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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Cracks in the foundation: Laches and proximate cause defeat auto glass false advertising claim

Posted on August 12, 2021 by rtushnet

Campfield v. Safelite Gp., Inc., 2021 WL 1215869, No.
2:15-cv-2733 (S.D. Oh. Mar. 31, 2021)

Plaintiffs alleged that Safelite misrepresented the nature
and characteristics of plaintiffs’ products to consumers in violation of the
Lanham Act. Safelite counterclaimed for various business torts/CFAA violations.
Safelite managed to kick out the Lanham Act claim for want of proximate cause.

The parties compete in vehicle glass repair and replacement
(VGRR) services. Safelite’s business focuses on “sale and installation of
replacement windshields.” It primarily serves insurance companies,
administering their glass breakage coverage; commercial customers who have
vehicle fleets; and indivudal consumers who may or may not have windshield
damage insurance. Plaintiffs focus on the sale of products used to repair
cracks longer than six inches (called “long cracks”), as well as the service of
performing such repairs.

Safelite follows the “dollar bill” rule and neither
recommends nor performs long-crack repairs. In 2007, ANSI approved windshield
industry repair standards, the Repair of Laminated Automotive Glass Standards
(ROLAGS), that stated windshield cracks up to fourteen inches are repairable. Plaintiffs
alleged that the dollar bill rule is no longer the prevailing view in the
industry, and that Safelite’s internal documents show that it knew that the
repair of windshield cracks “up to 24 [inches] … can be safe and is viable.” Safelite
allegedly falsely advertised that (1) “if damage spreads beyond the size of a
dollar bill, a replacement will be necessary”; (2) “when a chip is smaller than
a dollar bill, it can usually be repaired without replacing the windshield.”

Safelite counterclaimed for trade secret theft not related
to advertising.

Prior opinions narrowed the case in Lanham Act relevant
ways. As to basic Lanham Act coverage: (1) Safelite’s statements to
policyholders in its role as a claims administrator are not commercial
advertising or promotion under the Lanham Act [hmmm]; (2) Safelite is not
liable for any statements made by insurance companies regarding the dollar-bill
rule, even if drafted by Safelite [double hmm; seems at least secondary
liability would be appropriate]; (3) Safelite may be liable for statements it
made directly to insurers, including in brochures and educational materials, if
these statements were made for the purpose of ultimately influencing customers
or even insurance companies to buy (or contract for the provision of)
Safelite’s goods and service, as opposed to for the purpose of explaining an
insurance company’s existing policies; and (4) unsurprisingly, statements made
by “Safelite’s front-line sales force” directly to consumers may be “commercial
advertising or promotion.”

As to substance, the first category of challenged statements
(“if damage spreads beyond the size of a dollar bill, a replacement will be
necessary”) could be literally false, while the second category needed to be
proven misleading.

Laches: The parties agreed that Ohio’s two year statute of
limitations was analogous, so if they actually or constructively knew of the
alleged violative activity more than two years before the August 2015 filing,
there’d be a presumption of laches. Safelite argues that “Plaintiffs knew of
Safelite’s dollar bill policy and thought it was false and misleading decades
before they filed suit.” By 1998, Campfield (a relevant person and
counterdefendant) was telling insurance companies that Safelite was lying to
consumers by using the dollar bill rule. He also unsuccessfully sued insurance
companies and Safelite based on similar claims in the past, including in 2003
and 2004.

Plaintiffs argued that they rebutted a presumption of
prejudice, that there was good cause for their delay, and that Safelite’s
“egregious” conduct excused the delay.

As to prejudice, they argued that Safelite wasn’t going to
stop no matter what, with a relevant person saying, in response to the new
ROLAGS standards, that “[a relevant entity] has made it clear to insurance
companies that it is not going to change its repairable dimensions to include
crack repair until we research the safety implications.” That wasn’t enough to
show that Safelite would have ceased its conduct if ordered to do so by a
court, which was the relevant question. [Is “ordered by the court” really the
relevant question for assessing prejudice? I thought it was whether Safelite
would have had, and possibly taken, an opportunity to minimize the damage it
was causing by changing its conduct/building goodwill some other way.] More
plausibly: “Every year that Plaintiffs delayed in bringing this lawsuit is
another year that Safelite continued its use of the dollar bill rule,
prejudicing Safelite by increasing potential damages that Plaintiffs could
claim as well as increasing money Safelite invested in promoting the dollar bill
rule.” So the presumption of prejudice applied.

Did they have good cause for delay? Plaintiffs argued that
their previous losses meant that they couldn’t sue until there was a real
industry standard. But elsewhere plaintiffs expressly denied that their claims
depend on the ROLAGS industry standard. There was also no evidence that the
nature of Safelite’s statements to insurers or consumers materially changed
after the earlier litigation, meaning that there was no analogue to progressive
encroachment. Anyway, the industry standard came to be in 2007, eight years
before filing.

Was Safelite’s alleged conduct egregious enough to avoid
laches because it involved safety? In a footnote, the court said that economic
harm to consumers wasn’t enough to be egregious conduct. Plaintiffs failed to
create a genuine issue of material fact as to whether the statements put
consumers at risk. Although an expert stated that “in [his] professional
opinion the risk of personal injury or death to a driver or passenger in a vehicle
accident can result more from improper windshield replacement than an improper
windshield repair,” he didn’t specifically testify that Safelite windshield
replacements “put consumers’ safety at risk.” Rather, he testified that
Safelite’s windshield replacement process complies with the Auto Glass
Replacement Safety Standard (AGRSS), which in his view means that it is safe
for “everyone who rides in that car.” He was not aware of a single instance in
which a Safelite windshield replacement failed and caused injury or death to a
consumer.

Thus, laches barred plaintiffs from obtaining some of their
requested damages, but not injunctive relief or post-filing damages because
there was no estoppel. Safelite argued that egregious delay could bar
injunctive relief in false advertising cases, but the court saw no reason to
distinguish them from trademark cases, which do allow injunctive relief even
when damages are lached.

Were plaintiffs’ injuries proximately caused by Safelite?
Plaintiffs provided testimony from nine customers (individuals who perform
long-crack repair) that Safelite’s use of the dollar-bill rule makes it more
difficult for them to sell long-crack repair to their own customers, and that
if underlying demand for repair increased they’d definitely buy more of
plaintiffs’ products. They also argued that Safelite’s ads denigrated their
products/services, given that “Plaintiffs’ business is premised on long-crack
repair … Safelite advertises, markets, and promotes just the opposite,” and
that Plaintiffs are the “face of long-crack repair” whose success depends “on
the industry’s acceptance of that practice.” One expert’s surveys found that
individuals who did not see statements advertising the dollar bill rule were
more likely to repair instead of replace a windshield with a long crack.

Under Lexmark, economic or reputational injury
flowing directly from deception “occurs when deception of consumers causes them
to withhold trade from the plaintiff. That showing is generally not made when
the deception produces injuries to a fellow commercial actor that in turn
affect the plaintiff.” That was the case with respect to the first harm
argument; it was too indirect. (Since plaintiffs’ customers are apparently
unconcentrated, that means that they could never recover unless a court allowed
a plaintiff class.) Absent the allegedly false advertising, car owners would
need to choose one of plaintiffs’ customers to perform the repair, making
demand increase enough for those customers to order more of the products. This
was too speculative. True, the plaintiff in Lexmark sold to customers
too, but it was allegedly 100% or nearly of the market, which doesn’t seem to
be the case here.

Plaintiffs’ own expert said:

The fact that, Safelite
notwithstanding, the crack repair industry is “highly fragmented” and that the
competition between Safelite and Ultra Bond is multi-faceted makes assessing
the particular impact of Safelite’s actions to Ultra Bond difficult. …While Ultra
Bond’s position as a leading seller of Long Crack repair supplies suggests that
Safelite’s gains result in lost market opportunities for Ultra Bond, estimating
Ultra Bond’s losses is difficult because not every lost repair would have been
from Ultra Bond.

The disparagement argument was more legally sound, but still
unavailing. Plaintiffs didn’t show that Safelite denigrated their product by
name or singled out their products, as opposed to a concept of long-crack
repair.

Because proximate cause is an element of the cause of
action, the claim failed even as to injunctive relief, not just monetary
damages.  “In the absence of proximate
causation, no Lanham Act claim—whether for monetary damages or injunctive
relief—can proceed.” Comment: Super important statement after the TMA. If this
applies to trademark claims as well, then harm is still a requirement of some
sort even with a presumption of irreparable harm after the cause of action has
been adequately made out.

Summary judgment for Safelite.

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IPSC Panel 20 – Copyright Theory

Posted on August 12, 2021 by rtushnet

Shyamkrishna Balganesh, The Institutionalist Turn in Supreme
Court Copyright Jurisprudence

[Mandatory laptop update delayed my entry; this is a
typically rich paper]

Institutionalism example: commitment to Congress to decide
in Eldred in Golan.

Substantive disagreement takes the language of interpretation
in Kirtsaeng.

Methodology comes to the center in Aereo.

Textualism becomes an acceptable method in Star Athletica:
there’s a plain meaning (despite an 8-way circuit split). Continuity with other
areas of law; greater unanimity; Breyer-Ginsburg split becomes less important.

GvO is a win for fair use (good) but also a bad application
of textualism to copyrightability. Court has no role in linedrawing
copyrightability under 102(b), even though the legislative history is clear
that courts were supposed to do that. [To me this is why textualism is often
quite empty; 102(b) itself is quite clear about not protecting things that are
part of protectable works.] Then the dissent says you’re overriding
congressional policy by applying fair use. Breyer is sort of genius in using
fair use—where textualism really cannot make any inroads.

Glynn Lunney: Cautious about stories that rely on a plan
since it’s 9 Justices with different motives. Breyer’s treatment of factor four
in GvO doesn’t seem very textualist.  Are
we going to see an insistence that reproduction requires wholesale copying,
instead of allowing copying of any significant part to be infringement?

A: Sure, not a concerted plan in the institutionalist turn.
But the language of institutionalism makes its way into the structure of the
cases and the outcomes reveal that. And he expects that the Court will stay
away from the reproduction right; that means it will stay in the lower courts
that aren’t particularly committed to institutionalism.

Matt Sag: Cert grants do show a pattern when it knew it was
going to be 8 members—remedial © cases make sense when they know they’ll be split
on hot-button ideological issues. But that wouldn’t be a © agenda, rather a
Court management agenda. They need to keep some of the cases uncontroversial. Also,
was Star Athletica textualist really? He just refuses to interpret it and insists
the language is clear! [Again, reinforces my opinion about what textualism is.]

A: focus on plain/clear meaning whenever possible and no
recourse to legislative history. Does influence how they write opinions—see also
Georgia v. PRO dissent where Thomas says the statute is completely clear. Definitely
the Court is caught up in other disputes about institutionalism and © proves to
be the perfect vehicle.

Stephen Yelderman, The Supreme Court’s Fragile Copyright Law

Sometimes the Court disrupts well settled caselaw, even when
the apparently settled law has been accepted by industry and engendered
significant reliance. This overt disruption is unpredictable. Most circuit law
doesn’t get overturned. Generates uncertainty even when the Court doesn’t act.

Examples of overt disruption: Stewart v. Abend. Rohauer had explicitly
teed up the issue for cert and the Court had denied; it was written by Judge Friendly;
it had a yes or no answer; and the Court let it sit for 12 years and industry
had relied on it, including making new movies based on books or promoting those
movies. Movie studios told the Court that in their arguments, saying 100s of
films were in jeopardy. SCt didn’t care, though it engaged w/Friendly’s
arguments as arguments, which he would have said was fine.

This happens repeatedly, including where the relevant
circuit law is more than 2 decades old and the reliance interests ran to $100s
of millions.

There are a number of vital provisions that have evaded SCt
review, like the DMCA [yikes], and that means that a new question lacks SCt guidance.
Without SCt cases nearby, it’s hard to argue for intervention in the absence of
a circuit split. Contrast with patent law, where Court is more active. Among
the results: reliance on 2d/9th Cirs. Other circuits often defer to
them. But the Court is happy to override them and doesn’t consider overriding
them as a stare decisis issue despite the reliance interests.

How many doctrines that are important pillars found only in
circuit law? A lot! Notice how many of the key cases we teach are circuit/district
cases. No choice, because they are not found in SCt law. De minimis exception;
right and ability to control; lots of DMCA issues; character copyright. What
protects that circuit law? They are open to different interpretation—regardless
of your method of statutory interpretation. Some are even the result of
judicial interpolation [the professor exception to works for hire!].

Court does take questions 20 years after they arise. And
after it’s denied cert before. And after reliance has developed. The best thing
that could possibly happen for industry/reliance interests is that the Court
stays out of it. The only constraint is that 4 Justices must take an interest
at the same time. Cert and merits process don’t talk to each other, especially
w/r/t reliance interests in old circuit law.

Does that mean that the Court should never overturn old
cases? Or always grant cert as soon as a split arises? No, sometimes the
precedent is wrong and should be reversed; sometimes questions do merit
percolation and the Court has limited resources [the declining number of cert
grants suggests that its resources are much greater than are being used now,
though]. But he does argue that these considerations should be taken into
account at some point in the process.

Jeanne Fromer: why is this about © as opposed to just
anything that the Court doesn’t hear regularly? Should this be a broader
project or what are the © specific issues? Does this say anything about how
well the SCt decides cases.

Xiyin Tang, Privatizing Copyright

Example: YT private deals with record labels, now model for Europe’s
mandatory licensing law. Antidemocratic effect of allowing large parties to
rewrite © rules with no public oversight. Music Modernization Act removed all
consideration of public policy in compulsory licensing of music, removing four
public-interest-oriented factors that required maximizing availability of
works. The new rates are unapologetically market-based and take privately negotiated
agreements as the lodestar. Follows the model of §1201, which allowed private
decisions. But those older changes were more democratic and transparent than
the new privatization. 1201 at least has rulemaking with public hearings and
published rules. Even software end-user agreements are at least accessible to
consumers who putatively agree to them. It’s no surprise that those essentially
backfired to the industry—1201 led to an entire countermovement of © users who
organized under broad umbrella of access to knowledge. By contrast, today’s users
are largely complacent—they don’t know what the deals actually say. One
possibility: revive © misuse. State consumer protection statutes? Could try to
represent a group of users whose videos were blocked, though there would be
commonality issues. The heart of the paper is not solutions, but about rethinking
the internet’s transformative potential because of lack of participation in
rulemaking can lead to lack of ability to participate in making new creative
works.

Lunney: why do platforms agree to these? Threat of ©
litigation? Threat of legislation? Helping create a barrier to entry? Second,
is there any feedback the other way? If © was narrowed, would that change the
contractual situation.

A: the paper says it’s a mix of motives. Avoid litigation;
more problematic explanation is certainly monetization—they could make more
money by tracking what users were watching and if you want to monetize the
content it’s harder to rely on the safe-harbor, so this was a win for YT and
for the content owners. Who it isn’t a win for is the creators/users being
tracked and monetized. FB has also been pressured to do this. [Though Lunney’s
point is perhaps that saying FB was pressured may mistake FB’s market power—who
has more market cap, FB or the labels?] Anticompetitive effects are also
significant.

Bruce Boyden: Is it private contracts driving the problem or
the non-© restrictions? What if YT on its own decided to pull videos it thought
were made with external content, regardless of fair use? Can they pull down
anti-vax videos without implicating the concerns you have? He thinks it has to be
the contracts. So why exactly forming a contract that goes beyond what © might
require is a problem. [I kind of think the whole paper is about that from a
democratic perspective.]

A: one section of the paper is dedicated to artists’
objections. A leaked agreement between FB and one content holder—artists can
object to the use of their music in connection with anything for any reasons;
the label gets a certain number of such objections per month. But that could be
critical/fair use.

Jake Linford: YT is providing the service to noncommercial
users for free, in exchange for data mining. That’s just part of the ecosystem.
It may not be unique: well heeled central players get better treatment in tax
law; CVS gets a better deal from TM owners because it is big enough to
negotiate. Maybe this is a window into a bigger world where you get whatever
you can negotiate. Maybe individual user or even a collection of users lack
leverage. Is the goal then to read contracts in light of hypermuscular fair
use, and how would you sell that to courts? [Or the goal could be to change the
law of contracts to disallow some provisions.]

A: there was a version of © misuse that would have
prohibited provisions that went beyond ©, like prohibiting reverse engineering;
those cases have been neutered. We could revitalize the doctrine—Omega v.
Costco concurrence. It’s also useful to bring light to what these clauses say.

Matt Sag: Is it the privatization or the lack of democratic
input or the lack of transparency that really is the core? How do we evaluate
the extent of that problem versus the efficiency of the scale of Content ID?

A: Lack of public insight into new rules. Ability to take
down things for any reason. If those provisions wouldn’t be upheld in court,
they might not exist.

Glynn S. Lunney, Jr., Transforming Fair Use

From his perspective, © (and patent) is in a better place
now than in decades—vast increase in number of people who can be published
authors; memes have become popular ways of distributing points of view; and
there are cat videos. Key differences: initial investments to create and
distribute are now often trivial. Before, only the privileged few could share
writings or music with the public at large. Often, the value of these works
comes from the fact that they are copied—not unique objects. In the past, a
book was often published once and then not reprinted; no matter the duration of
©, access deteriorated.

When everyone can hire a lawyer, standards are probably
better than rules. In the new digital world, © should be weak, narrow, and
short. In the digital environment, a book from 50 years ago can still be
available online. Rules are better—for drivers’ license, we say 16 or older—because
we want everyone to paritcipate. So too with rules when everyone is an author.
Not perfectly just but more sensible in aggregate. Compulsory licensing is one
option, but noninfringement is simpler: compulsory licensing with rate set to
zero.

What then? Congress is hopelessly captured, which leaves the
courts—and fair use is the main safety valve they can use, so that’s where they’ve
turned. The earlier claim that analysis must generalize the effect on the
market if the use were universally repeated (even in Folsom v. Marsh) is
empirically false; if it were true, libraries would destroy the book market,
which they don’t. GvO is more careful empirically—new market, ease of transition
for programmers, size of what was copied. For the first time in a SCt decision,
court says you have to take public benefits of copying into account in market
harm analysis. But it is hard to separate the value generated by programmers
from the value generated by fan fiction authors—it can’t really confine the
rule to software on a factual basis. And we don’t live in a world where we can
actually do the full utility analysis of whether Progress is better served by
voting for Google or for Oracle. Looking for natural experiments: current
results suggest that incentives don’t matter—more $ for Oracle wouldn’t lead to
more and better future versions of Java. Music shows that throwing $ at the
music industry doesn’t work—the highest revenue period for the industry, the
90s, is the least popular.

Given that we aren’t going to get reform from Congress, we
have to focus on courts—300 out of 120,000 words was unfair; right now any
copying needs justification. His proposal: for non-full copying, any penalty
needs justification.

Yelderman: You briefly alluded to natural monopolies being
easier in real world—strikes him as counterintuitive.

A: in the ideal world we wouldn’t need intermediaries at
all. Platforms have developed into monopolies, but 1000s of people set up webcasting
in their own homes. [That still required an intermediary, at least the wires] In
the analog era, you needed a bro

[Display right seems to be heading in the wrong direction; unexplored
ground in plain meaning of the distribution right which on its plain meaning terms
no digital delivery can implicate directly to correspond w/your suggestions
that the reproduction right should really mean reproduction, not copying of a
tiny chunk]

Lisa Macklem, A Tale of Two Cases: A Fairer Approach for
Creativity and Innovation

Oracle + Canadian case holding that Access Copyright tariff
isn’t mandatory. What the decision says about collecting societies doesn’t
apply to every situation. Both decisions affect ability to research/access
materials to learn a craft and innovate. Pursuant to NAFTA replacement, Canada
is about to increase term to life+70 and change the rules about intermediaries,
which currently assume innocence/place burden on accuser. Also looking into AI.
Struggling to keep up with tech. Seems obvious to make fair dealing exceptions
illustrative instead of closed.

Canadian court said in essence that the real parties in
interest weren’t present—© owners. Lower courts had misinterpreted some things
about access/fair dealing. Focused on context, like GvO—what are the facts in
the case? What is going on with users? Helps balance legislation.

If the result had been otherwise, one instance of
infringement could have made a university liable for the full tariff, millions
of dollars. They were getting licenses and finding other ways of getting access
to students, but they weren’t getting licenses from Access Copyright—and the
ruling was that they didn’t need to do so.

Looking at the institutional perspective and institutional
nature of copying was an error in the lower courts in Access Copyright—failed to
look at individual students. Funds saved by not subscribing went to legitimate
educational uses, not to profit. Access Copyright argued that in theory a whole
book could have been copied in chunks each distributed to a different student,
but that was the wrong approach; generalizing would penalize larger schools
over smaller ones.

Pam Samuelson: Acknowledgement that reuse can benefit
creativity is really significant in the cases.

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IPSC: Copyright and Trademark

Posted on August 12, 2021 by rtushnet

Panel 17 – Copyright Substantial Similarity

Crossprogrammed with my panel; I came here first because I
had more experience with the first paper in the other panel.

Clark D. Asay, An Empirical Study of Copyright Law’s
Substantial Similarity Test

1005 cases found. Significant rise in substantial similarity
litigation starting in 2006—tripled. Possibly related to internet adoption. Share
of 9th Circuit opinions also exploded in 2006. Courts don’t do
really prong one beyond assessing access (not independently assessing copying).
50% of opinions use access as the sole means to resolve prong one, 80% rely on
it alone or in combination with some other factor or subtest. Only about 25% of
cases assess similarity under prong one, whether striking, substantial,
probative, or otherwise. Experts only used under prong one in 3.8% of opinions.
Under prong two, that’s 11.5%. Direct evidence, which court says is quite rare,
is used in 17% of opinions. Rare, but not much rarer than assessing similarity
under prong one. Ps win prong one around 77% of the time.

Prong two is a mess. Ordinary observer is most popular, 28%
(47% in 2d Cir). Extrinsic/intrinsic in 24%, 64% w/in 9th.
Abstraction/filtration/comparison only 11%.  No test at all, nearly 24%; total concept and
feel 21%, striking similarity, 18.5%.

A little over 65% of opinions rely on multiple subtests. No
dominant subtest, even w/in circuits. Courts frequently rely on multiple conflicting
subtests in the same opinion. Ordinary observer and reasonable observer language
are used inconsistently.

Experts are used more frequently under prong two than under
prong one.

Defendants win substantial similarity decisions slightly
more than Ps.

Whether a court engages with copyright limitations in the
decision appears to make a big difference about who wins the case. 60% invoke
some limitation; P wins 2/3 of the time when court doesn’t mention limitations;
D wins 2/3 of the time when court does do so.

Annemarie Bridy: reproduction right? Derivative works?

A: we coded for which right; substantial similarity applies
to any right according to treatises.

Matt Sag: What looks like an increase over time may be an
artifact of the way cases became available on WL post-2002 or so. Break out
reported/unreported for all your analysis to deal w/that.

Bruce Boyden: 9th Circuit screws this up. Is
probative similarity prong one? Is it extrinsic similarity? Pre-Rentmeester,
all you did under prong one was examine access and then jump to extrinsic/intrinsic.

A: we saw that sometimes. We coded extrinsic analysis as prong
two when it focused on protectable expression. Earlier 9th Circuit
opinions did often use “extrinsic” as prong one; we tried to avoid
interpretation and rely on what it said it was using; did code some as unclear. 

Panel 18 – Trademark Liability:

Jake Linford, Justin Sevier, Allyson Willis, Sex, Drugs, and
Trademark Tarnishmyths

Sex/drugs inherently tarnishing? Courts take that as a
truism. Prior attempts to measure tarnishment: Buccafusco et al 2016 focused on
porn parodies, found burnishing except among very conservative consumers.

Bedi and Reibstein 2020 found marginal evidence of tarnishment
in a single-impression, centrally processed experience (they’re paying
attention); stronger tarnishment with multi impression, peripheral processing (they’re
not paying attention).

Their studies: we might see tarnishment in the brand
context, and stronger among conservatives.

Asked consumers to rate and pick among Reese’s and Snickers.
Test subjects saw sexy M&M and Reefer’s Cup. Other tests: McDonald’s
sexualization with M changed to woman’s spread legs; Titleist/Titties; Enjoy Cocaine;
Sour Patch/marijuana .

Control to tarnishment—They rated the brand as stronger if
they saw the tarnishing stimuli. Target choice—those who picked the tarnished
brand increased significantly over control. Change in brand strength mediates
purchase choice. Perception of brand strength leads to preference.

If you split conservatives and liberals, that’s marginally
or not significant for conservatives and significant for liberals. For Reese’s
and Titleist, burnishment for conservatives, for Coca-Cola and McDonald’s,
there’s tarnishment among conservatives; liberals show burnishment among all
but most for Titleist.

In the control group, men were more disposed to pick target
brand than women; in treatment, women shifted dramatically enough to make them
look like the source of statistical significance.

Second proposed experiment: Stoner Skittles and Satan Shoes.
There is some evidence on social media that people were blaming Nike (then
again, people on social media blame Biden for the Delta variant, so).

Previous experiment: exposed to 4 ads for CHICKS FILL A,
people saw a drop in rating for tastiness and wholesomeness of Chik-Fil-A,
though it recovered after 8 ads (if I am understanding the graph).

Tarnishment, they concluded, takes multiple impressions; and
reading a news story removes focus from tarnishing stiumuli; consumers better
control effect when their attention is drawn to it.

Do too many people already know the Satan Shoes were
unsponsored, and if so, does that make the instrument a bad one?

Nicholson Price: Is there a theory justifying the use of
multiple hypothesis testing?

Chris Sprigman: Did you cut by age, not just gender? With
57% women panel, it’s possible there’s an age skew in the panel in the way
people look at ads/internalize messages.

Felix Wu: If some people are confused, then you’re mixing up
people who are confused and people who experience what the law calls dilution.

Alexandra Roberts: Agreed, there are complicated first sale
issues with Satan Shoes given that they are Nike shoes, but customized.
So there are issues about what even constitutes confusion or dilution!

Luminita Olteanu, The
‘trade-mark-law-as-innovation-catalyst’ trap: why it would be wise to

conceptualise innovation outside the realms of branding and
dilution protection

Broader PhD project: reconceptualized dilution test for EU.
Current approach is unpredictable/not rigorous when there’s no evidence of
actual harm. Relaxation of proof requirement of harm or unfair advantage conceals
other normative goals. But, the other potential normative goals, including
innovation incentivization, are unconvincing/unsound. Marketing literature may
show appropriate methods to evaluate trademark reputation, or potential harms
or unfair advantages.

Dev Gangjee has written about how this new justification is
sneaking in—EC says “The mark works in this case as an engine of innovation:
the necessity to keep it relevant promotes investments in R&D”; WIPO says branding
helps firms recover investment in innovation, providing them a further
incentive to innovate; diluting may reduce economic rents. It’s creeping into
EU law, e.g., AG Opinion in Google France.

They’re using innovation in a very broad way. Not all
innovations are good or desirable: innovative advertising may target consumers
in vulnerable positions; innovative branding can be employed for discriminatory/racist
ad targeting. Also innovation is ill defined.

Literature claims: strong TM protection is likely to lead to
investment into strengthening the mark, not to innovation in product; and TMs
are more valuable for incremental innovation than basic, so that might induce
overinvestment in existing tech rather than new and untried tech. Empirical
research showed reduced R&D spending following the FTDA.

The indicators used by the claimants don’t measure
innovation; TM registration counts aren’t innovation. Since brands can be used
anticompetitively or to promote the wrong type of innovation, skepticism is
required in applying an innovation rationale.

Glynn Lunney: Many aspects that we now call dilution showed
up as expanded likely confusion issues. That literature may be of use. Arnold
Plant said the case for monopoly can’t be justified on the basis that the
profits of monopoly will go to desireable things.

Sprigman: never understood the economics of this [me neither].
If you raise expected returns to innovation for incumbents, it’s possible that
they will innovate more (and also that they won’t). But you’re also raising market
entry barriers, so new entrants will innovate less. So how would you know? It’s
related to the question of whether market power promotes innovation. That’s
quite a bet with a lot of downsides. Confused as to how we got where we are
[though the larger defense of monopolies from the Chicago School does provide
some clues, I think].

McKenna: European economists did try to demonstrate
empirically that TM registrations were associated with firms that they thought
were innovative; they made those claims in causal terms, though they were probably
showing that successful firms with new products often registered TMs. Did that
literature peter out and now we are getting a new wave of less empirical, more
theoretical literature, or is the current discussion derived from that?

Linford: do we think of certain types of marks as
innovative? Fanciful marks are a kind of innovation, though maybe not what you
mean by innovation. Exploring that could be fruitful.

A: one element of this is that patent is our IP system for
innovation; TM excludes functional features, so the claims about “innovation”
writ broad are untrue.

Wu: Good to make clear that descriptive claims are really
cover for normative claims about value of branding. Innovation is being defined
as including brand value, and once you define it that way then it looks like TM
protects innovation. No need for causal claims!

RT: maybe design rights are causing the crossover here
because they are also accustoming people to think both “everything is an
innovation” and “everything is protectable.”

Robert W. Woods and Derek E. Bambauer, Is the Bloom Off the
“Tea Rose”? Reevaluating the Tea Rose Doctrine for the 21st Century

Does the internet age change things by making it very easy
to spread your reputation and business around the world? There’s a circuit split
on whether good faith in a remote junior use means absence of knowledge or also
incorporates an intent to trade upon the senior user’s mark. In theory, there’s
no consumer confusion in a remote area, so why would that matter? [And why
would knowledge mean bad faith, if you also knew they were remote?] Natural
zone of expansion theory also is accepted in some courts and not in others.
Some courts follow the common law and some courts rely on the federal statute—so
there is a doctrinal soup, and also the world has changed around the doctrine,
which is having trouble adapting. Maybe there are two different subsystems, one
for registered and one for unregistered. Institutional competition among courts
and legislatures; also sometimes the Lanham Act controls state law and
sometimes it doesn’t. Theory and doctrine seem to fit least well together in
this doctrinal area.

Questions: how does this doctrine interact with concurrent
registrations? What are courts actually doing? Some troubling internet
exceptionalism here. Notice to competitors and consumer protection might both
indicate that Tea Rose is a bad idea. Registration providing nationwide rights
is a fiction, but one upon which the Lanham Act is founded.

Most controversial possibility: propose that Congress eliminate
unregistered marks at state/federal levels. State registration could allow
pockets, reducing burdens on small businesses/startups, but limit part of 43(a)
and state protections for unregistered marks. The thought is that there’s
really no remoteness left.

We could also allow the likely confusion analysis to do all
the work for us. We could just build in geographic considerations from Tea Rose
and Dawn Donut into the LOC test. We could expand on 33(b) and limit exceptions
to registered marks. But that might lead to some gaming of the system by
different states.

Lunney: this would be the last thing on his list to fix in
TM. The doctrine benefits small businesses, lots of which are purely local and
don’t want to expand. Requiring them to get a TM registration is unrealistic. And
consumers adjust.

A: Fair, and consumers do adjust, but that’s a burden that
we often want to take away from them.

Rosenblatt: Strength of the mark is tied into this. There
are hundreds of Broadway Pizzas—this is not an obsolete doctrine for many kinds
of marks.

Jennifer Rothman: are you suggesting eliminating all TM
protection for unregistered marks? That would be extreme and raise distributive
justice issues. Why disfavor limited area markholders? State registries are
also somewhat problematic given that they offer virtually no review—not clear
what we gain by sending people to them.

A: agrees that state registry quality is important; they’re
ministerial generally but can solve the notice problem. Recognize that it’s a
steep hill to climb.

McKenna: the original Lanham Act was not supposed to cover unregistered
marks; it was supposed to be common law protection, and courts just created
that. So it wouldn’t be radical [as long as state common law wasn’t preempted].

Linford: consider Lady Antebellum/Lady A case—the earlier
artist didn’t have a TM registration. If you do your system, that’s a shift
from first to use to first to file.

Would your proposal also have implications for famous
foreign marks?

A: yes.

Bita Amani: TMs in Transition, with Carys Craig—argues that
the shift to first to file was not good for Canada. Slippery slope for removing
the use criterion for purposes of protection in the registry. The US is the
last bastion of use as the basis for protection, and that should stand.

Wu: Question: are you proposing preemption or merely that
there’d be no federal protection? Tea Rose originally was not about federal law
at all. [Federal law has to have some preemptive effect, I would think.]

A: strong and weak version of proposal. Paper defends strong
version: unregistered marks cause problems. Lesser options may at least
ameliorate the problems. 

Rebecca Tushnet, House Brands: The History of an Idea

Interested in this area of the law since I was a baby law
professor getting followed in a Wal-Mart and kicked out of a Walgreens for
taking pictures.

Partially a descriptive project: the case law, as well as
the people producing empirical literature, aren’t as favorable to national
retail stores as a trip to the CVS would seem to suggest. Very common for
shampoo, tampons, cereal, soda—basically any core grocery/pharmacy product.

Empirical literature mixed/plaintiff favorable [my doubts
about its solidity since the confusion stuff often makes assumptions about
confusion or defines it in ways that many lawyers would not; interesting
antitrust-ish claims with some literature saying it’s anticompetitive free riding
on national brands by distributor chains which has resonance with current
arguments about Amazon.

Cases mixed at best [Splenda: court reached split results,
finding too-close similarity in some versions and enough difference in others.]

Practice nonetheless entrenched for major brands of household
basics (courts are more likely to find actionable with third-party copiers and perfume)
(contrast to the Amazon practice which applies to anything Amazon sees is
selling)

(1)  Why?
What combination of profit and incentive to litigate on both sides generates a
practice that is far more favorable to copiers than the blackletter law might
seem to indicate?

(2)  Is
this what unfair competition would look like as a general rule for trade dress?

Dennis Crouch: In many situations traditionally some
retailers communicate and push back against the mark holder: if you want shelf space,
you have to allow us to sell this. Amazon might disrupt this tradition and spur
more litigation.

Lunney: you’d like to have price or market share data as
generic comes closer or further apart. [But very hard to get; hard to think
that consumers make the distinctions about small variations in the packages the
way the Splenda court assumed. As I think about it, the fact that all the
different store brands—Giant and Food Lion &tc—lined up against each other
in that case may well have affected the court’s decision to split the baby,
even though consumers would never see them that way.]

Sprigman: those colors are quasi-functional—different sweeteners
branded very powerfully w/colors, and likewise soda flavors. Is any harm
transitory because consumers learn? What message do consumers learn? Is it that
supermarkets and CVS use this, but not bodegas? Shaping competition in a way
that favors major players. [Competition considerations go not only CVS v. bodega
but CVS v. J&J]

Laura Heymann: On the shelf versus there’s no referent—in a dollar
store, you’re likely not to see the major brand comparator on the shelf. Does
that affect the analysis? Also how does the confusion get operationalize:
physically grabbing the wrong product even though intellectually the consumer
knows that the store and national brand are distinct.  [those things cut against each other: if it’s
not paired on the shelf there’s no risk of pure accidental grabs; but maybe
being on the same shelf increases the likelihood of such accidents based on
peripheral cues]

Rothman: Intent also matters. House brand producers are
viewed as good actors providing consumers with a meaningful choice. Knockoffs
are seen as targeting a particular product and usurp its value. [here’s the
weird thing: the case law isn’t that favorable. Maybe the law doesn’t actually
shape perceptions. The Splenda case is an example: it’s a mixed result, though
the intent is the same throughout.]

Chris Buccafusco: The world we have seems like the perfect
response to fair v. unfair competition. There are two different sets of source
identifiers being used: the word mark, which mostly is doing a really good job
of minimizing confusion, and trade dress, which is doing a really good job of
signalling a genre of products to consumers. So isn’t that the best of both
worlds?

[But why only allow this for CVS and not for a third party
copier? And there probably is a tradeoff of increased accidents for the not
attentive shopper and increased benefits from the shopper who uses trade dress
to make a simple comparison]

McKenna: Power of the brand name as opposed to retailer—British
Brands Group is extremely upset about products in grocery store/pharmacy that
look similar to national brands. They were not allowed, as a matter of law, to negotiate
over retail placement or slotting fees, so the backstory is about retailers/competition
policy.

The good cases say you can’t get so close that the package
is confusing about identity, but we aren’t interested in sponsorship or affiliation
confusion. Consumers may know that brands sometimes produce house brands, so
what would sponsorship or affiliation confusion even look like?

RT: when the national brands do make house brands, the
packages tend to look completely different. But consumers may not know or care
about that, and this version of unfair competition may require a notional reasonable
consumer, not an empirical average consumer, to draw its lines.

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IPSC Panel 14 – Copyright Authorship & Ownership

Posted on August 11, 2021 by rtushnet

Timothy J. McFarlin, A Copyright Ignored? Mark Twain, Mary
Ann Cord, and the Meaning of Authorship

Twain used the story of formerly enslaved cook Mary Ann
Cord, changing her name to Aunt Rachel. Told story “repeated word for word as I
heard it.” Letter: “I have not the altered the old colored woman’s story except
to begin it at the beginning, instead of the middle, as she did—and traveled
both ways.” He said it had no humor in it (recounted her history, including
seven children who were separated from her by enslavers). He also sets the
scene, so 20% is that, but 80% is her words as he remembered them.

Taking him at his word: Did Twain infringe her common-law
copyright? Would that still exist today? [Federal preemption.] Atlantic Monthly
first published Twain’s work, credited to him alone, in 1874. Searching for any
surviving descendants.

Cord told Twain the story in NY, which is governed by
Hemingway’s Estate v. Random House (NY Ct App 1968). Twain thought he should
have ownership of his lectures—“my lecture was my property.”

No evidence of express consent; is telling it in front of
him implied consent for him to publish it in his name w/no payment? Seems
unlikely. Twain gave her a signed & inscribed copy after publication, which
descendants donated to UMd decades back. Inscription: “to Aunty Cord with his
kindest regards,” says it’s a “libelous portrait” but well meant; perhaps
referring to stereotypical illustration that accompanied publication.

If no consent, then arguably no fixation, then no federal
preemption under 301(b). Adverse possession doesn’t fit b/c of lack of
exclusivity. Statute of limitations/laches has been watered down federally by Petrella,
but perhaps NY state court would apply it more strictly—or could accept a claim
for equitable relief, like attribution, going forward. Unsettled; hard to say
Cord & family intentionally or even negligently sat on their rights. Did
Twain make fair use? There’s some transformation in organization; used entire
work/market substitute so Cord wouldn’t be able to sell her narrative a publisher.
If a household worker had listened to Twain tell a story and published it, would
we think it was fair use?

Crux: was Cord an author? Fits into “slave narrative” genre,
which influenced Twain. Twain called it “a curiously strong piece of literary
work to come unpremeditated from lips untrained in the literary art.”

Betsy Rosenblatt: 2 questions worth separating—is Cord an
author and is Twain an author are different important questions. They’re both
authors. What do we do with that? It’s not clear that giving Cord’s estate
ownership would be social justice, but that’s a question worth asking.

Shani Shisha, Copyright Pragmatism

Formalities provoked a strong pragmatic reaction from
courts. Prototypical 19th case: Publishing agreement is silent on
ownership; publisher complies w/formalities and author doesn’t. The choice is
invalidate the © for failure to comply with formalities, or hold that author
implicitly assigned the © to the publisher, saving the © in its hands. Problem:
statute appeared to require written assignments, recorded in clerk’s office.
Determined to prevent forfeiture, courts found—often on very thin evidence—that
authors implicitly transferred rights, defying statute. Pulte v. Derby: Author
didn’t want a 3d edition published; publisher said it was the owner, court
agreed because, though the agreement was silent, without publisher’s efforts to
comply, the © would have been abandoned to public. Publisher thus got the © and
the evidence of that was published “under the eye of the complainant. He,
therefore, sanctioned it.”

There’s a parallel line of cases reaching the opposite
conclusion when compliance w/formalities isn’t at issue. In some contexts
(e.g., paintings), courts effectively flip the default; there’s an assumption
of assignment unless the parties agreed otherwise. SCt provides an ex post
rationalization: before the author registers the rights, the author doesn’t
have a ©, so the statutory requirement of written assignment doesn’t apply
before registration.

To prevent forfeiture, some courts create equitable
co-ownership: Registrant is the formal proprietor, but author is equitable
co-owner and there’s a constructive trust w/registrant trustee on behalf of
author.

What should we make of this? First, tradition of aggressive
pragmatism turning almost entirely on forfeiture; courts laundered facts and
defied statutory directives. Also, issue of doctrinal drift—rules on implicit
transfer grew from this specific context. And we should be talking more about
implied permission, not © ownership per se. The court understood that what the author
meant to do was to give the publisher an implied license to use/distribute
work; given the risk of forfeiture, they had to frame these facts as an issue
of assignment.

Zvi Rosen: Wheaton v. Peters starts out very formalist—you didn’t
separately deliver the copies that you delivered to the gov’t, so no
protection. Signed letter from Librarian of Congress wasn’t enough: very
formalist. 1834 Act didn’t make written assignment mandatory, just rules for
bona fide purchases. These aren’t copyright cases, but common law copyright cases—courts
are using assignment rules b/c they think they aren’t statutory cases. So you
should go more into common law/statutory distinction. Copyright Office had a
report on contributions to periodicals in the 1960s—there was an old case
saying that there was no ©, which made everyone unhappy.

A: my point is exactly that: that these cases are about
contracts/implied consent. A lot of them involve courts thinking about
statutory copyrights. Courts look to the statute, understand the statute to be
controlling, but still do this. Definitely true that they weren’t entirely
pragmatic. Sometimes formalities compelled forfeiture. As for 1834 Act, it did
say an unrecorded assignment was fraudulent and void—and these were read into
the contracts by the courts ex post. [Rosen says: void against subsequent BFP,
not void in general]

Michal Shur-Ofry: do we see a larger trend of shift between
pragmatism and formalism in other areas of the common law?

Sarah Polcz, Coauthorship for Minor Contributors: Empirical
Evidence of Efficiency

Focusing on songs. Rules about what counts as coauthorship used
to be good for songs, bad for movies; now they’re good for movies, bad for
songs. Minor contributors to films would likely have qualified as coauthors
under existing law; courts thus changed the law. [Interesting characterization;
courts themselves wouldn’t have said they were changing anything, but that’s
certainly not dispositive!] New test: coauthor must have had control over the
whole work.

Some scholars say default ownership share should be
proportional to contribution. In songwriting, that’s not how people prefer
splits. Of 1.2 million cowritten songs, 63% of musical groups treat lesser
contributors equally. But maybe an inefficient norm has taken hold. No impact
on # of albums released. Equal credit=much more likely to be in top decile of
sales, highly significant even controlling for other factors. Coauthorship for
lesser contributors significantly predicted that a band that had one gold album
would go on to have other gold albums.

Providing evidence against courts’ key empirical assumption
that equal shares for lesser contributors will harm creative works via
demotivating majority contributors. Equal rewards for lesser contributors are
actually positive; creators’ preferences are driven by prior relationships.
These results can guide creators and attorneys even in the absence of congressional
or judicial action.

Equality and friendship are linked. Role labels help us
organize relationships. Balance in an equality relationship depends on equality
in allocation, but not on measuring contributions. People strongly desire
certain relationships to be equality-based. Market pricing model focuses on measuring
contributions and shapes other relationships. They’re incommensurable. Equality
is a specific moral demand, not about generosity/asymmetry.

Prior friendships impact whose contributions count and what
they’re worth. Prior friendship significantly influences split allocation where
the hypo is that subject writes a song and other person provides suggestions
and refinements. If they started a band with a friend, nearly 70% preferred
equal split, while under 50% picked an equal split when it was not with a
friend. Those who chose equality, whatever condition they were in, used
equality matching (which isn’t limited to friendship). They know they’re mostly
responsible for the song, but feel a moral relationship dominates.

In the gold record set, coded prior friendship or none. For
uneven songwriting contribution bands, most significant factor for equal shares
was prior relationship. Stable over time though magnitude of effect may change
over time.

Friendship can help us predict whether equal shares would be
preferred. Should replace control doctrine with industry-based rules that can
provide predictability.

Andrew Gilden: does friendship mean friendship or intimate
connection—dating, family

A: it’s a peer relationship. Used public data on whether
they said they were friends, neighbors, schoolmates, preexisting peer
relationship before the economic venture. Initially coded family members
differently but there was no difference—they were almost all siblings, and they
were peer relationships.

Rosenblatt: compare credit to avoid copyright disputes.
Credit might have a different relationship to quality and friendship. People
may be willing to share proceeds if they’re already pretty popular. Ed Sheeran
already has money from “Shape of You.” Maybe music is better and therefore more
popular if the people making it already know each other.

A: Interesting result: hard to renegotiate an initial split,
and people became friends when they spent all that time together, but didn’t
necessarily renegotiate.

Andres Sawicki: effects of nonmonetary compensation? Usually
disproportionately allocated across band members—lead singer/guitarist versus
bassist/drummer. So how does that dimension factor in; are they spitting the
financial proceeds in ways that are balanced in the fame dimension?

What else might be driving success? How long the people have
been making music together?

A: controlled for a lot of that, including who gets the lion’s
share. Guitarist who is the songwriter may be more reluctant to split equally
with the main singer.

Chris Buccafusco: might be able to tease out causality—does unequal
share degrade friendships? How do the bands persist or not over time?

Trevor Reed: why?

A: some people who didn’t share equally said that they didn’t
want to share royalties so they could pursue side hustles; if they shared
equally then the group would want their full time commitment, which might be related
to prior relationships.

Eva E. Subotnik, Dead Hand Guidance: Deconstructing the
Posthumous Control of Visual Art

Following aesthetic instructions after death: law and
theory. There don’t seem to be many clearcut examples of visual artists trying
to micromanage work posthumously; more literary examples. But there does seem
to be need/desire for more guidance to be given by artists in that successors want
to have that guidance. We should encourage artists to be more specific but not
to create binding instructions; guidance is not the same thing. Literary and visual
art works are not sufficiently distinct to justify different treatment; enforcing
interests from the grave can create conflicts with ©. E.g., can parts of a
triptych be reproduced separately? Living generations are often not interested
in fulfilling those wishes, making them practically unenforceable (gave Van
Gogh virtual exhibit as an example); should not misrepresent to artists the
likelihood of specific instructions being binding.

Guy Rub: sometimes it can be helpful for the artist to blame
“the lawyers” or “the business” for control claims and perhaps vice versa?

A: these companies tout themselves as helping artists/taking
work out of their hands. E.g., advice to reserve one piece of art per year or
series to have a representative sample of your work that you could keep as a
collection. Business of managing visual artists’ estates has just seemed to
explode, and it’s not entirely clear why.

Bita Amani: Theberge case in Canada—transferred authorized paper
backed posters to canvas for resale. Deals with © and moral rights, first sale,
users rights.

Guy Rub, The Challenges of Posthumous Moral Rights

Exist in Europe, but not as such in US, except for works
created & never sold before VARA’s effective date; coauthored work where an
author remains alive; the year in which the artist dies. Presumably, the heir
can sue, maybe. Probably can waive it too. Found one case in which deceased
coauthor’s heirs sued w/the living coauthor.

Five states provided postmortem rights before VARA;
assumption was that states would continue to do so. That was a compromise. No
state has joined those five, and they’re rarely used. One decision found: a
failed California claim by heirs.

Also of course economic rights can provide partial protection
for postmortem moral rights.

EU didn’t and probably won’t harmonize moral rights, unclear
why. Some countries provide postmortem rights tied to economic rights duration:
Germany, Netherlands, Austria. France and Italy provide perpetual protection.
These rights are not absolute, especially postmortem rights. German takes an
approach of “fading of rights.” French approach: Victor Hugo’s grand-grand-grandson
sued an author for a sequel to Les Miserables, in which the villain is neither
dead nor the horrible person of the Broadway musical. Court said: after economic
rights expire, you can’t just block sequels. Balance with freedom of
expression. At the same time, European harmonization maybe should mean that
harmonized exceptions to © apply to moral rights. Open question when you can
make fun of a character, for example.

Moral rights can be, and often are, cleared and generate a
lot of income, which may seem odd given that they’re supposedly nonwaivable.
Clearing rights becomes more difficult after the artist’s death: there were 15
Hugo heirs, and the court held that any one of them could assert his moral
rights. There are also dead hand issues: you’re supposed to implement Victor
Hugo’s rights, not the opinions of his heirs—and Hugo made conflicting statements
about what he wanted. So practical concerns about what would offend him arise.
Normatively concerning; risk of stagnation.

Waiting for Godot: Initially cross-gender casting was held
to violate the estate’s moral rights, but this appears to be eroding. Why?

Removing Confederate statues: moral rights claims if the
rights were perpetual? Other examples of racially offensive art placed by public
authorities in public places.

Expanding moral rights, especially postmortem, would require
us to think very carefully about balancing. There aren’t VARA fair use cases,
though technically it applies; there isn’t a very good fit b/t fair use and
original works. Is it worth the candle? Not for personality interests, and
interests in preservation don’t fit well with moral rights.

RT: Question: does waiver/clearance by one person continue when
they die and the moral right descends to their heirs? Or does clearance have to
be done all over again?

A: He thinks the answer is yes. Blanket licenses aren’t
allowed; you need to approve specific alterations. But his intuition is yes
that when there is a waiver/approval, it applies to heirs.

Michal Shur-Ofry: how many of your arguments also apply to
postmortem economic rights?

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no preemption of state claims where FDA didn’t regulate cosmetic talc at all

Posted on August 11, 2021 by rtushnet

Johnson & Johnson v. Fitch, No. 2019-IA-00033-SCT, —
So.3d —-, 2021 WL 1220579 (Miss. Apr. 1, 2021)

The Mississippi AG sued J&J under the Mississippi
Consumer Protection Act for selling talcum powder products, alleging that
J&J failed to warn of the risk of ovarian cancer in women who used talc. J&J
argued that the MCPA didn’t cover FDA-regulated labels and that if it did it
was preempted. In 1994 and 2008, citizen petitions to the FDA requested a
cancer warning on cosmetic talc products; the FDA denied both because it “did
not find that the data submitted presented conclusive evidence of a causal
association between talc use in the perineal area and ovarian cancer.”

The MCPA prohibits acts that constitute “unfair or deceptive
trade practices in or affecting commerce,” and provides that “[i]t is the
intent of the Legislature that in construing what constitutes unfair or
deceptive trade practices that the courts will be guided by the Federal Trade
Commission and the federal courts to Section 5(a)(1) of the Federal Trade
Commission Act (15 USCS 45(a)(1)) as from time to time amended.” But the FTCA,
J&J argued, explicitly excludes the regulation of labels on cosmetics,
which it commits to the FDA. The state pointed out that “[t]he FTC Act’s false
advertising prohibition does not include labeling, but that limit explicitly
applies only ‘For the purposes of sections 52 to 54,’ not § 45(a)(1), the
section in which the Act instructs courts to be ‘guided’ by.” Also, “guided by”
doesn’t mean “determined by.” Given that, at the federal level, the FDA and FTC
together cover the waterfront, but that “[i]f judges in Mississippi were bound
by the federal Act, then Mississippi would be left without a legal mechanism to
address labeling issues,” the state supreme court agreed with the AG.

Moreover, federal law didn’t preempt the claim. The FDCA has
an express preemption provision covering cosmetics. Except as otherwise
provided, “no State or political subdivision of a State may establish or
continue in effect any requirement for labeling or packaging of a cosmetic that
is different from or in addition to, or that is otherwise not identical with, a
requirement specifically applicable to a particular cosmetic or class of
cosmetics” under relevant federal law.

However, by its plain language, preemption only applies if
the FDA adopts “a requirement specifically applicable” to a given cosmetic,
which it has not. Instead, the FDA decided not to act.

Comment: I would think that the natural reading would be
that if there are no federal requirements at all for talcum powder—which seems
to be the missing premise here, itself somewhat unlikely—then there’s
preemption if the state tries to add any. But: “the preemption statute
requires the existence in federal law of a positive expression of regulation
applicable to a specific product.”

Nor did implied preemption apply.

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false advertising as a workaround when municipal codes are copied?

Posted on August 11, 2021 by rtushnet

International Code Council, Inc. v. UpCodes, Inc., 2021 WL
1236106, Nos. 17 Civ. 6261 (VM) & 20 Civ. 4316 (VM) (S.D.N.Y. Mar. 1, 2021) (presently on appeal)

ICC, a nonprofit that develops model codes for
design/construction that are often adopted by government entities, sued for
false advertising and unfair competition by UpCodes, alleging that they falsely
claim to provide updated and accurate building codes on their website, when in
fact the posted codes contain numerous errors. The court granted UpCodes’
motion for summary judgment.

ICC develops the codes through a
consensus process and revises the codes regularly to reflect changes in the
industry. ICC publishes revised I-Codes every three years, and it also
publishes custom codes that reflect versions of the codes as adopted by states
and local governments (the “Custom Codes”).

That’s costly. It sells I-Codes and Custom Codes through its
online store, along with access to additional features through its
premiumACCESS tool. “[I]ts primary funding source is the sale and licensing of
publications containing its copyrighted works.”

Meanwhile, UpCodes is a for-profit that provides access to
materials and tools of particular importance to building professionals, such as
the state and local building codes that govern their projects. It allegedly
sold or gave away unauthorized copies of the I-Codes and Custom Codes to both
customers and prospective customers. In addition, while UpCodes claims its
codes are up-to-date and contain integrated amendments, UpCodes’s codes allegedly
actually contain numerous errors.

The complaint alleged that UpCode falsely asserted that the
posted codes are “always up to date”; the UpCodes website said customers would
“never work from outdated code,” “Your code library in one place, always up to
date,” “Codes are organized by state and jurisdiction to provide a full
understanding of the applicable codes for your project,” and “Understand all
the requirements for your jurisdiction in one place”; on Twitter they claimed that
their codes are “kept up-to-date with all the amendments integrated natively
into the code”; it claimed that it provides the building industry with “ ‘a
complete understanding of relevant material’ for their projects” and helps
customers “surface the most critical code sections.”  ICC alleged reliance, including a customer
review saying he was “much more comfortable knowing that my team is working off
the most up-to-date codes.”

Likewise, ICC alleged that UpCodes falsely claimed: “Integrated
Amendments: … Never miss important requirements in your jurisdiction”;
“UpCodes has the adopted codes as enacted by the state or local jurisdiction”;
and “While some states provide integrated codes … Where these are not
provided, UpCodes has integrated the local amendments ….” Etc. On Twitter,
UpCodes claimed that their copies of building codes are “kept up-to-date with
all the amendments integrated natively into the code,” and separately that they
had integrated “all 973 amendments” to the New Jersey 2018 codes.

However, ICC alleged errors in UpCodes’s Wyoming, Virginia,
Oregon, and New Jersey codes. The errors include: posting the entire text of a
model code as the state code when it wasn’t incorporated in its entirety (this
meant, among other things, posting appendices for Wyoming that included Tsunami-Generated
Flood Hazards); failing to incorporate certain amendments the states made to
the codes; and failing to include appendices that were adopted.

Finally, UpCodes allegedly falsely claimed to be the “only
source” of state amendments integrated into the model code, when in fact ICC
also offers custom codes on its website.

Once upon a time, this was a copyright dispute. When the
court ruled mostly in favor of UpCodes, though reserved for trial whether
UpCodes infringed by copying “model codes as model codes or indiscriminately
mingl[ing] the enacted portions of the model codes with portions not so enacted”
as a factual matter, ICC filed this new suit, which the court consolidated.

Falsity as to amendment integration: UpCodes argued that its
claims weren’t adequately alleged to be false, because “two dozen” errors among
“tens of thousands” of Integrated Amendments wasn’t plausibly false or
misleading. ICC responded that the errors it identified were merely
representative, not an exhaustive list, and that two dozen errors among
thousands was sufficient for falsity. The court declined to rely on “vague and
conclusory” allegations about “additional, unidentified errors” under Twiqbal.
But even if the complaint plausibly alleged more errors, the statements about
amendment integration were neither literally nor impliedly false. ICC acknowledge
that UpCodes does have “some” integrated amendments, so its claim to offer
integrated amendments was not rendered false by (1) not having all the possible
integrated amendments or (2) having errors in the integration; those things
went to accuracy and completeness, as discussed below.

Falsity as to accuracy/completeness: UpCodes argued that its
claims of accuracy and completeness were nonactionable puffery, not material,
and not plausibly the source of injury because ICC has more errors than
UpCodes’s website.

Even a statement that could in theory be proven true or
false, and isn’t a vague statement of opinion, can be puffery if it is “an
exaggerated, blustering, and boasting statement upon which no reasonable buyer
would be justified in relying.” That was the case here. Claims to provide “a
complete understanding of relevant material,” a code library that was “always
up to date,” and that ensured that customers “never work from outdated code”
were exactly the type of “exaggerated” and “boasting” statements “upon which no
reasonable buyer would be justified in relying.” The court noted that numerous
courts have treated the terms “accurate” and “complete” as puffing language,
and putting them in the context of legal requirements didn’t change matters.
Accuracy is important in building, but “codes are not static, nor are the laws
that rely on them. As changes in law occur, some delay between the adoption of
those changes, their dissemination to the public, and their publication on the
UpCodes website is not only understandable, but expected.” Thus, no reasonable
consumer would believe that “the codes are instantaneously updated and at all
times error-free.” And the complaint didn’t plausibly allege “rampant” errors
by plausibly alleging errors in the codes of four states.

This was further supported by a disclaimer on the UpCodes
website (cited in the complaint, but that might not be necessary since the
website is integral to the complaint), which expressly disclaims liability for
“any errors or omissions in the information or content” on its website and
expressly disclaims warranting that the services provided will be “error-free.”
Although in the copyright decision, the court made reference to “rather
surprising oversights,” UpCodes corrected issues when notified by ICC.

Falsity as to unique services: ICC’s own screenshot shows
that UpCodes claims to be the only source of integrated codes only for
“jurisdictions [that] do not provide integrated code books.” ICC didn’t allege
that the statement as qualified was false.

The state-law claims thus failed too.

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CA’s Prop 65 warning unconstitutional for acrylamide warnings for being scientifically overcertain

Posted on August 10, 2021 by rtushnet

California Chamber of Commerce v. Becerra, 2021 WL 1193829, No.
2:19-cv-02019-KJM-EFB (E.D. Cal. Mar. 30, 2021)

California allegedly compelled businesses to display
misleading warnings about the dangers of acrylamide, a carcinogen. The Council
for Education and Research on Toxics (CERT) intervened because it often files
lawsuits against businesses that do not display warnings about acrylamide.

The court granted an injunction against the law because genuine
scientific dispute over the harms to humans of acrylamide meant that the
disclosure was not “purely factual and uncontroversial,” so not ok under Zauderer,
and the state didn’t meet its burden under any higher standard.

Acrylamide is a toxic chemical first
detected in food in 2002, but not newly there. It often forms as a result of a
reaction between sugars and the amino acid asparagine, which naturally occur in
many foods. Roasting, baking, frying, or otherwise cooking food at a high
temperature appears to cause acrylamide to form, whether at home or at
industrial scale. According to the U.S. Food & Drug Administration (FDA),
the foods that contribute the most acrylamide to the American diet are baked
and fried starchy foods like french fries, chips, crackers, donuts, pancakes,
and toast. Coffee also contains acrylamide, as do almonds, olives, and asparagus.

It’s well established that acrylamide increases cancer in
animals; more acrylamide means more cancer. The studies do use very high doses,
not real-world doses. “[M]any public health authorities have concluded that
exposure to acrylamide probably increases the risk of cancer in people.” Some
researchers—some with ties to the food/beverage industries—think that rats and
mice react differently to acrylamide. And for obvious ethical reasons, there
aren’t clinical human studies, though in vitro human cell studies suggest that
acrylamide causes DNA changes that are known to cause breaks and mutations in
chromosomes, which can in turn cause cancer; in the International Agency for
Research on Cancer (IARC) database of 1,600 human tumor genomes, about one
third of the tumor genomes could be connected to acrylamide. “This may mean
that a large portion of human cancer is connected to acrylamide exposure.”
However, dozens of epidemiological studies have failed to find a connection. This
may simply be because food diary studies are unreliable, especially given the ubiquity
and uniformity of acrylamide exposure—plus, the effects may not surface for decades,
so a short-term study won’t be helpful.

It is thus unsurprising that, despite their conclusions
about “probable” or “likely” links to cancer, government authorities haven’t
urged people to avoid acrylamide-containing foods, though the FDA has offered
guidance to reduce consumption. “At the end of the day, however, because
acrylamide is found in so many foods, it is probably impossible to avoid it
completely. The FDA advises Americans not to attempt removing fried, roasted,
and baked foods from their diets.” California public health authorities specifically
decided not to warn against acrylamide exposure in coffee; the State found
“inverse associations—decreasing risk with increasing coffee consumption—for
[some] human cancers.”

But non-coffee sources remain subject to the warning
requirements of California’s Safe Drinking Water and Toxic Enforcement Act of
1986, more commonly known as “Proposition 65.” Businesses must not knowingly or
intentionally expose people to chemicals “known to the state to cause cancer or
reproductive toxicity” without a “prior clear and reasonable warning.”   A chemical “must be listed even if it is
known to be carcinogenic or a reproductive toxin only in animals.”

Regulations require warnings to name the chemical and to be
displayed “prominently,” “with such conspicuousness” that they are “likely to
be seen, read, and understood by an ordinary individual.” A warning may include
more information than this, but only if the addition “identifies the source of
the exposure or provides information on how to avoid or reduce exposure.” There
is a safe harbor warning: “Consuming this product can expose you to [name of
one or more chemicals], which is [are] known to the State of California to
cause cancer. For more information go to http://www.P65warnings.ca.gov/food.”

California has settled cases by allowing more nuanced
warnings: in potato chip litigation, it allowed the warning to say the chips
“contain acrylamide, a substance identified as causing cancer under
California’s Proposition 65.” The warning further explained that foods other
than chips contain acrylamide and that acrylamide is not added to these foods,
but rather is “created when these and certain other foods are browned,” and
that the “FDA has not advised people to stop eating potato crisps and/or potato
chips…or any foods containing acrylamide as a result of cooking.”

Proposition 65 allows for exceptions, as with coffee; under
the regulations, 0.2 micrograms/day poses no significant risk and needs no warning,
and higher levels of exposure are permitted when “chemicals in food are
produced by cooking necessary to render the food palatable or to avoid
microbial contamination”; and the law grants businesses an affirmative defense
if they can prove the alleged exposure “poses no significant risk assuming
lifetime exposure at the level in question,” but the court concluded that these
paths were too risky to be a defense to the First Amendment claim.

Here, the only safe path—the safe-harbor warning—would be:
“Consuming this product can expose you to acrylamide, which is …known to the
State of California to cause cancer. For more information go to
http://www.P65warnings.ca.gov/food.” First, by “asserting vaguely” that consumption
could expose the consumer to acrylamide, a chemical most people have likely
never heard of, “the warning implies incorrectly that acrylamide is an additive
or ingredient.” And the warning required consumers to make several leaps—that
it meant that animals get cancer more often when they consume doses hundreds of
times larger than the amounts in the food, that scientists presume (absent
other evidence) this means cancer in people, and that therefore the chemical is
“known” to cause cancer in humans. (Necessary implication!) “People who
read the safe harbor warning will probably believe that eating the food
increases their personal risk of cancer.” There was indeed some evidence for
that, but the epidemiological studies didn’t find it, and “California has also
decided that coffee, one of the most common sources of acrylamide, actually
reduces the risk of some cancers.”

Thus: “the safe harbor warning is controversial because it
elevates one side of a legitimately unresolved scientific debate about whether
eating foods and drinks containing acrylamide increases the risk of cancer.”

The state couldn’t adopt private definitions of what it
means for California to “know” that acrylamide causes cancer, “or by showing
the warning contains no affirmative falsehoods. Statements are not necessarily
factual and uncontroversial just because they are technically true.”

The court commented that these problems could have been
avoided by allowing businesses to explain that acrylamide forms naturally when
some foods are prepared; that California has listed acrylamide as a chemical
that “probably” causes cancer or is a “likely” carcinogen or that the chemical
causes cancer in laboratory animals; and that acrylamide is commonly found in
many foods and that neither the federal government nor California has advised
people to cut acrylamide from their diets. Although this was okayed in the
potato chip litigation, it wasn’t obviously available to others without
litigation, based on the statute and the regulations. On the current record,
the court agreed that “only the safe harbor warning is actually useable in
practice,” and the state couldn’t “ ‘put the burden on commercial speakers to
draft a warning that both protects their right not to speak and complies with
Proposition 65.’ If the seas beyond the safe harbor are so perilous that no one
risks a voyage, then the State has either compelled speech that is not purely
factual, or its regulations impose an undue burden.”

This case was distinguishable from the earlier CTIA cellphone
radiation warning case in three ways: First, the CTIA warning only “hinted”
at potential dangers, for example by referring vaguely to “safety,” but “its
text was a purely factual summary of federal regulation about radio frequency
radiation.” This wasn’t even argued to be “controversial as a result of
disagreement about whether radio-frequency radiation can be dangerous to cell
phone users.” But the truth of whether acrylamide is “known to cause cancer” is
“the subject of controversy,” even if it wasn’t a political or moral
controversy.

Second, CTIA involved an unchallenged federal mandatory
disclosure of the same information; the ordinance at issue just required more
prominence. Here, “[n]o regulatory or public health authority has advised
against consuming foods with acrylamide.” [… That’s not what this disclosure
says either.]

Third, the ordinance in CTIA allowed businesses to
add information, whereas “Proposition 65 does not permit businesses to add
information to the required warning at their discretion, and thus prevents them
from explaining their views on the true dangers of acrylamide in food.”

Since Zauderer didn’t apply, it also flunked Central
Hudson and any higher standard of scrutiny. “There is no question that
protecting the health and safety of consumers is a substantial government
interest.”   But at this stage of the
litigation, the required warning likely does not “directly advance” that
interest and is “more extensive than necessary” because it misleadingly implied
that the science about the risks of food-borne acrylamide was settled. The
state could also fund scientific research and pursue public awareness campaigns
to further its interest. “Regulators could also modify safe harbor warnings to
eliminate inaccuracies and controversial statements.”

The court cautioned that it was not invalidating “existing
consent decrees, settlements, or other agreements. For example, this order does
not permit businesses that have already agreed to display a certain warning do
take those warnings down, and businesses that have agreed to reformulate their
products to reduce acrylamide content are not permitted by this order to breach
those agreements.” And the court noted the risk of misinterpretation or misuse
of this injunction to attack warnings about other carcinogens and reproductive
toxins. “California has a substantial and likely compelling interest in
protecting people from exposure to dangerous chemicals, including chemicals
that have been shown to cause cancer or reproductive harm in experimental
animals, even if epidemiological evidence is inconclusive.” But at this stage,
the court granted the preliminary injunction.

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trolling over gnomes–no, really–on Amazon

Posted on August 10, 2021 by rtushnet

Shenzhen Tange Li’an E-Commerce Co. v. Drone Whirl LLC, 2021
WL 3474007, No. 1:20-CV-00738-RP (W.D. Tex. Aug. 6, 2021) (R&R)

Shenzhen sought a declaratory judgment that a design patent
for a toy gnome figurine was unenforceable and invalid, given that defendant/counter-plaintiff
Tatiana Mironova allegedly purchased its stuffed gnome toys, then switched
manufacturers and obtained a patent for an identical ornamental design without
authorization. Mironova then allegedly filed intellectual property complaints
against its storefront on Amazon.com fraudulently claiming infringement of her
patent rights and copyrights. Amazon delisted Shenzhen’s products. Shenzen also
brought claims under Texas law for unfair competition, tortious interference
with existing business relationships, fraud, and business disparagement. (The
parties agreed to judgment on the pleadings holding a key patent invalid.
Nonetheless this is now a patent case.)

The defendants (collectively Drone Whirl) counterclaimed
that Shenzhen retaliated after Drone Whirl stopped buying gnome dolls from
Shenzhen by interfering with Drone Whirl’s business on Amazon.com. Shenzhen allegedly
placed orders without paying for them to “lock up” Drone Whirl’s gnome
inventory; bribed Shenzhen’s customers to submit bad reviews of Drone Whirl’s
products; and distributed pamphlets to its customers containing false or
misleading statements about Drone Whirl’s products. It counterclaimed for
unfair competition under the Lanham Act, as well as Texas common-law claims of
fraud, breach of contract, business disparagement, and tortious interference
with existing and prospective business relations.

In relevant part, the Shenzen pamphlet began:

We are aware that there are a number of companies who are
committing design infringements on our products. Producing versions of our
products and selling them on the internet, particularly AMAZON. Using our
products description, our pictures that we have taken of our own products even
our brand to falsely exploit our reputation, in order to make quick sales.
Then, they are manufacturing cheap imitations with the intent of selling them.
There are only 3 shops (shop name: ITOMTE, ITOMTE INC., Hi Gnome) that are
currently authorized to sell our products on AMAZON ….

Not discussed in the opinion, but relevant—the pamphlet
offers various incentives for reviews of competitors. Is this legitimate, either
under general advertising law, or Amazon policy?

Without discussion of the broader caselaw about legal claims, the
magistrate concluded that stating that a company engaged “design infringements”
to manufacture products that are “cheap imitations” of Shenzhen’s “authorized”
products were all “statements of fact that are capable of being proved false or
misleading.” Alleging that these statements disparaged Drone Whirl (not named,
but implicated) and that they were likely to confuse consumers was sufficient
for falsity/misleadingness, and alleging that the statements were in emails and
a pamphlet sent to customers was sufficient to allege commercial advertising/promotion.

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