alleged misrepresentation of partnership/approval suffices for false advertising claim

Posted on December 15, 2023 by rtushnet

Faire Wholesale, Inc. v. Tundra, Inc., 2023 WL 8586681, No.
23-cv-02538-JSC (N.D. Cal. Dec. 8, 2023)

When does TM logic creep into false advertising cases? Faire operates an online marketplace connecting wholesalers
with retailers. Faire sued Tundra, which makes a comparison tool. Faire sued, challenging
Tundra’s unauthorized use of Faire’s users’ login credentials to gain access to
Faire’s non-public information. The court denied Tundra’s motion to compel
arbitration; the remaining statutory claims weren’t intricately intertwined
with, nor dependent on, Faire’s service terms. Tundra—a nonsignatory to the
service terms, and thus the arbitration agreement—couuldn’t force Faire to
arbitrate those claims.

Tundra’s motion to dismiss was granted with leave to amend
on the CFAA and California Comprehensive Computer Data Access and Fraud Act
claims, and the California UCL claim to the extent it relies on the two former
claims. The rest of the UCL claim and the Lanham Act claim survived because
Faire plausibly pled that Tundra made misrepresentations likely to deceive the
public into believing Tundra had partnered with Faire and was permitted to
access Faire’s computers.

To list a product or search the catalog of products for sale
on Faire’s platform, users must create an account with a username and password.
Only users who have logged into password-protected accounts may access
inventory, pricing, and contact information related to the goods available for
sale on Faire’s platform. Faire’s service terms prohibit users from disclosing
their passwords to third parties. Faire makes a commission on successful
transactions on its platform, but Faire also provides wholesalers with a
personalized link they can use to invite retailers to order directly from their
shop on Faire’s platform; using that link results in 0% commission to Faire. Tundra’s
comparison tool encourages its users to disclose their Faire login credentials
and offers to pay the retailers up to 10% “cash back” on every purchase they
make from a Faire wholesaler. Tundra solicits sellers on Faire’s platform to
provide their Faire Direct links to retailers registered with Tundra by
“promising to promote their brands to new retailers and give them greater
exposure” to Tundra retailers. Tundra charges sellers who participate in the
Faire Direct program a fee of 15% “that replaces the marketplace commission for
new retailers to a marketplace and their reorders.” It then pays a percentage
of this fee as “cash back” to the retailers and pockets the rest. This
allegedly diverts commissions properly owed to Faire to Tundra. Tundra allegedly
uses the information it scrapes from Faire’s platform, including contact information,
to market its product.

UCL fraudulent claims: These were predicated on 1) Tundra’s
misrepresentations it was an authorized user when logging into Faire’s platform
and 2) Tundra’s misrepresentations Faire was aware of and approved Tundra’s
practices. Reliance was required; Faire adequately alleged its own reliance on
1), and that its customers relied on 2), which was enough given that the parties
competed.

Screenshot: "you're eligible for cash back on 11 marketplaces," with specific solicitation for Faire login credentials

The screen seeking a consumer’s login credentials plausibly supported
an inference the public would falsely believe Tundra was partnering with Faire
and had Faire’s permission to obtain the consumer’s Faire login credentials.
(Would a clear disclaimer have solved the problem? Does it matter that there seem to be 10 other marketplaces involved?)

The Lanham Act claim also survived, for similar reasons. The
screenshot was “commercial advertising or promotion.” And Faire alleged that
Tundra repeatedly falsely advertised via phone and email solicitations that
Faire was aware of and approved Tundra’s scheme: on December 15, 2022, Tundra’s
employee allegedly told Brand A Faire approved of Tundra’s scheme and “it was
above board.” The allegation that hundreds of brands have been targeted by
Tundra’s false advertising “supports an inference Tundra’s misrepresentations
have the tendency to deceive a substantial segment of Faire’s audience.”

On materiality, it sufficed to allege that brands pay for
its services and Tundra’s false advertising influences brands to purchase
Tundra’s services instead of Faire’s services. “Again, the screenshot of
Tundra’s website is alone sufficient.” This seems wrong; in other cases,
including one I just blogged, courts require a link between the falsity
and the purchase decision. It wasn’t false that Tundra offered this service
related to Faire; what was the allegation that Faire’s approval of the
scheme mattered?

from Blogger http://tushnet.blogspot.com/2023/12/alleged-misrepresentation-of.html

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false advertising is harder to prove than TM infringement because of the injury requirement (not to mention materiality)

Posted on December 15, 2023 by rtushnet

ImprimisRx, LLC v. OSRX, INC., 2023 WL 8604148, No.
21-cv-01305-BAS-DDL (S.D. Cal. Dec. 12, 2023)

The parties are compounding pharmacies that focus on
medications used in optometry and ophthalmology. Section 503A compounding pharmacies
fill prescriptions for individual patients. Section 503B compounding pharmacies
produce compounded products in large quantities that are not necessarily tied
to a specific patient, sold to practitioners and hospitals as “office stock” to
be available for use on an as-needed basis. Plaintiff ImprimisRx operates both
a Section 503A pharmacy and a Section 503B pharmacy, while defendants operate
only a Section 503A pharmacy.

Section 503A allows for drugs compounded “for an identified
individual patient … [that are] necessary for the identified patient” to be
exempted from the typical FDCA drug-approval requirements if certain conditions
are met, including: (1) the drug compounding occurs after the receipt of a
valid, individual prescription; or (2) the drug compounding occurs before the
receipt of a valid, individual prescription “based on a history of …
receiving valid prescription orders for the compounding of the drug product”
within an “established relationship” between the compounding pharmacy and the
prescriber. There are other requirements, including for sterile manufacturing.

The court addressed motions for partial summary judgment on whether
the statement that “OSRX operates in full compliance with Section 503A
regarding compounded drugs as defined in the [FDCA]” violated the Lanham Act. Imprimis
had two theories of falsity: (1) Defendants instruct prescribers to place bulk
product orders, rather than for particular patients, and provide “office stock”
for use by unspecified future patients; and (2) defendants fail to compound
drugs in a sterile manner. The truth/falsity of these theories was subject to
material dispute.

On materiality, literal falsity wasn’t enough to presume
materiality. Defendants argued that their claims were in tiny print on the
website and thus could not be observed by consumers. “While the statements may
be presented in a small font, possible purchasers could still see them on
Defendants’ website and order forms.” Imprimis also provided declarations by
four ImprimisRx customers that claim Section 503A compliance was an important
factor in their purchasing decisions and survey evidence that 54.1% of surveyed
prescribers indicate that whether a compounding pharmacy “operates in full
compliance with Section 503A” is an important factor in selecting a compounding
pharmacy. But defendants’ own expert and survey evidence created a material
issue of fact. (Even on sterile manufacturing?!?)

Injury: Injury too could not be presumed despite the fact
that the parties were direct competitors; this wasn’t false comparative
advertising. “Instead, Plaintiff must provide some proof of past injury or risk
of future injury caused by Defendants’ false statements” to get money.  

Email correspondence where defendants attempted to poach Imprimis’s
customers and other evidence of direct competition wasn’t sufficient to presume
injury. This wasn’t mostly a two-player market, and the allegedly false
statements did not harm the entire market. Although the parties were two of the
largest compounding pharmacies within the post-operative ophthalmological
market, Allergan, Novartis, and Bio Tissue manufacture competing products. “Because
prescribers have many options in selecting post-operation ophthalmological
drugs, the Court cannot assume Plaintiff’s sales were necessarily reduced by
any increases to Defendants’ sales due to the false statements.”

And Imprimis provided evidence of materiality, but not of
injury.  The evidence of poaching didn’t
show that these customers were poached as a result of the alleged false
statements. Although a precise calculation of damages is not required under the
Lanham Act, a showing of some injury is required. Thus, defendants received
summary judgment on Imprimis’s monetary damages and unjust enrichment claims.

In addition, Imprimis didn’t show irreparable injury, which
would be required for a permanent injunction.

Counterclaims: Defendants alleged that Imprimis falsely
advertises that it “compl[ies] with all cGMP requirements which are the most
stringent standards in the nation.” All four challenged claims were publicly
available three years before defendants lodged their counterclaims (three years
being the California fraud statute of limitations, which the parties agreed was
the most analogous). Defendants had the burden of showing why they lacked the
means to discover the statements to invoke the discovery rule. They didn’t. “Indeed,
because Plaintiff is a main competitor for Defendants, one assumes Defendants
would be aware of the content hosted on Plaintiff’s website or the claims
Plaintiff makes regarding its products.” So there was a presumption of laches.
But there was no evidence of prejudice, so summary judgment on the laches
defense was denied.

Once again, there were disputed fact issues on falsity and
materiality. Once again, the counterclaimant couldn’t show any lost customers
or any other actual harm, thus no irreparable harm, so there was summary
judgment on monetary damages and injunctive relief.

(I guess what’s left is disgorgement?)

from Blogger http://tushnet.blogspot.com/2023/12/false-advertising-is-harder-to-prove.html

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Dastar bars false advertising claim against “first of its kind” ads

Posted on December 15, 2023 by rtushnet

 Vericool World LLC v. Igloo Prods. Corp., 2023 WL 8634803, No.
22-cv-02440-HSG (N.D. Cal. Dec. 13, 2023)

Vericool alleged that Igloo falsely claimed that its
“Recool” biodegradable cooler was the first of its kind. The court found this Dastar-barred,
since the alleged misstatements do not go to the “nature, characteristics, or
qualities” of the cooler as required under the Lanham Act. The court rejected
arguments that the materiality of the claim distinguished it from Dastar-barred
claims, and that “first of its kind” doesn’t necessarily imply anything about
patent/IP status.

Dastar explicitly stated that the Lanham Act “does
not exist to reward manufacturers for their innovation in creating a particular
device” and that the Act’s “common law foundations … were not designed to
protect originality or creativity.” “Yet that is precisely what Plaintiff seeks
to protect in this case: the originality and novelty of its own cooler design.”
There was no meaningful distinction between claims of being the “first” and
claims of inventorship. “Plaintiff may not directly challenge the Recool as
infringing its patents, but just as in Dastar and Sybersound, it
is trying to protect its intellectual property rights through the Lanham Act.”

Vericool didn’t help its claim by stating in its papers that
“[t]o vigorously defend its patent, Vericool World had to bring this claim.” But
“[t]he rights of a patentee or copyright holder are part of a ‘carefully
crafted bargain,’ ” and for whatever reason, it didn’t bring a patent
infringement claim.

Zobmondo Ent. LLC v. Imagination Int’l Corp., No. CV
09-02235 ABC PLAX, 2009 WL 8714439, at *1 (C.D. Cal. June 23, 2009), found that
the use of “original” to describe a board game was actionable because it was
about first physical manufacture, not creation of the idea. The court here
disagreed. The ad at issue wasn’t about physical manufacture, just used the
word “original.” “Yet the Supreme Court has stated that patent law, and not the
Lanham Act, offers protections for a manufacturer’s ‘originality’ and ‘creativity.’”
Plus, Zobmondo didn’t explain why date of manufacture was a quality or
characteristic of the game itself. “Although when a product was manufactured
may have implications for patentability, such as whether it is considered novel
or non-obvious, in the Court’s view it does not alter the nature of the product
or a user’s experience with it.” In Sybersound, the Ninth Circuit
explained that the “nature, characteristics, and qualities” of the karaoke
recording referred to things like the “quality of its audio and visual
effects.” “Such attributes would affect the consumer’s experience rather than
the rights of third parties.” (Comment: “First printing” might therefore be
different.)

Blue Spike, LLC v. Texas Instruments, Inc., No. 6:12-CV-499,
2014 WL 11848751, (E.D. Tex. July 25, 2014), report and recommendation adopted,
No. 6:12-CV-499, 2014 WL 11829325 (E.D. Tex. Aug. 15, 2014), involved
allegations that the defendants falsely claimed on their websites that they
were the “first to create content fingerprinting technology,” and that
competitors are using “borrowed” technology. Here too, the decision didn’t
explain how being the first to use a specific kind of technology goes to the
“nature, characteristics, and qualities” of the good itself as opposed to the
innovation of the technology at issue.

This reasoning also
disposed of the UCL claim.

from Blogger http://tushnet.blogspot.com/2023/12/dastar-bars-false-advertising-claim.html

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Of Bass Notes and Base Rates: Avoiding Mistaken Inferences about Copying

Posted on December 14, 2023 by rtushnet

 New article with Chris Buccafusco:

Houston Law Review, Vol. 61, 2023

Abstract

To prove copyright infringement, a plaintiff must convince a jury that the defendant copied from the plaintiff’s work rather than independently creating it. To prove copying, especially cases involving music, it’s common for plaintiffs and their experts to argue that the similarities between the parties’ creative works are so great that it is simply implausible that the defendant’s work was created without copying from the plaintiff’s work. Unfortunately, in its present form, the argument is mathematically illiterate: It assumes, without any underlying evidence, that the experts know or could reasonably estimate how likely it is that a song with similarity level x to another, earlier song was created without copying from the earlier song. Until the state of the underlying art changes, it is reasonable for experts to testify about the existence of similarities between works, but it is unsupported and unreasonable for them to testify about the likelihood that those similarities came about from copying. We don’t know that likelihood in the absence of evidence about base rates: how common is it for a song to have similarity level x with some other song in the corpus of existing songs, and how common it is for that similarity to come from copying or from independent creation (or from both copying a shared antecedent). Until that knowledge is available, testimony about the probability of copying should be deemed inadmissible under Federal Rule of Evidence 702.

from Blogger http://tushnet.blogspot.com/2023/12/of-bass-notes-and-base-rates-avoiding.html

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Netchoice amicus on behalf of Discord

Posted on December 7, 2023 by rtushnet

 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

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Dastar bars false marking claims brought under Lanham Act (dubitante)

Posted on December 7, 2023 by rtushnet

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

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using testimonials post-relationship failure can be a ROP problem

Posted on December 7, 2023 by rtushnet

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

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California’s UCL potentially available against junk fees

Posted on December 7, 2023 by rtushnet

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

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court finds that transferring title to mural also transferred (c); VARA and CMI claims against ad also fail

Posted on December 6, 2023 by rtushnet

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

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Amicus brief on applying the Lanham Act to political speech post-JDI

Posted on December 6, 2023 by rtushnet

 In support of neither party.

from Blogger http://tushnet.blogspot.com/2023/12/amicus-brief-on-applying-lanham-act-to.html

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