Deceptive whiskey?

Posted on July 8, 2014 by rtushnet

The Whiskey Reviewer announces a series evaluating the marketing claims of various whiskeys. What I found quite striking was that the claims of interest were very much centered around “authenticity,” both in production and in narrative:

  • Potemkinism: Does the company run what Chuck Cowedery labeled a “Potemkin Distillery,” where they claim to be a distillery but are in fact a bottler?
  • Back Story: Are there bogus elements in the company’s historical claims, and if so how bogus are they?
  • Marketing Flim Flam: Other elements of the company’s image and marketing practices that some find objectionable.

    • As with so many things, stories matter.

    H/T James Milles.

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    intent to use successful term in ads isn’t intent to confuse

    Posted on July 7, 2014 by rtushnet


    Overstock.com, Inc. v. Nomorerack.com, Inc., No. 2:13-CV-1095 (D. Utah June 30, 2014)
    Overstock sells a lot of stuff online: over one million products, with over six million customers last year. Nomorerack directly competes with Overstock, and has sold more than $420 million worth of products to nearly 5.2 million customers since it was founded. Overstock owns a number of registrations for OVERSTOCK.COM, and sued Nomorerack for using “overstock” in ads, like so:
    The court denied a preliminary injunction.
    First, the court found the similarity between the marks to favor defendants. (This might be an example of stampeding the factors.) Marks aren’t to be dissected, so the court rejected the argument that “overstock” was nearly the same as “overstock.com.” The marks have to be considered as they’re encountered in the marketplace, including Overstock’s stylization of its mark. By contrast, Nomorerack didn’t use a stylized “O” design and it didn’t use .com. It used “overstock” in combination with other words, such as “overstock clearance,” generally in all caps, and always with a reference to “nomorerack” or “nomorerack.com.” Though Nomorerack used text-based ads that didn’t have distinct stylization, the domain name was always clearly displayed in those. Thus, there was little visual or aural similarity between the marks. There was similarity in meaning: the sale of discounted products. But Overstock used the term to identify its company, while Nomorerack used it to identify a type of product or sale. 
    Next, the court found Nomorerack’s intent unproblematic. The court refused to infer intent to confuse based on Nomorerack’s knowledge of Overstock. Intent to copy a mark can justify an inference of likely confusion, but intent to copy a product can’t justify that inference; so therefore with awareness of the plaintiff. Instead, the evidence was that Nomorerack used a number of different terms in ads—“Cyber Monday, Black Friday, Free Shipping, Blowout Sale”—and settled on “overstock” because that word had the best performance. The intent was not to copy, but to sell more effectively. “Whether the success of this term is based on Plaintiff’s reputation and good will or some other reason is not clear.” Continued use after receipt of a C&D also didn’t justify an inference of bad intent, since intent at the time of adoption is key.
    Overstock argued that Nomorerack moved away from its own green and white color scheme to adopt Overstock’s red and white colors. But the evidence didn’t justify that finding; instead Nomorerack used a variety of color schemes in its ads. Intent weighed in Nomorerack’s favor.
    Actual confusion: All Overstock had were isolated, anecdotal instances of confusion, which could be disregarded, given the large volume of transactions at issue. Overstock received ten consumer complaints about Nomorerack, and Nomorerack produced over 200 complaints. Some consumers who bought from Nomorerack thought they were buying from Overstock; others thought that Nomorerack somehow “hijacked” their order; others believed that Nomorerack’s ad was an ad for Overstock; others believed that the parties were somehow affiliated. (Other than the ad-based ones, how do we know these incidents derived from ads using “overstock” in the text?) However, even in the evidence provided by Overstock, some consumers clearly recognized the difference. E.g., one consumer said “[s]ome items listed on Nomorerack.com are cheaper than the same items that Overstock.com has” and that they found “better pricing on nomorerack.com.” Plus, in the context of millions of customers and millions of sales per year, “relative to the total volume of sales, the limited evidence of actual confusion provides little weight.”
    Overstock argued that Nomorerack’s denominators were meaningless because we don’t know how many consumers saw the infringing ads. But that weighed against Overstock, which bore the burden of proof. It only provided a handful of complaints, which could be disregarded.
    Similarity in products/manner of marketing: this favored Overstock.
    Degree of care: The expense of the parties’ products varied widely, but price isn’t determinative. What matters is the consumer’s degree of care exercised at the time of purchase. Overstock argues that consumers trying to get a good deal wouldn’t be careful about the source of the offer, but Overstock’s VP of marketing said that a high percentage of its customers engage in comparison shopping, and Overstock prices products on the assumption that people are comparing prices. “Because both parties purport to offer items at discounted prices, the Court believes that consumers will exercise care to find the best price for the product they seek to purchase, rather than purchasing the item on impulse.” This favored Nomorerack.
    Strength of the mark: OVERSTOCK.COM was incontestable, but that didn’t make it strong. The court found the conceptual classification “close,” but ultimately “overstock” was descriptive: it conveyed the characteristics of the products, that they were excess or surplus inventory. Overstock originally began as an Internet-based liquidator of excess or surplus inventory. Overstock argued that it now carried more goods and services than that, but descriptiveness doesn’t require that a term convey all of a product’s characteristics, uses, or functions. (And relatedly, a term can be descriptive of some of a business’s products/services and be descriptive for the business as a whole—e.g., In re Quik-Print Copy Shops, Inc., 616 F.2d 523 (C.C.P.A. 1980), where the business provided services other than quick printing.)
    Commercial strength: Overstock provided evidence to support a finding of commercial strength. It submitted a study indicating that approximately 73% of United States consumers and 89% of online shoppers had heard of Overstock.com or “the Big ‘O.’” The commercial strength of the mark made up for its conceptual weakness, making the overall factor favor Overstock.
    The particular factors favoring Nomorerack indicated that confusion was unlikely. Thus, the court didn’t need to evaluate Nomorerack’s descriptive fair use defense, though it noted that Nomorerack’s evidence on this was compelling: it submitted evidence that it wasn’t using the term as a mark (query what would count as “evidence” of this), that the term was descriptive, and that its use was fair and in good faith.
    Belt and suspenders: Overstock also didn’t show irreparable harm, given the minimal actual confusion, and given that its evidence of lost sales suggested that cost and product selection could explain consumers’ choices to buy from Nomorerack instead of confusion. By contrast, an injunction would require Nomorerack to stop using one of its most effective ad campaigns, harming it.
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    Your daily unauthorized use

    Posted on July 4, 2014 by rtushnet

    Geisinger Medical Center is expanding.  Here’s one of the images of what the new version will look like:

    Okay, but who are those handsome devils (also in Slide 17 of the Geisinger slide show)?

    Could it be Sam and Dean Winchester, as portrayed by Jared Padalecki and Jensen Ackles?  (Screenshot from Supernatural 5×08, Changing Channels.)

    I must say, I admire the dedication of whoever put them into this presentation.  Incidental use?

    I’ve covered “unexpected Jensen Ackles in advertising” before; I wonder how many other non-A-list actors this happens to. 

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    NY statutory law covers B2B false advertising, but common law unfair competition doesn’t

    Posted on July 3, 2014 by rtushnet


    Leason Ellis LLP v. Patent & Trademark Agency LLC, No. 13 CV 2880 (S.D.N.Y. July 2, 2014)
    Leason Ellis (of Trademark Blog fame) sued PTA for false advertising, unfair competition, deceptive business practices, and tortious interference with prospective economic relations. Here the court grants in part and denies in part a motion to dismiss.
    The complaint alleges that PTA “seeks to confuse trademark owners into purchasing services under false color of authority,” holding itself out as a government entity (or as affiliated with the USPTO) “by using a misleading name and website, and by employing a website URL located in the “.org” top-level domain instead of the ‘.com’ top-level domain (i.e., ‘www.patenttrademarkagency.org’).”  PTA allegedly mails confusing “reminder” notices to trademark owners that appear to be government-issued and falsely state the owners’ trademarks are about to expire. Instead, the notices are solicitations, which don’t disclose that the fee charged by the USPTO to renew a trademark is $100 per class, whereas PTA charges $985 to renew the registration of one “class” of goods or services and $385 for each additional class.  PTA’s website says “[w]e are not lawyers and do not provide legal advice,” but Leason Ellis alleged that defendants nevertheless advertised legal services/engaged in the “unauthorized practice of law” by appearing before the USPTO without a law license in violation of certain USPTO regulations. 
    PTA allegedly solicited Leason Ellis’s clients and potential clients, leading clients to complain to Leason Ellis and causing confusion.  Leason Ellis alleged that these efforts “create a false and deceptive representation of equivalence with the legitimate trademark-related services provided by those such as [p]laintiff,” thereby unfairly “diverting business” from plaintiff and allowing defendants “to unjustly profit from providing inferior services to unsuspecting trademark owners.”
    The court concluded that there are only two bases of liability under §43(a)(1), and if you choose (B) it must be false advertising, as opposed to (A)’s false association.  Leason Ellis alleged only the former, using various theories.  PTA argued that Leason Ellis lacked standing; the court disagreed, given the allegations of damages.
    However, the common law unfair competition claims had to fail.  New York courts have now clarified that there are “two theories of common-law unfair competition: palming off and misappropriation.”  That’s it, despite earlier broad statements.  Leason Ellis alleged neither.  Alleging that the public confused the PTA with the PTO didn’t matter in the absence of a plausible allegation of confusion of PTA with Leason Ellis, or even with law firms generally. 
    By contrast, GBL §349 and 350 claims survived.  The challenged practice must be “consumer-oriented,” but businesses can be consumers in appropriate circumstances, which were present here.  A claim under these statutes must allege consumer injury or harm to the public interest; the allegations, if proven, would involve public harm.
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    AU Gender/IP call for papers

    Posted on July 2, 2014 by rtushnet
    The Women and the Law Program
    and the Program on Information Justice & Intellectual Property
     American University Washington College of Law 

    Call for Papers: Eleventh Annual IP/Gender Symposium
    Save the Date: Friday February 27, 2015

    This year, we will engage in a broad discussion of “Reimagining IP/Gender: The Next Ten Years of Feminist Engagement with Intellectual Property Law.” The symposium will take place in Washington, DC on Friday, February 27, 2015.

    Rather than focus discussion on particular cultural practice, such as the creation and dissemination of fan fiction or the stewardship of traditional knowledge, this year, we seek papers and projects that address the full spectrum of feminist/queer theory and all aspects of intellectual property and information law. We encourage submissions from scholars, creators and activists who have not yet engaged with intellectual property law to explore how this legal space might open up new insights regarding the production of knowledge, commodification, definition and valuation of women’s work, and other areas of feminist and queer inquiry. We also hope to spur intellectual property scholars to explore how the tools of deliberately intersectional feminist and queer theory can shed new light on the challenge of creating intellectual property law that fosters social justice. 

    Accepted papers will be considered for publication in the American University Journal of Gender, Social Policy, and the Law in a special symposium volume. 

    Additional information, including some possible topics, can be found at: pijip.org/2015-ipgender-call/ 

    We are interested in projects that relate to specific case studies, as well as more synthetic studies of these topics. We also welcome projects that include performance and demonstrations in connection with specific projects or overall themes. Please visit pijip.org/ip-gender/ for a complete list of past presentations. Proposals from all disciplines, including law, women’s studies, queer studies, education, communication, cultural anthropology, development, medicine, sociology, and the arts are not only welcome, but encouraged. 

    If you are interested in taking part, please submit a 250-500 word précis of your project, with some indication of where your work on it stands, as well as a current C.V., by Sunday, July 27, 2014, using this submission form. We will notify you of whether we will include your proposal in the program no later than Friday, August 8, 2014.

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    PTO/NTIA upcoming copyright roundtables

    Posted on July 2, 2014 by rtushnet

    If you want to speak up for remix culture and are around Berkeley or LA, you can still register for the Los Angeles and Berkeley Green Paper Roundtables.  Registration is open for the Los Angeles roundtable until COB July 8, 2014 and will remain open until COB July 9, 2014 for the Berkeley roundtable.

    The Los Angeles roundtable will be held on July 29, 2014 at Loyola Law School, Walter J. Lack Reading Room, 919 Albany Street, Los Angeles, CA. The Berkeley roundtable will take place the following day, July 30th, at UC Berkeley School of Law, Booth Auditorium, 215 Bancroft Way, Berkeley, CA.

    These Green Paper roundtables will focus on the following topics: 1) the legal framework for the creation of remixes; (2) the relevance and scope of the first sale doctrine in the digital environment; and (3) the appropriate calibration of statutory damages in the contexts of (i) individual file sharers and (ii) secondary liability for large-scale infringement. Register to participate or observe.

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    court enjoins company’s claim to be another company’s founder

    Posted on July 2, 2014 by rtushnet


    Galvotec Alloys, Inc. v. Gaus Anodes Intern., LLC, 2014 WL 2918581, No. 7:13–CV–664 (S.D. Tex. June 26, 2014)
    Galvotec was founded in 1984 by Rogelio Garza and brothers Luis Miguel and Ramon Galvan. Gaus was founded in 2005 by a third Galvan brother, Juan Antonio. They compete to produce sacrificial anodes for corrosion protection of structures used in the oil and gas industries; there are 3-4 US-based competitors. Galvotec has about 70% of the market, and Gaus now has about 15%. Galvotec owns registrations for GALVOTEC and GA.
    Galvotec challenged Gaus’s use of the Galvotec mark “only insofar as Gaus has claimed corporate affiliation with and prior ownership of Galvotec in its advertisements and personal dealings with customers.”  A Gaus witness testified that the three Galvan brothers, plus a fourth, formed a Mexican parent company that used the name Galvotec and was involved with producing sacrificial anodes.  Galvotec disputed that the name was used to refer to that parent company.  But regardless, Galvotec provided uncontested evidence that it was separately formed as a US company in 1984, that the two Galvans who helped found it sold their shares, and that those shares were transferred to Garza in 1987.  Gaus, however, claimed on its website that it founded and sold “Galvotec,” and evidence was offered that it continued to claim that Gaus or Juan Antonio Galvan previously owned Galvotec.
    The court found that this claim, in the US market, was likely to be interpreted by customers to mean plaintiff Galvotec rather than the Mexican parent formed by the Galvan brothers.  Allowing the claim to continue “would perpetuate Gaus’s ability to divert to itself the reputation and good will created by Galvotec.”  A preliminary injunction against this misleading representation wouldn’t hurt Gaus.  (Is this a trademark claim or a false advertising claim?  What’s the role of Dastar?  If this is a false advertising claim—which it might have to be under Dastar—is this explicit or implicit falsity?  I’d be willing to go for falsity by necessary implication, given the ordinary meaning of Galvotec to the US marketplace.)
    However, the court denied an injunction as to the GA trademark.  Garza testified that Galvotec used the GA logo since 1996 as an abbreviation of Galvotec Alloys, Inc., and that customers have come to refer to Galvotec-produced anodes as “GA” anodes.  Gaus’s witness testified that the Gaus logo, using “Ga” or “GA,” signified the element gallium, the fact that sacrificial anodes are also known as galvanic anodes, and the Galvan family name. “GA” is followed in the logo by “US,” to signifiy Gaus’s US base.  Gaus has marketed itself as GaUS and GAUS.
    Galvotec failed to show irreparable harm.  Its substantial delay in seeking a preliminary injunction demonstrated that there was no urgency.  Gaus has been one of only 3-4 US-based competitors since 2006, so Galvotec couldn’t claim only recent knowledge of its existence or use of GA.  Garza admitted that he learned about Gaus in 2008, and then registered GA as a mark, advising Gaus of its alleged infringement in 2010.  Galvotec then waited until December 2013 to seek an injunction.
    Relatedly, “given that Gaus has been operating under its name and logo since 2006, an order essentially requiring that it change its name to continue operating would result in damages, especially if liability issues are resolved in Gaus’s favor.”  Given the harm to the defendant from a preliminary injunction plus the delay, the preliminary injunction would be denied.
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    Court applies Lexmark to TM case, in the alternative

    Posted on July 2, 2014 by rtushnet

    Ahmed v. Hosting.com, 2014 WL 2925292, Nos. 13–13117, 14–10026 (D. Mass. June 27, 2014)

    This isn’t a difficult case, but it represents the first move towards applying Lexmark to §43(a) in its entirety.  Only time will tell whether this will be an eBay v. MercExchange-like change in the way trademark litigation works, or a diversion.
    Ahmed sued Hosting, Facebook, and some John Does for infringement of the marks “The News International,” “the Jang,” and “Geo.” (These marks apparently are in use in Pakistan by a company known as Jang.)  Hosting and Facebook moved to dismiss.  Ahmed claimed an interest due to trademark applications filed by a company called Axact, but alleged no connection between Axact and himself.  When Jang learned of Axact’s applications, Jang sued it in Pakistan, and the High Court of Sindh at Karachi issued an injunction ordering Axact to refrain from trying to undermine Jang’s trademarks; Jank also filed an application in the US for “The News International.”  Axact assigned its applications to Ahmed; the PTO refused registration.
    Obviously there was no standing to sue for infringement of a registered mark. What about §43(a)?  The First Circuit has used a “reasonable interest” test, looking for some degree of commercial injury to the plaintiff.  Ahmed lacked standing under this test.  He claimed damages to his business and goodwill, but failed to allege “specific facts that establish any causal link between Hosting’s use of the mark and the alleged injury.”  He didn’t identify his type of business or his products and services, or how they were adversely affected by defendants’ use.  Nor did he allege his own use in commerce; the rejected trademark application wasn’t enough to establish a protectable interest.
    In the notable part of the holding, the court commented that the Supreme Court “may have supplanted the reasonable interest test” in Lexmark.  Though the court acknowledged that the Supreme Court was interpreting §43(a), it found it “unclear” whether the holding extended to §43(a)(1)(A) false association claims.  Fortunately, it didn’t matter, since Ahmed failed to show standing under the Lexmark test too.  (This reminds me of early cases applying eBay only in the alternative.)  Lexmark requires “a two-step process: a zone of interests inquiry and a proximate cause analysis.”  The zone of interests covers those who “allege an injury to a commercial interest in reputation or sales.” Proximate cause requires “economic or reputational injury” that isn’t “‘too remote’ from the defendant’s unlawful conduct.”
    Here, Ahmed’s allegation of damage to his business might “hint at” a commercial interest, but there weren’t enough facts alleged that, if true, would substantiate his assertions. A mere legal conclusion of injury wasn’t enough in the absence of facts establishing either a commercial interest in the mark or a commercial injury caused by the alleged infringement. (And here is where Lexmark might have some bite, depending on how it’s read: other plaintiffs may also have difficulty telling the story of how confusion harmsthem, even if it occurs.) 
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    spy in the house of conservative IP thought

    Posted on July 1, 2014 by rtushnet
    American Enterprise Institute Center for Internet, Communications, and Technology Policy
    Copyrights and innovation: Understanding the debate
    Moderator: Jeffrey Eisenach, AEI: 80% of market cap of Fortune 500 is from various forms of intangible property.  Different from traditional capital.  (RT: Well, it was never the mills alone; the knowledge of how to run them always mattered a lot.)  What is a free marketer to think?
    Panelists:
    Jerry Brito, Mercatus Center, GMU: Divides us because seen in moral terms: for/against property.  He doesn’t have strong moral © convictions, more pragmatic.  © is a tool that governs uses to promote a public good: access to expressive works.  Without ©, we’d have movies and poems, but fewer.  Same reaction as to other tools of gov’t to promote a public good: like cap and trade, or taxi medallions. As conservatives, we should apply the same critical thinking to © as to those things.  How do we know that the gov’t when setting the boundaries of the property right isn’t screwing it up?  A central planner has a difficult time getting the right combination of institutional rules.  Public choice: when you have a gov’t tool, interests will organize to ask for boundaries in their own favor. 
    First © act after the Constitution was limited to maps, charts, and books.  Framers knew about music and art; just thought that they’d get enough of such works without the subsidy.  Today: fashion designs are excluded; is that the right balance?  First Act had 14 year renewable term, and required registration etc.  Today the term is life + 70. How do we know if that’s not enough or too much?  As conservatives, we should agree that retroactive term extension is bad.
    Mark Schultz, George Mason University School of Law: Compatibility of © with free markets, in principle and as applied.
    In principle, if you like free markets you should like ©.  As a property right, it supports liberty.  Property rights support independence: when people can own the fruits of their productive labor, they can support themselves and lead a truly productive existence. Owing your existence to others leaves you constantly in peril.  (Oh for a feminist reading of this.)  Finding willing buyers, not gov’t or powerful patrons = independence, allowing development of ideas freely and perfection of craft, flourishing culture. Property rights also free sphere of private action. Rights to exclude etc. help you live a private life: our own homes, phones, churches, businesses, and other private spaces facilitates economic freedom as well as cooperation, or simply being left alone as we choose.  © facilitates millions of mutually beneficial transactions.  Litigation is unfortunate exception to peaceful rule of productive cooperation. Investment/security enables private market where people engage in free expression for their own edification and entertainment (I thought it was for $ if © was the reason, but ok).  Third, property gives you a stake in self-government.  Copyright is an engine of free expression: helps generate the works that lead to reflective democracy and self-gov’t; leads to class of people who support free expression b/c they make a living from it.  Gov’t doesn’t do as well as property rights for liberty.
    As applied: the institutional and legal details matter. ©’s scope is actually very narrow, protecting expression and not ideas.  It’s a force multiplier for multiplication of ideas, allowing them to proliferate freely.  © is a narrow property right, as popular entertainment shows.  (Why shouldn’t it be a broad one, given the above?)  Modern © as a product of lobbying: misidentifies the problem; it’s a problem of overregulation—© has too many price controls, compulsory licenses, and people lobby to protect themselves.  Statutory rate for music under 1909 act was 2 cents, and lasted 70 years. We’ve never had a free market in this part of the music industry. When you live under price controls, of course you’re going to lobby in self-defense.  To the extent © deviates from free markets, the problem is not enough property.  (But still a narrow one?  I am confused.)
    Tom Palmer, Atlas Economic Research Foundation: Labor/desert theory—he’s skeptical of this. Hard work can lead to nothing deserving of reward if it’s not of value; hard to capture the value of a reputation. Personality theory: artist has claim against patron if art is put in ugly frame. Not a fan.  Utilitarian claims: we get more of something value.  He’s also skeptical. Did IP generate hip-hop? 
    Skeptical of liberty claim. Property claim in a song is that Mark can say I can’t sing it. But that infringes on my liberty in a way that saying that you can’t go into Mark’s home and use his typewriter doesn’t. Restricts my body, my own equipment.  That’s not a silver bullet; people can innovate around all the stupid things policymakers do. © law is driven by rentseeking: term extension as clear example. Perpetual extension of right?
    Doesn’t believe patent promotes innovation either, where patent mills are shaking down companies systematically. Forced to sign nondisclosure agreements after shakedowns.  Does not promote innovation.  Not much evidence it works in the arts either.  Asian meeting with lobbyists from Hollywood etc., trying to convince them that US IP law was essential to economic growth—but the one plausible thing they didn’t talk about was TM law, which is important because it protects against bad drugs. Not so much Hollywood and Silicon Valley—protectionism.  Software industry/Hollywood arguments about lack of US standard laws—harm is calculated on unreasonable basis, their market price rather than what would have been paid in reality. What we really need is good model for price discrimination, not US IP. Extending ©—there’s little evidence supporting that.
    Stan Liebowitz, University of Texas at Dallas: Not sure why he’d view interference w/use of © work as any different than not being able to drive my car. Either way, it’s something you want to do that I don’t want you to do.  Free marketers do have surprising divergence on these.  Markets are better than government; should © be treated differently than real property? It always has been. But it’s not clear that it needs to be.  © is just property, relatively recent property.  People still look at it as new and created by gov’t. But we take for granted the fact that the gov’t protects property; without gov’t protection of property we’d have anarchy/chaos.  (Cf. claim a few sentences ago: markets are better than gov’t.) 
    © as monopoly: fact is that © doesn’t provide any more monopoly than owning my car provides me a monopoly. Just owning a particular piece of IP. 
    © as restriction of creativity: people want to use other people’s work, but you can create a work from scratch and then you don’t need to worry. If you want to borrow someone’s characters, ideas, or thoughts, you shouldn’t be allowed to use it for free any more than you should be allowed to use someone else’s land.  (Yes, he said ideas, though I presume that was a slip of the tongue, possibly a Freudian one.)
    © as for corporations: Sure, some corporations benefit. Small guys benefit as well, just as in most other markets.
    © as lasting forever: Crazy. Lasts longer than it used to, but it won’t reach infinity, and that wouldn’t necessarily be a bad thing anyway.
    © as limiting free speech: No, it just eliminates plagiarism. (I’m embarrassed for AEI.)  You can use others’ ideas, just not their words.
    Brito: There wasn’t much disagreement, though Liebowitz’s argument about the song/car ignores rivalry.  There’s still a song left over to sing.  Still broad agreement that © is property and generating innovation is good.  What we need to get deeper into is the contours.  Compatible with the free market, but what’s the difference between © and taxi medallions, also property?  Restricts people who don’t have them from driving; inheritable/transferable; lobby gov’t to protect it.  Sure they’re compatible with the free market, but why are we more skeptical of medallions than of ©?
    Schultz: That’s not hard. No one created taxi medallions; they’re a gov’t entitlement. People create expressive works through expressive labor. (BUT NOT COPYRIGHT; people do create taxis too.) When one labors, all labor is ultimately productive intellectual labor when we create something new in the world.  We say people deserve to own copyrighted works because they contributed something and because they need to own that thing to live flourishing lives.  Ownership as rivalry—but all property rights impose burdens on others’ liberty. Your ownership of land makes me walk around it.  Proves too much.  Liberty is not “I do what I want”; grown up understanding is ordered liberty, reconciling competing claims/rights, and that’s what property/copyright does.
    Palmer: Rivalrous v. nonrivalrous: good reason to have property, because it avoids conflict over rivalry. When there’s no property as in developing world, people fight over claims.  Property allows us to live together in peace. But that doesn’t carry over to someone in another country singing a song I wrote.  Comes down to a theory of labor as desert. People work hard in the fashion industry; how horrible they don’t get IP protection—why not?  We didn’t have © protection for foreigners until late in history, but Dickens made a bunch more in the American market than in Britain anyway through contracts.  Similar story with Tolkien, who didn’t register.  People could support him as a living by buying an authorized edition, and they did.
    Free speech: Scientology showed that copyright claims can suppress free speech by controlling texts.
    Liebowitz: you can sing a song without violating ©, but you can’t record it. (Um… Why is the lack of a private performance right/exception for certain noncommercial public performance ok to him, anyway?)  Nonrivalry: true, it doesn’t get used up, but the question is whether that should be crucial.  Let’s say your car depreciates over time, and not by use.  Should someone be allowed to use your car while you’re sleeping because there’s no interference with your use and no harm to you? 
    Palmer: the option to use a car at any time is valuable because of the rivalry.  (E.g., you wake with an emergency!)  Embedded in sleeping is the possibility that you awake.  (Liebowitz really does insist you must sleep in his hypothetical, because that is what makes his hypothetical work, or not work, in that once the car is entirely nonrivalrous it is difficult to see why this magic car is indeed any different from copyright.)
    Liebowitz: yes, there are ways around ©, but if you read the work you see British authors’ payment was less than they could’ve gotten by a considerable margin.  Dickens hated it.  Being first to market doesn’t work as well as it used to.
    Atkinson (?): we snuck on to plane because it wasn’t full, and snuck into hotel because it wasn’t full, and snuck into movie because it wasn’t full: no harm because nonrivalrous?  Taxi medallion: gov’t could produce a medallion for moviemakers, and you could only make a movie if you buy the medallion. That’s not what we have here.
    As a VC if they’re willing to fund a startup without IP. Vast majority are unwilling—no IP, no monetization.
    Incentive component v. rights: basically no incentive effect on individuals like him—not writing for money. But has a pro writer friend who supports his family by writing; without © he wouldn’t be an author.  Rights: would be upset if someone were to take his book and publish it under their own name, though he doesn’t make money.  (Why “under their own name”?)  It’s still his property and he has a right.  Seems like a race to the bottom: who can agree to get rid of the most gov’t. He doesn’t like air quality and taxi medallions.  Isn’t less gov’t on © even more libertarian?  No, it’s not, because without it you end up with more gov’t and not less.
    Jay Rosenthal, National Music Publishers Ass’n: Songwriters—in Nashville, about 30,000 standalone songwriters 20 years ago. Problems with © and piracy: only a couple hundred. We’ve lost a whole generation. Framers weren’t thinking about amateurs or YouTube—they were thinking about pro authors.  © has come full circle—it’s supposed to protect property, and he believes the empirical story in that a songwriter who gets paid will continue to write songs while one who doesn’t, including by being unsuccessful, will choose another job. You can support a © property interest while being critical of how gov’t has been bought.
    We should repeal §115 compulsory license.  Led to incredible disparity of value/undervaluation of musical compositions.  Right now 9.1 cents per record; labels tried to get it down to 6. Labels aren’t subject to compulsory license.  Conservative theory should focus on compulsory licenses.  There might be argument for noninteractive public performance of sound recordings, but in other areas it’s time for the free market to work. We’ve never had a free market, and conservative theory could help here.
    Jeff Bloom, Dignetwork: comparisons to car are oversimplifying. We wouldn’t be here for a seminar on trespass. The unique thing is not what © is but how you infringe.  © owners deserve compensation, but look at history of how content community has gone after tech offers very important lesson. They challenged the phonograph, the VCR, the DVR, the remote DVR, the commercial-skipping remote; won only against Aereo; courts recognized there has to be a balance. If the consumer is legitimately paying for content, shouldn’t you have the right to record it when you want? Skip ads? Watch remotely on iPad?  Impact on economics of consumer and tech are really important. 
    Tom Sydnor: Would like to see debates moved past tired and inaccurate examples.  © is not like cap and trade.  Congress does not have to act like a central planner—it doesn’t prescribe outcomes/outputs. It’s a tradeable property right. If you create something with value, then you have control over how it’s disseminated. If you create something without value, your © is worthless. (Unless you use it to block someone else, of course.)
    Framers protected books of plays and musical compositions—it’s not new.  Also, it was the first market focused copyright act, not the Statute of Anne which had a general compulsory licensing provision.  1790 Act didn’t have compulsory license; Framers trusted markets and we should follow their lead.  (But for life + 70, and with performance rights?)  Framers used international norm for term.  Our current norms for copyright terms are prescribed by treaty—Berne Convention, negotiated by Europeans, not by Hollywood.  US was not party to that treaty.  France & Germany wanted life + 70, so they had a departure from national treatment.  (Note the misdescription about life + 70 versus life + 50.) We can make this system work by ensuring that people have enforceable rights.
    Neil Fried, MPAA: Constitutional principle behind © is that it is ultimately good for the consumer: rewarding people who make things gets you more of them. Creating a marketplace. Allows infinite variety of market relationships—consumers, producers, distributors can arrange their own relationships as tech changes. Working remarkably well.  100 online legal video services; consumers accessed 5.7 billion movies in 2013. © drives innovation to generate a marketplace. The notion that we need a balance with consumer welfare is a mistake.
    Schultz: Push back against narrative that creative industries are at odds with innovation.  Creative industries’ content serve as a platform for innovation.  Motion pictures are licensing widely (if you can’t beat them…); so are publishers and music industry. Individual creators like George Lucas and James Cameron invest to create new tech to create movies we all enjoy.  There is no inherent conflict. 
    Larry Spivak, Keynes Center: ability to make costless copy is part of the issue, but free is never the right price.  (I’m sure glad the AEI didn’t know that when it hosted this free event!) Our studies show that theft is not costless to society. We put out a paper looking at the giants of conservative and libertarian thought: Von Mises, Hayek, Friedman—© is completely consistent with laissez-faire economics and doesn’t create monopoly. Justice Dep’ts IP guidelines say IP doesn’t create monopoly.
    Ryan [x] from Competitive Enterprise Institute: gov’t develops rules to limit property where it’s harmful, like numerus clausus. Makes property better with limits. ©: the goal is not to subsidize industry but to bring us closer to optimal amount of creation, because DRM and contracts aren’t good enough.  Q whether we should propertize something is fact-specific. Many things people create could be propertized but shouldn’t be because costs are too high/things work pretty well most of the time. With nearly perfect DRM, we might not need much ©, but right now it’s a legit tool.
    [x], Federalist Society: Standup comic; jokes not subject to ©. Standup is harder than it looks—1 hour act takes a year to develop. Easy to steal. Rivalrousness: he thinks jokes are rivalrous because they can be told too many times. Comedy/creative work can depend on novelty/reaching the market first/association with your brand.  Don’t we have to consider the relationship with the public as we don’t do with other property?
    Palmer: there’s a lot of innovation w/out IP and the burden of proof is on those who would demand propertization. 
    Brito: comedy is an example of where you don’t need IP. There’s no dearth of comedy available. (Guy says it’s stolen; Brito asks what that means.) There are internal sanctions; we see a lot of innovative comedy without copyright. Does more copyright get us more expression remains a question.
    Liebowitz: he hears the argument that people produce anyway. Maybe more songs are created now every year, but they’re garage band versus professionally created.  Burden of proof should be: every other market has IP.  Increased payments = increased supply. So the burden of proof should be on the anti-copyright.  IP supports professional careers; you get paid.
    Shultz: Comedy markets are not bereft of IP; aspects are protected by © and TM. So there are ways of protecting intellectual labor. Sometimes norms can work, but two sad things: (1) sometimes when the system fails there are actual fights—that’s not a good thing. Property rights exist to stop violence. (2) They work with people with equal power, but people with more power get away with flouting the norms. Normative systems don’t always protect the weak against the strong.
    Jared Myer, Manhattan Institute: Miley Cyrus owns her rights to her songs longer than if I cured cancer. Doesn’t that seem out of whack?  Retroactive extensions: are those ok?
    Tom Sydnor: If © owners could get 20 years of exception-proof protection, no limitations or exceptions, idea and expression both, they would take that. © and patent differ fundamentally because scope of rights is radically different. Historical differences also matter. Rights of author approach has always mattered.  Not just a term picked out of a hat; differs from patent context.  (Actually the multiples of 7 approach historically applied to both, possibly arising from Biblical/apprenticeship heritage, as a great unpublished paper I once read argued.)
    Eisenach: length of term issue—Walt Disney isn’t more likely to have created Mickey because the copyright term might someday be extended, but that’s the economic event we’re trying to affect. Instead it’s whether Disney continues to invest in things people value, which is enabled by ability to appropriate part of value created by Mickey.  (Um, that makes no sense. Why shouldn’t other people be able to acquire capital for their new works by using Mickey? You first have to decide that Disney is a better user of Mickey-related capital than any other possible producer, and that is really not a “free market” position at all.)
    Atkinson (?): Nobody really cares if you can’t access Miley Cyrus.  Patents are different because we want to spur innovation and then open it up to other people, allowing others to develop derivatives. That’s very different than ©; we don’t care whether Miley Cyrus is open or closed from a societal perspective; by contrast there’s a big societal benefit from opening patents up after a short period.  (Whoa.  Also, again, my kingdom for a feminist reading; again this was a pretty direct quote.)
    Liebovitz: we don’t often talk about it, but something underneath markets makes them work, and that something is government.  Gov’t is what we expect to be in place making sure the property right exists and functions.  It’s not the gov’t creating/interfering.  No easy resolution to this clash of perspectives.
    Palmer: Would a VC invest in a firm without IP? No, because we have an IP system. A great deal of activity is response to the law, which should be surprising to no one. People do respond to incentives; we shouldn’t raze them, but should be skeptical of constant extension. Retroactivity was a violation of the rule of law. If you want a new incentive, do it going forward.  The industry capture that produced term extension is a good warning bell of the dangers here.
    Claims made about innovation are often in a particular institutional setting. Aircraft patents: had a compulsory patent pool for a long time.  Same as no patent system at all. Hard to say there was no innovation 1970-1985. Same thing for art, books, etc. Maybe we get more.  The law should be about establishing clear rights that everyone should understand. Don’t screw around with it with extensions or retroactivity in response to concentrated interests. That’s why he’s a skeptic.
    Schultz: Some of this is a reaction to the role of gov’t.  Heterodoxy: gov’t does good.  Work in developing world: a lot of free market advocates/libertarians in developing countries are not anarchists. They know anarchy and don’t like it. Gov’t is good/legit when it enforces property, contracts, rule of law. Smearing something with the gov’t brush doesn’t end the argument. We have to ask why we have the right, when should gov’t act. That’s when you look to the moral basis of the right.  That’s what distinguishes the taxi medallion from ©: people engaging in productive labor, living flourishing lives through their ability to control their property.  (Taxi drivers by contrast are apparently unworthy and do not perform productive labor.)
    Term is a red herring, just prudential. Not a fundamental justification issue, but a matter of trade policy.  Reasonable argument for it as well as reasonable argument it’s too long.  We should have that argument after the effective term is longer than 5 minutes given inability to enforce.  (If it weren’t fundamental, then you should fully commit to the idea that © and patent, as property, should never end any more than property in a car/land.)  Empirical evidence for IP exists.
    Brito: he was as shocked by the term argument as I was! Though for somewhat different reasons. He thinks © is obviously property and fosters innovation, but the contours of that right matter a lot. Term, whether you need registration, etc. Where we set the dial is the crux of the debate. 
    Taxi medallions: the key distinction is that some on the right see it as property v. privilege—and © is absolutely a privilege.  Congress can, tomorrow, repeal copyright statute.  Congress cannot write a law that repeals property rights in your self or your personal property.  The real question is where to fix the limits.
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    correcting false advertising before money changes hands isn’t enough

    Posted on July 1, 2014 by rtushnet
    Helde v. Knight Transportation, Inc., 982 F. Supp. 2d 1189 (W.D. Wash. 2013)
    This is mostly a wages case, but it provides a reminder that bait and switch advertising is generally actionable under consumer protection law.  Here, plaintiffs claimed a violation of Washington’s Consumer Protection Act based on representations allegedly made to them before employment about the pay rate available to them as long-haul drivers.  They alleged that Knight advertised a per mile pay rate that was higher than that actually paid and that they reviewed the advertisements and accepted positions in reliance thereon. Knight argued that there was no reliance, and that any misstatements were corrected during orientation and before plaintiffs accepted their first driving assignment.
    The court found that a reasonable factfinder could conclude that the alleged misrepresentations were material and affected plaintiffs’ decision to apply.  Though neither plaintiff bringing the claim could remember, years later, the full amount of information in the ads, one remembered a claim that drivers could make up to 41 cents per mile.  “[I]t is reasonable to infer that, when looking for employment opportunities in a multi-employer environment such as line haul trucking, the effective pay rate would be a, if not the, material consideration.”  Knight could not escape liability for correcting misrepresentations during orientation:
    By that time, plaintiffs had committed time and resources to the application and orientation processes and had abandoned their search for employment in order to pursue the allegedly fictitious benefits offered by defendant. Injury under the CPA includes time spent and expenses incurred in unwinding the deceptive and unfair statements. If plaintiffs can prove that defendant advertised jobs paying 33¢ per mile and subsequently reduced that offer once it got people in the door, the factfinder could reasonably conclude that the alleged misrepresentations forced plaintiffs to choose between attempting to absorb the time and expenses incurred while they start the job search anew or accepting less than what was originally offered in order to get a paycheck. Either way, injury to business or property causally related to the misrepresentations may be shown.
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