WIPIP, PLENARY SESSION 1 — Race, Gender, and IP

Dan Burk, University of California, Irvine School of Law

Racial Bias in Algorithmic IP

Unpacking bias: divergent meanings: statistical bias (sampling),
design (wrong type of model, model created for one purpose used for another), the
fact that “raw data” is an oxymoron, social bias (inappropriate social outcome—different
than the bias that designers often talk about, so they may talk past each other
even if there’s overlap). This can make some responses beside the point:
transparency, auditing, “human in the loop”—those are mostly attempts at better
technical accuracy. That’s a red herring. Example from criminal justice: parole
determinations. Zip code is a major factor in these, and that’s correlated with
poverty and race. It’s a really good predictor, but that’s the wrong question:
why do we put up with that connection/digital redlining? An AI patent examiner
that rejects/narrow claims based on race of inventor, that’s not inaccurate to
past practice. It’s wrong in the sense of being immoral and [supposedly]
socially unacceptable.

Machine bias may be the wrong question. Let’s deal with the
bias in the system; it doesn’t matter whether it comes from a human or from an
AI trained on the past practices of humans. But there are differences in
practice: Illusion of objectivity; humans put too much faith in numbers, Donna
Haraway’s “God trick” in which the human is no longer visible in the picture. E.g.
overweighting of numerical evaluations. Algorithmic performativity: they enact
what they assume and create their own social facts. The yearly ranking of law
schools by USNWR. Wendy Chun suggests: we should use these systems as
diagnostics. We don’t think a weather forecast is diagnostic or that it can be
used to create better weather; we can use AIs to find out what our biases are.

Ann Bartow, University of New Hampshire Franklin Pierce
School of Law

Ruth Bader Ginsburg’s Copyright Jurisprudence (with Ryan Vacca)

Strong copyright and liberal politics. As a DC Circuit judge
and SCt Justice, she authored sixteen opinions in © cases, ten majority, four
concurrences, two dissent, and joined 11 others, ten majority, five of which
were unanimous, and one concurrance. Mostly owner-favorable and Goliath over
David, which may seem surprising. Five opinions favor authors: Tasini, Eldred,
Golan, Reid (WFH), and arguably Muchnick, the followup to Tasini. Many were in
favor of owners: Petrella, Nat’l Cable TV Ass’n v. Copyright Royalty Tribunal,
Atari v. Oman (2x). Concurred in Grokster & Star Athletica; fiery dissent
in Kirtsaeng. But did favor accused infringers sometimes: Fourth Estate v.
Wall-Street.com & OddzOn v. Oman as well as concurring in Quality King. She
joined Campbell, Fogerty v. Fantasy, Feltner, and several others.

Unpersuasive explanations: widely known love of opera and
art (other Justices have those too); Jane Ginsburg’s uncontested expertise (Ginsburg
fille isn’t particularly highly cited by Ginsburg J. and Breyer cited her against
a Ginsburg opinion).

Better: Incrementalism—if judges reach unnecessary issues,
this creates instability/undue stress on judiciary. Evident in gender equality
work and critique of reproductive rights litigation based on lack of incrementalism.
Intergovernmental deference: evolution/interpretation of law shouldn’t be
diatribe against Congress, President, admin agencies, or states, but as dialogue.
Courts have instiuttional capacity constraints and must do this to be effective.
Lily Ledbetter Fair Pay Act after loss at Scotus; Petrella opinion recounts
back and forth with Congress and courts. Atari v. Oman: Sent it back to Office
twice and told them to look at Feist.

Eldred and institutional capacity: worried about whether the
courts were the right institutions to decide duration. How does Breyer know his
economic analysis is right? [Framed as “where is his economics degree from? And
Lemley in chat says “Oxford.”]

Some divergence in © jurisprudence: seemed to favor
alternative remedies in ©–In Tasini, suggested court shouldn’t issue
injunction preventing inclusion of the disputed articles, but instead compulsory
licenses/consent decrees. She was much more skeptical of alternative remedies,
like a lesser military school for women instead of VMI, for gender

Ryan Vacca: responding to chat point that citing Jane Ginsburg
isn’t a great proxy for being influenced by her, and they acknowledge this.

Dalindyebo Shabalala, University of Dayton School of Law

Solomon Linda, Traditional Knowledge Pirate? Mbube, “The
Lion Sleeps Tonight” and Traditional Knowledge

Challenging the originality of Linda’s work as potential cultural
threat. The story: popularized in the 1950s including by Pete Seeger from a pop
music record in South Africa. That song, story goes, was composed by Solomon
Linda, who died penniless while millions were made. 2000 article resurrected
the story of misappropriation and injustice; led to a suit against Disney.
Settlement elided the basic question of who really created it. He argues it
should be tested in court because it’s a key issue in TK: What happens when a
traditional piece of music gets translated, derived from, built on, recorded,
and moved into the © system? The classic TK story is an outsider coming in and
taking it into the © system. Story of Linda is, he suggests, a much more
traditional trajectory: an insider who traverses the boundary of the community
to the outside and acts as the translator, then lays claim themself to the TK.
Musicologically the origin story is more complicated, and the question of what
rights insiders should get is much more complicated than misappropriation by
record companies.

Linda was an originator of a style. Urban music/dance, built
on tradition of rural Zulu style. He took a wedding song sung by village girls.
Developed in a sharing/building/borrowing culture. How should that affect what
we think the world owes Linda? Community rules may continue to bind insiders
when they try to exploit works outside those communities. We should not think
of this as a new problem. © has always been bound up with nationalism. The
problem to be solved was misappropriation across borders. The problem for
traditional communities is very much the same. Should think about solutions for
insiders who flee.

Bita Amani, Queen’s University Faculty of Law

Law, Race, and Alchemy: Exclusion(s), Existential Crises,
and the Transformative Possibilities of Intellectual Properties

Operationalizing privilege through law presented as formally
equal. Curricula/cultural materials are an important part of naturalizing
privilege. “Exclusivity” of rights: IPRs are part of broader colonial legal
regimes, so why would we expect anything other than disparate impact in rights
acquisition and enforcement? Authorship in fact v. authorship in law is gendered/raced;
work v. play distinction means some of us are disenfranchised from labor/means
of production while others become owners.

Carys Craig, Osgoode Hall Law School, York University (with
Anupriya Dhonchak)

A Feminist Theory of Moral Rights: Creative Agency and
Voices from the Margin

Not surprising that feminism would have something to say
about a right conceived of as intensely personal. Dichotomies: public/personal;
economic/moral; rational/emotional; masculine/feminized; valued/devalued: so
moral rights are the feminized Other. Personhood rationales have therefore
tried to masculinize/propertize the justifications. The image of the artist is
that of the solitary male genius, individualized author. Hegel, proponent of
moral rights, held that women were not capable of art. Kant likewise thought
that knowledge unfitted women for their places. Not clear why a feminist would start
from Kant and Hegel! Moral rights rhetoric is also filled with references to
paternity; patriarchal metaphors of birth without women, right to control
offspring. We need a better ontology of authorship.

A feminist relational theory of authorship locates
creativity in cultural situations and social relationsh; creative capacity is
enabled by relational web. Relational autonomy, capacity to make meaning is the
foundation of authorial rights. Authorship as dialogue/relationships of
communication. Every text is multivocal; for feminists, this invites
exploration and activating of the unvoiced, exiled world of women (Mary O’Connor).

Could say that integrity right ensures dialogue is a real
one, but we think that clings to the romantic idea of there being a single
meaning bestowed on work by author, and dialogism refutes that at the core. Risk
of weaponizing moral rights against those who critique the dominant culture. Integrity
right misundersands relationship b/t author, text and public in way that casts
disruptive dialogic engagement as moral and legal wrong; not consistent
w/feminist politics of confrontation, resistance, and social reform. Example: Fearless
Girl attacked as violation of moral rights of bull sculpture’s sculptor.

But: attribution right deserves attention through feminist
lens. Tracing who is speaking, from where, on behalf of whom can be about
feminism and authorship. De-Kanting acknowledgement: Kant thinks that the harm
is compelled speech, but feminist theory is that the harm is the silencing, the
refusal to acknowledge that someone has spoken. The power to make knowledge
claims v. the people who have been erased from/made invisible in our narratives.
Attribution is a call against erasure.

Caveat: it doesn’t follow that © is the right space to
achieve political goal of amplifying marginal voices given the bluntness of
legal tools and power needed to wield them. Empowering communities of practice
is the goal. Moral rights don’t occupy a moral high ground; they’re based on
the same patterns of exclusion and control as ©, but can benefit from feminist

Moderator: J. Glynn Lunney, Texas A&M University School
of Law

Lemley: AI does expose some fundamental contradictions in
what we think of as inequality: a broader problem of how we measure equality
and how we want to balance procedure and substance. Making that explicit can be

For Bartow: Don’t shy away from the harm she did in throwing
out Sony in her Grokster concurrence, Petrella and its authorization of a wave
of © lawsuits forever, etc. There are interesting agency/courts/etc. metrics to
all of these, it is still worth noting that she ends up on the side of the ©
owner and he doesn’t think that’s a coincidence.

Burk: all human tech may be prosthetic: cars are feet
prosthetics; AIs may be cognitive prosthetics, but bring all human baggage.
Amplifying and disclosing may be the useful parts—using them as diagnostics to
figure out where we’ve been screwing up. But they are our messes to solve.

Bartow: yes, and that’s painful about this project.

Betsy Rosenblatt: For Shabalala: Norms are good at governing
in communities, but they are really bad at governing outside of communities.
Natural takeaway might not be that everyone owns TK but that no one does, but
that may be imposing a norm on the group from outside. Maybe that’s exactly
where we need laws (when it moves outside the community) but then whose rules
should we adopt as the law?

Shabalala: This is the key part of the project. The premise
has to be cultural sovereignty: the only communities with a strong claim have
to build on a preexisting political sovereignty, b/c the right to regulate
citizens’ lives is built on sovereignty. Rosenblatt says that’s a very American
way of looking at sovereignty, but Shabalala responds that African nations have
wholeheartedly adopted it, although there are sub-sovereign, sub-metropolitan
communities that are clearly left out of this formulation, and that is a real
problem. Reaching outside the community is required to regulate exploitation,
but TK may not be the answer.

Amani: Note that in the US the definition of an Indian comes
from the federal government; the problem is complementarity of structural
inequality that is imposed.

RT: for Craig: Is this a right/interest of the author or a
right/interest of the audience? Consider anonymity; women writing as men; whites
writing as natives.

Craig: it’s about
relationships, with text as vehicle for dialogic engagement. Ideally we’d know
who is speaking, but wouldn’t insist upon removing anonymity. Risk of silencing
voices with removal of anonymity matters. [RT: we valorize some kinds of
contestation, but there are situations where the speaker treats the audience as
marks to be exploited
—good to think about those situations when conceptualizing
moral rights.]

from Blogger https://ift.tt/3admlp1

Posted in Uncategorized | Tagged , , , , , | Leave a comment

unconscionability prevents enforcement of arbitration agreement for consumer claims

Cabatit v. Sunnova Energy Corp., No. C089576, —
Cal.Rptr.3d —-, 2020 WL 8365909 (Ct. App. Dec. 31, 2020)

California isn’t fond of mandatory consumer arbitration.
Here, the court finds the arbitration agreement unconscionable and refuses to
enforce it against a claim relating to the solar power lease agreement between
the Cabatits and Sunnova. The rule of McGill v. Citibank, N.A., 2 Cal.5th 945 (2017)—that
an arbitration agreement waiving statutory remedies under California consumer
protection law is unenforceable—was unnecessary to the decision. Because
Sunnova didn’t argue in the trial court that the arbitrator had to determine
the unconscionability issue, that issue was waived; the arbitration clause was procedurally
and substantively unconscionable under general principles independent of McGill.
Some details:

The salesperson said the Cabatits
did not need to read the agreement language because he would go over the
details, but the Cabatits would need to sign the agreement and initial certain
parts before any work could be done. The salesperson scrolled through the
agreement language quickly, indicating where signatures or initials were

Indiana Cabatit speaks and
understands English fairly well, but she does not understand complicated or
technical terms. As the salesperson scrolled through the agreement language,
Indiana Cabatit signed or initialed where the salesperson indicated, even
though she did not understand most of what he was saying. The salesperson did
not explain anything about arbitration.

The Cabatits had no computer and no
internet access. They did not receive a copy of the agreement until this
dispute arose and their daughter obtained a copy.

This was a procedurally unconscionable contract of adhesion,
with no opportunity to bargain over terms, which were not explained anyway. It
wasn’t enough that Indiana Cabatit signed a statement that she had read the
terms of the agreement, and even if the arbitration provision was “conspicuous”
in the abstract, the evidence was that the salesperson scrolled through the
agreement, and the arbitration clause was not called to the Cabatits’
attention. And any right to cancel within 7 days “was meaningless because
Sunnova did not give them a copy of the agreement during the relevant time
period and there is no evidence such a right was explained to the Cabatits.”
The context indicated oppression and surprise, resulting in “a high degree of
procedural unconscionability.”

Substantively, this was a one-sided agreement which required
the Cabatits to arbitrate their claims, but allowed Sunova to file in court if
the Cabatits defaulted (defined as failure to make a payment, failure to
perform an obligation under the lease, providing false information, or assigning
the lease without prior authorization). “In other words, Sunnova reserved the
right to take most of its claims to court but purported to deny the Cabatits
the same opportunity.” Although the Cabatits were allowed to go to court to
seek (1) injunctive relief for any threatened conduct that could cause
irreparable harm, (2) a judgment confirming the award, or (3) a small claims
judgment, that was still too one-sided given the breadth of “default” favoring
Sunnova. Sunnova didn’t show it had special need for this one-sidedness.

from Blogger https://ift.tt/3apc73K

Posted in Uncategorized | Tagged , , | Leave a comment

survey sustains false advertising claim alleging misleading use of military imagery

Mahindra & Mahindra Ltd. v. FCA US LLC, 2021 WL 323253,
No. 18-cv-12645 (E.D. Mich. Feb. 1, 2021)

Plaintiffs sued FCA for a judgment of noninfringement of the
Jeep grille design in its Roxor vehicle (which dispute mainly took place in the
ITC), and FCA counterclaimed for, among other things, false advertising (over
which the ITC lacked jurisdiction). Here, the court denies plaintiffs’ summary
judgment motion on the false advertising counterclaim, which relates to an ad
that allegedly misrepresented plaintiffs’ vehicles’ history with the US

The Roxor’s design and construction is “based on a long line
of military-style vehicles that [plaintiffs] have been manufacturing and
selling in India and around the world for over 70 years, since the end of World
War II.” The 30-second
ad at issue

features Roxor vehicles of various
colors driving on unpaved mountain trails, along with various images of
individuals camping, hiking and chain-sawing logs. It also includes various
military imagery and references. According to Defendant, “more than 20 seconds”
of the 30-second Advertisement displays such military-inspired elements,
including the U.S. Army star logo, a vehicle operator wearing camouflage in a
camouflage vehicle, an Army green version of the Roxor, a man dressed in Army
green attire, and the Roxor logo on an Army green background. Plaintiffs
emphasize that the U.S. military “is never mentioned in the commercial.” 

The Advertisement’s voice-over
script is as follows:

When the mission calls for
military grade grit, call in an off-road vehicle built on more than 70 years of
hardcore heritage. The one that makes “there’s no way we’re getting out of
here” the best news you’ve heard all day, and answers menacing terrain with,
“Is that all you’ve got? Get out there in legendary off-road vehicle: Roxor,
from Mahindra. There’s plenty to be done.

FCA argued that this ad falsely evoked a connection with the
US military. (Twenty years ago, there were a handful of cases saying that
claims like this—the D’s ad falsely connected it to a third party—asserted
someone else’s rights and so the non-owner-plaintiff was not the right
plaintiff, but that reasoning probably doesn’t survive Lexmark.) (FCA
also argued that evoking the US military “suggests a shared-legacy between the
Roxor vehicle and the Jeep® brand and the Jeep® brand’s U.S. [mi]litary’s
heritage,” though that really seems a bridge too far—no pun intended—and the
survey, wisely, didn’t bother to test that idea.)

Hal Poret conducted a survey for FCA, which he concluded
found that: (1) at least 46.3% of respondents believe that the Roxor has been
used by the military or has a military history/heritage; (2) 70.4% of
respondents believe that the Roxor is connected to the military; and (3) 37.0%
of respondents believe that the Advertisement’s message pertains to the U.S.
military. In response, plaintiffs argued that “[t]here is no evidence in the
record that a single Roxor vehicle buyer saw the Advertisement.”

The court found that there was no literal falsity; the ad
was ambiguous in using the phrases “[w]hen the mission calls for military grade
grit”; “[c]all in an off-road vehicle built on more than 70 years of hardcore
heritage”; and “[g]et out there in a legendary off-road vehicle: Roxor, from
Mahindra” along with black-and-white footage of a Jeep during World War II.

This was not puffery. The statements and imagery were
neither “exaggerated, blustering and boasting” nor a “general claim of
superiority over comparable products.” The court would not equate “historic
military footage, a claim that something is ‘military grade,’ and a suggestion
that company’s 70 years of heritage is connected to the U.S. military” with “vague
phrases which are ‘nothing more than a mere expression of opinion.’”

The survey was sufficient evidence for a reasonable
factfinder to find misleadingness and deception, at least for purposes of
securing injunctive relief. Among the relevant responses:

[What was the main message or
message of the commercial we showed you?] Roxor is a new off road vehicle that
has a long history of being used in the military.

[What reasons, if any, did the
commercial give for choosing to purchase the advertised vehicle?] Military use
in World War Two; theyve [sic] been used in the military for years.

[What did the commercial say or
show relating to the history or heritage of the advertised vehicle?] It showed
pictures of it working in the military from many years ago; Used by our
military in the 2nd world war [sic]; That the military used this brand for its

Materiality: The court framed this as whether suggesting a
“connection” between the U.S. military and the Roxor was “an inherent quality
or characteristic,” which I find unhelpful for modern materiality analysis.  Plaintiffs emphasized that it was undisputed
that the “clip and reference to ‘military grade grit’ comprise a de minimis
portion” of the ad. “[A] rational trier of fact could conclude that the
disputed issues relate to the inherent quality of the Roxor,” since there was
testimony that plaintiffs’ history and heritage was useful to its brand story.
Even though the reference was short, length wasn’t required, given that FCA “pointed
to several instances where Plaintiffs considered the advantages of including
reference to the military grade, which concern the relevant consumer market..”

Causal link to the claimant’s injury: FCA only sought
disgoragement and a permanent injunction, not damages. (Only!) So it wasn’t
required to quantify its damages. Rather, “logical likelihood of damages is
sufficient.” FCA provided evidence that the ad was likely to cause harm,
specifically “causing it to lose singular control over its brand image and
diluting the distinctiveness of the brand, rendering its marketing messaging
less effective and causing it to have to spend more to communicate
effectively.” And: “[Plaintiffs] are trying to leverage the Jeep® DNA just as
we plan to. And based on my own experience, it appears [Plaintiffs are]
targeting people who are interested in the Jeep® brand.” Although some of the
evidence was about the Roxor generally, the Poret survey was sufficient to show
the requisite harm causation.


from Blogger https://ift.tt/39Mk1Fo

Posted in Uncategorized | Tagged , | Leave a comment

Uber avoids taxi suit because of causation problems

Ezeokoli v. Uber Technol., Inc., 2021 WL 247975, No. A156445
(Cal. Ct. App. Jan. 26, 2021)

Plaintiffs, a putative class of taxi drivers, lost this
Lanham Act false advertising appeal because they couldn’t show that Uber’s
allegedly false statements harmed them (as opposed to Uber’s nonfalse business
model). Uber allegedly misrepresented the availability and proximity of rides
through cartoon images of cars displayed on its consumer app; (2)
misrepresented the safety of its service; (3) misrepresented the legality of
its operations at certain airports; and (4) made false and misleading statements
about driver gratuities.

Uber won summary judgment with “evidence that (1) the
plaintiffs could not show reduced income from driving taxis during the relevant
period; and (2) they could not show that any economic harm was caused by the
alleged misrepresentations.” In particular, “as to the challenged statements
related to safety concerns, only a very small percentage—fewer than 2.5
percent—of Uber users would have seen them.”

Plaintiffs could not succeed on appeal with deposition
testimony from individual drivers that they were working more, but earning
less, once Uber became a competitor. Their speculation that this was driven by
Uber’s false advertising wasn’t enough. Although the Lanham Act expressly
authorizes suit by a person who “who believes that he or she is likely to be
damaged,” standing requires “a real possibility of … being damaged and not the
mere assertion of a belief.”

Nor was an economist’s expert report that proposed a
methodology for estimating their damages plus a promise of survey data regarding
consumer deception. The damages estimate would have been based on the full
competition from Uber; it wasn’t enough to promise to sort out the impact of
false statements later.

No presumption of injury and causation applied because
Uber’s advertising wasn’t directly comparative. In a footnote, the court
endorsed the reasoning of Il. Transp. Trade Association v. City of Chicago, 839
F.3d 594 (7th Cir. 2016): People might prefer Uber’s “storage of payment
information, so that one does not need to be carrying cash or a credit card;
the ability to see a time estimate of how long a pickup will take and also a
driver’s rating by past users; and the ability to request a ride from wherever
one is (e.g., from the comfort of home, inside during the rain rather than by
hailing on a street).”

As to the comparative advertising point, the trial court
reasoned: “Plaintiffs do not show evidence that Uber made actionable
comparative statements in the context of advertising. ‘Statements made to the
media and published in a journalist’s news article concerning a matter of
public importance are not commercial speech and are protected under the First
Amendment.’ ” For example, an alleged statement by Uber’s Head of
Communications for the Americas to a local news affiliate that Uber was “
‘confident that every ride on the Uber platform is safer than a taxi’ ” hadn’t
been shown to have been “made as part of a coordinated advertising campaign or
with the intent to influence consumer opinion.”

Uber’s claims of, for example, the “ ‘safest rides on the
road’ ” and “ ‘always the safest experience,’ ” employed “ ‘an industry leading
background check process,’ ” and “ ‘thoroughly screen[ing]’ ” its drivers “ ‘through
a rigorous process we’ve developed using industry-leading standards’ ” weren’t
comparative in the way that would trigger a presumption of injury/causation
because this wasn’t a two-player market. The trial court found that Uber
“exists in a complex market for personal transportation, and taxis are not its
only, or even its primary, competitor” so any business gained by Uber did not
necessarily mean lost business for taxi drivers. The court of appeals pointed
out that “a survey that even plaintiffs’ expert relied on found that riders
chose Uber over taxis and other modes of transportation for a variety of
reasons, including safety, comfort, ease of use and payment, time savings, and
reliability.” [This reasoning shows the value of a regulatory state that can
act against false advertising that causes generalized risks to everyone in the
market. Also, frankly, saying that taxis aren’t the primary competitor is less
plausible than saying that it’s easy to not use Facebook.]

Plaintiffs’ proposed survey expert “failed to explain how
his survey design would eventually assess the impact of the alleged
misrepresentations on potential riders and distinguish it from other reasons
riders might choose one mode of transportation over another.”

from Blogger https://ift.tt/36tFhh6

Posted in Uncategorized | Tagged | Leave a comment

Videos in conjunction with my advertising law class

 In this pandemic year, I’m experimenting with short videos as part of the pre-class materials. They generally elaborate on a point to set up class discussion. I’m sharing them because, as Tom Lehrer says, they might prove useful to some of you someday perhaps in a somewhat bizarre set of circumstances.

from Blogger https://ift.tt/39DjiXd

Posted in Uncategorized | Tagged , , , | Leave a comment

Book talk: global mandatory fair use via the Berne quotation right

Tanya Aplin & Lionel Bently, Global Mandatory Fair Use,
AU Book Talk.

Based on their new book.

Art 10(1) Berne Convention: It shall be permissible
to make quotations from a published work; mention shall be made of the source
and name of author if it appears. This constitutes global, mandatory, fair use.
Berne and TRIPS both require implementation of Art. 10. Meaning and purpose of
quotation is broad. Fair because of the requirements: lawfully made available
to the public, attribution, proportionality, consistent with fair practice.
Mandatory language can be contrasted with other exemptions, which say “it shall
be a matter for legislation in the countries” of the union. Drafting history
includes vote to reject making 10(1) optional rather than mandatory.

Scope: applies to all Berne works, not just literary works,
though optional for related rights b/c Rome Convention has no mandatory
quotation right. Also does not apply to moral rights, b/c travaux suggested
moral rights are reserved, and Art 10(3) provides different requirement for
attribution of source.

What’s the meaning of “quotation”? Proposal to limit
language by purpose were rejected; it was intention to leave language open
because couldn’t agree on purposes to which it should be limited. Aplin &
Bently argue: does not have to be short, can be of the whole work, need not be
distinct, need not be used in another work; need not support or further an
argument or critique. None of these individually are necessary conditions for “quotation.”
Many fields use “quotation” to include use of a full work, no requirement of
commentary, no requirement of “quotation marks.” Example: Cézanne’s Compotier, verre
et pommes, 1878-79, shown in Maurice Denis’ Homage to Cézanne, 1900: group of
painters standing around an easel representing the Cézanne: they’re admiring Cézanne’s
work. It is (all but) the whole work; it is not distinct from the rest of the
work; and one might question whether there’s any critique or dialogue: the
dialogue seems to be “isn’t this a great painting and aren’t all those people
admiring it.”

Similarly in architecture there is quotation: Konstantin Melnikov,
Rusakov Club; quoted in James Stirling, Leicester Engineering Building.
Architecture literature doesn’t hesitate to describe this as quotation w/common
trapezoidal forms. Not distinct from the rest but still described as quotation.
Similar examples from film, e.g., Francis Bacon, Study for the Nurse from the
Battleship Potemkin.

In literature particularly, “quotation” is used routinely
w/o any requirement of critique, which contrasts with EU requirement of
dialogue with work being quoted. That’s not the ordinary meaning of quotation,
which includes inscriptions on buildings that edify visitors.

Art 10(1) requirements help constrain the exception:
lawfully made available to public, attribution, quotation doesn’t exceed that
justified by purpose, and proportionality. Made available: wider notion than
publication under Art 3(3); covers making available via compulsory license.
Sticky issues about where the work has to be made available. Suggest that the
better view is that it should be judged according to place of first making
available. Not synonymous w/right of attribution b/c requires mention of the
source and author if the latter appears thereon. As a result, should be
viewed more flexibly, allowing attributions in abbreviated form, indirect,
implicit attribution, or easily identifiable.

Proportionality: “the extent of the quotation does not
exceed that justified by the purpose.” From human rights jurisprudence:
suitability: is quotation capable of achieving purpose claimed; necessity:
whether shorter quotation would be as effective in achieving the purpose and
less restrictive of author’s rights. Counterbalances the removal of “short” before

Finally, “fair practice” requirement gives a lot of scope
for considering fairness. Little guidance in the travaux. Reject of three
possible approaches: (1) solely determined by national law, given that it’s
mandatory and normative; (2) informed by relevant state practice; (3)
synonymous with three-step test. Clearly seen as important mechanism of constraining
exception. Fair practice should assess fairness, informed by notions of
economic and moral harm (which may involve considering amount quoted as well as
nature/purpose of quotation as well as size/proportion); freedom of expression
(expressive purpose of quotation, including political v. commercial; nature of
claimant’s work); distributive justice (educational uses, translations, poorly
financed creators); and custom, to a limited extent (drawing on Kenneth Crews
and Jennifer Rothman’s cautionary work on custom). Notions of bad faith wouldn’t
fall within our meaning b/c it’s too vague: manner of obtaining work is better
dealt w/ by other areas of law; commercial motive can be dealt with by
considering economic harm; failure to ask permission is circular.

Differences from WTO’s approach to the 3 step test, which is
very formalistic. 10(1) v. 3 step: latter is narrow in scope and reach, whereas
quotation can be interpreted broadly. Normative value: 3 step in WTO panel view
is fixated on rights holders interests, while fair practice brings a plurality
of interests into play. 3 step test doesn’t require availability to public;
doesn’t take moral rights into account. 3 step is cumulative in nature, while quotation
elements have some overlap, e.g. proportionality and fair practice. Royalty-free
exception while 3-step envisages paid but permitted exemptions. 3 step test is
not the only lens through which to see exceptions: a powerful force alongside
it. Despite TRIPS art. 13: TRIPS art 9(1) says that nothing in the relevant
provisions shall derogate from existing obligations, and 10(1) is an existing
obligation. Therefore TRIPS doesn’t override 10(1), though it can make 10(2)
and 10bis subject to the 3 step test. Similar argument with WCT, as well as
agreed statement to WCT which supports the argument further.

Consequences for US fair use: assessment according to 3-step
test becomes redundant, but would need to pay attention to making available,
attribution requirements, moral rights, and different emphasis for fairness
factors. Also provides occasion to revisit quotation exceptions where they fall
short by restricting purpose (Portugal), limited to types of works (Austria,
Zimbabwe), restricted to short quotations (France, Greece, Serbia), or require
dialogue/incorporation into other works (France, Germany). CJEU decisions are
also incorrect/inconsistent by requiring intent to enter into dialogue with
work, wrongly importing identifiability/recognisability requirement. Parody
exceptions could also be seen through 10(1) and not just three step test: lets
us worry less about definitional distinctions among parody, satire, pastiche,
though that might be relevant to fair practice rather to whether exception
kicks in at all.

Publisher guidelines could also be revisited through this lens;
many publishers are incredibly narrow and risk averse in acceptable quotation.

Peter Jaszi: mentioned questions in Salinger cases about
whether being made available in archives ought to count as available to public.

Bernt Hugenholtz: Shall is not the same thing as may, and it
ought to have consequences. But note that Berne allows different treatment of
nationals. Mentioned discussion in chat about the new EU snippet right as a
related right that could override the quotation right.

Discussion: Because of the mandatory nature of the quotation
right, it should override any related right where that’s necessary to exercise
the quotation right (e.g., a broadcast treaty or special rights for press
publishers that extend beyond the author’s right).

Discussion of what doesn’t count as quotation: perhaps intermediate
copying (though may be required to avail oneself of some kinds of quotation),
reverse engineering.

from Blogger https://ift.tt/2KZRHpq

Posted in Uncategorized | Tagged | Leave a comment

surveys/expert evidence of deception still not required in consumer protection claims

Hawkins v. Kroger Co., 2021 WL 210843, No. 15cv2320 JM (AHG)
(S.D. Cal. Jan. 11, 2021)

Hawkins sued, with the usual California claims, because
Kroger breadcrumbs said “0g Trans Fat Per Serving”  on the front and the nutrition label said
“Trans Fat 0g”; the breadcrumbs included partially hydrogenated vegetable oil
(PHO), which meant that they contained “trace amounts” of trans fat.

The use of PHO in food products was legal during the class
period: the FDA allowed producers until June 18, 2018 to remove PHO after it
was removed from the “generally regarded as safe” classification.

So the use of PHO was not unlawful, but was it unfair?
During the class period, there was no public policy against it, and the FDA
declined to prohibit its use then, weighing against unfairness. But the degree
of harm associated with PHO was a material and genuinely disputed fact. “[D]espite
the legality of the use of trans fat during the class period, reasonable jurors
could disagree as to whether the danger of trans fat to human health was sufficient
to render its use ‘immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers,’” so the court declined to grant Kroger
summary judgment on UCL unfairness.

Labeling claims: The court rejected Kroger’s argument that a
reasonable consumer would understand the breadcrumbs contained trans fat
because the ingredient list included PHO. Not only are reasonable consumers not
required to look beyond misleading representations on the front of the box, but
here it was not clear that typical consumers understood that PHO necessarily
meant trans fat. Moreover, no reasonable juror could find that interpreting “0g
Trans Fat” to mean “no” trans fat was unreasonably “sweeping.” [The FDA did
require rounding down for amounts under .5g, in contradiction to what
reasonable consumers would think. As the court explains, the cases have
therefore held that, “although the FDA mandates the disclosure of ‘0g Trans Fat’
on the nutrition label when the product contains less than 0.5 grams of trans
fat, it does not mandate or allow for the product to be labeled ‘0g Trans Fat’

The court also rejected an attempt to impose a survey/expert
evidence requirement for determining reasonable consumer expectations in
California consumer protection cases. Here in particular, “it is not clear what
else the claim ‘0g Trans Fat’ would lead a reasonable consumer to believe other
than the product contains no trans fat.” Certainly Kroger wasn’t entitled to
avoid a trial.

Hawkins also got summary judgment on the argument that “0g
Trans Fat” violated 21 C.F.R. § 101.62(a)(1)-(2), “[a] claim about the level of
fat …. in a food may only be made on the label …. if … (1) [t]he claim
uses one of the terms defined in this section [or] (2) [t]he claim is made in
accordance with the general requirements for nutrient content claims in §
101.13.” Section 101.13 then provides “the label or labeling of a product may
contain a statement about the amount or percentage of a nutrient if …. [t]he
statement does not in any way implicitly characterize the level of the nutrient
in the food and it is not false or misleading in any respect (e.g., ‘100
calories’ or ‘5 grams of fat’)[.]” Previous cases have held that this provision
doesn’t “authorize” a “No Trans Fat” claim on the label. Though this was in a
preemption context, the logic held here: “No Trans Fat” outside of the
nutrition facts panel was misleading, given that the conceded use of PHO and
thus of “some” trans fat content was actual evidence the “0g Trans Fat” label
was false or misleading. Thus, Hawkins established a predicate for her
“unlawful” UCL claim.

However, even if Hawkins didn’t have to show that a
reasonable consumer would be deceived, there was a genuine dispute of material
fact on reliance/causation, so she didn’t win summary judgment on the entire

Kroger’s statute of limitations defense also failed because
Hawkins wasn’t required to look beyond the front of the box.

Also, the “0g Trans Fat” label was “too specific to be

from Blogger https://ift.tt/39eXAbC

Posted in Uncategorized | Tagged , , | Leave a comment

when is a publisher sufficiently beholden to a manufacturer to engage in commercial speech?

Ariix, LLC v. NutriSearch Corp., No. 19-55343 (9th Cir. Jan.
22, 2021)

Over a dissent, the court reverses the district court’s dismissal
of a false advertising claim
against a purportedly independent supplement
guide that allegedly is linked, behind the scenes, with one producer,
motivating its praise of that producer and refusal to praise others. On the facts
alleged, the supplement’s relevant statements constitute commercial speech;
there’s a remand to determine whether the statements are designed to encourage
the purchase of relevant products as required by a remaining element of the
“commercial advertising or promotion” test. There is no First Amendment
protection for “a publisher of supposedly independent product reviews if it has
secretly rigged the ratings to favor one company in exchange for compensation.” 

“NutriSearch publishes a widely used nutritional supplement
guide.” It is allegedly “a trusted name among sales representatives in the
direct marketing supplement industry.” It rates supplements comparatively;
companies that get a five-star rating can get NutriSearch Medals of Achievement,
which require compliance with the FDA’s pharmaceutical good manufacturing
practices (GMP) and certification from an approved laboratory that its label
claims are true. The medals are allegedly “described as a binary determination:
either a company obtains [GMP] certification and laboratory verification of the
label claims, or it does not.” In the sixth edition, Usana Health Science was
the only company that obtained the highest ranking, the platinum medal.

NutriSearch allegedly “portrays itself as an independent
company that presents only objective data and scientific analyses to the public,”
claiming “it relies on scientific criteria to mathematically calculate the
ratings.” The guide’s author, the former CEO, appeared on the Dr. Oz Show
promoting the Guide as an evidence-based book that does not have any
“particular bias.” The inside of every edition of the Guide through the fifth
edition stated:

This guide is intended to assist in
sorting through the maze of nutritional supplements available in the
marketplace today. It is not a product endorsement and does not make any health
claim. It simply documents recent findings in the scientific literature.

This guide was not commissioned by
any public sector or private sector interest, or by any company whose products
may be represented herein. The research, development, and findings are the sole
creative effort of the author and NutriSearch Corporation, neither of whom
is associated with any manufacturer or product represented in this guide
. (emphasis

NutriSearch removed the second paragraph from the sixth
edition, published after Ariix filed this lawsuit.

However, NutriSearch allegedly rigged its ratings to favor
Usana under a hidden financial arrangement. The author/ex-CEO, MacWilliam, worked
as a Usana sales representative and served on its scientific advisory board
until another company exposed this affiliation. He allegedly told former Usana
executives, “I should not be on the board or a representative anymore because
it looks like I’m biased. I am going to create more of a third-party
appearance, but I’d like you to use me for speaking and support me.” Usana
allegedly agreed in exchange for the number one rating in the Guide, and uses
it in marketing pitches.

Usana allegedly pays hundreds of thousands of dollars
annually in speaking and promotion fees to NutriSearch and MacWilliam in
exchange for being rated the top supplement company in the Guide, accounting
for more than 90% of his income. In addition, NutriSearch allegedly “promotes
certain scientific claims to dovetail with Usana’s marketing campaign, or
emphasizes certain ingredients that Usana has added to its products to ensure
that Usana attains the top ranking in the Guide.”

In 2008, Usana allegedly withdrew its support for
NutriSearch after other companies obtained a medal certification in the Guide,
causing NutriSearch and MacWilliam to suffer financially. Usana allegedly
suggested that Usana would recommence providing fees and speaking engagements
if Usana obtained a number one ranking in some way. NutriSearch released a new
“Editor’s Choice” award and gave it to Usana, and MacWilliam then asked for and
received a nationwide tour from Usana.

Ariix alleged it was wrongly denied a medal certification in
the Guide, including through the use of metrics that exempted Usana from the
same standards. NutriSearch initially rated one Ariix product 3.5 stars, “but
after public criticism and incontrovertible evidence of quality, NutriSearch
revised the rating to 5 stars.” When Ariix tried to get MacWilliam as a
speaker, he allegedly admitted that “[t]hey [Usana] will cut me off the second
I do this [speak for Ariix].”

Were the challenged statements commercial advertising or
promotion? This is “(1) commercial speech, … (3) for the purpose of influencing
consumers to buy defendant’s goods or services, and (4) that is sufficiently
disseminated to the relevant purchasing public.” The omitted (2), everyone here
agrees, is a competition requirement that was abrogated by Lexmark; one
satisfies Lexmark by having a relevant commercial interest and showing
proximate cause.

The complaint plausibly alleged that the Guide was
commercial speech by plausibly alleging “that the Guide is essentially a sham
marketing ploy intended to boost Usana products.” Under Bolger, “speech
that does not propose a commercial transaction on its face can still be
commercial speech.” Although the question was close, the majority agreed with Ariix.

Although the Guide lacked “the traditional form of an
advertisement” and didn’t provide price or availability information,

this fact alone does not tell us
much, especially given today’s sophisticated and subtle marketing campaigns. For
example, companies now pay so-called “influencers” to issue posts on social
media touting their products or services. While such social media posts may not
have the indicia of a traditional advertisement, there can be little doubt that
these paid posts are in fact advertisements. [citing FTC alert; footnote about
how much Kim Kardashian West is paid per Instagram post according to publicly
filed litigation documents]

The Guide also referred to specific products, though that is
far from dispositive.

The Bolger test also asks “whether the speaker acted
primarily out of economic motivation, not simply whether the speaker had any
economic motivation.” Obviously, “not all types of economic motivation support
commercial speech. A simple profit motive to sell copies of a publication or to
obtain an incidental economic benefit, without more, does not make something
commercial speech.” But at the same time, “economic motivation is not limited
simply to the expectation of a direct commercial transaction with consumers.”
Indirect benefits can also count, such as “benefits to employee compensation, improvements
to a brand’s image, general exposure of a product, and protection of licensees’
interests.” The key is whether “the economic benefit was the primary purpose
for speaking.”

FWIW, I think this point could be helpfully sharpened: the
key is whether the hoped-for economic benefit involves people buying some
product other than the speech itself. If you write a song with the intention of
creating an earworm that will have a zillion plays on Spotify, that is not a
commercial speech motivation: you want people to buy the speech itself. If you
write a song with the intention of promoting a beer brand, and you are paid
based on the beer company’s hope of success, then the results are commercial
speech (though there may well be no regulable factual statements in the song).
[My formulation has to do a bit of finessing when there are potentially
falsifiable statements made about the speech itself—“this album costs $9.99” is
commercial speech; that specific statement about the noncommercial speech on
the album is separable from the content of the album, though the titles of the
songs on the album aren’t—but I believe that it addresses the key distinction.]

Footnote: Not any economic benefit will suffice; “speech
that is mainly motivated out of economic benefit can still be fully protected,
such as in labor cases…. Rather, the question is context-specific and requires
determining whether the speaker’s purpose primarily turns on the economic
benefit that the speaker receives from the speech.” [Again, I think we can
usefully distinguish “unions will increase employee pay” from “hire me to do
this job because I have a JD” here, but reasonable minds might disagree.]

Anyway, Ariix “plausibly alleged that NutriSearch and
MacWilliam published the Guide mainly with the economic goal of furthering
their own self-interests beyond simply benefiting from sales of the
,” given the facts alleged above. [Emphasis added because this
gets at how I would phrase the distinction.]

The court noted that it wasn’t relying only on alleged
payments. “Many of Ariix’s allegations raise significant doubts about whether
the Guide is an objective compilation of product reviews and suggest that the
Guide is instead a sham marketing scheme intended to benefit Usana,” such as
the allegedly false disclaimer in the first five editions.

The district court noted that the
factual allegations do not show that the defendants should be treated as a
single entity subject to the same conflicts of interest. But showing that the
defendants are so closely related as to constitute a single entity is not
required to plausibly allege that the Guide was published primarily for
economic benefit. We are not asking whether MacWilliam’s actions influence
NutriSearch or vice versa, but whether allegations involving either defendant
reveal the primary purpose of the Guide.

…. Usana even uses MacWilliam as
part of its image advertising; the complaint includes an image of MacWilliam
that states that “I have full confidence that USANA will once again stand out
as an industry leader and will continue to receive an elite standing in the new
Comparative Guide.” That NutriSearch and MacWilliam chose such a strongly
worded yet false disclaimer — disclaiming any association with all
manufacturers in the Guide despite having obvious ties to Usana — raises substantial
questions about the Guide’s true purpose, if the allegations in the complaint
are true.

The court cautioned that its decision was “narrow.”
Consumers face so many choices that they often seek out independent reviews. “But
when someone falsely claims to be independent, rigs the ratings in exchange for
compensation, and then profits from that perceived objectivity, that speaker
has drowned the public trust for economic gain. Society has little interest in
protecting such conduct under the mantle of the First Amendment.” Ultimately,
the majority embraced “a common-sense distinction between protected speech and
commercial speech — in this case, legitimate product reviews versus paid
product promotion …. Simply put, paid promotion is commercial speech.”

This wasn’t just an allegation of bias and inaccuracy—and
here comes a line defendants may well quote: “A mere failure to disclose bias or
financial interest would not necessarily make speech commercial.”

Here, though, we face allegations
that the defendants conceived the Guide to juice sales of Usana products,
actively misled the public about their supposed independence, and fiddled with their
own ratings criteria to boost a favored company that lavishes them with
hundreds of thousands of dollars in compensation. Put another way, it is more
paid promotion than product review, according to the complaint. It is not
controversial to conclude that “liability can arise under the Lanham Act if
websites purporting to offer reviews are in reality stealth operations intended
to disparage a competitor’s product while posing as a neutral third party.”

Nor was this speech “inextricably intertwined” with fully protected
speech. The Guide also “describes the benefits and science of nutritional
supplements.” But the commercial, specifically, the allegedly rigged ratings “are
not so connected to this informational section to lose their commercial character.
On the contrary, they seem easily separable.” The Guide even allegedly comes in
two parts, informational and ratings; the first could easily be published
separately. “[T]he Guide does not gain full First Amendment protection simply
because it includes a distinct summary of scientific ideas as a prelude to its
supposed product reviews.”

But was the Guide “intended to influence consumers to buy
the defendants’ goods,” as required by a remaining factor of the “commercial
advertising or promotion” test? The advertising was allegedly intended to help
Usana’s goods, not NutriSearch’s product. The parties didn’t brief the issue
and the district court didn’t rule on it, so the court of appeals remanded.
Though the dissent made good points on this element, the district court should
address it. “In considering this question, though, it may be useful to
determine whether the defendants and Usana had an agency relationship; for
example, it might be the case that the defendants were acting as agents of
Usana and therefore had a vested interest in the goods that Usana sold, which
might be enough to satisfy this element.” [Also, the false claims of neutrality
might well be helping sell the Guide, too.]

Final element: was the Guide allegedly sufficiently
disseminated to the relevant purchasing public? Sure. Ariix alleged that the
“professional edition [of the Guide] is specifically designed for and marketed
to tens of thousands of Usana sales representatives, who are told that
referring prospective customers to the guide is one of the most effective ways
to sell Usana products.” The district court mistakenly looked at whether
statements within the Guide were sufficiently disseminated.

The district court also found that Ariix didn’t sufficiently
allege misrepresentations; the court of appeals disagreed. The comparative
five-star ratings were non-actionable statements of opinion; even though the
Guide purported to rely on scientific and objective criteria, “there is an
inherently subjective element in deciding which scientific and objective
criteria to consider.” However, the disclaimer of independence was a factual,
falsifiable statement. And the failure to award Ariix a medal certification
presents specific and measurable statements about Ariix, given that it was allegedly
based on two falsifiable criteria: compliance with the FDA’s pharmaceutical
good manufacturing practices and certification of product labels’ claims from
an approved laboratory. “By not awarding Ariix a medal certification — despite
Ariix being eligible for such an award — the Guide falsely implies to consumers
that Ariix did not comply with the FDA’s GMPs or that it did not obtain the
appropriate laboratory certification.”

The district court wrongly found that compliance with the
GMPs wasn’t a statement of fact because consumers would merely “conclude that
perhaps a manufacturer did not follow practices that the FDA considered good.” But
whether Ariix followed those practices was itself a question of fact.

Judge Collins dissented.

First, he would not give any weight to allegations that
defendants falsely advertised the Guide itself, rather than Usana’s products.
But “advertisements that accurately reprint[] false claims contained in the
advertised works [are] protected from tort liability to the same degree as the
underlying works.” Anyway, Ariix didn’t plausibly plead that its injuries were proximately
caused by the advertising of the Guide, as opposed to the product reviews
contained in the Guide. [FWIW, I disagree: Independence is what makes such claims
more credible; consumers may discount claims made by a party with an economic
interest, which is why disclosure is so important to the FTC. Proximate cause
is an issue of legal causation, not a matter of counting steps in the chain.]

Rather than stretching the Lanham Act in ways that threaten
the First Amendment, the dissent would have relied on the remaining prongs of
the “commercial advertising or promotion” test. The dissent agreed with
everyone else that Lexmark abrogated the “competition” requirement in
older versions of the test. “Given that (1) a competitors-only limitation
similarly lacks any textual grounding in the phrase ‘commercial advertising or
promotion,’ (2) Gordon & Breach derived this atextual limitation
from its review of pre-Lexmark caselaw; and (3) Lexmark’s
emphatic rejection of a competitors-only limitation would be wholly undone by
continued adherence to this aspect of Gordon & Breach, the
conclusion is inescapable that Lexmark precludes limiting ‘commercial
advertising or promotion’ only to the commercial advertising and promotion of a
direct competitor.”

Lexmark left the sufficient dissemination requirement
intact; this was adequately pleaded.

What about “for the purpose of influencing consumers to buy
defendant’s goods or services”? This too

flows from the statutory language
and remains valid after Lexmark. By referring to representations that a
“person” makes “in commercial advertising or promotion,” the Lanham Act clearly
refers to commercial speech promoting sales of goods that may fairly be said to
be those of that “person,” i.e., the defendant. We do not normally think of
third-party product reviews or endorsements as being that person’s “commercial
advertising”—at least when they are not done on behalf of the product’s
manufacturer or seller.

That last qualification seems to be at issue here; also it’s
interesting that the dissent doesn’t discuss the nearby statutory language
making clear that statements in commercial advertising or promotion are
actionable if they “misrepresent[] the nature, characteristics, qualities, or
geographic origin of his or her or another person’s goods, services, or
commercial activities” (emphasis added). Even if, as the dissent says,
independent reviews are fully protected speech, that’s not the situation
alleged here, and the concerns governing the lesser protection for deceptive
commercial speech are clearly implicated.

The dissent recognized that the statute extends beyond
advertising by manufacturers and distributors themselves. “[W]hen an entity
acts as an agent of a manufacturer in making a product review, then that entity
acts on behalf of the manufacturer and is in that sense advertising its own
product. ‘[P]aid publicists’ speech’ about their payor’s products is commercial
speech.” Likewise “there may be other endorsers who have such a direct
financial stake in specific sales of a product—such as a cut of each sale—that
it may likewise be fair to say that they are thereby advertising their own
product.” But being cautious here avoids difficult constitutional questions. [It
is notable that those difficult questions have generally involved regulation of
truthful speech, like information about contraceptives; where the speech
is deceptive, there is less reason to be concerned for the free flow of
information.] The dissent thought that the majority created “a substantial
amount of uncertainty as to the scope of First Amendment protection for product
reviews, a result that I find doubtful and disquieting.”

The dissent would thus have concluded that Ariix failed to
plausibly plead that the statements promoted NutriChoice’s own products. The
complaint didn’t allege “Usana’s advance direction and control in preparing the
content of the Guide,” which might have sufficed. The dissent wanted Usana to
have changed or put “specific content” in the Guide—a standard that would
likely free many influencers from regulation. It wasn’t enough to allege that “Defendants
produced biased reviews in the craven hope that Usana would then act in ways
that were economically favorable to Defendants.” [That really seems like a
misdescription of the allegations—it might be a fair characterization if the
parties had never before interacted and the first contact was when MacWilliam
reached out to say “look how well I rated you!”]

The dissent thought that the allegations merely showed “that
Usana liked favorable reviews and that Usana promoted the Guide and its author
when the reviews were distinctly superlative and did not do so when they were
not…. That Defendants wrote obsequious reviews in the hope that Usana would be
pleased and buy more Guides or give MacWilliam speaking engagements does not
make them Usana’s agents in writing those reviews.” Sure, MacWilliam was
Usana’s agent when he did paid speaking tours expressly promoting Usana’s
products, but the complaint didn’t rest on that theory. [Surely it is relevant
to what MacWilliam was doing with the Guide, though.]

Nor was there anything else justifying the conclusion that  Usana’s products were in any relevant sense NutriChoice’s
products, such as an entitlement to a cut of each sale, or other links to
profit if consumers chose particular supplements.

from Blogger https://ift.tt/3c7Ng75

Posted in Uncategorized | Tagged , | Leave a comment

Happy inauguration day to Redbubble in particular: 9th Cir. affirms functionality in Lettuce Turnip the Beet

LLTB LLC v. Redbubble, Inc., No. 19-16464 (9th Cir. Jan. 20,

LTTB LLC sells t-shirts and other goods bearing its
registered trademarks, the words and design, “LETTUCE TURNIP THE BEET.”  LTTB sued Redbubble for infringing by selling
products containing the same words and design. The district court granted
summary judgment in favor of Redbubble on grounds of aesthetic functionality/failure
to function. The court of appeals affirmed in a nonprecedential opinion,
holding (contrary to what INTA wanted) that Job’s Daughters is still
good law even though its “broad language was soon clarified and narrowed.”

Anyway, under Au-Tomotive Gold, the symbols here were
functional. Although “the t-shirts, tote bags, and other products bearing the
LTTB mark would still function as t- shirts and tote bags without the mark” and
use of the mark doesn’t alter the cost structure of production or add to the
[physical] quality of the products, but the question of aesthetic functionality
is whether the marks “perform some function such that the exclusive use of the
marks would put competitors at a significant non-reputation-related
disadvantage” (cleaned up).

Without explicitly interpreting what “significant” means
here, the court reasoned: “It cannot be disputed that competitors would be
unable to sell products bearing the phrase if LTTB’s marks were protected.” And
the Ninth Circuit disfavors monopolization of “a design feature which, in
itself and apart from its identification of source, improves the usefulness or
appeal of the object it adorns.” There was no evidence that consumers bought LTTB’s
goods because they identify LTTB as the source, rather than because of the
aesthetic function of the phrase, “LETTUCE TURNIP THE BEET.” LTTB’s evidence of
the popularity of its goods didn’t raise a triable issue on source
identification. Indeed, almost all of LTTB’s products bore the phrase “LETTUCE
TURNIP THE BEET” on them, “indicating that the phrase acts as an aesthetic
design, not as a symbol for the company.” Unlike high fashion brands, LTTB presented
no evidence “that consumers buy the goods because the design associates the
goods with the company LTTB rather than because they want goods bearing the
phrase.” Thus, it didn’t raise an issue of fact on aesthetic functionality.
[Although the court also doesn’t say anything about this, here the fact that no
evidence of secondary meaning was required to register the marks cuts against
LTTB: it was never required to develop such evidence, and the fact that a
symbol could be inherently distinctive if used in the right way doesn’t do
anything to rebut evidence that consumers are looking for the aesthetic effects
of displaying the symbol prominently on goods.]

LTTB’s registrations, and even incontestable registrations,
couldn’t overcome the defenses listed in statute, including “[t]hat the mark is
functional.” “Because, on this record and when used on the allegedly infringing
products that are the subject of LTTB”s complaint, LTTB’s marks are functional,
they are not protectable against any type of allegedly infringing activity.”

So, is the court actually recognizing pure defense-side functionality?
Sort of. Footnote: “[W]e do not hold that LTTB’s marks are per se invalid.”
Instead (?), the uses here—including on Redbubble’s website and in online
advertising—could not be infringing. But also: “Because LTTB’s mark is
functional and therefore not protectable on this record, there is no need to
address the issue of likelihood of confusion.” Nor did the district court err
in not addressing LTTB’s design marks separately; trademark isn’t supposed to
protect originality or creativity, but rather to protect source identification.
“Like the sweater designs in Wal-Mart, LTTB’s marks are primarily
aesthetic on this record, not source-identifying.” [This reiteration of “on
this record” is confusing. Is the court suggesting LTTB can try again if it
develops evidence as to front-of-product uses? Why? While there are a couple of
cases allowing terms that had distinctiveness, then became generic, to reclaim
that earlier distinctiveness, I’m not aware of cases allowing a once-functional
product feature to become nonfunctional.]

The district court also didn’t err in looking at the PTO’s
initial rejection of LTTB’s application on failure to function grounds; TrafFix
looked at the prosecution history of an expired patent in addressing trade dress

We end with some vagueness about whether LTTB owns anything:

LTTB’s marks do not function as
trademarks because they are aesthetic only and do not identify the source of
the goods. The allegedly infringing activity does not deceive or mislead
consumers about the source of the goods but copies the designs themselves…. Because
functionality is a defense to the validity of the marks and to LTTB’s exclusive
right to use the marks, the district court properly granted summary judgment to
defendant Redbubble ….

from Blogger https://ift.tt/2Y1yyWU

Posted in Uncategorized | Tagged | Leave a comment

Dastardly DoorDash fails to get restaurant complaint dismissed, including under UCL/FAL

Lona’s Lil Eats, LLC v. DoorDash, Inc., No. 20-cv-06703-TSH,
2021 WL 151978 (N.D. Cal. Jan. 18, 2021) (magistrate)

This case addresses a topic that’s received broader media coverage
than most advertising issues. The magistrate finds that Lona’s sufficiently
alleged false advertising by DoorDash about its availability, diverting
potential consumers from Lona’s to restaurants that were DoorDash partners. (The
practices considered are why I always start with the restaurant’s own website
and order from that.)

This putative class action alleges violations of the
Lanham Act, the FAL, and the UCL, alleging that DoorDash “misrepresents to
consumers that it provides delivery and pick-up services for non-partner
restaurants and then misrepresents the restaurants are closed, do not offer
delivery services, or are unavailable for pick-up orders.” The complaint
alleges that, especially given the pandemic, “DoorDash’s market power is such
that restaurants are put in a difficult situation: they can become partner
restaurants and pay exorbitant fees and commissions to Defendant, or they
decline to do so and risk losing out on sales.”

Even worse,

DoorDash pressures non-partner
restaurants by setting up “landing pages” for them, which in some instances
still are available on its website and on its mobile app. … DoorDash’s
marketing power is such that the landing pages are often prioritized on
internet search engines and displayed even before the restaurants’ own
websites. These landing pages are complete with DoorDash branding and usually
show a restaurant’s full menu, even if the restaurant has no affiliation with
DoorDash and has not authorized the use of its information. This façade of a
connection signals to consumers that the landing page for the non-partner
restaurant is legitimate and can be relied upon.  

On these landing pages, DoorDash
publishes false and misleading information about restaurants that are not its
partners, including restaurants being “closed” when they were in fact open;
being “unavailable” as “too far away” for delivery; and being “unavailable” for
pick-up orders when the restaurant is in fact accepting pick-up orders. Each of
these false and misleading statements steers would-be customers of non-partner
restaurants’ to DoorDash’s partner restaurants.

Lona’s alleged that a search for “Lona’s Lil Eats delivery”
in June 2020, “as a result of DoorDash’s market power and internet marketing strategies,”
would display a link for Lona’s on a DoorDash website as one of the first
results. “Clicking through the
link for Lona’s would bring a consumer to a page with DoorDash branding and
Lona’s’ complete menu, as if it were possible to place an order through the

“DoorDash’s site would let the customer go through the
process of placing an order, including the opportunity to customize the order,
adding credibility to the idea that Lona’s had partnered with DoorDash and that
placing an order was possible:” (not cool, DoorDash)

“The order, however, could not be completed, and no matter
what the user’s proximity to Lona’s—even as close as only 200 feet away—the
site would say that ordering from Lona’s was ‘unavailable’ on account of being ‘out
of the delivery area’ and ‘too far.’”

Likewise, DoorDash’s mobile app allegedly (as of Nov. 2020) misrepresents
that Lona’s is not available for delivery and also not accepting pick-up

If the consumer clicked on the information button
immediately next to “Unavailable too far away,” then the app displayed options
of “Switch to Pickup” or “See other stores.” But if a consumer chose “Switch to
Pickup,” DoorDash would then misrepresent that pickup wasn’t an option, even
though Lona’s does offer pickup: 

At that point, the only other option, “See other stores,” switched
consumers to DoorDash’s partner restaurants.

Lona’s alleged that several customers were, in fact, misled
by DoorDash’s misrepresentation that Lona’s was closed. Some allegedly reached
out to Lona’s to ask if they were actually open. Although the false “closed”
designation was removed, Lona’s allegedly lost business because of DoorDash’s
misrepresentation, and nothing stopped DoorDash from doing it again.

Applying Rule 9(b), the court found that Lona’s pled the
existence of a “false statement” with particularity; sufficiently pled that the
statement was in a “commercial advertisement”; sufficiently pled actual
deception/tendency to deceive; and adequately pled injury.

Two literal falsehoods were pled: that Lona’s was closed and
that pickup from it was unavailable. And one misleading statement: that pickup
was unavailable because the customer was “too far away.”

The judge understandably rejected DoorDash’s argument that
Lona’s needed to allege who at DoorDash made the statements: “DoorDash points
to no legal authority suggesting that an individual employee must be named in
the complaint, and it’s hard to see how Lona’s could get that information at this
point or who even at DoorDash would be considered the maker of the statement in
lieu of the company itself.” Nor did any authority suggest that Lona’s must identify
specific deceived customers at the pleading stage. “In this case, where the
plaintiff has alleged that a statement was made to the purchasing public and
that at least some of the public communicated that they were misled by those
statements, that is enough specificity at the pleading stage.”

Commercial advertisement: The judge clearly explained how
the Gordon & Breach test, which was adopted by the Ninth Circuit, has
been modified by Lexmark, making the “by a competitor” element of the
test no longer good law.

Accordingly, for representations to
constitute “commercial advertising or promotion” post-Lexmark, they must
be: (1) commercial speech; (2) for the purpose of influencing consumers to buy
defendant’s goods or services; and (3) disseminated sufficiently to the
relevant purchasing public to constitute “advertising” or “promotion” within
that industry.

DoorDash argued that pages on its website or app where customers
complete orders aren’t “commercial speech.” But it waived that argument through
failure to do more than gesture at it (and anyway they obviously are; Lona’s
even alleged the economic motive: increasing its commissions and strong-arming
Lona’s into partnership). Even if you accepted that the statements were not in “advertising
format” (which in my opinion they clearly are, given how internet advertising
works), that’s not dispositive.

DoorDash argued that the complaint failed to allege that
“closed” or “unavailable” designations were made to convince customers to
purchase DoorDash’s products because DoorDash does not sell food. That was
irrelevant, given Lexmark and given that DoorDash “makes money in fees
and commissions whenever a consumer orders food from a partner restaurant ….
[B]y allegedly misleading consumers and re-directing them away from non-partner
restaurants to partner restaurants, DoorDash allegedly gains at non-partner
restaurants’ expense.” That was all that was required at the pleading stage.

DoorDash also argued that Lona’s didn’t allege sufficient
dissemination because Lona’s “does not identify, or even estimate, how many
potential customers saw” the statements. “[A]t best,” DoorDash argues, “only
those customers who attempted to place an order for food from [Lona’s] would
have come across such statements.” But that was sufficient, since “the primary
focus is the degree to which the representations in question explicitly target
relevant customers.” Lona’s alleged that DoorDash targeted all relevant
customers, and that, as a result of its market power and marketing strategies, it
was “one of the first results” that such customers would encounter.

Finally, DoorDash argued that the alleged misrepresentations
only occurred after multiple clicks, on a final checkout page. But so what? “The
reasonable takeaway is that by luring would-be Lona’s’ customers onto its
landing pages, taking them through a Lona’s’ menu, and then ‘redirect[ing]
[them] to [ ] Partner Restaurants by suggesting that Lona’s is not an option,’ DoorDash
was promoting its own services. Why else go through the trouble?” Bait and
switch, indeed.

Deception/tendency to deceive: Evidentiary proof of actual
or likely deception is not required at the pleading stage, and deception can be
presumed from literal falsity.

Injury: Lona’s sufficiently alleged both short-term and longer-term
harm: “[N]ot only do [putative class members] miss out on orders in the short
term, but they are less likely to attempt to order from them in the future,
since they are represented to be closed or not available.” General allegations
of resulting monetary damages and “other irreparable injury, including loss of
market position, loss of reputation, loss of goodwill, the ability to continue
as a going concern, and other damage for which there is no adequate remedy at
law” were sufficient. The fact that DoorDash wasn’t a direct competitor didn’t
matter after Lexmark. Although DoorDash argued that “alleged injuries
‘still require sufficiently detailed allegations,’ ” it didn’t offer suggestions
of what more Lona’s needed short of lost customer names. For purposes of the
pleadings it was sufficient that Lona’s alleged that “[s]everal customers were,
in fact, misled by DoorDash’s misrepresentation that Lona’s was closed, and
they did not know whether Lona’s was actually open,” and that “[s]ome of these
customers reached out to Lona’s to ask if they were actually open.”

FAL/UCL claims: While a number of California federal district
courts have held that Proposition 64 meant that plaintiffs have to allege their
own reliance on the defendant’s false claims, which obviously would exclude
Lona’s as a proper plaintiff, the magistrate rejected that line of cases.

In re Tobacco II Cases and Kwikset held that Proposition
64 narrowed the reach of fraud-based claims under the UCL and FAL. Now, a
plaintiff’s economic injury must “come ‘as a result of’ the unfair competition
or a violation of the false advertising law.” “The phrase ‘as a result of’ in
its plain and ordinary sense means ‘caused by’ and requires a showing of a
causal connection or reliance on the alleged misrepresentation.” Recognizing
that “ ‘reliance is the causal mechanism of fraud,’ ” the California Supreme Court
held that in consumer claims based on fraud under the UCL or FAL, a plaintiff “
‘must demonstrate actual reliance on the allegedly deceptive or misleading
statements.’ ” Courts have extended this to “unlawful” and “unfair” claims when
the claims are based on misrepresentation.

But Tobacco II “emphasize[d] that our discussion of
causation in this case is limited to such cases where, as here, a UCL is based
on a fraud theory involving false advertising and misrepresentations to
consumers,” and the court noted that “[t]here are doubtless many types of
unfair business practices in which the concept of reliance, as discussed here,
has no application.” And Kwikset elaborated that “as a result of” means “caused
by” and requires “a showing of a causal connection or reliance on the
alleged misrepresentation.” (emphasis added). The judge here reasoned that this
language “suggests strongly that there are situations where the element of
causation can be proved without showing actual reliance, so as long as there’s
sufficient causation.” If every plaintiff in every situation had to prove
reliance, “it would be hard to imagine when a competitor would be able to
assert a false advertising claim,” which would conflict with the California
Supreme Court’s clear statement in Kwikset that the purpose of the false
advertising laws “is to protect both consumers and competitors by promoting
fair competition in commercial markets for goods and services.”

In addition, Proposition 64 was passed to prevent abusive
UCL claims where plaintiffs had not been injured in fact. But unlike such
plaintiffs, competitor[ish] plaintiffs do suffer injury in fact as a result of
false advertising: lost market share and sales. “Proposition 64’s purpose of
preventing actions by plaintiffs who have not suffered an actual injury is not
served well by extending Kwikset to all cases, and a rule requiring all
plaintiffs to prove actual reliance would in fact defeat the UCL and FAL’s
purpose of protecting consumers and competitors alike.”

Finally, DoorDash argued that Lona’s lacked standing for
injunctive relief, but this was rebutted by the complaint’s allegations. Lona’s
alleged that it was realistically threatened by a repetition of the violation;
it even alleged that the “out of range” misrepresentation persisted at least
through a month after Lona’s sued.  This
wasn’t a case where the defendant’s purported reform was “irrefutably
demonstrated [ ] and comprehensive.” “The fact that Lona’s had to wait over a
month for DoorDash to remove the content adds plausibility to Lona’s’
allegation that ‘there is nothing to prevent [DoorDash] from reinstating such
misrepresentations as to Plaintiff or any member of the putative class.’”

from Blogger https://ift.tt/3sInyvK

Posted in Uncategorized | Tagged , , , | Leave a comment