Alerts

AD-ttorneys@law – May 8, 2020

Alerts / May 8, 2020

In This Issue:

Upcoming Webinars

Join BakerHostetler’s NEW Digital Transformation and Data Economy Team (DTDE) for a webinar series where attorneys will cover legal implications surrounding COVID-19 for business leaders and provide practical answers and actionable advice.

The DTDE team is designed to help you determine where your opportunities and vulnerabilities lie and design a plan to manage, protect and leverage digitization and data assets. If you are positioning for what’s beyond the horizon and looking for your North Star, we can be your crew that moves the ship forward.

Register now for one or all of the webinars in this series:

  • May 13: How to Pivot and Transform Your Digital Assets into Alternate Revenue Streams
  • May 20: Accelerate: Getting to Your North Star Faster
  • May 27: How to Navigate Your Exit
Jeff Dunham Tries to Bring Curtain Down on T-Shirt Company

Accuses ooshirts of profiting off his career, with a COVID spin

Comedy for Dummies

Think of the biggest acts in comedy. Names like Chris Rock, Amy Schumer, Gabriel Iglesias and Jerry Seinfeld come to mind. But did Jeff Dunham make your list? He should be on it ‒ he was one of the top-ten highest-paid comedians of 2019, and has been a mainstay on that list for years. At one point, he ranked third on that list, behind Rock and Seinfeld.

Not bad for a ventriloquist act.

If you haven’t seen his work, the basic gist is this: Dunham plays a bland everyman who brings to life a series of over-the-top puppet characters, some of which have offended politically correct sensibilities – there’s a skeletal terrorist, a crotchety old geezer, a jalapeño pepper with a Mexican accent, a flamboyant pimp, and so on.

Hammer v. Rodentia

The point is, these characters are Jeff Dunham’s living; without the puppets he would perhaps find some fame as voice talent, but he would not have earned the popularity he now enjoys.

The value of Dunham’s puppet partners is at the center of a deeply exasperated complaint he filed in the Central District of California in April. Dunham goes after the defendants, Raymond Lei and his novelty fashion company ooshirts, with the “I can’t take it anymore” desperation of a Lifetime movie channel heroine finally confronting her stalker. Allegedly, Lei and company have spent years profiting from Dunham’s copyrights and trademarks by printing his various characters and their catch phrases, as well as images of Dunham himself, on T-shirts and other products.

“Defendants have been engaging in this same conduct for years, which can be equated to a game of ‘whack-a-mole,’” says the complaint, which describes an ongoing cycle of infringement by Lei, legal action by Dunham, court orders to remove the infringing products and the inevitable appearance of new infringing products from ooshirts.

The Takeaway

What gives this lawsuit a very 2020 flavor is Dunham’s weaponization of the COVID-19 pandemic in the complaint. According to Dunham, Lei and company “are marketing, advertising, promoting, manufacturing, selling, and profiting off of consumer products, including COVID-19 face masks and t-shirts, that clearly incorporate and exploit the world-famous ventriloquism characters that Plaintiff Jeff Dunham spent years to develop.”

Because Lei also used pictures of Dunham to promote the knockoff products, “fans of the Plaintiff … ask him whether he was improperly trying to profit off of the COVID-19 pandemic by selling these COVID-19 products,” an unfortunate deception that “continues to cause great harm to [his] reputation and brand.”

Dunham is trying to pull off a trifecta: an intellectual property infringement suit, a right-of-publicity suit and a public relations campaign tied to the ongoing COVID disaster. We’ll let you know how the next round of whack-a-mole turns out.

Eleventh Circuit: Guitar Designer Wasn’t Taking a Solo

Confusions over ownership and endorsement kill signature series guitar dispute

I Am Legend

“Dimebag” Darrell Abbott is a hall-of-fame heavy metal guitarist.

If you’re a metal fan of a certain age, Dimebag, the lead guitarist and co-founder of metal juggernaut Pantera, likely had a tremendous influence on your musical tastes. But if you’re a metal neophyte, here’s a video of the man giving a guitar clinic (watch your speaker volume and be prepared for the man to swear a few times).

You could spend all day watching videos of Dimebag’s skills in action, but we like this clip ‒ it shows off his artistry, of course, but also demonstrates the man’s affability and sense of humor. These are rare public qualities in a musical genre that prides itself on technical supremacy and macho fearsomeness.

His approachability, along with his virtuosity, makes Dimebag’s demise all the more tragic ‒ he was shot to death by a deranged fan in the middle of a concert in 2004, depriving metal of yet another great talent.

Damagesplan

At the beginning of the video, Dimebag briefly discusses what was then a newly minted endorsement relationship with Dean guitars, a relationship that provides the grist for a recent Eleventh Circuit ruling.

Back in the 80s, Buddy “Blaze” Webster, a friend of Dimebag’s and a respected guitar designer, took a Dean model electric guitar, souped it up, painted a lighting graphic on it and presented it to the guitarist as a gift. Dimebag called it the “Dean from Hell,” and it became his signature axe.

Fast forward to the aftermath of Dimebag’s murder: Although Dimebag did not live to enjoy the fruits of his endorsement deal, Dean Guitars began producing a “Dean from Hell” model of its own. Webster waited for just a bit ‒ 13 years ‒ but eventually sued Dean Guitars and Dimebag’s estate in 2017, alleging that the guitar manufacturer had infringed his copyright, engaged in unfair competition and falsely endorsed the design.

The Takeaway

The circuit court ruled in favor of Dean and the Dimebag estate.

On the copyright infringement claim, the court agreed with the Middle District of Florida that Blaze’s claim was filed too late because it presented an ownership issue rather than a general infringement claim: “[C]laims of co-ownership, as distinct from claims of infringement, accrue when plain and express repudiation of co-ownership is communicated to the claimant,” the appellate court wrote, quoting an earlier case. Dean Guitars had maintained that Dimebag’s estate, and not Webster, owned the copyright as early as 2007, meaning that the clock ran out on the claims in 2010, long before the suit was filed.

On the unfair competition claim, the Eleventh Circuit again agreed with Dean and its co-defendants. Videos produced for Dean to promote various “Dean from Hell” reissues in which Webster discussed the history of the design and other statements by the company did not cause customer confusion because “the videos accurately show Webster describing his part in the history of the DFH, which he has used to his own advantage to sell his own [guitar model]. The statements in these videos do not become misleading, nor do they imply that he endorses or benefits from the sale of the DFH reissues.”

Finally: “Webster argues that his presence in Dean’s promotional materials and videos ‘was “inescapably interpreted” by the audience of guitar-enthusiasts [as] an endorsement.’” But the Eleventh Circuit concluded that “because Webster has not established a likelihood of consumer confusion, mistake, or deception, the district court properly granted summary judgment in favor of the Appellees on his false endorsement claim.”

So we have a double takeaway ‒ know your rights, and know how long they last. In anticipation of future disputes, keep issues of ownership clear from the beginning of a collaboration. Likewise, in the case of the unfair competition and false endorsement claims, seek sound legal counsel before you participate in the promotion of a product. You may be promoting a future claim away.

Drug or Cosmetic? The Question Is Preempted

Cali’s Southern District ends the long life of a case that was showing its age

Sloughing Off

We’re going to fast forward through the six years of legal wrangling that dogged Franz v. Beiersdorf, Inc., from the original 2014 complaint in the Southern District of California to its 2017 appeal before the Ninth Circuit and back to its recent dismissal by the district court. Too much happened during this saga to summarize easily ‒ claims shaved down, plaintiffs replaced midstream …

We only have so much real estate.

“Four years ago, Plaintiff Stacie Somers purchased a twin-pack of Nivea CoQ10 Lotion online,” the court wrote in a terse order granting summary judgment on behalf of Beiersdorf, Nivea’s manufacturer.

“Three motions to dismiss and one appeal later, [Plaintiff] Somers is left with a single claim: that Defendant Beiersdorf’s sale of the lotion was ‘unlawful’ under California’s Unfair Competition Law because the lotion is a drug sold without the approval of the Food and Drug Administration.” You can almost feel the exhaustion.

Vanishing Cream

The issues at the center of the dispute are of interest to manufacturers of cosmetics and personal care products, of course ‒ there’s a fine line that such products walk between being purely cosmetic and medicinal in nature. Claims made by Beiersdorf included that Nivea was “proven to firm and tighten skin’s surface in as little as two weeks.” Somers maintained that such claims rendered the lotion a drug and not a cosmetic.

But the court didn’t care about that argument ‒ or rather, didn’t have to care about it. Beiersdorf moved to dismiss, countering that the Federal Food, Drug and Cosmetics Act preempted Somers’ state-law claim, and the court agreed.

“Because it disposes of the motion on preemption grounds,” it wrote, “the Court does not—and indeed cannot—reach the question of whether the lotion is a drug or a cosmetic.”

So what prompted the court to find that the state claims were preempted? Private action is forbidden under the FDCA. According to the court, “[C]laims seeking to enforce the FDCA must thread a ‘narrow gap’ to escape preemption.” The court went on to say that plaintiffs must sue for “conduct that violates the FDCA … but the plaintiff must not be suing because the conduct violates the FDCA.”

What on earth does that mean?

The Takeaway

The court presents one of Somers’s allegations as a clarifying example:

“Defendant engaged in illegal conduct by unlawfully making skin firming representations about its Nivea CoQ10 Lotion that resulted in its being deemed a drug under FDA regulations, but did so without obtaining required FDA approval through the FDA NDA [New Drug Approval] process.”

Somers sued Beiersdorf because the company allegedly ignored established review processes, exactly the sort of misstep that the FDCA empowers the FDA to pursue and punish. “There is no reasonable way to construe [Somers’s] allegation except as an attempt to privately enforce the FDCA, enforcement that has been committed by law to the FDA.”

Indeed, just a year into this six-year-long odyssey, the court asked Somers to pursue relief directly from the FDA (the FDA responded by telling Somers that it did not intend to take any action).

“Whether the Nivea CoQ10 Lotion is being sold unlawfully depends on whether it is subject to the NDA process in the first instance,” the court concluded. “And that is a determination that ‘rest[s] within the enforcement authority of the FDA, not this Court.’”

Consumer Files Brief Over Costco Boxer Cotton Content

Says warehouse club mislabeled percentage of high-quality cotton

Call of Duty

Let’s give a big hand to Dr. Sabit Adanur, a professor at Samuel Ginn College of Engineering, Auburn University.

Why the celebration? Two reasons: First, because Dr. Adanur is the rare provider of expert analysis named as an individual in a complaint. People like him make lawsuits possible, but are mostly anonymous in court documents.

Second, Dr. Adanur, who is an expert on fibers, yarns and textiles, doesn’t flinch. When Floridian plaintiff Paula Damaso sued mega-chain Costco and needed her underwear tested, Dr. Adanur was there.

Dr. Adanur, we salute you.

The Takeaway

We’re in the early days of Damaso’s lawsuit ‒ her original class action was filed in late March, and the dispute was moved to the Middle District of Florida in mid-April. All we have now is the initial filing.

Damaso alleges that she purchased two packs of Costco’s Kirkland Signature brand Comfort Fit Boxer Briefs. Aside from a universally acknowledged need for underwear, she was motivated in part to purchase the briefs because they were labeled as “96% Pima Cotton” ‒ Pima being a species of cotton that grows extra-long fibers and is associated with high-quality cotton products.

When she unwrapped the briefs, she noticed that the tag on the briefs themselves ‒ invisible through the outer packaging ‒ boasted only “96% Cotton.” So Damaso had the material tested.

The good Dr. Adanur analyzed the tests and determined “that less than 80% of the cotton fiber in the two Product samples qualifies as Pima cotton.” Hence the class action, which charges Costco with violation of the Florida Deceptive and Unfair Trade Practices Act. We’ll keep you, um, briefed on how it unfolds, but the basics are clear: If your product itself is imprinted with information like parts or ingredients, make sure those claims jive with the packaging.

FCC to Private Sector: “Calling All Consortia”!

Commission seeks private sector help to enforce anti-robocall act

Terms of Agreement

Before we discuss the TRACED Act, let’s dispense with the obvious. The subsection of the American legislature that has dedicated itself to torturing the English language into cutesy acronyms had its hands all over this one. The name stands for “Telephone Robocall Abuse Criminal Enforcement and Deterrence Act.” Not the most egregious acronym, or the wittiest, but a solid attempt. Enough said.

The TRACED Act passed at the end of last year, a rare bipartisan effort that was even signed by the president into the books. The reason for the bipartisan amity is obvious: No matter how the major political parties demonize and attack each other, they will always agree on the fact that robocalls not only suck, but they’re also getting way out of hand. Americans received upward of 55 billion robocalls in 2019, more than double the previous year.

Commission Unleashed!

The Act contains a slew of provisions that should stem the robocall flood, including:

  • Extending the statute of limitations on robocall violations, adding additional penalties and allowing pursuit of first-time offenders.
  • Requiring networks to adopt the STIR/SHAKEN framework to eliminate call spoofing without additional charges to customers (if you’re an acronym hound, here’s a relevant article for you).
  • Mandating an interagency task force, headed by the Department of Justice, to improve government prosecution of robocall violations.

The Takeaway

The TRACED Act also required the Federal Communications Commission (FCC) to anoint a single consortium of private companies to “conduct private-led traceback efforts,” and the process of selecting that group is underway.

The FCC recently released a call for letters of intent from interested consortiums consortia (it just sounds cooler). The FCC is looking for neutral third parties that can demonstrate competence, come to the party with defined strategies and agree to launch their efforts prior to winning registration. The deadline for applications is May 21; interested groups can read more here.

It’s clear to anyone familiar with the telecommunications landscape that a reduction in robocalls will require active participation by the private sector. Let’s hope that the FCC receives a robust response ‒ and chooses the winner wisely.

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DSIR Deeper Dive: Using Compromise Threat Intelligence

Organizations are under tremendous pressure to be agile and resilient. A key part of building a mature cybersecurity posture to enable the goals of the organization is conducting ongoing risk assessments and then implementing risk-prioritized measures. Organizations contact us during this process to ask what emerging threats to guard against. Our answer always includes a list of the issues that have already emerged and that are still causing incidents. Learn more here.

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