Rebecca Tushnet's 43(B)log

NYT trend story on false advertising claims

2009-11-22T10:26:00.001-05:00

"Companies that were once content to fight in grocery-store aisles and on television commercials are now choosing a different route — filing lawsuits and other formal grievances challenging their competitors’ claims." Related video.

Pleading false advertising after Iqbal

2009-11-22T05:57:00.000-05:00

Tseng v. Marukai Corp. U.S.A., 2009 WL 3841933 (C.D. Cal.)

Tseng alleged patent infringement and false advertising, but didn’t include the level of detail required after Iqbal and Twombly. Reciting the elements of a cause of action isn’t enough, so allegations that defendants sold goods that infringed plaintiff’s patent were insufficient. Likewise, the allegation that “defendants falsely advertised their infringing goods as genuine and authorized products by imprinting the Patent In Suit's patent number” was insufficient, because false advertising is a legal conclusion that requires allegation of underlying facts. Tseng needed to offer facts indicating what kind of advertising defendants engaged in, what they said, and why it was false. Dismissed, with leave to amend.

Hope my girlfriend don't mind it

2009-11-21T10:21:00.001-05:00

Consider the following songs:

Stacy’s Dad, after Stacy’s Mom.

I Kissed a Girl, sung by Ivri Lider. (Bonus Smallville video with Clark Kent as the POV character, on the same theme.)

“I Kissed a Boy,” sung by a female singer with the gendered nouns and pronouns reversed. (What does it say about our culture that this is the one I couldn’t find?)

I Kissed a Boy, same lyrics, sung by a male singer. (Bonus Cobra Starship I Kissed a Boy with substantially changed lyrics.)

Which, if any, are transformative and why?

What is the relevance of the fact that it is, as far as I can tell, universally accepted that, under 17 U.S.C. §115, it is unobjectionable to flip gendered nouns and pronouns (among other things, making Alanis Morissette the Queen of Pain, but you knew that already)? Section 115 provides that a compulsory license “includes the privilege of making a musical arrangement of the work to the extent necessary to conform it to the style or manner of interpretation of the performance involved, but the arrangement shall not change the basic melody or fundamental character of the work.” Apparently, one’s sexual or romantic partners are part of one’s style or manner of interpretation, but the gender of the person described by the lyrics isn’t fundamental to the character of a work—an interesting result.

Project Runway does IP

2009-11-21T09:07:00.002-05:00

One designer, told she couldn't use images of Coney Island because they were "trademarked" (my guess is that this was a copyright problem, but ok), ended up with a dress printed with Reasons to Love New York, which were taken from New York Magazine. Though a world away conceptually from Jeff Foxworthy's You Might be a Redneck If... jokes, the principles from that case might apply to this one.

Actually, the AP likes fair use after all

2009-11-20T21:29:00.002-05:00

At least when it's the AP doing the copying! TPM reports that an internal AP memo explains its fact-checking process on Sarah Palin's new book:

"The AP was determined to get the first copy," Oreskes [a senior managing editor] wrote, detailing how the writers learned a store had "inadvertently placed the book on sale five days before its official Nov. 17 release date." "They bought a copy, ripped it from its spine and scanned it into the system so it could be read and electronically searched," he wrote.

I do think this is fair use: it's an intermediate use with the ultimate product distributed to the public being a fair use, indeed a canonical fair use--quotation for purposes of critical review. (Albeit a scoop, a little reminiscent of Harper & Row v. Nation.) But it would behoove the AP to take note that a robust fair use doctrine is good for news reporting, given the AP's high-protectionist stance in other instances.

Another reason I'm glad to be a vegetarian

2009-11-20T21:22:00.002-05:00

Sushi fraud: Apparently, if you don't walk around fingerprinting the DNA of your fish--the database is, hilariously, FISH-BOL--you run the risk of ordering tuna and instead receiving escolar, "a nasty fish with buttery flesh that can cause bizarre episodes of diarrhea, accompanied by a waxy intestinal discharge," or an endangered species of tuna. "[R]esearchers from Columbia University and the American Museum of Natural History ordered tuna from 31 sushi restaurants and then used genetic tests to determine the species of fishes in those dishes. More than half of those eateries misrepresented, or couldn’t clarify the type of fish they were mongering."

Alternate post title: California roll, for the inevitable consumer protection lawsuit. HT: Eric Goldman.

Non-survey experts in trademark cases

2009-11-20T11:45:00.003-05:00

Flagstar Bank, FSB v. Freestar Bank, N.A., 2009 WL 3837145 (C.D. Ill.)

I am very interested in the use of non-survey expert evidence in trademark and false advertising cases; I think it has a lot of potential to improve the analysis, especially given how manipulable surveys are—reasoning from what we know about human communication and understanding generally may well be more reliable than a claim-specific survey. But it’s not often done, and the judge’s careful dissection of a proffered expert opinion in this case shows that anyone attempting to do it needs to be attentive to the Daubert standards, probably more so than with a conventional survey. I still think a good expert in practical linguistics is worth the investment in an appropriate case. Partially this is because an expert will often be so much cheaper than a survey plus a survey expert, especially given that you can often expect a big, expensive admissibility battle with a survey even if it will probably survive to be admitted. But it’s not just about expense: I really believe that the addition of expert knowledge about how consumers make meaning would improve the quality of adjudication beyond claim-specific surveys.

The underlying dispute: Flagstar is a Michigan-based bank with 175 “banking centers” in Michigan, Indiana, and Georgia, offering checking and savings accounts, home mortgages, and money market accounts. It also operates 104 home loan centers, including 5 within Illinois. They involve mortgage origination only, not deposits or withdrawals, and the loan centers independently decide how to use Flagstar marketing materials in local ads. Prospective customers must undergo a credit check before opening a Flagstar account. It has several registered trademarks and spent $12.3 million on advertising in 2008.

Freestar is a small community bank offering traditional banking services, including checking and savings accounts and home mortgage loans. It has 13 branches, all located within a three-county area of Central Illinois: Champaign, Livingston, and McLean, where Flagstar has no operations. Freestar, which advertises only in that area, adopted the Freestar Bank name in 2006 as a rebranding.

The court ruled on a Daubert motion to exclude proffered expert witnesses. “Dr. Edward Lee Lamoureux holds a Ph.D. from the University of Oregon in Rhetoric and Communication with an emphasis on conversation analysis, rhetoric, qualitative research methods, general speech, and interpersonal communication.” The court accepted him as an expert on “social” linguistics, as distinguished from “formal” linguistics. His report claimed that “flag,” “free,” and “star” are each “strongly associated with some of the most broadly shared values in American culture: Patriotism, loyalty, national identity, and individual rights.” Given the “significant and overlapping metaphorical associations,” he concluded that substantial consumer confusion was likely.

Freestar argued that Dr. Lamoureux failed to employ any identifiable methodology, though he said he consulted “classic texts” in the field of metaphorical association. Except that association is not confusion. He would have been better served to consult the word studies in which people tend to make mistakes about what words they’ve seen on a list when they’re later presented with words semantically related to the words that really were on the list (e.g., put “bone” on the list and people are more likely to mistakenly think that “dog” was on there as well than they are to think that “cat” was there). That would be the missing link in the claim here, which is a variation on the trademark rule—which does not generally require the submission of specific evidence—that similarity in meaning increases the likelihood of confusion. Courts have found infringement based on similar meaning: Lollipops and Jellybeans for roller skating rinks were found confusing. That’s context-dependent; with respect to desserts, lollipops and jellybeans have very different meanings. But precisely because they’re arbitrary for roller rinks, the consumer might easily encode “sweet treat” but not remember which sweet treat served as the name of the business she’d encountered before. Likewise, one could argue—though I am far from convinced on the facts as stated in this case, and I think the descriptiveness/laudatory nature of the terms is important—that the patriotic associations of “flag” and “free” combined with “star” are so similar that, in context, consumers might not remember which they’d seen before.

This is beside the point, because the court noted that, if the expert can’t specify methodology, it’s impossible to evaluate the propriety of that methodology. Here, Dr. Lamoureux didn’t offer any “proposal, theory, or technique” justifying the conclusion of likely confusion. He didn’t footnote or attach supplements explaining the theories on which he relied, or discuss the “classic texts” in his report. The court wouldn’t speculate on what those might be or how they related to his ultimate conclusion. Dr. Lamoureux proposed no theory explaining “how one particular metaphor shared by three words becomes so dominant in customer[s’] minds that it overcomes the many other metaphorical associations attributable to the words.” Moreover, he did not rely on any polls or qualitative research supporting his claim that patriotic metaphorical associations are particularly important post-Sept. 11, 2001, nor—more importantly—did he connect increased patriotic fervor with likely confusion.

The absence of a reliable theory was highlighted by Dr. Lamoureux’s inability to explain how he’d evaluate whether other terms such as “freedom,” “America,” “liberty,” and “patriot” fall under the same metaphorical umbrella. This concern, I think, is related to the descriptiveness/laudatory caution I offered above. There are good reasons to be hesitant to give Flagstar rights over the patriotic metaphor as applied to banks, while monopoly rights over sweet dessert names applied to roller rinks are much less troublesome. To the court, his methodology appeared result-driven.

Aside from reliability concerns, there were also relevancy issues. Expert testimony may be excluded if the primary facts can be accurately and intelligibly described for the jury and if the jury is just as competent as drawing conclusions from the facts as are expert witnesses. Dr. Lamoureux’s two-page report wasn’t particularly helpful because the trier of fact can also evaluate the meanings of the words comprising the parties’ marks. “When presented with the parties’ marks, the average person is capable of concluding that all three words share a patriotic connotation.” A juror could also recognize differences in meaning. Expert testimony would be helpful in explaining how similarities lead to confusion, or how differences negate likely confusion, but that’s not what was on offer here. Thus, Freestar’s motion to exclude was granted.

On to infringement: the court swiftly disposed of Freestar’s argument that Flagstar lacked constitutional standing for failure to suffer injury in fact. But Flagstar clearly alleged an invasion of a legally protected interest, that protected by its federal registrations; this was sufficient.

On likely confusion, however, Flagstar’s evidence fell short. (Here let me praise the court for including multiple images in the opinion, allowing readers to follow along.)

“Flag” and “free” were distinctly different elements of the mark, contributing to distinct overall impressions, especially given that Flagstar’s formatted mark used mostly lower-case letters, included a slogan (“The new wave in banking”), and was accompanied by a black graphic suggesting the waves of a flag. Freestar’s mark had italicized capital letters and a very different slogan (“Life keeps getting better!”), along with a green A and a star-shaped graphic, invoking shooting star imagery. The slogans were important differentiators—Flagstar’s describes its services, and Freestar’s focuses on the reader.

In the marketplace, Flagstar’s mark prominently features the color red, while Freestar’s pending registration uses black, green, and white. Based on these dissimilarities, a reasonable consumer would not be confused. There was greater similarity with Flagstar’s “Legacy mark,” a mark it still uses on occasion—both marks featured italicized capital lettering, the work “Bank” at the lower right, and a star graphic in the midle of the letter A in “Star.” But the wave graphic, the slogan, the “shooting” appearance of Freestar’s star, and the colors actually used in the marketplace still left the marks readily distinguishable. “A customer is not likely to be confused between the origin of marks with different names and completely different colors and slogans,” especially when one graphic invokes a waving flag and the other a shooting star.

Intent: there was no evidence of intent to pass off, but Flagstar argued that Freestar failed to exercise due diligence in rebranding, given that its registrations provide constructive notice. However, even actual knowledge is not enough to prove bad intent. Bad intent can only be inferred based on similarity where the senior mark has attained great notoriety and is nearly ubiquitous in the area where the junior mark competes. This wasn’t true here.

There was no evidence of actual confusion. Moreover, because of the lack of geographic overlap, Flagstar and Freestar’s services aren’t used concurrently in any area or manner. “An Illinois consumer seeking to open a bank account would need to drive across state lines before encountering a Flagstar banking center. A person seeking a home loan cannot ‘cruise down the street’ and become confused by the presence of a Flagstar home loan center and a Freestar banking center because he or she will not encounter both of these entities within the same county, let alone city.” Customers couldn’t be confused by marks they don’t encounter during their everyday lives.

Nor did Flagstar show that it was reasonable to think that it might expand into Freestar’s counties. Its SEC filings announced an intent to focus on expanding in Michigan and Georgia. Unsurprisingly, there was also no evidence of overlapping marketing channels, given Freestar’s limited local advertising and Flagstar’s failure to show it advertised in those counties. Indeed, Flagstar was unable to confirm that the home loan centers it operates actually use Flagstar advertising materials within Illinois. Though both parties use the internet, the court found no precedent to hold that the maintenance of two independent websites, not linked in any way (such as via metatags), could count as an overlapping marketing channel.

In addition, the court thought that, though banking services are ubiquitous, consumers are likely to exercise a higher degree of care than they do when buying cooking spray or oil changes. Flagstar customers must submit to credit checks; Freestar requires customers to speak with a bank loan officer before obtaining a home loan. Customers wouldn’t carelessly sign themselves up for such “invasive and prolonged inquiries.”

Flagstar also argued that even if banking consumers are sophisticated, they’re still vulnerable to initial interest confusion and reverse confusion. However, there was no evidence that Freestar “lured” consumers, the way the defendant in Promatek Industries, Ltd. v. Equitrac Corp., 300 F.3d 808 (7th Cir. 2002), did by using confusing keywords. (Yes, I know, but let’s just be grateful the court didn’t buy the IIC argument.) And there was no other evidence that anyone would patronize a Freestar bank because of a perceived link with Flagstar.

Nor did the facts support a reverse confusion claim, where a large junior user saturates the market and creates a strong association between its product and the senior user’s mark. Freestar is a small bank, not saturating the market, and there was no evidence that its use, and subsequent goodwill, would hamper Flagstar’s expansion into Central Illinois.

Turning at last to strength of the mark, the court found Flagstar’s mark not particularly strong from an economic/marketing perspective. 175 banking centers and $12.3 million in ads in 2008 is not enormous, and Flagstar failed to provide any evidence about Illinois because it didn’t submit (or apparently even seek) any evidence about how the home loan centers advertise. “A mark cannot bear economic and marketing strength in a place where it does not do business and does not advertise.” The court didn’t even address conceptual strength (which also would have been relevant to reverse confusion.)

Similarity of the products was the only factor really favoring Flagstar: they were identical.

Overall, the court weighed the lack of concurrent use particularly heavily: “Consumers cannot become confused by a mark they will never encounter in the marketplace.” Further, despite the similarities between the marks, as a whole those similarities wouldn’t lead to confusion—and even if there were a material issue on that point, the record was extremely lopsided on the other confusion factors. Thus, Freestar was entitled to summary judgment.

The history of snake oil

2009-11-19T17:09:00.002-05:00

From the Smithsonian Museum of American History (yes, it has a blog). And a website for its collection of patent medicines. If you want to know why we have the FDA, take a look. HT: Zach Schrag.

California law allows UCL claim against insurer

2009-11-19T08:48:00.001-05:00

Zhang v. Superior Court, 100 Cal.Rptr.3d 803 (Ct. App. 2009)

States deal with nonfederal preclusion as well as preemption issues. Here, the question was whether state insurance regulation precluded a cause of action uncle general unfair competition/ false advertising law. The appellate court, rejecting another appellate ruling, said no. Conduct that violates only the insurance code, which is not enforceable via a private cause of action, can’t support an unfair competition claim. But false advertising is actionable even when insurance-related. This is very similar to the working compromise between the Lanham Act and the FDCA, especially is you take into account the court’s dicta that conduct that violates both laws, UCL and specific provisions of the insurance code, is actionable.

Fundamentally, given that insurance is not excluded from UCL coverage, “[t]o construe the Unfair Insurance Practices Act as immunizing insurers from the consequences of misconduct that other business must suffer would simply make no sense.” The court cautioned that the plaintiff could not recover merely by showing unreasonable handling of her claim. She’d need to show that the insurer falsely advertised to the public “that it operated honestly and equitably in settling claims and that it in fact had a policy or regular practice of ‘lowballing,’ delaying, or taking unfair advantage so that its advertising and/or representations were in fact likely to mislead the public.”

Presenting in Chicago

2009-11-19T07:30:00.002-05:00

Tomorrow at noon, I'll be giving the Distinguished Professor Presentation at John Marshall's Center for Intellectual Property Law, talking about "Running the Gamut from A to B: Federal Trademark and False Advertising Law," in which I argue that the Lanham Act would make more sense if we spent more time thinking about the relationship between 43(a)(1)(A) and 43(a)(1)(B). You can register here.

Ignorance of 230 is bliss for lawyer ad regulation

2009-11-18T18:09:00.001-05:00

A recent opinion of the South Carolina Ethics Bar reveals a not uncommon failure to appreciate the scope of §230. State bars have been struggling to deal with lawyers’ internet advertising, which can reach potential clients in new ways; anything on the internet, not just a banner ad, might in theory count as advertising. And new intermediaries have sprung up to help potential clients navigate, including lawyer rating services that offer profiles of lawyers. Sometimes for a fee, lawyers can “claim” their profiles and add extra information to make themselves more attractive. The South Carolina ethics body ruled that, when a lawyer claims a profile on such a service, she becomes responsible for its content under the ethics rules, including peer endorsements, the service’s own ratings, and client comments. But §230 was written to prevent states from such attributions unless the user herself—here, the lawyer—provides the content at issue, and the ethics body specifically stated that it was relying on the opposite rule, holding the lawyer responsible for statements of others. Section 230 precludes any liability for the parts of the profile lawyers did not create, including the three features highlighted by the ethics body: peer endorsements, the service’s ratings, and client comments.

Damageless music infringement

2009-11-18T01:01:00.002-05:00

EsNtion Records, Inc. v. TritonTM, Inc., 2009 WL 3805827 (N.D. Tex.)

Talk about snatching defeat from the jaws of victory. Watch as an apparently unassailable copyright claim falls apart. Plaintiff EsNtion, which I’m just going to call plaintiff, is an independent record label; it sued defendant TM, which is in the business of programming music for radio stations. TM sells subscriptions to radio stations and DJs, including a weekly subscription called HitDisc, which consists of one or more CDs with songs that subscribers use to update their playlist. Plaintiff sued for unauthorized inclusion of its songs on the CDs, also alleging DMCA violations, trademark infringement, and unfair competition. TM disputed a bunch of the allegations and argued that it got the songs at issue from plaintiff, its recording artists, or a promotional company working for it, and that inclusion on the CDs provides a promotional benefit.

Plaintiff pled infringement of 235 songs, but TM argued, without rebuttal, that it didn’t distribute 211 of them. Whoops. Then, for eight of the remaining songs, plaintiff only pled pending copyright applications. The Fifth Circuit follows the (wrong) rule that jurisdiction requires only that the Copyright Office receive the application, deposit, and fee. But plaintiff didn’t even meet that standard, because it only submitted emails from the Copyright Office indicating that “registration claims” had been submitted, but not indicating that the fee or the material being registered had been received.

Then, TM argued that plaintiff didn’t own or have an exclusive license to many of the recordings at the time of the alleged infringement, with no written agreements in place. The court found evidence of licensing agreements that supported plaintiff’s claims for most of the remaining songs, but three more were knocked out that way.

Plaintiff didn’t register before the infringement began, so it wasn’t entitled to statutory damages or attorney’s fees. All that was left was actual damages, and here’s where disaster really struck. Plaintiff’s president was unable to identify damages from the infringement, including lost sales or contract opportunities. Plaintiff also submitted expert reports, but the court concluded that they didn’t support a finding of actual damage, because neither expert opined on that—one “assumed” that plaintiff would prove its allegations of infringement (I don’t get why this is disqualifying, unless the expert actually assumed that plaintiff would prove damages, not just infringement) and the other stated that the infringement “could” cause damage to an independent record label, but didn’t conclude that there was actual damage.

Under Davis v. The Gap, a reasonable royalty is an alternative method of calculating damages where both defendant’s profit and plaintiff’s lost sales are impossible to figure out—why wasn’t that available? Hypothesis, though there's nothing in the opinion or on defendant's site that makes this clear: because these are promotional CDs, the copyright owners who choose to participate in this market might provide them for free, making the market-set royalty $0. Usually, the law leaves it to copyright owners to decide whether they want to participate in a market, and will find infringement even if the infringement increases the value of the work—but there might be infringement without damage.

In any event, there was also no evidence that TM profited from the infringement. It didn’t sell songs or CDs, but only profited indirectly from selling its subscription service. Its revenues didn’t depend on the songs at issue and no one specifically requested them.

Without any damages, TM won summary judgment on all the copyright claims, including contributory and vicarious infringement. Even worse for plaintiff, TM might be entitled to a fee award as a prevailing party (though, having failed to register on time, plaintiff wouldn’t have been eligible for a fee award had it prevailed), based among other things on bad litigation conduct including failing to amend the complaint to remove the songs that never appeared on TM’s CDs.

Plaintiff also brought a DMCA claim for removal of copyright information and provision of false copyright information. TM argued that it didn’t have the intent to induce, enable, facilitate or conceal infringement, as required for liability under §1201, and that it didn’t remove any information. TM claimed that it had no incentive to remove such information and instead makes it as accurate as possible. And, none of plaintiff’s CDs had any electronically-embedded copyright information; some courts have limited CMI coverage to electronic information, though the statute isn’t written to make that the obvious conclusion. Anyway, though the evidence might show that TM threw away the physical copies of CDs sent to it, the song information, including copyright and other identifying data, was input into a database available to subscribers. The court thus dismissed the DMCA claim.

Plaintiff also brought §43(a)(1)(A) and (a)(1)(B) claims. First, it failed to show harm, as required for constitutional standing. There was no evidence that it lost anything, or that TM gained anything from including the songs. (Not that I mind this foreshortened analysis, but I will note that the typical trademark argument is that loss of control over one’s reputation is sufficient harm in confusion cases.) Even if plaintiff had constitutional standing, it would lack prudential standing. (Again, note that this test is usually only applied to §43(a)(1)(B) false advertising claims, though if you are going to do the ridiculous antitrust-based prudential standing test that has attracted so many circuits then it’s a little less silly to apply it to both branches than applying a competition requirement.) Plaintiff argued that TM engaged in literally false advertising by using plaintiff’s name without permission, causing customers to buy TM’s products instead of plaintiff’s. TM allegedly sold compilation CDs to companies that would otherwise have purchased plaintiff’s products. The court found this argument insufficient, because the evidence didn’t show that the parties competed; TM sold subscription services, not CDs. Nor had plaintiff shown any damages. (Really this claim is barred by Dastar and materiality, not standing.)

Plaintiff’s unfair competition claim failed for want of any independent tort. Plaintiff argued that TM attempted to confuse consumers by using plaintiff’s name on its CDs, but this was just trademark infringement.

Wow.

2009-11-16T20:24:00.001-05:00

Jerk doesn't believe in fair use, wants payment for academic quotations. Also, he'd like a pony.

Tarnishing Harvard

2009-11-16T13:50:00.002-05:00

From the back cover of the Yale alumni magazine, Nov/Dec 2009. Headline: "Is everything that begins with the letter H only half as good?" The reference is of course to Harvard (and its crimson color). Ad for Coda Automotive.

(As a proud graduate of both schools, I can only offer the best counter-put-down I ever heard, involving one frat boy telling another that frat boy A's fraternity had some really funny songs about frat boy B's fraternity. "Really?" asks frat boy B. "We don't have any songs about you.")

Add another to the overreaching trademark annals

2009-11-16T08:03:00.003-05:00

Seattle Trademark Lawyer reports that Car-Freshner has sued Getty Images for licensing for commercial use photos that include Car-Freshner's car deodorant products in the frame. Not that I don't think the claim is ridiculous, but (like the keyword cases) wouldn't the claim be better if it were for contributory infringement? I wonder if anyone's actually used these in an ad.

Reverse confusion claim over highly descriptive mark fails

2009-11-15T13:12:00.001-05:00

World Wide Sales, Inc. v. Church & Dwight Co., Inc., 2009 WL 3765881 (N.D. Ill.)

This case caught my eye for a brief moment of insight into the kind of market research large companies tend to have on hand, repurposed for litigation.

World Wide, a small company that made Forever Fresh for the Fridge (a refrigerator deodorizing product) and sold it via infomercials sued Church & Dwight, which makes Arm & Hammer, including Arm & Hammer’s newer Fridge Fresh refrigerator deodorizing product, for infringement—reverse confusion, in particular. Given the highly descriptive nature of the mark—the PTO actually told World Wide to disclaim “fresh” and “fridge”—and the different appearances of the parties’ products, the court had little trouble rejecting the claim.

In running through the factors, the parties disputed the care taken by consumers. World Wide argued that deodorizers are an impulse buy; Church & Dwight puts Fridge Fresh next to conventional baking soda precisely to encourage such “oh, yeah, that looks good” purchases. Church & Dwight, however, argued that baking soda purchases are planned, and cited research “indicating that consumers do not go into the baking aisle of supermarkets unless they are planning to purchase a product,” raising the typical level of care used on low-cost products. The court didn’t agree, concluding that buyers of low-cost refrigerator deodorizers aren’t likely to be all that meticulous in their selection. Given the difference in appearance, though, even a hurried casual consumer wouldn’t be confused.

That baking aisle research intrigues me. I strongly doubt it was conducted for purposes of litigation, and so the questions it asked were likely broader ones. Obviously Church & Dwight would like to get consumers into the baking aisle more regularly, and I wonder what strategies they are pursuing.

Another drug equivalence claim fails to persuade

2009-11-15T13:06:00.000-05:00

Graceway Pharmaceuticals, LLC v. River’s Edge Pharmaceuticals, LLC, 2009 WL 3753586 (N.D. Ga.)

Graceway sells prescription benzoyl peroxide, Benziq, for treating acne. River’s Edge markets a benzoyl peroxide product, Benprox, created specifically to compete with Benziq. They’re both available as a 5.25% wash and 5.25% and 2.75% gel. Graceway sued over River’s Edge’s allegedly false and misleading promotion of Benprox as “generically equivalent or otherwise substitutable” for Benziq, and over allegedly false representations on Benprox’s label about active ingredient strength, dosage form, and expiration date.

River’s Edge sent new product submission forms to various pharmaceutical databases, which are key to most retail pharmacy dispensing systems. It was critical to the sale of Benprox that it be listed as a generic or equivalent to Benziq so that it would show up when pharmacists looked up drugs and brand names. As a result of River’s Edge’s submissions, Benprox was linked with Benziq in the First DataBank and Wolters Kluwer databases. River’s Edge argued that its submissions occurred on standardized forms and didn’t include any claims of generic or equivalent status, and didn’t mention Benziq by name. But once the products were linked, it did contact pharmacies and drug distributors to market Benprox as a substitute for Benziq, and entered into drug supply agreements with drug wholesalers to increase Benprox’s market share.

In addition, River’s Edge gave a flyer to Kinray, a wholesale distributor for generic drugs, to give to its customers. It said, “Get your money-saving, quality River’s Edge generic products through Kinray today,” and promoted Benprox as “compet[ing] with” Benziq. River’s Edge argued that the flyer was prepared in a format prescribed by Kinray, which supplied the headline and the table heading “competes with.” It also included a disclaimer that River’s Edge products don’t claim bioequivalence to products they “compete with” unless noted otherwise—a disclaimer that also was on the email transmittal sheet accompanying the new product submission form discussed above.

In a survey of pharmacists, 39% stated that when a database shows that a benzoyl peroxide drug is linked to a specific brand name, it means that the drug is a generic equivalent. River’s Edge argued that the survey was flawed, among other reasons, because it didn’t specify that the question covered unrated, topical products like the parties’. This is an important point: neither party’s products had been tested or approved by the FDA. No NDA for Graceway; no ANDA (used to approve generics for already-approved drugs) for River’s Edge. The FDA publishes the Orange Book of approved drug products with therapeutic equivalence evaluations; neither Benziq nor Benprox is listed and the FDA has not made any equivalency determination.

So: to summarize, what we have is the consequence of a scheme that grandfathered in some drugs. Today, pharmacists (like medical personnel and patients, I imagine) are likely to default to the assumption that FDA standards govern all prescription drugs. If we really took consumer belief seriously, albeit belief generated by an underlying regulatory regime, we would apply FDA standards for approval beyond what the statute actually requires of the grandfathered drugs. And this is precisely the question the survey here might force the court to answer. Can it get out of this conundrum?

The court found that substitutability was governed by state law. The Georgia Pharmaca Practice act allows a pharmacist to substitute a drug that is “pharmaceutically equivalent” to the prescribed brand name product, defined as “drug products that contain identical amounts of the identical active ingredient, in identical dosage forms, but not necessarily containing the same inactive ingredients.” This does not require therapeutic equivalence. By law, if a doctor prescribes a benzoyl peroxide wash or gel without specifying a brand name, a pharmacist shall dispense the lowest retail priced drug product in stock which is, in the pharmacist’s reasonable professional opinion, pharmaceutically equivalent. Based on pricing, that’s Benprox.

As for the dosage form, active ingredient strength, and expiration date, Graceway asserted concerns about the integrity of the manufacturing process (done by Corwood Labs), which underlay much of its argument against substitutability as well. River’s Edge lists a two-year expiration date on its label, on deal sheets to distributors, and on each certificate of analysis. Graceway’s expert found that Benprox failed stability testing due to a change in the drug's color, viscosity, gravity, and benzoyl peroxide strength, falling below specifications six months into accelerated testing. River’s Edge argued that the long-term stability of color, viscosity, and gravity are irrelevant and immaterial; the expert acknowledged that the FDA doesn’t require viscosity and gravity to be measured in a topical benzoyl peroxide product. Moreover, a two-year expiration date is supported by meeting the active ingredient specifications three months into an accelerated test, as Benprox did.

Graceway also argued that River’s Edge misrepresented that some of its products are gels, because Benprox fails to meet the FDA definition of a gel: a “semisolid dosage form that contains a gelling agent to provide stiffness to a solution or a collodial dispersion.” Semisolids don’t flow at low shear stress. But Benprox, because of manufacturing shortcomings, allegedly separates and runs, behaving “more like a lotion than a gel,” and one of River’s Edge’s experts acknowledged that some Benprox gel products “flow like a liquid” and were “pourable.” River’s Edge argued that the FDA Data Standards Manual definition above was irrelevant, and the US Pharmacopeia standard, which is the uniform industry standard, only requires that a benzoyl peroxide gel be in a “suitable gel base.”

Graceway’s expert also examined the certificates of analysis with respect to label strength. Benprox 5.25% wash is expected to contain between 90-110% of the amount listed on the label. But five of the ten batches manufactured by Corwood that he looked at contained over 110%, up to 120%. Three batches of 5.25% gel ranged from 113-119%, while two batches of 2.75% gel contained 120 and 124%.

River’s Edge argued that Graceway didn’t identify an appropriate range of variation for the gel. Also there’s no FDA or USP monograph establishing the appropriate range for a benzoyl peroxide wash. And the FDA doesn’t recognize “wash” as a dosage form at all, so for the court to find such would preempt the FDA’s responsibility. Alternatively, River’s Edge submitted the USP definition of a benzoyl peroxide gel, which used a range of 90-125%, and argued that the court should apply the gel definition to the unrecognized “wash,” which Corwood describes as an opaque gel. Once viewed as a gel, all batches of Benprox wash fall within the USP guidelines of a benzoyl peroxide gel.

The first issue for the court was whether the FDA’s authority under the FDCA precluded its determination of any of these issues. There’s no automatic bar to Lanham Act claims, and in particular courts may evaluate claims of equivalance between non-Orange Book drugs. This case didn’t require the court to interpret the FDCA or FDA regulations in determining truthfulness. However, with respect to the labeling claims, the court wanted to be careful not to get too close to the FDA’s exclusive enforcement domain.

Ultimately, the court found that for it to take a stance on the challenged representations of dosage form, expiration date, and strength would go too far. The dosage form claim was limited to the Benprox gel, premised on the fact that it didn’t meet the FDA definition of a gel. However, the USP standard was the industry standard, and only required a “suitable gel base”; Graceway hadn’t alleged falsity under that definition. The court refused to hold that the FDA definition of a gel is the only acceptable standard for a non-FDA approved drug; that would be a matter for the FDA.

As to strength, the court also rejected Graceway’s claims that Benprox varied too much. The allowable range Graceway alleged was not based on an FDA or USP monograph for a benzoyl peroxide wash, because no such monograph exists, and anyway the FDA doesn’t recognize wash as a dosage form. The court wouldn’t define a dosage form without backing from the FDA or USP. As a result, there was no established range of variation in strength, and no way for a jury to decide whether the percentage in the Benprox wash was appropriate.

As to expiration date, Graceway’s expert conceded that the percentage of benzoyl peroxide three months into accelerated testing was sufficient to warrant a 2-year expiration date. And the other changes in color, viscosity, and gravity were not enough. The FDA doesn’t care about them for topical benzoyl peroxide products, and Georgia law only requires identical amounts of the same active ingredient in the same dosage form for pharmaceutical equivalence. Graceway didn’t demonstrate that color was relevant to those things, and thus to substitutability, and so it didn’t show that color change was material. Viscosity or specific gravity might be relevant to whether Benprox was properly labeled a gel or a wash, but there was no evidence that the difference was material.

As a result, River’s Edge won summary judgment on all the composition/label claims.

What remained was substitutability. The court assumed for the sake of argument that River’s Edge falsely represented generic equivalence, but found that any misrepresentation was immaterial, because there was no evidence that the Kinray flyer affected pharmacies’ decisions to buy Benprox or pharmacists’ decisions to dispense it in place of Benziq. In Georgia, generic or therapeutic equivalence is not required to substitute a drug, only pharmaceutical equivalence. Graceway didn’t provide any evidence that would allow a jury to find that Benprox was not pharmaceutically equivalent to Benziq. Thus, any misrepresentation would not have been material to substitutions. In regards to the New Product Submission form in particular (listing the active ingredient, strength, and dosage form), there was no evidence from which a jury could conclude that any of these representations were false.

Graceway argued that River’s Edge hadn’t conducted any comparison testing to determine the accuracy of its substitutability claim, but it wasn’t River’s Edge’s burden to do so. (If the claim is of the sort that reasonable pharmacists would believe was backed up with comparison tests, then it’s a necessarily implied “tests prove” claim and can be falsified by showing the absence of tests. However, it seems more plausible that a substitutability claim in the pharmaceutical context is reasonably understood to be backed up by some scientific evidence, not necessarily comparison testing, and River’s Edge does seem to have plenty of evidence about the active ingredient in its product, which would satisfy that standard.)

The court granted summary judgment on the Lanham Act claims and the coordinate state law claims. It also rejected the common-law misappropriation claim. River’s Edge gained an advantage because it wasn’t burdened with the expenses of development and marketing, and its business plan was obviously likely to do just that, but it’s not illegal to copy an unpatented article.

Buffalo Panel #4/Putting Advertising in Context

2009-11-14T09:31:00.000-05:00

William O’Barr, Duke University, Alternative Forms of Advertising Regulation: Comparative Notes from China, India, Brazil, and the US

From most people’s perspectives, law involves writing a will and buying a house, little more. The caselaw doesn’t touch ordinary people’s lives or make up the stuff of law in practice.

Comparative perspective from big countries. China: very highly regulated; India and US: moderate; Brazil: low. Primary methods of regulation are very different. China: government. India: cultural taboos. US: Industry tries very hard to preempt government regulation through various self-regulatory bodies, especially for TV ads, staying one step ahead of regulation. Brazil: the ad agency decides what to do.

Pepsi makes a pattern ad they’d like to use all over the world, but will have to be reshot in various ways for local regulations and ambiance. He showed a popular Pepsi ad with Michael J. Fox; Chinese censors didn’t like it because it showed a number of inappropriate behaviors—running down a fire escape in a nonemergency situation, crossing in the middle of the street, gangs in the city, etc. Chinese version: similar dialogue, very different behavior—he crosses at a crosswalk! Chinese regulators didn’t want to show antisocial behavior. Not an isolated instance.

India: (incidentally, here’s the Indian version of that ad—worth a look, especially in light of the Chinese changes) A private company started competing with the government in condom distribution; people didn’t like how thick the government issue condom was, though it was promoted heavily for population control. Chose the name Kamasutra to emphasize its greater sensuality. Can’t show men and women kissing in movies or on stage; this is a huge taboo. Nor can a man touch a woman’s hips or most parts of her body in an ad. Ad agency works within the context of taboos. The condom ad included a prominent framed picture of the couple—showing that they weren’t engaged in casual sex. Ads can be erotic—he showed a condom ad that probably couldn’t be exceeded in the US—and yet there are still taboos.

Brazil: Creative strategy has become divorced from the product—lost the purpose of selling stuff. “Ghost ad”: made specifically to enter into international competition, but don’t show on TV or in magazines. There’s just no regulation. Ketchup ad: won a competition, didn’t show at home. O'Barr then showed an ad in which boys repeatedly ogled and spied on women, to advertise candy—forget government regulators in the US; this wouldn’t make it past the network censors for concerns over sexualizing kids, objectifying women, general creepiness.

Ramsey: How long does ad approval take in China?

A: Several months. Tedious. Many are rejected and need to be replaced/remade. China has a good side: what the government is requiring is for advertisers to think about whether the values promoted in ads are antisocial and thus contrary to the population’s larger interests. He wishes we could do some of that in the US.

Bradford: OK, so what about niche marketing to homosexuals in China?

A: Wouldn’t get talked about at all: standardization of the ideal family. Same thing with any totalitarian regime: they have an idea of what the images ought to be and enforce them heavily. Also doesn’t allow regional minorities to appear—multiculturalism doesn’t show up in China.

Bartholomew: former student did a presentation on Chinese ads. An ad in which a boy bought two Cokes so that he could stand on them and get tall enough to press the Pepsi button, then abandoning the Cokes, would never be allowed.

A: That’s because comparative ads aren’t allowed. You can’t say your car is best because everyone knows the other brands work fine.

He thinks Brazilian ads are exceptionally cool, and Chinese ads are fascinating because the ads thrive in the midst of this totalitarian state. And why can’t we advertise condoms in this country?

Stauffer: That Brazilian ad is really disturbing, particularly in dialogue with the papers from earlier in the day about the recruitment of women’s bodies to use sales—the social education that boys are supposed to be voyeurs, stick a mirror under the teacher’s dress, etc. Unlikely to be ads in which little girls fantasize about men’s bodies. That doesn’t have the same social meaning.

A: Note that these things are all competing to be the standard for global advertising. The US doesn’t come out very well. US ads are no-nonsense, WYSIWYG, not beautiful, not creative, not generalizable because the American population looks different from every other population—the set of people chosen to represent multiculturalism is unrepresentative everywhere else (blacks, Hispanics, Asians along with whites); too many facts/reasons compared to French/Japanese ads. We’d be wise as Americans to realize how very culturally specific these issues we’ve been talking about today are.

There’s no pretense of multiculturalism in ads elsewhere—they don’t bother to put Muslims in ads in France. American racial codes are different—a code for communicating sensitivity to diversity that is uniquely American, so we show three kids brushing their teeth, one white, one Hispanic, one Asian—an improbable social situation created to show multiculturalism. But there are a small number of niche markets that warrant special treatment in the US—Hispanic, African-American, gay/lesbian; now Asian, though ads tend to make them honorary whites.

Daniel Horowitz, Smith College, David Riesman: From Law to Social Criticism

Lawyer who made his mark as a sociologist in The Lonely Crowd; turned his back on the law. Buffalo was actually critical to his evolution; he came to the law school when the dean was trying to turn it into a national law school, and began to build his career as a sociologist, pushing the boundaries of what was proper to study. He was interested in empirical data, using it to examine the law of finders. Riesman worried about defamation of Jews in Europe. Tried to deal with that in law review articles about the conflict between defamation and free speech. What linked his legal training with his work in sociology? The Lonely Crowd is not obviously a book written by a lawyer.

Horowitz proposes: the link is concern for the conditions under which democracy can continue to flourish under adverse conditions. He began with the problem of political apathy, and tried to figure out how to preserve individual autonomy from attack by totalitarianism in Europe and consumer culture in the US. Often misread as pessimistic.

At several points, he focused on advertising, suggesting that educating consumers might promote autonomy. Wanted “leisure counselors” to educate Americans, especially children, how to consumer, and wanted market research to uncover consumer desires and meet them. Understood the individualizing potentials of mass media, contrary to Adorno and the Frankfurt School, and tried to understand how consumer culture individualizes people and provides a source of resistance to the pressure of the peer group. Feedback and the importance of consumers talking back to corporations and advertisements. The other-directed personality promises flexibility and self-expression, and ads/market research could help Americans resist conformity and seek autonomy. He was countering the pessimism of the Frankfurt School.

Bartholomew: What episodes from popular culture did he find hopeful?

A: Later essays, yes. Charlie Chaplin, American jazz are commonly cited by writers of this bent. Women & sex in The Lonely Crowd—he moves towards women’s liberation through sexual experience: women are acting in their homes more like courtesans.

Alberto Salazar, York University: Consumer Counter-Advertising Law and Corporate Social Responsibility in Canada

In Canada, the law chills consumer expression/counteradvertising, which prevents democratic demate and social deconstruction and reconstruction of the commodification of life. McDonald’s litigated in the UK over the use of “McDollars, McGreeedy, McCancer, McMurder, McDisease” for 6 years, finally losing at the European Human Rights Commission. Court said: lack of government aid to consumers to prove the accuracy of their criticism against a corporation is a violation of their freedom of expression.

In Canada, defamation law is considered private. Defenses are costly, and there’s no anti-SLAPP legislation. Most people are sympathetic to consumer expression and yet the law doesn’t facilitate it.

Example of problems: discourse on obesity, anorexia, healthy eating. Change in law could stimulate behavioral change, past the “public interest responsible journalism defence,” which is not clearly available to ordinary nonjournalist citizens.

Ramsey: Do firms use TM law as well?

A: Hasn’t studied that.

Ramsey: How rigid is the standard? Negligence?

A: No, truth. Even nonnegligent falsehood leads to liability, and you have to prove truth.

Buffalo Panel #3/New Forms of Advertising Regulation

2009-11-14T08:59:00.000-05:00

Laura Bradford, George Mason Law: Sponsorship Confusion

Consumers would prefer more transparent information about sponsorship, but the market is underproviding because of agency and other costs. It’s becoming more and more difficult to tell advertising from organic speech—viral YouTube videos and so on. Search engine results: why do results come up first? More of an issue before Google.

Historically, we have TM owners police deceptive uses of marks. They have more incentive to watch the marketplace carefully. But seller interests in sponsorship disclosure diverge from consumer interests—an agency cost, if we are concerned with consumer welfare. The linkage of a product with a well-known brand tells a consumer that someone with a lot to lose has control over the product: Apple’s reputation sells iPods; McDonald’s reputation sells burgers. But then there’s sponsorship—95% of new product introductions are brand extensions, and cobranding is also on the rise, allowing each brand access to the other’s customers. McDonald’s and Disney market Happy Meals that promote movies and food.

Some buyers punish brands for affiliation—Converse was an indie sneaker, until it was bought by Nike and some buyers abandoned it. Now the Black Spot sneaker, produced by a family business in Portugal, intended to show distance from artificial sameness of mass production, and (some) consumers want this.

Sponsorship and affiliation affects consumer preferences and gives them information about unobservable qualities. Consumers are also interested in learning about compatible products that may not be sold by the TM owner; may want to compare; but they do get useful information from sponsorship. (This doesn’t seem to go to sponsorship of communications v. sponsorship of products and services.)

Sellers: want to preserve the value and meaning of their own marks. Sellers are hurt by lack of common language for disclosing affiliation. They rely on logos/distinctive typefaces to indicate sponsorship, which means that TM owners are forced to police uses in unrelated markets. And she means forced; had to advise clients that they needed to send threat letters even in unrelated markets in order to preserve the right to go after real threats in the future. They have to object when anyone, anywhere accurately depicts the mark/logo. This is a coordination problem: TM owners can’t get together to provide a common language. There’s also an agency problem, because some benefit from uncertainty. There’s no penalty for obscuring sponsorship, as with product placement or guerrilla marketing. Consumers are getting more wary, but that just means that the real harm is the ability to have and trust organic speech.

Another harm: this gives TM owners broad power to pursue other goals. Consumer uncertainty = TM owners can safeguard preferred distribution channels by alleging affiliation confusion, shut down secondary markets in used goods, prevent competitors from using brand names in truthful ads for compatibility or comparability, police brand image by suppressing objectionable speech, etc. Advertisers don’t fully share the costs to consumers of uncertainty and get offsetting benefits.

Since TM law creates the problem by assigning enforcement of consumer interests to producers, TM law should deal with that problem by creating a new mark to realign incentives. The new (s) symbol would indicate a licensed use, and they’d be entitled to current levels of protection against sponsorship/endorsement confusion. Those who didn’t do so would need to provide clear and convincing evidence of confusion and materiality. Asks sellers to stand by their choices. If they want freedom to engage in ambiguous strategies, have to allow others to do so themselves. Shareholder derivative lawsuits: plaintiffs’ attorneys are incentivized to find potential harms, but because of the agency costs—risks of meritless lawsuits—we impose a heightened pleading standard.

Three possible outcomes, all an improvement: (1) everyone uses the (s) mark. Affiliation becomes much more transparent. Everyone learns to recognize it. (2) No one uses it; advertisers want to blur the lines. Heightened standard allows more freedom for organic users. Advertisers who don’t like it can use the (s). (3) Inconsistent use, most likely. Consumers remain uncertain. But the availability of the symbol may change courts’ approach—organic use would be given more breathing room. We’d also get more revealed preferences of sellers—when sponsorship information is seen as critical and when less important, for example by industry.

Katyal: Sees how it would work visually; how would it work orally/in movies?

A: In a lot of cases, you see the logo, so it wouldn’t be that hard to have a little (s) next to it, part of the way it’s depicted in the scene. Consumers would learn it has significance, in the same way that some brand names are blurred out and that practice teaches consumers about legal significance of appearance.

My Q: Seems to me that use and recognition might not covary as she says in (1), which would have consequences for the regime. And I’m not sure how you’d have the current standard and the availability of the (s)—sounds like she thinks the existence of the (s) would change the standard, and wouldn’t it do so even if the plaintiff did use the (s), because the plaintiff would be challenging a use without the (s) and thus have a decreased likelihood of confusion?

A: Yes, she assumes consumers will learn, and that’s key to the regime. And she agrees that it would be harder for everyone to win. Consumers can learn to see the absence of a symbol as an absence of sponsorship, and that would lower the likelihood of success for people who use the (s).

Ramsey: Oral use? Think about how it works with things like trade dress, etc.

A: Needs to be worked out. (Audio disclosure at beginning/end?) That’s advertiser’s job, if they want the protection.

Q: Why not mark when it’s not sponsored and disclaim?

A: That’s kind of the law now. The burden is on the user to show nonconfusion, and that’s hard in context. There’s no easy language to disclaim sponsorship either. Federal Expresso coffeeshop—not claiming affiliation. Because names are seen as indicators of sponsorship, no easy way to say “we’re not affiliated,” and disclosures/disclaimers often don’t work.

Q: Wouldn’t it be burdensome to have all the logos around sports arenas add an (s)?

A: Not a big one, and if they find it burdensome they don’t have to do so.

Stauffer: proposed EU directive: product placement would have to be generically disclosed with a black dot on the screen. Could have a tone for radio.

Why are you confident this won’t be coopted by the antibrands as well? The Yes Men will use the (s).

A: Then they’re likely to be confusing!

Errol Meidinger, University at Buffalo Law School, State University of New York: Branding Corporate Responsibility with Marks of Rectitude

Margaret Chon just published a piece on a similar topic; he’s been talking with her. Home Depot execs came to their building and found a giant banner: Stop selling old growth wood! Using their logo, too. Home Depot protesters brought inflatable chainsaw to the parking lot: thanks for helping Home Depot destroy the world’s old-growth forests! Homedepotsucks.com.

What should Home Depot do? Initially resisted getting certified, but ultimately adopted. Contestive branding: not just about the image, but the image is part of the regulatory regime being crafted.

Forest Stewardship Council: an example of corporate responsibility institutions. A set of institutions using activist targeting of corporate brands; standard setting institutions that accredit certifying organizations and attempt to balance North/South power. They certify products and communications. FSC is legislative: the certification requires meeting various criteria on biodiversity, monitoring, indigenous rights, and so on—looks like what a state would do except that no single state institution would be able to do it.

When Home Depot agreed, the Rainforest Action Network ran an ad in the NYT thanking them. Used the ad to attack other companies that weren’t yet on board.

Pour encourager les autres: After the Network turned its attention from Home Depot, it took only two phone calls to get Lowe’s to follow.

This triggers the growth of private competing certifiers—SFI, a US industry initiative for alternative “green” certification. Eventually, the industry coalitions turned into a worldwide certifier, PEFC. It’s a tournament of competing programs. He posits this has reshaped the forest policy arena, in which environmentalist- and industry-driven certifiers are setting global policies and NGOs and states are at the periphery.

Similar things have been happening in many other sectors: fisheries, organic, coffee, apparel, tourism, carbon footprints, energy efficiency, animal welfare, flowers, etc. He showed some beautifully designed logos, of which the Marine Stewardship Council was my favorite because of the checkmark integrated into the fish.

IP strategies: the Marine Stewardship Council tries to ensure the fish comes from a sustainably managed fishery. The policy is implemented through the logo, and shaped by the fact that it’s implemented through the logo. It’s registered as a mark in Australia, Canada, EU, Iceland, New Zealand, Sweden, Switzerland, and UK. Does license agreement with each user for a fee. On-product requirements: logo, plus statement about meeting MSC’s standards, plus chain of custody code number. MSC owns the mark but delegates the power to license it to MSC Int’l for IP purposes. Main concern is use by nonlicensed organizations. MSC denied its permission for use on a brochure attacking farm/acquaculture salmon—wants to give gold stars, not black marks. They are looking into a standard for aquaculture. They don’t allow any association with campaigns, and demand permission required for all uses.

He sees strategic concerns about future use of the mark ending up being a not insignificant inhibition on public speech.

Another element: certification wars: “Don’t Buy SFI: Certified Deception by the Same-old Forest Industry.” One entity filed a complaint with the FTC: there’s no chain of custody; it’s an industry organization; standards are deceptive because they’re not ecologically protective but littered with holes. (Reminds me of the “Animal Care Certified” case.) SFI filed a countercomplaint against the Forest Stewardship Council and the US Green Buildings Council arguing there’s too much variation in the standards—sometimes it can be certified if it’s grown in a lenient environment but not in another one; imperfect auditing/chain of custody. Also making antitrust allegations because the USGBC has accepted the FSC as the sole source for certification for LEED green building standards, with allegedly anticompetive effects. FSC also doesn’t admit prospective members who publicly criticize the FSC.

And then there’s the question of the WTO: the WTO gives presumptive validity to relevant international standards. One hope is that these standards will be absorbed into international law this way.

Competition for moral authority. NGO v. industry fight, NGO v. corporate. IKEA prides itself on buying FSC wood, but doesn’t display any FSC labels in its stores. Is that a problem, for IKEA to take green branding and put it into the IKEA label?

Ramsey: This is an area where nonprofits are offering up information—complicates the commercial speech account/claims that TM law should be limited to commercial speech. You mentioned prohibitions on use by campaigns: is that justified?

A: He doesn’t make a commercial/political distinction. Maybe it’s not so bad to disallow the use of the logo in political debate—you can talk about the Council.

Ramsey: but bloggers often like to have the logo there (heh).

A: If the point is to brand rectitude, to withhold the use of the logo is a little odd—making moral claims signified in a special way. (Well, just because they say that’s their rule, doesn’t mean it’s the rule by which bloggers must govern themselves, as I believe I am demonstrating—the moral claims are made by application to fish, not to blogs.)

Rebecca Tushnet, Georgetown Law: Ad Creep, Astroturf, and Other Challenges of the Attention Economy

I have a very rough draft in which I talk about my own crackpot theories of why ads are colonizing every aspect of existence. The bulk of the paper is given over to defending advertising law’s ability to follow ads where they go, even in the realm of user-generated content, subject not to First Amendment constraints but to §230. I argue that §230 does in fact prohibit liability for advertiser adoption of pure user-generated content, creating a possibility of regulatory arbitrage (since the user will be subject only to state-law defamation standards while the advertiser who “said” the same things would be subject to strict liability under the Lanham Act), and that we might want to think about revising §230 in this specific circumstance, though opening up §230 might be so risky that it’s not worth the cost. By contrast, I argue, contrary to Eric Goldman and in agreement with Paul Alan Levy, that the FTC’s new endorsement guidelines are fully compatible with §230, since they make the advertiser responsible for a blogger’s content based not on the provision of internet access (nor even associated payment/consideration for same) but on other agency principles.

Questions focused on what counts for the FTC’s purposes—not a free book, but a free Playstation—and aforesaid crackpot theories of how ads, like porn and protest, are in a dynamic of getting more and more extreme so as to overcome our exhaustion and ennui.

Buffalo Panel #2/Responding to New Types of Advertising

2009-11-13T12:29:00.001-05:00

Sonia Katyal, Fordham Law: Anti-branding and Stealth Marketing: The Love that Dare Not Speak its Name

Wayne’s World (1992): Mike Myers & Dana Carvey are confronted with stardom when their cable access program is bought up. They’re entreated to allow their corporate sponsor on the show, and reminded the contract requires this. Wayne the character resists, but while openly displaying a Pizza Hut box and snacking on Doritos. Garth agrees while wearing head-to-toe Reebok and drinking Pepsi. Watch it. They’re disavowing and calling attention to it, and laughing all the way to the bank.

Years later, product placement has gone even further. A brand can be political and commercial at the same time. Anti-branding/culture jamming movement has sprung up, cataloged in Naomi Klein’s No Logo. Billboard liberation movement recodes some messages in urban spaces. In cyberspace, tons of examples as well—parody sites, gripe sites, gamers who create anti-advergaming. As many ways as people design branding, anti-branding can follow. Artists and activists raise complicated questions for the law—a First Amendment-IP clash.

In the last few years, we’ve seen a really dramatic shift in relation between brand and anti-brand. The brand used to coexist with the anti-brand; consumers could identify both by using context. But as consumers have grown more overloaded with information, advertisers have been forced to seek more ways to communicate, leading to blurring between commercial and noncommercial. People don’t respond to traditional ads. Thus the rise of stealth marketing in real and digital space. Public and private are blended.

Stealth marketing often takes place within the traditional channels of antibranding activism. (I’ve wondered whether that V spoiler campaign is in fact sponsored by ABC, actually.) Ellen Goodman describes two types of stealth marketing: traditional payola and immersive/embedded advertising where products are part of content. New generation of product placement is far more diverse—reality shows, videogames, individuals themselves sponsor viral videos, sponsors sit in on editorial meetings for TV and new media, advertisers produce their own content. A new generation of companies instituted fake sites and blogs—Wal-Mart blog about an average American couple traveling across the US spending each night in a Wal-Mart parking lot. Turned out to be funded by Wal-Mart. Ask.com had a guerrilla marketing campaign against Google—Stop the Online Information Monopoly, speaking the language of the antibranding activist—directed them to informationrevolution.com, owned by Ask’s ad agency. Mozilla: site called “Fight Against Boredom,” with a fake Facebook page etc. Advertisers can use flash mobs too.

Implications for trademark: can be difficult to tell the difference between official and unofficial pages—sometimes they can collaborate, as with Coca-Cola’s Facebook page created by fans. In other cases, companies may be less enthused. Facebook now requires individuals with company pages to prove they legitimately speak for the company—“helping companies keep control of their messages,” in order to be able to charge them someday. Authentication = companies can shut down commentary.

Cannibalization of anti-brand by brand—where is the line when they use the same channels? What’s the role of the law? Clear delineations between commercial and noncommercial speech are nearly impossible. Next generation of cases will have to grapple with these difficulties. Should the law require more disclosure of sponsorship? What would that look like, and how would it affect the consumer imagination?

Zahr Stauffer: Historical narrative can be complicated—there’s a conventional view about when product placement began, but it didn’t begin with Reese’s Pieces. It’s as old as Hollywood itself. This has ramifications for whether the practice is depicted as disruptive. It obfuscates emphasis on other key factors in your story—changes in consumer culture, creative culture. Guerrilla marketing does seem new.

A: She doesn’t mean to say E.T. was the first time for product placement, but that it was a very dramatic example of how much companies were willing to pay. Other factors: so much cynicism attached to the notion of sponsorship. Her students turn away from sponsored products. Other: info overload. So many channels/options that it’s almost necessary for the advertiser to figure out how to use them more productively. Consumers are learning to tune ads out.

Q: Add to this what people in advertising industry say. People in the industry want to eliminate the term “advertising” and say they’re communicating, engaging, having the consumer enter their environment. We need to see the system, but also what the natives think they’re up to—their language has changed.

My thought: pursue the misuse arguments Posner offered in Ty v. PIL. It is a wrong inflicted on the information environment to disguise source to enhance credibility and sell stuff (have to confront literature on anonymity and pseudonymity).

Lisa Ramsey: Disclosure?

A: Possible—still have the cynicism to deal with.

Q: The previous panel was about blurring boundaries between consumer and worker, commercial and noncommercial sources of identity. Why are we so upset? Feminists used to argue against the public/private divide because we should make visible what’s in the private sphere. If your critique is right, disclosure won’t be enough if the brands are actually acting, teaching us how to be and think, as opposed to just communicating information.

A: Disclosure would be one step to encourage consumers to take notice of how they’re being marketed to. Expanding the parameters of fair use would also be a part of it. Both offensive and defensive strategies.

We used to think of the anti-brand world as noncommercial and branding as commercial, but markets are developing in both, which raises the question of escape as well as complicating First Amendment analysis.

Lisa Ramsey, University of San Diego School of Law: Brandjacking on Social Networks: Confusion About the Source of Information or Advertising

Virtual and physical impersonation: the Yes Men recently impersonated the Chamber of Commerce quite successfully for a short time. Many people instinctively think this is free speech, but TM law may apply and that might not be such a bad thing in appropriate circumstances.

Social networking sites: often not clear if the markholder is behind the particular page. Facebook account for Nine West model auditions, soliciting women to send contact information and photos of bodies and toes. Someone else (possibly a competitor’s employee) set up a fake Twitter for PR firm Kinner Friedman—put embarrassing comments on as well as news taken from the real site. “Janet” signed up on Twitter as ExxonMobilCorp and started interacting, though allegedly her work contained several errors. It’s not unreasonable to assume that consumers might disclose personal information to the “brand,” which might be misused—identity theft, buying nonauthentic goods. If the posts are offensive or false, this could also discourage customers from buying the products or services. Info overload: hard for consumers to figure out which of 100 Nike Facebook pages is real.

What if the fake site isn’t selling anything, though? There seems to be no commercial use. Her thesis: TM law does cover impersonation, and it should where reasonable people believe and rely on the false statement of identity and are confused about the source. However, free speech can be harmed if courts apply this outside the pure impersonation context—it should not apply to commentary/criticism. Likelihood of confusion about source only, not confusion about sponsorship/affiliation/consent, should count. (I think this claim makes Mark McKenna’s point quite well: TM’s key wrong turn came when it abandoned competition. Ramsey’s argument is essentially that someone pretending to be in competition—selling the same stuff—with the TM owner is committing a wrong; the reason that conclusion is scary is because of its implications when the person isn’t quite pretending to compete but is actually engaging in commentary. If we didn’t have such an expansive coverage of noncompeting goods and services, then we wouldn’t have to worry about the real parodist when making doctrine.)

Many TM owners have TMs on the provision of information services relating to their products/services—Viagra, for example, applied to register information services such as pamphlets, websites, and so on offering information about erectile disfunction. As long as you’re not just advertising your own goods and services, you can extend your TM to information services. In that case, someone impersonating you is competing with you in the provision of a service you also provide—information.

Can make clear that you’re not the markholder—Fake Steve Jobs, or tags like “victim” or “fan.” Courts should also look at content to see the context—Fallwell.com case. Initial interest confusion is insufficient from a free speech perspective. Another alternative: the Rogers v. Grimaldi balancing test—a fake Facebook page can be literary expression. Is the use relevant to the content? Often it will be. Does it explicitly mislead consumers as to source or content? If people really are confused, you can’t take advantage of this test. (I think this misreads Rogers by reading “explicitly” out and reducing it to a confusion test, which is of course manipulable—recall that Rogers submitted a confusion survey in that case showing levels of confusion that would have convinced some courts. The issue was that the film didn’t say “authorized” or “real” or anything else, and thus the court held as a matter of law that the First Amendment protected the title of the film. Nor did the ExxonMobilCorp account, though perhaps the contents of tweets would have crossed the line.)

Is saying that you’re the markholder a “knowingly false statement of fact”? It’s not anonymous or pseudonymous, but a false attribution of authorship. (Does that mean it’s false for me to take “Mark Twain” or “Samuel Clemens” as my pseudonym? Roleplaying groups will be very very sad to hear this conclusion. Ramsey says in response to my question that no, it has to be contextual—can’t rely on the reaction of a newbie to the forum.)

How long does confusion last? The Yes Men confused a few major media institutions for long enough to get a news cycle. What must people do in reliance on the information? Is belief enough, or do we want to require financial harm—stock price, lost sales, etc.? Do we care only about harm to consumers, or also about harm to markholders?

A commercial use requirement might be a good idea, but political groups and religious organizations would like to use TM to protect themselves, and we may well want to allow them to do so. (Once again, it’s all about competition. United We Stand is a good case because it involved competing political parties; suing Nader for using a credit card slogan was not.)

Bartholomew: Isn’t there something to be said, politically, for sucking people in—e.g., A Modest Proposal? When you see the criticism emerge, that can be more powerful.

A: That’s a huge issue—at what point do you have to get the joke? Case by case, in the end.

Q: wouldn’t this be analogous to a man appearing in a white coat in an ad, confusing consumers about whether this is a message from a doctor?

A: She’s confining analysis to impersonation of TM owners, but individuals have claimed harm from impersonation of their identities. Whether people should sue is often a big question—companies risk a backlash if they sue.

Q: Cultural question of whether this is good for society v. how we fit this in TM law—which issue do you want to address?

A: She understands why this is an effective form of communication. But that doesn’t always mean it’s protected speech or noninfringing—maybe this is civil disobedience and you take your chances if you do it.

Q: Focus on TM law limits this to US only in an international age. US tried “Brand America” overseas—ambiguous source. How can TM law help?

A: Well, all countries have TM—has to be nation by nation. As a consumer, she’d like to know source.

Laura Bradford: Should we hang back because these are new uses? People may form expectations depending on how we regulate. In the beginning, some judges believed that search results were confusing because search engines were new. But then norms developed and most people aren’t confused by organic results. Aren’t you stacking the deck by saying that, for example, a stock price decline is a TM harm? That’s just a back door to saying the parody was effective.

A: She thinks it should be tentative and case by case. Practically, courts are willing to find consumer confusion with a 15% confusion showing, and that will harm true parodies. Stocks: she struggles with whether it’s actionable, though it is a harm (and there are several cases recognizing it as such, see Checkpoint Systems v. Check Point Software in the 3d Circuit).

Q: Because it’s up to private parties who have to pay for an action, there’s a large amount of unlitigated stuff—it’s serendipitous who gets picked on. From a First Amendment perspective, that may be a chilling problem.

A: Maybe the government should step in to protect consumers in certain circumstances—this is a very different situation from parody, cybergriping, etc.—you claim to be someone else and consumers (readers?) believe you. Markholders providing negative information about themselves have more credibility than other sources.

Zahr Stauffer, University of Virginia School of Law: Novels-for-Hire: Authors, Advertising, and the Law

There is a regulatory regime of sponsorship disclosure in broadcasting, though it’s flawed. But what of literature? Early stages of project thinking through differences between ads in literature v. TV/film. Intuition: differences with respect to authorship, consumer experience/engagement. Now covering branded entertainment--ad-supported literature. Includes novels with actual ads (like in magazines) in them. She distinguishes autonomous references (free plugs) from sponsor-induced references.

Embedded advertising: embedded within entertainment contexts—need not be stealthy, as with Wayne’s World drawing attention to its own operations.

Taxonomy: ads placed around fiction: literary banner ads; online content; way it worked in mid-19^th century England. Ads embedded in fiction: literary product placements. More common than we think, though not that common. Ads as fiction: sponsor-generated content. Sponsor often commissions an independent author. But “generated” points to the legal fiction that the commissioner is not just the owner but the author. It also sets up the concept in parallel with user-generated content, and in fact the rise of one is correlated with the rise of the other.

Many issues raised; she is focused on copyright but needs to think through the other areas. She has argued that embedded ads are beneficial elsewhere, but has no normative take on advertising in fiction here—she’s engaged in detective work.

Taxonomy is important not just generally but also because we have no regulation in place against which to measure what’s going on. We might think through different modes of ads in literature—is it anything like payola? Would we analogize to the FTC’s Endorsement Guidelines? Could it be an unfair trade practice? Or is it First Amendment-protected speech? Do we need new concepts, or none at all?

Three foundational assumptions: (1) product placements in literature, and branded entertainment in general in publishing, are more common than we think. Details are usually private; scandals occur when authors are outed and there’s a lot of downside for disclosure and no requirements of same. Since embedded advertising in general is such a large market, it would be surprising to think that publishing would be excluded, particularly with the rise of immersive/cross-platform marketing. Authors themselves are slick marketing machines: Stephen King, Janet Evanovich, James Patterson (former creative director at ad firm, presumably not reluctant to engage in marketing). Lots of brand references to cars in his books, but when something evil happens in a car it’s never identified by brand. Difficulties in publishing industry also provide incentive to turn to sponsorship. And a couple dozen reported instances.

(2) This practice will continue to grow sufficiently to be worthy to think through the implications. Declining print revenues and increased pressure to experiment with new revenue-generating models, e.g. digital textbooks. Increasing acceptance of product placement in traditional media to get revenue, even in hostile environments like Canada. Shift in digital platforms—makes the process more appealing for sponsors because inserted ads’ performance can be tracked/measured, and ads can quickly be updated. Imminently expanded regulation of embedded ads under various proposals might force advertisers to literature—that’s why cigarette companies went to novels in the first place, when they were kicked offscreen.

(3) Draws line between fiction and nonfiction. Harms differ.

Why use brands? Verisimilitude. Can be more distracting to viewers to have a brown car than a branded car. Brands can embed meanings. The meaning of the brands of beer Obama and his guests drank was a source of debate! Aesthetic results of using brands.

Ads placed around fictions: very common historically; probably originated with Dickens. Common in late 1970s to pay for placement in pulp novels. Authors often didn’t know. Showed up in Toni Morrison’s The Bluest Eye. One advertiser paid for 540 million paperbacks. Poised to grow exponentially with the Kindle, which is thinking about subsidizing through banner ads.

Embedded in fiction: Hemingway got a case of pastis for his references. More modern: references to Maserati earned the author a party at a dealership. Another author mentioned champagne in return for free champagne at the launch of his next book.

Sponsor-generated fiction: Susannah James, Love Over Gold: the untold story of TV’s Greatest Romance, Nestle’s Gold Blend (those googly-eyed coffee ads). Ken Casper, Running on Empty, NASCAR-sponsored romance. Entrenched in the kid’s market—the Oreo Cookie Counting Book; Herhsey’s counting book. Electrolux commissioned a novel about a guy who hates housework and whose girlfriend dumps him; features tips on cleaning. Lexus-brand fiction: “Black Sapphire Pearl” was named after a paint style; well-known authors like Jane Smiley and Curtis Sittenfield were commissioned for the followup, “In the Belly of the Beast.”

These are explicitly efforts to reach valuable demographics. She assigned “Black Sapphire Pearl” to her law & literature class on the Lexus website, wanting her students to encounter it on the website. Four days before class, it disappeared. Mark Haskell Smith, the author, doesn’t list it on his website as a work he wrote.

Concerns: consumer deception, which she finds more worrisome than in broadcasting, where consumers are more savvy about placement. Authors: preferences under patronage systems; some may like them, but there are tradeoffs as compared to a market system. These works are trying to be works for hire. But do they fit into the model? Congress envisioned WFH to be a narrow class because it’s owner-friendly but author- and user-unfriendly. If we see this area get a lot of traction, we might be putting a lot of pressure on the WFH category.

Kindle amplifies these questions—we may see banner ads exploding; we may see ads be target-sensitive with different ads for different copies; we see Stephen King commissioned to write a novella for the Kindle that heavily integrated the Kindle and that was initially available only on the Kindle.

Errol Meidinger: What kinds of authors do you expect here? Already high-profile? Different implications than if it’s a way for a poor struggling author to get paid.

A: That’s one research question—is this helpful or a windfall? There’s a range. She’s seen not very well known authors get a 2-novel deal to write about Ford; Fay Weldon, already a defined brand herself, got commissioned. James Patterson is hard to figure out. Arguably he has some sort of placement deal. They don’t want you to know what the deals are. Recently, some teen novels have come out about this—think that the demo doesn’t care.

My Q: Say more about the parallel relationship you see between user-generated and sponsor-generated content. Also how do you deal with franchises like Nancy Drew or Gossip Girl or even Star Trek tie-ins?

A: She thinks that the question is whether the marketing is driving the content. Is it a pure aesthetic dictate? She doesn’t think that aesthetics can be free from commercial constraint, but she looks for actual consideration provided. Gossip Girl, filled with brands, is the way it is because it’s seeking a placement deal. It’s a way of signalling adaptability for screenplays.

Conference on Advertising and the Law, University at Buffalo Law School

2009-11-13T10:27:00.003-05:00

Opening Remarks

Mark Bartholomew, Buffalo Law: F. Scott Fitzgerald said that advertising’s contribution to humanity was “exactly minus zero.” But TMs are ads and they’re useful. And sometimes we just like ads, e.g. the Superbowl. Google and Hulu use ads and make our life better. Today we have an interdisciplinary group talking about ads and what they do in the world.

Panel #1/Advertising’s Social Consequences

Marion Crain,Washington University School of Law: Consuming Work

Over the last several decades, the American economy has shifted from work-centered to consumer-centered. So we can have a “jobless recovery,” measuring consumption instead of employment. Branding has replaced ads, designed to persuade consumers to choose one virtually identical product over another. Advertising speaks but brands act, erecting a frame of reference for trust, loyalty, basis for brand extensions. Iconic brands influence and innovate cultural change. They represent social consensus about societal values. Marketers say, instead of asking consumers what they want, study social trends and look for cultural contradictions/breaches in social fabric that could be exploited by a product. Reagan era: This Bud’s for You—aimed at working-class men, designed to deal with anxieties of blue-collar men over outsourcing, a new phenomenon.

Branding is usually associated with products, but also increasingly with services, and it’s here that branding invades management, as it must because employees are part of the brand. They interact with consumers to deliver on the brand promise, portraying the brand and symbolizing corporate identity: front-line ambassadors. Employers must control and manage employee identity to communicate the brand effectively. Also, service work is fundamentally embodied: can’t separate the work from the workers. And those bodies have cultural and social attributes: race, gender, class, particular physical characteristics.

Dramatic rise in aesthetic marketing and aesthetic labor, triggering emotional associations at a precognitive level—things look/feel good and that’s why we choose them; the choice then signals our identity—I like this brand becomes I’m like this brand. Aesthetic marketing requires aesthetic labor: employees have to look and feel like the product/service. Thus, an increasing pattern of employee selection for aesthetics and not just skill. Service businesses also develop and commodify the workers once hired through training, appearance regulation, discipline and reward systems designed to produce an appealing service experience—hear a smile in the voice, see the expected brand image. Particular emphasis on middle-class look, with racial and gender connotations as well as meaning for mannerisms and modes of speaking. 93% of retail/hospitality employers in Glasgow searched for and developed aesthetic characteristics in employees.

Particular innovation: wearing the brand, work and consumption intertwined on the bodies of employees. This is especially exploitative. Significant effects on culture. Most pronounced in retail fashion, where it’s a practice to require employees to wear/model the brand as well as sell it. Employees not unionized, easily fired; used as walking billboards/talking statues. All employees are embodied, but wearing the brand communicates a prior act of consumption while performing the labor of selling. So it’s smart marketing and it has a powerful impact on employees’ identity. Shapes employees beliefs about the brand and induces/compels their participation in value chain in which they have to shop for the most flattering styles, figure out how to accessorize the look each day, and continue to respond to trends to constantly update their wardrobes. This also determines how others respond to the employees, because we perform so much identity through dress.

Retailers require employees to buy the clothes, albeit at a substantial discount of 25-75%. Employees are often drawn from the consuming base—Abercrombie & Fitch is notorious for recruiting off of the sales floor. Buying the clothes creates a captive branded community of consumers. Of necessity, they carry the clothes out the door. Employees generally don’t object; may want to align themselves with the brand. They appreciate the clothes.

So what’s the harm? First, qualitatively different from anything employers have done because of its powerful impact on identity and culture. Long history of (exploiting) employees as consumers: Henry Ford who paid his workers enough to buy his products; the Big Three automakers developed a system of employee friend & family discounts, which were incredibly profitable. Textile mills established company stores and company housing. Employment conditioned on buying and living there; employers even issued script redeemable only at the store. But there’s still a separation between identity and consumption. They don’t convert physical and cultural attributes of the workers into firm profits. Not so stereotypical.

Employers reinforcing a middle-class look and attitude are valuing employees for their cultural capital, not their human capital. Employees are being trained in look and feel, not real marketable skills. This contributes to income inequality and reduces class mobility. The captive branded audience is fundamentally dependent on the employer. Creates “addicts.” Erodes boundaries between work and leisure by extending the selling past the time the worker leaves. Excludes people based on race and gender—suits against Abercrombie & Fitch. Cultural capital deployed in sale of brand in ways that conflict with discrimination law—whiteness as property, on which the employer trades to increase profits. Employer taps into stereotypical assumptions about what whiteness means—reliability, power, choice, consistency and reputation. Transforms cultural narratives into action.

All this marketing is sold to employees and the public as the product of free choice. Reinforces assumptions about the power of the market, making collective resistance more difficult.

My Q: Relation to sex work, which is illegal/not corporatized but also exploits the body?

A: Sex work is work. The most exploited sex workers are so because it’s so hidden. In this context, the real work is hidden: the consumption is explicit but where do the dollars come from to buy these things? Employers are hiring for a middle-class look, but the employees are paid less than minimum wage by the time the deductions are made from their paychecks to pay for the clothes. Some have sued under the labor statutes when that occurs—but then there’s a big legal question of what counts as a uniform.

Q: How would this be different from a cultural studies perspective? What does law bring to this?

A: The law is structured to deal with exploitation segregated by subject: sex or race exclusion is actionable under Title VII. But they overlap, and the issue of uniforms shows this. How do you deal with employees who end up buying lots of clothes from the brand? Donning/doffing regulations: should employees be paid for the time spent putting on/taking off uniforms—courts really reluctant to extend that past blue-collar workers to white-collar workers. If paid for putting on “uniform,” why not for commuting time? Requirement to wear the brand might be a wedge situation where employees could get some compensation.

Q: Benetton ads mobilize race and ethnicity in a particular way—comment?

A: Similar to exploitation of Native American identity as mascots by sports teams—mirror image of her argument. Replicating subordination and profiting from it. Her project is the exploitation of white identity. (Ads v. real workers—similar to composition of hospital staffs on TV medical shows versus in the real world.)

Bartholomew: What’s the potential for resistance in this area? People rework school uniforms subtly. Can the Gap employee do so as well?

Q: A lot of research exists on this. Disney employees are heavily regulated in appearance and public interactions, yet they resist in subtle and not-so-subtle ways. But what intrigues her is that mostly employees don’t resist. They resist most when regulation is very specific and detailed. If you’d be sent home for failing to shave your legs recently enough, then backlash may occur. But in the US, with the way we valorize individual choice, the obscuring of the coercion here—where employees are allowed to pick their clothes—makes the clothes not a uniform and also makes resistance more difficult because consumption is fundamentally an individualistic, solitary activity.

Laura Bradford: What about the employer interest in having a uniform appearance? There’s some utility to consumers knowing what the image is they’re buying into. Nobody has to work in fashion—there are other jobs. But we now have nonwhite images of style; why not allow stylish people of all ethnicities to find jobs in retail?

A: Sure, there are reasons to create solidarity/communicate to customers—Wal-Mart’s blue aprons. What’s bothersome is the complete and all-encompassing control over the employee’s appearance. Choice to work: this goes back to how marketers draw brands from the culture—not just reflecting but innovating. The range of choices is constrained by the way marketers decide what they want to sell. And there are significant wage disparities between wages paid by upscale white fashion retailers and what minority employees are able to command.

Dianne Avery, University at Buffalo Law School: Ladies in Red: The Selling of Gendered Work

Focuses on airline attendants’ uniforms. Richard Tyler designed uniforms for Delta—“signature” red dress. Set off against men’s dark but stylish suits. Makes the women “stand out.” New, fresh, sexy image—and some flight attendants, through their union, object. It’s a story of technological and organizational methods used to deliver the brand internally and externally, and the legal, social and psychological relationships between producers and consumers. It’s also the story of one airline’s attempts to boost revenue by reprising days of glamor and sex in flying—anachronistic but perhaps understandable in a world where the public knows that airplanes can be weapons of destruction. The female employees who are the right size, and thus have the red dress option, perform sex appeal as part of the Delta brand.

Delta bought Northwest, making the largest carrier in the world. The attendants and groundworkers at Northwest are unionized, while those at Delta aren’t. Unionization of the merged entity is unclear. Big challenge: build a single airline with a single brand image. Delta’s spent a lot of money on new food and wine, new paint for planes, new uniforms. Nostalgia for the hypersexualized ads of the 1970s with scantily clad female flight attendants.

Stewardess couture first evolved within narrow boundaries: demure, tailored. Shift in the 1960s for all advertisers, including airlines; sex became a way to tout the expected gratification from a service: the apogee/nadir being Southwest Airlines in 1971, with attendants in hot pants.

Richard Tyler is a celebrity designer known for his sexy designs. In 2004, commissioned to design Delta’s clothing. Sent the Delta line down the runway in 2005 along with his couture line, unprecedentedly. A trend to have high fashion designers do airline uniforms (as well as other service industry uniforms). Past designer charged with redesigning British Airways uniforms said he wanted to bring glamor back: the girls will look very sexy and the men will look like strong heroes. Union replied: attendants are safety personnel; and revealing uniforms would lead to more sexual harassment and air rage. Ultimate collection was quite conservative. Big innovation: women had a choice of low-waist boot-cut trousers or skirts.

Another piece of the puzzle: the uniform industry. More than 5 million people wear Cintas uniforms to work every day. The company is aggressively anti-union; violated living wage ordinances in Los Angeles and Alameda County; sued many times for wage & hour violations, OSHA violations, antidiscrimination law; accused of running sweatshops. But it wins awards from the National Ass’n of Uniform Manufacturers and Distributors for creating good images. Delta’s manufacturer dresses 1 million employees every day.

Delta has a style clinic: employees get to pick/mix and match elements of the uniform. The problem: NW flight attendants began to wear the collection in March 2009, and learned that the red dress is only available through size 18, but every other piece of the collection in other colors (dark blue) is available in other sizes. Union filed a grievance. An injustice for one is an injustice for all: let employees decide. The red dress symbolized a reimposition of humiliating weight (and age, marriage, pregnancy) restrictions. Essentially a form of sex plus weight discrimination. (With the added fillip of choice.)

There’s also a separate Red Dress campaign for heart health, to which Richard Tyler submitted the Delta red dress. There’s a First Ladies red dress collection, a Mattel doll in a red dress, etc. 61% of American women now recognize the color red as associated with heart health. Irony: according to psychologists, red signifies sex to men. So what does this brand mean? Celebrating women’s health and beauty; aphrodesiac for men; etc.?

Crain: How much is about classing up air travel, especially in the era of cattle-car travel? Compensating consumers for the bad experiences; making employees feel better about their jobs because of the opportunities for choice.

A: Reaction to 9/11—a way to reglamorize travel. And the flight attendants apparently do like it, though they have to buy the uniforms themselves ($150 allowance per year; one vest costs $50). How the uniform is worn is highly regulated.

Q: In Japan, red means something different—it’s an international airline. Cultural analysis would help—red may have certain key meanings across cultures.

A: China Airlines also puts attendants in red—used differently in different places.

Q: Note also Air New Zealand ad with attendants in body paint.

A: Hooters Airline, a short lived experiment. Blurring of work and play.

Q: Paper mentions Song airlines, designed to appeal to mothers, in the paper—what uniform did they think would do that?

A: They sexed up the men with pajama-like outfits, put the women in sportswear.

Q: What’s wrong with the sizes?

A: Sends a message that there are different classes of employees. The workers who can wear the red dress and be the brand ambassador—the “signature” dress—will be preferred.

Mark Bartholomew, University at Buffalo Law School, State University of New York: Advertising and Social Identity

Why do ads work? Standard answers: Attractive people, cute animals, music, humor, etc. Exercise: describe yourself, then discuss your favorite brands—look at the links between brands and identity. What are the markers in ad campaigns that make us feel that brands speak to us? Marketers aren’t just interested in our attention, but in our emotional investment. How do ads influence our sense of self, and what are the consequences? Previous papers show the employees being affected by ad campaigns; he is interested here in consumer effects. Especially important in an age where ads are touted as the savior of the content industry.

How is identity formed? How does advertising piggyback on this process? What are the consequences? What are the appropriate regulatory moves?

Case study: ads to the gay community, because it’s been a darling of marketers since the early 1990s. Breathless pieces on how it’s an untapped niche for making money. He’s not arguing that ads influence being gay (whatever that means); they influence the meaning or construction of that identity. Doesn’t mean to imply that there’s only one gay identity, but using “gay” as shorthand because marketers do that.

Identity formation: identities aren’t innate, but we actively shape them. But identity is often formed subconsciously, from surrounding contexts. Like birds, if we’re near twigs and sticks we’ll make our nests out of twigs & sticks, but if we’re near People magazine we’ll make our nests out of People magazine. We define ourselves by group memberships—academic, Boston Red Sox fan. We take on the behavioral patterns and norms of people in those groups. Two-step process: self-categorization (looking around at potential models and seeing what fits) and comparison. We then look for metrics of difference favorable to our choice of group.

Ads fit in well as part of identity formation. They surround us. 3000 ads per day per American. Advertisers are also very skilled at subconscious, implicit appeals. And today they typically engage in niche marketing, a change from 50 years ago where appeals were more broad-based (patriotism, general insecurities). Triggered by the rise of identity politics and technology, which allows massive databases/sorting. Does that represent just an increase in welfare, more to choose from? Ads show archetypes.

Gay community-focused ads: depict white affluent males. Leaves out lesbians, people of color. Ads have been very conservative, depicting sexuality in essentialist manner, 100% gay or 100% straight, but monogamous anyway. Leaves out lots of people.

One might argue: there are other non-ad role models—friends, coworkers. This niche marketing, however, involves a coopting of the spaces groups normally use to engage in self-categorization. That’s Niche Marketing 101—the importance of infiltrating once less-commercialized group spaces. E.g., gay bars, gay bookstores, gay-oriented publications—important to developing a social group, allowing self-categorization. But now you can go to Amazon.com and still get something targeted to you. Gay publications that used to focus on gay identity and civil rights now talk about what it takes to participate in the gay lifestyle, which is an ad message.

Another important space for engaging in categorization: in-group codes used to identify one another, particularly important for groups with a history of discrimination. Words like pride/queer, or the rainbow flag. Advertisers appropriate these things, as niche marketing theory advises them to do to signal to the consumer that the consumer is being addressed in that social role. So there’s Pride brand beer. But that deprives pride of its power as signifier of difference—maybe it’s an outsider trying to tell you something. Shrinks ability to categorize self outside the market.

Second part of identity formation: comparison with other groups. The metric advertisers emphasize over and over—while they tell you your group is better than others—is trend-setting. Gays are supposed to be trendsetters. It’s a myth; market researchers told companies that gays were early adopters, but that was faulty statistics; gay market isn’t as affluent or style-conscious as was thought c. 1992. Problem: it costs a lot to participate in trendsetting lifestyle. You can’t buy your clothes at Wal-Mart. Queer Eye for the Straight Guy: constant emphasis on taste that gay men have to which heterosexual men have insufficient access—must consult a gay man. This is linked to class. A lot of people without economic/cultural wherewithal but who want to be part of the gay community feel a lot of frustration that they can’t be what advertisers tell them they should be.

Implications: it makes sense sometimes for emotion to guide decisionmaking. But there might be collateral damage. Thoughts: use law to expand identity models. Greater need for fair use/First Amendment defenses when people tweak a brand to serve a different identity purpose. Most of us don’t process ads very much, though, so there may be little reworking of them. Counterintuitively, maybe there should be less protection of advertisers and their constructions and more allowance for confusion. We tend to rely on what the advertiser tells us, but if we were more conditioned to think ads were unreliable maybe we’d engage with them more.

Q: Instead of identity, what about talking about subjectivity? Might be helpful. Exercise: show men across the life cycle in ads. Gay men in ads don’t have a childhood or an old age; they deal with financial security and AIDS.

Sonia Katyal: Couldn’t you also argue that ads function to expand a lot of models? Every time a market gets identified, advertisers seek to fill/represent that niche and form it. Some results are negative, but some positive. As a reaction against gay male model, new businesses/ads have emerged representing lesbians. More trans-positive ads now. Normatively, is it possible/desirable for niche communities to escape ads when everyone is so pulled in?

A: He’s not sure how much escape is possible. There may be more nuanced advertising; it’s impossible to be comprehensive about this, but his take is that there’s still a conservative/stacked depiction despite some more sensitive campaigns.

Q: Brand hijacking: Timberland boots adopted by young black men, against the wishes of the brand.

My comment: I don’t think allowing uncertainty about factual claims (allowing greater confusion) would help if the problem in identity formation is the emotional, nonrational/preconscious part of ads—factual claims seem orthogonal to identity operations. Katya Assaf on cultural symbols v. brands might be a good source.

Class action inappropriate where regulation is required

2009-11-13T00:31:00.001-05:00

Ramirez v. Dollar Phone Corp., --- F.Supp.2d ----, 2009 WL 3747215 (E.D.N.Y.)

Judge Weinstein delivered a fascinating opinion in this putative class action about fraudulent marketing of prepaid phone cards, notable for its recitation of problems with such cards and attempts by regulators to deal with them—including descriptions of other cases, FTC notices, and proposed legislation—that reads more like a law review article than a decision. He ultimately concluded that the court was powerless to do anything for these plaintiffs. I don’t know enough about class actions to know whether there’s precedent to dismiss a class action because only regulatory action can work—I’d love to hear from anyone who knows more.

Ramirez sued defendants under the consumer fraud acts of eleven states for deceptive practices. The court found that a class action was not superior to other available methods. “In general it is inappropriate to deny those wronged civilly a fallback court-supervised remedy when the administrative law segment of our justice system has neglected to provide an available superior form of protection. There are, however, instances where the litigation remedy is relatively so inferior as to warrant denying it altogether in the hope that administrative justice will prevail. This is such an instance.”

Background: “Deceptive and abusive practices in the prepaid calling card industry have been widely documented.” The industry is multilevel, and it’s hard to tell who’s responsible for setting rates, disclosing information, etc.—there are a number of middlepeople before purchased minutes turn into calling cards. Agencies and researchers have found “widespread discrepancies between the amount of calling time claimed in advertising and marketing materials, and the calling time actually available to card users. In tests conducted by the FTC in connection with recent enforcement actions, the cards were found to provide half or less than half of the advertised minutes.” The plaintiff, for example, bought a $2 card to call El Salvador; he was promised 48 minutes at the beginning of the call, but it ended after 25 minutes because the card was out of money.

Purchasers are typically poor and can’t afford traditional phone service. Many of them are recent immigrants who don’t speak English, and are thus particularly vulnerable. Deceptive practices in the industry have been the subject of “extensive, repetitive private litigation as well as repeated enforcement actions by the FTC and several state Attorneys General.” At the court’s request, the federal government submitted a summary of the actions the FTC and the FCC had taken in the area so far, from which the court determined that “the federal government has made substantial efforts to assist purchasers of phone cards by its publications and actions to prevent misleading conduct.

Yet, the federal government is inhibited in providing full and uniform protections by a lack of explicit authority.” There’s a proposed federal Prepaid Calling Card Consumer Protection Act of 2009 to deal with the inconsistent patchwork of current regulations resulting from the FCC-FTC split in authority over telecommunications providers (carriers) and advertisers (wholesalers, distributors, and retailers). “While the FTC seems to have been active in policing the calling card industry, as is demonstrated in the list of its enforcement actions, it seems not to have the authority to take any action against those the plaintiffs claim are ‘the real culprits’ in the deceptive practices, the carriers.”

In the meantime, the FTC has brought several deceptive practices enforcement actions against prepaid card providers; orders and proposed orders involve both money and detailed disclosures and other restrictions, including ongoing testing to make sure rates are accurate, going forward. State AGs have been active as well, though there’s no uniformity in state laws specific to prepaid phone cards. “The problem posed in controlling abuses is thus not only that there are different levels of specificity, but that one state often regulates conduct that another state does not.”

There are also at least 21 other private actions filed in federal court since 2003 over prepaid calling cards; some have been dismissed without prejudice, many settled, and some are still pending. Proposed and approved settlements vary significantly—one court approved a settlement providing $2 million in charitable donations plus a $20 million refund pool. That one also has extensive regulations on the defendants’ future conduct, including disclosures and review by the NJ AG’s office. Another approved settlement involved $300,000 in charitable donations, $200,000 in discounts for class members, and up to $3.7 million in refunds, but no constraints on future behavior. And so on.

The sale of the specific card at issue was governed by NY’s prepaid calling card statute, and the defendant who provided service for the card, is subject to consent orders from NJ and Florida. Defendants, who sell in other states as well, may be subject to conflicting statutory and regulatory mandates, plus the FTC, plus three other pending private lawsuits; plaintiff’s counsel is a repeat player using the same plaintiff, filing 9 similar suits against prepaid calling card companies.

Plaintiff argued that, company by company, “we are reforming this industry by extending the limited statewide regulation that currently exists on a nationwide basis through agreed upon 23(b)(2) injunctive relief.” It was better to use a patchwork than to do nothing. The court respectfully disagreed that “this somewhat dysfunctional private method of control of a major national and international communications link through repetitive civil litigations is appropriate.”

Fundamentally, the court concluded, the allegations presented issues that should be resolved on a uniform, national basis, not by piecemeal state-law litigation. “While utilization of cy pres or the fluid recovery doctrine might provide a viable remedy with some benefit to the class and to society, this is the unusual situation where the present action’s limited patchwork repairs are not worth the costs or benefits of allowing the case to go forward.” Rather, “[a] sprawling, hit-or-miss, costly, and confusing series of civil litigations across many states is an absurd way to control a vital national and international form of communication.”

The court found it “intolerable” that a multi-billion-dollar industry affecting the lives of millions of vulnerable consumers, “many of them low-income or recent immigrants to whom telephone contact with loved ones abroad is vital to their own and their families’ health and happiness,” was so unregulated, noting that the industry’s problems did not seem to be limited to a few bad apples but were structural. And the chaotic regulatory structure is no picnic for service providers and distributors either. Consumers need uniform standards that will enable them to compare cards, especially since many of the relevant consumers are transient.

But this lawsuit wasn’t the solution; it would likely “compound the problem and encourage perpetuation of an ineffective regulatory regime that is confusing and incomplete, that is unduly burdensome for the industry, and that provides neither effective protection nor a suitable remedy for most injured consumers.”

It would be possible to administer this proceeding with some “minimal benefits” to the class, though meaningful recovery directly to individual class members would not be possible in view of the small sums involved and the costs of distribution. Relief would have to rely on cy pres (“as close as possible,” a doctrine justifying things like donations to charity) and fluid recovery along with injunctive relief. Appellate courts have generally rejected academic and district court endorsements of cy pres and fluid recovery. (I detect the sting of past reversals!) Injunctive relief would mire the court in “inappropriate” continuing supervision of the industry.

In this context, the class action was not “superior” to other available methods for fairly and efficiently adjudicating the controversy, and final injunctive or declaratory relief would not be appropriate respecting the class as a whole. The only adequate way to protect the class’s rights would be through federal regulation and enforcement. “To use the truncated powers of a misshapen 23(b)(3) class action to address the issues raised in plaintiff's complaint would be unfaithful to the premise and reason for the class action--considerations of equity and good judgment.”

Software ranking mere opinion, not fact

2009-11-11T21:54:00.002-05:00

ZL Technologies, Inc. v. Gartner, Inc., 2009 WL 3706821 (N.D. Cal.)

ZL sued Gartner for false advertising, defamation, and related torts based on its ranking of ZL's software. The court, reasoning in a way that certainly makes Google happy, concluded that Gartner's aggregation of opinions was itself mere opinion, not falsifiable fact.

ZL makes software for large enterprises to store, index, search and purge electronic data. It alleged that it’s avoided seeking large amounts of venture capital in order to retain its independence and make decisions for customers’ long-term benefit. It also alleged that it has the “strongest product offering in the marketplace.” Gartner identifies itself as “the world’s leading information technology research and advisory company,” and it provides analysis of the IT industry to its clients, including product recommendations, advertising that it has the “combined brainpower of 1,200 research analysts and consultants who advise executives in 80 countries every day” and other sources of expertise. Gartner has done research on email archiving, which is a method of storing “large amounts of emails (and attachments) by ... offload[ing] and stor[ing] those emails in a separate repository which is much cheaper to maintain than a primary email server.”

ZL sued over several allegedly false or misleading statements. First, ZL’s ranking in Gartner’s Magic Quadrant (MQ) Report on IT vendors, which allegedly is a “key revenue” driver for Gartner, and heavily influences its customers. The Report claims to accurately rank IT vendors for enterprise buyers, dividing them into four quadrants in declining order of desirability: Leader, Challenger, Visionary, Niche. The axes measure “ability to execute” and “completeness of vision,” which stand for about what you’d think they stand for. ZL alleged that its designation as Niche was derogatory because Gartner’s customers accept that as a “warning.” Since ZL was first ranked in 2005, Symantic has been ranked as a Leader, creating a “perceived vendor gap” which is allegedly false or misleading because of ZL’s superiority, outperforming Symantec by over a thousandfold in search speed and improving accuracy, etc. In fact, ZL alleged, the MQ report is “highly subjective” and lacks mathematical or other sound basis; further, Gartner didn’t engage in any independent testing. Nor does Gartner disclose its criteria or relative weighting, resulting in arbitrary and misleading statements. ZL alleged that Gartner was swayed by Symantec’s puffery; Gartner overweighs good sales and marketing, leading to a bias in favor of larger companies with bigger marketing departments. Real research couldn’t support the statements, meaning that Gartner knew or was reckless as to the falsity.

Along with the quadrant ranking, the 2008 MQ Report warned that, “ZL is primarily a product and engineering-focused company. To remain [a] viable vendor in the market, the company must gain greater visibility and more aggressively expand its sales channels.” In addition, ZL alleged additional negative statements, including that the “ZL Products and Symantec’s Enterprise Vault (EV) ‘were the same.’”

Gartner’s statements allegedly caused ZL to lose business, including from the Department of Veterans Affairs, which relied entirely on the MQ Report; ZL had other specific examples. According to ZL, Oracle Corporation “complains that it gets ‘Gartnered’” when it attempts to resell ZL products.

The Lanham Act claims foundered on §43(a)(1)(B)’s standing requirement. ZL didn’t allege a competitive injury—one that harms the plaintiff’s ability to compete with the defendant. ZL argued for a “reasonable prudential standing approach” such as that followed by the 3^rd, 5^th, and 11^th Circuits (comment: argh). The court declined to adopt such a standard. Even if the court did apply that approach, ZL failed to explain how its alleged injury was one of the type Congress sought to redress in providing a private remedy under the Lanham Act. (The court also noted that without competition, it would be very hard, if not impossible, to show that the statements at issue were “advertising” given the generally accepted judicial test for what constitutes Lanham Act “advertising and promotion.”)

Even assuming standing, ZL failed to identify any actionable (falsifiable) statements. Allegedly false statements that Gartner’s research “is ‘high quality, independent and objective research’, (b) it is a ‘thought-leader’ in information technology, [and] (c) it can ‘show how to get the best return on your technology investment,’” were mere puffery.

The other state-law claims all depended on the conclusion that the challenged statements were false or misleading claims of fact, but the court concluded they were all nonactionable opinions, so the motion to dismiss was granted as to all of them.

An opinion is protected by the First Amendment. In the Ninth Circuit, courts examine “(1) whether the general tenor of the entire work negates the impression that the defendant [is] asserting an objective fact, (2) whether the defendant used figurative or hyperbolic language that negates that impression, and (3) whether the statement in question is susceptible of being proved true or false.”

The court thought that the general tenor of the MQ Report negates the impression of an objective factual claim in the “Niche” assignment. Gartner’s cover page for the email archiving review states “The opinions expressed herein are subject to change without notice.” While not every disclaimer will absolve a defendant, here this does contribute to a general tenor, along with statements that the Report reflects Gartner’s “view” based on “more than 1,000 conversations over the past year with Gartner customers, as part of [its] inquiry service, survey responses and updates from the vendors in the March/April 2009 time frame, and over 70 conversations with vendor-supplied references in March and April 2009.”

Gartner also identifies the bases of its opinion, which are clearly not product performance testing but conversations and surveys. Moreover, the “axes” along which vendors are rated—“ability to execute” and “completeness of vision” contribute to the general subjective tenor. These are fuzzy terms are (sort of) defined in the text of the Report, but attributed again to conversations and surveys. While subcriteria like “quality of goods” and “market responsiveness and track record” might be amenable to objective testing, Gartner nowhere claims or implies it has engaged in such.

ZL argued that Gartner’s claim to offer “highly discerning research that is objective, defensible, and credible to help [customers] do their job better” (quoting Gartner’s website) implied objective assertions of fact. Even so, these terms do not imply factual assertions. (What, then, does “objective” mean? Gartner says it just means its methods are “independent and unprejudiced.” Defensible means “capable of being defended,” and “credible” reflects Gartner’s belief that it’s right but can’t reasonably be understood as a statement of fact.) Anyway, sophisticated readers wouldn’t infer that Gartner’s rankings were more than opinion.

What about the specific content and context, including the use of figurative or hyperbolic language? ZL argued that the absence of hyperbolic language and the presentation of “sober, technical evaluations” supported its position. But the ratings axes are subjective on their face, so the court wasn’t convinced.

Finally, falsifiability: There was no allegation that Gartner actually said that ZL is a bad choice, merely that consumers would infer the same from its placement in the Niche quadrant. This placement can’t be proved true or false, but reflects ZL’s disagreement with Gartner’s weighing of criteria. In fact, Gartner said some very nice things about ZL, including “great product performance as well as good prices and consistent support” and that ZL “has large deployments with customers that are happy with product features, scalability and efficient use of infrastructure resources.”

ZL alleged that its Niche designation was impossible to reconcile with its product performance review, but it didn’t score well in “Product/Offering Strategy ... Geographic Strategy ... Marketing Execution, and Sales.” This difficulty reflected the reality that a MQ rating isn’t a fact that can be proved true or false, but is based on weighing multiple criteria.

The other allegedly defamatory statements were also opinions. “ZL is primarily a product and engineering-focused company. To remain [a] viable vendor in the market, the company must gain greater visibility and more aggressively expand its sales channels,” clearly couldn’t be proved true or false. Nor was the statement that ZL and Symantec’s products were “the same” defamatory given Symantic’s prestigious Leader rating, and anyway that was nonactionable opinion.

ZL argued that liability was still possible if the statements of opinion implied the existence of additional undisclosed facts. But these statements didn’t imply any such thing.

Additional hurdles for the state law claims: California’s UCL only makes restitution available, which requires the defendant to have benefited from the actions that resulted in the plaintiff’s lost. But there was no allegation that ZL’s lost money went to Gartner in any way. Moreover, the court read California case law to require that a plaintiff demonstrate its own reliance on false statements to recover under the UCL, rather than third-party reliance that then hurt the plaintiff.

And finally, there was a question whether MQ reports constitued advertising. Under Kasky v. Nike, courts look to the speaker, the intended audience, and the content of the message. Were the reports commercial speech? They didn’t promote Gartner’s services—they were Gartner’s services. They weren’t factual representations about the speaker’s business, and (though the court for some reason didn’t say this outright) they weren’t commercial speech.

ZL wanted leave to amend because of new facts about board and shareholder overlap between Gartner and Symantec, and allegations that Gartner maintains business relationships with some of the companies it rates, some of whom pay Gartner hundreds of thousands per year for services, promotion, and participation in Gartner trade shows. Though the court thought that evidence of bias could be consistent with allegations of a flawed methodology, none of that changed whether Gartner’s statements were non-factual opinions, even if Gartner is really a gun for hire; under Iqbal and Twombly, ZL didn’t seem likely to be able to make its claim plausible on its face.

This gets to a question I’ve been wondering about with respect to the FTC’s new endorsement guidelines: the endorsement rules don’t exclude puffery. The FTC seems to hold—quite reasonably—that an endorsement from someone paid to puff who doesn’t disclose the relationship may materially deceive consumers. I think this is empirically sound, but it creates a bit of an embarrassment for the general theory that puffery doesn’t affect purchasing decisions. If Gartner really were a mere sockpuppet for Symantec, wouldn’t the appearance of independence make its endorsement material to consumers in a way that, at least, the FTC Guidelines would recognize, and therefore state false advertising law might recognize as well? Whether defamation law would accept the same conclusion, of course, is another question.

Nonetheless, given the 9^th Circuit’s strong policy favoring amendment, the court did grant leave to amend with respect to everything but the California statutory (UCL/FAL) claims and negligent interference with prospective business advantage (which requires some sort of duty between plaintiff and defendant, usually related to a contract), as to which amendment seemed futile regardless of additional factual allegations.

7th Annual IP/Gender: Gender & Invention CFP

2009-11-10T06:57:00.000-05:00

IP/Gender: Mapping the Connections

7th Annual Symposium, April 16, 2010
American University Washington College of Law

Special Theme: Gender and Invention

Sponsored by
American University Washington College of Law’s Program on Information Justice and Intellectual Property and Women and the Law Program
Journal of Gender, Social Policy & the Law

In collaboration with Dan Burk, Chancellor’s Professor of Law, U.C. Irvine

Deadline for submission of abstracts: October 30, 2009

The 7th Annual Symposium on “IP/Gender: Mapping the Connections” invites proposals for papers on gender issues relating to the production and use of inventions, broadly defined. Appropriate topics might include: gendered patterns in the history of invention or creation; gendered regulation of inventive activities; gendered models of individual and collective inventive activities; gendered aspects in licensing or assignment of technologies; and related subjects.

Introduction & Context

Over the past seven years, the IP/Gender symposium has provided a forum to examine and discuss research on gendered dimensions of intellectual property law. Because issues of gender in intellectual property have been under-appreciated and remain under-theorized, much of this work has been exploratory and pioneering. Topics discussed in past years have ranged from the impact of intellectual property law and policy on gender-related imbalances in wealth, cultural access, political power, and social control; creative production and gender; the effects of stereotyping and of actual and rhetorical feminization and masculinization of participant roles upon intellectual property stakeholders; the gendered development of IP doctrines and doctrinal categories; related issues in the teaching and practicing of intellectual property; feminist jurisprudential insights about intellectual property law; and female fan cultures and intellectual property.

We expect that the Spring 2010 symposium will again offer an opportunity to present and critique innovative research, related to the special theme, that is either currently underway or now under contemplation. As in previous years, we anticipate the program and the audience will be highly interdisciplinary, including historians, social scientists, legal academics, cultural scholars, and practicing lawyers bringing their disciplinary perspectives to bear on the theme. A limited number of spaces is available on the program. We would appreciate receiving abstracts by Monday, October 30, 2009. Papers will be selected for presentation and possible publication by November 15, 2009, and will be due by March 1, 2010. Please submit abstracts through the website identified below, and please contact any of us if you have questions. We would also be grateful if you would forward this notice to others you know to be working in or interested in this area. We look forward to hearing from you.

Vicki Phillips, vfphillips@wcl.american.edu

Josh Sarnoff, jsarnoff@wcl.american.edu

Dan Burk, dburk@law.uci.edu

IP/Gender Mapping the Connections Organizational Details

DEADLINE for submission of abstracts is OCTOBER 30, 2009 at 5:00pm Eastern Time US.

To submit an abstract or project description for consideration, fill in the web-based form at https://www.wcl.american.edu/pijip/ipgender/proposals.cfm . Participants will be notified if their project has been accepted for presentation by November 15, 2009. For presenters, reasonable travel expenses may be provided if needed, subject to limitations on available funds.

The symposium will begin at 6:00 pm Thursday, April 15, 2010 at the American University Washington College of Law in Washington, D.C. The symposium will convene from 9:00 am until 4:00 pm on Friday, April 16, 2010.

To view programs from prior IP/Gender: Mapping the Connections symposia, please visit www.wcl.american.edu/pijip/go/events/ip/gender/ip/gender-mapping-the-connection

Papers may be published in the American University Journal of Gender, Social Policy & the Law.

ABA's Private Advertising Committee: program announcement

2009-11-09T18:41:00.000-05:00

I have been following with great anticipation the new ABA Antitrust Section’s Private Advertising Committee, a committee focused on false and deceptive advertising and marketing issues and litigation developments. Interested folks can join the Committee, sign up for programs and/or sign up for the discussion email list at this link.

It’s a good moment to mention the new committee, because it, along with the Civil Practice and Procedure, Economics and Trial Practice Committees, are sponsoring a teleconference:

Damages in Lanham Act False Advertising Cases: Theory and Practice

November 24, 2009, 2:30 p.m. to 4 p.m. ET

Panel summary: The Lanham Act provides for a variety of remedies against false advertising. Although injunctive relief is most common, damages, fees and costs can also be awarded. What measures of damages are available? What factors, other than falsity of the claims, must a plaintiff establish in order to obtain damages? What role do presumptions play in winning damages? Is any showing of causation required, and if so, how does one prove causation where advertisers themselves often have difficulty determining the effectiveness their ads?

This telephonic brown bag program will provide an overview of the legal bases for the award of money to prevailing parties under the false advertising provisions of the Lanham Act. The panel will survey the legal underpinnings of damage claims and discuss key cases in which damages were awarded, and denied. The panel will then provide a practical overview of how damages can be proved or rebutted through expert testimony in a hypothetical case.

The panelists are:

Christopher Cole, Partner, Manatt, Phelps & Phillips LLP

Professor Ravi Dhar, George Rogers Clark Professor of Management and Marketing & Director of the Center for Customer Insights, Yale University School of Management

T. Christopher Borek, Ph.D., Managing Principal, Analysis Group

Chris Cole will moderate. Recordings of this Brown Bag will be posted on the Section website Members Only area following the program and downloadable in an MP3 format, free of charge.