Tuesday, February 21, 2017

State law can't protect uncopyrightable design for useful article

Ultraflo Corp. v. Pelican Tank Parts, Inc., No. 15-20084 (5th Cir. Jan. 11, 2017)

A nice citation for the proposition that §301 preemption covers both copyrightable and uncopyrightable matter. Ultraflo argued that Pelican engaged in unfair competition by misappropriation claim by stealing Ultraflo’s drawings showing how to design valves and then used them to make duplicate valves. Ultraflo argued that its claim escaped preemption because its valve design, when separated from the drawing itself, was uncopyrightable. But “copyright preemption prohibits state interference with Congress’s decision not to grant copyright protection just as much as it protects a decision to provide protection.”

The drawings of the valves were copyrightable; they were the basis of a copyright infringement claim rejected by the jury below. But the misappropriation claim was based on copying the valve design, not copying the drawings. The valve design was either a useful article or an idea, and not copyrightable, but preemption covers more than copyrightable works; §301 preempts state protection for works within copyright’s subject matter, including useful articles, whether or not they are copyrightable. “[S]cope and protection are not synonyms.” The court noted that “the exclusion of useful articles from copyright protection is a corollary of the idea-expression dichotomy”; allowing state-law protection for useful articles would undermine their deliberate exclusion from the federal scheme. 

Was plaintiff claiming a right equivalent to that granted by copyright?  The Copyright Act doesn’t grant the owner of a drawing of a useful article to control the making of the useful article—but preemption is more general than just what would infringe copyright.  “The question is not whether state law provides a right identical to federal copyright law, but whether state law provides a right akin to those ‘within the general scope of copyright as specified by section 106’” (emphasis added).  And the exclusive rights generally include the right to make derivative works.  Indeed, §113(b), by making clear that the owner of the copyright in technical drawings can’t prevent making the articles, “recognizes that such derivative use may otherwise be protected by the copyright laws.”  The key issue was not the rights Congress actually provided but “the type of rights it has the power to confer. Withholding a particular right is part of the balance Congress struck between the need for copyright incentives and the value in public access to ideas.”  The exclusion also protected the patent/copyright line.

Unfair competition by misappropriation lacked the necessary extra element to escape preemption.  Sweat equity, use against a competitor, and intent don’t count as extra elements.

Gun gag rule case provides good overview of post-Reed First Amendment doctrine

Wollschlaeger v. Governor, No. 12-14009 (11th Cir. Feb. 16, 2017)

The court of appeals at last mostly overturns Florida’s Firearms Owners’ Privacy Act (FOPA), after several false starts.

The AMA “encourages its members to inquire as to the presence of household firearms as a part of childproofing the home and to educate patients to the dangers of firearms to children,” as does the American Academy of Pediatrics and the American Academy of Family Physicians. But, in 2011, “the Florida Legislature learned that a pediatrician in Ocala had reportedly told a mother that she would have to find a new physician for her child due to her refusal to disclose information about firearm ownership in the family home.” The doctor said he asked all his patients so he could provide safety advice, and that he asked similar questions, such as whether there was a pool in the home. “The mother felt that the question ‘invaded her privacy,’ but the record is silent as to whether she ultimately answered the questions posed to her about firearms.” The legislature also learned of “five other incidents in which patients complained that doctors and medical professionals had asked unwelcome questions or made purportedly improper comments regarding their ownership of firearms.” Two anecdotes involved claims that disclosing firearm ownership was a Medicaid requirement.

As a result, the legislature enacted FOPA, which contained record-keeping, inquiry, anti-discrimination, and anti-harassment provisions. The record-keeping provision states that a doctor or medical professional “may not intentionally enter any disclosed information concerning firearm ownership into [a] patient’s medical record” if he or she “knows that such information is not relevant to the patient’s medical care or safety, or the safety of others.” The inquiry provision states that a doctor or medical professional “should refrain from making a written inquiry or asking questions concerning the ownership of a firearm or ammunition by the patient or by a family member of the patient, or the presence of a firearm in a private home” unless he or she in “good faith believes that this information is relevant to the patient’s medical care or safety, or the safety of others.” The anti-discrimination provision states that a doctor or medical professional “may not discriminate against a patient based solely” on the patient’s ownership and possession of a firearm. The anti-harassment provision states that a doctor or medical professional “should refrain from unnecessarily harassing a patient about firearm ownership during an examination.”

The relevancy standard means that doctors can’t ask all their patients, or all their patients’ parents, whether they own firearms or have firearms in their homes, as part of a standard intake questionnaire. As the panel opinion in this case concluded, such inquiries (and record-keeping) are appropriate only if the doctor or medical professional has “some particularized information about the individual patient, for example, that the patient is suicidal or has violent tendencies.” Violations of these provisions are “grounds for disciplinary action,” punishable by a fine of up to $10,000 per offense, a letter of reprimand, probation, suspension, compulsory remedial education, or permanent license revocation.

The court had little trouble finding these to be content-based limits on speech; even the anti-harassment provisions primarily targeted questions or advice, not conduct. “[A]nti-harassment laws, insofar as they regulate speech based on content, are subject to First Amendment scrutiny.” Under Reed, such rules are normally subject to strict scrutiny even assuming they are viewpoint-neutral. But even under Sorrell’s heightened but not strict scrutiny, FOPA’s record-keeping, inquiry, and anti-harassment provisions failed.

The state argued that the First Amendment wasn’t implicated because any effect on speech was merely incidental to the regulation of professional conduct. This argument relied on Justice White’s argument, in concurrence, that when people are exercising judgment with respect to a particular client, they’re “engaging in the practice of a profession” and the speech is “incidental to the conduct of the profession.” See Lowe v. S.E.C., 472 U.S. 181, 232 (1985) (White, J., concurring in the judgment). Justice White proposed that regulations of so-called professional speech receive only rational basis review. See Thornburgh v. Am. College of Obstetricians & Gynecologists, 476 U.S. 747, 802 (1986) (White, J., dissenting). By contrast, laws purporting to regulate a professional who does not have a “personal nexus” to a particular client and who is merely speaking generally would receive heightened scrutiny.

Applying Justice White’s framework to licensing requirements is different from applying a law restricting what license holders can say on a given topic in practicing their profession. The Ninth Circuit has also adopted Justice White’s approach in upholding a California law prohibiting mental health practitioners from providing sexual orientation change efforts therapy to children under the age of 18. See Pickup v. Brown, 740 F.3d 1208, 1225–29 (9th Cir. 2013) (as amended on rehearing). However, the Ninth Circuit held that the law didn’t restrict what the practitioner could say or recommend to a patient or client, and thus the law “regulate[d] conduct” even though it covered the verbal aspects of SOCE therapy. The court here expressed “serious doubts” about whether Pickup was correctly decided, because it’s dubious to ever characterize speech as conduct (really? What about “I promise to give you this car if you give me your money”?). But anyway, Pickup was distinguishable on its facts, and recognized that “doctor-patient communications about medical treatment receive substantial First Amendment protection.”

By contrast, Conant v. Walters, 309 F.3d 629 (9th Cir. 2002), struck down a federal policy which threatened doctors with revocation of their DEA prescription authority if they recommended the medicinal use of marijuana to their patients. This was content- and viewpoint-based regulation in violation of the First Amendment; it lacked the requisite “narrow specificity.”

The Supreme Court has never adopted or applied Justice White’s rational basis standard to regulations which limit the speech of professionals to clients based on content, but instead has sometimes applied heightened scrutiny to regulations restricting the speech of professionals. See, e.g., Legal Servs. Corp. v. Velazquez, 531 U.S. 533, 542–48 (2001) (law regulating attorneys violated the First Amendment because it limited “constitutionally protected expression” and “alter[ed] the traditional role of the attorneys”); N.A.A.C.P. v. Button, 371 U.S. 415, 438–44 (1963) (law regulating organizations’ provision of legal services violated the First Amendment because the state had not advanced any substantial regulatory interest to justify the prohibition). As Button said, “a State may not, under the guise of prohibiting professional misconduct, ignore constitutional rights.” Given that, the plurality opinion of three Justices in Planned Parenthood of Southeastern Pennsylvania v. Casey, 505 U.S. 833, 884 (1992), upholding a risk-notification requirement for doctors performing abortions, didn’t support the use of rational basis review here:

If rationality were the standard, the government could—based on its disagreement with the message being conveyed—easily tell architects that they cannot propose buildings in the style of I.M. Pei, or general contractors that they cannot suggest the use of cheaper foreign steel in construction projects, or accountants that they cannot discuss legal tax avoidance techniques, and so on and so on.

Under heightened scrutiny under Sorrell, government “must show at least that the [provisions] directly advance[ ] a substantial governmental interest and that the measure[s] [are] drawn to achieve that interest. There must be a ‘fit between the legislature’s ends and the means chosen to accomplish those ends.’” “[u]nlike rational basis review, th[is] . . . standard does not permit us to supplant the precise interests put forward by the State with other suppositions.” The Supreme Court has noted that “[t]he quantum of empirical evidence needed to satisfy heightened judicial scrutiny of legislative judgments will vary up or down with the novelty and plausibility of the justification raised.” Nixon v. Shrink Missouri Gov’t PAC, 528 U.S. 377, 391 (2000). Six anecdotes and nothing more was insufficient, in a state with more than 18 million people, to show that the state’s concerns were “real, [and] not merely conjectural,” and that FOPA provisions “will in fact alleviate these harms in a direct and material way.”

The state’s interest in protecting Floridians’ Second Amendment rights was a substantial government interest, but: (1) The legislature had no evidence that doctors had infringed those rights, because as private actors they can’t do so. (2) Florida makes it a misdemeanor to fail to secure firearms that are then obtained or possessed by minors without supervision, which means that questioning patients is consistent with state policy and not inconsistent with the Second Amendment. (3) The record-keeping, inquiry, and anti-harassment provisions didn’t advance any anti-interference with gun goals in a permissible way, since some patients don’t object to questions and advice about firearms and firearm safety, “and some even express gratitude for their doctors’ discussion of the topic.” In “the fields of medicine and public health . . . information can save lives.” Sorrell. Doctors, therefore, “must be able to speak frankly and openly to patients.”

The state’s interest in protecting patient privacy was also substantial. But patients can simply refuse to answer any questions about firearms; the state didn’t explain why that protection wasn’t enough. The chilling effect of disclosure and record-keeping was already limited by Florida law’s existing protection for medical records, and there was no evidence of improper disclosures about firearms. While the appellate panel said that there was a danger of hacking, theft, or some other intrusion, the legislature didn’t rely on this rationale and the state couldn’t rely on it now.

The state’s interest in ensuring access to health care without discrimination or harassment was also substantial. (Talk about ideological drift. I guess it all depends on what you want to be free from discrimination about.) The non-anti-discrimination provisions, though, weren’t well tailored for that. If the issue were threats to end the physician-patient relationship or to refuse treatment if questions about firearm ownership were not answered, then the legislature should’ve barred doctors from ending professional relationships with patients who decline to answer questions about firearm ownership, as a less speech-restrictive alternative. But FOPA does the opposite: medical professions can end a relationship over a refusal to answer.

The state also argued that there was a significant power imbalance between doctors and their patients, who are in a vulnerable position. But, for adults, “the Supreme Court has never used a vulnerable listener/captive audience rationale to uphold speaker-focused and content-based restrictions on speech.” (Citing Snyder v. Phelps, 562 U.S. 443 (2011).) And patients have the right to refuse to answer questions. “There is nothing in the record suggesting that patients who are bothered or offended by such questions are psychologically unable to choose another medical provider, just as they are permitted to do if their doctor asks too many questions about private matters like sexual activity, alcohol consumption, or drug use.” The fact that a few felt coerced and harassed can’t sustain broad content-based regulations of this sort; listening to speech you don’t like is the price of freedom.

Finally, the state argued that it needed to regulate the medical profession in order to protect the public. This is obviously true in the abstract. But the state “must do more than simply ‘posit the existence of the disease sought to be cured.’” Given that “injuries are the leading cause of death and morbidity among children older than one year, adolescents, and young adults,” the AMA and the American Academy of Pediatrics both recommend that doctors and pediatricians ask patients about firearm ownership, and educate them about the related dangers. “There is no claim, much less any evidence, that routine questions to patients about the ownership of firearms are medically inappropriate, ethically problematic, or practically ineffective.” Nor was there any evidence that the result was “bad, unsound, or dangerous medical advice.” Two of the six anecdotes on which the legislature relied were false claims about Medicaid coverage—but the obvious solution to that would be to ban false claims. (Citing commercial speech doctrine.)

The anti-discrimination provision was a little different, since it banned discrimination “against a patient based solely” on his or her ownership and possession of a firearm. On its face, that wasn’t speech-based. The court upheld the anti-discrimination provision “by construing it to apply to non-expressive conduct such as failing to return messages, charging more for the same services, declining reasonable appointment times, not providing test results on a timely basis, or delaying treatment because a patient (or a parent of a patient) owns firearms.” So limited, there was no First Amendment problem.

Judge Marcus concurred, writing separately to challenge the vagueness of the anti-harassment provision, given its prohibition on “unnecessarily harassing” a patient. “Reasonable doctors are … left guessing as to when their ‘necessary’ harassment crosses the line and becomes ‘unnecessary’ harassment -- and wrong guesses will yield severe consequences.” In general, harassment has an understandable meaning, and anti-harassment laws can be further understood through context and formal definitions. But “the State takes the plain word and renders it incomprehensible by appending a wholly nebulous adverb,” which was particularly difficult because “we expect doctors to doggedly exhort unhealthy patients to exercise more, eat less, or stop smoking, even when such admonishments may ‘annoy persistently.’”

The state tried to limit the scope of the provision by saying that a doctor operating in good faith would be fine, but that was inconsistent with the plain text of the statute, which provided a good faith defense for the inquiry provision, but not for the harassment provision. “[W]e cannot find clarity in a wholly ambiguous statute simply by relying on the benevolence or good faith of those enforcing it.” Plus, “a disgruntled patient is likely to disagree with his doctor about precisely how much harassment is truly necessary,” and a complaint can have severe consequences for doctors’ careers even if it’s not upheld. “Doctors deserve more notice before they are subjected to these consequences.”

Judge Wilson concurred (joined in part by Judge Martin), arguing that strict scrutiny and not intermediate scrutiny should apply. This was more than content discrimination—it targeted a particular viewpoint. “Content-based restrictions on speech are permitted only when they fall within a few historic and traditional categories, such as obscenity or defamation,” and doctors’ truthful speech wasn’t such a category, which would have to be based on “a long (if heretofore unrecognized) tradition of proscription.” [As to “proscription,” this is surely true—but a long history of heavy regulation does exist.]

The Supreme Court hasn’t squarely addressed the appropriate level of protection for professional speech; this regulation was different from cases in which the state had a valid interest in regulating a specialized profession. “Proscribing access to a profession is entirely different than prohibiting the speech of an entire group of professionals.” Other regulations don’t prohibit truthful speech within the scope of the profession. [But! All the work here is done by “truthful.” Who decides what’s truthful or misleading? For ordinary malpractice, a jury does under ordinary, nonconstitutionalized tort standards. I would say there’s a strong argument that a tradition of regulation exists to validate this treatment, even under Stevens.]

The concurrence also expressed doubts about the anti-discrimination provision, because “the anecdotes of discrimination that motivated the Act all stemmed from speech, and “it strains credulity to imagine scenarios in which this Act will be used to punish only conduct, and not speech…. Doctors may be hesitant to inquire about firearm ownership, as inquiries are strong evidence of a discriminatory motive.” Given the safety interests at issue, “we cannot afford to silence these voices.” With the harassment provision gone, the state might now use the discrimination provision to punish “harassing” conduct. However, anti-discrimination provisions against discriminatory conduct don’t generally violate the First Amendment, so Judge Wilson ended up concurring.

Judge Pryor concurred (joined by Judge Hull) to remind everyone that he loves the Second Amendment. That fundamental right could provide the substantial government interest in protecting Floridians from discrimination on the basis of their exercise of their right to bear arms. But, Judge Pryor reasoned, an anti-gun legislature could have enacted laws banning doctors from promoting gun ownership as a health and safety measure. [Of course, query whether any hypothetical universe is plausible in which doctors trained in medicine and statistics would do so.] Anyway, governments have in the past politicized the practice of medicine. [See also: abortion regulation, though I don’t think Judge Pryor minds that.] “If anything, the doctor- patient relationship provides more justification for free speech, not less.”

Judge Pryor’s parade of horribles is also quite interesting, insofar as it suggests that he thinks that antidiscrimination laws might be more broadly constitutionally vulnerable, especially to the extent they cover proselytization by a doctor:

Without the protection of free speech, … [t]he state could stop a surgeon from praying with his patient before surgery or punish a Christian doctor for asking patients if they have accepted Jesus Christ as their Lord and Savior or punish an atheist for telling his patient that religious belief is delusional.… [T]he First Amendment ensures that doctors cannot be threatened with state punishment for speech even if it goes beyond diagnosis and treatment.

An activist state might punish a doctor for “advising” a patient about sex-reassignment surgery, drugs, alcohol, or tobacco; advocating for universal health care, against Obamacare, against abortion [he doesn’t suggest a doctor couldn’t be punished for advocating for abortion], for vaccination [could a doctor be punished for advocating against vaccination? Note that this is a variant of “is malpractice as a tort vulnerable to First Amendment scrutiny?”]; for abstinence or safe sex, for organ donation or surrogacy or terminal care; or “explaining the risks or benefits” of a vegan diet or of playing football.

Other constitutional rights don’t need “protection” from private speech, only from government infringement. “That the government may not establish a religion, or ban handguns, does not suggest that private individuals may not start a church or give away their guns.” If Florida can do this, other legislatures could identify different rights—specifically, equality rights—as justifications for suppressing students’ unpopular views about race, religion, or sex.

Judge Tjoflat dissented, decrying the flattening of levels of scrutiny apparently encouraged by Reed. He fully agreed that the inquiry, record-keeping, and anti- harassment provisions were content-based regulations of speech specifically targeting medical professionals, and that rational basis review didn’t apply.

Special scrutiny for content-based regulations is based on the fear “that the Government may effectively drive certain ideas or viewpoints from the marketplace” altogether, or that its acts may be based on “hostility—or favoritism—towards the underlying message expressed.” (By contrast, content-neutral regulations get intermediate scrutiny because they rarely raise such core First Amendment concerns.) However, the language of the “free market” for ideas has “effectively constitutionalized the market-based ideology underlying neoliberalism,” which “effectively obliterates the classic distinction between heavily-protected political speech and other, lesser forms of expressive activity, like consumer spending,” and Judge Tjoflat expressed his discomfort with “constitutionalizing any particular ideological framework.”

Before Reed, the test for content neutrality was “‘whether the government has adopted a regulation of speech because of disagreement with the message it conveys. The government’s purpose is the controlling consideration.’” A regulation would be content neutral as long as it “serves purposes unrelated to the content of expression” even if the regulation imposed incidental effects on particular speakers or messages. Reed seemed to work a sea change, expanding the universe of “previously permissible regulations now presumptively invalid,” because the government’s indifference to the message or content-neutral justification no longer mattered.

Judge Tjoflat thought that “the First Amendment does not require such rigorous interventionism,” and that existing First Amendment doctrine could cabin Reed in ways better than watering down strict scrutiny—the other temptation, as Justice Breyer likewise cautioned. Instead of formalism, Justice Breyer’s balancing approach corresponded with Judge Tjoflat’s understanding: we should focus on the values underlying the reasons for the categories. Thus, we ask “whether the regulation at issue works harm to First Amendment interests that is disproportionate in light of the relevant regulatory objectives…. The more directly a challenged regulation impinged on speech without adequate reasons for doing so, the higher the level of constitutional scrutiny applied to the law.”

Thus, content-basis in the Reed sense shouldn’t automatically trigger strict scrutiny. It merely indicates “a heightened possibility that the government seeks to impermissibly favor a particular viewpoint, or otherwise lacks adequate justification for legislative action.” The alternative is widespread, unnecessary invalidation of reasonable laws. Under this approach, Judge Tjoflat would apply only intermediate scrutiny, because Florida was only regulating “a very specific part of the relationship between medical professional and patient,” rather than speech to the public or speech that the doctor hadn’t determined was relevant to the patient’s medical care, safety, or the safety of others. The connection to medical care meant that the regulation didn’t interfere with core First Amendment values.

The idea of “professionals” “presupposes the existence of a code of behavior and some element of state control over that code in order to ‘safeguard[] the interests of the public who partake in . . . professional services.’” Moreover, medical professionals are fiduciaries who typically possess “superior knowledge, expertise, experience, and stature in relation to the client that inherently places the professional in a position of superior leverage and influence.” State regulation is thus necessary “to protect patients from the significant potential abuse that exists both within a specific fiduciary relationship and more broadly within the medical profession itself.” Thus, the state can regulate the professional’s speech “on matters relevant to the provision of appropriate medical care”; this regulation deserved intermediate scrutiny given the longstanding tradition of government regulation in this area. (Citing Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447 (1978) and Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833 (1992) (joint opinion)).

Under that standard, Judge Tjoflat would have sustained the law. “[T]he Act merely codifies the commonsense conclusion that good medical care does not require inquiry or record-keeping regarding firearms when unnecessary to a patient’s care … and that good medical care never requires the discrimination [against] or harassment of firearm owners.” All the law required was “an individualized, good faith judgment of the necessity of speech related to firearm ownership to provide competent medical care to a patient.” 

Reading list: poetry and copyright norms


Intellectual property grants artificial monopolies to authors, and this practice has long been justified as an economic bargain necessary to encourage new authors. However, many creative communities thrive without intellectual property protection. These communities have been described as intellectual property’s negative spaces. This Note navigates those negative spaces by the light of the contemporary poetry community’s efforts to discourage thieving and encourage transformative copying. The community does so though there is little money in poetry, and thus little to animate an economic justification for intellectual property protection. Observing how one community considers intellectual property without an economic underpinning will help the legal community make informed decisions as intellectual property continues to navigate the creative sea of changes of the twenty-first century.

Monday, February 20, 2017

Seen in Cambridge

Is this really a Pop Tart?

The trademark part of ASTM v. PublicResource.org

American Soc. for Testing & Materials v. Public.Resource.Org, Inc., No. 13-cv-1215 (D.D.C. Feb. 2, 2017)

The copyrightability/fair use issues are serious and arguable here, but I’m going to focus on the trademark analysis, because unlike the copyright analysis it’s incoherently wrong.  Public Resource made copies of ASTM standards incorporated into various laws.  ASTM sued for copyright infringement and trademark infringement; the court granted summary judgment to ASTM on both claims.

PR argued that posting the standards infringed ASTM’s trademark. The court thought Dastar didn’t bar this because there was an “independent” basis for the infringement claim: “Defendant distributed standards online bearing Plaintiffs’ registered trademarks and logos,” confusing people as to the origin of the copies.  But that doesn’t work.  Compare the Slep-Tone cases in the 7th and 9th Circuits: you can’t get around Dastar by incorporating a trademark into your copyrighted work, because that would create a perpetual copyright over the unmutilated work. The presence of the Universal “roaring lion” at the beginning of a movie cannot keep Universal movies out of the public domain; likewise, ASTM’s trademark interest in its name and logo cannot prevent it from being correctly identified as the producer of a work on which it uses that name and logo.  (Also, depending on the circuit, mere distribution on the internet might not be “use in commerce,” contrary to the court’s conclusion here.) 

The court also rejected PR’s first sale argument because these were copies, and “Defendant’s quality control standards in reproducing Plaintiffs’ standards were outside of Plaintiffs’ control and below that sufficient to deem the standards it distributed ‘genuine.’”  ASTM didn’t have to show a defect in the copies, only that it couldn’t exercise quality control.  PR’s quality control “resulted in missing or inverted pages and typographical errors in numerical values or formulas.”

Then, the court found confusion likely on the theories that (1) ASTM authorized PR’s posting, and (2) ASTM produced the PDF and HTML versions of the standards PR posted.  PR argued that, under Prestonettes, Inc. v. Coty, 264 U.S. 359 (1924), its disclaimer was enough to inform consumers that it repackaged or changed the original.  But “the disclaimer in that case stated clearly that the distributor was not connected with the producer and that the producer’s product was merely a constituent part of the distributor’s new product,” whereas PR’s initial disclaimer was:

In order to promote public education and public safety, equal justice for all, a better informed citizenry, the rule of law, world trade and world peace, this legal document is hereby made available on a noncommercial basis, as it is the right of all humans to know and speak the laws that govern them.

The court found that this didn’t mention PR’s creation of the reproductions, PR’s lack of authorization, that the reproductions were reproductions (what else would they be?), “and can hardly be called disclaimers at all.”  Even if the PDFs looked like scans, that wouldn’t help a consumer determine whether PR or ASTM created the scan.  (Why on earth would they care?)  PR’s later disclaimer was instituted after the litigation began and the court didn’t analyze whether it would avoid confusion.

Although there was no evidence of actual confusion, the court found this “nearly as black-and-white a case as possible” because PR “intentionally created a copy that is meant to appear identical, including use of Plaintiffs’ trademarks.” A consumer might download that standard for free from PR “without knowing that it is not created by the Plaintiffs and may contain missing pages or typographical errors leading to inaccurate values for measurements.”  And here’s the problem: that “it.”  What is the “it” at issue?   The court clearly cares about the similarity of the content, not the source identification, but trademark law is not about content, and Dastar should make it impossible to argue that trademark infringement occurs merely from correctly copying content.

The court then rejected PR’s nominative fair use defense by taking a “one from column A, one from column B” approach to the different circuits’ tests.  It started with the 9th Circuit version, requiring PR to show “that its use of Plaintiffs’ trademarks was necessary to describe their standards; that it only used as much of the marks as was reasonably necessary to identify the standards; and that it has not done anything to suggest sponsorship or endorsement by the Plaintiffs or to inaccurately describe the relationship between the parties’ products.”  (citing  Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 154 (4th Cir. 2012)). But then: “Nominative fair use by a defendant makes it ‘clear to consumers that the plaintiff, not the defendant, is the source of the trademarked product or service’” (citing Century 21 Real Estate Corp. v. Lendingtree, Inc., 425 F.3d 211, 220 (3d Cir. 2005)), a case that adopts a different version of the test).  

And finally, “if Defendant’s use is nominative fair use, it would not create ‘confusion about the source of [the] defendant’s product’” (citing Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 102 (2d Cir. 2010) (alteration in original), a case that doesn’t actually apply any particular test, just announces a conclusion that means that nominative fair use isn’t a defense or a separate test: You don’t need a defense if your use doesn’t cause confusion; outside of the Second Circuit the nominative fair use test therefore substitutes for the usual confusion factors, because those factors work really badly in cases of referential use (e.g., similarity of the marks will always be identical if there’s a reference).  Just to confirm that the court isn’t treating nominative fair use as a defense, it concludes “because the court has already determined that consumer confusion as to the source of the trademarked standards is likely, the nominative fair use defense is inapplicable and the court need not assess each of the Rosetta Stone factors” (emphasis added)  That is, of course, exactly why nominative fair uses need to be treated differently.  Even in the Second Circuit version, there's a need to consider the nominative fair use elements along with the other factors!

Friday, February 17, 2017

GM's defeat device is almost by definition fraudulent omission

Counts v. General Motors, LLC, No. 16-cv-12541, 2017 WL 588457 (E.D. Mich. Feb. 14, 2017)

Plaintiffs sued GM for deceptive advertising, breach of contract, and fraudulent concealment claims under the laws of thirty states based on GM’s alleged installation of a “defeat device” in the 2014 Chevrolet Cruze Diesel, which results in significantly higher emissions when the vehicle is in use compared to when it is being tested in laboratory conditions.  The court declined to apply the primary jurisdiction doctrine or find the claims preempted by the Clean Air Act, but did give GM some victories.

GM argued that the plaintiffs lacked Article III standing because they didn’t allege a concrete and particularized injury and because they brought claims arising under the law of states where none of the named plaintiffs reside or bought their vehicle.  GM characterized their claims as arising from alleged environmental harms and violation of government standards, but plaintiffs alleged a standard overpayment theory: if they’d known the truth about the defeat devices/the actual emissions levels, they wouldn’t have bought the supposedly “clean diesel” vehicles or would have paid less for them, especially given that GM charged more for the diesel model than a comparable gas model.  GM argued that this higher price came from the increased power and fuel efficiency that diesel engines feature.  The court agreed with the plaintiffs.

Plaintiffs plausibly pled deceptive behavior.  The complaint detailed “numerous studies and reports from European authorities finding that GM vehicles are noncompliant with European emission regulations, despite meeting those regulations when tested in laboratory settings.” It also alleged that plaintiffs’ own tests of a Cruze found that emissions were significantly higher than represented. Though plaintiffs did not specifically allege that the Cruze they tested was the 2014 diesel model, they plausibly alleged that GM’s vehicles share common designs, including engines; “common sense compels the conclusion that GM does not start anew each time it designs a vehicle.”

Nor did plaintiffs have to show reliance to show Article III standing:

The clean diesel features of the Cruze were an important component of the vehicle, as evidenced by GM’s advertising campaign which featured the clean diesel system. That system elevated the apparent value of the vehicle. Even if Plaintiffs did not specifically choose the Cruze because of its clean diesel system, they paid more for the vehicle because it included the system. If the system did not actually provide any value to the vehicle, then Plaintiffs suffered financial injury through overpayment regardless of whether they relied on GM’s alleged misrepresentations.

Turning to the fraudulent concealment claims, they had to be pled with particularity, even though they were omission-based.  However, particularity demands different things in different contexts.  “If a plaintiff’s theory for relief involves a failure to act, then requiring the plaintiff to specifically identify the point in time when the defendant should have acted may be unduly burdensome. … [T]he difficulty of obtaining proprietary GM information or pinpointing the point in time when a fraudulent omission occurred will be taken into account.”

Here, the complaint sufficiently alleged with particularity facts showing that GM fraudulently concealed or misrepresented that the functionality and effectiveness of the Cruze’s “clean diesel” system was substantially lower than a reasonable customer would expect, given the representations made in GM’s advertising campaign. Further, where omissions are at issue, showing reliance means showing that the facts deliberately withheld would be material to a reasonable consumer.

GM argued that the ad claims plaintiffs cited were mere puffery.  The more general a statement is, the more likely it is to be puffery. But numbers alone aren’t enough, if they’re still not believable.  GM’s statements about the “high-quality” and “safety” of its vehicles were inherently subjective and couldn’t form the basis of a fraud action, nor could “Turbocharged Clean Diesel” nor statements regarding cleanliness, “more efficient combustion,” and improved “performance.”  

Indeed, even claiming that the “turbocharged engine in Cruze Clean Turbo Diesel [sic] generates at least 90% less nitrogen oxide and particulate emissions when compared to previous-generation diesels” and that “Cruze Diesel emissions are below strict U.S. environmental standards” was nonactionable, because it wasn’t quantifiable by itself.  The purported comparison to previous-generation diesels wasn’t specific enough—did it mean past GM diesel vehicles, all diesel vehicles, or all diesel vehicles from before a certain date?  [This is ridiculous nitpicking.  A reasonable consumer might not have formed an opinion about the exact meaning, but could reasonably presume that there was a generally understood industry meaning, especially in combination with percentages and specific named pollutants.]  The court seemed to think it was important that no competitor was named (even though identifying a competitor is exactly when we might be able to rely on competitor suits to backstop consumer suits), nor was there a specific assertion that the claim was based on testing.  “One might argue that some type of testing is implicitly assumed by the language [indeed one might!], but the advertisement’s level of generality further supports a finding of puffery.”  The court thought it would be hard to prove the falsity of this claim, because the complaint included no data about the level at which “previous-general diesels,” however defined, produced emissions. And the Cruze might simultaneously produce more emissions than expected when being driven and still produce, in total, 90% less emissions than previous-generation diesels.

The final affirmative representation at issue was that “Cruze Diesel emissions are below strict U.S. environmental standards.” But a lawsuit against GM for producing a vehicle that produces emissions in noncompliance with EPA regulations would be preempted by the CAA.

On the other hand, fraudulent concealment, instead of affirmative misrepresentations, was adequately alleged.  A duty to disclose can arise under the laws of some states where there’s exclusive knowledge of a defect or active concealment of that defect.  The very nature of the “defeat device” suggests active concealment: “The only plausible purpose of such a device is to create the appearance of low emissions without the reality of low emissions,” and GM couldn’t reasonably argue that plaintiffs could have found out about it before buying.  Both common-law and statutory consumer protection claims based on omissions thus survived.

Thursday, February 16, 2017

claims about others' patent infringement can be factual, commercial speech subject to Lanham Act

Global Tech Led, LLC v. HiLumz International Corp., 2017 WL 588669, No. 15–cv–553 (M.D. Fla. Feb. 14, 2017)

The parties, former business partners, now compete in the retrofit LED lighting industry. Global Tech sued defendants for patent infringement. HiLumz counterclaimed for false advertising/trade libel under federal and state law based on statements such as one that Global Tech “received a permanent injunction, rendering account and damages based on its newly-granted patent against HiLumz USA for infringement of its US patent” and accusing defendants of “stealing” and “copying” Global Tech’s product ideas.  Someone from Global Tech warned HiLumz distributors attending the 2015 World Energy Engineering Congress to “be careful what products you sell” and said that “HiLumz will be out of business soon.” Global Tech also allegedly told “customers, sales representatives, competitors, and others” that HiLumz infringed Global Tech’s patents, that “HiLumz USA is no longer allowed to sell LED retrofit kits,” and that “Global Tech was preparing to file suit against HiLumz, and would also file suit against anyone who does business with HiLumz.”

Global Tech argued that its alleged statements were mostly not made in commercial advertising or promotion.  First, it argued that the challenged ads weren’t commercial speech because they referenced only Global Tech’s patents, not any products, but referring to a particular good or service isn’t required under Bolger.  Plus, even if a product reference were required, it was present in most of the challenged statements—for example, Global Tech’s press release  specifically mentioned Global Tech’s “LED lighting products” with hyperlinks for the word “products.” Warning distributors to take care when determining which products to sell, in light of HiLumz’s impending demise, and statements that defendants couldn’t sell HiLumz retrofit products, also referenced products. And defendants sufficiently alleged economic motivation.

However, one challenged statement—posted on a personal LinkedIn profile page, incorrectly asserting that a relevant parent patent  “issued on June 8, 2009” instead of having been filed then—wasn’t commercial speech.  The speaker “sought merely to showcase his contribution to the world of patentable technology.”

The court also mostly found the statements adequately disseminated to the relevant purchasing public, at least as a matter of pleading. Disseminating the press release online made it available to the world; disseminating claims to distributors attending the World Energy Engineering and to “customers, sales representatives, competitors, and others” also were plausibly pled as adequate dissemination of those statements “to the relevant purchasing public.”  However, allegations that “when internet users searched on the internet for ‘global tech LED hilumz’ ” at least as late as on October 6, 2015, a Google search result appeared containing a URL wrongly stating that Global Tech had already received a permanent injunction against HiLumz.  “[T]he Court cannot gratuitously infer that any netizen beside Defendants ever actually googled ‘global tech LED hilumz’ during the relevant time period.”

Global Tech then argued any statements regarding HiLumz’s impending demise, patent infringement, and inability to sell retrofit kits were “non-actionable opinion.”  The court agreed that the statement warning HiLumz distributors that HiLumz was “going out of business” was non-verifiable “prediction or opinion about the future of [Hilumz], and consequently, is not actionable as a false or misleading statement of fact under the Lanham Act.”

However, claims that defendants infringed Global Tech’s patents and therefore defendants weren’t allowed to sell them  “fairly implies a factual basis” and was thus properly treated as a statement of fact, despite being “framed as an opinion.” The outcome of the patent infringement claim will reveal the truth, making the statements empirically verifiable.  Plus, the counterclaim alleged that Global Tech had been making these statements as early as fall of 2012, years before Global Tech actually obtained the patent in suit. “Given that ‘[a] patent application cannot be infringed,’ the falsity of these statements may be readily ascertainable.”

State-law unfair competition claims survived to the same extent. Florida Deceptive and Unfair Trade Practices Act claims also survived; the court rejected the argument that only consumers have standing under the current version of the law.

Doctor's evaluation of another doctor's treatment isn't commercial speech

Tobinick v. Novella, No. 15-14889 (11th Cir. Feb. 15, 2017)

Ultimately, despite a long battle, this is a relatively easy case about “the medical viability of a novel use for a particular drug.”  Dr. Tobinick (plaintiff, along with related entities) thinks his “unorthodox use for the drug etanercept” can be used to treat spinal pain, post-stroke neurological dysfunctions, and Alzheimer’s disease, though it isn’t FDA-approved for those conditions.  Dr. Novella, a neurologist, blogs about various topics.  In response to an article in the LA Times about Dr Tobinick’s novel treatments, Dr. Novella discussed the Los Angeles Time article, the typical characteristics of “quack clinics” or “dubious health clinics,” the key features of Dr. Tobinick’s clinic, and lastly the plausibility of and the evidence supporting Dr. Tobinick’s allegedly effective use of etanercept.

Dr. Novella also quoted a portion of the LAT article, which reported that “[Dr. Tobinick’s] claims about the back treatment led to an investigation by the California Medical Board, which placed him on probation for unprofessional conduct and made him take classes in prescribing practices and ethics.” A second article, filed after Dr. Tobinick filed his initial complaint, detailed the lawsuit and provided Dr. Novella’s view that the lawsuit was designed to silence his public criticism of Dr. Tobinick’s practices, which he then restated in large part.   He again mentioned the Medical Board of California (MBC)’s investigation, explained that the MBC “filed an accusation in 2004, amended in 2005 and 2006,” and listed the different allegations made in the 2004 Accusation. 

Tobinick’s claims were based on state law and the Lanham Act.  As relevant here, the district court granted Dr. Novella’s special motion to strike state law claims, applying California’s anti-SLAPP law. The court of appeals affirmed, accepting that Dr. Tobinick was a limited public figure, and agreeing that he hadn’t produced evidence of actual malice that would allow a probability of prevailing.

California applies a subjective test in which “[t]here must be sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication.”  Relevant factors include “[a] failure to investigate, anger and hostility toward the plaintiff, [and] reliance upon sources known to be unreliable or known to be biased.”  Tobinick primarily argued that Dr. Novella improperly relied on the MBC’s 2004 Accusation, which had been superseded by a 2006 Second Amended Accusation, and that the articles contained false statements such as that Dr. Tobinick ran a “one-man institute.” However, Tobinick’s evidence was insufficient to allow a reasonable jury to conclude that Dr. Novella had serious doubts as to the truth of the content contained in his two articles.  For one thing, the evidence showed that Dr. Novella consulted the 2006 accusation, and even referenced competing studies (which themselves were referenced in a 2007 MBC decision with a stipulated settlement) in his second article, admitting that “[t]here are small studies for disc herniation showing conflicting results.” 

Alleged falsities and inconsistencies didn’t demonstrate actual malice—awareness or recklessness as to falsity.  Indeed, Tobinick couldn’t show that many of Dr. Novella’s statements were false. For example, Dr. Novella characterized Florida—one of the states in which Tobinick worked—as a “very quack-friendly state,” but this was plainly opinion.  Other details in the articles didn’t go to their essential criticism of Dr. Tobinick’s medical practices, and at most could show negligence.  For example, Tobinick argued that Dr. Novella falsely implied that Tobinick’s clinics committed health fraud by putting the first article into a website category labeled “Health Fraud,” but the article itself never said Tobinick committed health fraud, and there was no evidence that Dr. Novella decided what category to put the article into.  Also, as to the “one-man institute” phrase, Tobinick failed to rebut Dr. Novella’s statement that he looked at Tobinick’s websites and saw that the only physician named and profiled on the websites was Tobinick.  “Dr. Novella’s statement is reasonably held, as the name of Dr. Tobinick’s California clinic, ‘Edward Lewis Tobinick, MD,’ further supports his belief that ‘Dr. Tobinick was a solo practicioner[.]’”

The court noted that, although “[t]he failure to conduct a thorough and objective investigation, standing alone, does not prove actual malice,” the evidence of Dr. Novella’s investigation, “in which he looked to trustworthy sources, demonstrates his lack of subjective belief that the articles contained false statements.”  Before he wrote, Dr. Novella consulted the LA Times article, many of Dr. Tobinick’s case studies, the MBC’s accusations, and Tobinick’s websites. 

The Lanham Act claims then failed because the articles weren’t commercial speech.  They weren’t core solicitations, nor did they satisfy the Bolger test for non-core commercial speech. The articles weren’t ads, nor could they reasonably construed as such. The first didn’t mention Dr. Novella’s practice or medical services; the second did so only in providing context for Dr. Novella’s criticism of the lawsuit as an attempt to suppress Dr. Novella’s critiques. Indeed, Dr. Novella clarified that he primarily treats headaches, “thereby distancing the types of medical services he provides from the services marketed by Dr. Tobinick.”  The articles didn’t discuss any products Dr. Novella sold, nor did they tout his practice.  References to the treatments Tobinick sold weren’t themselves sufficient to make the speech commercial—Gordon & Breach held that product reviews aren’t commercial speech, and so too here, even though the seller of the reviewed product could convert the review into commercial speech by using the review to advertise the product.  Dr. Novella’s discussion “resemble[d] a medical peer review of a treatment’s viability.”

Finally, Tobinick didn’t show economic motivation for the speech sufficient to make it commercial.  It didn’t matter whether the websites on which the speech appeared were profit-seeking.  Tobinick’s complex theory about how profits were “funnelled” from website-related revenue sources to Dr. Novella “relies on such a level of attenuation that it fails to demonstrate economic motivation in the commercial speech context.”  In World Wrestling Federation Entertainment, Inc. v. Bozell, 142 F. Supp. 2d 514 (S.D.N.Y. 2001), the district court held that the WWF could use the Lanham Act to sue a “concerned parents” council over a public attack campaign about violence in wrestling, because the council featured the attacks “prominently in a fundraising video,” in “fundraising letters,” and in order “to raise the profile of [the council].”  None of that was true here.  The court of appeals also emphasized that “neither the placement of the articles next to revenue-generating advertising nor the ability of a reader to pay for a website subscription would be sufficient in this case to show a liability-causing economic motivation for Dr. Novella’s informative articles.” Those are standard features of magazines and newspapers.  “Even if Dr. Novella receives some profit for his quasi- journalistic endeavors as a scientific skeptic, the articles themselves, which never propose a commercial transaction, are not commercial speech simply because extraneous advertisements and links for memberships may generate revenue.”

Wednesday, February 15, 2017

Use of P's photos to advertise D's goods must be challenged via copyright, not Lanham Act, under Dastar

Barn Light Electric Company, LLC v. Barnlight Originals, Inc., 2016 WL 7135076, No.14–cv–1955 (M.D. Fla. Sept. 28, 2016)

Plaintiff BLE, owned by the Scotts, sells light fixtures to consumers over the internet. Defendant Hi–Lite, owned by the Ohais, makes light fixtures and sells to distributors, not to end users. In 2008, BLE became a retail distributor for Hi–Lite and bought lighting components from Hi–Lite. Hi–Lite provided BLE with photographs, line drawings, and other depictions of its products, providing BLE a license to use its copyrighted photographs. Hi–Lite designates its products by parts numbers.

BLE decided to begin making its own light fixtures patterned after the fixtures sold by Hi–Lite. In 2012, Hi–Lite had a sales rep use BLE’s website to order the “Barn Light ‘The Original’ Warehouse Shade” and the “Barn Light Warehouse Pendent Shade.” The BLE website showed the products with the parts numbers H–15116 and H–15116G, corresponding to Hi–Lite’s parts numbers, and they were accompanied by pictures from Hi–Lite’s catalog. But BLE shipped light fixtures bearing BLE’s logo that were actually manufactured by BLE. The order confirmation for the sale included the Hi-Lite parts numbers.  Hi-Lite terminated the parties’ business relationship and asked BLE to remove all photos and drawings of Hi-Lite fixtures from BLE’s website.

After the relationship ended, defendant Ohai created defendant Barnlight Originals, Inc., a retail seller of light fixtures. BLO sells Hi–Lite fixtures. Ohai registered BARNLIGHT ORIGINALS and BARNLIGHT ORIGINALS, INC., the domain name www.barnlightoriginal.com, and a logo with the United States Patent and Trademark Office.  Hi-Lite also sent BLE a C&D charging infringement of a pending patent application.

Hi-Lite counterclaimed for trade dress infringement of the design of twelve of its light fixtures. Product design trade dress requires a “high degree of proof” to show secondary meaning.  Hi-Lite lacked survey evidence, and the representative of a Hi-Lite marketer couldn’t identify the source after being shown thirty images of products from Hi–Lite (including those at issue), BLE, and other third parties. For all of the fixtures he was shown, he testified that there were multiple manufacturers that made the same or very similar designs.  A previous BLE employee who now operates his own retail company and sells Hi–Lite products likewise testified that although he recognized photos of Hi–Lite’s alleged trade dress from its catalogs, he would not be able to identify the products as manufactured by Hi–Lite unless he looked at the hidden backing plate with Hi–Lite’s name embossed on it.

Hi-Lite argued that BLE’s intentional copying and use of its sales and advertising efforts showed secondary meaning. It also claimed use for 7-12 years and sales of thousands to tens of thousands of units, plus “considerable” advertising expenses in its catalogs, in magazines, on the internet, at trade shows, and in show rooms.  Intentional copying isn’t enough to show secondary meaning, given the other possible motivations for copying and the perfect acceptability of copying public domain designs. Nor do extensive sales and advertising show secondary meaning, which requires the effective creation of consumer recognition.  The court found that Hi-Lite couldn’t show secondary meaning and granted summary judgment on the trade dress claims.

Other Lanham Act claims: Hi–Lite alleged that BLE used Hi–Lite’s photographs and parts numbers to sell BLE products on its own website, violating the Lanham Act. BLE responded, “Dastar,” and the court agreed.  Uncredited use of another’s photos in connection with the sale of goods or services “must be pursued as copyright claims.” Hi-Lite’s false designation of origin claim was “directed to the same conduct that underlies its copyright infringement claims,” which wouldn’t do.  Moreover, Hi-Lite’s claim would only work if the images themselves were “source-identifying marks” for Hi-Lite’s products, but the photos merely depicted Hi-Lite’s light fixtures, thus requiring a protectable trade dress rights in the design and appearance of the light fixtures, which Hi-Lite lacked.  Similarly, Hi-Lite didn’t show that its parts numbers functioned as marks.

False advertising: To the extent that this was merely a restatement of the false designation of origin claim, it failed.  Even without Dastar, Hi-Lite lacked enough evidence to prevail on the merits.  It failed to show that the alleged deception—advertising Hi-Lite fixtures but delivering BLE fixtures—was material.  The only evidence was the Hi-Lite-induced purchase from the BLE site, but the sales rep wasn’t acting as a consumer but rather as an agent on behalf of Hi–Lite. BLE’s misrepresentations “could not have made a difference in his purchasing decision,” and he wasn’t an expert qualified to opine on likely consumer confusion.

However, claims based on BLE’s alleged use of the BARN LIGHT ORIGINALS word mark survived.

Incontestability precludes non-listed defenses, court affirms

NetJets Inc. v. IntelliJet Gp., LLC, No. 15-4230 (6th Cir. Feb. 3, 2017)

NetJets is a private aviation company that specializes in “fractional ownership” of private airplanes and related endeavors. NetJets’s predecessor company developed a software program to “run [the company’s] business,” and named the program IntelliJet. In 1995, it successfully applied to register INTELLIJET in connection with the good of computer “software . . . for managing the business of aircraft leasing and sales.” In 2002, the company filed a “declaration of use and incontestability,” which was accepted by the USPTO.

NetJets licensed the IntelliJet software to two external companies, though one apparently stopped and the other was acquired by NetJets. The company also uses the software to communicate with caterers and other vendors. In early 2013, NetJets debuted an “owner’s portal,” allowing customers to put their reservation requests directly into the IntelliJet software over the internet; the portal features the INTELLIJET mark. NetJets discusses IntelliJet on tours of the NetJets facility for customers and potential customers, and in its own promotional literature, and the mark has been mentioned in several trade press and general news sources.
Portal--see "powered by IntelliJet" at the bottom: good use?
IntelliJet was founded in 2005 and is primarily a broker for private jet services, or helping customers buy or sell an aircraft. It offers referral services for aircraft management and leasing services, but does not perform these services itself. IntelliJet uses a sales-tracking software that it has referred to as “IntelliShit.” In choosing the name, IntelliJet searched the internet for other jet aircraft brokers, business names in Florida, and the USPTO website. That last search turned up several registrations of “IntelliJet,” including NetJets’s registration. IntelliJet’s principal Spivack determined that the mark was “specifically for a software package,” and that “being in the industry,” he knew the registered agent as “NetJets.” 

NetJets sued for trademark infringement and related claims; IntelliJet counterclaimed for cancellation of NetJets’s trademark registration on the grounds that NetJets abandoned it and that it was void ab initio. This appeal was from the district court’s grant of summary judgment to IntelliJet.  The district court reasoned that NetJets’s mark was not incontestable and that the mark was void ab initio because NetJets could not show that it was used in commerce at the time of its registration. Nor could NetJets show that it had rights to the INTELLIJET mark as a service mark under the Lanham Act or Ohio common law. Finally, the district court also granted summary judgment on the basis that there was no likelihood of confusion.

The court of appeals reversed the cancellation but otherwise affirmed.

A mark may become incontestable if it is not successfully challenged within five years of its registration. One requirement is continuous use in commerce for “five consecutive years” subsequent to the date of the registration, along with continued use in commerce. “Once incontestability is established, only [the] . . . defenses enumerated in § 1115(b) can be interposed in an action for trademark infringement.” Void ab initio, or non-use at the time of registration, isn’t one of the defenses enumerated in § 1115(b).  (And, unlike functionality, void ab initio wasn’t implied from a “judicially created rule which predates the Lanham Act”—even though use and nonfunctionality are both pretty important parts of the common law.)  Thus, the court of appeals held, it was not a proper defense to incontestability.  See University of Kentucky v. Kentucky Gameday, LLC, 2015 WL 9906634, at *2 (T.T.A.B. 2015),(rejecting a void ab initio claim because the claim was “not enumerated under Trademark Act Sec. 14(3), and is not available against a registration which is more than five years old.”).

It seems to me that one could establish lack of continuous use for any 5-year period at all over the life of the registration and defeat incontestability; one simply can’t start with “void ab initio.”  It must be the case that it is valid to challenge incontestability on the ground that the registrant failed to satisfy the statutory requirements therefor; it’s just that distinctiveness is not one of the statutory requirements, and apparently use at the time of registration isn’t either—but five years of continuous use is.  Because §1064 barred IntelliJet’s void ab initio challenge, the court of appeals said, it didn’t need to decide whether the mark was actually incontestable under §1065; thus, the issue remains for remand.

The court of appeals did affirm the district court’s conclusion that IntelliJet wasn’t a service mark under Ohio common law, because it was used as a mark for software as a good, not as a service mark. The IntelliJet software is “the conduit through which NetJets provides its services,” not the service provided by NetJets itself.

Likely confusion: IntelliJet is suggestive, and relatively weak, “especially considering other federal registrations of the term and additional third party uses of the same or similar terms.”  NetJets argued that incontestability made the mark presumptively strong, but incontestability (if it existed) wouldn’t be determinative of strength.  The services were related but not directly competitive.  Although the district court reasoned that no one would confuse NetJets’s IntelliJet software with NetJets’s aviation services, the question was about source confusion, not product/service confusion.  Still, IntelliJet doesn’t sell software that could be confused with NetJets’s software; relatedness didn’t favor NetJets.  Similarity: obviously favors NetJets.  There was no evidence of actual confusion, which favored IntelliJet.  Marketing channels: both used the internet, but the products were still marketed differently, and NetJets’s software wasn’t marketed as a standalone product.  Consumer care: the parties’ customers are highly sophisticated.

Intent: Use of a mark with knowledge of another’s rights can be evidence of likely confusion.  But here, IntelliJet knew of several IntelliJet registrations, and there was no indication that it chose the name to copy or compete with NetJets specifically.  Likely expansion: Though NetJets argued that IntelliJet wanted to compete with NetJets in areas such as chartering, leasing, and aircraft management, it wasn’t appropriate to compare NetJet’s business as a whole with IntelliJet’s services.  There was no indication that NetJets intended to market its software separately, or that IntelliJet intended to begin selling its own aviation software.

Based on this de novo review, the court of appeals found confusion unlikely.

Spyware or spam?

A new one on me:

Received spammy email claiming, “Hello Rebecca,

I hope you don't mind a fellow Tushnet reaching out. I have a permit which states that WW Express did some work at [your home].

Could you tell me how it went? … I'm helping a new homeowner find a professional for her project, and I was hoping you could share your experience with me before I make any recommendations….


Brooke Tushnet
Customer Success | VetMyPro
C: 23097051
BP: 55181251”

I am fairly sure that there is no “Brooke Tushnet” in the world.  Instead, this message is creepily and misleadingly leveraging our tendency to be more helpful to people “like us.”  (On this and other tactics, Robert Cialdini’s books Influence and Pre-Suasion are very good.)  To what end, I’m not sure, but I can’t help feeling misused.  I even tried to find this potentially long-lost relative, just in case!  Also, VetMyPro lacks any internet presence beyond its own website.  Now I’m becoming concerned about spyware!

Tuesday, February 14, 2017

This is not NORML: court of appeals finds ISU violated First Amendment with TM licensing program

Gerlich v. Leath, No. 16-1518 (8th Cir. Feb. 13, 2017)

Iowa State University (ISU) grants student organizations permission to use its trademarks if certain conditions are met. The ISU student chapter of the National Organization for the Reform of Marijuana Laws (NORML ISU) had several of its trademark licensing requests denied because its designs included a cannabis leaf.
The first shirt that became problematic

later rejected design

Two members of NORML ISU sued for violations of their First and Fourteenth Amendment rights; the court of appeals affirmed a permanent injunction with reasoning relevant to the pending Tam case: student groups’ use of ISU logos couldn’t possibly be government speech because there are so many of them, including conflicting ones like ISU Democrats and ISU Republicans. I get that argument for trademark registrations in general, but it seems weaker here, because ISU’s logo is the logo of an arm of state government, and I do think a government can reasonably say with its speech “we agree that X and Y are in-bounds, while Z is out-of-bounds.” Allowing ISU Democrats and ISU Republicans to use the logos but not ISU White Nationalists seems like the state controlling its brand. This is not to say that the overall conclusion is wrong, especially given ISU’s litigating position, but the district court’s opinion did a far better job of explaining why that might be.

ISU has approximately 800 officially recognized student organizations, including NORML ISU. Organizations can use ISU’s trademarks on merchandise if ISU’s Trademark Licensing Office determines that the use complies with ISU’s Guidelines for University Trademark Use by Student and Campus Organizations.

In 2012, NORML ISU submitted a t-shirt design to the Trademark Office that had “NORML ISU” on the front with the “O” represented by Cy the Cardinal. On the back the shirt read, “Freedom is NORML at ISU” with a small cannabis leaf above “NORML.” The Trademark Office approved this design. Then, the Des Moines Register published a front-page article about legalization efforts, in which it quoted NORML ISU’s president stating that “his group has gotten nothing but support from the university. He even got approval from the licensing office to make a NORML T-shirt …” The article also had a photo of the T-shirt.

The person in charge of the trademark office provided ISU’s PR office with a statement that ISU didn’t take positions on what student organizations stand for. Thus, the statement continued, the claim that “his group has gotten nothing but support from the university” was “a bit misleading. He may be confusing recognition of the group as the university ‘supporting’ it.”

Then, an Iowa House Republican caucus staff person sent a formal legislative inquiry to ISU’s State Relations Officer asking whether “ISU’s licensing office approve[d] the use of the ISU logo on the NORML t-shirt” pictured in the article. This led higher-ups to ask if they could “revoke” the approval of the T-shirt design. Then, someone from the Governor’s Office of Drug Control Policy emailed and called the head of ISU’s government relations office about the article, indicating that he was “curious about the accuracy of the student’s statement cited in the report, and perhaps the process used by ISU to make such determinations.” The head of ISU’s PR office responded that NORML ISU’s use of ISU’s trademarks was “permitted under the policies governing student organizations.” The email went on to say, “[h]owever, this procedure is being reviewed.”

Next, NORML ISU’s request for permission to use the design for another shirt order was put on hold, which was unprecedented in anyone’s memory. The ISU board decided to change the trademark guidelines, and ISU told NORML ISU that they were concerned that the T-shirt caused confusion as to whether ISU endorsed the group’s views regarding the legalization of marijuana. Thus, the Trademark Office would not approve of any t-shirt design that used ISU trademarks in conjunction with a cannabis leaf. They also told the group that it needed prior review before submitting any designs to the Trademark Office, again an unprecedented requirement. The new Trademark Guidelines prohibited “designs that suggest promotion of the below listed items . . . dangerous, illegal or unhealthy products, actions or behaviors; . . . [or] drugs and drug paraphernalia that are illegal or unhealthful.”

After that, the Trademark Office rejected every NORML ISU design application that included the image of a cannabis leaf, as well as designs that spelled out the NORML acronym but replaced “Marijuana” with either “M********” or “M[CENSORED].” The Office did approve designs without a cannabis leaf that simply stated the group’s name and fully spelled out the NORML acronym.
also rejected: Cy the Cardinal holding a marijuana leaf
The district court entered a permanent injunction against “enforcing trademark licensing policies against Plaintiffs in a viewpoint discriminatory manner and from further prohibiting Plaintiffs from producing licensed apparel on the basis that their designs include the image of a . . . cannabis leaf.” The university created a limited public forum “by opening property limited to use by certain groups or dedicated solely to the discussion of certain subjects.” A student activity fund is an example of a limited public forum, and so is ISU’s choice to make its trademarks available for student organizations to use if they abided by certain conditions.

Rejecting NORML ISU’s designs was impermissible viewpoint discrimination, as evidenced by the “unique” scrutiny ISU imposed on NORML ISU after the Des Moines Register article. ISU argued that it wasn’t unique because the hockey club was also subject to additional oversight over its trademark applications, but that was because the hockey club mismanaged funds and misrepresented itself as an intercollegiate sport. Also, the hockey club was not required to receive preapproval of its designs by two ISU senior vice presidents, as NORML ISU was. No other student group was rejected for fear that the university would be seen as endorsing a political cause. Defendants pointed to six other rejections on anti-endorsement grounds, but four of those were rejected because it appeared ISU was endorsing a corporate logo; another design suggested that a club sport was an official athletic department sport; and another was rejected because it appeared that ISU was endorsing the views of the Students for Life club, but a minor change allowed it to be approved.

ISU implausibly argued that the political pushback it received didn’t play a role in decisionmaking. But defendant Leath testified that “anytime someone from the governor’s staff calls complaining, yeah, I’m going to pay attention, absolutely,” and that “[i]f nobody’d ever said anything, we didn’t know about it, it didn’t appear in The Register, we’d probably never raised the issue.” Both individual defendants’ motives were political in that they wanted to avoid controversy “in a state as conservative as Iowa.” Defendant Hill told the Ames Tribune that the reason student groups associated with political parties could use ISU’s logos, but groups like NORML ISU may not, is because “[w]e encourage students to be involved in their duties as a citizen.” But that statement implied that Hill believed that the members of NORML ISU were not being good citizens by advocating for a change in the law. The person in charge of approving student requests told NORML ISU that the group’s design applications “do not further your cause as an advocate for change in the laws or trying to change the public’s perception of marijuana.” As the court of appeals wryly commented, “[t]here is no evidence in the record of Zimmerman offering advocacy advice to any other student group.”

The administration of the trademark licensing regime wasn’t government speech because it was a limited public forum. Even if it wasn’t a limited public forum [and note the conceptual difficulties of calling a non-physical space a “forum”], the government speech doctrine didn’t apply. Walker v. Confederate Veterans asked (1) whether the government has long used the particular medium at issue to speak; (2) whether the medium is “often closely identified in the public mind with the” state; and (3) whether the state “maintains direct control over the messages conveyed” through the medium. [So, is the medium the trademark? Or the trademark licensing regime?]

The court found that the first two factors didn’t apply, which seems an odd characterization. If the medium is the trademark, then the government has definitely used it to speak; if it’s the trademark licensing regime, then the argument is weaker but not obviously weaker than that for license plates, where as here the relevant regime produces the state’s symbol coupled with the organization’s symbol. Both the trademark and the trademark licensing regime seem likely to be “closely identified in the public mind” with the state. But the court of appeals, as I noted in the intro, was compelled by the fact that ISU allows approximately 800 student organizations to use its trademarks, including groups with opposing viewpoints. The court did not analyze the Supreme Court’s treatment of similar facts in Walker. Here’s the district court’s distinction, which is not bad:

Because American society regards its universities as incubators for intellectual experiment and exploration, the Court cannot conclude that observers would associate a student group’s message, bearing an ISU icon, to represent the views of ISU. Rather, ISU’s myriad student groups are rightfully understood to represent a jumbled mix of interests, views, and opinions, some mainstream and others offensive to conventional sensibilities, in the spirit of intellectual debate.

I will say, however, that ISU rejected a lot of shirts in the past, mostly for sexual references but also for alcohol/firearms references, and I’m not sure why those rejections don’t (1) establish a lot of ongoing control over the licensing program, and (2) also now turn into unconstitutional acts.
rejected "How the Health Are You?" for double entendre

rejected for sexual references

The ISU club for kayaking received a number of rejections

rejected, double entendre

when is a law firm "national"? hub-and-spoke firm finds out

Cochran Firm, P.C. v. Cochran Firm Los Angeles, LLP, 2016 WL 6023822, No. CV 12-5868 (C.D. Cal. Aug. 18, 2016)

Previous 9th Circuit opinion affirming earlier unclean hands ruling discussed here. This case began with a legal partnership turned sour. In 1999, McMurray (principal of The Cochran Firm Los Angeles) joined The Cochran Firm’s (TCF’s) Los Angeles office. McMurray claimed to have received a letter from TCF principals Johnnie L. Cochran (now deceased), Givens, and Cherry, congratulating him on his elevation to named partner. In 2007, McMurray acquired TCF’s Los Angeles office, assuming all of its debts and obligations. He organized the office under a partnership called The Cochran Firm Los Angeles (TCFLA), formed with other parties Dunn and then adding Barrett.

TCFLA remitted a cut of its monthly case fees to TCF. Things soured, and McMurray was allegedly shut out of the TCFLA partnership. TCF sent a C&D to McMurray seeking to terminate his right to use the Cochran name. Dunn allegedly took over the remains of TCFLA’s practice, changing its name to The Cochran Firm California. TCF filed suit against McMurray and TCFLA. It initially obtained a preliminary injunction, but the Ninth Circuit remanded for consideration of whether TCF had unclean hands. The district ultimately dissolved the preliminary injunction after determining that TCF had unclean hands in the use of its trademark “because it improperly held itself out as a national law firm.”

Here, the court gets rid of a bunch of TCFLA’s tortious interference claims, but finds that a reasonable jury could find that TCFLA parties had standing to seek cancellation of TCF’s registered mark “THE COCHRAN FIRM.” Even though McMurray wasn’t currently using THE COCHRAN FIRM mark, and testified that he had no present intent to do so, he also testified that he “may change that depending on the outcome of this case.” McMurray established “a real and rational basis for his belief that he would be damaged by the registration sought to be cancelled, stemming from an actual commercial or pecuniary interest in his own mark.” TCF’s mark “prevented McMurray from advertising his relationship with Johnnie Cochran to the public.”

Lanham Act counterclaim: This counterclaim was based on TCF’s website, which featured statements such as “America’s Law Firm,” “Experience Trial Lawyers Who Deliver Results,” “With offices nationwide and a team of some of the country’s most experienced and aggressive personal injury attorneys and criminal defense lawyers,” and “While The Cochran Firm is a national law firm with multiple attorneys, we handle each case we take with equal dedication and tenacity. Your attorney may draw on the collective experience of his or her partners, but will continue to work personally with you throughout all legal proceedings,” and included a list of offices from around the country.

The court found that these statements were literally false; no further evidence of consumer deception or materiality was required. Though TCF “market[ed] itself as a traditional, national firm with regional offices around the country,” the firm’s structure more closely resembled a network of several partnerships, connected only through their relationship with TCF. “Semantic quibbling” over the prospect that national might not mean “single” was unpersuasive.

The McMurray parties also provided sufficient evidence of damages: McMurray testified that, despite having retained TCF’s original Los Angeles telephone number, he now receives significantly less of the types of cases that he typically got at TCFLA. Though this was “quite weak” evidence, given that a new law firm might reasonably get a lot less business than an old one, that was enough to show a triable issue on injury.

However, the court rejected counterclaims against the Dunn parties (TCF-CA) based on statements such as “Welcome to The Cochran Firm, Founded over 40 years ago by Legendary attorney Johnnie L. Cochran, Jr.,” “The Cochran Firm has grown to encompass 27 offices in 16 states around the country,” and “The Cochran Firm Los Angeles has been in the same location for 25 years, and remains committed to upholding Johnnie’ vision of ‘a diverse law firm which reflects society and is capable of handling cases throughout America.’ “ These claims weren’t literally false, and they were “much vaguer and more ambiguous” than the literally false claims by the other parties.

To show deceptiveness, the McMurray parties offered multiple court records in which former clients sued both TCF and a TCF-affiliated regional office for judgments owed, and an expert report analyzing those court records. The court found this evidence probative of deceptiveness, since it showed that, in multiple instances, former TCF clients attempted to collect monies owed from both TCF and an affiliated regional office under the assumption that they were one and the same. However, the McMurray parties failed to show materiality. Though there was evidence that consumers were deceived into believing that TCF was a “national” firm, there was no evidence that a consumer would choose TCF-CA over another law firm such as McMurray’s new law firm “out of some misplaced belief that TCF-CA had Johnnie Cochran’s imprimatur.”

McMurray also counterclaimed for violation of his right of publicity because TCF or TCF-CA used his image and biography on websites without his consent, using it to draw business. However, the court found no evidence of injury, as required to recover [note that courts will usually double-count benefit to the defendant as injury to the plaintiff where the plaintiff is a celebrity]. Broad statements by McMurray that he believed he’d been injured weren’t enough to show injury.

California UCL: Although the underlying conduct above could found a UCL claim, the only available remedy was restitutionary (since the McMurray parties weren’t seeking injunctive relief). And the evidence of economic harm—possibly lost clients—didn’t support a claim for restitution. Such damages were “exactly the sort of damages that cannot be achieved via a UCL claim.”