it is some
anecdotal support for the survey results.” The social media reactions were
treated similarly.
So the survey, which tested a “made with”/“brewed with” ad,
helped support a finding of likely success on the merits, but only as to those
ads that didn’t use the “made with”/“brewed with” language and thus crossed the
line from misunderstanding to misleading. 
That sounds weird, but I guess I see how the court got there: if “made
with”/“brewed with” ads are confusing but nonetheless nonactionable, then
surely the ads that go even further are deceptive.
Irreparable injury:  “[I]t is well settled that injuries arising
from Lanham Act violations are presumed to be irreparable, even if the
plaintiff fails to demonstrate a business loss.” Promatek Indus., Ltd. v. Equitrac
Corp., 300 F.3d 808, 813 (7th Cir. 2002). The Seventh Circuit hasn’t revisited this
in light of eBay (though it should, but
I understand why a district court wouldn’t, even though I think it could also
have read the writing on the wall/in the statute). Anyway, no presumption was necessary
given the evidence of irreparable harm. 
AB argued that failure to prove harm to sales prevented a finding of
irreparable harm, but MC showed reputational harm through its survey and anecdotal
social media and consumer comments, which was irreparable even with conflicting
evidence about whether MC’s sales or market share had been harmed.  Indeed, the evidence showed that MC’s market
share was “stable at best, while defendant’s sales and market share is growing,
albeit apparently at the expense of other, smaller competitors. This begs the
question why plaintiff’s share of these lost sales has not grown, at least in
proportion to its share of the market for light beers.”
However, the court qualified its finding of harm, which
affected the scope of the injunction.  As
in the SDNY
Danone case
, the court thought
that there were truthful things that AB can say, and harm caused by truth
couldn’t be actionable; relevant harm comes from the difference between the
truth and what AB actually said. “Here, if plaintiff’s reputation was injured
solely, or even principally, by consumer awareness that its products are brewed
with or made with corn syrup, this may not serve as a basis for reputational
injury.” [In the Danone case,
however, there was no evidence that the potential truthful statement—Chobani actually
had less sugar than the Dannon product, just not as much less as it claimed—was
misleading, whereas MC’s evidence tends to show that the truthful “made with”/“brewed
with” statements, presented in the way AB presents them, imply misleading factual
claims to consumers.]
 

package with “no corn syrup” and image prominently on sides
The injunction thus didn’t disturb ads that only use the
words “brewed with,” “made with,” or “uses.” MC also sought to cover AB’s
packaging that prominently featured the claim “no corn syrup,” but this wasn’t part
of the original written PI submissions. 
The court allowed MC to submit an argument why the injunction should cover
noncomparative packaging.  [The answer is
Grice, or maybe xkcd.]

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