Who’s honoring me now? (Public Knowledge)

Posted on June 11, 2015 by rtushnet

I’m delighted to announce that Public Knowledge is giving me one of its 12th Annual IP3 Awards.

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Student athletes lose another right of publicity claim

Posted on June 11, 2015 by rtushnet
Marshall v. ESPN Inc., No. 14-01945 (M.D. Tenn. Jun. 4,
2015)
 
Current and former student athletes who played NCAA football
or basketball sued college conferences, networks, and licensors for violating
their rights of publicity and foreclosing them from the market for their rights
of publicity.  To participate in NCAA
sports, athletes have to sign a form allowing the NCAA to use their names and
pictures to promote NCAA events, activities or programs.  And they don’t have much choice about NCAA,
since there’s no comparable alternative and the NFL and NBA don’t let players
enter directly from high school. To play competitively, student athletes have
to get a scholarship and sign over their rights.  The NCAA and defendants make billions, and
the student athletes get essentially nothing, though each has a fair market
value of over $1 million (not including scholarship).
 
Plaintiffs thus alleged that defendants violated their
Tennessee statutory and common law rights of publicity, the Sherman Act, and
the Lanham Act, and were unjustly enriched. The Sherman Act claims failed
because you can’t win an antitrust case without a signed affidavit from that
monocle guy from Monopoly, so no more about them.
 
Tennessee loves property rights, and “property includes all
rights that have value.” Because a celebrity’s right of publicity is valuable,
it is property.  State ex rel Elvis
Presley v. Crowell, 733 S.W.2d 89, 96-97 (Tenn. Ct. App. 1987). (Somewhere,
legal realists are weeping.)  There is
both common-law and statutory protection; the Tennessee Personal Rights
Protection Act (TPRPA) “was intended to ‘create an inheritable property right
for those people who use their names or likenesses in a commercial manner, such
as an entertainer or sports figure – someone who uses his or her name for
endorsement purposes.’”
 
The court found that the statute supplanted the common-law
right (at least in its coverage of publicity rights of athletes in sports
broadcasts).  Two courts in Tennessee had
found the statutory and common-law rights to be co-extensive, and no Tennessee
court had recognized a right to publicity in sports broadcasts. Moreover, when
there’s a conflict between the common law and a statute, the statute must
prevail.  The TPRPA specifically defined the
right of publicity as it relates to sports broadcast, which had not been
litigated before its enactment.
 
Even if the common-law right wasn’t coextensive with the
statute, and even if the specific statutory definition didn’t control, the
plaintiffs’ allegations still didn’t set forth a plausible claim for relief.
There was no relevant authority for the proposition that participants in
sporting events have a right to publicity under the common law. The other
jurisdictions to decide the issue have almost all found against such a right,
except for In re NCAA Student Athlete Name and Likeness Litig., 37 F. Supp. 3d
1126 (N.D. Cal. 2014). But the only value of that case here was to say in dicta
that there might be such a right in Minnesota, a conclusion thrown into doubt
by subsequent developments in Dryer
finding no such right under the laws of Minnesota, New York, New Jersey,
California, or Texas law.
 
So, onto the language of the TPRPA:
 
Any person who knowingly uses or
infringes upon the use of another individual’s name, photograph, or likeness in
any medium, in any manner directed to any person other than such individual, as
an item of commerce for purposes of advertising products, merchandise, goods,
or services . . . without such individual’s prior consent, or, in the case of a
minor, the prior consent of such minor’s parent or legal guardian . . . shall
be liable to a civil action.
 
“Likeness” is defined as “the use of an image of an
individual for commercial purposes.”  Further, the law says that “[i]t is deemed a
fair use and no violation of an individual’s rights shall be found, for
purposes of this part, if the use of a name, photograph, or likeness is in
connection with any news, public affairs, or sports broadcast or account.” “Thus,
the TPRPA clearly confers no right of publicity in sports broadcast, or with
respect to any advertisement if the advertisement is in connection with such a
broadcast.”
 
Plaintiffs argued that the sports broadcast provision didn’t
immunize defendants because they used plaintiffs’ images to advertise unrelated
products, but they didn’t plead any specific facts supporting that claim.
Plaintiffs relied on Zacchini v. Scripps-Howard Broad. Co., 433, U.S. 562
(1977), and Wisconsin Interscholastic Athl. Ass’n v. Gannett Co., Inc., 658
F.3d 614 (7th Cir. 2011), to support their right of publicity claims. They
argued that there was a key distinction between reporting about sports events
and broadcasting entire events.  There
was no doubt that those cases drew that distinction, but “stating that the
First Amendment does not guarantee unlimited broadcast rights does not mean
that it correspondingly establishes a right to publicity by the athletic
participants when entire games are broadcast.” 
 
Also, Zacchini was both a performer and the producer of his
one-man show, so protecting his act was consistent with incentive theory. “It
is a mistake, the Court believes, to read Zacchini
as supporting a right of publicity by anyone who performs in an event produced
by someone else.” Likewise, Wisconsin
Interscholastic involved a high school athletic association’s challenge to
the streaming of a tournament game by news organizations, and the Seventh
Circuit affirmed the association’s
right to enter into exclusive contracts for broadcasting entire games, noting
that “tournament games are a performance product of [the association] which it
has a right to control.” Plaintiffs were the players, but the networks were the
producers and the games were their
products.
 
Finally, plaintiffs argued that the sports broadcast
exception, interpreted this way, had a disparate impact on them, as
African-American students.  While this is
a very interesting argument and consistent with critiques of various other IP
rules, such as copyright’s idea/expression distinction, its treatment of
musical style, and its authorship rules, the court dismissed it for failure to
allege, among other things, any racially discriminatory purpose. Nor was there
any alleged impact on a fundamental right, since “[t]he ability to profit from
a right of publicity simply does [not] rise to the level of a fundamental right,”
unlike the right to privacy.
 
The Lanham Act false endorsement claims failed too. First,
“[t]he Lanham Act is constitutional because it only regulates commercial
speech, which is entitled to reduced protections under the First Amendment.” And
broadcasting sports events doesn’t propose a commercial transaction. 
 
Second, plaintiffs failed to adequately allege likelihood of
confusion. “They merely allege that they played in games that were shown on
television, and that advertisements appeared in the broadcast of the games.”  At the hearing, plaintiffs’ counsel played a
video clip from a tournament basketball game that showed a player preparing to
shoot a free-throw, while an advertisement for an upcoming TV program appeared
on the bottom of screen.  (I wonder if
this required circumvention to create!)  “[I]t
is simply implausible to conclude that the shooter or those along the key were
in any way endorsing the upcoming program, any more than Tennessee Titans
players, their opponents, or spectators endorse Louisiana-Pacific building
products (or, indeed, any of the host of other products displayed on the
scoreboard) when games are played at LP field, even though such advertisements
may be captured in the background during the game.”  All the broadcasts showed was players playing
their sport.

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Student athletes lose another right of publicity claim

Posted on June 11, 2015 by rtushnet
Marshall v. ESPN Inc., No. 14-01945 (M.D. Tenn. Jun. 4, 2015)
 
Current and former student athletes who played NCAA football or basketball sued college conferences, networks, and licensors for violating their rights of publicity and foreclosing them from the market for their rights of publicity.  To participate in NCAA sports, athletes have to sign a form allowing the NCAA to use their names and pictures to promote NCAA events, activities or programs.  And they don’t have much choice about NCAA, since there’s no comparable alternative and the NFL and NBA don’t let players enter directly from high school. To play competitively, student athletes have to get a scholarship and sign over their rights.  The NCAA and defendants make billions, and the student athletes get essentially nothing, though each has a fair market value of over $1 million (not including scholarship).
 
Plaintiffs thus alleged that defendants violated their Tennessee statutory and common law rights of publicity, the Sherman Act, and the Lanham Act, and were unjustly enriched. The Sherman Act claims failed because you can’t win an antitrust case without a signed affidavit from that monocle guy from Monopoly, so no more about them.
 
Tennessee loves property rights, and “property includes all rights that have value.” Because a celebrity’s right of publicity is valuable, it is property.  State ex rel Elvis Presley v. Crowell, 733 S.W.2d 89, 96-97 (Tenn. Ct. App. 1987). (Somewhere, legal realists are weeping.)  There is both common-law and statutory protection; the Tennessee Personal Rights Protection Act (TPRPA) “was intended to ‘create an inheritable property right for those people who use their names or likenesses in a commercial manner, such as an entertainer or sports figure – someone who uses his or her name for endorsement purposes.’”
 
The court found that the statute supplanted the common-law right (at least in its coverage of publicity rights of athletes in sports broadcasts).  Two courts in Tennessee had found the statutory and common-law rights to be co-extensive, and no Tennessee court had recognized a right to publicity in sports broadcasts. Moreover, when there’s a conflict between the common law and a statute, the statute must prevail.  The TPRPA specifically defined the right of publicity as it relates to sports broadcast, which had not been litigated before its enactment.
 
Even if the common-law right wasn’t coextensive with the statute, and even if the specific statutory definition didn’t control, the plaintiffs’ allegations still didn’t set forth a plausible claim for relief. There was no relevant authority for the proposition that participants in sporting events have a right to publicity under the common law. The other jurisdictions to decide the issue have almost all found against such a right, except for In re NCAA Student Athlete Name and Likeness Litig., 37 F. Supp. 3d 1126 (N.D. Cal. 2014). But the only value of that case here was to say in dicta that there might be such a right in Minnesota, a conclusion thrown into doubt by subsequent developments in Dryerfinding no such right under the laws of Minnesota, New York, New Jersey, California, or Texas law.
 
So, onto the language of the TPRPA:
 
Any person who knowingly uses or infringes upon the use of another individual’s name, photograph, or likeness in any medium, in any manner directed to any person other than such individual, as an item of commerce for purposes of advertising products, merchandise, goods, or services . . . without such individual’s prior consent, or, in the case of a minor, the prior consent of such minor’s parent or legal guardian . . . shall be liable to a civil action.
 
“Likeness” is defined as “the use of an image of an individual for commercial purposes.”  Further, the law says that “[i]t is deemed a fair use and no violation of an individual’s rights shall be found, for purposes of this part, if the use of a name, photograph, or likeness is in connection with any news, public affairs, or sports broadcast or account.” “Thus, the TPRPA clearly confers no right of publicity in sports broadcast, or with respect to any advertisement if the advertisement is in connection with such a broadcast.”
 
Plaintiffs argued that the sports broadcast provision didn’t immunize defendants because they used plaintiffs’ images to advertise unrelated products, but they didn’t plead any specific facts supporting that claim. Plaintiffs relied on Zacchini v. Scripps-Howard Broad. Co., 433, U.S. 562 (1977), and Wisconsin Interscholastic Athl. Ass’n v. Gannett Co., Inc., 658 F.3d 614 (7th Cir. 2011), to support their right of publicity claims. They argued that there was a key distinction between reporting about sports events and broadcasting entire events.  There was no doubt that those cases drew that distinction, but “stating that the First Amendment does not guarantee unlimited broadcast rights does not mean that it correspondingly establishes a right to publicity by the athletic participants when entire games are broadcast.” 
 
Also, Zacchini was both a performer and the producer of his one-man show, so protecting his act was consistent with incentive theory. “It is a mistake, the Court believes, to read Zacchinias supporting a right of publicity by anyone who performs in an event produced by someone else.” Likewise, Wisconsin Interscholastic involved a high school athletic association’s challenge to the streaming of a tournament game by news organizations, and the Seventh Circuit affirmed the association’s right to enter into exclusive contracts for broadcasting entire games, noting that “tournament games are a performance product of [the association] which it has a right to control.” Plaintiffs were the players, but the networks were the producers and the games were theirproducts.
 
Finally, plaintiffs argued that the sports broadcast exception, interpreted this way, had a disparate impact on them, as African-American students.  While this is a very interesting argument and consistent with critiques of various other IP rules, such as copyright’s idea/expression distinction, its treatment of musical style, and its authorship rules, the court dismissed it for failure to allege, among other things, any racially discriminatory purpose. Nor was there any alleged impact on a fundamental right, since “[t]he ability to profit from a right of publicity simply does [not] rise to the level of a fundamental right,” unlike the right to privacy.
 
The Lanham Act false endorsement claims failed too. First, “[t]he Lanham Act is constitutional because it only regulates commercial speech, which is entitled to reduced protections under the First Amendment.” And broadcasting sports events doesn’t propose a commercial transaction. 
 
Second, plaintiffs failed to adequately allege likelihood of confusion. “They merely allege that they played in games that were shown on television, and that advertisements appeared in the broadcast of the games.”  At the hearing, plaintiffs’ counsel played a video clip from a tournament basketball game that showed a player preparing to shoot a free-throw, while an advertisement for an upcoming TV program appeared on the bottom of screen.  (I wonder if this required circumvention to create!)  “[I]t is simply implausible to conclude that the shooter or those along the key were in any way endorsing the upcoming program, any more than Tennessee Titans players, their opponents, or spectators endorse Louisiana-Pacific building products (or, indeed, any of the host of other products displayed on the scoreboard) when games are played at LP field, even though such advertisements may be captured in the background during the game.”  All the broadcasts showed was players playing their sport.
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violation of labeling law is presumptively material and deceptive

Posted on June 11, 2015 by rtushnet
Brown v. Hain Celestial Group, Inc., 2015 WL 3398415, No.
11-cv-03082 (N.D. Cal. May 26, 2015) (magistrate judge)
 
Plaintiffs sued Hain for selling cosmetics whose front
labels used the word “organic,” but that did not contain at least 70% organic ingredients
as required by the California Organic Products Act (COPA), resulting in CLRA
and UCL claims; the court certified two classes corresponding to two Hain
product lines. Here, the plaintiffs sought and received summary judgment on
five issues of California law. 
 
It was undisputed that, before reformulation/relabeling, at
least some Hain cosmetics were labeled and sold as “organic” without meeting
COPA’s organic-content requirement.  The
parties didn’t agree on which products were “cosmetics” under COPA, or which
specific products fell short of COPA’s 70% minimum. Here, though, the
plaintiffs weren’t seeking to establish that any specific product violated
COPA, but rather to establish the relevant law in the abstract.  The court found this to be an acceptable use
of Rule 56, which is designed to streamline cases for trial, although it has
obvious implications for Hain’s tactical position.
 
COPA provides that “[c]osmetic products sold, labeled, or
represented as organic or made with organic ingredients shall contain[] at
least 70 percent organically produced ingredients.”  Plaintiffs asked the court to hold that selling
any product that used a variant of the word “organic” on the label but had less
than 70% organically produced ingredients violated COPA. Hain responded that
the court should defer to a February 2013 “notice of resolution” from the
California Department of Public Health (CDPH). This notice came at the end of
an agency inquiry, which included several hundred pages of documents from Hain,
including a chart showing that Hain would be discontinuing all but two of its
Jason products (one of the relevant product lines).  Hain also described or sent the CDPH samples
of revised Avalon Organics and Jason labels, now conforming to the organic
content standards and not at issue in this case. The new Jason labels no longer
carried their old “Pure, Natural, and Organic” tagline. The CDPH’s letter
acknowledged the changes, suggested that these products did not use the word
“organic” so as to trigger COPA, and stated that the CDPH “consider[ed] the
matter resolved.”
 
This letter didn’t bar the plaintiffs’ claims. The CDPH
inquiry was ex parte and too informal to have a preclusive effect, “amounting
only to the agency’s decision not to further investigate.” The agency had no
comparative interpretive advantage over the courts, since “[t]his case presents
a question of straightforward statutory interpretation in plain English.” To
the contrary, “[g]iven that the court’s workaday job consists largely of reading
and applying statutes, it probably has the interpretive advantage over the
CDPH.” Plus, there was no reason to think that the CDPH was probably correct
(which would help justify deference).  “Reading
COPA’s very comprehensible language, it would seem that the CDPH baldly erred
if it held that a product labeled ‘organic’ but having less than 70% organic
ingredients does not trigger COPA.”
 
Then, the court held that COPA violations were “unlawful”
for purposes of triggering the unlawfulness prong of the UCL.
 
Next, the court turned to presumptions of materiality,
deception, and reliance, framing the question as whether the plaintiffs could
prove most of their case through presumptions and inferences.  Answer: yes. The basic theory:
 
The California legislature in
passing COPA determined that mislabeled organic products are “material” to the
ordinary consumer….This legislative determination of materiality compels the
further conclusion that, as a matter of law, the label was “likely to deceive”
the ordinary (read: reasonable) consumer. Finally, California law holds that,
if a CLRA plaintiff proves that a misrepresentation was “material,” then absent
class members need not prove that they actually relied on the
misrepresentation. The law will infer that they did.
 
If you put together the UCL standing cases, primarily Hinojos
v. Kohl’s Corp., 718 F.3d 1098 (9th Cir. 2013), and Kwikset
Corp. v. Superior Court, 51 Cal.4th 310 (2011), and class certification
cases discussing the UCL and CLRA, Stearns
v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011), and In re
Tobacco II Cases, 46 Cal.4th 298 (2009), that is indeed the result you get.  “[B]y enacting COPA, the California
legislature has determined that organic-content representations are material,” which
then indicates that, as a matter of law, violations of COPA are “likely to
deceive reasonable consumers.” 
 
As a
matter of law, “using the word ‘organic’ on a product label will likely lead reasonable
consumers to believe that the product in fact is organic (which, in California,
is legislatively defined to mean containing at least 70% organic ingredients).
That would seem to be exactly the point of labeling something ‘organic.’” If
the product is mislabeled, the consumer has been misled, which is to say
deceived.  As Stearns reasoned, “One might even say that, in effect, California
has created what amounts to a conclusive presumption that when a defendant puts
out tainted bait and a person sees it and bites, the defendant has caused an
injury; restitution is the remedy.”  Named
class representatives in UCL cases must still show “additional factors as to
[themselves], such as injury in fact and causation.” But absent members need
not.
 
These classwide presumptions of materiality and likely
deception would be more troubling if the remedies allowed individually defined
recoveries and denied Hain the ability to show that a specific transaction
wasn’t influenced by “organic.” But the UCL isn’t based on individual recovery;
its focus is the defendant’s conduct and its limited remedies are injunctive
relief and restitution. “Given this orientation, it is less troubling to say
that the California legislature has deemed certain conduct material and that
the courts must presume — even, as Stearns
suggests, conclusively presume — that that conduct is ‘likely to deceive’
ordinary consumers.”

The court rejected Hain’s arguments that other district court cases had refused
to follow this line of reasoning.  These
cases all differed from the one before the court, mainly though not entirely
because here there was a specific legislative definition of “organic.”
 
Finally, the court ruled, material misrepresentations create
a “classwide” presumption of reliance under the CLRA. However, this inference
is not conclusive, so Hain could show lack of reliance in individual transactions.  But otherwise, materiality was no different
as between the UCL and the CLRA. “The root materiality determination comes not
from the UCL but from the underlying substantive statute: COPA.”
 
Hain argued that the court’s holding turned a basic COPA
violation into a series of runaway inferences, carrying the plaintiffs too far
towards proving their case, at least in the abstract. Kwikset, Hinojos, Stearns, and Tobacco II, Hain argued, weren’t summary judgment cases, and didn’t
deal with the merits of UCL claims.  Although the result here was “striking,” it
was supported by the case law, given the “specific legislative determination”
of COPA that “organic” claims are materially false if a product does not meet
the 70% mark and the “defendant-focused orientation” of the UCL.  “[T]he strength and clarity of what these
cases say about the substance of UCL claims make it practically impossible to
wall these off as mere ‘pleadings cases.’” Plus, plaintiffs’ motions here were
abstract and thus not distinct from the pleadings cases.  Plaintiffs will eventually have to prove the
COPA violation as well as named plaintiffs’ reliance.  But despite how striking the result was, this
court wasn’t going to put itself at loggerheads with the Ninth Circuit (Stearns) or the California
legislature. 
 
Anyway, food labeling cases vary a lot, so this holding was
more limited than it might first appear. 
“The details of, and differences between, mislabeling cases can impede
easy translation of all but the most basic legal rules from one case to the
next.”  Here, the court addressed only
the situation before it: the legislature barred a specific word unless products
met a specific definition. Analogous cases “should not be too numerous.”
 
Finally, the chain of presumptions was not so troubling as
all that:
 
It embodies something like strict
liability. If you mislabel a product and violate COPA, then the law will deem
the offending representation material, and will assume that it deceived (UCL)
and was relied upon by (CLRA) those who bought the product. Statutory remedies
will follow. That remains striking but is not unprecedented.
 
Maybe this result was deliberate, or maybe it was “the
inadvertent confluence of different strands of somewhat related law.” Either
way, the court wasn’t free to ignore precedent.

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violation of labeling law is presumptively material and deceptive

Posted on June 11, 2015 by rtushnet
Brown v. Hain Celestial Group, Inc., 2015 WL 3398415, No. 11-cv-03082 (N.D. Cal. May 26, 2015) (magistrate judge)
 
Plaintiffs sued Hain for selling cosmetics whose front labels used the word “organic,” but that did not contain at least 70% organic ingredients as required by the California Organic Products Act (COPA), resulting in CLRA and UCL claims; the court certified two classes corresponding to two Hain product lines. Here, the plaintiffs sought and received summary judgment on five issues of California law. 
 
It was undisputed that, before reformulation/relabeling, at least some Hain cosmetics were labeled and sold as “organic” without meeting COPA’s organic-content requirement.  The parties didn’t agree on which products were “cosmetics” under COPA, or which specific products fell short of COPA’s 70% minimum. Here, though, the plaintiffs weren’t seeking to establish that any specific product violated COPA, but rather to establish the relevant law in the abstract.  The court found this to be an acceptable use of Rule 56, which is designed to streamline cases for trial, although it has obvious implications for Hain’s tactical position.
 
COPA provides that “[c]osmetic products sold, labeled, or represented as organic or made with organic ingredients shall contain[] at least 70 percent organically produced ingredients.”  Plaintiffs asked the court to hold that selling any product that used a variant of the word “organic” on the label but had less than 70% organically produced ingredients violated COPA. Hain responded that the court should defer to a February 2013 “notice of resolution” from the California Department of Public Health (CDPH). This notice came at the end of an agency inquiry, which included several hundred pages of documents from Hain, including a chart showing that Hain would be discontinuing all but two of its Jason products (one of the relevant product lines).  Hain also described or sent the CDPH samples of revised Avalon Organics and Jason labels, now conforming to the organic content standards and not at issue in this case. The new Jason labels no longer carried their old “Pure, Natural, and Organic” tagline. The CDPH’s letter acknowledged the changes, suggested that these products did not use the word “organic” so as to trigger COPA, and stated that the CDPH “consider[ed] the matter resolved.”
 
This letter didn’t bar the plaintiffs’ claims. The CDPH inquiry was ex parte and too informal to have a preclusive effect, “amounting only to the agency’s decision not to further investigate.” The agency had no comparative interpretive advantage over the courts, since “[t]his case presents a question of straightforward statutory interpretation in plain English.” To the contrary, “[g]iven that the court’s workaday job consists largely of reading and applying statutes, it probably has the interpretive advantage over the CDPH.” Plus, there was no reason to think that the CDPH was probably correct (which would help justify deference).  “Reading COPA’s very comprehensible language, it would seem that the CDPH baldly erred if it held that a product labeled ‘organic’ but having less than 70% organic ingredients does not trigger COPA.”
 
Then, the court held that COPA violations were “unlawful” for purposes of triggering the unlawfulness prong of the UCL.
 
Next, the court turned to presumptions of materiality, deception, and reliance, framing the question as whether the plaintiffs could prove most of their case through presumptions and inferences.  Answer: yes. The basic theory:
 
The California legislature in passing COPA determined that mislabeled organic products are “material” to the ordinary consumer….This legislative determination of materiality compels the further conclusion that, as a matter of law, the label was “likely to deceive” the ordinary (read: reasonable) consumer. Finally, California law holds that, if a CLRA plaintiff proves that a misrepresentation was “material,” then absent class members need not prove that they actually relied on the misrepresentation. The law will infer that they did.
 
If you put together the UCL standing cases, primarily Hinojos v. Kohl’s Corp., 718 F.3d 1098 (9th Cir. 2013), and Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (2011), and class certification cases discussing the UCL and CLRA, Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011), and In re Tobacco II Cases, 46 Cal.4th 298 (2009), that is indeed the result you get.  “[B]y enacting COPA, the California legislature has determined that organic-content representations are material,” which then indicates that, as a matter of law, violations of COPA are “likely to deceive reasonable consumers.” 
 
As a matter of law, “using the word ‘organic’ on a product label will likely lead reasonable consumers to believe that the product in fact is organic (which, in California, is legislatively defined to mean containing at least 70% organic ingredients). That would seem to be exactly the point of labeling something ‘organic.’” If the product is mislabeled, the consumer has been misled, which is to say deceived.  As Stearns reasoned, “One might even say that, in effect, California has created what amounts to a conclusive presumption that when a defendant puts out tainted bait and a person sees it and bites, the defendant has caused an injury; restitution is the remedy.”  Named class representatives in UCL cases must still show “additional factors as to [themselves], such as injury in fact and causation.” But absent members need not.
 
These classwide presumptions of materiality and likely deception would be more troubling if the remedies allowed individually defined recoveries and denied Hain the ability to show that a specific transaction wasn’t influenced by “organic.” But the UCL isn’t based on individual recovery; its focus is the defendant’s conduct and its limited remedies are injunctive relief and restitution. “Given this orientation, it is less troubling to say that the California legislature has deemed certain conduct material and that the courts must presume — even, as Stearnssuggests, conclusively presume — that that conduct is ‘likely to deceive’ ordinary consumers.”
The court rejected Hain’s arguments that other district court cases had refused to follow this line of reasoning.  These cases all differed from the one before the court, mainly though not entirely because here there was a specific legislative definition of “organic.”
 
Finally, the court ruled, material misrepresentations create a “classwide” presumption of reliance under the CLRA. However, this inference is not conclusive, so Hain could show lack of reliance in individual transactions.  But otherwise, materiality was no different as between the UCL and the CLRA. “The root materiality determination comes not from the UCL but from the underlying substantive statute: COPA.”
 
Hain argued that the court’s holding turned a basic COPA violation into a series of runaway inferences, carrying the plaintiffs too far towards proving their case, at least in the abstract. Kwikset, Hinojos, Stearns, and Tobacco II, Hain argued, weren’t summary judgment cases, and didn’t deal with the merits of UCL claims.  Although the result here was “striking,” it was supported by the case law, given the “specific legislative determination” of COPA that “organic” claims are materially false if a product does not meet the 70% mark and the “defendant-focused orientation” of the UCL.  “[T]he strength and clarity of what these cases say about the substance of UCL claims make it practically impossible to wall these off as mere ‘pleadings cases.’” Plus, plaintiffs’ motions here were abstract and thus not distinct from the pleadings cases.  Plaintiffs will eventually have to prove the COPA violation as well as named plaintiffs’ reliance.  But despite how striking the result was, this court wasn’t going to put itself at loggerheads with the Ninth Circuit (Stearns) or the California legislature. 
 
Anyway, food labeling cases vary a lot, so this holding was more limited than it might first appear.  “The details of, and differences between, mislabeling cases can impede easy translation of all but the most basic legal rules from one case to the next.”  Here, the court addressed only the situation before it: the legislature barred a specific word unless products met a specific definition. Analogous cases “should not be too numerous.”
 
Finally, the chain of presumptions was not so troubling as all that:
 
It embodies something like strict liability. If you mislabel a product and violate COPA, then the law will deem the offending representation material, and will assume that it deceived (UCL) and was relied upon by (CLRA) those who bought the product. Statutory remedies will follow. That remains striking but is not unprecedented.
 
Maybe this result was deliberate, or maybe it was “the inadvertent confluence of different strands of somewhat related law.” Either way, the court wasn’t free to ignore precedent.
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Plaintiff is over a barrel without a protectable trade secret

Posted on June 10, 2015 by rtushnet
Giles Const., LLC v. Tooele Inventory Solution, Inc., 2015
WL 3505309, No. 2:12–cv–37 (D. Utah June 3, 2015)
 
Giles alleged that the defendants, including individuals, improperly
disclosed and used its trade secrets related to barrel processing and pricing,
resulting in violations of the CFAA, the Lanham Act, and the Utah Uniform Trade
Secret Act (UTSA), as well as tortious interference with contractual relations,
unjust enrichment, and conversion. The court found that all the claims failed
as a matter of law.
 
ATI is a large company that sells titanium, using barrels to
ship its product.  The individual
defendants had some relationship with ATI, and for a few months in 2011, Giles supplied,
refurbished, and shipped barrels for ATI. Tooele now provides barrel processing
services to ATI, after submitting a lower bid. 
When Giles was hired, ATI provided it with a sample barrel and
specifications for barrel dimensions; Giles found a barrel supplier through a
15-minute web search.  Giles had an
account with this supplier, but no contract, nor did ATI have an exclusive
contract with Giles for barrel processing; rather, Giles agreed to fulfill any
purchase orders ATI sent.
 
ATI began searching for a less expensive barrel processing
service, with direct purchase of barrels and a separate vendor for processing. It
found Giles’ supplier; when it sought bids for barrel processing alone, only
Giles and the newly formed Tooele submitted bids.  Giles alleged that ATI revealed trade secrets
to Tooele, making it possible for it to underbid Giles.
 
Giles first alleged that certain defendants violated the
CFAA by obtaining Giles Construction’s proprietary information on ATI computers
and then divulging that information to competitors in violation of ATI’s
corporate guidelines.  But misuse of
information acquired with authorization does not constitute “access[ing] a
protected computer without authorization, or exceed[ing] authorized access.” In
reaching this conclusion, the court discerned a trend in the courts towards
adopting a narrower view of the CFAA, which was consistent with the statutory
text (including its definition of actionable damages) and the rule of lenity.
Thus, defendants were entitled to summary judgment.

So too with the Lanham Act claim, since the Lanham Act doesn’t cover misuse of
confidential information.  There was no
allegation of any misleading representation to any consumers.
 
The trade secret claim failed. The identity of Giles’ barrel
supplier was not a trade secret, because it could be easily ascertained with
basic research.  As for Giles’ pricing
information, Giles failed to produce evidence that its pricing or pricing
method was unique or especially innovative. 
Finally, Giles’ barrel processing process was not a trade secret.  There was ample evidence that ATI instructed
Giles on much of the process, and palletizing and wrapping barrels for delivery
is a well-known process in the shipping industry.
 
After the trade secret claims failed, the Utah Uniform Trade
Secrets Act preempted “conflicting tort, restitutionary, and other law of this
state providing civil remedies for misappropriation of a trade secret.” This
preemption reached any state law claim that is based on allegations of misuse
of confidential information, “regardless of whether the claim contains
additional, separate allegations.” That is, claims that are to some degree
based on misuse of information are preempted even if they’re not solely based
on that misuse: “if the claim fails without the allegations regarding misuse of
information, the UTSA preempts it. This is so even if the purported
confidential information does not constitute a trade secret, which forecloses
the ability to alternatively plead causes of action if they are based on the
misuse of information.”  That was true
here.
 

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Plaintiff is over a barrel without a protectable trade secret

Posted on June 10, 2015 by rtushnet
Giles Const., LLC v. Tooele Inventory Solution, Inc., 2015 WL 3505309, No. 2:12–cv–37 (D. Utah June 3, 2015)
 
Giles alleged that the defendants, including individuals, improperly disclosed and used its trade secrets related to barrel processing and pricing, resulting in violations of the CFAA, the Lanham Act, and the Utah Uniform Trade Secret Act (UTSA), as well as tortious interference with contractual relations, unjust enrichment, and conversion. The court found that all the claims failed as a matter of law.
 
ATI is a large company that sells titanium, using barrels to ship its product.  The individual defendants had some relationship with ATI, and for a few months in 2011, Giles supplied, refurbished, and shipped barrels for ATI. Tooele now provides barrel processing services to ATI, after submitting a lower bid.  When Giles was hired, ATI provided it with a sample barrel and specifications for barrel dimensions; Giles found a barrel supplier through a 15-minute web search.  Giles had an account with this supplier, but no contract, nor did ATI have an exclusive contract with Giles for barrel processing; rather, Giles agreed to fulfill any purchase orders ATI sent.
 
ATI began searching for a less expensive barrel processing service, with direct purchase of barrels and a separate vendor for processing. It found Giles’ supplier; when it sought bids for barrel processing alone, only Giles and the newly formed Tooele submitted bids.  Giles alleged that ATI revealed trade secrets to Tooele, making it possible for it to underbid Giles.
 
Giles first alleged that certain defendants violated the CFAA by obtaining Giles Construction’s proprietary information on ATI computers and then divulging that information to competitors in violation of ATI’s corporate guidelines.  But misuse of information acquired with authorization does not constitute “access[ing] a protected computer without authorization, or exceed[ing] authorized access.” In reaching this conclusion, the court discerned a trend in the courts towards adopting a narrower view of the CFAA, which was consistent with the statutory text (including its definition of actionable damages) and the rule of lenity. Thus, defendants were entitled to summary judgment.
So too with the Lanham Act claim, since the Lanham Act doesn’t cover misuse of confidential information.  There was no allegation of any misleading representation to any consumers.
 
The trade secret claim failed. The identity of Giles’ barrel supplier was not a trade secret, because it could be easily ascertained with basic research.  As for Giles’ pricing information, Giles failed to produce evidence that its pricing or pricing method was unique or especially innovative.  Finally, Giles’ barrel processing process was not a trade secret.  There was ample evidence that ATI instructed Giles on much of the process, and palletizing and wrapping barrels for delivery is a well-known process in the shipping industry.
 
After the trade secret claims failed, the Utah Uniform Trade Secrets Act preempted “conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret.” This preemption reached any state law claim that is based on allegations of misuse of confidential information, “regardless of whether the claim contains additional, separate allegations.” That is, claims that are to some degree based on misuse of information are preempted even if they’re not solely based on that misuse: “if the claim fails without the allegations regarding misuse of information, the UTSA preempts it. This is so even if the purported confidential information does not constitute a trade secret, which forecloses the ability to alternatively plead causes of action if they are based on the misuse of information.”  That was true here.
 
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Ron Coleman reviews Keller & Cunard copyright treatise

Posted on June 10, 2015 by rtushnet

In his inimitable style.  Obligatory disclosure: I worked at Debevoise with Bruce Keller and Jeff Cunard lo these many moons ago, which I guess makes me a demon-affiliate.  To the best of my recollection, I did not work on any previous versions of the treatise.

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Ron Coleman reviews Keller & Cunard copyright treatise

Posted on June 10, 2015 by rtushnet

In his inimitable style.  Obligatory disclosure: I worked at Debevoise with Bruce Keller and Jeff Cunard lo these many moons ago, which I guess makes me a demon-affiliate.  To the best of my recollection, I did not work on any previous versions of the treatise.

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DMCA Class 21 (vehicle software) FYI

Posted on June 5, 2015 by rtushnet

From the Copyright Office:
Class 21 Witnesses,

Additional written materials were submitted at the hearing for Proposed Class 21: Vehicle software – diagnosis, repair, or modification. The Copyright Office provided the opportunity to respond to these materials until the close of business on June 2, 2015. The Office did not receive any such responses to the additional written materials. However, this appears to be the result of a technical issue. If you sent in responses to the additional written materials submitted for Class 21 available at http://ift.tt/1FzpJ3v, please resend those responses to:

Steve Ruwe
Assistant General Counsel
Office of the General Counsel
U.S. Copyright Office
sruwe@loc.gov

Please get the word out–the Office does not have records of who attempted to submit a response.

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