1201 roundtable, evidentiary and procedural issues in rulemaking process

Posted on May 19, 2016 by rtushnet
SESSION 2 Rulemaking Process – Evidentiary and Procedural
Issues
This session will explore the general operation of the
triennial rulemaking process under section
1201, including the evidentiary showing required for an
exemption, and the procedural aspects of the rulemaking.
Andrew Moore, Kevin Amer, Regan Smith, Jason Sloan
40,000 written comments.
Participants noted significant effort/burdens.  How is it working?
Rebecca Tushnet, Organization for Transformative Works: 500-600
hours; burdensome.  Cyberlaw
Clinic eloquently runs through the evidence about legislative intent and
appropriate interpretation of the requirements, won’t rehearse here.
In terms of what a showing of adverse impact on
noninfringing uses should require: The Copyright Office should consider actual
knowledge and behavior among potential users of the exception when interpreting
whether there are alternatives to circumvention—that is, it should consider
whether the alternatives are in fact known and used.  CO has not even addressed this argument,
which we have made across three rounds of rulemaking, much less given a reason
to reject it.  That is frustrating as
well as contrary to due process principles and notice and comment rulemaking.
Bruce H. Turnbull DVD Copy Control Association and Advanced
Access Licensing Administrator, LLC: In general, it works well. Basic approach
is correct: those who seek the exemption have the necessary info.  Some issues about number of rounds.  Respondents: we had one opportunity but
proponents had multiple opportunities.
Q: was there something you had left unsaid?
Turnbull: Other than through the hearings, imperfect way of
doing it, there were things in the responding round from the proponents that we
would have liked to have an opportunity to respond to.  CO could reject new evidence, or give another
round, but there were definitely times we would have responded.
Raza Panjwani, Public Knowledge: we filed general comments
at the outset: identification of classes of works; standard for identifying
noninfringing uses; adverse effects.
Cyberlaw clinic’s comments on adverse effects were very
appropriate.  Distinguishing tablets and
phones; distinguishing K-12 students and college students and teachers;
distinguishing Blu-Ray and DVD—not clear where these distinctions come from,
and increases lots of burdens.
Expectation that proponents must ID affirmative precedent showing
noninfringement, as opposed to showing that there’s no precedent showing
infringement; given 1201, there’s a lack of opportunity for case law
development in that case. Effectively denies courts jurisdiction to define what
copyright law is in certain areas.
Q: statute requires finding of likely noninfringement.
Krista L. Cox, Association of Research Libraries:
Extraordinarily time-consuming. Lucky to have clinic assistance; otherwise it’s
not doable in time in resources.  Write a
brief on why your use is noninfringing.
Takes a year or more.  Public
interest resources/time are extremely limited.
Putting together evidence is difficult b/c courts have lacked the
opportunity to develop precedent in the area. Turnbull says that proponents
have info necessary, but there’s an asymmetry of interests, where the
corporations opposing the exemptions v. public interest groups w/o resources
have to walk through this complicated and burdensome and formalistic system.
Chris Mohr, Software & Information Industry Association:
Distinguish problems w/statute and problems w/rulemaking. The statute is
working quite well overall, encouraging new business models. This was designed to
be a fail-safe.  Specifically, statute
has to be a source of causation of harm; rather than inconvenience—it has to be
the statute causing the adverse effect.
To the extent the rulemaking has gone off the rails, might be useful to
examine how closely the library has hewn to that standard.
Q: Elaborate?
Mohr: Library changed its position on whether an exemption
can issue to a class of user.  Allowing
users makes it a lot fuzzier.  Other
statutes may prohibit a course of conduct, and if both statutes are valid and
proscribe the same same conduct, 1201 can’t be identified as a cause; has nothing
to do with ©.  Tie goes to no
exemption.  That’s what I mean by
statutory causation.
Matt Williams, Association of American Publishers, Motion
Picture Association of America, and Recording Industry Association of America:
Comments contain criticism, but you also deserve good bit of praise for taking
tricky statute and making it overall work quite well. It’s not broken, so be
careful trying to fix it. Functioning as intended. Frequently unhappy with some
outcomes, and we have suggestions for improvement. We’d love to see an advanced
draft of the language in order to comment on drafting choices.  One filing v. three, we also felt that there
were some things left unsaid, in part b/c at the hearings proponents were given
a lot of opportunity to explain their cases, so we ran out of time.  PK raised the issue of distinguishing b/t different
types of users; grew out of the alteration of the approach to consider a class
of users, though my clients have come to find that change helpful, though we do
have some concerns.  Band raised the
issue of how it will keep growing and growing until the whole building works on
it, but that’s a result of the CO trying to accommodate proponents and make
their case and alter the definition of a class; you have to take a little bad
with a lot of good, which is why the proceeding has grown.  1201 inhibiting the development of normal ©
case law: never understood that argument. You have to counsel a client to
address both. If there are the number of threats that exist, there are lots of
ways to pursue declaratory relief w/o connection to the 1201 threat and still
pursue their argument; other exceptions-related cases that have nothing to do
w/1201.
Q: how to define a class of works: subsequently have defined
w/ reference to set of users.  If this
were to define wider pool, would there be fewer exemptions?
Peter Decherney, University of Pennsylvania: Not a question
of larger or smaller, but about bringing the exemptions in line with fair use
law; makes the logic of exemptions much cleaner.  The obsolete video games exemption is really
about archivists.  Should rethink de novo
review etc.  How evidence is preserved
and used and reused for the future.
Q: reform for renewals might take some pressure off.
Panjwani: Clinic help is not sustainable.  Consumer appliances aren’t covered w/any exemptions;
that will be an additional class. Comment periods: in my limited experience,
the party w/burden of proof gets opening and reply; surreply is typically not a
matter of right. If the burden is on proponents, you can have your exemption
denied w/o any opponents as happened w/recommendation exemption for blind in
2010.  Cyberlaw clinic delineates 9
factors CO apparently considers, but you can’t ID them from any one place, you
have to parse the NOI and the NPRM.
Office has to use classes but grant exemptions for
noninfringing uses, which creates a problem. There’s a middle ground. Motion
pictures for classes of fair use, instead of types of formats, where that gets
too sliced thin.  Urge a movement away
from current level of specificity.
RT: Agree.  Too
difficult.  Witnesses testify about good
pedagogy, not about media studies and film studies or about kindergarteners or
5th-graders or 12th-graders.  That justifies an exemption going to
teaching, not to K-12 or college students.
That also tracks the statute and fair use cases, which talk about
education not about particular grades.
Turnbull: Focus on K-12 and different types of higher
education has enabled exemptions; a broader category resulted in no exemption.  Broader category = much more likely to find
that there isn’t a real problem.
Williams: Agree w/Turnbull.
If you only altered that approach, it would be narrowed. You have to
decide that the use is noninfringing,
not just likely noninfringing; but even w/likely noninfringing, you have to
engage in the linedrawing being criticized, like uses of short portions. That
helps you get to the conclusion that it’s a lawful use.  Also need conclusion that there are no
reasonable alternatives, which requires you to consider different formats. DVD
quality footage needs aren’t Blu-Ray quality footage needs.  Allows compliance w/statute (though he
disagrees) as well as giving proponents some of what they want.
Burden of proof was debated in 2000 and 2003; lots of
disagreements b/t NTIA and CO but both agreed that burden was on proponents, in
legislative history.  Fed. Reg. 64588:
initial reasoning about burden on proponents.
Cox: Use-based definitions make sense.  K-12 and disciplinary distinctions don’t make
sense b/c we’re talking about educating students. Drawing distinctions makes
the text of the exemptions less usable.
Most recent process: 2006 exemption for educational uses was 44 words
long; now 1000 words long.  Average
teacher has a much easier time understanding the former than the latter.  Would make the process less long and drawn
out if you focused on uses and not on slicing users apart.
Robyn Greene New America’s Open Technology Institute: CO
should be uniformly applying a standard of “likely noninfringing”—Cyberlaw clinic’s
comments.  Narrow interpretation of
adverse effects also allows for better implementation.
Decherney: in 2006, we were criticized for limiting to media
professors; we had support from many different fields, AAUP support.  DVD/Blu-Ray distinctions are not about
noninfringing uses; level of need/quality/useful for education—what is the standard?  Not clear to us, and possibly not to you.
Q: Burden of proof: CO has said that the burden of proof is
on the proponent.  Substantive and
procedural: reforms that give less opportunity to submit evidence?
Mohr: administrative notice could streamline the
proceeding.  Someone who’s proven an
exemption should be able to provide abbreviated info that they’ve used it,
provided that all that’s being sought is the exact same exemption unless
someone comes forward and shows the exemption is being abused or that it should
be revisited.  As admin agency, have more
flexibility in how you handle that going forward.  [Actually, a court could exercise “de novo”
review without revisiting any facts.]
Q: is there agreement than preponderance is the proper
baseline framework?  Or do we have
latitude?
Panjwani: we don’t take issue with the preponderance as such
but what we have to show.
RT: No, don’t change the process to give us less opportunity
to make our case, but burden of proof/preponderance on what?  The statute’s requirements: noninfringing
use, adverse effects, not the 9 things added.
In terms of interference w/ development of case law: (1) my
own experience, counseling remixers who wanted to counternotice—how was this
footage made; mostly it was through DVD ripping because that’s the best way to
get high quality source—before the exemption they couldn’t counternotice no
matter how committed they were to fair use because they’d lose regardless; now
that we have the exemption they can go ahead and be ready to make the fair use
case; no counternotice I have worked with has ever proceeded to a case; (2) dicta
in the Corley case opining on what was not before it—quality—explicitly disavowed
by subsequent 2d Cir precedent but still haunting us 16 years later.
Williams: confusion in the comments about what the standard
means: more likely than not, which isn’t very difficult to meet.  Comments seemed to think it meant something
different. You could clarify that in NOIs. Manager’s report: Don’t come to us
with hypos, philosophical issues, only real world issues. Burden has been
handled properly.
Q: re totality of circumstances.
Greene: Manager’s report is not appropriate legislative
history. Text of the statute doesn’t say any of that. It says likely to be
adversely effected by virtue of the TPM. The appropriate standard is whether or
not the use is likely noninfringing, which would be in keeping with
preponderance of evidence.  Seek to
determine adverse effect as a result of TPM, not heightened standard as to
level of adverse effect.  Not the report
from a single member of Congress—no substantial adverse impact contemplated.
Panjwani: Breaking Down Barriers to Innovation Act offers
amendments by explicitly placing into statutory factors a lot of the things we’ve
talked about here. Still our position that statute can be interpreted to allow
for many of the things if not all.  DVD
space-shifting, which we apply for every 3 years. CO disagrees w/us in analysis
of case law, but NTIA looking at same case law comes to the same conclusion as
us; same happened with NTIA and narrative film clips for fictional filmmakers.
The appropriate authority to settle that dispute is a federal court, and the
only way we can do that is to get it to a federal court w/an exemption.
Q: how could we fix that?
Would you tip the scales in the case of disagreement?
Panjwani: appropriate application: barring affirmative
caselaw saying it’s infringing, the tie should go to noninfringing as that
element. If CO is wrong, rightsholders can close that exemption off by bringing
suit.
Q: is that disagreement w/outcome or process?
Panjwani: both: if done right, fact of agency disagreement +
no affirmative precedent = should have come out differently.
Mohr: Statute says nothing about affect by TPMs; now says
affected by the prohibition. That change is the manager’s report issue—that textual
change wasn’t mentioned in the Harvard Cyberlaw submission, and that’s fairly
significant.  W/r/t manager’s report
itself, Sutherland on Statutory Construction—nice summary of case law.  Statements by managing committee’s member—general
rule, properly applied by CO, is contained there.
Turnbull: Puzzled by statutory background; changes made
later on, but the need for evidence was emphasized by the committee that
created the process, though the process was changed later on and moved from
Commerce Dep’t to CO.  Commerce became
advisor.
Cox: exemption for the blind/ereaders.
Came with number of books they couldn’t access, and Joint Reply from AAP
etc. said that the submissions didn’t give any indication that the exemption had
been used, and no evidence that exemptions helped.  Difficulty around this is confusion about
what you need to show: that the past exemption has made things better?
Difficult to get that for the blind. Should be enough to show that there are a
significant # of inaccessible literary works out there. Touches both about
evidentiary standards and difficulty of the process.
Q: Would statutory change help?
Cox: renewal w/o showing things have changed would help.
Williams: Commerce Committee and Manager’s report are both
completely valid legislative history, but either way there are other reports
taking the same position.  Likely
noninfringing: likely to be adversely effected in their ability to make
noninfringing uses—a judge doesn’t tell you that it’s likely that this is what
the law is.  The CO has taken a different
approach, but is already favoring proponents by saying “likely” noninfringing.
To take it further and require adverse precedent against proponents upends ©
b/c default is that you’re making a copy you’re committing an act of
infringement; you then have a burden
RT: compare © preemption in 301: the statute was changed
after the report came out, and courts have agreed again and again that the
legislative history is not helpful. Same here.
Commerce became advisor and not decisionmaker: that isn’t a trivial
change, it’s a complete revision, changing both the entire branch of gov’t in
which the decision sits and the competence/focus of the decisionmaker, not to
mention the other changes made to the process. “Upends ©” in previous comment:
making a copy is not the point of 1201.
The people I represent, for example, have legitimate access; they want
to make remix.
Decherney: some of these issues are matters of degree. We
might all agree that a remix is noninfringing, but what is the level of quality
is needed? This is not really a measurable issue, though we can have anecdotes.
Q: should the period be longer or shorter?
Panjwani: both too short and too long. For dealing with
advances in tech, too long.  For coming back
again and again, too short.
Williams: no perfect solution.  3 years has worked pretty well.
Mohr: fine from our perspective. Resist the premise that a
change requires tinkering w/the statute.
[Not what the content folks said at 512 hearings, though in fairness that occurs on our side too; as Mohr pointed out to me in a followup, SIIA in particular did not ask for changes to 512.]
Cox: Panjwani is right.
To resolve this, could have a shorter period for a new exemption,
keeping up with advances in tech, but permanent or streamlined process for
existing exemptions.
Decherney: 3 years can be a long time for an educator.  Recognize that law school clinics, which do a
lot of the representation, have an academic calendar—that would help a lot.
Post-hearing questions complicate things.
Q: If we stay in this sandbox, what can we do to make this
better?
Williams: Hearings should take place when students can attend
and do oral advocacy.  Currently hearings
come just after students leave for the year.
We’d love to see drafting approaches at the end of the process.  Time is a concern, but given the period for
post-hearing letters built into the process, if drafting issues were just
presented to people who appeared at the hearing, we could give you some
feedback, and that would be helpful.
Hearings are often very helpful, but if we prepare a fact witness that
relates to every way that a studio uses access controls, it’s relevant across
all different proposals.  Last cycle, it
wasn’t clear whether the CO could use the testimony from one proposal in
considering another, and that harms both proponents and opponents.  [This is one consequences of too much
splitting.] More clarity on what evidence can be presented for the first time
at a hearing.  Would be helpful to
clarify.
RT: how to make this better?
Cyberlaw clinic’s suggestions.  Picking
up on Adler, who talked about how access was special: access/rights controls have
now been merged by actors making strategic use of 1201, destroying balance
Congress intended. The CO has referred to this problem several times in its
rulings.  Remixers have lawful, paid-for
access; what they need is the ability to make creative, fair uses. This is the
problem of the merged access/rights control.
Could recognize that as “other factor” justifying exemption, both w/in
traditional © categories and outside them.
Congress may have been contemplating Celestial Jukebox, but definitely
not celestial fridge or tractor!
Greene: making rulemaking more accessible by allowing
proponents to submit confidential versions, particularly in the context of
security research but also in some other circumstances. Sometimes we withhold
info for fear of liability, confidential business info, or info that could
allow others to exploit existing vulnerabilities.  SEC etc. allow.
Q: just for CO?
Public version & private version?
Greene: yes, there should be public version and full public
discussion about parameters.
Turnbull: no problem with confidential submissions, but we’d
like a protective order allowing some witnesses/opponents access to the
information w/o exposing it to the public.
There are a number of precedents for that in other admin proceedings.   On access
v. rights: the access granted in a DVD is to that content in a particular
context in a particular form/format and under the rules of the system. In the clear
on the TV, but not in a usable way in the system.  They own it, but they have access only
visually & if they want to point a camcorder at the screen go ahead [Can I
quote that?] [That is exactly the problem I’m ID’ing about the merger of access
and rights controls: you configure it as an access control so that you can control the rights.] Clear that Congress
contemplated this rulemaking to deal w/the uses of the content in the context
of the access control. That’s why it’s 1201(a) rulemaking and not 1201(b).  Mischaracterize the nature of this
proceeding, which is about uses in the context of access control.
Williams: Agree w/Turnbull.
Wrong to think that Congress didn’t anticipate that some access controls
would also be copy controls; that doesn’t mean that in every case an exemption
should result.  If it is both access
& use control and inhibits a lawful use, you go through the factors and see
if there are alternatives.  Red herring
to say merger has created unanticipated problems.  [Tony Reese has
a good article about this.]  No
problem w/confidentiality; we might also like to file confidentially, and
counsel should be allowed to see them.
Q: will certainly look at confidentiality. But 3-year
rulemaking is a much quicker pace than what other federal agencies do, so we
wouldn’t want a year of fighting over a protective order.
Q: statutory language about “such other factors.”  Role of non-copyright issues.  Several commenters argued that CO shouldn’t
consider non-copyright issues.  Is it
within our authority to reach out to other agencies or are we limited to
consulting with NTIA.
Mohr: as long as you disclose your sources, you can amass them—though there
should be public comment on them.  Get
information from experts on particular subject matter and weigh their views
even if you didn’t agree with them.
Panjwani: “Other factors” are directed at the fact that the
proponents must prove noninfringement, allowing CO to consider other harms;
interagency process isn’t necessary to figure out whether exemption is
warranted. The q is whether © liability will attach—TPMs weren’t supposed to
cover anything under the sun, from product safety to medical devices. Conflation
of “there’s software in here and that’s expression” with “that’s our issue”—medical
devices have existed for a long time, and law and policy have developed to deal
with that, e.g., whether you can modify your car to defeat emissions; if you’re
not VW, we have annual inspections to deal with that. This isn’t the appropriate
venue.
Q: petition about internet of things.  Examples of hacking subway system, nuclear
power grid. Should we entirely ignore public safety?
Panjwani: Hackers are going to hack regardless of whether
there’s a 1201 prohibition.
Williams: reiterate: be careful about what constitutes a
core © concern. That would have to be carefully defined to have any real
benefit. There is a distinction b/t access and copy controls, and Congress
clearly intended to protect unauthorized access to works available for
subscription/on demand [but not fridges and tractors; movies on demand].  A work
protected by both access and copy controls: you could hack for access and watch
the movie, and without circumventing the copy control there’d be no nexus to
infringement; Congress clearly intended to bar that.
Decherney: All these considerations often cut both ways—found
out about hearings that VW was actually the problem, not hackers.  Same is true w/fair use: that is the
foundation of many productive businesses and economic successes.
Turnbull: other factors include the integrity of our
licensing system, which doesn’t interact w/fair use—whether the system can
continue to exist. More generically, as you address “not core copyright” you
need to be really careful not to eliminate considerations that matter in the
context of expressive works.
Panjwani: role of legislative history: Mohr’s correct about
approaches, but in the specific case of the House Manager’s report, there are
specific criticisms.  “Substantive
diminution” language in the report, specifically criticized by Nimmer in his
article on DMCA legislative history.

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1201 roundtable, relation of 1201 to infringement, consumers, and competition

Posted on May 19, 2016 by rtushnet
Copyright Office, 1201 Roundtable, DC
James Madison Building, Mumford Room
NB: I won’t be here tomorrow because the Office had the
temerity to schedule the roundtables after I committed to a different exiting
roundtable, this one at Notre Dame on deception.  I wish I could be at both.
 
Session 1 Relationship of Section 1201 to Copyright
Infringement, Consumer Issues, and Competition
This session will explore the role and effectiveness of
section 1201 in protecting copyrighted content, and will consider how the
statute should accommodate interests that are outside of core copyright
concerns.
 
CO: Jason Sloan, Kevin Amer, Regan Smith, Abi Mosheim
 
Smith: 1201 is part of DMCA; Congress recognized that TPMs
could be deployed not only to prevent piracy but also support new ways of
dissemination of © material to users digitally. 
Protects access controls, trafficking in circumvention tech for access
and rights controls.  Regulatory process
has become burdensome, particularly upon renewal; permanent exceptions may not
have adequately foreseen developments. 
 
Amer: big picture: overall role and effectiveness of
1201.  Many comments noting the different
distribution models TPMs facilitated; other comments questioned the
relationship between legal protection of TPMs and effectiveness of TPMs. 
 
Jonathan Band, Library Copyright Alliance: lawyers like to
feel we have an impact on the world, but TPMs, to extent they’ve been
effective, it’s b/c the TPMs have been technologically effective. Saw early on
ineffective measures such as CSS, very easy to hack, and the tech to hack it
was widely available. There was some hacking, some not, but we now are
generations beyond that, especially w/r/t content in the cloud behind
paywalls.  The law has nothing to do with
the effectiveness of those systems, especially w/r/t the general public.  What makes those work is the tech, not the
legal protections.  Hacking into systems
is the purview of the CFAA and state anti-hacking statutes. [Not to mention
that many of these threats are foreign and also by dedicated lawbreakers; not
deterred by anything we can do.]
 
Allan Adler Association of American Publishers: Recognized
early on [that is, before there was evidence], b/c this legislation was the
result of an int’l treaty determining that legal protections were important.
Common sense that ability to use locks means nothing w/o legal restrictions
against violating locks or creating devices [like secondary liability?].  Compared this to breaking into a locked room
to get a copy of a book.  [Yeah, that’s
totally what vidders do.]  Convenient,
cut expenses, make works easier to find: but access online had to be secure in
the face of all the ways in which online networks are susceptible to
unauthorized activities.  [There will be
no cars on the information superhighway without perfect protection!]  Wild success.
 
Jonathan Zuck, ACT | The App Association: remembers buying
Copy2PC, in my younger unruly days—I copied software I wanted to use; it took
creating software to respect it, in my case. [Which is why we should make it
hard for people to create new stuff via remix …]  It’s not the availability that matters, it’s
the inability to walk into Best Buy and get the software that matters—practical
availability, not binary connection.
 
Raza Panjwani, Public Knowledge: WIPO treaty thought
necessity to provide protections to © owners to encourage them to provide
digital goods and distribute them online. We’ve seen DRM unnecessary to various
business models—iTunes, game distribution platforms, Tor book distribution.  Not necessary; 1201 burdens noninfringing
uses to provide protection, and CBA is justified—do we still need high barriers
to encourage distribution? We should also ask how effective 1201 has been at
discouraging piracy, not just
“circumvention”—comments decry how much piracy there is. [Including, not for
nothing, Adler for the APA, as I recall from a few weeks ago.  Zuck has a point about Best Buy, but the
corrollary is that a digital copy in the wild circulates freely once any DRM
has been circumvented once. Bittorrent doesn’t require you to walk anywhere.]  The content allegedly made available by
circumventing DRM and the content existing in marketplaces is the same—don’t
conflate correlation with causation.
 
Q: how do we get at that? 1201 actions: relatively common or
not?
 
Stanley Pierre-Louis, Entertainment Software Association:
new consoles, games, are possible b/c of goals of DMCA: the thought was that we
want to expand consumer access to broadband and new tech, and encourage that by
getting © content online and on devices. We’ve seen that growth, which makes
our industry a growing one, $23.5 billion—we know that our investment in our
tech and software will get protected. 
When we’re talking about DRM-free content, that’s a choice; 1201 doesn’t
require it.  [Unsurprising evasion of the
question.] 
 
Q: do you use 1201 in court?
 
Pierre-Louis: we’ve had a lot of success in preventing
access, so we don’t make legal claims; but we know that have that as a
backstop. Internationally as well.  [Even
in places w/o 1201 style law?]
 
Troy Dow, The Walt Disney Company: There is real value in
the tech.  The law was also
important.  DMCA was directly relevant to
adoption of CSS, allowed intro of DVD, which was fastest growing device.  That was hacked, but that also spawned
precedent of DMCA in enforcement litigation. Not to say that these techs are
hack proof, but that you keep them out of the mainstream.  Zuck talks about Best Buy: when we were in
litigation with 321 Studios, that was exactly the issue. 1201 keeps that at the
fringes.  Business side: availability of
legal tools was directly relevant to getting into these markets—ACS, 4k, over
the top TV, streaming TV through authentication—1201 a factor in all those things.
 
George P. Slover, Consumers Union: It’s not the intended
uses, it’s the overbroad unintended/uninvisioned uses that are a problem.  “Breaking into a house to steal a book”:
compare “my wife has baked a cake she intends to take to church; she can tell
her hungry son not to touch the cake on the counter or she can lock him out of
the entire kitchen.” Reconfigure to focus on the protection against
infringement, not interoperability and less closely related side benefits to
industry of denying access.
 
Q: Dow said 1201 successful for motion pictures. Has 1201
played a useful role in the markets for 3D printers or cars?
 
Aaron Lowe, Auto Care Association: Aftermarket is a huge
industry in the US. Use of software in virtually every component. We can’t tell
if it’s functional or simply to make it difficult to make aftermarket parts.
1201 is used to keep our industry from reverse engineering and even servicing
cars. We see more and more parts with chips on them making it difficult for
aftermarket to exist.
 
Brian Weissenberg, Institute of Scrap Recycling Industries,
Inc.: Exactly—last year, when we asked for phone unlocking, phone co. said we
rely on DRM to protect our business model, but that’s not a © interest.
 
Zuck: Non-DRM business models do exist; the people that make
use of DRM don’t like it.  It increases
consumer support costs, but it’s a necessary antipiracy tool. Successful in
software market; distinction b/t software and content is increasingly blurred.
App that teaches yoga positions: 
sometimes piracy is pulling content out of app and repurposing it.  Final point: expanding beyond intention—I’m
not a lawyer, but my understanding is that where adjudication occurred they’ve
interpreted the DMCA more narrowly for garage door openers and printers [unless
you’re in the 9th Cir.].  The
system worked—jailbreaking exception from Congress. Be cautious about upending
success.
 
Band: There have been relatively few 1201 cases, especially
relative to 512. Keep in mind its role in larger construct.  One reason why so few is that it’s really
broadly drafted; talks about active circumvention and 1201(b) trafficking;
early cases were strongly in favor of rightsholders; there hasn’t been a need
for litigation because it’s so broad. 
Then the action has shifted to the rulemaking b/c of all these adversely
affected people. You have 2 choices: go ahead and hope that in the event of
litigation you’ll end up in the Fed. Cir. or the 6th Cir. and not in
the 9th Circuit.  Good luck on
ensuring that!  Or you can go to the
rulemaking. That’s where the energy and activity has all shifted. That’s why so
many of us are so intent on getting it to work better.
 
Robyn Greene, New America’s Open Technology Institute:
Agrees with Band re: not much litigation. 
It’s impossible to calculate the chilling effect on the market. Entrepreneurs
trying to enter a marketplace don’t want to take the chance that all their efforts,
expenses etc. are all for naught even if they eventually win litigation.
Litigation has been pushed to rulemaking, and that’s still a chill, especially
for activities very clearly unrelated to infringement, such as security
research, due to the burdens of the exemption process.
 
Q: add an infringement nexus to 1201?
 
Adler: there’s already an infringement nexus, but not in
1201(a); access is not part of exclusive rights under 106, but that’s the
threshold issue w/r/t uses that implicate exclusive rights will occur. Congress
structured 1201(a) to deal w/ access independent of the issue of infringement
b/c access was whether consumers could exploit the marketplace for these work
and whether there’d be a market to exploit. 1201(b) doesn’t address
circumvention of TPMs that protects rights of a copyright owner b/c it
recognizes those rights are themselves subjects to exceptions like fair use—have
to look at questions differently. Access isn’t about infringement. [Which is
why (c) owners have merged access and rights controls.] 1201(b) is where the
balance w/exceptions and limitations were struck. [But merger destroyed that
balance, and you guys did that, not us.]
 
Band: yes, but Congress was thinking about access to
something you hadn’t paid for, such as access to premium cable you hadn’t paid
for.  Not the situation that Lowe deals
w/in auto context, a person not being able to access her own software in her
own car to make sure she doesn’t pay marked up prices for repair parts.  No policy reason for restrictions on rights
to access their own copies for which they have paid.  That’s why we think changes make sense.
Whether through statutory change or liberal application of the rulemaking in
the case of at least software where we see this problem most pervasively, we
could simplify the CO’s work considerably and not regulate the entire US
economy.
 
Q: is your theory dependent on owning the good, rather than
renting? Fear that consumers may have paid for a penny but want to access a
pound? Does it matter whether you own the refrigerator or just lease it?  Is it different w/ a book?
 
Band: there are various ways to slice the loaf; if amending
1201(a), the best way would be requiring a nexus to infringement.  [The only reason fridge makers now assert
that consumers aren’t really fridge owners is the legal exploitability created
by 1201.  It was uncontroversial that your
thousands of dollars bought you a
fridge until then; they don’t take it back if you breach your “license”; the
legal regime is driving the ownership characterization and that’s bad.] 
 
Q: would nexus encompass the paradigm “access to watch”?
 
Adler: problem w/requiring infringement nexus is fails to
recognize that access has its own independent value w/o regard to whether
someone will infringe. We hear all the time about print v. digital that reading
a book isn’t something that exploits one of the exclusive rights of a © owner.
True, but purpose of putting a book on the market is ultimately to have people
read it. [Won’t that involve copies, digitally speaking, especially given the
RAM copy doctrine that Adler surely endorses?] 
Only way to control access is to not require infringement nexus.
 
Band: could be drafted; if I rent a book for a week, and I
fiddle w/software so I can keep it another week, that might get into what we’re
actually interested in, especially since “reading” involves RAM copies of more
than transitory duration.  Even in that
case, it could be drafted to be w/in the scope of amended 1201.
 
Dow: Adler is right; absence of nexus to infringement is
deliberate; proposals to require nexus were rejected b/c that would make it duplicative
of 106.  What Congress saw was a world in
which value to consumer and © owner was derived from access, not 106
rights.  Doesn’t require copying, distribution,
public performance, but just access: celestial jukebox. Congress had that in
mind.  [But not the celestial fridge!]
 
Panjwani: Nexus could help a lot.  “Exclusive right of access for authors” is
the claim of Congress’ intent.  So: Let’s
have a debate about right of access, not circumvention. If Congress had wanted
to do that, they could have put it in 106. 
Instead, Congress said it wanted incentives to enter digital markets,
and thought this was a necessary step. Let’s now evaluate that. WIPO treaty says adequate protections for TPMs employed by authors
in the protection of their existing
rights. Adler/Dow: underestimate ability of plaintiffs’ counsel to find 106
violation: lawfully possessed after the rental expired?  Unlikely! 
Doesn’t require such a broad prohibition, burdening all other
noninfringing uses.
 
Q: speak to distinction between access and copy controls in
1201(a) and (b).
 
Panjwani: Antitrafficking provisions’ distinction in
implementation has not worked.  Access
control and copy control are the same in practice.
 
Q: b/c they’re merged in industry?
 
Panjwani: yes, in practice.
 
Pierre-Louis: in our industry that’s not the case.
Publishers and disk manufacturers have separate types of access and copy
controls.  We’re not trying to ID
infringers, but cultivate consumers. Access to work helps distinguish users—some
want it mobile, some online, some on disk. These rules let us meet customers
where they are. Nexus to infringement harms the consumer, b/c right now
possession of the work isn’t infringing, it’s the uses.  That access control allows them to make uses.
 
Slover: Ownership v. rental: Ownership is the core focus.
The rights of a consumer who owns a product to use it. Be careful: ownership
can be written around by lawyers so a consumer thinks she owns something but
doesn’t.  Concept: consumer’s rights and
dominion about the product they paid for. 
It’s a useful starting point to clear the smoke around the tech.
Traditional incidents of ownership should matter. Auto software: if consumer could
do it in garage w/screwdriver in the past, it wasn’t a © issue.  In the new world, may require access to
software to make adjustment; the fact there’s a TPM on top shouldn’t change the
ultimate calculus.
 
Q: software embedded devices study: could we treat those
TPMs differently than TPMs protecting expressive works, instead of infringement
nexus?
 
Slover: not a © lawyer, and Consumers Union came into this
from phone unlocking. Can’t speak too definitively, but sees a big picture
conceptual distinction b/t core creative works like books, movies, songs and
products that you now can’t use unless you have software inside them.
 
Adler: Panjwani suggested that Congress could have included
access w/in exclusive rights of © owner. 
Presumably his constituents would vigorously oppose that, b/c it would
make access a property right as the other aspects of 106 are [hah!] as opposed to
encouraging use in a market and ability to assert terms & conditions of
availability & use by controlling access in the first instance.  Concerned by emphasis in notice on 1201 “outside
of core copyright concerns.” Not sure what that means, but mistake to equate
that w/notion of nexus to infringement, b/c © concerns drive far more than
whether one of the exclusive rights is violated. Incentives to create works of
original expression in the first place, which is driven by © incentives [for
fridges, sure].  Access can occur w/o
infringement and that is a core © concern and we shouldn’t treat that narrowly
so that we don’t think that only infringement raises core © concerns.
 
Q: goes to Slover’s point: is there a way to reform 1201 to
include things like circumventing TPM to watch movie for free, but excluding
garage door openers?  One idea: permanent
exemption for software essential to operation of a device. Would that strike a
proper balance?
 
Zuck: Discussion on embedded software roundtable was quite
robust, but the same dynamism in product offerings still applies to “embedded
software market” as well. Tivo: the hardware was given away as a loss leader,
and the embedded software and services associated w/it created the value. [You
could do that w/cars too—but usually you do that with leases, and there isn’t
an obvious case to be made that you should be able to do that by preventing
replacement parts from being used.] Couldn’t support broad exclusion of
embedded software. 
 
Panjwani: a permanent exemption for embedded software would be
a good start, addressing overhang of issues like 3D printers. There are also a
number of issues around traditional expressive works.  [As indeed software must be to be protected
by ©.]  Exemptions involve appropriate
balance b/t access for fair use purposes; 1201 also substantially burdens those
uses.  Caution that any attempt to create
a permanent exemption would instead turn into a fight about what a software-enabled
device is; could spend years hashing out a definition. End result would be
fighting not about © infringement but about the device definition.
 
Pierre-Louis: tread carefully w/blanket exemptions.  Software is expressive: we use software to protect
software.  Blanket rule could swallow
entire industry. Games are played on game consoles; TV; movies; all manner of
distribution b/c consumers demand it.  So
we have to tread carefully b/c implicates more than just a tractor.
 
Band: Switching hats to Owners’ Rights Initiative: we could
support that, though a nexus requirement would be better. Embedded software
exemption would be a good start.  There
could be exceptions to the exception for game software.  Bigger point: Congress in 1201, and I was part
of those discussions, wasn’t thinking about tractors. Fact that we’re talking
about tractors does suggest a serious problem. 
Internet of things: CO as sudden regulator of the entire manufactured
world.  We went from 2 exemptions to 22;
in the next cycle it will continue to grow geometrically. 
 
Lowe: Emphasize parts on a car that used to be repairable
using mechanical means now require software access. The software is equivalent
to the parts; taking away the right to repair threatens our industry. People should
be able to modify their cars in their garages; your suggestion is a good
one.  Mechanical functions taken over by
software, including windshield wipers: the noncopyrightable function should not
be protected.
 
Dow: Embedded software “necessary to make a device run”—I’m
not sure how to interpret that, which highlights difficulty of drafting.  Thinking back to early cases, RealNetworks—authentication
sequence; you needed to authenticate your device to ensure you were talking to
a real server.  If you spoof the
authentication sequence, that was really software, and a lot of what goes on in
TPMs is authentication. Urge caution of impact on totally different contexts.  [Which is exactly what the car folks are
saying!]
 
Q: devices w/ and w/o expressive content?  One testimony said that the software was the same
no matter what the device does. Can we distinguish based on what the device
does?
 
Pierre-Louis: we have consoles; we have servers in the
cloud. We have different kinds of interoperability/authentication.  It takes a lot of thinking about how those
work before we get into rules.  Software
that operates the machinery might be copyrightable, but I don’t know enough
about the tech to say it shouldn’t count. Some of these other areas, they are
probably doing copyrightable things, and it’s not for me to judge. There are rationales
behind each of our uses of software, and there are unintended consequences. For
us, the leaks are the business; once they’re out, they’re out.
 
Zuck: There’s certainly software itself; we are interested
in using these protections.  A lot of
different licensing models for software itself, and protecting dynamism is
really important. Allows different models of making software available to
different sectors.  I’d rather approach this
from the other end. 1201 process in place: maybe it’s better to try to
streamline renewals, once you’ve identified a clearly acceptable use.  Seems to be a working process [heh]. Rather
than trying to go through and predict legislatively into the future.  [Because the 1201 prediction was so bad … no,
wait, that’s not your position.  Everyone
likes predictions that predict that they should continue to make money.]  The current system is working. I don’t mind
the default answer being no.  The notion
that people are afraid to start new businesses b/c of © liability is not a
problem—it’s not that confusing what is and isn’t legal. [Uh, ok.]
 
Greene: We spent a while on marketplace implications of
effectiveness/ineffectiveness of TPMs, but not on public safety. Consider
chilling effect on security research. Geometric increase in connected devices;
1201 is a tremendous obstacle to security research to ensure that cars,
airplanes, fridges, or TV sets are in fact secure. When we set access as the
threshold and tell them that 1201 is meant to stop that, as opposed to
protecting against infringement, then we’re telling the public that market
interests are more important than public safety and health.
 
Adler: w/r/t those concerns, they’ve been addressed to some
extent by Congress in exemptions in the statute, and every 3 years we revisit
many of those issues in rulemaking. Goes back to the Q of whether the issue of
infringement becomes the tail that wags the dog of 1201. 1201 was a recognition
that wholly apart from infringement there was value to access that had to be
w/in rightsholder to control, otherwise they wouldn’t provide it online.  Courts haven’t had any difficulty dismissing
the notion that fair use contains a right of access to a copyrighted work. It
never has.  [Our folks have lawful,
paid-for access; what they need is the ability to make creative uses. This is
the problem of the merged access/rights control.]
 
Panjwani: the discussion we’re having now about embedded
software highlights the danger of setting defaults as no. The growth of these
other issues shows that what we thought was small actually implicates a vast
range of economic activity. Reevaluate whether the default being no still makes
sense! The examples of successes—Chamberlain & Lexmark—exist, but MDY v.
Blizzard and RealDVD are counterexamples rejecting the rationales of those
cases.  We never get to core © issues b/c
of 1201.  Adler says access is a right:
but that’s not what Congress said—they said they were creating an ancillary right
for the purpose of discouraging infringement of 106, due to easy
reproducibility of digital content; not a standalone right.
 
Zuck: Public safety: it’s equally important to recognize
that there are public safety implications to tinkering w/embedded
software.  Medical devices.  [The CO is clearly the correct decisionmaker
here, amirite?]
 
Adler: for my industry, library elending or print on demand
or rental on demand, the issue is software being used to provide access to the
expressive work that’s protected by ©. Don’t let difficulties created by dual
ID of software as expressive work and uses to control access to a separate work
to place those works in a position Congress didn’t intend. Right of access wasn’t
considered only w/r/t piracy—it was specifically that Congress sought to create
online markets for © works.  That’s why
access had to be controlled v. what you intended to do with the work once you
had access.  [What would the Framers have
thought about cell phone unlocking and digital tractors?  Originalism is often unhelpful.]
 
Band: there’s a big difference b/t access to something you
paid for and access to something you didn’t pay for.  Congress did create some permanent exceptions,
but there wasn’t one for the testing of the VW for purposes of determining that
they were committing an enormous fraud on consumers around the world. No one is
stealing the VW to do the testing; they’re buying the VW and trying to figure
out how the software works, but much of that isn’t covered by the exemptions
that exist.  Yes, there are people who
take the risks, but many of them have decided it’s not worth it. If you’re at
an institution and you know there are colorable legal issues and you have
funders to please, people decide not to go there—it’s hard enough to get tenure
without that. Consumer protection issues, safety issues, many other things not
covered and to hope that rulemaking will continue to work for you every 3 years
is insufficient; we could make relatively simple narrowing changes to the DMCA.
 
Greene: Reiterate chilling effect. Public safety concerns: I
wasn’t suggesting that’s an equity for the CO to weigh; in fact, the inquiry
should be limited to whether the proposed use would constitute an infringement.
Making the point that by expanding the inquiry beyond infringement implicates
significant public policy concerns.  The
idea of access as a threshold—the industry is trying to have its cake and eat
it too.  Other industries can’t protect
their products w/© for the underlying work. At some point 46% of Americans engaged
in piracy; clearly it’s not working, yet the vast majority ended up buying more
digital products than those who didn’t. 
So we should rethink ithe value of limiting access; it doesn’t seem to
be doing what it was supposed to do.
 
Q: how prevalent is it for 1201 to be used for what you
might regard as anticompetitive purposes or to enforce 1201 against consumer
products?  We’ve heard about Chamberlain and
Lexmark, but those are older and Ps lost, but we’ve heard about chilling
effect.
 
Dow: What I see is largely anecdotal and in context of
rulemaking.  27 sought and 22 granted, so
the process is working.  To Panjwani: not
correct that access was not separate from infringement.  House report said: TPMs can be deployed not
only to prevent piracy but also to support new ways of disseminating and
safeguarding legitimate uses.  Purpose:
incentivize new business models.  Those
are the business models we’re engaged in. We have apps allowing you access to
our TV channels, watch on the go.  Access
is controlled through authentication.  [And
you wouldn’t sue someone for © infringement for unauthorized use?]
 
Panjwani: We assume that many people are law-abiding; if the
activity would be prevented by 1201, then much of the activity wouldn’t be out
there. We filed to clarify the legal ruling on 3D printers, which led to a
voluminous opposition by Stratsys. Another competitor just announced end of
life of one of its printers, which had lock-in to proprietary filament, showing
need for exemptions.
 
Pierre-Louis: 1201 succeeded in getting works online. [The
same way I succeeded in getting rain to fall the past week.]  Businesses like certainty. Invest more when they
know they can get a return. That’s been proven. [Except if you attended the
content industries’ presentations at the 512 hearings.]
 
Weissenberg: Tracfone filing: has used the DMCA to enforce
its anticompetitive lock-in many times.
 
Band: Trump thinks unpredictability is a virtue, but it’s
not good for clients.  After DMCA passed,
plain reading of 1201(a) showed it could be used anticompetitively.  Had to counsel clients that way.  Chamberlain allowed a change, but then
Blizzard v. MDY came by and rejected Chamberlain—now has to tell clients they
can’t compete in the aftermarket if they’re in the 9th Circuit.  Look at who is opposing exemptions to see its
anticompetitive use: market leaders in phones, 3D printers, auto
manufacturers. 

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First Amendment/commercial speech conference in NYC, June 13

Posted on May 18, 2016 by rtushnet
On Monday, June 13th (8:45 a.m. – 2:30 p.m.) the Floyd Abrams Institute for Freedom of Expression will host a major conference on the commercial speech doctrine. The event will take place in New York City.
→ Click here to register for the event.
This conference on the commercial speech doctrine will focus on its changing and varying definitions, the regulation and potential liabilities based upon it, and the potential impact of Sorrell and Reed, two Supreme Court decisions. The discussion will center on its impact on the content creation community, lawyer speech, food and drug and other areas of corporate speech
Interview: Who’s Afraid of Commercial Speech? — 26 Years Later
Ron Collins (Harold S. Shefelman Scholar, University of Washington, School of Law) will interview Judge Alex Kozinski (U.S. Court of Appeals for the Ninth Circuit). 
The Shifting Boundaries Between Commercial & Non-Commercial Speech
A look at the varying definitions of commercial speech, historical basis for the commercial speech doctrine, and the likely impact of the Supreme Court’s decisions in Sorrell v. IMS Health, Inc. and Reed v. Town of Gilbert.
  • Floyd Abrams, Partner, Cahill Gordon & Reindel LLP
  • Jack Balkin, Knight Professor of Constitutional Law and the First Amendment, Yale Law School
  • Tamara Piety, Phyllis Hurley Frey Professor of Law, University of Tulsa College of Law
  • Martin Redish, Louis and Harriet Ancel Professor of Law and Public Policy, Northwestern University School of Law
Moderator:  Vince Blasi, Corliss Lamont Professor of Civil Liberties, Columbia Law School
Commercial Speech:  The Definition Matters
“Commercial speech” is a dividing line between free expression and potential multimillion dollar liabilities in many areas of law.  A specific look at that divide in attorney, trademark, corporate-financial, and food and drug commentary.
  • Steven G. Brody, Morgan, Lewis & Bockius LLP
  • Denise Esposito, Covington & Burling and Former Chief of Staff to the Commissioner of the U.S. Food and Drug Administration (FDA)
  • Joshua M. King, Chief Legal Officer, Avvo, Inc.
  • Rebecca Tushnet, Professor of Law, Georgetown Law School
Moderators:  Chris Beall, Levine Sullivan Koch & Schulz LLP and Bruce Johnson, Davis Wright Tremaine LLP
Brand Journalism, Sponsored Content and the First Amendment
Difficult issues involving rights of publicity, copyright fair use and consumer protection disclosures arise in the First Amendment No Man’s Land between obvious commercial advertising and editorial speech by traditional media.  This panel examines the disparate jumble of legal tests and standards that apply when brands sponsor, influence or author news stories, features or commentary on matters of public concern and considers whether they can be harmonized with evolving commercial speech doctrine.
  • Deirdre Sullivan, The New York Times Company
  • Rick Kurnit, Frankfurt Kurnit Klein + Selz PCMary K. Engle, Federal Trade Commission, Associate Director, Division of Advertising Practices
  • Allison Lucas, BuzzFeed, General Counsel
Moderator:   Scott Dailard, Cooley LLP
Strategic Issues:  What questions are we asking now? Where is the law going?
An all room discussion on the strategic issues that should be raised in litigation concerning commercial speech and the First Amendment.
Moderator:  Timothy L. Alger, Greenberg Traurig LLP
The conference is sponsored by: Avvo Inc., Cooley LLP, Davis Wright Tremaine LLP, Frankfurt Kurnit Klein & Selz PC, Greenberg Traurig LLP, and Levine Sullivan Koch & Schulz, LLP.

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Et tu, Copyright Office?

Posted on May 18, 2016 by rtushnet

Authors’ rights are for other people, apparently.  (I don’t actually begrudge them this release, but it does say something about the difference between “reasonable for me to want” and “reasonable for you to want.”  OK, a little more snark: “irrevocable,” LoC?  Are you sure about that?)

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Second Circuit narrowly interprets materiality for Lanham Act purposes

Posted on May 18, 2016 by rtushnet
Apotex Inc. v. Acorda Therapeutics, Inc., — F.3d —-,
2016 WL 2848911, No. 14–4353–cv (2d Cir. May 16, 2016)
 
The parties compete to make tizanidine, a drug for treating
spasticity. Apotex alleged that Acorda (i) filed a sham citizen petition with
the FDA to hinder approval of Apotex’s competing formulation in violation of
Section Two of the Sherman Act, and (ii) violated the Lanham Act’s proscription
on false advertising. The factual dispute focused on the relative efficacy of
tablets or capsules in controlling somnolence, one of the key side effects of
tizanidine; tablets and capsules aren’t bioequivalent, and there’s a substantial
difference in drug absorption when capsules are taken with food.  Taking the capsules with food thus diminishes
sleepiness as a side effect, and Acorda had a patent on capsules while Apotex
sold generic tablets.  The district court
dismissed the claims and the court of appeals affirmed, in the process hinting
at the instability that Caronia has
introduced into advertising law.
 
As for the antitrust claims, “Although precedent supports an
inference that a citizen petition is an anticompetitive weapon if it attacks a
rival drug application and is denied the same day that the application is
approved, that inference has been undercut by recent FDA guidance.”
 
False advertising: capsules carried an FDA label instructing
doctors to distinguish between tablets and capsules and between taking the drug
with food and without: “The prescriber should be thoroughly familiar with the
complex effects of food on tizanidine pharmacokinetics.”  The label also had a graph showing “Mean
Tizanidine Concentration vs. Time Profiles for Zanaflex Tablets and Capsules (2
x 4 mg) Under Fasted and Fed Conditions.” The peak for the curve representing
tizanidine capsules (taken with food) was lower, and occured later than the
peak for the curve charting concentration over time for tizanidine tablets
(taken with food).  As the label
explains, pharmacokinetic differences between the fed and fasted state may
affect the frequency and onset of certain adverse events, including sleepiness.
 
Once Apotex’s ANDA for capsules was approved, Acorda “countered
with its own authorized generic version.” 
Apotex argued that Acorda’s sales reps misrepresented to doctors that
its capsules reduced the maximum concentration of the drug in comparison with
tablets, and then improperly used reduction in that measure as a proxy for
decreased sleepiness.
 
On the Lanham Act claims, the court spends a bit of time
hammering home that its old “inherent quality or characteristic” language
really, really just means materiality, like every other circuit requires.  Then the court explicitly holds that “representations
that are wholly consistent with an FDA label” aren’t subject to Lanham Act
liability, for some reason not mentioning Pom
Wonderful.  A footnote cautions that “Lanham
Act liability might arise if an advertisement uses information contained in an
FDA-approved label that does not correspond substantially to the label, or
otherwise renders the advertisement literally or implicitly false.”  However, the general rule “reflects proper ‘deference
to the expertise’ of the FDA as the regulatory agency responsible for issuing
the label by respecting the exhaustive process preceding the issuance of a
label.”  Furthermore, this rule “insulates
pharmaceutical companies from liability when they engage in First Amendment
speech that is consistent with the directive of the regulatory body having
oversight of product labels.” 
 
A couple of things: of course, assuming Central Hudson is still good law, the Lanham Act also insulates companies from liability
when they engage in truthful, nonmisleading commercial speech (presumably what
the court means by “First Amendment speech,” since even false advertising is covered by the First Amendment, albeit
not protected).  That is, the Lanham Act regulates less than what Central Hudson supposedly allows, because false/misleading
commercial speech may simply be banned. 
In that regard, there is no need to refer to the FDA, unless the First
Amendment requires a safe harbor for FDA-approved speech.  I think a rather more complex theory would be
required to justify that claim, and
it’s also inconsistent with what the Supreme Court has held with respect to
product liability claims about drugs, not to mention arguably (though not
necessarily) with Pom Wonderful.
 
Separately, when the court of appeals says that, “in order
to avoid chilling speech that ought to be protected, Acorda’s advertisements
cannot form the basis for Apotex’s claims to the extent they were in line with
the FDA-approved label,” it is a bit disingenous about its own precedent. The
court is surely aware of its own decision in US v. Caronia, holding that the First Amendment protects much, much
more than FDA-approved statements, but it is shying away from the implications
of that decision for other regulatory regimes. 
As this awkward attempt foretells, the day of reckoning can only be
staved off so long.
 
The court mostly found that the challenged statements were
supported by the FDA-approved label.  E.g., a rep said, “I explained to [the doctor]
that the [C]apsule[ ] [is] really unique in that it counteracts a lot of the
drowsiness when you dose it with food. He said he would give that a try and see
how well it works for his patients.”  “When
Acorda learned that its representatives may have made unauthorized promotional
claims for Zanaflex Capsules, Acorda’s head of sales sent a memorandum to the
sales team explicitly forbidding promotions that Zanaflex Capsules had fewer
side effects and less sedation than the tablets.”  Though representations that capsules provided
more “flexibility” than tablets weren’t on the label, Apotex’s burden was to show
falsity, not just lack of FDA approval. 
And there was no evidence that claims about flexibility were false or
misleading.  Nor did the reps’ claims
explicitly or implicitly represent test-proven superiority in sleepiness, only that
the pharmacokinetic results suggested less sleepiness.  “It is immaterial that no study has shown a
reduction in somnolence associated with Zanaflex Capsules; … Apotex must show
falsity, not merely uncertainty.” 
Moreover, the FDA label backed up the sleepiness claims—something that
the court specifically called a “harbor,” albeit not a “safe harbor”—because the
label warned that adverse events such as sleepiness might occur when switching
between tablets and capsules in the fed state.
 
In a brochure, Acorda superimpsed “30% INCREASE FOR TABLETS”;
“20% DECREASE FOR CAPSULES” on the FDA-approved graph.  Apotex argued that this was misleading,
because the graph showed mean
tizanidine concentration, which is the average drug concentration at different
points in time, while the text relates to the maximum drug concentration and,
by definition, was different from the mean drug concentration.  
 
The court of appeals found that there was a triable issue of
fact on falsity only with respect to the graph. 
The brochure also used sun and moon graphics and discussed day and night
dosing, but that wasn’t an unambiguous representation about efficacy against
sleepiness and there was no consumer reaction evidence.  And here the court implicitly rejects case
law suggesting that deliberate attempts to mislead can substitute for consumer
reaction evidence: “Apotex relies on internal marketing statements from Acorda
focusing on reduced [maximum concentration] and somnolence; but Acorda’s
motivations for launching the gatefold brochure do not constitute extrinsic
evidence as required.”  This isn’t a full
rejection, though, because of the issue with respect to falsity about the
concentration-sleepiness link: an intent to make an unsubstantiated claim doesn’t
translate into an intent to make a related false claim.
 
Apotex argued that the district court erred by examining the
brochure in isolation while ignoring the context of Acorda’s launch letters and
other documents detailing Acorda’s marketing efforts. “But the relevant context
of the advertisement is the overall message conveyed by the brochure. The
district court was not required to consider external marketing documents.”
 
The only real issue was the graph with the superimposed
text.  Since maximum concentration values
aren’t time dependent, and the graph displayed mean drug concentration over
time, a jury could find literal falsity. However, a jury could not find
materiality.  Apotex argued that literal
falsity allowed a factfinder to infer materiality, but that’s not so, despite
statements in case law indicating that “consumer deception is presumed, and
‘the court may grant relief without reference to the advertisement’s [actual]
impact on the buying public.’ ”  The
falsity here was only an exaggeration of the scale of the differences, and
there was no record evidence that this “inaccuracy” would deter capsule
purchases.  [Surely the court means “tablet”
purchases.] “Apotex fails to make the necessary showing that the specific
misrepresentation in the graphic—in any of Acorda’s advertisements—was likely
to influence consumers’ purchasing decisions.” 
Just how broadly the Second Circuit means this statement to stretch–for example, whether plaintiffs will be required to show that ads without the false statement at issue were less persuasive, versus whether they’ll be required to show that the claim is the kind of thing consumers care about–remains to be seen.

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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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