WIPIP, plenary session 1

Posted on February 19, 2016 by rtushnet
WIPIP, University of Washington School of Law
Plenary Session 1: Innovation Policy
 
Stephanie Bair, Promoting the Useful Arts: Corporate Edition
 
87% of patents are assigned to organizations, not
individuals.  How to motivate
individuals/employees?  Assumption is
usually that companies will offer optimal incentives, such as financial
bonuses.  But companies vary quite widely
in incentive structures, both financial and more importantly nonfinancial.  Amazon: works employees past endurance.  Amazon thinks challenging employees is good
for innovation.  Google: free massages,
food; policy allowing employees to take extended leave w/benefits to work for
nonprofit, travel, etc.  Google also
thinks its approach is good for innovation.
 
Findings: workplaces that function like economic exchanges—bonus
financially for innovation—don’t work very well. Social exchanges tend to
motivate creativity more.  Social
exchanges are less formal than economic exchanges, like friend/neighbor
relationship.  Loose exchange of favors
over time. Can be more efficient because of informality; reduces transaction
costs. Built on trust, dignity, and respect. 
Other factors good for creativity: autonomy, competence, feeling of relatedness
among employees, variety of tasks, work/life balance.  Promoting sense of choice; avoiding undue
control; giving credit for work; encouraging appropriate breaks/downtime.  Conclusion: Amazon has it wrong.  Controlling behaviors make employees feel
less competent.  [Does Amazon get fewer
patents relative to its non-warehouse employee cohort size than Google?  What other measures might we use?]
 
How to get companies to do what’s best?  The case for private ordering.  Evidence shows that creativity incentives
support the bottom line, are related to employee
satisfaction/productivity/loyalty; good press. 
Should want to do it of their own accord.  (Unless employer class has taste for control/status
inequality that overwhelms this, or is in a market with less need for ongoing large-scale
innovation and just wants bodies.  Cf. Edward
Baptist’s excellent and terrifying The
Half Has Never Been Told—physical
torture can also elicit innovation and efficiency from human bodies.)
 
What causes these incentives to fail?  Bounded rationality.  Info processing limitations; status quo bias;
conformity bias.  Solution: company can
use metrics.  Info asymmetrics: potential
employees may not have as much info as they do at Apple.  Amazon announced new benefits after the bad
press.  Social norms: managers should
face constraints for behaving poorly. 
Employment law: promote employee mobility.
 
Glynn Lunney, Copyright’s Excess
 
We know © exists to solve a problem of supply/demand and
underproduction in the absence of legal protection; © tries to eliminate free
riders to push paying demand = actual demand, making supply & demand
intersect at optimal level.  Copyright’s
excess is: when we push © up we do it uniformly, not just for marginal works we
want to incentivize—transfer wealth from consumers to producers of works we
would have gotten anyway, with less ©. 
Traditional analysis: just redistribution, no welfare effects; maybe it’s
in pockets of Congress, but that doesn’t matter. Plus, given uncertainty, might
be incentive effects even for nonmarginal works.
 
But, traditional answer: higher prices mean higher
deadweight losses and higher transaction costs to be balanced against marginal
benefits. Deadweight loss will be half of what’s transferred to producers (in
perfect model).
 
Real world application: demand curves are highly
skewed.  One song streamed 60 million
times during 2005-before.  4 million
songs on Spotify have never been streamed by anyone.  5 million times for Goo Goo Dolls song.  To help one marginal song by $1 we have to
give $12 to that song at the top.  Very
little goes to the marginal songs overall.
 
Music has seen a radical transfer of wealth from consumers
to copyright owners from the 1970s to 2000s—followed by sharp decline in
sales.  What relationship between income
and output in the music industry?  Music
revenue is down from peak in 2000.  File
sharing traffic is up—1000 petabytes a month, 1.25 billion albums a month if they
were all albums; $75 billion in reduced deadweight loss.  Albums released in US from 1996-2012: 30,000
to 100,000, then recession took us to 80,000, well above the peak revenue year
of 1999.  Billboard Hot 100: 5200
slots/year; number of unique songs: in 60s/70s it was about 750.  Falls steadily until 2002 when it’s 300
songs, then up to 500, then recession and 400. 
Turnover isn’t exact proxy for high quality output—maybe we’re getting
some super-high quality songs sticking around. 
Did quality peak in 1999?  Rolling
Stone thinks it peaks in 1970s (top albums ever), but Spotify might be less
white-guy.  2014 play count: backside of
Spotify distribution curve; median user is 28 and mostly younger; normalized,
though, the play counts peak in 1983, when revenue was lowest, and 1997 is
nadir in terms of what people still listen to today. So we didn’t see peaks in
quality in 1999. 
 
Why might we be getting fewer high-quality songs?  New artists—peak revenue period in 1983-1999,
there is a slight upward slope in the number of new artists.  25% of songs were by new artists, up to 40%
at peak; filesharing kicks in and we go back to 15-20%.  Why not as many new songs?  Existing artists produce fewer hits when
record sales are going up. 
 
Hypothesis: backwards bending labor supply curve. Overpaying
superstars reduces their creative output. 
Backstreet Boys & ‘Nsync were making $200 million/album.  They produced fewer albums.  Top 250 acts of all time, according to RIAA:
early ones like Beatles produced average 14 albums in first 10 years of career
(Beatles were 12 albums + EP); by the 1990s, that was down to 5.  Lost: Sergeant Pepper’s, the White Album,
Abbey Road, Let it Be.  Adele’s delay between
albums will predictably be greater too. 
Top artist hit production from 1962-present: number of hits v. record
sales over first 10 years of career—the artists with lots of hits tend to be grouped
on low income portion of scale.
 
More revenue didn’t yield more and better works of
authorship.  Higher revenue = more new
artists, but fewer hits from existing artists; most of the new artists were
one-hit wonders. Second effect (fewer hits) outweighed the first.  Maybe we need to balance incentives for
marginal artists v. incentives for most popular, instead of incentives v.
access.
 
Laura Pedraza-Fariña, Scaffolding Innovation: The Role of
Patents, Grants, and Informal Norms in Assembling Teams that Span Technological
Domains
 
Lumpy structure of architecture of knowledge
distribution.  We’ve made vast improvements
in the way we can cure cancer/prolong survival, particularly for childhood
cancers, but the side effects include infertility; fewer advances in that
area.  Why this disconnect?  Two communities involved in
infertility/cancer research: oncologists, who are interested in understanding
cell division; endocrinologists, who in part work on addressing infertility.
Though when you ask cancer patients their main concerns, infertility is second
only to fear of death, that research hasn’t happened.  These two communities are not talking to each
other though they have key complementary knowledge to address secondary
infertility from cancer treatment.
 
Accounts of innovation incentives often assume free flow of
information; don’t look at barriers to assembly of teams even once free-riding
and market-demand problems are eliminated. 
Architecture of knowledge distribution/social barriers to flow of
knowledge are often important.  NIH sought
proposals for interdisciplinary research—problems that can only be solved by
cooperation among disciplines; oncofertility is one example.
 
Interviewed key informants: barriers and benefits to such
research; what is the effect of current patent and grants policy/what should we
do to encourage it?  Requires someone in
a position to unite two groups—an endocrinologist who fortuitiously ended up in
charge of a cancer center.  Benefits of
collaboration: problem finding.  Huge
areas of unknowns—when the mouse ovary and monkey ovary people got together
(hadn’t previously been talking), they realized that these ovaries behaved very
differently and they needed to account for that instead of using mouse ovaries
as human models.  New field of research:
oncofertility. New products: gel matrix to grow follicles into eggs in
vitro.  New social connections: ongoing
collaborations between engineers, endocrinologists, oncologists, etc.  People w/40 years of experience described it
as the best program they’d been involved with in their lives.  Intrinsically motivating to work in
non-traditional teams.
 
Policy conclusion: create scaffolds.  Temporary bridges may be enough to bring
together communities previously separated by structural holes, b/c intrinsic
motivation may take care of the rest. 
Patents are not the right tool for the job; the type of research creating
nontraditional teams tends to be exploratory, low appropriability/high
spillovers, long time to market—patents tend to distort incentives against
these.  Grants aren’t currently
structured to do this b/c NIH institutes weren’t coordinating, but could
be.  Regulatory levers: FDA.  Collaborative R&D.
 
W. Nicholson Price II, Timo Minssen, & Arti Rai, Patent
Failures on Life Science Frontiers
 
Poster child for patents seems to be developing new
drugs.  Some literature says that’s not
true across pharma/bioscience—antibiotics, orphan drugs, biosimilars, manufacturing,
second uses for existing drugs, diagnostics—all these things are different.

Themes emerging from the literature: coordination—many of these policies cut
across areas—FDA, PTO, Fed. Cir., Congress think of different things and don’t
talk to each other.  Policy academics in
these areas also often don’t talk to each other. Maybe industry trade groups
are better at figuring out how to play off regulations/regulators.  Life sciences are different?  Maybe health is special: human flourishing,
market failure, FDA as giant regulator sitting on top of everything,
gatekeeping market entry.

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Uber and out: court grants limited but still tricky injunction against Uber

Posted on February 18, 2016 by rtushnet
Uber Promotions, Inc. v. Uber Technologies, Inc., No.
15-cv-206 (N.D. Fla. Feb. 16, 2016)
 
This is a hardcore test of how you feel about consumer
protection as the sole legitimate aim of trademark law.  Uber Technologies (Tech) rolled into
Gainesville, over the unheeded objections of local senior user Uber Promotions
(Promotions), which among other things provides party buses or limos to take
people to events.  Someone who Googles
“Gainesville party bus” would find, on page two of the results, a listing for
“Uber Promotions.” Generally, its services include  “promotional and event planning services, . .
. graphic, web design and print media photography services, . . . modelling and
talent agency services, . . . private venue rental services,” and “passenger
transportation services, including through limousine and charter services.”  It used “UBER,” “ÜBER,” “UBER PROMOTIONS,”
and “ÜBER PROMOTIONS” since at least 2006.  Tech registered UBERCAB in 2010, then
registered UBER in 2011.  It expanded
permanently into Florida in November 2013, starting with Jacksonville and
reaching Gainesville in August 2014.  But
Tech is an elephant, and Promotions a squirrel. 
Shall the strong do as they will and the weak do as they must?
 
Promotions sent Tech a letter in April 2014 demand ing that
Tech “discontinue the use of the terms ‘Uber Promotions’ in connection with
[Tech’s] marketing and advertising campaigns . . . and undertake in writing
that [Tech] will not at any time in the future use any of [the] Uber Promotions
name in any future mark[et]ing or advertising campaigns, Twitter Accounts, or
apply for registration of any trademarks/service mark that may be confus ingly
similar to Uber Promotions.” Tech responded by (1) removing the term “Uber”
from the title of a page on its website that had previously been titled “Uber
Promotions” and (2) responding (through counsel) that it didn’t agree that
there was a problem, but that to avoid trouble it removed the “Uber Promotions”
reference.
 
Soon after the lawsuit was filed, Tech launched a new
service called UberEVENTS, which allows customers to purchase rides for others
that can be used at a particular time in the future, “a popular option for
corporate events.”
 
Promotions sought to keep Tech out of Florida.  It didn’t get everything it wanted, but what
it did get might pose some interesting technical challenges.
 
First, the court addressed the lurking eBay issue: the court was inclined to agree that no presumption of
irreparable harm was appropriate now. 
But history also indicated that the practice of presuming irreparable
harm from likely success “was grounded upon the sound principle that the harm
associated with trademark infringement is typically irreparable in nature. So
while a court must, in each trademark in fringement case, make a finding of
irreparable harm before an injunction may issue, that finding will often be
made due to the na ture of the harm.” 
Still, the court has considerable equitable discretion to tailor its
relief.
 
Likely success: First, the court agreed with Tech that its
use of UBER related back to the registration of UBERCAB in 2010—though this is
a question of fact under Hana Bank, “this
Court is confident that Tech would be able to convince a jury that UBER and
UBERCAB would be ‘considered the same mark’ by a reasonable consumer,” so UBER
was effectively registered in 2010.
 
The court then asked whether Promotions was entitled to a
reasonable zone of future expansion; §33(b)’s freezing provision suggests
otherwise, but the case law seems to recognize such a zone even when the junior
user is a federal registrant.  The court
also asked what Tech’s nationwide rights were for—its registrations cover “computer software for coordinating
transportation services,” not the provision of actual transportation services
themselves.  (It’s a platform!)  It wasn’t necessary to resolve these issues,
because there was no evidence of a zone of expansion outside Gainesville.  Promotions’ infrequent trips out of town to
various places weren’t enough to show use or likely expansion, except perhaps
for Promotions’ bus service to Ocala Poker and Jai Alai in Reddick, Florida,
which it might have been servicing regularly for many years.  Thus, Promotions was the senior user in
Gainesville.
 
This is a reverse confusion case, meaning that “the largest
class of people who might be confused are people familiar with Tech’s marks who
then encounter Promotions’ marks.”  Promotions primarily serves and advertises to
college-age people.
 
The court first looked at the UBER marks except for
UberEVENTS, which it analyzed separately.
 
Strength: Tech argued that the term UBER was laudatory and
descriptive.  There wasn’t much
competitive need for the term UBER, though UBER PROMOTIONS was a closer call on
being laudatory and thus descriptive. 
Though “uber” isn’t extremely uncommon, it’s also “less frequently
encountered—and thus less likely to be perceived by the relevant public as
merely self-laudatory—than a term like ‘super’ or even ‘ultimate.’” Thus,
Promotions’ mark was suggestive.  The
mark wasn’t especially strong conceptually, so this factor slightly favored
Tech.
 
Similarity: There are many ways to be familiar with Tech
without using Tech’s services, given its wide recognition.  The court agreed that the differences between
Tech’s app and Promotions’ logo, together with the fact that Promotions usually
included “Promotions” in its name, made consumer confusion relatively unlikely
on a full encounter.  But “the visual
differences are much less significant for those consumers less familiar with
Tech.”  Tech’s ads and promotional
materials suggested that the most important feature of Tech’s mark was the word
UBER, not any particular design element. 
Indeed, Tech switched logos after the hearing in this case.  If anything, “[t]he fact of the change—and
the fact that it was so well-publicized—might tend to increase reverse
confusion by creating doubt among those familiar with Tech about what its ‘look’
really is.”  Regardless, visual similarity
weighed slightly in favor of Promotions. 
More importantly, “many consumers may have just heard of Tech or read a
news story referencing it, in which case the visual differences are quite
unimportant,” nor would the relatively common word “Promotions” help consumers
distinguish the two.  Plus, Tech often
uses “Uber Promotions” in connection with various promotional campaigns, which
could easily create confusion.   
 
Similarity of services: Though both offered passenger
transportation, the services differed in many important ways—Tech had “driver
partners” using their own cars, while Promotions used more traditional vehicles
such as charter buses, party buses, and limos. Tech focused on moving
individuals or small groups, whereas Promotions focused more on group
transportation. “These differences are not so great that they weigh heavily
against confusion, particularly in light of Tech’s expanding roster of
transportation options,” such as the UberXL service that provides SUVs and
minivans, as well as UberPOOL, which allows customers traveling in similar
directions to share a car and save money, though the latter wasn’t yet
available in Gainesville.  People highly
familiar with Tech would notice the absence of driver partners, but “those who
only know that Tech has something to do with transportation or that it provides
something like a taxi service could very well think that Promotions and Tech
are affiliated based on Promotions’ services.” 
(Also, Amazon just opened a physical bookstore—just because you start
out without employees doesn’t mean you end that way.) This factor tilted
slightly in favor of Tech.
 
Similarity of sales methods weighed heavily in favor of
Tech, because Tech uses an app, whereas one must call, email, text, or send a
Facebook mes sage to Promotions in order to set up a ride. Even people only
vaguely familiar with Tech might well know that its services were app-based.
 
Similarity of advertising methods: both use social media
extensively. Some of Tech’s affiliates even put ads for Tech’s services on
Promotions’ Facebook page. Though the look of Promotions’ ads was quite
different from the look of Tech’s ads, extensive use of social media and
especially Promotions’ Facebook page raised the likelihood of confusion.  Also, Tech’s use of AdWords made it more
likely that certain searches would lead to an ad for Tech being displayed above
the results.  Weighed slightly in favor
of Promotions.
 
Intent: In a reverse confusion case, the concern is that the
infringer will “push[] its [smaller] rival out of the market,” thus “usurp[ing]
[the rival’s] business identity.” Only intent to “usurp identity” through
confusion is relevant.  (Here’s where the
equity kicks in.  What about reckless
indifference to the senior user’s trademark rights?  Tech clearly didn’t intend to misappropriate
Promotions’ goodwill, but it might well have anticipated that its entry into Gainesville
would extinguish that goodwill, which is a kind of “usurping” the identity of
UBER in Gainesville.  How should we think
about that?)  The court was skeptical:
 
It is difficult to believe that
Tech acted with the intent to push Promotions out of the Gainesville market by
using a confus ingly similar mark. Elephants don’t look out for gerbils when
they plow through the bush. Tech adopted its mark before it ever knew of
Promotions and expanded nationally thereafter. Surely it knew that it would
collide with Promotions once it entered Gainesville, but that doesn’t mean it
intended to confuse consumers and thereby hurt Promotions. This factor is not
particularly relevant to the analysis in this case.
 
Actual confusion: There was a fair amount, which is
interesting in light of the court’s conclusion that most of the standard
circumstantial factors either favored Tech or only weakly favored
Promotions.  Promotions received “numerous”
phone calls from customers looking for tech. 
The court found that some of the people who called Promotions looking
for Tech “were indeed “confused” within the meaning of the Lanham Act—that is,
they understood they were calling Promotions and thought Promotions was affiliated
with Tech.” 
 
But Tech’s number is hard to find, so many of the callers
were just misdirected, such as the ones who asked about becoming driver
partners.  Especially since a Google
search for “Uber Gainesville phone number” or “Uber Gainesville phone” brings
up Promotions’ phone number, “it’s likely that a large fraction of the callers
didn’t even grasp that they were calling something called Uber Promotions, but
instead thought they were calling Uber Technologies. This is akin to being
given a wrong number by a telephone operator.” 
The confusion about who they’d reached isn’t relevant trademark
confusion, at least not in a reverse confusion case—it would be highly relevant
to initial interest confusion. “A person who does not even grasp that he is
talking to Promotions on the phone, or that Promotions even exists separate and
apart from Tech, is obviously not going to form a bad opinion of Promotions
based on his ‘confusion,’ nor is Promotions going to lose any business.” The
same was true with emails received by Promotions from people looking for Tech. “The
Los Angeles customer appears to be someone so easily confused that even
trademark law cannot protect her.”
 
Two instances of confusion by former customers of Promotions
were more helpful: they clearly understood what Promotions is, understood what
Tech is, and thought they were affiliated. Also, there was evidence that “a few
Tech customers—and even some driver partners and others affiliated with Tech”—thought
the parties were related.  The
calls/emails were less important, especially since their confusion could be
easily corrected.  “That said, it strains
credulity to think that at least some of the many dozens of callers were not
actually confused, and certainly two of the emailers were.”  Even a few instances of actual confuison were
worthy of note because of how difficult actual confusion is to find.  This factor weighed in Promotions’ favor, “but
it by no means weighs so heavily that a finding of a likelihood of confusion is
inevitable.”
 
All together: The court was especially impressed by the
difference in sales channels: “anyone who has used Tech’s services necessarily
understands that those services are accessed via a smartphone app, and is
unlikely to think that Tech has all of a sudden started to make its services
accessible via other means.”  So, the people
who might be likely to be confused are people who have “heard of, but not used,
Tech’s services.”  But the people in that
group most likely to encounter Promotions’ mark is young people, a group that’s
relatively tech-savvy and therefore likely sensitive to the difference in sales
channels.  (NB: I don’t think tech-savvy
means that; an ability to spit out emojis super fast is not sophistication in
business organizations.)  Plus, a person
who’s heard of Tech might be aware that Tech is available in many locations,
not just Gainesville, “and the local focus of Promotions’ advertising will not
tend to create confusion.”  (Though doesn’t
Tech roll out new services place by place?)
 
If there were no evidence of actual confusion, the court
wouldn’t find likely success on the merits. 
But there was, so it did. “[G]iving great weight to evidence of actual
confusion helps ensure that a judge doesn’t rely (perhaps subconsciously) too
heavily on his own subjective view of the likelihood of confusion” and “helps
counteract the empathetic deficiencies that necessarily distort the analysis of
the remaining factors.”  There were about
five clear instances of people who truly thought that Promotions and Tech were
related “despite having a more-than-casual relationship with the two entities.”  Even a few can be enough, though.  It was a close call, but the court found
likely success on the merits.
 
As for UberEVENTS, confusion was much more likely if it were
allowed to grow in Gainesville pending trial:
 
First, the more “Uber _” services
there are, the more likely it is that a consumer might think that Promotions is
just another branch on the Uber Technologies tree. Second, UberEVENTS is
accessed through a webpage, thus eliminating one of the key differences between
Tech and Promotions. [Ed.: But no reasonable consumer would expect that,
right?] Third, the service allows users to coordinate transportation at a set
time in the future for a large number of people, just like Promotions.
 
Though most driver partners’ vehicles were probably less
lively than a party bus, the services were far closer than with any of Tech’s
other offerings. This one wasn’t a close case.
 
Tech’s laches and estoppel affirmative defenses weren’t
pursued in opposition to the preliminary injunction, and anyway wouldn’t work
as to UberEVENTS because that launched after the lawsuit began.
 
Irreparable harm: Without an injunction, more people would
be confused about the relationship between Tech and Promotion.  “But so what? Where’s the harm? The harm
usually cited as flowing from confusion in a reverse confusion case is the loss
to the senior user of the ‘value of the trademark—its product identity, corporate
identity, [and] control over its goodwill and reputation.’” These harms, if
they occur, aren’t easy to quantify and redress with money damages, which makes
them irreparable. But nonetheless, the harm must be likely, not just possible.
 
The court identified three reasons for concern: (1) Tech’s
high rate of growth in the Gainesville market, allowing it to do Promotions
more harm before trial.  (2) UberEVENTS,
which might even cause Promotions to lose business to forward or initial
interest confusion. (3) Tech’s “massive” public relations problems. The court
pointed to the top Google News search results (as of 5:00 p.m. on February 11,
2016) for “uber florida”:
 

Bad press for “uber florida”

“With all due respect to Tech, Promotions has every reason
not to want potential customers and other members of the public to associate it
with a company that has inspired protests in cities around the world.”
 
Balance of hardships: enjoining Tech from using UBER in
Florida would go way too far.  Promotions
argued that Tech could “make a new app with a new name and operate as a sort of
parallel universe version of itself in the Gainesville area.”  But this would be technically infeasible, if
not impossible, and economically unwise.  Plus, Tech would have to give up the value of
its trademark in Gainesville, “and would have to mount a massive campaign to
introduce itself to the Gainesville public. Promotions’ proposal seems to
ignore the value of name recognition and brand identity, which are the very
things that trademark law seeks to protect.” 
(Look, I’m not a big believer in protecting brand identity.  But if Promotions is the senior user in
Gainesville, Tech doesn’t have any right to name recognition or brand identity
in Gainesville, any more than Delta Dental has a right to expand into airlines
under its existing brand.  The court’s
reasoning seems to ignore §33(b), which freezes the senior user in, but also
freezes the junior user out.)
 
The practical effect of enjoining Tech’s use of its marks in
the Gainesville area would be its cessation of operations.  This would set back Tech’s efforts to build a
customer base before trial.  (Note the
assumption that ultimately it will be able to operate in Gainesville; if true,
the court’s got a point.)  Of course,
self-inflicted injury can be discounted, but here the infringement wasn’t
willful.  Plus, Promotions could have
sued earlier; it waited over a year after Tech moved into the Gainesville
market to file suit. This might not be enough for laches, but it factored into the
balance of hardships.  Thus, the injury
to Tech from a flat ban in Gainesville was more significant than the injury to
Promotions.

The court was also concerned to avoid “arming squirrels with bazookas.”  (AKA trademark trolling.)  An injunction against the name in a large
market could cost Tech far more money than Promotions could ever hope to make,
creating a windfall for Promotions given that it could sell the injunction to
Tech for “a sum far exceeding its anticipated profits but still far below the
cost to Tech of obeying the injunction.” 
A permanent injunction after a finding of infringement might be
appropriate in such a case, given the adjudicated violation of trademark law.
But a preliminary injunction required more caution.  The risk of holdup was a concern in any preliminary
injunction proceeding, but was particularly acute in a reverse confusion case,
where a small, regional plaintiff takes on a national behemoth. “[A]
preliminary injunction should not serve as a bazooka in the hands of a
squirrel, used to extract from a more fearsome animal a bounty which the
squirrel would never be able to gather by his own labors—at least not when the
larger animal is mostly without sin.”  (A
skeptic might suggest that courts, like guns, were created by societies
precisely so that the big could not simply do to the small what their size
permitted them to do—and that courts are better equalizers than guns for a
variety of reasons.)
 
Thus, the court would grant Promotions only narrow relief.
The injunction would aim at (1) preventing people looking for Tech’s phone
number from coming across Promotions’ phone number and (2) preventing UberEVENTS
from causing further confusion.  Much
confusion stemmed from the fact that Promotions comes up when one searches
“Uber Gainesville phone” or “Uber Gainesville phone number” on Google. Thus,
Tech would be required to set up a local (352 area code) number to handle calls
from Tech customers and driver partners in the area.  (Won’t this further entrench Tech’s
dominance/crushing of the goodwill of Promotions in Gainesville?)  Tech would also be preliminarily enjoined from
using its marks in connection with UberEVENTS in the area.
 
Public interest: a full injunction against Tech using UBER
in Gainesville wouldn’t serve the public interest, because that would harm Tech’s
driver partners and customers, including its “Freedom in Motion” program, in
which it “facilitates on demand, subsidized transportation services for
residents of senior citizen communities,” and in the “Safe Rides” program,
“which gives university students discounted rates on their rides when returning
home late at night.”  Yanking away Tech’s
lower-cost on-demand transportation, especially when Promotions doesn’t
directly compete with Tech and couldn’t replace its services, would harm
citizens.  But more limited relief would
help reduce confusion without harming consumers.  “While enjoining any further growth of
UberEVENTS might impact Tech’s driver partners, the effect is likely to be very
minor given the fact that UberEVENTS is relatively new and has not yet taken
off in Gainesville.”
 
Bond: Tech asked for a security bond of $64 million, based
upon a broad injunction covering all of Florida. The court had little to go on
for the more limited injunction, so settled on $10,000.
 
Now take a gander at the injunction’s components, and
consider how Tech can accomplish them: (1) No advertising of UberEVENTS in
Alachua County, including a posting promoting UberEVENTS placed on the Facebook
wall or page of people/entities in the county. 
(2) UberEVENTS can’t book events in the county.  (3) Uber has to set up a local phone number
and list it in all available directories. 
(4)  The kicker:
 
Defendant must ensure that a search
conducted with the Google, Yahoo, or Bing search engine using the keywords
“Uber Gainesville phone” or “Uber Gainesville phone number” returns a result
containing Defendant’s 352 areacode number along with words clearly indicating
that the result is associated with Defendant. Such words may in clude “driver
partner,” “app,” or “ride.” Defendant must ensure that this result, while
prominently displayed on the search results page, does not replace the result
for Plaintiff’s phone number that is currently returned when a search is
conducted using these keywords. Compliance may entail using the search engines’
paid advertisement features such as Google AdWords.
 
In addition, Tech was required to “ensure” that a search
conducted with the Google, Yahoo, or Bing search engines using the keywords
“Uber promotions Gainesville phone” or “Uber promotions Gainesville phone
number” didn’t return Tech’s phone number.
 

Court’s suggested configuration of Google search page

Thoughts on the technical feasibility of these measures?

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No compelling interest in right of publicity for private figure, 9th Circuit rules

Posted on February 18, 2016 by rtushnet
Sarver v. Chartier, No. 11-56986 (9th Cir. Feb. 17, 2016)
 
Shorter opinion about why the film The Hurt Locker didn’t violate Army Sergeant Jeffrey Sarver’s right
of publicity: “video games are different.” 
Sarver led a team in Iraq to dispose of IEDs. A journalist embedded with
his division followed him “for a significant amount of time and took
photographs and video of him while he was on and off duty,” and conducted
additional interviews with him back in the US. 
The Playboy article he wrote
was later condensed in Reader’s Digest;
it used two photos of Sarver and other personal information, allegedly without
his consent, and he objected to the article. 
The journalist later wrote the screenplay for The Hurt Locker, and Sarver argued that Will James, the movie’s
main character, was based on his life and experiences.
 
Sarver sued in New Jersey for misappropriation of his
likeness and right of publicity, false light invasion of privacy, defamation,
breach of contract, intentional infliction of emotional distress, fraud, and
negligent misrepresentation. The case was transferred to California, where the
defendants filed a motion to strike under California’s anti-SLAPP statute.  The court of appeals first went through a
choice of law analysis and applied California law, given the predominance of
California contacts, the difficulty of determining Sarver’s domicile, and California’s
strong interest in enforcing its anti-SLAPP law to “encourage continued
participation in matters of public significance” and to protect against “a
disturbing increase in lawsuits brought primarily to chill the valid exercise”
of constitutionally protected speech.  While New Jersey has no similar law, “its
courts have allowed defendants to bring a claim for malicious use of process to
protect against suspected SLAPP actions.” Thus, the balance of interests tilted
towards California: “Whereas California would appear to object strongly to the
absence of a robust anti-SLAPP regime, New Jersey’s interests would be less
harmed by the use of California law.”
 
It wasn’t hard to show that defendants’ acts were an exercise
of their free speech rights on a matter of public interest, something which is
to be broadly construed.  One California
court said:
“a matter of public interest should be something of concern
to a substantial number of people.” Further, “there should be some degree of
closeness between the challenged statements and the asserted public interest,”
and the “focus of the speaker’s conduct should be the public interest.” The
Iraq war, and the use of IEDs by insurgents during the war, was “a matter of
significant and sustained public attention.” 
Sarver argued that the true issue was “whether the defendants’ alleged
misappropriation of his private persona is of public interest.”  However, unlike the situation of a random
callow youth, “Sarver’s work while deployed in Iraq was an issue of public
concern significant attention devoted to the war and to the role of IEDs in it.”  Significantly, while the film allegedly
incorporated his personal characteristics, the portrayal specifically centered
around his work, and his characteristics were displayed only in the context of
his job in Iraq. Thus, “the private aspects that Sarver alleges the film
misappropriated are inherently entwined with the film’s alleged portrayal of
his participation in the Iraq War.”  This
was sufficient to show that the narrative focused on an issue of public
concern.
 
At that point, the burden shifted to Sarver to “state and
substantiate a legally sufficient claim.” 
Under last Term’s Reed
decision, content-based restrictions on speech, such as the right of publicity,
are presumptively unconstitutional and must be shown to be narrowly tailored to
serve compelling state interests. 
[Query, in the case of a common-law right, who is to make this showing
and on what record.]  Zacchini said the right of publicity was
constitutional as applied to the appropriation of a performer’s entire
performance.  [Zacchini, of course, did not apply strict scrutiny; rather, it
applied an analogy to a form of speech restriction that the Court has said
ordinary First Amendment principles don’t apply to, see Eldred/Golan, a logic
that looks even worse after Reed.] 
 
Zacchini reasoned
the state’s right of publicity law was aimed at protecting “the proprietary
interest of the individual in his act” and “prevent[ing] unjust enrichment by
the theft of good will,” in order to provide “an economic incentive for [the
individual] to make the investment required to produce a performance of
interest to the public.” This was similar to the interests which “underlie[]
the patent and copyright laws long enforced by this Court,” as opposed to
reputational and privacy-based interests which underlie torts like defamation. The
Court balanced this interest against the TV station’s First Amendment interests
in broadcasting the performance and found the station’s interest less weighty
because “[n]o social purpose [was] served by having the defendant get free some
aspect of the plaintiff that would have market value and for which he would
normally pay.” [Note how the “balancing” has nothing to do with Reed strict scrutiny.  Just sayin’.] 
 
The Ninth Circuit has extended Zacchini to lots of things, from greeting cards to video games,
even outside of advertising.  “[O]ur
precedents have held that speech which either appropriates the economic value
of a performance or persona or seeks to capitalize off a celebrity’s image in
commercial advertisements is unprotected by the First Amendment against a
California right-of-publicity claim.” 
 
But those cases don’t apply here, because Sarver isn’t a
celebrity: he didn’t “make the investment required to produce a performance of
interest to the public,” or invest time and money to build up economic value in
a marketable performance or identity.  He’s
a private person, even though his story is of public interest.  “Neither the journalist who initially told
Sarver’s story nor the movie that brought the story to life stole Sarver’s ‘entire
act’ or otherwise exploited the economic value of any performance or persona he
had worked to develop. The state has no interest in giving Sarver an economic
incentive to live his life as he otherwise would.”
 
Comment: so, the state has no interest in giving incentives
for things that would be produced anyway, where the incentive is given by way
of restrictions on speech?  Good to know.
 
Continuing: “The Hurt
Locker is speech that is fully protected by the First Amendment, which
safeguards the storytellers and artists who take the raw materials of
life—including the stories of real individuals, ordinary or extraordinary—and
transform them into art, be it articles, books, movies, or plays.”  Um, aren’t celebrities part of the raw
materials of life?  (Calling Andrew Gilden:
perhaps celebrities are already cooked, but they can still be chocolate chips
in my expressive cookies, no?)
 
Anyway, it’s not even clear that California’s right of
publicity would extend this far, given that the California Supreme Court barred
a right of publicity action based upon the unauthorized exhibition of a
“fictionalized version” of Rudolf Valentino’s life on television, because there
was no postmortem right.  Guglielmi v.
Spelling-Goldberg Prods., 603 P.2d 454, 455 (Cal. 1979). But a broader
concurring opinion explained that, unlike in Zacchini, there was no claim that the defendants secretly filmed
Valentino’s “performance” or otherwise stole his “entire act,” so as to
“undercut[] his ability to earn a living,” thus meaning that the fictionalized
portrayal of Valentino’s life was entitled to greater First Amendment
protection than the conduct in Zacchini.  Gee, I wonder what implications that logic would
have had for Keller v. EA?
 
After the right of publicity claims were kicked out, the
remaining defamation, false light, and intentional infliction of emotional
distress claims promptly followed. “[A] reasonable viewer of the film would be
left with the conclusion that the character Will James was a heroic figure,
albeit one struggling with certain internal conflicts.”  Even unflattering aspects wouldn’t be enough
to make this defamatory or highly offensive to a reasonable person, even if
they were provably false (such as the character’s alleged fascination with war
and death).

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High-quality health care claims are puffery

Posted on February 16, 2016 by rtushnet
Intermountain Stroke Center, Inc. v. Intermountain Health
Care, Inc., — Fed.Appx. —-, 2016 WL 523613, No. 14–4045 (10th
Cir. 2016)
 
Intermountain Health Care is a large hospital/clinic/doctor network.  Before it ceased business in 2013, the Stroke
Center provided “same-day and next-day treatment” to patients presenting with
strokes and transient ischemic attacks (TIAs). According to its staffer Dr. Nancy
Futrell, the Stroke Center was “the only outpatient, non-emergency facility in
Utah to provide non-emergency, same-day and next-day stroke and TIA treatment
by …. a stroke specialist” and the “only” facility in the state that offered
these services at rates significantly lower than prevailing hospital rates.  Originally, Futrell and the Stroke Center sued
Intermounntain in state court for violations of Utah’s Truth in Advertising Act
and related claims; they added a Lanham Act claim and Intermountain removed.
 
Plaintiffs challenged (1) general representations that
Intermountain follows “best medical practices,” provides the “best possible
care,” and has a mission of “[p]roviding excellent care of the highest quality
at an affordable cost,” and (2) three more specific representations about the
number of Intermountain physicians specializing in stroke and TIA treatment,
the efforts made by Intermountain to avoid prohibited sources of revenue, and
the proper scope of post-stroke or post-TIA care.  The court of appeals affirmed the dismissal
of the Lanham Act claim because the challenged statements were puffery as a
matter of law.
 
On its website, Intermountain held itself out as “an
internationally recognized, nonprofit system of 22 hospitals, a Medical Group
with more than 185 physician clinics, and an affiliated health insurance
company,” “offering a full range of services,” and “[p]roviding excellent care
of the highest quality at an affordable cost is at the heart of [its] mission.”
Also: “Our network of experienced doctors, surgeons and caregivers strive[s] to
provide clinically excellent healthcare through a wide range of services in a
setting where patient needs come first.” On a page called “For Intermountain
Healthcare Trustees,” Intermountain described its business model as “[a]n [i]ntegrated
[h]ealthcare [s]ystem” offering “[c]linical quality,” “[s]ervice quality,”
“[l]ower costs,” “[p]revention,” and “a relatively seamless continuum of care.”
Being a vertically-integrated network supposedly enabled it to “contribute in
essential ways to the sharing of best medical practices, and raising the
standards of clinical excellence.” Thus “Intermountain not only provides
quality healthcare; it often achieves lasting improvement in cost
structures.” 
 
All this was puffery, in context, which included the fact
that it was mass advertising expressed in vague terms, not something said to a
particular person with knowledge of that person’s specific needs. “Healthcare
is fraught with unpredictability, and a healthcare-delivery system hardly
strikes us as the species of business from which a particular
objectively-superior result (e.g., with respect to certain stroke and TIA
treatments) could reasonably be expected by a consumer without at least some
modicum of specificity being provided by the business in its representations
….”
 
Puffery was not an affirmative defense, as plaintiffs
claimed; whether statements were factual or puffery were questions of whether
actionable conduct had occurred.  Nor did
puffery have to be “forward-looking”; that’s just an example of a type of
puffery.  “[V]ague statements of
corporate optimism” also qualify.  Lexmark changed none of this.
 
As for the three specific statements, they were also
non-actionable.  First, plaintiffs argued
that Intermountain claimed to have more physicians for stroke and TIA care than
it actually did, using misleading statements that its heart and vascular
surgeons specialized in such care, and that neurologists at its clinic were
stroke and TIA “subspecialists.”  Plaintiffs alleged that Intermountain’s
listing of stroke on its website “under ‘Heart and Vascular Services’”  would “confuse stroke and TIA patients into
believing that cardiologists and other heart specialists specialize in the
treatment of stroke and TIA, which is not accurate.”  Also, “the ‘Find a Doctor’ link from the
[Intermountain] website … lists heart and vascular surgeons … as stroke
treatment providers,” which would mislead consumers. 
 
The court of appeals found that implausible.  “Plaintiffs’ own evidence supports our
conclusion that any association of stroke and TIA with ‘heart and vascular’
services is proper” because stroke is a cerebrovascular or cardiovascular
disorder.  “[I]t follows that stroke
patients could not have been misled by a suggestion that a vascular physician
might be of assistance.”  Likewise, the
“Find a Doctor” tool would provide a list of doctors, including information
about each doctor’s educational background, certifications, and clinical
interests. None of the “primary specialty” notations explicitly included a
claim of expertise in stroke and TIA treatment; the only claim was that some of
them possessed “the core competencies to treat cerebrovascular diseases,” which
appeared to be true.  Plaintiffs failed
to explain how consumers would infer that the doctors were specialists in
stroke and TIA.  Though plaintiffs might
want Intermountain to include a disclaimer, the law didn’t require that.
 
Also, Intermountain’s Annual Stroke Report said: “The Stroke
Program also offers resources for patients with ongoing medical needs after
hospitalization. The Outpatient Neuroscience Clinic[ ] … is home to
subspecialists including epileptologists, general neurologists, physical
medicine and rehabilitation physicians, and neuropsychologists.”  Plaintiffs failed to explain why it was false
or misleading to label them “subspecialists,” even though they held themselves
out as focusing on specified brain disorders. There was no explicit or implicit
representation that Intermountain’s Outpatient Neuroscience Clinic was devoted
to stroke and TIA.  [I have changed the
court of appeals’ language a bit; the court wrote as if making merits
determinations, where under Twiqbal
it really should have been talking about plausibility.]
 
Plaintiffs alleged that Intermountain falsely claimed in its
Ethics Code to “carefully review financial relationships with physicians and
other Health Care Practitioners for compliance with the anti-kickback and Stark
laws.” In fact, Intermountain reached a settlement with regulators over compensation
arrangements that appeared to violate federal healthcare-fraud statutes. But
the court found the Ethics Code claims true and not misleading.  Then, contradictorily, it said that an announcement
of intent to behave ethically was outside the scope of the Lanham Act entirely
(that is, puffery).  A code of ethics is
aspirational; “it simply cannot be that every time a violation of that code
occurs, a company is liable under federal law for having chosen to adopt the
code at all, particularly when the adoption of such a code is effectively
mandatory.”
 
Moreover, the Ethics Code promised consequences for
misconduct, tacitly acknowledging that standards are sometimes violated.  In fact, the court found that was what
happened when Intermountain found out about the compensation schemes and
settled with federal regulators. 
Comment: Even on its own terms, that’s wrong, which is not to say the
ultimate holding is wrong.  But in fact,
that Intermountain settled does not itself show that anyone involved in the
schemes suffered “consequences” therefore; we would need a lot more information.  The court of appeals, however, concluded that
“the very existence of the resulting settlement agreement evinces the truthful
spirit underlying Intermountain’s Ethics Code,” which promised to report
observed and suspected violations of laws or policies.  Aspirational statements about federal anti-fraud
laws didn’t implicate “the nature, characteristics, qualities, or geographic
origin of [its] … services.”
 
Finally, plaintiffs challenged Intermountain’s Stroke
Pamphlet, targeted at stroke and TIA patients who have been admitted to an
Intermountain facility, as well as their family members and friends. The
pamphlet contained background material on strokes and TIAs, a “Stroke Recovery
Checklist,” an index of stroke resources, and other general information
concerning “[a]ftercare.”  The aftercare
page said that “an appointment with” a patient’s primary care provider “is
usually recommended 1 to 7 days after [leaving] to go home” and, similarly,
that visiting a neurologist “is usually recommended” “4 to 6 weeks after
[leaving] to go home.” Plaintiffs alleged that “a TIA patient who reads this
pamphlet is likely to be under the mistaken impression that he or she can
safely wait 4 to 6 weeks before following up with a neurologist.”
 
The court of appeals found this nonactionable because it
made no statement about “the nature, characteristics, [or] qualities[ ] … of
[Intermountain’s] … services.”  In the
entire pamphlet, Intermountain named itself only on the title page; in one very
small “Call 911!” icon; and at the end, as one of “many organizations that
support people who’ve had a stroke.”  Plus, the aftercare chart in particular
couldn’t plausibly mislead anyone about the scope of Intermountain’s services.  This “rudimentary worksheet suggesting how
patients might approach post-stroke or post-TIA life” was “far too vague to
support a Lanham Act claim.” Plus, if a reader reached the chart on page 10, it
stood to reason that she also read the disclaimer on page 3 stating that “this
booklet doesn’t replace the specific instructions you will receive from your
healthcare providers.”

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Reading list: the class action as trust

Posted on February 16, 2016 by rtushnet

Sergio J. Campos, The Class Action as Trust.  Abstract:

The class action is controversial because the class attorney can litigate or settle the claims of the class members without their consent. Many scholars have turned to corporate law to address the potentially disloyal behavior of the class attorney. These scholars have used analogies to corporate law to support (1) the use of opt out rights and (2) restrictions on class conflicts to constrain class attorneys, and the law has generally mirrored both requirements. In practice, however, both of these requirements have undermined the efficacy of the class action and prevented the class action from being used in many appropriate settings.

This article argues that a more useful model for the class action is the trust. Unlike the shareholders of a corporation, the beneficiaries of the trust typically cannot exercise control over the trustee. Moreover, unlike the corporation, trust law facilitates the creation of trusts with conflicts among the beneficiaries. These features of the trust mirror the most controversial features of the class action.

The article shows that both of these features are necessary to address problems of scale found in both contexts. Unlike in the corporate context, both the trust and class action contexts lack a well-developed market for managerial control which would allow beneficiaries/class members with conflicting interests to cede control to a third party with better aligned interests. In the absence of such a market, retaining control among the divided beneficiaries/class members prevents them from investing in the res/claims at the right scale.

Accordingly, trust law shows that class action requirements such as opt out rights and class cohesion are misguided. The article concludes by applying the trust model of the class action to such class action issues as the ascertainability of class members, settlement pressure on the defendants, and cy pres awards.

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seller-incentivized reviews might be misleading (and violate FTC guidelines)

Posted on February 16, 2016 by rtushnet
Vitamins Online, Inc. v. HeartWise, Inc., 2016 WL 538458,
No. 13-CV-982 (D. Utah Feb. 9, 2016)
 
The parties (plaintiff d/b/a NutriGold and defendant d/b/a NatureWise)
make and sell dietary supplements online, including on Amazon; their competing
products  include one containing garcinia
cambogia and one containing green coffee. 
Vitamins Online began selling NutriGold Garcinia Cambogia and NutriGold
Green Coffee products on Amazon.com before 2010, when there was little demand
or competition because they were not well known to consumers.  In 2011, Dr. Oz showcased green coffee
extract for weight loss on his show, causing demand to explode for those that
met his recommendations of at least 45% chlorogenic acid and without any
binders, fillers, or other artificial ingredients, including NutriGold Green
Coffee.  Similarly, demand for garcinia
cambogia extract for weight loss purposes, particularly that meeting his
recommendations, exploded after Dr. Oz recommended it.  The increased demand attracted competition,
including NatureWise, which advertised its products as having Oz-recommended
characteristics.
 
NatureWise then had its employees vote on the helpfulness of
reviews on its product pages, voting up positive reviews and down negative
reviews, increasing the likelihood that potential consumers would see positive
reviews first.  NatureWise also
encouraged customers to repost positive reviews on Amazon.com by offering them
free products or gifts cards. It would review and, in some cases, edit the
reviews before asking the customers to post them on Amazon.com.  (As described, this behavior might also
trigger FTC scrutiny.) 
 
Vitamins Online alleged that NatureWise made false
ingredients claims, and impliedly false claims by manipulating the ranking and
number of positive reviews on Amazon.com. 
NatureWise argued that this manipulation couldn’t be either literally or
impliedly false, because Vitamins Online didn’t show that the votes or the
reviews themselves were counter to the actual user experience or actually deceived
consumers. Vitamins Online did not contend that NatureWise employees were
voting as helpful reviews that were in reality unhelpful or that the reposts
from consumers were counter to their actual experience, but that the votes and
reviews gave a false impression that unbiased
consumers found these reviews helpful and chose to post positive reviews
without anticipating a reward.  Though
the Lanham Act was broad enough to cover these practices as misrepresentations
if they were deceptive, Vitamins Online didn’t show that consumers were
deceived.  The court denied summary
judgment to NatureWise because Vitamins Online might be able to obtain the
necessary evidence via consumers surveys, which the court granted it additional
time to do.
 
The court turned to injury; the requisite showing depends on
the relief sought. For injunctive relief, likely harm—existing or future—will
do, while proof of causation and specific injury is required for damages.  For comparative advertising or a two-player
market, most courts presume likely injury for purposes of injunctive
relief.  The Tenth Circuit has suggested
that this presumption might apply to an “obvious competitor,” which Vitamins
Online argued that it was, given their direct competition on Amazon and the
fact that NatureWise instructed its graphic designer to create an ad for
NatureWise similar to Vitamins Online’s Amazon.com product page. Vitamins
Online also offered evidence of declining sales corresponding to NatureWise’s
increasing sales and a drop in Vitamins Online’s ranking on Amazon.  The court declined to presume injury here,
though competition and the correlation in sales gains/losses was relevant to
showing injury.  Thus, genuine issues of
material fact existed on causation and injury.
 
Likewise, the court declined to apply a presumption of
irreparable injury, which it found arguably unsupported post-eBay even as applied to comparative
advertising.  Instead, there was merely a
genuine issue of fact.

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Rules of Engagement for Valentine’s Day

Posted on February 12, 2016 by rtushnet

I talked about the rules of engagement for Valentine’s Day in this YouTube video from Georgetown.

The Note on which this is based can be found here.

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Reading list: Feminist values in the Archive of Our Own

Posted on February 10, 2016 by rtushnet

Casey Fiesler et al. have written An Archive of Their Own: A Case Study of Feminist HCI and Values in Design (CHI 2016), a paper about feminist principles and human-computer interaction in the Archive of Our Own.  As a noncommercial website, the AO3 has a different perspective on policies and practices than entities trying to monetize fandom, and that matters!

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From tarnished financial brand to ashy whiskey?

Posted on February 8, 2016 by rtushnet

This story about Lehman Brothers whiskey is … well, it is what it is.  I’m not sure I’ve seen a similar use of an abandoned mark before.

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The rest is silence: #thatswhatshesaid goes on, redacted

Posted on February 8, 2016 by rtushnet

Here’s the story.  Apparently Pike just got another C&D from the holder of the rights in the play The Whipping Man, which is apparently represented in Pike’s work by the sound of 72 pages flipping (because there are no women in the play at all).  The emptiness of that claim perhaps  makes even clearer that the objections are based in not liking criticism, especially criticism that is damning precisely because it’s quotation.

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