Chris Sprigman and I just submitted this brief. The focus of the argument is the associational interests of Discord’s users, who want and need assistance from centralized content moderation in order to support their communities.
from Blogger http://tushnet.blogspot.com/2023/12/netchoice-amicus-on-behalf-of-discord.html
Urban Dollz LLC v. Lashify, Inc., 2023 WL 8292459, No. CV
23-1427-GW-AFMx (C.D. Cal. Oct. 17, 2023)
Super-interesting holding that, while there’s no patent
field preemption against bringing false patent marking claims under the Lanham
Act, Dastar (as expansively interpreted to cover false advertising
claims) does preclude such claims, possibly only because of party argument.
Urban Doll sued Lashify for Lanham Act false advertising and
false patent marking, alleging that Lashify made false statements on social
media that certain of its products were patented and innovative.
A party pleading false marking claim under 35 U.S.C. § 292
must show: (1) an unpatented article; (2) an intent to deceive the public; and
(3) a competitive injury. The court found that, to satisfy Rule 9(b), Urban
Doll needed to allege competitive injury in more detail, and dismissed with leave
to amend. (The element of knowledge of falsity was satisfied by pleading, among
other things, that defendants asserted their patent rights many times; that
defendants claimed that defendant Lotti was the inventor, and that they have
posted on social media that “falsely claiming patents or patent pending is
illegal and false marketing.” “These factual allegations support Plaintiff’s
allegation that Defendants are sophisticated, which in turn supports alleged
intent to deceive.”)
A competitive injury is an injury that: (1) “results from
competition,” and (2) is “caused by the alleged false marking.” It wasn’t
enough to allege lost sales without alleging specific facts to support the claim
that it was the false statements that led to the lost sales. Defendants argued
that all but one of the allegations on which Plaintiff relies “predate[s] Urban
Doll’s founding,” or was made “shortly thereafter.” The court agreed that Urban
Doll needed to plead either that it was a current competitor in the same market
at the relevant time, or that it was a potential competitor with both the
intent and action of entering the market.
Likewise, Urban Doll needed more specific instances of
competitive injury such as lost sales or deterred market entry causally
traceable to the false marketing. It
wasn’t enough to allege that defendants “repeatedly labeled its competitors as
“infringers, copycats, and counterfeits,” “with the express purpose of driving
sales away from those competitors,” and that “Defendants’ customers believe and
rely on Defendants’ representation when deciding what products to purchase.”
Dismissed with leave to amend.
False advertising: First, the Patent Act can’t “preempt” the
Lanham Act, but to harmonize them, courts have required Lanham Act claims based
on false advertising of a patent to allege bad faith, which isn’t usually
required. (Honestly, it sounds like disparagement could be a better false
advertising claim here, depending on what exactly was said.)
But, though no one has noticed it before, even bad faith isn’t
enough because of Dastar. In Sybersound Records, Inc. v. UAV Corp., 517
F.3d 1137 (9th Cir. 2008), “to avoid overlap between the Lanham and Copyright
Acts,” the court interpreted “the nature, characteristics, and qualities of
karaoke recordings under the Lanham Act … to mean characteristics of the good
itself, such as the original song and artist of the karaoke recording, and the
quality of its audio and visual effects.” Misrepresentations about licensing
status/compliance with copyright were not, therefore, actionable. Baden Sports,
Inc. v. Molten USA, Inc., 556 F.3d 1300 (Fed. Cir. 2009), applied Sybersound
to an alleged misrepresentation of inventorship. So, “authorship, like
licensing status, is not a nature, characteristic, or quality, as those terms
are used in Section 43(a)(1)(B) of the Lanham Act.” And that also applied to
inventorship (or at least the plaintiff didn’t seem to dispute that claims only
based on inventorship were barred).
The court noted that Baden wasn’t binding on it and was
not immune from critique. One could read Sybersound to be about barring
circumvention of patent/copyright rules by bringing a Lanham Act claim (e.g.,
expired patent, non-owner of IP right), not that one could never bring suit
over statements about the IP status of a good. Here, at least with a bad faith
add-in, the two statutes didn’t clash—the court doesn’t say this, but the
logical extension is to say that the Lanham Act is precluded in false marking claims only to the extent
that it’s strict liability.
Claims about physical qualities, like “lashes are so light
they literally stick to your lashes and melt within your lash line,” were not actually
pled as false advertising, though the court granted leave to amend to make
non-inventorship false advertising claims. Ad claims to use a “revolutionary
method,” or to be the “worlds [sic] only” or “worlds [sic] first DIY lash
extension system” “could reasonably be construed as being about the nature of
the goods themselves (e.g., that they employed a new or unique technique or one
that is superior to other products),” so the court wouldn’t construe them as
only about inventorship. But the court cautioned that some of this was puffery.
from Blogger http://tushnet.blogspot.com/2023/12/dastar-bars-false-marking-claims.html
McCandless Group, LLC v. COY Collective, Inc., No. LA CV
21-02069-DOC-KES, 2023 WL 8351525 (C.D. Cal. Oct. 23, 2023)
The individual defendants co-founded COY in 2019 to provide
creator clients with a platform to offer subscription services. COY hired MG to
develop COY’s subscription platform. Things eventually went bad, resulting in
contract/trade secret claims and copyright/ROP counterclaims.
One of the individual defendants is “a social media
personality and model who became well-known for her photos and videos, and who
has also started an agency to provide management services to other models and
influencers.” Individual counterclaim defendant McCandless pitched Bartlett on
building a personal website for her to “monetize” her following on Instagram
and other sites. After they executed a Web Development Agreement, a number of
her copyrighted photos were added to the site created by McCandless (it’s
disputed who did that). Bartlett also helped them recruit another popular
Instagram model, Passos. Because of Bartlett’s popularity, McCandless used her,
among other personalities, to market his services and asked her to provide a
“testimonial” video for him to use, which she provided and he posted to his
Instagram.
After the relationship broke down, Bartlett’s website became
disabled, but MG and McCandless kept copies of Bartlett’s photos on their
servers until after defendants filed their counterclaims. “Before their
removal, Works were accessible at least to an unknown number of individuals
with content creator or content manager access to MG’s platform. While the URLS
for each image (which included long strings of characters unique to each image)
were only findable by those with that access who had saved the links prior to
Bartlett’s website being shut down, any person that entered the correct URL
into a web browser could access the photos.”
McCandless admits that he left Bartlett’s testimonial on his
Instagram page and did not remove the video until September 2022, despite
lacking authorization since at least 2020. Although not tied specifically to
Bartlett’s video, MG received revenue from new models during the period of use
of Bartlett’s endorsement video for recruitment. “Bartlett was upset by the use
of her image to endorse a company with whom she was also engaged in litigation.”
Addressing only the counterclaims: Bartlett made out most of
her ROP claim related to the testimonial video, despite an argument that she hadn’t
shown injury. “The invasion of plaintiff’s right to privacy constitutes the
harm, entitling plaintiff to recover for all damage caused by the invasion.
While special damages may be awarded if sustained, general damages are
recoverable without a showing of specific loss,” which included injury to her
feelings. While the prima facie claim had been established, there was a genuine
dispute of fact on the affirmative defense of incidental use, which the court
predicted existed in California.
A defendant’s “insignificant or fleeting use of plaintiff’s
identity is not an infringement.” It was undisputed that Bartlett’s video was a
small part of a longer endorsement video, and it was disputed whether
McCandless was “unaware” this video was on his Instagram and what commercial
impact the video had. These were questions for the jury, as was the “knowing”
element of the statutory misappropriation claim, given the credibility question
of whether McCandless knew the video was still on his Instagram page.
Copyright counterclaims: There was a genuine dispute of fact
about the public display right. Bell v. Wilmott Storage Servs., LLC, 12 F.4th
1065 (9th Cir. 2021), held that an infringing public display includes making an
image available via a server that is publicly accessible, regardless of whether
anyone accesses the photo. Causation was established because Wilmott had
“assum[ed] responsibility for … the servers.” This was “volitional for
purposes of copyright infringement.” “In other words, Bell establishes
that general control of the server that is publicly displaying the image may be
sufficient to impose liability.”
But in Bell, the copy was apparently always
infringing, which doesn’t seem to be the case here. Nonetheless, the court
concluded that MG’s inaction after Bartlett requested the images be removed and
filed her counterclaims “may have caused the photos to remain public, without
Bartlett’s consent, for five months.” Responsibility for the website and its
architecture was a disputed issue.
from Blogger http://tushnet.blogspot.com/2023/12/using-testimonials-post-relationship.html
Sepanossian v. National Ready Mix Co., — Cal.Rptr.3d —-,
2023 WL 7590798, No. B319260 (Ct. App. Nov. 15, 2023)
Sepanossian, who operates a construction business, filed a
class action against Ready Mix, which sells mixed concrete to small businesses
for construction projects, alleging Ready Mix charged its customers an “energy”
fee and an “environmental” fee “wholly untethered to any actual cost for
‘energy’ or ‘environmental’ issues” that Ready Mix instead “recognize[s] as
profit.” The complaint alleged causes of action for UCL fraudulent and unfair
business practices; breach of contract; and “unjust enrichment.” The court of
appeals reversed a dismissal of the UCL claims, but affirmed on unjust
enrichment.
Customers pay Ready Mix a “set rate” for its concrete
products. Sepanossian alleged that Ready Mix adds an “energy” fee and an
“environmental” fee separate from the set rate to every sale, about $30 each.
These fees are uniform and do not correlate to or fluctuate in any way with any
actual energy or environmental costs incurred by Ready Mix or the size of the
order, but instead allegedly are recognized by Ready Mix as profit. The energy
and environmental fee amounts were separately itemized on invoices and
disclosed to customers, but without further explanation or information. “The
gravamen of Sepanossian’s complaint is not that class members did not know the
amount of these charges, but rather that the terms environmental fee and energy
fee were misleading.”
Sepanossian alleged, “Plaintiff and class members would not
have entered into contracts with Ready Mix and would not have paid the fees at
issue had they known the truth about the ‘energy’ and ‘environmental’ fees and
had not been subject to Ready Mix’s misrepresentations and omissions.”
The trial court dismissed the complaint on the basic theory
that plaintiffs didn’t suffer any harm because the amount was disclosed to them
and Ready Mix didn’t make any claims about how it was going to use the fees. I
think that undersells the harms of junk fees—they come late in the transaction,
they hamper comparison shopping, and by seeming “regulatory” they prevent any
attempts at negotiation, which for a business customer might be a real thing.
The court found that plaintiffs stated a claim both for “fraudulent”
and “unfair” practices under the UCL. At
the pleading stage, it was plausible that the fees misled consumers into
thinking they had some nexus to energy or environmental costs. “A perfectly
true statement couched in such a manner that it is likely to mislead or deceive
the consumer, such as by failure to disclose other relevant information, is
actionable,” and “a reasonable consumer would likely be surprised to learn that
a charge expressly identified as an ‘energy’ or ‘environmental’ fee, added on
top of the set rate for a concrete purchase, had no actual relationship of any
kind to Ready Mix’s energy or environmental costs and was pure profit.” Indeed,
“[r]easonable consumers are entitled to infer that the descriptive name
attached to a particular fee they are being charged has some connection to the
fee unless otherwise indicated.”
Unfairness: Similarly, it sufficed to allege that (1) such
fees are automatically added to every concrete purchase, thus causing
substantial injury to customers; (2) the fees provide no countervailing benefit
to customers; and (3) the fees were mandatory and unavoidable, thus there was
no way for customers to reasonably avoid the injury because if they wanted to
purchase concrete from Ready Mix, they had to pay the fees. It wasn’t enough
that consumers could avoid the fee by declining to transact with Ready Mix.
However, because there was an express contract between the
parties covering the fees, and the contract was not procured by fraud or
otherwise unenforceable or ineffective, Sepanossian could not assert a claim
for restitution based on unjust enrichment.
from Blogger http://tushnet.blogspot.com/2023/12/californias-ucl-potentially-available.html
Williams v. Hy-Vee, Inc., — F.Supp.3d —-, 2023 WL
3602813, No. 4:22-cv-00025-RGE-HCA (S.D. Iowa Mar. 15, 2023)
Williams, a professional artist, was commissioned to paint an
abstract mural on the wall of a building located in Des Moines, Iowa. The contract provided that the buyer would own
the “Work” once it was paid for and that “Purchaser and/or building owner may
not copyright, reproduce, or merchandise images of the Work without the
Artist’s written consent in advance.” The agreement also stated: “The Purchaser
will not permit any use of the Artist’s name or misuse of the Work which would
reflect discredit on his/her reputation as an artist or which would violate the
spirit of the Work.” In the completed mural, William’s initials (“CAW”) and his
Instagram username (“@KingCaw”) were included in the lowermost opposing corners.
 |
| a picture of the Williams mural |
Hy-Vee, a grocery chain, aired a commercial during Super
Bowl LIII, which featured portions of the mural. A longer version of the
commercial was also posted on Hy-Vee’s Facebook page.
The central portion of the mural is depicted in the
commercial, but not the lower right- and left-hand corners of the mural.
Williams registered his copyright and sued, alleging infringement, violation of
VARA, and §1202 violations. Hy-Vee counterclaimed for declaratory judgment that
Williams’s copyright registration certificate for the mural is invalid because
Williams knowingly provided inaccurate information to the Register of
Copyrights when he filed his copyright registration application.
Williams wasn’t entitled to a rebuttable presumption that he
was the copyright owner because he only submitted a copy of his Public Catalog
search results, not his certificate of registration. The court found that the
only reasonable interpretation of the contract was that “Work” referred to both
the physical mural and the copyright. If the agreement was terminated before
payment, the contract provided “all rights of ownership in the concept, design,
and Work itself” to Williams, but didn’t reserve those rights if it was
completed and paid for. “This omission is telling.” Reading the other
provisions “to silently reserve to Williams the same rights expressly reserved
in the immediately preceding clause would frustrate this objective” by rendering
the express reservation of Williams’s
ownership rights in the “concept” and “design” of the mural superfluous. The requirement
that the owner couldn’t “copyright, reproduce, or merchandise images of the
Work without the Artist’s written consent in advance” wasn’t the same thing as a
reservation of copyright. This provision didn’t make the copyright unusable,
just restricted some of the rights in a copyright. Williams’s other arguments relying
on extrinsic evidence thus couldn’t be considered because the contract wasn’t
ambiguous.
VARA: VARA immunizes from liability “any reproduction,
depiction, portrayal, or other use of a work in, upon, or in any connection
with any item” enumerated in the Copyright Act’s list of items excluded from
its definition of a “work of visual art,” including any “motion picture or
other audiovisual work.” Thus, VARA’s attribution right did not apply to the
commercial.
§1202 CMI removal: Although CAW/the Instagram handle met the
definition of CMI, Hy-Vee didn’t violate §1202 by filming only sections of the
mural without that CMI. The depiction of the center portion of the mural in the
commercial didn’t constitute a “transfer or moving” of Williams’s copyright
management information, nor a “change” in the substance of this information. The
court didn’t reach the speculative allegation that the CMI might have been
cropped in post-production.
Worse for Williams, Hy-Vee made out a prima facia case that
the registration was invalid because Williams claimed he owned “all of the
rights” in the mural. The court was required to seek the Copyright’s Office at
this point, so it didn’t fully resolve the invalidity issue. In response to Hy-Vee’s
argument that he knew he didn’t own the rights, he submitted sworn affidavits
from himself and the executive director of the organization that hired him to paint
the mural, both attesting to their understanding that copyright in the mural
was reserved to Williams. But “[g]iven the terms and context of the Agreement,
Hy-Vee has ample factual support to allege Williams either knew or was
willfully blind at least to the necessity of transferring the right to publicly
display the mural to 6th Avenue Corridor.” At the very least, the court
reasoned, he’d transferred the right to publicly display the mural, since by
its nature it was publicly displayed.
This fact alone provides strong
basis for Hy-Vee’s allegation Williams knew he did not own all rights in the
mural. It is more than plausible 6th Avenue Corridor would have acquired the
right to publicly display the mural—the only way possible to display the
mural—along with physical ownership of the mural. Williams’s argument that 6th
Avenue Corridor was merely granted a “limited, non-exclusive license” to
publicly display the mural is unconvincing. Williams fails to explain how the
right to publicly display a mural fixed on the exterior of a building could be
non-exclusive. conclude Williams retained ownership of the right to publicly
display the mural would create an absurd and inefficient division of ownership.
[FWIW, I think the contract interpretation is wrong but
plausible, but this part is just wrong, and continues the conflation between the
work and the copy. §109 limits the public display right when someone is
publicly displaying a lawfully made work they’ve purchased (without further
transmission elsewhere). So it’s perfectly reasonable for Williams to believe
he retained the entire public display right, subject to §109 and other
limitations provided for by law.]
from Blogger http://tushnet.blogspot.com/2023/12/court-finds-that-transferring-title-to.html
In re SoClean, Inc., Marketing, Sales Practices &
Products Liab. Litig., 2023 WL 8006602, MDL No. 3021, No. 22-542 (W.D. Pa. Nov.
17, 2023)
Because this is MDL with lots of claims, the facts are a bit
complicated. SoClean is a dominant player in the market for medical devices
that sanitize continuous positive airway pressure machines (CPAPs), which treat
sleep apnea and respiratory conditions. It alleged that the Philips defendants,
who make such devices, engaged in false advertising about one of SoClean’s
devices in order to deflect blame for the Philips devices’ design defects. SoClean
and the FDA have been back and forth about what kind of medical device SoClean’s
product is; as part of their interactions SoClean dropped “claims pertaining to
the cleaning, sanitizing, or disinfection of CPAP machines” from its website.
SoClean has submitted a de novo application for its latest product, which is under
review.
In 2020, the FDA issued a safety communication about
“potential risks associated with the use of ozone and ultraviolet (UV) light
products for cleaning CPAP machines and accessories” focusing only on the issue
of potential risk of ozone leakage, but SoClean alleged that its products don’t
leak ozone at unsafe levels. (In its press release, the FDA referred to its own
testing on “several of those illegally marketed products,” although SoClean
alleged that it believed in good faith that it didn’t need preapproval.)
Meanwhile, Philips allegedly knew for years that the
polyester-based polyurethane foam used to dampen sound in Philips’ ventilator,
CPAP, and other respiratory care devices was susceptible to degradation and
off-gassed potentially harmful volatile organic compounds (VOCs). Philips
allegedly misled the FDA by telling it that foam degradation may be
“exacerbated” by ozone cleaners, without any reliable testing or other valid
scientific evidence to validate those statements. Philips repeated similar
statements elsewhere. One Philips entity’s CEO said, on an earnings call, that
ozone was a problem for foam, and that “[t]he FDA observed this and also put
out a safety notice to say, don’t use ozone for CPAP machines,” which allegedly
misrepresented the reasoning for the safety notice. As in other instances, he
used the opportunity to promote the next-generation Philips product, which had
a more stable foam.
A number of Philips devices were recalled for foam degradation,
giving two reasons to customers and users: foam off-gassing and foam
degradation from use of “unapproved” ozone cleaning devices, which could “exacerbate[e]”
the problem; anti-ozone cleaning claims were disseminated in various ways,
including Philips’ website FAQ about the recall and another earnings call.
Philips also allegedly blamed SoClean at the largest 2021 home
medical equipment trade show and conference in the United States, telling
distributors and resellers during meetings that “SoClean was the problem.” Resellers
and distributors allegedly cited these statements as the reason for not placing
orders with SoClean, leading all but one of SoClean’s top distributors and
resellers to stop placing orders with SoClean. Because the disparagement was successful, and actual
and prospective customers and distributors believed that SoClean devices were
the reason for the product recall, sales to distributors, resellers, and
end-users allegedly plummeted.
The Philips defendants argued that there was no statutory
Lanham Act standing because they weren’t even indirect competitors, but the
court here found that Lexmark removed any requirement even of indirect
competition (including by blessing lawsuits across the distribution chain, e.g.
manufacturer v. dealer). All SoClean needed was to show that it suffered
commercial injury proximately caused by defendants’ violations of the Lanham
Act, which it plausibly alleged.
However, the Philips defendants argued that SoClean wasn’t within
the zone of interests protected by the Lanham Act because the only commerce
protected by the Lanham Act is lawful commerce. And, they continued, SoClean was
illegally marketing its devices. This argument couldn’t be resolved at the
present stage, when SoClean alleged that it marketed and sold its device “with
the knowledge of the FDA,” including having an FDA inspection of its
manufacturing facility without FDA raising concerns. However, other documents
integral to the complaint indicated that the FDA thought there was a potential
FDCA violation. So the court wanted to hear from FDA experts about whether the
FDA’s knowledge that SoClean planned to continue marketing the challenged
device for a limited period of time gave it a “legally protected interest” during
the relevant timeframe.
Commercial advertising or promotion: A separate problem. Quarterly
reports and earnings calls, “without allegations that defendants intended to
influence the consumers and the communication was disseminated to the consumers,”
aren’t commercial advertising or promotion for these purposes. (The court says
they’re not “commercial speech,” but since that’s a First Amendment term, I’m
using the more statutorily precise “commercial advertising or promotion.”) Here,
the allegations were insufficient to show that the earnings calls and quarterly
report were advertising or promotional; rather, they primarily served their
typical function: to influence investors. Although the statements “may have had
an incidental effect of promoting goods, i.e., to deflect blame for the recall
and promote Philips’ goodwill so that the consumers would continue to purchase
Philips’ devices,” that wasn’t sufficient: they weren’t primarily made to
advertise or promote Philips’ products. Nor did SoClean plausibly allege
sufficient dissemination of the earnings calls and quarterly report; there were
no allegations that any consumers listened to the calls or read the report.
Recall notice: Eli Lilly & Co. v. Roussel Corp., 23 F.
Supp. 2d 460 (D.N.J. 1998), found that a recall notice wasn’t commercial
advertising or promotion because it wasn’t designed to influence customers to
purchase defendant’s goods, but rather to inform consumers that the goods will
no longer be available for sale. Did alleged blame-shifting in these recall
notices change the analysis? No. “[A]ny effect of promoting defendants’
products (by deflecting blame to SoClean to promote the Philips defendants’
goodwill) was incidental to the primary purpose of the recall notice, which was
to inform consumers about the recall.”
Recall FAQ on website: Same thing.
Update to physicians and health care providers: This one
said that “[t]he foam degradation may be accelerated by environmental
conditions of high temperatures and humidity. Unauthorized cleaning methods
such as ozone cleaning may exacerbate potential degradation….” It ended: “Philips
is recommending that customers and patients do not use ozone-related cleaning
products.” Again, this wasn’t an ad but an informational document about the
recall, and it didn’t promote Philips’ newer devices.
2022 press release: The stated purpose of the update was to
“provide healthcare providers, patients, and other stakeholders with updated
information on the testing results to date.” A press release can be an ad, but
not this one. It didn’t promote any Philips product—the only one it mentioned
was the recalled product which could not be sold—or explicitly propose a
commercial transaction. The general economic motive of being a for-profit
business was not enough. “This is not a case in which the press release
compared two products, touted one product as superior to another, or promoted
the defendant’s product.”
Statements to distributors: First, did Rule 9(b) apply? The
court didn’t reach the issue, because even if it did, SoClean could satisfy the
heightened pleading standard by pleading “information and belief” about what
defendants said to third parties.
But were they commercial advertising or promotion, or nonactionable
“oral statements disseminated to a small group of people.” While “purely
private” communications cannot be “commercial advertising or promotion,” this “is
a matter of degree based upon specific facts of a case, including facts about
the pertinent industry.” Here, the allegations about the size and influence of
the trade show, including that the parties’ largest distributors and resellers
were there, sufficed to plead commercial advertising or promotion.
[Pause for harm causation questions: Was too much damage
already done by then? The allegations about losing big distributors after that
seem enough to defeat that argument.]
Falsity/misleadingness: The Philips defendants argued that
the “gist” was true: according to the FDA itself, foam might degrade both on
account of high heat humidity as well as ozone, and customers shouldn’t use ozone
cleaners because they are unapproved, potentially harmful, and might harm their
CPAP devices. The FDA, they argued, was investigating SoClean and issued its
public Safety Communication warning against the use of ozone cleaners more than
a year before the recall at issue in this case, which was more than a year
before the Philips defendants could have allegedly influenced or misled the
FDA.
The court reasoned that SoClean plausibly alleged that the
recall had nothing to do with ozone cleaners or off-gassing during ozone cleaning,
so the statement to resellers and distributors was at least misleading.
New Hampshire Consumer Protection Act: Same analysis. But must
the conduct have occurred in New Hampshire to be actionable? The trade show
wasn’t there. Still, since this was allegedly a nationwide campaign, that was
enough to show plausibly that the offending conduct took place within the
state.
Tortious interference claims also survived.
New Hampshire defamation: The Philips defendants argued that
their allegedly defamatory statements concerned a class of products and how
those products CPAP products, and, therefore, were not “of and concerning”
SoClean. But it was plausible that the alleged statements to the resellers and
distributors specifically referred to SoClean. As for the rest of the
statements (which weren’t covered by the Lanham Act/state consumer protection
law), SoClean plausibly pled that the recipients of those statements understood
that defendants were referring to SoClean. But, defendants argued, SoClean was
really alleging trade libel, not defamation, and trade libel isn’t recognized
in New Hampshire. Still, if SoClean’s own reputation was injured, not just its
product’s reputation, that could be the basis of a defamation claim.
Other issues, like whether SoClean was a limited-purpose
public figure, needed more information; “if SoClean’s devices were legally
marketed and safe (as SoClean alleges) and the Philips defendants provided the
FDA erroneous information about ozone’s role in the foam degradation, then the
controversy would not be about the safety of SoClean’s ozone-generating
devices.”
from Blogger http://tushnet.blogspot.com/2023/11/earnings-calls-recall-notices-not.html
Design Gaps, Inc. v. Hall, 2023 WL 8103156, No. 3:23-cv-186-MOC
(W.D.N.C. Nov. 21, 2023)
Design Gaps produces custom cabinetry for high-end homes; Hall
is a former employee of Design Gaps who signed a nonsolicitation/noncompete
clause but went to work for a design studio that was part of Design Gaps’ main
competition, Peters. Peters allegedly subsequently constructed homes with
interior designs “substantially similar” to building components depicted in
Design Gaps’ technical drawings. Design Gaps had in the past conducted projects
for Peters Custom Homes including the design and construction of residential
cabinetry in homes referred to as “Quail Hollow North” and “Lake Wylie.” Defendants
allegedly promoted the kitchen and other areas of the residences designed and
constructed by Design Gaps as their own designs and trade dress.
Design Gaps brought trade secret, tortious interference, and
state and federal false advertising/false designation of origin claims against
defendants.
Defendants moved to dismiss the Lanham Act claims as preempted
by copyright. (It’s preclusion, really, but the court says that preemption principles
are implemented by Dastar.) And the complaint was full of references to
Design Gaps’ copyrighted designs and defendants’ “copying.” Here there was
no extra element rendering the claims qualitatively different from copyright
claims. Instead, plaintiffs alleged that the alleged substantial similarity itself constituted
a misrepresentation of origin. This was just Dastar: “Design Gaps does
not allege that the kitchens and cabinets cited in the Amended Complaint were
actually sold in commerce by anyone other than the Peters Defendants.” So too
for the state law claims.
from Blogger http://tushnet.blogspot.com/2023/11/too-much-complaining-about-copying.html
MillerKing, LLC v. DoNotPay, Inc., — F.Supp.3d —-, No.
3:23-CV-863-NJR, 2023 WL 8108547 (S.D. Ill. Nov. 17, 2023)
“This case pits real lawyers against a robot lawyer.” Spoiler:
the robot wins for lack of Article III standing.
DoNotPay is an online subscription service that touts its ability
to allow consumers to “[f]ight corporations, beat bureaucracy and sue anyone at
the press of a button” and bills itself as “The World’s First Robot Lawyer,” offering
legal services “related to marriage annulment, speeding ticket appeals,
canceling timeshares, breaking leases, breach of contract disputes, defamation
demand letters, copyright protection, child support payments, restraining
orders, revocable living trusts, and standardized legal documents.” But DNP isn’t actually licensed to practice
law. MillerKing, a small Chicago law firm that claims to be a direct competitor
of DNP, sued DNP for false association and false advertising under the Lanham
Act and Illinois state law. Along with state consumer protection claims, MK
alleged that DNP was engaged in the unlawful practice of law under Illinois
law. (The false association claim was based on the theory that consumers are
misled to believe that DNP is affiliated with licensed attorneys and that State
bar authorities approve of or sponsor DNP’s services.)
MK “advertises its services online and provides legal
services across various practice areas including personal injury, wrongful
death, family law, divorce law, child custody, criminal law, traffic law,
estate planning, probate, workers’ compensation, business law, municipal law,
and mediation.” It sought to represent a class of similar law firms.
DNP advertises that it uses artificial intelligence” rather
than “human knowledge.” Users can generate personalized contracts, independent
contractor agreements, non-disclosure agreements, bills of sale, prenuptial
agreements, LLC operating agreements, promissory notes, and parenting plans. It
also touts its ability to give advice on property tax appeal procedures, create
customized property tax guides, provide advice on how to appeal traffic tickets
in any city, provide services to initiate litigation and obtain a judgment, and
guide users through the process of filing a court case. For a lawsuit over
$500, DNP states that it “can generate demand letters, court filings and give
you a script to read in court.” It claims to have taken on hundreds of
thousands of parking ticket cases and overturned $4 million in parking ticket
fines; initiated more than 1,000 small claims lawsuits against a single company
in 42 states; and “processed over 2 million cases.” However, it backed off a
claim that the “robot lawyer” would soon represent someone in a courtroom by
whispering in the person’s ear exactly what to say because of “threats from
State Bar prosecutors.” Some online reviews are poor, stating that DNP has
failed to dispute parking tickets as requested, has created inadequate legal
documents, or has included inaccurate information in its forms. DNP removed
some products from its website, but it continued to advertise and promote legal
products and services including defamation demand letters, divorce
certificates, divorce settlement agreements, and numerous other categories of
legal services.
MK argued that it, and the class, have been or are likely to
be injured by the direct diversion of clients from themselves to DNP or by a
lessening of the goodwill associated with MK and the class’s goods and
services. That wasn’t enough. MK didn’t allege any lost revenue or added
expenditures as a result of DNP’s conduct. Nor did it allege that any MK client
or prospective client withheld business, considered withholding business, or even
heard of DNP. For the hundreds of thousands of parking ticket cases that DNP
claims to have taken on, for example, there was no allegation that those
customers originally were clients of MK, had considered hiring MK, or would
have sought the advice of any law firm in the first place if not for the
representations made by DNP.
As to goodwill, although the complaint alleged that DNP
provided some poor customer service, it didn’t allege that DNP’s failures were
imputed to MK specifically or lawyers generally. What about Lexmark?
Unlike MK, Static Control not only
alleged injury due to diversion of sales and reputational harm, but it also
provided the facts necessary to make those allegations plausible. Static
Control alleged Lexmark directly targeted its customers and falsely stated that
doing business with Static Control was illegal. These facts are sufficient to
state a concrete, particularized, and actual injury. MK’s general allegations
that DNP has caused a diversion of clients and loss of goodwill, on the other
hand, are not.
Even if the Court were to find that MK (a law firm) was a
“direct competitor” of DNP (an AI-based legal subscription service), the court
would not presume Article III standing from direct competition. “MK has
conflated the injury requirement for a statutory cause of action under the
Lanham Act claim with Article III’s injury-in-fact requirement.” Maybe presuming
injury works in other cases, but the
products here were different enough that the court declined to do so. “[T]he Court will not infer that MK has suffered harm
through lost clients just because DNP has gained them.”
from Blogger http://tushnet.blogspot.com/2023/11/who-has-standing-to-challenge-robot.html
Rebecca Tushnet 