Monday, August 21, 2017

Tag-along state UDAP claim leads to $18.5 million fee shift against unsuccessful plaintiff

Procaps S.A. v. Patheon Inc., No. 12-24356-CIV, 2017 WL 3536917 (S.D. Fla. Aug. 17, 2017)

This case stands as a stark reminder that adding a state-law deceptive trade practices claim to a federal claim can have serious consequences—the only reason to do it as a plaintiff is if you think the substantive standards will vary (certainly possible, depending on the state) or the remedies will vary (likewise).  But where that’s true, consider whether the fee-shifting standards will also vary.  In Florida, they do.

Here, Procaps is ordered to pay about $18.5 million in attorneys’ fees and costs after losing “a full-throttle lawsuit which has generated 1165 docket entries and an appeal (including oral argument) since it was first filed in mid-December 2012.”  Procaps’ main claim was a federal antitrust claim, but it brought a coordinate Florida Deceptive and Unfair Trade Practices Act claim.  The federal antitrust statute authorizes an award to a prevailing plaintiff but not to a prevailing defendant, but that turns out not to matter even though the FDUTPA claim was a “tag-along” claim, “based mostly (though not entirely) on the same circumstances at issue in its federal Sherman Act antitrust claim.”

Under FDUTPA, a “prevailing defendant” is permitted to recover its attorney’s fees and costs from a non-prevailing plaintiff after the exhaustion of all appeals; the court has to consult a non-exhaustive list of discretionary factors:

(1) the scope and history of the litigation; (2) the opposing party’s ability to satisfy the award; (3) whether an award would deter others from acting in similar circumstances; (4) the merits of the respective positions, including the degree of [Procaps’] culpability or bad faith; (5) whether the claim brought was not in subjective bad faith but was frivolous, unreasonable, or groundless; (6) whether the defense raised a defense mainly to frustrate or stall; and (7) whether the claim brought was to resolve a significant legal question under FDUTPA law.

I’ll let the judge summarize the scope and history: “Nothing was easy in this case. Nothing. Basically, the parties fought about anything and everything.” Further descriptors: “difficult,” “problematic,” “stressful,” “grueling,” “especially unpleasant and nasty.”  Procaps could pay.  On appeal, the Eleventh Circuit characterized its theory as “intrinsically hopeless,” so that supported a fee award.  Procaps and its counsel, “at a minimum, … made this case far more difficult than it had to be, and … this caused Patheon to incur additional attorney’s fees and costs.” Frivolousness isn’t a requirement, and courts award fees under FDUTPA to defendants who prevail on summary judgment on a FDUTPA claim after a plaintiff initially gets past a motion to dismiss.  Though the court declined to find the claim frivolous, its antitrust theory was “either unreasonable or approaching the level of being unreasonable,” because it needed and could not show concerted action.

In terms of deterrence, the court considered that Procaps apparently brought its antitrust claim because it was a limited exception to the parties’ arbitration agreement “and because it wanted to use the threat of treble damages to pressure Patheon into paying a hefty settlement.” Because of the weakness of the antitrust claim, a fee award wouldn’t deter legitimate antitrust claims brought by private attorneys general, but it would be good to deter a putative plaintiff from bringing an “intrinsically hopeless” antitrust claim.  The remaining factors were neutral, and the court declined to follow a few federal district court cases holding that FDUTPA fees shouldn’t be awarded when the FDUTPA claim is a tag-along to a separate federal claim.

In fact, Florida state caselaw indicates that the prevailing party should get the benefit of overlapping claims; fees can’t be deducted for work unless it was clearly unrelated to the FDUTPA claim.  “[I]t is Procaps’ burden to establish that the attorney’s fees and costs incurred by Patheon were clearly not related to the FDUTPA claim, which was largely based on the same antitrust theory as the antitrust count.” Thus, “the time Patheon spent defending the Sherman Act claim was time spent defending the FDUTPA claim.”  And that’s $18.5 million.

The court emphasized that not every party who prevails on a FDUTPA claim would be entitled to fees; if “some” of the factors had gone in Procaps’ favor, the result could well have been different. But the factors “strongly” favored a fee award.


Bad dilution claims are so common that they aren't "exceptional" for fee-shifting, court rules

Parks, LLC v. Tyson Foods, Inc., 2017 WL 3534993, No. 15-cv-00946 (E.D. Pa. Aug. 17, 2017)

Tyson sought attorneys’ fees in this Lanham Act case after its summary judgment victory was affirmed by the Third Circuit. The court found that this was not an exceptional case meriting an award of fees, despite the novelty of Parks’ main legal theories.

There was an unusual degree of discovery trouble in the case, but not because of “wasteful procedural maneuvers” or “dilatory tactics.” Instead, the parties just didn’t seem to understand each other’s claims or to work collaboratively at discovery; this didn’t mean that one side litigated the case in an unreasonable manner.

Tyson argued that all three of Parks’ Lanham Act theories—false advertising, false association, and trademark dilution—were frivolous, but the court disagreed. The primary claims were for false advertising and false association. The first theory was that Tyson’s use of the name “Park’s Finest” was false, or at least misleading, because it conveyed to consumers that Tyson was selling Parks’s finest product. From early on, the evident problem was that this seemed to simply duplicate the false association claim.  But that didn’t weigh against a fee award, because “at the time Parks brought the claim, there was little case law—particularly in this circuit—addressing the dividing line between claims of false advertising and claims of false association.”  On appeal, the Third Circuit also noted that this case offered an opportunity to “clarify” what it had never before directly held about that line.  “Given the state of the governing law at the time this case was filed, Parks’s decision to attempt a claim under the banner of false advertising was not ‘unreasonable.’”

Anyway, the collapse of theory one into theory two (false association) meant that the merits were the same as to both, and the false association claim was not so “exceptionally meritless” as to warrant fee shifting. But really, this case was about failed proof: the Parks name “once enjoyed widespread recognition” as a result of an ad campaign that was at one time “ubiquitous and long-running,” so much so that the appellate judges recalled it at oral argument.  That recognition, it appeared, no longer existed, but this past glory “differentiates this case from the mine-run of frivolous trademark infringement suits brought by plaintiffs who seek to prevent others from infringing on marks that do not and have never had the sort of recognition in the marketplace that would entitle them to protection.” The similarity of the parties’ marks and goods also made the suit potentially meritorious.  “Even now, Tyson perhaps does not appreciate how close it may have come to a different result in this case.… A properly-designed survey (and perhaps a bit more modesty in the geographic area Parks sought to protect) might have changed the course of this case.”

As for Parks’s claim for trademark dilution, which was voluntarily withdrawn at summary judgment, it “had little chance of success from the start,” but a fee award isn’t about how great the disparity was between the parties’ positions—it’s about whether the present case “stands out from others.”  And dilution claims are commonly “tacked on to claims for trademark infringement or false association,” despite the rarity of true fame; as a result, “the vast majority of attempted dilution claims not only fail, but had very little chance of ever succeeding.”  Fees could be available for some non-meritorious dilution claims, but in light of the Parks name’s former strength, “the company’s attempt to characterize its mark as ‘famous’ is not so different from numerous other plaintiffs that have tried the same thing, despite having hardly any chance of being considered alongside that pantheon of truly famous marks.” [Urgh.]


Parks’s motivation, though not dispositive, also seemed legitimate to the court: Parks “genuinely viewed Tyson’s use of the name ‘Park’s Finest’ as an existential threat—a potential final blow to the once-prominent company, inflicted by a competitor that, by revenue, is approximately four thousand times its size.” Parks’ good faith was relevant, and also weighed against a fee shift.

reading list: Willis on remedies for consumer fraud

80 Law and Contemporary Problems 7-41 (2017)

Abstract
In resolving cases of unfair, abusive, and deceptive acts and practices, consumer protection enforcement agencies often prospectively dictate—in great detail—the design of defendants’ marketing, websites, disclosures, sales processes, and products. However, advances in technology and analytics increasingly allow defendants to comply meticulously with these precise requirements while simultaneously continuing to deceive and injure consumers.

By trying to micromanage defendants’ conduct, enforcement agencies fail to protect consumers, squander precious enforcement resources, and create pointless compliance work for defendants. Defendants themselves are in the best position to ascertain how to cure the confusion and ill consequences they have wrought and they should bear ultimate responsibility for doing so.

To effectuate this, this article introduces two new performance-based remedies to consumer law enforcement: (1) confusion prohibitions and (2) consequences prohibitions. These injunctive remedies order defendants to eliminate the confusion and ill consequences induced by defendants’ fraud. To comply with these prohibitions, defendants would be required to reduce the confusion and ill consequences they inflicted on their customers to prescribed levels within a prescribed time period. Defendants would bear the costs of demonstrating, through independent third-party audits, their compliance.


Recommended!

Friday, August 18, 2017

Comparative advertising using P's logo is nominative fair use

SolarEdge Technologies Inc. v. Enphase Energy, Inc., 2017 WL 3453378 17-cv-04047 (N.D. Cal. Aug. 11, 2017)

SolarEdge sued Enphase, a competitor in the business of selling electronic components for solar panels (aka PV modules), for false advertising and trademark infringement.  SolarEdge’s primary products are components involved in the “optimization of energy generated from solar panels.”  PV modules convert solar energy to direct current, which then must be converted to alternating current to be delivered through the power grid.  An “inverter” performs this conversion. Traditionally, competitors in the industry have used multiple solar panels connected to one or a small number of centralized inverters. SolarEdge’s “power optimizers” are attached to each individual solar panel and then connected to a simplified centralized inverter to aid in a more efficient conversion from DC to AC. This practice is referred to as “module-level power electronics” (MLPEs). Enphase instead uses “microinverter” technology, which attaches a “small inverter at each solar panel,” also an MLPE.

MLPEs can come in two varieties: an embedded MLPE is installed into the solar panel before it leaves the factory, thereby reducing the time required to install a PV system at an end user’s location.  Non-embedded MLPEs are installed on-site.  SolarEdge alleged that it produced embedded power optimizers, but that it was still known “primarily for its non-embedded optimizers, as embedded technology is still not widely used in the PV industry.”

Enphase announced that it would be offering an embedded version of its microinverters, the Enphase AC Module. Its ad campaign included a video, “Enphase Energized AC Module vs. String+Optimizers,”  purporting “to depict a time-compressed video comparison between the installation times for PV systems using comparable SolarEdge and Enphase products.” On Enphase’s website, the video appeared with the text “Stop wasting time installing optimizers—When compared to optimizers, the Enphase AC Module cuts rooftop installation time in half. See for yourself.” The video also featured a testimonial from an installer attesting to the ease of installing an AC Module panel as compared to a non-embedded SolarEdge power optimizer. The video ended displaying the conclusion that the “Enphase Energized AC Module cuts installation time in half.” SolarEdge alleged that the comparison was false because it tested the AC Module against SolarEdge’s non-embedded optimizer, rather than the embedded version. The video also included SolarEdge’s stylized logo, displayed throughout the video.

This motion for preliminary injunction hinged on whether the claims at issue were literally false, given that the heading and the introductory page of the video purports to compare the AC Module against “string+optimizers” generally, and implied that SolarEdge didn’t produce an embedded version. Enphase argued that the marketing campaign was directed at experienced installers, who would immediately recognize the specifics of the comparison; also, other statements on the website, such as “Stop wasting time installing optimizers,” indicated no literal falsity because that statement wouldn’t make sense if Enphase were comparing its embedded technology against embedded optimizers. Also, nothing in the video suggested that Enphase is the only producer of embedded MLPE technology.  On this record, the court did not find likely success on the merits.

Trademark infringement: The court applied nominative fair use and (rightly) found in favor of Enphase, despite the use of SolarEdge’s stylized logo.  Under Ninth Circuit precedent (to the extent it can be discerned), if a nominative use fails to satisfy all three factors, “the district court may order defendants to modify their use of the mark so that all three factors are satisfied,” but “it may not enjoin nominative use of the mark altogether.”  In a useful reformulation, the court here said: “while satisfying all the factors necessarily negates trademark infringement liability, the failure to satisfy one of the factors does not establish liability in and of itself.”  So NFU is only a replacement for the multifactor test if the defendant succeeds; this is an important clarification of Judge Kozinski’s muddling of the issue in Tabari.

This ues in a comparative ad satisfied all three factors, and regardless SolarEdge didn’t make any arguments about how confusion over sponsorship or endorsement by SolarEdge.


The court briefly addressed irreparable harm as well.  SolarEdge argued that it would suffer lost sales if Enphase if the ad could be shown at an upcoming trade show, one of the largest in the industry.  It also argued that Enphase was unlikely to be able to pay damages here, given that it had faced significant financial difficulties of late.  The court found “only a bare, threshold showing” on irreparable harm—statements from a senior executive could be evidence of irreparable harm, but the record lacked data supporting her conclusions. Also, Enphase’s modification of the ads to clarify that the comparison was to non-embedded, standalone optimizer systems minimized the likelihood of irreparable harm, as did the court’s adoption of a fast schedule for further proceedings on the case.

taking customer list as conversion; false claims of official investigation as false advertising

Yeti Enters. Inc. v. Tang, 2017 WL 3478484, No. 13-cv-01203 (D. Or. Aug. 14, 2017)

This is a tangled story that illustrates how false advertising claims can arise from failed business agreements.  Plaintiff NPK sued Nicholas Jackson and Jessica Lilga for conspiring with Jim Heagle to eliminate NPK from the distribution market for frequency-water products.  NPK contracted with Yeti to market and distribute Yeti’s product known as frequency water, which appears to be sold as a better way of preventing plant mildew/mold than regular water.  NPK created three plant washes, Mighty Wash, Power Wash, and PM Wash, all of which contained and were marketed as containing frequency water.

Jackson is a part owner of NPK, though his relationship with NPK was bad for a while.  Lilga initially took over Jackson’s responsibilities as VP of sales when Jackson was incarcerated, though that relationship was also difficult and ended after three weeks.  As Jackson continued to negotiate his exit from NPK, he sent Heagle a draft copy of a proposed NPK ad that depicted a new series of products: “They’ve been lying to you. I mean, sitting there telling you they weren’t going to do other products. They already did.... They’ve got their whole nutrient line....” Heagle moved to terminate Yeti’s distribution agreement with NPK; the termination letter said that the “last straw” was the draft ad.  Yeti and NPK worked out an agreement for continued supply for a year, in exchange for which NPK would turn over to Yeti certain frequency-water-related trademarks that NPK had registered in its name.  This agreement didn’t work out; the parties sued each other in state court.  NPK also sued Jackson in state court; Jackson countersued.

By this time, NPK’s distribution agreement with Yeti had ended and NPK had relaunched its product line without Yeti’s frequency water. Jackson began working with Left Coast, a former distributor of NPK’s products, to launch a competitive product line using Yeti’s frequency water. Jackson promised to supply Left Coast with a list of 1300 Sunlight stores; Sunlight was a major NPK customer.  Left Coast then sent emails to NPK’s customers stating that it had “decided to discontinue distributing products from NPK industries” because NPK’s new plant-wash line, which no longer contained frequency water, was susceptible to molding.  It also stated that Left Coast would now “provide the original frequency altered formulations and will be marketing under the trade names Mega Wash, White Wash, and Freq Wash....” The emails, plus the new Left Coast product line, halved NPK’s sales, which had already been halved earlier in the year due to the loss of Yeti’s frequency-water products.  

In this litigation, NPK sued Jackson for fraudulent misrepresentation, violations of the Lanham Act, common law trade libel, conversion, and breach of the parties’ nondisclosure agreement.

Fraudulent misrepresentation requires showing, by clear and convincing evidence: (1) a material misrepresentation that was (2) false, (3) made with knowledge of its falsity or with ignorance of its truth, (4) with the intention that it be acted upon by the party claiming fraud, and (4) that the acting party in fact justifiably relied on the material misrepresentation, (5) suffering an injury as a result. Typically, “mere silence is not fraud,” but “[w]here the law imposes a duty on one party to disclose all material facts known to him and not known to the other, silence or concealment in violation of this duty with intent to deceive will amount to fraud....” NPK argued that Jackson “had a special relationship with [NPK] which included the duty to disclose to [NPK] all information which could damage its business,” including his assistance in bringing competitive products to the market and assistance in cutting NPK out of the plant-wash distribution market.

The court disagreed.  Members of an LLC who aren’t managers, as Jackson wasn’t once he was incarcerated, owe no duty to disclose information that could damage its business.  As for fraudulent misrepresentation through active concealment, the evidence didn’t show active concealment—“Jackson repeatedly attempted to leave NPK and made his intentions to do so quite clear.” His failure to disclose private business negotiations was distinct from active concealment, which requires the fraudster to take steps that eliminate an opportunity to discover the truth, leading the victim to rely on the falsity.

Lanham Act claim: Jackson allegedly told NPK’s customers that NPK’s plant-wash products were susceptible to molding; that their products no longer contained frequency water; that frequency-water products would no longer be distributed by NPK; that Lest Coast and other wholesalers discontinued distribution of NPK’s products; and that Yeti was releasing a “new and improved product line....” Further, Jackson allegedly aided in distributing e-mails falsely claiming NPK was being investigated and going to be shut down by the EPA, IRS, DEQ, and other agencies.

NPK easily showed harm from these statements, and the court was convinced that Jackson participated in their distribution.  However, NPK could only show falsity for two statements.  (That conclusion would seem to require a re-evaluation of the harm question—can NPK show harm flowing from the false statements specifically?)  It was true that NPK’s products no longer contained Yeti’s frequency water at the time the statement was made; it was true that Left Coast and others discontinued distribution of NPK’s products; it was true that Yeti was releasing a new-and-improved product line.

The statements that NPK was being investigated by the EPA, IRS, DEQ, and other agencies were not literally false—NPK’s witness testified that NPK was being investigated, though its position was that Jackson and Left Coast had prompted their investigations by providing false information.  However, the statements “were likely to, and in fact did, mislead or confuse consumers, as these statements implied the agencies were going to shut down the company.” The “susceptible to molding” claim was also rebutted at trial, and thus proved false.  These statements were also material: molding would indicate that the products didn’t work as intended, and false statements that NPK would be shut down for regulatory noncompliance “certainly raised the presumption that its products or business was operating improperly or outside the law.”  Thus, NPK proved a Lanham Act violation.

Common law trade libel: the court found that NPK didn’t prove that Jackson made or aided in the distribution of the two false statements maliciously or with knowledge that they were false. In fact, he appears to have believed his own claims (drunk his own frequency water?) that molding would be a risk without frequency water.  This belief also meant he didn’t act with malice.  Though he did “demonstrate a complete disdain for NPK,” that contempt isn’t malice.  The same was true for statements involving agency investigations into NPK.

Jackson was also liable for conversion for getting Lilga to download NPK’s customer database. The court doesn’t address tangible/intangible property as the subject of conversion, instead holding that Jackson’s “exercise of control over [the property] constituted a serious interference because it severely impacted the economic value of the database.” But NPK didn’t provide an accurate assessment of the market value of any of the information converted.  However, “if the property has no market value at the time and place of conversion, either because of its limited product, or because it is of such a nature that there can be no general demand for it, and it is more particularly value to the owner than any one else, then it may be estimated with reference to its value to him.” As secret information, the database could be evaluated in this way.  (I believe that some states wouldn’t allow trade secret liability standards to be circumvented in this way, though it sounds as if this information might well have constituted a trade secret as well.)  The customer database, while valuable, was only part of the results of NPK’s marketing campaign and couldn’t represent the entire value of NPK’s goodwill, which included other elements such as name recognition. Still, its customer relationships were “clearly an integral part of the value of its goodwill.” Thus, the court would factor the conversion into the damages award.

NPK also argued that Jackson breached the parties’ nondisclosure agreement by distributing the customer lists.  There was no question that he breached the express terms of the contract by disclosing NPK’s database of customer lists and by disclosing a proposed ad.  Jackson didn’t show that NPK failed to substantially perform any part of the its side of the agreement. And NPK suffered ascertainable damages that were foreseeable by the parties at the time they entered into this agreement, so Jackson was also liable for this breach.

Civil conspiracy and aiding and abetting: because NPK didn’t show any other torts beyond conversion and violation of the Lanham Act, and because Jackson was already liable for those, he couldn’t be independently liable on those claims.


Damages: “[I]f the plaintiff proves with the requisite degree of certainty that the defendant’s violative actions have resulted in damage, the actual amount of damages need not be proved with exact certainty.”  That was the case here.  “NPK went from sales of $3 million in 2012 and a profit of around $125,000 to virtually no revenues and strictly losses in the years since.” Likewise, NPK could recover for lost goodwill, even though “such damages are not capable of exact ascertainment.”  The court found damages of a little under $166,000. However, the end of Yeti’s distribution agreement was also responsible for NPK’s lost goodwill, and so the court cut the damages in half, for which Jackson’s liability was partly shared with Lilga.  

Wednesday, August 16, 2017

Barton Beebe & Jeanne Fromer's submission to PTO on streamlined cancellation proceedings

Supporting the proposal, they summarize their evidence of overcrowding on the register.  Read it here.

Traveling pictures: trademark/publicity rights questions, bonus torts

Yellowstone proper had very little in the way of obvious TM issues, interestingly enough.  Other things I have encountered:
For the torts folks; note especially the guy in the background blithely walking away from the dissolving child

"Nothing in life is absolute except vodka"--a drinking tour of Yellowstone

John Wayne endorsement?


Yes, Pink Cadillacs is a registered trademark for candy; a separate registration for pastry also exists, owned by someone else

Wondering about these Kits candies

Parody soda candy

parody candy cigarettes

paging the Marlboro man?

Bogarts restaurant: right of publicity problem?

This vase is patterned in little plastic closers, which are subject to various patent & TM claims

Amazing Spider-Moose

Fast & Furious

Star Wars parodies, also Bat-Moose below
I didn't get a picture of the moose covered in rainbow dreadlocks a la Bob Marley.

Shoes and surveys (picture post)

Since apparently there was some question whether the shoes I asked about post-Star Athletica were really shoes, here is proof:
Not much less functional than the average super-high heel
Also, I randomly got selected for a trademark infringement survey on SurveyMonkey!  Reading the questions as a consumer makes it even more clear that the "affiliation" questions are nonsense.
makes or puts out: okay, I can answer that

authorization/approval question

business affiliation or connection: as they say in the X-Files, how the hell should I know?

Friday, August 11, 2017

IPSC Breakout Session V


Copyright Theory (my apologies; I had to leave early for a flight)

Redundancy and AntiRedundancy In Copyright – Oren Bracha & John M. Golden
Doctrines that overlap: fair use/functionality; fair use/improper appropriation; copyrightable subject matter originality; reproduction/derivative works rights (cautionary example).
Forms of redundancy: bidirectionally partial, standard Venn diagram; unidirectionally partial—safe harbor laid over a more general standard (§512 and secondary liability); complete (arguably “aid & abet,” “arbitrary & capricious,” eBay test prongs 1&2).  Fed. Cir. has resisted redundancy in things like patentable subject matter, SCt has pushed back.

Value in redundancy: error limitation and clarity at core; potential administrative advantages (dismissal/SJ, for example in Greatest American Hero case where the court says no improper appropriation w/o needing full fair use analysis/discovery); potential robustness against strategic behavior; evolutionary potential.  Copyrightable subject matter/originality: Copyright Office treatment of yoga sequences—usually not w/in CSM.  9th Cir.: functionality b/c of psychological and health benefits (claimed).  You won’t always have that kind of clear, easily available evidence of functionality in admission against interest.  Series of rules, each of which is an imperfect filter, might be the best.

Bad example: Harry Potter case—court decides Lexicon isn’t a reproduction but is a derivative work; the rights may not be producing good overlaps.

Buccafusco: how do these overlaps affect litigation choices and do they affect it asymmetrically? [I think w/TM the overlapping defenses can cause trouble, as Bill McGeveran has documented, b/c if you pick the wrong one you may be out of luck].

A: may cut both ways.

Rosenblatt: there are redundancies in protections, exceptions, liability doctrines (indirect infringement)—these might operate differently from the standpoint of litigants, creators, owners.

A: Maybe, and the point is more thought about design of overlaps and functions—backstops or partial redundancy or coequal partners.

Quantifying Copyright – James Grimmelmann
We encode almost anything digitally and count the bits—the number is a measure of complexity. Some number of bits can likely be squeezed out by compression, and those bits didn’t really matter in the first place.  You’re throwing out information, but if you do it right/high enough, you can throw out only information that humans didn’t care about.  Lyrics to Happy birthday have internal redundancy; can be compressed to subsequences that appear in the digital work.  Information theory: communications, processes, encoding, noise (redundancy)—Fromer & Scafidi have both done work in IP under the heading of redundancy. It’s about communications systems.  When do we want to be efficient and when redundant so we can recover the message even in presence of scrambling & noise?  Other branch of info theory: algorithmic.  It’s about computation, compression, individual works—a work is only as complex as its shortest encoding.

Tentative idea #1: Feist says there are hundreds of millions of ways to select 50,000 listings; about 1,500,000 bits to describe an arbitrary selection—but it’s a lot easier to describe Feist’s actual selection, and that is an indicator of lack of original creativity.

Tentative idea #3: quantify factor 3: a compressed image could be seen as 100%, but you could also look at how much human perception has been discarded going from big to small, which would be less.

Rule-based creativity: can’t extract more bits of expression than you put in; merger kicks in when there are only a ltd number of ways to express an idea. Scenes a faire are about predictability: in a hard-boiled detective novel, it adds almost no new info to learn that the hero drinks.

More ambition: you could try to directly quantify expression and do filtration and similarity tests.  Problems: full complexity is uncomputable exactly. We can only approximate. Also, that leaves off psychology and aesthetics and all the reasons people actually care about having expressive works.

Boundary arguments: there are some situations where there is no room for expression; you could use it as an input into expert testimony. Maybe something in exploring lossy compression and its relationship to psychology.

Linford: doesn’t music in Happy Birthday add a level of complexity, which also makes it difficult to compare text to music.

A: tells you immediately that musical works are simpler than sound recordings.

Christina Mulligan: how would you do the hard-boiled detective thing? You need a baseline for defining the genre.

A: Hard.  Mainly wants situations where there are actual numbers—file sizes for thumbnails.  A way of thinking about questions that involve choice and constraint.  Predictability/compressibility are throughlines that explain a lot of appeals to number of available options.

Rosenblatt: could really be misused where psychology etc. means that perceptions are completely different but analysis finds few differences.

A: yes, this does a faceplant in transformativeness. It clearly informs “extrinsic” analysis but has nothing to say about intrinsic analysis.  This is a formalist approach.

Buccafusco: compared to what? Everything else sucks; this approach only has to suck less.

Sheff: you might need different encoding selections to measure and to compare.

A: K complexity is coding independent.

Rewarding Derivative Works – Joseph P. Fishman

Derivative works’ share of all films’ combined box office keeps climbing. One explanation: it’s how they deal with risk.  But that’s not enough.  Derivative works rights subsidizes this investment, and not other works.  Franchises on average do earn more over production budgets than non-sequels. Merchandising is also huge: $118 billion entertainment/character related merchandise; $38 billion box office receipts. 

Jennifer Rothman: TMs are part of this; also, cross subsidization of smaller films both by studios and by directors/etc. other people who fund what they want to do w/the bigger films.

A: yes on TMs; maybe he needs a better term than adaptation. 

Q: Many novels were originally posted as serials; they weren’t short stories. Maybe we’re finding that longer visual stories are increasingly popular, and they come in segments.

Then I had to leave.





IPSC Breakout Session IV

Copyright Enforcement 

Protecting Copyright Integrity – Shyamkrishna Balganesh & Gideon Parchomovsky
Dominant theory: © is about value. Additional assumption: w/every exclusive right comes important limitations. Every grant of power is also clear placing of limits on scope of that power. Classify them as those internal to the grant, based on its very structure (originality, fixation); prerequisites for enforcement for right (substantial similarity); defenses or exceptions (first sale, fair use).  Broad approach to limitations.

© has a clear enforcement asymmetry b/c rights owners have a clear mechanism of enforcing rights, but there’s no mechanism for public rights. Implemented if at all through litigation predicated on actual or threatened action. If you want the limits independently enforced, you want a clear sense of scope, there’s no cost-effective mechanism to know the parameters. §505 is the closest, but not clear how it will be applied—is prevailing party parity even possible after Kirtsaeng? This feeds into risk aversion on the side of users, but not of owner-claimants.

Concept: integrity violations.  The way in which common law develops incrementally is by identifying principles that fit within the present system and can be justified by present principles.  Integrity—building on existing system—idea is “fit” and justification, like a chain novel.  Where a © owner makes a claim that can’t be fit to current © doctrine or can’t be justified by current © principles, a P should be able to challenge it.  “Fit” is a doctrinal concept, while justification is about the underlying principle—a Dworkinian approach.  Doctrine is black letter, while justification is about development of rules.  © owners should be able to determine the boundaries, so we don’t want them to be deterred from bringing claims as such, only from bringing overbroad claims.

Components: Substantive integrity violation.  Procedural: qui tam structure (addressing fraud on the public, misuse of a state grant).  There would need to be a formal claim via litigation or otherwise—C&D would suffice.  Would not fit with existing © doctrine—not merely that it’s uncharted territory.  Cannot be justified using copyright principles as an attempted expansion of doctrine. Courts do a pretty good job of this in the common law generally.

Paradigmatic situation: Paramount v. Axanar: crowdfunded fan film.  Claim to own Klingon language as a whole was the integrity violation (though the claim based on derivative works was “on the wall”).  Paradigmatic lack of integrity violation: Kirtsaeng—the distribution right was an area of ambiguity, which could be justifiable in © principles.

Standing: structure similar to False Claims Act: protection of public domain.  Remedial teeth: instead of waiting for declaratory relief, create an incentive for 3d party enforcement—reverse statutory damages.  Aggrieved P can get statutory damages w/o proving actual harm.  Statutory minimum for successful claim; alternative actual damages where P is directly affected.  Equitable relief as well.

Lemley: I understand what overbreadth means in a claim-based system like patent, and I know what overenforcement looks like in © but I don’t know what ex ante violation looks like in © where you might assert rights against a fair use or against a not-fair use.

A: Has to be a formal claim of some sort.  A simple statement w/o enough proof of overbroad claim: P’s claim would fail.  P has incentive to wait until the breadth of the statement becomes clear. 

Lemley: then you lose the advantage of solving the in terrorem effect.

Deterring Copyright Extortion: A Consumer Protection Approach – Ben Depoorter & Peter S. Menell
Perfect storm: digital age, Napster, increased statutory damages; RIAA et al. ended up targeting individual users.  Bittorrent used for porn movies; created a nice little business model, identifying people who’d be embarrassed to be named in a suit; make a deal w/© owner; get lots of people in one swarm and send lots of threatening letters; profit.  No cases are litigated all the way through; seamy side of P’s bar.  Many ISPs comply w/these subpoenas.  The Prenda letter got a lot of a notice—people like you have been subject to large awards; go through the history in a somewhat misleading way, mentioning default judgment of $1.5 million dollars (but that’s a seeder, not a downloader).  Doing harm to © system.  Only 2 adjudicated cases where someone in this situation gets held to be an infringer.

Motions to quash: improper joinder, undue burden, lack of personal jurisdiction; 1A right to anonymity.  Advice for those who shared files: (1) don’t hire Charles Nesson; what happened to Tenenbaum, who thought he could discharge damage in bankruptcy but was wrong, was bad. (2) Default judgment risk is serious; the cost of doing business is about $3000—you’ll pay that much for a lawyer to fight or to settle. (3) Don’t lie. (4) Might be able to avoid liability on a technicality; Matt Sag’s article gives good advice to lawyers, but you’re paying either way. (5) Clearly $150,000 is not what you will pay. You should probably settle, but the number to put in is not clear.  Sag uses about $1500; he thinks that’s a good starting offer but not guaranteed.  We’re not looking at this from a socially optimal perspective, but private cost/benefit analysis.  (6) Get a subscription service.

If you didn’t share files, the unfortunate truth is that the advice is somewhat similar.  Still a disruptive experience.  This is the price of a civil society that uses litigation and doesn’t fee shift by default.

© Office could provide objective advice, though he’s not confident they’d do it; many of their patrons are committed to statutory damages.  Try to put what’s almost ½ of all filings into some kind of small claims/UDRP system—judges would very much like this off their dockets.  Fed courts have many costs v. a modest process that is a slap on the wrist—but should also make it easier for © owners to find out who these people are. 

Hard to solve w/o recalibrating statutory damages.

Taking Intellectual Property into Their Own Hands – Amy Adler & Jeanne Fromer
Not a new problem, but perhaps growing—high profile examples.  GucciGhost—artist using Gucci logo on clothes. They hire him to design part of their line.  Big hits, sold out for $.  Gucci elements w/own take—lots of positive critical attention. Success at coopting him.  Gucci claims street cred as “essence of the Gucci brand.”  Playing w/theme of authenticity—using Guccy on elements.  Contrast: Gucci put a piece forward w/puffy sleeves w/Gucci logo, which looks a lot like Dapper Dan’s work (Harlem based tailor who bought actual products and made new clothes out of them).  Not such a clean-cut story. Not everything that’s reappropriated is critically acclaimed.

Aquazzura and Ivanka Trump: straight up social shaming in the media.

Richard Prince’s New Portraits & appropriating appropriation: new portrait series taken from Instagram.  Portraits “curated” from Instagram, sold for $90,000; 4 people have sued, while one target, the Suicide Girls, an alternative porn collective, chose to appropriate the appropriator—they got a lot of what litigation would have afforded, but they got it overnight on the cheap.  They sold his work for $90.  Internet loved it; they made money (for charity).

Drake and James Turrell, an iconic light artist.  Drake loved Turrell’s work and created Hotline Bling using sets that were copies of Turrell’s installations.  Rap IP diss songs: Tupac Shakur’s Hit ‘Em Up v. Young Jeezy’s Stay Strapped.  Accusing people of taking other things, and they reappropriate and rework what was taken and call the taker out.  Tupac adapts the beat of Get Money by Junior Mafia and raps Take Money.  Reworks a hook from another song and delivers it w/same melody and turns it violent.  Lots of accusations of stealing, copying, beat biting, taking—taking samples that he knew Tupac was using. 

Working outside the law to (1) get financial compensation, (2) get attribution, (3) avoid misattribution of who’s the appropriator.  It’s cheaper, but there are no procedural protections; it’s very easy to call someone out for copying, even in a way the law might not recognize as a cognizable taking.  Effects on IP law’s goals?  Do we get more or better creativity when people create art in response to a taking instead of filing a lawsuit?  Do we get better branding (Gucci)/claims of authenticity?  Does it create more or less risk aversion on the part of appropriators?

Q: Greg Mandel’s empirical work suggests people view IP as an attribution law. Your project suggests that this is the heartland of what people believe the law to be—they think they aren’t acting outside the law but enforcing it.

Lunney: take a broader view on self-help, which has fallen into disrepute in other areas—landlord-tenant repossession; cars.  [I really like Steve Clowney’s article on this.] Drug territories and how those are maintained through self-help. Don’t treat this in isolation.

A: we haven’t decided this is all good.

Sheff: focus on distinguishing TM/©.  Attribution and control are distinct. Reappropriating something that’s been appropriated, for a brand, means collaborating in cultural creation of meaning. If you hire the guy that’s different from appropriating a street artist’s work. Tiger by the tail: can come back to bite you when alcohol brands, fashion brands are trying to appropriate youthful energy, and then youthful energy starts riots.  Doesn’t seem as much of a problem in ©.

Laura Heymann: Feedback loop—does it communicate anything to the community about what the law is?  Suicide Girls action didn’t deter Richard Prince.  He wasn’t required to disgorge any $.

A: yes, it’s odd to get relief w/o the appropriator having to pay—you get $, but not from Richard Prince; you get attribution w/o his involvement. So what are the incentive/deterrent effects w/o some other reputational harm?

Copyright Irrelevance in Architecture – Kevin E. Collins
Lots of protection overlaps, but architects aren’t using any of them. Underenforcement (not normative judgment but vs. broad protection that is available).  Irrelevant in architecture based on what theory? Incentive to create?  Enabling transactions?  © is irrelevant for custom designs, but not for stock designs (where it is licensed to many). Almost all non-residential design is custom, and stock designs dominate residential communities. There are few licensed architects in stock design world, where most of the designers are “registered designers” not licensed architects.  Licensed architects have contempt and embarrassment for registered architects who design stock houses—“ambulance chasers.”

Suits against transactional partners—employees who leave firms, or people who fall out w/builders or clients—those are different kinds of enforcement. Enforcement against transactional strangers is where © is necessary to go out on the market; enforcement against transactional partners is different.  © isn’t relevant for bolstering exclusivity, but for other purposes.  Relevant to help architects get paid, but not the ordinary “incentive to create” story.  Almost all suits in custom design are against partners; almost all suits in stock design are against strangers.  Sometimes suits in the custom space are owners of homes who are pissed off at copying of their houses.

Of 3 custom design nonresidential cases against strangers, two are industrial designs.  All © trolling is in stock design.

Q: different transaction costs exist in each case (strangers v. transactional partners).

A: True. Custom side ends up w/ a lot of suits against clients; both sides have about the same # of suits against departing employees.

Lunney: consider legal work—custom legal brief is generally not copied, tailored to fit facts of your case; you’re paying for professional judgment.


A: true, demands of clients and sites are different; that just may affect substantial similarity. Different projects can end up looking quite similar!

Thursday, August 10, 2017

IPSC Breakout Session III

Useful Articles 
Star Athletica: Stuck on the Merry-Ground  – Alfred C. Yen
We’re just going round and round. Those who can’t remember the past are condemned to repeat it; a page of history is worth a volume of logic. For a case the SCt took, the Ct was astonishingly indifferent to precedents. Only 4 cited © cases: Mazer v. Stein; Chosun (2d Cir. 2005) (article need not remain functional once artistic elements removed); Brandir dissent (statute controls, not intent); Bleistein.  All we have to do is look at the object and see if it’s capable of existing separately from the underlying function.  Doomed to failure b/c very project of identifying a hypothetical aesthetic object is riven w/strongly inconsistent perspectives. You can’t escape moving among perspectives in trying to identify artistic object.  Formalism (form of object itself), intentionalism, institutionalism (audience reaction). Doesn’t think we can ever rid ourselves of these contradictions in ordinary practice, and maybe we don’t want to—each can bolster one of the others.

Court rejects audience and intent as not being based in the statute; all they want to do is go back to formalism.  Star Athletica then puts us back where we started, in Mazer v. Stein.  Prediction: we will go around merry-go-round again.  Wy won’t it work? Even the very effort of trying to identify whether something is a useful article is fraught w/difficulty. Airplane wing or sculpture?  Shovel or sculpture?  Wall or sculpture?  Might want to know more about why it was made and how it is used.

RT: the other part of 102 might provide some protection: control over artistic design doesn’t give any control over making the thing depicted.  If form & function are unified, then anyone can sell that shovel in Home Depot regardless of whether the shovel-sculpture is ©able.  Now, that might just shift the intentionalism/institutionalism Q to the defense side, but it might also take care of many of the situations where we think there are competitive issues distinct from what we think of as the “real” point of ©.

A: it’s hard to talk about protectability of useful articles w/o also talking about thickness of ©.

Chris Buccafusco: the opinion lacks formalist analysis.  Can we spot pictorial features/a work of art?  Yes.  Opinion never describes them or engages w/what you might think formalism would entail, such as identifying or describing the pictorial/graphic elements.  A formalism that never specifies form, unlike Mazer & Carol Barnhart at least tried.

A: Court realized that trying to deliver an analysis would make it even more clear that there is nothing more there.  Thomas ducks: it’s the only way to avoid being criticized for subjectivity.

McKenna: some of these problems are Congress’ fault.  There is a definition of useful article, putting thumb on scale of calling it a useful article, but the courts have never taken that seriously. Also, Congress asked for an impossible task. Really Congress wanted to separate © from design patent, not © from utility patent, and that’s really difficult.  Look at the examples Congress used, and they’re all highly analogous to physical separability. Ignoring that caused Court problems.  You can’t really distinguish applied art from industrial design.

A: Temporal equity problem: if it was sculpture first, conversion to useful article later shouldn’t matter. If that’s the case, the reasoning goes, then it shouldn’t matter in the other direction.  That’s what gets you stuck.

Q: So we should just reject the temporal equity point.  If you use 102(b) to let defendants sell things as useful articles but not as sculpture, then you get lots of administrative costs.


Responding to Star Athletica v. Varsity Brands – Lili Levi
Issues: Practical impact of indeterminacy; Court’s approach to art; whether other limiting doctrines will work and how well; use of © for branding/anticompetitive non-© strategies.

Conflicting views on how bad Star Athletica is; the attempt to adopt a deceptively simple, uncertain unitary test creates an incentive for opportunistic litigation which is likely to expand boundaries—already happening, Puma’s action against Forever 21 over Rihanna’s footware, which is plastic slides w/bows and fake fur on them. These aren’t Schiaparelli’s dresses. Court doesn’t talk about affect on fashion industry and whether it would be good or bad to kill fast fashion.

There can be different interpretations of function—you don’t need to use the same definition of function to determine separability that you use to determine whether something is a useful article.  Possible functions: Mechanical, marketing (enhancing saleable value), branding. What about making people look thinner? Use in an interactive way w/audience’s perceptual responses, knowingly crafted to achieve resonance—does that make them expressive?

Star Athletica said it wasn’t ruling on originality, but she isn’t very hopeful, given that in the case itself there was disagreement b/t dissent and concurrence on elasticity of originality. Could make arguments about role of originality being different w/useful articles, but don’t know.  Maybe we should also look at scene a faire—whether there’s enough common understanding already; that’s mushy doctrine too. Granular, case by case analysis will be required.

Pam Samuelson: there’s no question that functionality was key part of what Congress was trying to do; ignoring that is a huge problem w/the decision. If we care about the implications, working on what function means is a task that we can bring to this.  Even though the definition of useful article states that conveying information is never functional, she found dozens of cases finding compilations functional and uncopyrightable.

Intellectual Property’s Usefulness Problem, or Functionality as Fair Use – James Y. Stern

Even if we rested on any one of those 3 visions Yen talked about, we’d still have problems of incoherence b/c we have ontological problems.  Humvee designed to survive bomb blasts, deployed as suburban vehicle—is it functional in a subdivision? 

Externalist controls—preserving space for patent law.  Internalist—limits based on our view of what © is. Ontological v. pragmatic: the essential Q is whether TM/© protection would restrict access to a useful technology. Could defendant make a product that works as well without using material claimed by right holder?  Focus should be on alleged infringer, not right-holder. Doctrine should treat functionality as a defense, not an invalidity basis.  Not taking any position on where burdens of proof should be allocated, but it should be case-specific in terms of what the D is up to, rather than the nature of what the P has produced.  Traffix: currently upside down—focused on whether the spring is the reason the TM owner’s device works. In a lot of places in TM, that’s not always important, where we deal w/side by side competitors in the same market—functional for P and functional for D will overlap. If both make luggage w/shiny lining that causes confusion; in one case it’s purely decorative while the other has thermal insulation.  If the former is the senior user and sues, its feature isn’t functional for its use—and it seems like it should win!  [I doubt any court would so find, though.  Descriptive fair use would be a doctrinal hook if you can’t stretch functionality, though I have hopes that a court would recognize at least a category of defendant-side or product-category functionality.]  If the latter is the senior user and sues, it loses.  [This version is almost literally the old aluminum washboard case, updated.  False advertising would still be available as a claim, if consumers understood the silver to communicate the fact of thermal insulation.  If they didn’t, then so what?]

Copyright hypo: imagine bike rack designer copied the original Brandir sculpture, rather than the resulting bike rack.  Result under useful article doctrine seems to be that there is infringement, which means restricted access to tech.  Duchamp’s urinal would be the counterexample.

Star Athletica was interpreting what was really an attempt to create an internal limit: protection for industrial design excluded, but not for applied art.  Can’t you imagine anything as art, though?   Functionality takes care of many worries b/c functional uses are immune from © claims, and context matters—useful article doctrine requires exclusion of fact of utility in considering the nature of creative elements.  USB connector in the shape of a faucet—can’t protect the fact that it’s a USB connector through ©.  [Could through design patent.]


Lemley: internalist justifications ultimately have to fall back on externalist—you need a theory of why © shouldn’t extend too far; he thinks that will ultimately be about why we want other doctrines. We ought to have a doctrine of D-focused functionality, but we need not get rid of P-focused functionality. Even where there isn’t a D-focused functionality, we don’t want to give © or TM protection for truly functional elements.  [Really? What about ipodmybaby.com, where they put the image of the [functional, by hypothesis] click wheel on a baby onesie, where it was nonfunctional.  Seems little reason to allow non-Apple parties to do that, though there may also be minimal reason to stop them.]

A: thinks that’s more true for © than for TM.

Q: if you’re thinking about integrating useful articles in 102(b), you have to think about internalist views—there’s a lot of exclusions that aren’t dependent on patent law—many of such exclusions exist b/c we think they shouldn’t be protected at all, by patent or otherwise.

Buccafusco: you don’t need anything about Star Athletica to get copyrightability for the USB shaped like a faucet—that’s Mazer v. Stein.

A: but what are the copyrightable aspects?  Combination w/practical device should be excluded from consideration.

James Grimmelmann: TM: descriptive fair use + deny protection to descriptive terms as marks, analogous to P-side and D-side functionality. Serves prophylactic purposes.  There are arguments that scenes a faire and merger are defenses that have been pulled back into protectability.  That USB faucet might not be protectable b/c there’s no originality.

A: even a pure mold copy?  Might/might not have minimal © necessary.  As for both kinds of functionality, that might be practical, but don’t confuse prophylactics for principle.  Looking for answers in the nature of what makes the characteristic functional in the first placer.

Trademarks & Consumer Perception Room 304
Should Trademark Law Protect Marketing? Deven Desai
Why not protect nontraditional TMs?  Countries are increasingly accepting registrations for them. 

Why not?  First, scope. How do you know what’s being claimed.  US is less precise than Europe, which requires specific Pantone.  How do different people see the color?

Second, exhaustion of available colors, shapes, etc. 

Leads to aesthetic functionality morass.  Significant nonTM function: what does that mean?  Marketing literature: Design is part of branding, which can be used to compete.  The whole point is to move beyond competitors’ ability to compete.  Design is a source of differentiation.  It’s not marginal to the product but core; design & marketing dep’ts work together. Designers are looking to tap into innate attitudes—features, shapes, forms, colors, materials, surfaces, textures, to build brand image. Aesthetics and ease of use are all developed together.

Notion of innate/essence capturing: communicating an aesthetic is done best by using symbols to tap into innate preferences—preferences for unity, proportion and symmetry, etc.  Bright colors; shoes (large to signify power; even if a hair dryer has a ton of power in smallness, consumers like it better when it’s big), angular forms for masculinity in cars, roundness (phone edges, car trunks).  Functional/ergonomic: largeness can indicate power, communicate quality by looking reliable or solid.  Does the number of buttons make consumers think a machine is easier to use? Consumers care about shape of button.

Attention drawing/categorization.  Varying size and color; contrasting colors can draw attention. Categorization: the way a consumer chooses products as fitting w/in product market can drive consumer choice.  You want prototypicality: look or appearance that makes most people think it belongs in the product space.

Look at Apple’s claims for trade dress—all those features seem functional under this view—icons arranged to be easy to see and use, contrasting colors b/t borders and screen, rounded shapes for phone & icons—all these things you’d be very wise to use if you wanted to compete.

Maybe we should have a ban, taking seriously that TM isn’t supposed to be incentivizing creativity. Consumers would learn that product design trade dress isn’t necessarily reliable indicator of source.  Reality, though: rules aren’t going away—so we need to manage it. Justin Hughes has proposed a way to handle design, which Desai doesn’t think will work.  Where aesthetic appeal preexists the product, he says, there should be functionality, but not otherwise. But: designs are hybrids. They draw on and perform a variety of functions at the same time—designers are explicitly tapping into innate and preexisting preferences or biases.  Also, there are not clear metrics on what should be granted. EU isn’t as clear as people want, though it’s clearer than we are.  Super-limited protection/scope might work, but there’s still the deep problem that the more we grant, the more overreach we get, worse than in word marks.  Still, it’s here to stay, so we need limiting efforts.

Q: curb cuts, designed for wheelchairs but used by many other people. Why the iPad became such an appealing piece of software/hardware for differently abled people—goes to a lot of the things you’re talking about.  That’s an example of the worst case scenario for protecting these features—you give monopoly on accessibility.

Gerhardt: role of registration in determining scope?  Frequently we seen trade dress defined against what the D is doing—ex post.  Ex ante applications to register are in a weird space; companies proceed differently than they do w/registering word marks.  They jump on word marks, but w/trade dress they sometimes try to pin it down to put everyone else on notice, or it doesn’t occur to them, or they don’t want to be pinned down so they wait.

A: Needs to know more about that.

McKenna: you could harden up the claiming rules to limit ex post problems.

Trademarks, Employees, and the Firm – Matthew T. Bodie
TM is about attribution, so has particular puzzles for employees/firm.  How can a firm claim that a product or service is protected by TM when the employees aren’t making the product/performing the service?  What about the firm can change and yet still be the same “source”?  Paradox of Theseus’ ship—every bit is replaced, and is it still the same ship?  [I would say, why are you asking?]  School of Law isn’t the building it’s in; it isn’t the people who are there now (all the originals have been replaced).  Is the school anything more than the TM, the right to say that it’s the School of Law? 

What about a labor-fissured firm, like Uber/independent contractors? How can we say their work is “Uber”? The magic of the brand is to encompass this, and the TM is the legal operationalization of enforcing the brand connection.  Work done by non-employees is still our TM.

TM has cheated and said that the business is the source—the fictional entity. Firms have been arbitraging and we shouldn’t let them get away w/it—disavowing for labor & employment law purposes, but claiming for brand & TM purposes.  TM law does say that you can lose a mark through giving up on quality control—control over quality establishes the mark.  Firms control through contracts, etc. w/outside entities.

Choices for fissured firms: maintain control over labor and become employer/joint employer (operate as a firm)—or if they want to outsource housekeeping and not control it, they should lose TM b/c they aren’t controlling quality any more.

Lunney: TM Act: authorizes TM owners to allow related cos. to use their marks, defining related as those TM owner has control over.  But people don’t know or care whether there are independently owned franchises or centrally controlled; you’d force central control and McDonald’s seems to be doing fine having both types of restaurants.


McKenna: 100 years ago, outsourcing would have been considered fraud. There was a very deliberate move in the common law and then in the statute to abandon that, to enable companies to create different kinds of commercial relationships. You might say TM law enabled the labor/employment situation you enabled, and the payoff is that the market structure isn’t independent of the rest of the law. If TM law were different, it would create a different labor/employment market. Another take: in a service economy, what does control mean? That might be a different paper.

Transformative work of the day, Richard Siken edition

The Siken Bot tweets lines from Richard Siken poems at 30-minute intervals.  And after following it for a few days, I find that I do see Siken's poetry differently.  At this point I'm not even sure whether I like it less or more, but the tweets highlight his use of specific techniques, especially repetition, and  yet contrast sharply with the full poems, which have more room to use those techniques in service of a larger effect.

IPSC Breakout Session II

IP Theory 
The Boundaries of Intellectual Property: A Preliminary Exploration of Constitutional Salience –
Amy Kapczynski

What IP law is about: what values beyond efficiency we might be able to say this law serves.  You can’t justify IP v. grants or prizes based on efficiency w/o further beliefs, such as beliefs about the dangers & competences of the state. The value is thus more something like liberalism—better, more free society if we minimize the role of the state, creating private property in ideas.

More than liberal values, republican values.  Republicanism has a theory of political economy.  Jefferson believed in an agrarian republic preventing vast inequalities of wealth and the corruption associated w/aristocracy.  Jefferson restricts primogeniture & slavery in Northwest Ordinance—conception that property law had to reflect and build a society they wanted. More opportunity for white men in the West than the South in the decades following the Northwest Ordinance: it worked.  Property qualifications for voting were restrictive, based on idea that you needed a stake to be politically responsible; but there were progressive strains as well. 

Best reading of IP clause thus makes public interest a truly meaningful concepts. Anti-oligarchical, equality, anti-monarchical commitments, giving limits in IP clause resonance.  Look also at early state © laws which emphasized public interest, limits.  Somewhat startling egalitarianism of early US patent law. 

Focus on boundary cases: what’s in and what’s out? Wheaton v. Peters: why allow © on court reports? At the time, reporters may have needed incentives, but also weren’t reporting exactly what judges said.  May also help understand patentable subject matter and preemption—concerns about competition, anti-oligarchy, equality of access that aren’t organized around incentives.

INS v. AP: creating quasi-property right in news: Court first has to say why give a property right at all, v. Brandeis pointing out that people hurt others in business all the time.  Majority: news is important.  B/c we live in a democratic society, not b/c we have preferences for news.  Second move in the case: why doesn’t the quasi-property right extend to everyone?  If preferences tell us what news to produce, a robust property right might be efficient.  But Pitney shuts that off: Framers couldn’t have wanted to give first reporter exclusive rights—our constitutional order can’t permit property in news.  From efficiency perspective, that’s a bit puzzling, but not from republicanism.  Anemic right created under INS.

Government patent infringement: mostly there was immunity; now you can get reasonable damages, not lost profits.  Gov’t may be interested in national security, drugs—there we suspend property logic.  Commitment to the public determining through political process how we want to treat these goods.

Q: I understand why not grants, but what republican advantage does IP have over prizes?

A: Might be in part the lack of a highly developed administrative state at the time. Over time, more elaborate state apparatus could achieve some of these values in different ways/playing a more active role.  [Seems like reasonable to talk about Bayh-Dole at this point.]

Q: What’s the role of the state in INS?  Pinckney has a conception of private property that doesn’t purport to rely on the state.

Chris Sprigman: Is this a matter for the courts to enforce, or is that not included in a republican conception?

Jonathan Masur: is the argument that there are strands of republicanism or that republicanism is a dominant theme?

A Heap of IP: On the Essential Indeterminacy of Intellectual Property Rights –Jeremy Sheff

IP rights, or scope of any individual rights, will have some zone of irreducible indeterminacy. (1) intellectual property operates based on categories rather than based on physical phenomenon. A car is a thing in the world you can touch. There may be questions of boundary definition between one plot of land and another, but there is no question that there is a plot.  IP defines either things or possible things that might be subject to rights to control others’ use or bringing other things into the world.  (2) IP rights, even defined by exemplar, have features—they are composed of the whole of those elements. If you take one piece away, you will face questions about whether you are still dealing w/the same thing.

Philosophy has tools for this.  Experiences of people in a position to make the decision will determine (1).  Old philosophical puzzle: you have a heap of wheat & take one grain away—at what point does it stop being heap?  Goes to the idea that there are some predicates that are very clear at the extremes but unclear in the middle.  We do this w/IP all the time.  Infringement doctrines get at this part-to-whole or little-by-little relations in various ways.  Egyptian Goddess does away with point of novelty; says to look at article as a whole. There is no one feature of a patented design that makes the difference b/t infringement or noninfringement. If that’s true, how are we to determine whether a particular accused device/work is or isn’t within the scope of an IP right. Philosophers have a few approaches, none of which are particularly useful for lawyers. One: epistemic limitations prevent us from knowing where the truth is, although there is one. But in law, someone is going to decide.  Two: Truth gaps w/r/t certain predicates—there are definite truths at the extremes, and no truth or falsity in the middle—it is neither true nor false.  Lawyers & judges can’t do that with specific disputes.  Third: truth can be a matter of degree, not bivalent. Law again can’t do that w/r/t infringement.

What then? If it’s true that application of rules isn’t determined in advance but by social context/practices of people making these decisions, then we have to recognize that different people from different contexts will come out different ways. Who decides becomes incredibly important—allocation of decisionmaking authority may be more important than the rules’ content: whether a question is for a jury or a judge. We see them divided up in different ways, w/some instability.  The law itself will not determine the scope of the right; only in practice through application by people who approach questions based on context/institution from which they come. So we should look at systematic differences.

James Grimmelmann: why is IP special?  Your answer may be on IP’s in rem nature—not necessarily corresponding to specific physical objects.  The jury is special here b/c it can take a decision that doesn’t have to be reasoned or consistent.  Standards of review that permit higher bodies to say “it’s in a range that we can allow the decision to stand.”

A: Allocating to jury is a way of saying “who can say?”  There’s no clear truth value, so give it to a relevant community, and maybe a jury is that in a democratic society.

Q: connect philosophical ways of understanding vagueness to using different communities as a solution.  One philosophical resolution is semantic indeterminacy.  We just haven’t managed to nail the answers down, but we could in theory do so.  One way of understanding outsourcing to various communities is engaging in the task of building answers—the jury can answer one way or another. Then based on jury’s determination the issue might become less vague, via precedent.

Masur: Explain what purchase you get through Wittgenstein etc. that we didn’t get through Holmes and the realist revolution—the life of the law has not been law, it has been experience; law is about predicting what the jury will do; based on policy not pure logic.

Felix Wu: seconding Grimmelmann: to what extent is IP special?  Linedrawing is always difficult: what counts as speech protected by the First Amendment? Has the same characteristics you just described.  Not clear to him that the whole game is institutions/allocation of decisionmaking—what part of the game might be elsewhere?  You send something to the jury, but presumably they get instructions about some notion of substance we want to maintain.

RT: Puffery: you can actually decide that the truth is undecidable by a court.  Burden of proof: can’t it take care of these issues (assuming, as Wu says, that you have the substance defined properly).

Q: people in a creative community might notice unpredictability, and might want to avoid the judicial system.  They could create ADR where they’d trust other community members to make more predictable, sounder judgments about how much borrowing is ok, how much new stuff one must add.  We do sometimes see ADR in creator communities, in response to perception that courts don’t understand.

Sheff: one question is whether best practices are entitled to any deference—a way of assigning responsibility to a community.

The Game’s the Same, But the Rules Have Changed: Rights of Publicity, False Endorsement, and the First Amendment – David S. Welkowitz

Football players who object to uncompensated use of images in videogames: two cases that are the same that come out differently, depending on what he alleges.  From the First Amendment perspective, they are the same case.  EA says the First Amendment protects its right to use the image.  Court acknowledges full 1A protection.  This makes no sense.  Contrast: 6th Circuit’s Rosa Parks case uses same test for ROP and for false endorsement.  It is unusual to have such a conflict—for at least one of the claims, the statute might do the work instead of the First Amendment.  Here’s Johnny toilet case: no likely confusion, but that didn’t matter to the ROP claim.

Analogy: Hustler v. Falwell. Can’t use IIED to substitute for 1A-barred defamation claim.  Compare contract law, which can be used to override otherwise existing 1A rights.  Tentative conclusions: maybe to reconcile this by looking at what interests the 1A protects; may also imply things for remedies in ROP—if you are seeking a defamation-like remedy, perhaps you shouldn’t be able to seek that to evade the 1A—Food Lion v. Capital Cities, 4th Circuit limited remedy for contract-like claims to avoid defamation-like remedies.

Heymann: Hustler comes from a sense that the P is trying an end run.  You’re making the same sort of argument here [but courts are happy saying ROP is different—it was invented precisely to make this end run, whereas IIED had a different history and really a different set of aims].

A: The 1A outcome can’t vary unless the interests are sufficiently different, and that’s where the problem lies.

Pam Samuelson: ROP/privacy claim and copyright claim at the same time—1A protected D from privacy/publicity liability, but not ©--based on a photo of a gay couple kissing, used by a conservative political group.  Might look at nature of the interest in © versus ROP.

Yen: look at who got paid—Brown was paid and Keller was not (as college player).  That may influence the way courts think about it.  Falwell is about 1A’s Faustian bargain for politicians: in return for coming forward, you expose yourself to attack—where’s the bargain?

A: the panel drops a footnote in Brown saying that if it were a ROP case we’d do it differently, so that status doesn’t seem to have mattered. 

Rothman: Agree that we need to harmonize.  Brown refiled w/ROP claim and succeeded in moving the case forward; EA then settled for $600,000.

Choice of Law and the Right of Publicity – Mary LaFrance
Differences in subject matter: whether it’s protected at all; what aspects are protected; duration (postmortem; whether it will be forfeited if not exploited in life, etc.).  Courts typically apply forum’s default conflict of law rules to ROP.  To determine scope of P’s exclusive rights courts usually apply law of place of infringement, but to determine existence of protectable right, majority rule applies the law of the exploited person’s domicile, or domicile at time of death. Domicile rule is typically justified as traditional choice of law rule for property ownership.

Domicile rule conflates issues: (1) whether there is a protectable postmortem right in the exploited persona, by analogy to other forms of state protected IP—the place of infringement should determine that (e.g., state law copyright, which has suddenly taken off, and whether it protects pre-1972 sound recordings; trademarks protected under state law; trade secrets)—courts ignore that in other types of IP, not personal property, courts look to the place of infringement.  Conflated with (2) if the right exists, who owns it? That’s just a matter of state inheritance law, and we look to the law of the state governing inheritance, which is probably domicile at death. There it makes perfect sense to look at decedent’s domicile.

Transferability/assignability presents similar issues: which state’s law should determine whether it’s assignable, which depends on whether it’s a property right or personal right. If there is an assignment, is it valid? Which state’s law governs contract interpretation?

Case, Bi-Rite, which didn’t apply Mass. law (local) or UK law (domicile). Illinois, Connecticut, and Georgia, b/c some of the UK performers granted exclusive licenses to Illinois & Conn. To exploit their ROP; others licensed through a Ga. Company. Therefore, court applied law of place where licensees were domiciled.  This is weird.

Sometimes courts don’t even spot the conflicts question; automatically applied law of place where infringement occurred, e.g., Zacchini, or Estate of Presley (D.N.J.) where at the time Ga. didn’t recognize a postmortem right but NJ did, even though estate couldn’t have won a suit in his home state.  Policy arguments against current domicile approach: How can you have a class action w/the domicile rule?  If the ROP is a property right, as most courts treat it, why treat it differently from other IP rights?

One argument in favor: for books, internet—you can’t really limit it to one state where you can’t be sure where you’ll be an infringer.  Domicile rule might not be the answer but we need some form of predictability.

These laws do seem to discriminate against nonresidents.  Judge in Bi-Rite case suggested it was unconstitutional to discriminate against foreigners.  But in going through antidiscrimination provisions, the problem is that the plaintiffs are not necessarily nonresidents. Discrimination is usually based on content of goods, not location of the merchants—content isn’t protected under the laws of our state b/c it's based on some nonresident’s persona.  [I’m not sure I see that.  The P still wins or loses depending on residency.]

Q: Potential difficulties: where the owner of the rights under one state’s law would be different through inheritance than others.

Q: why not a uniform federal law?


A: not going to happen any time soon; no one is really lobbying for it.