Models’ false endorsement claims fail for want of recognition, bad survey

Posted on August 17, 2021 by rtushnet

Souza v. Exotic Island Enterprises, Inc., No. 18-CV-9448
(KMK), 2021 WL 3501162 (S.D.N.Y. Aug. 9, 2021)

Another in the burgeoning genre of models suing “adult”
clubs for using unauthorized images in online ads for the clubs. As this case
shows, the Second Circuit is not as favorable a jurisdiction for these claims
as some others, given the short ROP limitations period and the skepticism about
non-ROP claims. Lexmark has crept into §43(a)(1)(A) via false
endorsement; it will be interesting to see whether courts recognize that other
trademark claims are likewise subject to a proximate cause requirement by that
logic.

Facts in the light most favorable to the plaintiffs: Each of
the plaintiffs has a significant number of followers on various social media
platforms, ranging from greater than ten thousand to several million, and most
are “considered social media influencers.” “Because they rely on their
reputation to get work, Plaintiffs are selective about the jobs they take, and
exercise ‘complete control’ over the use of their images and likenesses,”
especially given the persistence of images online. Mansion runs a club where
nude or semi-nude women offer entertainment; “[p]romotions containing
Plaintiffs’ images were without Plaintiffs’ permission posted to Mansion’s
social media pages.” Plaintiffs sued for false advertising and false
endorsement under the Lanham Act, violation of their right to publicity,
deceptive trade practices under New York GBL Section 349, and defamation. 

The court was guided by Electra v. 59 Murray Enterprises,
Inc., 987 F.3d 233 (2d Cir. 2021), which considered all these claims except for
false advertising. Electra found that, even where models had transferred
all rights in the photos to a third party, they could still bring ROP claims:
the clubs didn’t claim to be beneficiaries of those agreements and the releases
didn’t constitute the necessary “written consent” for defendants’ uses, though “the
releases could provide a defense in an action against the releasees or those who
could assert lawful use by reason of assignment or license.” However, false
endorsement claims failed because they didn’t prove that they had the kind of
fame that meant that their appearance in an ad was an endorsement, as opposed
to an appearance by a model. There was no deceptive practices claim under
Section 349 because the conduct wasn’t consumer-oriented; this was “a private
dispute over a private injury visited on the individuals portrayed in the
photographs.” Defamation claims also failed: First, the ads didn’t
unambiguously indicate that the models would be appearing at the clubs and
might just indicate that they were in the ads, and second (and relatedly), plaintiffs
failed to show actual malice; at most, they failed to investigate whether
third-party contractors had the rights to the images, but that’s not actual
malice.

Given Electra, plaintiffs withdrew their GBL Section
349 and defamation claims.

False endorsement: Failed for similar reasons to the claims
in Electra. You can be really popular on social media without being
recognizable enough for the “strength” factor to favor likely confusion. Electra
quoted with approval a district court’s reasoning that “[t]he misappropriation
of a completely anonymous face could not form the basis for a false endorsement
claim, because consumers would not infer that an unknown model was ‘endorsing’
a product, as opposed to lending her image to a company for a fee.”

Plaintiffs didn’t show sufficient evidence of recognition.
Their affidavits that “[o]n any given day, regardless of where [they are] at,
[they are] recognized by complete strangers and [their] fans who follow [them]
on social media” were vague and conclusory. And their expert report was not good.
Martin Buncher’s putative testimony was based on a survey of 812 people who
were at least 21 years old living in the metropolitan area around Mansion, and
who had patronized a “Bikini Bar/Gentlemen’s Club/Strip Club” in the two years
prior to taking the survey. This survey showed that “almost half of the
respondents felt they recognized … Plaintiff[s’] images in the ads in some
manner having seen them prior to this research.” The court excluded this as
unreliable.

First, Buncher “used copies of the images annexed to the
Complaint with … [P]laintiffs’ names removed from the top, which resulted in
large parts of their faces and heads being removed.” The court found that “[s]urvey
respondents are highly unlikely to be able to accurately identify [plaintiffs]
based on photographs that do not show their face above their nose.” Yet, oddly,
his study “shows relatively uniform levels of recognition across the images of
all eight Plaintiffs, including those that show a Plaintiff’s face and those
that do not,” from 55-43% recognition. Perhaps this flaw was related to the
lack of a control group. Electra likewise rejected a Buncher survey and
his explanation that his survey was “a communications study, not a consumer
confusion study” as “insufficient to set aside the district court’s conclusion
that the Buncher Report was fatally flawed.

That the results bunch around 50%
recognition for each Plaintiff, regardless of whether her whole face is shown,
supports the view that many respondents were guessing. Another possibility is
that respondents—generally agreeable people who agreed to participate in the
survey—were yea-saying. Because Buncher made no effort to control for these
possibilities, he lacks good grounds for his conclusion that Plaintiffs were
recognizable, and the Court will not permit him to testify to this point based
on these survey questions.

Separately, the recognition questions were independently
defective because they “provided no opportunity for respondents either to
express uncertainty or to provide the identity of the [p]laintiff.” “As a
result, the Court has no way to verify whether respondents truly recognized any
of the Plaintiffs.” Yeah, that seems bad. Indeed, the survey responses didn’t
identify any plaintiff by name. That wasn’t absolutely required; a number of the
plaintiffs had modeled for Playboy, and there were at least 11 references to
Playboy in the responses, but “Playboy itself is a strong brand. No reasonable
jury could find that these references suggest that respondents recognized
Plaintiffs from their work with Playboy.”

Buncher has been allowed to testify with similar surveys in
other district courts, but those courts are in circuits that like to admit
surveys and then discount their probative value, almost whatever their flaws.
The Second Circuit is more discerning.

It was not enough for each plaintiff to be a “successful
model” with “substantial followers on their social media accounts.” In Electra,
while the successful Carmen Electra earned over $5 million modeling between
2009 and 2012, the unsuccessful plaintiffs made annual modeling incomes ranging
“from $400 … to $92,000,” and those amounts weren’t significant enough to
favor a finding of recognizability.  Electra
had “not just appeared in popular movies and television shows, but had regular and
starring roles in them.” While the other plaintiffs had “participated in
promotional campaigns for a wide variety of brands and appeared in magazines,
TV shows, and movies, their resumes [were] devoid of evidence that they
actually garnered recognition for any of their appearances.”

Here, plaintiffs didn’t establish their income, which was
their burden to do if they wanted it to weigh in their favor. In discovery, they
produced evidence that ranged from $107,000 in one year, when the plaintiff
earned $100,000 as Playmate of the Year, to “up to” $7000 for two roles. Nor
was the other evidence of prominence strong; though they provided “an extensive
list of the magazines and ad campaigns in which they were featured,” “[s]imply
listing brands or magazine titles is insufficient.” They were also seen in
additional roles, but their “resumes are devoid of evidence that they actually
garnered recognition for any of their appearances.” Only two showed a “starring
role[ ]” in something, but neither made any showing that these productions were
“popular” or that they had “regular” starring roles. No reasonable jury could
find that these facts supported strength. The court reasoned similarly with
respect to social media followings at the time the images at issue were
published.

Given their relatively weak marks, the absence of actual
confusion evidence was significant.

Plaintiffs relied on the Buncher report, which concluded
that “62% of survey respondents believed each Plaintiff had some affiliation,
connection[,] or association with Mansion; 75% believed Plaintiffs agreed to
sponsor, promote[,] or endorse Mansion; and 76% of respondents believed
Plaintiffs approved Mansion’s use of their images.” But that was excluded.

Buncher showed photos from the social media posts at issue,
and asked:

Considering that these are actually
real women shown in these ads and not just fictitious drawings, please indicate
using your strangest (sic) impression for each pair of opposing statements the
one you think is true based on your personal feelings. Remember, we want your
response based only on these ads you are seeing, and nothing else you might
have seen or heard previously.

• All of the women shown in these
ads have some affiliation, connection or association with those clubs in whose
ad they appear

• All of the women shown in these ads
do not have any affiliation, connection or association with those clubs in
whose ad they appear

[similar binary “all of the women” sponsorship/endorsement/approval/participation in the club events/women were paid to be in the ad questions]

It’s like a list of what not to do in surveys! There was no
anti-guessing instruction or “not sure” or “no opinion” options. These omissions
made the survey leading. Each question forced the respondent into binary
answers about “all” of the women. But there were three relevant possibilities:
(1) the ads suggest affiliation; (2) the ads suggest lack of affiliation (etc);
(3) the ads don’t suggest anything one way or another about affiliation. “By
failing to provide the third option, Buncher’s survey led respondents to
answers favoring Plaintiffs.” The court pointed out that (3) was the most
obvious answer for respondents who weren’t confused. “It is logically difficult
to see a person in an ad and draw the affirmative conclusion that she has no
affiliation whatsoever with the advertiser.” So a respondent who wasn’t confused
would especially need option (3).

At most, the evidence showed a possibility, not a
probability, of confusion.

Bad faith: In Electra, the Second Circuit held that
the plaintiffs “failed to establish … bad faith” where “the record merely
show[ed] that [the defendants] failed to investigate whether the third-party
contractor responsible for the advertisements secured legal rights to use [the
plaintiffs’] pictures in the promotional images—not that [the defendants]
intended to use the pictures without legal right to do so.” So too here.

Even if a reasonable jury could find that the remaining Polaroid
factors favored plaintiffs, they’d still lose, as in Electra.

Plaintiffs argued that they could still win on affiliation
confusion even if they failed to show endorsement confusion. First, Electra
was controlling. Second, “Plaintiffs’ distinction is immaterial.” It’s all Polaroid.
“The Court’s analysis applies with equal force to the claim that consumers were
likely confused about Plaintiffs’ association with Mansion as it does to the
claim that consumers were likely confused about Plaintiffs’ endorsement of
Mansion.”

False advertising: Plaintiffs didn’t come within the zone of
interests protected by §43(a)(1)(B). Their alleged harm, lost licensing fees,
was not the requisite type of harm—lost business to the defendants.The plaintiffs
argued that they directly competed with defendants, because “both seek to
attract customers and vie for the same dollar via the use of an image of a
beautiful woman.” But while they share a marketing strategy, Plaintiffs and
Defendants “each perform different functions within the marketplace.” “That two
products are sufficiently related that consumers could be confused about the
association between them does not suggest that these two products are direct
competitors.”

They didn’t show cognizable injury by asserting a right to
compensation from use of their images. “This assertion misunderstands the
nature of a false advertising claim, which is focused on how false assertions
in the market harm a plaintiff’s present and future prospects.” Lost wages “are
not within the zone of interests that the Lanham Act protects.”

Plaintiffs also alleged that use of their images hurts their
reputation and business. But the burden was on them to show that this was true,
and they did not. Evidence of lost opportunities wouldn’t be required if they
could show “other evidence of reputational or competitive harm,” but they didn’t.

Plaintiffs relied on Lexmark for the proposition that
“when a party claims reputational injury from disparagement, competition is not
required for proximate cause” and that “a defendant who seeks to promote his
own interests by telling a known falsehood to or about the plaintiff or his
product may be said to have proximately caused the plaintiff’s harm.” But that
was about proximate cause, not the zone of interests.

Finally, they argued that “a court may award a defendant’s
profits solely upon a finding that the defendant fraudulently used the plaintiff’s
mark.” But this rule requires first that a Lanham Act violation has been
established.

Finally, many but not all of the state ROP claims were
barred by a one-year statue of limitations (as established in Electra).
The court declined to exercise jurisdiction over the two remaining plaintiffs’
claims, which is an extra yikes. First, the court found that it lacked diversity
jurisdiction since the amount in controversy for each plaintiff didn’t exceed
$75,000. And because it was kicking out the federal claims, it declined to exercise
supplemental jurisdiction despite how far the litigation had progressed.

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data breaches can lead to a potpourri of claims

Posted on August 17, 2021 by rtushnet

In re Blackbaud, Inc., Customer Data Breach Litig., No.
3:20-mn-02972-JMC, MDL No. 2972, 2021 WL 3568394 (D.S.C. Aug. 12, 2021)

Query whether this kind of case will come out differently as
TransUnion v. Ramirez gets further assimilated into the law.

Blackbaud (good name!) “provides data collection and
maintenance software solutions for administration, fundraising, marketing, and
analytics to social good entities such as non-profit organizations,
foundations, educational institutions, faith communities, and healthcare
organizations.”

It stores both PII and Protected Health Information from its
customers’ donors, patients, students, and congregants. Plaintiffs “represent a
putative class of individuals whose data was provided to Blackbaud’s customers
and managed by Blackbaud,” thus they weren’t direct customers of Blackbaud.

In early 2020, “cybercriminals orchestrated a two-part
ransomware attack on Blackbaud’s systems,” copying plaintiffs’ data and holding
it for ransom. The cybercriminals then attempted but failed to block Blackbaud
from accessing its own systems. “Blackbaud ultimately paid the ransom in an
undisclosed amount of Bitcoin in exchange for a commitment that any data
previously accessed by the cybercriminals was permanently destroyed.” [Um. That
commitment seems … hard to believe?]

Plaintiffs alleged that the attack resulted from Blackbaud’s
“deficient security program” and failure to comply with industry and regulatory
standards. Its forensic report found that “names, addresses, phone numbers,
email addresses, dates of birth, and/or SSNs” were disclosed in the breach but allegedly
improperly concluded that there was no credit card data taken. Plaintiffs also
alleged that Blackbaud failed to provide them with timely and adequate notice
of the attack and the extent of the resulting data breach. In its July 2020
disclosures, Blackbaud asserted that the cybercriminals did not access credit
card information, bank account information, or SSNs. But its September 2020
Form 8-K with the Securities and Exchange Commission said that SSNs, bank
account information, usernames, and passwords might have been taken. This
litigation followed.

This opinion addresses certain statutory claims, highlighting
variation around the country in both specific data breach and general consumer
protection claims.

California Consumer Privacy Act :

The CCPA

provides a private right of action
for actual or statutory damages to “[a]ny consumer whose nonencrypted and
nonredacted personal information … is subject to an unauthorized access and
exfiltration, theft, or disclosure as a result of the business’s violation of
the duty to implement and maintain reasonable security procedures and practices
appropriate to the nature of the information to protect the personal
information[.]”

Blackbaud argued that it was not a “business” regulated by
the Act. Short answer: it was adequately alleged to be one.

California Confidentiality of Medical Information Act: One
plaintiff plausibly alleged that her “medical information” was disclosed during
the attack, and that Blackbaud plausibly qualified as a “medical provider”
under the CMIA despite its lack of direct contact with her.

Florida Deceptive and Unfair Trade Practice Act: Monetary
recovery requires “(1) a deceptive act or unfair practice; (2) causation; and
(3) actual damages.” Blackbaud’s alleged bad practices were failing to adopt
reasonable security measures and adequately notify customers and Plaintiffs of
the data breach; misrepresenting that certain sensitive PII was not exposed
during the breach, that it would protect Plaintiffs’ PII, and that it would
adopt reasonable security measures; and concealing that it did not adopt
reasonable security measures. However, the Florida plaintiffs failed to sufficiently
allege actual damages, which under FDUTPA are “economic damages related solely
to a product or service purchased in a consumer transaction infected with
unfair or deceptive trade practices or acts.” A plaintiff may not recover for
“damage to property other than the property that is the subject of the consumer
transaction.” Here, Blackbaud’s data management software was “the property that
is the subject of the consumer transaction,” not the data itself. And these
plaintiffs didn’t allege damage to that property, only to their own bank
accounts, emotional well-being, and data.

However, the Florida plaintiffs did state a claim for
injunctive relief, since FDUTPA makes “declaratory and injunctive relief
available to a broader class of plaintiffs than could recover damages,” as long
as a plaintiff is “a person ‘aggrieved’ by the deceptive act or practice.” Plaintiffs
alleged that Blackbaud’s misrepresentations and omissions about its security
efforts and the scope of the Ransomware Attack “prompted them to take
mitigation efforts out of fear that they were at an increased risk for fraud or
identity theft.”

New Jersey Consumer Fraud Act: Blackbaud argued that its
services weren’t within the scope of the NJCFA because it sells services to
sophisticated businesses and entities, not the general public. The NJCFA prohibits
a person from using an “unconscionable commercial practice, deception, fraud,”
or the like “in connection with the sale or advertisement of any merchandise or
real estate.” Merchandise is defined as “any objects, wares, goods commodities,
services or anything offered, directly or indirectly to the public for sale.” New
Jersey courts have said that the law’s applicability “is limited to consumer
transactions which are defined both by the status of the parties and the nature
of the transaction itself.” Although the NJCFA does not define “consumer,” New
Jersey courts have interpreted the term to mean “one who uses economic goods
and so diminishes or destroys their utilities.” A plaintiff does not qualify as
a “consumer” if they do not purchase a product for consumption. Thus, the NJ
plaintiffs weren’t “consumers” entitled to the protection of the NJCFA. Nor
were donations to the entities that transacted with Blackbaud enough. Donors
are not “consumers” under the NJCFA because they are “not being approached in
their commonly accepted capacity as consumers” and a donation “involves neither
commercial goods nor commercial services.” Plaintiffs didn’t allege that they
purchased or used Blackbaud’s services, knew Blackbaud existed, or perceived
that Blackbaud managed their data.

New York General Business Law § 349: This requires a
consumer-oriented practice, which occurs if it has “a broader impact on
consumers at large,” or “something more than a single-shot consumer transaction
or a contract dispute unique to the parties.” However, GBL § 349 does “not
impose a requirement that consumer-oriented conduct be directed to all members
of the public[.]” Unsurprisingly, the allegations here adequately established
consumer-oriented conduct.

Privity isn’t required under GBL § 349, so it was irrelevant
that the NY plaintiffs weren’t direct consumers of Blackbaud. Section 349(h)
specifically empowers “[a]ny person who has been injured by reason of any
violation of this section” to bring an action. GBL § 349(h). “The critical
question, then, is whether the matter affects the public interest in New York,
not whether the suit is brought by a consumer or a competitor.”

Pennsylvania Unfair Trade Practices and Consumer Protection
Law: The UTPCPL provides a private cause of action to “[a]ny person who
purchases or leases goods or services primarily for personal, family or
household purposes and thereby suffers any ascertainable loss of money or
property, real or personal, as a result of the use or employment by any person
of a method, act or practice declared unlawful” by the Act. “It is the
plaintiff’s burden to prove justifiable reliance in the complaint.” Again
unsurprisingly, the Pennsylvania plaintiff failed to sufficiently allege
reliance on Blackbaud’s misrepresentations and omissions. She instead alleged
that she was “required to provide her PHI to her healthcare provider as a
predicate to receiving healthcare services[,]” and didn’t allege that she knew
that Blackbaud maintained her data or was that she was exposed to
representations Blackbaud made to her or her healthcare provider. Her
allegation that she “would not have entrusted her Private Information to one or
more Social Good Entities had she known that one of the entity’s primary cloud
computing vendors entrusted with her Private Information failed to maintain
adequate data security” was merely conclusory. Courts sometimes presume
reliance, but only in cases involving life-threatening defects.

South Carolina Data Breach Security Act: The provision plaintiffs
sued under covered only entities that “own[] or licens[e] computerized data or
other data that includes personal identifying information,” requiring them to
notify South Carolina residents in the event of a data breach; Blackbaud didn’t
own or license the data; its possession was insufficient. True, a separate
provision of the law required someone “maintaining computerized data or other
data that includes personal identifying information that the person does not
own” to notify the owner or licensee after a data breach, but plaintiffs didn’t
assert claims under that provision.  

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Non-alphanumeric logo isn’t CMI

Posted on August 16, 2021 by rtushnet

CoStar Group, Inc. v. Commercial Real Estate Exchange Inc., No.
CV 20-8819 CBM(ASx), 2021 WL 3566415 (C.D. Cal. Jun. 9, 2021)

CoStar owns a number of digital marketplaces containing listings
of real estate for sale and for lease. Its LoopNet is allegedly “the leading
digital marketplace for commercial real estate,” and contains CoStar’s
copyrighted images, data from the CoStar database, and edits made by CoStar to
“improve marketability.” Defendant CREXi is trying to build its own online
commercial real estate marketplace and auction platform. It allegedly CREXi
“harvest[ed] content, including broker directories, from CoStar’s subscription
database without authorization by using passwords issued to other companies.” This
opinion addresses only CoStar’s CMI claims.

The court agreed with CREXi’s argument that CoStar’s watermark
wasn’t CMI. It didn’t include the copyright symbol (©) or any identifying
information about the author of the work, such as a web address or company name.
Its logo “can be described as five small light grey parts that form a circle.” (Interestingly,
it doesn’t seem to use grey for its regular logo—perhaps black disappeared into
too many photos.)

One version of CoStar logo (which is elsewhere usually accompanied by its name)

Although CoStar alleged that this identified its ownership
of the image, that was a legal conclusion; the logo itself didn’t contain any
identifying information about the author of the work as required by § 1202(c). McGucken
v. DMI Holdings, CV 18-4837, 2019 U.S. Dist. LEXIS 60852 (C.D. Cal. Apr. 9,
2019), accepted “45SURF” superimposed onto a photo as CMI because “it
identified plaintiff and his brand as the author and owner of the photographs”;
he used that as his professional name. But CoStar’s logo “does not include the
author’s name, title, an alphanumerical designation, or identifying symbols
referring to such information.” See also Maule v. Anheuser Busch, LLC, No.
17-00461, 2018 U.S. Dist. LEXIS 125805 (E.D. Pa. July 27, 2018) (“Visit Philly
Skyline Dot Com” superimposed on picture was not CMI: it “did not contain
Maule’s name or any identifying information about him as the author of the
photograph or owner of the copyright to that work … nor does it inform the
public that something is copyrighted [or] prevent infringement.”)

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reasonable consumers of manuka honey know its price and grading scheme

Posted on August 16, 2021 by rtushnet

Moore v. Trader Joe’s Co., 4 F.4th 874 (9th Cir.
2021)

Trader Joe’s markets its store brand Manuka honey as “100%
New Zealand Manuka Honey” or “New Zealand Manuka Honey,” but Moore alleged that
because Trader Joe’s Manuka Honey actually consists of only between 57.3% and
62.6% honey derived from Manuka flower nectar, Trader Joe’s engaged in “false,
misleading, and deceptive marketing” of its Manuka honey. FDA guidelines permit
labeling honey by its “chief floral source,” given that busy bees cannot be
prevented from foraging on different types of flowers, despite their keepers’
best efforts, and plaintiffs’ own tests indicated that Manuka was the chief
floral source. The court concluded that the 100% claim wouldn’t deceive a
reasonable consumer, with some plausible arguments and one really bad argument
(it was so cheap that no reasonable consumer would believe it was Manuka honey,
which assumes a lot of highly calibrated knowledge among consumers that seems a bit inconsistent with a motion to dismiss).

100% New Zealand Manuka Honey and New Zealand Manuka Honey jars

Identical nutrition panel on both showing the only ingredient as manuka honey

Manuka honey supposedly has antibacterial properties and health
benefits; this, plus geographic barriers to widespread production, result in
high demand and low supply and “a price far in excess of other honeys.” Manuka
honey producers grade the purity of Manuka honey on the Unique Manuka Factor (UMF)
grading system, from 5+ to 26+ based on the concentration of honey derived from
Manuka flower nectar. A bottle of Manuka honey 92% derived from Manuka flower
nectar costs approximately $266, or $21.55 per ounce.

TJ’s Manuka Honey is labeled with a UMF grade of 10+, “a
relatively low grade, and sells for the comparatively low price of $13.99 per
jar, or $1.59 per ounce.”  The ingredient
statement lists Manuka honey as the sole ingredient.

Plaintiffs brought the usual California claims. I think that
the court wouldn’t have to rest on factual claims about the details of what
consumers understand about Manuka honey if it had admitted that what is really
going on here is balancing: given the unique production/collection of honey
products, there’s no simple way to explain to consumers what’s going on, so requiring
a more complicated explanation would obscure more than it prevented deception.
(Though a 5 to 26 scale is pretty weird, LSAT-level weird, and perhaps it really
would be more helpful if they indicated that 10+ wasn’t all that Manuka-y.)

Anyway, TJ’s Manuka Honey met the FDA standard, being derived
from between 57.3–62.6% Manuka flower nectar (as estimated by pollen count). Taking
into account “all the information available to consumers and the context in
which that information is provided and used,” “other available information
about Trader Joe’s Manuka Honey would quickly dissuade a reasonable consumer
from the belief that Trader Joe’s Manuka Honey was derived from 100% Manuka
flower nectar.”

Specifically, “information available to a consumer is not
limited to the physical label and may involve contextual inferences regarding
the product itself and its packaging.” Though, as the Seventh Circuit has held,
“[d]eceptive advertisements often intentionally use ambiguity to mislead
consumers while maintaining some level of deniability about the intended
meaning[,]” as with the “100% Grated Parmesan” full of non-cheese, there was nothing
like such conduct here. “Bees make the Manuka honey, without input from Trader
Joe’s or any other manufacturer. Trader Joe’s does not insert any additional
ingredients to produce the product or mix Manuka honey with other, non-Manuka
honeys to dilute it.” And a consumer wouldn’t make an unreasonable or fanciful
interpretation of “100% New Zealand Manuka Honey” because of: (1) the
impossibility of making a honey that is 100% derived from one floral source,
(2) the low price of Trader Joe’s Manuka Honey, and (3) the presence of the
“10+” on the label, all of which is readily available to anyone browsing the
aisles of Trader Joe’s.

“Although a reasonable consumer might not be an expert in
honey production or beekeeping, consumers would generally know that it is
impossible to exercise complete control over where bees forage down to each
specific flower or plant.” Of course, consumers are unlikely to think of (1)
when they browse the aisles. They may very well assume to the contrary even if
they’d see the unlikelihood—surely not the impossibility; are there not
greenhouses and fields of monocultures around the world?—if forced to work the
problem through. (1) is really a cost-benefit analysis: consumers may assume
the wrong thing, but correcting that assumption isn’t worth the information costs
especially given that there are no single-source honeys.

(2) assumes a really high degree of calibration of
understanding, beyond “it is expensive” to “I know the right retail price for
high grade honey and I understand that this goes beyond what TJ, a savvy buyer
known for its good deals on house brands, could do.” I think that’s a bad idea
on a motion to dismiss; it, as with the truffle oil case that invented this consideration,
authorizes sellers to deceive bargain-hunters because they aren’t as
sophisticated about pricing as the court thinks (without actual evidence) they should
be. But plaintiffs didn’t help themselves by alleging that manuka honey
consumers “know[s] that the concentration of manuka [nectar, as measured by
pollen,] as opposed to other honey pollens can vary significantly from brand to
brand depending on what measures have been taken to maximize manuka purity” and
“attach importance to representations that communicate a higher purity level.”

The court here thought that consumers of Manuka honey, “a
niche, specialty product, are undoubtedly more likely to exhibit a higher
standard of care than ‘a parent walking down the dairy aisle in a grocery
store, possibly with a child or two in tow,’ who is ‘not likely to study with
great diligence the contents of a complicated product package.’ … Rather, an
average consumer of Manuka honey would likely know more than most about the
production of the product and the impossibility of a honey that is 100% derived
from Manuka flower nectar.” In a footnote, the court pointed to Broad City’s
parody of the “perceived high-brow nature of the product,” where a main
character under the influence of heavy medication buys it at Whole Foods in a grocery
trip costing $1,487.50; it’s sarcastically described as “so reasonably priced.”
Yeah, that’s real motion-to-dismiss-worthy evidence, speaking of sarcasm.
Anyway, the $1.59 per ounce cost of the honey should have signaled relatively low
pollen count.

(3) assumes that consumers know the rating scheme, and don’t
think it’s 1-10, which is possible though not necessary given the allegations
of the complaint. I myself had certainly heard of manuka honey and its purported
special properties, but I had no idea of a 5-26 rating scale. The court:

While there are no other details on
the jar about what “10+” means, the presence of this rating on the label puts a
reasonable consumer on notice that it must represent something about the
product. Reasonable consumers of Manuka honey would routinely encounter such
ratings and would likely have some knowledge about them. … Thus, even a
consumer with cursory knowledge of the UMF scale would know Trader Joe’s Manuka
Honey was decidedly on the lower end of the “purity” scale.

Why is a reasonable consumer of Manuka honey someone used to
encountering the expensive stuff, rather than someone who’s read about it and
happy to find an affordable version in the local TJ’s?

Anyway, the name was ok, and so was the use of “Manuka
Honey” as the sole ingredient on the ingredient statement, as provided for by
the FDA’s Honey Guidelines.

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Claims that timeshare exit services are legal and effective were not puffery

Posted on August 16, 2021 by rtushnet

Bluegreen Vacations Unlimited, Inc. v. Timeshare Lawyers
P.A., 2021 WL 3552175, No. 20-24681-Civ-Scola (S.D. Fla. Aug. 11, 2021)

Another timeshare versus timeshare exit false advertising
case. Marketing Defendants allegedly falsely advertise timeshare exit services
by promoting a legitimate process to exit timeshare contracts. The Marketing
Defendants allegedly advertise their services on the Third-Party Marketing
Defendants’ websites that rate various timeshare exit companies. The Lawyer
Defendants allegedly execute a letter directed to Bluegreen that is intended to
“cut off any communication between Bluegreen and the Bluegreen timeshare
owners, and constitutes the entirety of the ‘service’ the Lawyer Defendants
perform.” And the Credit Repair Defendants allegedly manipulate the timeshare
owners’ credit reports and remove negative trade lines related to the timeshare
owner’s default on the timeshare contracts and file false police reports
claiming identify theft on behalf of timeshare owners to discourage credit
bureaus from reporting negative information.

This opinion considered only the marketing defendants. First,
the court rejected the argument that Rule 9(b) applied to the false advertising
claims. Noting only that local courts “tend to apply Rule 8 when addressing
motions to dismiss claims under the Lanham Act,” the court followed that trend.
And it found that the particularity requirements of Rule 9(b) do not apply to the
FDUPTA claims. Under FDUPTA, “the proscription against unfair and deceptive
acts and practices sweeps far more broadly than the doctrine of fraud or
negligent misrepresentation, which asks only whether a representation was
technically accurate in all material respects.” And because “FDUTPA’s elements
are more particularized than those of common law fraud,” Rule 9(b)’s concerns
with subjecting defendants to unfounded allegations of fraud are lessened by
the required specificity. Because “FDUTPA claims seek a remedy for conduct
distinct from traditional common law torts such as fraud[,]” “the uniqueness of
the cause of action place[s] it outside the ambit of Rule 9(b).”

So too with tortious interference.

There is in general a division among courts on the pleading standard for state consumer protection claims; I wonder if there’s any correlation between whether the defendants are, in the court’s perception, ordinary advertisers, and the results.

Bluegreen also stated a claim for Lanham Act false
advertising by alleging that the Marketing Defendants falsely claimed their
services were legal and effective: “Our team at Timeshare Compliance as has a
proven track record of persuading developers to exit timeshare contracts. We
will remove all liability from your timeshare contract.” They advertised a
“proprietary strategy of resolving timeshare contracts,” which was allegedly “to
trick timeshare owners to withhold payments to Bluegreen and to hide their
fraud through credit repair services and letters from lawyers falsely affirming
the legality of the Marketing Defendant’s services.” Their cold calls allegedly
said that “TSC’s service permits the Bluegreen owner to safely stop payments to
Bluegreen” and that “the Bluegreen owner is guaranteed to receive a legal
release from their timeshare obligation.” Evidence of misleadingness or of
specific timeshare owners fooled by the scheme wasn’t required at this stage.

This wasn’t puffery/opinion: Claims about “a 100% guarantee
and top ratings, as well as advertisements that owners would not be liable at
all under the timeshare contracts could constitute facts on which a consumer
may rely.”

The other claims survived too.

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Alleging sponsorship/endorsement confusion can’t defeat clear nominative fair use

Posted on August 16, 2021 by rtushnet

Pasadena Tournament of Roses Ass’n v. City of Pasadena, 2021
WL 3553499, No. 2:21-CV-01051-AB-JEMx (C.D. Cal. Jul. 12, 2021)

For over a century, PTRA has hosted the Rose Parade and Rose
Bowl Game as part of its annual New Year’s Day Celebration. It does so at the
Rose Bowl Stadium under three contracts with Pasadena, including a Master
License Agreement, Trademark Agreement, and Trademark Consent Agreement. Under
these agreements, PTRA is the exclusive owner of the Rose Bowl Game trademark
and owns the mark for use in connection with the annual game. For many years,
the parties worked together behind the scenes to help ensure the success of the
annual game. PTRA alleged that Pasadena disrupted that relationship by
interfering with its trademark rights in statements made in news articles and
via an Instagram post:

IG post using #RoseBowl and 1956 Rose Bowl program image

The pandemic led the 2021 Rose Bowl Game to be played in
Texas. Pasadena objected that, in the event of a force majeure, the MLA gave it
the right to restrict PTRA from hosting the Rose Bowl Game in a venue other
than Rose Bowl Stadium. The parties strongly disagree about this issue and PTRA
sought declaratory judgment concerning the parties’ rights with respect to the
Rose Bowl Game and its related intellectual property.

There was no controversy as to whether Pasadena had an “ownership”
interest in the relevant trademarks. And there wasn’t a sufficient possibility
of future harm that would justify a declaratory judgment interpreting the
contract such that PTRA could host the Rose Bowl elsewhere if a force majeure
event occurred.

Trademark/unfair competition claims: these were all based on
 alleged use of the “Rose Bowl” mark in
an Instagram post made on the Rose Bowl Stadium’s official Instagram account,
together with an image of the official program from the 1956 iteration of the
Rose Bowl Game. Pasadena said this was (1) nominative fair use and (2) an
expressive work protected by the First Amendment.

The Instagram post was before the court and was NFU. The Rose
Bowl game wasn’t readily identifiable without “Rose Bowl.” The IG post used
“#RoseBowl” in plain text to describe the 1956 Rose Bowl Game program depicted
in the post.

PTRA argued that, because Pasadena has referred to the Rose
Bowl Game as “the game” in the past, the Rose Bowl Game was readily
identifiable without using the term. But those past posts included video clips
that used “Rose Bowl” to identify “the game.”

And Pasadena used only so much of the mark as was necessary.
The term was used twice, but that’s not per se unreasonable. The question here
was not whether it was necessary to use “Rose Bowl” at all, but whether it used
only so much of the mark as is reasonably necessary to identify the Rose Bowl
Game.

Finally, the post had nothing to suggest association or
sponsorship by PTRA. Pasadena posted from its Instagram account,
@rosebowlstadium. “It did not use any express or implied language of
sponsorship or endorsement or ‘tag’ Plaintiff’s accounts.” Conclusory allegations
of possible confusion “are insufficient to plead there was a suggestion of
association or sponsorship.”

The court noted that the parties had been partners for
decades. “Plaintiff has consistently benefitted from Defendant’s promotion of
Plaintiff’s game and its history and likely encourages such promotion. … [T]hat
this claim is being brought now is puzzling to the Court and it is clear that
this claim is not the crux of the parties’ conflict.”

False advertising: Pasadena’s mayor allegedly gave an
interview to the New York Times and stated that “the city [ ] shares a
trademark on the name of the game with the Tournament of Roses Assocation
[…]” and that “The football game belongs to the City of Pasadena and the
people of Pasadena.” But the only statement at issue is the second, which was
the only one actually attributed to the Mayor.

This was not “a representation of fact with respect to who
owns the marks,” but rather “appears to reflect Defendant’s pride for the
nearly 100-year-old annual football game held in Defendant’s Rose Bowl Stadium.”
Expressing an opinion of its own, the court found that PTRA “cannot reasonably
dispute that, separate and apart from intellectual property ownership, the
heart and soul of the Rose Bowl Game belongs to the people of Pasadena.” Thus,
this was merely opinion or puffery and not the type of statement “reasonably
interpreted as a statement of objective fact” surrounding the intellectual
property ownership.

This also got rid of the breach of contract claim, which was
based on the alleged trademark infringement and false advertising.

 

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Illinois unfairness claims against opioid marketers continue

Posted on August 13, 2021 by rtushnet

City of Chicago v. Purdue Pharma L.P., No. 14 CV 4361, 2021
WL 1208971 (N.D. Ill. Mar. 31, 2021)

Chicago alleged unfair and deceptive misconduct in multiple
defendants’ marketing, commercializing, and promoting their opioid products. (Perdue
is first in the list but it’s a bunch of them, so parts of this case will
survive the bankruptcy whatever happens there.) There were a bunch of kinds of
allegedly deceptive marketing related to misrepresentations and failures to
disclose. There were also alleged unfair practices related to diversion of
opioids into illicit channels. Defendants allegedly didn’t comply with their
statutory duties to maintain suspicious-order-monitoring systems (“SOMS”), and
concealed their failure from the public, misrepresenting that they were in
compliance with their obligations under the law. This led to the rise of “pill
mills” and an increasing number of deaths and hospitalizations.

Among other things, the court addressed whether the City
adequately pled unfairness under the Illinois Consumer Fraud Act. Courts look
to the FTCA for guidance on ICFA, and thus consider: “(1) whether the practice
offends public policy; (2) whether it is immoral, unethical, oppressive, or
unscrupulous; (3) whether it causes substantial injury to consumers.”

The parties focused on the public policy element; the City
argued that defendants violated their duties to monitor and prevent diversion
under the CSA (Controlled Substances Act). Defendants rejoined neither the
CSA nor its implementing regulations impose any duties owed to consumers that
might reveal a relevant public policy; it just guided the DEA in enforcement.
But, as the MDL court earlier in this case held, the CSA and its implementing
regulations impose an ongoing duty on DEA registrants. “Given that, as the
Court has explained, defendants were under legal duties, imposed under the CSA,
to monitor for suspicious orders and halt shipments of them, the Court has
little doubt that their alleged failure to do so offends public policy,
particularly under circumstances in which consumers of their products and the
consumers’ communities were likely to be injured by addiction and its
consequences.”

However, public policy wasn’t dispositive, “because
plaintiff’s allegations of immoral, unethical, oppressive, or unscrupulous
conduct causing substantial injury to consumers are sufficient to state a claim
on their own.” In particular, this was “oppressive” conduct because it deprived
consumers of choice:

By promoting the use of their
products for chronic or long-term pain while concealing the risks, including
the risk of addiction, they not only caused consumers with chronic pain to use
their product, but also, a reasonable factfinder could conclude, they put these
consumers in a position in which they were compelled by their addiction to
continue buying defendants’ product, whether via legal or illicit channels. In
other words, the consumers, having been tricked into buying defendants’
products, had little alternative but to submit to defendants’ alleged
misconduct and continue to buy the products, even in illicit channels, if
necessary. This is enough to state a claim by itself.

There was also no preemption by the CSA.

Defendants contested harm causation because the City alleged
oversupply in the aggregate without identifying specific orders that should
have been refused, but the court agreed with others that the “very existence of
the duties to maintain effective controls supports the notion that opioid
misuse is foreseeable.” Any intervening acts, “including decisions by
prescribers, patients, distributors, pharmacies, and third-party criminals,”
were “reasonably foreseeable, and thus not superseding acts” that broke the
chain of proximate causation.

 

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reasonable consumer isn’t required to interpret ingredient list for naturalness

Posted on August 13, 2021 by rtushnet

Moore v. GlaxoSmithKline Consumer Healthcare Holdings (US)
LLC, No. 20-cv-09077-JSW,  2021 WL
3524047 (N.D. Cal. Aug. 6, 2021)

Moore alleged that GSK falsely labeled certain ChapStick
products with the claims “100% Natural,” “Natural,” “Naturally Sourced
Ingredients,” and “100% Naturally Sourced Ingredients.” The products allegedly contain
non-natural, synthetic, artificial, and/or highly processed ingredients. The
products are

100% Natural Lip Butter; Total Hydration 100% Natural Lip
Balm; Total Hydration Essential Oils Lip Balm; Total Hydration Moisture + Tint
Lip Balm; and Total Hydration Natural Lip Scrub, which come in a variety of
scents and shades, though Moore alleged that they were substantially similar,
identifying twelve allegedly non-natural (etc.) ingredients. Moore alleged that
she routinely the Total Hydration 100% Natural Lip Balm in Eucalyptus Mint and
Fresh Citrus scents and the Total Hydration Essential Oils Lip Balm in the
Happy scent, relying on the natural representations on the label. She alleged a
continued desire to purchase the products if they didn’t contain any
non-natural ingredients but was currently unable to rely on the truth of the
natural representations. She brought the usual California statutory claims, along
with breach of express warranty and unjust enrichment.

Based on these allegations, Moore had Article III standing
for products she didn’t buy, because the products and alleged
misrepresentations were substantially similar. Differences might impact class
certification or summary judgment, but they weren’t enough to defeat
substantial similarity for the purposes of standing. She also had standing to
seek injunctive relief. As with prior cases, desire to buy the properly labeled
product plus inability to rely on the truth of the packaging constituted a
cognizable risk of future harm. Moore alleged that as “an average consumer who
is not sophisticated in the chemistry, manufacturing, and formulation of
cosmetic products,” she would not be able to differentiate between cosmetic
ingredients that are natural and those that are synthetic. Thus, she alleged
that she was at risk of reasonably, but incorrectly, assuming that GSK fixed
the formulation. “[E]ven if Plaintiff is now aware of some synthetic
ingredients, it is plausible that she would still be unable to rely on the
Products’ labeling in the future given her allegations that she cannot
differentiate between synthetic and natural ingredients.” In any event, the
court didn’t think that she should be required to bear the burden of
scrutinizing the ingredient list to figure out if the products were really
natural.

Moore also adequately stated a claim under Rule 9(b). As to
misleadingness, she alleged a definition of natural and alleged that she
interpreted the natural representations as claims that the products contained
no non-natural, artificial, and/or synthetic ingredients. She also provided a
definition of “synthetic” and alleges how each challenged ingredient is
non-natural, synthetic, or artificial. Moore further plausibly pled deception
by reasonable consumers. Numerous courts in the Ninth Circuit have found it
plausible that a reasonable consumer could understand similar ‘natural’
statements, including ‘100% natural,’ ‘natural,’ and ‘naturally-sourced,’ to
mean that a product does not contain any non-natural ingredients.” Contrary
cases involved limited natural representations, such as “Made with 100% Natural
Moisturizers.”

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IPSC: Remedies and Creativity

Posted on August 12, 2021 by rtushnet

Panel 24 – Remedies:

Thomas F. Cotter, Nominal Damages—and Nominal Damages
Workarounds—in Intellectual Property Law

TransUnion v. Ramirez—FCRA case where D allegedly failed to
use reasonable care and people were falsely identified as potential terrorists;
sought statutory damages, but most Ps were unable to show that the info had
been distributed to third parties. These Ps didn’t suffer concrete harm and
lacked standing to sue. Congress can’t enact an injury into existence and can
provide a remedy only for concrete harms, which can include intangibles like
emotional distress if they’re recognized by the relevant body of law and
proven.

Several modern-day remedies were enacted to reduce the risk
that IP owners would otherwise be able to recover only nominal damages—reasonable
royalties for patents; statutory damages for © infringement; disgorgement of
total profits for infringement of design patents. These nominal damages workarounds
are available without proof of lost profits or quantifiable harm to the D. Reasonable
royalties are based on a legal fiction of a hypothetical bargain; can a
hypothetical injury be concrete? He thinks the answer is mostly yes—history and
tradition offer a meaningful guide to what counts as an Article III injury.

IP derives much of its value from opportunity to license, so
it often makes sense to think of reasonable royalty as a cognizable harm. By
contrast, elsewhere it might not make as much sense to think of the problem as
a lost opportunity to license, e.g., the listing of someone as a terrorist.

Are these workarounds an appropriate response to the domain-specific
problems or would reasonable royalties be appropriate across the board?

Basically, reasonable royalties are superior to statutory
damages and disgorgement for public policy reasons. Inconsistency/predictability
critiques could be applied to reasonable royalties too, especially in patent,
but there are some ways to deal with that, and it might be easier in © and
design patent where the damage awards are lower.

Are nominal damages appropriate where the conditions for the
use of the workaround aren’t present? E.g., owner failed to register in a
timely fashion and she doesn’t prove actual damages or entitlement ot
injunction b/c infringement has ceased—is court obligated to dismiss the case
for lack of subject matter jurisdiction? Patry says Copyright Act doesn’t
permit nominal damages, but he’s not sure that’s right. Predecessor Act and
Lanham Act both said/say nothing about nominal damages but courts sometimes
award them. They aren’t a consolation prize for a plaintiff who fails to
plead/prove actual damages; they’re damages by default. Suppose a patent owner
fails to substantiate its damages theory with admissible evidence—the statute
says “in no event less than a reasonable royalty.” Nominal damages are often a species
of general damages. If there’s no proof, there should be nominal damages.

Are there any circumstances in which the award should be
nominal or zero damages as a matter of law? Yes, e.g. where D would have been
no worse off had it used a noninfringing alternative, at least where it’s
possible to quanitfy the value of the difference b/t infringement and next best
noninfringing alternative, though that might be harder in ©. What if D offers
to manufacture/sell an invention but doesn’t follow up with sales? Some cases
allow big damages for a hypothetical bargain. Without use, maybe there’s no
reasonable royalty under the statute, which does speak of a reasonable royalty for
the “use.” NPEs should be able to get reasonable royalties—no reason that a
practicing entity’s lost licensing royalty is a cognizable harm while an NPE’s
isn’t.

Are there any implications for injunctive relief? Before
courts awarded reasonable royalties, in the 19th century they
sometimes awarded established remedies for the entire patent term, and there
was no injunction because that was an adequate remedy at law. Courts usually
awarded injunctions b/c that was hard to prove; but now it’s not a stretch to
say they should just award reasonable royalties prospectively as an adequate
remedy.

RT: Why is the paper about “IP” and not patent & © with
a trade secret chaser? The analysis doesn’t seem as successful for TM, ROP. Related:
if damage is an element of every claim under Article III then why are nominal
damages ok? Aren’t they just the invention of an element of the claim?

A: Not sure there’s a principled basis for the distinction
made for nominal damages—the majority in one recent case approving it was
written by Thomas who of course dissented in the TransUnion case. History and
tradition is an important consideration in determining when courts may award
nominal damages.

RT: Which is particularly weird for patent because that
seems to be saying that the common law [not legislatures] get to decide what is
a harm, but there is no common law patent (and common law © is a very different
thing than statutory ©).

Matthew Sag and Pamela Samuelson, Hysteresis: An Empirical
Study of Copyright Injunctions After eBay v. MercExchange

In 2012, study found eBay ignored/ineffective in © cases;
cited in only 11% of cases; applied in a cursory way; continued to grant
injunctions at high rates. Maybe it took some years to take effect. Reviewed
about 70 cases in which injunctions were denied; there are patterns.
Hysteresis: it takes time for changes to propagate through a system.

Collected 330 cases 2000-2019. There are a lot of easy
piracy cases where it just wouldn’t matter what the standard was, you’re going
to get an injunction. Overview: eBay was never as poorly cited in cases where
it would be likely to have an effect as the early literature would suggest; it’s
now better cited (around 50% in nondefault cases; citations to eBay or its
progeny start out at 40% and jump to mid-60s). One category: in nondefault
permanent injunction cases, the citation level hasn’t increased, but that’s
because it was always strongly cited in that subset. There are fewer successful
injunction Ps, and that category has increased, showing evidence of delayed
effect, except for where preliminary injunctions were concerned where the drop
was substantial and immediate. Grants bounce around from year to year; weirdly,
the permanent injunction grant rate goes up immediately after eBay, then goes
down and down. In preliminary injunctions, the grant rate goes down immediately,
even before Winter. At the same time, number of injunction cases are going
down, while damages claims aren’t going down at the same rate. There is an
apparent selection effect where Ps aren’t pressing injunction claims as
aggressively.

Why such different results from Liu’s 2012 study? Did a full
replication study b/c didn’t have access to Liu’s data on reported cases (506);
we found 86 using that methodology, 29% of which cited eBay. It wasn’t really
based on reported cases, but unreported cases that were available on WL and
Lexis. This really matters because those cases were chock full of easy cases
padding out the decisions, particularly unreported default judgments.

Takeaways: if you had the view that eBay didn’t affect ©
cases, you can’t hold that view any more. Or empirical studies, you really have
to think about the difference between easy cases and hard cases, label cases
carefully, and think about mechanics of legal change. Don’t believe everything
you read! Don’t extrapolate from everything you read. If our study had included
unreported cases, we would likely report much higher rates of injunction.

My reaction: hysteresis is very plausible in general—after the
TMA and its explicit statutory command, we’re still getting cases citing eBay
in TM/advertising cases and that’s just a matter of diffusion of knowledge.

Jorge Contreras: Other people did say that there were big
changes in ©; that was always his understanding. Reported/unreported cases are
complicated—there can be value to unreported cases, as in the patent world. And
they matter to practice. Maybe benefit in reporting both sets of results and
explaining why you think they differ.

Panel 23 – Creativity and Culture:

Amy Adler and Jeanne Fromer, Memes on Memes

[Came in midstream b/c of other panel attendance] Memes further
blur the commercial/noncommercial distinction, as well as the idea/expression distinction
[snowclones!]. With a meme, the expression becomes the idea. [I think this
might be a characteristic of images that memes bring to the forefront]. Memes
move faster than life +70—they become stale in months. Selective enforcement is
also huge—everyone can use the meme except a few targets. Decentralizes
authorship: the work becomes what’s important b/c it spreads, decontextualized.

How could © respond?

One possibility is do nothing, but leaving it alone is a bit
dangerous. Could shift norms, and that could be bad. Another possibility: go
down the attribution route. But it’s very impractical in this context. How do
you attribute things that keep changing and shifting? Another option: tailor ©
to new realities of meme culture. Selective enforcement feels much more
troublesome from a free speech perspective when you’re disallowing only a few
people from use.

Jennifer Rothman: the disallowed use is most likely to be
fair use. Reducing term would also be much harder than making other changes
like attribution. [I think those are different and both significant kinds of “hard”—the
former is political, the latter is in enforcement/implementation]

Madhavi Sunder: Is this new or part of the broader critiques
we’ve had for a long time?

Fromer: the paper goes into this; there are strands of this throughout
© but tech makes copying that much easier and the rise of the visual also has
had a real impact.

Adler: also, looking for the author of a meme is, in a way,
folly.

Madhavi Sunder, Intellectual Property Is Theft!

Began career celebrating appropriation—e.g., appropriation
of Indian stories to tell new lesbian narratives. Still thinking about it, but
in different ways now. Cultural appropriation and racial justice: as a place of
redress and potential remedies, as with the Washington Football team. Social
movements brought down brands that TM law couldn’t. George Floyd’s death had
implications beyond criminal law [RT: perhaps only beyond criminal law
and not within it, unless something changes about qualified immunity].
Dispossession of Black intellectual and physical labor—history and continued
source of our nation’s wealth as founded on expropriation of racial minorities.
Racial capitalism: defining resources from Black communities as nonproperty and
free for the taking. Reparations claims have moved from property to IP.

Of course, “art is theft,” as Picasso says, and there are
arguments that culture can’t be owned. Has agreed with those values and
impulses, but trying to hone in on when cultural exchange crosses into
misappropriation or theft. Trying to create a definition that does more than
focus on taking of resources from one culture to another, but starts with
Ijeamo Oluo’s focus on exploitation by a more dominant culture. W/o that,
cultural appropriation becomes much less harmful. And there’s distributional
harm—redistributing benefits of innovation away from subordinated group.

3 kinds: cultural degradation; misappropriation; racial
capitalism.

Cultural degradation: understanding relationship b/t
representation and structural racism. Jim Crow, before it came to be the
moniker of structural racism, was a brand. A created minstrel character in 1830:
the performer happened on a disabled older Black man; was taken by the man’s
movements and created a character mimicking/mocking him. Racist brands have
continued despite the Lanham Act’s bar on disparaging marks (until invalidated
in 2017). People feared that would usher in racist marks, but huge culture
shift occurred instead. Navajo Nation’s litigation to control designs as marks—offers
possibility of better control (in litigation against Urban Outfitters).

Misappropriation: Traditional knowledge/global fashion
brands taking designs from indigenous communities: a lot of pushback from
culture ministers around the world. Asking not just for credit but for
partnership. And the old idea that artists can just take what they want is
under attack. Such borrowing often happens with “blithe thoughtlessness,
creative entitlement”—that’s what’s being called out now. Cases brought by
collectives against Neiman Marcus, other fashion proprietors: what’s being
taken is the work of individual artists. Using © and “cultural appropriation”
as a legal claim; case was settled.

Racial capitalism: how to contend w/appropriation that
occurs when culture only becomes valuable when mediated through white
performers. Copyright in dance—claim for © in the Carleton dance was rejected,
but Beyonce’s choreographer received a copyright in popular dance choreography
and has started a firm to help young choreographers get power over their art,
has talked about “authentically Black” dance and art and wants to protect that
against Fortnite and other exploitation. Controlling dance might be an important
place to start affirming Black voice and body, taking back what minstrelsy appropriated.

RT: intersectionality: guessing you don’t now object to the Indian
lesbian stories; does race have indexical priority here? [Also, I’m again going
to recommend Ashley Mears’ Very Important People, which is about how women’s
beauty capital is valuable only in the hands of men.] Concerns about whether
move from tangible to intellectual is just another way to keep resources out of
the hands of the poor—who gets hired to create is still largely determined by
who got into a well-known college, and so middle and upper class Blacks are the
face of continued appropriation from poor Black communities.

A: yes, focusing on power, both within and among communities.

Trevor Reed, Restorative Licensing

Tribes/mascots are examples of wins against cultural appropriations.
Trying to identify IP rights and ways to remedy violations. Judicial colonialism
makes it difficult for tribes to enforce their own rights structures. We don’t
have good numbers on quantity of Native American creations being used by other
institutions w/o their permission. What we do know: a significant number of settler
institution holdings likely are within the subject matter of tribes’ IP laws.
Bootlegged recordings, looting, graverobbing, acquired from someone not
authorized to transfer IP. While most institutions don’t adhere to tribal IP
laws, there’s nothing inherently inferior about them; tribes are separate
sovereigns and Copyright Act is silent about preemption of tribal laws.

Johnson v. M’Intosh—indigenous sovereignty is held inferior
to colonizers’ sovereignty, based on outdated assumptions about race and
culture. Have to use federal IP or other law to make claims. NAGPRA is the
prime example recognizing right to demand return of patrimony taken in
violation of tribal law. Can also enforce law when there’s entry onto tribal
lands, but most appropriation is off the land. Institutions have also started
to take private action to recognize tribal IP. Different standards, some of
which recognize tribal interests overriding IP defaults, some of which balance,
some of which don’t recognize tribal interests. Some acknowledge harm; others appear
motivated by efforts to increase inclusivity or limit liability. Some require
consultation w/tribes before making indigenous IP available; some require
repatriation where gathered illegally or w/o consent; others only allow input
on whether materials are culturally sensitive, which reflects institution’s
view of what tribes should be concerned about.

Violation of tribal IP laws is not just an ethical matter.
It is experienced by indigenous individuals and their communities as a
violation of the law. Judicial colonialism makes it difficult to enforce those
rights in settler courts; restorative justice may provide a framework for
resolving claims.

Columbia U decided to take responsibility for
misappropriating tribal music. Many of their collectors had violated tribal laws.
Went to communities to understand what the harms were and what expectations the
tribes had for Columbia to make them whole. Shame, embarrassment, psychological
issues that result from disclosure of private material to public: Boy Scouts
performed material outside tribal control; record labels made ceremonial sounds
available to the public. Bad public policy resulted from having lives depicted
w/o authorization. Community closed more now b/c of fears of unauthorized rampant
appropriation. Children being confused about right source of knowledge in the
community. Community wanted enforcement of their own IP rights and structures.

How do we repair the harms of the past and meet the
expectations of communities going forward? Extend tribal jurisdiction over
specific cultural materials just as state and federal IP law governs.
Institutions must learn tribal IP laws; provide restitution to the community
for violations of such laws; police themselves going forward; maintain contacts
w/tribe to ensure correct administration. Many institutions are willing to
interact though not clear they’re willing to subject selves to liability.

What about patrons/general public? Restorative justice doesn’t
talk much about the community surrounding the offender. The real concern is not
the institution, but the entities using the institution’s resources.
Restorative licensing framework: bring the institution, patrons, users under
the tribe’s jurisdiction. Exercising jurisdiction under nonmembers could be
tricky, but can be done with contractual provisions involving choice of law,
conditional licensing as with EULAs limiting uses to those allowed by tribal
law. Repatriation of any copies for violation.

Chris Buccafusco: Who is the tribe for these purposes with
older materials? Eastern Band of Cherokee may have different approaches than
two tribes in Oklahoma. Possibility of race to the bottom about who has the
right to license things.

A: could recognize tribes as constituted now, or religious
authorities w/in tribe as subgroup having sovereignty. Could be that Eastern Band
has separate jurisdiction. Timing and way tribe settles that could be helpful.

Betsy Rosenblatt: Restorative justice framework seems useful
and valuable for beyond tribal sovereignty and to other conceptions of
differing norms bases. So thinking about negative spaces: if/how this is
different from other norms-based subcultures. Calls for legally enforceable
licensing attached to these processes seem to require more tangible/concrete
links.

A: key question: what’s the justification for treating these
materials differently? There are groups trying to create their own sovereignty,
like Creative Commons [I thought he was going to say the “sovereign citizens”
movement] [BR says that CC requires contractual privity]. We’re talking about
dispossession. Were it not for judicial colonialism, you would have to obey
tribal rights. [In the US, you don’t have to obey British IP rights to the
extent they conflict with US © law and/or the First Amendment. But I take the
argument to be more that, if there weren’t a US, we’d be living under different
tribal legal systems entirely. But would those systems really look like current
tribal law? That seems like a big reach, since other nations have also settled
on various consensus ideas about IP—even to the extent of a couple of mandatory
exceptions and limitations. There is not international consensus about most
issues relating to traditional knowledge. In the hypothetical, have the nations
joined Berne? Lack of full sovereignty has insulated tribes from many of the political
pressures that would otherwise be brought to bear by IP industries—the RIAA/MPA
don’t lobby them because they don’t have to. (Compare what happened when pharmacos
tried to use the tribes for patent laundering.) I think using the sovereignty
argument as a way to distinguish the tribes from other groups is in some
tension with the argument for using restorative justice because of the violations
to which the tribes have been subjected.]

JohnJohn Uket, Transforming Policymakers into Innovators in
the Civil Service of Developing Countries

Nigeria as example: head of civil service/bureaucracy adopted
mission statement to provide professional and efficient services that are
responsive to citizens and other stakeholders. But this isn’t possible w/o
innovation in civil service structure.  About 90,000 civil servants in Nigeria. Many
struggles, including low overall trust in government. Innovation struggles in
government which has a more rigid operating system which emphasizes stability,
certainty, and predictability. Requires leadership: openness to incremental and
transformational ideas from inside and outside the structure. Openness to risk
as well as feedback—fear of risk means nothing happens. Human factors are key
to dissemination of innovation and that has to be understood before success.

Q: Consider path dependence literature too.

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Lexmark applies to false endorsement, defeats noncelebrity claim (for now)

Posted on August 12, 2021 by rtushnet

Abrahams v. Simplify Compliance, LLC, 2021 WL 1197732, No.
19-3009 (RDM) (D.D.C. Mar. 30, 2021)

From 1985 to 2003, Plaintiff Daniel
Abrahams contracted with the Thompson Publishing Group (“TPG”) to author a
series of publications related to the Fair Labor Standards Act. TPG eventually
sold the publication rights to Abrahams’s works to Columbia Books in 2013,
which, in turn, sold the rights to Defendant Simplify Compliance (“Simplify”)
in 2016. Simplify then purportedly terminated Abrahams’s publication agreement,
refused to pay him any fees or royalties, and continued to market, sell, and
distribute his publications.

He sued for D.C.-law tort and contract claims and one
federal claim under the Lanham Act. The Lanham Act claim was based on the
continued publication of updates and newsletters “hold[ing] [Abrahams] out to
the public as editor of the publications via its website, among other media, on
a global basis.” Simplify allegedly “lists [Abrahams] as the premier editor of
the [ ] publications … [and] claims [that Abrahams] serves on the [e]ditorial
[a]dvisory [b]oard for these products.”

Do Lexmark’s zone of interests and proximate cause
requirement apply to false endorsement? Yes, they do. Thus, “a plaintiff may
not prevail on a false association claim without alleging a commercial injury.”
But Abrahams failed to do so. He didn’t allege “the type of commercial harm
that the Lanham Act seeks to prevent,” but relied on “mere conclusory
statements,” or “[t]hreadbare recitals of the elements” of injury, which are categorically
insufficient “to ‘state a claim to relief that is plausible on its face.’ ” It
was therefore insufficient to allege that Simplify “has deprived [him] of the
fundamental value of his name and abilities with regard to editing the
publication,” and claims that because Simplify “holds [him] out [ ] as an
editor without permitting him to control the quality of the work,” it has
“depriv[ed] him of the ability to maintain his reputation and standing in the
marketplace.”

Compare the following analysis to the treatment of a
standard trademark claim:

Missing from these allegations,
however, is any explanation of how Simplify’s conduct harms Abrahams’s
cognizable commercial interests. Abrahams does not claim that the publications
are of substandard quality or that he disagrees with or disapproves of their
contents, such that his association with the publications risks his reputation
(indeed, Abrahams authored or edited the publications himself). Nor does
Abrahams allege that he has found it more difficult to market his own products,
labor, or identity as a result of Simplify’s purportedly false association, or
that any individual has declined, or is likely to decline, to do business with
him as a result of Simplify’s actions. A similar flaw attends Abrahams’s claim
that Simplify “is likely to confuse purchasers to believe, contrary to fact,
that the publications are authorized, endorsed, or sponsored by [Abrahams].”
What commercial injury does this alleged confusion produce? Abrahams’s
complaint does not say.

Loss of compensation was definitely a cognizable injury
under Article III, but it wasn’t Lanham Act commercial injury. Even if alleging
merely an existing intent to commercialize an interest in identity was
sufficient under the Lanham Act, “Abrahams’s complaint would still fail because
it contains no allegation that Abrahams intends to commercialize his identity
in any way.” He argued in his motion papers that he was doing so because “his
law firm bears his name, and his website too,” but that wasn’t in the complaint
and the court wasn’t going to speculate about whether that would be enough.

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