irreparable harm is permissible inference, Third Circuit rules

Posted on December 18, 2014 by rtushnet
Groupe SEB USA, Inc. v. Euro-Pro Operating LLC., No. 14-2767 (3d Cir. Dec. 17, 2014)
District court opinion discussed here.  Euro-Pro appealed the preliminary injunction against it based on Lanham Act false advertising claims against its advertising for its steam irons.  The court of appeals treated this as primarily a case about “how courts should interpret an advertising claim when the packaging or label unambiguously defines a claim term.”  The court agreed with the district court that if a claim is false by the advertiser’s own definition, then consumer survey evidence can be disregarded and literal falsity is established.  In addition, while bound by the circuit’s earlier rejection of a presumption of irreparable harm, the court of appeals found that the evidence before the district court justified an inference of irreparable harm.
SEB’s Rowenta models 5080 and 9080 compete with Euro-Pro’s Shark 405 and 505.  The Shark 405 packaging claims that the Shark 405 offers “MORE POWERFUL STEAM vs. Rowenta®†† at half the price.” The “††” characters refer to a fine-print footnote on the bottom of the packaging, which states that the claim is “††[b]ased on independent comparative steam burst testing to Rowenta DW5080 (grams/shot).” The front of the packaging also says that the Shark 405 delivers “#1 MOST POWERFUL STEAM*.” The asterisk refers to another footnote on the bottom saying the Shark 405 “*[o]ffers more grams per minute (maximum steam setting while bursting before water spots appear) when compared to leading competition in the same price range, at time of printing.” The Shark 505 packaging makes substantially the same claims, except with a comparison to the Rowenta 9080.  Packaging hang tags claimed “MORE POWERFUL STEAM vs. Rowenta . . . at half the price,” with a reference claiming “[b]ased on independent comparative steam burst testing” to the respective Rowenta  steam irons in “(grams/shot).”
SEB ran tests to check these claims, and found that the Rowenta 9080 performed the same as the Shark 505 in grams per minute.  In grams per shot of steam, the Rowenta 9080 was superior.  SEB then commissioned an independent lab to do more tests, which found that the 5080 and 9080 outperformed the Shark 405 and 505, respectively, in grams per minute and grams per shot, on average.  (The district court made a calculation error that led it to conclude that the Shark 405’s average performance was slightly higher than the Rowenta DW5080’s average performance.)  
Euro-Pro introduced testimony and a study from its scientific expert, Dr. Abid Kemal, who calculated steam power based on the kinetic energy of a steam burst divided by the duration of the burst. Using this measurement, Kemal concluded that the Sharks outperformed the Rowentas on steam power, and that the grams per shot results were comparable between the products.  Euro-Pro also submitted a consumer survey from Dr. Gary Ford showing that consumers do not have a uniform understanding of the meaning of the phrase “more powerful steam.”
SEB’s marketing director, Scott Pollard, testified that “SEB had invested substantial resources to promote Rowenta as  the best brand of steam irons in  the eyes  of retailers and consumers. According to Pollard, the direct reference to Rowenta on the lower-priced Shark steam irons likely would erode the Rowenta brand’s reputation in the eyes of retailers, current consumers, and future consumers.”
The key dispute on appeal was whether the Shark claims were literally false.  Literal falsity analysis must consider the message in context.  The first interpretive step is figuring out whether the challenged claim conveys an unambiguous message, which is then evaluated for falsity.  Only unambiguous claims can be literally false.  The standard of review for a determination of ambiguity/unambiguity is clear error.
The district court found that the “more powerful than Rowenta” was unambiguous, given the footnote reference to grams per shot.  The “#1 most powerful” claim was also unambiguous by necessary implication because of the proximity to the other claim’s comparison to Rowenta.  This was false, given SEB’s evidence and the fact that the Kemal report didn’t measure steam power in grams/shot or grams/minute.
The court of appeals agreed that the “more powerful vs. Rowenta” claim was unambiguous.  “When a product’s packaging includes an advertising claim and unambiguously defines a claim term, the packaging’s definition of the claim term applies to the claim’s explicit message.”  (As we’ll see, there are some qualifications to come.  I don’t think this is license to advertise “$40/day every day*” and define “day” in a footnote as Monday-Friday.)
The court of appeals reasoned that “[t]o make something explicit is to state it clearly and precisely.”  So, when Euro-Pro “took the affirmative step to include a reference on the Shark packaging that clearly defined the key term in its claim—that steam power is measured in grams per shot—it made an explicit claim.”  This was also unambiguous because grams/shot was a unit of measurement used by the leading independent standard-setter for relevant technologies.  There was only one plausible meaning: “the claim means exactly what the reference on the packaging says it does.”
This conclusion was supported by the rule that courts must view claims in the context of the entire ad.  “[I]gnoring the reference in our analysis would be not only to read the claim out of  context, but also to ignore part of the claim itself denoted by the symbol.” 
This conclusion was also consistent with other areas of the law where courts engaging in interpretation must apply an author-provided definition, as in statutory interpretation, patent claim construction, insurance contracts, and other contracts.
What about the fact that the symbol referred to fine-print footnotes that consumers are “presumably” less likely to read?  “We understand that other courts have held that footnote disclaimers purporting to make a false or misleading claim literally true cannot cure the claim’s false or misleading message. We have not addressed this issue, and we do not decide it today.”  (Really?  I hope not, but I don’t see why the logic wouldn’t cross over to make a footnoted claim at least ambiguous, except for the fact that such a conclusion would be a terrible idea, which is why the court of appeals tries to dodge it.)  Instead, the court of appeals said, its holding was “analytically distinct” from such no-takebacks cases. Its holding was that “what a product’s packaging says a claim term means is in fact part of the claim’s explicit message.  If that explicit message is both unambiguous and false, the claim is literally false.”  (But what about my “day” example above?  Wouldn’t the footnote alone require a plaintiff to provide a consumer survey to show misleadingness by making the definition of “day” “ambiguous”?)
Furthermore, Euro-Pro’s consumer survey purporting to show alternative meanings for “steam power” wasn’t relevant.  Euro-Pro invoked Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241 (3d Cir. 2011), for the proposition that courts had to consider consumer surveys in determining whether a message was unambiguous.  That case actually approved the use of the name “Havana Club” for rum despite consumer survey evidence indicating that many consumers thought the rum came from Cuba, even though the label stated “Puerto Rican Rum.”  There’s got to be a point at which we stop arguing over what a claim means and turn to the legal consequence of that meaning, and that point was reached with the label at issue.  But the Pernod Ricard court cautioned that judges should not “lightly disregard” consumer surveys because they  may reveal “potential ambiguities in an advertisement” that show reasonable consumers may in fact be misled by the advertisement. Plus, “a district court’s decision to disregard survey evidence is reviewable de novo, since it is founded on a legal conclusion based on underlying facts, that is that no reasonable consumer would be misled by an advertisement.”
However, this case, unlike Pernod, involved literal falsity, so evidence of actual consumer deception wasn’t required.  Consumer surveys don’t need to be used to define the meaning of words that are plain enough and have “baseline meanings such that consumer survey evidence is irrelevant.”  Here, Euro-Pro explained what it meant on the packaging; the court wasn’t substituting its own perception for consumer perceptions, but rather using the definition Euro-Pro provided. 
Likewise, the court of appeals agreed that the “most powerful steam” claim was unambigously comparative to Rowenta.  True, the relevant message wasn’t “explicit,” because the corresponding footnote referred to “leading competition in the same price range,” and the parties agreed that Rowenta steam irons are in a different price range.  But this was still false by necessary implication, because consumers would unavoidably receive a false message given that the “most powerful steam” claim appeared directly above the “more powerful vs. Rowenta” claim.  (Note that here we may have an answer to the question whether a footnote definition can convert a claim to ambiguous: at the very least, not in this instance, which means not all the time.  If the main holding is just a version of estoppel, it’s not that significant.)
Since there was no clear error in finding the messages unambiguous, the next question was falsity, and there was also no clear error in that determination.  The district court reasonably relied on SEB’s tests, which used the relevant measurements, and even the Kemal report didn’t find a grams/shot difference.  Euro-Pro argued that the district court improperly shifted the burden of proof to Euro-Pro.
But the Third Circuit held in Novartis that “a court may find that a completely unsubstantiated advertising claim by the defendant is per se false without additional evidence from the plaintiff to that effect.” Euro-Pro argued that this exception only applied when a defendant refused to present anyevidence, whereas it provided the Kemal report.  Novartis was not so narrow.  (This is probably the much bigger holding.)  The Kemal report was “mostly irrelevant” to the messages actually conveyed by the ads. Thus, Euro-Pro’s claims were entirely unsubstantiated.  Anyway, the district court also had affirmative evidence of falsity; it didn’t shift the burden of proof at all.
Now, irreparable harm: the district court didn’t have the benefit of Ferring Pharmaceuticals, Inc.  v. Watson Pharmaceuticals, Inc., 765 F.3d 205 (3d Cir. 2014), which applied eBay to Lanham Act cases and barred presumptions of irreparable harm in place of a “clear showing” thereof.  But it said it wasn’t applying a presumption, regardless.  Portions of the district court opinion do read that way, and the district court cited repeatedly to a case relying on the now-disallowed presumption.  Other parts are consistent with Ferring, so it was unclear whether the wrong standard affected its analysis.  But anyway, the district court could be affirmed if there was sufficient record evidence of irreparable harm.
The record here did contain such evidence of “likely harm to the Rowenta brand’s reputation and SEB’s goodwill. See S & R Corp. v. Jiffy Lube Int’l, Inc., 968 F.2d 371, 378 (3d Cir. 1992) (‘Grounds for irreparable injury include loss of control of reputation, loss of trade, and loss of goodwill.’).”  [Note that this too is pre-eBay.]  SEB’s marketing director testified to Rowenta’s strong reputation; the products compete side by side; and the marketing director testified that false comparative claims would likely harm Rowenta’s reputation, especially since the Sharks were lower-priced.
This was not a “veiled” presumption of irreparable harm.  “Ferringdoes not bar drawing fair inferences from facts in the record. Indeed, a key lesson from Ferring is that courts considering whether to grant injunctive relief must exercise their equitable discretion in a case-by-case, fact-specific manner.”  The inference of likely irreparable harm to brand reputation and goodwill was supported “not by a general rule or presumption but by the literally false comparative advertising claims at issue, the competitive relationship between the parties and products, and the judgment of Pollard that the harm to SEB’s brand reputation and goodwill is impossible to quantify.”  
Chief Justice Roberts’ eBayconcurrence noted that the trend to grant injunctions in patent suits shouldn’t be forgotten entirely when applying the four-factor test—a page of history is worth a volume of logic; Justice Kennedy agreed.  (Compare actual results post-eBay in patent cases—a lot of injunctions, but a lot of denials too.)  The same was true here, for reasons particular to false advertising.  Ferring distilled two justifications for the traditional presumption:

(1) a misleading or false comparison to a specific competing product necessarily causes that product harm by diminishing its value in the mind of the consumer, similar to trademark infringement cases; and (2) the harm necessarily caused to reputation and goodwill is irreparable because it is virtually impossible to quantify in terms of monetary damages.

“Although we no longer apply a presumption, the logic underlying the presumption can, and does, inform how we exercise our equitable discretion in this particular case.”  So basically, it’s up to the district court: a permissible inference rather than a presumption. “Logic” seems to be another word for “no individualized evidence of harm required.” Thus, any error by the district court was harmless.
Finally, Euro-Pro challenged the scope of the injunction on First Amendment grounds.  Injunctions against false or misleading commercial speech must be narrowly tailored to cover only the speech most likely to deceive consumers and harm the plaintiff. The injunction here required Euro-Pro to put stickers over the two claims at issue and remove the hang tags.  Given that false commercial speech is unprotected, and that SEB showed likely success on the merits, the court of appeals saw no First Amendment problems. 
Euro-Pro argued that the injunction was overbroad because it required Euro-Pro to cover the ad claims rather than only the references, which were critical to the literal falsity analysis—without the references, the claims might be ambiguous.  No such luck.  The references plus the claims together comprised the literally false message; the injunction was properly limited to literally false claims.  And Euro-Pro’s reasoning would be unworkable: district courts can’t be expected to parse each part of a literally false claim “to see if the removal of a word or a portion here and there would render the remainder true.”  (Not to mention that the plaintiff would then have to be prepared to show falsity and deceptiveness for every imaginable redaction of the claim.)

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in http://schemas.google.com/blogger/2008/kind#post, remedies | Leave a comment

Soul survivor: publicity and TM claims against recorded performance fail

Posted on December 17, 2014 by rtushnet
Cummings v. Soul Train Holdings LLC, 2014 WL 7008952, No. 14 Civ. 36 (S.D.N.Y. Dec. 12, 2014)
This right of publicity/trademark case based on use of recorded performances to which the plaintiff didn’t own the copyright could’ve gone a lot of ways—statutory exclusion, First Amendment/Rogers, copyright preemption, Dastar—the important thing is that it goes nowhere.
Jeremiah Cummings was a member of the rhythm and blues music group, Harold Melvin and the Blue Notes from 1973 to 1980.  On several occasions, the Blue Notes appeared on Soul Train, including an interview where group members were asked to introduce themselves by name.  Cummings alleged that he didn’t sign any release or grant of rights for future use of his performance.  (In the Ninth Circuit, he should’ve brought copyright claims!)  Footage from the Blue Notes’ performances has been used in (1) DVD compilations called “Best of Soul Train” and (2) TV ads and Internet videos marketing these DVDs. The trademarks Soul Train and Time Life (used under license) were prominently displayed on the DVD packaging and contents.  The complaint also alleged that certain defendants licensed stock footage of the Soul Train shows.  Cumming alleged that this violated Cummings’ rights of publicity and privacy, as well created a false assocation.
The NY right of publicity claim failed on choice of law grounds, since NY applies the law of the plaintiff’s domicile to such claims—here, that’s Illinois.  The materials in question were clearly exempt from Illinois law, given its explicit provision that the statutory right of publicity didn’t apply to “use of an individual’s identity in an attempt to portray … [an individual] in a live performance, … musical work, film, radio, television, or other audio, visual, or audio-visual work,” as long as the performance “does not constitute in and of itself a commercial advertisement for a product, merchandise, goods, or services.” Naturally, “promotional materials, advertisements, or commercial announcements” for such use are also exempt.  (And the statute supplanted any common law right, also explicitly.)  That’s that.
The claim was also independently preempted by copyright law:

[O]nce a performance is reduced to tangible form, there is no distinction between the performance and the recording of the performance for the purposes of preemption under § 301(a). Thus, if a baseball game were not broadcast or were telecast without being recorded, the Players’ performances similarly would not be fixed in tangible form and their rights of publicity would not be subject to preemption. By virtue of being videotaped, however, the Players’ performances are fixed in tangible form, and any rights of publicity in their performances that are equivalent to the rights contained in the copyright of the telecast are preempted.

Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 849 (2d Cir. 1997).
Nor could Cummings bring a successful NY right of privacy claim, since his likeness wasn’t used for advertising or for purposes of trade, as required by N.Y. Civ. Rights Law § 50. (The court doesn’t make very clear what separate NY “right of publicity” claim it was dealing with above, since NY has no common law right of publicity.)  The New York Court of Appeals has “underscored that the statute is to be narrowly construed,” and excludes publications on newsworthy events or matters of public interest, which go well beyond “hard news.” Gautier v. Pro–Football, Inc., 304 N.Y. 354 (1952), involved an animal trainer who consented to perform during the halftime show of a pro football game.  Because he consented to perform in front of 35,000 spectators in a game attracting wide and legitimate public interest, he had no claim against having his performance televised.  Even without a release, he consented to perform live on national television; using the recordings of those performances doesn’t invade his right of privacy, even if he wasn’t paid.  And the promotional materials advertising the DVDs were protected by the doctrine of incidental use, allowing advertising of otherwise protected materials.
The Lanham Act claim was dismissed for failure to plead anything explicitly misleading, per Rogers v. Grimaldi.  The DVD sets were artistic works, “and the Complaint does not allege facts that could possibly show that consumers are likely to be confused about the source or ownership of those works because of the depiction of Plaintiff, among many other artists, in and on the DVD sets.”  The risk of confusion was outweighed by the First Amendment interests at stake, particularly given that Cummings was depicted along with many other artists and that the Soul Train and Time Life trademarks were prominently displayed.
Cummings’ state law deceptive business practices and common law trademark infringement claims suffered the same fate because Illinois courts apply the same analysis to Lanham Act claims as to coordinate state law claims.  (Interesting choice of law question: do they apply Rogers, after all a Second Circuit case?  The Fortres Grand district court used Rogers without discussion, and the Seventh Circuit has cited its First Amendment prioritization favorably; smart money says yes to Rogers, but it’s always possible that the iconoclasts on that court would make up their own test, which Illinois would then presumably follow.)  In addition, these claims were also preempted by §301 as not qualitatively different from copyright claims.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in http://schemas.google.com/blogger/2008/kind#post, preemption, right of publicity, trademark | Leave a comment

the intersection of FTC US origin guidelines and the Lanham Act

Posted on December 17, 2014 by rtushnet
A.P. Deauville, LLC v. Arion Perfume and Beauty, Inc., No. C14-03343, 2014 WL 7140041 (N.D. Cal. Dec. 12, 2014)
Deauville sued Arion for false advertising and unfair competition, and Arion counterclaimed.  This opinion granted in part Deauville’s motion to dismiss.
Deauville makes Power Stick deodorant, antiperspirant, body spray, and body wash through “value-priced retailers.”  Arion sells European American Design products that compete with Power Stick products.  Deauville alleged that EAD product labels “contain false and misleading statements or otherwise fail to meet the requirements for product labeling in the United States.”
Arion counterclaimed with similar allegations, arguing that the Power Stick product labels were misleading because the statement “Made in the U.S.A. of U.S. and/or imported ingredients” was ambiguous—because of the and/or, there was no guarantee that any ingredients would be domestic.  Deauville also advertises online with languages such as “Why we are made in America?” without clarifying whether the product ingredients are domestic or foreign.
Deauville argued that its products contained no more than a de minimis amount of foreign content (something Arion contested) and that its unqualified and qualified statements weren’t misleading.  Moreover, Deauville argued, whether it complied with the FTC’s guidelines wasn’t provably false and there was no private right of action under the FTCA.  Arion relied on the FTC’s analysis of US origin claims to show the element of deceptiveness, arguing that the FTC had conducted significant research on consumer understanding of such claims; Deauville didn’t disagree with that part of the argument, but did contend that only the FTC could evaluate compliance with its guidelines and resulting deception.
The FTC permits unqualified statements of U.S. origin only when “all or virtually all” of the ingredients are domestic.  The final assembly must take place in the US, but other factors also matter, including “the portion of the product’s total manufacturing costs that are attributable to U.S. parts and processing” and “how far removed from the finished product the foreign content is.” To the FTC, “there is no single ‘bright line’ to establish when a product is or is not ‘all or virtually all’ made in the United States.”  
Power Stick products used a qualified U.S. origin statement (“of U.S. and/or imported ingredients”) and its ads used unqualified statements (“manufactured in the USA”).  Arion didn’t contest that the products were manufactured domestically, but argued that the use of a qualified statement justified an inference that the products contained more than a de minimis amount of foreign content, requiring a better qualification to avoid confusion. 
The court disagreed: the FTC says there’s no bright line, and so even if Deauville was forced to provide all available information about Power Stick ingredients, “neither the parties nor the Court would be in a position to determine whether there was sufficient foreign content to satisfy the FTC’s standard.”  Thus, whether Deauville was in compliance with FTC policy was not provably false.  Query: Would it be provably false if the FTC relied on it in FTC-initiated proceedings?  That is, is this really a falsity holding, or a delegation of this particular question to the FTC even if private false advertising claims can proceed on other theories? Perhaps this sentence suggests an answer:  “The Court does not wish to become the handmaiden of the FTC, nor does it imagine that the FTC would welcome the help.”
The court further clarified that, although the use of both statement types and “and/or” language could be confusing, Arion made those arguments only in the context of FTC policy. The US origin statements could be misleading if the products indeed contained more than a de minimis amount of foreign content, but Arion need to allege some evidence suggesting that confusion could be proven.  It didn’t, other than by arguing about what the label implied about the ingredients, and therefore it failed to state a claim.  (Thus, presumably, if there were sufficient facts alleged, a jury could use the FTC findings as evidence that false statements about US origin were deceptive and material to consumers.  This is not a preclusion case but a pleading case.)
However, some counterclaims under California statutory law survived. Deauville argued that Arion lacked standing to claim that Deauville’s products violated FDA labeling requirements, because their products also violated those requirements.  At the pleading stage, general allegations of injury were sufficient.  Arion alleged that Power Stick Cool Blast violated numerous FDA requirements for over-the-counter drugs, in violation of California’s UCL.  Deauville was allegedly able to charge less than Arion for similar products by “skirting labeling requirements[,]” thus diverting consumers and retaining greater profit.  This was a plausible chain of injury, given Arion’s allegation of direct competition.
Deauville’s argument that Arion too violated FDA rules was essentially an unclean hands argument that the court couldn’t assume to be true for purposes of a motion to dismiss, as was its claim that the products didn’t really compete.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in california, fda, ftc, http://schemas.google.com/blogger/2008/kind#post | Leave a comment

Is a bigger sucker a protected consumer?

Posted on December 15, 2014 by rtushnet
Securian Financial Group, Inc. v. Wells Fargo Bank, N.A., 2014 WL 6911100, No. 11–2957 (D. Minn. Dec. 8, 2014)
How sophisticated can you be and still be a consumer for the purpose of consumer protection law?  Pretty sophisticated, in some cases. 
The plaintiffs: Minnesota Life is an insurance, pension, and investment products firm that provides its services to individuals and families. Securian Financial, its parent, is an insurance and financial services firm with over 13 million clients, and Securian Holding is its parent.  Advantus Capital Management is a registered investment adviser wholly owned by Securian Financial.  Advantus provided asset management services to Minnesota Life and Securian Holding. Advantus has billions of dollars in assets under its management and its professionals have significant experience in the investment industry. Advantus advised and managed the Advantus Series Fund, whose investments backed some Minnesota Life products.
Wells Fargo is a bank offering a Securities Lending Program.  The SLP allows Wells Fargo to act as an agent lending its clients’ securities to brokers in return for collateral, usually cash. Wells Fargo then invests the collateral on behalf of its clients.
Plaintiffs were institutional investor clients of Wells Fargo’s SLP. They were experienced in a number of types of asset management, including “traditional asset management,” but they didn’t administer any SLPs. Wells Fargo marketed the SLP as involving investments in “short term money market instruments” that “maximize[d] earnings, while taking minimal risk.”  Plaintiffs alleged that the securities lending business was very complex and requires specialized knowledge and processes.  Plaintiffs and Wells Fargo entered into a number of securities lending agreements, and they paid Wells Fargo approximately $5 million for its services.  Further complexities ensued, involving structured investment vehicles and hedging activities; they went bad.  Plaintiffs sued for breach of contract (and ERISA violations), which I won’t discuss, and violation of Minnesota consumer protection statutes.
Wells Fargo sought summary judgment on the grounds that plaintiffs, as sophisticated merchants, were barred from bringing consumer protection claims.  Minnesota’s consumer protection/unfair trade practices laws are “generally very broadly construed to enhance consumer protection.”  The controlling state precedent didn’t bar “merchants” from bringing consumer fraud claims across the board.  “Instead, courts focus their analysis on whether a party can be considered a sophisticated merchant in the specific skills or goods at issue, and only those parties that are in fact deemed to be sophisticated merchants in the specific skills or goods at issue have been precluded from asserting Minnesota consumer claims.”  The court found that a jury could reasonably concluded that plaintiffs weren’t “merchants” for purposes of these transactions, based on disputed facts about their sophistication. 
Though it would be an uphill battle, there was enough evidence to go to a jury about whether they were sophisticated in matters of securities lending.  Plaintiffs offered evidence that they never held themselves out as having special skills or knowledge with respect to the securities lending business. To this they added an expert opinion that securities lending is a highly complex business that involves complex services, processes, and monitoring, and evidence that, “due to this complexity, they did not have the mechanisms for managing securities lending and also gave management discretion entirely to Wells Fargo for their investments.”  In addition, a jury could accept that Wells Fargo agreed that plaintiffs weren’t sophisticated in this area given the marketing materials Wells Fargo provided to them, which detailed the program and Wells Fargo’s risk safeguards.
The court also denied plaintiffs’ motion for summary judgment on their breach of contract claims.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in consumer protection, http://schemas.google.com/blogger/2008/kind#post | Leave a comment

restrictions on lawyer ads touting past results unconstitutional

Posted on December 15, 2014 by rtushnet
Rubenstein v. Florida Bar, No. 14–CIV–20786, 2014 WL 6979574 (S.D. Fla. Dec. 9, 2014)
Florida bars attorney advertising from referring to past results, which a Bar task force held in 1997 were inherently misleading to laypeople, because cases that appear similar to laypeople offer differ substantially to the law; past results don’t show competence or fitness on any particular matter; laypeople can’t judge well what counts as a good result versus a bad one—an apparent success might be a failure and vice versa; and success or failure don’t necessarily reflect on an attorney’s ability or performance.  Conclusion: “Only a person with legal training and experience in the particular field and a knowledge of all the facts would be in a position to accurately judge how a particular result reflects upon the lawyer.”  The rules applied to radio, billboards, and TV; most websites and email were separately regulated and didn’t have a blanket ban on using past results.  The Bar didn’t link its recommendations to any specific data or findings from surveys, focus groups or data analysis.
In 2007, the Bar was directed to study the issue again, and in 2013, the Supreme Court of Florida adopted a completely revised set of attorney advertising rules.  Now, advertising could refer to past results that were “objectively verifiable,” and the restrictions weren’t based on the advertising medium.
The Bar reasoned that “[t]he U.S. Supreme Court has generally struck down regulations restricting advertising truthful information;” that “[o]f those responding to the survey on public perception of lawyer advertising, 74% indicate that past results are an important attribute in choosing a lawyer[; i]t is clear that the public wants this information available to them;” and that “[m]ost of those Florida Bar members who provided written and oral comments also noted that the lawyer advertising rules should not prohibit truthful statements regarding past results.”
Rubenstein developed an ad campaign about past recoveries for clients.  The Bar issued opinion letters approving some and rejecting some, including some that could comply with appropriate disclaimers.  For example, Rubeinstein submitted a TV ad animated with a cartoon car accident, a courthouse and dollar signs drawn on a dry-erase board; using an attorney voice over; and depicting the words “COLLECTED OVER $50 MILLION FOR THEIR CLIENTS IN JUST THE LAST YEAR! Gross proceeds. Results in individual cases are based on the unique facts of each case.”
In 2014, the Bar issued new “Guidelines for Advertising Past Results.” The Guidelines advised that inclusion of past results “carries a particularly high risk of being misleading,” requiring more information than usual ads.  Display, radio, and TV ads couldn’t effectively communicate the necessary information and couldn’t comply with the rules.
The ABA’s Model Rules of Professional Conduct don’t have blanket bans on references of past results.  Most states follow the ABA approach, but 6 require references to past results to be accompanied by a disclaimer.  No other state barred past results entirely in any media form.
As a result of the Guidelines, the Bar withdrew some of its prior approvals of Rubenstein’s ads.  The Bar also told Rubenstein that certain ads also violated the rules by stating that the firm obtained a specific recovery and omitting facts necessary to avoid misleading consumers—in this case, they advertised gross recoveries, rather than the amount actually received by the client.  Rubenstein didn’t challenge the application of that rule.
The Bar also commissioned a survey, currently in progress, to determine whether ads containing references to large-dollar recoveries were misleading, and how well disclaimers worked. This research was in progress when the opinion issued.
Attorney advertising is commercial speech protected by the First Amendment. The court found that the challenge was quasi-facial, not just as-applied: plaintiffs were challenging the ban on TV and radio advertising of past results.  Attorney ads with past results statements were at most potentially misleading, not necessarily misleading.  Intermediate scrutiny applies to bans on commercial speech that isn’t false or inherently deceptive: Central Hudson asks whether the ban (1) promotes a substantial governmental interest; (2) directly advances the interest asserted; and (3) is not more extensive than necessary to serve that interest. 
Discussion: And here we get to the immense swamp of “inherent” misleadingness, a concept the Supreme Court has invoked but never defined, and certainly not with reference to ordinary legal concepts of misleadingness.  The Bar regulated this speech because it deemed past results claims to carry a high risk of misleading consumers.  The court in this case understood that claim to be a concession that such ads are only likely or potentially misleading.  But “actually” misleading ads never have to mislead everyone; usually likelihood of misleadingness establishes misleadingness for, just by way of example, the Lanham Act.  That is, a high risk of misleading reasonable consumers is misleadingness.  What else could “inherently” misleading be?  Even false ads won’t fool everyone.  Also, of course, this analysis has huge implications for the constitutionality of practically everything the FTC does, not just the endorsement and substantiation guidelines.
Anyhow, the Bar conceded that Central Hudson applied, and the court also noted that no other state had found this blanket media ban necessary.  Public Citizen, Inc. v. La. Attorney Disciplinary Bd., 632 F.3d at 219, like this case, struck down a rule barring attorney communications containing references to past successes or results except by client request.  It’s possible to present past results in a non-misleading way, as opposed to promising results.
The court found that the rule supported three substantial governmental interests. The record reflected that the rule was part of a scheme for protecting the public from false or misleading lawyer claims; promoting the provision of useful information; and preventing “advertising that contributes to disrespect for the judicial system” or that “causes the public to have an inaccurate view of the legal system,” all of which were substantial.
However, the Bar failed to show that the restrictions advanced the government’s interests in a direct and material way.  Mere speculation or conjecture is insufficient; the government needed to show that the harms at issue were real and that the restriction would in fact alleviate them materially.  The Bar failed to meet its burden of showing that restrictions on use of past results in attorney advertising supported its interests.
Instead, the record evidence showed that consumers wanted more “useful” and “factual” information to help them chose an attorney. Many consumers were interested in attorney “qualifications,” “experience,” “competence” and “professional record (i.e., wins/losses).” In addition, the Bar’s surveys showed that negative attitudes about legal system and lawyers consistently declined over the relevant survey period, despite the increase in quantity and breadth of attorney advertising.  The Bar’s blanket assertions that the use of past results was misleading to the untrained public and that past results are not informative about competence or fitness were not backed by evidence.  The Bar’s survey showed that 74% of consumers believed that past results were an important attribute in choosing a lawyer.  Also, the Bar’s prior report explained that there was no reason to distinguish among media. 
But the Bar didn’t provide any factual support when it reversed course in 2014. “In the absence of evidence—especially in light of the fact that the Bar continues to permit the widespread use of past results in other advertising media—[the Bar’s rationale] amounts to mere conjecture and speculation.” The pending survey wasn’t before the court, and the Bar didn’t ask the court to wait for the outcome.  It wasn’t enough to fear that people would get unrealistic expectations and make bad decisions with truthful information.  However, if the Bar developed sufficient evidence, the restriction wouldn’t necessarily be unconstitutional for all time.
The court continued that the rule wasn’t properly tailored to the asserted interests.  Central Hudson’s fit requirement doesn’t require perfection, but it does require reasonability—a restriction can’t be broader than reasonably necessary to prevent deception.  The Bar didn’t show that blanket bans on display ads, TV, and radio were necessary, or that lesser restrictions such as a disclaimer or required language wouldn’t suffice.
Thus, Rubenstein was entitled to injunctive relief; on this record, “there is no attorney subject to the Rules as to whom the Guidelines’ blanket prohibition on advertising using of past results in indoor and outdoor display, television and radio media could survive scrutiny under the Central Hudson standard.”

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in advertising, commercial speech, first amendment | Leave a comment

Consumer suit against juice name preempted

Posted on December 15, 2014 by rtushnet
Bell v. Campbell Soup Co.,  No. 4:14cv291, 2014 WL 6997611 (N.D. Fla. Dec. 11, 2014)
The facts are essentially the same as in Pom Wonderful v. Coca-Cola, but the result is that only competitors, not consumers, can sue for false advertising of juices.  (I wonder if Campbell also received threats from Pom.)
The court kicked out this Florida consumer protection case against two fruit and vegetable juices as preempted by the FDCA’s ban on non-identical state requirements.  The two V8 V-Fusion drinks at issue were pomegranate blueberry and açai mixed berry, but the analysis was the same.  The pomegranate blueberry juice contains only a tiny amount—less than 1%—of pomegranate and blueberry juice; the juice is predominantly from sweet potatoes and purple carrots. A “thorough reading” of the back information panel discloses that the largest portion of the juice comes from sweet potatoes, followed by purple carrots, then other fruits and vegetables, and finally pomegranates and blueberries.
Plaintiffs argued that the primary display panel was nonetheless misleading, suggesting that the product was 100% pomegranate and blueberry juice:

Even assuming that the jury could find this to be misleading, every statement on the primary display panel was “either unobjectionable or complies to the letter” with FDA rules.  The plaintiffs argued that the placement of “100% Juice” and its larger size was misleading, along with the vignette prominently depicting only pomegranates and blueberries.  The court expressed skepticism about misleadingness, since it thought that many consumers would understand that V8 was a blend of fruit and vegetable juices and would notice other statements on the primary display panel.  But regardless, the label complied with the FDA’s juice labeling requirements for indicating common names; names can include the flavoring juice so long as the label includes a statement “that the named juice is present as a flavoring.” So it was here.
The federal rules didn’t address where the statements should be placed, and a requirement to place them elsewhere, phrase them differently, or change the vignette would be a non-identical requirement.  The court rejected plaintiffs’ argument that preemption only barred a requirement that Campbell change the label, not damages; that made no sense.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in consumer protection, fda, http://schemas.google.com/blogger/2008/kind#post, preemption | Leave a comment

Transformative use of the day, judicial edition

Posted on December 12, 2014 by rtushnet

Judge uses cartoon in opinion to explain rebuke of lawyer.  Reporting on opinion includes separate reproduction of cartoon.  Two levels of transformation?  (Side note: the judge feels the need to explain the joke, which may say something about judicial humor generally.)

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in copying, http://schemas.google.com/blogger/2008/kind#post | Leave a comment

PTO roundtable on the accuracy and integrity of the TM register

Posted on December 12, 2014 by rtushnet
USPTO Roundtable: Ensuring the Accuracy and Integrity of the Trademark Register
(Note: I wasn’t able to attend in person so I just didn’t get names)
Debbie Kahn, commissioner for TMs
Registration renewals: pilot requiring additional proof of use for 500 registrants submitting Section 8 affidavits of use.  Stemmed from Bose, where standard of fraud was raised quite a bit.  Is there a problem?  97% have completed the pilot. Of those, 51% were unable to verify previously claimed use for the additional requests for proof of use. Of those, 35% deleted goods or services queried under the pilot, and 16% failed to respond to the office actions, resulting in cancellation. Pretty big result—we weren’t sure of the magnitude, and that was more than we had anticipated.  Also a surprise: it spanned all bases of registration. Not just foreign registrants.
Section 1(a) registrants: 27% deleted goods or services queried under the pilot. 44(e): 58% deleted. 66(a): 59% vcombined 1(a) and 44(e), 63%. Overall acceptance rate was lower for pilot participants than for non-pilot, from 80-89% (1(a) and 44(e)).  Notices of cancellation: 1(a) 18%, 44(e) 7%, 66(a) 14%, combined 1(a) and 44(e) 13%.
Cancellation only occurred if they didn’t respond to the office action.  Acceptances included registrants who deleted goods and services.
Now what?  Possible next steps, no decisions today. 
Sharon Marsh: Options: (1) nonuse expungement procedure from Canada, streamlined method of removing deadwood, Section 45 of the Trade-marks Act.  Third parties could request PTO to require owner to prove use; if owner complies, procedure completed. If not, any goods/services for which not provided proof are deleted from the registration.
McKeon: proceedings are summary; don’t determine substantive rights in a TM.  Not intended to replace proceedings about ownership, distinctiveness, abandonment: just show mark in use and if it isn’t and there aren’t special circumstances it may be expunged. There’s a lot of case law—dedicated case officers, steady stream of decisions.  No standing requirement.  Lawyers can initiate—don’t have do disclose who their clients are.  Requesting party can’t file evidence or conduct cross-examination; limited to written argument/taking part in oral hearing.  Must show sufficient facts to demonstrate trademark use.  Use by licensee suffices, but there has to be control, which in Canada won’t be assumed b/c of shareholder interest.
Q: if at Sec. 8 time in the US, excusable nonuse is valid—also true in Canada?
A: Yes.  Has to be real evidence, not just a hope and a prayer. Cases can get fairly complex. 
Appeal as of right to federal court where one can file new evidence.  But there cross examination by requesting party is available.  Court can order costs against parties, so it’s a little more serious.
Janet Furor: Affidavit stage: no cross-examination; no new evidence on appeal = no cross-examination.
Kahn: speed is appealing.  Is this a good procedure?
Furor: I like it for clients: relatively quick even if contested; 18-24 months and relatively inexpensive. Dedicated to deadwood.
A: If it’s real deadwood, can be faster than that. You can also stay a confusion rejection based on a mark by filing a contest.  A little over 6 months is possible if you prompt the TM office.
A: in 2012, 644 pending cancellation proceedings; 446 that went through to cancellation for nonuse.  Only 81 were contested.  More or less consistent over time.
A: agree generally, though it can be abused.
Kahn: if we did it here, are there things we should change?
A: Procedure could be shorter. Automatic 3 month extension is available to registrant, so 3 months becomes 6.  Increases uncertainty. If you’re in a search process, you’re in trouble.  Also can be used tactically.  Used to get something from the registrant. That may be good or bad; just an observation.
A: sometimes it would be nice to have cross-ex, but given the numbers it might not be worth it compared to keeping the procedure simple.
A: very important to require use as to each of the goods.  Specificity really does keep registrants honest.
A: Not a requirement of overkill: generally need a label sample, explain channel of trade. If list of goods is modest, very low cost to registrant–$2500-$3000. In many cases, once the affidavit is filed, the requesting party gives up.  Filing fee for requesting party, $400.
Q: is it more common for an unrepresented party to default?
A: given the technical definitions, being unrepresented is risky.
Q: who would decide these in the US?
Kahn: informal, preliminary thoughts: might use petition route, administrative decision w/ appeal option.
AIPLA (not official position of organization, just reflective of certain comments): one consideration is confidentiality.  Business information that the concerned party might not want to have made public.  (RT: Hunh?  If you have to show evidence of use, that really does have to be public to be “use.”  Not clear what this concern is.)  Another comment: will this open the floodgates?  What if you had to have a 2(d) refusal before you could file a request to look into the use?  That would keep it timely.  (That seems like a real barrier to business plans that could legitimately be confidential.
A: not crazy about that—allowing counsel to be named party addresses confidentiality.  Also, in practice, Marriott has used section 45 proceeding. In one situation, we were trying to make a go/no-go decision in a multicountry situation.  If you have to have already filed and gotten something cited against you, it’s not very helpful.
A: In Canada, registrar has discretion to dismiss clearly frivolous filing.
A: In Canada, there’s no standing requirement.  The registrant is the one who has to put on evidence. Hard to get at bad motives.
A: Registrant can’t be subjected to multiple frequent requests. No more than one every 3 years.
A: Registrar can initiate proceedings itself, but that’s very rare.  May sometimes be used if there were exceptional circumstances and then a bunch of time has passed and the Office thinks that you should have been able to use the mark by now.
A: would have to have standing requirement in the US under the statute, unless we go to Congress. A less costly, relatively quick process would have a lot to commend it. Other suggestions use a sledgehammer to swat a fly.
Q: do they take into account differences in nature of use pertaining to industry?
A: if your business is selling nuclear reactors, the expectations are different than if your business is selling chewing gum.  “Normal course of trade” standard.
A: generally doesn’t take a brain surgeon to find who’s behind a sec. 45 request—if the lawyer is the same as the lawyer for an application for another similar mark, you know.  General practice for IP firms: until about 5-10 years ago, all the requests were made by firms. Now more common to make requests in name of interested party. 
Kahn: for a petition, the standing requirement wouldn’t necessarily apply v. cancellation.
A: philosophical Q: whose responsibility is it to maintain the quality of the register? Someone who is given the benefits of registration? Or someone else?
Kahn: another option: require specimens for all goods/services listed when the first Section 8 or 71 declaration is filed; require specimen to be a photo showing use of the mark in conjunction w/claimed goods/require ad for services.
A: participants seemed unhappy w/this.  INTA: unofficial view—not excited.  In theory you need to show entitlement to benefits of registration, but people don’t expect this—significant cost to client as well as counsel time in preparing filings.  While it’s fair to have a relatively summary proceeding in which registrant is called upon to make showing when there’s reason to do so, balance isn’t in the right place to have it as a matter of course.  (But the stats show that half the time there’s a problem.  That’s a lot of problems as a matter of course.)
Another suggestion: Increase solemnity of declaration, including statement that registrant understands the seriousness of the oath; require statements detailing steps taken to verify use with the goods/services in the registration.
A: (again unofficial, not ABA position) The ‘steps taken’ would be a sledgehammer when a flyswatter would do.  Going through a laundry list is the same thing as requiring a digital photo.  When you put a declaration in front of a client, unless the client is herself an atty, the client will ask if it’s ok to sign. Puts onus on atty again.  Increasing solemnity of declaration won’t do much more than the current version.
Agreement by others—client would just sign it; check box won’t make them take it more seriously.
A: might give counsel more ammunition to impress on clients the importance of what they’re signing. It might help if the form highlighted exactly what goods you’re attesting are still in use.  Might focus their attention on what it is they’re declaring.
Final suggestion: continue random audits. 
Some support for that as well.  Q of resources; comment that the registrant should have the evidence fairly easily at hand.
In the pilot, it was a group of senior attorneys. 
Followup question: should there be a stronger result for people who don’t show use—should they lose the whole registration?
A: that’s too much, but there should be a fee for the amendment.
A: Bose spoke to that—correction of the register should be to the realities of use, not the whole registration.
A: Pilot did disclose a deadwood issue, and if we’re going to have use based rights in this country we should take reasonable steps to address it.
A: random audit would be really useful for data; not clear it would help deter, except to the extent that it empowers counsel to put the fear of God into clients; they can delete now for free but would have to pay later.
A: problem is not deadwood so much but overbreadth: most people had to delete goods/services. Not fraud but unawareness, in part because overseas the practice is different/they’re permitted to have overbreadth.  Should offer a procedure that can happen early in the registration for when it’s perfectly obvious just from the list of goods and services that it’s overbroad.  Not just for renewals!
Kahn: that’s our concept if we move forward.  RFC will come out for any proposals we put forward.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in trademark | Leave a comment

Dastar bars false advertising claim based on patent filing

Posted on December 12, 2014 by rtushnet
Akzo Nobel Surface Chemistry LLC v. Stern, 2014 WL 6910212, No. 2:13–CV–00826 (S.D. Ohio Dec. 8, 2014)
Akzo makes specialty chemicals, including adjuvants, which are additives that modify the properties of the main ingredient in formulations.  Stern was formerly employed by Akzo as a research chemist with access to confidential information and is now emplyed by defendant Huntsman, a direct competitor of Akzo.  His agreement with Akzo provided that any “inventions, ideas or improvements” he made were the sole property of Akzo and that he agreed to not divulge confidential information.  Six years after he left Akzo, Huntsman filed a patent application whose subject matter, Akzo claims, infringes on (uses?) the specific adjuvants formulations that Stern developed and/or learned of while employed with Azko.  Azko sued.
One of Akzo’s claims was that defendants’ filing of the pending patent was a misappropriation and misrepresentation of Akzo’s trade secrets, in violation of 43(a)(1)(B) and the Ohio Deceptive Trade Practices Act.  Defendants argued that filing a patent application didn’t constitute making statements in commercial advertising or promotion.  Akzo alleged, however, that after seeing the pending patent, a potential customer inquired about Akzo’s ownership of the adjuvants. Thus, Akzo argued, it was reasonable to infer that the patent application constituted a statement of ownership to the relevant (sophisticated) purchasing public.  But Semco, Inc. v. Amcast, Inc., 52 F.3d 108 (6th Cir. 1995), held that a “detailed description and explanation of a new process” without advertising, is not commercial speech.  Akzo didn’t claim that “advertising language” was included in the application.
Moreover, defendants successfully contended that claims “related solely to the creation and ownership of intellectual property” weren’t actionable under the Lanham Act because they didn’t go to the “nature, characteristics, or qualities” of the adjuvants, even though Dastar(which was about the meaning of “origin”) didn’t really hold that. Cf. Romero v. Buhimschi, 396 Fed. Appx. 224 (6th Cir. 2010) (§ 43(a)(1)(B) does not refer to failure to provide “authorship designation”).  (Just to be clear, the real problem in most failure to credit false advertising claims is materiality, but they shouldn’t be entirely off the table, when the advertiser is trying to sell itself because it was the creative force behind something.)  Here, the court rejected the argument that filing a patent application was a misrepresentation about whether Akzo had the legal right to use its own IP.  (Is this even true given prior user rights under the AIA?)  The court was unpersuaded.  “To claim that information contained in a patent application equates to misrepresentation of the details underlying the goods or service is, at best, a stretch.”  Such claims are better the province of copyright or patent law; to hold otherwise would be to create a perpetual patent/copyright, which Congress can’t do.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in dastar, http://schemas.google.com/blogger/2008/kind#post, patent | Leave a comment

Actual confusion irrelevant when Rogers v. Grimaldi applies

Posted on December 12, 2014 by rtushnet
Mil-Spec Monkey, Inc. v. Activision Blizzard, Inc., No. 14-cv-02361 (N.D. Cal. Nov. 24, 2014) 
MSM alleged that the video game Call of Duty: Ghosts made infringing use of MSM’s “angry monkey” mark, “among the most popular morale patch designs” MSM sells.  (Morale patches are patches that military personnel can’t wear officially, but are allegedly frequently used in unofficial contexts.)  
 

Angry Monkey patch


Ghosts includes an image visually similar to the angry monkey mark as a patch players can use on their avatars’ uniforms in multiplayer mode.  When selected, the patch appears at various points during play, and it also appeared in Activision’s pre-release promotional trailer for Ghosts’ multi-player edition.  MSM alleged copyright and trademark infringement and related claims.

Activision moved to dismiss the non-copyright claims based on the First Amendment, and won.  Ghosts’ use of the patch was artistically relevant and not explicitly misleading, thus passing Rogers v. Grimaldi.
Ghosts is the tenth installment in the Call of Dutyfranchise.  Ghosts “depicts highly realistic combat in a near-future, war-torn setting, featuring numerous characters, complex narratives, and advanced graphics. Its main protagonists are the Ghosts—a force of U.S. Special Operations personnel trained to conduct secret missions behind enemy lines.”  The game uses “dozens of contemporary weapons and vehicles that players can customize with modifications or attachments, and a variety of military equipment based on real-life counterparts or portrayals of future designs.”  It likewise uses “names and insignia of contemporary forces such as the National Security Agency, the United States Marine Corps, and the United States Air Force.”  A new feature allows players in multiplayer mode the option to customize their avatars, including gender, uniform style, gear, accessories, and over 600 patches. Thirty-two patches are available at the beginning, while more can be unlocked as rewards, and others are available for download; the angry monkey is one of the standard 32.

Patch selection screen
Closeup
The patches may appear onscreen during multiplayer matches “when a player may glimpse a patch on the uniform of another player, or alongside a flash of the name of an avatar wearing a patch who just performed a particular objective in the ongoing mission. The patches also appear alongside other player information in match summaries,” which are displayed at the end of play. Thus, patches serve to identify characters during play.  In the pre-release trailer, the design is visible for about 2 seconds at the bottom of the screen, associated with an avatar, along with other patches for other avatars.
Screenshot from trailer, monkey near bottom left
Ghosts is an expressive work entitled to First Amendment protection.  MSM argued that before applying Rogers to an expressive work, the Ninth Circuit requires a mark to be a cultural icon.  This argument was based on a misreading of Mattel v. MCA.  While it found support in “an outlier decision from this district,” Rebelution, LLC v. Perez, 732 F. Supp. 2d 883 (N.D. Cal. 2012), the court distinguished Rebelution even if it was consistent with governing law: That case favored a reggae band using the name Rebelution in a case against Pitbull’s album with the same name, but there Pitbull wasn’t referring to the band.  (If “Rebelution” was artistically relevant to Pitbull’s own message, for example through its slightly punny connotations, of course, that should count too, as the court here seems to signal with its skepticism.)  But Ghosts’ use of a patch drawing on a design that’s extremely popular in the military world was artistically relevant.
Mattel “stands for the proposition that a trademark owner may not control public discourse whenever the public ‘imbues his mark with a meaning beyond its source-identifying function’—a far more inclusive standard than the ‘cultural icon’ one MSM advocates.”  Plus, this rule wasn’t a threshold limitation, but just part of the first prong analysis.  ESS Entertainment 2000 v. Rock Star Videos didn’t require the Play Pen strip club to be a cultural icon; Rogers applies as long as the game is an artistic work.
Rogers provides that a use of a mark in an artistic work is not actionable unless (1) the use of the  mark has “no artistic relevance to the underlying work whatsoever,” or (2) it has some artistic  relevance, but “explicitly misleads as to the source or the content of the work.” This is a highly speech-protective standard.  Ghosts’ multiplayer mode was supposed to be a realistic combat experience, “the intensity of which is heightened by sophisticated features permitting players to customize their avatars’ identities and engage with other players in the virtual environment.”  The use of many real-world references creates a “critical mass” to achieve a “look and feel” consistent with the game creators’ vision. The angry monkey patch is a small part of this vision, helping to create “an authentic universe of morale patches, like those available in the real world.”  Thus, the inclusion of the patch had “some artistic relevance,” all that was required.  MSM argued that there was no artistic relevance because the armed forces ban morale patches on uniforms in the field.  “But MSM invokes no authority, nor is there any, for the proposition that use of a mark must sufficiently mimic reality to fall within the First Amendment’s safe haven.”
MSM argued that the use of the patch was commercial speech, but it wasn’t.  Its brief appearance in the pre-release trailer and in a menu that also allowed players to access additional patches for purchase didn’t change its artistic relevance in the game.  Creators of artistic works can market them, and can even choose to focus on trademarked products as a “crass marketing tool” as long as they’re also artistically relevant. Winchester Mystery House, LLC v. Global Asylum, Inc., 210 Cal. App. 4th 579 (2012).
Nor was the use explicitly misleading.  Explicit misleadingness requires “an affirmative and overt statement that indicates a relationship with or endorsement by the plaintiff.” Using the mark can’t itself be affirmatively misleading, or Rogers would be meaningless, and this rule extended to using the mark in promotional materials for the work (as is necessarily entailed by Rogers’ origin in a case against a movie title!). MSM didn’t show any way in which Activision affirmatively purported to “share a relationship” with MSM.  The packaging was very clear about origin and source.
MSM’s evidence of “actual confusion” from a blogger was irrelevant.  As the Ninth Circuit has already held in Brown v. EA, survey evidence can’t change mere use of a mark to “explicitly” misleading.  The only relevant evidence under Rogers relates to the nature of the behavior of the defendant, not the impact of the use.  Rogersitself disregarded a survey showing 38% confusion.  The risk of confusion was outweighed by the First Amendment interests at stake.

http://tushnet.blogspot.com/feeds/posts/default?alt=rss
Posted in first amendment, trademark | Leave a comment