Respondents Brief — Consumers Union of United States, Inc. v. General Signal Corp.

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No. 83-1870 Nee

SANDER STEVag

ee ee cai ‘Cet. Sree CTERK :

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

CONSUMERS UNION OF UNITED STATES, INC.,

- Petitioner,

THE NEW REGINA CORPORATION and

GREY ADVERTISING INC.,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

JOSEPH M. BURKE

DAVIS & GILBERT

850 Third Avenue

New York, New York 10022

(212) 593-0707

Counsel for Respondent

Grey Advertising Inc.

* Counsel of Record

CHARLES D. FERRIS

BRUCE D. SOKLER *

CAMERON F. KERRY

MINTZ, LEVIN, COHN, FERRIS,

GLOVSKY & PoPEo, P.C.

1825 Eye Street, N.W.

12th Floor

Washington, D.C. 20006

(202) 293-0500

JULES P. KIRSCH

CooPER, DUNHAM, CLARK,

GRIFFIN & MORAN

30 Rockefeller Plaza

New York, New York 10012

(212) 977-9550

Counsel for Respondent

The New Regina Corporation

WILSON -

EPES PRINTING Co., INC. - 789-0096

- WASHINGTON, D.C. 20001

ag

QUESTION PRESENTED

Whether, in exercising its discretion to decide that a

preliminary injunction was inappropriate, the United

States Court of Appeals for the Second Circuit correctly

applied copyright law principles to the facts of this case

to determine that petitioner was unlikely to succeed on

the merits?

(i)

TABLE OF CONTENTS

Page

QUESTION PRESENTED ............................. sania i

gc ciahcvcntinenenniehinlennietiocionectionenins iii

Ee Ne I IN nisin entsnsirnensenscnsecintnnasiisnns iv

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ot a i) |, ) ee 8

SERENA eS Se eee Sener ee 9

I. SINCE THE DECISION OF THE COURT OF

APPEALS INVOLVED A PRELIMINARY

INJUNCTION, IT IS NONFINAL AND NOT

RIPE FOR REVIEW BY THIS COURT AND

ALSO RESTS INDEPENDENTLY ON FAC-

TUAL DETERMINATIONS NOT BEFORE

ee ahenaadiaistaleidectnacinbhiicaenlansabionynanetbiesein ]

II. THE DECISION BELOW IS COMPLETELY

CONSISTENT WITH DECISIONS OF THIS

COURT AND THE COURT OF APPEALBS........ 10

TY nacre tececadicsaacpiasechadionsebucinminntindeanaanasiinan 16

(ili)

iv

TABLE OF AUTHORITIES

Cases: Page

American Construction Co. v. Jacksonville T. &

K. W. Ry., 146 U.S. S72 (1698) ............................ 10

Berlin v. E.C. Publications, Inc., 329 F.2d 541 (2d

RMR eee GPR We Reo mmm 12

Brotherhood of Locomotive Firemen and Engine-

men v. Bangor & Aroostook R.R., 38) U.S. 327

(5 Rpt Peet etna Rennie Seren eOe nnn: hreove enue 9

Cobbledick v. United States, 309 U.S. 328, 324-25

(REE RERSSR sar eae SFE NORE DOD om Rey eI naa 9

Consumers Union of United States v. Theodore

Hamm Brewing Co., Inc., 314 F.Supp. 697 (D.

A eh 15

Consumers Union of United States, Inc. v. Hobart

Manufacturing Co., 189 F.Supp. 275 (S.D.N.Y.

api eae Te ae ec mene Ann SA eae ea GCE RSS 15

Elsemere Music, Inc. v. National Broadcasting Co.,

623 F.2d 252 (2d Cir. 1980) (per curiam)........ 12

Gillespie v. United States Steel Corp., 379 U.S. 148,

Gk ea me es Ber Biri mei FS 9 AE 10

Hamilton-PBrown Shoe Co. v. Wolf Bros. & Co., 240

ne I lee 9

Harper & Row Publishers, Inc. v. Nation Enter-

prises, No. 83-1632 ............... PB eth eA T OE sae ee eR 10

Iowa State University Research Foundation, Inc.

v. American Broadcasting Companies, Inc., 621

Pe NR eR nn Ae a 13

Karll v. Curtis Publishing Co., 39 F. Supp. 836

a cccabaieieenaks 12

Land v. Dollar, 330 U.S. 731 (1947) ...............0........ 10

Larson v. Domestic & Foreign Commerce Corp.,

re ic ciesibinaanonons 10

New York Times Co. v. Roxbury Data Interface,

Inc., 484 F.Supp. 217 (D.N.J. 1977) .......0.00000000.... 12

Pittsburgh Press Co. v. Pittsburgh Commission on

Human Relations, 413 U.S. 376 (1978) ............... 11

Rosemont Enterprises, Inc. v. Random House Inc.,

366 F.2d 303 (2d Cir. 1966), cert. denied, 385

I a a sasaki dosnmeenae 12-13

Vv

TABLE OF AUTHORITIES—Continued

Page

Sony Corporation of America v. Universal City

Studio, Inc., 104 S.Ct. 774 (1984) -... ii iansleemtaahastas 9, 14-15

Triangle Publications, Inc. v. Knight-Ridder News-

papers, Inc., 626 F.2d 1171 (5th Cir. 1980)........ 12

United States v. General Motors Corp., 323 U.S.

Et _ | RRNA EMT eRe APE ne TET 10

Virginia State Board of Pharmacy v. Virginia Citi-

zens Consumer Council, Inc., 425 U.S. 748

GIP III *cssdnsiticonsceidcshdestichschinabnireth Adana sip sabsdgrastccn aces seme ae 11-12

Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S.

SO I iis cation husccnarnteeccisenckens ee tctsheerateelaatamics 9

Constitutional Provisions and Statutes:

United States Constitution, First Amendment........ passim

es Oe ED waists cestcticenccesiaccncecsuceaee 2

pF RLS © sy 5 PURER ee ea aE Aa a 2

pg Mal Ren MeO Tr rere eM S EC 9! 2

A EG eb cadeidndsacdncusnannbiadeeebateeeanninea passim

Other:

H.R. No. 94-1476, 94th Cong., 2d Sess. 66 (1976),

reprinted in, [1976] U.S. Code Cong. & Admin.

re en OF ies Lo 12

Sen. Rep. No. 473, 94th Cong., Ist Sess. 62. (1975)... 12

R. Stern & E. Gressman, SUPREME COURT PRACTICE

£3 Bi fg SR ete een 9

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

No. 83-1870

CONSUMERS UNION OF UNITED STATES, INC.,

. Petitioner,

THE NEW REGINA CORPORATION and

GREY ADVERTISING INC.,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

STATEMENT OF THE CASE

Respondents The New Regina Corporation (“Regina’’)?

and Grey Advertising Inc. respectfully request that this

Court deny the petition for certiorari filed May 14, 1984

1 This litigation involves television advertisements regarding

Regina vacuum cleaner products. When the case was initiated, they

were manufactured by The Regina Company, then a division of a

wholly-owned subsidiary of General Signal Corporation, a defendant

below. On July 3, 1984, General Signal divested Regina, and The

New Regina Corporation was formed. After consultation with the

Clerk’s Office, we have captioned this Brief in the name of the new

entity, now the real party in interest.

Pursuant to Rule 28.1 of the Rules of the Supreme Court, re-

spondents The New Regina Corporation and Grey Advertising

Inc. state that each has no corporate parent and no publicly-owned

subsidiaries or affiliates.

2

seeking plenary review of an interlocutory decision by the

United States Court of Appeals for the Second Circuit

that reversed and vacated a preliminary injunction bar-

ring broadcast by respondents of two television commer-

cials.”

In September, 1983, Regina began a national television

advertising campaign for The Regina Electrikbroom

Powerteam vacuum cleaner (“The Regina Powerteam”)

that contained brief, verbatim quotations from an article

that evaluated lightweight vacuum cleaners in Consumer

Reports, published by petitioner Consumers Union of

United States (“CU”). On September 30, 1983, CU filed

the instant action. The Complaint alleged violations of

the copyright laws, 17 U.S.C. § 1 et seq., of the Lanham

Act, 15 U.S.C. § 1114(1) and 1125(a); and of state and

common law. On October 18, 1983, upon the basis of a

record consisting exclusively of written briefs and affi-

davits, the district court entered a preliminary injunc-

tion based solely on the copyright claim.

Regina took an expedited appeal to the Second Circuit.

On November 25, 1983, a unanimous panel of the Court

of Appeals reversed the District Court and vacated the

injunction. The Ceurt issued its opinion in support of

its judgment on December 6, 1983. The court found that

no preliminary injunction was appropriate because CU

failed to establish a likelihood of success on the merits on

any ground asserted in its complaint or to introduce con-

crete evidence of harm to CU, while there was “substan-

tial evidence of potential harm to Regina from mainte-

nance of the injunction.” (Pet. App. 24a).

2 The following abbreviations will be used in this brief: “Pet.”

for citation to the Petition for a Writ of Certiorari, “Pet. App.” for

citation to the Appendix to the Petition and “App.” for citation to

the Joint Appendix below.

3

STATEMENT OF FACTS

Regina’s principal business is the manufacture of light-

weight, upright vacuum cleaners. These are lighter,

smaller, and cheaper than conventional full-sized vacuum

cleaners. Regina’s top of the line model is The Regina

Powerteam.*®

Petitioner CU is a non-profit, independent consumer

organization that compiles and provides information to

the public regarding consumer products and services.

CU maintains testing laboratories and facilities, conducts

tests, and makes judgments on purchased samples of

tested products and services. The results of CU’s tests

are published in its monthly magazine, Consumer Re-

ports, distributed to paid subscribers and sold on news-

stands.*

In its July 1983 issue, Consumer Reports evaluated

lightweight vacuum cleaners. The headline of the article

declared “Most of the 18 we tested were lightweight per-

formers. Only one worked well.” The one product that

Consumer Reports singled out was The Regina Power-

team. The article was illustrated with a picture of a man

holding The Regina Powerteam, captioned “Regina

Powerteam—far ahead of the pack in cleaning ability.”

The Consumer Reports article was remarkable in the

clearcut, decisive edge it gave The Regina Powerteam

over the other seventeen models tested:

—“Of the models we tested, only the Regina

Power Team has a motorized nozzle brush, like that

in a full-sized vacuum cleaner.”

—“({O]nly one model, the check-rated Regina

Power Team, was an adequate substitute for a full-

sized vacuum.”

—‘Only the Regina Power Tvcm vacuumed the

floor thoroughly.”

8 App. 129-130.

* App. 84-85.

Se a

4

—“The Regina Power Team also stood out in our

) carpet-cleaning test. It alone left the carpet present-

able after only one sweep, pristine after two

sweeps.”

lightweight with a powered nozzle brush, it was the

only model tested for deep carpet cleaning. Our ex-

perience showed that the others, using suction alone,

couldn’t handle the job. The Power Team’s deep-

cleaning performance was comparable to that of a

fair, full-sized canister vacuum with a power noz-

zle.”’

:

—“Since the Regina Power Team was the only

|

—The article concluded: “The check-rate Regina

Power Team, with its power nozzle, performed much

like a full-sized vacuum cleaner. It was the only

model judged very good at picking up sand and

dust from bare fleors. It was the only model that

did a very good job of cleaning our medium-pile

carpet. And it did the job with the least effort.” °

CU also disseminated the results of its evaluation of

lightweight vacuum cleaners well beyond the pages of its

magazine. Consumer Reports distributes news reports

encapsulating its test reports to newspapers nationwide.

In late July, 1983, Consumer Reports issued such an ar-

ticle on the lightweight vacuum cleaners, distributed to

between 300 and 400 papers. The newspaper account

parallels in briefer form the magazine article.®

Because of the highly competitive nature of the mar-

ket for lightweight vacuum cleaners, most manufacturers,

5 Pet. App. at 638a-74a. The article contained a chart summarizing

the evaluations of the products tested. The Regina Powerteam was

listed at the top of the chart, accompanied by a check mark. Models

are check-rated when Consumers Union judges the samples of the

products tested to be of high overall quality and appreciably

superior to non-check-rated models in the same report.

6 App. 145-150. Additionally, CU aired an even briefer radio

“Report to Consumers” on July 26, 1983 trumpeting The Regina

Powerteam. App. 151-152.

5

including Regina, advertise their product directly to the

consumer. Sales of lightweight vacuum cleaners are

cyclical, with more sold in the second haif of the year

(particularly during the Christmas season) than the first

six months. Consumer marketing is therefore geared to

this second six-month period, especially the fourth calen-

dar quarter.’

As a part of its product promotion, Regina planned

a national television advertising campaign for 1983.

Regina’s research has indicated that there is a strong cor-

relation between advertising its products and increases

in the sales of its products. Regina coordinated its na-

tional advertising with its promotional activities among

retail sales outlets in an attempt iv maximize shelf space,

exposure and selling conditions for its products. The ad-

vertising campaign was designed to lead up to the Christ-

mas selling season.®

In connection with its national advertising campaign,

Regina purchased time spots on the American Broadcast-

ing Company, the National Broadcasting Company, and

CBS, Inc. networks, starting September 26, 1983. Pro-

grams and time slots were selected on the basis of demo-

graphic research to aim the messages most efficiently and

most economically at the target audience of potential

lightweight vacuum cleaner purchasers. Because of prac-

tices in the television industry, Regina purchased its time

spots several months in advance.®

Regina prepared three commercial messages for this

television campaign. The first, not at issue in this litiga-

tion, emphasized the lightweight nature of The Regina

Powerteam by showing several women handling the prod-

uct as if it were a military rifle.

7 App. 183-34.

8 App. 134.

9 Id.

6

The second message, entitled “Squid”, also emphasizes

the lightweight convenience of The Regina Powerteam,

compared to full-sized vacuum cleaners. It then reinforces

the message by reassuring the potential customer that the

product can be used like a full-sized vacuum cleaner.

During one of the many different visual portions of the

message the voice-over announcer quotes, accurately, that

The Regina Powerteam “is the only lightweight that

Consumer Reports says was an adequate substitute for

a full-sized vacuum.” Superimposed on the screen the

entire time Consumer Reports is mentioned, is the state-

ment that “Consumer Reports is not affiliated with

Regina and does not endorse Regina products or any

other products.” *°

In the third message, entitled “Consumer Keports,”

Regina provides the consumer with more complete infor-

mation regarding the Consumer Reports’ glowing evalua-

tion of its product. The message includes several quota-

tions from the Consumer Reports’ evaluation visually

displayed on the screen as they are read by the an-

nouncer. Each time that Consumer Reports is mentioned

and a quotation is read, there appears on the screen the

statement that “Consumer Reports is not affiliated with

Regina and does not endorse Regina products or any

other products.” This statement appears on screen for

a total of 14 secunds out of the 29.5 second actual dura-

tion of the message.”

In preparing its message, Regina took great pains to

insure that its messages were accurate, fully comported

with applicable law, and did not suggest that CU en-

dorsed or sponsored the product or the messages or other-

wise associated it with Regina rather than with the in-

formation in its magazine. As a consequence, Regina

took the extraordinary step of including in its messages

10 Pet. App. 6a-7a; 77a-79a.

11 Pet. App. 7a; 77a-79a.

7

the visual statement that emphasizes the independence of

Consumer Reports from Regina and the fact that Con-

sumer Reports does not endorse products.”

Regina notified CU that it planned to broadcast these

commercials. CU ultimately filed suit and sought a pre-

liminary injunction. representing a prior restraint

against the airing of the commercial messages. At the

approximately one-half hour hearing on its injunction re-

quest in the district court, CU presented no live testi-

mony, but offered only the argument of its counsel and

a conclusionary affidavit by its Executive Director. While

CU contended that it would be irreparably harmed by

these messages, its only evidentiary assertion was a single

written paragraph:

“Each broadcast [of the Regina message] hurts

Consumers Union deeply. Each broadcast destroys

more and more of the untainted reputation for im-

partiality and freedom from the commercial bias

which we have painstakingly spent forty-seven years

in acquiring.*

In opposition to CU’s request for an injunction, Regina

submitted the affidavit of its President that set forth the

circumstances leading to the development of the Regina

advertising campaign. The affidavit also documented the

irreparable harm Regina would suffer by an injunction

preventing it from communicating with the public:

The entry of an injunction would irreparably dis-

rupt Regina’s business plans and operation. It is

uncontroverted that Regina is in a highly competi-

tive market, with low brand identification, a modest

12 Moreover, Regina presented the message on the screen in a

size that is comparable with normal television advertising practice

for required disclosures, used by major companies such as General

Motors or Ford. In addition, the statements remain on the screen

for a considerably longer period than is normally utilized for such

disclosures. App. 136.

13 Pet. App. 23a; App. 98.

8

maraet share, and the challenge of new entry. Re-

gina has made a substantial commitment of re-

sources to purchase national advertising time on the

three networks and has coordinated its entire mar-

keting programs with this national advertising.

An injunction would play havoc with Regina’s

marketing strategy. Retail dealers and the trade

have been informed of the marketing support repre-

sented by Regina’s national advertising campaign.

Inventories and shelf space commitments exist re-

filecting Regina’s marketing commitments. It is im-

possible to quantify the loss in dollars for the hoped

for success of the campaign cannot be predicted.

Enjoining Regina from presenting its messages at

the times it selected would be especially harmful

since it would deprive Regina of its audience just at

the time of the year when sales of vacuum cleaners

peak. Regina will be irreparably injured not only

by the loss of sales and audiences, but by the harm

that will be caused to existing relationships with the

trade and its dealers.™

Since the Second Circuit vacated the district court’s

injunction, Regina has broadcast the “Squid” and “Con-

sumer Reports” messages on the three national televi-

sion networks between December, 1983 and May, 1984.

SUMMARY OF ARGUMENT

CU asks this Court to undertake its own plenary re-

view of the Second Circuit’s judgment of CU’s likelihood

of success on the merits of its copyright claim and

thereby have this Court conduct its own “full review”

of whether a preliminary injunction is appropriate.

This Court’s review of that component of the decision

below is unwarranted, not only because the decision is

interlocutory, but because that decision rests on the

Second Circuit’s discretionary factual determination that

14 App. 139-140.

9

the balance of equities favored Regina, not CU. Thus,

the review requested by CU would not change the result

below.

Nor does anything in the Second Circuit’s discussion

of the copyright fair use doctrine warrant review. The

Second Circuit’s decision is in conflict with no decision

of this Court or any court of appeals, but like previous

decisions of that and other circuits, balanced both the

factors enumerated by Congress as relevant to fair use

and the evidence of harm on the record, and made a

determination on the facts of this case. CU’s efforts to

manufacture a conflict between the Second Circuit deci-

sion and this Court’s subsequent opinion in Sony Corpo-

ration of America v. Universal City Studio, Inc., 104

S.Ct. 774 (1984) does not withstand scrutiny of the

court of appeals’ opinion.

ARGUMENT

I. SINCE THE DECISION OF THE COURT OF AP-

PEALS INVOLVED A PRELIMINARY INJUNC-

TION, IT IS NONFINAL AND NOT RIPE FOR RE-

VIEW BY THIS COURT AND ALSO RESTS INDE-

PENDENTLY ON FACTUAL DETERMINATIONS

NOT BEFORE THIS COURT

This Court traditionally has refused to review inter-

locutory judgments of federal courts.° The prohibition,

although not jurisdictional, conserves limited judicial

resources and avoids piecemeal litigation. Interlocutory

15 See, e.g., Brotherhood of Locomotive Firemen and Enginemen

v. Bangor & Aroostook R.R., 389 U.S. 327, 8328 (1967) (“because the

Court of Appeals remanded the case, it is not yet ripe for review

by this Court.”); Youngstown Sheet & Tube Co. v. Sawyer, 3438

U.S. 579, 584-85 (1952) ; Cobbledick v. United States, 309 U.S. 323,

324-25 (1940) ; Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240

U.S. 251, 258 (1916) (lack of finality “of itself alone furnished

sufficient ground for the denial”); R. Stern & E. Gressman,

SUPREME COURT PRACTICE § 4.19 (5th ed. 1978).

10

review has been held proper only in limited circum-

stances involving exceptional facts.**

CU has made no showing that this is such a case."

To the contrary, even if CU could demonstrate that its

view on fair use were correct, that would not change

the result below. The court of appeals explicitly found

that “CU has not sustained its burden of showing that

the equities lie in its favor.” (Pet. 23a.) While acknowl-

edging CU’s reputation, the Court held that “Regina’s

use of an explicit disclaimer makes CU’s conclusory

claims of harm unacceptable.” (Pet. 24a.) On the other

side of the balance, the court found “substantial evidence

of potential harm to Regina from maintenance” of an

injunction. (Jd.) CU has not challenged these findings.

Hence, the decision below is correct for reasons independ-

ent of the likelihood of success on the merits challenged

in the petition.

Il. THE DECISION BELOW IS COMPLETELY CON-

SISTENT WITH DECISIONS OF THIS COURT AND

THE COURT OF APPEALS

A. CU’s first argument for review, that the Court of

Appeals misapplied the commercial free speech doctrine

(Pet. 18-32), is a strawman. Nothing in the opinion

16 See Gillespie v. United States Steel Corp., 879 U.S. 148, 153

(1964) ; Larson v. Domestic & Foreign Commerce Corp., 337 US.

682, 685 n.3 (1949) ; Land v. Dollar, 8380 U.S. 731, 734 n.2 (1947) ;

United States v. General Motors Corp., 323 U.S. 878, 877 (1945) ;

American Construction Co. v. Jacksonville T. & K. W. Ry., 148

U.S. 372, 384 (1893).

17 The writ of certivrari to the United States Court of Appeals

for the Second Circuit in Harper & Row Publishers, Inc. v. Nation

Enterprises, No. 83-1632, raises issues of fair use very different

from those in this case. In any event there is no reason to hold this

petition pending a decision in Harper & Row, since this case will

be returned to the district court in any circumstance for trial on

the merits, and the courts below will have the benefit of any rele-

vant holdings in Harper & Row in subsequent proceedings.

11

below supports CU’s apocalyptic suggestion that the Sec-

ond Circuit carved out a new commercial speech fair

use exception that rides roughshod over all copyright

rights, or that its holding is “inconsistent with this

Court’s numerous decisions in the commercial speech

area.” (Pet. 20).

The court simply made the required factual analysis

of the four factors delineated in the statutory definition

of fair use, 17 U.S.C. § 107. In considering the “purpose

and character of the use,” 17 U.S.C. § 107(1), the Sec-

ond Circuit rejected CU’s argument that a commercial

use can never be a fair use. CU would now have this

Court construe that rejection as a holding that puts a

commercial use on a higher footing than other uses. The

court of appeals’ ruling, however, was simply that com-

mercial use “alone does not defeat a fair use defense,”

(Pet. App. lla), and that—in this instance—the use

does “more than propose a commercial transaction,” ™

it “includes the conveyance to consumers of useful infor-

mation which is protected by the First Amendment.”

(Pet. App. lla). Moreover, the court contrasted such

conveyance of information with appropriation of the

form of expression. (Pet. App. 12a). The court’s con-

clusion in this regard is firmly grounded upon this

Court’s recognition of the public interest in commercial

speech :

[A]dvertising . . . is dissemination of information

as to who is producing and selling what product,

for what reason and at what price. So long as we

preserve a predominantly free enterprise economy,

the allocation of our resources in large measure

will be made through numerous private economic

decisions. It is a matter of public interest that those

18 Virginia State Board of Pharmacy v. Virginia Citizens Con-

sumer Council, Inc., 425 U.S. 748, 761 (1976), quoting Pittsburgh

Press Co. v. Pittsburgh Commission on Human Relations, 418 U.S.

376, 385 (1973).

12

decisions, in the aggregate, be intelligent and well-

informed. To this end, the free flow of information

is indispensable.

Virginia State Board of Pharmacy v. Virginia Citizens

Consumer Council, Inc., 425 U.S. 748, 765 (1976).

The Second Circuit’s holding that commercis] adver-

tising can be a fair use accords with the only other cir-

cuit decision involving advertising, Triangle Publications,

Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171,

1175 (5th Cir. 1980).%° It also accords with the many

other decisions holding that a use is not disqualified as

a fair use merely because it has a commercial motive.”

Hence, the Second Circuit’s decision represents no

startling departure from the commercial speech doctrine

or court of appeals precedent on fair use in a commer-

19In Triangle, the court of appeals held that the fair use doc-

trine permitted a newspaper’s comparative advertisements promot-

ing its television program guide publication to display copyrighted

covers of a competing publication, TV Guide. The Triangle court

took account of Congress’ emphasis that “the doctrine of fair use

must be flexible.” 626 F.2d at 1176 n.13, citing, H.R. No. 94-1476,

94th Cong., 2d Sess. 66 (1976), reprinted in [1976] U.S. Code

Cong. & Admin. News, p. 5659, Sen. Rep. No. 473, 94th Cong., Ist

Sess. 62 (1975). It found that the fact that “the commercial use

occurred in the course of a truthful comparative advertisement

undercuts the significance of the commercial nature of the use.”

Id. Regina’s messages too are in the nature of comparative adver-

tising, merely substituting for the advertiser’s own unavoidably

self-serving claims more reliable references to a third party’s

findings.

20 See Elsemere Music, Inc. v. National Broadcasting Co., 623

F.2d 252 (2d Cir. 1980) (per curiam) ; Rosemont Enterprises, Inc.

v. Random House, Inc., 366 F.2d 308 (2d Cir. 1966), cert. denied,

385 U.S. 1009 (1969); Berlin v. E.C. Publications, Inc., 329 F.2d

541 (2d Cir. 1964) ; New York Times Co. v. Roxbury Data Interface,

Inc., 4384 F.Supp. 217 (D.N.J. 1977) ; Karll v. Curtis Publishing Co.,

89 F.Supp. 886 (E.D. Wisc. 1941).

13

cial context." It is merely the effectuation of Congress’

direction to consider “the purpose and character of the

use.” It is likewise consistent with the purposes for

which Congress recognized fair use. Indeed, in that con-

text, CU’s reliance on Professor Nimmer to attack the

Second Circuit’s decision is puzzling (Pet. 26), since

Professor Nimmer submitted an affidavit in the district

court in support of Regina, which indicated, inter alia,

advertising of an informational nature may be a fair

use notwithstanding its commercial nature and that

“The Regina messages precisely constitute such an

informational use in that they provide information

to the public as to the objective evaluation of a

product by a third party, and hence provide poten-

21 The court’s helding is not “directly contrary” (Pet. 26) to the

Second Circuit’s previous decision in Jowa State University Re-

search Foundation, Inc. v. American Broadcasting Companies, Inc.,

621 F.2d 57 (2d Cir. 1980). There is no resemblance between the

two cases. At issue in Jowa State was a 28-minute student film

regarding an Olympic wrestling champion at the school. Plaintiff

sought to sell the film to ABC for use during its Olympics broad-

cast coverage; no agreement was ever consummated, but ABC

ultimately used substantial parts of the film. The Second Circuit

found that the fair use doctrine was inapplicable, principally

because ABC’s use “did foreclose a significant potential market to

Iowa—sales of its film for use on television in connection with the

Olymipes.” Jd. at 62.

In rejecting ABC’s argument that its use was worthy of protec-

tion under the first fair use standard because it assisted the devel-

opment of historical and biographical works, the court of appeals

made the dictum quoted by CU (Pet. 27) out-of-context that the

“fair use doctrine is not a license for corporate theft, empowering a

court to ignore a copyright whenever it determines the underlying

work contains material of possible public importance.” Jd. at 61.

In the context of the Jowa State facts, the statement makes perfect

sense. As it is being applied here, CU equates the absence of CU’s

consent, ipso facto, with corporate theft by Regina. But that

equation totally miscomprehends the fair use doctrine which ty

definition is use of copyrighted material without the consent of the

copyright owner. E.g., Rosemont Enterprises, supra, 366 F.2d

at 306.

14

tial huying information. Moreover, § 107 expressly

provides that “criticism” and “comment” are pri-

mary forms of use envisaged under the fair use

doctrine. The repetition of such criticism or com-

ment, within reasonable limits, in my opinion like-

wise constitutes a use envisaged by the fair use

doctrine. For example, it would be unthinkable for

the publisher of a book or the producer of a Broad-

way play to have to obtain a license from the New

York Times before there could be a quotation of

comments from a favorable review appearing in the

Times.” **

B. CU’s attempt (Pet. 32-46) to concoct a conflict

between the decision below and this Court’s recent deci-

sion in Sony Corp. v. Universal City Studios, 104 S.Ct.

774 (1984) is equally extravagant. CU’s selective ex-

cerpting from the Sony opinion regarding commercial use

(Pet. 33) and harm to the copyright owner (Pet. 35-36)

ignores that in this case, unlike, for example, in Sony,

the copy does not compete with and cannot substitute for

the copyrighted works. Regina is not selling or promot-

ing its advertisements. Thus, the court of appeals found

that “we [are] faced with a claim of injury which does

not stem from competition between the copyright owner

and the copier... .” (Pet. App. 16a).

In Sony, on the other hand, in language seized upon

by CU, this Court contrasted “commercial use” with the

“monopoly privilege that belongs to the owner of a copy-

right.” 104 S.Ct. at 793 (emphasis added). Thus, it is

evident it looks on commercial use as unfair because it

competes against the copyright holder. The Second Cir-

22 App. 161.

23 As Professor Nimmer recognized (App. 163), CU’s arguments

suggest that the prevailing custom of excerpting theatre, movie,

and restaurant reviews from major publications replaces the de-

mand for the copyrighted original and is an infringement, an

erroneous result that runs counter to the basic purpose of copyright.

15

cuit was entirely consistent with Sony, therefore, when

it looked on the fourth fair use factor, “the effect of the

use upon the potential market for or value of the copy-

right work,” * as “aimed at the copier who attempts to

usurp the demand for the original work.” *

Despite the fact that there have been previous in-

stances where advertising uses of Consumer Reports’

evaluations had not been enjoined,** CU placed in the

record no concrete evidence of actual or future harm to

the demand for its works, let alone evidence amounting

to a preponderance of the evidence. In such consequences,

the Second Circuit’s rejection of a conclusory assertion of

harm in an affidavit (App. 98) is unremarkable and

requires no review by this Court.*"

17 U.S.C. § 107(4).

25 Pet. App. at 14a-15a (citations omitted).

26 Consumers Union of United States v. Theodore Hamm Brewing

Co., Inc., 314 F.Supp. 697 (D. Conn. 1970); Consumers Union of

United States, Inc. v. Hobart Manufacturing Co., 189 F.Supp. 275

(S.D.N.Y. 1960).

27 CU’s attempts to ascribe an evidentiary standard to the Second

Circuit’s evaluation of the absence of evidence of harm reads too

much into what is in the context of the evidence an inconsequential

choice of words.

16

CONCLUSION

The petition for a writ of certiorari should be denied.

JOSEPH M. BURKE

Davis & GILBERT

850 Third Avenue

New York, New York 10022

(212) 593-0707

Counsel for Respondent

Grey Advertising Inc.

* Counsel of Record

Respectfully submitted,

CHARLES D. FERRIS

Bruce D. SOKLER *

CAMERON F. KERRY

MINTZ, LEVIN, COHN, FERRIS,

GLovskyY & Popgo, P.C.

1825 Eye Street, N.W.

12th Floor

Washington, D.C. 20006

(202) 293-0500

JULES P. KirscxH

Cooper, DUNHAM, CLARK,

GRIFFIN & MORAN

30 Rockefeller Plaza

New York, New York 10012

(212) 977-9550

Counsel for Respondent

The New Regina Corporation