Trademark/(c)/ROP question of the day, Stephen King edition

Posted on December 16, 2016 by rtushnet

This is a book bag.  Get it?  I wish it were a little bigger, but boy does it look nice.  What’s the appropriate rights analysis?

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Falsely claiming TM ownership isn’t false advertising, court rules

Posted on December 16, 2016 by rtushnet
Dille Family Trust v. Nowlan Family Trust, No. 15-6231, 2016
WL 7202073 (E.D. Pa. Apr. 21, 2016)
There’s a pattern in the ED Pa where they put all the legal
analysis in a big footnote in the order granting a motion to dismiss.  I don’t know why.
Anyhow, Dille alleged Lanham Act violations including false
designation of origin and false advertising, relating to claims over who owned
the “Buck Rogers” trademark.  Intangible
property rights, such as trademark rights, are not “goods or services” for
Lanham Act purposes, and this is consistent with Dastar. 
Nowlan made allegedly false statements about the ownership
of the Buck Rogers mark, but never produced any products or granted any
licenses.  Thus, there was no false
designation of origin claim or false advertising claim.  Note: the latter conclusion ignores the quite
relevant phrase “commercial activities” in §43(a)(1)(B), as well as Dastar’s explicit reservation of false
advertising claims, though there’s nothing new about the latter.  Anyway, the court found that Nowlan’s letters
contained “nothing more than statements asserting Defendant’s legal rights,” and
thus couldn’t be commercial advertising or promotion.

Also, the claim for trademark cancellation for lack of bona
fide intent to use wasn’t sufficiently fleshed out, and appeared contradicted
by the allegations of the complaint that Nowlan was offering to license other
parties.  [Would that be a naked
license?]

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Second Circuit will trust FDA on drug facts, not on misleadingness

Posted on December 16, 2016 by rtushnet
Church & Dwight Co., Inc. v. SPD Swiss Precision
Diagnostics, GmBH, 2016 WL 7131177, No. 15-2411, — F.3d – (2d Cir. 2016) (as
amended on denial of reh’g Dec. 5, 2016)
Original
opinion discussed here; the court amended the opinion to deal more
explicitly with a couple of issues.  In
particular, the original opinion said that the Second Circuit hadn’t settled on
a definition of materiality, but presumed that materiality required that the
deception be “likely to influence [consumer] purchasing decisions.” Apotex
Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51 (2d Cir. 2016), recently adopted
that very standard, so there was no need to grant rehearing on this issue.
SPD argued that Apotex
couldn’t be reconciled with the opinion here, but the panel found that any “tension”
was “only a tension of emphasis, not content.” 
First, while Apotex said that
“representations commensurate with information in an FDA label generally” (emphasis added) wouldn’t be
actionable under the Lanham Act, it went on to acknowledge (in a footnote) that
“Lanham Act liability might arise if an advertisement us[ing] information
contained in an FDA-approved label… [is] literally or implicitly false.” Such
was the case here.
Second, this case involved a different question of law.  Apotex
presumed that the court could consider the claim, and the issue was “whether
aspects of the defendant’s advertising incorporating FDA-approved factual
assertions about pharmacological effects of its product were nonetheless false.”  But here, SPD was arguing that the court
couldn’t even entertain a claim of falsity relating to FDA-approved messaging,
without consideration of whether the advertising or labeling was in fact
misleading, and that argument was rejected by Pom Wonderful.  [This
distinction makes my head hurt, especially as to whether it can be
distinguished from the first reason given by the court.]

Third, “the Lanham Act claims in the two cases relate to
significantly different aspects of the FDA’s competence.”  And here we have one of my main
questions/concerns about Pom Wonderful
coming to the fore, perhaps unsurprisingly in the Second Circuit that also
decided Caronia.  “The inquiry here does not relate to the
truth or falsity of an FDA-approved factual assertion about the effects of a
medical product, but rather to the question of whether the phrasing of
advertising messages might be misunderstood by consumers.”  Apotex
involved whether “a fact about the pharmacological effects of a drug, which the
FDA had determined to be true, should nonetheless be found by the court to be
false.”  The FDA’s job is to figure that
out, and the court wouldn’t second-guess it “on matters as to which its
competence vastly exceeds that of courts.” 
Misleadingness was another matter. 

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Exposure to false advertising doesn’t create Article III standing

Posted on December 16, 2016 by rtushnet
Truthinadvertisingenforcers.com v. Dish Network, LLC, No.
8:16–cv–2366, 2016 WL 7230955 (M.D. Fla. Dec. 14, 2016)
Pro se plaintiff TruthInAdvertisingEnforcers.com is a
website solely owned by Gerald Collette, who received the advertisements at
issue at his residence. Defendants include five internet service providers and
two sales agents for those service providers. 
Truth alleged that defendants’ ads claimed that high-speed internet services
were available at lower prices than were actually available to consumers in
Collette’s county.  E.g., “HIGH SPEED
INTERNET Starting at $19.99 month No Matter Where You Live! No TV Service
Required!”

The court found that Truth lacked Article III standing
because there was no injury in fact. 
Truth didn’t allege that it bought more expensive services because of
defendants’ bait-and-switch.  The injury
was merely that the advertised prices weren’t available.  Bare violations of false advertising laws don’t
create Article III standing.  That’s not
a concrete injury, just a personal disappointment.  (Wonder whether the Florida AG agrees?)  Thus, the court lacked subject matter
jurisdiction and remanded to state court.

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When does a false advertising case create a right to a jury trial?

Posted on December 15, 2016 by rtushnet
Ferring Pharmaceuticals, Inc. v. Braintree Laboratories,
Inc., — F.Supp.3d —-, 2016 WL 7223279, No. 13–12553 (D. Mass. Dec. 13,
2016)
The parties compete for the market in products used for
bowel preparation before colonoscopies, and each alleged that the other had
engaged in false advertising. Braintree’s moved to strike Ferring’s demand for
a jury trial.  “Parties have the right to
a jury trial when a statute or the Seventh Amendment so requires.” The Lanham
Act does not create such a right if a plaintiff seeks “the remedy of an accounting
of defendant’s profits,” nor does Massachusetts Chapter 93A, the coordinate
state false advertsing law.
The key to the Seventh Amendment analysis here was whether the
remedy sought was legal or equitable in nature.  If legal, then there would be a right to a
jury trial; an equitable remedy can also be “of a legal nature” sufficient to
entitle a party to a jury trial.  “For
instance, an accounting of profits can act as a proxy for a legal claim in some
circumstances.” The court determined that it would apply the proxy rationale “if
1) the case involves similar products, 2) there is no adequate remedy at law
and 3) the products compete directly.”
Braintree argued that its requested disgorgement remedy was
equitable. Ferring was entitled to a jury trial with respect to its defenses to
Braintree’s counterclaims, which the parties agreed were legal in nature. But
the proxy argument was closer—the first two factors weighed in favor of finding
that Ferring’s claim was a proxy for legal damages. The competing treatments were
very similar, and there was no alternative legal remedy, because Braintree’s
purported false advertising began as soon as Ferring’s treatment entered the
market, “making it impossible for Ferring to measure its alleged losses by
decreased sales.”
However, it wasn’t clear if there was direct
competition.  Though the two products
perform the same function and were prescribed by the same doctors, and though Braintree’s
advertising directly targeted Fering’s product, there were other colonoscopy
preparation drugs on the market during the time period at issue.  [They’re direct substitutes.  They may be in head-to-head-to-head
competition, but reading an extra requirement of being the only two competitors
on the market into the standard for “direct competition” seems to need more
justification.  I guess the justification
would have to be that “direct competition” is a poor shorthand for the actual
standard: you have to be relatively sure that any of defendant’s sales were
taken from plaintiff’s hands, and that isn’t as clear when there are other
competitors in the market.  But then, if
there might well have been other victims, is disgorgement likely to be
appropriate?  I’m not sure how the
underlying standard for recovery interacts with the Seventh Amendment
argument.]

The court decided to go ahead and have the jury trial first,
as required no matter what.  “If Ferring
has failed to show that it is entitled to a jury trial at that time, the Court
will treat the jury’s verdict as advisory.”

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Business betrayal isn’t false advertising, could be TM infringement

Posted on December 15, 2016 by rtushnet
Kische USA LLC v. Simsek, 2016 WL 7212534, No. C16-0168JLR
(W.D. Wash. Dec. 13, 2016)
Kische alleged that former employees—Mr. Simsek and Ms.
Walker—abused their positions to misappropriate Kische’s assets and found JD
Stellar, a competing business. Kische accused Costanza, its former attorney, of
participating in this misconduct, though he gets out of the case because Kische’s
allegations did not dispel the reasonable inference that the ex-employees had
apparent agency to do what they allegedly did.
Kische “design[s] and import[s] fashionable clothing from
manufacturers in Turkey and [sells] them under the mark ‘KISCHE’ to prominent
retailers in the U.S., including Nordstrom, T.J. Maxx, Marshalls, Ross[,] and
others.” Mehmet Uysal is the owner and sole member of Kische. Simsek and Walker
“served as managers and employees of [Kische] for over six years.”  While still employed by Kische, they allegedly
(1) formed JD Stellar, a competing company; (2) assigned one of Kische’s
registered trademarks—“Marseille”—to JD Stellar without Uysal’s approval; (3)
registered the trademark “Dantelle,” which Kische alleges directly competed
with Kische, on behalf of JD Stellar; (4) dissuaded Kische’s customers from
doing business with Kische; (5) purposefully delayed Kische’s payments to
manufacturers and vendors; (6) stole furniture, equipment, and clothing from
Kische; (7) made payments from Kische to JD Stellar without authorization; and
(8) otherwise improperly utilized Kische’s resources. Kische alleged that its
annual revenue of $13 million from the “Kische” mark dropped to zero as a
result.
The court found that Kische sufficiently pleaded infringement
of the Kische mark, but not the Marseille or Dantelle marks. Even if Marseille
was fraudulently transferred, Kische didn’t allege that it still owned the
mark, and though Kische alleged ownership of Dantelle, it didn’t allege
infringement.  As for Kische the mark,
Kische properly alleged that the Stellar defendants sold identical products
with an identical mark, supporting the claim of likely confusion.
False advertising claims did not fare so well. First, they’re
subject to Rule 9(b), unlike trademark claims subject to Rule 8, because courts
have said so.  The court found that Kische’s
allegations, including use of the Kische mark as a keyword, use of the Kische
address as JD Stellar’s address, and use of Kische’s clothing designs as JD
Stellar’s, were not statements of “fact.” 
There were no allegations of specific assertions that describe testable,
“absolute characteristics” of the products. 
[Stellar’s address is certainly a verifiable fact about Stellar’s
services, though perhaps at some point it wasn’t false as to customers even if
it represented a betrayal of Kische.]  At
most, Kische was recycling its Dastar-barred
reverse passing off claim, alleging that Stellar sold clothing embodying Kische
designs under a different mark.
Kische also alleges that the Stellar defendants made false
statements to Kische’s clients and cited the declaration of Lorraine Hooshyar,
“[s]ales representative for specialty stores.” But the declaration stated only
what buyers—not the defendants—told her: that Uysal “had shipped substandard
product,” that Uysal and Kische “were closing their business,” and that a buyer
had to “cancel [an order] because [Uysal and Kische] couldn’t meet the delivery
or produce the garments.” Hooshyar’s statement “[e]ach and every buyer that I
have reached out to has had a bad taste due to the ending and the untruths that
have been spoken by [Walker and Simsek]” was about the, but was too conclusory
to plead false statements of fact.  Also,
the facts as pleaded didn’t justify the inference that the statements
constituted advertising or promotion.
Trademark dilution: allegations that Kische’s marks were
famous  “due to [Kische’s] reputation for
high quality women’s fashion” were insufficient. These included allegations
about a video in which a commentator calls Kische a “luxurious line,” customer
ratings, purchase orders to “major women’s fashion retailers,” and an email in
which “Taste of Eden show[ed that] it thought that [the] Kische cardigan was
famous.” That wasn’t enough to show wide recognition by the general consuming
public. 
The evidence on which Kische bases
its factual allegations shows at most that fashion purchasers recognized
Kische’s marks—not that the general consuming public widely recognized the
marks. Similarly, the fact that a commentator called the Kische brand a
“luxurious line” or that a few customers gave high ratings to Kische’s clothing
do not lead to the reasonable inference that the marks are widely recognized by
the consuming public.
As for the Washington Consumer Protection Act, Kische insufficiently
alleged an unfair or deceptive practice, and separately failed to allege an
impact on the public interest. There was no reason to think that the defendants
deceived “a substantial portion of the public,” or that additional persons in
the same situation would be injured in the same way.  Likewise, fraud claims failed because the
relevant misrepresentations were made to the PTO and to Kische’s suppliers,
retailers and customers, not to Kische—thus Stellar couldn’t have intended
Kische to rely on them, and Kische would have known that the statements were
false and couldn’t have relied on them. 
As to allegations that the defendants made false representations to
Kische about Kische’s financial status, Kische also failed to state a claim.

Allegations for breach of fiduciary duty and conversion of
Kische’s assets, including “trademarks, money, and equipment,” did survive, and
Kische was allowed leave to amend against the Stellar defendants.

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Announcing the Open Source Property Casebook

Posted on December 15, 2016 by rtushnet
Straight from Jeremy Sheff:
On behalf of myself and my co-authors (Steve Clowney, James Grimmelmann, Mike Grynberg, and Rebecca Tushnet), I am pleased to announce the immediate availability of Open-Source Property, a completely free casebook for the 1L Property Law course. We would like to ask you to share this announcement with readers of the PropertyProf Blog, and spread the word among your colleagues who teach Property Law.

Open-Source Property is a comprehensive, high-quality teaching resource with substantial advantages over commercial casebooks:
– It’s Free. Open-Source Property is distributed completely free online, in multiple formats.
– It’s Easy to Use. Open-Source Property comes with teacher’s manuals and slides. We also encourage adopters to submit their own teaching materials to be shared on the instructors page of our website. (The instructors page is password protected; please email me  from your institutional email account to request a password).
– It’s Flexible. You can choose to download a complete casebook that has already been tested in the field by the authors. Or you can mix, match, and edit chapters, right in Microsoft Word, to achieve your preferred coverage profile. Our individual chapters cover all the basics, from Finders to Future Interests to Takings, as well as more specialized topics such as Intellectual Property and Property Rights in Human Beings.
– It’s Open-Source. Open-Source Property is licensed under a CC-BY-NC 4.0 license. You are free to copy it, use it, redistribute it, and edit it under the terms of the non-commercial license. In fact, we encourage adopters to submit their own contributions and their own builds of the casebook to be posted on the casebook website.
We hope you will visit us at http://ift.tt/2gP9VIg to check out Open-Source Property and consider adopting it as your casebook. If you do, please let us know! And if you have any questions or comments regarding the casebook, or if you just need some encouragement and support to make the switch, feel free to email us at feedback@opensourceproperty.org, or to find me at the AALS Annual Meeting in San Francisco next month. We are here to make it easy for you to do your students and yourself a favor by moving to a free, open-source course text.
In the meantime, you can watch for updates by following us on Twitter  or liking us on Facebook.
As a personal note, I enjoyed writing the zoning chapter a lot.  It’s a bit unusual–it focuses on the history of St. Louis and its suburbs as a way of telling the story of zoning; it includes several actual zoning codes and plans of various types, to give students a sense of what they’re like; and it is deeply concerned with explaining how, in America, property law is racially inflected.  Feedback is welcome, on this or any other part of the casebook.

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Reading list: why search engines shouldn’t implement the right to be forgotten

Posted on December 14, 2016 by rtushnet

Note structural similarity to arguments about copyright takedown notices.

Stuart Hargreaves, The Trouble
with Using Search Engines as the Primary Vector of Exercising the Right to Be
Forgotten, [2016] 19 Pandora’s Box 83-106
Abstract:     

European privacy law currently
implements the ‘right to be forgotten’ by positioning commercial search engine
operators as the initial site of decision-making regarding its exercise. This
is problematic for a number of reasons. First, there are a number of structural
flaws in the mode of this decision-making that make it unclear that search
engines are capable of (or interested in) incorporating a robust account of
competing interests. Second, right to be forgotten requests are not susceptible
to the same kind of algorithmic techniques search engines use to deal with
other kinds of removal requests, meaning large numbers of decisions must be
made rapidly and primarily by staff lacking formal legal qualifications. When
compounded with the possibility of heavy penalties for failure to comply with
the right under European law, these two issues suggest there is a significant
potential for bias toward deletion rather than preservation of borderline
links. A third problem is that the simple online forms provided by search
engines for European data users making a deletion request mask a complicated
legal analysis, meaning those who properly structure their requests in an
appropriately technical and legal manner may have a higher chance of success in
their claims. This threatens to open up a new digital divide along the axis of
reputation. Finally, the massive compliance costs associated with this new
right may serve as a form of anti-competitive lock-in, preventing the emergence
of innovative new companies in ‘search’. In sum, if the right to be forgotten
is to have real meaning in European law, search engines are not the correct
vector for its implementation.

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NYIPLA IP writing competition

Posted on December 12, 2016 by rtushnet

For current law students.  $1500/$1000 awards for the winners.  Deadline March 3, 2017.  Details here.

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Trademark questions of the day, pictorial edition

Posted on December 12, 2016 by rtushnet

Some photos I found in my end-of-year cleanup:

wine caddy in form of black shoe with red sole: infringement or dilution?

petco label, “because I’m worth it”

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