Consumer Law & Policy Blog

Trademark Bullying from a Merchant of Death

by Paul Alan Levy

Take a gander of this image:  do you think, or even suspect, that Philip Morris, the maker of world-renowned Marlboro cigarettes, might approve this image, or might indeed be offering it for sale?

If so, you might well be one of the morons in a hurry that Philip Morris and Roberta Horton, a lawyer at its long-time law firm Arnold and Porter, consider to be so likely to be confused about sponsorship or affiliation that sale of this Tshirt represents trademark infringement or dilution.  Or, at least, so she claimed in a cease and desist letter to SkyGraphX, the maker of the shirt.

We at Public Citizen have been tangling with Arnold & Porter about its proudest client's right to kill consumers through smoking products for as long as I can remember.  We don't always agree with the point of view of people whose online free speech rights we defend, but this is a situation in which we are especially pleased to be able to defend the rights of this parodist to convey his message through a Tshirt offered for sale.  In a letter today, I have explained to Ms. Horton why her client's claims lack merit

Indeed, when I tried to talk to Ms. Horton about her client's claims and why SkyGraphX was not going to truckle to her demands, she expressed impatience because, she said, she had been able to "resolve" hundreds of situations just like this one.  I confess that this piqued my curiosity about how much successful bullying she and her client have been able to do.  One of the natural issues that can arise in a trademark infringement action is the extent to which the trademark holder has been "policing its mark," so assuming that this case ever gets into discovery, we will look forward to finding out about past bullying of this sort.  It may well that there is a pattern of oppressing free speech that may warrant injunctive or declaratory relief.

Price Controls on Payment Card Interchange Fees: The U.S. Experience

That's the name of this article by Zywicki, Manne, and Morris. Here is the abstract: 

The Durbin Amendment to the Dodd-Frank financial reform legislation capped debit card interchange fees for banks with assets of $10 billion. Credit card and prepaid card interchange fees were not regulated. The cap, which took effect on October 11, 2011, cut the average interchange fee for covered banks from $0.50 to $0.24 per transaction.

The cap reduced annual revenues from interchange fees by between $6 billion and $8 billion. Covered banks have recouped these losses in indirect ways. In particular, they have:

- Reduced the availability of fee-free current accounts. The total number of banks offering free current accounts fell by 50% between 2009 and 2013. In comparison, fee-free banking actually increased at banks not subject to the Durbin Amendment.
- More than doubled the minimum monthly holding required on fee-free current accounts between 2009 and 2012, from around $250 to over $750.
- Doubled average monthly fees on (non-free) current accounts between 2009 and 2013, from around $6 to more than $12.
- These fee increases and loss of access to free checking contributed to an increase in the unbanked population of approximately 1 million people, mainly among low-income families.
- Consumers have shifted their payment usage from debit cards to credit and prepaid cards, which were not subjected to price controls.

Most large retailers have seen significant cost reductions as a result of the Durbin Amendment, yet to date there is no evidence that those cost savings have been passed-through to consumers. Interchange fees have increased for merchants that make small-ticket transactions, as networks have eliminated discounts that they previously received, and smaller merchants have not seen any reduction in their merchant discount rates. Thus, while consumers have seen large and immediate increases in the cost of bank accounts, to date there is no evidence of reduced prices at the pump or checkout. We estimate that as a result of the Durbin Amendment, there will be a transfer of $1 billion to $3 billion annually from low-income households to large retailers and their shareholders, which have been the primary beneficiaries of the Durbin Amendment to date.

The Research Integrity Council, the CFPB, and Transparency

by Jeff Sovern

Last March, the CFPB Monitor Blog, announced  that "a group of representatives from across a variety of industries met to discuss the formation of a Research Integrity Council (RIC), the purpose of which will be to make recommendations to improve the quality and veracity of the research being conducted by the CFPB to inform its rulemaking process." According to that blog post, one concern about CFPB research was "the lack of transparency into the activities of the [CFPB's] Academic Research Council."

Yesterday, the CFPB Monitor reported that the RIC had held a Research Academic Forum. The blog post summarized remarks by the speakers, who included Thomas Durkin, retired Senior Economist in the Federal Reserve Board’s Division of Research and Statistics; Howard Beales, Professor at George Washington University School of Business and former Director of the Federal Trade Commission (FTC) Bureau of Consumer Protection; and Todd Zywicki, Professor of Law at George Mason University School of Law, Senior Scholar of the Mercatus Center, and former Director of the FTC Office of Policy Planning. Mr. Durkin "expressed concerns with the overall lack of transparency in how the CFPB conducts its research . . . ."

I was curious to discover more about RIC.  I have learned a lot from the CFPB Monitor and the firm that produces it, Ballard Spahr, and so I hoped to learn more from the RIC web site, and maybe even be able to listen to the Research Academic Forum. I googled the Research Integrity Council and Research Academic Forum, but couldn't come up with anything beyond links to the CFPB Monitor blog postings.  How about some transparency, guys?

Credit Discrimination and Same Sex Couples

by Jeff Sovern

Our casebook includes a problem raising the question of whether discrimination against same sex couples in the granting of credit violates ECOA (some states have statutes explicitly barring discrimination on the basis of sexual orientation, see, e.g., N.Y. Exec. L. 296-a(1)(a), and a HUD rule bars discrimination on the basis of sexual orientation in FHA-insured mortgages, but that's not exactly the same thing).  So I was particularly interested to see a story in the American Banker this week headlined HMDA Data Offers Clues on Discrimination Against Gays (behind a paywall).  The story, which is definitely worth reading if you are interested in this issue, observes that HMDA data shows credit denials for same-sex couples are higher than for opposite-sex couples, though lower than denial rates for individuals. That doesn't mean that the denials are discriminatory, though it certainly raises questions, especially in light of a HUD study last year of rental units that found that "same-sex couples experience unequal treatment more often than heterosexual couples when responding to internet ads for rental units . . . "

Ready for Hillary Retracts Infringement Claim on Eve of Litigation

by Paul Alan Levy

Ready for Hillary may have no more sense of humor than the NSA, but like the NSA, its leaders apparently know when the law is against it.  Late last night, just before midnight in fact, we learned that Ready for Hillary had sent a letter to Zazzle retracting its contention that Dan McCall’s Ready for Oligarchy parody infringes its intellectual property rights.  Ready for Hillary did not bother notifying McCall of its decision, and it is a good thing that the Eastern District of Virginia does not allow electronic filing of complaints, because our complaint fully drafted and would have been e-filed last night.  Had we filed suit, McCall’s a claim for damages for shirts not sold in the interim would have survived the mootness of his claim for declaratory relief, but we have concluded that the case is not worth filing now that Ready for Hillary has, however begrudgingly, done the right thing.

We remain distressed that Zazzle and CafePress removed the items in the first place, although their conduct over the past week confirmed my sense that CafePress remains the better company for sellers whose expression plays on names, designs, slogans or logos that enjoy trademark or copyright protection and who therefore rely on robust application of the doctrine of fair use and the rule that true parody, although it resembles a trademark enough to call the IP owner to mind, nevertheless does not create an actionable likelihood of confusion.  CafePress makes its own judgments about challenged materials – in the words of CafePress's Sarah Segal, it “balances our desire to support free expression of its users” and reviews individual situations in discussions with its users.  Zazzle, by contrast, woodenly follows the DMCA (at least when copyright violations are claimed), immediately removing challenged material and restoring it, if at all, if the user follows the DMCA counternotice procedure and sufficient time passes.

As for Ready for Hillary, the judgment of its leadership remains in substantial question.   It’s a good thing for Hillary Clinton that she can point to the PAC statutorily-required independence from her control in distancing herself from its attack on protected expression.

And McCall himself is spinning out new parodies....

 

Percentage of Minnesotans without health insurance plummets over last 7 months, apparently because of the Affordable Care Act

As of May 1, less than 5% of Minnesotans lack health insurance, down from just under 9% just 7 months earlier, as explained in this article by Jackie Crosby. (I'd be curious to hear about the latest data from other states.)

Dee Pridgen on POM Wonderful

Brian posted earlier about the Supreme Court's POM Wonderful decision but I thought readers of the blog might also be interested in the views of my co-author, Dee Pridgen:

POM Wonderful, the makers of pomegranate juice dietary supplement products, scored a big victory in the U S Supreme Court today   The Court ruled 7-0 (with Justice Breyer abstaining) that the regulation of juice labeling by the FDA under the Food, Drug and Cosmetic Act did not preempt or preclude a Lanham Act unfair competition suit by POM against Coca-Cola, whose Minute Maid division sells a competing pomegranate juice blend product.  The Court concluded that POM can move forward with its Lanham Act case because that statute is complementary to the FDCA, and not conflicting.  POM, as a competitor, is contending in the Lanham Act suit, that Coca-Cola’s product labeling is misleading and causes competitive injury to them, on the basis that the Coca-Cola product contained only miniscule amounts of pomegranate juice, and is mostly apple and grape juice.  POM Wonderful was itself sued a few years ago by the FTC, who alleged that POM was marketing its products deceptively by claiming that it cured or prevented heart disease, prostate cancer and erectile dysfunction without having adequate substantiation.  The FTC case is currently on appeal to the DC Circuit Court.  Thus POM can now move forward with its claim that Coca-Cola was trying to unfairly horn in on the market for pomegranate juice products that POM had created based on unsubstantiated claims about the benefits of pomegranate juice.  On the other hand, one has to quietly cheer for POM because the Coca-Cola label was breathtakingly misleading itself, at least in terms of the amount of pomegranate juice in the product. 

Dee Pridgen will be speaking on these two POM cases at the 14^th Consumer Issues Conference, FOOD: Perceptions, Practices and Policies, to be held on the campus of the University of Wyoming October 8-10. www.uwyo.edu/cic.

 

Supreme Court: Despite FDA regulation of misbranded food, POM Wonderful may sue Coca-Cola under the Lanham Act for allegedly deceptive ads

Read this morning's Supreme Court 8-0 decision here. (Justice Breyer did not participate.) The first three paragraphs of Justice Kennedy's opinion sum things up nicely:

POM Wonderful LLC makes and sells pomegranate juice products, including a pomegranate-blueberry juiceblend. App. 23a. One of POM’s competitors is the Coca-Cola Company. Coca-Cola’s Minute Maid Division makes a juice blend sold with a label that, in describing the contents, displays the words “pomegranate blueberry” with far more prominence than other words on the label that show the juice to be a blend of five juices. In truth, the Coca-Cola product contains but 0.3% pomegranate juice and 0.2% blueberry juice.

Alleging that the use of that label is deceptive and misleading, POM sued Coca-Cola under §43 of the Lanham Act. 60 Stat. 441, as amended, 15 U. S. C. §1125. That provision allows one competitor to sue another if it alleges unfair competition arising from false or misleading product descriptions. The Court of Appeals for the Ninth Circuit held that, in the realm of labeling for food and beverages, a Lanham Act claim like POM’s is precluded by a second federal statute. The second statute is the Federal Food, Drug, and Cosmetic Act (FDCA), which forbids the misbranding of food, including by means of false or misleading labeling. §§301, 403, 52 Stat. 1042, 1047, as amended, 21 U. S. C. §§331, 343.

The ruling that POM’s Lanham Act cause of action is precluded by the FDCA was incorrect. There is no statutory text or established interpretive principle to support the contention that the FDCA precludes Lanham Act suits like the one brought by POM in this case. Nothing in the text, history, or structure of the FDCA or the Lanham Act shows the congressional purpose or design to forbid these suits. Quite to the contrary, the FDCA and the Lanham Act complement each other in the federal regulation of misleading food and beverage labels. Competitors, in their own interest, may bring Lanham Act claims like POM’s that challenge food and beverage labels that are regulated by the FDCA.

As we've noted before, POM's position in the Supreme Court was a tad ironic, given its history of ads claiming the wondrous health benefits from drinking its pomengranate juice. Watch Jon Oliver's brilliant piece on the subject here.

CafePress Rejects Ready for Hillary's Takedown Demand

by Paul Alan Levy

CafePress has responded to our letter to the political action committee Ready for Hillary by agreeing that Dan McCall's Ready for Oligarchy parodies are protected by the First Amendment as well as by the doctrine of fair use; it is in the process of restoring the parodies to its onlne store.  It also provided is with a copy of Ready for Hillary's actual takedown letter to that company, revealing both that its principal claim was copyright infringement, and that the immediate target of its takedown command was a different parodist, whose crime was to pair the words "Ready for Hillary" with the words "to Explain Benghazi."

Zazzle, regrettably, has yet to respond, and neither has Ready for Hillary acknowledged its overreach and recinded its claims of infringement.  We have, therefore, reminded its counsel that the deadline to avoid an action for a declaratory judgment of non-infringement is fast approaching.

Should People at GM Be Prosecuted for Homicide?

by Jeff Sovern

That's the question raised by my letter in the Times.  Here's the relevant portion of the letter:

Candice Anderson was charged with manslaughter and ultimately pleaded guilty to criminally negligent homicide for an accident leading to the death of her boyfriend.

Now that G.M. has concluded that the accident was caused not by her but by a defective part, it will be interesting to see if anyone at G.M. is charged with similar crimes.