Opinion ID: 209272
Heading Depth: 2
Heading Rank: 1

Heading: Dastar and Section 43(a) of the Lanham Act

Text: We agree with Molten that Dastar precludes Baden's section 43(a) claim. The Supreme Court stated in Dastar that section 43(a) of the Lanham Act does not have boundless application as a remedy for unfair trade practices. Dastar, 539 U.S. at 29, 123 S.Ct. 2041. Because of its inherently limited wording, section 43(a) can never be a federal codification of the overall law of unfair competition, but can only apply to certain unfair trade practices prohibited by its text. Id. Section 43(a) of the Lanham Act does not create liability from Molten's advertisements because those advertisements do not concern the origin of goods, to which section 43(a)(1)(A) is directed, nor do they concern the nature, characteristics, [or] qualities of the goods, which is what Ninth Circuit law has interpreted Section 43(a)(1)(B) to address. See Sybersound Records, Inc. v. UAV Corp., 517 F.3d 1137, 1144 (9th Cir.2008). Section 43(a)(1) of the Lanham Act reads as follows: (1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act. 15 U.S.C. § 1125(a)(1). Dastar involved a television series about World War II. The owners of the series allowed its copyright to expire, thus placing the series in the public domain. Dastar, 539 U.S. at 26, 123 S.Ct. 2041. Dastar Corporation copied and edited the series, added new narrations, repackaged and renamed the series, and began selling the modified video as its own product. Id. at 26-27, 123 S.Ct. 2041. A number of media companies brought suit against Dastar Corporation alleging that sales of the video violated section 43(a) of the Lanham Act, the same section implicated by the present appeal. Id. at 25, 27, 123 S.Ct. 2041. Section 43(a)(1)(A) of the Lanham Act makes actionable any commercial misrepresentation that is likely to cause confusion as to the origin of goods. 15 U.S.C. § 1125(a)(1)(A); see also Dastar, 539 U.S. at 29-30, 123 S.Ct. 2041. The Supreme Court held that origin of goods, as that term is used in Section 43(a), does not refer to the person or entity that originated the ideas or communications that `goods' embody or contain. Dastar, 539 U.S. at 32, 123 S.Ct. 2041. Instead, the Court read origin of goods as referring to the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods. Id. at 37, 123 S.Ct. 2041. Because Dastar Corporation was the origin, or producer, of the products it sold, the Court held that Dastar was not liable for false advertising under the Lanham Act. Id. at 38, 123 S.Ct. 2041. Applying the Supreme Court's interpretation of section 43(a)(1)(A) to this case entails an evaluation of whether Molten's advertising refers to the producer of the tangible goods, in which case a claim under section 43(a)(1)(A) would be proper, or whether it refers to the author of the idea or concept behind Molten's basketballs, in which case the claim would be foreclosed by Dastar. Looking at the case in this light, it is apparent that Dastar does not permit Baden to claim false advertising under section 43(a)(1)(A). Baden has not argued that someone other than Molten produces the infringing basketballs, and nothing in the record indicates that Molten is not in fact the producer of the balls. Thus, Baden's claims are not actionable under section 43(a)(1)(A) because they do not cause confusion ... as to the origin of the basketballs. While Baden agrees that Dastar precludes finding liability in this case under section 43(a)(1)(A), it argues that its Lanham Act claims are permitted under Section 43(a)(1)(B). That subsection creates liability for any commercial advertising that misrepresents the nature, characteristics, qualities, or geographic origin of goods. 15 U.S.C. § 1125(a)(1)(B). Baden argues that its claims survive Dastar 's holding by pointing to dictum at the end of the Dastar opinion: If, moreover, the producer of a video that substantially copied the Crusade series were, in advertising or promotion, to give purchasers the impression that the video was quite different from that series, then one or more of the respondents might have a cause of actionnot... under the confusion ... as to the origin provision of § 43(a)(1)(A), but for misrepresentation under the misrepresents the nature, characteristics [or] qualities provision of § 43(a)(1)(B). Dastar, 539 U.S. at 38, 123 S.Ct. 2041 (alteration in original). This language, according to Baden, permits Baden to bring its false advertising claim because Molten's innovation claims misrepresent the nature, characteristics, or qualities of its basketballs. Indeed, in permitting Baden's innovation claims to proceed to trial, the district court relied on Dastar. Baden Sports, 2007 WL 2058673, at , 2007 U.S. Dist. LEXIS 51252, at . The court found that innovative, in contrast to proprietary and exclusive, related to the nature, characteristics, and quality of the basketballs themselves. Id. The court found that any advertising indicating that Molten's `Dual Cushion Technology' is `innovative' or new relates, not to the inventor of Molten's basketball technology, but to the `nature, characteristics, [or] qualities' of the basketballs themselves. Dastar does not bar a false advertising claim based on Molten's advertising that its product or technology is innovative. Id. While the dictum in Dastar might suggest that the Supreme Court left open the possibility of a claim arising from a misrepresentation concerning the qualities of certain goods, it does not necessarily suggest that claims based on false designation of authorship are actionable under Section 43(a)(1)(B). Such a holding could create overlap between the Lanham and Patent Acts. See Sybersound Records, 517 F.3d at 1144 (excluding false authorship claims from the Lanham Act in order to avoid overlap between the Lanham and Copyright Acts). Moreover, the Ninth Circuit, whose law we follow in this Lanham Act case, held that the nature, characteristics, and qualities language of Section 43(a)(1)(B) did not refer to the licensing status of a copyrighted good. Id. The court held that, to avoid overlap between the Lanham and Copyright Acts, Section 43(a)(1)(B) must refer to the characteristics of the good itself. Id. According to the court in Sybersound, the nature, characteristics, and qualities of the disputed karaoke recording referred to such things as the quality of its audio and visual effects, not to its licensing status. Id. Following Sybersound 's reasoning, we conclude that authorship, like licensing status, is not a nature, characteristic, or quality, as those terms are used in Section 43(a)(1)(B) of the Lanham Act. Having reached this determination, we now must examine whether Baden's false advertising claims otherwise implicate the nature, characteristics, or qualities of the basketballs. Thus, we must determine whether Baden has alleged anything more than false designation of authorship. We conclude that Baden has not. No physical or functional attributes of the basketballs are implied by Molten's advertisements. Innovative only indicates, at most, that its manufacturer created something new, or that the product is new, irrespective of who created it. In essence, Baden's arguments in this case amount to an attempt to avoid the holding in Dastar by framing a claim based on false attribution of authorship as a misrepresentation of the nature, characteristics, and qualities of a good. Baden has repeatedly alleged that Molten falsely claimed that Molten, not Baden, created the innovation known as dual-cushion technology. Throughout the trial, Baden steadfastly argued that Molten's advertisements were false precisely because Molten was not the source of the innovation. See, e.g., Tr. of R. at 1045, Baden Sports, 541 F.Supp.2d 1151 (No. 369) (They took our technology and they began to advertise it as their own invention.); id. at 1051 ([T]he representation that `dual cushion technology' is a Molten innovation would have a tendency to deceive a substantial segment of his audience.). The district court stated that [a]lthough some of that testimony indicates that witnesses believed Molten's advertising was false because Baden actually created the patented design, not Molten, other testimony makes clear that witnesses believed the advertising to be false because Molten's product was not `new,' Baden Sports, 541 F.Supp.2d at 1159. On appeal, Baden has waived any such argument about novelty or newness, as Baden has limited its arguments to Molten's claims to be the innovator of dual-cushion technology. For example, Baden states in its reply brief that [t]his is not a case that involves any single consistent use of `innovative' or `innovation' in Molten's advertising. Instead, there are multiple variations that collectively convert Molten's advertising from a general statement that it is merely selling an `innovative' product to communicating [that] `this particular innovation is Molten's.' Baden's Reply Br. at 49; see also id. at 45 (Baden did contend that it wanted Molten to stop falsely advertising that Molten is the creator of the design.); id. at 50 (arguing that Molten's advertisements are not puffery because they do not merely claim an innovation, but rather a Molten innovation (emphasis in original)). Furthermore, at oral argument before this court, Baden's counsel confirmed that Baden was alleging false advertising based exclusively on Molten's claim to have been the innovator of the technology. The Court: So the only thing you're really saying they offended is by saying, `We, Molten, made these innovations'? Counsel for Baden:  That's correct. What we're saying is Baden developed this technology. Oral Argument at 20:45, http://oralarguments.cafc.uscourts.gov/mp3/XXXX-XXXX.mp3. Baden has not argued on appeal that Molten's innovation claims were false for any reason other than a false attribution of the authorship of that innovation. Baden's claims therefore do not go to the nature, characteristics, [or] qualities of the goods, and are therefore not actionable under section 43(a)(1)(B). To find otherwise, i.e., to allow Baden to proceed with a false advertising claim that is fundamentally about the origin of an idea, is contrary to the Ninth Circuit's interpretation of Dastar. See Dastar, 539 U.S. at 37, 123 S.Ct. 2041; Sybersound, 517 F.3d at 1144. Thus, we reverse the district court's denial of judgment as a matter of law on Baden's Lanham Act claims. [1]