Lamborghini going to pot?

Posted on November 21, 2014 by rtushnet

If “anything can signify anything,” is this equation of a pot with a Lamborghini nominative fair use?  (It’s just an object. It doesn’t mean what you think.)

Anything can signify anything billboard, Washington DC

Photo by Zach Schrag.

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organic cosmetics class certified

Posted on November 20, 2014 by rtushnet
Brown v. Hain Celestial Group, Inc., No. C 11-03082, 2014 WL 6306581 (N.D. Cal. Nov. 14, 2014)
Hain has staved off class actions several times, but not here: the court certified a class of purchasers of Avalon Organics and Jason cosmetic products, based on allegations that they were labeled “organic” when they weren’t, in violation of California’s Organic Products Act (COPA), the UCL, the CLRA, and express warranty.  Before 2011, the product lines contained less than 70% organic ingredients, with few exceptions.  In 2011, Hain changed the formulations and labels of substantially all the products.  Plaintiffs bought products from the two lines, in the belief that they were completely/mostly made from organic ingredients, and were willing to pay more for that feature.
Federal law governing foods requires that food labeled “organic” or “made with organic” must be at least 70% organic.  This doesn’t apply to cosmetics, but plaintiffs alleged that the federal definition shaped consumer expectations for all organic products, including cosmetics.  Moreover, COPA requires that cosmetic products advertised, marketed, sold, labeled, or represented as organic in California be made of at least 70% organic ingredients; plaintiffs alleged that COPA was a “legislative determination” that it is deceptive to represent as organic cosmetic products that have insufficient organic content. 
Jason’s tagline “Pure, Natural & Organic” and Avalon Organics’s name and “pro-organic” pledge on their front labels allegedly misled consumers, given that they didn’t comply with the 70% rule, whether measured by weight or volume.  For example, only the 9th out of 19 listed ingredients in Jason Face Wash was certified organic, which can’t possibly be 70%.  (Hain argued that after the 2011 reformulation, Avalon Organics products contained more than 70% organic ingredients; plaintiffs disagreed.  The answer turned on whether one could count water added to reconstitute dehydrated aloe powder as part of the percentage of organic ingredients. If yes, then the products all had more than 70% organic ingredients; if no, they didn’t.)
Hain challenged the class definitions as containing non-actionable products and as non-ascertainable because based on self-identification without receipts. The court found that the class definition for Jason products tracked the temporal use of the “Pure, Natural, & Organic” tagline, and properly excluded products that are USDA-certified as organic.  The Avalon Organics class was similar; post-June 2011 purchasers were part of the class, but if water used to rehydtrate aloe powder counts towards the 70% threshold, they’d lose on the merits—something the court wasn’t going to resolve before certification.
As for ascertainability, the court rejected the Third Circuit rule requiring receipts or external identification of class members as gutting the Rule 23(b)(3) class action precisely where it’s most needed—where individual harm is small but aggregate impact significant.  While reliance on affidavits can be problematic, the analysis must be case by case.  Extreme variety in covered products might make memory and affidavits unreliable, but here all but 8 of 362 products were the same with regard to the organic claims and product formulations used as the basis for the claims; the 8 were Jason products that weren’t popular.  Consumers could reasonably be expected to recall the word “organic,” which was even part of the Avalon Organics name.  Given the likelihood that consumers could correctly recall their purchases, self-identification by affidavit was acceptable for a small-ticket claim, especially since the alternative would be lack of redress for false advertising.  This conclusion was bolstered by the fact that “total damages” would be proved and fixed at trial, because they were restitutionary. Hain’s profit “will be measured without regard to any individual plaintiff; then, after the total figure is set, individual claimants will divide the award.”
Numerosity, commonality, typicality, and adequacy were satisfied.  Because COPA, the UCL, and the CLRA all use an objective reasonable consumer standard, once the claim was proved material to that objective reasonable consumer, inferences of reliance and causation would arise. Hain argued that both Avalon Organics and Jason products bore “other label statements (such as ‘no parabens’ and ‘no animal testing’) that surely influenced some consumers’ purchase decisions.”  But that didn’t destroy typicality, given the inference of reliance that would arise from material misrepresentations.  One plaintiff bought from an online vendor and paid less than wholesale; this didn’t make him atypical, only affected his individual damages.  Here, as distinct from in cases where certification was denied for want of typicality, uniform misrepresentations about one word on the products’ labels were at issue across the entire class:
Whatever the precise formulations and uses of Hain’s various products, and whatever additional reasons consumers had for buying them, the plaintiffs’ claims against them are simple and uniform: the products were presented as organic when, under COPA, they were not. The plaintiffs’ claims, in other words, have nothing to do with the unique characteristics of the various Hain products; they have to do only with what is allegedly shared by all those products. The court thus thinks that the plaintiffs’ core claims can be adequately proved, for example, by someone who has bought shampoo for someone who has bought hand cream.
For similar reasons, the court found predominance. While, accepting Hain’s characterizations, 6 of 184 Jason products had no organic representation, and 2 had 70% organic content, that represented only a small percentage of products that could be easily excluded and didn’t destroy predominance. 
Nor would materiality, reliance, and causation raise individual issues under California law given the objective reasonable consumer standard.  This standard “reflects the UCL’s focus on the defendant’s conduct, rather than the plaintiff’s damages, in service of the statute’s larger purpose of protecting the general public against unscrupulous business practices.”  Moreover, even if other representations also motivated purchases, there can be more than one material reason for purchase.  “This is how consumers shop: they buy products all the time for more than one reason.”  In addition, plaintiffs adequately showed that, if they proved their claims on the merits, they could show that an “organic premium” existed and would’ve been paid by all consumers, regardless of their reasons for purchase. Thus all would have suffered injury regardless of purchase motive.
This brought the court to the issue of damages models.  The plaintiffs offered the declaration of Dr. Stephen Hamilton, chair of the Department of Economic s at California Polytechnic State University, San Luis Obispo.  He calculated Hain’s revenue/profit from sales of the products at issues, and also calculated a price premium for the “organic” attribute, not based on individualized information about class members.  Hain challenged Hamilton’s models with testimony from an economist, arguing that his methods wrongly defined restitutions and flunked the Supreme Court’s requirements for damages models set forth in Comcast.
Under circuit precedent, plaintiffs needed to present a damages model that ties damages to their theory of liability. And, to comport with due process, the court must “preserve” the defendant’s right “to raise any individual defenses it might have at the damages phase.”  The court concluded that plaintiffs adequately showed that damages could be calculated on a classwide basis in a way adequately tied to the plaintiffs’ liability theory.  Hamilton used three different methods to separate out the “organic” premium from other product features.  The fact that he hadn’t performed the calculations dictated by his models wasn’t dispositive; in part this was apparently because discovery was ongoing.  “The point for Rule 23 purposes is to determine whether there is an acceptable class-wide approach, not to actually calculate under that approach before liability is established.”  Hain could offer any defenses to individual claims in the damages phase.
The class action, naturally, was superior to no lawsuit, which was the only realistic alternative.

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Koch and wine: punitive damages for wine fraud reduced but allowed

Posted on November 17, 2014 by rtushnet
Koch v. Greenberg, 14 F. Supp. 3d 247 (S.D.N.Y. 2014)
There’s probably a good magazine article or two in this story.  William Koch, the “litigious younger brother” of Charles and David, bought over 2600 bottles of rare French wine consigned by Eric Greenberg to an auction house.  He subsequently determined that 24 were counterfeit, and sued Greenberg for fraud (both affirmative misrepresentation and fraudulent concealment) and violations of New York’s General Business Law.  A three-week jury trial resulted in a verdict for Koch on all his claims, awarding compensatory damages of $355,811 (the purchase price for the 24 bottles) and an additional $24,000 in statutory damages on one of Koch’s GBL claims ($1000 per bottle, pursuant to §349’s authorization of treble damages up to $1000 per violation). In addition, the jury awarded Koch $12 million in punitive damages.
The court reduced the compensatory damages award to $212,699 to take account of Koch’s prior settlement with the auction house Zachys.  It also remitted the punitive damages award to $711,622, denied Koch’s requests for attorneys’ fees and injunctive relief, and granted him pre- and post-judgment interest.
The court denied Greenberg’s motions for judgment as a matter of law and for a new trial.  Of interest to me, Greenberg argued that the statements at issue were non-actionable statements of opinion, and that Zachys, not Greenberg, made the relevant statements.  Opinion: the jury was properly instructed that statements of opinion are non-actionable unless the opinion is not sincerely held.  And the jury was properly instructed that puffery is non-actionable.  The jury is presumed to follow instructions, and along with vague superlatives, “the record contains several additional potential statements of fact, or potentially insincerely held opinions, that the jury could have reasonably construed as actionable misstatements.
As for statements in the Zachys auction catalogue, fraudulent misrepresentations don’t need to be made directly to the plaintiff as long as the plaintiff is among the class of persons intended to rely on the statement.  The jury could conclude that misrepresentations made to Zachys were intended to be communicated to purchasers like Koch and that the misrepresentations in the catalogue could ultimately be traced to Greenberg as the “driving force.”  The jury apparently rejected contrary evidence, apportioning blame for Koch’s GBL claims at 100% for Greenberg and 0% for Zachys with respect to the § 349 claim and at 75% for Greenberg and 25% for Zachys with respect to the § 350 claim. 
Likewise, the jury could properly have found fraudulent concealment, on the theory that Greenberg possessed superior knowledge with respect to material facts about the bottles and that therefore his silence or omission could constitute fraud. Greenberg’s counsel repeatedly emphasized that Koch had the opportunity to inspect the bottles at issue, and could have seen apparent indicators of their counterfeit status.  But the jury was free to reject that argument.  The record did indicate “surface-level problems with the bottles of wine—aberrational labels or irregular cork striations, for example,” but it also included numerous references to information Greenberg knew but chose not to share.  The jury could agree that no amount of inspection would’ve revealed what Greenberg knew.  It was properly instructed that buyers, especially sophisticated ones, have a duty to protect themselves in business transactions.  But it was also properly instructed that “a buyer is not required to conduct investigations to unearth facts and defects that are present, but not obvious,” meaning that “a buyer is not expected to discover that a house is infested with termites.”
Nor was Koch’s reliance unreasonable as a matter of law.  There was an “as-is” clause in the auction catalog, disclaiming the authenticity, provenance, and merchantability of the wine. The jury was instructed that specific disclaimers ordinarily “preclude a finding of justifiable reliance,” as required for a fraud claim.  But not always: where the material facts upon which a plaintiff relies are “peculiarly within the [defendant’s] knowledge,” and not discoverable by the plaintiff through “the exercise of ordinary intelligence,” such an “As–Is” clause will not act as a bar to a fraud claim.  The jury was also properly instructed that in determining whether Greenberg had “peculiar knowledge” it should consider the buyer’s sophistication and the accessibility of the underlying information.
Greenberg argued that, even if it was difficult to inspect over 2000 bottles of wine, that was a difficulty of Koch’s own making, and Koch’s wealth and sophistication weighed against a finding of peculiar knowledge.  But it was reasonable for the jury to conclude that, in light of all the circumstances, and despite Koch’s sophistication and his right to inspect the bottles, it was unreasonably difficult or impossible for him to have discovered what Greenberg knew.  Under the circumstances, Koch wasn’t unreasonable as a matter of law to fail to recognize various indicia of inauthenticity or hire an expert to spend 25 minutes per bottle on inspection at the time of purchase.  The jury could therefore find fraud notwithstanding the presence of an explicit disclaimer.
As for the GBL claims, GBL § 349 claim requires that (1) “the defendant has engaged in an act or practice that is deceptive or misleading in a material way”; (2) the “plaintiff has been injured by reason thereof”; and (3) the deceptive act or practice is “consumer oriented.”  Consumer-oriented conduct has to be more than a private contract dispute, but it need not involve repetition or a pattern as long as it was aimed at the public at large.  Given the large number of bottles Greenberg consigned, other consumers at the auction could have been affected by the alleged misconduct.  The finding of liability under §349 also survived.
The court then found that the exclusion of Greenberg’s refund offers as evidence during the liability phase was proper, though it was properly admitted when the jury was considering whether to award punitive damages.  Refunds as a remedy for counterfeits might provide limited insight into wine industry practices, but not necessarily into Greenberg’s state of mind at the time of the key events, but their probative value was outweighed by the prejudicial effects of portraying Koch as unreasonable and litigious in not accepting the money.
The court also upheld the award of punitive damages; the jury heard sufficient evidence from which it could conclude that Greenberg acted with wanton disregard for potential buyers’ rights, and that this auction was not the first time Greenberg had sold counterfeit wine. However, the award was reduced because of due process concerns.
The reprehensibility of the conduct at issue was the most important factor: the harm was economic as opposed to physical or potentially physical (these bottles were collector’s items, not for drinking), and the targets—Koch and other potential buyers—were not financially vulnerable, and the subject wasn’t a core asset like a home or business.  “Greenberg deceived a wealthy collector whose hobby involves expenditures that most people will never contemplate.”  Some punitive award was nonetheless appropriate, given that “[t]o deceive for one’s personal, pecuniary gain and exploit one’s superior knowledge—the gravamen of the fraud here—reflects reprehensibility that warrants some sanction.”  The jury evidently rejected Greenberg’s argument that his refund offer proved his good faith.
The high ratio of the jury’s award to its compensatory award (33x the initial amount, and 56x the reduced amount) signalled a constitutional problem.  Given the economic nature of the fraud, its lack of relation to liberty or dignity, and its lack of disruption of Koch’s life, this wasn’t a case that justified going up to the limits of the Due Process Clause.  A six-figure compensatory award was already significant in the absolute sense, but less so in the relative sense, “particularly in the context of high-end wine auctions where a single bottle may sell for $20,000, and in light of the wealth of the inevitable participants in such auctions, including Greenberg.”  Thus, a punitive award less than the compensatory award wouldn’t likely have much deterrent effect.  Thus, the court remitted the award to $711,622, twice the initial compensatory damages award.  The court didn’t use the setoff from the Zachys settlement in its calculation, given that the jury awarded punitive damages on the fraud claim—a claim brought only against Greenberg when Zachys settled—and given that the jury allocated 100% liability to Greenberg (and 0% to Zachys) on the GBL § 349 claim.
Attorneys’ fees: Koch sought nearly $7.9 million in attorneys’ fees.  The GBL allows an award of reasonable fees to a prevailing plaintiff, at the trial court’s discretion.  The court declined to do so, for several reasons.  The fees “bore no relationship to the amount of actual damages at issue,” given the aggressive “battle royale” fought by the parties for six years, for a compensatory damage award of only $355,811.  In addition, the compensatory damages for Koch’s commercial injury did capture the extent of his success at trial, as opposed to other situations in which intangible rights are vindicated. 
Also, the purposes of the GBL didn’t support an award of fees; the potential for punitive damages on the fraud claim was the only reason the case wasn’t mooted by Greenberg’s refund offers, but only the GBL claims provided a basis for fee-shifting.  This wasn’t a case within the heartland of GBL fee-shifting, because it didn’t involve vulnerable or disadvantaged consumers, and it didn’t involve conduct with a broad impact on consumers in general, even though Greenberg’s conduct was consumer-oriented. 
Plus, Koch did refuse a full refund and insist on trial, “in the hopes of sending a message and exposing what he perceived as Greenberg’s wrongdoing.”  He did so, and the court accepted that Koch felt strongly about the matter, but this was really “a litigation of choice and of principle, rather than of necessity or monetary recompense.”  Though neither Koch’s wealth nor his sophistication barred an award of fees, it was still relevant that Koch could’ve gotten his compensation years earlier but chose to spare no expense in litigation.
Koch also requested broad injunctive relief against Greenberg, barring him from (among other things) engaging in deceptive acts or practices in selling wine.  The GBL allows private parties to obtain injunctive relief, but it wasn’t clear whether eBay applied.  The case law suggested that, while government entities didn’t need to meet the traditional equitable requirements in seeking injunctions, private plaintiffs did. Just because the New York statute specifically authorized injunctive relief didn’t mean eBay’s equitable principles were displaced; so too does the Lanham Act. The alternative would be absurd: automatic injunctive relief for any prevailing plaintiff, no matter how small the violation.  Given the absence of specific statutory conditions for injunctive relief, the court applied the ordinary rules.
Koch didn’t suffer irreparable injury; money fully compensated him.  Though Koch argued that Greenberg consigned more than the 24 counterfeits proven at trial, that was beyond the scope of the trial and not the proper subject of a permanent injunction.  Compensatory and punitive damages were adequate to make Koch whole. 
As to the balance of hardships, Koch requested extensive and damaging mandatory disclosures not required of other consigners in the wine industry.  “Koch has made efforts to change the auction practices in the industry that permit this type of deceit to occur. However, it does not follow from the jury’s finding that Greenberg engaged in GBL violations that he must now be the symbol for changed norms within the wine industry.” An injunction wouldn’t serve the overall public interest.  Rather, “this costly litigation, intense public scrutiny, and a punitive damages award are sufficient to dissuade Greenberg from engaging in deceptive acts or practices in the future.”

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NPR story on apple varieties and TM as substitute for patent

Posted on November 14, 2014 by rtushnet

The story suggests that control over new varieties could last forever, instead of expiring as previous patents on new varities have, because the varieties are “trademarked.” Query: if the public knows the apple as SweeTango, why isn’t that word the generic term for that kind of apple?

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bills, applications and manuals can be commercial speech

Posted on November 12, 2014 by rtushnet
Heartland Payment Systems, Inc. v. Mercury Payment Systems, LLC, 2014 WL 5812294, No. C 14–0437 (N.D. Cal. Nov. 7, 2014)
Heartland and Mercury compete to provide electronic payment processing to small and medium-sized merchants through point of sale (POS) systems, which allow merchants to accept credit cards and debit cards. POS systems, allow banks and credit card companies to receive their fees, merchants to receive the proceeds from sales, and consumers to have their accounts charged. Both companies use an “interchange-plus pricing model”: banks and credit card brands charge a fee, typically as a percentage of the transaction plus a per-transaction fee. POS systems providers then charge an additional fee to the merchants as their price.  POS systems providers can’t control the interchange fee, but do control the plus fee, which is “usually in some combination of basis points and cents-per-transaction.”  Both plus and interchange fees can be reset as often as twice per year.
Heartland alleged that Mercury took advantage of the interchange fee adjustment to increase its fees and deceptively blame increases on the credit card brands.  Mercury allegedly falsely told merchants that it would pass on the interchange fees at cost, with no markup.  Heartland alleged that the deceptions worked through Mercury’s merchant application; the representations of third-party POS dealers who sell Mercury’s product; its website; and “other advertising and promotional materials distributed to merchants and potential merchants.” Moreover, Heartland alleged that Mercury’s Operating Guide contained deceptive language that misrepresents how Mercury bills its merchants.  In its review of nearly 300 of Mercury’s monthly billing statements, Heartland alleged, it found that in 75% Mercury actually charged a fee higher than disclosed.  Heartland alleged that merchants didn’t know the actual network fees and couldn’t easily determine them based on Mercury’s statements.  Further, Heartland identified thirty merchants who switched from Heartland to Mercury, and believed that its bid was deceptively undercut.  The resulting statement allegedly showed Mercury’s bid-upon amount as the “plus” fee, but also “falsely inflated network charges to impose an additional four cent fee per card transaction.”
Heartland sued for false advertising under the Lanham Act and state law, and related business torts. The court first determined that Rule 9(b) applied to all claims, because Heartland alleged “a unified course of fraudulent conduct” as the basis of its claims, and sought punitive damages based on Mercury’s allegedly intentional and willful conduct.
Mercury argued that it wasn’t engaged in “advertising and promotion.”  First, Mercury argued that its monthly statements weren’t ads, because they “memorialize transactions that have already occurred”; that the Merchant Application was a contract, and not promotional; and that the Operating Guide, despite being on its website, is a mere “technical manual.”  (It seems to me that monthly statements don’t have to be ads; it’s the alleged misrepresentations that got merchants to engage in the transaction that are the core problem, and the statements then allegedly prevent the merchants from realizing the prior deception.)
The court found that, with respect to alleged oral statements, Heartland failed to plead with the requisite particularity.  Heartland didn’t disclose the name of the merchant it allegedly identified as a victim, or any other merchant.  It also didn’t allege facts to support the idea that a Mercury employee or representative made false statements, or engaged in commercial speech.  However, Heartland had no way to know exactly which employee drafted the written ads, so to the extent the complaint relied on written documents, Heartland didn’t need to identify exactly who wrote them and when.
The court did find that the monthly statements “could induce merchants to continue using Mercury’s services, and hence could be considered commercial speech designed to propose a continued business relationship.” Similarly, the Operating Guide “could be seen to propose a commercial transaction by providing information to a potential merchant who may be considering using Mercury’s services.” And the Merchant Application could be viewed as proposing a commercial transaction—not a contract, but an offer to enter into a contract. Thus, the complaint adequately alleged Mercury’s commercial speech.
The complaint still failed because Heartland didn’t allege sufficient facts to show that Mercury disclosed its pricing as Heartland alleged, or that Mercury charged something different from what it disclosed.  It needed to identify specific language to show that there wasn’t sufficient disclosure of pricing and fees.
For basically the same reasons, the UCL, FAL, and intentional interference with contract/prospective economic advantage claims were dismissed, with leave to amend.

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Prior class settlement precludes state from seeking restitution for false advertising

Posted on November 10, 2014 by rtushnet
California v. IntelliGender, LLC, — F.3d —, No. 13–56806, 2014 WL 5786718 (9th Cir. Nov. 7, 2014)
The 9th Circuit held that a CAFA-compliant settlement precluded the People of the State of California, acting through their representatives (here San Diego’s City Attorney), from seeking restitution for IntelliGender’s allegedly false advertising, but did not preclude other remedies. The district court approved a settlement for a nationwide class of buyers of the IntelliGender Prediction Test, touted as an accurate predictor of a fetus’s gender using the mother’s urine sample.  The State sought civil penalties, injunctive relief, and restitution, and IntelliGender sought to enjoin its action.  Because the State’s action was “designed to vindicate broader governmental interests than the class action,” the whole thing couldn’t be enjoined.  But because CAFA provides that the defendant has to provide notice to relevant state officials of any settlement, to allow them to object, and California didn’t, it couldn’t now obtain a duplicate recovery in the form of restitution of citizens who were bound by the bargained-for restitution in the settlement. [This result puts a premium on the FTC monitoring settlements, which is arguably a good thing but may strain resources; since so much of the FTC’s recovery in recent years has been restitution-based, the ability to cut that off at a comparatively low price could be incredibly valuable.] 
CAFA  requires notice of a proposed settlement to be served on the “appropriate” federal and state officials—typically the USAG and “the person in the State who has the primary regulatory or supervisory responsibility with respect to the defendant.” A court can’t order final approval of a proposed settlement until 90 days after the notification.  The state isn’t required to intervene, and it might not: “Aside from securing compensation for citizens, state enforcement actions serve other interests such as protecting citizens from future harm, and these interests might not be served by intervention in ongoing settlement proceedings.”  Being an objector could serve important interests, but direct enforcement actions serve equally if not more important public interests; CAFA doesn’t interfere with government’s power to bring enforcement actions.  Under California’s UCL, a public prosecutor can seek civil penalties, permanent injunctive relief, and restitution, but private individuals are limited to injunctive relief and restitution. Private suits can’t substitute for public enforcement actions, “which serve as a far greater deterrent and thus a greater protection.”
IntelliGender makes the IntelliGender Prediction Test that promises “immediate gender results in the privacy and comfort of the home. In minutes, the IntelliGender Gender Prediction Test indicates your gender result based upon an easy to read color match.”  IntelliGender settled a class action over its advertising, with proper notice to state and federal officials, by agreeing to pay $10.00 for each approved claim and to make a cy pres donation of $40,000 worth of product. In addition, it agreed to change its website’s advertising as well as the Test’s product insert and box. Changes to the product website included clarifying that the “Nobel Prize winning chemist [who] was added to the research team,” was actually “a graduate student” who was merely “part of a 1996 Nobel Prize winning research team in chemistry.” To receive the $10.00, a class member had to submit a valid claim form, requiring her to swear under penalty of perjury that the Test result was inaccurate as to her child’s gender.  [Note: this settlement indicates the compromise involved in settlement, perhaps too much here; those changes are tiny, and requiring inaccuracy as to the child’s gender seems misguided when flipping a coin would have been right roughly 50% of the time, thus undercompensating class members who were fooled but got lucky.]
Subsequently, the San Diego City Attorney sued for violations of the UCL and FAL (also alleged in the class action).  IntelliGender removed and the case was transferred to the judge who presided over the related class action.  IntelliGender sought an injunction under the All Writs Act and under principles of res judicata, but the district court refused, reasoning, in part, that the State’s claim was brought in the State’s sovereign capacity to protect its citizenry from unscrupulous business practices.
Federal courts can’t enjoin state court actions except under a few circumstances, including where necessary “to protect or effectuate the federal court’s judgments,” which reinforces res judicata and collateral estoppel. “Res judicata applies when the earlier suit: (1) reached a final judgment on the merits; (2) involved the same cause of action or claim; and (3) involved identical parties or privies.”  (The court of appeals noted that, because the issue was not argued, the court was using federal law without resolving whether the federal or state law of res judicata should apply.)
There was definitely a final judgment on the merits on the same causes of action, the UCL and FAL.  Privity was the key, and the Supreme Court has cautioned that “issuing an injunction under the relitigation exception is resorting to heavy artillery. For that reason, every benefit of the doubt goes toward the state court; an injunction can issue only if preclusion is clear beyond peradventure.”
The court found that the district court correctly denied IntelliGender’s motion to enjoin the State’s enforcement action in its entirety.  No class action settlement could bind the State in its sovereign capacity, where it asserted both public and private interests.  The fact that special penalties were available to the State showed the separate public interest.  The State’s failure to object to the settlement was irrelevant; an official objection or its absence is relevant to fairness, but CAFA specifically provides that the notification requirement does not “impose any obligations, duties, or responsibilities upon, Federal or State officials.”  To count failure to object as a reason to find res judicata would undermine the purpose of the statute.
But what about the State’s claims for restitution?  Insofar as it sought restitution for individual members of the settlement class, the action should have been enjoined under the court’s continuing jurisdiction to enforce and administer the settlement.  Courts should preclude double recovery by an individual, and when the government sues for the same relief a plaintiff has already pursued then the requisite closeness of interests for privity is present.  The individuals on whose behalf the State sought restitution were the same as the certified class, and it didn’t matter that the amounts sought were different.  The district court had reasoned that the class was limited to only those who bought the product and got an inaccurate result, whereas the State was seeking restitution for all purchasers—but that wasn’t true. It was just that only members who got an inaccurate result (and applied) got paid.  Members who didn’t get compensation are still bound by the settlement; if the State wanted compensation for them, it should have intervened after receiving notice.  “This is the method CAFA established for states to seek equitable compensation for class members.”  Compensation was res judicata.  The different amount sought didn’t matter, and just confirmed that the State was seeking double “(or at least better)” recovery.  “[T]he appropriate inquiry is not what relief was ultimately granted, but whether the government is suing for the same relief already pursued by the plaintiff.”  The district court abused its discretion in not granting an injunction, given the harms of relitigation to the class action system.  Allowing extra claims for restitution would decrease the incentive to settle and buy peace.

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lack of substantiation versus falsity

Posted on November 10, 2014 by rtushnet
In re Bayer Phillips Colon Health Probiotic Sales Practices Litig., No. 11–3017, 2014 WL 5776153 (D.N.J. Nov. 6, 2014)
This is another case where Bayer argued that the plaintiff’s claims were merely based on “lack of substantiation” for Bayer’s scientific claims that the combination of 3 bacterial strains in its Phillips Colon Health Probiotic products “helps defend against” “constipation, diarrhea, [and] gas and bloating.”  Plaintiff argued that a wide range of advertising “consistently conveyed one message: Phillips’ Colon Health, with its probiotic bacteria cultures, is scientifically proven to provide all consumers with digestive and immune system health benefits.”  The court agreed that lack of substantiation couldn’t ground a private action under Illinois or California consumer protection law, but found that plaintiffs had stated a claim for falsity.  The court did not specifically note that plaintiff was trying to falsify the “scientifically proven” part of that, but the allegations on which it relied are instructive.
The complaint alleged that the European Food Safety Authority (EFSA) reviewed the scientific proof in relation to the strains of bacteria and concluded that the data didn’t demonstrate a cause and effect relationship between consumption and “improvement of intestinal transit within the normal range,” “decreasing potentially pathogenic intestinal microorganisms in infants and children aged between 0 and 36 months,” “immune system improvement,” or “maintenance of defenses against pathogenic bacteria.” The court found that these scientific studies allowed the court to draw the reasonable inference that Bayer’s claims were false or “at a minimum” misleading.  The misleadingness, I think, has to come from the implicit or explicit claim that the benefits of the product are scientifically proven.  As I often say, this isn’t a lack of substantiation theory; not all claims need to be scientifically proven.  But when health and similar claims are proven to be not founded in science, the inherent representation that they are so founded has been falsified.

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Guest post: Peter DiCola’s notes from Notre Dame roundtable on The Eureka Myth

Posted on November 10, 2014 by rtushnet
Jessica Silbey’s _The Eureka Myth_
Book Roundtable at Notre Dame
November 7th, 2014
Notes from Peter DiCola
*Panel #1*
1) David Schwartz
— Praise for the book
— Will raise a few methodological issues
— Issue of representativeness of the sample.
— Need to trust Jessica’s selection of the quotes as well.
— There are about 50 interviews. When we want to discuss particular communities of creators or inventors, such as inventors (i.e., not lawyers, not creators), we are slicing the sample pretty thin. The number of observations is small, limiting our ability to draw inference.
— If every one in the small sample is consistent, then that may tell us something
— Concern that interviewees will tell the interviewer what she wants to hear
2) Laura Murray
— In Laura’s department, when she has done work on interviews, she gets questions about whether the results can be reproduced
— This book offers thick description
— The book is clear about methodology
— Organization: Jessica’s book goes through the creative process step by step. By contrast, Laura’s book was organized case by case. Each approach to organizing the discussion has advantages and disadvantages. The advantage of Jessica’s approach is that it shows the commonalities across different creators.
— Concern about copyright being an object of scorn in selecting interviewees — Laura, in her book project, handled this by asking about copyright last. Copyright fluttered away — the interviewees’ topics of discussion went in other directions.
— “Mis-“ prefix & under-/over-enforcement discussion vs. terms that are not law talk
— Less emphasis on groups in the structure Jessica chose; less information on where ideas came from. But of course this is just a lumper vs. splitter issue.
— Why creators don’t discuss money as a motivation. Conditioning (of us scholars) not to question this. Other people supporting the work — the artist’s spouse or mother. Place of privilege.
— Finally, a question about choosing pseudonyms. Most of the names seemed to have Anglo origin.
3) Kara Swanson
— When reading, started counting for gender representation within each field
— Comparison between Jessica’s interview data and what historians are able to ask
— Post-1790 Eureka myth. Stories of Archimedes and Isaac Newton are not related to IP. Then, after 1790, the myth gets tied to IP.
— Kara looked at two works: (1) F.M. Scherer’s study of composers, 1650-1900 and (2) Christine McLeod’s book on the industrial revolution 1660-1800. Similar questions: why compose? why invent? Jessica’s data aligns with these pre-1790 studies.
— Scherer looks at the shift from patronage. Variation across countries. Does copyright aid the shift to freelance work? Scherer finds questionable support for this. No evidence on rate of creation or commercialization/distribution. Petra Moser has a recent paper that does not discuss and does not appear compatible with Scherer’s findings.
— McLeod discusses reasons to patent, e.g. patent to escape guild, patent to replace a failing guild; prestige; preemption. IP as legal insurance.
4) Zahr Said
— Book needed to be written. Lots of threads for future work
—What do we do about the data? Incentive story assumes money should play a role.
— Different disciplinary methodology, happily
Point #1
— Literary study. Bifurcated argument. (1) accept data gathered carefully, proxy these data for misalignment. (2) interpretive layer. Jessica is asking us to accept her readings. textual interpretation, but not a lot of discussion of multiplicity of meanings.
— Part (1) of the argument is convincing, part (2) not as much.
— Example on p. 186: how works arise vs. how they are disseminated. Only in footnote 11 of the appendix is there an acknowledgement of the textual interpretation issue, the possibility of alternative readings of the quotes.
— distant reading vs. close reading. Debate in literary theory. Franco Moretti as exemplar of strategy to treat literature as data. Distant reading. Digital tools. Analyzing different amounts of data.
— For example, IP as fluid. Jessica is characterizing the views, not relying on metaphor
— Here, close reading seems to be foreclosing multiple meanings
— Example, in chapter 1 on inspired beginnings, “find THE point.” Destabilizes larger categories?
— Maybe not such a law and humanities approach; maybe trying to write for a partly law & econ or patent-focused audience.
Point #2
— change happens across time. but this study is a narrative balance sheet, i.e. a snapshot. would love to see a narrative about income flow, i.e. a dynamic picture. Copyright law knows this happens.
— example from recent Diane von Furstenberg interview on NPR in which the designer discussed her career at different times and how she made different assessments of her work at different times
Point #3
— Memory. Accounts shift. Myth-making.
*Question and Answer Session After Panel 1*
1) Nicole Garnett
— deeper and broader knowledge in follow-up studies. fluidity in follow-up questions.
— motivating vs. enabling in IP. things that occur because of IP, what could you/would you do without IP, who would/could do this without IP.
— Robert Johnson contrasted with modern hip-hop artists in their relationships to IP
— side jobs, distributional consequences
Jessica’s answer
— Not all creators rely on copyright. Commissions play a huge role, for example, and those are not copyright.
— “Enabling” is the right word
2) Mark McKenna
—Simultaneously arguing against a narrative, but the interpretive lens ends up incorporating it
Jessica’s answer
— All interviews transcribed in a database. Boolean searches, etc. are possible
— One becomes invested in the words, and there’s a path-dependence to that.
3) Peter DiCola
— having used different empirical methods (interviews, surveys, case studies, observational quantitative studies), I have found personally that interviews provide the most solid foundation
— qualitative studies allow one to rule things out, especially about objective facts. more difficult when subjects are discussing their motivations.
— quotes are still available in the text for the reader to interpret. Jessica offering her interpretation does not foreclose the reader’s. we still have to trust Jessica’s selection of quotes.
— discussion of Petra Moser’s recent paper on opera; might be compatible because it focuses on a particular change in the legal regime in some Italian states. (Kara responded that she thinks Scherer discussed this same change and that he had different findings.)
Jessica’s answer
— Not overly concerned about cause in this research, as the economists Scherer and Moser are.
4) Daniel Kelly
— Two questions for Jessica
— How did you identify the interviewees? Book mentions snowball sampling.
— Geography — focused on the northeast?
Jessica’s answer
— Geography was Washington, DC and north.
— Identified relevant variables and select candidates based on this. Ask a lot of people. Confidentiality was provided.
— Interviewees had to self-identify as a creator or someone supporting creative work
— Variables included copyright vs. patent, new vs. old, independent vs. employee
— had to find a few people for each box created by these dichotomies
— based on preliminary interviews, rejected those who seemed too close to previous interviewee
— sent hundreds of letters, got some responses
— protocol is a bare-bones qualitative interview
5) Barton Beebe
— Race, class, and gender. Will focus on gender.
— How does this fit into the methodology. Theory as “soft,” quantitative as “hard.”
— Appreciated the “Mis-“ words. Prefix. Minor words to the major words. Exceptions to the rule.
Jessica’s answer
— gender and *hierarchy*
— particular audience
— women are in the sample. the genders denoted with the pseudonyms are accurate.
— in earlier drafts of the book, no names were used.
— sample is diverse ethnically and by class
6) Abraham Drassinower
— The fetish of the normative. Part of the world, descriptively. Hard for lawyers to avoid normatively. The fetish of the empirical opposes this.
— The fetish of cause vs. fluidity
— Law is part of the everyday. Tension between law and life. Law must cut life to make sense of it.
Jessica’s answer
— binary is false in other disciplines (they don’t feel traumatized), but there is this binary in law.
— There are moments of alignment
7) Kara Swanson
— Who is the audience for the book?
Jessica’s answer
— Law, policy, business people.
— Some business people have shown interest in restructuring employment situations.

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The Eureka Myth: Reputation

Posted on November 7, 2014 by rtushnet
Fourth Session: Reputation and Policy Take-Aways
Abraham Drassinower: what does thinking about misalignment tell us how to think about IP?  Move from debunking eureka myth to debunking the myth of progress.  Misalignment of IP with its own justifications, needs of its creators. Whatever IP is, it’s not an instrument of progress.  Realign it with its own progressive purpose?
Because you’re talking about misalignment b/t interview data and progress, you’re not talking about whether progress should be the focus of our attention.  Quantity is the wrong metric.  Social engineer with balances can’t figure it out.  The concept of value, and circulation of value, can’t provide sufficient foundation for the specifically legal concept of IP.  Like Holmes in INS v. AP who tells us that property is a social category.  But will qualitative approach answer the question either? If the problem is indeterminacy, then lived experience may not help answer the question of value.  Then IP remains unjustified as instrument of progress.
One conclusion: strong IP/maximalism is not correlated with progress.  Correction of mistake: gather more data but the justificatory mechanism remains collecting data to achieve progress.  But it seems at least as plausible to ask whether your empirical observation that IP doesn’t align with progress doesn’t mean that IP isn’t an instrument of progress.  Maybe it’s about something else.  Hard to say in the US though. 

More subtly: it’s the meaning of progress, rather than the nature of evidence to be deployed, that requires interrogation. But that seems to require not a recalibration of IP but rather a reassessment of what it means to gather data when you’re trying to justify something.  It’s very hard to get rid of the incentive story by looking at evidence.
Questions: (1) What is progress? (2) Is progress the same for all three cardinal branches of IP?  (3) How can data collection answer normative/legal justification questions? Not saying it doesn’t, just saying it’s not self-evident.
Joe Bauer: Difference between individual and corporate aims: corporation aims at maximizing rewards. But corporation is a legal fiction. IP is directed towards wealth for owners.  Are we as a society acting at our peril if a reduction in those rewards significantly reduces willingness to invest in IP.  (Well, how are the relative returns?)  Also, corporations aren’t one size fits all—financial rewards may play greater or lesser role.  Significant investment/unclear payoff may be different: movies; pharmaceuticals.
Should we fine-tune the rules to differ across types of work, authors, inventors, owners?  Should we give more attribution rights, and if so is the European model appropriate or some American version?  Copyright and patent are exclusive; is the implication of your analysis that compulsory licensing would be better?
Barton Beebe: IP as enabling rather than incentivizing—a key insight.  Creating conditions for play—connection w/Julie Cohen’s work.  How that relates to process over product: good IP facilitates the process and doesn’t allow incentivization imperative to destroy facilitation. Facilitation applies to second-generation artists; importance of derivative works comes out.
Shifting away from process into trademark law: is trademark law the same as attribution and reputation?  Not quite. Open source communities is very anti-IP but get very fussy if you don’t honor attribution rights.  Creators (note it’s a charged term) accept less money if you offer them autonomy and attribution.  Unalienated labor can be had more cheaply; they also want connections with consumers.  Make the market human to them; you can pay them less.
Book reports overreach; people become aggressive and fussy whereas underenforcement prevails in the rest of the book.  Human attribution is dangerous in the corporate context—the whole point of TM these days is not to indicate source but to obscure it—no, this shoe was not made in the Phillippines by an underpaid child, it was made by Nike.  Branding as authenticating source—old strict source theory of TM law has been replaced by anonymous source rule.  Book shows that everyday TM law isn’t about branding or persuasion but defamation/right of integrity.  A name is a creative act (Laura Heymann). 
(1) Star systems/mere mortals.  (2) What about those who don’t rise to the level of pro paid artist or who give up?  Adolescents’ views?  (3) Concept of the romantic author and how it might fit in. Romantic author as solitary voice/artist struggling in face of massification and speaks ex nihilo, creating something out of nothing.  A concept created in response to new material conditions of industrial production—secularization of Protestant tradition per Martha Woodmansee.  Never actually bought this as explaining copyright law.  We use the trope of the author creating ex nihilo to justify IP rights—if the author didn’t create out of a community, then he deserves all this money.  Silbey’s book creates image of people opposed to the market, working for other reasons, in opposition to industrial capitalism, but is that opposition really as opposed as all that? 
Market aspect to reputation: people who get to construct themselves as playwrights/novelists while being supported by spouses—if they’re wealthy that’s cool, if not we judge them horribly.
Mark McKenna: very few people wanted to talk about reputation here.  Hard to figure out what to say.  Merges’ reaction: this book fully justifies a strong attribution right overruling Dastar. But reputation is used in a number of different senses throughout the book by interviewees. Some talk about their reputation as scientists/artists—for being creative/innovative. Others talk about reputation in business world/ability to get deals done. Then there’s reputation as source.  Reductionist move to either talk about TM or right of attribution. But different uses may have little to do either w/TM or ©.  Attribution right would do no work for most of these reputational issues—the things that bothered artists most were some of the things they had the least justified claim to control, and giving control over those things to the artists might well be unconstitutional.
The more you see in TM law, the more you should worry about a free floating right of attribution. What counts as a “work” deserving attribution?  A piece? Whatever the author says? Who gets to say who’s a source?  Experience w/TM law is not promising.  
Why is the impulse to provide an attribution right to an artist and not to the people who stitch the shoes, who are also vital to the creation and might care a lot too.
If you were designing a legal system to deal with all these kinds of reputation, would want to think more about harm. In some cases the harms might have economic consequences but in others they might be purely emotional. Under what circumstances are those harms real? Or are they just idiosyncratic harms to the author?  Might see inverse relationship between most significant dignitary harm and greatest willingness to provide rights; thus his deep suspicion of attribution. Reputation is not one thing.
Nicole Garnett:  Some people respond to incentives and the Q is whether they’re producing what we want.  Decide what the “more” is and then investigate how the incentive works. 
Overreach/leakiness—all about optimal enforcement.  Book seems to give sense that level of enforcement is not optimal, but we never want 100% enforcement of the law. Fact of exclusion rights enables community; owner can tolerate intrusion on lawn because that won’t actually dispossess her.  What’s optimal level of leakiness?  Especially in communities where norms do more work than law.
Loren: Likes Traffix because court is clear that it’s concerned with harassment value of IP right: default rules that don’t allow quick dismissal can harm competitors for lawful behavior.  It’s that harassment value that is the overreach. Twiqbal has helped dismissal for ridiculous copyright claims.  What’s the harassment suit value of an attribution claim? That’s what makes her nervous.
Garnett: rights always raise possibility of harassment suits. Is it particularly bad here?
McKenna: tied to the remedy. If there were statutory damages available there’d be nuisance value to suits.
Loren: harassment value used to be much higher because of possibility of preliminary injunction.
Golden: making inequalities worse through just providing attribution? 
RT: Carol Rose: rights are means of communicating.  If they aren’t clear or are misunderstood, trouble can arise. Or different communities w/different norms intersect and clash.
Silbey: could be very hard to understand what interviewees meant by reputation. It’s a category that didn’t make sense as a whole.  [RT: could see it as a cluster of concepts/prototypes.] Point about blowback of attribution right—agrees with McKenna’s assessment.
Said: underenforcement—we have no duty to police ©.
Silbey: may have given them the category by asking; there are still multiple issues w/ meaning.
Kelly: culture and habits; mixed motivation could be consistent w/law and econ, but here’s one place where assumptions miss the boat by starting w/individual instead of more social view of the person, in context/social setting.
Loren: © and patent as driving different types of innovation than trade secrets, live performance, etc. As long as there’s sufficient respect for the distribution models chosen, it can work. Price discrimination/arbitrage: if it avoids a chosen distribution model then maybe it’s not justified.
Drassinower: legal construct of moral rights limits their scope: not a general defamation protection.  Did interviewees have a defined sense of what a reputation was?
Beebe: we didn’t talk much about the chapter on lawyers.  Lawyers aren’t the talent; they’re a cost center, as one interviewee says.  Was there a class division?
Silbey: trying to be helpful to people who don’t think they need you but they do.
Schwartz: litigators are problem solvers—may be seen differently than transactional lawyers.
Silbey: necessary evil (litigators). In-house tended to be more transactional, but many had moved between roles over time, except for patent specialists who only drafted patents or did audits.  Even young ones generally had varied experience.
Golden: reputation among informed peers/reputation among consuming public might differ.  Lawyers drafting patents have to avoid becoming inventors themselves.  Lawyers can also have involvement w/designing around.
DiCola: one bit in the lawyer chapter that he really liked was a music agent convincing an artist to take the money for a 30-second spot.  That’s a representative story—there was a moment when VW started licensing indie rock and it became ok because VW was cool; shift from “don’t sell out” to “I need the money.” 
Cohen: IP lawyers have a choice: discipline the talent by normalizing output that can be monetized, or they’re mediating between creators and firms, taking into account that firm’s demands can’t just be ignored but that talent has demands as well.  The people whose stories seem happy are those who are mediating.  When we teach IP, are we teaching a hermetically sealed causality story or teaching the need to mediate?  We can do the latter.
Professional responsibility questions: the Model Rules are litigation focused; don’t get at this delicate negotiation at all.  Institution-building as a goal.  Contrast: MERS and professional responsibility—people are going in to foreclose with no evidence, and now it’s a professional responsibility issue at the individual foreclosure level.  But nobody in power is saying that Covington did this incredibly unethical thing by building this powerful institution, MERS, at the behest of the top banks, even when it was absolutely foreseeable from day 1 that it would screw up the real property system.  Lawyers build stuff: they built Spotify; they built Aereo. That’s a kind of mediation too.
Golden: see constant demand by clients for noninfringement/invalidity opinions in patent; some lawyers seem willing to provide those.  You might orally communicate your opinion if it’s unfavorable; they might shop around.  That’s a product that comes from the lawyers, though of course it’s to overcome a problem created by lawyers elsewhere.

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Eureka Myth roundtable: Communities and Creativity

Posted on November 7, 2014 by rtushnet
Third Session: Communities and Creativity
Rebecca Tushnet: Silbey’s choice of subjects are those who are the targets of IP law: inventors, artists, various types of intermediary facilitators like lawyers.  They are very important.  (Unsurprisingly, they are not utility monsters, such as you might find by examining billionaires; they want enough but they also want to leave as good for others.) 
I want to talk about who’s not in these stories.  Jordan Ellenberg’s book on math, How Not to Be Wrong, tells the story of the military trying to figure out where to armor their warplanes for greatest effect at least weight.  They saw all the bombers coming back from runs with lots of holes in their wings and relatively few in their engines.  Lesson: Armor the wings better, right?  No!  Armor the engines, because assuming a normal distribution of bullet strikes, the evidence shows that an engine with more than a few holes in it isn’t going to make it back.
Who’s not making it back?  Interviewee Ted, in house counsel for bioengineering company, says: “the most successful inventors here are the people who are constantly looking for an edge, and looking at how to buck the system…. Always looking to game the system or something like that…. They were probably horrible juvenile delinquents in their youth.”  In an age of school to prison pipelines for poor and brown Americans, that’s a very charged story.
White people–especially white men –can afford to be disruptive.  Consider Kate Losse’s article, The Unbearable Whiteness of Breaking Things:
What Stanford does not teach young white men …, in the course of teaching them about startups, is that everything they are being taught—about breaking rules, taking risks, and not asking for permission—works especially well for them, and often only for them, because of who they are, what they look like, and all the associations their appearance does and does not carry. On University Avenue, white men who break things look … “cute”, not delinquent or scary, and this is why privileged young men are brought to Palo Alto in droves to learn and practice the business of what Facebook calls “breaking things”. At every turn this breaking of things is celebrated and encouraged. If you’re not breaking things in Palo Alto, you’re not doing your job.
…unless you’re not a young white man.
As Losse points out, the consequences of moving fast and breaking things are, for other groups, likely to be unpleasant and possibly lethal.  See also Jen Dziura, When “Life Hacking” is Really White Privilege.
This is not a criticism of Silbey: she went to where the creative folks making a living were.  And If you’re lucky enough to earn a living from your art, you’re probably white, to quote one of a number of articles about a report by artists analyzing Census data showing that nearly four out of every five people who make a living in the arts in the US are white.
Aside from differential risks of taking risks, what else may be going on? Silbey identifies two features of ongoing creative work: (1) hard work and labor, and (2) autonomous time and personal space.  Who has those latter things?  Who doesn’t?  Sometimes the interviewees describe taking more lucrative other jobs to make ends meet, which apparently could always be had, jobs that still left time and energy over for art.  Where are the other origin stories, of people who didn’t have that time and money but made art anyway? Silbey discusses Virginia Woolf’s Room of One’s Own, but only as an individual aspiration, necessary to creativity but not structurally there for everyone. 
The interaction between the individual and the community also highlighted for me the importance of communities of artists who were listening when each other spoke—and the lost histories of female artists, the women who have been forgotten—and I mean that in a very active sense—so that women don’t know they’re working within a tradition, as Joanna Russ sets out in How to Suppress Women’s Writing. Without that community, it’s harder to survive as an artist.
If reputation is important and law isn’t, that also raises important distributional questions. Silbey discusses reputation as identity, as social glue, and as form of expression and self-representation: but some people have spoiled identities, to use Erving Goffman’s term. Reputation and misattribution: if women’s contributions are perceived as less important, if white artists become popular with black styles, then the reputation economy won’t work the way we want it to.  Who gets to trust that they won’t be misread or read out of the story?  Might be useful to bring in critical race theory discourses about why people with less structural power might prefer formalized rules, from which deviations can be more clearly identified and fought against.
Finally, who are the people against whom these creators construct themselves? Marketing professional: “We are different than other companies, where we don’t say, ‘All right, now we own your property.’ We partner with them …. [I]t’s an ethical thing for us…. [I]t’s their baby, it’s their child, and we don’t believe in taking it away from them.”  Who does? Whose children are sold into metaphorical slavery, and who’s doing the buying?
Side comment: book suggests TM/brand management is key concern, but all we want to talk about is copyright/patent.  Why is that?
Torie Bosch: John Scalzi’s Lock-In, sf detective novel in which a number of people have lock-in syndrome: can’t move, can talk; those who can afford it use robots to move around.  Scalzi wrote Unlocked, a short companion work filling in backstory.  Publisher behind these: Tor, fascinating case study.  (Owned by Macmillan itself owned by Holtzbrinck.)  Most successful sf imprint.  Sell books without DRM (after an initial failed experiment w/that, which Holtzbrinck shut down).  Publisher continues to go after “pirates.”  After they went DRM-free, no discernable increase in piracy.  Publisher says: For their readership, essential and fair: close-knit community w/huge online presence, and closer fan-pro contact; fans very upset by DRM. 
Tor.com: focused on novella-length works.  Clever branding.  Published first five chapters of Lock-in and made Unlocked free ($1.99 as ebook).  One of the interviewees in The Eureka Myth creates multimedia platforms that allow franchises to create ecosystems allowing fans to contribute.  Way to get and give value. 
Peter DiCola: Feedback loops in creative process, relation between law and creators/inventors.  “Work makes work”: interviewee says that doing the work itself shows where the work should go. Perceptions of law shape behavior with then shapes law.  Preference for the sake of choice and preference for the sake of welfare are two different things—but these narratives suggest that creators have preferences, make choices, decide how well off they are, may change their preferences.
Process: process does work through the tangible.  At every point the process does leave tangible traces.  But a greater emphasis on the physicality of work, the time and space it takes, is important.  Maybe quality of work experience is what we’re trying to maximize: maybe there’s something special about being a full-time musician that we want to be available to some people.  IP might enable that. 
Utilitarian story isn’t one story, it’s a family; you can alter the calculus to take into account lots of things/preferences. Can we tell a better incentive story if there is one to be made? 
Feedback loop idea is also useful for talking about under and overenforcement.  People react to and play with the boundaries of IP law, making it a moving target.
Silbey: Publishers claimed that primary revenue driver was TM/reputation. Recognize that they’ll be pirated, but cared more about TM than textbook.  Taking DRM off might not matter if people want to buy it from this publisher rather than another.  (Presumably it also matters that school districts largely would prefer not to buy unauthorized copies.)
Loren: Multimedia guy: people don’t want to watch Shawshank Redemption on their phone, but they will read ancillary content like the story of Andy’s trial; textbook publisher now making its money on test sheets etc. Did it happen because of the shifting platform or because of IP?  She thinks it’s really the shifting platform, not IP-driven.
McKenna: relates to Q of how you structure the way you want to make money. Add-ons may be more attractive when you’re less likely to make money on the sale of the core thing.  Who decides how that business is structured?  Even in biosciences, different models of service/product. 
RT: Note that ultimately it’s the consumer who decides how the business is structured.  You can have exclusive rights and consumers can stay away in droves.  McKenna: it’s a dialogue: which package the business offers, or its choice set, can be structured by law.  RT: sure, but careful of rhetoric that firm has the “right” to choose its own business model.
Beebe: back to survivors.  How do you study the ones who failed?
Silbey: there are stars in this dataset and then there are people who make a living; several people in the dataset identify as artists/inventors but haven’t yet made a living from it.  Been thinking about if you were going to form communities to support work that isn’t made sustainably now, they need time and space.  We don’t have community centers around our nation that provide innovation labs, kilns, craft rooms, access to computers. Colleen Chien says mayors can do this.
Beebe: Is that progress if the artist is enjoying herself but not disseminating?  All aesthetic experience as craft, fighting the art/craft divide and looking for aesthetic experiences.
McKenna: infrastructure for creation: we could just have art in schools, as we used to. We tend to think about how to get stuff out of fully formed people, but we should talk about infrastructure.
Silbey: You do need communities to survive. Space is finding people who are doing things you’re doing and are not being told to do it in school but are choosing it and finding validation.
DiCola: Most IP academics/IP policy folks have stopped coming to the Future of Music conference; but people from HUD and Dep’t of Education come because they’re interested in this question—not about “cool” cities, but deeper policies.  One program: pilot program in schools to get musicians and artists teaching – another program allows them to work as musicians by working in the schools. 
Said: interesting to track people w/artistic aspirations from adolescence.
Silbey: people who weren’t making a living didn’t perceive themselves as failures, just on the way to success.  Do people who disband bands perceive themselves as failures? Award winning photographer left the industry and works in a family business because he was disgusted w/how he was treated.
Cohen: Diversity in people who don’t support themselves with art.  Photographers have “photo salon” once a month, with juried shows allowing people to build reputation, and at the highest levels you might be carried by a gallery.  Worries about firm distinctions between survivors and “failures”—salon has everyone from the very new to the expert; take stock of the whole.  State-funded support for the arts in Maryland is fairly racially diverse.
Silbey: RT was talking about the problem of inequitable distribution of self-fulfillment. There are people in the study who by many external standards would be “failures” but they don’t consider themselves to be failures at all. What are we measuring? Who wishes they could live an authorial life but dies unfulfilled? Who is not getting the chance to develop in those ways?
Golden: some communities may be more likely to arise than others. Story: Grad student in physics who said “I really like being a grad student in physics. It’s like being part of an all-male club.”  Both explicit and implicit bias.  How we should be assigning value to work.
RT: I don’t support the survivor/failure binary either. Nor am I really interested in personal satisfaction w/one’s own work as such.  (Many pro authors would flunk that test.)  I wasn’t really talking about people who go to photo salon, but the people who got discouraged or never got started.  Who learns that experimentation might get you arrested, harassed or killed?  (1) Of course amateur work is not failure!  I kind of have a thing about that.  (2) We often valorize survival when it’s not the result of personal factors or even moral luck but just luck. 
DiCola: superstars/winner take all markets.  Did anyone talk about being stuck in such a market?  No one can name the second best violinist in the world even though Yo-Yo Ma is probably not 100x better than that person. 
Silbey: they talk about randomness but not that.
DiCola: What’s bad about winner take all markets? One claim: too many people compete for the big payoff.  Instead of basketball or music, we need more engineers.  But why would an economist be confident in saying that?
Silbey: agent says “it’s my job to help my clients make money, and I’ll do that however I can.”  Even her perception, w/many big and little clients, is that she gets them enough. Some get a lot, and she can’t explain why, and others don’t get as much as she thought they would, but there’s not a lot of winner take all discussion. 
Laura Murray: how people judge their own success: peer recognition is a big deal both for artists and grant-making authorities.  That can be turned into cash in various ways, direct and indirect.  Some definitions also say you’re a pro if you spend more time on art than on other things, but that doesn’t work for a lot of artists.  If people aspired to do that, or an aspiration to make money, could consider them pros.  Not always about paying the rent. Some were privileged and had support from a spouse or other, but they wanted money as a sense of achievement/making people take you seriously.  Complicated semiotics. Others said that being on the cutting edge made you a pro; many were invested in distinguishing themselves from hobbyists even if they hadn’t made money recently or ever.  These communities do make distinctions; partly a function of the way that the arts are so little valued—a way of trying to get taken seriously and get recognition of expertise.
Loren: in criminal area, Head Start is great way to prevent crime: invest early, not late.  Same here.
Drassinower: the woman in Silbey’s interviews who didn’t try to publish her work: if we think about process as what matters, and not result, then whether this becomes publicly available is a result-oriented process.  If you don’t have a result-oriented conception, the woman is just doing her process.  If we want to say that at the heart of progress there’s some inherent respect for the process, then respecting the dignity of her process is to let her not publish.  Right of first publication!  Key element of progress which requires respect for the dignity of the author in at least this way.
Silbey: that same interviewee said she needed to write every day the way some people need to exercise.
Drassinower: survivors are not IP problems but social/political problem—how do we distribute the possibilities for self-fulfillment equitably. Not sure IP is the vehicle for solving the problem; they are rights of exclusion.
RT: but if your theory built on survivors is wrong, then you won’t get the results you want when you write the law.  That’s the point of talking about the airplanes: if you theorize about what made your survivors survive, you may make mistakes.  Attribution is an example. Current mechanisms for attributing authorship disadvantage women/female roles, for example; so changing the rules won’t necessarily do what you want.
DiCola: Mechanism: music is an industry built on copyright, and its gatekeepers put 90% men on stage at Pitchfork. Then the teen girls in the crowd don’t see themselves on stage, and that plays a role in what happens next.
Drassinower: I wouldn’t start w/IP; this would be tinkering.  Counterproductive to focus on social inequality from IP standpoint?
RT: I’m not saying we can use IP to fix inequality. Rather, I’m saying if our theory is built on what gets currently successful groups to produce IP, then changing the rules in ways we think will encourage more creativity may not do so, like armoring the wings of the airplane.  (Or, you know, extending the term of copyright.)
Said: if “survivor” has a utility as a concept, we should also frame the problem of silence around the people whose voices aren’t heard.
Swanson: European IP Soc.—pilloried by economists when she suggested that IP systems were gendered and discriminatory; they said that JK Rowling was making plenty of money. But: If IP matters so little in these creators’ lives, am I wasting my time thinking so much about IP? 
McKenna: innovation beyond IP—trying to reframe the issue to include lots of things we traditionally don’t think of as relevant.
Drassinower: really hard to grow up in Latin America and think of copyright as a basic problem.  We want to think in a more disciplined way about the role of IP in society at large. Indeterminacy of progress is part of the problem; IP can’t be the engine of progress in every direction, though Constitution says science and art.  In the mode of strategies, IP is less likely candidate for a big mover.
Loren: we don’t know what we want: “more.”  “Progress.”  How do you know what you want when you don’t have it?  So instead we let the market tell us.
[Catharine MacKinnon’s retelling of John Stuart Mill is all about this: what would we be like if we were free?  There are things you can do to find out, and in © they’d center around derivative works.]
Cohen: platonic backhand, you clear away all the mess and simplify; platonic forehand: having extrapolated causality from artificially simplified dataset, you offer normative prescriptions. The backhand is not normative. The problem w/law is that we have melded legal realism with positivism with law & economics: technocratic social planning.  Silbey’s book discredits the platonic backhand—have to go and talk to people, not just tell a causality story. But when somebody does that, we have to figure out what to talk about.

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