27th Annual BTLJ-BCLT Symposium: From the DMCA to the DSA—A Transatlantic Dialogue on Online Platform Liability and Copyright Law

Posted on April 7, 2023 by rtushnet

Tutorial “The EU Digital Services Act – Overview and Central
Features”

General DSA Architecture and Approach     

Martin Senftleben, University of Amsterdam

Formally, the safe harbor system is still in place for mere
conduit, caching and hosting services for third-party information they transmit
and store. For ©, voluntary own initiative investigations done in good faith
shouldn’t lead to more liability. More intermediary services are covered under
DSA. Points of contact for authorities/legal representatives are existing
obligations but new are terms of service/content moderation policies and tools
disclosure requirements, including algorithmic decision-making and human
review, as well as rules of procedure of internal complaint handling. How much
information must be disclosed? Must be balanced against trade secrets. Another new
obligation: diligent, objective and proportionate application to safeguard
fundamental rights. Obligation is on the service provider.

Transparency: reports on content moderation, including
judicial orders, notices, number and type of content moderation, use of automated
means and related training, and number of complaints.

Special rules for hosting providers, including online platforms;
online platforms, including distance contracts, and very large online platforms
and very large online search engines.

What about the copyright interface w/ the DSA? Art. 2(4):
this is all w/o prejudice to rules laiid down by the © laws. So on top of all
those distinctions, there are OCSSP obligations from Art. 17: online content
sharing services. So where the © regime is silent, use the DSA. And there’s where
the safe harbors have been gotten rid of: using the Art. 17 rules of required
licensing—there’s direct liability if you’re unlicensed, but you can decrease
the risks by using filtering to police the borders of your licensing deals.

OCSSPs are a controversial category in itself. YouTube is an
OCSSP, but other than that much is unclear—are all different types of social
media OCSSPs? We don’t have definite caselaw.

DSA requires VLOPs and VLOSES to have reasonable,
proportionate and effective mitigation measures tailored to specific systematic
risks w/particular consideration to the impacts on fundamental rights. Art. 17
is more specific and thus a further addition to DSA requirements.

“Sufficiently substantiated notice from the rightsholders”
and rightsholders should “duly justify the reasons” for their requests—opening for
more specific requirements like Art. 16 of DSA which say that notices have to
be sufficiently precise/adequately substantiated; so to statements of reasons
must be “clear and specific.”

DSA Art. 23: suspend, for reasonable period of time, and
after warning, users who have violated rules; so too processing of notices and
complaints by complainants that frequently submit notices or complaints that
are manifestly unfounded—not present in © framework so additive to it. Also Art.
22 requirement to ensure that notices submitted by trusted flaggers w/in their
designated area of expertise, should be processed w/o undue delay. Must comply
w/quality standards—status awarded by Digital Services Coordinator of Member State
if flagger has particular expertise of detecting/notifying illegal content; is
independent of any provider of online platforms (but does not need to be
independent of © rightsholders); and carries out its activities diligently,
accurately and objectively.

DSA also requires VLOPs and VLOSEs to get annual independent
audit opinions, reporting to Commission, potential for fines, so they can’t just
wait for court cases to identify whether they’re doing it right.

Fred von Lohmann: For enforcement: other than the
intervention of the Commission through the audit process—how will enforcement
be done? Private rights of action?

A: DSA enforcement is very much by the Commission itself in
his understanding. Drafter of DSA, Irene Roche-Laguna: it depends on the kind
of platform—hosting service, platform, or VLOP. EC has exclusive powers for
enforcement of obligations that apply only to VLOPs/VLOSEs—auditing/risk
assessment. But content moderation requirements for platforms in general are
for country of establishment (if in Europe) and where the legal representative
is (if not). If a platform neglects notices it becomes a systemic issue; the
Commission can jump in. [I wasn’t sure whether she meant that was true even for
non-VLOPs.]

Q: can a recipient of the service receive money damages for
violation of these obligations? Is that governed by Member State law?

A: In DSA 54, there is an avenue for private actors to bring
damage claims to complement audit-based or other executive activities.

Pam Samuelson: will audits be publicly available?

Roche-Laguna: Audit reports will be published w/transparency
reports every 6 months, and audit implementation reports have to be published.
They will have a bit of time to respond.

A: given the transparency requirements, the audit report
should be able to provide more insights, but we don’t know for sure yet.

Q: what makes an online platform?

A: central aspect is dissemination of information. [Husovec’s piece
says Blogger and WordPress aren’t platforms, which seems bizarre to me.] What
is a public? It may not have to be a large public. In © we accept that
dissemination to a circle like 12 or 50 people can already be a public, so
would that also apply under the DSA? The Court of Justice could set a
relatively low threshold.

Roche-Laguna: there is a gray area. A hosting service that
disseminates to the public as ancillary feature, like a comments section on a
website, that wouldn’t be a platform. But we have questions about messenger
services with open chats/groups—100,000 people in chat. Or music service that
has licensed content and user-uploaded content: what is the platform part? [That
doesn’t seem to answer questions like, is email dissemination to the public?]

Q: do platform rules have to be observed for the ancillary
service? It’s a lawyer’s paradise. [Roche-Laguna is laughing but I’m not
finding it funny that they actually can’t seem to answer those questions.]

Rules for Hosting Providers, Online Platforms and Very Large
Online Platforms  

Martin Husovec, London School of Economics

DSA is about content moderation, construed very broadly. Not
just removal of content as w/© infringement but decisions about violations that
aren’t based on legality but are purely contractual—FB and breastfeeding images;
suspending individual users. Also about institutions lower in the stack like app
stores. Hiding/demonetizing content is also covered. DSA covers almost
everyone, though advertising providers and payment providers are touched only
tangentially. Infrastructure providers like access providers, transit services,
DNS/VPN services, domain registrars and registers, generally have very few obligations
other than transparency. But distribution and content layer have more
obligations.

Part of the second generation that replaced the first
generation like section 230 designed to create breathing space for speech and
industries; focus on is regulation of risks posed by services.

For content moderation: fairness in design ex ante, due
process in implementation, transparency, and risk management. Due process
constrains the moderation of both illegal content and contractual breaches.
Risk management for very large players: required to think about product design
and operations; w/some risk management obligations for smaller platforms.

Online platforms are covered if 50+ employees/EU turnover of
10 million euros. VLOPs/VLOSEs: Alphabet, Microsoft, Meta, Bytedance, Snap,
Pinterest, Twitter, Amazon, Wikipedia as the only nonprofit.

Decide what rules are; open to notification from third
parties about content that might be illegal or violate terms & conditions;
make decisions (hosting services and any-size companies); allow appeals/internal
contestation (midsize and above); allow external contestation by users (VLOP/VLOSE);
transparency. Any content restrictions has to be codified in terms and
conditions, and decisions must be made on the basis of the rules. But the rules
must be diligent, objective and proportionate, including in their design
according to the recitals. What does it mean for design of rules? His take:
only extreme outlier policies would have an issue.

Core of DSA: tries to discipline providers in how they make
decisions. They must issue a statement of reasons, including for visibility,
monetization, etc. Specific explanation of reasons required, useful enough to
allow user to argue against them. They can be automated, but DSA says you need
to provide a free opportunity to appeal where a human has to be present in some
step of the process. Internal appeal must be easy to access and user-friendly;
not solely automated; must occur in timely, diligent, and objective manner.

Who can complain or appeal? External players: trusted
flagger, regular notifier, content creator, NGOs.

Possibility of external dispute resolution/ADR: Regulators
certify entities independent of platforms and users; FB’s Oversight Board is
not independent. Content creators and notifiers and reps can use the option.
ADR provider is complainants’ choice; no need to exhaust appeals. ADR decisions
are nonbinding; platforms must engage in good faith. Plaintiff compensates
complainants who win (fees and possibly costs). Complainants that lose pay
their own fees and costs. Trying to improve quality of decisionmaking within
company.

The proceduralist approach constrains implementation more
than rule formulation. Consider: for 5 EUR a month, you can say whatever you
want on the service as long as it’s legal in your country—disinformation,
nudity, etc. all ok. Everyone else is moderated on ToS violations and illegality.
Is this a violation of art. 14(1)? No if disclosed. Art. 14(4): probably no—paying
5 EUR to be unmoderated doesn’t seem disproportionate. What if you have a list
of VIPs whose content is not moderated at all b/c they are leaders of
countries? Again, 14(1) is ok if properly described. But 14(4) would be a
problem in his view due to the impact of illegal content.

Open issues: big guys can easily automate statement of
reasons; what about small providers? Licensed content moderation solutions from
third parties? What about users of services, like newspaper’s FB page—are they
considered to be a separate entity for purposes of people whose content they
moderate? How will there be standard transparency database if different people
are sending their reports in nonstandard format and with anonymization?

Risk management for VLOPs/VLOSEs will likely not be subject
to private enforcement—mostly extended or intensified reporting obligations;
researcher data access; unique obligations for profiling-free choice on
recommender systems (whether organic or advertising), or advertising archives. Subject
to regulatory dialogue w/whole community, including national regulator, NGOs,
researchers, where main thing is to figure out what companies are doing w/r/t
certain types of risks on their platforms. Dialogue b/c of opacity of system
and info asymmetry: regulators can’t instruct on what to do w/out knowing what’s
going on. Must assess systemic risks stemming from design or functioning of
services including algorithms and use made of their services, as well as back
end governance, taking into account the risks’ severity and probability. Risks
include: illegal content; fundamental rights; public security and elections;
health and well-being (including gender-based violence, public health, minors,
physical well-being, and mental well-being). Nothing of concern to civil
society is left out. If a social network adopts ChatGPT into design, that
becomes regulated along with anything else the platform uses.

Metaphor: authorities can partly restrict how and when
protest activities take place (streets, hours, use of amplification tools) and
take measures to prevent harm to protestors or others (e.g. by boosting police
presence) but can’t select speakers or dictate content.

Q: why is business to business included here? Why can’t
Amazon say “one strike and you’re out” to a business?

A: b/c the design was about risks of hosting services, not
just harms to individuals or individuals as consumers. Advertising marketplaces
are available to the public.

Q: what about risk mitigation for humans conducting content
moderation/labor harms?

A: sure.          

Interplay with OCSSP Rules in the Directive on Copyright in
the Digital Single Market

João Quintais, University of Amsterdam

Background of lots of attempts to interpret previous rules under
InfoSoc Directive. Primary liability is harmonized. But secondary liability was
mostly unharmonized; ended up with mostly a notice and takedown regime. Court of
Justice expanded right of communication to the public to the point where there
was a Q of whether YT’s own services triggered direct liability. Poster child was
YouTube/claims of “value gap” (sigh).

Six states haven’t met the implementation deadline; still
waiting to figure out what the rules actually should be. Poland decision: CJEU said
Art. 17 was ok but had to give due regard to uploaders’ interests. OCSSPs cover
UGC platforms with large amounts of works that organize and promote them and
have a commercial/competitive effect. Exclusions: encyclopedias, ecommerce,
B2B/cloud hosting: Wikipedia and GitHub/ArXiv.org, Skype, Dropbox, and eBay are
excluded—partly down to who had good lobbyists. But you are still covered by
InfoSoc directive plus DSA. Startup provisions: under 3 years and 10 million
Euros, only notice & takedown, but if above 5 million visitors also notice
and staydown. Not much there. Could be excluded from DSA but covered by Art.
17.

A bipolar copyright system/an employment program for EU
lawyers. You might have to look service by service to figure out whether you
are an OCSSP. Etsy? WordPress?

Non-OCSSP: default no direct liability/hosting safe harbor
and moderated duties of care, based on YT case and national law. OCSSP: default
is direct liability w/exemptions tied to best efforts licensing and filtering.

Most online platforms for DSA will be OCSSPs so you have to
figure out what applies—DSA may cover things only partially, and it’s not very
clear/depends on your normative preferences. Bonanza for lawyers! If you’re a
non-OCSSP, DSA will probably apply to almost everything.

Von Lohmann: Secondary liability seems to have disappeared.
It’s not just OCSSP/non-OCSSP—there’s no harmonization for secondary liability,
and safe harbors are interpreted as not precluding injunctive relief in most
jurisdictions—so don’t you also have an entire category of secondary liability
injunctions that are outside of both of these regimes or they displaced by DSA/Art.
17?

A: you are right, there might be that category. YouTube case
is designed for YouTube, but is now covered by Art. 17: need to apply that to
other platforms, and how to do so is unclear. German courts are deciding how to
modulate duties of care and will continue to do so unless ECJ tells them to
stop. In all cases, you assess liability also on the basis of compliance
w/duties of care, but DSA duties are different: obligations regarding
user-uploaded content are about your role as platform.

Comment by Senftleben: may not be as bad as that—the CJEU
has extended primary liability so far that there’s not much room left for
platform secondary liability. The crucial question, and an open one, is what
can be expected from a reasonably diligent operator in this situation—will this
be influenced by the new DSA duties?

A: court will likely look at whether this is a good faith
player—will reason backwards to find no liability if so. The “good guy” theory
of EU copyright law: court finds a way around liability for a good faith
player, and a way for direct liability if there’s not. You can’t really get
from the text to the outcomes; the court just makes up a bunch of conditions.

Comment: primary and secondary liability are no longer
distinct categories. Now all under the umbrella of primary, but if you can’t
get authorization you have to filter, so the duty of care is now embedded in
primary liability.

Beyond Copyright Infringement: DSA Review, Moderation and
Liability Rules Compared to Previous National Review and Takedown Approaches
for Illegal Content

Matthias Leistner, LMU Munich Faculty of Law

Need to know whether national rules are preempted, and they
also provide evidence of experience that might be useful for implementing DSA.
There were differences in applying and enforcing rules; national authorities
might have leeway in applying DSA rules, which might lead to forum shopping
about where to have a company seat.

German NetzDG regulates allegedly criminal content on social
media (obvious v. non-obvious are treated differently). Austria has a similar
law; France’s law was partly invalidated b/c of extremely short blocking
periods for certain content, but it also has a law against fake news in 3
months before a national election; Italy has a law against “cybermobbing” and
dealing with parents/minors; Baltic states have their own.

NetzDG has limited scope: social networks, video sharing
platforms v. DSA’s comprehensive/four-tiered approach.

NetzDG: catalogue of substantial/hard-core criminal
offenses, continuously extended v. DSA’s all illegal content including minor violations
(including consumer protection law), plus special notification duties for criminal
acts etc.

NetzDG: persons affected in their rights can notify; DSA:
everyone can notify.

NetzDG: expeditious blocking: 7 days or 24 hours in obvious
cases; DSA: expeditious/without undue delay.

NetzDG: redress for both sides; another human in the loop;
DSA: role of complainant surprisingly unclear, no standing for the other party
in the complaint.

NetzDG: No further prioritization b/c of limited scope; DSA:
system of trusted flaggers given priority; dynamic adaptation through
provisions on misuse and suspension.

NetzDG: limited and crisp; DSA: wide and wobbly.

Provisions on transparency of user contracts are similar to
German case law; reasonable and cost-efficient b/c contracts exist anyway. But
may not be easy to implement b/c some transparency obligations relate to what
the algorithms actually do. [I think this may undersell the
difficulty of figuring out what is, for example, abusive or hateful speech,
especially for non-dominant communities.] Protection of trade secrets is also a
huge issue.

Most probably, NetzDG will be repealed in 2023, but does the
DSA entirely preempt Member State laws? Depends on the harmonized subject
matter—access for research purposes? Research access for other public policy
purposes?

Was there overblocking b/c of NetzDG? No empirical evidence
under the procedural mechanism, but a backlash to unjustified blocking under
different user policies. Was preventive blocking under user policies/community
standards perhaps indirectly due to NetzDG? Avoiding cumbersome statutory
mechanism by overcompliance? Hard to assess w/o access for research.

Indirect regulatory effects have probably worked quite well
w/o overblocking; proposed self-regulation boards for notice and takedown don’t
seem to have worked. Platforms didn’t want to cooperate and platforms have
different policies w/regard to user communities.

CJEU has responsibility for hard questions, along with
national coordination; resources and coordination are issues and GDPR
experience is disheartening though antitrust experience is better.

Q: regulations require clear and understandable rules in
terms that are neither clear nor understandable: how are platforms going to
establish such rules for billions of pieces of content?

A: it’s not new that the legislator can do things that a
private entity can’t. German FB case established certain basic standards for
typical user policies that would be easy to comply with. There must be certain
reasonable rules on what is allowed and what isn’t. DSA requires examples for
rules of what is prohibited and what is not. Pretty much about procedures. [But
people will always be able to argue that their slur is closer to the not-prohibited
side than the prohibited side, if their slur isn’t in the list of examples.
This reassurance might work for legal/illegal but it is not helpful at all for
lawful but awful.] It’s about the bad guys with self-contradictory community
policies that block without reasonability.

Midsize platforms can game the system by choosing a friendly
jurisdiction like Ireland. Carveouts don’t protect enough small providers and
will be problems for Baltic startups.

Q: it’s nice to say that Germany doesn’t require too much
detail but this is a new regime, and France is going to be different.

A: agree to a certain extent; also important that some
standards are new—certainty will take 10 years and that’s not great. But the
transparency obligation doesn’t come from a vacuum—consumer protection law/transposing
concepts of standard terms to the platforms [where the subject matter of the
transaction, the user’s speech, is pretty different!]. While we were discussing
DSA, it made sense to object and discuss our concerns, but now we have it, so
it’s time to think about ways to make it workable to the extent possible. The only
way forward is to implement it.

Daphne Keller: share concerns about private litigation in
different member states, lack of harmonization. How many states might be
interested in allowing this?

A: We had this problem before, w/27 different standards—how many
of them really matter? Here we have to distinguish b/t public and private
enforcement. Public enforcement, the Commission will matter/establish standards
that might trickle down from VLOPs to smaller platforms. Germany, France,
Netherlands, Scandinavian countries will matter.

Keller: DSA is silent on question of what injunctions can
say.

A: private enforcement: new provision on damages and
injunctions might be possible; would have to look at different states’ laws.
Largest dangers are Germany and France national unfair competition laws, where
competitors might be able to sue—real problem w/GDPR that we are still
grappling with. Practically limited to Germany, France, maybe Austria and some
others. So far, Austria legislated specifically that compliance obligations don’t
qualify for injunctions, period; caused quite a number of problems in the
market.

Free Speech Challenges and Potential Risk Reduction in the
DSA

Eleonora Rosati, Stockholm University

Balancing freedom to conduct a business and the need to
protect recipients of services through transparency. Enhanced obligations for
VLOPs and special provisions for micro/small enterprises. Art. 17 tries to
protect users with certain exceptions.

Copyright and free speech: EU Charter of Fundamental Rights
is a primary source of EU law, and recognizes IP within right to property; also
recognizes free speech. Also recognizes freedom of artistic expression, freedom
to conduct a business, respect for private and family life, and protection of
personal data—not just integration of markets but integration of morals.
Balancing framework, though how the balancing is to be done is the key. Level
of protection for © needs to be high—what does that mean? High level of
protection for whom and of what? InfoSoc Directive refers to authors,
performers, producers, and culture industry alike, as well as consumers and
public at large. There are other kinds of rightsholders. ECJ has been clear
that high level of protection does not mean highest level of protection; the
goal is a fair balance of different interests. Increasingly characterized by a
fundamental rights discourse.

Many concerns about free speech from Art. 17, resulting in
action by Poland:. Resulting judgment: ECJ didn’t say Poland was wrong that it
restricted free speech—free speech is not absolute and can be restricted under
certain conditions. ECJ said there were enough safeguards: filtering tools must
be capable of adequately distinguishing b/t unlawful and lawful content; users
must have rights; rightsholders must provide relevant and necessary
information; no general monitoring obligation; procedural safeguards must
exist; and there should be stakeholder dialogue and fair balance.

Inconsistent approaches at the national transposition level,
so Art. 17 won’t be the stopping point. Also, lex specialis/lex generalis
relationship is likely not to be frictionless. CJEU will have to smooth things
out.

Comment: if you overblock, all you face is user complaints.
If you underblock, you get sued and it’s costly. That’s where the balance is.

A: mostly the remedy for overblocking is to let the thing
up; though national law might have some other remedies.

Comment: German law has a sort of must-carry obligation if a
user asserts the applicability of an exception. But it’s the minority approach.

A: Italy does the opposite—if there’s a complaint, content
must be disabled during the dispute. From platform point of view, you may have
to divide treatment of Germany and Italy/geoblock.

Q: is Italy compliant with the Poland CJEU decision?

A: neither Italy nor Germany is—you can’t have a blanket
approach. [I don’t understand what that means—I would appreciate hearing what a
provider is supposed to do.]

Exceptions and limitations might mean something different in
terms of whether they establish user rights—or maybe not! The new data mining
provisions are characterized differently from each other, but not clear whether
that makes a difference to whether, for example, one is entitled to remuneration
and one isn’t.

Comment: if you take auditing seriously, maybe there can be
changes/real examination of the practices.

Von Lohmann: but who selects and pays the auditors?

Comment: they’re supposed to be independent!

VL: that’s not the question.

Q: will this get rid of small platforms b/c all rights have
to be equally honored?

A: it depends. ECJ is adamant that fair balance depends on
circumstances of the case. Some rights might take precedence on a particular
platform; not all content is created alike. There might be situations in which
certain concerns override other types of rights. France would maybe answer your
question in the affirmative, but not all would.

Comment: situating different categorization options under
DSA, might see cases that the more you diversify the types of content you host,
the more obligations you have.

Q: for US lawyers, we look at the Texas and Florida laws
that are clearly politically motivated attempts to suppress content moderation
in favor of a political agenda. Hard time understanding how that’s going to be
handled in Europe, but the language of nondiscrimination suggests that it can
and will happen in Europe too, which also has culture wars [and backsliding democracies].

A: indeed, the concerns around © are also in line with those
concerns. The discourse is broader than ©–Afghanistan papers case, where
German gov’t attempted to repress publication of military reports about
operations of German army in Afghanistan. Used © as a tool. Advocate General
and ECJ emphasized that © can’t be used to suppress free speech and one should be
careful to limit © to its purposes.

from Blogger http://tushnet.blogspot.com/2023/04/27th-annual-btlj-bclt-symposium-from.html

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lidocaine suits find pain point as judge dismisses claim

Posted on April 4, 2023 by rtushnet

 Prescott v. Rite Aid Corp., — F.Supp.3d —-, 2023 WL
2753899, No. 22-cv-05798-VC (N.D. Cal. Apr. 3, 2023)

Breaking with several previous cases, this court holds that
Rite Aid’s “Maximum Strength Pain Relief Lidocaine Patches” with 4% aren’t
misleading even though a consumer could get a prescription from their doctor
for a 5% patch.

A reasonable consumer understands
that over-the-counter products differ from products that are available with a
prescription. … Reading the label, a reasonable consumer would understand the
patches to contain the “maximum strength” dose available at the drug store, and
they would contemplate the possibility that a stronger dose might be available
from their doctor…. Unless an over-the-counter drugmaker draws a direct
comparison between its products and those available with a prescription,
statements like “maximum strength” are generally understood as comparisons to
other over-the-counter products.

Comment: I’m not sure how the court knows these things.

from Blogger http://tushnet.blogspot.com/2023/04/lidocaine-suits-find-pain-point-as.html

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consumer survey can’t make a scientifically wrong use of a term right

Posted on April 3, 2023 by rtushnet

Gunaratna v. Dennis Gross Cosmetology LLC, No. CV
20-2311-MWF (GJSx), 2023 WL 2628620 (C.D. Cal. Mar. 15, 2023)

Plaintiff challenged defendant’s “C + Collagen” claim as
falsely indicating that its product actually contained collagen.  

Defendant wants to make this action
about whether “collagen” means “collagen” and what consumers understand
“collagen” to mean. The problem for Defendant is that “collagen,” standing on
its own, is not some undefined, amorphous term — there is a widely-accepted
scientific definition describing collagen. Even Defendant’s own expert, when
pressed, defines collagen as a protein only found in animals.

This affected the expert testimony that would be admitted.

Defendant is free to [argue] that
the label does not convey that the products contain collagen and that the
presence of collagen is not material to consumers’ purchasing decision. But
Defendant is not free to offer its own definition of “collagen” unsupported by
any reliable science in the record.

Thus, portions of expert reports that “blindly adopt the
notion that ‘plant based collagen amino acids’ exist” would be excluded.

The role of a district court in screening experts is that of
“a gatekeeper, not a fact finder.” “An expert can appropriately rely on the
opinions of others ‘if other evidence supports his opinion and the record
demonstrates that the expert conducted an independent evaluation of that
evidence.’ ” And an expert may adopt his party’s version of the disputed facts,
“unless those factual assumptions are ‘indisputably wrong.’ ”

This is a putative class action against a skincare company
that allegedly falsely advertises products labeled “Dr. Dennis Gross C +
Collagen,” because they “(admittedly) do not actually contain any collagen, as
the word is typically and scientifically understood. Rather, the products
contain vegetable-derived amino acid molecules, which Defendant claims mimic
the structure of ‘hydrolyzed’ collagen. But collagen is a protein found
exclusively in the cartilage, bone, and tissues of animals, fish, and humans,
and is not found in plants.” There’s a market for collagen-containing products
because it’s been linked to maintaining youthful skin, hair, and nails.

Defendant argued that its labels weren’t false because consumers
understand “C + Collagen” to mean that the products contain Vitamin “C” (which
it does), and Vitamin C boosts (“+”) the body’s natural production of
“Collagen.” Plaintiffs pointed out that “+” is commonly used in the industry to
indicate “and” not “boosts.”

Defendant also argued that the products actually contain
plant-sourced “collagen amino acids,” that is, amino acids derived from corn,
soy, and wheat, not from collagen, but that are 
chemically and functionally identical to amino acids from hydrolyzed
animal collagen. Plaintiffs argued that, if so, defendant should have invested
in marketing to explain to consumers that plant-based amino acids have similar
anti-aging attributes as does collagen. As long as consumers, whether logically
or not, attach value to the label “collagen,” the labels distort the available
information in the market and gives a price premium to the product.

The court accepted plaintiffs’ expert Dr. Fetzer’s opinion
that the amino acids weren’t “collagen amino acids.” This was not about
equivalence but about origin. He opined that, even if there were some
similarities between the vegetable amino acids in the products and real
collagen, calling the amino acid solution within the products as “collagen” or
“collagen amino acids” is “analogous to stating that a collection of the 26
letters of the alphabet in approximate proportions to those of Shakespeare’s
Hamlet mean that those letters must have really been from a text of Hamlet.”

To rebut this chemist’s opinion, defendant offered the
opinions of a dermatologist, but they weren’t supported by the record. Her
opinion as to the products’ overall efficacy was only relevant to the issue of
damages, not falsity or deception. Her interpretation of what “Collagen + C”
conveys was not relevant to the reasonable consumer test (and also tended to
support plaintiffs anyway). However, to the extent that defendant could show
that reasonable consumers interpret the term as meaning that the product boosts
collagen rather than containing collagen, her opinion would be relevant to show
that was true. But her opinion that the supposed vegetable collagen was
equivalent to actual hydrolyzed collagen was excluded; she was not a chemist,
has not researched equivalency of hydrolyzed solutions or plant protein
hydrolysis, and didn’t have expertise in chemical industry standards for
equivalency.

However, the court didn’t exclude her opinions as biased just
because she was an endorser and user of the products.

Both sides offered surveys; ordinarily, the court would
consider them both admissible because the objections went to the weight of the
evidence. But the defendant’s survey and its objections to plaintiffs’ survey
were based on the excluded opinions regarding the chemical composition of the
products. Defendant’s view of the facts — that it is accurate to call its solution
“plant-based collagen amino acids” — was explicitly rejected by the only expert
who is a qualified chemist and was otherwise unsupported by any admissible,
scientifically-sound evidence. Saying that a product has “plant-based collagen
amino acids” is not the same as saying it has “the equivalent” or a “synthetic”
version of collagen. It was like arguing that watches made in Japan can be sold
with a label “Made in the USA,” just because the watches are just as effective
as those made in the USA. “By saying amino acids are ‘collagen’ amino acids,
Defendant is representing that the amino acids are derived from collagen.
Otherwise, what makes the amino acids ‘collagen amino acids’?” Not any amino
acid in collagen is a “collagen amino acid,” at least by the admissible
testimony and common sense. “One cannot claim something has water in it just
because it has some amount of hydrogen.”

But the Ninth Circuit has instructed courts to be very
generous with consumer surveys. Still, there is Daubert, and “the low
bar imposed on consumer surveys has been described in contrast to novel scientific
theories,” but here the survey was the vehicle for introducing such a theory.
Thus, defendant’s survey expert’s assumption that “plant based collagen amino
acids” exist and, moreover, that this full phrase appeared on the products, “deeply
infects the results of her survey and would confuse the issues for any jury.”

Defendant has not shown by
admissible evidence that what “collagen” means is up for any real scientific
debate. While consumers and laypersons may not have a scientific understanding
of where collagen comes from – the question “what is collagen?” has but one
accurate answer, and more importantly, is not the issue in dispute at least on
the issue of falsity/deception.

Defendant challenged plaintiffs’ survey on various grounds.
The survey used respondents who had purchased personal care and beauty products
in the last 6 months and asked them whether they understood the product labels
to mean that the products contained collagen. He then asked whether, they would
be more or less satisfied with their purchase, or more or less likely to buy it
again, after learning that the products contained no collagen and only
contained amino acids. He also asked the respondents whether, after learning
that the product contained no collagen and only contained amino acids, they
would be more or less likely to purchase the product again. The expert
concluded that over 95% of respondents understood the front label to mean that
the products contain collagen, and 51.7% of respondents indicated that they
would be “much” or at least “somewhat less satisfied” if they learned
otherwise. This adequately tested deception and materiality, even if it didn’t
test reliance.

Defendant argued that the respondents weren’t representative
because its consumers are high-end, sophisticated product purchasers and
therefore the population was non-representative. But it wasn’t clear why that
would be a problem, given that more sophisticated shoppers “are likely more
aware of, and perhaps specifically desire, the benefits of collagen products,”
so this just went to weight rather than admissibility.

Meanwhile, the central question in defendant’s survey was:

Q13. Based on your understanding of the product, which of
the following, if any, describes what C + Collagen means? 

(Select all that apply)

1. Product contains Vitamin C which increases collagen

2. Product contains animal collagen

3. Product contains plant-based collagen amino acids

4. Something else (Please specify): ___ 

5. None of these [EXCLUSIVE]

6. Don’t know / unsure [EXCLUSIVE]

Defendant’s expert concluded that “the majority of
purchasers [surveyed] understand that C + Collagen means the product contains
Vitamin C” (49.7% selected “Product contains Vitamin C which increases
collagen). And the “next most common interpretation of C + Collagen was that
the product contains “plant-based collagen amino acids” (37.2%), while only
26.4% indicated that C + Collagen meant that “the product contains animal
collagen.”

The survey also asked materiality questions assuming that
plant-based collagen amino acids were real, and purportedly found that 58.5% of
consumers wouldn’t care—and of those who did care, only 3% would be less likely
to buy plant-based products.

But nothing in defendant’s survey tested plaintiffs’ theory
of the case: that the label conveys that the products contain both Vitamin C
and collagen. “So, the fact that most individuals picked the answer choice
indicating that they interpreted the label to mean Vitamin C boosts collagen is
unsurprising given it is the only answer that contains both Vitamin C and
collagen.  The fatal flaw was that the survey used the junk science that the court
was supposed to keep out of the courtroom: “the questions introduce a substance
that does not exist in the real world or even appear as a phrase on the
Products’ packaging.” 

The survey “tested whether consumers understand where
collagen comes from,” but that was different from the argument that “consumers
value the word ‘collagen’ itself – whether consumers understand the science or
not,” which allowed the defendant to charge inflated prices. Thus, the expert’s
opinions and conclusions related to these questions were excluded as to falsity
and materiality, as were her critiques of other experts based on their failure
to test the concept of “plant based collagen amino acids,” The remaining
aspects of the report (such as the reliance questions/answers) were admissible.

from Blogger http://tushnet.blogspot.com/2023/04/consumer-survey-cant-make.html

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lidocaine patch, allegedly not “maximum strength,” gives Walmart some pain

Posted on April 3, 2023 by rtushnet

Rodriguez v. Walmart Inc., 2023 WL 2664134, 22-CV-2991 (JPO)
(S.D.N.Y. Mar. 28, 2023)

This is another lidocaine lawsuit finding that plaintiffs
stated a claim under New York’s GBL based on allegedly false advertising that
Walmart’s patches and creams deliver a “maximum strength” dose of lidocaine and
with respect to the patches, function as a “stay-put flexible patch” that
“lasts up to 12 hours.”

Plaintiffs alleged that other over-the-counter and
prescription lidocaine creams and patches deliver a higher concentration or
amount of lidocaine and the lidocaine patches do not contain a higher dose of
lidocaine than competing patch products without the “maximum strength” label. In
addition, the patches allegedly systematically fail “by large margins” to
adhere to users’ bodies for 12 hours; fail to continuously relieve pain during
that period because of the premature detachment; and are insufficiently
flexible to withstand daily activities such as walking, stretching, and
sleeping.

It was plausible that a reasonable consumer would understand
“maximum strength” to mean that the patch product contains the maximum amount
of lidocaine available on the market for that type of product. Walmart’s
arguments that prescription-strength patches are not proper comparators and that
plaintiffs used erroneous calculations couldn’t be resolved on a motion to dismiss.
And “max strength” was equivalent to “maximum strength.”

Whether “stay-put flexible patch” was non-actionable puffery
couldn’t be resolved at this stage. It wasn’t too vague to be actionable; “[w]hether
the patch tends to remain adhered to users’ skin and flex along with their
movements during a typical period of use is an objective question.” And the
phrase wasn’t “so patently hyperbolic that it can be deemed puffery as a matter
of law.”

Similarly, “lasts up to 12 hours” was plausibly misleading:

After reading directions that state that a user should use
one patch for “up to 12 hours,” a reasonable consumer would indeed plausibly
expect to be able to use a single patch for a period approaching 12 hours.
Further, Plaintiffs do not allege that 12 hours is a guarantee; rather, they
allege that the patches systematically fail to adhere for a time period close
to 12 hours.

Plaintiffs also plausibly alleged material omissions by
failing to disclose that the patches are “prone to even greater detachment when
[consumers] engage in moderate exercise or other regular daily
activities.”  Walmart argued that it had
no obligation to state the obvious — that is, that the patches could detach
when the user is mobile. But “[j]ustifiable reliance by the plaintiff is not an
element of [a] statutory claim” under GBL § 349 or § 350.

 

 

from Blogger http://tushnet.blogspot.com/2023/04/lidocaine-patch-allegedly-not-maximum.html

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“Paris” on makeup doesn’t itself indicate origin

Posted on March 31, 2023 by rtushnet

Eshelby v. L’Oréal USA, Inc., 2023 WL 2647958, 22 Civ. 1396
(AT) (S.D.N.Y. Mar. 27, 2023)

Eshelby sued L’Oréal over its use of “Paris” (including as
part of the brand name “L’Oréal Paris”) and French-language text in ads and on
the front of packages when the products aren’t made in France. They say in fine
print on the back or side of the packaging that they are manufactured in the
United States or Canada. She alleged that American consumers associate French
products with high quality and luxury such that consumers are willing to pay a
premium for French products, and further that other cosmetic products sold in
the United States that display the word “Paris” are manufactured in France, making
this deceptive to reasonable consumers. She brought the usual
California claims and some others, but the court dismissed them all.

Some of the accused products didn’t have other French words
on them. “As a matter of law, a mere reference to Paris is insufficient to
deceive a reasonable consumer regarding the manufacturing location of a
product.” Plus:

The word “Paris” always appears in
stylized text underneath the word “L’Oréal,” in the same font and color as the
word “L’Oréal,” such that a reasonable consumer would understand that “Paris”
is part of the brand name “L’Oréal Paris.” … And, although a reasonable
consumer may infer from the brand name that the company originated in Paris, a
reasonable consumer would not also conclude that a particular product is
manufactured in Paris, or elsewhere in France—particularly because each product
also contains a disclosure on the back label stating the manufacturing
location.

What does this mean for geographic deceptiveness or
misdescriptiveness refusals, especially in light of the greater constitutional
scrutiny given to refusals after Tam and Brunetti?

Reasonable consumers may not have to look for corrections to
misleading matter on the front of the label, “but the front label on the
products Eshelby purchased do not make any actual representations about country
of manufacture; rather, Eshelby inferred from the word ‘Paris’ and the
French-language text that the products were manufactured in France. The front
label is not so misleading that a reasonable consumer who cared about the
country of manufacture should not be expected to look at the full packaging for
a disclaimer, which was clearly and correctly provided on the labels of each
product Eshelby purchased.”

Even the addition of other French-language text was
insufficient. Although she pointed to two other products with French names that
were made in France, she didn’t allege “that the examples she points to are
comparable to the haircare and makeup products she actually purchased, i.e. in
terms of retailers, price point, or target audience.” Also, they presented
their French text differently, with product names in French, and the
French-language descriptions preceding the English translations. The L’Oréal
products use product names in English only as well as large/preceding English
descriptions, making it implausible that they were made in France for French
consumers. And there was nothing on the labels making explicit claims about
country of manufacture except the truthful disclosures on the back.

“The mere presence of words in a foreign language is
insufficient to mislead a reasonable consumer.” [Citing a case about Spanish;
is that really generalizable to all languages?]

Amending the complaint to include allegations about a survey
supporting her claims would be futile because “[a] plaintiff cannot rely solely
on consumer surveys to state a claim.” Anyway, the survey only showed
respondents the front of the product, and omitted responses stating that, based
on the front label of the product, the respondent does not know where the
product was manufactured.

from Blogger http://tushnet.blogspot.com/2023/03/paris-on-makeup-doesnt-itself-indicate.html

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(c) ownership claim allows both (c) and Lanham Act claims on motion to dismiss

Posted on March 31, 2023 by rtushnet

Estate of Henry Joseph Darger v. Lerner, 2023 WL 2664341, No.
22 C 03911 (N.D. Ill. Mar. 28, 2023)

Darger “was an artist who died in obscurity but whose work
received significant posthumous acclaim.” The Estate alleged that his copyrights
were wrongfully claimed for nearly 50 years by Darger’s landlords. The court
denied a motion to dismiss on copyright and trademark etc. claims; the latter
trouble me for obvious Dastar reasons.

Darger had a tough life, including institutionalization. “From
approximately 1930 until 1973, when he moved to a care facility and shortly
thereafter passed away, Darger lived in a room at 851 West Webster in Chicago’s
Lincoln Park neighborhood. Darger’s landlords from approximately 1960 to the
end of his life in 1973 were Nathan and Kiyoko Lerner.”

When he died intestate, he left
behind in his apartment a 15,000-page epic fantasy novel called In the Realms
of the Unreal, about a civil war between children and abusive adults, which
included approximately 300 pages of watercolor, pastel wash, pencil, and
collage illustrations. He also wrote other expansive works …. Darger’s works
posthumously became well-regarded in the genre of “outsider art” (art by
self-taught artists who have no contact with the mainstream). “His works are
known for using a vibrancy of color and vivid composition.” Today, a single
illustration from In the Realms of the Unreal regularly sells for $200,000 to
$400,000 and has been known to fetch as much as $750,000. His illustrations
have also been featured in books, teaching materials, commercials, films, and
museums around the world.

“Upon Darger’s death, the Lerners took control of his works
under the allegedly false pretense that he had gifted the physical copies of
his works and their associated copyrights to them.” They also used Darger’s
name, identity, and likeness to “exploit” his works and by registering the
domain name “officialhenrydarger.com.”

In 2022, a distant relative was appointed as administrator
of the Estate, which then sued.

Defendants’ primary argument was laches/statute of
limitations, but those are affirmative defenses usually not appropriate for a
motion to dismiss, and it was conceivable that they didn’t apply. “First, under
the separate-accrual rule which applies to the Copyright Act, the statute of
limitations runs from each successive violation.” Thus, defendants were
allegedly currently violating the Copyright Act, Landham Act, and state IUDTPA.

Second, the discovery rule might apply. It was reasonable to
infer that the Estate didn’t have a reasonable basis for learning of
defendants’ conduct until recently, given the allegations of “the difficult
circumstances of Darger’s childhood which cut him off from any extended family;
that he lived a solitary life working “menial” jobs; that he died intestate;
that his art, though posthumously well-regarded, is mainly known in the niche
genre of ‘outsider art,’; and that Sadowski was appointed administrator of the
Estate by the Cook County Probate Court in only 2022.”

Copyright ownership: At this stage, the court accepted as
true the allegation that Darger did not gift his works to the Lerners. Given
that the disputed transfer was pre-1978, it was governed by the common law. “A
transfer of a common law copyright did not need to be in writing.” Still,
though a transfer of the material object could normally evidence an intent to
transfer the underlying common law copyright, the issue was always the intent
of the transferor. Nimmer even uses a relevant example: “if author A submits a
story to editor E at a magazine for consideration … E waits decades until A
is dead; and then E publishes it under a purported grant from A, there is scant
reason to credit the necessary ingredient of A’s intent to convey copyright
ownership.”

Does copyright preempt the Estate’s equitable easement and
IUDTPA claims? The first claim sought physical access to create an alternative
master; this was a substantively different right than copyright, so not
preempted. The second was, according to the court, not a preempted reverse
passing off claim, but instead based on Kiyoko Lerner falsely holding herself
out to consumers as a representative of the Estate. “Making such a
misrepresentation about one’s affiliation, by itself, is not among the
exclusive rights enumerated in § 106 of the Copyright Act.” [But depending on
what she actually said, Dastar or conflict preemption might be quite
relevant.]

Lanham Act false designation of origin, unfair competition,
and cybersquatting: The complaint identified Henry Darger’s name as the
relevant trademark (I don’t see how the Estate can plausibly claim to own it as
a mark, but ok). “[W]hether Kiyoko Lerner has a registered trademark in
Darger’s name is outside the four corners of the Complaint and is therefore a
factual dispute and not properly considered on a motion to dismiss.” And likely
confusion can’t be assessed at the motion to dismiss stage, nor were plaintiffs
required to allege specific facts establishing bad faith for cybersquatting at
the pleading stage. Still seems to me like they’re heading for fatal Dastar
problems.

from Blogger http://tushnet.blogspot.com/2023/03/c-ownership-claim-allows-both-c-and.html

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Third Circuit follows Second in protecting medical journals against trade libel claims

Posted on March 27, 2023 by rtushnet

Pacira Biosciences, Inc. v. American Soc’y of
Anesthesiologists, Inc., — F.4th —-, 2023 WL 2621131, No. 22-1411 (3d Cir.
Mar. 24, 2023)

Courts in particular kinds of false advertising cases say
that scientific claims are not falsifiable, even as the majority of workaday false
advertising claims involving scientific fact are (correctly) treated as falsifiable.
The rule seems to be that scientific claims directed at sophisticated
audiences, to whom details of the claims are disclosed, are treated as opinion,
whereas scientific claims in standard consumer advertising are treated as
factual. This may well be justified because of the different ways in which such
claims are perceived, but it also smacks a bit of those old cases that held
that educated men could be allowed access to things that would be obscene as to
their footmen and housemaids.

Anyway, Pacira sued ASA, the editor-in-chief of its medical
journal, and the authors of three articles for statements made about one of
Pacira’s drug products, for trade libel under New Jersey law. The court of
appeals affirmed a finding that the statements were nonactionable opinion.

Pacira makes Exparel, a local anesthetic administered at the
time of surgery to control post-surgical pain; Pacira claims that it offers
longer lasting pain relief than standard local anesthetics. The challenged
statements conveyed defendants’ view that Exparel was not superior or was even
inferior to standard analgesics for pain relief. E.g., the cover of the
February 2021 issue of Anesthesiology stated that “Liposomal Bupivacaine Is Not
Superior to Standard Local Anesthetics.” Pacira challenged three articles: (1)
a meta-analysis of studies of Exparel, which concludes that the drug is “not superior”
to standard anesthetics; (2) a narrative review of clinical trials involving Exparel,
which reaches a similar conclusion; and (3) an editorial based on the
meta-analysis and narrative review.

Pacira had specific complaints about each article, including
that the first one cherry-picked studies; employed a “flawed method” known as
“crude pooling,” in which results from different studies using different
popoulations are grouped together; and violated “the standards of medical
research” by failing to account for the statistical heterogeneity in
population, medication type, outcome definition, and design of the studies on
which it relied. Similarly, the narrative review allegedly failed to discuss
the “most relevant anesthesia procedure,” ignored favorable studies with
minimal explanation, and two of its authors failed to disclose financial
conflicts of interest.

The ASA’s Continuing Medical Education program allowed
participants to answer questions based on the articles and receive credit to
satisfy medical licensure requirements. Pacira alleged that these questions
restated as fact the articles’ conclusions, including that Exparel is
“inferior” to standard anesthetics and that studies favoring it are biased.

In sorting potentially actionable fact statements from
opinion, courts consider the (1) content, (2) verifiability, and (3) context of
the statements.

Content: “Not superior” and “inferior”  were the type of “loose” or “figurative”
language that the New Jersey Supreme Court has said is “more likely to be
deemed non-actionable as rhetorical hyperbole.” (This seems like a overgeneralization
of what those terms mean in the abstract, unaccompanied by more specifics—those
types of words are generally opinion on their own, but here the context is one
of analyzing relative efficacy; the court is atomizing the claim in order to reject
it.) In a footnote, the court relied on past precedent: “If a statement could
be construed as either fact or opinion, however, we must construe it as an
opinion. A contrary presumption would ‘tend to impose a chilling effect on
speech.’” Also, that most of the cases it cited were false advertising cases

strengthens, not undermines, our
conclusion that the statements here are nonactionable opinions. Commercial
advertisements are directed at consumers, whereas peer-reviewed academic
journals are generally “directed to the relevant scientific community.” ONY,
Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490, 496-97 (2d Cir. 2013). If
New Jersey courts have concluded that statements of relative superiority would
not mislead an average consumer, then similar statements made in an academic
journal will not mislead the experts reading the journal. See Eastman Chem. Co.
v. Plastipure, Inc., 775 F.3d 230, 236 (5th Cir. 2014) (holding disputed
statements made in sales brochures were actionable because “Eastman did not sue
Appellants for publishing an article in a scientific journal. Rather, Eastman
sought to enjoin statements made in commercial advertisements and directed at
customers”).

Verifiability: The statements here weren’t verifiable. (I
suspect the doctors targeted would be surprised to hear that their CME wasn’t
actually telling them verifiable information. Arguably, this line of cases
highlights one way in which the collapse of any kind of consensus reality has
damaged the First Amendment.) First, they were “tentative scientific
conclusions and were expressly disclosed as such.” Adopting the reasoning of ONY,
the court reasoned that the statements, though theoretically provable, were nonetheless
still “tentative and subject to revision, because they represent inferences
about the nature of reality based on the results of experimentation and
observation.”

[“that’s just, like, your opinion, man” from The Big Lebowski]

Of possible interest: Cf. to Daubert’s statement: “Scientific
conclusions are subject to perpetual revision.” But in Daubert, that conclusion
is part of the reason that we let factfinders resolve factual disputes. Also,
in a footnote: “One court has recently observed that if there is consensus on a
scientific issue, then a statement about the issue may be deemed verifiable.
Conformis, Inc. v. Aetna, Inc., 58 F. 4th 517, 533 (1st Cir. 2023).” [This is a
product disparagement case that, in some significant tension with ONY
and the case at bar, finds the statement that a treatment is “not clinically
effective and not accepted by doctors and insurance providers as a standard
treatment” is at least potentially factual for purposes of surviving a motion
to dismiss. The court’s references to Plastipure and this case strengthen my conviction that this is a special rule: statements that are in fact verifiable will nonetheless be treated as opinion when made in scholarly format with sufficient detail about their limitations. I don’t think this is wrong as a result, I just wish the rule were stated more clearly.]

However, the broad statements above are probably limited by
the following discussion of the “express[]” qualifications of the challenged
materials. “For example, immediately before concluding that EXPAREL is not
superior to standard analgesics, the Hussain Article enumerates five ‘notable
limitations’ of its study, including ‘variabilities’ that ‘may have played a
confounding effect,’ ‘publication bias’ in selecting studies, and statistical
limitations due ‘to scarcity of data.’” The second article ended, “[h]owever,
medicine is constantly evolving with ongoing research, and the use of [EXPAREL]
for postoperative analgesia will certainly be no different.” It then identifies
several “knowledge gaps for future research,” including improving comparative
data for certain metrics.

Anyway, Pacira’s allegations “boil down to disagreements
about the reliability of the methodology and data underlying the statements,”
which isn’t the same thing as verifiability…. [M]ere disputes about the
reliability of a scientific study’s disclosed methodology cannot create an
actionable falsehood for trade libel, as such disputes do not address whether
the statements themselves are verifiable.” [There were no allegations of faked
data or the like.] Allegedly undisclosed conflicts of interest weren’t relevant
to falsifiability, even if relevant to actual malice.

Another footnote tries to preserve ordinary Lanham Act cases:
“For [establishment] claims, literal falsity may be established by showing that
‘the underlying studies upon which the representations are based are not
sufficiently reliable to permit one to conclude with reasonable certainty that
they established the claim made.’” [Um, the court just said above that
reliability was different from verifiability—why wouldn’t those claims still be
unverifiable even if unreliable? Immediately after this footnote, in text it
says: “It is only after establishing the statements can be proven true or false
that reliability of the underlying data and methodology may become relevant.”
Separately, if the claim isn’t an establishment claim—it doesn’t expressly or
by implication claim scientific backing—it has, historically, been possible to
falsify it by proving the contrary with scientific evidence.]

The real justification for calling these statements opinion,
which the court gets to next, is that these disputes should be kept out of the
legal system in order to avoid chilling scientific research and discourse. [What
happens when plaintiff’s competitors disseminate these articles as part of
their own self-promotion? The commercial/noncommercial speech distinction can
handle this, but defamation/trade libel may be ill-suited to do so.]

Context also pointed in favor of calling these statements
opinion: This was “a peer-reviewed journal for anesthesiology specialists.
While statements are not protected solely because they appear in a
peer-reviewed journal, such journals are often ‘directed to the relevant
scientific community.’ Their readers are specialists in their fields and are
best positioned to identify opinions and ‘choose to accept or reject [them] on
the basis of an independent evaluation of the facts.’” More generally, “statements
directed at readers who are capable of performing an independent evaluation of
the facts upon which an opinion is based support the conclusion that the
opinion is nonactionable.”

The court pointed out that “the readers were provided with
the data and methodology on which the statements were based.” [Note that if no
one is likely to do their own research, that may not matter, just as no one
really reads lots of other disclosures. Also, doctors are actually
not statistics experts, in general, and are just as vulnerable as the rest
of us to being spun.]

from Blogger http://tushnet.blogspot.com/2023/03/third-circuit-follows-second-in.html

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“Safe” not puffery in context of electric dog collars

Posted on March 27, 2023 by rtushnet

Hernandez v. Radio Systems Corp., No. EDCV 22-1861 JGB (KKx),
2023 WL 2629020 (C.D. Cal. Mar. 9, 2023)

Hernandez brought the usual
California claims against RSC for  allegedly false and misleading advertising of
its electric collar products for pets under the brand name PetSafe. He
allegedly bought them because he believed that they were safe, effective,
harmless, and an appropriate tool for training household pets based on the
packaging and advertising of the products, e.g.:

SAFE CORRECTION: When your pet
enters the “off limits” area, the transmitter sends a safe static correction to
their receive collar.

SAFE CORRECTION: When your pet
enters the barrier area, they feel a safe, progressive static correction,
starting at the lowest level; includes automatic safety shutoff.

SAFELY CORRECTS YOUR PET: When your
pet enters the boundary area wearing the receiver collar, they will hear a
series of beeps and then will receive a safe yet startling static correction.

He also viewed the PetSafe logo, “Safe Pets Happy Owners,”
as reassurance that the products were safe. In addition, the packaging of
PetSafe electric fence systems prominently display the following question and
answer:

Will it hurt my pet?

NO. The correction is delivered
when a pet crosses the established boundary zone. It is designed to get your
pet’s attention, but not punish him. This method has been proven safe and will
not harm your pet.

He alleged that, after using the product, he noticed that
his dog’s personality was more subdued than normal and that she had lost her
appetite. He identified a sticky residue and a foul burning smell around his
dog’s neck, and discovered that a patch of fur was missing from her neck. His
veterinarian identified holes in the dog’s neck that coincided with the
electrode inserts in the PetSafe Products.

Hernandez thus alleged that claims that the PetSafe Products
are “safe” and “harmless” are false and misleading because they (a)
misrepresent the dangers and risks of severe physical harm and injury to pets
associated with the use of the Products; (b) misrepresent the dangers and risks
of psychological damage, including anxiety, stress, and depression, to pets
associated with the use of the Products; (c) misrepresent the dangers and risks
of increased aggression and behavioral problems in pets associated with the use
of the Products; and (d) misrepresent that the Products are humane or are
recommended by industry experts. Instead, he alleged that an “overwhelming body
of scientific research confirms that being trained through electric shock is a
stressful and painful experience for dogs.” However, he would allegedly be
willing to purchase PetSafe Products if they were in fact safe, harmless, and
humane.

In this context, representations that the products were
“safe,” “comfortable,” “effective,” “harmless,” and “humane” were not puffery. While
only “misdescriptions of specific or absolute characteristics of a product are
actionable,” allegedly false claims that “explicitly or implicitly address
product attributes of importance to customers” are not puffery. “Representations
concerning the health and safety effects of products are ordinarily important
to consumers such that false advertising claims based on them should survive
dismissal.”

While defendant argued that products weren’t “inherently
dangerous or hazardous,” a reasonable consumer may disagree. “When a seller
represents that [an electric collar] is ‘safe’,’ a reasonable consumer may
understand that to be a concrete representation that, at the very least, the
[electric collar] will not [harm the pet] when used correctly.”

Likewise, the court couldn’t conclude that there would be no
deception as a matter of law. RSC argued that no reasonable consumer would
assume that the PetSafe Products are “risk-free” because the packaging and
product manuals disclose the relevant safety risks, including skin damage. But
small print can’t cure deception of reasonable consumers, nor can disclosures
in product manuals. Further, “brand names by themselves can be misleading in
the context of the product being marketed.” “Defendant’s descriptive brand
name, PetSafe, requires ‘little thought’ of the consumer and implicitly assures
consumers that the Products are safe.”

The court also declined to reject the request for injunctive
relief.  Fernandez alleged that he’d want
to purchase them in the future, but can’t know if the ads are accurate. That
was enough. (This strikes me as out of the mainstream—it would seem to require
a reformulation of the product for him to change his mind, as opposed to
accurate labeling.)

from Blogger http://tushnet.blogspot.com/2023/03/safe-not-puffery-in-context-of-electric.html

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Protecting Creativity with a Bottle of Jack on the Floribama Shore (and tiny JDI oral argument observations)

Posted on March 24, 2023 by rtushnet

Media Law Resource Center conference, Southwestern Law
School

Kevin Vick, Jassy Vick Carolan LLP (Moderator)

Just a few panel notes since I’m not going to recap Rogers or
MFGB v. Viacom.

Evynne Grover, Vice President, Media Liability Claims
Practice Leader, QBE North America: Rogers is incredibly important for
clearance. It gives us confidence in insuring productions. It can be applied on
a MTD, which costs $50-$175,000 but that’s much less expensive than going to
summary judgment. It allows us to clear more productions, support more speech,
and charge lower premiums. W/Rogers, 85% of threat letters go nowhere, and the
rest go away quickly. If we take away Rogers, we’re facing lengthy litigation,
losing settlement leverage, lose MTD opportunities, which would substantially
increase the costs of defense that are now low. Would have to be factored in to
premiums and retentions, and could make insurance cost-prohibitive for some
creators.

Susan Kohlmann, Jenner & Block, counsel for Viacom/MTV
in MFGB Properties v. Viacom: emphasizes the cost and burden of discovery in
having to go through all the depositions etc. Rogers would have counseled early
dismissal.

Lynn Jordan, Kelly IP, amicus counsel for the Motion Picture
Association in MFGB Properties v. Viacom: MFGB is a case that couldn’t have
been litigated by an independent filmmaker because of the highly burdensome
discovery/costs of defense.

Guilio Yaquinto, Pirkey Barber PLLC, amicus counsel for the
American Intellectual Property Law Association in Jack Daniel’s: wants to
distinguish commercial products from speech.

Rebecca Tushnet, Professor of Law, Harvard Law School

A test that deems this toy confusing with Jack Daniels is a
bad test. And it’s a bad test for the toy for the same reason that the
multifactor test is bad for movies and books: because that’s not how people
interact with products that are purchased for expressive purposes; people buy
this dog toy because it’s funny, because of its expression.

Cohen v. California: Paul Cohen was arrested for wearing a
jacket that said fuck the draft. The Supreme Court understood that because he
was arrested for his expression, the fact that it was on a jacket was not relevant.
[I admit that the Court seemed to think that T-shirts were different from dog
toys.]

I want to drill down on the (oft-heard) statement “Most
reasonable people won’t think the TM owner is making fun of itself.” Where’s
your evidence of that? Walmart’s WalQaeda survey said otherwise, finding 59%
confusion over WalQaeda and Walocaust T-shirts with plenty of other criticism
of Walmart on them, using the same questions asked in the VIP case. The jurisprudence
on confusion over affiliation means that the claim about successful parodies being
nonconfusing is not going to survive actual ligitation. Alito showed some
interest in treating the reasonable consumer test as an objective standard, which
it often is in other First Amendment areas, which could handle both the dumb
surveys and the larger problem of circularity (if consumers think that the law
is that parody or any reference to a TM owner requires permission, then the law
will require that permission if Jack Daniels has its way).

Q: on as applied challenges? RT: That seemed unappealing; if
you have hundreds of as applied challenges eventually you get a rule, which would
likely be something like Rogers.

Kohlmann: Registration is different from infringement, which
made the references to PTO practice sort of mysterious.

[While I’m here, other stuff I particularly noted about the Jack Daniels oral argument:

Sotomayor’s point that Polaroid isn’t in the statute either!
And that’s important because Polaroid works really badly for expressive uses; Rogers
can be a substitute test for finding when material confusion is likely, and when it’s not, given
the special characteristics of noncommercial speech.

Use as a mark: Justice Jackson seemed interested in an intuitive
concept of use as a trademark, but most lower court cases (with the partial
exception of the 6th Circuit) don’t accept that as a question
different from whether confusion is likely: They reason that, if confusion is
likely, then there is use as a trademark. More generally, I think it is easy to
get entangled in lay ideas of what trademark infringement means (something like
counterfeiting), which trademark claimants have exploited to expand rights far
beyond passing off.

The faux amis of use in commerce, commercial use, and
commercial speech showed up a bit; the Court seemingly well understood that
selling T-shirts could be protected speech if the regulation was imposed on the
shirts because of the expression printed on them, but no one seemed confident
of where the line was. Perhaps that’s the thing that should be done on a case
by case basis.

Small points about JDI’s claims:

Gone with the Wind isn’t a trademark? Has anyone told
Turner Entertainment Corp. which holds a registration for, inter alia,
“books”?  So too with the claim in
rebuttal that TikTok videos aren’t use in commerce—they very much are, even though
many are not commercial speech; this is the faux amis problem.]

from Blogger http://tushnet.blogspot.com/2023/03/protecting-creativity-with-bottle-of.html

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Another digital “buy” button case survives motion to dismiss

Posted on March 23, 2023 by rtushnet

McTyere v. Apple, Inc, 2023 WL 2585888, No. 21-CV-1133-LJV
(W.D.N.Y. Mar. 21, 2023)

Plaintiffs alleged that Apple made false representations
when it “sold” them digital content on the iTunes Store only to later remove
their access to that same digital content. They claimed violation of sections
349 and 350 of the New York General Business Law, as well as unjust enrichment.
Consumers can “rent” movies from Apple on the iTunes Store for about $5.99, but
the “buy” option costs much more. “Regardless of which device is used to access
digital content, or which ‘iTunes’ app is used to buy or rent the digital
content, the app provides a tab or folder labeled ‘purchased.’ ” But when third
parties terminate their licensing agreements with Apple, Apple “must revoke [a]
consumer[’s] access” to purchased digital content “without warning.” Plaintiffs
alleged that if they had known about the possibility that Apple might later
revoke access to already-purchased content, “they would not have bought [ ]
digital content from [Apple] or would have paid substantially less for it.”

Apple was not collaterally estopped from raising arguments against
liability that were rejected in Andino v. Apple, Inc., 2021 WL 1549667 (E.D.
Cal. Apr. 20, 2021), given that the claims arose under “completely different
state laws.”

Apple argued that it wasn’t misleading to say “buy,” because
to “buy” something means to “acquire possession, ownership, or rights to the
use or services of by payment especially of money.” Apple argued that
plaintiffs in fact received the “right to the use of” the digital content at
issue here, so its advertising was not misleading regardless of whether their
ability to access that digital content later disappeared.

But that “right to use” argument
cannot carry the water that Apple asks it to carry. The right to use something
may last but a moment or forever. And by ignoring that issue, Apple’s argument
begs the question.

Take, for example, two consumers
who each pay $19.99 to “buy” two different movies on the iTunes Store, each
planning to watch the movie the next night. The following night, the first
streams his movie purchase without a hitch. But when the second sits down on
the couch and opens the iTunes Store, she finds that the movie has disappeared
from her “purchased” folder. As it turns out, Apple lost the rights to that
movie minutes before. Both consumers had the “right to the use of” their movie
purchases for the twenty-some hours between the time they purchased them and
the time they sat down to watch them. But the second would-be movie watcher
understandably might feel a little miffed if she were told that she received
exactly what she paid for.

In a footnote, the court noted that Apple’s argument would
mean that both the consumer who “rented” the movie and the one who “bought” it
would receive the “right to the use of” that digital movie. Someone who plans
to rewatch a movie might not pay the enhanced price to “buy,” and just rent
instead, if they know that “buying” is no guarantee of continued access.

Thus, “reasonable consumers might have been misled when they
purchased digital content with the mistaken impression that the content could
not later be removed from their libraries.”

Apple also argued that its iTunes Store terms and conditions
alerted the plaintiffs (and other consumers) to the possibility that they might
lose access to purchased digital content and should download digital content to
prevent that possibility. The parties disputed whether Apple’s terms and
conditions were equivalent to front-of-package clarifications, which was a
factual issue. Also, it wasn’t clear that the T&C were sufficient. The
earliest applicable terms and conditions that Apple has submitted warn
consumers only that “Apple and its licensors reserve the right to change,
suspend, remove, or disable access to any iTunes products, content, or other
materials comprising a part of the iTunes service at any time without notice.” A
reasonable consumer “might read those terms and conditions and nevertheless
believe that once he or she has ‘purchased’ digital content and that content is
saved to his or her ‘purchased’ folder, Apple cannot at that point suspend or
terminate access to it, notwithstanding whether it otherwise could do so to
other material in the iTunes Store before purchase.”

Apple argued that the plaintiffs were warned to download
digital content “to ensure continued access to it”; once consumers download
content, Apple said, they can in fact continue to stream that content even if
Apple terminates its licensing agreement with another party. But the plaintiffs
argued that not all content can be downloaded and that the “right to download”
does not fully protect against the possibility that a consumer will lose access
to digital content. This couldn’t be resolved on a motion to dismiss.

Although the unjust enrichment claim could ultimately be
deemed duplicative of the other theories of recovery, the court also declined
to dismiss it at this stage.

from Blogger http://tushnet.blogspot.com/2023/03/another-digital-buy-button-case.html

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