Spyware or spam?

A new one on me:
Received spammy email claiming, “Hello Rebecca,
I hope you don’t mind a fellow Tushnet reaching out. I have
a permit which states that WW Express did some work at [your home].
Could you tell me how it went? … I’m helping a new homeowner
find a professional for her project, and I was hoping you could share your
experience with me before I make any recommendations….
Best,
Brooke Tushnet
Customer Success | VetMyPro
C: 23097051
BP: 55181251”

I am fairly sure that there is no “Brooke Tushnet” in the
world.  Instead, this message is creepily
and misleadingly leveraging our tendency to be more helpful to people “like
us.”  (On this and other tactics, Robert
Cialdini’s books Influence and Pre-Suasion are very good.)  To what end, I’m not sure, but I can’t help
feeling misused.  I even tried to find
this potentially long-lost relative, just in case!  Also, VetMyPro lacks any internet presence
beyond its own website.  Now I’m becoming
concerned about spyware!

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This is not NORML: court of appeals finds ISU violated First Amendment with TM licensing program

Gerlich v. Leath, No. 16-1518 (8th Cir. Feb. 13, 2017)
Iowa State University (ISU) grants
student organizations permission to use its trademarks if certain conditions
are met. The ISU student chapter of the National Organization for the Reform of
Marijuana Laws (NORML ISU) had several of its trademark licensing requests
denied because its designs included a cannabis leaf.
 
The first shirt that became problematic

later rejected design

Two members of NORML ISU sued for violations of their First
and Fourteenth Amendment rights; the court of appeals affirmed a permanent
injunction with reasoning relevant to the pending Tam case: student groups’ use of ISU logos couldn’t possibly be
government speech because there are so many of them, including conflicting ones
like ISU Democrats and ISU Republicans. I get that argument for trademark registrations in general, but it seems
weaker here, because ISU’s logo is the logo of an arm of state government, and
I do think a government can reasonably say with its speech “we agree that X and
Y are in-bounds, while Z is out-of-bounds.” Allowing ISU Democrats and ISU
Republicans to use the logos but not ISU White Nationalists seems like the
state controlling its brand. This is not to say that the overall conclusion is
wrong, especially given ISU’s litigating position, but the district court’s
opinion did a far better job of explaining why that might be.
ISU has approximately 800 officially recognized student
organizations, including NORML ISU. Organizations can use ISU’s trademarks on
merchandise if ISU’s Trademark Licensing Office determines that the use
complies with ISU’s Guidelines for University Trademark Use by Student and
Campus Organizations.
In 2012, NORML ISU submitted a t-shirt design to the
Trademark Office that had “NORML ISU” on the front with the “O” represented by
Cy the Cardinal. On the back the shirt read, “Freedom is NORML at ISU” with a
small cannabis leaf above “NORML.” The Trademark Office approved this design. Then,
the Des Moines Register published a front-page article about legalization
efforts, in which it quoted NORML ISU’s president stating that “his group has
gotten nothing but support from the university. He even got approval from the
licensing office to make a NORML T-shirt …” The article also had a photo of the
T-shirt.
The person in charge of the trademark office provided ISU’s
PR office with a statement that ISU didn’t take positions on what student
organizations stand for. Thus, the statement continued, the claim that “his
group has gotten nothing but support from the university” was “a bit
misleading. He may be confusing recognition of the group as the university ‘supporting’
it.”
Then, an Iowa House Republican caucus staff person sent a
formal legislative inquiry to ISU’s State Relations Officer asking whether “ISU’s
licensing office approve[d] the use of the ISU logo on the NORML t-shirt”
pictured in the article. This led higher-ups to ask if they could “revoke” the
approval of the T-shirt design. Then, someone from the Governor’s Office of
Drug Control Policy emailed and called the head of ISU’s government relations
office about the article, indicating that he was “curious about the accuracy of
the student’s statement cited in the report, and perhaps the process used by
ISU to make such determinations.” The head of ISU’s PR office responded that
NORML ISU’s use of ISU’s trademarks was “permitted under the policies governing
student organizations.” The email went on to say, “[h]owever, this procedure is
being reviewed.”
Next, NORML ISU’s request for permission to use the design
for another shirt order was put on hold, which was unprecedented in anyone’s
memory. The ISU board decided to change the trademark guidelines, and ISU told
NORML ISU that they were concerned that the T-shirt caused confusion as to
whether ISU endorsed the group’s views regarding the legalization of marijuana.
Thus, the Trademark Office would not approve of any t-shirt design that used
ISU trademarks in conjunction with a cannabis leaf. They also told the group
that it needed prior review before submitting any designs to the Trademark
Office, again an unprecedented requirement. The new Trademark Guidelines
prohibited “designs that suggest promotion of the below listed items . . .
dangerous, illegal or unhealthy products, actions or behaviors; . . . [or]
drugs and drug paraphernalia that are illegal or unhealthful.”
After that, the Trademark Office rejected every NORML ISU
design application that included the image of a cannabis leaf, as well as
designs that spelled out the NORML acronym but replaced “Marijuana” with either
“M********” or “M[CENSORED].” The Office did approve designs without a cannabis
leaf that simply stated the group’s name and fully spelled out the NORML
acronym.
 
also rejected: Cy the Cardinal holding a marijuana leaf
The district court entered a permanent injunction against “enforcing
trademark licensing policies against Plaintiffs in a viewpoint discriminatory
manner and from further prohibiting Plaintiffs from producing licensed apparel
on the basis that their designs include the image of a . . . cannabis leaf.” The
university created a limited public forum “by opening property limited to use
by certain groups or dedicated solely to the discussion of certain subjects.” A
student activity fund is an example of a limited public forum, and so is ISU’s
choice to make its trademarks available for student organizations to use if
they abided by certain conditions.
Rejecting NORML ISU’s designs was impermissible viewpoint
discrimination, as evidenced by the “unique” scrutiny ISU imposed on NORML ISU
after the Des Moines Register article. ISU argued that it wasn’t unique because
the hockey club was also subject to additional oversight over its trademark
applications, but that was because the hockey club mismanaged funds and
misrepresented itself as an intercollegiate sport. Also, the hockey club was
not required to receive preapproval of its designs by two ISU senior vice
presidents, as NORML ISU was. No other student group was rejected for fear that
the university would be seen as endorsing a political cause. Defendants pointed
to six other rejections on anti-endorsement grounds, but four of those were
rejected because it appeared ISU was endorsing a corporate logo; another design
suggested that a club sport was an official athletic department sport; and
another was rejected because it appeared that ISU was endorsing the views of
the Students for Life club, but a minor change allowed it to be approved.
ISU implausibly argued that the political pushback it
received didn’t play a role in decisionmaking. But defendant Leath testified
that “anytime someone from the governor’s staff calls complaining, yeah, I’m
going to pay attention, absolutely,” and that “[i]f nobody’d ever said
anything, we didn’t know about it, it didn’t appear in The Register, we’d
probably never raised the issue.” Both individual defendants’ motives were
political in that they wanted to avoid controversy “in a state as conservative
as Iowa.” Defendant Hill told the Ames Tribune that the reason student groups
associated with political parties could use ISU’s logos, but groups like NORML
ISU may not, is because “[w]e encourage students to be involved in their duties
as a citizen.” But that statement implied that Hill believed that the members
of NORML ISU were not being good citizens by advocating for a change in the
law. The person in charge of approving student requests told NORML ISU that the
group’s design applications “do not further your cause as an advocate for
change in the laws or trying to change the public’s perception of marijuana.”
As the court of appeals wryly commented, “[t]here is no evidence in the record
of Zimmerman offering advocacy advice to any other student group.”
The administration of the trademark licensing regime wasn’t
government speech because it was a limited public forum. Even if it wasn’t a
limited public forum [and note the conceptual difficulties of calling a
non-physical space a “forum”], the government speech doctrine didn’t apply. Walker v. Confederate Veterans asked (1) whether the government has long
used the particular medium at issue to speak; (2) whether the medium is “often
closely identified in the public mind with the” state; and (3) whether the
state “maintains direct control over the messages conveyed” through the medium.
[So, is the medium the trademark? Or the trademark licensing regime?]
The court found that the first two factors didn’t apply,
which seems an odd characterization. If the medium is the trademark, then the
government has definitely used it to speak; if it’s the trademark licensing
regime, then the argument is weaker but not obviously weaker than that for
license plates, where as here the relevant regime produces the state’s symbol
coupled with the organization’s symbol. Both the trademark and the trademark
licensing regime seem likely to be “closely identified in the public mind” with
the state. But the court of appeals, as I noted in the intro, was compelled by
the fact that ISU allows approximately 800 student organizations to use its
trademarks, including groups with opposing viewpoints. The court did not
analyze the Supreme Court’s treatment of similar facts in Walker. Here’s the district court’s distinction, which is not bad:
Because American society regards
its universities as incubators for intellectual experiment and exploration, the
Court cannot conclude that observers would associate a student group’s message,
bearing an ISU icon, to represent the views of ISU. Rather, ISU’s myriad
student groups are rightfully understood to represent a jumbled mix of
interests, views, and opinions, some mainstream and others offensive to
conventional sensibilities, in the spirit of intellectual debate.

I will say, however, that ISU rejected a lot of shirts in
the past, mostly for sexual references but also for alcohol/firearms
references, and I’m not sure why those rejections don’t (1) establish a lot of
ongoing control over the licensing program, and (2) also now turn into
unconstitutional acts.
rejected “How the Health Are You?” for double entendre

rejected for sexual references

The ISU club for kayaking received a number of rejections

rejected, double entendre

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when is a law firm “national”? hub-and-spoke firm finds out

Cochran Firm, P.C. v. Cochran Firm Los Angeles, LLP, 2016 WL
6023822, No. CV 12-5868 (C.D. Cal. Aug. 18, 2016)
Previous 9th Circuit opinion affirming earlier
unclean hands ruling discussed
here
. This case began with a legal partnership turned sour. In 1999,
McMurray (principal of The Cochran Firm Los Angeles) joined The Cochran Firm’s
(TCF’s) Los Angeles office. McMurray claimed to have received a letter from TCF
principals Johnnie L. Cochran (now deceased), Givens, and Cherry,
congratulating him on his elevation to named partner. In 2007, McMurray
acquired TCF’s Los Angeles office, assuming all of its debts and obligations. He
organized the office under a partnership called The Cochran Firm Los Angeles (TCFLA),
formed with other parties Dunn and then adding Barrett.
TCFLA remitted a cut of its monthly case fees to TCF. Things
soured, and McMurray was allegedly shut out of the TCFLA partnership. TCF sent
a C&D to McMurray seeking to terminate his right to use the Cochran name.
Dunn allegedly took over the remains of TCFLA’s practice, changing its name to
The Cochran Firm California. TCF filed suit against McMurray and TCFLA. It
initially obtained a preliminary injunction, but the Ninth Circuit remanded for
consideration of whether TCF had unclean hands. The district ultimately
dissolved the preliminary injunction after determining that TCF had unclean
hands in the use of its trademark “because it improperly held itself out as a
national law firm.”
Here, the court gets rid of a bunch of TCFLA’s tortious
interference claims, but finds that a reasonable jury could find that TCFLA
parties had standing to seek cancellation of TCF’s registered mark “THE COCHRAN
FIRM.” Even though McMurray wasn’t currently using THE COCHRAN FIRM mark, and
testified that he had no present intent to do so, he also testified that he “may
change that depending on the outcome of this case.” McMurray established “a
real and rational basis for his belief that he would be damaged by the
registration sought to be cancelled, stemming from an actual commercial or
pecuniary interest in his own mark.” TCF’s mark “prevented McMurray from
advertising his relationship with Johnnie Cochran to the public.”
Lanham Act counterclaim: This counterclaim was based on TCF’s
website, which featured statements such as “America’s Law Firm,” “Experience
Trial Lawyers Who Deliver Results,” “With offices nationwide and a team of some
of the country’s most experienced and aggressive personal injury attorneys and
criminal defense lawyers,” and “While The Cochran Firm is a national law firm
with multiple attorneys, we handle each case we take with equal dedication and
tenacity. Your attorney may draw on the collective experience of his or her
partners, but will continue to work personally with you throughout all legal
proceedings,” and included a list of offices from around the country.
The court found that these statements were literally false;
no further evidence of consumer deception or materiality was required. Though TCF
“market[ed] itself as a traditional, national firm with regional offices around
the country,” the firm’s structure more closely resembled a network of several
partnerships, connected only through their relationship with TCF. “Semantic
quibbling” over the prospect that national might not mean “single” was
unpersuasive.
The McMurray parties also provided sufficient evidence of
damages: McMurray testified that, despite having retained TCF’s original Los
Angeles telephone number, he now receives significantly less of the types of
cases that he typically got at TCFLA. Though this was “quite weak” evidence,
given that a new law firm might reasonably get a lot less business than an old
one, that was enough to show a triable issue on injury.
However, the court rejected counterclaims against the Dunn
parties (TCF-CA) based on statements such as “Welcome to The Cochran Firm,
Founded over 40 years ago by Legendary attorney Johnnie L. Cochran, Jr.,” “The
Cochran Firm has grown to encompass 27 offices in 16 states around the country,”
and “The Cochran Firm Los Angeles has been in the same location for 25 years,
and remains committed to upholding Johnnie’ vision of ‘a diverse law firm which
reflects society and is capable of handling cases throughout America.’ “ These
claims weren’t literally false, and they were “much vaguer and more ambiguous”
than the literally false claims by the other parties.
To show deceptiveness, the McMurray parties offered multiple
court records in which former clients sued both TCF and a TCF-affiliated
regional office for judgments owed, and an expert report analyzing those court
records. The court found this evidence probative of deceptiveness, since it
showed that, in multiple instances, former TCF clients attempted to collect
monies owed from both TCF and an affiliated regional office under the
assumption that they were one and the same. However, the McMurray parties
failed to show materiality. Though there was evidence that consumers were
deceived into believing that TCF was a “national” firm, there was no evidence
that a consumer would choose TCF-CA over another law firm such as McMurray’s
new law firm “out of some misplaced belief that TCF-CA had Johnnie Cochran’s
imprimatur.”
McMurray also counterclaimed for violation of his right of
publicity because TCF or TCF-CA used his image and biography on websites
without his consent, using it to draw business. However, the court found no
evidence of injury, as required to recover [note that courts will usually
double-count benefit to the defendant as injury to the plaintiff where the
plaintiff is a celebrity]. Broad statements by McMurray that he believed he’d
been injured weren’t enough to show injury.

California UCL: Although the underlying conduct above could
found a UCL claim, the only available remedy was restitutionary (since the
McMurray parties weren’t seeking injunctive relief). And the evidence of
economic harm—possibly lost clients—didn’t support a claim for restitution. Such
damages were “exactly the sort of damages that cannot be achieved via a UCL
claim.”

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pool party: lawsuit raises survey and TM priority issues

Solar Sun Rings, Inc. v. Secard Pools, 2016 WL 6138294, No.
EDCV14-2417 (C.D. Cal. Jan. 20, 2016)
Illustrating the principle that those who sue competitors should be sure to have their own house (or in this case, pool) in order: The parties compete in the market for heated pool covers. SSR
sued Secard for trademark infringement, leading to false advertising/unfair
competition counterclaims based on SSR’s allegedly false statements about the
effect of “mini magnets” used on its products and the water and chemical
savings caused by its products. The “coverage calculator” on SSR’s website also
allegedly deceived consumers into thinking that choosing SSR’s products would
be cost-effective because it falsely advised consumers to purchase less product
than they would eventually need to heat their pools.
The court found that, even assuming falsity, there were
disputed issues about materiality and harm. Secard’s expert report opined that
3.33% of SSR customers were deceived by SSR’s allegedly false statements and would
have purchased Secard’s competing product had the false statements not been
made. Although Downey, the expert, had 35 years’ experience in the swimming
pool industry, he had no other expertise about consumer behavior and related
fields. Still, that was okay because he had relevant experience catering to the
preferences of pool product consumers. He conducted discussions with “swimming
pool industry leaders” and estimated that roughly twelve percent of consumers
are familiar with SSR’s product, while roughly one percent of consumers were
familiar with Secard’s product. He then conducted phone and personal
conversations with “leaders in the swimming pool industry, people who work in
swimming pool stores, mass distributors and manufacturers, industry legal
counsel, pool service technicians, pool builders, buying groups and pool
remodeling companies.” He estimated that roughly 40% of consumers who bought
from SSR had been diverted from competing products, such as Secard’s, yielding
3.3% diversion. Survey evidence “should ordinarily be found sufficiently
reliable under Daubert” because “unlike
novel scientific theories, a jury should be able to determine whether asserted
technical deficiencies undermine a survey’s probative value.” This survey might
be “technically lacking,” given that “his sample size is limited and it is not
entirely clear how he derives his estimates from the data he provides,” but the
court declined to exclude it.
Solar Sun Rings, Inc. v. Secard Pools, No. EDCV14-2417, 2016
WL 6139615 (C.D. Cal. Jan. 13, 2016)
This is a trademark ruling in the same case. SSR began
selling passive solar heating products for pools and spas under the name “Solar
Sun Rings” in 2003. Secard has been selling pool products since 1958. In 2011, Secard’s
CEO created Solar Sun Squares, which he designed to compete with Solar Sun
Rings, and registered solarsunsquares.com. In 2013, SSR caught wind of Secard’s
intent and attempted to register a trademark for “Solar Sun Square,” then sent
Secard a C&D that prompted Secard to change the name of Solar Sun Squares
to “Solar Heat Squares.” SSR then began selling Solar Sun Squares the month
after Solar Heat Squares launched in 2014.
Solar Sun Rings

Solar Heat Squares
Solar Sun Squares

Secard argued that, as the senior user of Solar Heat
Squares, it couldn’t infringe on Solar Sun Squares. However, SSR argued that it
should be able to tack its rights and claim priority. This is usually a matter
for a jury. Given that Solar Sun Rings and Solar Sun Squares were written in
the same font and the same color, on the same sized package, over the same four
images encased in the shape described in the mark, and that the products were
identical except for shape, a jury could find that the marks had the same
connotation. Plus, a jury could find that the “aural appearance” of the marks –
“three short, alliterative words (two of which are the same word) – evoke the
same mental reaction.” (Of course, to the extent that tacking occurs on the
basis of visual elements of the mark, the similarity inquiry will also have to
take visual elements into account.)
There was also enough evidence to go to the jury on likely
confusion, given the similarity of the products and the purchasers. The court
gave a very broad reading to the intent factor, ruling that “[a] jury could
reasonably infer that Secard intended to confuse consumers by improving upon
Plaintiff’s pre-existing product with a similarly-named product.”

However, Secard got out of the trade dress infringement
claim. SSR argued that its infringed trade dress was its color scheme, characterized
by “a sequence of several colors (red, yellow and orange) depicted against the
distinct blue backdrop of SSR’s products, and displayed in a highly distinct
dot-matrix style of color printing and color shading.” SSR alleged that Secard’s
use of a sun design bolstered its infringement claim. But “Secard was already
using the allegedly infringing color scheme along with an image of a sun in
1993, well before Plaintiff went into business in 2003.” Without priority of
use, SSR couldn’t win. “To hold otherwise would allow a junior user to employ
litigation as a means of forcing a senior user to abandon a trade dress which
predates the junior user’s existence.” [Interesting conceptual question: if the
trade dress was in use but hadn’t developed secondary meaning, and the junior
user then came along and developed secondary meaning, what then? Of course, the
junior user’s ability to develop secondary meaning would itself suggest lack of
confusion with the existing trade dress, whether or not that prior trade dress
could be the foundation of any affirmative rights.]

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Juxtaposition is transformative for RoP purposes, divided court rules

Daniel v. Wayans, No. B261814 (Cal. Ct. App. Feb. 9, 2017)
Pierre Daniel, an actor, worked as an extra for a day in A
Haunted House 2. Marlon Wayans co-wrote, produced, and starred in the movie.
Daniel sued Wayans and others, alleging that he was the victim of racial
harassment because during his one day of work on the movie he was compared to a
Black cartoon character and called “ ‘[n]igga,’ “ and also alleging violation
of his right of publicity. Wayans moved to strike Daniel’s claims against him
as a SLAPP suit; the trial court agreed and the court of appeals affirmed.
Over a dissent, the court of appeals agreed that the conduct
at issue was part of the “ ‘creative process’ “ inherent in making the movie,
and thus involved free speech/an issue of public interest. Wayans also tweeted
about Daniel’s appearance
, comparing him to the Simpsons’ Cleveland Brown. Given
that Daniel was an extra on the film, which was made by a popular producer and
was a sequel to a successful film, advance information about the film was a
topic of public interest. The post “contributed to the public ‘debate’ or
discussion regarding the film by giving fans and those interested a glimpse of
someone in the film.”
 
screencap of tweet
Daniel’s claims for statutory and common law
misappropriation of name and likeness were based solely on the tweet; again,
over a dissent, the court of appeals held that he couldn’t show a probability
of prevailing, as necessary to overcome the anti-SLAPP motion. First, he failed
to overcome evidence that he waived his claims when he signed a broad release
consenting to the use of his image in connection with the movie. Second, the
use was transformative. The court called the test “straightforward”: “whether
the celebrity likeness is one of the ‘raw materials’ from which an original
work is synthesized, or whether the depiction or imitation of the celebrity is
the very sum and substance of the work in question.” New expression alone is
sufficient; it need not convey any “ ‘meaning or message.’ “ Though Wayans used
two unaltered images, he juxtaposed them and added “arguably humorous” comedy,
adding “an element of caricature, lampoon, or parody.”
[Just to be clear, the implication is that tweets that aren’t
transformative, and don’t involve juxtapositions, may infringe the right of
publicity. Consider that the next time you see a brand tweeting something
related to recent celebrity news.]
Daniel’s false light claim failed because the tweet referred
only to Daniel’s physical resemblance to the Cleveland Brown cartoon character.
It was a combination of an “expression of an opinion by Wayans that Daniel
looked like Cleveland Brown and an accurate photographic comparison.” That wasn’t
offensive enough, and it didn’t imply any further comparison to Cleveland
Brown.
Judge Liu, whom I respect a great deal, unfortunately
dissented; he would not have found the use transformative as a matter of law:
Wayans used Daniel’s photo not as
raw material for an original work, but as a literal depiction of Daniel’s
appearance and a literal depiction of the appearance of cartoon character
Cleveland Brown. Wayans simply repackaged the two images together and added a
caption remarking upon the resemblance of the two. This was not a
transformation that was primarily Wayans’s own expression.

Sigh. Among other things, what does that mean for a
republisher of a transformative work, which isn’t the republisher’s “own
expression”? This inability to agree on relatively simple situations shows the
instability of “transformativeness” in the right of publicity context.

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Lexmark’s harm requirement shields XYZ’s comparative claims

Verisign, Inc., v. XYZ.com LLC, No. 15-2526 (4th Cir. Feb.
8, 2017)
Verisign sells internet domain names and operates the
popular .com and .net top-level domains. In 2014, XYZ launched “.xyz,” a new
top-level domain. As part of its marketing push, XYZ, and its CEO Daniel Negari,
touted the popularity of the .xyz domain and warning of a scarcity of desirable
.com domain names. Verisign for false advertising, and here the court of
appeals affirmed the district court’s grant of summary judgment.  Verisign couldn’t show that XYZ’s
self-promoting statements caused it harm, and its statements about the
availability, or lack thereof, of  .com
domain names weren’t shown to be false or misleading.
XYZ made “a series of affirmative statements about .xyz,
promoting .xyz’s popularity and touting its high registration numbers.” For
example, by August 2015, XYZ had secured over one million .xyz registrations.  Although this was literally true, Verisign
argued that it was false or misleading because the numbers included not only
registrations bought and paid for by consumers – indicating actual consumer
demand – but also 375,000 registrations given away for free through an
agreement between XYZ and Web.com.
Also, Verisign challenged statements such as, “All of the
good real estate is taken. The only thing that’s left is something with a dash
or maybe three dashes and a couple numbers in it.” Another statement was that
“nine out of ten .com searches show up as unavailable.” A YouTube ad compared a
new Audi with a .xyz license plate to a dilapidated Honda with a .com plate,
and stated, “With over 120 million .coms registered today, it’s impossible to
find the domain name that you want.”
“[A] Lanham Act claimant may not mix and match statements,
with some satisfying one Lanham Act element and some satisfying others.”  Verisign argued that XYZ used deception to
create the appearance of a “gold rush” for .xyz domains, including claiming
that NPR had dubbed it the “next .com.”  The court of appeals affirmed the rejection of
these claims based on Verisign’s failure to prove “an injury flowing directly
from the challenged statements”—hellooo, Lexmark.  Verisign’s harm expert was excluded because
her methods were “questionable” and her conclusions were “not reliable,”
primarily because her analysis failed to distinguish between correlation and causation.
 Her testimony was properly excluded;
that left Verisign with nothing.  While
her report showed that Verisign experienced a drop in .net registrations after
.xyz – along with other new top-level domains – became available, it didn’t
show “anything other than a temporal link between XYZ’s statements and the
drop-off.”  This failure wasn’t
surprising, since “XYZ’s boasts about its registration numbers and NPR
interview were distributed to a narrow audience, comprised mostly of readers of
XYZ’s blog and a small percentage of registrars.”  This gave them “limited potential to influence
the domain-name market, particularly at a time when hundreds of new top-level
domains were clamoring for attention in a newly competitive market.”
The court of appeals then agreed that claims that “all of
the good [.com] real estate is taken,” or that it is “impossible to find the
domain name that you want” were nonfactual opinion or puffery.  The statement that it is “impossible to find
the domain name that you want” wasn’t verifiable, in part because of “the indefinite
nature of the referenced ‘you.’” 
So too with the claim that “[a]ll of the good real estate is
taken,” because what a “good” domain name is, is a matter of opinion. Verisign argued
that the next sentence in the relevant interview – “The only thing that’s left
is something with a dash or maybe three dashes and a couple of numbers in it” –
was literally false, because there were at least some available .com names that
didn’t include dashes and numbers. But in context, the overall message was an
opinion that the available .com names weren’t “good” because they involve
dashes and numbers. 
While XYZ’s CEO claimed that these were the “only” .com
names left, “that is precisely the kind of puffery or bluster on which no
reasonable consumer would rely,” especially in a spoken statement, which might
be offered more casually than a written statement.  In such statements, “we must take care not to
label as ‘literally false’ what really is no more than a colloquial
exaggeration, readily understood as such.” 
In a footnote, the court of appeals pointed out that Verisign argued
that the relevant market was registrars who purchase domain names and then
resell them to end users, making it “especially unlikely that these savvy
industry players would construe XYZ’s claims about .com availability as factual
statements and rely on them accordingly.”

The claim that “99% of all registrar searches today result
in a ‘domain taken’ page” was verifiable, but verifiably true. Verisign argued
that this number was a “naïve” metric of unmet demand because it included automated
searches undertaken by registrars looking for high-demand, previously
registered domain names. The court of appeals wasn’t convinced—given that
registrars were battling “fiercely and on a daily basis over a limited supply
of desirable .com names,” the statistic seemed to convey the difficulties of
registering a .com name.  Anyway,
Verisign didn’t provide a consumer survey about reactions to this claim, nor
did it provide any other evidence of deceptiveness.

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Challenging materiality when literal falsity is conceded

Smart Vent, Inc. v. USA Floodair Vents, Ltd., 193 F.Supp.3d
395 (D.N.J. 2016)
Smart Vent alleged patent infringement and false advertising
related to competitor Floodair’s flood vents, which it allegedly falsely
claimed to be certified by various bodies. 
The regulations at issue, however, requried only certification, not
certification by specific parties; the real question was whether Floodair falsely
or misleadingly described its product as certified in accordance with a
standard known as TB-1. 
As a matter of law, the court determined that TB-1 called
for an individual certification different from that provided by Floodair. Thus,
the court granted partial summary judgment on falsity, but refused to find materiality
or harm to Smart Vent without further evidence. 
“While there is a reasonable inference that USA Floodair’s
misrepresentation that its product complies with TB-1 led to increasing its
sales and decreasing Smart Vent’s sales, that inference is unavailable to Smart
Vent as the movant in its summary judgment motion.”  The parties also agreed that appropriate
certification decreases flood insurance premiums, which “creates at least the
impression that certification-related statements would influence purchasing
decisions,” but that still left a triable issue.  Floodair provided some evidence that other
aspects of its product, such as cost effectiveness and ease of maintenance,
could also drive sales. 

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