Reading list: Redskins as insult and brand

Posted on December 12, 2015 by rtushnet

C. Richard King, Redskins: Insult and Brand (2016)

Passionate, if somewhat repetitive (as perhaps all moral calls to action are), argument about the poisonous nature of the Washington football team’s name. King argues that the name isn’t just about insulting Native Americans, but about white people owning them, propertizing their images and getting to decide what “counts” as a real problem, and that this ownership itself is one of the benefits the name provides in bolstering white supremacy. Claiming Indianness becomes a privilege of white masculinity, the mascot now a trophy. (Notably, the team was famously racist towards African-American players and the last in the NFL to integrate, with an anthem that not only stereotyped “braves on the warpath” and used mock pidgin but also urged the players to “fight for old Dixie.”) The name, and the images with which it is associated, combine a “paradoxical love of imagined Indians and a loathing of actual, embodied Indians that continues to this day.” That love is indifferent to the fact that, for example, the team currently plays on the ancestral territory of the Piscataway Tribe, or that DC is where the Patawomeck used to live. And as hard as the team tries to remove the stereotypes and leave only tribute, as late as December 2014, fans ran a “Scalp Out Cancer” fundraiser. When defending the name, team fans speak of their own hurt and pain—what King calls “playing Indian and playing the victim.” It’s their power to name and claim that’s threatened, and that’s all they see—as when fans consider protesters inauthentic because they don’t look “Indian” enough then claim that they have 1/16 Cherokee blood.

Along with the privileging of whiteness, King also discusses the harms directly done by stereotypical images: making Native Americans feel worse and triggering disparaging stereotypes in whites. I learned that owner Dan Snyder’s Original Americans Foundation, while launched to huge hoopla, appears to have gone completely dormant in terms of carrying out any charitable activities. I also learned more about the history of the term that arose “to accommodate an increasingly racialized European and European American view of the world which was imposed on a broad range of peoples who only gradually developed a sense of a collective identity in response to it.”

King also discusses Native Americans who don’t mind the team name, or like it. It’s a useful point: “how could there not be some American Indians who support it?” There’s a lot of diversity among any group of people; some don’t think about it; some have family connections to the team; and, “in a society that offers so few images of American Indians, … that has so fully erased living indigenous people in favor of imaginary versions of them, why wouldn’t some number of Native Americans come to accept, endorse, and even identify with” the team? King further suggests that Native Americans living on reservations experience racism differently than Native Americans living in large cities, who see the logo regularly and don’t have the insulating counter-narratives that might surround them in their communities. So, while three high schools with a majority Native American student body still use the same name, their communities and audiences wouldn’t use the stereotypes that white football fans do.

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Reading list: empirically testing tarnishment of movies

Posted on December 9, 2015 by rtushnet
Christopher Buccafusco, Paul J. Heald, & Wen Bu, Testing
Tarnishment in Trademark and Copyright Law: The Effect of Pornographic Versions
of Protected Marks and Works:
 
This Article [reports] the results
of two novel experiments designed to test the effects of pornographic versions
of creative works on the value of the underlying works. In our experiments,
subjects viewed movie posters of pornographic versions of popular movies before
they were asked questions about those movies. Our data show little if any
support for the tarnishment hypothesis and some significant support for an
alternative enhancement hypothesis: Some of our subjects actually perceived
more value in the “tarnished” movies. We believe the results of these
experiments put the ball back into the court of tarnishment theorists to prove
their anxiety has a factual basis.
 
Good to see some empirical confirmation of the position
I’ve long taken (wow, I’ve had this blog for more than ten years!).

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6th Circuit holds that targeted ads are commercial advertising or promotion

Posted on December 8, 2015 by rtushnet
Grubbs v. Sheakley Gp., Inc., 2015 WL 7964109, — F.3d – (6th
Cir. Dec. 7, 2015)
 
District
court’s ruling covered here (with my raised eyebrow).  The court of appeals affirms the dismissal of
the RICO claims (they’re RICO claims), but reverses the dismissal of Lanham Act
claims based on the consequences of a mass employee departure.
 
Grubbs owns Tri–Serve, Ltd.; TriServe # 1, LLC; and Capital
Concepts, Inc.  Capital Concepts is a
financial planning, wealth management, and tax preparation firm, while the
other firms were successors to four professional employment organizations,
which are a type of Ohio regulated entity to which employers may outsource
certain administrative tasks, such as payroll, workers’ compensation, and
benefits.  Tri-Serve provides PEO
services to the greater Cincinnati, Ohio market.
 
After she purchased Tri-Serve, Grubbs asked Defendant Strunk–Zwick
to manage the newly acquired companies because of her expertise with PEOs.
Strunk–Zwick was subject to a non-competition agreement.  Defendant Larry Sheakley owns and operates
the Sheakley Group of Companies, which also provide “401(k) services, flexible
benefit plans, workers’ compensation, payroll, [and] human resources
outsourcing solutions,” headquartered in Cincinnati.
 
One of the Sheakley defendants solicited Strunk–Zwick to ask
for her assistance with Sheakley’s PEO division while she was still employed by
Tri-Serve. “During March and April 2009, Strunk–Zwick was paid by Sheakley on a
consulting basis, and was sometimes absent from the Tri–Serve office during
business hours in order to provide services to Sheakley.”  Sheakley solicited Strunk-Zwick and other
Tri-Serve staff members to join Sheakley, and coordinated the transfer of
Tri-Serve clients to Sheakley.  Defendant
Steve Wolf, a Sheakley VP, suggested that Strunk–Zwick tell Tri–Serve clients that
“we are partnering with Sheakley and that we may transition them over to give
them better service etc.”  For example,
Strunk-Zwick sent an email to 22 Tri-Serve clients:
 
We are moving! In order to better
serve you, we are partnering with Sheakley HR and moving our offices. As many
of you know, we have partnered with Sheakley over the years with regards to our
workers compensation and unemployment management. We have been blessed to have
experienced tremendous growth over the last 6 months. We find ourselves needing
more office space and more resources to ensure that our customer service level
continues to meet your expectations. By moving into Sheakley Group we will be
able to provide you and your employees with additional resources, services, and
benefits, while continuing to provide you with the service that you have grown
accustomed to expect from TriServe. Nothing will change from your standpoint.
We will have new contact information, but nothing else will change. You will
begin to see the Sheakley HR name and we will be introducing new benefits and
new services to assist you with growing your business. …
 
Effective Monday, July 6, 2009 our
Contact Information will be:
TriServe LTD c/o Sheakley HR
Solutions…
 
“Several Tri–Serve clients expressed dissatisfaction with
the move, were upset that they had received no notice, and worried that all of
their information had been transferred to Sheakley.”  At that point, Strunk-Zwick resigned from
Capital Concepts.  Before she left
Capital Concepts, she removed all files, including all customer files; took
Tri-Serve’s 2009 tax returns; and deleted computer files and e-mails.  Sheakley continued to use the Tri–Serve name
thereafter.
 
Grubbs had sporadic contact with Strunk–Zwick and Sheakley for
the next several months as they tried to work out various issues with payroll,
taxes, and similar matters for 2009. As of August 2009, health insurers and
workers’ compensation departments were still sending third-quarter invoices to
Tri–Serve at Grubbs’ office, but Sheakley, not Grubbs, received the client
payments.  Strunk-Zwick denied possessing
Tri-Serve’s own tax documents; Grubbs continued receiving bills for Tri–Serve, “which
she paid from her retirement account.” 
(Nice detail, plaintiff’s lawyers!)
 
Grubbs sued in 2013. 
The district court dismissed her Lanham Act and RICO claims, and
declined pendent jurisdiction over 15 state-law claims.
 
False designation of origin: Grubb argued that Strunk-Zwick’s
conduct could be imputed to Sheakley. 
Vicarious liability exists when “the defendant and the infringer have an
actual or apparent partnership, have authority to bind one another in
transactions, or exercise joint ownership or control over the infringing
product.”  The “partnership” email sent
to 22 clients used that language at Wolf’s suggestion.  “The intent to create an apparent partnership
in the eyes of the Tri–Serve clients is self-evident from this language.”
 
Next, the court considered whether there was “trademark use”
or instead use in a “non-trademark way,” which would fall outside the Lanham
Act. “This finding may be dispositive: plaintiffs cannot succeed on a trademark
claim where trademark law does not apply.” The district court found that the
email used Tri-Serve’s mark in a non-trademark way, as a source of comparison
between the two organizations.
 
Hensley Manufacturing v. ProPride, Inc., 579 F.3d 603 (6th
Cir. 2009), found no actionable trademark use where an inventor, Jim Hensley,
left the company bearing his name and designed products for its rival, who
described the products by identifying Jim Hensley as the designer, with a
disclaimer that Jim Hensley was no longer affiliated with Hensley Manufacturing.  This was not trademark use.  However, Hensley
was inapposite.  The email provided a new
address of Tri-Serve at Sheakley HR Solutions at One Sheakley Way, designating
geographic source and implying that those services would be originating from
both Tri–Serve and Sheakley HR. Likewise, including a link to http://www.triservehr.com
suggested that Tri–Serve would still be the source of payroll services, as
before. Domain name use was use “in a trademark way.”
 
Likely confusion:  Tri-Serve is a suggestive mark, “toward the
stronger end of the spectrum,” and “Tri–Serve customers were perfectly
acquainted with the name.”  The services
directly compete, making confusion likely in cases of sufficient
similarity.  Mark similarity: defendant
copied “wholesale,” favoring confusion.  Actual confusion: Some clients expressed
dissatisfaction and worry, and they started sending payments to Sheakley,
indicating that they were duped. 
Marketing channels/customer base: the same.  Degree of customer care: there was no
evidence that business owners purchasing HR services need to be held to an
unusually high standard—the question was whether “a typical buyer exercising
ordinary caution receiving Strunk–Zwick’s e-mail could be confused as whether
the HR services were coming from Sheakley or Tri–Serve.”  Intent: “The use of the Tri–Serve name cannot
have been anything other than purposeful; we therefore read Strunk–Zwick’s
e-mail as calculated to mislead the Tri–Serve clients into diverting their
business to Sheakley.” 
 
All the factors supported a finding of likely confusion, and
this was not in any way counterintuitive. 
“Taking the facts in the light most favorable to Plaintiffs, as we must,
we read the frequent use of the first person plural throughout the e-mail to
mean Tri–Serve, not simply Strunk–Zwick and the other Tri–Serve staff members
who were entering Sheakley’s employ; according to the e-mail, all of Tri–Serve
was moving, and was partnering with Sheakley.” 
The email was chock full of ambiguous (at best) references, which could
sow confusion and strongly implied affiliation, even though Grubbs—the actual
owner of Tri-Serve—did not affiliate with Sheakley.
 
False advertising:  The district court used the Gordon & Breach test for “commercial
advertising or promotion.”  The Sixth
Circuit hasn’t adopted Gordon & Breach,
but circuit precedent was silent about what constitutes “advertising or
promotion.”  The court of appeals here noted
the Seventh Circuit precedent stating that advertising was “promotion to
anonymous recipients,” but (like other courts) didn’t note that the Seventh
Circuit subsequently walked that back a bunch. 
(Does this failure by subsequent courts to notice later refinements tend
to happen more with Seventh Circuit cases because they are so breezy about
precedent generally and thus it’s harder to tell when they’re
limiting/contradicting earlier precedent?) 
The Second Circuit has adopted most of Gordon & Breach in Fashion Boutique of Short Hills, Inc. v.
Fendi USA, Inc., 314 F.3d 48 (2d Cir.2002), requiring that “the contested
representations are part of an organized campaign to penetrate the relevant
market. Proof of widespread dissemination within the relevant industry is a
normal concomitant of meeting this requirement.”
 
Like the Second Circuit, the court of appeals adopted the Gordon & Breach requirements that
“commercial advertising or promotion” must consist of “ ‘commercial speech’
that is made for the purpose of influencing the purchasing decisions of the
consuming public.”  Likewise, it adopted
the “organized campaign to penetrate the relevant market” standard, which need
not entail widespread, market-wide dissemination.  “[P]roducers today employ data as never
before to track our consumption habits, especially on the Internet, and send
out personalized promotional material accordingly.”  Targeted promotion to a discrete segment of a
larger market could be an organized campaign even without “flooding” the
market.  “[T]he plain meaning of the
terms ‘commercial advertising’ or ‘commercial promotion’ accommodates targeted
communications to a substantial portion of a company’s existing customer or
client base.” 
 
Still, not all commercial speech should be actionable under
the Lanham Act (because …?). Thus, the appropriate definition was:
 
(1) commercial speech; (2) for the
purpose of influencing customers to buy the defendant’s goods or services; (3)
that is disseminated either widely enough to the relevant purchasing public to
constitute advertising or promotion within that industry or to a substantial
portion of the plaintiff’s or defendant’s existing customer or client base.
 
No competition was required. 
(This is also entailed by Lexmark,
as other courts have observed.)
 
The letter to all of Tri-Serve’s clients fit squarely within
this definition.
 
The complaint sufficiently pled that the emails contained
several false and misleading statements of fact about Tri-Serve’s services and
its “partnership” with Sheakley.  “Tri–Serve
was not moving and the companies had no relationship whatsoever.” The new
address at One Sheakley Way “was also a false representation of the geographic
origin of the PEO services and could also have created a further misimpression
as to the relationship between the companies.” 
There was also evidence of actual deception, necessary for a damages
claim.  Health insurers and workers’
compensation departments billed Tri–Serve at Grubbs’ office, but clients paid Sheakley,
not Grubbs. 
 
What about interstate commerce? Grubbs didn’t allege that
the e-mail, or the mailed versions thereof, ever traveled outside Ohio, or
where any of the relevant e-mail servers might have been.  However, a civil plaintiff need not allege
that an e-mail crossed state lines to survive a motion to dismiss; stating that
an email was sent was enough to allow the reasonable inference that the
allegedly false advertisements were introduced into interstate commerce.

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California claims against false use of “organic” not preempted

Posted on December 7, 2015 by rtushnet
Quesada v. Herb Thyme Farms, Inc., 2015 WL 7770635, No.
S216305 (Cal. S.Ct. Dec. 3, 2015)
 
Labels matter to consumers, and misrepresentations on labels
hurt consumers in their search for information and also disadvantage honest
producers attempting to differentiate themselves.  Thus, the Supreme Court of California concluded,
federal law didn’t preempt claims against allegedly intentional
misrepresentations of organic status by an herb grower.  Congress only preempted state law on matters
related to certifying production as organic, rather than also reaching out to
preempt action against abuse of the “organic” label.  Such state claims further Congress’ purpose
of having a clear national definition of organic production, allowing consumers
to rely on organic labels.
 
According to the complaint, Herb Thyme has multiple
conventional farms and one farm that is properly certified as organic by a
registered certifying agent. When it comes time for distribution and marketing,
however, Herb Thyme allegedly brings its conventionally grown and organic herbs
to the same packing and labeling facility, processes them together, and sends
blended conventional and organic herbs out under the same “Fresh Organic” label
and packaging. Herb Thyme also allegedly packages and labels as organic some
herbs that are entirely conventionally grown.

The trial court and court of appeals found preemption of the state-law consumer
protection claims based on the Organic Foods Production Act of 1990.  The Supreme Court recounted the history
behind OFPA: the rise of consumer demand for “organic” food, but the
persistence of consumer confusion and deception in the absence of uniform
standards.  States reacted first, but
created inconsistent standards.  Congress
responded by creating national standards for the production, labeling, and sale
of organic products. Producers may label products as organic only if they comply
with an approved organic plan; approval must come from either state officials
or private certifying agents.
 
California became the first state to have its own organic
program approved.  Approved state
programs take principal responsibility for certifying growers and instituting
administrative proceedings for noncompliance with the governing standards.
California’s state program authorizes anyone to file a complaint about
noncompliance, and various state authorities may bring enforcement actions and
impose penalties.
 
Express preemption applies to federalize (1) the term
“organic”—a state can’t allow something the feds don’t, and (2) certification
for growers, which must be carried out only by certifying agents who themselves
have been federally accredited.  Whether
production processes qualify as organic is to be measured “only … in
accordance with” the provisions of OFPA. 
However, no such language of exclusivity appears in the provisions
governing sanctions for misuse of the organic label.  There was no reason to conclude Congress
wanted these sanctions to be a ceiling as well as a floor, especially since the
law permits states to adopt more stringent standards governing “organic”
production. Other courts to consider the issue have found no no express
preemption of state consumer protection lawsuits.
 
Herb Thyme argued that obstacle preemption applied.  There’s a presumption against preemption, and
the longstanding interest of the states in protecting consumers against
deception in food labeling makes preemption especially unlikely.  Even if the minority on the Supreme Court who
advocate for removing the presumption against preemption were in charge, it
wasn’t clear that they’d apply a presumptionless test in matters of obstacle
preemption.  State consumer fraud
lawsuits promote Congress’ goals of avoiding consumer deception, building
consumer trust in a standard definition of “organic,” and protecting legitimate
organic producers from having their prices undercut by sharp dealers.  Indeed, the USDA’s final rule adopting
implementing regulations emphasized that a standard definition of “organic”
would aid state enforcement of consumer fraud laws by providing a clear
benchmark.  Because OPFA has no private
right of action, implied preemption “would render organic labeling uniquely
immune from suits for deception because of legislation Congress passed, in
part, to prevent food from being ‘deliberately mislabeled as “organic.”’”  It seems unlikely that Congress intended to do
so. 
 
The Eighth Circuit preempted only consumer protection claims
asserting the defendant dairy should not have been permitted to sell milk as
USDA Organic because its production methods were not actually consistent with
federal regulations—“that is, claims making a frontal assault on the validity
of the organic producer’s government certification.” Nor could consumers sue
the certifying entity on the grounds that it erred either in initially granting
certification or in not revoking certification. But that case expressly
distinguished state law claims that merely challenged the truth of facts
relating to certification.  Herb Thyme
argued that the claims here went to split operations involving both
conventional and organic produce, which are required by regulation to institute
precautions against inadvertent commingling, and thus allowing the case to
proceed would conflict with organic regulations.  If the claim was that Herb Thyme’s
anti-commingling protocols were inadequate for “true” organic production, notwithstanding
the plan’s approval by a federal certifying agent, that might well be
preempted.  But that wasn’t the argument
here: the complaint accepted Herb Thyme’s certification and compliance with
federal regulations on its certified
organic farm.  It claimed intentional
mislabeling of conventional herbs as organic. “The Organic Foods Act cannot be
interpreted, under the guise of obstacle preemption, as shielding from suit the
precise misconduct Congress sought to eradicate…. [T]hese claims do not
contest Herb Thyme’s ability to do anything its federal certification actually
permits it to do.”
 
Further, the overall scheme was inconsistent with Herb
Thyme’s claim that only one “umpire”—the federal government—should have a say,
since it already delegated lots of decisions to certified growers, state and
local officials, and certifying agents.
 

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is “this video has been removed for violating the ToS” commercial advertising?

Posted on December 7, 2015 by rtushnet
Darnaa, LLC v. Google, Inc., 2015 WL 7753406, No.
15-cv-03221 (N.D. Cal. Dec. 2, 2015)
 
Darnaa posted a music video, Cowgirl, to YouTube.  At one point, YouTube removed the video from
its original location, later reposting it at a new URL with its view count
reset to zero because of an alleged violation of section 4.H of YouTube’s Terms
of Service, which prohibits the use of automated tools for increasing the view
count of videos posted on its site. 
Darnaa denied any such attempt and alleged that the removal, and YouTube’s
posting of a notice that the video had been removed because it violated
YouTube’s Terms of Service, harmed its business and reputation.
 
Darnaa argued that YouTube’s terms of service were
unconscionable and thus unenforceable, because they granted Google unlimited
discretion, limited Google’s liability, and shortened the statutory limitations
period for all claims to one year. 
Indisputably, the ToS were a contract of adhesion, which is enough to
establish some degree of procedural unconscionability.  Here, though, the degree was slight.  There are alternative websites for sharing
music videos, so Darnaa had meaningful choices. 
YouTube didn’t hold Darnaa’s job hostage to agreeing, as in other cases,
and Darnaa was free to take its content elsewhere.  Even if Darnaa didn’t read the terms, these
terms weren’t hidden in the contract; Darnaa had a real opportunity to read the
terms.
 
Substantively, the terms weren’t so one-sided as to be
unconscionable.  None of the three
provisions challenged by Darnaa shocked the conscience.  As for YouTube’s unbounded discretion, it was
reasonable for YouTube to retain broad discretion and minimize its exposure to
damages because it offers its hosting services for free.  Some California courts have found certain
contractually shortened statutes of limitations to be unconscionable and
unenforceable. But shortening the period to one year in this case was not
unreasonable.
 
Darnaa’s claims were therefore dismissed as time-barred,
unless Darnaa could amend the complaint to show that it was entitled to
equitable tolling (based, I assume, on a timely filed state court suit prior to
this one).
 
Google argued that the breach of contract and tortious
interference claims were barred by the ToS’s Section 10: “In no event shall
YouTube … be liable to you for any direct, indirect, incidental, special,
punitive, or consequential damages whatsoever resulting from … (iv) any
interruption or cessation of transmission to or from our services … [or] (v)
any errors or omissions in any content … whether based on warranty, contract,
tort, or any other legal theory[.]”  Such
exculpation clauses were particularly appropriate where, as here, Google
offered its service for free.  Darnaa
argued that all of its claims—with the exception of negligent interference with
prospective economic advantage—were intentional torts, which prevented the ToS
from exculpating Google under California law. 
This was correct—in California, “contractual releases of future
liability for fraud and other intentional wrongs are invariably invalidated”—so
only the negligence-based claim was barred.
 
As for the breach of the implied covenant of good faith and
fair dealing, Google argued that the ToS allowed it to relocate or remove
videos in its sole discretion “at any time, without prior notice and in its
sole discretion,”  and to “discontinue
any aspect of the Service at any time.” Darnaa argued that the relevant terms
applied only to content, not to services such as video hosting, and that Google
reserved only the right to terminate any aspect of its service as to all users,
not to terminate service for a particular user. The court found the relevant
terms ambiguous, because the provision for “Content” that violates the ToS
didn’t include view counts in the definition of “Content.” Even if view counts
were “Content,” it wasn’t clear that the ToS authorized the removal of the
associated video, not just the offending view count.  It was also ambiguous whether the ToS
permitted YouTube to remove any “Content” without prior notice, or whether it
referred only to the Content that “infringes on another’s intellectual property
rights.”  Further, it was not clear that
YouTube reserved the right to discontinue any aspect of its service provided to
a particular user, without restriction. Thus, it wasn’t clear that YouTube
eliminated the implied promise of the good faith and fair dealing normally
contained in every contract.  Thus, the
contract must be interpreted against the drafter, and the implied covenant of
good faith and fair dealing applied.
 
As for intentional interference with prospective economic
advantage, Google argued that tortious interference didn’t apply to alleged
interference with a large, anonymous group such as the public or a musician’s
fanbase.  The claim based on Darnaa’s
relationship to its fans was thus dismissed with prejudice.  However, Darnaa sufficiently pled Google’s
knowledge of its relationship with Clear Channel and independently wrongful
conduct (breach of the implied covenant of good faith). Darnaa alleged that
“Clear Channel constitutes a major advertising industry competitor of Google”
and that “[t]hrough the use of sophisticated tracking software,” defendants
were “able to ascertain that the large majority of the viewers accessing the
‘Cowgirl’ video on YouTube came to the video by clicking links embedded in
various of the hundreds of Clear Channel Internet radio websites.” Darnaa
referred to Clear Channel in its email to YouTube protesting the removal of the
video.
 
Defamation and Lanham Act claims were based on YouTube’s
posting, at the original URL, of a message that the video had been removed for
violation of the YouTube Terms of Service. 
Google argued that Darnaa hadn’t pled “commercial advertising or
promotion.”
 
Darnaa argued that the notice was inserted, at least in
part, if not in whole, to influence viewers to buy or use Google’s goods or
services because it showed that “defendants are on the job policing the Website
and enforcing their policies for the protection of the Website and its users.” The
complaint, however, alleged that the notice was made as part of YouTube’s
service, perhaps for the purpose of “disparag[ing] the integrity” of Darnaa,
which wasn’t enough; the court dismissed the claim with leave to amend. 
 
Defamation: Darnaa didn’t sufficiently plead that the notice
was “of or concerning” them, that it had defamatory meaning, or that it
suffered special damages.  Because the
plaintiff was Darnaa, LLC, not the recording artist, there was no allegation
that the plaintiff was a public figure; it need only plead negligence as to the
truth or falsity of the statement. 
However, the notice referred to the video, rather than the poster of the
video.  There were no allegations about
how the notice identified Darnaa, LLC. 
Other courts have found that a statement alleging breach of contract or
policy, including a breach of ToS, isn’t defamatory per se.  In the absence of any detail about the type
of violation allegedly underlying the removal, a notice that a “video has been
removed for violation of the YouTube Terms of Service” couldn’t constitute
defamation per se.  Danaa would have to
plead extrinsic circumstances that would make the notice defamatory is granted,
as well as special damages.

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Court mashes up Dastar and commercial speech doctrine to protect book from Lanham Act

Posted on December 7, 2015 by rtushnet
Keel v. Axelrod, No. 15-1507, 2015 WL 7733973 (E.D. Pa. Dec.
1, 2015)
 
Political operative David Axelrod wrote a book, Believer: My
Forty Years in Politics. Frank Keel, a political and media consultant, sued
under state and federal law for reverse passing off, claiming that Axelrod
falsely took credit for political consulting during the 2003 reelection
campaign of former Philadelphia Mayor John F. Street, which Keel identified as
a pivotal moment in his consulting career. 
Street was in a close race with his Republican challenger, Katz, when members
of the Philadelphia Police Department discovered an FBI listening device in
Mayor Street’s City Hall office, reportedly placed there as part of a “federal
investigation into City Hall corruption.”  The media wanted to know why Street was the
target of an FBI investigation, and Street held an impromptu press conference,
where he assured the public he had “done nothing wrong.”
 
In the hours after this press conference, Keel allegedly
proposed, “[a]s part of the consulting services he was providing to Mayor
[Street],” that the campaign “publicly announce that the bug was part of a ‘Republican
dirty-tricks’ strategy” from high in the George W. Bush administration.  Keel alleged that he “conceived and
implemented” the “Republicans Did It” strategy on his own, without any “input
or involvement” from Axelrod.
 
Axelrod’s book, by contrast, says:
 
As we approached the final month of
the campaign, I got a call from George Burrell, Street’s savvy political deputy
at City Hall.
“I think we have a problem.”
“Problem?” I asked warily.
“Yes, it seems we’ve found a bug in
the mayor’s office.” “A bug?”
“Yes, a listening device.”
“And who do we think this bug
belongs to?” I said. I really didn’t have to ask, but was hoping against hope
for an unexpected explanation.
“It appears to belong to the United
States government,” Burrell said, slamming the door on my wishful thinking.
Four weeks before the election, the
news would be filled with headlines about a federal investigation of the mayor
and his administration. It struck me, as I thought about it, that this was our
problem but also our opportunity. In an overwhelmingly Democratic town, a probe
launched by the Republican Justice Department in Washington would surely be
greeted with skepticism, perhaps even outrage. I called Burrell back. “We need
to hold a press conference on the steps of City Hall and accuse John Ashcroft
of trying to steal this election.” (Attorney General Ashcroft, a well-known
conservative ideologue, was highly unpopular among Democrats.) When Street
confronted reporters, frantic over the news, he came armed with a line I had
written for him: “I’m happy to speak into a microphone I can see!”
 
Keel alleged that, in fact, right after the press conference,
Axelrod demanded that Keel “immediately” stop implementing the “Republicans Did
It” strategy. Keel also alleged that Axelrod “plainly also intended the book to
provide advertising for promoting his political consulting business,” which was
still active, and that he and Axelrod competed for potential clients.  The publisher was allegedly contributorily
liable for failing to fact-check.
 
Why not just Dastar
this?  The court mentions Dastar, but uses its general rationale
that there’s a need to limit the scope of the Lanham Act to harmonize with the
requirement of a majority of circuits that there be a “threshold commercial
element” to the defendant’s activity. 
True, the Second Circuit has indicated that “use in commerce” is broader
than “commercial speech,” United We Stand America, Inc. v. United We Stand,
America New York, Inc., 128 F.3d 86, 92–93 (2d Cir. 1997) (Lanham Act isn’t
limited to “profitmaking activity”).  But
all the relevant cases “involve trademark name infringement or the direct solicitation
of clients, neither of which have been pleaded here.” Apparently, uses on the
front cover of a magazine and online “present a much greater risk of deceiving
potential customers as to the proper origin of the slogan than the facts
presented in this case.”   Direct
solicitations to potential customers can be “use in commerce,” but “a single
passage in a nationally marketed book cannot be viewed as a direct solicitation
of services to specific clients,” and anyway the book didn’t refer to any
trademarked services of Keel, so even in the Second Circuit this claim wouldn’t
work.  [This reasoning is extremely
shaky, because it doesn’t explain why trademark infringement gets to cross the
commercial speech barrier but other causes of action don’t. Not to mention its
indifference to the head of §43(a) under which this claim is brought—either
reverse passing off is actionable or it’s not, and if passing off would be
actionable under the same circumstances I can’t see why the court’s logic works–nor, of course, should passing off be actionable even if the passage had stated that Axelrod was endorsed/sponsored by Keel.] 
 
The Third Circuit has yet to impose an explicit commercial
use requirement, but the allegedly misleading use “must have a clear,
promotional purpose to attract customers.” Also, a number of district courts in
the circuit have found that “[t]he Lanham Act regulates only commercial
speech.” Other district courts in the Third Circuit have also found that claims
under the Lanham Act must concern commercial speech.  Here, there wasn’t “quasi-commercial
activities such as trademark infringement or the direct solicitation of clients,”
so Keel needed to plead commercial use.

Lanham Act disputes between nonprofits are actionable, but “commercial use”
doesn’t depend on the legal status of a defendant.  Instead, it requires promotional use of the
plaintiff’s proprietary material. Trademark infringement or the direct
solicitation of customers “are clear, promotional and advertising
activities.”  [This is the wrong way to
the right result, because trademark infringement is only “clearly” promotional
if you (a) sufficiently constrain what you’re willing to call infringement (a
desideratum in itself, but achieved via Rogers
or some other means that itself requires application of commercial speech
doctrine), or (b) adopt a circular definition: that which causes confusion is
by definition promotional.  (b) should
lead you to the same holding with respect to other kinds of falsity with
commercial effects, though.]
 
So, was the book passage in question commercial speech?  Under Third Circuit precedent, this question
involves a “commonsense distinction between speech proposing a commercial
transaction…and other varieties of speech.” Compared to the special on an
upcoming NFL video game that the Third Circuit found was an ad in Facenda, the passage in Axelrod’s book
didn’t note the availability of his consulting services, nor did it describe
unique features of his services.
 
Keel argued that the unique nature of political consulting
made false credit claims actionable, citing Gensler v. Strabala, 764 F.3d 735
(7th Cir. 2014).  Though both political
consultants and architects rely on their records to acquire customers, “Gensler is distinguishable from the
facts of this case because of the defendant’s commercial use of proprietary
material.”  [Again, this is a classic
example of letting property rhetoric distort analysis—yet so unnecessary to the
outcome!  It doesn’t even work,
conceptually: since Axelrod is describing the services he provided (according
to him), then to the extent that his services also have a reputation he is using “proprietary material” in the
sense that the court means it.  It’s
“commercial” that’s doing the work here, because Gensler involved the
defendant’s use of claims on his business website and associated Flickr account.]  Thus, it was unnecessary to reach the
question of whether a reverse passing off claim based on services survived Dastar.
 
“[C]ommunications made primarily for expressive purposes,
like the political and narrative purposes of Believer, enjoy broad First Amendment protection, and therefore,
are generally not actionable under federal statutes such as the Lanham Act”
[citing, among others, Citizens United].
 Only if Axelrod plausibly wrote Believer to promote his consulting
services to potential clients would his speech be actionable.  Although Axelrod had an economic motivation
to sell as many copies as possible, that doesn’t make the contents of the book
commercial speech.  The specific disputed
passage also lacked an obvious economic motivation to further Axelrod’s
political consulting services.  (The
court expressed doubt whether the passage even referred to Axelrod’s services,
though I think it did; the passage did not, of course, refer to Keel’s services.)
 
Most troublesome, however, was that the excerpt simply
wasn’t an ad: “a message with a clear, promotional purpose.” Believer didn’t explicitly tout the
availability of Axelrod’s consulting services, and couldn’t fairly be
characterized as an “infomercial.”  This
contrasted to “the unauthorized use of a trademarked name in a prominent
location, such as the front cover of a magazine, or in the domain name for a
business website,” which could be deemed ads. 
Instead, Believer expressed
Axelrod’s political views, and the challenged excerpt was a biographical
anecdote.
 
Keel also didn’t allege other facts linking Believer to the promotion of Axelrod’s
consulting services. He didn’t allege that Axelrod solicited clients at his
book signing or otherwise stated that Believer
was a marketing tool.  And now we’re
back to Dastar, mushing together the
predicate “commercial advertising and promotion” with the substance of the
claim: if attending book signings were enough to trigger a Lanham Act claim,
then any number of authors could be held liable for mischaracterizations of
past events; but requiring “this degree of accuracy in crediting strategies,
ideas, and/or services mentioned in a larger expressive work” would be the Dastar-barred “search for the source of
the Nile and all its tributaries.”

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Reading list: commercializing fanworks in the US and Japan

Posted on December 3, 2015 by rtushnet
Nele Noppe, Mechanisms of
control in online fanwork sales: A comparison of Kindle Worlds and Dlsite.com,
12 Participations 218, 231 (2015) (citations and footnote omitted):
 
This research also suggests that
while the establishment of Kindle Worlds may have been a watershed moment for
fanwork sales in the U.S., its apparent failure should not be taken as proof
that all fans are inherently opposed to the monetization of their works. DLsite.com
alone serves hundreds of thousands of fans that are interested in selling and buying
digital fanworks, including many English-speaking fans. Fanwork monetization is
neither new nor exceptional even in parts of English-speaking fan culture. To
provide just one example, ‘filing off the serial numbers,’ or changing
identifying names from fan fiction in order to publish it as an ‘original’
novel, is a practice with a long and storied history that is currently popular
especially in the Twilight fandom from which Fifty Shades of Grey hailed. The
existence of ‘filing off the serial numbers’ and other strategies of fanwork
monetization suggests that Kindle Worlds is not failing because all fans are
uninterested in selling fanworks, or because all fans believe that fanwork
exchange should only be ‘non-commercial’. I would argue that Kindle Worlds is failing
because it does not add enough value for fans – value to their fannish
experience, or to their commercial aspirations. This implies that fanwork sales
could be successful on the English-speaking Internet if a better business model
were found.
 

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EU public consultation on intermediary liability

Posted on December 3, 2015 by rtushnet
EU Delegation to the US, Public Workshop on the Digital
Single Market Strategy, Consultation on Online Platforms, Cloud & Data, Liability
of Intermediaries, Collaborative Economy
 
2003 Directive: recital says that there’s no prohibition for
member states to come up w/codes of conduct for intermediaries or generalized
duties of care.  If you can or should
reasonably expect that an intermediary should have been aware of illegal
activity, you can impose certain responsibilities. Not a hands-off approach to
what’s on your system.  Problem: how
harmonized are these rules? Notice and action: that is harmonized.  But when we did 2010 assessment, practice on
how quickly to respond, which formats can be used, can notices come from
private parties was very widely diverging. Also risks of overreaction: parties
can send continuous notifications w/o even checking whether content is even
possibly illegal.  Puts intermediaries in
difficult permission.  Also intermediaries
continue to claim to be passive, but business model is based on processing data
(implication: that’s not passive).  There
is no conclusion yet about what we should do, if anything.  Difficult to get concrete information on what’s
actually happening. 
 
Sampling as monitoring: control procedures can be justified
if they sample because they catch illegal activity samples ex post, even if
they don’t catch every piece of bad activity. 
If we did ex post, how post should the ex post be?  Certain member states interpreted the
Directive on “expeditious” action on notification as 24 hours, while others
interpreted it as 6 months.  You can’t
have a common market with such huge differences.  There are certain requests from stakeholders—not
good policy/reasonable to expect we can simply say there’s no problem. Not fit
for purpose given the amount of data going out. 
We aren’t really talking about ©/IP—we’re talking about all kinds of
illegal content, including terrorist content, radicalization.
 
Q: if liability might exist for insufficient monitoring,
then why wouldn’t an intermediary be in trouble if it misses one thing? Why isn’t
that a general obligation to monitor, inconsistent w/the directive?
 
EU person: There are concerns that you can’t have a duty of
care w/o a general monitoring duty. 
 
Jonathan Band: Internet has space for ecommerce; but also
for competing values.  Emphasis should be
in favor of free expression. US goes further than ecommerce directive in
§230.  Bad ideas may come to the US here—right
to be forgotten, ancillary copyright.  Comments
about
 
RT: OTW: actually a nonprofit, with no business partners, hosting
user-generated content: That doesn’t mean small scale. 90 million pageviews per
week, approaching 2 million unique pieces of content, over 600,000 registered
users—writing skills, language skills, coding skills to mostly female users.  All volunteer, including our support and
abuse team, who are not lawyers.  A
standard that requires us to behave like YouTube, with automated scrutiny, or
with “staydown” to keep a piece of content down no matter who posts it, would
simply shut us down, despite all the benefits we provide.  Sampling is the same: would require us to
have a larger team of lawyers than we have support personnel to engage in legal
analysis—be clear on what that means. 
Then we’d get arguments about whether we should be sampling/auditing more
heavily in problem areas like audio—should it be random per work or within
categories—the internet is much bigger and more diverse than the sites that are
often focused on.  Civil society is more
than businesses and the inquiry should keep that in mind.
 
A: My personal idea is auditing, that is not an official
position of the EU, but important to consider.
 
Emma Llanso (sp?), CDT: Overblocking of lawful content is
inevitable when you try to impose these types of duties on intermediaries.  Intermediaries having to figure out what
content is illegal will be really dangerous. 
Takedown and staydown: also very clear that this can’t be accomplished
w/o monitoring obligations—inconsistent w/ ecommerce directive.
 
A: Note that we are open to different definitions of online
platforms.
 
Q: note that monitoring duties harm smaller market entrants—works
against the EU.  US companies already
dominate the internet—how to replicate in the EU?  Excessive compliance costs in EU favor the
giants, who already have $.  Magical thinking
among non-programmers: humans write code; code can’t just scrutinize
everything. Imperfect algorithms & humans; at least you need a good faith
exception. No level of perfection will be obtained.  Circular: if you put in good faith, what
standard do you truly get? 
 
A: I like good faith effort (but I am not official EU
policy).  People have very bizarre ideas
of how software is built.  In European
legal system, we do have charter of fundamental rights, including freedom of
expression/access to information; equal status to right to security, privacy,
etc. Commission has not taken a position but should remember it’s part of our
system. We also can’t live in a world in which a court has to order every
takedown.
 
Q: cybersecurity—risk-based approach could be modeled. 
 
Internet Ass’n: Startups. 
In US, bright line safe harbors have been instrumental in success of
many startups.  Driven investment capital
towards startups, which is also key.  If
goal is to foster climate in EU conducive to investment/startups, remember
success story of US.
 
A: You need to provide data on this, not just assertions,
when you answer the associated questionnaire for this inquiry.
 
Software & Info Industry Ass’n: Just b/c of lack of
legal liability, doesn’t follow that intermediaries/platforms should do
nothing. Socially responsible platforms do have programs in place to deal w/things
like revenge porn.  §230: a good
samaritan provision—giving them opportunity to take voluntary steps to deal
w/problematic content w/o incurring legal liability.  Sometimes these discussions elide
responsibility w/legal responsibility.
 
Wilson Center: conceptual slippage—implementation is on the
internet provider/self-regulating. But that’s different from enforcement. Would
this be decentralized enforcement or not? 
Code of conduct—corporate social responsibility model. Will also be
important who participates/draws that up. 
Hasn’t been much about what the EC can/can’t do. Complexity: ecommerce
& other directives have been around for 10 years or more. How much will the
role of ICT standards/Comm’n admin guidelines play? Will the EC do
administrative rulemaking? For small businesses & nonprofits, they’re
sometimes unaware of bulk of rulemaking taking place to flesh out the
regulation.
 
A: There’s a clear push not to do hard legislation if at all
possible. The delay before Council/Parliament agreement, full regulation
(immediately applicable) or directive (must be transposed to member states)—average
is 7 years.  We know very well not to do
legislation unless clearly needed. Thus, rely on admin rulemaking and
cooperation.
 
US Chamber of Commerce: Not clear why ecommerce should be
treated differently than physical markets—especially when digital commerce is
the best way to enhance competition for easy startups. Should encourage more of
that instead of trying to pull down leaders, esp. w/o clear definition of the
problem we’re trying to solve?  Is
competition policy not doing the job?  What
are the barriers b/t states?  On the
cloud issues: mentions distrust of cloud computing—but we’re not clear where
that comes from.  Why are you worried
about it/who distrusts it?  You are asking
for data but we want to ask for the same thing from you.  Also: Data protection: must work w/digital
single market—not 28 different methods of enforcement.
 
Q: Many European startups simply pick up & move to the
US for access to customers, etc.  Data
flow regulation is a big part.
 
A: (In response to statement about EU targeting US companies
for competition investigation) Actually we target 80% EU companies; US
companies just tend to complain more in public whether they are targeted by EU
or US regulators—you didn’t hear EU banks whinging about being fined millions
of dollars in the US for behavior that was legal in the EU; you don’t hear the
German chemical sector whining about the constant investigations it’s under in
the EU.  EU is the most open market in
the world.  We are extremely transparent.

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Amicus brief in visual meme case

Posted on December 2, 2015 by rtushnet

While I’m at it, Chris Sprigman and I filed a brief on behalf of IP professors in a case against Fox News for republishing a 9/11 meme on a Fox Facebook page, with commentary on the order of “Never Forget”–the owner of the copyright in the photo of firefighters raising the American flag at Ground Zero, which was part of the meme, sued.  The brief argues that a meme of this sort, reflecting popular reaction to important events, is fair use.

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Amicus brief in karaoke case: Dastar revisited

Posted on December 2, 2015 by rtushnet

Mark McKenna (and I) filed an amicus brief on behalf of IP professors in another karaoke case, dealing with alleged infringement that consisted of displaying karaoke lyrics using unauthorized copies of the karaoke tracks, based on alleged trade dress in the audiovisual display/the use of plaintiff’s mark in the tracks.

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