conclusory allegations of confusion don’t allege statutory standing for TM claim

Posted on July 3, 2023 by rtushnet

Blacks in Technology Int’l v. Greenlee, 2023 WL 4186376, No.
3:20-CV-3008-X (N.D. Tex. Jun. 26, 2023)

On one side: Blacks in Technology International (BIT
International), Blacks United in Leading Technology International (BUILT), and
Blacks in Technology, Texas (BIT Texas). On the other: Blacks in Technology,
LLC (BIT LLC) and two individual defendants, Greenlee and Schultz. After much
back and forth, BIT LLC had trademark/unfair competition claims against the BIT
International, BUILT, and BIT Texas; I’ll ignore the other claims.

Perhaps because the litigation seems to have been otherwise
painful, the court actually gave some attention to the harm story and found that
BIT LLC failed to allege that it had standing to bring its trademark claims.

BIT LLC wasn’t the registrant for one of the marks at issue,
BLACKS IN TECHNOLOGY, but it could establish that it owned the mark by showing
it used the mark as a source identifier, but it made only conclusory assertions
that it did so. Under §43(a), it didn’t have to own the mark (or the other
asserted registered mark, a “Blacks in Technology” logo) as long as it
satisfied the zone of interests and proximate cause tests.

Even if BIT LLC fell within the Lanham Act’s zone of
interests, it failed to allege proximate causation of injury. The “paradigmatic
direct injury” is “diversion of sales to a direct competitor”; other recognized
injuries may include “harm[ing] a plaintiff’s reputation by casting aspersions
on its business,” “denigrat[ing] a plaintiff’s product by name,” “damag[ing]
the product’s reputation by, for example, equating it with an inferior
product,” or “seek[ing] to promote [the defendant’s] own interests by telling a
known falsehood to or about the plaintiff or his product.” BIT LLC made only
conclusory assertions of likely confusion and resulting damage. “BIT LLC then
includes what appears to be a screenshot from a nondescript social media chat
forum in which five participants discuss the similarity between BUILT’s logo
and BIT LLC’s logo.” And it alleged that the putative “infringement will also
lessen the ability of [the Mark and the Logo] to identify and distinguish BIT[
] LLC’s goods and services, thereby causing harm to BIT[ ] LLC.”

That wasn’t enough.

BIT LLC has failed to allege any
economic or reputational injury “flowing directly from the deception wrought
by” the advertising of BIT International or BIT Texas. Its complaint makes no
mention of any specific advertising by these two parties whatsoever. And BIT
LLC’s screenshot demonstrating the apparent confusion of five anonymous users
of an unidentified social media chat forum—all of whom were able to distinguish
the two logos, and none of whom referred to anything indicating reputational or
economic harm—is insufficient to plausibly allege that BUILT proximately caused
any injury to BIT LLC via infringement.

Claim dismissed without prejudice.

from Blogger http://tushnet.blogspot.com/2023/07/conclusory-allegations-of-confusion.html

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Inter American Convention allows claims that Lanham Act makes dubious after Abitron; but what about Article III?

Posted on July 3, 2023 by rtushnet

Industria De Alimentos Zenu S.A.S. v. Latinfood U.S. Corp., No.
16-6576 (KM) (MAH), 2023 WL 4200169, — F. Supp. 3d — (D.N.J. Jun. 27, 2023)

 

Industria sued Latinfood for trademark and copyright
infringement; Latinfood counterclaimed for tortious interference against
Industria and another counterdefendant Cordialsa. The court granted summary
judgment against Latinfood on the counterclaims, and gave partial victories to
both sides on the main claims. Notable for use of the Inter American Convention
to protect foreign marks in the US—Christine Haight Farley has explored
this once-forgotten treaty that seems to be undergoing a revival.

Industria, based on Colombia, produces and distributes food
products under two relevant brand names: Zenú and Ranchera. They’re successful
brands: approximately $300,000,000 annually in sales of Zenú products and
$100,000,000 in sales of Ranchera products. But Industria does not advertise or
sell its Zenú or Ranchera products in the United States and there are no market
surveys specific to the United States for Zenú or Ranchera.

Industria has never had a registration for Ranchera; its
application was opposed by an unrelated third party and has been suspended; a
prior registration for Zenú was cancelled and Industria never sold any Zenú or
Ranchera products in the United States when it owned that registered trademark.

Latinfood’s predecessor in interest was founded by Zuluaga, who
lived in Colombia until he was approximately 17 years old. Zuluaga claimed
first use of Zenú in 2011; the predecessor company applied to register the mark
in 2013, with specimens using actual images of Industria’s products (though
Zuluaga claimed lack of knowledge either of Industria or the specimens filed on
its behalf by a filing service). The mark was registered in 2013; nearly two
years later, Zuluaga told the filing service that “we need to replace / change
the pic of the specimen loaded in the application…. [T]he one showed in the
application is not mine.”

Zuluaga told a designer to look at Industria’s website when
creating Latinfood’s packaging designs for Zenú and Ranchera and brought one of
Industria’s Ranchera labels to the designer’s office. I have tried to sort
plaintiff and defendant’s labels based on what the court says, but I might be
wrong (which is clearly the point).

 I believe these four images are Industria’s Ranchera:

I believe this is Latinfood’s Ranchera:

Industria’s Zenú (again, I think):

Latinfood Zenú (I think):

Latinfood did ultimately change the Zenú logo.

Also:

Some of Latinfood’s Zenú and
Ranchera product labels state that the product is manufactured or distributed
by “Zenú Products US, Inc.”; display the web address http://www.zenu.us.com; and
contain the phrase “Linea de Exportacion,” which translates to “exportation
line.” Latinfood does not export its Zenú or Ranchera products outside the
United States. In 2016, the Latinfood website contained the phrase “We have
products from” followed by marks of imported brands, among which was an image
of Industria’s Zenú mark. Advertisements made for Latinfood Zenú products used
the phrase “una deliciosa tradición,” which translates to “a delicious
tradition.”

One supermarket sold Latinfood’s products in an aisle
designated for “Hispanic and Latin imported goods,” despite having another
aisle designated for similar goods made in the U.S. After a sales manager for Cordialsa
visited the supermarket and told the manager that he was “surprised to find”
Zenú-marked products at the store, it ceased carrying Latinfood’s products,
though the reason was unclear.

The extent of Industria’s plans for US sales and the reason
for Industria’s decision not to import its products was “heavily disputed” by
the parties. Prior import plans in 2010-11 were paused. Industria became aware
of Latinfood’s Zenú and Ranchera products sometime between October 2013 and
September 2014. Its cancellation petition for Zenú has been suspended during
this litigation.

Inter American Convention for Trademark and Commercial
Protection: Industria sought cancellation of the registration and priority in
the US under the IAC, as well as an injunction against “unfair competition.” [I’m
not sure how we should think about Article III standing for purposes of
injunctive relief—it seems clear there’s standing to contest the registration,
but is there sufficient injury/redressability for an injunction if there’s no
pending use in the US?]

Latinfood argued that the IAC claims were barred by territoriality.
“Here, the U.S. has purposely breached the territoriality principle by entering
into mutual treaty obligations with certain foreign nations. The IAC is a
self-executing treaty, having the force of law by virtue of its enactment. The
IAC has thus been recognized as an exception to the territoriality principle.”
And it creates a private cause of action. Industria didn’t need to comply with §44(d)
in order to claim rights under the IAC.

Latinfood won summary judgment on the claim under Article 7,
whose sole remedy is to grant priority. Industria clearly conceded that its IAC
claims weren’t based on a claim of priority rights in the US.  Also, because Latinfood registered the Zenú
mark in the U.S., Industria was barred from using Article 7 to gain priority
over the Zenú mark for itself.

Article 8 grants the owner of a mark the “right to apply for
and obtain the cancellation or annulment of the interfering mark.” This
relevantly requires that the owner had legal protection for its mark in another
state and the other party knew of the owner’s use for the specific goods to
which it applied the mark before it adopted the mark. (There’s another route,
not available here, when the mark owner was already trading in marked goods in
the country in which cancellation was sought.)

Summary judgment for Industria was appropriate: It showed
legal protection in Colombia prior to Latinfood’s application, and the evidence
of knowledge of use on the same goods was “overwhelming and one-sided.” “Latinfood
cannot shirk responsibility by simply stating that Mr. Zuluaga was unaware of
the contents of the application he signed.” (There was other evidence of
knowledge too.) The same goods requirement was satisfied even though the
parties’ lists of food items didn’t correspond “precisely” or “item-for-item.” “Latinfood’s
registration covers various meat and fish products, which would fall within the
plain meaning of ‘meat, fish, poultry and game’ covered by Industria’s
registration.”

The order was temporarily stayed pending full authentication
of the Colombian registrations.

Under Article 17 of the IAC, Industria needed to show,
relevantly, that Latinfood’s interfering mark “may lead to error or confusion
in the mind of the consumer” with respect to Industria’s commercial name. The
court found an issue of fact and denied summary judgment on likely confusion
(see below).

Article 18 grants the right to “apply for and obtain an
injunction against the use of any commercial name or the cancellation of the
registration or deposit of any trade mark.” (The injunction-against-use
provision is where there may be an Article III problem, it seems to me.)   This relevantly
requires a showing that Latinfood’s interfering name or trademark is “identical
with or deceptively similar to” Industria’s commercial name “already legally
adopted and previously used in [Colombia] in the manufacture, sale or
production of articles of the same class”; and prior to Latinfood’s use or
adoption of the name or mark, Industria used and continues to use the
“commercial name adopted and previously used” for the “same products” in
Colombia. But it does not seem to require harm. Still, the court granted
summary judgment for Industria (conditional on authenticating the registration).

Lanham Act (and parallel NJ Fair Trade Act): Here too there
may be standing problems. The TM part of this might need revisiting in light of
Abitron; the court earlier held that use of a mark in the US wasn’t
required to bring Lanham Act claims, but subsequently Meenaxi Enterprise, Inc.
v. Coca-Cola Company, 38 F.4th 1067 (Fed. Cir. 2022), demanded injury to sales
or reputation in the US and held that “nebulous future plans for U.S. sales
cannot be the basis for a Lanham Act claim.” [Dawn Donut, but for
extraterritorial use.]

So, did Industria satisfy Lexmark? There were genuine
issues of fact on (1) whether Industria had concrete plans to enter the United
States market; and (2) whether Industria’s commercial injury was proximately
caused by Latinfood’s actions. There was insufficient evidence of reputational
injury as an alternative theory; Industria didn’t provide any evidence even
showing that it had any particular US reputation to be harmed.

Industria argued that Latinfood blocked its entry into the
US market, and a jury could credit its evidence, but there was also evidence
that it couldn’t enter the US market because of various regulations.

False advertising: Industria argued that deception could be
presumed from literally false statements that Zuluaga “convinced a major
product manufacturer in Colombia to sign an exclusive distribution and
importing rights agreement for the tri-state area”;  his statement to a supermarket sales associate
that he had Colombian products; and Latinfood’s website stating in substance
that it offered Industria’s Zenú products. For the first two, Industria failed
to show literal falsity. Among other things, the sales associate testified that
Zuluaga did not mention the names of the Colombian products (is that even
commercial advertising or promotion?). But the third statement was literally
false.

As evidence of deception, Industria submitted evidence that one
of Latinfood’s distributors believed that Latinfood’s products were associated
with Industria’s products. Also, a Twitter user sent a message to Industria’s
Twitter account with a picture of Latinfood’s Zenú and Ranchera products and
asked whether Industria had “a sales franchise for beer sausage and ranchera
sausage that they are selling in New York and New Jersey and Florida, as
so-called Colombian sausages.” Industria’s advertising agency manager,
responded that the products are not Industria’s, to which the alleged customer
replied “So why are they using your brand? This makes Colombians abroad get
tricked.” A supermarket sales associate testified at deposition that
Latinfood’s products were sold in a store aisle with other Hispanic or
Latin-sourced products, rather than in an aisle with products made in the U.S. A
supermarket store manager testified that Zuluaga had a reputation for selling
Colombian products and that Zuluaga told him that Zenú was a brand known in
Colombia. And of course, Latinfood’s packaging resembles and implies an
affiliation with Industria. The packaging also includes the line “Linea De
Exportacion,” which translates to “exportation line.”

The court found that Industria’s argument for false
advertising “falls on the wrong side of the line between a false association
claim and a false advertising claim. On these facts, any mistaken belief that
Latinfood’s products were Industria’s products depends on evidence of a false
association between the brands, which is distinct from a false advertising
claim.”

The use of “exportation line” was arguably the exception,
but “[o]ne country’s exportation … is another’s importation, and the meaning is
unclear.” There was no evidence of a tendency to deceive.

What about injury? To get injunctive relief, a plaintiff has
to prove likely injury. But there was no evidence that the only actionable
statement—Latinfood’s use of Imdustria’s logo on its website in 2016—was likely
to cause injury. “[N]o reasonable jury in 2023 could conclude that Latinfood’s
use of Industria’s logo in 2016 is likely to cause damage to Industria in the
future.” Summary judgment for Latinfood.

Trade dress infringement: Summary judgment denied; I’m going
to skip most of the discussion because, sadly for the hardworking district
court, I think Abitron does require revisiting it, even if the trade
dress is inherently distinctive and was copied. Without a reputation in the US,
I don’t see how there can be confusion in the US.

On strength, Industria conceded that it didn’t actively
advertise in the US, but submitted evidence that its trade dress had been “seen”
by US residents and that its websites have been visited by US users “thousands”
of times 2012-2017, which “may indicate at least some commercial strength of
its trade dress.” (Later, the court noted, “there are no products for sale on
those websites and there is no indication that Industria sells products to
United States consumers either through its websites or in stores.”) In light of
the size of the food market, that’s a bit hard to credit. Citing domestic precedent,
however, the court reasoned that “the mark’s strength in other markets is
relevant.”

Other evidence of actual confusion, besides that noted
above, was that, sometime in or after 2014, a Facebook user posted in a group
titled “WikiWomen in Medellin” that she purchased “ranchera sausages” at an
unidentified location in the United States and that “they say” that “Zenú set
up a plant in New York for the Colombia market in the U.S.A.” And the copying
here could also lead to an inference of deception.  “The fact finder might also find it
significant, however, that for a relevant period of eight years, Industria was
able to provide only three somewhat equivocal instances of customer confusion.”

Did intentional copying show intent to confuse? A jury could
go either way.

Trademark infringement/false association: There wasn’t
sufficient evidence that Industria owned the Zenú or Ranchera marks for
purposes of the trademark infringement claim. (I don’t quite get how it could
show ownership of the trade dress in the US but not ownership of the word
marks.) Summary judgment for Latinfood.

Cancellation for fraud: Industria wasn’t required to
establish United States trademark rights to petition for cancellation of
Latinfood’s Zenú mark. A trademark application is a “legitimate commercial
interest,” which satisfies the “real interest” requirement, and “blocking” an
application can satisfy the belief of damage requirement. It was entitled to
summary judgment because Zuluaga knew that Industria had a prior right. (This is
inconsistent with the holding above that Industria didn’t have US rights:
Zuluaga signed a declaration stating “to the best of his/her knowledge and
belief, no other person, firm, corporation, or association has the right to use
the mark in commerce, either in the identical form thereof or in such near
resemblance thereto as to be likely when used on or in connection with the
goods/services of such other person, to cause confusion, or to cause mistake,
or to deceive.” We know this means US commerce, so his knowledge of the Colombian
rights wouldn’t matter.)

But there was also fraud in using Industria’s products in
photos purporting to show Latinfood’s use. Industria showed that Latinfood
never used the Zenú mark in commerce prior to filing its application.

Copyright: The Third Circuit applies the discovery rule to
the limitations period of three years. Industria filed its copyright
infringement claims on April 21, 2017. Its witness testified that Industria
found out about Latinfood’s use of the Zenú mark in or around October of 2013. It
was put on notice of the need to investigate and the limitations period began
to run then for those claims, but copyright infringement is a continuing
violation so it could reach back three years prior to filing, and also Latinfood
didn’t show it was entitled to summary judgment on the limitations period as to
the Ranchera mark. (Not clear from this discussion if the copyright claims are
really for copyright in the logos or cover the labels.)

The tortious interference counterclaim failed; it related to
one supermarket that removed Latinfood’s Zenú products. Assuming that Industria’s
assertion of its trademark rights led to this removal, Industria had a
substantial basis for its claims, such that “even if its position is not
ultimately borne out, it does not meet the high bar of malice.”

from Blogger http://tushnet.blogspot.com/2023/07/inter-american-convention-allows-claims.html

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Transatlantic Dialogue Workshop Institute for Information Law (IViR) Amsterdam Law School Part 5: Beyond the DSA

Posted on June 30, 2023 by rtushnet

Chair: João Quintais

Samuelson: Joel Reidenberg’s Lex Informatica
is a foundational text worth revisiting. Riffs off of the concept of law of
trade; what happened was that people engaged in inter-area commerce made up
sales law through their practices. Informal rules became law; he was thinking
that Lex Mercatoria was a metaphor for Lex Informatica, where similarly we need
to think about new tools. Commission has tried to invent these new tools.

Proposed AI Act disclosure of data—if you don’t want us to
cough up every URL on the internet, what do you want? “We used Common Crawler”?
What is the purpose for which disclosure is sought? Whether you want a map the
size of the territory depends on the goal—is it collective licensing? [Would
that even help get the money to the right people? I guess that’s rarely the big
concern of people demanding collective licensing.]

Eleonora Rosati: EU Parliament wants to get AI Act to finish
line in 2023. Goal: framework for trustworthy AI. Continues on lines of transparency/disclosure.
But also can’t exist w/o thinking of other frameworks; shows how fragmentary EU
law is. Consider: deepfakes and training data. Original EC proposal provided
training material disclosure, but didn’t clarify what permission was needed (if
any). Now refers to “without prejudice to applicable © rules.” No mention of
whether permission is required for deepfakes.

Justin Hughes: you can have deepfakes about floods and
tornadoes, not just about people. In effort to address free expression they’ve
also added unnecessary bangs and whistles. Current proposal: Deepfakes are
defined as things that falsely appear to be authentic or truthful, which
requires disclosure, except if they’re evidently created satirical, artistic,
or fictional (which seems like it wouldn’t falsely appear authentic or truthful).
“Sufficiently detailed” summary of use of training data protected by © is
required, but as/more interesting is requirement of generative AI to have
adequate safeguards against generation of content in breach of EU law (which
means ©). [I assume they also mean CSAM and other things to be named later.]
Art. 27 of DSA is recommender system transparency; are they high-risk AI
systems w/in the meaning of the AI Act? Yes in Parliament’s version. That means
direct overlap in rules. His view: some recommender systems should be prohibited
AI, if social media use is addictive.

Sebastian Schwemer: Understand where it comes from—new legislative
framework for product regulation. Talk to those who followed the broader
process.

Sean O’Connor: training and outputs may need different
safeguards. Each has different relationships to ©.

Eric Goldman: dictating how content is published is the
fundamental framework of the Act—we’re going for the idea that gov’t will dictate
that, which he dislikes extremely.

Quintais: they realized that they hadn’t clearly covered
generative AI and panicked and started introducing new rules.

Daphne Keller: Such a mistake to add generative AI—the policy
questions around AI for criminal sentencing, whether you get a loan, etc. are
so important and deserve attention—would be better to deal with content
generation/speech separately. Use in content moderation—deciding what to take
down—v. using in recommendation—do you have to guard against addiction in
recommendation?

Quintais: Drafters didn’t talk to the people doing the DSA
or the overlaps. Depending on what happens next, there might be real overlap.

Matthias Leistner: if you take measures to avoid substantial
similarity in the models, you might stave off fundamental challenges to ©
principles that show up only in case law—no protection for ideas or style,
though protection for characters. Taking measures to limit the models might be
a good strategy to deal with the long-term danger of loss of those principles.
Use of existing works to train is a separate issue.

Quintais: for the first time, have heard © lawyers say there’s
a need to protect style—not a good development.

Hughes: doesn’t think that AI output is speech.

Goldman: does. Collect information, organize it, disseminate
it. AI does those things which are what makes a publication.

Hughes: expression is by humans.

Goldman: makes a different choice.

Keller: readers have a right to read what they’re interested
in.

Niva Elkin-Koren: when
I prompt ChatGPT and interact w/it, that is speech.

Hughes: if an algorithm
suggests content written by human, there’s still human participation in the
underlying creation. Recommendation automation itself shouldn’t be speech b/c
it’s not human.

Elkin-Koren: ranking
search results should be considered speech b/c it reflects an opinion about how
to rank information implemented by code.

Samuelson:
explainability as a different factor—if it’s not possible to explain this
stuff, generative AI may not have much of a future in Europe. [Of course “the
sorting principle is stuff I like” is not really explainable either, even if
there is in fact a deterministic physical source in my brain. But scale may
make a difference.] “As explainable as possible” might work.

Keep in mind that
standard-setting also favors power: who can afford to go to all the meetings
and participate throughout. Delegating public authorities to private entities.
Different regulatory structures for different entities—when telcos became
broadband providers, had to decide where they would be regulated, which is
similar to the Qs raised by definitions of covered AI—regulatory arbitrage.

Senftleben: use of
collecting societies/levies can be a better regulatory answer than a cascade of
opt-out and then a transparency rule to control whether opt-out is honored and
then litigation on whether it’s sufficiently explained. If we’re afraid we
might lose freedom of style/concepts, telling © owners to accept a right of
remuneration is an option.

Matthias Leistner: don’t give in too soon—remuneration already
frames this as something requiring compensation if not control, but that’s not obvious.
Note that Japan just enacted a very strong right for use for machine learning,
and the anime/comics industries didn’t object to it apparently.

Van Hoboken: May need new speech doctrines for, e.g.,
incorporating generative AI into political speech.

Schwemer: we might want special access to data for purposes
of debiasing AI as a uniquely good justification for, e.g., copying for
training.

Bernt Hugenholtz: these companies want to move forward, and
if they can get certainty by paying off rightsholders they will do so; probably
not collective licensing although the societies would like that; they don’t
have mandates. Instead firms will get rid of uncertainty through cutting big
private deals.

Senftleben: we can give a collective licensing mandate if we
choose—the only way to get money to individuals.

Hugenholtz: but levy systems take forever to introduce too.
We’ve never had a levy regulation.

Elkin-Koren: Google already has an enormous advantage over
newcomers; making everyone who enters pay a levy would kill competition
forever. [I also wonder about what a levy would mean for all the individual
projects that use additional datasets with existing models to refine them.]

Senftleben: his idea is to put a levy on the output.

Samuelson: but they’re demanding control of the input in the
US, not the output (unless it is infringing in the conventional sense).

Frosio: In US it is obvious that training the machine is
fair use; not the case in Europe. What do we do? [Some discussion of how
obvious this was; consensus is that’s the way to bet although the output will
still be subject to © scrutiny for substantial similarity.]

Some discussion of German case holding that, where full
copies of books were in US, Germany only had authority over snippets shown in
search, and those were de minimis. Frosio: French decision held Google Books violated
copyright/quotation right didn’t apply. At some point some countries are going
to find this infringing, and there will be a divide in the capacity to develop
the tech.

Keller: Realpolitik: if platforms can be compelled to carry
disinformation and hate speech, the platforms’ main defense is that they have
First Amendment rights to set editorial policy through content moderation and
through ranking—this was relatively uncontroversial (though is no
longer!). Eugene Volokh thinks that ranking algorithms are more speechy than
content moderation b/c former are written by engineers and bake in value
judgments; she thinks the opposite. There’s caselaw for both, but Volokh’s
version has been embraced by conservatives.

Leistner: why a levy on the output if it’s distant enough to
not infringe a protected work? If you have a levy on the input, why? Results
don’t reflect inputs/the model itself doesn’t contain the inputs, so people
will just train the models outside Europe. So that means that you’d need to
attach levies to output, but that’s just disconnected from ©–an entirely new
basis.

Dussolier: If the issue is market harm from competition w/an
author’s style, a levy is not compensation for that—it harms specific people
and if it is actionable it should be banned, not subjected to a levy.

Elkin-Koren: if generative models destroy the market for human
creativity, does that mean we pay a levy for a few years and then © ceases to
exist? What is the vision here?

Frosio: another question is who is liable: if we focus on
output, liability should be on end users—end users are the ones who instruct model
to come up w/something substantially similar and publish the output.

Samuelson: a global levy is not feasible; also, most of the works
on which the models have been trained are not from the big © owners or even
from small commercial entities—it’s from bloggers/people on Reddit/etc—how would
you even get money to them? [I mean, I’m easy to find 😊]

from Blogger http://tushnet.blogspot.com/2023/06/transatlantic-dialogue-workshop_81.html

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Transatlantic Dialogue Workshop Institute for Information Law (IViR) Amsterdam Law School Part 4: Industry Impact and Industry Relationships

Posted on June 30, 2023 by rtushnet

Chair: Daphne Keller: EU heavy compliance obligations + a
bunch of other laws coming into effect right as platforms are laying off people
who know how to do that—a bumpy road.

Impulse Statement: Rachel Griffin: Technocratic approach to
regulation; we associate auditing with clear success metrics (did you make a
lot of $ or not) versus these very political issues with no yes/no answers—what
does it mean to be successful? Rhetoric of auditing, but even in finance
auditing is not that objective; the problems multiply when applied to political
speech. “Rituals of verification” substitute for results in lending legitimacy.
What goal is the rhetoric and framework of auditing actually serving? “others
doing the Commission’s job for it?” Maybe it should be to provide the minimal
value of accurate information—not just making up numbers. If so, it would be
more helpful to have transparency reports audited rather than risk assessment.

Are we focusing too much on auditing and too little on
platforms’ internal risk assessments, which are a precondition to the audits? Realistically,
any audit report will take what companies have been doing as their point of
departure and give them feedback on improving.

Risk of regulatory capture by corporations. Wants to push
back against civil society involvement as a solution—up to a point, but that’s
not automatic or easy and has its own limitations. Civil society doesn’t
represent everyone equally; it’s prone to corporate capture too.

Impulse Statement: Eric Goldman: Hypotheses about what he
thinks will happen, supposed to be provocative but also sincere: Homogenization
of services’ practices: companies will watch each other and figure out what
satisfies the necessary audiences. Ossification of content moderation processes
once blessed: it won’t change further. Cut as many corners as they can: much depends
on how regulators push back on that—seen that with GDPR and will see that here
given the scope for judgment calls. In the US we would know that doing the
minimum would suffice, but the expectation here is that would “prompt a
dialogue,” though what happens then is unclear. Many of these provisions will
be outdated soon or w/in years—fighting the last war. Will see the
weaponization of options—everything we’re doing is put through a partisan
filter, and the longer we’re in denial about that the worse things will
ultimately get. Raise the costs of the industry, rewarding big and punishing
small, so we’ll see a shrinking number of players who offer UGC as a matter of
economics. Switch away from UGC to professionally produced content,
w/significant distributional effects.

Frosio: We already saw a number of major newspapers
eliminating comment sites after liability to monitor comments sections was
imposed on them.

Senftleben: A system blessed by audit will continue: is that
ok? If European legislator wanted to open spaces for startups, the best thing
you can do is make established broad services as boring as they can be to make
space for niche services. [That assumes that the system will continue to function
as content evolves, which does not track past experience.]

Comment: platform w/UGC component and walled garden component
could easily make the conscious decision to grow only the latter—that’s why
Spotify is so cautious with podcasts.

Discussion about what it means for content to be UGC—at the
request of the recipient of the service. Monetization can still be UGC but some
forms of monetization may take it out of UGC when it’s done at the request of
the service itself.

Platforms likely to define risk assessment by looking at the
minimum they need to do under the audit, so there are feedback loops.

Elkin-Koren: there will also be pressure to move to sites
that are currently unregulated: WhatsApp viral distribution has been used in
many countries, and it’s under the radar of the DSA. We should also keep an eye
out for that. Generative AI may also change this as people don’t access the UGC
directly. New paths of access and consumption require new thinking.

Schwemer: platforms/hosting services host content and users
provide it. Netflix isn’t covered by the DSA at all—licensed content provided
by the producer. Podcasts=interesting case.

[If you need an invitation to provide content, how do you
count that? Radio over the internet where they select specific shows to stream,
Bluesky? Is the answer how much prescreening goes into the invitation?] Answer:
may need to be litigated. Key definition: Whether hosting is at the request of
the user or of the service. May depend on targeting of users as well. [I can
see how my pitch of content to Netflix doesn’t depend on me having my own Netflix
account/being a Netflix “user,” but I wonder how that generalizes.]

Cable started out as super-open infrastructure—you could put
your own content into Amsterdam cable from your own rooftop. Then the economics
of consolidation took over. Happening on YouTube here—line between UGC and “professional”
content are very blurry. Are they asking YT or is YT requesting them to provide
content? And requiring licensing from YT providers, including individual users,
blurs this further.

Keller: advertisers will also say they don’t want their
content next to spam, porn, etc. That has influence over policies, usually
restrictively. YT agreed not to consider fair use in content takedowns from a
major movie studio—a concession that affected other users.

Samuelson: We have a more direct interest in researcher
access than we have to industry reactions: in public they will say “we are
doing all we can to comply,” so you have to read the public performance. The
private face looks quite different—a lot of hypocrisy, understandably, because
you don’t want to appear contemptuous of something even though it’s not well thought
through and you don’t think you can really comply.

Keller: then other countries look and say “oh, we can impose
this too because they can comply.”

Samuelson: don’t take at face value statements by the big
companies. That cynicism is itself a concern for regulators. Another thing
under the hood: how are the platforms redesigning their technologies and
services to minimize compliance obligations? The easy one to see is eliminating
comment sections. We won’t see the contracts b/t platforms and other entities,
which is an issue, bypassing regulatory control.

Dussolier: sanitization rhetoric is very different from © licensing.
Don’t invest too much copyright thinking into this space.

Matthias Leistner: there is at least one element w/a clear ©
nexus: data related issues. Inconceivable to subsume fundamental issues like
creative freedom behind copyright; this is a systemic risk. If the duties also
related to the practice of dealing with data from consumers, couldn’t you at
least control for systemic risks in licensing data, e.g., homogenization of
content? Or would that carry the idea of systemic risk too far? Journalism that
tells people only what they want to hear is a known risk; so are there uses of
data which you must not make?

RT: Casey
Newton just wrote about Meta’s new system cards (Meta’s
own post on this here):

Written to be accessible to most
readers, the cards explain how Meta sources photos and videos to show you,
names some of the signals it uses to make predictions, and describes how it
ranks posts in the feed from there.

… The idea is to give individual
users the sense that they are the ones shaping their experiences on these apps,
creating their feeds indirectly by what they like, share, and comment on. If
works, it might reduce the anxiety people have about Meta’s role in shaping
their feeds.

… Reading the card for Instagram’s
feed, for example, the signals Meta takes into account when deciding what to
show you include “How likely you are to spend more than 15 seconds in this
session,” “How long you are predicted to spend viewing the next two posts that
appear after the one you are currently viewing,” and “How long you are predicted
to spend viewing content in your feed below what is displayed in the top
position.”

Note what’s not here: demographics. How did it assess
your likelihood of spending more than 15 seconds/watching the next two posts,
etc? And did it assess others’ likelihoods differently depending on categories
that humans think are relevant, like race and political orientation? By
contrast, one source Meta cited in support of these “model cards” was an
article that explicitly called for
model cards about demographics. (My favorite bit from this
Meta page: “the system applies additional rules to ensure your feed contains a
wide variety of posts, and one type of content does not dominate. For instance,
we’ve created a rule to show no more than three posts in a row from the same
account. These rules are tested to make sure that they positively impact our
users by providing diverse content that aligns with their interests.” Diversity
as completely empty shell!) This is a really clear example of how they’re
trying to get ahead of the regulators and shape what needs to be disclosed etc.
in ways that are not actually that helpful.

Dussolier: how do we deal with two trusted flaggers, one of
which is a conservative Catholic group and one a LGBTQ+ rights organization?
You can trust them to represent their own positions, but what does that mean?

Keller: they have to be gov’t vetted and they can be kicked
out if they submit too many invalid claims—they’re supposed to be flagging
genuine violations of the platform’s TOS. But different gov’ts might approve
different entities, which will create conflicts. They don’t have to honor flags.
But when it goes to litigation, national courts will interpret TOS in light of
fundamental rights, which will lead to potential divergence.

Senftleben: We also don’t have trusted flaggers to support
content as permissible.

Keller: risk profiles don’t match statuses in system:
Wikimedia is a VLOP but not 4chan or 8chan.

Griffin: who’s going to be doing this trusted flagging? It’s
not something that scales very well. Assumes that civil society will be sitting
there all day. What is the funding model? The answer is obvious in ©, but not elsewhere.

It’s worse than that, since in © you don’t need to be a
trusted flagger b/c the © agreements are broader.

Schwemer: risks of rubber-stamping flaggers’ flags. But
might be able to get more insight from transparency. National differences in
Europe could be very powerful in who is designated as trusted flagger;
potential crossborder effects.

Dusollier: entitled flaggers v. trusted flaggers—© owners
are entitled to flag their content claims; is that the same as trusted?

DSA was thinking about security agencies/police forces as
trusted flaggers—clearly the plan.

Hughes: will law enforcement agencies want to have to
publish what they did and what happened, as contemplated for trusted flaggers?
Would rather have side agreement w/Meta. Both pro- and anti-gay forces might be
able to fundraise to participate in flagging, so maybe it’s a successful
mechanism to generate flags. And putting out a report every year is a positive
for them to show what funders’ money is funding.

Leistner: concerned about this—modeled on existence of
active civil society w/funding—not in many member states, where there is no
culture of funding proto-public functions with private $ (US has many nonprofits
because it has low taxes and low public provision of goods). These may be
pretty strange groups that have active members. Worst-case scenario: Orban
finances a trusted flagger that floods the European market with flags that are required
to be prioritized, and flaggers can flag across nations.

Hughes: does have to be illegal content.

Griffin: good point that especially many smaller EU states
don’t have that kind of civil society: France and Germany are very different
from Malta.

Keller: nobody knows how often flaggers accurately identify
hate speech, but every current transparency report indicates that complying with
more notices = improvement. We don’t know how many accurate notices v.
inaccurate there are.

Quintais: It’s worse b/c of broad definition of illegal
content. The definition of trusted flagger is about competence and expertise—you
can have competence and expertise without sharing values. If LGBTQ+ content is
illegal in one country, not clear how to prevent a trusted flagger from
receiving priority throughout EU.

Schwemer: There can also be orders to remove, though they
have to be territorially limited to what’s necessary to achieve the objective.
Those are not voluntary.

Griffin: Using Poland/Hungary as examples is not fully
explanatory. France has a lot of Islamophobic rules and isn’t getting the same
pushback.

from Blogger http://tushnet.blogspot.com/2023/06/transatlantic-dialogue-workshop_19.html

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Transatlantic Dialogue Workshop Institute for Information Law (IViR) Amsterdam Law School Part 3: Algorithms Liability and Transparency

Posted on June 30, 2023 by rtushnet

Chair: Martin Senftleben

Impulse Statement: Sebastian Felix Schwemer

Recommendation systems; transparency is the approach to
recommender systems, which intersects with privacy/data protection. How much
can we throw recommendation of information and moderation of information in the
same bowl? Algorithmic recommendation/moderation: we’re interested in platforms
but there’s a world beyond platforms where automation is an issue, such as the
DNS. Keeping in mind that regulatory focus is platforms and VLOPs in terms of
algorithmic moderation.

Transparency is a wicked question: who for and how. Not only
rules in Art. 14 p. 4 but also a requirement about terms & conditions: balancing
of fundamental rights when they use algorithmic content moderation. Affects
decisionmaking. Obligation to report on use of automated means for content
moderation—for all intermediary service providers, not just VLOPs, including
accuracy and possible errors. Relates to Q of benchmarking/how do we evaluate
the quality of this decisionmaking? DSA doesn’t have answers to this. Decision
quality might look very different across fields: © might have a yes/no answer,
but misinformation might be very tricky. Very little information on what kind
of human competence is needed.

Impulse Statement: Rebecca Tushnet

Benchmarking: spam detection—interesting that until a
political party got interested there was no inquiry into reliability, and still
no standard for spam detection quality other than “don’t screen out political
fundraising.” Related to the abject quality of real content moderation: it is
literally beneath our notice and we have contempt for the people who carry out abject
functions.

VLOP definition versus “sites that actually have the
problems against which the DSA is directed”—not only fashion sites; nonprofits
as a special issue—Wikipedia, Internet Archive, AO3 which does not recommend
anything; compare to DMCA Classic and DMCA Plus, where some large entities have
repeated © issues and lots of valid notices and others simply don’t—DMCA is a
reasonable system for most of them: Etsy has problems, but not ones that make
sense to frame in any way as Instagram’s or Parler’s.

DSA’s separation of overarching patterns from individual decisions
is good if maintainable, but doesn’t fit easily into US framework—Texas and
Florida laws are both indications of what politicized targeting look like and relatively
unsurprising in reliance on private claims (though outsized damage awards show
the targeting).

Problems with scale: inherent inconsistency. This is usually
shorthanded as “we make 100 million decisions a day, so even a tiny error rate
means a large absolute number of errors.” But it is more than that: inconsistency
and conflicting decisions. We have to accept that—indeed, it will mostly go
undetected—but we also have to accept that the existence of conflicting
decisions does not mean that either one is wrong. Compare: TM applications—in the
US system at least, it is an explicit principle of law that one cannot dispute
a registration decision by pointing to others that seem factually similar (or
even identical) but went the other way; see also: grading by school teachers.

This is related to the DSA mandatory appeals system, which
does look like Texas and Florida. One size fits all for YouTube comments and
entire accounts; not a great model—the same degree of due process for
everything instead of allowing services to focus only on serious disputes like
when someone loses an account. Significant concerns: disproportion in the
demographics of who appeals moderation, already well known as an issue—men, English
speakers. But inconsistency even w/in categories will also be necessary to live
with.

Senftleben: Overarching issues—relationship of different
things addressed in DSA—moderation and recommendation: are they comparable/pose
similar problems? Are there already new problems unaddressed such as generative
AI? Then getting public interest/human rights balancing into the system—who is
responsible for checking this is done properly at the platform level. Consistency
of decisions across countries, cultural backgrounds, appeals. [To be clear: I
don’t think it’s just about cultural backgrounds or demographics: two people w/
the same background will also make different decisions on the same facts
and that’s not necessarily a wrong. (Also: ought implies can and what I’m
arguing is that consistency cannot be achieved at this scale.)]

Goldman: disparate impact can come from many sources, often
impossible to tell what they are. Lots of evidence of disparate impact in
content moderation whose causation will be disputed. Humans v. Machines: there’s
a cost to having humans in the loop: worker wellness. Regulators just don’t value
it and that is a problem in balancing costs and benefits.

Daphne Keller: DSA prohibits inconsistency: you have a right
of appeal to resolve hard judgment calls and get to consistency. [But: ought
implies can; I would think a civil law system is ok with calling each judgment
a tub on its own bottom.]

Leistner: in context of European court system, a small PI
injunction will stay locally; there are divergent results already b/c it only
goes to European courts in rare circumstances. Thus you have inconsistencies
based on the same standards.

Hughes: inconsistency at first decision is not the same
thing as inconsistency at the appeal level. The TTAB and PTO try to be
consistent. [We disagree about this. They certainly try to have rules, but they
also don’t hold that they’re required to treat the same facts the same way—there
might be undisclosed differences in the facts or a different record and they
don’t try to find those differences, just presume they’re there. This is aided
by the fact that different TM applications will, by virtue of being different
TM applications, have slightly different features from previous applications—which
is also true of stuff that gets moderated. The school discipline cases also
show that even when you get to the second level the variety of circumstances
possible make “consistency” a hopeless ideal—the “impersonate a teacher Finsta”
will play out differently at different schools so the facts will always be
differentiable.]

Schwemer: Nondiscriminatory and nonarbitrary which is the
DSA standard doesn’t necessarily require consistency in that strict sense.

Keller: suppose you have a rule: I will remove everything
the machine learning model says is nudity, knowing it has a 10% error rate.

Van Hoboken: No—there’s a due process reconsideration requirement.

Keller: but the model will give the same result on
reconsideration.

Van Hoboken: still not ok. [I take it because that’s not a
fair rule to have?]

Keller: so that is a requirement for hiring people.

Rachel Griffin: Analyzing meaning in context is getting
better—so will people start saying it’s ok to leave it to the machine?

Niva Elkin-Koren: We assume that a good decision by a court/oversight
body on particular facts will immediately translate into the system, but that’s
not true. One reason is that there is a huge gap between the algorithmic system
running on everything and the decision of a panel on one removal. Translation
gap: so we have to ask whether there is bias as well as compliance/error rates.
Agree there’s no evidence that human in the loop improves process, but we could
encourage regulators/implementors to enhance the opportunities for making
humans more efficient—researchers can help with this. Avoiding humans who
participate just for rubber-stamping the system itself.

Séverine Dusollier: Inconsistencies: we know as professors that
we aren’t completely consistent in grading; we know that morning differs from
afternoon—we fight it but it is human nature. There is something that you can’t
completely analogize with machine inconsistency—we might have some randomness
in both, but we are also informed by bias/political perspective/etc. The machine
will also be inconsistent but perhaps in better ways, but what we have to do is
rely on social science studies about how they actually show bias entrenched in
machine and human decisions. The consequences are not the same: a decision on
online platforms has different impacts. [I agree that we don’t know what
machine inconsistency will look like; of course the inputs to the machine come
from humans!]

Wikipedia doesn’t make recommendations. Sometimes the answer
you get from the community is so sexist and misogynistic that it shows it’s still
a system that needs intervention. [Agreed, but my point was that it doesn’t
have the “algorithms” that people accuse of hurting democracy/spurring
anorexia/etc. because it’s not optimized for ad-display engagement. So the
mechanisms for addressing the problems will necessarily be different as will
definition of the problems.]

Samuelson: Audits are really important to counteract human
tendency towards inaction (and perhaps bias in who appeals), but there are no
standards! Financial audits work because we have standards for the kind of
activities we should and shouldn’t be doing in accounting. Right now there is
an emerging new profession for computing audits; but right now the promise exceeds
the capability. We need standards for what the audits should look like and what
the profession that does the audits should look like.

Van Hoboken: it’s not very clear how to judge moderation
especially at the level at which Art. 14 is drafted. Surface specificity, but
application to many different types of services means there’s lots to do. Inconsistency
is a problem of focus precisely b/c we want to see diversity in approaches to
content moderation. We might want “free speech friendly” services in the mix
and “safe for kids” ones. Both are good things. There are also different ways
to achieve those results. Media pluralism in DSA can be broadened to say there’s
value in pluralism generally: DSA doesn’t tell you how to do things. When we
add in the human cost of moderation, we should accept that social media companies
can’t do it all.

Senftleben: inconsistency is a pathological perspective;
pluralism is a democratic one. [Although I was thinking more about whether a
breastfeeding photo shows too much nipple, etc.]

Comment: just because a human is in the loop doesn’t mean
they can make an easy decision. Legality of © use in the EU, under 27 different
legal regimes, with lots of grey zones in parody/creative uses, is not simple
for a human. You’d probably have to request a comparative © law professor. What
kind of human are we talking about and what are the standards they are to
apply?

Senftleben: isn’t the human value the intuition we bring? Failures
and all?

Schwemer: in online framework, differentiate b/t different
stages in decision process. There is no human involvement/judgment required in
initial decisions. Ex post only, once there is an appeal. 2018 Commission
recommendation was the blueprint for the DSA, but that talked about “oversight”
rather than human review. Oversight relates to design/development/operations
but “review” is ex post, which is an important difference. Desirability of
human involvement in operations of first moderation, not just ex post redress. There’s
a huge cost to the humans involved, which DSA overlooks. AI Act actually
mentions something about training and competences of humans, but that relates
to oversight of design/development, not operations.

Keller: FB conversation in which appeals resulted in
reversals less often than random sampling of removal decisions for
review. Transparency report: There’s about 50% success for appeals under FB’s
nudity/terrorism policies and a lot lower for harassment/bullying. So our
knowledge is mixed: seems unlikely that FB is wrong 50% of the time about
nudity.

Big audit firms seem reluctant to sign up for content
moderation auditing b/c they’re accustomed to working from standards, which don’t
exist. They’re legally accountable for “reasonable” results—they’d have to vouch
for way more stuff than they’re comfortable vouching for given the lack of
existing standards. This is why civil society groups are more invested in being
at the table: they need to be there as standards are developed, not just a
conversation b/t Deloitte and Meta.

Elkin-Koren: we use the term audit but the free speech
tradeoffs here are different than the tradeoffs involved in financial audits.
The purpose is not to show compliance with a standard but to provide us with
info we need to decide whether the system is biased against particular values
or to decide what values it does and should reflect. It has to be understood as
a work in progress [in a different way than financial audits].

Keller: It would be awesome if the DSA allows descriptive audits,
but it’s not clear to her there’s room for that, or that there’s room for civil
society to participate deeply in analyzing the information.

Samuelson: financial audits work through transparency about
what GAAP are—both a procedure and a set of substantive rules. Then people in
the auditing business know what they have to comply with. If Meta and Deloitte
do this, they’ll do it in house and not publicize it. So another issue the Commission
will have to grapple with is oversight of how standards are set.

Comment: DSA really does require an audit to assess
compliance w/ due diligence obligations including risk mitigation/fundamental
rights. The risk mitigation obligations are so fluffy/vague that this might
define in practice what mitigation means. There is going to be a huge flavor of
“compliance” here. What are you going to do when 10 audits say that Meta
complied w/its obligations and there are appeals that show this might not be
the case?

Van Hoboken: audit requirement was specifically linked to
risk mitigation approach. In some sense: “We want other people to do our job.”
Changes the character of the audit. It’s an institution-building move, European
standard for algorithmic transparency—developing capacity to do that.
Government-funded research can also help.

Frosio: what about lawful but awful content? Center stage in
UK debates. Seems that DSA doesn’t want lawful but awful content filtered out
automatically—UK Online Safety Bill seems to have retreated from obligation to
remove lawful but awful content, substituted by more protections for
children/new criminal offenses/more control for users over what they see in
social media.

Art. 14: entry point for terms and conditions, which can
restrict lawful but awful content; applies not just to illegal content but
content prohibited by terms of service—services have to protect fundamental
rights. But if it’s lawful but awful, what is the fundamental right at issue
and how is there to be balancing with terms & conditions?

Griffin: fundamental rights are not only freedom of
expression. EU regulators are concerned w/child safety, so automated moderation
of nudity/pornography/self-harm may be necessary to do that effectively.
Unlikely that courts/regulators will disapprove of that. Regulatory priorities
are going in the opposite direction.

Frosio: Some of that will be legal/illegal. My question is
more general: what should we be do with lawful but harmful content? Should we
think it’s ok to block harmful content although it is lawful? What does that
mean about what balancing fundamental rights means? Who’s going to decide what
harmful content is? At one point, pro-democratic/revolutionary content was “harmful.”
[LGBTQ+ content, and anti-LGBTQ+ content, is a vital example. What does “protecting
children” mean?]

Schwemer: if an intermediary service provider does screen
lawful but awful content, it is restricted in terms and conditions both substantively
and procedurally. What about spam? Spam is not illegal in Europe. That would be
a case of moderating awful but not illegal content.

from Blogger http://tushnet.blogspot.com/2023/06/transatlantic-dialogue-workshop_30.html

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Transatlantic Dialogue Workshop Institute for Information Law (IViR) Amsterdam Law School Part 2: Data Access

Posted on June 29, 2023 by rtushnet

Impulse Statement: Christophe Geiger: Relevance to © exceptions
and limitations—access to © protected work is important for this work. Research
organizations have exception in © Directive and also are vital to DSA, so we must
look at both. Only digital coordinator-approved researchers are allowed access,
with some limited exceptions similar to fallback provisions in DSM Directive
art. 4.

Impulse Statement: Sean Flynn: Data protection can be seen
as protecting right to privacy but can interfere with right to research. Need
balancing/narrow tailoring. Duty to protect: duty to regulate third parties—protecting
both privacy rights and researchers in data held by third parties. Duty to
promote right of society to benefit from research—similar to duty to create
libraries—use the idea to check if we’re balancing rights correctly, regulating
appropriate third parties, creating institutions to implement rights.

Europeans were less generous in concepts of “educational”/ “scientific”
research than his US perspective—formal research organizations may be required.
Journalists in some key categories: are they involved in scientific research?
Consumer organizations?

Senftleben: Subordinated to goals of the DSA—research has to
be about systemic risk (or mechanisms used by platforms to control systemic
risk), which interferes with the freedom of research. If we want researchers to
understand what is going on, you have to open up the data silos anyway. Thus
there would have been more than enough reason to include a provision opening up
data for research in general—trust the research community to formulate the
questions. Not reflected in provision. Para. 12 opens up a bit b/c it goes
outside the vetted researcher dynamic, but systemic risk defines what can be
done with the data.

Keller: the provision formally sets out a really dumb
procedure: the researcher formulates the data request without any contact
w/platform, gets approval from authority, then goes to platform, which has to
respond in 2 weeks. Unlikely to be a format/type of query that is immediately possible
to collect, and the platform can only object on 2 enumerated grounds. So the
workaround is to create a more dynamic feedback process so researchers can ask
for what platforms can actually give. Hopefully an entity set up to deal w/GDPR
issues can also check whether the researcher is asking for the right data/what
the parameters should be. Hangs on reference to “independent advisory
mechanisms” to prevent the process actually described in the DSA from
happening.

Elkin-Koren: Example of studying society, not just digital
platforms: studying health related factors not caused by platforms but for
which platforms have tons of data. Basic/exploratory research where you don’t
know the specifics of data you want or specifics of research question but would
benefit from exploring what’s there. The key innovation of the DSA is turning
research from a private ordering Q into one of public ordering.

Quintais: you have to be careful about who you invite into
your research—if the researcher is from outside the jurisdiction they may have
to be excluded from the data.

Leistner: one strategy is to interpret research as broadly
as possible; another is to ask whether the exception is exclusive. NetDGZ used
to have a broader scope; can a member state choose to keep/provide a new
exception for research purposes, maybe it is at liberty to do so—there’s no harmonization
for general access to data for research purposes. Maybe that is necessary, and
it would have to transcend the various IP rights, including © and trade
secrets.

Keller: note that having platforms store data in structures
amenable to researchers also makes them more attractive to law enforcement.
Plus, researchers are likely to find things that they think are evidence of
crimes. National security claims: NATO actually indicated that it wanted to be
considered a covered research organization. In the US there’s a very real 1A
issue about access, but the Texas/Florida social media cases include a question
about transparency mandates—not researcher access like this but not unrelated. Also 4A issues.

Comment: No explicit consideration of IP in grounds for
rejection but third-party data leads to the same place.

Van Hoboken: Bringing different parts of civil society together
for platform accountability for VLOPs; data access is the way to bring in
researchers on these risks/mitigation measures. If this provision didn’t exist,
you’d have VLOPs doing risk audits/mitigation measures but no way to compare. Some
requests will be refused if the platforms say “this isn’t really a risk.” Platforms
may also have incentives to deny that something is a mitigation measure to
avoid research access. Mid-term value—won’t work fast and maybe will ultimately
be defeated.

Goldman: What are Internet Observatory’s experiences
w/benefits & threats by House Republicans?

Keller: serious internet researchers among the many academic
researchers in the US targeted by various far right people including members of
Congress and journalists with good relations w/Elon Musk, targeted as
Democratic elite censorship apparatus: allegedly by identifying specific tweets
as disinformation, they contributed to suppression of speech in some kind of
collusion w/gov’t actors. About 20 lawsuits; [Goldman: subpoenas—information in
researchers’ hands is being weaponized—consider this as a warning for people
here. His take: they’re trying to harm the research process.] Yes, they’re
trying to deter such research and punish the people who already did it,
including students’ information when students have already had their parents’
homes targeted. Politicians are threatening academic speech b/c, they say, they’re
worried about gov’t suppressing speech.

Goldman: consider the next steps; if you have this
information, who will want it from you and what will they do with it? A threat
vector for everyone doing the work.

Keller: relates to IP too—today’s academic researcher is
tomorrow’s employee of your competitor or of the gov’t; researchers are not
pure and nonoverlapping w/other categories.

Elkin-Koren: is the data more secure when held by the
platform, though? Can subpoena the platform as well as the university.

Goldman: but you would take this risk into account in your research
design, though.

Van Hoboken: At the point this is happening, you have bigger
democratic problems; in Europe we are trying to avoid getting there and promote
research that has a broader impact. But it’s true there are real safety and
politicization issues around what questions you ask.

Goldman: bad faith interpretation of research: the made up
debate over

RT: Question spurred by a paper I just read: is the putative
“value gap” in © licensing on UGC platforms a systemic risk? Is Content ID a
mitigation measure?

[various] Yes and no answers. One: © infringement is illegal
content, so you could fit it in somewhere, but to create a problem, it would
have to go beyond the legal obligations of Art. 17 b/c there’s already a
specific legal obligation.

Keller: don’t you need to do the research to figure out if
there’s a problem?

Yes, to study effects of content moderation you need access;
can get data with appropriate questions. Could argue it’s discriminatory
against independent creators, or that there is overfiltering which there isn’t
supposed to be. But that’s not regulated by Art. 17.

Catch-22—you might have to first establish that Content ID
is noncompliant before you can get access.

Frosio: you might need the data to test whether there is
overblocking. [Which is interesting—what about big © owners who say that it’s
not good enough & there’s too much underblocking? Seems like they’d have
the same argument in reverse.]

Would need a very tailored argument.

Quintais Follow-up: had conversations with Meta—asked for
data to assess whether there was overblocking and their response was “it’s a
trade secret.”

Samuelson: Art. 40 process assumes a certain procedure for
getting access. One question is can you talk to the platforms first despite the
enumerated process. Some people will probably seek access w/o knowing if the
data exists. There’s an obligation to at least talk to the approved
researchers. But the happy story isn’t the only story: platforms could
facilitate good-for-them research.

A: the requirements, if taken seriously, can guard against that—have
to be a real academic in some way to be a vetted researcher; reveal funding;
not have a commercial interest; underlying concept: the funder can’t have preferred
access to the results. Platforms can already fund research if they want to.

Flynn: Ideological think tanks?

A: probably won’t qualify under DSA rules.

Samuelson: but the overseers of this access won’t be able to
assess whether the research is well-designed, will they?

A: that’s why there’s an inbetween body that can make
recommendations. They propose to provide expertise/advice.

Leistner: Art. 40 comes with a price: concentration of power
in Commission, that is the executive and not even the legislature. Issues might
arise where we are as scared of the Commission as US folks are of Congress at
the moment. That doesn’t mean Art. 40 is bad, but there are no transparency
duties on the Commission about what they have done! How the Commission fulfills
this powerful role, and what checks and balances might be needed on it, needs
to be addressed.

Paddy Leerssen: Comment period: US was the #1 country of
response b/c US universities are very interested in access. Scraping issues:
access to publicly accessible data/noninterference obligations. How far that
goes (overriding contracts, © claims, TPMs) is unclear. Also unclear: who will
enforce it.

Conflict with open science/reproducibility/access to data
underlying research. Apparent compromise: people who want to replicate will also
have to go through the data request process.

Leistner: but best journals require access to data, and
giving qualified critics access to that underlying data—your agreement with Nature
will say so.

from Blogger http://tushnet.blogspot.com/2023/06/transatlantic-dialogue-workshop_29.html

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Transatlantic Dialogue Workshop Institute for Information Law (IViR) Amsterdam Law School Part 1: Overarching Questions

Posted on June 29, 2023 by rtushnet

My apologies, but I’m extremely jetlagged and will not
attribute well or capture a lot of nuance.

Chair: João Pedro Quintais

Impulse Statement: Niva Elkin Koren: Déjà vu from 1990s:
radical technology change, but the world is different and tech moves in a
different direction. Polarization/globalization as a response to isolation of
Russia and China. Investment in R&D is not in distributive, generative
things that are open to the public but in seeking private domination. Conflicts
b/t types of regulation where lots of changes are happening at the same time. Copyright
as an example: requiring disclosure of datasets used for training by the
initiators of the model doesn’t solve any of the actual problems of how users
are using the model by adding new inputs to train it further. Learning from
other things regulated in digital ecosystem: Database Directive, GDPR. GDPR has
become a gold standard but how much do we know about whether it’s enforced or
whether it makes any difference in people’s actual level of privacy? It
definitely created a regulatory burden that affected competition, but what became
of the big promises? US pushes to provide alternative standards—crossborder privacy
regulation as an alternative.

Impulse Statement: Matthias Leistner: You didn’t know
generative AI existed and so your regulations don’t cover it. ECJ is getting
first action on application
of DSA to Zalando’s classification as VLSOP. I’ve never heard of Zalando
but it is an online fashion platform; systemic risks, even if they could be
identified, are very different for Amazon/retail than for Facebook. Litigation
indicates: it isn’t more efficient than standard competition or sector-specific
regulation; it just reflects that there wasn’t enough information about what
they were regulating.

Sector-specific approach raises fundamental interface issues—DSA
sits uncomfortably with GDPR and proposed AI Act. Aggravated if, beyond public
law regulation which allows smoothing of inner inconsistencies by nonenforcement,
this becomes basis for private law liability. Martin Husovec would say it’s
definitely not, but under © liability cases, the CJEU would ask whether a
diligent operator has followed all necessary precautions and duties—will be tempting
to say that failure to comply w/DSA=© liability. And outside the large
platforms we’d really have a problem.

Comment: political pressure to regulate leads to focus on
what’s feasible. In an ideal picture, what are the fundamental first principles
that are distinct from current platform issues? Internet is multilayer, with
infrastructure/nontraditional hosting actors. Can we agree on human involvement
in automation processes? Redress mechanisms? Piecemeal approach leads to
overlaps and national regime conflicts. Where to focus to fix?

Martin Senftleben: The more complex the system gets, the
lighter and less detailed the framework should be—open-ended notice and
takedown would be better than DSA. But the DSA offers some room b/c they’ve
overdone it so much. There’s so much complexity and inconsistency that we could
use that to say there’s no clear answer, so to harmonize the legislation, there
is space for us as academics to make sense of it and keep it up to date. DSA is
based on three categories of hosting; search engines entered at the last
moment, and the DSA underperforms as to entities that do hosting, content
generation, and search. This type of content provision is growing enormously,
as w/Microsoft’s use of AI. Already outdated.

RT: Jennifer Pahlka’s Recoding America (highly recommended!)
documents regulatory failure from a waterfall approach where detail keeps
getting added at each stage. Suggestions become requirements and you end up
with procedures that require outdated or counterproductive elements because
they’re in the regs. Federal/state/local overlaps also affect this. What if
anything is different in Europe?

Daphne Keller: There’s a real difference b/t a culture that
has real trust in regulators to do things with vague language and one that
doesn’t. Europeans don’t think the regulators will be unreasonable. [Tort-based
culture can’t be the full explanation because Pahlka documents these problems
in places like military contracting where there’s no tort potential.] Data access
is an example of openness where researchers are hoping that the process will
look very different from what appears to be described in the legislation. #1
ask of civil society: keep us involved in the process; no particular ask other
than role in interpretation. Chinese legal culture: The action isn’t in
legislation; the action is in administration afterwards. The DSA is more like
that. [Is China a culture with real trust in regulators?]

Quintais: DSA gives regulators more power than GDPR did.

Joris van Hoboken: Intermediary liability part of DSA is
well-known and there’s a lot of consistency with prior practice—DSA adds a few
elements. Separation between liability provisions and all the other stuff. Senftleben
could be right about effects on liability of duties, but from a regulatory
perspective there’s a separation.

Eric Goldman: what’s our definition of what would qualify as
success or failure of the DSA? Might be broken down by topic. Who’s going to
hold the powers that be accountable for whether or not this accomplishes the
goals that they claimed it would/we think it should?

Bernt Hugenholtz: complexity reflects European tradition of
civil law in the books, and other reasons, many already pointed out—desire to
deal w/urgent tech developments, etc. But also, this is a regulation—an act—a directly
binding instrument which is very different from what we grew up with
(directives, which are instructions to member states to do certain things in
harmonized fashion). Those could be vaguer/more concise b/c more was left to
member states to implement/fill in gaps/national law could continue in the gaps.
Regulation requires more specificity b/c you’re the regulator for the entire
union. [In the US, we’d talk about preemption here.] DSA might be too early for
AI, but on the other hand regulation is always too early in this field, since
we never know where the field is going.

Matthias Leistner: Don’t generalize too much—some parts of
DSA might be too early; revisions to Ecommerce directive might be too late. The
more open the standards are, the less you need to worry about being too early.

US/EU differences: There are always internal European and Union-Member
States issues. It is remarkably different in different areas at the European level.
GDPR leaves it to member states to specify; DMA/DSA are comprehensive but tend to
further centralize, which might have certain advantages (efficiency) and
disadvantages (flexibility/power concentrated in Brussels). The data act
follows a different approach: seems to provide umbrella regulation w/further
specification possible, e.g. open health regime. EU-Member state issues: need
to ask new questions—is a regulation v a directive conclusive? Major question
is private enforcement. Damages claims of individual users provision in DSA is
the first time parliament has considered this kind of enforcement, but creates
new questions about tort law and its enforcement. Not clear whether member
states could add criminal liability, for example.

Leaving “hot potato” issues to self-regulation as a popular way
to avoid them? But that doesn’t work for everything—it is naïve to think that
Zalando hasn’t been talking to the Commission for months, but the result is litigation.
DSA’s self-audit requirements: can this work? Just delegating it to a further
level.

Christophe Geiger: different EU/US traditions around
regulatory oversight/verification of compliance with key values v private
ordering. DSA is obviously overdoing it, but fundamental approach is very
interesting—compare IP: don’t leave rightsholders & platforms alone, someone
else has to step in. 27 different coordinators/regimes/traditions of
intervention is problematic but the principle of regulatory oversight is at
least interesting.

Eleanora Rosati: It is a success to have gotten to the point
of adopting direct regulation—DSM Directive has resulted in extremely
fragmented transposition and it’s not clear whether they can go as far as they
have, including providing new rights not provided for in DSM. The relation b/t
different provisions of DSM—link tax, data mining, “value gap,” etc—is unclear.
So we have at least skipped that frustration created by directives of this
type, including Ecommerce Directive. Vagueness of the safe harbors in that
directive is no indicator of success. Didn’t create a level playing field.

Senftleben: What would DSA success look like?: a great
question. We used to navigate cities ourselves, didn’t leave it to the machine.
We knew where the different parts of the city were. Now we don’t. We’re lazy.
We don’t do our own content filtering. The DSA puts burdens on citizens to be
active. Transparency information: you can see how things function; the burden
is on the citizen to do something (including creating an NGO or using the
redress mechanisms). Fear: huge failure b/c we are just too lazy to use that.
We’ll just behave like we do with Google Maps and follow what the automated
systems tell us. Success=people are empowered in a real way and track how
information flows/reaches them.

Pam Samuelson: How do I teach people to follow this? It is
too complicated/requires a kind of perspective about regulation as a good that
isn’t part of the current US regulatory culture. One thing US might see in a
Brussels effect: larger platforms adapt so US doesn’t have to do anything
legislatively, whether different or the same. But is that really a good thing? Do
you care about barriers to entry? If you do, then maybe this isn’t the optimal
strategy. [Goldman: that’s one question for the success/failure metrics.] I’d tell
a startup to come to the US and only think of entering the European market
after a certain amount of success.

Elkin-Koren: Common market creation is a measure of success,
and digital platforms are likely to comply. What are the other consequences?
Intended or not? Not intended to lower competition; tries to look at mice and
elephants differently, but may turn out the opposite.

Giancarlo Frosio: Fundamental rights as a missing concept!
That’s the great achievement of the DSA, meant to be interpreted and applied
w/reference to fundamental rights recognized by Charter, to achieve a fair balance
of conflicting fundamental rights.

Sebastian Schwemer: Goal is to regulate recommendation on
the internet generally, focusing on process and not content. Would advise
startups to start in Europe b/c as long as you’re in compliance everything is simple
[I think I misunderstood this]. We focus too much on VLOPs.  DSA is overloaded, to be sure, but there’s
important stuff. VLOPs provisions are different—competences aren’t clear where
Commission has so much power not just over process but over content, setting
rules and enforcing them both. 2021: Denmark proposed a social media law doing
DSA+; it was shut down, but now they’re trying to introduce age verification on
all platforms. DSA allows more leeway, again by focusing on process. Problem is
two-tier system with regular platforms and VLOPs, which are understudied.

Justin Hughes: Some topics here are premature, others old
hat (trusted flaggers). Opposite of the precautionary principle: AI Act seems
like precautionary principle issue. Take on the known unknowns at least. 1201
looked like a failure, now it looks like a success. [????] Maybe the self-audits
will fail, and they’ll never be eliminated b/c people are afraid to eliminated
them. Maybe a few national authorities will dominate rather than 27. In the US:
Maybe [big platforms] will take their lobbying energy elsewhere and not oppose
new US regulations, but maybe they’ll continue to oppose them on principle.

Leistner: might compare amount of litigation under different
regulations, directives. DMA: goal is to have more traders on platforms/increase
diversity—could just check whether this happens five years from now. That would
be clear-cut. Much more difficult w/r/t DSA b/c we don’t know what the DSA
actually wants; there are a number of theories (nerd harder?). Could look at
share of platform resources devoted to content moderation over time, strength of
European democracy, whether there is European brain drain/smart Indian
innovators come to California or to Munich, or other things. What kind of data
would we need to have some plausible natural experiment?

Giancarlo Frosio: Again, protection of fundamental rights is
a key measure—tools to force platforms to set up algorithms so they don’t limit
fundamental rights. [This is why I don’t get why Wikipedia and the Internet
Archive are even covered, since they don’t have the algorithmic problems at
which the DSA is supposedly aimed.]

Keller: one key issue is that VLOPs have the ability to
shape the rules for those who come up after them—codes of conduct negotiated by
older companies that work for them but may not work for new entrants. This
comes up with questions of what risk mitigation looks like.

Geiger: fundamental rights is a main pillar of DSA. But here
I think we need to push for academic community’s permission to do homework/coordinate
efforts to ensure this is actually happening. Most regulatory authorities are
political appointments w/no specialization in IP or fundamental rights. Some
will be strongly captured by IP claimants.

from Blogger http://tushnet.blogspot.com/2023/06/transatlantic-dialogue-workshop.html

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10th Circuit endorses presumption of Lanham Act false advertising injury in mostly two-player market

Posted on June 29, 2023 by rtushnet

Vitamins Online, Inc. v. Heartwise, Inc., — F.4th —-, 2023
WL 4189604, Nos. 20-4126, 21-4152 (10th Cir. Jun. 27, 2023)

Proceedings below most
recently blogged here.

Vitamins Online sued Heartwise under the Lanham Act and Utah’s
Unfair Competition Law for false advertising about the ingredients of its
competitive nutritional supplements and manipulating those products’ Amazon
reviews. The district court ruled for Vitamins Online at a bench trial and
ordered disgorgement of NatureWise’s profits for 2012 and 2013. The court also
awarded Vitamins Online attorneys fees and costs.

Both parties appealed and the Tenth Circuit favored Vitamins
Online, remanding for further consideration of punitive damages and an injunction—and,
more broadly, approving a presumption of injury in these specific circumstances,
with discussion of using antitrust principles (ugh) to determine whether a
presumption is appropriate.

The supplements here involve garcinia cambogia and green
coffee extract, which both purportedly help with weight loss.

Vitamins Online purportedly offered unique (at least during
relevant time periods) ingredients that were clinically proven “to help support/assist
with weight loss” unlike other versions of the same ingredients. For example,
by the middle of 2013, Vitamins Online was the only seller of garcinia cambogia
with “SuperCitrimax” on Amazon, and Dr. Oz’s 2013 show on garcinia cambogia
featured the chief researcher for SuperCitrimax, leading Dr. Oz to urge his
viewers to buy only that type. After this show, Vitamins Online’s sales
increased substantially. Dr. Oz had similar effects on Vitamins Online’s green
coffee.

NatureWise’s products advertised that they met the same Dr.
Oz-endorsed requirements. To cut a long story short, they often didn’t. E.g.: “Although
NatureWise’s garcinia cambogia did not contain SuperCitrimax, NatureWise’s
founder specifically wanted to advertise SuperCitrimax because Vitamins Online
was selling it, and thus NatureWise referenced SuperCitrimax on its Amazon
product page and included the SuperCitrimax logo on the garcinia cambogia
label.”

Both parties relied on Amazon for sales.

NatureWise asked its employees—who
complied—to up-vote good reviews for its products and down-vote its products’
bad reviews (known as “block voting”), thereby affecting which reviews appeared
at the top of the products’ pages. This was a violation of Amazon’s policies,
and so NatureWise’s management did not want Amazon to learn of this practice.
In addition, NatureWise offered free products to customers in exchange for a
review. This also violated Amazon’s policies.

NatureWise’s entry into the market knocked Vitamins Online
from its #1 seller spot, which has competitive advantages. During 2012-2013,
Naturewise made over $9.5 million in profit from the accused products, which
the trial court ordered disgorged. That court also awarded fees for various
discovery improprieties, which the court of appeals upheld.

Falsity: A fact question reviewed for clear error; there was
none, either on the ingredient claims or the Amazon reviewbombing claims.

Of most interest: The district court didn’t clearly err in
finding that block voting on the helpfulness of reviews and the offering of
free products in exchange for reviews were misrepresentations. Block voting: the
district court found that the number of “helpful” votes was artificially
inflated and therefore literally false. NatureWise argued that nothing in the reviews
themselves was false. “[T]he issue is not the falsity of the reviews themselves
but rather the misleading impression ‘that many unbiased consumers find
positive reviews to be helpful and negative reviews to be unhelpful.’” An
expert explained that reviews “have a very significant impact on the purchase
decision process” when consumers believe that the reviews are “objective and
genuine.” Thus, it was not clearly erroneous for the district court to find
that NatureWise’s block voting misled customers, “given that customers were
likely under the misimpression that it was unbiased consumers—rather than
NatureWise’s employees—who found good reviews of NatureWise products to be
helpful and bad reviews unhelpful.” The court also noted the district court’s
additional finding that NatureWise’s management was worried that customers
would find out about the block voting. “This fact indicates that NatureWise
believed customers were being misled about the helpfulness ratings.”

Free products: The district court found that NatureWise made
literally false representations because it represented that it did not offer
free products in exchange for reviews—even though it did. But, NatureWise
responded, the free products were not contingent on the content of the reviews,
and that the act of giving a free product did not render the reviews themselves
false. Again, “NatureWise’s actions misled consumers about the number of
reviews from unbiased customers and the true ratio of putative unbiased
positive to negative reviews.” Vitamins Online’s expert concluded that the act
of offering a product in exchange for a review is likely to skew the positive
results of the review.

The district court gave Vitamins Online a rebuttable
presumption of injury  “because the
markets at issue were essentially two seller markets, so it could be presumed
that sales wrongfully gained by NatureWise were sales lost by Vitamins Online.”
This was correct.

A presumption of injury began in the Second Circuit for
comparative advertising. Even without a direct comparative statement, if the ad
targets an “obvious competitor,” that can also qualify for a presumption, and
when there’s an essentially two-party market, the ad will always target an
obvious competitor. A “strict two-player market is no longer inflexibility
required. Rather, the market simply must be ‘sparsely populated.’”

Thus, the rule: “once a plaintiff has proven that the
defendant has falsely and materially inflated the value of its product (or
deflated the value of the plaintiff’s product), and that the plaintiff and
defendant are the only two significant participants in a market or submarket,
courts may presume that the defendant has caused the plaintiff to suffer an
injury.” The presence of “a few other insignificant market participants” doesn’t
change anything “so long as the plaintiff and defendant are the only
significant actors in the market, since the defendant will still presumably
receive most of the diverted sales.”

Caveats: even in essentially a two-player market, the presumption
is a presumption that injury occurred, not about its degree. “The sparse
competitor market can support a finding of causation, but damages, if sought,
will typically require some further evidence or analysis.” The sparse
competitor market can support a finding of causation, but damages, if sought,
will typically require some further evidence or analysis. And the presumption
is rebuttable.

Back to the presumption: “Whether the presumption of injury
is applicable therefore turns primarily on the scope and occupancy of the
market. To make these determinations, our antitrust caselaw is instructive.”
[Cue antitrust lawyers talking about the difficulties of market definition in
antitrust! FWIW, I’m giving you essentially all of the market definition done by
the court; you can contrast that to what a market definition analysis by an antitrust
economic expert looks like and consider how “instructive” that really is.]
Product market boundaries are defined by cross-elasticity of demand; high
cross-elasticity means products are substitutes and low means they aren’t. Submarkets
“may be determined by examining such practical indicia as industry or public
recognition of the submarket as a separate economic entity, the product’s
peculiar characteristics and uses, unique production facilities, distinct
customers, distinct prices, sensitivity to price changes, and specialized
vendors.”

Market definition is a question of fact, and it was not
clearly erroneous to find the market sparsely populated. There was evidence “that
the parties were operating in a two-player market and that the existence of
other competitors were de minimis. That is enough to render the presumption of
injury applicable.” But … what about alternatives? Is the market all green
coffee, all green coffee sold on Amazon, all weight loss supplements, something
else? In a footnote: “We are not adopting our entire antitrust corpus as the
relevant standard to use in defining the market. … But the antitrust analogue is
a roughly useful template from which to start the analysis.”

NatureWise failed to rebut the presumption. It argued that
there could be no causation without correlation, but the record showed that
Vitamins Online’s sales dropped at roughly the same rate as NatureWise’s sales
rose for at least specific quarters, which was enough. Nor was Vitamins Online
required to prove a nexus between the false advertising and the lost sales. “Once
Vitamins Online made the requisite showing that the markets in question were
composed of just two significant market players, then the district court was
entitled to presume that NatureWise caused an injury.” [I assume materiality is
in there somewhere.]

NatureWise also argued that there were intervening factors
causing Vitamins Online to lose sales, but they didn’t show clear error. (1) Dr
Oz’s shows allegedly caused a flood of competitors to enter the market—but that
was answered by the trial court’s “essentially two-party market” finding.  Further, “this alleged flood of competitors
would presumably have resulted in sales losses for NatureWise as well—but
NatureWise’s sales increased when Vitamins Online’s sales decreased.” (2)
Vitamins Online’s products were “far more expensive” than competitors’. But
expert evidence contradicted this. (3) Vitamins Online’s products had an
average rating of 2.9 out of five stars, which would cause poor sales. “But
most of Vitamins Online’s products had a similar average rating both when its
sales rose before NatureWise entered the markets and when they fell after NatureWise
entered the market and employed in deceptive sales practices.”

Disgorgement was not an abuse of discretion, given the facts
above. But the district court was not required to award disgorgement for 2014
and after. It’s not error to limit profits to a period in which the plaintiff
can show actual damages, considering that as part of the equitable balancing. The
court rejected Vitamins Online’s argument that, under the statute, it had only
to “prove defendant’s sales,” and the burden was on NatureWise to prove which
portion of the sales are not attributable to the false advertising. But §
1117(a) still requires a plaintiff to “show some connection between the
identified ‘sales’ and the alleged infringement.” “Section 1117(a) does not
presumptively entitle Vitamins Online to all NatureWise’s sales proceeds no
matter how temporally disconnected from the false advertising injury.”

The district court denied an injunction on the basis that
Vitamins Online was adequately compensated by a disgorgement of profits, and
because it found that it would be against the public interest to force
NatureWise to remove all its product reviews from Amazon. But it should have
considered enjoining future review manipulation, including block voting and
free products.

The district court also needed to consider punitive damages
under the UCL. Enhanced damages aren’t ok under the Lanham Act when the
plaintiff was already “adequately compensated,” but under Utah law, only one of
the seven relevant factors for punitive damages considers the actual damages
award.

from Blogger http://tushnet.blogspot.com/2023/06/10th-circuit-endorses-presumption-of.html

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And Taco Tuesday

Posted on June 28, 2023 by rtushnet

 Speaking of authenticity, here is a funny WSJ podcast–even if you don’t listen to the whole thing, it’s worth listening to Gregory Gregory claim he invented Taco Tuesday, the discussion of its appearance in the 1930s, and then the last minute where he makes a surprising admission.

from Blogger http://tushnet.blogspot.com/2023/06/and-taco-tuesday.html

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Fajita followup: geographic origin as inherently contested concept

Posted on June 28, 2023 by rtushnet

 Yesterday’s post about what every reasonable consumer of Mexican food knows sparked some interest in my household. It’s not a new observation that Twiqbal‘s common sense can involve things that are not actually common sense to all reasonable people, and my spouse was struck by the fajita story specifically. After a bit of research, he came up with the following, which complicates the characterization of fajitas as Tex-Mex, but certainly doesn’t contradict the idea that authenticity is a social construct. The question–familiar to students of geographic indications more generally–is how the law should intervene in attempts to stabilize or shift that social construct. Even if the law doesn’t, economically motivated producers will do so, sometimes with indifference to existing meanings, it’s not always obvious how legal intervention affects consumer welfare (even straight-up false “Hecho in Mexico” could arguably be welfare-promoting if consumers wrongly preferred food made in Mexico which otherwise satisfied fewer of their preferences because they misinterpreted Mexican origin as a signal of other qualities).

So: Mario Montaño writes that “the origin of fajitas has been well documented to have been somewhere in the South Texas border region.” But he objects to calling fajitas “Tex-Mex,” on the grounds that “The American food industry, enacting the principles of cultural hegemony, has effectively incorporated and reinterpreted the food practices of Mexicans in the lower Rio Grande border region, relabeling them “Tex Mex” and further using that term to describe any Mexican or Spanish food that is consumed by Anglos. Although Mexicans in this region do not refer to their food as Tex Mex, and indeed often consider the term derogatory, the dominant culture has redefined the local cuisine as “earthy food, festive food, happy food, celebration. It is peasant food raised to the level of high and sophisticated art.”

Mario Montaño, “Appropriation and Counterhegemony in South Texas: Food Slurs, Offal Meats, and Blood,” in Usable Pasts, ed. Tad Tuleja, Traditions and Group Expressions in North America (University Press of Colorado, 1997), 50–67, https://ift.tt/z4V6O3q.

from Blogger http://tushnet.blogspot.com/2023/06/fajita-followup-geographic-origin-as.html

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