National Review reports on false advertising suit against Trump University

Posted on February 25, 2016 by rtushnet

Hey, the
National Review found a consumer protection lawsuit it likes: the one against
Trump University.  If he’s elected,
do we get to call him the Conman-in-Chief?

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Another court finds keyword buys don’t cause likely confusion

Posted on February 24, 2016 by rtushnet
USA Nutraceuticals Group, Inc. v. BPI Sports, LLC, 2016 WL
695596, No. 15-CIV-80352 (S.D. Fla. Feb. 22, 2016)
 
Plaintiff, here “Beast,” sells sports nutrition supplements
using trademarks such as “Beast,” “Beast Sports,” “Beast Mode,” and “Train Like
a Beast.” They’re packaged with the color “Beast Blue” and “a prominent ‘B’ in
black lettering.” Beast has used the “B” since 2008.  BPI sells competing products under the marks “BPI”
and “Be Better. Be Stronger. BPI,” the former of which was registered in 2012
and used since 2009.  BPI began using the
Better/Stronger mark on its products in early 2015.
 
BPI allegedly found that Beast had been buying keywords on
Amazon that included the BPI mark, along with “BPI Sports” (another BPI federally
registered mark), as well as “Best BCAA,” “Best Creatine,” and “Whey HD,” products
sold by BPI.
 

The banner redirects to a website offering Beast products
(though it was contested whether this meant a Beast-operated website or an
Amazon page).
 
In addition to its keyword buys, Beast allegedly infringed the
Be Better Be Stronger mark by using a tagline incorporating the stylized “B”
followed by the words “Original,” “Genuine,” and “More.”  This could be interpreted to read as “B
Original B Genuine B More,” allegedly confusingly similar to Be Better Be
Stronger BPI.
 

Beast argued that BPI lacked rights in the Better/Stronger
mark.  BPI’s CEO attested, under penalty
of perjury, that BPI had been using that mark “on all of its product labels,
product packs, advertisements, billboards, videos, and other promotional
materials” since April 7, 2015, which was enough to constitute evidence of
adoption.  Was the use sufficiently
public to identify the products to the public? Yes, because BPI showed that it used
the Be Better Be Stronger Mark on social media such as Facebook and Instagram,
in widely distributed print media such as Men’s Fitness Magazine, as well as in
other print advertisements, at trade shows, and on promotional items. Even
without sales volume evidence, this was enough to show that BPI targeted the relevant
public.  (The mark seems clearly
descriptive to me under the “general laudatory terms” rule—the use may be
public use, but public use doesn’t mean the public understands a trademark
meaning; but see below for the court’s conclusion.)
 
BPI argued initial interest confusion based on the keyword
buys; the Eleventh Circuit hasn’t adopted IIC as an independent theory, so
district courts in the circuit are reluctant to find it actionable.  BPI argued that North American Medical Corp.
v. Axiom Worldwide, Inc., 522 F.3d 1211 (11th Cir. 2008) “conclusively determined
that the purchase of ‘meta tags’—a piece of code akin to the use of advertising
keywords here—was actionable under the Lanham Act.”  As the court explained, “Not so.”  In Axiom,
a search using the plaintiff’s marks “yielded a result containing not only the
defendant’s competing website but, also, a description of the website which
included and highlighted the plaintiff’s trademarked terms.”  Thus, the Axiom
court found that consumers would believe that defendant’s products had the same
source as plaintiff’s, or at least that defendant distributed plaintiff’s
products, so there was regular source confusion.
 
By contrast, the banner ads didn’t refer to any of BPI’s
marks.  Thus, even assuming that IIC is a
valid theory, Beast’s keyword buys didn’t cause it.  BPI couldn’t find any cases indicating that
buying keywords, without more, suffices to cause IIC, which involves “luring”
consumers via similarity to another mark. 
“[T]he use of a keyword encompassing a competitor’s terms does not
necessarily produce an infringing advertisement; it is the content of the
advertisement and/or the manner in which the mark is used that creates initial
interest confusion.”  The court politely
referred to the Ninth Circuit’s “continued examination” of keyword ads culminating
in Network Automation to bolster its
conclusion.

Beast’s banner ads clearly contained Beast’s mark, “Click to Save on Fitness
Supplements,” and a clear identification of the advertisement’s sponsor, “Beast
Sports Nutrition.” Plus, the distinct markings of the banner ad, contrasting to
search results, “alerts the consumer viewing the page to the fact that the
image is an advertisement for products separate from those already listed in
the website’s organic search results.”  BPI even submitted evidence that keyword buys
were standard in the internet advertising industry, and the court declined to adopt
a premise that “logically culminates in the destruction of common Internet
advertising methods and unreasonably encumbers generally accepted competitive
practices.”
 
Turning to the Better/Stronger mark, the court found the
mark suggestive because it identified the intended results of the product, not components of the product.  However, the mental leap required was “minor,”
so the mark was only weakly suggestive. 
No discussion of market strength.
 
Similarity: BPI argued that the B Original tagline copied
the Be Better Be Stronger Mark’s cadence and sound.  The first version was most logically read to
incorporate a repeated “B” sound, which did create a similar impression to the Be
Better Be Stronger mark, and “even the second rendition seems to require an
articulation with a repeating ‘B’ sound.” 
Thus, the sound was “strikingly similar.”  Nonetheless, other elements created
dissimilarity, especially the use of each party’s house mark, with which the
taglines were exclusively used.  The
house marks clearly identified the respective sources of the parties’
goods.  Plus, the recurring syllable was
just a common verb, which made the similarity less relevant.  In addition, “the number of syllables present
in each mark undoubtedly affects the tempo of the mark’s pronunciation, as well
as the mark’s intonation, depending on the speaker, thereby altering the
overall impression of the respective marks.” 
Thus, similarity was a neutral factor in the court’s analysis.
 
Channels of trade/advertising methods: The products were the
same and sold in the same retail outlets to the same consumers.  Favored a confusion finding.
 
Intent: There was no evidence of intent to capitalize on the
goodwill of the Better/Stronger mark.  Actual
confusion: BPI had no evidence.  Neither
favored a confusion finding.
 
Overall, the court found confusion unlikely given the
relative weakness of the BPI mark and the dissimilarity between the parties’
uses.
 
The court rejected Beast’s unclean hands defense related to
BPI’s alleged purchase of Beast-related keywords, but this was a disputed
factual issue.
 
 

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Second Circuit upholds law against “credit surcharges” that allows “cash discounts”

Posted on February 22, 2016 by rtushnet
Expressions Hair Design v. Schneiderman, 803 F. 3d 94 (2d
Cir. 2015)
 
Somehow I missed this when it came out last September! New
York General Business Law § 518 provides that “[n]o seller in any sales
transaction may impose a surcharge on a holder who elects to use a credit card
in lieu of payment by cash, check, or similar means.” The district court
enjoined this law on First Amendment grounds, and the court of appeals
reversed.
 
The background:
merchants pay swipe fees to credit card issuers, 2-3% of a transaction.  Merchants would like to pass these costs on
to consumers using credit and let them know about the charge in order to
convince them to pay cash, so they’d like to impose a “surcharge.”  A discount for cash can also be offered, but
we know behaviorally it’s less effective of a frame.  It’s also plausible that people who were
deterred from using credit cards would buy less (since we find it harder to
spend cash than to use credit), thus dampening retail sales.  (Though presumably the merchants who want to
“surcharge” will take that into account for themselves.)  Proponents of bans on surcharges also argue
that they “tend to exceed the amount necessary for the seller to recoup its
swipe fees, meaning that sellers will effectively be able to extract windfall
profits from credit-card users.”  By contrast,
cash discounts won’t be set higher than the marginal cost of credit.  (Citing my
colleague Adam Levitin and spelling his name correctly this time!) Plus,
because credit-card surcharges (unlike cash discounts) offer a means of increasing customers’ bills, “dishonest
sellers may attempt to profit at their customers’ expense by imposing
surcharges surreptitiously at the point of sale.”
 
Federal law used to ban surcharges; when that law expired in
1984, eleven states, including New York, enacted their own no-surcharge
rules.  The law wasn’t very significant
for a while because of no-surcharge contracts imposed by credit card issuers,
but now those aren’t in effect any more because of antitrust law, and the NY AG
went after a few sellers for imposing “surcharges” to listed prices.
 
Plaintiff Expressions alleged that its current policy is to
charge two different prices, one for credit-card customers and one for cash
customers. But it was concerned that describing this difference as a “surcharge,”
or “say[ing] that credit is ‘extra’ or ‘more,’” might violate § 518.
Expressions would like to charge credit-card customers 3% more than cash
customers, and to display a sign that “characterize[s] the price difference as
a 3% credit-card surcharge on top of the listed cash price” without “displaying
the total credit-card price as a dollar figure.”
 
The court began by noting that § 518’s use of the word
“surcharge” “assumes that a seller to which the statute applies will have a
‘usual or normal’ price that serves as a baseline.”  This isn’t the ultimate price charged to cash
customers, but is the “regular” price. 
So, “if a seller’s regular price is $100, it may not charge credit-card
customers $103 and cash customers $100, but if the seller’s regular price is
$103, it may charge credit-card customers $103 and cash customers $100.”  Sellers who post single prices are posting
the “regular” price, and can’t charge credit-card customers more than the
sticker price if cash customers aren’t also charged. But the state law, unlike
the federal law before it, didn’t explicitly use the term “regular price,” and
didn’t deal with the issue of whether a seller can post a double sticker price,
one with the credit price and one with the cash price.
 
However, plaintiffs were seeking to invalidate the law’s
prohibition on advertising a single price plus a credit-card surcharge, not
just the arguable prohibition on dual sticker prices.  The court concluded that §518 was constitutional
as applied to single-sticker price sellers; the double-price advertising
challenge failed because §518 could readily be construed to be limited to the
single-sticker context.
 
The court concluded that §518 regulated conduct, not
speech.  Prices aren’t speech, though
they are communicated through speech. 
While advertising lawful prices is protected by the First Amendment, setting prices can be regulated
directly.  “If prohibiting certain prices
does not implicate the First Amendment, it follows that prohibiting certain
relationships between prices also does not implicate the First Amendment.”  Plaintiffs conceded that a flat ban on any
discounts or surcharges for credit-card use wouldn’t trigger First Amendment
scrutiny.
 
Plaintiffs responded that, because credit-card surcharges
and cash discounts “ultimately amount to equivalent differences between the
price charged to credit-card customers and the price charged to cash customers,”
§518 burdened speech by drawing a line based on words, rather than on economic
realities.  But by its terms, §518 didn’t
bar any referring to credit-cash price differentials as credit-card surcharges,
“or from engaging in advocacy related to credit-card surcharges; it simply
prohibits imposing credit-card surcharges.”  
 
Whether a seller is imposing a credit-card surcharge can be
determined without reference to the words the seller uses to describe its
pricing scheme: “If the seller is charging credit-card customers an additional
amount above its sticker price that it is not charging to cash customers, then
the seller is imposing a forbidden credit-card surcharge.”  Thus, the only relevant words and labels were
(1) the sticker price and (2) the price charged to credit-card customers.  Those prices aren’t speech, and regulating
the relationship between them didn’t regulate speech.
 
[Though I can see the argument that marking the product with
the (cash) price is speech, because it’s a statement “this is the price” as
well as being the price (unless there’s a credit surcharge).  It’s a performative speech act—but
interestingly, it is only performative so long as the law says so.  So we could say that the law is regulating
the performative part of the price: the law is specifying what the “price”
is.  Without the anti-surcharge law, the
seller could say “I didn’t mean to say that was the ‘price’ just because I put
it on the sticker.”  But that would raise
pretty obvious issues of consumer deception. 
In consumer protection law, we generally don’t let sellers redefine
words just because they would like to, even if there’s a small-print
disclosure—what a reasonable consumer would take away is the measure.]
 
Plaintiffs erred in insisting that imposing a surcharge (an
amount over sticker price) was equivalent to the words used to describe that
pricing scheme, “credit-card surcharge.” 
The law didn’t “favor” using the term “discount.”  It simply regulated the relationship of
sticker price to the price charged to credit-card customers.  A seller who does this could call it a
“discount” or a “cabbage” and would still violate the law.  A seller who offered a discount on its
sticker price to cash customers could call it a “surcharge” and would be acting
lawfully.  Of course, it might be more
natural to use more common labels, but the fact that each pricing scheme has a
label doesn’t mean it is the label.
 
Plaintiffs argued that “credit-card surcharges” were the
same thing as “cash discounts” because consumers react differently to
them.  (Put that way, that argument sounds
counterintuitive, because you might ordinarily think that people react
differently for some reason; the
implicit argument is that there is a predictable cognitive error (though maybe
it’s just a heuristic that is useful in many situations) and that government
cannot intervene to ensure that the consumer will perceive the baseline in a
particular way.)  But that argument
assumed that NY had regulated the labels, and not the prices.  The presumption against content regulation
doesn’t help answer the question of whether the law at issue regulates speech
or conduct.  Consumers can be made
unhappy lots of ways; “the mere fact that consumers react negatively to
surcharges thus does not prove that surcharges are speech.”  Consumers just don’t like being charged extra,
because of loss aversion.  Consumers are
annoyed when the sticker price is lower than the price they’re charged. If the
sticker price is $103, credit-card customers won’t be particularly annoyed by
having to pay $103, even if cash customers get a discount, and nothing about
that “turns on any words uttered by the seller.” [Other than the sticker price,
which created the initial expectation.] “[W]e are aware of no authority
suggesting that the First Amendment prevents states from protecting consumers
against irrational psychological annoyances.”
 
Moreover, it’s fine to ban certain prices because of how
consumers react to them.  The Supreme
Court has explicitly approved price controls designed to suppress consumer
demand.  The First Circuit allowed
Providence to ban discounts for tobacco products based on evidence that such
discounts would lead “to higher rates of tobacco use among young people.” Although
sellers could have lowered list prices to achieve the same dollar amounts as
the discount price, that fact doesn’t change the regulation from a price
regulation to a speech regulation.  New
York can likewise decide to spur demand for credit-card use without violating
the First Amendment, as applied to single-sticker sellers.
 
The court of appeals also reversed the finding of
unconstitutional vagueness. Section 518 plainly has a “core meaning that can
reasonably be understood”: “sellers who post single sticker prices for their
goods and services may not charge credit-card customers an additional amount
above the sticker price that is not also charged to cash customers,” just like
the lapsed federal ban.
 
In a footnote, the court noted plaintiffs’ argument that the
surcharge ban is a naked giveaway to the credit-card lobby.  However, the legislature identified a number
of “public-regarding” aims as well, and anyway, “a panel of this Court has
recently expressed the view (that we need not address) that even unadulterated
‘economic favoritism’ is a sufficiently rational basis to justify a state law
regulating economic activity,” because we don’t like Lochner.  Anyway, plaintiffs
didn’t bring a rational basis challenge; the wisdom of §518 was not for the
court of appeals to judge.

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WIPIP Session 7: International issues

Posted on February 20, 2016 by rtushnet
Session 7 Room 145: International IP
 
Sean Flynn, Mike Palmedo, & Walter Park, Creating a
Database of Changes to Copyright User Rights in 40 Nations
 
Fair dealing is flexible (uses a balancing test) but not
open (limited classes of acts).  There
are counts of industries in different countries; empirical question: how does
the law actually impact behaviors? 
Scattered data, such as lack of enforcement of German ©s in US during
WWII, but not broad data.  Existing
surveys are static, not dynamic.  There
are various exceptions around the world; South Africa’s quotation exception,
cabined only by fair practice, not criticism/review—looks like fair use in its
openness internally.  Looking for whether
this openness has consequences for innovation.
 
Calboli: Do you find major differences b/t common and civil
law?  Portugal has adopted something like
fair use.
 
A: We’re finding openness within civil law as well.  Civil law systems often say “we don’t use
abstract norms,” but even w/o multifactor test there’s often flexibility.
 
Lunney: You show larger revenues for big content industries
in nations with fair use v. those without, but you aren’t making causal claims.
 
A: not yet.
 
Lunney: How do I figure out for the US whether flexibility
is increasing?  Not sure you can get a
map of equivalent changes v. each district court/court of appeals cases in the
US.  Explain how you will map
changes/growth in fair use.
 
A: regionalization is extremely difficult, but the key
aspects are use of citations—we probably will look for circuit court level
stuff. In Brazil we’re looking at court changes—3-4 decisions opened up
interpretations of exceptions.
 
Alexandra George, Alternative Dispute Resolution in
International Intellectual Property Disputes: A Solution to Jurisdictional
Challenges?
 
Conciliation: like mediation, but conciliator puts forward a
nonbinding settlement proposal at some point—can be good if conciliator is an
expert in the field.
 
MedArb: blend of mediation and arbitration; binding if
mediation doesn’t work. The neutral may be the same at both stages (mediator
hears your secrets, finds your bottom line, and that’s controversial) or may be
different.
 
Expert determination: usually binding unless otherwise
agreed; expert has inquisitorial powers to gather info; usually only decides
issue w/in their area of expertise; can be useful in patent cases.  Mutuals generally can be experts, which may
be an improvement on judges.
 
Benefits: certainty; few avenues of appeal exist. Cost,
confidentiality, control over neutrals, location, date, even outcomes for mediation/conciliation.  Outcomes that wouldn’t be available in court;
speed; high resolution rate—80% for mediation, nearly 100% for arbitration.
 
WIPO is involved in ADR: maintains a list of neutrals &
matches them to cases; domain name dispute resolution; trade mark office
mediation.  ADR hubs: major cities like
London, Paris, Geneva, NY, Tokyo, Singapore—but Hong Kong, Delaware, etc.
promote themselves as good places—stable & predictable legal system, lack
of corruption, high quality lawyers, perception of neutrality, arbitration law
based on UN model law, geographic convenience.
 
Int’l dimension: mediation gets more complicated, but if we
get a treaty allowing settlements to be enforced worldwide, could be an important
development. Another possibility: ADR divisions of courts.  Online ADR: newly developing.  Model: UDRP through WIPO.  Small parties w/o much money may be able to
solve int’l problems this way.
 
Q: worried about capture of ADR by well-resourced interests
like TM bullies that then skew the results. 
Concerted effort by large corporations in US to mandate arbitration in
consumer contracts—less fair to smaller parties/more vulnerable groups.
 
A: Agree it’s an issue. 
When both parties seek arbitration, it works a lot better.
 
Peter Yu: Dealing with distrust of developing countries’
legal systems doesn’t deal with the choice of law issue.
 
A: Depends on how arbitration agreement is drawn up.  May allow arbitrator to choose equitably.
 
Kamil Kiljanski & Benedikt Herz, Survey of IP Piracy in
the EU: Actually about displacement rates of consumption of AV content—unpaid consumption
is common in Europe, but effect on movie sales is unclear.  Existing studies find very different
displacement rates, 0.27 to 1—all over the place for movies.  Our study is the first to use consistent
methodology and a big sample.

Dataset: survey.  6 different European
states.  Post-treaty/recent.  Surveyed minors: 14-17, also not done
before.  Survey how much unpaid and paid
consumption each had; don’t ask them what-if questions.  Trying to find if an individual consumers
more unpaid content consumers less paid content.  Endogeneity problem: Individuals differ in
unobserved tastes for films.  If you don’t
control for this, you get bias and more modest displacement rates than the
truth.  Control: some sort of supply
instrument.  Event study: close of
MegaUpload may give you more truthful estimate of displacement. But we didn’t
have such events systematically across member states. Control for broadband,
but density is now very high/not good any more. 
Use Rob/Waldfogel methodology: exploit the fact that most films are seen
in the year of release.  Except they did
it for 500 US students and we did it for 30,000 people in Europe.
 
Germany, Spain, France, UK, Poland, Sweden; 2014.  Report the way they saw the movies surveyed.
What about underreporting? We ensured anonymity; avoided terms w/negative
association, such as “illegal” and “piracy,” embedded questions in other
questions; specifically named known sites in each country.
 
Results: big differences b/t countries.  Much less illicit consumption in Germany than
in Sweden or Spain.  1/7 movies viewed
through illegal means.  1 illegal 1st
view reduces legal 1st views by 0.416 units.  Estimated displacement rate is higher than
with cross-sectional approach.  Illegal
first view slightly increased 2nd legal view: 0.04 units.  Higher in Spain than France or Germany.  For the whole sample, we estimate lost movie
sales to be 4.27%.  Germany v. Spain: 4x
difference in percentages.
 
Bartow: kind of movie? Blockbusters/special effects v.
romantic movie?  Some movies have staying
power.
 
A: this is just blockbusters/biggest sellers in the
country.  If it’s the rate for
blockbusters, it’s probably lower for other movies, because blockbusters are
the most-pirated.
 
Q: Are you just looking at movie attendance?
 
A: Cinema attendance, DVD, legal download—etc.
 
Q: what about delayed release of DVD?
 
A: we used release date country by country.
 
Q: Views v. downloads: people download stuff they don’t
watch.
 
Peter Yu, The Investment-Related Aspects of Intellectual
Property Rights:
 
Eli Lilly’s $500 million complaint against Canadian gov’t;
challenges against plain packaging by tobacco companies.  Concerns: (1) process—high arbitration cost,
$8-10 million on average and up to $30 million, compared to $300,000-400,000 in
TRIPS WTO dispute; (2) impartial/unaccountable artibrators; lack of transparent
proceedings; frivolous disputes; (3) interpretation: lack of binding precedent,
no appeallate process, oversimplified view of IPRs; ignore TRIPS flexibilities
and safeguards; narrow focus on IP side of bargain.
 
Outcome: large awards, $50 billion to Yukos Oil; used to
challenge legit regulations: environmental, labor; more forums to sue gov’t;
more lawsuits by private actors; more coverage beyond TRIPS based IPR;
rewriting TRIPS and other multilateral bargains.
 
TPP: says hearings will be open and available to public; all
submissions will be published for US cases. 
Attorneys’ fees for unreasonable claims. 
Amicus submissions allowed for stakeholders.  Right to regulate in public interest for
public health, safety, financial stability, and environment; also a
tobacco-specific measures allowing regulation. 
Burden on claimant in all instances to prove all elements of claims;
investor expectations aren’t enough.

Remaining concerns: Some improvements in TPP, but still concerns—high arbitration
costs; ignore TRIPS flexibilities and safeguards. To prevent forum shopping, a
claimant must waive the right to institute parallel proceedings in other
forums.
 
Suggestions for improvement: interrogate whether IPRs at
issue constitute investment.  Rights don’t
equate to investment in a country—investment protection focuses on investment
being taken away.  Registration of
patents, for example: you can register based on foreign examination in some
cases; just claiming patent rights shouldn’t be enough.
 
Contingency: there are a lot of contingencies in IPRs—invalidation;
maintenance/renewal fees; free speech and competition law constraints. This should
be recognized.  Many patentees will stop
paying maintenance fees if patent not valuable. 
 
IP investment protection—might need to look at overall
protection for investor, such as FDA protection, or understand that competition
law reduces protection.  State: recognize
state’s foundational contribution to registration and enforcement
infrastructure; bargain-based contribution—some companies might get tax
concessions/free land and that should be considered.
 
Examine relationship between TPP and other int’l agreements
like TRIPS.
 
Institutional improvements: Advisory center, similar to WIPO’s.
Small claims arbitration.  Appellate
process improvements.
 
Silver lining: TPP investment chapter maybe can be baseline
for ISDS safeguards.  Developing
countries may make traditional knowledge/traditional cultural expression claims
and may be able to use ISDS against them. 
May reduce WTO litigation as home gov’ts say: bring your own claim!  Benefits to small/medium enterprises if costs
of arbitration can be limited.
 

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WIPIP session 6: IP Theory

Posted on February 20, 2016 by rtushnet
Session 6 IP Theory 3
 
BJ Ard, More Property-Like than Property: The Asymmetry of
Remedies in Tangible and Intellectual Property
 
Real property remedies are less “property-like” than IP
remedies.  Property v. liability rules.
Real property often much more forgiving of unwitting trespasser than IP
is.  Putting a permanent structure
accidentally on a neighbor’s land.  If
you’re unwitting, court is more likely to enforce a liability rule: require you
to compensate your neighbor for lost land: involuntary sale.  In ©, by contrast, subjective innocence is
unlikely to entitle you to the innocent infringer defense.  In patent, you could do a good faith search
and still miss; though you might be spared punitive damages, an injunction can
still likely issue.  Adverse possession:
intentional trespass may become nonactionable. 
 
(1)  
It seems backwards that “property” rules would
be more prevalent in IP.  Proponents of
right to exclude: added security provides incentives to invest; remedies force
would-be takers to negotiate in the market; property rules can even secure
personality rights by protecting non-economic value invested in certain forms
of property. Nonetheless, tangible property law recognizes strong
justifications to depart.  Curious b/c
infringements in IP are often more socially efficient than the equivalent
taking in real property, because creativity is often iterative and builds upon
previous work.  In addition, nonrivalry
means that there’s no deprivation of use value as there is in real property
trespass.  Boundaries of IP are
communicated relatively poorly relative to boundaries of tangible property, so
unwitting infringers are more likely and harder to deter because they don’t
know.  Incumbent on property rule proponents
to justify.
(2)  
Pro-propertization rhetoric is missing context—many
argue that IP should be enforced by injunctive remedies/property rule
regularly.  Against the history of real
property remedies, it’s weird to derive rules for IP based on abstract theories
of property.
(3)  
Questioning IP’s current strategy of dealing
with these excesses. Congress occasionally acknowledges the problem, but its
go-to fix is piecemeal solutions—excused specific kinds of literal copying;
DMCA safe harbors.  Liability rules in
the form of compulsory/statutory licenses where transaction costs of property
rule seem unworkable. Startups, consumers, others who lack political voice can’t
get the exceptions they need.
 
Sheff: How does eBay
play into all this, if the quintessential property rule is injunction and eBay is decimating injunctions?
 
A: if courts apply it consistently, it goes a substantial
way to remedying this disparity (except for statutory damages). Patent comes
close to liability, but whether that works in practice comes down to
technicalities of calculation, which can sometimes be supercompensatory.
 
Calboli: Caps on infringement damages exist across
jurisdictions.  These are countries with
strong property rhetoric/traditions. Is the problem the property theory or the
structure of remedies?
 
A: You see in some jurisdictions a better sense of proportionality
in the remedies, missing in American context. 
If property is a right to exclude, that’s tightly linked to injunctive
relief.
 
RT: Dave Fagundes’
paper on this?  Patrick Goold’s
argument that copyright is really negligence, properly seen.  IP = patent, copyright.  Trademark?
 
A: Similar to Fagundes and Michael
Carrier—the wisdom of limits built into real property; good to build them
into IP.  Goold: the problem is that fair
use doesn’t have enough flexibility to deal with all the issues you might want in
a liability regime.  Not much familiarity
with TM (which might mean the paper should specify about ©/patent versus TM).
 
Q: Laches, estoppel as relating to adverse possession—which usually
requires open & notorious use.  Also,
there’s a reason for stronger remedies in patent b/c patent is temporally
limited as real property is not.
 
A: Could more equitable discretion in remedies help
this?  Petrella is one thing he worries about—no laches in ©. 
 
Tonya Evans, Reclaiming Copyright in the Age of Celebrity
Loan-Outs & Other Gratuitous Transfers
 
Intersection of property succession laws and ©, specifically
testamentary freedom v. right of statutory heir to terminate author’s transfers
during lifetime, specifically to an author-controlled, author-benefiting
vehicle.  Thesis: such transfers should
be treated equally; the latter should also not be subject to termination by
statutory heirs.  Apparently unintended
disparity between non-probate assets and probate assets, and the solution is to
except non-probate assets from termination rights inherited by heirs.  (So, to disinherit your heirs from your
literary estate, you have to hang on to your copyrights until death.)
 
Termination may be effected notwithstanding any agreement to
the contrary.  Loretta Lynn, Tom Petty,
Village People, Bruce Springsteen have successfully terminated, having survived
long enough. But what happens when an author passes away before the window
opens?  A small subset of heirs can
terminate.  Ray Charles: created a
private foundation funded solely by his royalties, designated sole heir in his
will.  His 12 kids got irrevocable trusts
after they waived any further right to his estate.  After he died, 7 children promptly served
notices of termination.
 
Current law includes gratuitous transfers made by the author
to a wholly controlled loan-out company, self-settled trust, private foundation
or similar will substitute.  Sometimes
they create future works as WFH for the trust/foundation, but will still want
to transfer existing works/rights to royalties. 
Useful for tax, estate planning, privacy—probated wills are public.  Unintended consequence: not honoring testator’s
well-planned intent.
 
Testamentary freedom: how do we identify what things might
be accepted, given the problem of the industry creating wiggle room against
Congress’ intent.  Solution: certain
gratuitous author transfers in the same way that wills are treated, exemption
from termination of transfers. A lot of artists transfer assets into their own
music publishing company; a critical means of asset protection along with
loan-out companies—financial/tax benefits to setting up that way.
 
RT: Really interesting project of evident practical
significance.  The industry evasion
concern is what jumps out at me: how should a gratuitous transfer be defined?  Can a proper definition do the necessary
work?
 
A: “author controlled, author-benefiting”—focused on that,
with concrete examples, is a good start.
 
Q: Entertainment label could work with that.  Are we more worried about transfers close to
the initial license period?
 
Ard: you’re concerned with the economic consequences of
interference w/Ray Charles’ intent. Is there an expressive component?  Marvin Gaye might have wanted a specific
approach to claims about copyright infringement that would be frustrated by the
kids.
 
A: Yes, that’s a primary concern.  The problem occurs b/c of financial/tax
issues, but as a property professor I’m concerned with parity for the treatment
of non-probate and probate assets.
 
Q: is there anything
courts can do if Congress won’t act?
 
A: will try to give some guidance to courts: w/Ray Charles
Foundation case, the court found that the Foundation had standing to fight
termination, but much remains to be decided. Heirs that agreed to do something
= doesn’t matter given the statutory language. 
[Maybe that should mean or be amended to mean notwithstanding any
agreement to the contrary before the author’s death.]
 
Betsy Rosenblatt, Belonging as Intellectual Creation: What
are we creating when we engage in creative endeavors?  First, stuff, the thing law has been most
concerned with—works, marks, inventions. 
But other things—communities—aren’t well served by incentives for
creation of stuff. But “progress” could embrace harder to quantify things like
human flourishing.  Money isn’t
everything for everyone.  One possible
creation of intellectual endeavor is a sense of belonging, and this can factor
into IP law and policy as we go forward. 
 
Belonging: personally and contextually mediated emotion felt
when people feel connected w/group, values in harmony w/group, etc. Basic human
need & value.  Vital component of
mental health.  One of the few universals
across cultures.  Strongly tied to
whether people find their lives to be meaningful.  IQ, motivation, physical health, life
expectancy can all be affected.  Ability to
participate in creative decisionmaking + reward, which reward is rarely
remunerative—being recognized/acknowledged as member of community, or
experiencing status, success, sense of accomplishment.  Synergy between reward and trust;
gatekeepers/barriers to entry can promote belonging w/in and inhibit w/out.
 
Creative communities are well-suited to developing senses of
belonging: unite people; opportunities for sense of belonging; opportunities
for status/recognition; if there are shared norms/trust that promotes belonging
even more.  Belonging is one of the
things that creative communities create. 
Amateur and professional.  Professional
artists often value sense of belonging from creating in ways stronger or
synergistic w/professional goals.  Lady
Gaga & her fans both get a sense of belonging from sharing the creation.
 
Law can promote or undermine belonging.  You can make it harder for people to be
recognized for their work.  I think WFH
may be a terrible idea for belonging; but maybe that’s not so if people even
within corporate communities can develop a sense of belonging based on other
factors.  Formal law can break
down/disrupt communities’ common norms/governance systems.  When we privilege creation by firms instead
of innovation by innovation in WFH, §1201, TM overreach, lack of experimental
use exception in patent—those things likely undermine belonging by discouraging
creative endeavor by individuals; firms may or may not choose to promote belonging
within themselves.
 
Adds an axis to our understanding of why we may want certain
IP rules. When we regulate away communities, we may be doing harm.  Need law to regulate among groups, but maybe
not so much w/in groups.
 
Q: Individual creation focus is quixotic—how does individual
creation turn into group creation?
 
A: The kind of belonging I’m talking about is situating
oneself w/in a creative community. Corporations can’t experience belonging, but
people can.  There is group creation, but
our law doesn’t account well for that.
 
RT: what if belonging is so strong people make it up no
matter what?  Slavery, prisons.  Then the reason for protecting belonging
would be more dignity-based than utilitarian.
 
A: we shouldn’t be trying to undermine it b/c it has benefit
in itself—it’s something that people need/seek out—don’t need to incentivize
it, just need not to harm it.
 
Q: Privacy literature has a lot about belonging.  Is belonging dependent on exclusion?
 
A: I think it doesn’t require exclusion, but empiricial
literature is internally contradictory.
 
Q: what if oppression brings people together as “pirates”
etc.
 
Jeremy Sheff, Progress for Future Persons
 
Normative commitments/debates that underlie our choices
about creativity policy: philosophical underpinnings.  Future persons: people who may exist in the future
but don’t right now. When we decide on certain policies, we have to decide
whether and how to account for those future people.  But for earlier authors, would we have
Shakespeare?  Would we have Romeo & Juliet?  He probably would have written something else—but
it’s not clear it makes our world better or worse—a problem of counterfactual
valuation. How should we think about these futures when we account for the
lives they will live/who they will be? 
What’s the moral implication of the non-identity problem—that if your
parents hadn’t gotten together, you wouldn’t be here and it’s not clear that we
wrong anyone by failing to bring them into existence, or by bringing into
existence someone whose life is worse than the life of another person we could
have brought into existence instead.
 
Economic response: count future lives, but discount them
according to some function; but that means welfare of future generations
asymptotically approaches zero very quickly. That seems morally troubling:
spend $1 now to save a billion lives later. 
Response in environmental law discussions: but it deals w/rights and
norms.  It’s not clear it makes sense
unless we’re talking about whether human life will be at all possible, v.
choosing among different types of suffering to invest in preventing.  Theory may be no help; we are indulging our
own normative commitments, and that’s ok. It may be inescapable; but then it’s
important to design social institutions to bring together disagreements and decide.
The future has no vote/can’t bargain with us, so we need a moral commitment to
an other-regarding view of the future.

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WIPIP Session 5: Copyright 2

Posted on February 20, 2016 by rtushnet
Session 5 Copyright 2
 
Zahr Said, A Transactional Approach to the Lay Observer in
Copyright Law
 
Internal contradictions in uses of the observer.  Humanities perspective: copyright doesn’t
have a theory of reading/interpretation/engaging with works.  Reader response theory as a means for
addressing some confusion in © law: it’s a literary theory broadly applied to
film, art history, music, and other genres beyond text.
 
Payoff: more coherence for ©’s reading practices and
specifically for its reader.  Formal tests
used by courts and a variety of informal uses. 
Formal: urge adoption of lay perspective, such as 2d Circuit’s ordinary
observer test; 7th Circuit’s more discerning observer test, which is
less about observer and more about filtering. 
Function of lay perspective unclear; rationales vary and are sometimes
in conflict—proxy for market harm, other things.
 
Reader response theory reoriented analysis of art away from
text and towards audience (an oversimplification but that’s what you get in 8
minutes).  Different movements w/in the
theory; her favorite is Rosenblatt, who started writing about it before almost
everyone else did—1938.  Scholar/teacher
who attended to pedagogical scholarship. Reader response theory involved a
spectrum of fidelity to text, author. 
Author communicates and controls à ideal reader.  Text controls à implied reader.  Reader controls à interpretive
communities.  Rosenblatt’s scholarship
was practical, thus useful for judges: The reader is here and the text is there
and something happens in the space of the transaction, but reader can’t do just
anything with a text.  Some readers see
more cues and some see fewer; some see different cues and you can be trained to
see different ones.  The reader actively
engages with the text. Transaction controlsà reader creates, text
constrains.
 
Two modes for readers: aesthetic and efferent stances.  Not the aesthetic from Bleistein, but
phenomenological.  Aesthetic: a general
experience from interacting with the work. Its meanings for you unfold through
time. You might notice color, shape in a painting—a basic understanding.
Efferent: You’ve been asked to take some piece of information away with you—efferent
comes from Latin, meaning to bear something away. There’s a correct answer: how
many straight lines are in the picture?
 
Aesthetic can change; there’s no one correct reading (though
there are incorrect ones) and the reading may change over time.  Evolves; concerned w/what’s experienced
during the reading; varies based on reader’s knowledge and background.  Efferent: objective, public, informational,
functionalist, can proceed quickly b/c you can filter; in theory any reader can
get the full/same info if equipped with sufficient guidance.
 
Aesthetic to efferent is a switch of modes: experience v.
studying for the midterm.  Spectrum of
practices in ©; judges are better efferent readers than aesthetic, especially
when we’re discussing questions of scope, such as what’s protectable and what’s
in the public domain.  Efferent reading
should be the task for matters of law.  Juries
or factfinders can read aesthetically. 
Doesn’t mean decision will be uniform. 
 
Prescriptions: we ought to allow more expert evidence for
anything that’s efferent. To the extent we allow aesthetics in for look &
feel or holistic test, acknowledge what we’re doing and instruct juries in it.  Perhaps even use special verdicts for the
jury to identify what they see as similar. 
If juries could explain, judge could even read jury’s expressions and come
to some conclusion about that.  We need
to be clearer about what we’re asking juries to do—look at the instructions in Blurred Lines case, where they were
unclearly asked to do a job that they unsurprisingly did poorly.
 
Kevin Collins, Economically Defeasible Rights to Facilitate
Information Disclosure: The Hidden Wisdom of Pre-AWCPA Copyright
 
As an architect, I viewed © not to stop copying by
architects, but as a tool to prevent owners from screwing me over.  Prevented the building owners w/whom I worked
from appropriating my design without full payment.  Law prof default: copyright augments
incentives for expression by preventing copying by strangers.  Architect view: © facilitates bargained-for
disclosure, resolving Arrow’s information paradox, backing up a contractual
relationship rather than providing incentive to create through in rem
rights. 
 
Pre-AWCPA rights were quirky, economically defeasible
rights.  Proven difficult to justify
under standard incentive theory of ©. 
Hidden wisdom revealed in dealings with building owners.  If you recognize that architectural © played
a transactional role in backing up contracts, it makes good sense. 
 
Copyright maximalists complained that lack of protection
against copying buildings meant insufficient incentive.  Minimalist critique: weak copyright is good
for creativity and protection should be thin; but defeasible rights are
ill-conceived.  Why not protect both buildings
and drawings and equally through thin copyright?
 
Features of contracts that create information problems:
Standard design-bid-build project delivery: five phases; design information is
mostly generated early on, with schematic design, design development; then
construction documents, bid oversight, construction management.  Last phases: more management, coordination,
not creative information producer.  These
agreements usually defer most compensation to later phases of the contract.
Antitrust authorities went after AIA in a way that makes architects hesitant to
share fees info. Design development is a small component of fees received; most
is paid at the end. When offering services a la carte, architectural firms
incresae the cost of schematic design as a stand-alone service. Finally, for
many reasons, the contract is terminable at the convenience of the owner. This
allows owners to engage in opportunistic conduct: hire more expensive architect
to design, then fire her and hire a cheaper architect to oversee the grunt
work.
 
Thus, architects will hesitate to reveal design information
early in the process for fear of misappropriation, but owners want to know that
information before fully committing. 
Pre-AWCPA rights provided strong rights against appropriation by owners;
until the building is built, there is no built building from which to copy,
which can then be copied—but by then architect will have received all the
necessary fees.  So pre-AWCPA rights
provided the minimum rights necessary to get the incentives right.
 
Almost all post-AWCPA cases fall into two categories: (1)
architect v. owner, same as pre-AWCPA. 
(2) suits against strangers involving cookie-cutter, model-home
developers/architects, where expectation is that cost of design is to be
recouped over the sale of many copies. 
Architects for specialized projects aren’t using their AWCPA rights.  Future work: why not?  Is post-AWCPA copyright just very thin?
 
Rebecca Curtin, Contractual Origins of Authors’ Rights:
Looking for deals showing an idea of literary property not dependent on
possession of the actual manuscript. 
Earliest evidence of authors’ contracts is in Stationers’ Register
itself: “Entered for his copy”—might not even name the author, but would name
printer/bookseller who entered the copy. A handful of different entries: The
Treatise of Melancholy by Timothy Bright, Oct. 1586; Bright promised not to
meddle with the printing of the book until sold.  One of the ambiguities of the time was how
soon or whether authors would have the right to reissue a new, altered,
abridged, or revised version.  Stationers’
copyright was protection only against literal copying, so authors putatively
(others as well) could abridge or otherwise create new versions.  Here, the parties negotiated to prevent
competition from the most desirable source, Bright himself.  Although this isn’t about a strong
reversionary right, we see authors & publishers trying to work out the
problem of literary property on a contractual basis.
 
1607: a note that it’s agreed that this copy shall never
hereafter be printed again without the consent of Mr. Ford the author.  A retention of rights.  Piggybacking off of the ability of the
bookseller who entered the copy to vindicate those rights.  That right doesn’t depend on physical
possession of manuscript; leverages contract to control the work. There’s still
an ambiguity: whether Ford is free to deal with another bookseller.
 
Another memorandum: seller promises not to reprint w/o
author’s consent, and will surrender copy to him when he shall require it.  Parties have advanced to thinking about the “masters,”
as it were.  Intended it to be used as
evidence in court in the event of a dispute.
 
Contracts become more complex over time—Milton’s contract
for Paradise Lost called for contingent payments; he got more money if the
first run sold out, and more if a second/third run sold out.  Total potential: £20.  Also
included duty to account; emergence of author as commercial dealer.  1690s: contract b/t Tonson and Dryden
includes complex compensation provisions, both up front and investment on
Tonson’s part to allow Dryden to resell copies as part of his compensation.  Language isn’t very clear separating delivery
of manuscript from right to exclusively print; they don’t always make the
distinction.  Very clear language borrows
from vocabulary of property in 1709, just before Statute of Anne: “sole right
and title” for a complete copy, “and 50 copies for my own use.”
 
Authors were far more active in market as proprietors than
we’ve given them credit for.  Idea of
authors as owners can be shown in the transactions they undertook.
 
Zvi Rosen, Saurabh Vishnubhakat, Empirical View of Copyright
Registrations and Renewals under the 1909 Copyright Act
 
No statistics exist prior to the Copyright Act of 1870.  Until 1897, there are statistics by class and
year.  No records for 1897, when they
moved buildings.  1898 and beyond: annual
reports with basic statistical information. Catalog of copyright entries begins
publishing in 1891; published for Customs agents to enforce manufacturing
clause, but it was ineffective for that and people quickly used it for
registration info.  CCE expanded over
time to add more information; 1947: began including statistics on renewal.
 
1909 Act: need publication with notice, then registration
and deposit.  So, did authors register
shortly after publication under the 1909 Act? 
Until renewal became optional, 98% of renewals were registrations for 28
years earlier; almost everyone registered pretty much right away. Even in 2005,
it’s 76%.  So renewal data can be used to
determine renewal rates as percentage of registrations. 
 
Annual reports turn out to be only kind of helpful,
though.  Ratio of registrations in annual
reports to registrations in CCES, also same issue w/ renewals: a lot of
variations (it doesn’t match the calendar year).   Registration
#s: Books dip in Great Depression while music seems to go up.  Photos: spike and then drop, lower in 1977
than they are in 1900.  Other categories
have their own curves.  Mapping copyright
against economic panics: you can see for all of them more or less there’s a
subsequent dip in © registrations.
 
Percentage of all renewals by filing year: Renewals that
mention an initial registration after 1978 and renewal after publication—this would
skew the calculation of renewal right. 2005: a lot of people filed a
registration and a renewal in the same year in order to be timely.  [I would guess for termination of transfer
reasons.]  Renewal rate for all registrations
1919-present.  1962: extension of renewal
term; 1978; 1992 becomes automatic and renewals decline.  47-year term: renewal rate gets substantially
higher and stays that way.  Renewal rate
for 1947-1961: 12%; goes up to 15% until 1977, when term was being consistently
extended; then went up to 20%. Very little variance year by year within
periods.  The one from 2005 is unusual
because it became increasingly known in business that filing was unnecessary.

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WIPIP Session 4: Design

Posted on February 20, 2016 by rtushnet
Session 4: IP, Design, User Experience
 
Sarah Burstein, Reviving Ornamentality: Fed. Cir. killed
ornamentality in design; right now it means nothing other than Morton-Norwich nonfunctionality. She
thinks we should bring it back.  Two
aspects: (1) “matter of concern” in normal and intended use; (2) if you can’t
see it we don’t care.  But “normal and
intended use” means everything from manufacture to disposal; if you can see it
when it breaks, then it’s within the possible scope of design patent.  If you can draft a patent application, you
won’t run up against an ornamentality problem.
 
First mistake: treating ornamentality as opposite of
functionality. Some designs can be both at the same time.  Fed. Cir. says: it’s not primarily functional
unless there are no other alternatives; this makes everything ornamental b/c
there’s almost always an alternative. 
Only recent exception: a key that fit into a specific lock; and even
then there was a dissent.
 
This is a problem b/c design laws should incentivize the
creation of new and creative aesthetic product designs.  Design patents are now protecting useful
innovations in design patent clothing/petty patents, against Congressional
design.
 
Before 1982, many courts said (1) is design dictated by utilitarian
concerns? (2) additional aesthetic requirement—some visual impact.  Don’t think of ornamentality as mere
nonfunctionality doctrine. Ask whether the design makes a material aesthetic
contribution to the product, providing a reason for choosing one over the
other?  How do we test that?  Well, we can measure it indirectly. Ask of
producer: was this design driven by utilitarian concerns?  Ask of consumer/user: does the appearance of
this type of design matter to a substantial portion of actual users?
 
Why focus on the visual? 
This is the only way that design patents make sense in our IP
landscape.  It’s the hole they were
intended to and can in fact fill: protecting useful articles with some visual
content that matters. Otherwise they’re just petty patents or copyrights.  If consumers don’t care (e.g., shape of USB
connector), then it’s wasted effort from design perspective/anticompetitive
from any other perspective.
 
Also addresses problems of partial claiming.  Plus the “Rabbit Strategy,” where you use
continuations to get competitors on the hook—you take a parent application and
then create child applications with subparts of the original design.  In my world, you’d have to prove consumers
cared.  Spare parts, too.  You might say that people buy bumpers b/c
they want the bumper to look like it did before the accident, but that’s not
the kind of aesthetic effect that should matter.
 
Would also make our crazy damages provision make more sense,
when you get total profits no matter what—if the design is material to the
consumer, that is closer to tort principles.
 
Mark McKenna: Who counts as a user?  You see TM use intermediate purchasers all the
time.  Materiality: you mean “is the
aesthetic aspect material”?  That raises
an important timing issue. As of the date of application? If it’s ever
true?  If successful, people will likely
come to appreciate the design and it will matter to them.
 
A: true, especially for primary products—the initiator of
the smartphone. But that may be justified.
 
McKenna: especially given evidence that familiarity breeds
likeability.
 
A: but that is ok: we should create incentives for people to
create nice products even when they aren’t typically bought for aesthetic
reasons.
 
Lunney: Congress didn’t intend this isn’t a good enough
justification—think more about broader social costs.
 
A: Agree—Congress said so for some pretty good reasons.  Mutant patents = big social problem. 
 
Farley: Steve Jobs even wanted the circuit board to be
beautiful.
 
A: I would focus on the user.
 
Zahr Said: presumptions anywhere?
 
A: We should just go test it.  Surveys; PTO would be subject to lower
standards as with TM. 
 
Peter Lee, The Law of Look and Feel: A comprehensive
examination of the regulation of consumers’ aesthetic experiences.  Emergent law of look and feel: exclusive
rights in design across ©, TM, utility patent, design patent.  Doctrines selectively mitigate exclusive
rights in response to certain factors. 
 
Look & feel of the 1980s, as shown by Pac-Man (really
Ms. Pac-Man).  Look and feel in Louboutin
heels; Abercrombie & Fitch clothes with hot guys and their abs—an A&F
store is a total sensory experience, including music and scent.  Exemplar of look & feel in modern
economy: the iPhone.  Valued in
significant part for how it feels in your hand. 
Marketers say: look and feel of products will determine their success;
in a crowded market place, aesthetics is often the only way to stand out.  Look and feel can encompass the
zeitgeist.  A&F evokes the early
2000s; iPhone = right now.
 
Law of look & feel. 
©: 9th Circuit in Roth Greeting Cards protected “total
concept and feel.”  Blurred Lines case:
jury found infringement based on sound & feel of the late 70s.  Limitations in ©: idea/expression; merger;
scenes a faire; useful articles.  Apple
Computer v. Microsoft: copying the GUI; the court invoked limiting doctrines of
merger & scenes a faire, including consumer expectations re: overlapping
windows.
 
TM: Taco Cabana
protects look & feel. Limiting doctrines: distinctiveness, functionality,
and likely confusion.  Product design
trade dress can’t be inherently distinctive. 
Aesthetic functionality: A&F lost claim against American Eagle for
general look of its stores.
 
Utility patents: Apple’s patents on two-finger pinch to zoom
and on slide to unlock. These patents contribute to look & feel:
streamlined aesthetic/user interface. 
Limitations: functionality; constraints on patentable subject matter;
apportionment of damages.
 
Design patents: here though there’s a distressing lack of
limitations.  Functionality is construed
narrowly; consumer deception standard for infringement isn’t sensitive to
context; expansive damages.  Greater
standardization is justified to make design patent fit better with the other IP
forms.
 
Linford: limits on © don’t seem to be that good.  We do abstraction, filtration, comparison
when we’re worried about functionality; total look and feel seems to be courts
generally extending broad protection. If the argument is design patent needs
more than what it has, I’m with you there, but it’s surprising to think that
copyright might be a good model.
 
A: Not saying that © is perfect; impressionistic view is
problematic in itself, but other doctrines help cabin it in ©, not design
patent.
 
Q: Zeitgeist—if it’s true that one producer was the first to
create the zeitgeist, wouldn’t limited term take care of that with obviousness
afterwards?
 
A: it could, but that revolves around the question of
timing. Something can achieve the status of a standard quite quickly, before 14
years expires.
 
Said: Roth never
really meant to establish a test.  Look
& feel cases seem to involve courts struggling; treating look & feel as
an element of a work along with plot, as opposed to a lens through which to
view the work.  Treating
errors/outcome-driven cases as a unifying principle begs the question.  She’d rather say: there are these cases, and
what about the cases drove the court to use total concept & feel instead of
something else—scope, filtration, etc.
 
Farley: also concerned you’re reifying look & feel,
which is a fictitious concept—case involving the artist Tarkay—attempt to
protect his style was rejected, and she’s not sure how to distinguish look
& feel from style.
 
A: we don’t want to focus on the words look & feel. What
we argue is that there’s a law of look & feel that extends past the use of
the words (to substantial similarity). 
It can’t be an analytic grab bag. 
Other doctrines that have never explicitly been associated with look
& feel are part of the broader law of look & feel.
 
Mark McKenna & Jeanne Fromer, Claiming in Litigation/Claiming
Design: How different systems of IP conceive of claiming. Louboutin: how does
the court understand the nature of the plaintiff’s claim as a kind of
property.  Yankee Candle: P attempts to
claim everything you might think about when you think about this store.  Recent TM application: all of the lines on
the image are dotted out, meaning they’re claiming no shape, just a color—the
color of something.  TM doesn’t have a
methodology for claiming; thinks about problem where law encounters it in
particular cases.  Recent design patents:
Claim limited to one curve on a gear, everything else dotted out.  What explains the different methodologies for
claiming, especially given increasingly overlapping use of those systems?  Design patent system forces you to show up at
PTO with a claim in pictures; you have some definitive ex ante claim against
which you can compare anything later on. TM says: you don’t have to do anything
ahead of time if you don’t want to (though we might want to change that rule)—most
trade dress cases involve unregistered trade dress, and even when there is a
registration, doesn’t seem to have much bearing on court’s infringement
analysis (Louboutin being the outlier).
 
What TM law does so differently: articulate your claim in
litigation, rather than in ex ante document. 
Issues of public notice.  Not
specific to design: happens in copyright, trade secret—claiming in litigation
is an issue in many situations.  Attacking the problem as a claiming in
litigation problem suggests that design is one instance of a larger
problem.  In TM we allow it because we’re
concerned about how it works in the market, not in the abstract.  Product designs change over time; makes more
sense to consider it at time of litigation. 
Costs of claiming in litigation: public notice; courts seem
uncomfortable w/lack of notice/lack of ability to pin down scope.  So they sometimes say “we don’t know what you’re
claiming, so it’s out.”  Fair Wind
Sailing in the 3d Circuit: P seems to be claiming a way of doing business,
using a certain size of boat and using customer testimonials—3d Circuit says “no
mark” but they don’t have a tool like distinctiveness or functionality to do
this work.
 
Trade dress cases: courts have tried to say: you need to
articulate the trade dress in words. The problem with that rule, though it’s
the right instinct, is that courts allow people to articulate the claim in
incredibly varying levels of generality: every Mexican restaurant you’ve ever
seen, or exacting description. Courts are thinking about infringement/managing
scope, and backing into a claim definition. Design patent: pictures are used,
but deep & persistent ambivalence about need to describe pictures in words—b/c
pictures are often not very illuminating (no pun intended). Maybe they aren’t
so different—the mostly dotted image is a trick, leaving the design patent
incredibly general and vague by claiming only a very small part of the design.  Relates to partial claiming.
 
Are there good reasons for claiming methodologies
differing?  You might say that TM v.
utility patent: it’s more important for utility patents to be clear b/c stakes
are higher. But that doesn’t work well for design patent. Iinfringement
standards are pretty similar b/t trade dress and design patent; obviousness
criteria are mostly nonexistent for design patent, so design patent claims look
like trade dress claims.  Both sides
ought to think about more specific rules to apply across cases.
 
Lunney: exemplar systems worked well for old-style TM (where
double identity was required to infringe) and © (pure copying) but never worked
for utility patent.
 
Fromer: we want people to have to think through an
invention; claiming forces you to a certain level of
generality/specificity.  Is there
something similar going on in this context? Do we want to force people to think
about their rights early on for TM/design patent.  Not as obvious.
 
Lunney: what would a written claim for Star Wars look like?
 
McKenna: reason why TM lacks methodology for claiming—historically,
most of this would have been in unfair competition, so you didn’t need to worry
too much about the front end.
 
Aaron Perzanowski, The “Buy Now” Lie: “Buy now” on Amazon
for Kindle books; the page for Orwell’s 1984
looks the same for Kindle version as for the paperback.  But Amazon can pull back and destroy 1984 for the Kindle, not for the
paperback. One claim: the market has spoken and people don’t value possession
rights for ebooks as much as they do for physical books. But that assumes
consumers understand that “buy now” doesn’t mean “buy now.”  Commerce Department White Paper: MPAA/Disney
said, of course consumers understand they’re buying a license.  But I figured it was worth empirically
testing.  Fake online retail portal:
simplified layout like Amazon’s.  Tested “buy
now” button. 1300 consumers representative of the US population in sex, income,
age.  Showed a number of variations on
this retail page.  Tested books, movies,
music.
 
What do consumers think they get?  Switched to “license now.”  What do consumers think when they see
that?  Switched to just a price + a
notice about what you can and can’t do: you can download to approved devices,
read on approved devices, keep subject to our terms of use; you can’t resell,
lend it, transfer it, give it away, or read on approved devices.  (Out of 1300 people, 14 clicked on terms of
use.)
 
Asked them: after they’d clicked, can you lend it to a
friend? Leave it in your will?  Resell
it? Keep it as long as you want?
 
People who believe they “own” what they buy using “buy now”:
high percentage; also high percentage believe they can keep forever & use
on device of choice (both of these in the 80-90% range).  Believe they can lend ebooks, mp3s, and
digital movies: (1/2 or less); lend as gifts (similar); leave in wills (1/3 or
less); resell it (17% or less).  Significant
number of consumers get these questions wrong. 
All of these percentages, w/possible exception of resale, are large
enough to establish falsity/deception.
 
Apple is replacing albums stored in the cloud; it can just
disappear.
 
Switch to “license now”—while belief in “ownership” goes
down, other things go weird but don’t change much and people still believe they
can keep forever & use on device of choice in the same %ages; more people believe you can resell
digital movies when you say “license now.”
 
The tested short notice caused a pretty big drop, especially
for lending, gifting, reselling—with the weird exception of digital movies.
 
Results: there is miscommunication happening.  There is a reasonably effective
intervention.  He isn’t a user interface
designer, and he spent 10-15 minutes on the notice, and yet it had a pretty
substantial impact.
 
Also asked respondents questions about materiality.  Maybe their wrongness doesn’t matter.  Digital v. hardcover: people’s ability to
lend and resell matters to consumers in stated preference, and there’s almost
no difference in preference b/t physical and digital version. Indeed, they care
more about reselling ebooks than hardcovers, if you believe his numbers (which
there’s no reason not to).
 
Also asked: if you can’t get the rights you want, would you
be more likely to download illegally or stream it from a subscription
service?  About 1/3 said yes to illegal
download; from 36-74% said streaming would also be more appealing.  WTP: $3-4 range for the rights.
 
Dep’t of Commerce White Paper recognizes the problem:
consumers don’t understand what they’re getting.  Doesn’t cite any evidence, but now there is
evidence.
 
Haven’t broken down results by age, education level,
behaviors of lending/reselling.
 
RT: Richard Craswell has good work on how you interpret
different results from different disclosures.
 
A: doesn’t know that new options will necessarily help
consumers.  [I think we were
saying/hearing slightly different things, but Craswell would probably agree
with this point.  Craswell has written
about when it makes sense to require rewriting a claim, if some people don’t
get information/lose value from the increased cognitive burden while others
benefit from enhanced information.]
 
McKenna: Do people think they own it but can’t lend it?  Do people have any idea what ownership means?
[Note that it’s possible to have a physical thing you own but can’t rent—that’s
what airBNB is fighting about.]
 
A: 40% say they don’t believe they’re allowed to lend their
physical books to other people.  There is
a big difference b/t physical and digital, but physical is interesting in its
own right.

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WIPIP Session 3: Trademark again

Posted on February 20, 2016 by rtushnet
Session 3 Trademark 2
 
Irene Calboli & Dan Hunter, Trademark Proliferation: Lots
of marks—Louboutin soles; motion of Lamborghini doors; etc.  Why so many? 
Very broad definition of what can be protected as a mark +
ill-interpreted concept of distinctiveness. 
TRIPS + Lanham Act both define marks broadly—anything capable of
distinguishing goods/services. TPP is even broader in definition. 
 
Spectrum of distinctiveness developed by Judge Friendly:
highest protection for fanciful marks/new symbols.  Reality: fictional distinctions between
descriptive/suggestive/arbitrary are ways to define ex ante an ability to
distinguish, not an actual distinctiveness. [Nicely put.]  We are betting that a fanciful mark will be a
better distinctive element.  Then we say
that anything distinctive can be a mark. 
Our project: differentiate between the ability to distinguish and
distinctiveness.  Every possible
aesthetic element of a product could in theory distinguish a product’s source—but
do we need that? Our answer: no.  TM law
isn’t supposed to protect aesthetic elements.

Go back to the drawing table: what is distinctiveness?  Stronger emphasis on TM use, or secondary
meaning?  Criterion of separability b/t
mark and product features? 
 
Marks have to be distinctive; not every sign that is
distinctive has to be a mark. 
 
Christine Haight Farley: Why is the spectrum of
distinctiveness the problem?  Isn’t it
just in need of tweaking?  Friendly’s
categorizations of word marks just don’t work for nontraditional marks.
 
A: we are starting to hear language of “fanciful” outside
the word mark context.
 
RT: [Of course if the other papers are right that names are
often part of product features, that gets harder.] [I like the concept of
limping marks for this goal of limiting TMs—Mark McKenna pointed out that Kit
Kat shape in Europe is an example of this issue—although it could in theory be
distinctive, in practice it’s always accompanied by other marks that do a
better job of distinguishing the goods.] [Artistic distinctiveness: Rock &
Roll Hall of Fame/ETW v. Jireh concepts, applied more broadly, do what the
paper is seeking to have done.]
 
A: Artistic creativity goes into a lot of logos.  Should TM be interested in branding at all?  As long as you’re allowed to use your word,
even if not your logo, you’re distinguishing yourself:
 
Jake Linford: assume fanciful marks are more likely to
signify source.  Doesn’t it save
resources to presume distinctiveness? 
Other rules are expensive and favor players with most money.  Not sure he believes this himself, but needs
answer.
 
A: Problem is from cluttering—we’re running out of
marks.  So it should be more expensive!
Unfair competition/passing off are options instead.
 
Betsy Rosenblatt: proliferation of TM protection for
arguably functional things, maybe they’re actually source identifying for the
population.  Red sole of Louboutins is
absolutely a source identifier and pretty. 
Adding secondary meaning as a stronger requirement wouldn’t solve that
problem. 
 
A: combine it with aesthetic functionality. 
 
Christine Haight Farley, The Impact of New gTLDs on
Trademark Rights in Domain Names: rise in domain name disputes generally; this
will increase disputes. ICANN increased new gTLDs to increase space for
competition.  Idea was: glut in dot-com
space.  Nearly 2000 applications; Google
applied for a huge #; popular applications were for generic words. How will
second-level domain name disputes? Nothing in all the wrangling which dealt with
second-level domain names & how they might differ in new gTLDs.  This is the biggest moment since .com was
introduced 26 years ago; expands number by 5000%; there was no study beforehand
of how it was working.
 
UDRP view: we ignore what follows the dot.  Mercedes v. mercedes.com = the same.
Neimancarcass.com = not confusingly similar, though some “sucks” domain names
have been found confusingly similar in UDRP. 
Gulp v. Gulpy: why isn’t it confusingly similar under TM law? B/c we don’t
do a visual comparison in UDRP cases, and we don’t consider context.  It’s impossible to map TM law onto UDRP, and
we’ve done a really sloppy law.  UDRP law
comes from TM law, but not exactly. 
UDRP: universal; no specific relevant user; focused on registrant and
its intent; supposed to be for easy cases.
 
First case in new gTLD case: Canyon (trademark for bike) v.
canyon.bike.  Panel in this case said
that the post-dot matter enhanced the similarity, rather than ignoring it.  So: what about
mercedes.spanishgirlsname? 
Ferrari.red?  “Red” is network in
Spanish; could be a network of Ferrari owners using that space.  Walmart.lgbt?
 
Changed over 15 years—strong assertion of TM owners’ rights
in the policy. New mechanisms: TM Clearinghouse; Uniform Rapid Suspension—very property
focused—allowed TM owners to have rights already in advance.  Madonna got first shot at registering
madonna.church; Apple got first shot at apple.farm.  Also had legal rights objections to new TLDs:
DirecTV challenged .direct, and DirecTV won on confusing similarity (one-letter
difference).
 
It is true that the other elements of the UDRP test can deal
with many of the problems. But if this is a giveaway to the TM owner, and it’s
already the TM owner’s property, then that will cloud interpretation of the
remaining prongs (legitimate use, bad faith). 
Amazon.books should come out differently from Amazon.river.
 
All decided TLD cases: three categories of decision.  (1) post-dot info may enhance confusion:
hsbc.mortgage; TM relates to the goods following the dot. (2) Traditional rule:
gTLD disregarded, so lafitness.email, porsche.help, lamborghini.black. (3)
Troubling cases: gTLD doesn’t distinguish; panel has found that if info doesn’t
steer away from confusion, it’s
confusing: volkswagen.guru, marlboro.reviews, porsche.social.  But why should VW own .guru name?  Especially since we don’t know what these
spaces will become.  Example: .horse,
which turns out to be a space with a lot of weird content, such as spoon.horse,
walmart.horse, taylorswift.horse, etc.—playful.
 
Jake Linford: in a world with good search, does it matter?
Are any of these not famous marks?  Maybe
this is really anti-dilution protection in the gTLD space.
 
A: useful questions—remains to be seen how search engines
will work in this new space. Even if it’s true that search engines make TLDs
irrelevant, the claim was that there was a need for gTLDs.  Also, lots of TMs you’ve never heard of win
their cases.
 
Won Bok Lee, Confusion in the Eye of the Beholder:
Likelihood of Confusion in Trade Dress for Prescription Drugs.  Pharmacists/doctors are expected to exercise
a higher degree of care. But the health implications of confusion may be very
severe.  Would that logic work the same
way in product design?  No, b/c doctors
and pharmacists rarely rely on appearance of drugs, but on name/label—under US
law, similar-looking drugs wouldn’t be found confusing.
 
Korean case: found that patients shouldn’t be considered
consumers for product design.  Viagra v.
PalPal.  Viagra lost: secondary meaning
and nonfunctionality accepted; but consumer can’t get confused because these
are prescription medications and the pharmacist fulfills the order. The
appearance of the drug doesn’t matter.
 
Japanese case: Selbex, anti-ulcer drug, v. generic.  Unfair competition claim.  IP high court found capsule color/blister
packaging nondistinctive; physicians and pharmacists exercise higher degree of
care and won’t be confused.  The law
should be construed so that the physician/pharmacist becomes the primary
consumer.
 
East/West divide: who’s wrong about the right consumer?  He leans to the Eastern perspective as more
reflective of realities.  You hand the
prescription to the pharmacist; purchase is made before you could be confused.
 
If patient isn’t considered, then do we discount the harm to
the patient for having switches? 
Difference in appearance b/t generic and branded can have negative
effects on patients.  Do we empower
pharmacists to palm off?  No, secondary
liability/liability for the pharmacist is still available.  Result: better adherence to generic; no
decrease in placebo effect; no confusion about what drug to take.  These negative effects may be greater in the
US where DTC advertising is permitted.
 
RT: [See also the papers in the Xalatan/Travatan case,
Pharmacia v. Alcon; mostly about the name but a bit about trade dress and
interaction with FDA requirements. Legal US DTC ads as key differences in secondary
meaning/who is the consumer?—little purple pill; not legal in most countries.  Consumers drive medication choices in the US—70%
of those who ask for a specific drug get it. 
That makes it possible to argue that consumers should be considered as
target consumers.]
 
Q: consider the learned intermediary doctrine from
torts.  Does Korea have automatic
substitution laws? [Answer: for some drugs.] That seems like a complicating
factor.
 
McKenna: there are other things that can avoid passing off,
like imprinting a name, that don’t involve size, shape or color.
 
Jake Linford, Are Trademarks Ever Fanciful?: Idea is that
fanciful marks have no lexical meaning, don’t point to product, therefore must
point to source.  A rose by any other
name … No inherent relationship between word and thing it represents.  If linguistic arbitrariness were really
strong, that would make sense—but that’s not the world we live in. The way
sounds communicate meaning: independent of lexical meaning, sounds convey
meaning.  Furniture called Mil and Mal:
which is bigger?  80-90% of consumers
will say Mal is bigger, and marketers understand this.  Dark beer: Gomel does better than Gimel.  Clever pro namers can hide some
descriptiveness in these marks w/o lexical, dictionary meaning.  Given sound symbolism, we should
recalibrate.  Tang (below) wants
aesthetic functionality; he thinks that’s too strong.  (1) Assumption that sound similarity is
evidence of bad faith should go where the sound similarity goes to product
characteristics.  (2) Think more
wholesale about sight/sound/meaning analysis—courts tend to say that we weigh
similarities more heavily than differences; if those have sound symbolism
packed into them, we shouldn’t do that. (3) could even act at the validity
stage, where sound symbolism might justify requiring acquired distinctiveness.
Maybe we should abandon Abercrombie,
despite the enforcement costs that arise from it.  Not all fanciful marks may have sound
symbolism.
 
Jeanne Fromer: Why not go further? Arbitrary marks aren’t
arbitrary. Once you put apple on a computer, people will make links (Newton’s
apple) which help the TM owner.  Is there
something particular about fanciful marks?
 
A: could apply same logic to arbitrary/suggestive; the
effect is worst for fanciful marks b/c they supposedly have no meaning other
than the TM meaning.
 
McKenna: doing this at the confusion stage makes more sense
from enforcement costs perspective. 
These considerations may contribute to descriptive fair use.  What kind of evidence would you want? And why
aren’t defendants doing it?
 
A: you have to find an expert, pay them, get possibly
skeptical courts to accept it.  Risk of a
big waste.
 
McKenna: can you imagine this argument changing particular
cases?
 
A: tends to pop up in drug cases, Xalatan/Travatan.  Easier to see in medical cases.  More a different approach to how we evaluate
strength. 
 
Farley: Color symbolism exists too.  Scarcity problem: we are more likely to see
scarcity outside of word marks, but you’re showing that some sounds are better
than others.
 
A: Breyer might be right—colors are sometimes symbolic and
sometimes not.
 
Xiyin Tang, A Phonaesthetic Theory of Trademark
Functionality:  Functionality applied to
product design; want to turn the spotlight back to word marks.  Doesn’t mean functional in the sense of “open
here” or “fragile.”  More in the
aesthetic sense of a heart-shaped candy box. Study the meaning of phonemes.  Phrases can also have aesthetic meaning, not
just words.  Similar evidentiary basis as
previous paper; broader claims.  TM claim
by university over chant “I believe we will win.”  Rolls well off the tongue, can be used to
speed up as it’s chanted.  Ornamentality?  But what if it’s on hang tags—not used in
ornamental position.  Still can argue
that it’s an important chant because of its sonic qualities, and shouldn’t be
monopolized.
 
Q: Familiarity as an independent issue?  [Familiar terms are more popular.]  Peru sued b/c it wasn’t allowed to label its
pilchards sardines in the EU, even though consumers weren’t familiar with
pilchards.  Sardines sounds much nicer
than pilchard.
 
A: trying to find independent reason that people would like
the terms.  May call for expert
testimony.

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IPSC Session 2: Trademark 1

Posted on February 19, 2016 by rtushnet
Trademark 1
 
Paul Heald, Testing Theories of Tarnishment in Trademark and
Copyright Law
 
Tarnishment should be treated like false advertising: you
should have to prove some (likely) damage to your TM to win, rather than
presumptions.  Tarnishment is a
psychological/cognitive theory. Appears similarly in © literature, mostly in
policy analysis—Landes & Posner—if we had an X-rated
Mickey Mouse movie, the Mouse would be destroyed.  (As opposed to the super
racist versions.)  Theory: owners “shepherd”
their marks/works better.  Theory is that
sexual association is particularly bad. 
ATM: Cookie Jar—strip club named Cookie Jar opens up across the street;
Restatement thinks this is clearest case for tarnishment, such that no evidence
is needed for relief.
 
Studies: lots of empirical work in marketing literature on
sex; increased memory for ads with sex, but decreased memory for brand. Lots of
gender effects.  Strong evidence of
congruence: sex in ads works better when product has something to do with sex—perfume,
jeans, hotel rooms v. iron skillets.
 
Experiment: show “tarnishing” version of well known
work.  Showing people two movies—poster and
short description—and ask which movie will be most successful at the box
office.  Titanic v. Good Will
Hunting.  Subjects do this for 20 filler
movie pairs and 10 target pairs. Porn examples, e.g., Bitanic, You’ve Got
Shemale.  See if treatment group exposed
to these versions ranked the originals any lower.  Theory’s prediction: Bitanic would diminish
preference for Titanic.  Instead, there
was a positive effect; overall no statistically significant diminishment for
any, and 5 of them showed statistically significant enhancement.  No significant differences between women and
men; a little, not statistically significant difference b/t conservative and
liberals.  Libertines do show a big
difference; Mechanical Turk has very few puritans.  So we tried to find a good distribution of really
conservative and really liberal people, and test sequels—damage to branding.  For sequels, there was no overall enhancement
effect or negative effect; some went down a little and some went up.  And again, no difference between gender. For
most conservative viewers: statistically significant negative effect—for them,
the presumption that sex causes tarnishment might apply. 
 
Implications: no evidence of tarnishment overall; would we
want to protect one corner of the population? 
Research calls evidentiary presumptions into question; rationales for
copyright term extension; parody/satire distinction in fair use cases; market
harm calculation in fair use cases.  We
have previously shown tarnishment in other ways: significant positive
correlation between quality of audiobook recording and perceived value of underlying
book, but no correlation between reader status or legal status and value.
 
Mark McKenna: are things getting mashed together in using
movie posters? Could there be something importantly different in creative works
v. brands attached to goods. One plausible explanation for the audiobooks is
that people think that the proprietor of the book is responsible for the
recording.  Why choose to use movie
posters rather than more conventional brands?
 
A: we did want to get at both, and the TM and © literature
both describes the same claimed harm and the same claimed mechanisms, so we
wanted to see if it would work.
 
Lunney: Why do TM owners sue over tarnishment then?  Every business has puritanical consumers, so
maybe they’re concerned about those consumers.
 
A: Third grade, intuitive mentality: this is mine and you
have no right to do this.  True, we may want
to protect a narrow proportion if the harm caused is significant, but we need
to balance that with the harm caused by absence of ability to tarnish.  Mickey Mouse porn: might benefit a slice of
the population even as it harms another slice.
 
Jessica Kiser, Market Responsiveness to Trademark Litigation
 
1997 article by Bhagat and Umesh in the Journal of Market
Focused Management: sample of approx. 60 cases mentioned in WSJ.  Focused on econometrics—stock prices when
sued, and when resolved.  Findings: TMs
are valuable; litigation is expensive; no broader context.  She decided to redo this to see if there was
a reason for TM overenforcement—do investors like your filing TM suits?  If there was a negative effect, which
traditionally comes from commercial litigation in other contexts—both parties’
stock prices go down—it shows irrational overenforcement. Began w/Ken Port’s
Mitchell Study on TM Litigation—2972 cases; adding stock prices to it; pulling
out cases w/o a publicly traded party. 
Open questions about how else to thin the herd.  Event study methodology: see what stock
prices do in relation to notice of litigation. 
Helps you figure out if the brand, not just the TM, is harmed by the
litigation.
 
Define the event and notice period; measure stock return
during that period; estimate baseline w/out event; compute abnormal return;
measure statistical/economic significance. 
 
Previous studies: 1995 study shows significant effect of
major endorsement deals; 2011 study showed that announcements about health of
Steve Jobs affected Apple stock prices.
 
How do you figure out what’s public?  Previous study used WSJ/NYT coverage, but
maybe that’s not the right measure now. 
Maybe we should look at Westlaw/LEXIS. 
Pre-and post-internet divide? 
When is the test window?  Any
effect of anticipation from C&D letters? Large company v. small company;
established v. newer company.
 
Q: Other related litigation studies: Alan Mathios & Mark
Plummer, The Regulation of Advertising by the FTC: Capital Market Effects, 12
RES. L. & ECON. 77 (1989); Sam Peltzman, The Effects of FTC Advertising
Regulation, 24 J.L & ECON. 403, 419 (1981).
 
Q: when does the fact that the alleged infringement is
occuring become known? That might be another relevant event. 
 
Q: Type of product? Some industries may not care.  Some of the most aggressive litigants, like
Louis Vuitton, are nonpublic.
 
Signe Naeve, User Generated Crafts in the Sports Industry
 
All the stuff people make as fans: knitted scarves,
etc.  Fan fiction/fair use in copyright
is different in trademark where people make and often sell stuff.  Working thesis: Met with counsel for sports
teams; came in from fan perspective wanting to argue for some permissive uses.  Now thinks this is different from fan
fiction; inherent tensions w/in TM law that lead TM owners to police
brands.  User-generated crafts raise
unique issues b/c, while TM owners can turn a blind eye to personal use, they
may need to take action to protect reputation. 
TM owners could sponsor contests, partner w/fans, license them.  Risk of losing the right creates need to
police.

Difference b/t kinds of sports—Mariners said “this is our TM, and we’re afraid
of tarnishment.”  Sounders: “there’s a
fan culture of supporters that’s different—we look for opportunities to partner
w/fans.”  Sounders have “posters by the
people” contests.  Implied or direct
licenses are even possible. 
Noncommercial fair use as a potential safety valve; only policing when
there’s broad distribution or where it competes with an exclusive license; you
could even donate older TM versions to public domain.
 
Q: Materiality? 
Matthew Kugler’s Measuring
Sponsorship Materiality.  Counsel may
be strategically overstating risks of naked licensing: PTO decisions on Bucky
Badger mascot, UNC—uncontrolled since 1792, but university was still able to
claim TM rights.  If the risk of losing
the right is real, then maybe the problem is the risk, not the fans.
 
Heald: Harvard’s TM counsel—not afraid of people’s
perception of licensing.  Harvard says
whether it licenses or not is proprietary information—it will not admit whether
it licenses “Harvard Mercedes.”  Mariners
may be overstating their fears.  (That Harvard
practice could have really interesting consequences in litigation.)
 
Irene Calboli: There is a risk of naked licensing in the US,
but the law is still very confusing. Natural for TM owners to err on side of
caution.  If we had a system in which the
registration conferred property rights, paradoxically, that could allow TM
owners to pick and choose more like patent/© owners.  Struggle is extent to which fan use can cause
a real issue of tarnishment/loss of control. 
Real world has merchandising; we can make a difference in cabining that
and telling owners you don’t need to enforce so aggressively.
 
Rebecca Tushnet, The First Amendment Walks into a Bar:
Trademark Registration and Free Speech
 
I’m going to talk
fast so you have maximum time to yell at me. 
My paper analyzes the First Amendment arguments against §2(a)’s
disparagement bar with reference to the consequences of any invalidation on the
rest of the trademark statute. 
Ultimately, given the differences—or lack thereof—between disparagement
and other bars in the statute, I conclude that §2(a) is generally constitutional
as a government determination about what speech it is willing to approve, if
not endorse.  If the Supreme Court
disagrees, it will face a difficult job distinguishing other aspects of
trademark law.  And these difficulties
signal a greater problem: the Court has lost touch with the reasons that some
content-based distinctions might deserve special scrutiny. 
 
Arguments I’m
playing with that haven’t yet made it into the paper: Consider this argument:
disparagement + false connection taken together is viewpoint neutral ban on use
of the identity of a person or group of which one is not a part: if it
disparages, probably doesn’t cause a false connection; if it causes a false
connection, probably doesn’t disparage, but together they make up one unified
content-based but not viewpoint-based prohibition on taking advantage of
another entity’s reputation in a mark [except that doesn’t explain Tam—but
perhaps that’s not necessary if the overall scheme is content neutral].
 
Vagueness objection:
the standard for disparagement is vague and hard to apply with predictability.
This is perfectly true, as the cases discussed by the majority indicate—but
it’s also a problem with the rest of the bars! 
If vagueness is a constitutional flaw in disparagement, consider if any
of the other bars—or even the “use as a mark” precedents requiring trademark
use instead of ornamental use for registration—they are no less vague.
 
There are over a
hundred thousand applications each year. 
It would be actively astonishing if even the consistency available in
obscenity cases were achievable in this flood. 
In fact, the inherent inconsistency in a merits-based system is one
reason why the Court has granted government flexibility in making content-based
decisions: many systems of government grants couldn’t survive if held to strict
First Amendment consistency in every case, and the costs of not having
trademark registration are greater than the costs of not having lots of
obscenity prosecutions.  This is what it
means to have a regulatory state, and it’s another reason why, if the state is
going to maintain a trademark system granting the benefits of registration
after substantive examination, it needs some flexibility and tolerance
inconsistent with traditional strict scrutiny.
 
Q: why isn’t disparagement viewpoint-based?  Very surprised if even before Tam RACISTS
SUCK would get rejected, precisely because we distinguish b/t things
disparaging to a discrete and insular minority and things not—lots of marks say
bad things about people.  [Law treats
only certain groups as if they can’t take care of themselves]; actual practice
discriminates b/t use of racist terminology by members of racial minorities:
dykes on bikes treats the content differently b/c of who the speaker is and
that seems an indication.
 
RT: [relevance of individualized determinations—Dykes on
Bikes had a different record about what the targeted group would think when
they saw the mark.]  The bar itself doesn’t
care what your viewpoint is; it rejects disparaging terms in context of their
use.  Also, dispute the paternalism
point: one way people take care of themselves is through the political process.
Antidiscrimination laws generally are ways to prevent some people from harming
others.
 
Sheff: nature of gov’t interest in different bars.  False consumer beliefs as to facts they encounter
is different in salience than interest in preventing gov’t support of
particular kinds of content  which is
different in interest in free competition. 
[treaty compliance in provisions on wines and spirits; if we can have
multiple interests implemented in §2, preventing gov’t endorsement of
disparagement is one of them]
 
Farley: if it were all about false association you wouldn’t
need the other bars besides false association. 
Very clear that viewpoint of speaker doesn’t matter, but the current
test makes the viewpoint of the listener matter.
 
Q: but the other bars are about levels of generality.
 
RT: yes, as predictions that, say, use of a flag will be
confusing in some relevant sense—but if we apply 1A scrutiny, those predictions
seem highly vulnerable.  RE/MAX case
makes that clear: (1) nobody knew the mark was the flag of the Netherlands, so
couldn’t be confused; (2) though the registration was for the flag, in practice
it always had the balloon in front of the flag, so nobody could be confused
even if they would have recognized the flag. 
The level of generality is unwarranted if we let strict or even
intermediate scrutiny apply.
 
Q: where do consequences of registration fit into theory? If
law prohibited these forms of speech outright, this would be unconstitutional.
 
Q: if SCt affirms Tam, does it have to strike down Gay
Olympics?

RT: G-d willing.  Yes, when gov’t seeks
to suppress speech instead of just not support it, I want gov’t to be held to
higher standards of proof as to the harms it seeks to avoid.
 
Calboli: what is the minority group?  Asian-Americans?  Self-identified Asian-Americans?  Difficult to pinpoint potentially offended
community.  Also exclusive registration
prevents others from using the name: if Tam has a First Amendment right, why
don’t other potential users of the SLANTS have First Amendment rights to
commercial use?
 
RT: shift would have to be, as Sheff says, in nature of gov’t
justification—Tam’s first appropriation of the term.
 
Lucas Osborn, presentation (didn’t catch title): TM outsider
perspective: use in commerce required, but that doesn’t mean what it means in
the dictionary; confusion is actionable, but not what you think confusion means—can
include uncertainty among people looking creepily close at your stuff.
 
Effects of 3D printing: manufactured at home; TM owners will
want to police CAD files because they can’t control what goes on at home as
easily. Knockoffs will become easier and more diverse; creativity and
personalization will increase. 
Modifications, mashups (I love the connectors for multiple kids’
construction sets).  Normative shift:
source of the goods no longer mean the manufacturer; the important source is
the CAD file source.  CAD files can be
literally duplicated, so no further quality protection rationale if the CAD
file is the same (or if the person knows that it’s an unauthorized CAD
file).  Left with property based theory
of TM.
 
Pragmatically, TM owners want to police CAD files directly.
Tech and procedural hurdles as w/DMCA. 
Can protect CAD file with TM—IC 009: downloadable virtual goods, namely
computer programs featuring [specify] for use in virtual worlds.
 
Some but not all TM owners will embrace 3D printing, maybe
even allow you to personalize.  Will a
CAD file directly infringe a physical good? 
Related goods?  Dilution?  Indirect infringement/dilution based on web
host—eBay v. Tiffany means that knowledge
standard will apply; maybe we won’t need DMTA, but eBay requires at least some policing.  [Expect to hear about “notice and staydown”
with these as well.]
 
Knockoffs and counterfeits will proliferate, magnifying
existing concerns with post-sale confusion. Many more uses will proliferate for
free: circulating the CAD file will be less likely to be paid-for.  3D printing can undercut the mobs/criminals
funded by counterfeits.
 
Normative shifts with personal manufacturing: if I can take
a picture of something and reproduce it, creativity and personalization will
increase.
 
Lemley: post-sale confusion theories aren’t persuasive on
their merits; used instead to get proxy for design rights.  We will probably decide that posting the CAD
file is advertising for sale.
 
McKenna: creates a Dastar
problem: do people care about the “source” of the file when what they want is
the content?  Is a file a “good”?  (Could you even be confused about the source
when you know where you got it?)

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New article forthcoming on trademark registration

Posted on February 19, 2016 by rtushnet

New article:  Registering Disagreement: Registration in Modern American Trademark Law,

130 Harvard L. Rev. (forthcoming 2016)

Abstract: Trademark scholars widely agree that our current system for evaluating what rights a trademark owner should have over others’ uses of their (or similar) marks is broken. Courts too readily find that too many acts are infringing even when they’re harmless or actually useful to consumers. Trademark practitioners, meanwhile, while often quite approving of broad interpretations of trademark law, widely recognize that our trademark registration system has significant practical problems. What we haven’t done is try to unite concerns over the expansion of trademark rights with concerns over the registration system and explain their relationship to each other.

Registration offers some of the most challenging puzzles in trademark.

Consider: If the mark REDSKINS for a football team is disparaging and its trademark registration therefore invalid, can trademark law nonetheless protect the team against unauthorized uses of the term? This question became more than theoretical when a district court recently upheld the invalidation of the REDSKINS registrations, a ruling now on appeal and likely headed to the Supreme Court. Or suppose the PTO determines that, in the abstract, an applied-for trademark is likely to cause confusion with another previously registered mark. If the applicant decides to use the mark anyway, without a registration, should the PTO’s determination bind a federal court asked to determine whether the new mark, as actually used, causes confusion with that previously registered mark? The Supreme Court just decided this issue in a way that generated large-scale uncertainty about the new relationship between registration and infringement liability.

These questions, and a number of others, highlight the need for renewed attention to trademark registration as such. Registration provides opportunities to limit trademark’s current structurelessness.

Specifically, registration works best in a system that doesn’t aim to search out and extirpate every possible instance of confusion, instead recognizing multiple reasons that we might avoid fact-intensive confusion inquiries and instead either ban or allow certain market behaviors. Moreover, maintaining the registration system requires substantial government and private resources, which are currently almost irrelevant at the enforcement stage. Applicants and the PTO spend much time and effort crafting the equivalent of an exquisitely detailed origami crane; rather than considering the details, courts then ask the equivalent of “is this paper folded?” and move on. Not only is this a waste of resources, but it leads courts to misunderstand the proper scope of a registration. There are a number of changes, ranging from small tweaks to sweeping statutory reforms and the rejection of the Supreme Court’s ahistorical conclusion that registration is a matter of factual accident rather than an important distinction between types of marks, that could improve the law to the benefit of trademark owners and non-owners alike.

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