Trademark, Copyright, Advertising Law Madness

Fight WikiLeaks Case in Court, Not Cyberspace

2011-01-06T08:31:00.000-08:00

By Jim Astrachan and Eric B. Easton

If WikiLeaks founder Julian Assange conspired with Bradley Manning to acquire and disseminate classified government documents, the United States should indict, extradite, and prosecute him. But the United States government should not use extra-legal means to coerce or bribe American companies into withholding services from WikiLeaks.com as long as that organization’s First Amendment right to disseminate information remains an unresolved issue.

To be sure, we don’t know whether the government has pressured PayPal, Amazon, DNS.net, and others to sever ties with the rogue web site WikiLeaks.com after it began disseminating classified State Department cables. The White House has refused to comment despite reporters’ requests to clarify widespread speculation.

We do know that, whatever prompted those Internet service companies to drop the controversial site, the United States government now has egg all over its face. Not only did WikiLeaks activate dozens of mirror sites around the world, but other radical transparency advocates launched denial of service attacks on the American companies that couldn’t or wouldn’t take the heat. And it didn’t take long for the mainstream media to dig up a recent speech by Secretary Clinton praising the Internet’s ability to help people discover new facts and make governments more accountable.

But the matter of extra-legal coercion goes beyond its ineffectiveness or the government’s hypocrisy regarding the Internet. Where First Amendment issues are involved, such conduct by the government is just plain wrong.

At this point, we do not know for sure whether WikiLeaks broke any U.S. laws, at least any that can survive constitutional scrutiny. Attorney General Eric Holder has repeatedly said the Department of Justice had undertaken a major investigation, but no charges have been filed at this writing. Allegations of sexual misconduct in Sweden by WikiLeaks’ Julian Assange and extradition proceedings in London have bought Mr. Holder some time, but sooner or later he will have to come up with specific charges.

The last time the Department of Justice tried to use the Espionage Act to prosecute a “middle-man” like Assange – the late AIPAC prosecution – the case blew up in their faces. Receiving “stolen” property has long been held inapplicable to information, where the owner is not deprived of the property. And copyright infringement analogies suggested by some are certainly inapposite where, as here, there is no copyright.

Still, there may be a viable case against Assange. Perhaps there is evidence that he solicited the information or provided the necessary software, or perhaps the laws protecting national security information do constitutionally reach disseminators like Assange.

If the government truly has a valid cause of action against WikiLeaks because it violated the law, or because the Nation’s security is at stake, it should pursue the case through the courts, not start a surreptitious cyberwar that it should not and probably cannot win. Such tactics may be acceptable to frustrate Iran’s nuclear weapons program, but not to chill what must be described as protected speech until found otherwise.

If the government does take WikiLeaks to court, though, it must be mindful of the Pandora’s box it may open. For example, some commentators have gone to great lengths to distinguish WikiLeaks from its mainstream outlets: the Guardian, Der Speigel, and The New York Times. Journalistically, they are very different. These mainstream publications routinely exercise editorial judgment and, presumably, restraint. Well established communication channels, not duress, can mitigate serious security leaks.

But the New York Times and WikiLeaks.com are exactly the same under First Amendment law as we know it. When Daniel Ellsberg of Pentagon Papers fame was prosecuted under the Espionage Act, the government opted not to pursue the Times and The Washington Post. But it might have, according to some of the separate opinions of Supreme Court Justices, who collectively refused to enjoin publication. The Ellsberg prosecution was ultimately scrapped when the White House plumbers were discovered, and the Espionage Act dodged a modern First Amendment analysis.

In any event, the Supreme Court has repeatedly found that the press’s right to gather and publish information is the same as yours or mine or Julian Assange’s; the state cannot punish us for publishing the information unless we break the law to acquire it. Does national security information stand on different ground? We don’t know, but a successful prosecution of WikiLeaks.com for publishing national security information that it acquired legally could open the door to prosecuting the Times for publishing all the national security leaks it gets on a daily basis. Our concept of a free press would surely be jeopardized.

Freedom of speech is one of our most sacred and important rights, particularly where that speech involves the press’s gathering and reporting news about governmental activities. Should the government attempt to take WikiLeaks to court over these embarrassing, and even harmful, publications – at least without evidence of complicity in the leak – that right could be compromised. Still, it is better to raise this issue in open court than to attack freedom of speech by the back door.

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This commentary ran in the December 27, 2010 issue of The Daily Record.

So Sue Me, Hon!

2011-01-06T06:59:00.000-08:00

The recent revelation that Café Hon owns the trademark HON has stirred controversy among persons who think HON belongs to the residents of the City of Baltimore and should not, or cannot, be monopolized by one entity for its commercial gain. What’s a “Hon”? And does Café Hon have the right to enforce its HON trademark? Definitions of Hon abound because of its common and well-known usage. The Lexicon of Bawlamarese (How to co-moon-icate wiff the natives), defines Hon as “The universal name…Like Sir, Ms. ..interchangeable with any name.” My usual waitress at the Sip-n-Bite emporium of fine dining has been calling me Hon for six years. She has no idea of my name, nor does she care. We are all Hons to her, regardless of age or gender.

Wikipedia defines “honey” with a tip of its hat to Baltimore. “…’Honeybun’ and the abbreviation ‘hon’ has become a term endearment in most of the English-speaking world…In…Baltimore, Maryland, [Hon] is used when addressing casual acquaintances or even strangers.” A visitor to World Reference Forums opines that, “I am fond of terms of endearment and use them cheerfully. I call most of my friends hon, honey, sweetie, dear, anything like that…”. English-Test.net relates that “The short form of honey is hun, or sometimes it’s spelled hon.”

The Culture of Baltimore Wikipedia adds, “Between the 1950s and 1970s, it was common to see working class local women dressing in bright, printed dresses with outdated glasses and beehive hairdos…Hon (…an abbreviation of honey) was a common informal name for someone else.”

The hon culture predates Café Hon, the restaurant in Hampden that has obtained federal trademark registrations for CAFÉ HON and simply HON. John Waters has extensively and with accuracy parodied Baltimore’s hon culture in movies like Pink Flamingo and Hairspray. Even the most cursory Internet search reveals that there are many, many other references to Hon and Hon with reference to Baltimore. The Welcome to Baltimore, Hon! website celebrates all things Bawlamer, and dedicates its title to the Hon, indicating, perhaps, that there is no other word that best describes Baltimore.

The owners of Café Hon have properly registered the marks CAFÉ HON for restaurant services. Mention Café Hon to most Baltimoreans and that quirky restaurant in Hampden comes to mind to the exclusion of all other cafes. That’s what trademarks are intended to do – they designate a single source of goods or services to consumers because they are distinctive. But Café Hon has also registered the mark HON for use with retail stores, paper goods and the like. My first objection to this registration is that the word is hardly distinctive, is generic and generic words can never serve as trademarks. HON should not serve to describe the source of gift shops or paper napkins – it describes those ladies in bright glasses with out-of-date glasses and beehive hair does. It describes that waitress at the Sip-n-Bit who plops down the pie and calls me “Hon” even though she doesn’t know me. It describes the culture of Baltimore in one word and unlike apple and APPLE computers, ivory and IVORY soap, or shell and SHELL petroleum, Hon belongs to all of us because it is a part of our culture and the city in which we live. We use the term in so many ways, and so frequently, that it can never serve to designate a source of napkins.

HON should remain in the public domain where it was born, discovered and cleverly exploited by Café Hon. Granting to Café Hon a monopoly over the word, even if used with stores and napkins, is the equivalent to removing the word from the public’s use, risking that each time a person uses the word, commercially, he or she would be improperly subjected to a claim of trademark infringement regardless of how the mark is used. Evidencing that this is a real risk is the recent report that Café Hon “allowed” the Maryland Mass Transit Administration to use HON (not CAFÉ HON) on ads but insisted on creative control as if it was the owner of the word, which apparently it thinks it is.

The only way that a generic term can be elevated into trademark status – that is, it comes to mean the source of the goods – is through a radical change in how consumers perceive the use of the word. Given how popular Hon is in this town, it is highly unlikely that, despite Café Hon’s efforts to the contrary, Hon will ever come to mean other than the universal name, the abbreviation for honey or a way to address casual acquaintances.

My second objection is that the HON mark is very weak. If a trademark challenge occurs and a court is not inclined to find that Café Hon’s use of the HON mark is generic, it will still understand that all marks are not equal. Some are strong and they enjoy the highest level of protection. Some are weak and they receive little protection. Strength is measured by consumer perception. Weak marks are relatively unknown or very much like other marks, or words, already in use. They exist in a crowded field. A weak mark does not identify goods sold under the mark as emanating from a particular source. The word HON is in the lexicon and as such it is in common and frequent usage. It will be very difficult, if not impossible, for HON to achieve the status of strength that allows protection of it as a mark.

Finally, the use of HON to adorn napkins and shirts may be inconsistent with a trademark’s role as an identifier of source. Instead this use of a word to enhance a product may be seen as functional and as a product in itself. Trademark law might not protect such a use.

For the same reason that Ninth Circuit Justice Alex Kozinski quipped in his introduction to an opinion some years back, “ no one can tell me I can’t put a BAND-AID on a problem”, no one can tell me I can’t use HON in any fashion I please. The word is not entitled to the grant of a monopoly or protection – not in this town, anyway. As the bumper sticker reads: “So Sue Me, Hon”.

___

This article ran in the December 20, 2010 issue of The Daily Record.

Dilution By Common English Words (Visa Int'l Service Ass'n v. JSL Corp., 610 F. 3d 1088 (9th Cir. 2010)

2010-11-03T13:50:00.000-07:00

In late June 2010, the 9th Circuit Court of Appeals issued an opinion written by Chief Judge Kozinski affirming the trial courts' decision that a common English word, eVISA, could dilute the famous VISA credit card trademark. eVisa was being used by appellant JSL for a multilingual education services. JSL argued that its eVisa mark could not dilute the VISA trademark because visa is a common English word meaning a travel document that authorizes the bearer to enter a foreign country and as a result VISA's use of this common word could not be distinctive as is required under 15 U.S.C. §1125(c).

The Court disagreed with JSL but its opinion took pains to distinguish fanciful trademarks from those that are common English words for purposes of applying the dilution statute as follows:

When a trademark is also a word with a dictionary definition it may be difficult to show that the trademark holder's use of the word is sufficiently distinctive to deserve anti-dilution protection because such word is likely to be suggestive of an essential attribute of the trademarked goods. Moreover, such a word may already be in use as a mark by third parties.

To be diluted the mark must be both famous and distinctive. A non-distinctive mark can not be diluted and it is likely that a common English word used as a trademark will not be considered distinctive if others have adapted that word, which is likely in the case of these common words. Thus, if there are other uses of the mark, dilution by blurring is unlikely because the mark has not been associated with only one product and the new use of the mark is not likely to evoke in the minds of consumers an association with only one other product.

The Court held that although VISA, as used by the credit card giant, was a common dictionary word, its use of VISA was sufficiently distinctive "because it played only weakly off the dictionary meaning" of the term visa. It also held that the significant factor is not whether the word is a common word, but instead whether the use of the word VISA by the credit card issuer was sufficiently unique to warrant trademark protection. The Court explained "there are many camels but just one Camel [cigarette]; many tides, but just one Tide [detergent]...".

Although there is widespread use of the word visa for its common English meaning, e.g. Fred's Visa Service, JSL did not use visa for its common everyday meaning and as a result there were now two products in the market named VISA, the Court having disregarded the "e" as being meaningless to distinguish the two marks.

The Court patiently explained that trademark law will not prevent a person from using another's common word mark in its everyday, intended, manner, e.g. Joe's Apple Orchard; or Bob's Camel Farm. Conferring anti-dilution rights to common English words used as such would deplete the inventory of available and useful words.

But JSL did not use Visa for its literal dictionary meaning, and VISA was found to be strong and distinctive. As a result, eVisa diluted VISA by blurring and its use was enjoined because a consumer seeing eVisa was likely to associate it with VISA.

In summary, this is what the Court concluded:

Common English words can dilute a famous and distinctive mark.
Whether dilution exists is a question of fact, but summary judgment may be granted if no reasonable fact finder could fail to find a likelihood of dilution, as occurred here.
Where the mark is in the dictionary as a word, it may be different to establish that the mark is sufficiently distinctive. This is particularly true where there are other uses of the word as a mark.
Use of another's mark for its dictionary meaning should not be enjoined, e.g. JSL's Visa Service.

These practice pointers may help establish protectable rights in common English words:

A common English word proposed to be used should be tested to determine if it is being used in its dictionary sense, or in an arbitrary sense. If arbitrary, it may dilute another use if that use is famous and distinctive, e.g. Blackberry Farms v. Blackberry Motors. If arbitrary and there are no other trademark uses of this word, it may be protectable or distinctive although it must also be famous.
Look for other uses of the mark; it is more likely that the mark does not dilute if there are other trademark uses of the mark.
Dilution does not require a finding that there is a likelihood of confusion.

LexisNexis Emerging Issues Analysis by Jim Astrachan

Bankrupt Licensor’s Rejection of Executory Contracts

2010-11-03T13:47:00.000-07:00

Bankruptcy of a trademark licensor can be a very unwelcome event for its licensee. In 1985 the Fourth Circuit Court of Appeals permitted a licensor of technology who had filed for bankruptcy under Chapter 11 to reject the licensee as being an executory contract. That licensee lost all rights in the license and the licensed technology and was left with solely a monetary damage remedy against an already insolvent debtor. Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F 2d. 1043 (4th Cir. 1985).

In the case of a financially troubled licensor, rejecting the license may well be in its best interest, for often the value of the licensed technology has grown, and the licensor may be able to relicense it for a higher price. Sometimes, unfortunately for the licensee, this is due to its efforts.

Interests convinced Congress that the ability of a technology licensor to reclaim the licensed property through rejection of the license in bankruptcy was unfair. Congress passed legislation that would allow licensees to avoid this hardship in the future. The Intellectual Property in Bankruptcy Act of 1988 was intended to allow licensees whose bankrupt licensors rejected their licenses to reclaim rights in the licenses. 11 U.S.C.A section 365(n). The Act provides that the case of intellectual property, other than a trademark, trade name or service mark, a licensee of a bankrupt licensor can elect to retain its rights under the license for the duration of the license plus extensions and, in exchange, continue to pay royalties due under the license. Unfortunately, numerous decisions have held, correctly, that the Act, while it covers all other forms of intellectual property, such as copyrights, trade secrets and patents, does not cover trademarks. Gucci v. Sinatra, 126 F. 3d 380 (2nd Cir. 1998). As authority for so holding, this court and others have simply reviewed the legislative history of the Act which provides, “the bill does not address the rejection of executory trademark, trade name or service mark licenses.” Indeed, bankruptcy law does not even define a trademark, service mark or trade name as intellectual property. 11 U.S.C. §101 (35A). This is a harsh result for the licensee of a trademark who might have built its entire business around the mark. One court, however, has held that where trademark rights are melded with other intellectual property rights Section 356(n) may apply to trademarks. In re: Matusalem, 158 B.R. 514 (Bankr. S.D. Fla. 1993).

The apparent purpose for excluding trademarks, service marks and trade names from the definition of intellectual property for purposes of Section 356(n) can be found in the Senate Report and heavily implicates the requirement that, to protect the consuming public, a licensor must be able to control the quality of the products or services associated with its licensed mark. Congress determined that issues of quality control and supervision were well beyond the scope of this corrective legislation and would require extensive study before it could consider making trademarks subject to Section 356(n). Apparently, this exclusion of trademarks has never been revisited by Congress.

Practice Tip: There really is no way to avoid the exclusion of Section 356(n) when it comes to trademark licensing unless the license is truly not executory; most licenses are, however, as they require quality control and royalty payments. However, there may be limited circumstances where licensing can be avoided through the use of a coexistence, or “live and let live” agreement by which the parties merely acknowledge the other’s rights without transferring rights via a license.

LexisNexis Emerging Issues Analysis by Jim Astrachan

Repugnant Foreign Judgments

2010-10-06T07:04:00.000-07:00

I am between flights at Dallas-Ft. Worth Airport, sitting on a comfortable chair outside of Starbucks and thinking about an editorial that ran in the New York Times a few weeks earlier. It seems that an author, resident in New York State, had authored a book accusing a Saudi sheik of financing terrorism. The sheik sued the author in Great Britain for libel where it was reported only a few copies of her book were sold. She failed to appear or defend and a default judgment was entered against her.

The author had no assets in Great Britain or Saudi Arabia so the sheik sought to enforce his judgment in New York under New York’s Uniform Foreign Money Judgment Recognition Act (UFMJRA) which provides, with a few exceptions, that foreign judgments are final, conclusive and enforceable in the country where rendered and are deemed conclusive between the parties and enforceable by United States Courts. The Times was outraged because it believed that the author would have been able to assert First Amendment defenses had she been sued in the United States.

The Times’ editorial caught the eye of a long-time Maryland politician who felt that this “travel liable” liability should not be permitted in Maryland if the suit brought in the foreign jurisdiction was based on a cause of action that might be defended under the First Amendment. Maryland, however, has also adopted the UFMJRA.

A recent New York case illustrates the complexity of the UFMJRA, and the need for it. A website was sued in France for copyright infringement and “parasitism” by two French-based houses of couture – Féraud and Balmain. The site had published photos of plaintiffs’ fashion shows without authorization. The site, Viewfinder, was owned and run by the fashion photographer, Donald Ashby, who sells annual subscriptions for $999. Ashby likens his website to an electronic version of a magazine that contains topics of interest to fashion industry persons.

Féraud and Balmain sued Viewfinder in the Tribunal de Grande Instance in Paris because the published photographs of plaintiffs’ fashion shows revealed the upcoming season’s designs to its subscribers. Viewfinder failed to respond to the suit and a default judgment was entered against it.

Viewfinder appealed the judgment to the Cour d’Appel de Paris, but inexplicably withdrew its appeal. The plaintiffs filed in New York to enforce the final French judgments and an attachment order was issued. That’s where this story begins.

Viewfinder filed with the New York court motions to dismiss, for summary judgment, and to vacate the attachment order, presenting a number of reasons why it should have its way. The court held that enforcing the French judgment would be repugnant to the public policy of New York on the ground that doing so would violate Viewfinder’s First Amendment rights. Specifically, the court held that the fashion show photos depicted by Viewfinder, a magazine, were of public events and that publication of the photos was a protected First Amendment activity.

The court’s decision was appealed. UFMJRA makes clear that the first step in analyzing whether a judgment is unenforceable under the UFMJRA due to repugnance to public policy is to identity the cause of action on which the judgment is based. Incredibly, the trial court had not done so, and the appellate court was left on its own to conclude that the essence of the cause of action on which the French judgment was based was the “complete or partial performance or reproduction made without consent of the author” of the reproduced or performed work. The court then compared the French law on which the judgment was obtained to comparable United States copyright law and found them similar. Under the laws of both countries, photographs are subject to copyright protection and the French court ruled that publication of the photos by Viewfinder infringed the rights of the plaintiffs.

There was no basis for the court of appeals to second guess the French court’s finding of unauthorized reproduction and found, for purposes of its review, that Viewfinder’s acts resulted in infringement. Viewfinder, however, claimed that as an online “magazine” its actions were entitled to First Amendment protection and a finding of fair use. The appellate court wasn’t buying it, however, and held:

The ‘public policy’ inquiry rarely results in refusal to enforce a judgment unless it is inherently vicious, wicked or immoral, and shocking to the prevailing moral sense.

Laws that are antithetical to the First Amendment will create such a situation. Foreign judgments that impinge on First Amendment rights will be found to be ‘repugnant’ to public policy.

A court’s failure to enforce a foreign judgment requires a complete analysis by the court. Here, the district court agreed that Viewfinder was a magazine and concluded it had an absolute First Amendment defense to infringement, which was simply wrong. This is because in the United States, First Amendment and IP rights co-exist. Clearly, a magazine can infringe a third party’s copyright to a photo.

Thus, the proper inquiry for the district court would have been to ask whether the causes of action under French law for violations of IP rights conflicted with the rights a magazine might have, in these circumstances, via the First Amendment or the statutory defense of fair use – clearly rights that may lend themselves more to the defense of a liable charge than a garden variety charge of copyright infringement, although classification as a magazine might impact a finding that a fair use defense might have been available to it under U.S. law.

The process, then, requires two steps. First, the court must indentify the protection afforded the accused under the United States Constitution or statute, and second, determine whether similar protections are available under the laws of the country the accused has been charged with violating. In this case, a careful review of the fair use exceptions to infringement was warranted because for the most part, fair use deals with a person’s right to reproduce or perform work that it claims is protected under the First Amendment or by a statute that recognizes these rights. The district court missed the mark when it concluded, without any analysis, that even if the designs were protectable under French law, U.S. law provides “as a matter of First Amendment necessity a ‘fair use’ exception for the publication of newsworthy matters.” This is of course, blatantly and grossly untrue. A protracted analysis was needed and never occurred. Viewfinder was remanded for the development of a full record.

A remedy does exist in Maryland to prevent enforcement of a foreign judgment under certain circumstances, and likely will be an important defense to enforcement of a liable judgment against a news source. Although it is not talismanic there is likely no sense in creating a new law to do the same thing that UFMJRA would do. As Viewfinder will likely learn, it is best to be careful and respect the rights of others unless it is sure of its position.

2010-09-20T11:11:00.000-07:00

I am leading an ExecSense webinar this Thursday, September 23rd at 5pm EST

“The Instant Impact of Visa International Service Association v. JSL Corporation (9th Cir. June 28, 2010) on the Application of Federal Anti-Dilution Law to Trademarks That Are Common English Words"

For more information and to register for the webinar visit: http://www.execsense.com/details.asp?id=1793

Anonymous Defamation By Internet

2010-09-07T11:32:00.000-07:00

My buddy's call was a bundle of nerves. He's a medical doctor at one of the big institutions in town and he was on the receiving end of a nasty rating on a rate-the-doc type website. The kind that everyone has access to and can anonymously post a rating and comments.

I accessed the site while he was on the phone and found him by state and name. Wow! He wasn't kidding. There was a his name, address and affiliations and next to it was a "4 thumbs down" rating. The rater had described him as a "butcher whose incompetency knows no bowndrees [sic]." "Stay away from this doc, he's a killer," the posting warned.

I asked my friend if he had any idea of his protagonist's identity. "No clue," was the terse reply, "but I want you to learn who wrote this and sue the hell out of him or her and that damn website. I haven't even had a cross word with a patient in more than a decade." My buddy had a reputation for being a careful physician. He was always highly rated by his peers, and as an academic, he stayed on top of all new developments. I had no trouble believing that someone was out to get him for something unrelated to medicine.

I reminded him that he had recently finished building a vacation house, and during the process had fired a couple of contractors and refused to pay a landscaper for trees of poor quality. "Any one of them," I suggested, " could be seeking revenge through this website. After all, it is no secret that you are a physician, and it is easy enough to learn the identity of your employer."

"Okay, start the legal process. Get the name of the anonymous poster and sue him or her and the site for defamation."

My friend was beside himself when I responded that it was highly unlikely the site would voluntarily reveal the name of the poster, that it was not a given that he could force the site to do so, and worse, that the website was immune from defamation liability resulting from the posting. His words were not repeatable.

"Look friend," I told him, " The issue of anonymous posting on the Internet is not novel." As late as last year, the Maryland Court of Appeals crafted a standard that Maryland trial courts must apply to balance the First Amendment right to anonymous speech on the Internet with the opportunity of the subject of the speech, here, the doctor, to sue for defamation.

Internet anonymity has always been a part of the culture. From the beginning, chat room users have been permitted to use a screen name and are not required to use their real name. "The right to speak anonymously is protected by the First Amendment," I advised. In this regard, the Supreme Court has held that:

Anonymous pamphlets, leaflets, brochures and even books have played a role in the progress of mankind. Great works of literature have frequently been produced by authors writing under assumed names.

But calling my friend a "butcher" and a "killer" when he wasn't even a surgeon would hardly appear to reach the level of "great works of literature." "Clearly," I replied, "anonymity of speech is not absolute and may be limited by defamation considerations, as libelous utterances are not speech protected by the First Amendment." I explained that a libelous utterance is one that tends to expose a person to public scorn, hatred, contempt or ridicule and discourages others from having a decent opinion of the person or associating with him or her.

I told him I thought we could obtain from the website the identity of the writer if we sue and (1) undertake efforts to notify the poster that he or she is the subject of a subpoena or an application for an order of disclosure, and post a message of notification of the identity discovery request on the website; (2) do nothing until the poster has a reasonable opportunity to file and serve an opposition to our application; (3) identify and allege the exact statement the poster purportedly made which we assert is defamatory; and (4) be sure we have properly pled a prima facie case of defamation in our complaint.

"If," I said, "we do each of these the court will then balance the poster's right to remain anonymous against the strength of the prima facie case of defamation we have pled and the necessity of disclosure of the poster's identity so you can pursue your claim."

"Okay, what about the website? Why can't we sue it for defamation?" my bud asked. I had to explain that suing the website operator for defamation in this case would not be successful. This is because a website operator is immune from tort-like claims that do not involve infringement of intellectual property under the Communications Decency Act if the defamatory statements were provided by a person separate from the operator and the operator engaged in no editing. This is because immunity is granted by the Act to a prospective defendant who serves merely as an interactive computer service, as this rate-the-doc site appears to do. Courts generally apply a three part test to determine immunity under the Act: (1) Is the defendant a provider of interactive computer services; (2) are the postings at issue information provided by another information content provider; and (3) does the plaintiff's claim seek to treat the defendant as a publisher or speaker of third party content?

Clearly, the effort to reach the poster and correct the contents was going to be difficult, time consuming, expensive and uncertain. And in the end, it would be unlikely that any judgment awarded against the poster would be collected.

My friend was not pleased. "Tell it to your U.S. Representative," I replied.

What a Strange Trip It Will Be

2010-09-07T11:01:00.000-07:00

The phone rang and it was my bud on the other end of the line. He sounded down and confirmed his mental state when I inquired. "Let's meet for a drink, and I'll buy," I offered. Even that invite failed to elicit a change of tone.

We met at one of those funky Fells Point bars, taking a back booth to get out of the din so we could talk. We waited for someone to take our orders over small chit chat for a while until I realized the only way to get a drink would be to get it myself. I returned shortly to the table with two ales and put them down. "Okay, what's got you down?" I asked.

"Well, you know that for decades I have been fascinated by the work of an artist known for illustrating magazine covers and movie posters with gory monsters," he responded. "I've researched this guy from head to foot, and have followed the maturity of his art from his teens to his untimely death at age 53. He has a cult following, and there is very little I don't know about this guy. Call me obsessive, but I have spent a lot of time researching and writing a book about him and his work. I think I may have mentioned that to you last year."

"You did," I told him. "You said you were in the throes of an outline of something you wanted to put together and maybe publish."

He confessed that this was the work he had mentioned, and that over the years no one had really seen much of him because all his time was spent on research and the manuscript. Now, he told me the manuscript was done, and he had found an enthusiastic publisher.

"And this is what has made you bummed out?" I asked. "Seems to me you should be celebrating your good fortune."

A problem had arisen, he explained, and it was a problem he could not over come. It appears someone at the publisher had contacted the owner of one of the magazines that the deceased artist had worked for. The idea behind the contact was to see whether the publisher could get a quote to endorse the book. The magazine's former owner asked the publisher's rep a series of questions that ended with "What art work is being used to illustrate the book?"

The response included identification of some of the art that had graced the covers of his magazine. The conversation went bad as he told the publisher's rep that he owned the art that was created for his covers and that if just one of his cover art was used without his permission, "He would own the publisher."

My friend added that the publisher had become frightened and told him that he could not use the art to illustrate the book. "With that admonishment, my project went out the window," he said. "I even spoke to my nephew, who as you know is a third year law student at an accredited law school, and he told me, 'the publisher was right in not letting me use the art. He'd get sued for copyright infringement.'"

"Feh", I replied.

"Feh? My life's in shambles and that's all you can say. Feh?"

"Look chum. As good lawyer as your nephew the law student is not, he missed the boat on this one. Ever hear of a little thing called fair use?"

I explained patiently that since the dawn of U.S. Copyright law there has been opportunity for a person like my bud to use the copyrighted work of another. This is because the purpose of expressed granting copyright to an author is to promote the progress of science and the useful arts. This doctrine was not codified in the later part of the 18th century, but was recognized as a judicial doctrine by the courts. Fair use was codified as a defense to copyright infringement in 1976. The idea behind fair use is to allow limited use of another's work for the benefit of the citizenry, often by transforming the original work into something new, or by using the work for comment or scholarship. The 1976 Act establishes 4 non-exclusive factors for courts to consider when deciding if a use is fair. I explained there are no bright line tests, and each case must be considered, the factors explored and he results analyzed.

"Okay," he replied. "Does that mean I have to get sued and go all the way through trial in order to establish my rights to use this art?"

"No," I told him. "First, suit is not a guaranty despite what has been threatened. And second, even though fair use is a mixed bag of fact and law, some of the circuits, including the one that the putative owner lives in recognizes that the issue of fair use can be resolved by summary judgment."

"Well, what about my ignoring his demands that I stop? Won't that hurt my cause?"

"No, the U.S. Supreme Court has implicitly said that copying in the face of denial of a license is not a factor."

I spoke of a couple of cases where art was used to illustrate texts, including one brought by the Archives of rock and roll impresario Bill Graham over the use of Grateful Dead posters he owned in a third party's book about the Grateful Dead. In that case, I told my friend, the use was considered a fair use for a few reasons, perhaps the most important being that the illustrations in the book did not replace the need for the posters as display items, or expressions, and the chronological ordering of the posters in the book was transformative. My bud began to perk up.

"And this is not the only case," I told him. "Recently, the same Circuit Court dealt with an issue similar to your case and the Graham Archives case and again found fair use when cover art was used to illustrate a book about the artist." In that case the court quoted with approval a seminal law review authored by a member of its bench in which Judge Leval wrote that to be a fair use, the use must be productive and the work used in a manner different than the original. I explained to my friend that he would have no defense if he merely took the cover art and created posters or used the art to illustrate a new magazine. His intended use was so much different. In essence, he was writing a scholarly and transformative work that would not reduce the demand for the original art by anyone who wanted to display it or illustrate fiction. His work would be far different than the magazines on whose covers the work first appeared.

"So for this noble cause you will represent me for free?" he inquired. "Oy," I thought. "I can see where this will end up".

Celebrity Endorsements: An Eagle’s Eye

2010-09-07T10:51:00.000-07:00

I read with one eye closed that California Congressman Joe Baca was dropping his effort to honor Tiger Woods with the Congressional Gold Medal. This followed revelations that Mr. Woods has engaged in seriatim in extra marital affairs.

Baca’s statement regarding his initial support of the award of the Medal highlights the reasons Tiger has endeared himself to advertisers and consumers.

Woods has broken barriers with grace and dignity by showing that golf is a sport for all people, regardless of race, color or creed…Woods has inspired countless people of all ages, impressing upon them that their hopes, dreams, and prayers may be achieved through hard work, persistence, education and good sportsmanship.

The Congressman is absolutely correct; Woods has done all of these things and more. But his recently revealed conduct, and his failure to refute numerous public statements made by numerous alleged paramours – likely because he is unable to – have substantially eroded the selling power of his once solid image.

It is reported that approximately 93 percent of Tiger’s $100 million annual earnings are derived from off-course activities – primarily his role as a celebrity endorser. Nike alone pays him $30 million per year, and he has, or had, endorsement deals with the likes of Gatorade, Gillette, Accenture, Tag Heuer and others. But following the revelations of at least 11 women that Tiger was a naughty young man, and the circulation of nude pictures of Tiger by one them, Gatorade has dropped Tiger or at least a product branded with his name and photo. Perhaps Gatorade’s slogan, Is it in you? became a tad too controversial given the goings on. Big stars get dropped. McDonald’s, Coke, Nutella and Spalding canned Kobe Bryant following his sexual assault scandal.

Tiger was a gust of fresh air for golf, and sports in general, and likely he has several, if not more, decades to play the game. Many advertisers whose products he pitched invested heavily for the long term, hoping to ride on the tails of his success for many years. They are at a crossroads as to their plans, and I am certain there is a lot of handwringing going on in the marketing departments of Nike, Accenture and Tiger’s other sponsors. I suspect they would like to try to ride out this mess.

Two questions arise. Should the sponsors can Tiger, as did Gatorade, and are they legally able to do so if they want to? Several years ago, or maybe longer, we were negotiating a contract with the bad guy of basketball, Dennis Rodman. Our client asked whether we were intending to place a morals clause in the contract – a clause that would allow the client’s client, the sponsor, to can Mr. Rodman if he did anything repugnant to sensibilities or morality. “Dennis Rodman,” I stammered. “You want him to do something bad. Having a morals clause in his contract would be like putting a speed governor on Michael Schumacher’s Ferrari.”

Tiger is a lot different than Dennis Rodman, and not just because we don’t know that he isn’t dating Madonna. He’s a golfer, and golf is a gentleperson’s sport. The fans are very reserved and the TV announcers whisper their commentary. The bad boy persona simply will not work for Woods.

I don’t know whether Woods’ reps agreed to the inclusion of morals clauses in his contracts. The sponsors would have asked for it, but given Woods’ selling power he may have made inclusion of a morals clause a deal breaker. And the advertisers may have agreed to take a chance on his then squeaky-clean image. With one, his conduct will allow termination.

In the absence of a moral’s clause, Tiger’s team might have insisted on a clause that requires airing of the ads so as to keep Tiger in the public eye. However, there have been no Tiger ads seen on broadcast from late November to at least mid December when this column was written. Regardless of the terms of the contracts, the sponsors and Tiger could have agreed it made sense to suspend the ads for a while, even if by contract they are required to run the ads. And Gatorade, which discontinued the sale of its Tiger Focus sports drink, is reported to have decided to drop the brand on November 25, before the scandal grew wings. Gatorade says its partnership with Tiger will continue. We’ll see about that, but it’s hard to be a skeptic given Tiger’s pre-scandal career and the likelihood he will recover his grace, or much of it, and again be a mega endorser. A man who makes $100 million a year can buy a lot of PR crisis counsel.

In the meantime, perhaps there are advertisers who might benefit from the bad boy, out of control, image that the scandal has bestowed on Tiger, and I suspect more than one has made its pitch. Given that the status of Tiger’s relationships with his blue chip advertisers are not clear, even if ads have been pulled, Tiger will not move to endorse any of these potential sponsors. I doubt, also, his people will allow the current sponsors to modify their ads to have his image closer to reality, even slightly. Eventually, that may place sponsor and spokesperson at an impasse in cases where no morals clause exists, and may result in termination of contracts where moral clauses do exist. Right now, a lot of money has been spent on Tiger’s contracts and ads just are not airing. There will be very tough calls to make.

Bottom line is, who would have even guessed that Tiger Woods would be at the center of a scandal of this magnitude? Certainly not his conservative sponsors. I am certain they are agonizing as is Tiger. Four things are for certain, however. One, he will develop new sponsors, maintain existing sponsors or both, and he will return as a spokesperson. Two, his value has been substantially damaged, but that may create a long-term opportunity for his sponsors who may take advantage. Three, all his future contracts will contain a strong morals clause. And four, he will reign in his behavior.

2010-05-12T08:42:00.000-07:00

Russell Christoff v. Nestlé USA, Inc.
47 Cal. 4th 468 (2009)

Jim Astrachan
Astrachan Gunst Thomas Rubin, P.C.
Baltimore, Maryland

In 1986 professional model Russell Christoff posed for a photo that he was told might be used on vacuum packed bricks of coffee to be sold in Canada. He was paid $250 and promised $2,000 if the photo was used. In 2002 he discovered that his photo had been used in the United States on TASTER’S CHOICE coffee jars, and later discovered that his photo had been used for at least 5 years on coffee labels and other facets of Nestlé’s international advertising campaign. He brought his action for misappropriation of his identity under California Civil Code, §3344 within one year of learning of Nestlé’s unauthorized uses.

Misappropriation of identity, or right of publicity, is generally defined as an individual’s right to control and profit from the use of his or her identity, or persona, for commercial purposes, such as being included in advertisements or on a product. This right can be violated through the use of an individual’s identity including name, likeness, signature, photograph, drawing, nickname (Hirsch v. S.C. Johnson & Sons, 90 Wis. 2d 379 (1979); voice, look and sound alikes (Waits v. Frito-Lay, Inc., 978 F2d 1093 (9th Cir. 1992)), and even occasionally an inanimate object with which the person whose identity is taken is closely associated, such as a race car. (Motschenbacher v. R.J. Reynolds Tobacco Co., 498 F.2d 821 (9th Cir. 1974).

The right can arise through statute, common law or both in some jurisdictions such as California. (White v. Samsung Elec. Am., Inc., 971 F2d 1395 (9th Cir. 1992)). In many jurisdictions the right of publicity is treated as a property right and is descendible or assignable. The California statute, for example, provides that the right exists for 70 years following death; under Indiana law, it survives for 100 years. But under a New York statute, this right is not descendible and the concept of a common law right has been rejected. Stephano v. News Group Publications, Inc. 64 N.Y. 2d 174 (1984). Maryland has no statute and the common law has yet to recognize that this right is descendible.

For Nestlé’s transgressions, a jury awarded Christoff damages of $15 million, representing a portion of the profits Nestlé made from the sale of coffee bearing his photograph. The verdict was rejected by the California Court of Appeals on the grounds that the “single publication” rule, California Civil Code, §3425.3, and limitations required suit to be brought within 2 years following the first publication of the label unless Christoff could prove that Nestlé hindered his discovery or that the label had been republished.

The California Supreme Court affirmed that the jury’s verdict must be reversed on three grounds: the trial court’s erroneously ruled that the single publication rule does not apply to misappropriation of identity claims; the trial court had not developed sufficient facts to determine if Nestlé’s actions constituted a single publication; and it could not be determined if limitations had run on Christoff’s claim until the court determined whether the single publication rule applied.

The Supreme Court held that the single publication rule does apply to suits for misappropriation of likeness for commercial purposes, as the language of the statute is broad and applies to invasions of privacy and “any other tort founded upon any single publication or exhibition or utterance, such as any one issue of a newspaper or book or magazine or any one presentation to an audience or any one broadcast over radio or television or any one exhibition of a motion picture.” While the misappropriation of identity tort was not named in the statute, the method, by which the tort was executed, publication, was.

Once it was determined that the single publication rule applied to misappropriation of identity claims the court had to decide whether Nestlé’s extended actions, over several forms of media and numerous years, constituted a single integrated publication under the statute. If so, limitations might bar the entire claim as Christoff had not filed within two years of Nestlé’s first publication. The publication of a product label bearing Christoff’s photo and an ad campaign that run for five years raised the question of whether all of Nestlé’s activities constituted a single, integrated publication. This was an issue of first impression in California.

The purpose of the single publication rule is to control damages resulting from mass communications so that a repeated communication does not create new causes of action as the mass communication is repeatedly received by a mass audience. Belli v. Roberts Bros. Furs, 240 Cal. App. 2d 284 (1966). For example, a television announcement, or a newspaper article, can reach millions of people. It would be impracticable to allow the defamed subject of the broadcast, or article, to sue the media each time the message was received by a reader or listener. Thus, the one broadcast or the one edition of the newspaper, no matter how many people are reached, or how many copies are published, is one publication for purposes of the rule.

The above examples of single publication are rather straight forward, but Christoff’s case against Nestlé was not. The Court needed to determine whether Nestlé’s activities over the five year period constituted a single, or more than a single, publication. If it was a single publication, limitations had likely expired years earlier; if the different uses of Christoff’s photo constituted new publications, then limitations should run anew from each.

The Court confessed it did not have sufficient facts to determine whether the single publication rule should be applied, and remanded the case for fact finding as the trial court had not done so in the erroneous belief that the single publication rule did not apply to misappropriation of identity cases.

The concurring opinion of Justice Werdegar is of interest because he discussed circumstances where other state courts applied, and did not apply, the single publication rule. In particular, there was a 2006 Illinois state court ruling (Blair v. Nevada Landing Partnership, 369 Ill. App. 3d 318) and a 2008 ruling of the United States District Court for the Northern District of Illinois (Wells v. Talk Radio Network FM, Inc. N.D. Ill. 2008 WL 4888992) that reached different conclusions, the latter finding no single publication where a program was broadcast 17 times in 2 years. And a Florida decision was cited, holding that where there were multiple publications, “over several years, the defendant repeatedly used the plaintiff’s name and image in marketing presentations to potential clients, each such presentation was a new publication.” Baucom v. Haverty, 805 So. 2d 959, 960 (2001). Of this opinion Judge Werdegar wrote, “In my view, the latter approach is more consistent with our statutory language.”

If the California Supreme Court wants to decide that there were multiple publications of Mr. Christoff’s photograph, it can find support in the facts that the photo was used over five years in multiple countries and on the product and in multiple forms of advertising media. I believe it can and should.

Get Your Kicks

2010-05-12T08:36:00.000-07:00

By: James B. Astrachan

Trademarks can be a business’ most valuable asset. They instantly identify the source of the product and convey important information to the consumer. Is the product of high or low quality? Does it last or wear out? Smell good or bad? The LOWENBRAU mark has been in use since 1383.

A business can usually prevent a competitor from using its trademark or a similar mark in connection with the competitor’s goods or services if consumers are likely to be confused as to either the source of goods or an affiliation between the owner and its competitor. Some marks are considered famous, such as McDonald’s or Ford. They have been around forever and lots of ad dollars have been spent to reach most of the population. Even people who have never eaten at a McDonald’s have heard of McDonald’s. If a business selling goods or services not in competition with the owner of a famous mark adopts the famous mark, the mark’s owner can often stop its use under state or federal anti-dilution laws. For example, Sony and Sony’s restaurant. It’s not likely that anyone will believe Sony is in the restaurant business, but a restaurant’s use of Sony’s famous mark may blur the distinctiveness of the mark.

Not every use of another’s trademark is infringing and actionable and no one has a monopoly in its mark. The statutory concept of fair use allows another’s mark to be used for comparative advertising, parody and for descriptive purposes. For example, the owner of the SWEET N TART mark could not stop another candy marker from describing its candy as being sweet and tart, as long as the marker did not use the descriptive term as a trademark. There are also First Amendment considerations that allow the use of another’s mark in artistic works.

Established in 1926, U.S. Route 66, also known as the Will Rogers Highway, was one of the original United States highways. It ran from Chicago to Los Angeles, a distance of 2,448 miles. It was removed from the highway system in 1985, having been replaced by the interstate system and being considered no longer relevant.

Route 66 is also a popular song about getting kicks (on Route 66) written in 1946 and covered by many musicians including Chuck Berry and the Rolling Stones. Route 66 also spawned numerous businesses of that name including a race track, a technology company, a record label and a brand of blue jeans sold by K-Mart. Perhaps the most well remembered product associated with Route 66 was the television series that ran from 1960 to 1964 and featured Martin Milner and George Maharis and a sweet Corvette sports car. Martin’s and George’s characters drove for four years in their search for the meaning of life. The show, however, was not bound to locations along Route 66; the final episode was shot in Tampa, far from Route 66. There was a spin-off movie of the same name released in 2004, starring two Germans and an old Cadillac. The name still had drawing power and had not been forgotten after 40 years.

In 2001, Roxbury Entertainment acquired all rights to the Route 66 TV series and related intellectual property, including the federally registered Route 66 mark. Its intention was to release the old TV series on DVD and perhaps make or license a movie. It has been said that no iconic trademark escapes irreverent use by persons not its owner, and Route 66 was no exception.

Penthouse Media, the publisher of Penthouse Magazine decided that the mark Route 66 was perfect to use to market and sell its Route 66 titled DVD that featured on the cover – it is Penthouse, after all – two topless women standing on a roadmap with a silhouette of a mountain range behind them. The word “Penthouse” appears in all capital letters across the top of the package and on the bottom third of the package appears “Route 66” in a font two times the size of the Penthouse font. A California highway sign marked Route 66 is prominent in the photo. The DVD package is labeled “hard core adult entertainment.” The DVD is primarily graphic sex scenes, but there is a story line, albeit very thin. It concerns a young couple fleeing an unlawful event. They are traveling by car and on the run. It’s no surprise that they spend much of the movie in roadside motels along Route 66.

It’s no surprise, either, that Roxbury very strongly objected to the use of its registered mark in connection with a hard core porn movie that involved two road travelers. When Penthouse refused to stop selling the DVD, Roxbury sued for trademark infringement and violations of the anti-dilution act.

Penthouse’s First Amendment and fair use defenses were entirely foreseeable. Where an artistic work is involved, the First Amendment can provide a complete defense to a Lanham Act claim. This is because non-commercial speech receives more protection than does “buy me” speech, or to put it another way, speech that does nothing more than propose a commercial transaction, such as ads.

Films, as artistic works are generally, but not always, entitled to First Amendment protection. To determine whether a particular film deserves protection in a trademark case courts generally apply a test of two components. First, the defendant’s use of the plaintiff’s trademark must be relevant to the film, but the defendant has a great deal of leeway in this regard as courts have held that “the level of relevance must merely be above zero.”

The second component of the test requires an examination of whether a defendant’s use of the mark explicitly misleads consumers as to source or content of the film. In other words, would consumers believe that the film created by, or that the defendant is somehow associated or affiliated with the plaintiff? Mere use of another’s mark does not make for confusion.

Penthouse won its case as there was no evidence of consumer confusion presented to the court as to source or association. Subject matter aside, the DVD was a film and it had some modicum of a plot. And there was some relationship, albeit it weak, between the mark and a film about road travelers on Route 66.

The court didn’t discuss the strength of the mark. Stronger marks get more protection, and this mark is pretty weak due to its long use to identify a U.S. Route, and a myriad of uses by many persons. Nor did anyone raise the issue that Penthouse’s film may be a parody of the original TV series and the use of the mark essential to that parody.

It’s frustrating, no doubt, for the mark’s owner to see Route 66, a mark it paid considerable money to own, used for free in this fashion. But sometimes the First Amendment will frustrate someone who doesn’t like what someone else is saying. That’s just the way it is.

Insurance for Advertisers and Broadcasters

2010-01-08T05:46:00.000-08:00

One of our radio station clients was sued in federal court the other day for slander, first amendment violations and failure to allow a "citizen" access to the news media. The situation arose because the clients was hosting a call in show and discussing issues of local interest. A caller began a diatribe and was allegedly cut off by the host and called a "nut". that was it; nothing more.

A year and a half later, a package was dfelivered to the client bt a process server. It was a pro se (filed by the plaintiff...no lawyer) law suit. Many other persons and entities were included in the suit, and a brief on line search revealed that this was only one of many this person had filed...including a suit against the President of the United States and the Postmaster general.

There are 2 kinds of legal head aches: those you have to deal with and those you have to deal with and pay for. The client thought this was the former and learned it was the latter after his claim had been submitted to the insurance carrier and denied.

The station carried a General Comprehensive Liability policy, the kind that protects from fall downs and loss by fire and water damage. this one also contained coverage for advertising injury and for actions such as defamation and slander. Problem is, that the policy also excludes from its coverage of these two occurences anyone engaged in the business of advertising or broadcasting, and clearly a radio station is in the broadcast business. Clearly, the carrier wants a broadcaster or an ad agency to apply for the coverage seperatly, underwrite the risk and charge a premium that will reward the carrier for taking the risk. Had this rider existed, the carrier would have provided the defnense and likely the indemnity if a judgment was awarded.

Should the broker have so advised the station? That remains to be seen, but safe practice would say it should have.

Every story has a moral. This one is to be sure that if you are in the advertising or broadcast business you have a rider to cover your industry specific activities. If you don't , likely you are not covered.

Trademark Parody and Advertisers

2009-12-23T07:12:00.001-08:00

The client is always right. Maybe not right in terms of correct, but usually in terms of prevailing in a dispute with its agency. The agency creates ads, the client reviews, likes it and says, "run it". The agency/client contract may or may not call for the agency to indemnify the client if something goes wrong, such as the violation of a third party's trademark rights. Even if the contract is dead set against the client, the resulting dispute will spoil the relationship, and it will only be a matter of time before the client looks to another agency. and if the agency fears the loss, but has the correct legal position, it may pay for the client's loses hoping to make up the out of pocket in the future. tought business. Best to try to get it right and avoid law suits.

Parody is a ripe area for creative directors. take another's brand and make fun of it on behalf of the client. Sometimes use it it make social comment (barbie and Ken and Aqua and Mattel) but usually not. One thing is for sure, parody is tough to get right. That's because effective parody should project two simultaneous messages. First, this is the real product, and second, this is not the real product.

Where most attempts at parody fail is that they appear to a court to cause some modicome of confussion that the parody is associated, or is, the real product. and sosmetimes two courts in two jurisdictions, dealing with similar facts, can come up with decisions that are 180 degrees apart.

If you don't believe this, look at Chewy Vitton and Butt Wiper. Hard cases to reconcile other than the fact that Budweisser came to court with a survey that indicated that 30% of the persons surveyed thought there was an association between Butt Wiper and the King of Beers. Pretty absurd, but the court bought the survey and ruled against the dog toy.

in the case of Chewy the court found no likelihood of confussion, but the plaintiff, apparently sure of its case, offered no survey evidence. Or perhaps it couldn't find an expert to opine its way. Not likely.

and then there is the case of the furniture delivery truck with pictures on the two large side panels depicting a sofa wrapped like a choclate bar. No confusion likely there, the court thought, but it did find a liklihood of dilution of the famous Hershey's tradedress. this, based on the colors used and the inner foil wrapper. In other words, the furniture store's use of a Hershey-like wrapper diluted the uniqness of the real bar's famous trade dress. How many trademark lawyers would haqve seen this one coming down the road?

Parody is funny, it attracts attention and it can be considered clever by some....such as the creative director. It works when executed properly because no one has a monopoly in their own trademark, and parody is fair use, protected expressly under the Lanham Act and by decisions regarding the First Amendment. But when a creative director parodies another's mark, he or she can be sure that the work will come to the attention of the mark's owner, and a letter demanding ceasation of the parody will result.

That's when the questions between client and agency arise.

FTC Ad Guides Puts Teeth into Endorsement Rules

2009-12-18T12:47:00.000-08:00

THE FTC RELEASES MUCH ANTICIPATED REVISED “GUIDES CONCERNING USE OF ENDORSEMENTS AND TESTIMONIALS IN ADVERTISING.”

By: James B. Astrachan

Synopsis: The Guides, effective December 1, 2009, will require advertisers to be greatly more transparent when it comes to their associations with the persons who are endorsing their products and services. In essence, the Guides require that an endorsement must reflect “the honest opinions, findings, beliefs or experience of the endorser, and must alert the consumer to any material connection between any endorser.” The FTC has attempted to define who is an endorser and to create a myriad of disclosure requirements where endorsements occur to prevent consumer deception. While many of these rules are common sense, some are more subtle, particularly those dealing with endorsement in new media.

General

The Federal Trade Commission (FTC) published its revised Guides Concerning Use of Endorsements and Testimonials in Advertising. The Guides offer guidance to advertisers on how to ensure that their endorsements are not false or misleading under the FTC Act. The Guides were first published in 1975 and later revised in 1980. Because the last revisions were published in 1980, prior to the development and emergence of the Internet, the current revisions are the first to address the dissemination of endorsements through new media such as blogs, street teams and social network websites. Some important changes include: (1) guidance on the use of endorsements and testimonials offered by bloggers; (2) the liability of advertisers for false and unsubstantiated statements made by their endorsers and for failing to disclose their material connections with the endorser; (3) the elimination of certain disclaimers as effective means to prevent consumer endorsements from being false or misleading; and (4) the liability of endorsers for their statements.

Honest Opinions

Endorsements must reflect “the honest opinions, findings, beliefs or experience of the endorser.” The endorsement may not convey an express or implied representation that would be deceptive if made by the advertiser. If a material connection exists between the endorser and the advertiser, the advertiser must carefully monitor the content of the message, an easy feat for traditional media where the advertiser writes the script, but far less easy in the cases of blogging, message boards, street teams and other forms of viral advertising where the endorser is let loose to create the buzz.

The Guides cover celebrity, consumer and expert endorsements. The expert is a person, or entity, “possessing, as a result of experience, study or training, knowledge of a particular subject which knowledge is superior to what ordinary individuals generally acquire.” An obvious example might be an endorsement of tires by a well known NASCAR race driver. A less obvious example, cited in the Guides, is a blogging college student who has “earned a reputation as a video game expert,” of whom his readers frequently ask questions.

Disclosure of Endorser-Advertiser Relationship

The Guides generally require that where there is a relationship between advertiser and endorser that is not inherently obvious, it must be disclosed. That relationship, however, must be one that an ordinary person would believe would materially affect the weight or credibility of the endorsement (as viewed from the FTC’s perspective). It is well known that celebrities are paid a fee to endorse products, and consumers factor that into their decision to buy. It is not necessary to make the disclosure where the connection is obvious. It may not be obvious to viewers that a sports celebrity touting a medical clinic by name on a talk show has been paid by the medical clinic to talk it up when she can.

An advertiser may use the endorsement of experts and celebrities only as long as they have good reason to believe that the endorser maintains its product-related views. If an advertiser wants to use the endorsement over an extended time it must secure the endorser’s views over reasonable intervals. What is reasonable might be affected by new products, alterations, performance changes and the like. Also, if the advertiser represents that the endorser uses the products, the endorser must have been a user at the time the endorsement was made. The advertiser can only use the endorsement as long as it has good reason to believe the endorser remains a bona fide user of the product.

Consumer Endorsement

Consumer performance endorsements will be interpreted as representing that the product is effective for the depicted purpose. The advertiser must possess at the time the ad ran, adequate substantiation to support the claims. If appropriate, the FTC will require that substantiation be of a scientific nature. Specifically, the Guides provide, “consumer endorsements themselves, are not competent and reliable scientific evidence.” Thus, where the claim is capable of scientific substantiation or testing it is not sufficient to rely on the endorsement of consumers, who may have good faith beliefs, to establish the claim. The burden falls on the advertiser, and its agency. Disclaimers, such as “results not typical,” or “testimonials based on experience of a few people – you are not likely to have similar results” are not adequate or effective. The Guides, however, do recognize that in some, undisclosed instances, a strong disclaimer could be effective even when the advertiser does not possess reliable, empirical testing.

Transparency

The Guides provide examples that are helpful in understanding the FTC’s concerns in this area, but clearly run afoul of the often intended purpose of social marketing – that most often there be no transparency.

• A tennis star underwent laser vision correction surgery. She speaks highly of the clinic by name on TV talk shows, does not appear on commercials but does have a contract that pays her to publicly speak about her surgery when she can. Without a clear and conspicuous disclosure, the Guides provide that “this endorsement is likely to be deceptive.”

• A physician endorses an anti-snoring product must disclose that he owns part of the company.

• An online message board discussing new music download technology is frequented by MP3 player enthusiasts, including an employee of a leading playback device who touts her employer’s product on the message board. Knowledge of the affiliation would likely affect credibility and must be disclosed.

• A street team talks to friends about a product. Points are awarded for each interaction that result in valuable prizes. This relationship must be disclosed.

• A college student video game blogger, who reviews for free a new video game system from the manufacturer must disclose this.

The purpose of these requirements is simple. Consumers must understand what relationship exists between advertiser and endorser that is likely to affect the endorser’s endorsement.

The Guides attempt to restate old, and create new, rules. What comes through loud and clear for these advertisers who use new social and viral methods to advertise their products is that the FTC has announced that advertisers and their agencies will bear responsibility for the contents of their endorsers’ messages to consumers. To avoid liability, advertisers must direct their endorsers, employees and ad agencies to comply with the Guides.

Employees must be prohibited from anonymously posting touts for their employer’s products, and the prohibition should be written and often communicated.

Advertisers should require by contract that their agencies are aware of, and will comply with, the Guides. Advertisers and agencies are obligated to insist that their endorsers also comply and this should be written. Procedures should also be established to monitor compliance. Where product is provided for review, for example, the reviews should be monitored for sufficient disclosure of connection.

A copy of the revised Guides can be obtained at the FTC’s website, http://www.ftc.gov/os/2009/10/091005revisedendorsementguides.pdf. The Law of Advertising will provide a full discussion on the new requirements under the revised Guides in its Release 93 edition.

tiger's ad contracts

2009-12-18T09:18:00.000-08:00

everyone's writing and talking about Tiger Woods so i thought i would also. my subject is what his endorsement contracts must look like, and i need to say i have never seen one of his. but i have seen many others over the years.

advertisers get into trouble when their celebrity endorsers die or become involved in unseemly activities. some advertisers would like to encourage their celebrity endorsers to be bad; others, like Tiger's, do not. Nike, Accenture, Tag Heur and the like run respectable companies and want respectable endorsers. its about the image.

these advertisers pay a lot of money for Tiger...Nike reportedly pays $30,000,000 a year! that's more than most people make...in 10 lifetimes. how do they control his activities?

bottom line is that they can't. they are not there to watch him all the time, so all they can do is give them selves an out with what is called a morals clause in his contract. that means if the endorser engages in some conduct that is disreputable the advertiser has the right to pull the plug eg, cancel the sontract. it is possible, however, that a celebrity with Tiger's pulling power would refuse to include a morals clause and it is possible that a sponsor hot to get him, and thinking about what appears to be his squeaky clean image, would not insist.

some sponsors have announced they are walking. Accenture is one. it is possible that Tiger would let a sponsor out of its contract even absent a morals clause, or that some other deal was made. for example, lesser payment without use of the ads.

time will tell how this shakes out. my bet is that Tiger will land on his feet in short time and pick up enough quality sponsors to live a prosperous life. they will include morals clauses in future contracts however, and i don't think he'll see the really big bucks for a while. but he will at ssome time. scandal or not, the man's a super star.

copyright, trademark mediation

2009-12-18T08:22:00.000-08:00

mediation is an interesting concept. it can preceede or follow the filing of a lawsuit, and is supposed to involve a totally neutral third party as the mediator. it is held confidential by contract and what is said will not be used against the speaker if the case does not settle. say, for example, that you have been sued for copyright infringement. maybe you are an architectural firm and you have purloined, quite by accident you assert , another's plans. the owner is angry because it believes you have stolen from it and it wants compensation for your infringement.

there is no contract that requires mediation between you and the plan's authors so it is up to you and the author to each agree on mediation. is it a worthwhile process and how do you get there? what are you looking for in a mediator?

this isnt the garden variety of neighborhood dispute where one neihbor doesnt cut her grass and the person next door is trying to get her to do so. here, there is money at stake and a potential federal lawsuit that will be very expensive to resolve if it goes all the way (copyright cases can only be filed in the US district courts).

but as the case progresses it may become more difficult to settle at a reasonable price. the parties will be spending money on lawyers and feelings will become more frayed.

when i learn of a suit filed against my client, or threatened, i almost always call the other side's lawyer just to introduce myself...eventually, we will required to confer on electronic discovery and other preliminary issues anyway. so this is a good chance to say hello and begin to establish a rapport. depending how the conversation goes, i sometimes ask whether the other side will consider early mediation. sometimes they do, and sometimes they do not. some of the reasons for not doing so at that stage might be lack of discovery; lack of expert's opinion regarding money damages; the desire to stay with the case and not settle it; the desire of the plaintiff to punish the defendant; the feeling that "free" discovery will occur.

sometimes, however, the plaintiff is looking for a quick resolution and the lawyers can help that resolution along with mediation.

mediation is non binding. it helps each side learn about its case. sometimes it is desireable to conduct a little discovery before mediation to help flesh out the claims and the defenses. the mediator is supposed to be a neutral who really facilitates the process, but there are times when a person experienced in the subject area, whose been around the block...and has come back...can be helpful in interjecting a dose of reality into the discussions. that's for the lawyers to decide.

the parties and lawyers will meet with the mediator who should have requested a somewheat comprehensive briefing that might include what the parties think they can prove if the case goes to trial, strengths and weaknesses, and the history of any settlement discussions. following the mediator's introduction likely each party will make an opening statement about its perceptioon of its case, and its not a bad thing for the plaintiff and defendant to hear the other side's view. a mediator might restate this view point to reinforce it.perhaps it is being heard for the first time.

the mediator may or may not break the parties out into seperate rooms and shuttle back and forth. realisim is very important if the case is to be resolved in mediation, and the mediator if experienced in the subject area can add that rrealisim if both sides agree that the mediator should do this and not remain simply nuetral. i like to hear the mediator's perspective, and where cases can't be settled, the mediator's perspective may cause me to change my strategy. for example, if i am making no headway with the mediator in explaining an issue, or convincing the mediator, why should i think i will do any beeter with the judge or jury?

if the parties are able to reach agreement, it is very wise to document the agreement with enough detail that the agreement can be enforced if a party goes back on its agreement. even if the parties can't reach full settlement they may agree to resolution of certain aspects that will streamline the case, for example, a range of money damages. and they can always return to the mediation table in the future.

oh yes. don't fret that the judge who is assigned this case will feel left out if this case does not reach her court room. likely, she has more than enough to keep her busy. i have even received thank you notes from judges.