“use in a TM way” just creates another fact issue in the 6th circuit

Ford Motor Co. v. InterMotive, Inc., No. 17-CV-11584-TGB, 2019
WL 4746811 (E.D. Mich. Sept. 30, 2019)
Ford sued InterMotive for trademark infringement, false
designation of origin, trademark dilution, cancelation of trademark
registration, and declaratory judgment for using Ford’s trademarks in various
InterMotive ads; defendants counterclaimed for a bunch of things including misappropriation
of trade secrets and trademark infringement based on Ford’s launch of a
competing product of the same name:
In 2011 and early 2012, Ford and
InterMotive explored a potential business relationship wherein InterMotive
would design an “Upfitter Interface Module” (“UIM”) for Ford to use on its
vehicles. The UIM, as described in the record, is a product that allows its
user to modify a vehicle for special applications such as in the police, fire,
and utility truck market. For example, it can program a truck to flash a light
if exceeds 65 miles per hour, or program a police vehicle to automatically lock
its doors unless certain conditions are met.
Ford alleged that its relationship with InterMotive ended in
May 2012; it announced a different design
from a different vendor in 2016.  In June
2013, InterMotive and Ford executed a licensing agreement governing the Police
Surveillance Mode Module, which Ford argued (and InterMotive disputed) was an
express agreement not to use Ford’s marks, regardless of Ford’s alleged
acquiescence to InterMotive’s use throughout 2012.
Along with the trade secret claims, InterMotive argued that
Ford began using the name “Upfitter Interface Module” with full knowledge of InterMotive’s
use of the same name to market its product. After the announcement, InterMotive
applied to register UPFITTER INTERFACE MODULE, but it was placed on the
Supplemental Register.
The dispute over this triggered Ford’s own trademark claims.
First, InterMotive allegedly used the distinctive “Ford Oval” mark on the
“splash screen” of InterMotive’s UIM software, in a UIM brochure for Ford, and in
a promotional and training video on InterMotive’s website under the heading
“The Ford Competitive Advantage.” They also allegedly used the Ford Oval and “Go Further”
trademarks in a video on InterMotive’s website describing the “Ford Police
Interceptor Surveillance Mode.” InterMotive argued that its uses showed that
InterMotive is the source of the UIM product, as evidenced, e.g., by
InterMotive’s logo, phone number and web address printed on the bottom of the
brochure for prospective buyers, and merely showed that the product operates on
Ford vehicles.  (After Ford objected, the
oval mark was removed from the splash screen but a Ford mark remained.)
In August 2016, InterMotive’s engineering manager reviewed
Ford’s recently-released user manual for the Ford UIM, stating that the user
manual “is pretty much a knock off of [InterMotive’s], with different screen
layouts”; Ford argued that its UIM was thus not a “blatant copy” of
InterMotive’s UIM.
The court found that there was a question of fact whether
InterMotive used Ford’s marks “in a trademark way,” which is a predicate question
in the Sixth Circuit. 
First, the court noted that on the splash screen, Ford’s
mark appeared between the logos of Ram, Chevrolet, GMC and GM below the heading
“InterMotive UIM.” InterMotive also argued that the “splash screen” only
appears after the customer has downloaded InterMotive’s UIM from the
InterMotive website by clicking on an InterMotive software icon—none of which
display Ford marks. Ford argued “post-sale” or “marketplace” confusion, but didn’t
explain how this would happen.
Second, Ford challenged use of the Ford Oval and “Go Further”
trademarks in a video on InterMotive’s website describing the “Ford Police
Interceptor Surveillance Mode.” InterMotive responded that it merely posted a
link to the video on its website, but Ford hosted (and continued to host) the
video on YouTube. Ford just argued that it didn’t authorize InterMotive to use
the marks.
Third, Ford argued that InterMotive used the Ford Oval
trademark in a UIM brochure for Ford created on July 23, 2013. The heading of
the brochure states: “Ford Upfitter Interface Module” followed by the Ford Oval
mark below it. InterMotive points to its use of its logo, phone number and web
address printed on the bottom of the brochure for prospective buyers. InterMotive
argued that “Ford knew about the brochure and actually used it” at trade shows
or otherwise and InterMotive used it to demonstrate how InterMotive’s UIM
supported Ford vehicles.
Fourth, there was a “Ford Competitive Advantage” video,
which InterMotive argued was designed with Ford when they were actively working
together; InterMotive’s witness said that Ford provided a high-resolution image
of the Ford Oval mark for use in the video and InterMotive argued that the
overall video made clear it was from InterMotive.
Ford argued that these uses create a “presumption of
confusion” because InterMotive used a “precise replica” of Ford’s marks and
because InterMotive’s product competed directly with Ford’s product. But that
didn’t matter if there was non-trademark use. Also, the allegedly infringing
uses were all from 2012-13—up to four years before Ford had a competing
product.
Despite this very favorable description taken straight from
the court’s opinion, there’s still a genuine issue of material fact on
whether InterMotive only used Ford marks to show that its UIM was compatible
with Ford vehicles, which suggests something about the utility of many TM defenses.
A jury could accept that “the relationship between Ford and InterMotive ended
well before the advertisements were produced and the advertisements give the
incorrect impression that Ford, not InterMotive, is either the source of
InterMotive’s UIM or otherwise endorses the UIM.” Whether Ford really did
provide a high-resolution photo of the Ford Oval mark for InterMotive to use in
the “Competitive Advantage” video, whether Ford used and played the video at
trade shows, whether Ford welcomed and encouraged the production of the
brochure so that InterMotive could inform Ford at trade shows that its UIM was
optimized for Ford vehicles, and whether Ford gave InterMotive previous
approval to use the Ford Oval mark on InterMotive’s “splash screen” were all
issues of fact.  [Query: if all this is
true, should InterMotive get its fees?]
Also: why are these facts relevant to whether it was non-trademark
use, as opposed to a defense of consent? The court said that “[i]f Ford knew
that InterMotive was using its marks to advertise InterMotive’s products’
functionality on Ford vehicles, then Ford—in effect—concedes the … threshold
inquiry by saying that InterMotive was not using Ford’s marks to show that Ford
was the creator of the UIM.”  But even if
Ford contests the threshold inquiry, shouldn’t we ask if there really is a
question of fact posed by these uses? 
And what Ford “knew” is highly unlikely to have been framed by Ford at
the time as an issue of non-TM use, as opposed to “an ok thing a partner is
doing”; when they were working together, it wasn’t false to suggest they
were working together
.  So figuring out
what Ford thought isn’t really that helpful in identifying a non-TM use.
Anyway, Ford’s agreements with InterMotive didn’t prohibit
InterMotive from using the marks (again, super unclear why that would matter to
whether the use was infringing, as opposed to a breach of contract).
There was also, sigh, an issue of fact on trademark
dilution, because non-trademark use can’t dilute. There was a genuine issue of
material fact on whether InterMotive used Ford marks “only to describe some
aspect of the [InterMotive UIM] product.”
As for InterMotive’s claim based on “upfitter interface
module,” the PTO characterized the term as “(at best) highly descriptive,” but
that examiner statement “does not constitute a finding by the Patent and
Trademark Office.” Though Ford argued that the term was generic, a jury could
find otherwise. The PTO considered a number of “web page screen captures”
showing that the term “upfitter” was being used in a “highly descriptive” way
by Dodge, Ram, and Ford. “But a number of those examples are efforts by Ford to
market its ‘Ford upfitter interface module,’ which is the subject of
InterMotive’s trademark infringement claim.” And, alleged direct, intentional
copying of InterMotive’s mark was “strong evidence” of secondary meaning. “InterMotive
also presents Ford-affiliated publications where InterMotive advertised its
Upfitter Interface Module, demonstrating that it was a brand that Ford
associated with InterMotive.”  [Or demonstrating
that InterMotive made an upfitter interface module?]
Also, there was an email from a Ford employee who worked on
developing Ford’s UIM, which stated that the term “Upfitter Interface Module”
was already being used by an existing supplier and recommended changing Ford’s
UIM name to one of three suggestions: Programmable Upfitter Interface Module
(PUIM),19 Programmable Interface Module (PIM), or Programable Upfitter Module
(PUM). The existence of three alternative ways to refer to the product was,
InterMotive argued, evidence that “Upfitter Interface Module” wasn’t generic or
highly descriptive. This argument has a decidedly mixed record in the courts—there
are lots of ways to describe restaurants and hotels, but that doesn’t make “house”
or “inn” protectable; there can be multiple generic names for a thing.  But that’s a fact issue here.
InterMotive also provided possible evidence of confusion: “at
a 2016 trade show, Ford dealers and trade show personnel were confused over whether
Ford’s product came from InterMotive—as prior tradeshows demonstrated that
InterMotive was marketing an Upfitter Interface Module that was optimized for
Ford vehicles.” [But did that confusion come from the name or the terminated
partnership?]
InterMotive also challenged two claims in Ford’s ads as false
advertising.  In a promotional video
titled “Ford Programmable Upfitter Interface Module ‘Critical’ to Industry,” available
on YouTube, a Ford representative states: “Ford is the only product that is
actually programmable in these upfitter interface modules.” InterMotive alleged
that it did too. Ford argued that this claim was puffery, but it’s a specific claim.  Ford also argued that the statement was immaterial
and de minimis, given the video had been viewed less than 300 times at the time
Ford’s motion for summary judgment was filed. InterMotive’s witness declared
that this wasn’t small “because the work truck market is not very big” and “a
single viewer could make the decision to buy thousands of vehicles.” Moreover, the
views count didn’t include people at a trade show who viewed the video when it
was played; trade shows are an important market for InterMotive. In addition, InterMotive
argued that programmability was material because a product that is not
programmable “has much less use to the customer.” There were genuine fact
issues on materiality.
The second alleged false advertisement came from Ford’s
“What You Get” brochure: “[U]nlike aftermarket upfitter modules currently on
the market, [Ford’s UIM] is warranted by Ford and will not interrupt the
Computer Area Network (CAN).” In a classic caveat emptor argument, Ford contended
that its statement was true if taken as conjunctive (it’s the only one that is
both warranted by Ford and also won’t interrupt the CAN). Without ruling on
this bad argument, the court found that InterMotive hadn’t shown materiality/travel
in interstate commerce.

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small wonder: sleeve undergarment isn’t valid trade dress/innovation claim isn’t false advertising

R and A Synergy LLC v. Spanx, Inc., No. 2:17-cv-09147-SVW-AS,
2019 WL 4390564 (C.D. Cal. May 1, 2019)
The court dismissed trademark and false advertising claims
brought by R&A based on their “Sleevey Wonders” sleeved undergarments
designed to be worn under sleeveless tops. 
Note that it seems pretty bold for “Sleevey Wonders” to bring IP claims!
“Plaintiff claims that no other similar sleeved undergarment
product existed before the Sleevey products were introduced.”  Defendant ordered two Sleevey products and
then made its own Spanx-branded undergarment sleeve products.
Like Sleevey, Spanx products are allegedly made in different
colors, textures, and combinations thereof, similarly advertised as being able
to “Transform your wardrobe!,” advertised using paper dolls wearing sleeved
undergarments with interchangeable outfits in order to demonstrate the different
variations that are possible with the product. Like Sleevey, Spanx allegedly uses
a bullet point list to showcase the Spanx products’ features, and allegedly
uses equations to show how combinations of the Spanx products and outergarments
can create new outfits. It allegedly uses the tagline “#Madewithlove” to
advertise the Spanx products, similar to Sleevey’s claims to be made “with
love.”
Spanx allegedly claimed to have come up with the idea for
the Spanx products on its own, including by representing that the Spanx
products are new, that the Spanx products fill a “white space” in the market,
and that the Spanx products are “unlike any other layer options” in the market.
This allegedly misleads the public into thinking that Spanx operates its business
with the intention of supporting women in their entrepreneurial pursuits.
Trade dress infringement: Sleevey failed to properly
identify a protectable trade dress. It cited similarities in “colors, shapes,
fabric materials and material arrangements” between Sleevey and Spanx products.
Sleevey products include “basic, bell, bandeau, flutter, waterfall, halter,
shirred, tunic, and trellis” and are available “in a variety of colors
including black, white, grey, coral, pink, mint, cobalt blue, periwinkle blue,
apple green, olive green, forest green, navy, red, silver, turquoise, eggplant,
brown and off-white.” This failed to sufficiently identify a precise and
non-generic trade dress, and thus failed to provide proper notice to
competitors. “Concerns of imprecise trade dress definitions include the risk
that jurors will interpret the same trade dress differently, the possibility
that jurors or courts will be unable to determine functionality or secondary
meaning, the likely overbreadth of the trade dress claim, and the difficulty in
crafting narrowly-tailored injunctive relief.”
As alleged, the design was generic and uprotectable even on
a showing of secondary meaning. It was far too broad/generalized, and it was
also the basic form of a product. To the extent that Sleevey sought to claim
the concept of a “sleeved undergarment” as trade dress, that’s “nothing more
than a basic description of the product and its function.”
Nor did the packaging and promotional materials fit within
the description of product design; allegations about the similarities in
packaging weren’t contained in the trade dress claim.
For the same reasons, the features Sleevey sought to protect
were functional. The sleeved undergarment design, combined with various colors,
shapes, fabrics, and material arrangements, was essential to the Sleevey
products’ purpose, “which is to provide women with a variety of sleeved
undergarments to pair with other short-sleeved apparel in order to create the
appearance of sleeves.” Sleevey pled that the purpose of Sleevey is to cover
“bare, flabby arms,” and to “give the appearance of the sleeveless over garment
having sleeves.” The “form-fitting” nature of the sleeved undergarments “serves
an important function as it relates to the overall look of the wearer’s outfit,
beyond a mere aesthetically-unique design. The same can be said of the
particular material used for each individual Sleevey product; consumers buy a
particular item of clothing not just because of its overall look but also
because of its comfort and fit.” Because Sleevey sought protection for the
entire product line, “the general design and look of each individual Sleevey
product is undoubtedly functional.” Sleevey’s competitors, reciprocally, would
be placed at a significant disadvantage if the Sleevey product line were
treated as protectable trade dress.
Independently, Sleevey failed to plausibly allege secondary
meaning. (The court mentions inherent distinctiveness but of course that’s not
possible under Wal-Mart v. Samara.) Allegations that the Sleevey product
line has generated over $5.8 million in revenue, and that Sleevey products have
been worn by celebrities, showcased at trade shows, and featured in magazines, were
insufficient. Evidence of sales is not dispositive and “does not in itself
create legally protectable rights” in the product being sold; success in
promoting Sleevey as brand didn’t equate to secondary meaning in any feature of
the products themselves. “Plaintiff has not alleged that it sufficiently urged
consumers to associate any particular feature of the Sleevey products with the
Sleevey brand, other than by promoting the general design and purpose of
sleeved undergarments in its advertisements.”
Likely confusion: Sleevey didn’t plausibly plead likely
confusion.  It provided two examples of
alleged consumer confusion, one of which was allegedly consumer comments on Spanx’s
Instagram page regarding the similarities between Sleevey products worn by an
actress in a television show and Spanx products. There was also a comment on
Spanx’s Facebook page, where a consumer wrote that Spanx products “look a lot
like Sleevey Wonders.” These allegations didn’t support a confusion claim but
were consistent with the opposite conclusion: that consumers could readily
distinguish the Sleevey products from the Spanx products based on packaging,
manufacturing, and even product design. “The online comments Plaintiff alleges
were made by consumers were made on Defendant’s clearly-labeled corporate
accounts, refuting the notion that any consumer visiting those accounts would
believe that Defendant’s sleeved undergarment products were identical to
Plaintiff’s Sleevey products.” The marketing and packaging materials attached
to the complaint were also easily distinguishable.
False advertising: There were two categories alleged:
Spanx’s claims of innovation, e.g. its CEO being quoted in a newspaper article
as saying “[t]ights have been around for our legs for so many years, I was
thinking, ‘Why aren’t there tights for our arms?’ ” and its claims that its mission
is to support entrepreneurial women and to “help women feel great about
themselves and their potential.” This was allegedly false because Spanx hurt
Sleevey and other “small, women owned” businesses, rather than elevating those
women.
Nothing in the complaint alleged literal falsity, and the
statements weren’t misleading because they were puffing. “Merely advertising a
product as being new, invented, filling a white space, and being unlike other
layering options does not amount to an assertion of fact” and was puffery.  Likewise, statements that Spanx products are
“unlike any other layering options” was unquantifiable puffery.
Likewise, statements about Spanx’s mission to support women
in business were also clearly puffery:  “vague
and abstract goals in conducting business” that couldn’t be falsified. Plus,
the falsity claim put the cart before the horse by assuming infringement.
Puffery, of course, can’t be material. And “the Supreme
Court has directly addressed the question of whether representations about
which company came up with the idea for a product materially influence consumers”
in Dastar, which stated that claims under the Lanham Act “should not be
stretched to cover matters that are typically of no consequence to purchasers.”
It was clearly immaterial as a matter of law to consumers whether Sleevey or
Spanx was the original source of the general concept of sleeved undergarments.
False designation of origin: Unsurprisingly, no. Allegations
about similarities in the marketing and advertising materials were too
conclusory. The exhibits attached to the complaint “reveal that Defendant uses
clearly distinguishable advertising materials, packaging, and other brand
recognition materials under the Spanx brand, even if the substance and style of
those materials overlap with those Plaintiff uses for its Sleevey products.”

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Suffolk University IP Conference, Oct. 29-30

Webpage here.  Draft schedule (subject to change) is available to download.

Current Confirmed Speakers and panelists include:
  • Erich Anderson, Corporate Vice President and Chief Intellectual Property Officer, Microsoft
  • Eric. E. Bensen, Co-Author, Milgrim on Trade Secret
  • Deepika Bhayana, Senior Managing Director, IP at Dell Technologies
  • Larissa Bifano, Partner, DLA Piper
  • Carolyn Blankenship, Director, IP, Thomson Reuters
  • Tom Brown, Senior Legal Direct, Dell Technologies
  • Margaret Chon, Donald and Lynda Horowitz Professor for the Pursuit of Justice, Seattle University School of Law
  • Robert K. Coughlin, President & CEO, Mass Bio
  • Daniel Dardani, Technology Licensing Officer, MIT
  • Chad Davis, Partner, Dechert
  • Jeffrey Francer, Senior Vice President & General Counsel, Association for Accessible Medicines (AAM)
  • Stefania Fusco, Senior Lecturer, Notre Dame University Law School
  • Adam Kessel, Principal, Fish & Richardson
  • Bruce Leicher, former General Counsel, Momenta Pharmaceuticals, Inc.
  • Travis McCready, President & CEO, Massachusetts Life Sciences Center
  • Michael Meurer, Professor of Law, Abraham and Lillian Benton Scholar, Boston University School of Law
  • Byron Olsen, Vice President, Chief Patent Counsel at Dicerna Pharmaceuticals, Inc.
  • Scott Peterson, Red Hat
  • Alexandra Roberts, Associate Professor of Law, University of New Hampshire School of Law
  • Hans Sauer, Deputy General Counsel for Intellectual Property, BIO
  • David Schuler, Chief Intellectual Property Counsel, Bose Corporation
  • Jacob S. Sherkow, Edmond J. Safra/Petrie-Flom Centers Joint Fellow-in-Residence, Harvard University; Professor of Law at the Innovation Center for Law and Technology, New York Law School
  • Ofer Tur-Sinai, Senior Lecturer, Ono Academic College, Israel
  • Craig Smith, Partner, Lando & Anastasi
  • Christine Taft, Ph.D., Senior Licensing Manager at Partners HealthCare
  • Rebecca Tushnet, Professor of Law, Harvard Law School
  • James H. Velema, Partner, Lathrop Gage
  • Saurabh Vishnubhakat, Associate Professor of Law, Texas A&M University School of Law
  • Maria Laccotripe Zacharakis, Partner, McCarter & English

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Innovation, Justice, and Globalization: A Celebration of J.H. Reichman

Harvard Law School
Opening
Keynote
Yochai Benkler, Harvard University
How do we understand what we do in our field against the background
of profoundly increased inequality and stagnation for all but the top 5%, including
an unprecedented increase in death rate among US whites from diseases of
dispair? The economy functions in relation to power. Prior stories that have
failed us: Mainstream economics treated technology as exogenous; it has become
skill-biased. Monotonic story: the more skilled people are, the more they can
adapt to tech, so college degree gets a premium. Fit the 1980s US data
beautifully. Institutions played a relatively limited role in this theory and
we were supposed to educate workers. But that story didn’t work in the
1990s.  Early 2000s: “tasks framework”:
technology still exogenous, deterministic (some things are easier to automate
than others). Middle class jobs—people in the back office of the CPA—were now
being done by Excel. People on assembly line replaced by robots. Nonroutine jobs—the
janitor dealing with irregular floors, the CPA using Excel—still had demand.  But that still didn’t fit the overall
differences b/t different countries, all at the same tech frontier—substantial empirical
threat.
Then the story became: robots will take jobs, cause
sustained levels of structural unemployment; all work will be Uber.  Insitutionalists fought back: politics
led to sustained shift of bargaining power b/t labor and capital, b/t financial
sector and others; free movements of goods/capital but not people across borders
created new methods of offshoring, outsourcing, etc. Tech plays no independent
role in the institutional story.
So, where do we stand, who do law/institutions but also
believe that tech has an important role? 
Innovation economics/IP scholarship has some familiar forms. E.g., Classic/neoclassical
incentives/access model; Schumpeterian: market structure is more important, antitrust
is the key area of law; industrial policy intended to have exogenous effect. Institution
design can seek better innovation w/o attention to distributional effects. Or
you can have distribution sensitive innovation policy—primarily about access;
accepting a market society and looking for redistribution through rules. Market
systems will predictably not deliver access to certain goods, e.g. treatments
for tropical diseases. Central to Reichman’s work. How to structure markets and
more importantly innovation systems to deliver outcomes that are not maldistributive.
Next to this: people looking at tech rather than at IP,
sounding more in STS than in economics or law (Winner, Do Artifacts Have
Politics?, Nissenbaum, Bias in Computer Systems/Values in Design, Lessig, Code),
focusing on the fact that technologies settle politics, whether in the form of
bridges that block access to public beaches or machines that were less
productive than workers but still managed to break unions, tech is used to
resolve social conflict in favor of the party implementing the tech.
Look at ©, patent, TRIPs, WIPO treaty wars: the experience
is of active, knowing, strategic action both by firms and individuals, alone
and collectively, to shape the contest they understand will give them greater
or lesser market power. Rent seeking, particularly on the side of firms seeking
to increase the value of first mover advantages. (For Schumpeterians, rents
aren’t inherently bad—they drive innovation—but it matters how long they will
last before competition comes in.) Individuals come in with: freedom oriented
and other social values. Trying to nullify state capture. Strategic lobbying on
DRM, WIPO, etc. to create technologies that allow incumbents to control
entrants. Today: surveillance capitalism, dark patterns/manipulating consumer
demand.
Markets are arenas where power is negotiated in context—actors
spend some of their rents to create the context that will make it easier to
extract rents next time. Tech is endogenous and plastic.  There’s enough play in the joints that how it’s
designed makes a huge difference including for bargaining and distributions.
Markets are usually not efficient and power therefore matters. Institutions,
tech, and ideology each shape policy. 
Hired scholarship on one side justifying extractive practices; academics
trying to do something else—like Reichman on the relationship b/t academic
science and innovation. Shapes knowledge framework to shape the institutional
framework.
New institutionalism in sociology: models of practice are imitated/normalized
across groups.
Microfoundational component, just looking at the firm: every
firm faces a choice of action in any given context. It can increase
productivity (becoming more competitive) or decrease competitiveness (make products
for which demand is less elastic). Tech and institutions are part of the
investment pathways. Each pathway has an ideology too. They’re constantly
trading off options to shape future rents. Options: increase entry barriers, prevent
entry by innovators, increase competition among workers in the labor market and
decrease competition among employers, increase monitoring of employees, disrupt
collective action among employees/consumers, manipulate demand among consumers.
DRMs, terminator gene, rent maximizing price discrimination are all mechanisms
to control demand and disable competition. Older work on ways in which tech is
used to deskill and homogenize, to monitor labor, to decrease labor’s
bargaining power. “Ghost Work” by Mary Gray—platform organization makes it
harder for workers to organize, and that’s part of the point. It’s not just
about extraction; it’s in part about productivity and it’s also about ability
to strategically grab rents.  In each
relation, the objective is to decrease competition/entry, increase the size and
lifetime of the strategies and the rate of rents; larger rents give you more
bargaining power to capture more.
All this explains dramatic tech innovation/growth in one
sector along with higher rents, more markups, more concentration of firms and
wealth and increasing economic insecurity for everyone else—once the state is
removed as counterbalance through regulation, once unions are weakened through
labor law, then firms can dedicate more resources to rent seeking and rent
extraction over productivity.
Q from Reichman: What is to be done?
A: (1) Knowledge production is part of the process and
having a different story about how tech works opens up different avenues; many
regulators today are highly constrained by fear of upsetting the applecart by
regulating/pressuring tech firms. That’s changing a bit.  Having a better story that understands
structural/distributive things at play in tech policy, not just more is better,
is one part of moving forward. Invite distribution sensitive innovation
theorists to look more at extraction and competition. (2) Invite a multisystem
approach: look in the mirror and worry. He’s spent plenty of time being
skeptical about the state, trying to find self-organizing approaches like free
software. That’s not good enough. That’s not to be nostalgic for the 1950s and
60s—there are excellent reasons that model of regulation lost out in the
developing world. We need to find new ways to make regulation more effective—democratically
accountable but flexible sources of counterpower. Consider: who can actually do
this? What kind of actors can serve as counterpower? What innovations will
undermine the financial power of certain actors?
Maggie Chon: building on rent extraction being not
inherently bad—is it reinvested in R&D and innovation generation that might
lead to more growth/inclusion of labor?
Q: rate of innovation v. direction of innovation—are we even
capable of directional?
A: one of the outcomes of understanding things this way is
to get comfortable nudging tech development into different structures. There’s
no reason to think we should focus on rate; if we focus only on rate based on
letting market actors choose whatever they want we aren’t doing our jobs.
Social/political consequences can be vastly different and disruptive. Power of
labor, 15 years after you go to robot nurses versus PAs with computers in their
pockets, is completely different. Understanding how that relates to the broader
framework may make you demand to see the interactions b/t “rate” and the power
of incumbents.
Reichman: but where does the counterpower come from?
A: Democratic party in the US has changed a bunch in 20
years.  Green New Deal.  EC’s willingness to regulate tech now compared
to its willingness to hand out monopolies in database rights 15 years ago is
different.
Reichman: so institutional tools can evolve into
counterpower.
Do antitrust and competition law trust intellectual property
law too much?
Rebecca Tushnet, Harvard University, session chair
Graham Dutfield, The evolving role of branding in
pharmaceutical management: how should competition law respond?
Are there things other than patents that raise issues with pricing/competition?
Looking at TMs. Norlutin: on the market in UK since 1936.  Pfizer sold marketing authorization to Flynn;
Flynn debranded the product and escaped all price controls. Pfizer became the
sole supplier of the active ingredient to Flynn; Pfizer raised the price and
Flynn did as well (and then some). Then Flynn sought to block importation of Norlutin
from Italy based on its rights.  Competition authority imposed a fine, but they
appealed and won.  Trademarks do matter.
In historical work, patent based rights are often subordinate
to brand based rights. Dyestuff/chemical companies onward. 
What about the science? 
Plain packaging of pills conveys little info.  Text/visuals affect how consumers perceive
and even react to the products. Bayer puts its cross on its aspirin.  When TM litigated, Learned Hand says “aspirin”
has two meanings. Nowadays pharmacos use colors as well. When it’s transferred
to a me-too product that has a completely different price, what happens?  Zantac product expansion.
Looked at old cases on visual aspects of pills, UK case in
1972: court recognizes rights in “getup” or coloring.  Some problems: AstraZeneca, which has gotten
in trouble w/competition authorities over Nexium, has used color to protect
rights.
How does this matter? 
Tentative conclusions: Look further than patent system. Competition law
should reflect this broader focus.  Branding
can actually generate confusion about the product provenance/uniqueness, and
that’s a problem.
Maybe shape/color shouldn’t be protected/shouldn’t be
enforceable against authorized generics for the same conditions. Placebo &
nocebo effects are relevant here; if the color matters, it should be
transferred to the generic drug to avoid artificial creation of nonsubstitutability.
The consumer may reject/experience less effect from the generic.
Sean Flynn, Enforcing Fair Following Rights Through
Competition Law
Confronted an argument in assisting South Africa: you can’t
use competition law to force licensing of patent rights b/c they are completely
separate fields.  Reichman was
foundational in response to that. Also relevant to ©: rights to education and
research w/in the © system can also be seen as competition issues.
How do we craft the interface b/t IP and competition? Louis
Kaplow has done work on finding a realist/realistic proposal. US courts have
looked at the “scope of the patent” but that’s what Felix Cohen would call
transcendental nonsense. If competition law cabins the power of the patent
holder, you can’t use the scope of the patent to determine when competition law
operates: it has to have the ability to operate on the core of the rights,
including the right to exclude. Kaplow said it’s basically a ratio. The more
you have a small patent reward and a large monopoly loss, the more competition law
should bear on the situation and vice versa. 
Can we identify scenarios where one or the other will typically be the
case?
Where monopoly power is on essential goods/services w/
highly inelastic demand curve, and a country has extremely high income inequality,
it will almost always be the case that full exercise of monopoly power will
create small monopoly reward and huge deadweight loss. Edmund Kitsch was wrong:
we didn’t see, after TRIPs, proportional reductions in prices in countries with
less income.  It turns out that charging
high prices in India is still what happens. In the US if you charge a price
that only the top 10% can afford you make less than if you charge a price to
allow 60% to afford it. In South Africa, though, there’s a small # of people
who earn global high incomes and a large # who have very low incomes, and the
profit maximizing price turns out to be to serve only the small #.  You might even make more profit having a
higher price in a poorer country because you’re not serving much of it.
We also have textbook examples: books, like drugs, have
essentially zero marginal cost to distribute. But b/c you’re not trying to
serve the entire market, a higher price earns more profit. Exclusionary pricing:
more profit through massive deadweight loss. 2-3x more than monopoly profit. We
should be restraining that through competition law (or other means).
How to do it? 
Competition, fair use, international law.  In South Africa, they forced the licensing of
AIDS drugs, and after that the advice IP lawyers began giving to drug suppliers
was that any pharmaco has to give at least 4-5 licenses to local producers to enter
the market.  So we shouldn’t look at the
scope of the patent, but at whether there’s massive exclusion in the market. 
For ©, in South Africa there are affordable locally produced
textbooks, but not for niche topics. They can be 10-20x higher priced than normal.
Current SAfrican bill, on the President’s desk now, adds a competition standard
to fair use, allowing use of entire work where authorized copies can’t be
obtained at a price reasonably related to the normal price for textbooks in
South Africa.  Used language from the Berne
convention that was highlighted by Reichman.
Duncan Matthews, A Pro-Competitive Strategy for Developing
Countries: Do we still need this and where do we go from here?
Reichman’s work on flexibilities in TRIPs.  Not just the use of competition law per se,
but invoked Art. 7 & 8 of TRIPs. Art. 8 para. 2 creates potential to
prevent abuse of IP rights. UN panel on access to medicines referred to this as
underutilized.  OECD: competition
committee, where national enforcement agencies are looking closely not only at
excessive pricing and pay for delay and vexatious litigation but also at
patenting strategies, patent thickets, defensive patenting, divisional
applications causing noise & confusion to increase uncertainties for
generics.  TRIPs council: South Africa
has taken the lead, supported by China, India and Brazil, acknowledging that competition
law is one of the least discussed flexibilities and asking for information
gathering.
European perspective: the EC is led at WTO/TRIPs council by
DG Trade, which has pushed back against discussion of this topic, which is somewhat
surprising given what DG Competition has been doing in Brussels.  Pharma inquiry by DG Competition raised patent
strategy issues as recently as Jan. 2019. 
Policy incoherence in the EU prevents the issues from being discussed in
progressive way at TRIPs council; can be harmful to regional/EU discussions as
well. For developing countries, simple information gathering is being blocked.
Reichman’s ideas remain as topical and crucial as they did when TRIPs was new.
Pam Samuelson, The Infusion of Competition Policy in
Copyright Law
When they were starting out, the idea of considering
competition policy in © was relatively new. Reichman’s work on computer
software as applied knowhow was significant. Reichman argued against
overprotection via patent/©. At the time, Whelan v. Jaslow had suggested that
only the general purpose or function of a computer program was unprotected by ©
and everything else was protectable look and feel.  Nimmer’s treatise tried to rewrite the
statute, which is not the way it’s supposed to go. Reichman & Samuelson
started writing amicus briefs and getting more active—Lotus v. Borland, where
the dct protected the command menu hierarchy of a program even though the dct
also said that was the fundamental part of the functionality of the system.  The SCt blew it by splitting 4-4 when it got
to them, and we wouldn’t be in this Oracle mess if it hadn’t, but at least the
1st Circuit got it right. Likewise, worked on Sega v. Accolade to
allow decompilation to get access to un©able subject matter.  This was an uphill battle!  The 9th Circuit tracked their
amicus, yay.  The court said that decompilation
was important to innovation and competition—likewise the Altai case.  The cycle of overprotection seemed to have
come to an end.
But then there’s a threat of underprotection; recent
decisions in CAFC in Oracle v. Google overreacts to give us Whelan v. Jaslow
all over again.  So it’s still amicus
work for Samuelson et al.  Wrote a paper:
if we’re worried about cycles of over and underprotection, we should think
about what kind of protection programs really need—the industrial compilation of
applied knowhow is what’s valuable about them. 
She’s still convinced that’s right. They’re not suitable for ©; they
should be protected, if at all, through a sui generis right. She’s not expecting
that, but we should think it through regardless.
Peter Yu, Revisiting the Historical Lines of Demarcation:
Competition Law, Intellectual Property Rights, and International Trade When
TRIPS Hits 25
EU proposal on data producer’s right for anonymous data.
Japan actually did change its law in 2018 with respect to big data.  “Data is the new oil”: misleading but
persuasive description. Unasked important question: should data be owned in the
first place? Reichman & Samuelson have addressed this in an important
article dealing w/ the modality of protection. There are methods of regulation
between nothing and property rights, including unfair competition law.
Complementary operation of competition law: US filed an IP complaint
against China, its second under TRIPs, 2 years ago, that could have shed light
on these important issues. National treatment (art. 3) and about
license/contract in patent law. Some of the potential defenses come from art.
40, abuse of IP rights. Technology transfer and joint venture issues have been
important for decades, before TRIPs.  In
June, however, they suspended the complaint so we won’t have a ruling.
Traditional knowledge: do people overstate the importance of
protection?  Does competition law have
the same relation to TK as to other IP—do we want to encourage more
competition in this space?
Reichman’s 1983 article on design and the law: foundational.
Justin Hughes: is Altai about as good as sui generis would’ve
been?
Samuelson: yes, given that there would’ve been issues w/sui
generis protection too.  Cases mandating
filtering algorithms out as unprotectable procedures; interoperability as
unprotectable procedures improved the Altai standard. As long as there’s
meaningful effort to filter out the functional, it’s not so bad an outcome. The
software industry is doing well. Microsoft endorsed flexible fair use in its
amicus supporting cert in Oracle, which is not where Microsoft was in the
1990s.  Fed Cir threw out 102(b), merger,
and fair use, and you can get to the Fed Cir by alleging a patent claim; there
are no defenses left in (c) (they would get rid of the scenes a faire doctrine too
if given the chance).
Q: PTO asked for comments on protection of AI. Asked if we
need data protection. Seems quite concerning: comment period extended to Nov.
8.
Samuelson: she’s heard noises that extensive protection for
structure, sequence and organization is necessary because patents are being
invalidated under Alice; she thinks it’s healthy and that the industry doesn’t
need patents as much as all that.  There
should be a layer that is unprotectable except for trade secret; that’s the
most sensible.
Reichman: was puzzled by Alice, which seemed like a move to
the European approach (technical step/solution) but stopped short of it, which
makes it conceptually worse.
Samuelson: Alice involved 10 judges with 7 opinions, which
was part of the problem.  Fed Cir reacts
by saying that SCt threw out patent, so © must step into the void.

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Innovation, Justice, and Globalization: A Celebration of J.H. Reichman

Harvard Law School
Opening
Keynote
Yochai Benkler, Harvard University
How do we understand what we do in our field against the background
of profoundly increased inequality and stagnation for all but the top 5%, including
an unprecedented increase in death rate among US whites from diseases of
dispair? The economy functions in relation to power. Prior stories that have
failed us: Mainstream economics treated technology as exogenous; it has become
skill-biased. Monotonic story: the more skilled people are, the more they can
adapt to tech, so college degree gets a premium. Fit the 1980s US data
beautifully. Institutions played a relatively limited role in this theory and
we were supposed to educate workers. But that story didn’t work in the
1990s.  Early 2000s: “tasks framework”:
technology still exogenous, deterministic (some things are easier to automate
than others). Middle class jobs—people in the back office of the CPA—were now
being done by Excel. People on assembly line replaced by robots. Nonroutine jobs—the
janitor dealing with irregular floors, the CPA using Excel—still had demand.  But that still didn’t fit the overall
differences b/t different countries, all at the same tech frontier—substantial empirical
threat.
Then the story became: robots will take jobs, cause
sustained levels of structural unemployment; all work will be Uber.  Insitutionalists fought back: politics
led to sustained shift of bargaining power b/t labor and capital, b/t financial
sector and others; free movements of goods/capital but not people across borders
created new methods of offshoring, outsourcing, etc. Tech plays no independent
role in the institutional story.
So, where do we stand, who do law/institutions but also
believe that tech has an important role? 
Innovation economics/IP scholarship has some familiar forms. E.g., Classic/neoclassical
incentives/access model; Schumpeterian: market structure is more important, antitrust
is the key area of law; industrial policy intended to have exogenous effect. Institution
design can seek better innovation w/o attention to distributional effects. Or
you can have distribution sensitive innovation policy—primarily about access;
accepting a market society and looking for redistribution through rules. Market
systems will predictably not deliver access to certain goods, e.g. treatments
for tropical diseases. Central to Reichman’s work. How to structure markets and
more importantly innovation systems to deliver outcomes that are not maldistributive.
Next to this: people looking at tech rather than at IP,
sounding more in STS than in economics or law (Winner, Do Artifacts Have
Politics?, Nissenbaum, Bias in Computer Systems/Values in Design, Lessig, Code),
focusing on the fact that technologies settle politics, whether in the form of
bridges that block access to public beaches or machines that were less
productive than workers but still managed to break unions, tech is used to
resolve social conflict in favor of the party implementing the tech.
Look at ©, patent, TRIPs, WIPO treaty wars: the experience
is of active, knowing, strategic action both by firms and individuals, alone
and collectively, to shape the contest they understand will give them greater
or lesser market power. Rent seeking, particularly on the side of firms seeking
to increase the value of first mover advantages. (For Schumpeterians, rents
aren’t inherently bad—they drive innovation—but it matters how long they will
last before competition comes in.) Individuals come in with: freedom oriented
and other social values. Trying to nullify state capture. Strategic lobbying on
DRM, WIPO, etc. to create technologies that allow incumbents to control
entrants. Today: surveillance capitalism, dark patterns/manipulating consumer
demand.
Markets are arenas where power is negotiated in context—actors
spend some of their rents to create the context that will make it easier to
extract rents next time. Tech is endogenous and plastic.  There’s enough play in the joints that how it’s
designed makes a huge difference including for bargaining and distributions.
Markets are usually not efficient and power therefore matters. Institutions,
tech, and ideology each shape policy. 
Hired scholarship on one side justifying extractive practices; academics
trying to do something else—like Reichman on the relationship b/t academic
science and innovation. Shapes knowledge framework to shape the institutional
framework.
New institutionalism in sociology: models of practice are imitated/normalized
across groups.
Microfoundational component, just looking at the firm: every
firm faces a choice of action in any given context. It can increase
productivity (becoming more competitive) or decrease competitiveness (make products
for which demand is less elastic). Tech and institutions are part of the
investment pathways. Each pathway has an ideology too. They’re constantly
trading off options to shape future rents. Options: increase entry barriers, prevent
entry by innovators, increase competition among workers in the labor market and
decrease competition among employers, increase monitoring of employees, disrupt
collective action among employees/consumers, manipulate demand among consumers.
DRMs, terminator gene, rent maximizing price discrimination are all mechanisms
to control demand and disable competition. Older work on ways in which tech is
used to deskill and homogenize, to monitor labor, to decrease labor’s
bargaining power. “Ghost Work” by Mary Gray—platform organization makes it
harder for workers to organize, and that’s part of the point. It’s not just
about extraction; it’s in part about productivity and it’s also about ability
to strategically grab rents.  In each
relation, the objective is to decrease competition/entry, increase the size and
lifetime of the strategies and the rate of rents; larger rents give you more
bargaining power to capture more.
All this explains dramatic tech innovation/growth in one
sector along with higher rents, more markups, more concentration of firms and
wealth and increasing economic insecurity for everyone else—once the state is
removed as counterbalance through regulation, once unions are weakened through
labor law, then firms can dedicate more resources to rent seeking and rent
extraction over productivity.
Q from Reichman: What is to be done?
A: (1) Knowledge production is part of the process and
having a different story about how tech works opens up different avenues; many
regulators today are highly constrained by fear of upsetting the applecart by
regulating/pressuring tech firms. That’s changing a bit.  Having a better story that understands
structural/distributive things at play in tech policy, not just more is better,
is one part of moving forward. Invite distribution sensitive innovation
theorists to look more at extraction and competition. (2) Invite a multisystem
approach: look in the mirror and worry. He’s spent plenty of time being
skeptical about the state, trying to find self-organizing approaches like free
software. That’s not good enough. That’s not to be nostalgic for the 1950s and
60s—there are excellent reasons that model of regulation lost out in the
developing world. We need to find new ways to make regulation more effective—democratically
accountable but flexible sources of counterpower. Consider: who can actually do
this? What kind of actors can serve as counterpower? What innovations will
undermine the financial power of certain actors?
Maggie Chon: building on rent extraction being not
inherently bad—is it reinvested in R&D and innovation generation that might
lead to more growth/inclusion of labor?
Q: rate of innovation v. direction of innovation—are we even
capable of directional?
A: one of the outcomes of understanding things this way is
to get comfortable nudging tech development into different structures. There’s
no reason to think we should focus on rate; if we focus only on rate based on
letting market actors choose whatever they want we aren’t doing our jobs.
Social/political consequences can be vastly different and disruptive. Power of
labor, 15 years after you go to robot nurses versus PAs with computers in their
pockets, is completely different. Understanding how that relates to the broader
framework may make you demand to see the interactions b/t “rate” and the power
of incumbents.
Reichman: but where does the counterpower come from?
A: Democratic party in the US has changed a bunch in 20
years.  Green New Deal.  EC’s willingness to regulate tech now compared
to its willingness to hand out monopolies in database rights 15 years ago is
different.
Reichman: so institutional tools can evolve into
counterpower.
Do antitrust and competition law trust intellectual property
law too much?
Rebecca Tushnet, Harvard University, session chair
Graham Dutfield, The evolving role of branding in
pharmaceutical management: how should competition law respond?
Are there things other than patents that raise issues with pricing/competition?
Looking at TMs. Norlutin: on the market in UK since 1936.  Pfizer sold marketing authorization to Flynn;
Flynn debranded the product and escaped all price controls. Pfizer became the
sole supplier of the active ingredient to Flynn; Pfizer raised the price and
Flynn did as well (and then some). Then Flynn sought to block importation of Norlutin
from Italy based on its rights.  Competition authority imposed a fine, but they
appealed and won.  Trademarks do matter.
In historical work, patent based rights are often subordinate
to brand based rights. Dyestuff/chemical companies onward. 
What about the science? 
Plain packaging of pills conveys little info.  Text/visuals affect how consumers perceive
and even react to the products. Bayer puts its cross on its aspirin.  When TM litigated, Learned Hand says “aspirin”
has two meanings. Nowadays pharmacos use colors as well. When it’s transferred
to a me-too product that has a completely different price, what happens?  Zantac product expansion.
Looked at old cases on visual aspects of pills, UK case in
1972: court recognizes rights in “getup” or coloring.  Some problems: AstraZeneca, which has gotten
in trouble w/competition authorities over Nexium, has used color to protect
rights.
How does this matter? 
Tentative conclusions: Look further than patent system. Competition law
should reflect this broader focus.  Branding
can actually generate confusion about the product provenance/uniqueness, and
that’s a problem.
Maybe shape/color shouldn’t be protected/shouldn’t be
enforceable against authorized generics for the same conditions. Placebo &
nocebo effects are relevant here; if the color matters, it should be
transferred to the generic drug to avoid artificial creation of nonsubstitutability.
The consumer may reject/experience less effect from the generic.
Sean Flynn, Enforcing Fair Following Rights Through
Competition Law
Confronted an argument in assisting South Africa: you can’t
use competition law to force licensing of patent rights b/c they are completely
separate fields.  Reichman was
foundational in response to that. Also relevant to ©: rights to education and
research w/in the © system can also be seen as competition issues.
How do we craft the interface b/t IP and competition? Louis
Kaplow has done work on finding a realist/realistic proposal. US courts have
looked at the “scope of the patent” but that’s what Felix Cohen would call
transcendental nonsense. If competition law cabins the power of the patent
holder, you can’t use the scope of the patent to determine when competition law
operates: it has to have the ability to operate on the core of the rights,
including the right to exclude. Kaplow said it’s basically a ratio. The more
you have a small patent reward and a large monopoly loss, the more competition law
should bear on the situation and vice versa. 
Can we identify scenarios where one or the other will typically be the
case?
Where monopoly power is on essential goods/services w/
highly inelastic demand curve, and a country has extremely high income inequality,
it will almost always be the case that full exercise of monopoly power will
create small monopoly reward and huge deadweight loss. Edmund Kitsch was wrong:
we didn’t see, after TRIPs, proportional reductions in prices in countries with
less income.  It turns out that charging
high prices in India is still what happens. In the US if you charge a price
that only the top 10% can afford you make less than if you charge a price to
allow 60% to afford it. In South Africa, though, there’s a small # of people
who earn global high incomes and a large # who have very low incomes, and the
profit maximizing price turns out to be to serve only the small #.  You might even make more profit having a
higher price in a poorer country because you’re not serving much of it.
We also have textbook examples: books, like drugs, have
essentially zero marginal cost to distribute. But b/c you’re not trying to
serve the entire market, a higher price earns more profit. Exclusionary pricing:
more profit through massive deadweight loss. 2-3x more than monopoly profit. We
should be restraining that through competition law (or other means).
How to do it? 
Competition, fair use, international law.  In South Africa, they forced the licensing of
AIDS drugs, and after that the advice IP lawyers began giving to drug suppliers
was that any pharmaco has to give at least 4-5 licenses to local producers to enter
the market.  So we shouldn’t look at the
scope of the patent, but at whether there’s massive exclusion in the market. 
For ©, in South Africa there are affordable locally produced
textbooks, but not for niche topics. They can be 10-20x higher priced than normal.
Current SAfrican bill, on the President’s desk now, adds a competition standard
to fair use, allowing use of entire work where authorized copies can’t be
obtained at a price reasonably related to the normal price for textbooks in
South Africa.  Used language from the Berne
convention that was highlighted by Reichman.
Duncan Matthews, A Pro-Competitive Strategy for Developing
Countries: Do we still need this and where do we go from here?
Reichman’s work on flexibilities in TRIPs.  Not just the use of competition law per se,
but invoked Art. 7 & 8 of TRIPs. Art. 8 para. 2 creates potential to
prevent abuse of IP rights. UN panel on access to medicines referred to this as
underutilized.  OECD: competition
committee, where national enforcement agencies are looking closely not only at
excessive pricing and pay for delay and vexatious litigation but also at
patenting strategies, patent thickets, defensive patenting, divisional
applications causing noise & confusion to increase uncertainties for
generics.  TRIPs council: South Africa
has taken the lead, supported by China, India and Brazil, acknowledging that competition
law is one of the least discussed flexibilities and asking for information
gathering.
European perspective: the EC is led at WTO/TRIPs council by
DG Trade, which has pushed back against discussion of this topic, which is somewhat
surprising given what DG Competition has been doing in Brussels.  Pharma inquiry by DG Competition raised patent
strategy issues as recently as Jan. 2019. 
Policy incoherence in the EU prevents the issues from being discussed in
progressive way at TRIPs council; can be harmful to regional/EU discussions as
well. For developing countries, simple information gathering is being blocked.
Reichman’s ideas remain as topical and crucial as they did when TRIPs was new.
Pam Samuelson, The Infusion of Competition Policy in
Copyright Law
When they were starting out, the idea of considering
competition policy in © was relatively new. Reichman’s work on computer
software as applied knowhow was significant. Reichman argued against
overprotection via patent/©. At the time, Whelan v. Jaslow had suggested that
only the general purpose or function of a computer program was unprotected by ©
and everything else was protectable look and feel.  Nimmer’s treatise tried to rewrite the
statute, which is not the way it’s supposed to go. Reichman & Samuelson
started writing amicus briefs and getting more active—Lotus v. Borland, where
the dct protected the command menu hierarchy of a program even though the dct
also said that was the fundamental part of the functionality of the system.  The SCt blew it by splitting 4-4 when it got
to them, and we wouldn’t be in this Oracle mess if it hadn’t, but at least the
1st Circuit got it right. Likewise, worked on Sega v. Accolade to
allow decompilation to get access to un©able subject matter.  This was an uphill battle!  The 9th Circuit tracked their
amicus, yay.  The court said that decompilation
was important to innovation and competition—likewise the Altai case.  The cycle of overprotection seemed to have
come to an end.
But then there’s a threat of underprotection; recent
decisions in CAFC in Oracle v. Google overreacts to give us Whelan v. Jaslow
all over again.  So it’s still amicus
work for Samuelson et al.  Wrote a paper:
if we’re worried about cycles of over and underprotection, we should think
about what kind of protection programs really need—the industrial compilation of
applied knowhow is what’s valuable about them. 
She’s still convinced that’s right. They’re not suitable for ©; they
should be protected, if at all, through a sui generis right. She’s not expecting
that, but we should think it through regardless.
Peter Yu, Revisiting the Historical Lines of Demarcation:
Competition Law, Intellectual Property Rights, and International Trade When
TRIPS Hits 25
EU proposal on data producer’s right for anonymous data.
Japan actually did change its law in 2018 with respect to big data.  “Data is the new oil”: misleading but
persuasive description. Unasked important question: should data be owned in the
first place? Reichman & Samuelson have addressed this in an important
article dealing w/ the modality of protection. There are methods of regulation
between nothing and property rights, including unfair competition law.
Complementary operation of competition law: US filed an IP complaint
against China, its second under TRIPs, 2 years ago, that could have shed light
on these important issues. National treatment (art. 3) and about
license/contract in patent law. Some of the potential defenses come from art.
40, abuse of IP rights. Technology transfer and joint venture issues have been
important for decades, before TRIPs.  In
June, however, they suspended the complaint so we won’t have a ruling.
Traditional knowledge: do people overstate the importance of
protection?  Does competition law have
the same relation to TK as to other IP—do we want to encourage more
competition in this space?
Reichman’s 1983 article on design and the law: foundational.
Justin Hughes: is Altai about as good as sui generis would’ve
been?
Samuelson: yes, given that there would’ve been issues w/sui
generis protection too.  Cases mandating
filtering algorithms out as unprotectable procedures; interoperability as
unprotectable procedures improved the Altai standard. As long as there’s
meaningful effort to filter out the functional, it’s not so bad an outcome. The
software industry is doing well. Microsoft endorsed flexible fair use in its
amicus supporting cert in Oracle, which is not where Microsoft was in the
1990s.  Fed Cir threw out 102(b), merger,
and fair use, and you can get to the Fed Cir by alleging a patent claim; there
are no defenses left in (c) (they would get rid of the scenes a faire doctrine too
if given the chance).
Q: PTO asked for comments on protection of AI. Asked if we
need data protection. Seems quite concerning: comment period extended to Nov.
8.
Samuelson: she’s heard noises that extensive protection for
structure, sequence and organization is necessary because patents are being
invalidated under Alice; she thinks it’s healthy and that the industry doesn’t
need patents as much as all that.  There
should be a layer that is unprotectable except for trade secret; that’s the
most sensible.
Reichman: was puzzled by Alice, which seemed like a move to
the European approach (technical step/solution) but stopped short of it, which
makes it conceptually worse.
Samuelson: Alice involved 10 judges with 7 opinions, which
was part of the problem.  Fed Cir reacts
by saying that SCt threw out patent, so © must step into the void.

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Allergan gets small damages award in case against compounder

Allergan USA, Inc. v. Imprimis Pharmaceuticals, Inc., 2019
WL 4546897, No. 17-cv-01551-DOC-JDE (C.D. Cal. Aug. 2, 2019)
Previous
discussion of liability issues
in this pharmaco v. compounder false
advertising case. After the court awarded partial summary judgment to Allergan
(falsity and materiality, not damages), the court excluded Allergan’s expert
report that based all its damages estimates on the Imprimis business model, not
on the impact of the particular statements at issue. And the jury was to rule
on Lanham Act damages only (there were also UCL violations, but the relief
there is equitable and Allergan couldn’t get disgorgement). The jury awarded Allergan
$48,500 in damages and zero in disgorgement of profits.
Imprimis renewed its motion for judgment as a matter of law,
which the court denied. Imprimis argued that Allergan presented no credible
evidence linking the false advertisements to lost Allergan sales. Mot. at 3. It
relied on Out of the Box Enterprises, LLC v. El Paseo Jewelry Exchange, Inc.,
732 Fed. App’x 532 (9th Cir. Apr. 30, 2018), where the jury found in favor of
the plaintiff and awarded $1.5 million in lost profits due to false
advertisements. The Ninth Circuit held that the plaintiff’s expert’s testimony
“established only a correlation—not a causal relationship—between [the]
advertisements and a decline in Out of the Box’s projected profits.” The
testimony also “did not provide the jury with a way to determine by a
preponderance of evidence the amount of any lost profits … In short, the record
provides ‘no way to determine with any degree of certainty what award would be
compensatory,’ as required by our precedent.”
Imprimis likewise argued that Allergan’s references to a
drop in its sales established a correlation, not a causal relationship, making
both (1) the fact of damage and (2) the amount of damage unproven.
As for the fact of damage, the Ninth Circuit has “generally
presumed commercial injury when defendant and plaintiff are direct competitors
and defendant’s misrepresentation has a tendency to mislead consumers.” “The
Court instructed that the parties are in direct competition and consumer
deception existed; the jury could therefore infer that the false statements
caused some injury to Allergan.”
As for the amount, a court “must ensure that the record
adequately supports all items of damages … lest the award become speculative
or violate [the Lanham Act’s] prohibition against punishment.” For jury awards,
courts accept “crude” measures of damages based upon reasonable inferences so
long as those inferences are neither “inexorable … [nor] fanciful.” The Court
instructed the jury: “Allergan does not need to quantify its damages in any
particular way or provide expert testimony; many sources can provide the
requisite information upon which you may calculate damages. Only the fact of
damages must be established with reasonable certainty. You need not calculate
the amount of damages with absolute exactness but there must be a reasonable
basis for computing the amount of damages.” The jury was allowed to consider
both direct and circumstantial evidence.
There was no direct testimony from a relevant consumer that
she purchased from Imprimis rather than Allergan due to the false
advertisements; and there was no survey of relevant consumers indicating actual
confusion or economic harm. But Allergan presented sufficient circumstantial
evidence. For example, a medical practice requested information on Imprimis’s
FDA report from July 2017, and in response, Imprimis’s VP of Quality stated
that “FDA found our products and services to be safe and effective.” A doctor
from the practice placed an order with Imprimis only two weeks later. An
Imprimis sales rep told another practice that Imprimis’s drugs combine
“FDA-approved” component before the practice made a purchase. There was also
evidence that Allergan lost market share during the time in which Imprimis made
the false promotional statements at issue.
Allergan argued to the jury that it should use the following
methodology: (1) begin with Imprimis’s unit sales during the time period the
jury believed that Imprimis’s false advertising had an effect; (2) multiply
that number by the percentage of Imprimis’s sales the jury found was
attributable to false advertising; (3) discount the product of that calculation
by Allergan’s market share for that drug to determine Allergan’s lost sales
units caused by false advertising; and (4) multiply that by Allergan’s per-unit
profitability. Imprimis disagreed, but this was a reasonable way to ask the jury
to think about the case. The jury asked the Court for the “summary document
showing the market share of Allergan Products,” and the jury could reasonably
have reached the $48,500 figure from this information and circumstantial
evidence before it.
It’s true that other factors affected the market, and
Allergan’s sales trends in the pre-wrongdoing period might have supported a
different conclusion.  “But that does not
mean that the jury could not infer any connection between lost sales and false
advertisements.” Imprimis mostly convinced the jury that there wasn’t much in the way of lost sales, but not entirely.

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chilling effect: competitor’s name in text of keyword ad requires extreme care

TSI Prods., Inc. v. Armor All/STP Prods. Co., 2019 WL
4600310, Nos. 17-cv-01131, 18-cv-1682 (MPS) (D. Conn. Sept. 23, 2019)
TSI sued defendants for trademark infringement, unfair
competition, and false advertising under the Lanham Act; for Sherman Act
violations; and for violations of the Connecticut Unfair Trade Practices Act
(CUTPA). Astonishingly, all claims survived a motion to dismiss.
The parties compete in the market for do-it-yourself
refrigerant products and recharge kits, which permit car owners to recharge
their vehicle air conditioning (AC) systems on their own. They’re sold in
specialty automative stores and automotive departments of stores such as
Walmart. “[T]he non-value-added refrigerant category consists mainly of cans of
R-134a refrigerant, without any included additives, tools, gauges, or hoses….
[T]he category of value-added automotive AC recharge kits consist of cans of
R-134a refrigerant that also typically contain some combination of additives,
lubricants, hoses, gauges, or other tools.” The parties compete in both
categories.
TSI sells its refrigerant and recharge kits under the brand
names AVALANCHE, AC AVALANCHE, and BLACK DIAMOND AVALANCHE. TSI has registrations
for AVALANCHE and BLACK DIAMOND AVALANCHE. It claims rights in the mountain
logos used with its word marks.
Armor All bought “AC AVALANCHE” as a Google ad word, putting
an Armor All ad at the top of the search results. Armor All allegedly “made no
effort to distinguish themselves and their products from TSI, either in the
Google ad itself or on the linked AC Pro Website webpage.”
Prior to 2017, Armor All allegedly did not “utilize any
mountain imagery in its packaging of ARCTIC FREEZE products,” but started using
one that allegedly “looks confusingly similar” to the mountain logo on TSI’s
products and “causes customer confusion as to the source of the goods.”
TSI also alleged that Armor All made a number of
misrepresentations about its own products, e.g. “Our kits come with everything
you need to recharge your system with no additional tools or equipment,” “fast,
easy and accurate recharging,” and “just three easy steps.” For its refrigerant,
it claimed “#1 Rated Coldest Air” and “#1 Coldest Air,” “Formula with 2X
cooling boosters vs. the next leading brand of AC recharge kits: independently
tested to deliver the coldest air from your vehicle’s AC,” and “A/C PRO ultra
synthetic refrigerant kit features a specially designed formula that helps a
vehicle’s A/C produce the coldest air.”
In the smaller “market for value-added auto AC recharge kits
in the United States,” Armor All had an estimated market share of 88% in 2017.
TSI is Armor All’s largest competitor in terms of market share, with
approximately 10% share , and prior to TSI’s entry into the value-added AC
recharge kit market in 2015, Armor All did not face substantial competition in
that market. Armor All allegedly paid off retailer Advance Auto “to renege on
its agreement with TSI and refuse to allocate shelf space to TSI’s products,”
and made a similar deal with Pep Boys. 
Armor All also sent TSI a letter alleging infringement of
two patents. TSI hired a lawyer and responded. Neither Armor All nor its predecessor allegedly had a “good
faith belief that TSI infringed” either patent. Armor All allegedly “notified
retailers within the relevant market” about the companion lawsuit consolidated
with this one, which Armor All filed against TSI in 2017.
Keyword ads: although this is worded broadly, Armor All used
TSI’s mark as the beginning of its ad text in a way that wasn’t explicitly
comparative, and that’s clearly vital.  Edible
Arrangements, LLC v. Provide Commerce, Inc., No. 3:14-CV-00250 (VLB), 2016 WL
4074121, at *11 (D. Conn. July 29, 2016), adopted the “perspective of a user of
the internet search engine at issue,” and focused particularly on “(i) the
strength of the plaintiff’s mark as a unique search term related to a distinct
line of products, … (ii) the similarity of the marks and whether the
defendant’s mark draws a clear distinction as a competing brand…. [and] (iii)
what the consumer saw on the screen and reasonably believed, given the
context.” Armor All contended that “the purchase of a competitor’s marks as
keywords alone, without additional behavior that confuses consumers, is not
actionable.” TSI alleged that the displayed ad looked like this:

To be clear, A/C Pro is the competing product.  Armor All argued that the result was
prominently labeled as an ad, that it was only one of several ads, and that the
webpage hosted at the link address didn’t “any reference to TSI or its
AVALANCHE products.” Mot. to Dismiss, ECF No. 102 at 16. Armor All it argued
that the structure of the advertisement itself (“AC Avalanche – A/C Pro Saves
You Time & Money – acprocold.com”) separated the search term (“AC
Avalanche”) from Armor All’s “comparative advertising slogan,” making confusion
unlikely.
The court disagreed, and I do too. Drawing all reasonable
inferences in favor of TSI, the combination of keyword purchases plus ad text
was plausibly confusing. “AC Avalanche” and “A/C Pro” weren’t presented as
competing brands in the context of the advertisement. This was not, as alleged,
a clear “three-part structure: ‘[search keyword] – [advertising slogan] –
[website address].’ ” As the court pointed out, in the example shown, other
sponsored advertisements use hyphens but follow different structures: the other
two sponsored ads didn’t use the “AC Avalanche” search term at all, and neither
appeared to use two competing brands or companies. “Try Pepsi – It is Better
than Coca-Cola” or “Stop Collection Calls—is Allied Interstate Calling You” have
been found nonconfusing, but the ad here made no clear distinction between the
terms. “The overall context makes it plausible that the hyphen implies
association rather than disassociation.”

Avalanche mountain logos

Armor All Arctic Freeze
The mountain logo unfair competition/infringement claim also
survived. This one is a harder sell for me on plausibility—I would think that absent
more similarity in the words, the use of the mountain concept in very different
forms isn’t plausibly confusing—but Armor All focused on ownership (not
suitable for resolution on a motion to dismiss) and argued that its 2014
registered copyright on its “ARCTIC FREEZE Mountain Label” used a mountain logo
and preceded TSI’s alleged first use of the mountain logos in 2015. That failed
because owning a copyright isn’t a defense to infringement (though that’s not
exactly the claim here, which is priority-based, not copyright-ownership-based;
the copyright registration is judicially noticeable evidence of use preceding plaintiff’s
claimed first use).  The court nonetheless
accepted the factual pleading that Armor All did not use any mountain imagery
on its refrigerant products until 2017. 
(I wonder about whether there’s any exposure to fees if in fact the 2014
use really reflects what was on the market and TSI persists in this claim.)
False advertising: The court can kick claims based on clearly
subjective opinions out on a motion to dismiss, but should dismiss false
advertising claims only if the statements “fall comfortably within the category
of non-actionable puffery.”
Recharge kit statements: Armor All’s kits consist of
refrigerant, a hose and trigger dispenser, and a gauge that measures the
“pressure on the low side of the AC system” and indicates a “suggested fill
range.” TSI alleged that measuring the pressure only on the low side of a car’s
AC system can “lead to unusable and inaccurate pressure readings” for the
“[m]any AC systems [that] use a BLOCK or TXV valve [to] regulate the flow of
refrigerant.” This can lead consumers to overcharge their systems, which is are
costly to repair. Based on these allegations, TSI alleged that statements such
as “Our kits come with everything you need to recharge your system with no
additional tools or equipment,” “Extends A/C/ Life,” “fast and accurate
recharging,” and “The trigger dispenser and measuring gauge make filling your
system to the proper level fast and easy” were literally false and misleading.
Some of these statements—such as “Extends A/C Life,”
“Protects [A/C] System,” “just three easy steps,” and “Easy as 1, 2 …
Squeeze”—were non-actionable puffery, as did use of the terms “fast,” easy,”
“convenient,” and “a breeze.” However statements were specific enough to be
actionable. “All-in-One Kit” and “Come with everything you need to recharge
your system with no additional tools or equipment” implied and outright stated,
respectively, that “no additional tools” were needed to recharge an AC system.
Based on TSI’s allegations, these statements were false because “[a]dditional
tools and equipment are required to safely recharge AC systems with BLOCK or
TXV valves” using Armor All’s kit.  Likewise,
claims to provide “accurate” recharging and “make filling your system to the
proper level fast and easy” were statements of measurable fact that were
allegedly false.
Refrigerant formula: Armor All’s products contain lubricants
and additives in addition to refrigerant. TSI alleged that other AC recharging
products sold in the United States contain only refrigerant (R-134a), and that
a can containing only refrigerant will create colder air than a can of equal
volume that contains refrigerant along with lubricant and/or additives. Thus,
it alleged that the following statements were false: “#1 Rated Coldest Air” and
“#1 Coldest Air,” “Formula with 2X cooling boosters vs. the next leading brand
of AC recharge kits: independently tested to deliver the coldest air from your
vehicle’s AC,” and “A/C PRO ultra synthetic refrigerant kit features a specially
designed formula that helps a vehicle’s A/C produce the coldest air.”
Armor All argued that many courts have found “referring to a
product or service as ‘#1’ with regard to an industry or quality” to be
puffery. But not so here. “#1” advertising statements are non-actionable “when
it is unclear how a property should be measured.” But “coldest” is a statement
of superiority in a specific, measurable attribute. Courts have indeed been skeptical
of superlatives, but “coldest” is not the same type of superlative as “best” etc.  It is objectively verifiable. Armor All’s
claims that its products ave been “independently tested to deliver the coldest
air from your vehicle” and contain “a specially designed formula that helps a
vehicle’s A/C produce the coldest air” stated even more specifics; “claims of
testing are typically actionable.”
The antitrust claims survived too—surprise!

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