Is the “Uber for X” snowclone nominative fair use?

Posted on May 18, 2016 by rtushnet

That’s the question posed by the following ad (HT Zach Schrag):

“Turo is like Airbnb, but for real people’s cars” — USA Today, quoted in ad for Turo

This snowclone is common in (often mocking) descriptions of Silicon Valley elevator pitches, but what about use in an actual ad?  Does it matter that Airbnb may well have aspirations to be “Airbnb for cars” itself if the business model is viable, just as Uber desires to expand into different market niches?

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Challenging competitor’s TM as generic is protected by Mass. anti-SLAPP law

Posted on May 17, 2016 by rtushnet
Shire City Herbals, Inc. v. Blue, 2016 WL 2757366 (D. Mass.
May 12, 2016)
 
HT Eric Goldman.  Shire
City sued Mary Blue and two other people for trademark infringement and false
advertising-related claims based on their attacks on Shire City’s federally
registered trademark, FIRE CIDER, for a herbal tonic. Defendants filed a
special motion to dismiss the non-trademark infringement claims under
Massachusetts’ anti-SLAPP law, and the court granted the motion. (Apparently
even as to the Lanham Act false advertising claims? Not sure how that works.)
 
Shire City sells a tonic comprised of apple cider vinegar,
citrus, honey, and spices; it registered FIRE CIDER in 2012. After “obtaining”
(registering?) the mark, Shire City began objecting to similar uses of “fire
cider” on commercial websites. Defendants compete with Shire City in the market
for similar tonics. They claimed that “fire cider” is a generic term used by
herbalists for decades for this type of tonic, and that the registration is
therefore invalid.
 
Blue saw a blog post about the Shire City registration in
January 2014, and immediately created a petition at change.org to support
cancellation of the mark. The petition had over 2,000 signatures within 24
hours and currently has over 11,000 signatures. Shire City posted online that
it had obtained the trademark to protect itself from larger companies and would
discuss the matter with its lawyer. Another defendant, Telkes, then sent an
email to Shire City asking it to give up the mark/registration, stating that “Fire
Cider is an exciting and popular remedy that many of my students and friends
have wanted me to either mass market or they themselves have been pushed in
this direction,” and also stated, “I really don’t want to see you completely
lose all of your business after all of the hard work you have done.” Defendants
then began organizing a boycott of Shire City’s product. They created a
website, http://ift.tt/1ezqNyW, and various Facebook pages, including the
“Traditions not Trademarks” page.
 
Shire City alleged that defendants wrongly claimed that
Shire City had sued other herbal companies; that Shire City claimed to have originated
the recipe sold under the Fire Cider mark; that Shire City claimed other
herbalists would be legally barred from selling similar recipes; that Shire
City was forcing other herbalists to stop making and selling similar tonics; and
that Shire City was asking retailers to remove other herbalists’ tonics from
their shelves. Shire City announced that the only way to make “fire cider”
generic would be a decision from the TTAB (which isn’t technically true, though the
TTAB would have to cancel the registration to get it off the books early). Subsequently,
Blue filed a pro se cancellation petition with the TTAB, and then Shire City
sued defendants, bringing the cancellation issue before the court instead.
 
The defendants allegedly used their own websites and
Facebook pages, which also promote their own products, to link to the pages
supporting the boycott. Blue uploaded sample letters to http://ift.tt/1ezqNyW
for people to send to Shire City’s retail accounts, allegedly demanding that
they remove Shire City’s product from the shelves and replace it with similar
products made by defendant and others: a sample letter asked Stores “to consider
stocking a locally made Fire Cider in your store and removing Fire Cider made
by [Plaintiff] from your shelves until they revoke the trademark.” The current
sample letter on http://ift.tt/1ezqNyW only requests that Shire City’s product
be removed and does not mention replacing it with other products. Defendants
allegedly incited other people to contact Shire City’s retail accounts in other
ways too, such as via phone calls and personal visits. Defendants also reached
out on their own: for example, Telkes saw Shire City’s product sold in a store,
and suggested that the store “do their research” on Shire City. Defendants, and
other herbalists, also donated products for an Etsy shop to raise money for
legal costs.
 
Shire City alleged that it lost existing and prospective
retail accounts due to this conduct, and that some stores carry defendants’
products instead. Defendant Langelier’s website is linked in the “alternative
producers of fire cider” section of http://ift.tt/1ezqNyW,
though that section of the website was created after the filing of this lawsuit.
 
Massachusetts’ anti-SLAPP law allows a party to bring a
special motion to dismiss claims that “are based on said party’s exercise of
its right of petition under the constitution of the United States or of the
commonwealth.” The moving party must “make a threshold showing through the
pleadings and affidavits that the claims against it are ‘based on’ the
petitioning activities alone and have no substantial basis other than or in addition
to the petitioning activities.” The law defines the relevant acts as
 
[1] any written or oral statement made
before or submitted to a legislative, executive, or judicial body, or any other
governmental proceeding; [2] any written or oral statement made in connection
with an issue under consideration or review by a legislative, executive, or
judicial body, or any other governmental proceeding; [3] any statement
reasonably likely to encourage consideration or review of an issue by a
legislative, executive, or judicial body or any other governmental proceeding;
[4] any statement reasonably likely to enlist public participation in an effort
to effect such consideration; or [5] any other statement falling within constitutional
protection of the right to petition government.
 
“It is not necessary that the challenged activity be
motivated by a matter of public concern.” Defendants argued that their
activities were meant to effect the cancellation of Shire City’s trademark
[registration], and were thus petitioning activities, while Shire City argued
that they were attempting to cripple Shire City’s business for their own
commercial purposes.
 
Considering the context, the court agreed with
defendants.  Their goal “from the start
was to cancel the Fire Cider mark, and their activities took place in the
context of achieving that goal.” 
Basically, they published statements, gathered signatures, spoke with
retailers, and organized a boycott, all with the purpose of cancelling the mark
[registration]. These were statements “reasonably likely to encourage
consideration or review of an issue” by a government body, statements
“reasonably likely to enlist public participation in an effort to effect such
consideration,” etc.
 
It wasn’t significant that their first steps occurred before
formal cancellation proceedings began.  “Petitioning
includes all statements made to influence, inform, or at the very least, reach
governmental bodies— either directly or indirectly,” and defendants’ statements
“clearly” satisfied that standard. 
Especially given defendants’ lack of experience with intellectual
property, and their lack of legal representation even before the TTAB
proceedings began, their activity was petitioning activity.  While “[i]ndividuals who petition the
government are not necessarily free to engage in gratuitous publication of the
petition elsewhere without consequence,” the court saw “no hint” of gratuitous
publication here.  Although defendants
might have obtained some commercial benefit in connection with their cancellation
attempt, given that their products are alternatives to Shire City’s product,
there was also evidence that stores that replaced Shire City’s product with one
from defendants initiated contact with them and not the other way around.  Given that the listing of alternative
products didn’t go up until after Shire City sued, and that the Etsy shop is
raising legal funds with products from various herbalists, “it is difficult to
see how these commercial benefits could be considered evidence indicating
Defendants’ statements are secretly designed to promote their own products or
serve as cover for the real purpose of selling them.”
 
Even if defendants had commercial motivations, the initial
anti-SLAPP inquiry is not on the motive, but on the accused conduct itself.  “Actions can have economic or commercial
motives, or even be based entirely on economic self-interest, and still qualify
as petitioning activities for purposes of the anti-SLAPP law.”  Here, the challenged conduct  was “at the very most, petitioning activities
with some commercial effects,” not “commercial activities in and of themselves.”
As the court pointed out, “[p]ublishing statements and organizing a boycott are
quintessential petitioning activities.”
 
At that point, the burden shifted to Shire City to show that
“(1) the moving party’s exercise of its right to petition was devoid of any
reasonable factual support or any arguable basis in law and (2) the moving
party’s acts caused actual injury to the responding party.” This it could not
do.  Given defendants’ “genuine belief
that the Fire Cider Mark is invalid and the fact that the trademark dispute
will continue regardless of the outcome on this special motion to dismiss, it
is clear that Defendants’ actions were not devoid of any reasonable factual support
or any arguable basis in law.”

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Documentary on transformative works in France

Posted on May 16, 2016 by rtushnet
French
transformative fandom and its perilous legal status: Emmanuelle Debats
talks about her documentaries about French fandom.  Excerpts:
 
My first reaction to fanfiction was
surprise and shock. I mean I had the basic French reaction: “How can someone
write from a work belonging to someone else?” Then, I discovered fansites,
generosity, enthusiasm. I made my own interpretation of fanworks as an
instinctive resistance to some kind of starvation. Fanworks appeared to me as a
victory, a very smart tactic. Taking stuff from the canon and changing them is
very wise: it means accepting being a fan, instead of fighting against it….
 
Due to our “droit d’auteur” (rights
of the creator), fanfiction’s status in France remains fragile. Although it is
a very popular hobby among young people, it remains totally illegal. In my
opinion, that means people writing fanfiction are pretending they live in
another country or simply ignore the law, and the European members of the
Parliament pretend this popular culture (along with all the people involved in
it) does not exist….
 
Fair Use makes a huge difference. …
In France, we are living in the most hypocritical time…. The fact that European
Members of the Parliament get in contact only with right­holders is very
alarming. The law should provide shelter to the weakest, the amateur, or the
young, the not self-confident ones, and it does not. I hope some day
transformative works are protected by our law.

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The OTW is recruiting legal team volunteers!

Posted on May 13, 2016 by rtushnet

If you’re interested in supporting transformative works, and especially if you can help with the basics of running a nonprofit (no IP expertise required), please consider volunteering!

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Entitlement to disgorgement doesn’t create Lanham Act standing

Posted on May 12, 2016 by rtushnet

Gravelle v. Kaba Ilco Corp., 2016 WL 2644890, NO. 5:13-CV-642
(E.D.N.C. May 9, 2016)

Simple, but worth having a cite: plaintiff claimed false
advertising based on allegedly false patent marking.  He couldn’t show that the falsity was
proximately connected to any harm to his sales, in part because there were
other obvious explanations for declining sales (the product was near the end of
its commercial life and he also put a next-generation product on the market,
cannibalizing his own sales).  He argued
that he had standing to bring his Lanham Act claim because, if he prevailed, he’d
be entitled to disgorgement of profits. 
But injury and damages are separate inquiries.  “Thus, the mere fact that the Lanham Act
establishes a mechanism by which plaintiff could recover damages, were he
successful, does not mean that plaintiff has suffered an injury proximately
caused by defendant’s conduct, sufficient to support a claim under the Act.”

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Double play: Tyson defeats TM and false advertising claims

Posted on May 12, 2016 by rtushnet
Parks, LLC v. Tyson Foods, Inc., No. 15-cv-00946 (E.D. Pa.
May 10, 2016)
 
This case involves a trademark and false advertising
dispute. Previous
ruling denying an injunction. Parks claimed to own “Parks” for sausages and
other foods. Tyson owns the “Ball Park” trademark for hot dogs; it launched a
new line of “super-premium” frankfurters under the name “Park’s Finest.” Here,
the court grants summary judgment to Tyson and illustrates the caution that a (putative) trademark owner who sues puts its own rights at risk.
 
False advertising: the court reaffirmed its conclusion that
Parks’s allegations didn’t relate to the “nature, characteristics, qualities,
or geographic origin” of the Park’s Finest product, and thus couldn’t properly
be brought under §43(a)(1)(B); §43(a)(1)(A) was the proper home of a false
association claim, which is a trademark claim. “Parks is not contending that Defendants
have misrepresented the nature, characteristics, or qualities of their new line
of frankfurters; its claim is that the name ‘Park’s Finest’ is ‘likely to cause
confusion, or to cause mistake, or to deceive as to the affiliation,
connection, . . . association . . . [or] origin’ of the product.” A
§43(a)(1)(B) claim has to misrepresent either geographic origin or the characteristics
of the good itself, such as its properties or capabilities. Citations: Kehoe
Component Sales Inc. v. Best Lighting Prods., Inc., 796 F.3d 576, 590 (6th Cir.
2015) (quoting Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1144 (9th
Cir. 2008)); see Forschner Grp., Inc. v. Arrow Trading Co. Inc., 30 F.3d 348,
357 (2d Cir. 1994) (rejecting a claim that use of the phrase “Swiss Army knife”
to describe “an inexpensive and shoddy multifunction pocketknife manufactured
in China” constituted false advertising because the representation did not
relate to either the geographic origin or the quality of the product). Note the
inconsistency with the Fourth Circuit’s recent Belmora holding.
 

Use of “Park’s Finest”
 
could deceive consumers only if it
led them to believe that the product was associated with Parks. That could
happen only if the word “Parks” “identif[ies] and distinguish[es]” Parks’s
products “from those manufactured and sold by others”—in other words, only if
the word “Parks” constitutes a protectable trademark. Because Parks’s claim
rises or falls based on whether it is able to establish that “Parks” functions
as a trademark in the minds of consumers, the proper analytical framework in
which to assess this claim is the law of trademarks.
 
Even assuming that §43(a)(1)(B) applied, Parks would still
lose. The statement “Park’s Finest” wasn’t literally false. At the very least,
it could be a reference to the brand “Ball Park,” and was thus ambiguous. After
all, “Ball Park” was superimposed on “Park’s Finest” on the packaging, and both
phrases were used together in radio and TV ads: “Park’s Finest from Ball Park.”
Thus, even a consumer who knew the Parks brand wouldn’t “inevitably” perceive a
reference to Parks.
 
Tyson’s intent was irrelevant: what mattered was the message
in its context. “‘A determination of literal falsity rests on an analysis of
the message in context,’ not on the message the speaker intended to convey or
on survey evidence of what consumers may believe the message to mean.” Common
sense and linguistics were enough to establish that “Park’s Finest” could be
understood as a reference to the Ball Park brand. Plus, there was in fact
evidence that “Park’s Finest” was intended to interact with the meaning of Ball
Park, from Tyson’s market research firm, which concluded that “[t]he word
‘Park’ evoked feelings of the baseball park experience that is strongly
associated with hot dogs,” and the name “linked strongly to the Ball Park brand
name.”
 
Nor was the term misleading. Tyson presented a survey
showing that only one in 200 people mistakenly believed that Park’s Finest
originated with Parks. Parks produced a survey designed to show false
advertising and trademark infringement, but it didn’t follow the proper pattern
for a false advertising survey. It first should have asked what messages the
consumer got and then asked consumers who received a relevant message
“comprehension” questions to figure out what they thought the message meant.
 
Parks’s survey showed each subject five product images,
including (in the test group) pictures of a Parks breakfast sausage package, a
Park’s Finest package, and three other unrelated sausage and hot dog products,
before asking whether the participant believed that two or more of those
products were “from the same company or are affiliated or connected,” with
followups as necessary.  The respondents
who perceived a connection between Parks and Park’s Finest essentially all thought
it was because of name similarity, but this survey “sheds no light on what
message a consumer receives when they encounter the Park’s Finest packaging or,
more importantly, whether the consumer would receive the false message that the
product originated with, or was affiliated with, Parks.”  A respondent who didn’t receive any message
about origin from the Park’s Finest product standing alone could simply have
noticed that the word “Park” appeared in both images.  Such respondents should have been filtered
out for false advertising purposes.
 
Another flaw in the survey was that it assumed that “Parks”
had secondary meaning among the consumers of Park’s Finest.  “A consumer who is not familiar with the
“Parks” name could not be deceived by the ‘Park’s Finest’ name, even if that
consumer failed to comprehend that the product is part of the Ball Park family.”  The survey method allowed respondents to
identify a connection even if they’d never heard of Parks.  “Outside of the survey environment, there
would be no risk that this person would receive a false message from the Park’s
Finest packaging.”  The fact that this
claim turned on secondary meaning further reinforced that what was at issue was
a trademark claim, not a false advertising claim. 
 
Finally, the survey didn’t target the appropriate
universe.  Participants had to live in
one of approximately two hundred ZIP codes in the country that, according to
Parks, correspond to the locations of stores that sell “Parks”-branded
products.  This attempt to survey
consumers of Parks’s products might not be representative of whether a
substantial portion of the intended audience for Park’s Finest would be deceived.
 
The remaining evidence wasn’t enough to allow a reasonable
factfinder to conclude that a substantial portion of the target audience would
be likely to be deceived, even though Tyson’s survey wasn’t without flaws of
its own.  Parks cited reports by a
licensee, Dietz & Watson, that three consumers who contacted Dietz &
Watson after the launch of Park’s Finest product appeared to be confused about
the relationship of the Park’s Finest product to Dietz & Watson’s
“Parks”-branded products. Three consumers’ reaction was insufficient to be
extrapolated to likely confusion among a substantial number of consumers.  Nor was the testimony of one of Parks’s
co-owners that he’d been personally approached by personal friends who
mistakenly believed that Park’s Finest product came from Parks. These “anecdotal”
instances of confusion were also insufficient, both because of their small
number and because the friends of one of the owners weren’t likely to represent
average consumers.
 
Tyson also won summary judgment on the trademark
infringement claim because Parks couldn’t show secondary meaning in the Parks
name.  Its former federal registrations
expired between 2003 and 2011; Parks in context was clearly a surname,
requiring a showing of secondary meaning for protection (even though in other
context, like “Ball Park’s,” it wouldn’t be a surname). 
 
While the length of sales and exclusivity supported a
finding of secondary meaning, Parks failed to quantify how well the name was
known before its present owners purchased it out of bankruptcy.  The court pointed to minimal
advertising—Parks didn’t sell products directly, but licensed its marks to two
entities, one of which only used the marks in grocery store circulars and at
six “food shows” per year and the other of which sold Parks-branded products
predominantly to the US military. 
Likewise, company size and sales numbers didn’t establish secondary
meaning; Parks was “a very small company,” according to Dietz & Watson,
with its sales of Parks products about $5.5 million per year from 2008 to 2013,
with nearly all of those sales coming from the Eastern United States region
where Parks claimed to have secondary meaning. 
This was no more than 1.3% of the breakfast sausage market and less than
1% of the dinner sausage market in the Northeast.
 
No reasonable factfinder could conclude that Tyson copied
the Parks name.  Though a trademark
search revealed the expired registration, the search was itself evidence of
independent creation, since it was commissioned once the name was on the
table.  Nor was Parks’s survey probative
of secondary meaning.  Whether a survey
that shows likely confusion shows secondary meaning depends on survey format:
if respondents identify the plaintiff after being presented with nothing more
than the defendant’s accused product, that’s good evidence of secondary
meaning, but Parks’s survey was quite different.  All that Parks had was the “handful” of
alleged instances of confusion, and given that Tysons had sold “many millions
of units” of their Park’s Finest product to “[m]illions of consumers,” “reports
of only a few actual instances of confusion cast substantial doubt on Parks’s
claim of secondary meaning.”

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Reading list: Choreographing Copyright

Posted on May 11, 2016 by rtushnet

Anthea Kraut, Choreographing Copyright: Race, Gender, and Intellectual Property Rights in American Dance: Fascinating study of the complexities of claiming rights in a world in which asserting property rights is a measure of one’s humanity—and in which white women have often succeeded in doing so before men or women of color, as part of their fight against the objectification of the sexualized (and raced) female body but also as a result of an ability to rely on the privileges of whiteness. For example, white female dancer/choreographers routinely argued that their inspirations and antecedents were not really artistic and didn’t diminish the originality of their new creations because of the foreign origins and primitiveness of those earlier dances. Copyright claims signified artistic merit, desexualization, possessive individuality—all things that women had to fight to get.

 

African-American male tap dancers also claimed rights, both formally and informally, in a context in which “stealing” steps was sometimes ok and sometimes not. (Some of Kraut’s accounts of physical fights between black dancers sound like the fights among stand-up comics recounted by Chris Sprigman & Dotan Oliar.) “Stealing” steps is fascinating not just because it was sometimes tolerated and sometimes resisted, but also because it “contest[s] the idea that live performance, because of its ephemerality, cannot be replicated.” As in other studies of creativity without law, many of the sources Kraut cites indicated that copying steps was okay as long as the thief improved upon them, or at least put his own stamp on them. Attribution and recognition for “trademark” moves were also important to at least some of the dancers, although whether this was a second-best solution when ownership was impossible isn’t clear.

The rise of choreographic copyright claims, Kraut argues, coincided with the decline of tap, which faltered for many reasons, one of which was the Golden Age of the Broadway musical, which swallowed up elements of what had been vaudeville. In fact, the “ballet style” popularized by Agnes de Mille incorporated elements of tap, but this wasn’t officially acknowledged. The public recognized white female choreographers like de Mille as innovators for using improvisation and other techniques; at the same time, their authorship continued the pattern in which African-Americans wouldn’t be recognized as authors. “Integration” of dance into theater occurred only under the control of the white auteur. Whiteness emerges as, among other things, the privilege to choose different aesthetics and have them deemed original by others in power.

De Mille stumped heavily for recognizing choreography as copyrightable, but only by encoding the same disparagement of the popular (that is, usually, dances made popular by African-Americans)—of course, choreographic copyright’s proponents said, social dances and ordinary dance routines couldn’t be protected. (Faith Dane’s unsuccessful lawsuit for rights in her contribution to the musical Gypsy stands out as a prequel to Garcia v. Google; the court denied the authorial nature of Dane’s contribution of a stripperesque act.)

The book ends by considering Beyonce’s appropriation of a white Belgian choreographer’s work, which Kraut considers to be reversing the “racialized logic of property that helped underwrite the development of choreographic copyright in the United States.” Beyonce treated her work as just another input available for the taking, not as high art off-limits to the popular. Then, a Vietnamese-American boy recreated Beyonce’s choreography in a video that Beyonce endorsed—even though, by hypothesis, it wasn’t exactly her choreography; where were the Belgian choreographer De Keersmaeker’s rights in this? Through Beyonce, De Keersmaeker’s work became memified, but without any reference back to her—in a reversal of the ordinary racial logics of dance.

 

Kraut argues that choreographic copyright can “never completely deliver on its promise of averting objectification” by separating the dancer from the dance and allowing only the latter to be owned. Because dance is embodied, the line between the dance-maker and the owned dance can never be completely policed. I can’t do justice to the detailed and engaging story in a short review, but anyone interested in IP should take a look.

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There’s no cushioning this blow: Comparative advertising is copyright fair use

Posted on May 11, 2016 by rtushnet
Ashley Furniture Industries, Inc. v. American Signature,
Inc., 2014 WL 11320708, No. 11–cv–427 (S.D. Ohio June 25, 2014)
 
This 2014 case just showed up in my Westclip search and is
worth noting for adding to the small but consistent body of case law holding
that comparative advertising is a recognized category of copyright fair use.  Defendant Value City, a furniture seller that
competed with Ashley, ran various web and email ads, and used handouts/newspaper
inserts, comparing its products to those of Ashley by using Ashley’s own photos
of its furniture, taken from Ashley’s website, next to photos of Value City’s
furniture.  Value City it also used a
point of sale display containing a printout from Ashley’s website to tout the
comparative virtues of the furniture physically present in the Value City
stores.
Point of sale display with Ashley printout

Web/email ad with Ashley photo
In a deeply anticompetitive suit, Ashley sued for copyright
infringement (and unfair competition/trademark infringement, not addressed
here), arguing among other things that the price comparisons were
untrue/misleading; that the products weren’t truly comparable because of Ashley’s
higher quality; and that consumers were misled into thinking that Value City was
selling Ashley-made furniture, in part because the only brand name in the ads
was Ashley’s.  Initially, Ashley sued (without
copyright claims) in Chicago, but the judge expressed skepticism about the claims
and Ashley dismissed the Chicago suit without prejudice.  It then registered its copyrights in the
product photos used by Value City and sued again, first only for copyright
infringement, then re-adding the additional claims.
 
Ashley initially argued that Value City’s use couldn’t be
fair because its comparative ads were false and deceptive, making the purpose
and character of the use wrongful.  Dastar, however, cautions against
grafting Lanham Act principles into copyright law, creating a mutant.  Although courts have referred to deception
when addressing fair use in copyright cases, Sony Computer Entm’nt Am. v.
Bleem, 214 F.3d 1022, 1027 (9th Cir.2000); Triangle Publ’ns, Inc. v.
Knight–Ridder Newspapers, Inc., 626 F.2d 1171, 1176 n.13 (5th Cir.1980), “it
would be improper to materially alter the four-factor test by creating a
dispositive, threshold inquiry for falsity and deception.”
 
Factor one: courts have held that truthful comparative
advertising is in the public interest, even though it’s commercial.  The court here reasoned that “when
comparative advertising is truthful and not a passing off of the copyrighted
work, it serves the public interest and ameliorates the negative effect of
commercial use on a finding of fair use,” although Bleem and Triangle
treated this factor somewhat differently—Bleem
actually allowed the comparative nature of the advertising to favor a finding of fair use.  As for truthfulness: Value City didn’t
represent to consumers that the photos of Ashley’s furniture were Value City’s,
and even included Ashley’s trademarks with some photos, indicating that there
was no attempt to pass the photos off as having been created by Value City.
 
For purposes of a copyright claim, the only relevant passing
off would be of the copyrighted works.  “Very
simply, copyright law protects Ashley’s photographs, not Ashley’s interest in
selling the sofas depicted in the photos. As such, passing off in this context
would entail Value City’s sale of copies of Ashley’s photographs as its own,
which did not occur.”  Both Bleem and Triangle involved comparisons of copyrightable works that were the
underlying products, not separate, underlying products.  “Applying Lanham Act principles [relevant to
the underlying furniture] to evaluate Ashley’s copyright claim would run afoul
of the Supreme Court’s admonition against doing so in Dastar.” Thus, “allegations that Value City’s comparative
advertisements did not disclose differences in the quality of the furniture,
contained inaccuracies as to pricing, and led some consumers to believe that
Value City was selling Ashley sofas are actionable, if at all, under the Lanham
Act, not the Copyright Act.”
 
Thus, “the comparative nature of Value City’s
advertisements, which provided some benefit to consumers, reduces or negates
the impact of commercial use on the first statutory factor.”  Further, the use of Ashley’s photos as
components of comparative ads was transformative.  The comparative ads had a different purpose
than the original images: they contained an invitation to compare.  By contrast, if the defendant used only the
plaintiff’s images to claim that it could sell the underlying product, that
would be use “for precisely the same purpose as the plaintiff.”  This transformativeness made the first factor
neutral.
 
Factor two: the photos had both factual and creative
elements, weighing “modestly” against fair use. 
[This seems to contradict the relevance of transformativeness to other
factors, but oh well.]
 
Factor three: Ashley argued that Value City could’ve easily
created comparative ads without using Ashley’s photos at all.  However, the court agreed with Value City that
using the photos in their entirety was fair “because the photos were created to
depict Ashley’s furniture in the best possible light. Further, use of anything
less than the full images would not have given consumers a complete depiction
of the items of furniture for comparison.” 
Thus, factor three didn’t weigh against fair use.
 
Factor four: There was no market for these photos other than
Ashley itself. “Ashley sells furniture, not photographs of furniture.”  Though Ashley argued that the photos had
value for its independent dealers, it provided the photos to its dealers at no
cost, and any diminution in their value, or the value of Ashley’s furniture,
through the photos’ use in comparative advertising was not the kind of harm copyright
cares about.
 
If you’re following along, factor one is supposedly neutral,
two is slightly negative, three is neutral, and four “weighs substantially in
favor of a finding of fair use” because there’s just no market harm. “The
significance of the fourth factor cannot be overstated. The limited monopoly
copyright law grants to the creators of original works provides a concrete
incentive through access to the relevant market. It follows that if no market
or potential market exists for the original, then another’s use of the images
does not harm the copyright holder’s interests or inhibit the incentive to
produce original creative works.”
 

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Incarnadine: Pom’s FTCA violation could’ve given it unclean hands against Coca-Cola

Posted on May 6, 2016 by rtushnet
POM Wonderful LLC v. Coca Cola Co., No. CV 08-06237, 2016 WL
2587994 (C.D. Cal. Feb. 19, 2016)
 
After a trip to the Supreme Court, Pom’s false advertising
case against Coca-Cola ended with a verdict in favor of Coca-Cola; here, the
judge rejected Pom’s attempt to get rid of Coca-Cola’s unclean hands defense,
in reasoning that may be of broader interest. 
As you may recall, Pom sued Coca-Cola for selling a “Pomegranate
Blueberry Flavored 100% Juice Blend” with very, very little pomegranate or
blueberry juice in it.  Initially, Pom
alleged that “[a] key element of P[om’s] marketing campaign has been its
concentration on the health benefits associated with pomegranates and
pomegranate juice….” According to Pom, this “investment of millions of
dollars to research and promote the nutritional qualities and health benefits
associated with pomegranate juice” enabled Pom to “largely create[ ] the
burgeoning market for genuine pomegranate juice that exists today.”  The complaint accused Coca-Cola of cashing in
on the Pom-created consumer association of pomegranate juice with nutritional
benefits, misleading consumers into believing that they were getting “all
natural pomegranate blueberry juice with all of its associated health
benefits[] for a lower price, when in fact they are getting a very different
product primarily containing apple juice and grape juice.”
 
Coca-Cola asserted the defense of unclean hands, not only
from Pom’s use of other juices in its “Pomegranate Blueberry 100% Juice” and
its use of terms suggesting that its juices were fresh-squeezed rather than
from concentrate, but also from Pom’s unsupported claims of health
benefits.  After the DC Circuit largely
upheld the FTC’s ruling against Pom, Pom sought to amend its complaint to
remove allegations regarding the purported health benefits of pomegranate juice
and the importance of Pom’s health claims in creating consumer demand for its
products.  The court denied leave to
amend for lack of good cause shown.
 
Unclean hands is an equitable defense that bars claims for
money damages as well as for equitable relief. 
The defendant must show by clear and convincing evidence (1) “that the
plaintiff’s conduct is inequitable;” and (2) “that the conduct relates to the
subject matter of [the plaintiff’s] claims.” Although “precise similarity”
between the plaintiff’s inequitable conduct and the plaintiff’s claims is not
required, the misconduct “must be ‘relative to the matter in which [the
plaintiff] seeks relief.’ ” Thus, “the relevant inquiry is ‘not [whether] the
plaintiff’s hands are dirty, but [whether] [s]he dirtied them in acquiring the
right [s]he now asserts, or [whether] the manner of dirtying renders
inequitable the assertion of such rights against the defendants.’ ” Moreover,
even after both prongs are satisfied, the factfinder must balance the parties’
wrongdoing.  Nor should the unclean hands
defense be used to harm the public interest.
 
Pom argued that the misconduct identified by Coca-Cola
wasn’t directly related to the Lanham Act claim of deception about juice
content, and therefore couldn’t support an unclean hands defense.  Two previous cases addressed this issue with
respect to Pom.  One case found that
“from concentrate”-related claims weren’t directly related to Pom’s juice
composition false advertising claims.  However,
claims that Pom’s products contained undisclosed trace amounts of other juices
weren’t too unrelated to Pom’s false advertising claims to support an unclean
hands defense.  Another case interpreted
unclean hands more broadly, allowing concentrate-related claims to stay in.  Neither case decided anything about Pom’s
health-related statements.
 
Considering the standard to be whether the plaintiff dirtied
its hands in acquiring the right it now asserted, health-related claims were
sufficiently related.  Relation, not
“direct relation,” was required, but even a direct relation requirement was
satisfied, because Pom’s false advertising claims were premised on the
perceived health benefits of pomegranate juice as compared to other fruit
juices.  Pom alleged that it was Pom’s
health claims that created the demand for pomegranate juice, and thus consumer
desire for 100% pomegranate juice.  Pom
tried to distinguish general “health benefits” of pomegranate juice from
disease treatment/risk reduction claims, but Pom’s claims were not so
limited—Pom’s ads claimed specific benefits relating to heart disease, prostate
cancer, and erectile dysfunction.  Pom’s
damages expert also opined that Pom’s publications of studies touting specific
benefits of pomegranates made those fruits and their juice “must have” products
for certain consumers.
 
Under that analysis, Pom’s misconduct clearly related
directly to the present issue.  Pom
alleged that consumers were confused into thinking they were getting healthy
pomegranate-blueberry juice when they were really mostly getting “less healthy”
apple and grape juices.  Coca-Cola
responded that the health benefits were unsubstantiated; this was directly
related to the conduct Pom alleged had harmed it.
 
Pom then argued that its conduct wasn’t egregious enough to
warrant application of this “disfavored” defense, and that Coca-Cola failed to
show actual falsity as opposed to mere lack of substantiation.  “Neither Supreme Court nor Ninth Circuit
precedent requires that defendants prove that a plaintiff’s conduct was ‘egregious;’
if by ‘egregious,’ POM means that Coca–Cola must prove that POM’s health claims
were literally false.”  A willful
inequitable act is enough.
 
However, the party asserting the defense of unclean hands
must ultimately prove by clear and convincing evidence “wrongfulness,
willfulness, bad faith, or gross negligence” on the part of the plaintiff.  Coca-Cola presented enough evidence to avoid
summary judgment on this point. 
Coca-Cola pointed to the FTC’s finding of an FTCA violation.  Pom argued that this wasn’t sufficient
because the FTC hadn’t shown actual falsity, as a Lanham Act plaintiff would
have to.  “[N]either the Ninth Circuit
nor any other authority located by the Court requires that a defendant prove
that the plaintiff violated the same law or statute that it has accused the
defendant of violating.”  Rather, the
inequitable conduct must merely be sufficiently related to the subject matter
of the plaintiff’s claims.
 
Further, “[w]ell-accepted general principles of equity
support [the] contention that a statutory violation gives a party unclean
hands.” Thus, “Coca–Cola need only prove that POM engaged in deceitful conduct
to acquire the business and market share it alleges has been lost to
Coca–Cola.”  The ALJ’s finding that Pom’s
ads made deceptive claims about the health benefits of pomegranate juice was
sufficient to create a genuine issue of material fact about whether Pom engaged
in deceitful conduct in acquiring its customer base. Coca–Cola wasn’t alleging
a violation of the FTCA on its own behalf, but instead offered Pom’s statutory
violation as evidence that POM engaged in inequitable conduct. 
 
Pom also argued that the court couldn’t use the FTC’s
proceeding to prove Pom’s misconduct because a court “may not take judicial
notice of proceedings or records in another case so as to supply, without
formal introduction of evidence, facts essential to support a contention in a
case then before it.”  However, both the
ALJ’s Initial Decision and the FTC Opinion were admissible under Federal Rule
of Evidence 201(b) and Federal Rule of Evidence 803(8)(A)(iii). Findings about
what Pom’s claims were, whether they were deceptive due to inadequate
substantiation, and whether they were material were all findings of fact
subject to judicial notice.
 
Even without the FTC’s rulings, the court would still find a
genuine issue of fact on inequitable conduct, given Coca-Cola’s evidence that
Pom knew that the studies it advertised, and related studies, reached
“inconclusive, statistically insignificant, or even negative results.” 
 
The court did grant summary judgment to Pom on the “from
concentrate” aspect of the unclean hands defense; Coca-Cola didn’t offer
arguments on this point.  The court also
denied summary judgment as to the unclean hands defense based on whether Pom
misled consumers about the non-pomegranate juice content of its own juices,
because Pom didn’t argue the elements.

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In which I sue Amazon again

Posted on May 5, 2016 by rtushnet

In FTC v. Amazon, the initial opinion was heavily, albeit badly, redacted.  With the able assistance of Paul Alan Levy from Public Citizen, MediaPost and I have moved to unseal the opinion and the documents on which it’s based, on the ground that the public’s First Amendment interest in access to judicial proceedings outweighs whatever embarrassment the facts might cause Amazon.  Here’s our motion to intervene and motion to unseal.

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