Rebecca Tushnet's 43(B)log

Never steal anything from someone you can't outrun: Warner Bros. defeats infringement claim

2013-05-20T11:10:00.001-04:00

Fortres Grand Corporation v. Warner Bros. Entertainment Inc., No. 3:12-cv-00535 (N.D. Ind. May 16, 2013)

McCarthy has said that there’s “surprisingly little” case law on whether a fictional company or product using the same name/brand as a real one constitutes trademark infringement. If this is surprising, as the court here agreed, it’s only because we’ve started expecting overreach as a baseline. This case adds to the small but obviously correct body of case law rejecting such claims (and, I hope, putting defendants in a position to ask for an award of fees next time).

Fortres Grand makes a real software program, Clean Slate. Clean Slate erases evidence of user activity on a particular computer, and it’s a registered mark for “computer software used to protect public access computers by scouring the computer drive back to its original configuration upon reboot.”

The Dark Knight Rises included a handful of references to a fictional software program called “clean slate,” which Selina Kyle wanted to erase her criminal history from every computer database in the world. (Yet another example of ridiculous tech premises; see also Carrion on Revenge, the Machine on Person of Interest, “Let’s Enhance,” and Phone Trace Race (warning: this last link goes to TVTropes; I am not responsible for the time you waste if you follow it).) Also, WB created two relevant websites, rykindata.com and rykindata.tumblr.com, to promote the film. (Ed. note: Eric Goldman says keyword ad cases make no business sense; this tumblr has 5 entries, and the top one—featuring Selina Kyle—has only 94 reblogs/likes, whereas the others have 11, 4 (one of which is me), and none. Perhaps this also wasn’t worth suing over?) As the court explained, the sites served to extend the movie experience:

[R]ather than just creating a straightforward promotional website where consumers can get information about the film (like, in this instance, www.thedarkknightrises.com), additional websites are created that market the film in a more subtle or creative way. In this instance, the websites are essentially a creative outgrowth of the fictional world of the film. They look like what a (fictional) citizen of Gotham might find if they were looking for information on the (fictional) Rykin Data company. They include images of fictional police reports related to the fictional character Selina Kyle, a fictional police file labeled “Cat Burglar Investigation,” a fictitious software patent, and an endorsement from a fictional Gotham City Better Business Bureau (BBB). [Hilariously/sadly, this last seems to have been removed, perhaps when counsel got a better look at the tumblr because of this suit.]

These websites also use the term “clean slate” to describe the software referenced in the film. … One of the pages on the website is titled “PROGRAM: ‘CLEAN SLATE’” and explains that “‘Clean Slate’ is the informal name for Rykin Data’s primary service, in which the corporation will amass personal histories (specifically off the Internet) and destroy it permanently.” Both websites also contain a fictitious patent for the software, the abstract of which states that the invention has the effect of “granting the subject a clean slate within the digital world.” The Tumblr site also contains this statement: “Rykin Data: Providing Fresh Starts since 2004. . . . Clean slates are possible. . . . Have a fresh, clean start.”

The court considered these materials on the motion to dismiss because they were integral to the complaint.

Fortres Grand sued for trademark infringement and unfair competition under state and federal law; all the claims were subject to the same standard. It claimed reverse confusion.

The court began by noting what trademark law isn’t about: “trademark infringement protects only against mistaken purchasing decisions and not against confusion generally.” To prevail, Fortres Grand needed to plausibly allege that Warner Bros. saturated the market with a product that the public was deceived into believing emanates from, was connected to, or was sponsored by Fortres Grand. The fatal flaw in the case involved correctly identifying “the exact product that Warner Bros. has introduced to the market – a film, not a piece of software.” Paradigm reverse confusion cases involve directly competing products where a small regional producer is overwhelmed when a larger player “rolls out a similar product with the same trademark on a nationwide level.”

But Warner Bros. didn’t have real “clean slate” software. Fortres Grand couldn’t argue that it had been damaged by the saturation of the market with “clean slate” software. Confusion had to be judged by Warner Bros.’ actual product, as other courts in similar situations have also ruled. See Ocean Bio-Chem, Inc. v. Turner Network Television, Inc., 741 F. Supp. 1546 (S.D. Fla. 1990) (Star Brite Distributing had no claim against fictional Starbrite Batteries); Davis v. Walt Disney Co., 430 F.3d 901 (8th Cir. 2005) (Earth Protector advocacy organization had no claim against fictional environmental software company Earth Protectors); Caterpillar Inc. v. Walt Disney Co., 287 F. Supp. 2d 913 (C.D. Ill. 2003) (no consumer would be more likely to buy or watch George of the Jungle 2 because of any mistaken belief, based on presence of Caterpillar vehicles in the movie, that Caterpillar sponsored it).

Fortres Grand couldn’t plausibly allege either that consumers were deceived into believing that the DKR “clean slate” program came from Fortres Grand, or that they were deceived into believing that DKR came from Fortres Grand.

“First, no consumer – reasonable or otherwise – can believe the fictional ‘clean slate’ software in the movie emanates from, is sponsored by, or connected to Fortres Grand because the fictional software does not exist in reality.” A consumer who tried to find it would quickly discover that it didn’t exist. In other words, Warner Bros. was not making a trademark use of “clean slate”: it didn’t identify a source of software because there was no such software, and it didn’t identify the source of the film either (citing, inter alia, New Kids).

“Second, no consumer – reasonable or even unreasonable – would believe that the The Dark Knight Rises itself is connected to Fortres Grand.” Fortres Grand isn’t in the motion picture business, and no one would buy tickets or discs because of a perceived association with Fortres Grand’s products. Any allegation of confusion about the film’s source would be too implausible to survive Iqbal/Twombly. (Notice how sponsorship/product placement has been erased from the analysis. Really, the only coherent way to understand these statements is as normative claims, irrefutable by empirical evidence, rather than as descriptive claims.) The promo websites changed nothing. “To the extent it can be said that the term ‘clean slate’ on these sites is even being used as a trademark, it can only be to indicate the source or origin for the film The Dark Knight Rises.”

Mark McKenna will appreciate this bit: Pragmatically, infringement means confusion as to source, which means origin, which means “the producer of the tangible product sold in the marketplace.” Hello, Dastar! Vague, generalized confusion isn’t enough, since the key target is mistaken purchasing decisions. Because “no one looking for Fortres Grand’s software is likely to mistakenly buy a ticket to The Dark Knight Rises,” there was no plausible claim for such mistakes.

And also: the use of “clean slate” was protected by the First Amendment, even if there were potential consumer confusion. Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989), provided the standard. The Lanham Act doesn’t apply to artistic works as long as a use is artistically relevant and not explicitly misleading as to the source or content of the work. Rogers is about titles, but also applies to the use of a mark in the body of a work.

The first prong, artistic relevance, is a purposely low threshold. “Clean slate” had artistic relevance to both the film and the websites, as Fortres Grand’s own complaint acknowledged—it was the name of a program that would erase a person’s criminal history from every computer database. Nor was the use explicitly misleading. As the 9^th Circuit has (confusingly) said, “the relevant question” is whether the use of “clean slate” in The Dark Knight Rises would confuse its viewers into thinking that the Fortres Grand “is somehow behind” the film or “that it sponsors” the film. The requirement of explicit misleadingness makes this a high bar: a work must make some affirmative statement of sponsorship or endorsement, beyond the mere use of a plaintiff’s mark, in order to be explicitly misleading. There was no such affirmative statement here.

The court rejected Fortres Grand’s argument that Rogers only applies to forward confusion, not reverse confusion, because Rogers was about protecting use of “culturally relevant” marks. Because Warner Bros. wasn’t trying to refer to Fortres Grand at all, it argued, Rogers wasn’t relevant. The court didn’t see the logic there. First Amendment protection didn’t depend on the infringer’s having “some well-thought-out, ‘expressive’ critique of the trademark.” In fact, the chilling effect of Fortres Grand’s position could be huge. Small, relatively unknown trademark owners shouldn’t enjoy monopoly power over use of words in expressive works any more than the owners of famous marks should. Other courts had concluded similarly; the one case that supported Fortres Grand, Rebelution, LLC v. Perez, 732 F. Supp. 2d 883 (N.D. Cal. 2010), read “artistic relevance” too narrowly, requiring defendant’s use “to be with reference to the meaning associated with plaintiff’s mark.” As the Ninth Circuit has held, “the level of relevance merely must be above zero” (and, implicitly, “relevance” means “relevance to the work,” not “relevance to the plaintiff”—which is the only sensible reading; otherwise the reality show Apple Pickers about competing fruit sellers would be vulnerable to a claim from Apple, whose computers would lack artistic relevance to the show).

The same analysis applied to the promotional websites. Fortres Grand argued that Rogers didn’t apply because the sites were commercial speech, but they weren’t, in that they did more than propose a commercial transaction. “[I]n fact, it is hard to see that they really propose any commercial transaction, other than obliquely convincing consumers to buy a ticket to the film. Instead, they are creative, fictional extensions of the film – artistic works in and of themselves – and are thus entitled to First Amendment protection.” Rogers applied in the same way.

Allegedly false equivalence statement triggers insurer's duty to defend

2013-05-20T09:56:00.001-04:00

JAR Laboratories LLC v. Great American E & S Ins. Co., 2013 WL 1966386 (N.D. Ill.)

JAR sued its insurer seeking a declaration of a duty to defend it in an underlying suit filed by its competitor TPU, which distributes Lidoderm, a pharmaceutical product. TPU claimed injury from allegedly false and misleading representations JAR made in promoting its own LidoPatch. Great American’s policies cover “advertising injury,” which is injury arising out of “[o]ral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services....” There is an exclusion for suits alleging infringement of intellectual property, defined as “personal and advertising injury”

arising out of any actual, alleged, or threatened misappropriation, infringement, or violation of any one or more of the following rights or laws: a) copyright; b) patent; c) trademark; d) trade name; e) trade secret; f) trade dress; g) service mark; h) slogan; i) service name; j) claim of authorship; k) other right to or law recognizing an interest in any expression, idea, likeness, name, style of doing business, symbol, or title; l) laws or regulations concerning piracy, unfair competition, unfair trade practices, or other similar practices; or m) any other intellectual property right or law.

The policy also excluded injury “arising out of the failure of goods, products, services to conform with any statement of quality or performance made in your ‘advertisement.’”

TPU sued JAR for false advertising under the Lanham Act. The underlying complaint alleged that JAR issued a press release stating that LidoPatch contained the same active ingredient as the leading prescription patch, would be ready to ship shortly, and was “poised to become a major product in the topical analgesic category. With its proven pain relieving active ingredients, lidocaine, LidoPatch® can provide relief for minor pain …. Like the prescription brand, LidoPatch® will provide relief for up to 24 hours.” Further, JAR’s website allegedly depicted the package and stated “PAIN RELIEF FOR WHERE IT HURTS!! LidoPatch, with lidocaine, for long lasting pain relief, and menthol to instantly soothe your discomfort. The result is a patch that offers real relief for those painful areas that nag you throughout the night and day. LidoPatch TM—Relief that lasts all day, without a prescription!”

TPU alleged that JAR was trying to mislead consumers into believing that LidoPatch was merely an OTC version of Lidoderm, and otherwise equivalent and interchangeable. However, TPU alleged, LidoPatch had a completely different formulation, and JAR didn’t have FDA approval or tests showing that LidoPatch was effective/fast acting. TPU alleged that it lost goodwill and profits due to reduced demand for Lidoderm. TPU ultimately amended its complaint to add causes of action under the deceptive trade practices/unfair competition/false advertising/consumer protection statutes of five states.

Insurance policies are construed in favor of the insured. An insurer can’t refuse a defense unless it’s clear from the face of the underlying complaint that the allegations fail to state facts bringing the case within or potentially within the policy coverage. The question here was whether the allegations in the underlying complaint potentially alleged disparagement of Lidoderm. Great American argued that, in Illinois, disparagement requires a false statement about the underlying plaintiff.

But on its face the underlying complaint alleged that JAR communicated false/misleading messages about Lidoderm—that LidoPatch and Lidoderm could be used to treat the same indication and that they were equally effective/interchangeable. “That plaintiff's statements did not identify Lidoderm by name is immaterial, a point underscored by TPU's allegations about plaintiff's ‘messages.’ Whatever words plaintiff used, TPU clearly understood (and alleges that ‘a substantial segment of consumers’ would likewise believe) that plaintiff's implicit ‘message’ was about Lidoderm.”

And JAR’s literal statements could reasonably be read to identify Lidoderm explicitly, if not by name, since references to “the prescription brand” had to be read in view of TPU’s allegations that Lidoderm was “one of the most frequently prescribed pharmaceuticals in the United States,” and “one of the best-selling pharmaceutical patches of all time in this country.”

The alleged statements also needed to portray Lidoderm in a negative light to qualify as disparagement. JAR argued that allegedly false equivalence claims met that standard, because disparagement can arise from comparison with something inferior. See Acme United Corp. v. St. Paul Fire & Marine Ins. Co., 214 Fed.App. 596, 2007 WL 186247 (7th Cir.2007) (“[d]isparage means ‘to discredit or bring reproach upon by comparing with something inferior.’”); McNeilab, Inc. v. American Home Products Corp., 848 F.2d 34, 38 (2d Cir.1988) (“a misleading comparison to a specific competing product necessarily diminishes that product's value in the minds of the consumer.”). Great American argued that Acme was about underlying ad claims that the insured’s product was superior, not just equivalent, but “a statement equating a competitor's product with an allegedly inferior one is logically indistinguishable from, and no less disparaging than, a statement describing one's own product as ‘superior’ to the competitors'.” In addition, TPU’s allegations of damage to goodwill and sales diversion bolstered the conclusion that the allegedly misleading statements disparaged Lidoderm.

Thus, the underlying complaint could reasonably be construed as falling within the scope of the policy, unless any exclusion applied. Great American’s IP theory was that, because the underlying complaint asserted Lanham Act claims and state law claims that “sound in theories of unfair competition and unfair or deceptive trade practices, or other similar practices,” the IP exclusion was triggered. “But this sweeping construction of the exclusion is not supported by the authorities defendant cites, and it flies in the face of both Illinois' policy and plaintiff's reasonable expectations about the scope of coverage.” Allegations of unfair competition, “however unmoored from any intellectual property right,” weren’t excluded by the IP exclusion; to so hold would ignore the context in which that phrase appeared. Read in context, the catchall provision excluding claims of “unfair competition, unfair trade practices, or other unfair similar practices” “bars coverage only of intellectual property claims based on such allegations.” Otherwise, the term IP in the exclusion’s heading and its text would have no meaning. The court wasn’t going to restrict coverage by deleting a limiting term from the caption of an exclusion. Also, the exclusion began with the most specific excluded claims and ended with the most generall. The very last exclusion, just before the ones on which Great American relied, was for “any other intellectual property right or law.”(Emphasis added). “The clear import of this final phrase is that the preceding subsections likewise referred to intellectual property rights or laws.”

The “quality of goods” exclusion also didn’t relieve Great American of its duty to defend. The fact that LidoPatch was never released for sale was relevant to this exclusion. TPU’s claims alleged injuries directly flowing from JAR’s ads, not from consumers’ discovery that the ads were false. Plus, the underlying complaint alleged misstatements about Lidoderm, not just misstatements about JAR’s own products.

The court also rejected Great American’s argument that an exclusion for prior publication barred coverage, given that there were allegations of specific actionable statements within the policy period and TPU’s allegations of statements outside the coverage period were general and didn’t necessarily match up with the statements made within the policy period.

So Great American had a duty to defend, though it didn’t act in a vexatious and unreasonable manner given that there was a bona fide dispute over coverage, and therefore sanctions and costs weren’t appropriate.

No reasonable consumer would think diet soda "all-natural"

2013-05-20T09:35:00.002-04:00

Viggiano v. Hansen Natural Corp., --- F.Supp.2d ----, 2013 WL 2005430 (C.D. Cal.)

Viggiano brought the usual California claims, along with federal warranty claims, based on Hansen’s diet Premium Sodas labeled as containing “all natural flavors.” Each soda allegedly contained two synthetic ingredients, acesulfame potassium (“ace-k”) and sucralose, used as sweeteners and/or “flavor enhancers.” Each soda also contained at least one natural fruit extract flavor. Viggiano alleged that consumers would understand “natural flavors” to mean that the flavors have not been “modified, enhanced and/or supplemented with artificial and/or synthetic compounds,” and that the “Premium Diet Soda” name also implied that the sodas were flavored only with natural ingredients.

Hansen argued that his claims were preempted because the FDA expressly regulates the use of “natural flavor” labels. A manufacturer can use a “natural flavor” label even if the product contains artificial, non-flavoring ingredients, so long as the “characterizing flavor” is, in fact, natural. However, if any added artificial flavor “simulates, resembles or reinforces the characterizing flavor ... the name of the characterizing flavor shall be accompanied by the words ‘artificial’ or ‘artificially flavored.’” Other courts had found preemption in similar situations, distinguishing between unnatural ingredients and unnatural flavors. The regulations allow “natural flavors” even when not all the ingredients are natural.

The FDA allows sucralose and ace-k as sweeteners and, for the latter, as a flavor enhancer—a “[s]ubstance[ ] added to supplement, enhance, or modify the original taste and/or aroma of a food, without imparting a characteristic taste or aroma of its own.” Thus, the court held, neither sucralose nor ace-k were flavors, but rather sweeteners/amplifiers of whatever characterizing flavor a product already had. (I don’t know why that doesn’t count as “reinforc[ing] the characterizing flavor.”) And neither appeared on the list of artificial flavors promulgated by the FDA.

Since FDA regulations expressly permitted this labeling, any requirement to use additional or different labeling was expressly preempted. Another decision had held that the FDCA did not preempt state law consumer claims that an “all natural flavors” label on an ice cream box was misleading, because a reasonable consumer could plausibly interpret that to mean “all natural ingredients.” But that court didn’t appear to have considered the specific flavor regulations, which made clear that ace-k and sucralose were not flavors. “While the distinction between an enhanced natural flavor and an unenhanced natural flavor may be one with which normal consumers are not familiar, the FDA has not precluded food manufacturers from labeling their products naturally flavored simply because the flavor may be artificially enhanced.” Moreover, the general “all natural flavors” label was confirmed by the ingredient list, which identified the specific natural characterizing flavor for each can.

Even if the claims weren’t preempted, dismissal would be appropriate, because no reasonable consumer would be deceived. “Flavors” are not “ingredients,” and Viggiano identified no artificial flavors in the drink. “In cases where a product's front label is accurate and consistent with the statement of ingredients, courts routinely hold that no reasonable consumer could be misled by the label, because a review of the statement of ingredients makes the composition of the food or drink clear.” Plus, the fact that the soda was clearly labeled “diet” made clear that it contained artificial sweeteners, because it’s the absence of sugar that makes a soda “diet.” Given the ubiquity of diet sodas, a reasonable consumer would understand that a diet soda contains artificial sweeteners, even if it also said “all natural flavors.”

The truth of “all natural flavors” also disposed of the express warranty claims. To the extent that Viggiano relied on the “premium” statement, that was mere puffery with “no concrete, discernable meaning in the diet soda context.” Read in context of the other statements, none of them were actionable; thus, “premium” didn’t form part of an overall warranty regarding the quality of the product. Unsurprisingly, the implied warranty claims and the Magnuson-Moss Warranty Act claims also failed. The latter failed not just because the state law claims failed, but also because the MMWA doesn’t apply to warranties otherwise governed by federal law, as here with the FDCA, and because Hansen’s label wasn’t a covered “written warranty” in the form of an assertion that the product was defect free or that it would meet a specific level of performance over a specified period of time.

bewildering complexity of modern world makes class certification difficult

2013-05-20T08:22:00.003-04:00

Red v. Kraft Foods, Inc., 2012 WL 8019257 (C.D. Cal.)

Plaintiffs sued Kraft under the UCL, FAL, and CLRA based on allegedly false marketing of Teddy Grahams, many varieties of Ritz Crackers, Original Premium Saltine Crackers, Honey Maid Graham Crackers, Vegetable Thins and Ginger Snaps, as healthy, though they contain high levels of partially hydrogenated vegetable oil and other “unhealthy, highly-refined, highly-processed, and nutritionally empty ingredients,” and thus allegedly cause health problems including cardiovascular disease, diabetes and cancer. The court previously denied class certification without prejudice; the renewed motion limited the class to California consumers and proposed one subclass per product with the challenged label. (The court found that plaintiffs lacked standing as to varieties of Saltines they never purchased, so they could only make claims based on regular Premium Saltines, not Premium Saltines Unsalted Tops, Premium Saltines Multigrain, Premium Saltines Fat-Free and Premium Saltines Low Sodium—a list that amazes me just because I had no idea the world of saltines was so complex.)

In this tentative opinion before a hearing, the court was unwilling to certify a class seeking damages under Rule 23(b)(2), but sought clarification over whether plaintiffs would seek injunctive relief only under 23(b)(2) if it denied, as it was inclined to do, any 23(b)(3) certification (for a class seeking damages). Kraft argued that such a suit would be largely moot because it had discontinued many of the challenged labels, so the court needed more information, because 23(b)(2) certification might be warranted, but ascertainability and predominance precluded a 23(b)(3) certification.

Defining the class as including only consumers who bought products with the allegedly unlawful labels assuaged the court’s worry about ascertainability to the extent that a previous definition included consumers who might not even have seen the allegedly misleading claims and thus wouldn’t have standing. However, ascertainability was still a problem because the court thought it would be infeasible to determine whether a person was a class member—overlapping with manageability concerns. That is, these were cheap products and consumers were unlikely to have receipts or even good memories about what they bought when.

When there was no way to verify that self-identified class members suffered the alleged injury, and when consumers themselves might not be able to honestly identify themselves, certification was probably improper. Self-identification is more acceptable where “consumers are likely to have retained receipts, where the relevant purchase was a memorable bigticket item, or where the defendant would have access to a master list of either consumers or retailers who dealt with the items at issue.” The one case plaintiffs identified allowing self-identification for small-ticket purchases without written receipts was Zeisel v. Diamond Food, Inc., No. C 10–01192 JSW, 2011 U.S. Dist. LEXIS 60608 (N.D. Cal. June 7, 2011), which itself “relied upon cases involving big-ticket items or cases where there were no nuanced labeling issues involved,” and the court was unwilling to rely on it. Lack of ascertainability/manageability would also make it impossible for future courts to figure out who was and wasn’t bound by the judgment, a serious problem.

Since lack of ascertainability alone wouldn’t necessarily scuttle a class action, the court continued with the other factors. Numerosity was of course easy. As for commonality, plaintiffs identified common questions about what Kraft communicated, whether it was material, etc. Under the UCL and FAL, plaintiffs need not prove that each individual class member relied on misrepresentations if reasonable consumers were likely to be deceived. Thus, even if some class members bought the products because they liked the taste, that wouldn’t affect commonality. As for CLRA claims, individualized reliance is an element, but reliance can be presumed if material misrepresentations were made to the entire class. And materiality wasn’t suitable for adjudication at the certification stage; the court noted that plaintiffs made a sufficient threshold showing of materiality, identifying numerous Kraft documents indicating that health labeling like the challenged labels was likely to influence purchasing decisions. (However, the court noted that, among other things, the fact that one class representative made a post-suit purchase of one of the products indicated that the issue of whether the misrepresentation was material was far from clear.) As to subclasses involving one product and one label, whether a claim was material to a reasonable consumer was plainly a common question of fact.

Subclassing solved the court’s previous objections to the wide range of products and labeling claims challenged. Kraft argued that class members had different reasons to buy the products, but common injury didn’t depend on whether class members were upset about the injury for the same reasons: the question was whether liability could be determined by resolving the same factual and legal allegations.

However, the court thought the proposed classes failed 23(b)(3)’s predominance requirement: individualized issues of damages were too important. The court was troubled by other things, but not decisively so. Kraft argued that the Teddy Grahams and Ritz I subclasses still involved numerous products, but the former contained more than one product only insofar as the container sizes differed, which wasn’t enough variation. The court was more worried by the varieties of Ritz crackers—Kraft allegedly falsely claimed that “Reduced Fat, Whole Wheat, Hint of Salt, or Low Sodium” were all “sensible” choices, but the legal and factual underpinnings of why they weren’t sensible would seem to differ. Plaintiffs responded that the ingredients rendering the crackers nonsensible were the same for all the varieties, but the court would still find that four different products with two different labels was too many for one subclass.

Kraft also argued that the subclasses were challenging too many labels. This only related to Teddy Grahams and Honey Maid, since the others involved either only one label or the labels “sensible snacking” and “sensible solution,” “which are sufficiently similar that the Court cannot imagine Kraft to argue that different legal and factual questions would resolve the merits of Plaintiffs' claims as to one as distinct from the other.” The most problematic was the Teddy Grahams subclass, which challenged four labels: “sensible snacking,” “sensible solution,” “smart choices,” or “help support kids' growth and development.” These differed enough to prevent common questions from resolving the claims of all members. For Honey Maid, challenging “wholesome” also differed from “sensible snacking/solution,” and the court was inclined to narrow the class.

The court was less impressed by Kraft’s argument that there couldn’t be commonality when the same challenged words were used on a number of different package designs for the same product. Plenty of cases have found predominance where one allegedly fraudulent message was conveyed across TV, print ads, and product labels, and Kraft couldn’t cite cases in its favor on this argument. Though there were other problems with the proposed classes, it would be “manifestly unjust” for a court to reject predominance simply because a company didn’t use the allegedly fraudulent claim for an extended period of time or because it periodically made minor changes to the packaging containing the challenged claim.

Kraft argued that some of the packaging during the subclass periods didn’t bear the allegedly fraudulent representations, but consumers who bought those packages wouldn’t be part of the class in the first place; this was just another version of the ascertainability argument, or could be seen as going to damages from the challenged labels rather than to liability.

Kraft’s most successful argument was on individualized damages methods. Plaintiffs had the burden of showing that restitution could be calculated by methods of common proof. Nonrestitutionary disgorgement wasn’t available in a UCL class action, so awarding full disgorgement wasn’t allowed, since the class members “undeniably” received some benefit from the products, and a large portion of the sales wouldn’t be tainted by misrepresentations due to “customer loyalty and other factors” driving sales. Plaintiffs’ second theory was that Kraft should pay restitution of a premium charged for misleading health and wellness claims, compared to the same products before the claims were used. The amount of such a premium might be established on a classwide basis, but individual class members would still need to prove how many purchases they made, where and when, to determine how much they were owed. “While this method has been approved in a few analogous class actions, memory issues as to what products were purchased where and in what quantities, as well as price differences at the vast array of retail establishments that sell the Products render this Court unwilling to find that common questions of law or fact will predominate as to the resolution of class members' claims, due to the individualized nature of the damages calculations.” Thus, predominance wasn’t met due to manageability concerns.

The court rejected Kraft’s arguments against typicality, including the argument that plaintiffs were atypical because they bought and ate other foods with the same ingredients they alleged were unhealthy here. This was irrelevant because the issue was misleadingness, not whether plaintiffs bought other products that may or may not have made any healthfulness claims. Their purchases were relevant to individual reliance, but that wasn’t an element for the UCL and FAL claims, and the CLRA claim would only survive as a class action if the misrepresentations were material and individual reliance could be presumed.

The court also rejected various challenges to plaintiffs’ adequacy, though finding it a close question given the class representatives’ unfamiliarity with the complaint and the addition and removal of a law firm as co-counsel. The court cautioned counsel to “include, involve and respect the class representatives sufficiently if the case moves forward.”

The court left final resolution of certification for a hearing focusing on ascertainability, damages calculation, and other lingering issues.

Monster un-mash: no class action for YouTube plaintiffs

2013-05-17T15:29:00.000-04:00

Football Ass'n Premier League Ltd. v. YouTube, Inc., --- F.Supp.2d ----, 2013 WL 2096411 (S.D.N.Y.)

Interesting not just because of the intersection of class actions and copyright, but because neither side apparently had the incentive to clarify matters with respect to statutory damages, thus enabling some sloppy language, though nothing that ought to make a difference to this case.

The court began by suggesting that this case was a “Frankenstein monster posing as a class action” (citing Eisen v. Carlisle & Jacquelin, 391 F.2d 555, 572 (2d Cir.1968) (Judge Lumbard, dissenting from remand)).

The putative class consists of every person and entity in the world who own infringed copyrighted works, who have or will register them with the U.S. Copyright Office as required, whose works fall into either of two categories: they were the subject of prior infringement which was blocked by YouTube after notice, but suffered additional infringement through subsequent uploads (the “repeat infringement class”), or are musical compositions which defendants tracked, monetized or identified and allowed to be used without proper authorization (the “music publisher class”).

The plaintiffs claimed that there were at least thousands of members in the repeat infringement class, and hundreds in the music publisher class. (Let me pause here and note that everything about statutory damages that follows would make much more sense if the class definitions had involved works registered before the infringement began or within three months of publication; it is hard for me to imagine that this would’ve changed the size of the class very much except perhaps as to foreign works, since commercially significant US works tend to be timely registered and foreign owners generally either register in timely fashion or they don't, since late registration is pointless for them. Of course plaintiffs probably want a lot of non-US works in the class—but overall then, it probably would’ve been to their benefit to point out that many non-US works in the class wouldn’t be eligible for statutory damages. The idea of eligibility for statutory damages might seem to make damages calculations easier and thus class treatment more acceptable, but here I don’t think that adds much, given that individualized damages calculations are often acceptable if a class is otherwise valid.)

Ahem. Okay: plaintiffs didn’t explain how the worldwide members of the class would be identified, how they’d prove ownership, or how they’d prove YouTube’s awareness of infringement, which is important given YouTube’s general DMCA protection. Given the number of clips on YouTube, “[t]he suggestion that a class action of these dimensions can be managed with judicial resourcefulness is flattering, but unrealistic.” (Of course, neither will individual actions get much of anywhere, even if the individual is Viacom.)

In general, “copyright claims are poor candidates for class-action treatment.” Though of course the elements of infringement/secondary liability are the same across works, the issues “must be resolved upon facts which are particular to that single claim of infringement, and separate from all the other claims.” Aggregation therefore doesn’t simplify dispute resolution. Plus, the economic need to aggregate that often justifies class actions isn’t as significant because “the availability of statutory damages is designed to give litigation value to each individual case.”

Going through the class certification factors in Rule 23(a), the class wasn’t just numerous, but so numerous that joinder was impracticable. “While one can often phrase questions of law or fact in ways that make them ‘common’ to the class, in this case one can do that only at a level of generality which is useless in practical application.” Common questions there might be, but common answers couldn’t be found because of dissimilarities within the proposed class: in particular, whether the copyright owner’s notice was sufficient to permit YouTube to identify and take down the infringing material, along with other defenses like fair use. Other issues: validity and ownership of the copyright; whether the party asserting a claim is authorized to do so; amount of damages; substantial similarity and fair use. These were all too individualized. “One piece of music is unlike another, and is untouched by what infringes the other.” Under Dukes, “the few truly common issues, which largely pertain to the defendants' conduct, do not predominate over individual issues.”

This also meant there was no typicality. “By their very nature, copyrightable works of art are each unique, and what infringes one work will probably have no effect upon another.” (Even exact wholesale copying? Those are special snowflakes!) Each claim had individual issues of ownership, infringement, fair use, and damages.

Nor was Rule 23(b) satisfied. A class action would be inferior because it would “compress into one mammoth proceeding a universe of individual claims, each with its particular facts, issues and (in many cases foreign) law, much better handled in separate cases where each can receive individual attention.” The fear of expense was mitigated by statutory damages, and in any event “the unique nature of each work and of its infringement cannot be obliterated by its inclusion in a sea of other claims, and the defendants are entitled to contest each of them.” As for the individual questions of ownership, assignment, waiver, and fair use (or fair dealing, I presume), they’d be “better handled in the jurisdictions (often foreign) in which they arise, rather than thousands of miles away.”

Nor did the proposed subclasses help any. The first was the repeat infringement class, for works that are or would be registered or didn’t need registration (i.e., foreign works), whose owners submitted takedown notices but suffered subsequent uploads that could’ve been blocked by screening tools. The second was the music publisher class, for those who owned/controlled musical works that were tracked, monetized, or identified by YouTube, “including because YouTube identified a sound recording of the composition using its text-based or audio-fingerprinting screening tools,” whose works weren’t authorized.

As for the repeat infringement class, YouTube just wasn’t obligated by §512 to screen for repeat uploads; plaintiffs were bound by the Viacom holding to that effect, as they were parties to that appeal. That left “little or nothing” to the repeat infringement class, who at most would still need to litigate their individual issues. Plaintiffs’ implication that compliance with a takedown notice was a tacit concession of infringement ignored §512, which made clear that a takedown was no such thing and contemplated counternotification.

And for the music publisher class, even if §512 were overcome, there’d still be all those issues of ownership—“under the applicable foreign law in the instances of foreign plaintiffs”—lack of authorization, fair use, and nature and amount of damages, depending at least in part on registration timing. “Plaintiffs say that the burden is much simpler for this class than in the usual case, because of the special business characteristics of the class definition, and that may be so. But the showing must still be made, and one plaintiff's will be different from another's.” So there was no typical claim that could provide common answers, only a “diverse and unmanageable aggregation of individual claims, better dealt with separately.”

Plaintiffs also sought certification of two issues: whether defendants had the right and ability to control infringing activity on their website and received a direct financial benefit attributable to that activity, and whether defendants' unilateral syndication of clips to third parties was “by reason of the storage at the direction of a user.” These were dealt with in Viacom, and not to plaintiffs’ advantage.

Large Wells Fargo judgment reinstated

2013-05-16T10:41:00.001-04:00

Via the Consumer Law & Policy Blog. Previous coverage of the legal response to Wells Fargo's reprehensible practices here (9th Circuit) and here (earlier district court opinion). More from me likely next week, post-grading.

$40 million award against Skechers

2013-05-16T07:50:00.003-04:00

Skechers will pay $40 million for its unsubstantiated claims that its funny-shaped shoes improved fitness and health. Via the Trademark Blog.

To Save Everything, Click Here

2013-05-15T11:57:00.000-04:00

Evgeny Morozov, To Save Everything, Click Here: The Folly of Technological Solutionism: Morozov’s excellent first book, The Net Delusion, established him as a major critic of internet eschatology, particularly the utopian brand. His latest book attempts to expand on that critique, sometimes successfully and sometimes not. For a sample mostly taken from the book, here’s Morozov on why we shouldn’t be sanguine about using technology to “improve” incarceration. A good sampling of Morozov’s work is available online; I would recommend avoiding his debate with Farhad Manjoo in Slate, where Morozov mostly ignores legitimate hits (he attacks generalizations like “the internet” but himself has no trouble criticizing “Silicon Valley”) in favor of snide near-ad hominems.

Morozov wouldn’t be surprised that I, as an internet reviewer (“ordinary people don’t write reviews for the same reasons as professional critics; they are mostly interested in reviewing their own experience, not in making sense of a given work”), can’t improve on Kevin Driscoll’s take in the LA Review of Books, which has some very smart things to say about Morozov’s critiques of “solutionism” (social issues as problems with a fixed solution rather than approaches that have to be negotiated and compromised on) and internet-centrism. For a rather harsher view, there’s Tim Wu, who is attacked in the book and understandably annoyed; his criticisms are not unwarranted.

Morozov is a skeptic not just of whether Silicon Valley’s big promises can be carried out but, more importantly, whether they should be. Friction, lack of transparency, inefficiency, and so on are not just hinderers of efficiency, but crucial parts of human self-definition and autonomy; politics isn’t politics if it’s not messy and a bit hypocritical. Compromises and imperfections can be good, not bad; politics can’t be improved the same way that market transactions can be—if all interactions could be win-win, we wouldn’t have politics. “Try telling [an Amazon] shopper that not all of his or her desires can be satisfied because someone else has equally compelling interests and those have to be taken into account as well; the market simply doesn’t work that way.”

And the consumerist mentality that solutionists bring to political challenges leads to disappointment and disgust with “politics,” when it should lead to a rejection of solutionism: “Most public institutions should not be held to the same standards as their private counterparts because their mission is to provide goods and services that markets cannot or should not provide.” More generally, inefficiencies, hypocrisies, and the existence of crime “might be problematic in some limited sense, but they do not necessarily add up to a problem worth solving—any more than having a soccer match that lasts for ninety minutes rather than an eternity and features twenty-two people instead of everyone at the stadium is a problem to be solved.”

Relatedly, the “frictionless” solutions promoted by techno-utopians often don’t solve the problems they purport to, and they don’t solve them in particular ways reflecting existing political and social inequalities. For example, biometric identification technologies turn out to have particular trouble with certain racial groups, and fingerprint scanners have difficulty with people in certain working-class occupations--not that this is anything new, as Morozov is at pains to point out. (An example related to my own field is the way in which visual communications technology is bound up in whiteness: Richard Dyer, "Making 'White' People White, in The Social Shaping of Technology, eds. Donald MacKenzie and Judy Wajcman (noting that, among other things, videotape quality was evaluated by how well it displayed a blank, pale orange signal called "skin" that was supposed to match white skin); Brian Winston, A Whole Technology of Dyeing: A Note on Ideology and the Apparatus of the Chromatic Moving Image, Daedalus, Vol. 114, No. 4 (Fall, 1985), pp. 105-123 (discussing how, at every stage, film development was guided by how it did at showing white skin).)

For another example of solutionism, massive online open courses, Morozov notes, as many others have, that what they offer isn’t individual contact with an expert (even a grad student) but rather something else, and they don’t exist in a political vacuum: “In promising almost immediate and much cheaper results, they can easily undermine support for more ambitious, more intellectually stimulating, but also more demanding reform projects.”

Algorithms to recommend books to you have their biases, but that’s nothing compared to the dangers of algorithms that predict crime based on current circumstances (including poverty and racism that mean that crimes are committed and detected in particular ways). And design that simply prevents the possibility of crime also often prevents the possibility of civil disobedience, an important driver of social change: “Sometimes being caught with marijuana in one’s pocket is better than being prevented from putting it there, simply because an arrest is likely to generate media attention and trigger a public debate about drug laws.” But he’s always context-sensitive, and not dismissive of all better living through technology—anti-drunk-driving technology might be a good idea even if other technological interventions aren’t.

I was reminded of Morozov’s critique of big data solutionism by this bit in Slate about how facts can change their meanings when you have more context:

Marti Barletta, a consultant in marketing to women, told me one of the reasons women have gained a reputation for caring about frivolous details is because they do so much research. By the time they arrive at dealerships, they’ve already logged countless hours online finding cars that satisfy their main criteria. Now, they’re picking through minutiae—what, precisely, makes the Nissan Maxima better than the Toyota Camry? (Could it be the number of cup holders?) These questions, Barletta says, contribute to an impression among salesmen that women care mostly about the little stuff.

This is a good example of the point that “data-driven solutions” can’t ever be entirely data-driven: you always need a theory.

Morozov also constantly emphasizes that people construct technologies. There’s nothing inevitable about the configuration of “the internet,” or “Facebook” or “Google” for that matter. Facebook could limit the number of ads it shows; Google could write different algorithms. As Tarleton Gillespie insightfully noted, Twitter’s algorithm for picking trending topics favors breadth (many groups using the same hashtag) over depth (a united group using the hashtag a lot), which is a political design choice that can be contested. When we focus on current numbers, such as monitoring how much water we consume, we may be motivated to take individual action but we don’t understand or consider the complex systems of overall water consumption, and we aren’t challenged to think of how we might get a different set of numbers—Morozov wants our technologies to confound and challenge us.

This is an important reminder, but it leads Morozov to be highly critical of activist discourses around things like SOPA/PIPA/ACTA’s “don’t break the internet” advocacy, and here (like many of his reviewers) I think he somewhat misses the mark. Very few of the leaders, and I suspect very few of the followers, of the anti-SOPA/PIPA/ACTA protests believed that http and IP addresses and the like would disappear under SOPA/PIPA/ACTA etc. Rather, they believed that key features of the internet they knew and liked would be hampered if not destroyed. The “internet” that existed, they thought, would be similar to the “Medicare” that would exist if what we now call Medicare were replaced by a voucher system. It’s fair game in such a debate to say that “Medicare” would be destroyed by such a change; it’s even fair game to say that “marriage” would be destroyed by extending it to women who want to marry women, even if that’s a dumb argument on its own merits. Yes, of course we should often question definitions, where much of the important rhetorical work is getting done, and Morozov is right to point that out—but many of the people he accuses really do know that already, and have made it pretty clear that they do.

(He’s particularly unfair, it seems to me, to Jonathan Zittrain, whose The Future of the Internet and How to Stop It comes under attack for internet-centrism and quixotic desire to keep the internet in a single state forever. E.g., Morozov says “to claim that Apple—one of Zittrain’s culprits—is bad for innovation because it’s bad for ‘the Internet’ is like claiming that ‘the Internet’ is bad for innovation because it’s bad for the telephone. Well, it might have been bad for the telephone—but when did preservation of the telephone become a lofty social goal?” Yet a significant chunk of Zittrain’s book is devoted precisely to addressing questions of when we can say a technological configuration/change in the direction of greater or lesser centralized control is a good thing. Zittrain isn’t entirely successful, I think, but by failing to acknowledge his explicit attempts to grapple with Morozov’s points, Morozov makes it seem as if Zittrain were silly or hypocritical, and himself ends up fighting a straw man. This ungenerosity isn’t unique in the book. Later, for example, Morozov suggests that those who favor market transactions trading private data for material benefits as mutually beneficial must also therefore approve torture “provided the prisoners ‘strike the right deal’ and are well compensated,” whatever that might mean.)

Morozov is at his best discussing tradeoffs and political reactions to technology: greater access to information can be manipulated by governments just like other new forms of power can be, and if—which is not yet established—there is a link between the two, he’s right that it’s not clear that the “local politics in Bahía Blanca [Argentina] [should] make sacrifices so that a fifteen-year-old in Palo Alto can remix cat videos without going to jail.” He doesn’t want that fifteen-year-old to go to jail, but he also doesn’t want arguments for that remixer’s protection to prevent any tinkering with technologies to make them “safer,” for some politically chosen definition of safer, especially since private parties and nondemocratic states are willing to tinker anyway.

Some have found his attack on extreme self-monitoring technologies and technologists, who are really outliers, to be a bit much, but I really liked his point (again, not new, but well made) that there is a deep political problem with proposing self-monitoring as the solution to the barrage of advertising and subsidies that keep us eating terrible, unhealthy food: “yes, some of us might find ingenious engineering solutions to resist insidious marketing, but in all this celebration of modern technology, shouldn’t we also do something about the marketing itself? …. [P]olitical action all but disappears; rather than reforming the system, we just tinker with ourselves and tend to our reservoirs of willpower the way Swiss bankers tend to their vaults.” But Morozov also hates “nudging” via technical or legal structures, even though that’s pretty much the opposite of the individualistic solutions he condemns, because he wants us all to think deeply, and exhaustingly, about all our politically relevant choices, which is to say basically all of them, though he talks most about energy consumption.

Probably Morozov’s most effective assault is on the concept of “openness” as an unqualified good. Because of preexisting political struggles, “open” data will be used in politically inflected ways—for example, maps that visualize crime statistics across different neighborhoods could help improve police effectiveness, but they could also devalue properties and make people living in dodgy neighborhoods to be less willing to report crimes. Openness has feedback effects.

Likewise, digitization of land records in India, in an attempt to empower the weak, may have benefited the rich and powerful by exposing which occupants lacked formal title despite being morally and even legally owners. Morozov advocates for context-specific solutions—here, accepting other methods of proving title such as old family photos or maps along with official land titles, or selectively limiting access to land records so that people with “no obvious need” to see them can’t do so. Information, he argues, should be “collected and distributed in full awareness of the social and cultural complexity of the institutional environment in which it is gathered. Sometimes preserving the social relations that enable that environment to exist … might require producing data that is only half transparent or half accessible …. [D]emocracy thrives on compromise and the art of reconciling seemingly irreconcilable interests.” And it’s hard to disagree with that last point, whatever excesses are in the rest of the book.

New article: Performance Anxiety

2013-05-14T10:25:00.003-04:00

Performance Anxiety: Copyright Embodied and Disembodied, J. Copyright Soc.:

The primary economic and cultural significance of copyright today comes from works and rights that weren’t contemplated by the Framers of the Constitution’s Copyright Clause. Performance—both as protected work and as right—is where much of copyright’s expansion has had its greatest impact, as new technologies have made it possible to fix performances in records and films and as cultural change has propelled recorded music and audiovisual works to the forefront of the copyright industries. Yet copyright has never fully conceptualized performance, and this has led to persistent confusion about what copyright protects.

One key problem of performance from copyright’s perspective is how to identify the creative elements that make a work of performance original and protectable, as distinguished from elements that make it a work (a fixed artifact). A major variant of this question involves authorship: who is sufficiently responsible for a work of performance to be deemed its author, and thus its default owner? In a world where works require dozens and even hundreds of people to complete them, this question will often be difficult to answer while both respecting creativity and recognizing economic imperatives. Another set of questions involves whether there are ways to recognize performers’ creative contributions without contributing to copyright’s bloat, and how to assess claims of infringement in a performance context when the alleged copying isn’t exact. This article addresses these puzzles of performance, arguing that manageability rather than creativity is generally the basis for the rights allocations and distinctions copyright law makes. The recent controversy over the film Innocence of Muslims, along with other instances in which subjects of audiovisual works claimed copyright in those works, demonstrate the limited role played by creativity in copyright law.

foisting blame on subcontractor not actionable by subcontractor under the Lanham Act

2013-05-14T08:30:00.001-04:00

Nationwide CATV Auditing Services, Inc. v. Cablevision Systems Corp., 2013 WL 1911434 (E.D.N.Y.)

Nationwide sued Cablevision for breach of contract, false advertising under the Lanham Act, unfair/deceptive trade practices, and other torts. The court dismissed most of the claims.

Nationwide provides installation and maintenance services to consumers on behalf of cable providers, including Cablevision for a while. Their agreement required Nationwide to engage in employment screening and to not allow any individual to perform contract work unless the screening was acceptable. Nationwide hired Francisco Sanchez after such a screening, which revealed nothing of concern, and had him perform work for Cablevision, using the “Optimum Cable” badge, uniform and vehicle signage required by Cablevision. Shortly thereafter, law enforcement investigated a report from a Cablevision customer that Sanchez had stolen jewelry from the customer’s home while performing work for Cablevision. Nationwide notified Cablevision of the investigation, stopped Sanchez from performing further contract work, and performed a second background check, which again raised no concerns. Cablevision agreed that Sanchez could again perform contract work.

Nationwide significantly increased its workforce and bought additional vehicles based on Cablevision’s promise to provide additional contract work, but then police responded to a reported burglary and pulled over a van with “Optimum Cable” signs on the doors. Sanchez and two others were inside; they were arrested and charged with seven burglaries, and Sanchez was also charged with the earlier burglary. Various news reports identified him as a Nationwide employee.

Nationwide alleged that Cablevision tried to foist the blame on Nationwide, publicly announcing that it was immediately suspending work with Nationwide “which provides a limited amount of work, only in Suffolk County, NY, pending a complete and thorough investigation.” Cablevision failed to disclose that it had earlier specifically authorized Nationwide to permit Sanchez to return to work after the accusation of the earlier burglary, and that Cablevision's employees, not Nationwide's, had serviced some of the customers who had allegedly been burglarized.

Nationwide subsequently disclosed its screening materials for Sanchez and its other employees; Cablevision representatives allegedly assured Nationwide that Nationwide had done nothing wrong and couldn’t have anticipated Sanchez’s alleged crimes any more than Cablevision could have. However, they were instructed to terminate Nationwide’s contract as a PR strategy. Then, Cablevision allegedly worked with a Nationwide competitor, AWS, to hire away most of Nationwide’s employees, using the confidential information Nationwide had provided to Cablevision as part of the investigation. Cablevision terminated its contract with Nationwide for failure to conduct adequate background checks, an allegedly pretextual reason.

The court dismissed the breach of contract claim to the extent it was based on termination of the contract and on alleged promises to provide additional contract work, leaving some claims based on disputed equipment charges/withholding of remittances for work Nationwide performed.

The court also dismissed the state-law unfair and deceptive trade practices claim. Though Cablevision’s statement that it was suspending Nationwide was true, Nationwide alleged that it was misleading because it “impl[ied] that Cablevision ‘had effectively eliminated the risk of burglaries by cable technicians bearing its marks and logos on their vehicles and uniforms by terminating its contract with Nationwide,’ when in fact Nationwide had nothing to do with the thefts and the termination of Nationwide did nothing to protect the consumers who were the intended audience for Cablevision's false claim.” The court found that Nationwide provided only speculation about what consumers inferred from the statement, and that was insufficient to survive a motion to dismiss. Cablevision “made clear that it was conducting an investigation and did not claim to have provided all relevant information concerning the burglaries.” The information that Nationwide contended should have been included in the statement—whether Nationwide serviced the allegedly burglarized customers--was known to Nationwide, making it a nonactionable omission, and “Nationwide was free to publicize that information if it believed that it was relevant to consumers or would mitigate the damage to its reputation.”

Even if the statement was misleading, Nationwide failed to allege that it harmed consumers or the public interest. Allegations of consumer confusion—here, confusion over whether the risk of burglaries by cable technicians using Cablevision trademarks—are generally insufficient consumer harm under NY GBL §§ 349 & 350.

Unfair competition is a broad tort under New York law, but not this broad. It requires misappropriation of the fruit of a plaintiff’s labors, but not all commercial unfairness qualifies. Nationwide alleged unfair competition based on Cablevision’s alleged misappropriation of its employee-related information, and its requirements that Nationwide employees performing contract work omit any reference to Nationwide and use only Cablevision’s service mark. (Nationwide also alleged that Cablevision’s suspension statement was unfair competition because it caused Cablevision’s own activities to be mistaken for Nationwide’s activities, but since it wasn’t false or misleading it couldn’t be unfair competition.)

But Nationwide’s bare allegation that the identities of its employees were “confidential and proprietary” was not sufficient to withstand a motion to dismiss. Mere inducement of an at-will employee to join a competitor isn’t actionable absent dishonest means or a scheme designed solely to produce damage. Neither were alleged here. Given that Cablevision terminated Nationwide, it was true to tell the employees that their only option for continuing to perform work for Cablevision was to leave Nationwide and join AWS. The parties’ agreements didn’t designate employee identity as confidential, and Nationwide offered no other reason that this information should be considered proprietary.

As for the allegations about required use of the Optimum service mark, the contracts required all contractor vehicles to prominently display both the Cablevision sign and the contractor’s name and address. “Nationwide cannot complain of confusion caused by its failure to prominently display its name on its vehicles.” Nor did Nationwide explain how the alleged consumer confusion caused by the use of the Optimum service mark on employees’ badges and uniforms caused it any of the injuries it alleged.

The court also dismissed the Lanham Act claim because Cablevision’s statement wasn’t literally false, nor was it likely to mislead or confuse consumers based just on Nationwide’s speculation. Regardless, it wasn’t commercial advertising or promotion, which in the Second Circuit requires (1) commercial speech, (2) for the purpose of influencing consumers to buy defendant's goods or services, and (3) disseminated sufficiently to the relevant purchasing public. The touchstone is that “the contested representations are part of an organized campaign to penetrate the relevant market.” While Nationwide alleged widespread public dissemination, that was insufficient; the statement wasn’t part of an organized campaign, but at most an isolated disparaging statement, which had to be addressed (if at all) by state-law causes of action.

The court also dismissed Nationwide’s negligence, breach of fiduciary duty, unjust enrichment, civil conspiracy, and prima facie tort claims.

A whiter shade of rhodium

2013-05-13T11:13:00.001-04:00

Torres v. JC Penney Corp., Inc., 2013 WL 1915681 (N.D. Cal.)

Plaintiffs filed a putative class action for violations of the CLRA, UCL, and FAL based on defendants’ failure to disclose to consumers that the jewelry they advertise as “white gold” and “sterling silver” is coated with rhodium, which wears off. The wear reveals the underlying color of the jewelry, which is an “undesired yellow, off-white or dingy grey color.” Consumers can restore the jewelry's original “shiny white” appearance by re-coating the jewelry at their own expense.

Plaintiff Rojas bought an engagement ring from JCPenney for over $1000 and gave it to plaintiff Torres. It was sold as “white gold,” without disclosure of the rhodium coating, the underlying color, or the vulnerability to wear. Rojas and Torres had the ring re-coated “more than once” in the past year to restore its original white color. Plaintiff Kerner similarly bought jewelry advertised as “sterling silver,” without disclosure that the items were coated with rhodium, or that the coating would wear off “to reveal a layer of copper or nickel that is applied to the sterling silver core to make the rhodium coating adhere more easily to the jewelry.” Plaintiffs alleged that if they’d known the truth, they wouldn’t have bought the jewelry or would have paid less for it.

Defendants moved to dismiss on the basis that they were protected by safe harbors under the FTC Guides, the National Sampling Act, and a provision of California law adopting the National Sampling Act. California’s safe harbor doctrine precludes an unfair competition claim when the legislature has permitted certain conduct or considered a situation and concluded no action should lie. To forestall such a claim, another provision of law must actually bar the action or clearly permit the conduct.

Defendants argued that the FTC Guides allowed them to advertise an item as gold or sterling silver without disclosing a rhodium coating as long as the amount of other metals in the item diddn’t exceed the permissible tolerances set out in the National Stamping Act (NSA): three parts per thousand for gold and four parts per thousand for sterling silver. The court disagreed, for two reasons: first, the Guides aren’t legislation or regulations, as required for the application of the safe harbor doctrine, but rather merely interpretations designed to provide public guidance, not created by a formal rulemaking process. Second, defendants didn’t show that the Guides clearly permitted the failure to disclose. Rather, they stated that it was unfair/deceptive to misrepresent the presence of gold or silver if it didn’t meet the NSA’s permissible tolerances. This wasn’t permission for nondisclosure; at best, it didn’t make the nondisclosure unlawful. But there’s a difference between not making an activity unlawful and making that activity lawful. The same analysis applied to the NSA itself and California law incorporating it.

With that out of the way, the court found that the plaintiffs had pled their claims with the requisite particularity. Failure to disclose can be actionable under the CLRA if the defendant had a duty to disclose, which requires at least one of: (1) a fiduciary relationship with the plaintiff; (2) exclusive knowledge of material facts not known to the plaintiff; (3) active concealment of a material fact from the plaintiff; or (4) partial representations with suppression of some material fact. The court found that plaintiffs pled (2)-(4). Plaintiffs plausibly alleged that the rhodium coating wasn’t visually discernible to them at the time of purchase and that defendants had exclusive access to the specifications of the jewelry; they plausibly alleged active concealment because neither the ads nor the sales staff provided any information about the rhodium coating; and they plausibly alleged partial representations based on statements that jewelry was “14kt white gold” or “sterling silver,” without mentioning the rhodium coating.

Similar reasoning preserved the UCL claims under all three prongs: unlawful, unfair, and fraudulent. The court rejected defendants’ arguments that alleged violations of the FTC Act can’t ground a UCL claim because there’s no private cause of action under the FTCA. The UCL provides a cause of action for violations of other laws, and the FTCA doesn’t itself bar private enforcement of its provisions. And of course the FAL claims also survived.

Remington Steel: false advertising, but not TM infringement, from false identities

2013-05-13T08:43:00.002-04:00

General Steel Domestic Sales, LLC v. Chumley, 2013 WL 1900562 (D. Colo.)

General Steel sued defendants, including Chumley and his company Armstrong Steel, for trademark infringement, unfair competition, and false advertising. After a trial, the court rejected the infringement claims but found that defendants had engaged in false advertising.

General Steel had a registered trademark for its logo, the outline of a building with “General Steel Corporation” in it, and also on the word mark “GENERAL STEEL CORPORATION.” General Steel and Armstrong compete to sell prefabricated steel buildings. These range in size and purpose and cost from $10,000-$200,000.

General Steel has spent over $50 million in marketing, mostly on radio ads, from the late 1990s. It also has a history of some adverse court decisions on consumer protection issues, which are available to consumers online, as were other negative comments even before Chumley’s activities detailed here. General Steel’s sales peaked in 2002 and then steadily declined; its principal attributed the decline to a case arising out of the Colorado AG’s complaint.

Chumley worked as a salesperson for General Steel for about 9 months and left disgruntled. He then moved to another competitor, Olympia Steel, and sent an obscene email to General Steel employees under a mocking pseudonym, and created/directed the creation of a porn website falsely attributed to a General Steel employee. He then moved to Colorado to open an Olympia office, but then created the defendant business entities, doing business as Armstrong, which sold its first building in April 2009.

Chumley used Google AdWords to target General Steel, e.g.: “General Steel buildings – Steel framed buildings | Armstrong Steel ... Checkout [sic] various Armstrong Steel buildings – Building frames for your general steel buildings like commercial steel buildings, industrial steel buildings. www.armstrongsteelbuildings.com/steel-metal-building-frames.php.” He was also involved in issuing a number of internet press releases and articles using false claims to publicize Armstrong’s capabilities. Some of the articles used quotes from a fictional person, “J.P. Remington, III, V.P. of International Affairs for Armstrong Steel.” One falsely claimed that Armstrong established an “enrichment program . . . benefit[ting] the less fortunate children of the Middle East” by helping to rebuild schools in Iraq. It also claimed that it had been required to “postpone international deliveries by one month to meet rising demand here in the U.S. for their steel buildings.” Chumley’s email address sent emails purporting to be from Remington. Chumley blamed a former employee for writing the emails and false articles, but the court didn’t find this credible.

In 2010, Armstrong characterized itself as “one of the largest pre-engineered steel building manufacturers in North America,” and stated that “Armstrong Steel is a leading manufacturer of pre-engineered steel buildings and conventional metal buildings for commercial, industrial and religious building projects.” Its website described Armstrong as “the leader in metal buildings and steel metal buildings.” Chumley testified that Armstrong sold approximately seventy buildings from the time of its founding through April 2010.

The 2010 website also said that “[e]ach piece of steel we fabricate is representative of our experience, know-how and cutting-edge technology,” but Armstrong did not fabricate any steel at that time. Likewise, the website stated that Armstrong had an “onsite, environmentally-controlled painting facility” which “applies the finishing touches to every piece of your steel building structure without adding cost to your metal building project,” but Armstrong didn’t have an on-site painting facility, nor was the claim “[o]ur facilities utilize laser precision engineering” true.

Searching “general steel” on Google in February 2010 would likely have produced the sponsored ad: “General Steel Buildings www.ArmstrongSteelBuildings.com Price Your Building Online Or Let Us Do It. Guaranteed Lowest Prices!” By June 2010: “General Steel Buildings Price an Armstrong Steel Building Online in Minutes Or Let Us Do It. www.ArmstrongSteelBuildings.com,” or, just before the lawsuit commenced, “Don’t Buy General Steel Without Pricing Armstrong First. Price a Steel Building in Minutes! www.ArmstrongSteelBuildings.com,” “Before You Buy General Price Armstrong Steel First Guaranteed Lower Prices! www.ArmstrongSteelBuildings.com,” and “General Steel v Armstrong www.ArmstrongSteelBuildings.com Don’t Buy a General Steel Building Without Pricing Armstrong First!”

Once the lawsuit started, Chumley doubled down on the “General Steel” ad campaign, expanding it to Bing and Yahoo because defendants were “in litigation over it” and “may as well maximize.” Later, the search engines told Armstrong to stop using “General Steel” in its ad copy.

Then, Armstrong began directing visitors to its home page to a webpage entitled “May the Best Building Win.” The page continued, “Compare the Two Finest Buildings on the Market Today and Let Reputation and Price Be the Deciding Factors!” General Steel’s corporate logo was on the left and Armstrong’s corporate logo was on the right. Then purported features were listed. Armstrong claimed for itself a “40 year paint warranty,” “40 year wall panel warranty,” “35 year roof panel warranty,” and “Stainless Steel Fasteners.” However, Armstrong customers didn’t receive any warranty documents. Plus, both parties provided steel fasteners for a premium, making that comparison false (by necessary implication). Additional text invited customers to compare the two, and there was a small print disclaimer of any affiliation between the two.

In September 2011, additional language was added using “general steel” in an unusual way, e.g., “Armstrong will Research, Plan and Price your General Steel Materials Construction Project,” “There are a number of reasons why customers turn to us with their multi purpose metal building and general steel buildings project development needs,” and numerous other references to “general steel buildings.” The additional language also included the claim that Armstrong fabricated steel, which it doesn’t.

There was also a website, generalsteelscam.com. Chumley denied that he operated the site, but WIPO ordered the transfer of the site to General Steel based on a complaint filed against Chumley, who admitted to submitting large amounts of content to it. The trial evidence didn’t establish that the content was false, but the court found that his activity on the site indicated that Chumley was committed to damaging the reputation of General Steel. Plus, the court found, Chumley wrote and posted articles online that purported to have been written by two high-level General Steel personnel. The articles supposedly written by one, Jeffrey Knight, indicated that he was the webmaster of generalsteelscam.com (and some also said that he was the CEO/owner of General Steel). Many of the articles indicated that the website allowed customers “who have been ripped off by General Steel” to document their complaints.

The court first analyzed General Steel’s trademark claims based on Armstrong’s use of “General Steel Buildings” or “general steel” in AdWords ad copy, as a paid keyword, and in website text. The court found that Colorado’s unfair competition law was not broader, at least for these purposes, than the Lanham Act.

Defendants argued that “General Steel” wasn’t a valid mark. The court disagreed. The registration was prima facie evidence of validity; Armstrong argued that this was only limited to the full logo. But “General Steel” was the most salient feature of the registered logo mark, and the presumption of validity extended to the words as well. Armstrong didn’t produce evidence rebutting that presumption. Moreover, General Steel showed secondary meaning even though it wasn’t required to do so. Its over $50 million on marketing, using mostly radio ads that by their nature didn’t include the logo, were evidence that it had created an association in people’s minds. Indeed, General Steel was the third most searched term in the metal building industry after generic searches for “steel buildings” and “metal buildings.”

Armstrong’s own use of the term showed widespread awareness of General Steel’s strength. “[I]f Armstrong considered itself a seller of ‘general steel’ buildings, it would not have issued advertisements instructing consumers not to buy ‘general steel,’” but instead used the term to catch potential customers’ attention. Likewise, if “general steel” were a descriptive term, Chumley wouldn’t have created a website called generalsteelscam for a business he was in. Instead, the site described itself as “a worldwide online consumer reporting Web site and publication that allows customers who have been ripped off by General Steel to file and document complaints about General Steel Buildings ….”

Armstrong presented no credible evidence that “general steel” was a descriptive term for the parties’ products. Its own use of “general steel” on its website “demonstrates an attempt to embed search terms in website text, often with awkward results.” But that merely emphasized its targeting of General Steel. The only other documents using “general steel” in that way were the internet articles for which the court found Chumley responsible.

Turning to confusion, the court found no likely confusion despite defendants’ misleading behavior. (Here, the availability of false advertising as a separate cause of action may well have prevented a distortion of trademark to encompass techniques that are in themselves legitimate.)

The court began with the use of “General Steel” and “general steel” in AdWords text. Product similarity and marketing strategies weighed in favor of finding confusion, and of course the similarity of the marks was strong, despite the absence of General Steel’s logo and of the word “Corporation.” However, this use didn’t establish an intent to create confusion. Instead, as demonstrated by the creation of other sites maligning General Steel, the campaign was designed to create contrast, as illustrated by use of the phrase “Don’t Buy General Steel.”

Still, some ads showed an intent to confuse, supporting General Steel’s initial interest confusion argument. The court “suspect[ed] that certain customers may well have been lured to Armstrong’s website believing they were heading to General Steel’s.” They could have easily left, but Armstrong potentially benefitted from General Steel’s goodwill by retaining initially confused customers. But suspicion of initial interest confusion is not enough; proof is required. There was no evidence at trial of actual confusion. Though actual confusion isn’t required, its absence still weighed against finding likely confusion.

Moreover, the degree of care used by consumers “greatly diminishes any initial advantage Armstrong might have gained from improperly drawing people to its website.” Steel buildings are expensive, complicated, and require a thorough consideration of available options before purchase. This decreased the likelihood “that a customer’s choice would be significantly impacted by stumbling across one company’s website before another’s.” Thus, General Steel failed to show likely confusion from the use of “general steel” in ad copy. (Citing Toyota Motor Sales, U.S.A., Inc. v. Tabari, 610 F.3d 1171, 1179 (9th Cir. 2010) (“[R]easonable, prudent and experienced internet consumers . . . . skip from site to site, ready to hit the back button whenever they’re not satisfied with a site’s contents. They fully expect to find some sites that aren’t what they imagine based on a glance at the domain name or search engine summary.”)).

The court noted that Armstrong’s language on its website in September 2011 could potentially have confused a consumer: “Armstrong will Research, Plan and Price your General Steel Materials Construction Project,” and numerous other references to “general steel buildings.” “Nevertheless, this language appeared on a website devoted to contrasting Armstrong with General Steel. In that context, the references are more likely to appear discordant rather than to confuse potential customers as to the source of the product.” The use of “general steel” as a supposedly generic term was intended to further Armstrong’s SEO, bringing it higher in organic results for “general steel.”

But this, and Armstrong's keyword buys, weren’t enough to show initial interest confusion. “Although the appearance of a link in a results list may enhance the likelihood that a user will view the associated page, the user must still make an affirmative decision to select the link. In addition, the connection between the search term entered and the appearance of an advertisement is too attenuated to suggest an actual affiliation between the two.” Given the maturity of internet advertising, it’s much less likely that potential customers, especially sophisticated business customers interested in buying steel buildings, would believe that two companies known to compete were actually affiliated just because of the appearance of an ad.

In an argument Eric Goldman will love, the court rejected General Steel’s assumption that “potential customers entering the term ‘general steel’ into a search engine are searching exclusively for that company, as opposed to executing a broader search for all companies selling similar products.” Given the latter possibility, an overly restrictive rule on keyword buys would destroy the value of search engines. Many of the actual uses of “general steel” in website text “occurred either in the context of a clear comparison or in a context that, while puzzling, was unlikely to confuse consumers as to source.”

Further, even assuming that the few ads that didn’t starkly contrast the parties were enough to support a trrademark claim, there was no basis for an injunction, since the AdWords campaign was discontinued after General Steel contacted the search engine companies, who required Armstrong to remove the terms from his ads. “[E]ven assuming Armstrong desired to reinstitute the advertisements, plaintiff fails to demonstrate that it would be possible to do so or that plaintiff would lack an adequate remedy.” (Is this the first time a court has relied on search engine trademark policies to deny relief?)

Matters improved substantially for General Steel when the court turned to the false advertising claims, for reasons you can probably guess from the facts above. The court found that most of the challenged claims were literally false: that Armstrong was a manufacturer that fabricates steel buildings; that it used an on-site environmentally controlled painting facility and laser precision engineering; that it engaged in charitable endeavors and had significant international demand for its products; that it provided pregalvanized steel and steel fasteners as standard features and that General Steel did not; and that it provided “general steel buildings” and “general steel construction” (note the interesting use of false advertising as essentially a cause of action against genericide by a competitor).

However, Armstrong’s advertising of a generous warranty wasn’t literally false even though it didn’t provide customers with warranty documents. There was no evidence that it had disclaimed warranties, wrongfully denied claims under an existing warranty, or otherwise altered the terms of existing warranties. Even without specific warranty documents, there was no evidence that Armstrong’s representations were insufficient to create a binding and enforceable warranty.

Also, the court disagreed that Amstrong had actionably overstated its size and status in the industry, for example by referring to itself as “the leader in metal buildings.” “Leader” was nonactionable puffery. (Citing David A. Hoffman, The Best Puffery Article Ever, 91 Iowa L. Rev. 1395 (2006)). The greater the buyer’s expertise or the wider the audience, the more likely it is that a statement is puffery. (The “wider audience” thing makes zero sense, but it doesn’t matter here.) “Leading” is like “best”: on its own, too vague for objective evaluation. General Steel didn’t provide a concrete definition of the term against which to measure Armstrong’s claim. “Given the relative sophistication of individuals seeking to purchase steel buildings, the size of the audience targeted by internet advertising, and the placement of these claims within lengthy paragraphs extolling the unspecified virtues of Armstrong, there is no evidence that any consumer did or would interpret these claims as anything more than puffing.”

Finally, General Steel didn’t show that Armstrong’s claim to be an “OEM manufacturer” was false. Armstrong’s witnesses testified that an OEM manufacturer “is an entity that designs, but does not manufacture, the components of the products it sells, and that Armstrong employs engineers to design the components of its steel buildings.” The court found this testimony credible, and General Steel didn’t provide evidence that the term did or would mislead consumers.

On the literally false claims, no evidence of actual confusion was necessary. Separately, the court found an intent to deceive, also allowing the court to presume that deception occurred. Armstrong’s deceptive intent was evidenced by “its persistent use of deceptive means to undermine General Steel’s reputation.” Chumley’s instruction to “maximize” the use of General Steel’s name because Armstrong was already in litigation indicated its determination to target General Steel. (Why is targeting General Steel not just ordinary competition, as compared to the other things Chumley did?) After discovery closed, Armstrong expanded its comparison page to include lots of references to “general steel buildings” and “general steel construction”; Chumley contributed content to the website generalsteelscam.com and falsely attributed articles he published online to General Steel officers, “indicating his commitment to damaging General Steel’s reputation.”

Some circuits have also presumed materiality in cases of literal falsity, but the 10^th Circuit hasn’t ruled on the issue, so the court evaluated materiality separately. The court found materiality as to the literally false statements except for statements that Armstrong engaged in charitable endeavors and had significant international demand for its products. (Also interesting, because statements about a company’s ethics and popularity seem at least potentially material to me, but there doesn’t seem to have been direct testimony about that; note too that the claim to provide “general steel buildings” was found to be material, though I’m not quite clear why.)

Armstrong argued that there was no evidence of injury. The court agreed as to ads that concerned only Armstrong’s own products without reference to General Steel, since General Steel failed to present evidence that it lost customers, revenue, or goodwill, or was otherwise harmed by Armstrong falsely claiming to possess on-site painting or laser engineering facilities. The trial evidence showed that General Steel’s sales began to decline seven years before Armstrong entered the market, driven by the broader economic downturn and the Colorado AG’s action against General Steel.

However, the court presumed that Armstrong’s literally false comparative advertising injured General Steel. Even when a presumption of injury applies, a plaintiff still needs to provide an evidentiary basis showing actual harm to obtain money damages. The three false statements made in comparative advertising (that Armstrong was a manufacturer that fabricates steel buildings; that it provided pregalvanized fasteners and General Steel didn’t; and that it provided “general steel buildings” and “general steel construction”) as part of a pattern of willful deception presumptively injured General Steel. But because General Steel didn’t provide an evidentiary basis for the extent of its injury, it could only seek injunctive relief and disgorgement of profits.

Happily for General Steel, those were both available. As for injunctive relief, loss of goodwill/control over reputation is generally considered irreparable, and a plaintiff has no adequate remedy at law where, as here, a factfinder couldn’t quantify the extent of injury and remedy it through money damages. Plus, Armstrong’s pattern of willful deception indicated a likelihood of future harm absent injunctive relief. The other factors also supported an injunction.

Disgorgement is available under theories of unjust enrichment and deterring future willful violations. It’s most appropriate when damages are otherwise nominal, though actual damages remain relevant, especially given the remedy’s punitive nature and the risk of a windfall. Willfulness is necessary but not sufficient for disgorgement.

The court based its willfulness finding on the following: the major search engines stopped Armstrong’s use of General Steel’s name in its ads, but Armstrong nevertheless issued new ads falsely comparing itself to General Steel and falsely stating that it provided “general steel” buildings. It continued to disseminate its false ads even after General Steel’s WIPO claim against the scam website, “showing that enforcement proceedings are not sufficient to deter Armstrong from disseminating false advertising.” This pattern of willful deception betrayed a conscious desire to benefit from falsity, supporting disgorgement.

Likewise, the level of certainty that Armstrong benefited from its unlawful conduct favored disgorgement, since Armstrong’s rising profits and persistent use of falsity showed that it derived a commercial benefit from the falsity. And it deliberately singled General Steel out as its targeted chief competitor. Armstrong generated the vast majority of its leads through internet sales, “indicating the importance of webpage design and internet advertising to its sales.”

The disgorgement award was limited according to the limited scope of the established violations. To determine profits, a plaintiff must only prove defendant’s sales, and defendant must prove all costs or deductions claimed: profits are presumed to be the result of the unlawful activity and the defendant bears the burden of showing which, if any, of its total sales are not attributable to the unlawful activity. Some degree of speculation is allowed, particularly when it’s necessary in part because of defendants’ poor recordkeeping.

The trial evidence showed that Armstrong earned a net profit of $583,037 in 2009 and $649,232 in 2010, but these were conservative figures because they were based on Armstrong’s own financial statements “without taking into account the possibility that Mr. Chumley diverted profits by improperly charging personal expenses to the company.” Armstrong didn’t show evidence that its earnings were due to other, non-violative conduct. Its comparative ads lasted at least 18 months, from mid-August 2010 to mid-February 2012. But there was no credible evidence at trial of its 2011 or 2012 earnings, so the court awarded its prorated profits during the 4½ month period in 2010 when it was engaging in false comparative advertising: $243,462. General Steel was also given leave to seek attorneys’ fees and costs.

copyright infringement doesn't confer personal jurisdiction; other unfair trade practice issues remain

2013-05-13T07:47:00.001-04:00

Shell v. American Family Rights Ass'n, 899 F. Supp. 2d 1035 (D. Colo. 2012)

In yet another demonstration of the fact that there is no field so small that vicious battles can’t break out within it, Shell sued defendants (including AFRA, of which she was initially a cofounder) for using or copying her proprietary information—mostly the contents of her website—and for related torts. The parties participate in the market for services and information for families involved with child protection services; Shell operated a website at profanejustice.org and claimed copyright over every article, paper, and document published on the site. She licensed her materials, and created a training program based on her trade secrets. Attendees at her seminars were required to sign a noncompete/nondisclosure agreement before receiving the training or training materials. Some of the defendants attended her training program, and, as relevant here, Shell alleged that defendant Swallow took and used the noncompete/nondisclosure form and proprietary information without permission.

The court first found that it lacked personal jurisdiction over defendant AFRA. Though AFRA had members in Colorado and websites “advertised” by AFRA were (available?) in Colorado, that wasn’t enough, absent a showing that these activities were different than those conducted in the other 49 states in which AFRA allegedly had members. Even if AFRA members/a Colorado affiliate amounted to purposeful direction of AFRA’s activities to Colorado, Shell didn’t allege any connection between those activities and her alleged injuries. Shell’s harms arose from publication of her copyrighted works on various websites, but she didn’t show that the websites specifically targeted a Colorado audience, engaged in commercial or other significant transactions with Colorado residents, or otherwise were connected to Colorado.

Shell argued that her Colorado residency meant that her harm manifested in Colorado. But the 10^th Circuit requires that the forum state be a focal point of the tort, and residence in the forum state, meaning that harm is suffered there, doesn’t alone establish personal jurisdiction over a defendant who hasn’t purposefully directed activities at the state. The mere fortuitity of Shell’s Colorado residence didn’t establish specific jurisdiction over AFRA.

The court went on to address numerous other issues, including Shell’s Lanham Act claims against several defendants. Shell averred that defendant Swallow published a number of defamatory statements about Shell, and that the statements were advertisements, but the complaint had nothing more than conclusory allegations that Swallow engaged in commercial activities. At most, Swallow allegedly posted comments disparaging Shell and accusing her of criminal/fraudulent conduct. This might state a claim for defamation, but didn’t plausibly allege that Swallow was advertising her own product or service. Thus, the Lanham Act false advertising claim was dismissed.

Likewise, the state-law unfair trade practices claim against Swallow failed. The complaint alleged that Swallow improperly obtained and disseminated materials from Shell’s training seminar and published unfavorable comments about her on the internet. There were no allegations that Swallow engaged in an unfair trade practice in connection with Swallow’s own “business, vocation, or occupation,” as required, or that her conduct has had a significant impact on the public as consumers of Shell's goods or services.

Similarly, the Lanham Act claim against defendant Henderson was dismissed. The complaint didn’t allege nonconclusory facts to show that Henderson advertised anything, was in commercial competition with Shell, or made any statement in order to induce consumers to buy his goods or services. In fact, the crux of Shell’s suit was that she offered her materials and training in exchange for a fee, but that defendants made them available for free. These activities may have caused Shell financial harm, but didn’t amount to commercial activity by Henderson.

Shell noted that AFRA in the past promoted and advertised her materials when she was a member of the board; offers brochures for anyone to print; publicizes its positions on child welfare issues; and promotes itself as an organization. But none of that amounted to the sale of a product or service. What she called advertisements were “merely disparaging statements about her, apparently posted online or communicated person to person.”

None of the statements were specifically attributed to Henderson, nor were they made in connection with any effort by him to sell a competing product or service. The only conduct specifically attributed to him was his creation of AFRA interactive online groups, used to exchange information, to “offer AFRA fund raising items,” and to promote AFRA as an organization. She identified insulting and allegedly false comments posted on those groups and elsewhere by other people, and her disagreement with Henderson’s advice on child welfare issues. But while those facts might support a defamation claim against the speakers, they didn’t plausibly suggest that Henderson made any false statements in connection with commercial advertising of a competing product or service. (Henderson allegedly made two statements, apparently in communications to other AFRA directors, that he thought Shell had “Alzheimer's or what ...” and that Shell “even went so far as offering to fabricate a sexual harassment case against me because I used to end my phone conversations with the Christian ‘I love you.’”) Thus, the claim against him was dismissed without leave to amend.

However, the unfair trade practices claim against Henderson survived. Henderson was allegedly the founder, board member and former president of AFRA who maintained the AFRA website and set up interactive discussion groups, and he allegedly posted Shell's materials without consent and made nasty comments about her on these sites. Reading the complaint most favorably to Shell, “because of Mr. Henderson's leadership role in AFRA, the allegations could plausibly suggest that his conduct was in the course of his business, vocation or occupation.” Publishing Shell’s materials without consent or attribution and disparaging her professional reputation could plausibly be considered an unfair trade practice. (Dastar?) The complaint alleged that the market for Shell’s services and materials was affected by this conduct, injuring her financially.

Reading list: Koppelman on free speech

2013-05-13T07:15:00.003-04:00

Andrew Koppelman, Veil of Ignorance: Tunnel Constructivism in Free Speech Theory, 107 Northwestern U. L. Rev. 647 (2013) (citations omitted):

Pornographers, Nazis, and other transgressors of the sacred thus form a stable alliance with civil libertarians. This valorization of “sponsoring study-abroad sojourns in the land of fire and brimstone” is peculiar. Most “cultures do not train souls for the ironic contortionism that liberal subjectivity calls for.” Rather, most of the world’s population “cannot hear certain things without wanting to hit somebody.” Free speech is a distinctive cultural formation, and those who would maintain it had better know what it is that they are maintaining.

There’s also a discussion of copyright and the First Amendment.

Twitter as new frontier in appropriation art?

2013-05-10T20:46:00.000-04:00

This person is slowly tweeting every line of The Great Gatsby, in between other tweets. Discuss.

Another twist on music licensing: the re-recording

2013-05-10T10:01:00.001-04:00

Slate's story on re-recordings notes that record contracts often drive the practice, leaving musicians with little incentive to disclose the differences, even when the results aren't the same as the beloved version the listener heard lo these many years ago. Interesting advertising questions result, especially if the versions are often mislabeled, as the author contends.

Revised, lower Kellogg settlement receives preliminary approval

2013-05-09T11:55:00.004-04:00

Dennis v. Kellogg Co., 2013 WL 1883071 (S.D. Cal.)

Previously, the 9^th Circuit rejected a settlement of claims about Kellogg's alleged misrepresentations of the benefits of its sugary breakfast cereals for kids because the settlement had the wrong cy pres beneficiaries and suggested the fees were excessive. Dennis v. Kellogg Company, 697 F.3d 858, 869 (9th Cir. 2012). Here, the court preliminarily approved a renegotiated settlement, while expressing some concerns about it. The original settlement had a $2.75 million cash fund for distribution to class members on a claims-made basis; Kellogg distributing $5.5 million of food products to charities to feed the indigent; Kellogg refraining from using the challenged representations in ads for three years; and approximately $2 million in attorneys' fees and costs, for about $10-10.5 million total. The 9^th Circuit reversed the final settlement approval order because benefiting the indigent, as the cy pres award would do, “has little or nothing to do with the purposes of the underlying lawsuit or the class of plaintiffs involved.”

The revised settlement had a $4 million cash fund for distribution to class members on a claims-made basis, any remaining balance of which will be distributed equally among Consumers Union, Consumer Watchdog, and the Center for Science in the Public Interest. Kellogg would also refrain from using the challenged representations in ads for three years. “Minus attorneys' fees of up to 25% plus costs as well as approximately $550,000 in claims notice and administration costs, the cash value to the class totals approximately $2-2.5 million.”

Preliminary approval is nonfinal, but not a rubber stamp: a judge must ratify both the propriety of certification and the fairness of the settlement. As before, certification was proper given that the elements were reasonably shown to be satisfied. The one hesitation was the dramatic decrease in value to absent class members “while the requested attorneys' fees and incentive awards appear unaffected.” If not further addressed at final approval, these concerns could result in a finding of inadequate representation.

Because the court can’t fully assess many fairness factors before notice and an opportunity for objection, it doesn’t have to conduct a full fairness appraisal before preliminary approval. It only needs to look whether the settlement itself discloses grounds to doubt its fairness or other obvious deficiencies. The proposed settlement here “appears to fall within the range of possible approval, as it appears to be the product of arms-length negotiations by experienced counsel, was reached after considerable litigation and discovery into the asserted claims, and provides considerable cash recovery and injunctive relief.” Moreover, the court was satisfied that the cy pres recipients, “each a well-established and well-regarded consumer protection organization,” satisfied the 9^th Circuit’s rule that appropriate cy pres recipients in this false advertising case should be “organizations dedicated to protecting consumers from, or redressing injuries caused by, false advertising.”

However, the original settlement had about $8.5 million in value to the class, while the cash value here dropped to $2-2.5 million. The court wanted answers to its questions: “How did mere identification of proper cy pres recipients result in such a severe drop in the value of the class's claims? How is it that the value to the class dropped approximately 75%, while requested attorneys' fees appear nearly constant? These concerns are especially troubling given the Ninth Circuit previous admonishments to the parties over both illusory dollar values and excessive attorneys' fees.” This was not enough to defeat preliminary approval, but the court ordered the parties to fully address those concerns in the final approval briefing and hearing. (I suspect the real answer involves Kellogg’s increased willingness to litigate to prevent money from going to CSPI etc., but it will be interesting to see what the briefs say.)

IPKat on trademark bullying

2013-05-08T11:17:00.000-04:00

Discussing an example. Also of interest is this bit, from which I'd remove the word "British": "[explanatory note: it is a well-established tradition, almost bordering on a legal duty, for British journalists to confuse trade marks and copyright at least once in every published news item]."

Failure to attach full ads renders complaint implausible

2013-05-08T08:01:00.002-04:00

Fink v. Time Warner Cable, --- F.3d ----, 2013 WL 1859141 (2d Cir.)

By failing to specify the content of the allegedly deceptive ads, plaintiffs failed to plead a plausible claim for relief under NY and California consumer protection law. Time Warner allegedly misleadingly described its Road Runner internet service as providing an “always-on connection” at a “blazing speed” that is “up to 3 times the speed of most standard DSL packages and up to 100x faster than dial-up” and the “fastest, easiest way to get online.” Plaintiffs alleged that, in fact, Time Warner’s network management techniques decreased the speed of access of certain high-bandwidth internet applications.

A court may determine as a matter of law that an allegedly deceptive advertisement would not have misled a reasonable consumer, as required. Here, the record didn’t contain the allegedly deceptive ads, and their precise formulation and context was pivotal. The court of appeals asked the plaintiffs to supplement the record, and they identified a single ad dated nine months after they filed suit, which contained only one of the four alleged misstatements (up to 3 times the speed of most standard DSL packages and up to 100x faster than dial-up). Given that the complaint purported to quote the offending ad verbatim, it should have been easy to produce. Time Warner, meanwhile, submitted an ad printed from the internet less than a week after it received the initial complaint, which contained at least three of the alleged misstatements, “closely accompanied by multiple disclaimers and explanatory language, including the statement, ‘[a]ctual speeds may vary.’”

The primary evidence in a consumer fraud case based on advertising is the advertising itself, and context is crucial since, “under certain circumstances, the presence of a disclaimer or similar clarifying language may defeat a claim of deception.” Plaintiffs can’t misquote or misleadingly excerpt the language of an ad and survive a motion to dismiss (which suggests that plaintiffs must attach ad texts to complaints before discovery, or at least that defendants will demand that they do so from now on; I wonder what that means for pleading the net impression of an ad, which is the key factual issue). The allegations of the complaint were “materially inconsistent with the sole advertisement Plaintiffs have submitted” and therefore lacked facial plausibility.

In addition, the statement in the ad plaintiffs submitted couldn’t support their claims, because the phrase “up to” would lead a reasonable consumer to expect that speeds could be less than the advertised speeds. Plaintiffs conceded that “up to” was not a guarantee of the top speed

Still, plaintiffs argued that the parties’ disagreement about what documents would be relevant showed that how a reasonable consumer would react was a factual issue whose resolution would be premature on a motion to dismiss. The court disagreed: “this puts the cart before the horse. Plaintiffs brought this lawsuit, and purported to do so based upon the specific text of a specific advertisement. They should not need discovery to tell them exactly what that advertisement said.” (I sure hope future plaintiffs have eidetic memories!)

The Archive of Our Own is one of Time's 50 Best Websites of the year!

2013-05-06T15:29:00.003-04:00

Lev Grossman blurbs it here. The AO3 is a project of the Organization for Transformative Works, a nonprofit well worthy of your support.

Free Expression Scholars Conference, part 8

2013-05-05T14:48:00.000-04:00

Andrea Matwyshyn, Hacking Speech: Informational Speech and the First Amendment

Discussant: Felix Wu

Bomb-making and other informational speech: disclosure of security vulnerabilities. Mixed in with security vulnerability is the issue of code as speech. Courts don’t have great answer on when code is speech; muddied areas put together produce more mud.

Literature on how security works: iteration of discovering vulnerabilities in order to fix them. Notice practices are important. This info is particularly important when only a few people are capable of engaging in this kind of work, and their specialized knowledge leads to real research results.

Proposes weighing four factors: What are the speaker’s own goals (improve security v. enable criminals to exploit vulnerability); what are the circumstances of the disclosure (to whom being conveyed and under what circumstances: security conferences v. selling on market to nonowner of system); scarcity (is this specialized expert knowledge whose dissemination is beneficial or known/knowable information that script kiddies could use); what steps did speaker take to minimize affirmative harms as opposed to potential benefits (particularly contacting owner ahead of time or disclosing it in form that it is easier to understand than to use as an actual exploit).

Where would this test be applied? Constitutionality of laws restricting disclosure; and in criminal prosecutions for aiding and abetting criminal activity.

Wu’s thoughts: Not clear operationally how this works in those situations. A narrowly crafted prohibition on sales to foreign gov’ts would likely survive 1A scrutiny, but what if there’s a mix of characteristics? Which factors are more important/crucial? Hard time coming up with any example of sale to nonowner entity that should ever be permitted.

Is balancing the right way to go? This is very fact-intensive balancing suggested. Reminds him most of multifactor test for likely confusion (and that’s not a compliment)—no one factor is dispositive and it depends on individual facts. Odd to use that as a model for running a 1A analysis. What bad policy but constitutional law would look like: what meets the constitutional floor but would be a bad idea anyway? Reasons for security testing were good reasons, but it wasn’t clear they were 1A reasons (to choose openness over security by obscurity, for example).

Matwyshyn: these are ways to think about intent. Not a balancing test, but not a tally. It wasn’t clear to me which factor if any should be dispositive. Trying to respond to caselaw and the line between speech and commodity.

Sale to a nonowner: wasn’t willing to take a firm stand on because of hot debate in info security community. Not convinced it should be dispositive. The argument is, for example, let’s say the owner refuses to take an interest in fixing the system, and so someone has written the code and is interested in selling it, but is willing to sell it to a nonprofit that wants to fix the system. Vulnerability markets are developing; Google will buy vulnerabilities as part of a norm emerging that you can get paid for your work. Worried about foreclosing that reality. Still, any time you take speech out of the public eye, it does become more dangerous.

Q: nontrivial set of cases where owner’s interests aren’t aligned with public interest. Sale to gov’t—the intelligence community has a kind of startup incubator that sort of does this. Sale to the media—a little more unclear. If there’s going to be disclosure to a party that can force the owner to fix it, that’s probably not the nonprofit directly. But if a media source says it will run a story, the owner may act. But what if they publish “troop movement” analogues in the process?

A: that’s why it’s hard to argue in favor of any one element being dispositive.

Q: to sustain a market, given economic downturns, you have to have a model that allows incentivizing of risky activities (risk of DMCA prosecution, for example).

Wu: law banning all sales to nonowners might be bad policy but constitutional law.

Margot Kaminski: time place and manner usually works as limit on gov’t, not limit on what speaker can do.

A: using that as a reference but not a direct model.

Kaminski: O’Brien: look at whether gov’t is targeting nonspeech elements. Moving TPM analysis to speaker’s intent makes it riskier for speakers to speak in certain contexts, but not clear. Certain forums might die because of a chill either on the speaker or the forum. Robert Post: taking it out of the public forum makes killing a private forum ok. But if the issue is autonomy, speakers should be free to choose a forum. Say that I go to a Communist meeting hall, and that hall turns out to have a history of speakers who actionably advocate imminent overthrow of the gov’t. If presence at the hall is a relevant factor, then I may fear speaking there.

A: so the analogy would be that going to 4chan where you know black hats are is a factor. She’s ok with the speaker pausing longer before being willing to speak in certain forums. Say the speaker has contacted the owner and warned them and been ignored—is the speech happening in a reasonable place?

Kaminski: Brandenburg: likely to produce unlawful action—and the place may be relevant. But if that goes into whether it’s protected speech at all—

A: separating whether it’s speech from whether it’s fully protected.

Kaminski: understands O’Brien differently. Doesn’t think it’s about dual-purpose speech, but rather first looking at whether there’s a particularized message and then looking at whether gov’t is only regulating function rather than speechy elements.

A: Focusing on different elements of O’Brien. This is not a direct reading, but trying to extract its essence.

Kaminski: the theme you extract from O’Brien is the part that placed restrictions on the gov’t and you put that in evaluation of speaker’s intent, and she finds that troubling.

Risk mitigation idea is cool—the community norm is that you should engage in risk mitigation (provide notice, don’t do a zero-day exploit). Does that put unacceptable friction in the speech process, though? That is, is that an acceptable burden on the speaker?

A: yes, but worthy of further discussion.

David Goldberg: Phone hacking scandal in UK. There appears to be some discussion in the tech community that it wasn’t really hacking—reaction?

A: the term, in the US, has changed—hacking used to mean recombining elements in a creative way v. cracking, which was criminal intrusion. Now blending it. Trying to pun on the term in her title.

Goldberg: when you get info but the info per se isn’t published, what is that?

A: that would be intrusion—if used knowingly subsequent to intrusion, we have a different set of problematic issues.

Bryan Choi: trouble w/premise that there’s single use speech—even bomb info has multiple possible uses/purposes. Helen Nissenbaum: contextual privacy—seems similar, where context and intent of sharer matter; breadth of distribution matters; building in protections matters to whether privacy protection is justified. Is that a way to preserve appropriate information flows? Another example: anonymity—we have certain instincts about good and bad uses thereof. Patents too: patents promote disclosure in certain ways; if we don’t allow certain patents, does that implicate the same interests?

A: would think of patent as privilege bestowed by gov’t rather than free speech right.

Choi: but that’s not motivating ban on human cloning.

A: sure, that’s moralistic, and gov’t has said certain inventions are too sensitive. Certainly a normative choice about values being made, but the context embodies different concerns.

Choi: anonymity: do we bar it when we think the person has bad intentions and allow it with good intentions? Cases seem to look at intent, but anonymity is always dual-use depending on what people are using anonymity to do.

A: Prior restraints—limiting access to the speech—are more troublesome than after the fact prosecutions for things like using anonymizing technologies. Scope and scale of damage that could happen in the future is on a new level, so we should be prepared.

Kevin Bankston: concerned that standard systemically disfavors young, inexperienced, amateurs who participate in hacker subculture—assumes access to reputable public forum; assumes that jury will believe that DefCon is a reputable forum (M. says it’s covered by the press making it public and thus favored) when a prosecutor could show jury a lot to convince that it’s disreputable; junior folks can’t get slots at DefCon. Ironically these young people are the ones who eventually become experienced professionals. Scarce specialized knowledge—again, expert v. novice. Disclosure of zero-day by expert v. reuse by novice. Would distinguish use of exploit from publication; wouldn’t otherwise punish publication by amateur.

Standards also favors disclosure of the most damaging speech, to the extent that well-known vulnerabilities are less damaging than unknown zero-day vulnerabilities. Assumes you can meaningfully talk to company; also assumes you have a lawyer, because you definitely shouldn’t talk to a company whose program you have a security exploit for without being worried about being sued or having a prosecutor sicced on you. If you’re not willing to work for free, they say you’re extorting them—we saw that at EFF. Lawyer might help you get the boilerplate statements of purpose, whereas teenager will have more inchoate motivations and be less articulate; may just want to show how awesome s/he is. Ed Felten has a credible track record on his purpose; teenager won’t. This test will therefore disfavor the population most in need of protection.

Wants a factor to way the harm of the speech and the value, though maybe they cancel out—a vulnerability at a nuclear plant is very important to know but also very risky.

A: Admits the approach isn’t perfect. As to novices, there’s something to be said for creating a structure to encourage junior people to talk to senior people and to build an ethic around care. Not a fan of the 16-year-old trying to be leet and dropping zero-day exploits. Should build knowledge that they could cause real harm. Good idea to encourage access to EFF; researchers should be represented by counsel. Companies don’t necessarily have great reporting channels. If you have a track record of attempts to report, cooperate, work with owner of vulnerable code, that’s an attempt at mitigation; creates a record of reasonable conduct that would vote in favor of protecting speech even if there wasn’t successful mitigation.

Bankston: but the primary mode of mitigation you recommend would require obtaining counsel before you speak, because otherwise you can get sued/FBI set on you.

A: that’s why we need 1A protection. If company calls the FBI and starts prosecution, that’s an attempted mitigation that was cut off by the company. (How do you distinguish that from extortion, anyway?) Was the desire to fix the problem or to cause harm? Sensitivity of the information and likelihood of repurposing makes putting a burden on the speaker more acceptable.

Kaminski: helpful to give statutory frameworks to operationalize the intent.

Bankston: if the mitigation attempt is meant to be a proxy for intent, recognize that there are legit reasons not to attempt to mitigate in the way you suggest, given the legal risks you may be taking by attempting to communicate w/the company.

A: another way might be that you wrote the exploit in a way that shows the vulnerability but isn’t the easiest way to cause harm. Types of conduct that could logically be viewed as a form of attempted mitigation.

Ashutosh Bhagwat: several of the factors point in both directions: the publicness of the forum increases the risk of harm; specialization of knowledge also increases the risk of harm; how should a court figure out what’s positive? Understands difficulty with trying to do this, but these factors have strong built in normative assumptions such as the reputation of the forum. Whether DefCon or Wikileaks is a reputable forum depends on whether you think information should be free.

A: look at whether press covers it; whether gov’t goes there to recruit employees—demonstrates credibility.

Bhagwat: credibility to whom? That’s highly subjective. Needs greater defense of your definition of reputation. Understand why you don’t want to measure value of speech in abstract, but when building assumptions about acceptable use of knowledge, not sure it’s possible to fully avoid that.

A: scarcity: drives value of information in markets. But here, info already in existence out there, republishing increases likelihood of misuse for criminal purpose. If your speech is critical new info that could improve a system (or harm it!) you take on a greater risk by being the lone wolf who howls. Often there’s only one person who sees the vulnerability. Many researchers do desire to do the right thing by coming forward; want to create an environment that makes attempted responsibility easier.

RT: how do you distinguish your mitigation from extortion?

A: fact intensive. Call the company and say “you have a problem, I can help.” If they have a track record of being Ed Felten, that’s more credible. If presentation has been accepted at conference—Bankston steps in to say they’ll sue to stop the presentation—but then M. says the info will come to light in the court case—Bankston says it would be more fully into light if the presentation had happened. A: if you deal with a company that litigates, then do something else to minimize possible negative effects of your speech (like what?). Desire to help v. desire to line pockets. (But I’m stuck on the question of why you can’t do both—the “security researchers are being directed to work for free” point is very compelling, it seems to me.)

Piety: in other areas, often see arguments crafted around knowledge of law. Bankston’s concern is maybe some of the most positive work comes from people least knowledgeable of the law.

A: Even if you fail one prong, still have three out of four; err on side of protecting speech.

Christina Mulligan: mitigation and public forum suffer both from heavy reliance on existing reputation of the individual being such a big factor--being Ed Felten is ok, but sketchy people are two hops from Felten. Unconnected/new people will have trouble.

Bankston: overall concern is that, though you want to err on the side of the speaker, you are starting with what the speaker can do rather than with what the gov't can do and you seem to create a default rule that vulnerability speech is unprotected unless you follow a rather specific path, which seems unprotective/chilling. So what should Congress do/not do?

A: not a specific model, but encouraging thought about implications/norms of community.

Free Expression Scholars Conference part 7

2013-05-05T12:33:00.000-04:00

Kiel Brennan-Marquez, Reynolds v. FDA and the Right Not to Speak

Caroline Mala Corbin, Compelled Disclosures

Discussant: Amy Kapczynski: Brennan-Marquez’s case starts with graphic warnings for cigarettes, struck down as inappropriate compelled speech because these images were emotionally laden and not limited to factual information. Thesis: false symmetry between right to speak and right to be free from speaking. Right to free speech is democratic and autonomy, whereas right not to speak rests only on autonomy values. The main payoff: corporate speakers lack autonomy/personhood interests and therefore the tobacco case is wrongly decided. Autonomy as the capacity for conscience: can only be fulfilled by entities that have that capacity; sometimes people who aren’t corporations will not be speaking in a matter that implicates this capacity for conscience as well.

Concludes: only sustain challenge to compelled corporate speech when it constitutes functionally a ban on the right to speak.

Corbin covers the tobacco case but also abortion “informed consent” requirements that make doctors show women ultrasounds, listen to fetal heartbeat, disclose “facts” as well as disclosure requirements (struck down) that pregnancy crisis centers disclose that they don’t provide abortion services. Sets out a four part test for when compelled speech can’t be allowed: chilling speech; distorting speech (introducing falsehoods or misleadingness; it might not be clear it’s gov’t speech; compelling professional speech is commandeering professional credibility in order to have an impact on the speech market); autonomy of listeners—paternalism or exploitation of cognitive limitations to work our biases; gov’ts are allowed to be paternalistic if they’re autonomy-enhancing.

Corbin argues that the cases are all wrong: tobacco disclosures should have been fine; mandatory abortion disclosures should not have been; pregnancy crisis center disclosures should have been fine. Critical moves: gov’t isn’t making false statements in the tobacco context, nor working cognitive biases impermissibly. Courts disagreed with Corbin’s presentation of what counted as “true” in abortion and tobacco cases. Constructed a tortured version of the truth value of the abortion statements, and disagreed about the emotional value of the images—might have to go image by image to decide. Addiction as autonomy-degrading, making intervention on tobacco more justifiable.

Questions: Autonomy, as Post has argued, doesn’t make a lot of sense in the 1A context. Gov’t compels speech all the time—honor code as student; disclosing certain info about patients.

Who counts as a commercial speaker? Commercial speech v. speaker—corporate entity v. person. Corbin argues that corporations can’t have autonomy interests, but Brennan-Marquez may have noncorporations without autonomy interests in speaking because of their roles. So who doesn’t have autonomy? Can a corporation never have an autonomy interest? Are there other collectives that do have autonomy interests?

Compare interests about paternalism: there is a universe of arguments about protecting women from abortion as enhancing their autonomy because the world is pushing them to abort. Why not agree with the autonomy-enhancing structure of the argument, if we assume (as the court did) that the statements required to be made were true.

Corbin: two separate reasons why autonomy isn’t implicated in cigarette disclosures. Corporations don’t have a conscience. Commercial speech is protected for the benefit of the listener, not for the speaker. Might also extend to other entities, though more complicated for nonprofits.

Cigarettes: 90% of smokers wish they could quit; can’t say the same with abortion, that women who want an abortion would be better off without having one.

In terms of manipulating viewers, court’s assumption in smoking case that appeals to emotion were automatically problematic was wrong. Appeals to emotion aren’t automatically problematic—turns on assumption that ideal decisionmaker is completely rational. That’s inaccurate descriptively as a matter of the science of decisionmaking, nor is it normatively sensible. That doesn’t mean all uses are problematic. So when is provoking emotion ok? Distinction between persuasive and manipulative. Not wed to the line I try to draw: appeals to emotion are ok unless trying to exploit cognitive biases—intention to take advantage of systematic errors in decisionmaking.

Brennan-Marquez: using Reynolds as a departure point to conceive of the relationship between different kinds of rights to speak/not speak. Even if a speaker has a right to produce meaning, doesn’t necessarily confer a right to resist meaning.

Compelled physician speech: often runs into issues of what’s factual and not; when the content seems nonfactual and false, it’s not clear we need to reach the analytical question of whether there’s a 1A problem conscripting the doctor—the state lacks any interest in broadcasting false information to women.

To the extent that commercial speakers have a right to speak, chilling commercial speech isn’t the same as a regulation that compels them to broadcast the gov’t message—that begs the question of the shape of the right, so he’s comfortable distinguishing Sorrell.

James Grimmelmann: Analogy between corporations and computers? Entity not capable of autonomy, but used by people to communicate ideas. Operated by single person/small group—when gov’t says you have to disclose commercial ties; the gov’t requires you to place a particular ad in a particular place; the gov’t requires you to advertise ham though it’s a Jewish search engine.

Corbin: it’s not the only question you ask about 1A: chill and distortion and listeners’ autonomy may be implicated even if the computer has no autonomy right to speak. Do you impute programmers’ rights to the computer? That’s a separate question. Legally, a corporation is not the alter ego of the owners. Because we’ve insisted on distinction for liability purposes, it makes sense to say these are distinct legal entities for legal rights.

Brennan-Marquez: compelling speech of the machine seems unproblematic to him. But there’s a difference between compulsion in commercial context that requires carrying gov’t message and invites responses from that commercial speaker itself and the search engine context where speech is zero-sum in a sense. Compelling results first means that the programmer no longer has the autonomy to run its own algorithm. So this is about when a compulsion circles around to constructive prohibition.

RT: I wish I could believe that we can all agree that women who want abortions can’t be told you’d be better off without one, but the concerns expressed are not entirely for their later health, or at least not just for their physical health. Scrutiny of gov’t’s ability to find facts is where all the action is, and where we might want deference unless we can found the scrutiny in some specific constitutional right (like reproductive rights). Many women experience abortion as a regrettable necessity—what makes that different from addiction? Especially since the graphic image isn’t really designed to get the addict to quit—Christine Jolls has a very good paper empirically investigating what the image can and can’t do.

Persuasive/manipulative also impossible to sustain—it’s heuristics all the way down. Look at studies on how risks are presented: presented one way, people pay more attention to the risk, the other way they pay less attention. Which is the persuasive way and which is the manipulative way?

Similarly, disclosures are zero-sum: less package real estate to create the emotional connections the TM owner wants to create, so Brennan-Marquez’s distinction seems unsustainable to me. Reynolds made that very same constructive chill argument.

Corbin: paternalism concern—if gov’t is just requiring disclosures clarifying misleading ads/facts otherwise unavailable, most of us unworried. More uncertain when facts might be persuasive, when persuasive here means trying to make you act in a particular way (as opposed to informing you, presumably with the awareness that it might make you act in a particular way). But not all attempts to persuade are the same. So which are acceptable and unacceptable? Is it trying to persuade you to do something you’d do anyway? Paternalism = gov’t knows better than you do. If soup can ingredients are persuasive—gov’t mandated disclosure lets you avoid soup you wouldn’t have want to buy anyway.

Kapczynski: If you take gov’t facts as true, the fetus does have a heartbeat.

Corbin: but if the gov’t is trying to convince you something you disagree with, that’s the source of resentment—people resent the cigarette warnings too (I think that cuts against her argument). General social consensus that smoking is better avoided (I think that’s also true of abortion in many circumstances, though). Some people may still find the smoking disclosures paternalistic, if their smoking is rebellious. Can’t make the argument that abortion disclosures are nonpaternalistic—there’s no consensus that abortion is always in the worst interests of women. Not all paternalism is problematic.

Kapczynski: so can the gov’t require disclosures that big sodas make you fat?

Corbin: can draw the line in different places.

Some heuristics are more problematic than others. Advertisers are masters at manipulative heuristics. Affective priming. Associate product with preexisting positive association—sell you a toaster w/beautiful toaster v. sell you a toaster by draping beautiful woman over toaster. That latter is exploiting affective heuristic. It’s intentional. Example of exploiting errors that we make.

RT: but that’s b/c there’s no fact-based connection between the woman and the toaster. And there is between the cigarette and the diseased lung and between the fetus and the sonogram.

Corbin: but the wanted pregnancy is different—it’s like connecting the woman and the toaster. Ultrasound has a very particular social meaning in our culture, that is neither inevitable nor universal—it has the meaning of a wanted baby, though not in other cultures.

Jane Bambauer: don’t diseased lungs also have social meaning?

Corbin: the sonogram is not a picture of fetal development, but culturally it is a representation of a wanted baby; heartbeat means life/love. So the attempt is to create the fetus as wanted baby, mapping social meaning onto the fetus—affective priming. To Corbin, that amounts to manipulation.

Brennan-Marquez: Zero-sum: spatial and temporal constraints means that there will be some tradeoff no matter what. But there are lines to be drawn. Pruneyard: giving space to pamphleteers in shopping mall takes up some space that now can’t be used for other messages, but we have conception of information production through time that allows for proliferation of ideas and messages—inherent corrective in way that might not be true of search engine.

Felix Wu: Autonomy of listeners—is that a collective interest or an individual interest? Couldn’t quite see how we connected consensus to autonomy. Maybe cigarettes are easy, but what sort of consensus are we looking for?

Corbin: thinks of it as individual. If gov’t is trying to convince you to do something you want to do anyway, that’s not paternalistic.

Balkin: most schoolchildren aren’t Jehovah’s Witnesses, so can you make them salute the flag?

Corbin: implicates other concerns about forced speech. How do you know when the individual interest has been implicated? Can’t be done on person by person basis, so best alternative is to look for social consensus.

Brennan-Marquez: what if there was a consensus on abortion being bad for women? Would it change your analysis?

Corbin: would still find distortion of discourse—other factors would still matter. State is imposing its own ideology as it doesn’t do for any other medical procedure. (This strikes me as a reproductive rights objection rather than a 1A objection.) Would still be paternalistic even if there was a consensus.

Jason Mazzone: what if the gov’t’s message was “there’s an absence of consensus on the long-term effects of abortion on women’s health”?

Corbin: still thinks that’s wrong.

Mazzone: Congress found it.

Corbin: some of these claims are just made up; others are incredibly misleading. There’s an association between abortion and suicidal ideation—it’s ridiculous to say that this is just a disclosure of a correlation, since no one receives it that way. Claim about you’re taking the life of a whole human being—that’s an ideological statement. Some “facts” are not facts.

Mazzone: so what about “a substantial number of people believe that you’re about to murder a human being.”

Corbin: that’s a factual statement, but that doesn’t make it ok. It’s a persuasive statement, and there are some circumstances where the gov’t shouldn’t be doing that. (But they do a lot with drugs/supplements/etc.—again, this strikes me as an objection founded in the constitutional right to choose abortion.)

Mazzone: this reflects a slipperiness that seems related to normative commitments that show in the paper; thinks it needs more.

For Brennan-Marquez—how do categories of corporations and noncorporations map onto how speech is delivered in the modern context? Who is it you’d allow the gov’t to conscript to disseminate its message? If I write about politics and review products on my blog and there’s an affiliate link and I advertise and I incorporate, can I be required to speak in particular ways?

If you allow gov’t to conscript people, what are the mechanisms to make clear that this is gov’t speech? Should we require gov’t to pay for the ad space?

Brennan-Marquez: distinguish between your capacity as political/expressive speaker and as a commercial speaker. It depends on what kind of compulsion! Gov’t can require you, near your ads for a regulated product, to put the gov’t disclosure related to that product—burdens you only in your capacity as a commercial speaker. We can imagine websites where this is unclear, but it turns on the type of compelled disclosure. There might be some that has quasi-ideological content and quasi-factual. We can distinguish in first instance between you speaking as expressive agent and you speaking commercially.

Kapczynski: incorporation isn’t the key here.

Brennan-Marquez: the corporation doesn’t need a conscience to have an interest in expressing viewpoints. But it can be compelled to speak commercially at least. It’s because there’s commercial speech going on (and therefore not about incorporation?).

Mazzone: the blog that accepts ads is compelled as long as there’s a nexus between the commerciality and the compelled speech.

Brennan-Marquez: yes. That’s the meaningful difference between commercial disclosure and gov’t’s ideological opinion. The test is to ask whether a compelled commercial disclosure is acceptable.

(But what about the unincorporated blogger with affiliate links who gets valuable free stuff in return for reviews? The FTC regulations purport to require disclosure of at least some of her activities. Is that constitutional under this scheme?)

Kapczynski: so a corporate speaker can’t be compelled to speak about noncommercial issues. But it still lacks a conscience. So why does the corporate speaker have some right against compulsion?

Brennan-Marquez: if we’re thinking about compelled ideological disclosure—bloggers have to have a banner saying “guns kill people,” we’d ask whether this was commercial or ideological speech. As compelled ideological speech, does the speaker have a claim to the capacity for and exercise of conscience, and my first claim is that a corporation doesn’t. In blogging, we can tie it back to the human speaking not the corporation. If the gov’t wanted the same mandate on the cigarette cartons, that’s a difficult case.

Kapczynski: but I know that Rachel Maddow’s blog is not just written by Rachel Maddow.

Brennan-Marquez: there are also concerns about audience interest and distortion problems.

Corbin: would encourage disclosure of speaker’s objection to gov’t message—that helps correct distortions in that people trust doctors more than the gov’t.

RT: A fact is a fact. It is not a government fact. The FDA requires certain disclosures about supplements—if you said “we disagree with the FDA” on the label, I would expect some objection. You don’t get to advertise shark cartilege as good for cancer, no matter how much you disagree with the FDA. Compare the classic lawyer advertising case: it would be bizarre to say that the only allowed disclosure is one that says “the gov’t requires us to tell you that ‘fees’ don’t include ‘costs,’ which you’ll be liable for even if you lose.” The problem was that the use of “fees” misled consumers.

Kapczynski: so isn’t there tension b/t that stance that disclosure of gov’t source isn’t required and deference to gov’t in finding facts?

RT: no, it’s just a big gov’t.

Balkin: Nexus requirement? Disclosure should be germane to the particular transaction.

Kapczynski: if you’re an NGO delivering safer sex information, can you be required to give the gov’t’s message that prostitution is wrong?

Brennan-Marquez: esp. in the funding context, might be bad policy, but not unconstitutional.

Leslie Kendrick: regret as a legally significant thing? Kennedy says women’s putative later regret of abortion has constitutional meaning. We don’t do that with the right to vote just because one might regret a vote. Corbin’s argument is that in compelled disclosure it might be relevant; if people regret they started smoking, they might want some disclosures about risks up front. (So then we can further concentrate fault in them and not in the providers of the relevant products/services? This is a really interesting point and I don’t think Kendrick is going this direction, but it makes me think about individualism and the way that we use disclosure to offload responsibility on individuals when the overall conditions are created by social structures.) Regretting abortion in the sense of regretting having the abortion v. having a child they didn’t plan to have or regretting the necessity of the abortion—this is very hard to judge. Even if turns out that women regret having an abortion, that might not be relevant—that might be a good argument for putting an ultrasound on a condom package or a wine bottle, but the abortion is the wrong point to intervene in the nature of the regret.

Corbin: there’s no study showing women regret abortion more than they regret giving birth to an unwanted child. Instead it’s an assumption that women are incapable moral decisionmakers. Can imagine a world in which informed consent for all medical procedures included discussion of nonmedical consequences and moralizing about the nature of the procedure, but that’s not our world. Adding layers for one procedure is reflecting a belief about women’s capacity and a belief that regret would only be natural. (These strike me as further good arguments about reproductive rights, but not 1A rights since gov’t can address different kinds of problems—cigarettes are unique too and that’s often given as a special reason to regulate them.)

Kendrick: open-ended persuasiveness and end-determined persuasiveness. Disclosure is always when the gov’t thinks it will have some impact on decisions. But you want to distinguish where the gov’t wants you to make a particular decision. Gov’t has no interest in what decision you make, but just wants you to make the best decision for you. (But tobacco and abortion disclosures slot into the same end-determined category as far as I can tell; you can tell a story about wanting people to understand the risks before they proceed in both cases, but in neither is it particularly persuasive.) Other contexts like sterilization do define informed consent—reproductive rights organizations were instrumental there b/c they thought it was important to think hard about the consequences of sterilization.

Bryan Choi: commercial speech v. speakers. If artificial entities don’t consciences, commercial speech is directed at the public, but other areas are also implicated—incorporation documents require certain disclosures. 5^th Amendment: artificial entities don’t have a privilege against self-incrimination, also rooted in conscience. Anything can be ideology; if a sale happens to be involved, is that the test about which you’re concerned?

Corbin: there are lots of considerations in compelled speech, such as chill. Interests of speaker are sometimes present and sometimes not. Doctrine is unclear about commercial/noncommercial, fact/ideology. Look at first principles: why do we care about compulsion? Fewer reasons to care with corporation.

Brennan-Marquez: definitely what I’m concerned about. Distinction between types of entities rather than speech is important. The hard case for him: Reynolds being required to put ideological message on cigarette carton. They have no right of conscience to resist this, but 1A is implicated maybe because of the audience distortion if messages aren’t disclaimed as coming from the gov’t. Another problem is constructive chill on the part of the corporate speaker. If FDA says Reynolds can’t put anything on the carton, that is too much. (Plain packaging?) If the amount of disclaiming required to distance the speaker from the message requires too much diversion from the speaker’s own speech, that’s too much—that’s a way to explain Zauderer—it’s much easier to distance yourself/you don’t need to distance yourself since it’s just a factual disclosure. But that means a fuzzy line between ideological and factual/commercial disclosures.

Free Expression Scholars Conference part 6

2013-05-05T10:17:00.004-04:00

Seana Shiffrin, Lying and the Law

Discussant: Jack Balkin

Chapter of book on sincerity and law. The big idea is that the pure lie, the lie whether or not it deceives, whether or not the thing stated is true, but merely a lie in the sense that the person believes/knows her statement to be false, should receive no protection under the free speech principle (which can be distinguished from the 1A). It undermines a particular kind of social practice which is necessary to who we are as a people: a practice in which we say things to each other and believe that others believe them—the warrants each of us gives engaging in testimonial speech. Much social and moral life is based on relying on other people to tell the truth. An economy of warranted representations undermined when people lie, even when what they say is actually true or even when they don’t deceive. Millian argument: lying helps us see the truth—but Mill wasn’t talking about deliberate lying, but rather error.

Coda: on a different set of political values, accommodation: reservations about legal regulation of pure lie that emanate from concerns about equality, fraternity and toleration. Roughly speaking, the notion that we understand ourselves to be fallible human beings who make mistakes. Given that, others are equally human, so accommodation and toleration mean that we don’t demand of others everything we might. There’s good reason to apply this idea generally, especially when people lie about who they are and where they came from. Might not apply when businesses/institutions lie because they don’t give rise to the same considerations.

Key idea: there is damage that lying creates to the collective testimonial framework. Thus the argument that lies don’t harm particular individuals is not relevant, given the structural harm. Not an empirical argument, so the demand for causal proof is inapposite.

So why is it not empirical? If we looked for empiricism, we’d have something like Gresham’s law (bad money drives out good) or Akerlof’s market for lemons, where credibility decreases for everyone. But the nature of the transaction is different—it’s more about the used car salesmen than the cars; you trust everyone you deal with less because of lying. But that’s an empirically verifiable hypothesis about asymmetric information, and there are some conditions under which it works and others in which it doesn’t. If this is instead a deontological claim about moral duties, then it’s puzzling because arguments like Shiffrin’s arguments about counterspeech appeal to effects.

Great argument why these bans aren’t content based under current doctrine. One could argue that defamation law is content based, but if defamation is like Shiffrin’s argument about truth-telling—public discourse is sustained by people’s ability to say things without being defamed (or even privacy is sustained by such an ability)—then it should look content-neutral too. But the doctrine doesn’t work that way presently. What she says about lying has broader implications for 1A law.

Shiffrin says suppressing pure lies don’t violate the free speech principle. But a general antilying rule would invite discretionary/arbitrary prosecution. Maybe civil fines/actions would be more appropriate. Higher proof principles (as in defamation of public figures). Need for accommodation and tolerance too. She produces a set of rules that looks very similar to what you’d get under 1A doctrine: lies generally protected unless there’s individualized harm. Comes out close to doctrine today. So maybe the 1A is not the free speech principle, but rather contains a number of other values along with that: accommodation and tolerance; we already know the 1A concerns state overreaching; etc.

Shiffrin: Not primarily an empirical argument because the core argument is that when people lie they give you a reason to stop believing testimonial warrants, so what is produced is a reason rather than an effect. The damage is not the effect. For the state to act to prevent/express its displeasure at a practice that reduces/eliminates reasons for believing testimonial warrants doesn’t have to show citizens become cynical and disbelieving. When the liar reduces the reasons you and I have to accept testimonial warrants, they put us in a position where we have to gather particularized knowledge about person and conditions under which she’ll misbehave—particular epistemic burden to engage in empirical research rather than accepting each other’s testimonial warrants. This happens whether we know it or not. Either we respond to it or we accept warrants irrationally.

Balkin: but couldn’t Akerlof say the same thing? He’s discussing asymmetrical information.

Shiffrin: yes, it’s a model. The reasons we have to respond to models differ in different contexts. In the economic market, where we are interested in getting goods distributed well, it may be that actual reactions are more important than knowledge. I’m arguing about what epistemic reasons we’re entitled to have and not whether we manage to navigate through the world without adequate reasons because we have other empirical guides to what’s relevant/not relevant. Car market v. moral relations—treating people as other humans rather than anthropological units.

My main argument about counterspeech is that uncovering the truth doesn’t restore the reliability of the speaker and others who supply testimonial warrants, though as to whether the listener is at risk with respect to the accuracy of the content, that will depend on empirical facts. Counterspeech in general suggests we should move from relying on what people say to an empirical investigation of whether they are trustworthy, and that’s an epistemic loss.

Not as confident about extension to defamation law. Because defamation law requires that you show that the speech is false, that’s a form of identification by content and discrimination by content. We don’t seem bothered by that, so why so pressing in Alvarez? She doesn’t think the regulation of the lie turns on actual falsity, but all deception law—which we have a lot of—is content-based if you think that having to show that proposition uttered is false is a form of content discrimination. She doesn’t actually think regulating pure lie is content based, but doesn’t care much unless it involves a certain kind of gov’t effort by intent, effect or targeting to restrict/punish people for engaging with ideas and attempting to engage them sincerely, and content based/content neutral distinction doesn’t always do that work.

1A v. free speech principle—less confident that worries about gov’t abuse are really outside the free speech principle, because they encompass concern for abuse that hinges upon attempts to stifle speech. Accommodation principle is more about acknowledging shared defects in our moral character that happen in this case to be about what we say but don’t have to be.

Vincent Blasi: we have a system of epistemic reliance, but also public reliance on officials. NYT v. Sullivan principle is costly in that way; perhaps the tradeoffs are worth it. But isn’t there a reason to think that the balance is not as lopsided as Sullivan said. Or is there a qualitative difference in the epistemic value of sincerity v. competence?

Shiffrin: duties of accuracy are different. Requirement not to deceive is founded in duty to take care w/r/t each other’s beliefs. When appropriate, ensure what another walks away with is accurate. That’s at the bottom of a lot of defamation issues when they turn on what’s false rather than on sincere representation of what speaker believes to be true. Doesn’t have a particular theory across contexts on how strong duty of accuracy is. Should be fairly strong for press, which represents itself as expert, and have some privileged access that common citizen doesn’t in scrutiny of gov’t. Still comfortable with NYT privilege, though it would still be wrong for the press to abuse it.

Sincerity argument may well extend to political discourse.

Balkin: political lie is more important from the shoring up trust standpoint than the lie about the used car. Response is wariness about partisanship, favoritism, corruption and undermining of fairness. Value comes from democracy/rule of law than conception of free speech. 1A as overlapping set of political/moral/other considerations.

Shiffrin: Agrees that in order to assess whether regulating political lie would be good idea you’d have to look at culture produced by the regulation.

Balkin: you’re about what we owe to each other, I’m talking about culture.

S: we owe to one another a particular kind of culture that stimulates freedom of thought. But we do have to look at culture can have a well-crafted legal regime that won’t undermine free and robust discussion of gov’t. Whether we’re capable of that may vary according to time and place although the underlying principles don’t vary.

There are a variety of different arguments contributing to our understanding of free speech/1A, but less confident that they aren’t principled or capable of principled ordering.

Adam Kolber: why regulation of lying might be content neutral: as I understood it, you said lying was about the relationship to the expression, so two people could say the exact same thing and one is sincere and the other not. The fact that only one is regulated would be a reason to find content neutrality. How to apply to other kinds of attitudes: one person might speak ironically and the other not?

Shiffrin: I’d want to know the motive for regulation. A content neutral regulation can be assessed by target, purpose, and effect. Right to say that the intrinsic relation between speaker and utterance need not be content based though it may be as when identity of speaker determines meaning of statement. Ability to speak ironically is important to express self. But doubts that ability to represent self insincerely is essential aspect of ability to externalize mental content. Might have a problem on effect side as well as purpose side if you’re regulating irony. Why would we care about difference between content based and neutral regulation? Because content based captures main concerns about regulating speech. If I were able to show that those concerns were implicated by irony regulation, that should be enough; not interested in tracking doctrine.

Alexander Tsesis: When a physicist speaks about string theory, they know they’re fudging the numbers because the equations are too complex. When we say the sky is blue, we should know that it’s actually a multiplicity of colors. We say walls are solid but they’re not. Our communications are so inexact, and we trust inexact experts, and we tell our students there are three levels of scrutiny. So what’s a lie? Sometimes we’re insincere even when we know. People expect answers and so we answer despite our doubts.

Shiffrin: the lie is presentation of proposition to be taken as true objectively. But standards of truth with respect to precision vary quite a lot according to who you’re speaking to. Requisite level of precision to students varies from to colleagues, judges, child. When we have that context fixed, may you permissibly represent what you say as true within the standards of the context even when you believe it’s not? My topics are the last part, not the interesting questions of how precision is specified within a context and what happens when people attempt to alter the underlying standards through their speech. If the string theorist speaks in the way she speaks to children to her colleagues, then something has gone terribly wrong.

Zephyr Teachout: Past election, when Paul Ryan repeated that Obama took $716 million out of Medicare. The story is similar to Shiffrin’s: repeating of lies has led to nihilism in citizens’ understanding and acceptance of information, so they make judgments not based on information. If Paul Ryan repeats that in a speech, would you accept a law regulating candidates’ false knowing claims about facts? What if it was specific to insurance companies? That is, what are the implications of allowing context/identity to affect the rules? Could we have different standards for SuperPACs?

Agrees it’s dangerous to bring all values inside the 1A and make the 1A our Constitution, because it tends to put a 1A hurdle in front of anything.

Shiffrin: Doesn’t accept the instrumental reason for deciding whether something falls into the 1A or not. Accepts the idea that overly rigid const’l interp. interferes w/ our legislative freedoms. Thus there should be boundaries to the entire const’l structure. But is less confident that such reasoning applies to any particular provision, especially since she thinks application varies according to social context. Let’s just see where the arguments go.

Putting aside the issue of the facts, let’s suppose Ryan said something he didn’t literally believe but that is subject to contextual better understanding. (Balkin: Obama reduced payments to healthcare providers, and Ryan called this a cut. Dispute over whether this is a cut or savings in services. Ryan also voted for these cuts twice; he liked it except that it was Obama. But he said “it’s a cut.” Shows the molasses of these disputes.) That’s a better example of deception than of a pure lie. He’s culpable for believing it and for believing it’s the appropriate unit of information to transmit, but my argument isn’t about deception. What matters to me is not its falsity but that he doesn’t believe it and represents it as true. Free speech doesn’t bar regulation of that even by politicians; would certainly think business organizations were also covered. Gov’t abuse arguments have more sting w/r/t politicians but how that should go depends more on political culture/barriers we can create to abuse.

David Pozen: not whether we could regulate lies but whether we should. Would have to know a lot more about enforcing prohibitions on lying. Many contexts have strong moral, social, reputational sanctions against lying already. Would want more info on their efficacy before knowing about whether extra regulation would be helpful. Paper deals with costs like potentially sapping intrinsic motivation to be truthful; would we lose anything by not having collective moral response calibrated on the fly about how to deal with lies? Something more than accommodation and toleration may be compromized by legalizing response to lies—deliberative process of figuring out boundaries of acceptable behavior and appropriate punishment, if any, for lies. Something valuable happened in response to Paul Ryan that could be lost if it moved to prosecutorial decision. (I think this weirdly puts lawmaking off the table as a result of a deliberative process.)

Shiffrin: I take my argument to be necessary but not sufficient and take no position on when we should regulate the lie. These conversations are useful too. 1A concerns may get in the way of having a larger discussion of whether we have a problem that the law can address.

Sociologically, we’re not good at taking lies seriously. We’re stunningly casual about accepting that others lie and that we can’t have a healthy political culture. Whether legal regulation would make a difference, not certain that we have to understand legal regulation as taking over/monopolizing our social and moral attitudes rather than reinforcing them. Legal regulation can announce and affirm that we think this is a serious harm that is not merely interpersonal. We’ve seen laws play leadership roles rather than occupying morality and taking it over. Antidiscrimination laws helped to actually give a number of people the ability to make social claims of each other; illegality gave a reason to insist on compliance. But the law wasn’t enough. People had to find ways to manage problems, but the legal expression of the wrong made a difference in helping people accept that this was their responsibility. Look more to that model than to that for pharmaceutical regulation, which is supposed to take off our agendas the question “what can I ingest?”

Leslie Kendrick: Structure of project overall—relationship between duty of sincerity and conception of freedom of speech. Kendrick’s take: sincerity is a moral duty that we all have, and then you’re asking whether regulating lies in the service of this duty can be consistent w/freedom of speech. Freedom of thought seems related to this sincerity requirement—can you say more?

Shiffrin: duty of sincerity is rooted at least in part in political duties to treat one another well, respond to one another as individuals; we need to cooperate to do so, and to cooperate we have to know what others think as they’re willing to share it. Duty of sincerity is essential to the functioning of the economy of epistemic sharing. One of the arguments for it is that our political obligations depend on it. So to freedom of speech depends on those values—to become the kinds of people we have the right and obligation to be, we have to develop as thinkers, and ability to engage in sincere speech is an essential component of that. What underlies the duty of sincerity underlies the duty of freedom of speech, so it’s not shocking that they’re fully compatible even if the duty of sincerity were legal rather than moral.

Would there be an obligation to have a legal duty of sincerity? There certainly are freedom of speech values that depend on sincerity, and we need a full culture of sincerity to meet our duties of justice well. I would turn to specific questions of how regulation functions in a sociological culture to answer whether we need legal regulation. If we can manage w/o legal regulation we have no obligation to legalize it anyway, but is open to argument that law would foster free speech values.

Tabatha Abu El-Haj: are you concerned we’re complacent about lying throughout? In personal relations, we seem quite concerned or at least there are quite varied reactions. But in political culture we’ve reached a place where politicians lie all the time and don’t think they need reasons. Struggling with empirical/nonempirical divide.

Shiffrin: doesn’t mean for paper to rest on sociological claim. One’s sociological views have an influence on whether you think this is a problem or not. Not sure we’re doing well at interpersonal moral level—many people lie casually to friends, to corporations, when they think it’s trivial. When else are they willing to lie?

Meant accommodation argument to apply to autobiographical speech—reasons to tolerate that weakness. But when people take on expertise, fiduciary duties, there’s no political or legal reason to tolerate that.

Q: you can be insincere by asserting something beyond your level of confidence: you can make a testimonial warrant and believe that it might or might not be true. Wouldn’t your principle also apply to that?

Shiffrin: my position on what a lie is does extend to that—if I say “p” but believe “maybe p,” that’s a lie. But because for legal purposes it may be difficult to ascertain level of confidence of belief as well as level of confidence contained in the assertion, she’d make part of the standard of proof an active belief in the contrary.

Free Expression Scholars Conference part 5

2013-05-04T18:54:00.000-04:00

Adam Kolber, Card Counting and Freedom of Thought (earlier version)

Discussant: Seana Shiffrin

Theoretical question: is freedom of thought constitutionally protected only when connected to external expression or intrinsically connected to the First Amendment even if a series of thoughts don’t lead to expression. One approach: prohibitions on card counting. Playing blackjack for money is not an obvious case of expression, but if card counting is protected, then freedom of thought might be protected on its own.

(1) Question of how freedom of thought is to be protected is very interesting, but card counting regulations are coupled with commercial activity, so our reactions may not tell us much about freedom of thought. Though she thinks freedom of thought is intrinsically protected, she’s not worried about prohibitions on card counting. Look instead at state efforts to brainwash people, overwhelm capacity to think through for example excessive noise. Not coupled with other forms of regulable activity. So why not start with purer cases?

(2) Is there a free speech/thought problem with card counting when an activity is regulable, and a thought is an intention, component, or means to the external activity, the mental activity when conjoined with the external activity can be regulated: insider trading, for example, which involves use of info. Enhanced penalties under hate crimes statutes, where assailants used discriminatory motives as means of picking victims; other uses of mens rea in tort law. Freedom of thought does require vast protection for mental attitudes, but not the same opportunity to form active intentions and reveal them in ways other than through expression. Citizens are free to count cards, but not while and in order to place bets. Keeps the game fair as the state understands fairness.

(3) likes the proposed test that if a regulation on voiced expression would violate the 1A then a regulation on the thought would do so. But if you vocalized your count you’d be no more protected than if you silently counted. Nor would you be more protected if you told people you were using privileged and confidential info when buying stock. Nor would a pedophile on probation be ok if he told children that he was fantasizing about them because they were nearby. The problem is the use of mental activity in pursuit of something else, the latter of which renders it amenable to regulation: conjunction of thought with activity; kind of thought involved (intention, use of information) rather than mere attitude or belief.

Does share intuitive resistance to card counting regulations. Maybe an error theory would help. Not freedom of thought so much as inchoate ideas about fair conditions of gambling. If blackjack is luck plus skill, seems unfair to bar gamblers from using as much skill as they can acquire, especially if anyone can develop that skill (compared to insider agreement). Behemoth casinos already enjoy a protective advantage on the odds. As a political matter, no one’s hands in gambling are clean; gambling is corrupt and addictive; gamblers know they’re supporting such establishments. What most are trying to do is take money from other gamblers without productive activity. It’s regressive redistribution. If gov’t wants to insulate casinos, that’s typical unjust corporate subsidization and inequality. But that’s not about freedom of thought.

Kolber: why not brainwashing? In part because it’s relatively rare, whereas gambling is prosaic/everyday. 1A should have principled stands.

Suppose we made it a crime to increase your bet based on the attractiveness of the dealer. This still seems like a certain kind of thought/content discrimination, even though it’s conjoined with a regulable activity of betting. It wouldn’t penalize you for increasing your bet out of pity or for some other reason. Presses our buttons about thought censorship. (But this is just Wisconsin v. Mitchell, as Shiffrin pointed out.)

Insider trading: restricting information v. methods; is that a meaningful distinction? Blackjack: gov’t does enforce the idea that certain cards are face down and you aren’t allowed to cheat to ID the dealer’s face down card—certain info is off limits, just as insider trading is.

Mens rea in criminal law—maybe this isn’t difference. Example of NASA engineer who realizes that space shuttle will explode and doesn’t say anything—is he liable? Punish him based on knowledge that he had. Sleeping in the park as protest—maybe that is also relevant.

Why we might not like card counting: we can throw lots of reasons into the bucket, nonexclusively. To the extent that we can say these are low value laws, we might say all the more reason to worry about freedom of thought infringements. Restrictions on ways consumers are allowed to process advertising would also be problematic.

Shiffrin: theory of free thought can distinguish attitudes and beliefs from intention. If you think there’s a speech/action divide, look at the counterparts in thought itself.

Card counting is commercial activity, not commercial speech. Regulable under rational basis.

Kolber: does that distinguish the regulation of bets based on dealer attractiveness?

Shiffrin: that’s just a standard antidiscrimination law.

Q: is such regulation of thought even possible?

Kolber: you can tell whether someone is engaging in card counting by looking at the pattern of their bets. Someone who moves from betting $5, $5, $5 to $500 is basically certain to be counting cards. Key to what gov’t might do in the future with brain scans.

RT: (1) On gambling: Everyone should read Natasha Dow Schüll, Addiction by Design: Machine Gambling in Las Vegas. (My review.) Just tangential here—has more implications for some of the other topics today, about expression via algorithms and the uses of big data, as well as for how we conceive of the autonomous (automaton?) individual when faced with certain kinds of feedback/enticements; discusses also the line between deception and letting oneself be deceived.

(2) Small point: from the paper: “suppose a blind person wants to hire someone to tell him what cards he is dealt. A state law prohibiting such assistance would not only offend federal disability law, it would also offend the blind person’s First Amendment interests.” Sadly, we don’t need a hypothetical: that’s the DMCA. Might look at that where the thought is not allowed to become expression, at least not if it’s done through technical means. (DMCA/CFAA is also relevant to restrictions on ways consumers are allowed to process information—debate on whether ad blocker software is legal.)

(3) The NASA engineer—compare short sellers and repeated attempts to ban them. (Shows rarity of thought regulation where the thought is not conjoined with action, whether expressive or not.)

Kolber: there’s enough expression in blackjack that banning communication with a blind person about the cards would implicate the 1A.

Suppose all freedom of thought did was allow you to have thoughts: you could never act on it without fear of prohibition. If gov’t were able to so restrict your life that your thoughts could never affect your conduct, that would be troubling from an autonomy perspective. It can’t just be thoughts in your head.

Kristelia Garcia: ok with not allowing counting devices as unfair advantage, but the power of the mind is like the power of short-twitch muscles—if you have it, you shouldn’t be restricted from winning, even if steroid use can be banned.

Action v. thought: if you were counting cards to make money, that’s different if you’re counting cards to show corruption in the gambling industry.

Kolber: speeding as a protest to speed laws doesn’t generally get you out of a ticket.

David Thaw: still strikes me as observing thought at most, regulating based on action. True that thought alone shouldn’t be the only thing that’s protected. But say you had to pass an emotion test before being allowed into a venue with children. Just because you had a desire for children doesn’t mean you’ll act on them. The fact that you fail the test without acting sounds more like regulating thought than this.

Kolber: this is not as sci-fi as it sounds—neuroscientists are now saying they can determine sexual orientation. (Of course this relies on a highly particular and historically contingent definition of sexual orientation!)

If you buy into Doe v. City of Lafayette, the 1A prohibits punishment for pure thought. Could ask whether that has to be criminal. May also be a substantive due process claim.

Rebecca Bolin: table talk is prohibited by regulation. That’s the rules of the game (even for people who aren’t playing if they reveal others’ cards). You also can’t speak in other languages. Could be criminally enforced.

Kolber: one way to burden thoughts is to connect it to some activity. Gov’t can’t prohibit you from fantasizing about killing the president while playing checkers—no nexus. But Doe allows gov’t to prevent pedophile from going to a park where there are children and fantasizing.

Leslie Kendrick: discrimination in action will be regulable even if it’s coupled with protected thought. Consider other examples: contrast two tax evaders, like card counters. The harm is denying revenue to the gov’t (rather than the house in the casino). One blatantly lies on the return. Another, looking at the tax code, figures out a clever but not kosher way to deal with his income, requiring a lot of thought. Is there any difference between those two for freedom of thought purposes? The person who develops an elaborate scheme for murdering someone v. someone who just uncreatively pulls the trigger. It doesn’t matter how much thought; it matters that they used thought to achieve a harmful end. (Indeed, the elaborate one might be more punishable because of the possibilities of greater harm/nondetection or because of the moral opprobrium attached to deliberate, unheated violation of the law.) That doesn’t threaten freedom of thought—you can think elaborately without state intervention. This isn’t a massive constraint on freedom of thought precisely because there’s a harm principle.

Kolber: what makes card counting a harm is not winning $400, but the thought process you engaged in to get to $400 win on this particular bet. That distinguishes it from murder, where the dead body is still there no matter what the thought process, which only bears on level of culpability. But it only constitutes a harm if you counted cards.

RT: now you’re making me think of trademark dilution, where the alleged harm is that people will start to think differently about a trademark and value it less. Someday they may act on that by declining to buy the trademarked good, but we punish the diluter now to avoid the risk of action later.

Bolin: computer-enhanced thought—banning gambling devices versus banning thought. Casey Anthony sued under the ADA to get a golf cart—Scalia’s dissent was that it was wrong to force golf to change its rules. Relevant to the question of who gets to set the rules of the game, especially when the rules are incorporated into the criminal law as with gambling.

Breaking Vegas: a computer that watched roulette balls and learned to bet within quadrants. Mobile computers didn’t necessarily enhance thoughts but did tell people how to bet.

Kolber: gov’t doesn’t usually enforce rules of game. When can something get 1A protection when not technologically assisted but lose it with tech assistance, as with overhearing physically v. using a directional microphone? But handwriting v. speaking v. printing doesn’t get a distinction on the right to communicate what you’ve learned. So we need further thought on the device rules.

Shiffrin: psychiatric commitment. When people are interviewed about being committed, they’re asked about suicidal/homicidal thoughts, not behavior. Delusional ideation: questions about mental activity. Profile of reported mental activity can be sufficient reason to commit a person in some jurisdictions. Also relevant to competence to stand trial or control one’s own business affairs. So we do have practice responding to thoughts alone.

K’s argumentis that the meaningfulness of free thought requires a way to implement that thought. We agree that it must be implementable through external speech. Environments like association and relationships should also be protected. These are places that foster the freedom of thought. But implementing thought outside of expression isn’t an entailment of the First Amendment. Parallel claim: for free speech to be meaningful, you have to be able to implement what you’ve said. This is not a rule that we are likely to adopt outside of other constitutional protections that secure certain kinds of freedom of action.

Shiffrin: look at the very interesting cases about fortunetelling. Commercial speech doesn’t lack for protection; can also discuss the protection for speech in commercial contexts.

Kolber: if gov’t tried to prevent use of devices at home to count cards, would think that violated the 1A. (I’m not sure I get that, other than that the harm principle would not apply.)

Free Expression Scholars Conference part 4

2013-05-04T16:46:00.001-04:00

Stephen Feldman, Free Speech, Democracy, and Political Conservatism: Two Ironies of Conservative Free-Speech Jurisprudence

Discussant: Vincent Blasi

Rough periodization of US democratic culture: Civic republican democracy gave way in the New Deal to pluralist interest group democracy; less focus on the common good but also more participation of people who were excluded from the earlier concept of republican democracy and defined out of the common good. After WWII, gave way to consumer democracy—pluralism became more economic and pursuit of one’s self interest was further legitimated and elevated. Now: Democracy, Inc. characterized by political dominance of large, often multinational, corporations.

Interest in understanding modern conservative jurisprudence. Claim is that democratic culture developments impact conservative thought, which then affects conservative jurisprudence. Thumbnail: these developments led to a reaction. New Deal/inclusiveness was a defeat for conservative thought; reaction took two different forms that Feldman says are in tension. Traditionalism: call for moral clarity, but also libertarianism: an unsteady coalition.

If you think of the bad tendency test as about harm control, it wouldn’t necessarily follow from civic republicanism, but if you think of it as a deliberately nonempirical test allowing you to bring in claims about harms such as moral harms or diminished patriotism, it’s not too much of a stretch to ID bad tendency test with the claim that gov’t should have the authority to regulate speech to advance moral values or police for heresy/regulate ideas as such. It’s a huge move to go from that notion to saying that you can only regulate ideas when properly linked to harm; something we take for granted today. Feldman identifies this with the move from civic republicanism to pluralist interest group democracy, which has no fixed limits to the size or scope of gov’t; politics is about deciding and remaking the role of gov’t.

What does consumer democracy add? Feldman’s claim is that it takes the idea of legitimating self-interested political behavior and gives it more an economic spin—not just competing visions of the good society, but me first. This evolves into Democracy, Inc. where small business no longer plays a significant role, nor does individual consumer choice from a wide range of truly different options. Much greater dominance from large economic units, and more attention made feasible by their size to entering the political marketplace.

Kennedy campaign was qualitatively different in use of modern PR techniques to win an election; never been the same since. Democratic microtargeting for Obama was a reason (the reason?) he won. Whether you’re happy with that or not, it’s part of Democracy, Inc.

Feldman is troubled by the effect on conservative thought. Strong reaction to the New Deal. If your focus is the SCt, the immediate period of New Deal dominance doesn’t involve conservative Justices. Would like to see more evidence of conservatives being interested in civil rights, as Feldman suggests. Cold War: traditionalists sought moral clarity and viewed it as a war of ideas; libertarians hated communism as big government. Tensions weren’t exposed during this period.

Consumer democracy: Feldman misses opportunity in that consumer democracy poses a real challenge to aspects of conservative thought; ancient values are threatened. Maybe the answer was that conservative thought was still fighting the Cold War and didn’t turn to these kinds of issues. In the 1970s, you get conservatives on the SCt. Harlan as voice of conservatism? When Harlan writes Cohen v. California and Bork excoriates him, is that a clash of traditionalists and libertarians? Are they having an argument about how good citizens are made?

In Democracy, Inc., conservative thought has to realign around the values of new multinational corporatist economy, legitimating acquisitive liberty (aka license?). Many conservatives no longer fear bigness, comfortable with dramatic inequalities of wealth and of political power as part of the free enterprise system. Holmes too was like that, not afraid of bigness.

Criticism: where is social Darwinism in this story in the late 19^th century? Beginning of most powerful 1A metaphor: competition, red in tooth and claw, now for ideas too.

Not confident on the chronology. Feldman identifies pluralist interest group democracy with the New Deal; perhaps New Deal was culmination, but important developments occurred in WWI, long before New Deal—that’s where the opinions we start our 1A courses with come from. Open-ended embrace of possible goals of/size of gov’t as an important move leading to Brandeis/Holmes concepts of free speech.

Change of size matters: many of the earlier concepts aren’t feasible with a big country. Various efforts to get people to listen to you/attract attention—whether it’s flagburning, or spending zillions, or taking to the streets—all of that is because it’s harder to attract attention now than in a classic New England town meeting.

Conservatives wouldn’t agree that they were trying to strengthen democratic processes, so it’s not problematic to strengthen the power of bigness. So they wouldn’t agree that there was any irony in Democracy, Inc. Another irony that Feldman identifies: conservatives found moral clarity in profit-seeking. No version of serious conservative thought is about monism. But acquisitive liberty is a recent development; hard to embrace that as a matter of moral clarity, but conservative thought has evolved to genuinely admire those whose liberty is in acquiring wealth. Also limited gov’t is raised to the stature of a moral principle, not an instrumental one. That’s also something new in conservative thought. Third, disdain for compromise. Pluralism is all about compromise. Theoreticians of interest group politics like Dahl, Boorstin, Dewey are about accommodating and getting along. Modern conservative thought in quest for moral clarity has disdained compromise. Formalism/textualism has the same quest for certitude.

Where this all leads: the tension the paper begins with between the call for moral clarity and the call for liberty is not as acute. If you find moral clarity not with religion or ancient ethics, but in legitimating/leveraging wealth and limited gov’t, moral clarity and libertarianism coexist, so there’s less reason to expect implosion in conservative thought.

Feldman: doesn’t think of eras as completely separate—pluralist democracy is the major transition, which then evolves in reaction to cultural/economic changes, just as civic republican democracy had evolved before as the conception of the common good changed. Social Darwinism was another way to think about virtue and the common good—more racial thinking in late 19^th/early 20^th century where races were associated with virtue.

Q: distinguish between a history and some other form of argument. The conservative Justices now don’t all have the same beliefs. Alito seems to vote against speech he finds outrageous.

Tamara Piety: would like to see more exploration of why Rehnquist was such an exception not just on commercial speech but corporate speech in Belotti.

Q: another strain here, not conservative per se but Hobbesian that celebrates acquisitiveness. Hobbes isn’t pro-democratic. So the Hobbesian turn in conservative free speech doctrine (e.g., Kennedy) doesn’t recognize its own tensions with democracy.

Q: moral clarity: US v. Stevens; Alvarez; Snyder v. Phelps; Brown v. Entertainment Associates—fervent conservative splits on issues associated with moral clarity. Golan v. Holder as striking counterexample of minimal speech protection; similar to strong federal preemption holdings—not small government when it protects big corporate power.

Q: discuss the Chicago School more—important to the transition in conservative thought, but not a single one makes it onto the Supreme Court, probably because of the influence of moral conservatives. Kennedy v. Posner: a completely different type of conservatism; a particular kind of conservative libertarianism never made it to the SCt.

Q: different irony: acquisitive liberty is inconsistent with much conservative Christian thought. Tension between social conservative cause lawyers and economic liberty cause lawyers. Irony of Citizens United: promotes liberty but diminishes moral clarity of the morality that this group supports.