AlFrankenWeb.com: Fox vs. Franken Transcript

Thanks to Bill Hochberg for the transcript. Because this is a court transcript, the 'official' record does not note laughter in the courtroom, though there was much.

UNITED STATES DISTRICT COURT. SOUTHERN DISTRICT OF NEW YORK

FOX NEWS NETWORK, LLC,
Plaintiff,
New York, N.Y.

v.

03 Civ. 6162 (RLC)(DC)

PENGUIN GROUP (USA), INC., and
ALAN S. FRANKEN,

Defendants.

------------------------------x

August 22, 2003
3:30 p.m.

Before:

HON. DENNY CHIN,

District Judge

APPEARANCES

HOGAN & HARTSON LLP
Attorneys for Plaintiff
BY: DORI ANN HANSWIRTH
TRACEY A. TISKA
KATHERINE M. BOLGER

CAHILL GORDON & REINDEL
Attorneys for Defendants
BY: FLOYD ABRAMS
DEAN RINGEL

VON MALTITZ DERENBERG KUNIN JANSSEN & GIORDANO
Attorneys for Defendants

THE COURT: Good afternoon. All right. I have read the papers. Let me hear from the plaintiff.

MS. HANSWIRTH: Good afternoon, Judge Chin. Dori Hanswirth, Hogan & Hartson, for plaintiff, Fox News Network. Judge Chin, can we have permission to put up a demonstrative exhibit?

THE COURT: Sure.

MS. HANSWIRTH: Thank you. I am going to proceed. Your Honor, we view this as a fairly straightforward case of trademark infringement. As the court knows, the defendants have placed Fox News's registered trademark "fair and balanced" on the cover of their book. As you can see, it's the third book. It's the third image on the exhibit. The first two are newspaper advertisements for the Fox News Channel, and the one on the right is the cover.

THE COURT: I can see all that. You say it's a straightforward trademark case. Fox has to prove likelihood of confusion, correct?

MS. HANSWIRTH: On the trademark infringement --

THE COURT: Yes.

MS. HANSWIRTH: -- claim we have to prove likelihood of confusion. On the dilution claim, we don't.

THE COURT: I didn't ask about the dilution. I asked you about the trademark infringement.

MS. HANSWIRTH: Yes.

THE COURT: On the trademark infringement, let's start with that, the consumer. Who is the consumer?

MS. HANSWIRTH: The consumer can be either somebody who is a consumer of the Fox News Channel, a consumer of Mr. Franken's book or books like it.

THE COURT: Is there a difference?

MS. HANSWIRTH: There certainly could be.

THE COURT: Tell me what the differences are.

MS. HANSWIRTH: Well, Fox News Channel has 80 million subscribers, and I checked a statistic today, it is watched by approximately 19 million people every day. Some of those people could be people who would be interested in purchasing the defendant's book. Some likely are not.

THE COURT: When you say there are 80 million subscribers, by the way, I'm not sure what that means. In other words, you don't have to subscribe specifically to Fox, do you?

MS. HANSWIRTH: No.

THE COURT: On my basic cable I get the Fox cable station, right?

MS. HANSWIRTH: You probably do.

THE COURT: Yes. So am I a subscriber to Fox?

MS. HANSWIRTH: Yes. That's how the cable industry --

THE COURT: I see.

MS. HANSWIRTH: But we do have a statistic that I can furnish to the court in an affidavit which I got today which is what we call the reach of the network. That means how many people on average watch the network for at least one minute per day, which takes away channel surfers, and that statistic is 19.2 million people.

THE COURT: All right. The consumer who would buy the book is a relatively sophisticated consumer, correct? I mean someone interested in political satire and commentary.

MS. HANSWIRTH: I don't agree with that, your Honor. Generally, cases hold that purchasers of books are generally not, neither sophisticated nor unsophisticated.

THE COURT: Don't you have to look at the type of book in question? We're not talking about mystery novel or a romance novel. We're talking about social and political commentary and satire.

MS. HANSWIRTH: If you're talking about whether somebody will make an informed decision as to whether to purchase a book, that doesn't necessarily mean the consumer is particularly sophisticated.

THE COURT: The bottom line is, is it really likely that someone is going to be confused into believing that Fox or Mr. O'Reilly are endorsing this book or are sponsoring this book?

MS. HANSWIRTH: I would direct the court's attention to the Cliff Notes case, because the Cliff Notes case, which was decided by the Second Circuit in 19 --

THE COURT: My question is, do you really think it is likely that someone who walks into Borders and picks up Mr. Franken's book would believe that this book has been sponsored in some way or endorsed in some way by Fox?

MS. HANSWIRTH: I think that it is likely that consumers could believe that. When we are talking about the appreciable --

THE COURT: It is likely that consumers could believe that? Is that the test? Or is the test that --

MS. HANSWIRTH: They would be confused. That's the test. And the threshold, your Honor, in this circuit can be as low as 15 or 18 percent. In one case, in fact, 8 and a half percent of consumers were confused, and a court held that that was --

THE COURT: Do you think that the reasonable consumer would believe seeing the word "lie" above Mr. O'Reilly's face that Mr. O'Reilly or Fox were endorsing this book?

MS. HANSWIRTH: Your Honor, it doesn't appear from this cover that it's not necessarily true that anyone who saw this cover would think that the cover is accusing Mr. O'Reilly of lying. He's pointing his finger at somebody and it's not necessarily even true that someone who is looking at this and notices the "fair and balanced" mark would necessarily see that Mr. O'Reilly is there on the cover. To me it's quite ambiguous as to what the message is here. There's no real message that this is a humor book or a book of political satire. There's no indicating details like there was on the book in the Cliff Notes case for anybody to know that this is a joke. And, in fact, even though Mr. Franken has stated that his use of "fair and balanced" was a joke, there are no other jokes on this cover. It's a deadly serious cover, and it's using the trademark of Fox News to sell itself.

THE COURT: Do you think the use of the phrase "lying liars" can be a joke?

MS. HANSWIRTH: It can be, but it isn't necessarily. I mean, look at the title of Mr. O'Reilly's book "The Completely Ridiculous and American Life."

THE COURT: Let me ask you about that: Mr. O'Reilly uses in his book "the good, the bad and the completely ridiculous." Is that not a play on "The Good, the Bad and the Ugly"?

MS. HANSWIRTH: I don't know.

THE COURT: You don't know whether that's a play on "The Good, the Bad and the Ugly."

MS. HANSWIRTH: I don't know.

THE COURT: Well, assume that it is. Is that not a play on a trademarked phrase?

MS. HANSWIRTH: That's a title of a movie.

THE COURT: Yes. And I assume there's some kind of protection for the title of the movie "The Good, the Bad and the Ugly."

MS. HANSWIRTH: Your Honor, there generally --

THE COURT: I think that I have in some of the papers, it might have been the amicus brief, a representation that the phrase "the good, the bad and the ugly" is a trademarked phrase.

MS. HANSWIRTH: I don't know that that's the case. And I don't know --

THE COURT: Well, I mean, isn't Mr. O'Reilly doing exactly the same thing using a trademarked phrase in the title of his book? The good, the bad --

MS. HANSWIRTH: He's not doing it to confuse. He's certainly not using it to sell the product.

THE COURT: Do you think that Mr. Franken and the publisher are intending to confuse buyers into thinking that he, Mr. Franken, is somehow associated with Fox?

MS. HANSWIRTH: I think what they're doing is they're intending to use the trademark to sell the product. And they are. They've admitted that. The way that they've set it up is too ambiguous. Once again, it does not say parody satire. It is the only trademark on that book, unlike the O'Reilly book, which has Fox News's "The O'Reilly Factor" prominent trademark on it at least three times that I can see from here.

THE COURT: If the defendants put on to the cover, "this is a satire," would that somehow salvage it?

MS. HANSWIRTH: That would be a lot better, your Honor. That's all we wanted. All we asked was for some simple changes to this dust jacket to show that Mr. --

THE COURT: On a different note, is Fox really claiming that it has a monopoly to the phrase "fair and balanced"?

MS. HANSWIRTH: Fox has a registered trademark in "fair and balanced." That guarantees it the right to use the phrase "fair and balanced" in connection with its products and services and to exclude others from using the phrase in connection with similar products and services. So to the extent that the trademark law does grant a monopoly to trademark owners, yes.

THE COURT: How far does that go? I mean, I could see if a competitor cable news network wanted to use as its slogan "fair and balanced," you know, maybe there could be an argument. But if someone wants to write a book that contains the phrase "fair and balanced," Fox's position is that that's not permitted?

MS. HANSWIRTH: It would depend on the circumstances. Under these circumstances, the defendants have already admitted that they're using the phrase because it is Fox News's trademark. Mr. Franken has admitted that it is a knock-off, quote, unquote. That's classic trademark infringement.

THE COURT: But it's parody, isn't it?

MS. HANSWIRTH: It's not a parody. The reason it's not a parody is because a parody needs to refer to the trademark and to also simultaneously not refer to it. In the Cliff Notes case the reason the court found a parody is because the word "satire" was on the cover of that publication five times. It was on the back cover four times. The trademark of the defendant, Spy, was on the cover, "a Spy book." We don't have any other trademark on this cover. This is much too subtle to be considered a parody under the existing Second Circuit precedent.

THE COURT: But I mean the purpose of the trademark law is to avoid public confusion and avoid deceiving consumers as to the source of a product and here. I guess we go back to the question of whether there really is any likelihood that a consumer is going to be deceived into believing that this is a Fox product merely because the phrase "fair and balanced" is used in the title, it seems to me.

MS. HANSWIRTH: That is the core issue under the Lanham Act, Section 1125(a).

THE COURT: OK. What else do you want to tell me?

MS. HANSWIRTH: On the dilution claim, which, as your Honor knows, does not require Fox News to prove a likelihood of confusion, our case is crystal clear. Once again, the defendants have used our trademark on their book to sell a product, to poke fun at Fox News, to ridicule its number one talent, Mr. O'Reilly. And Fox News certainly has a commercial interest in Mr. O'Reilly's image. In fact, they have the contractual right to control his image and likeness.

Under the dilution laws -- we've sued under two dilution statutes, your Honor, under the New York State statute and the federal statute in the Lanham Act. Under the New York State statute, the showing that we have to make for dilution is that our mark is distinctive and that the defendant's use of it is either blurring it or causing some kind of tarnishment.

With respect to the blurring, not only does the use of the mark blur this with Mr. Franken, but it blurs it with the other subjects of his book, especially the people who are also on the cover, such as Ms. Coulter. Ms. Coulter is in the upper left hand of those four television images.

The first few chapters of Mr. Franken's book are about Ms. Coulter, and they are extremely derogatory. Somebody looking at this could certainly think that Ms. Coulter had some sort of official relationship with Fox News, which she doesn't. So this cover is certainly blurring. I would also add that the name of one of Ms. --

THE COURT: The President and the Vice President are also on the cover, are they not?

MS. HANSWIRTH: Yes, they are.

THE COURT: Is someone going to think that they are affiliated with Fox?

MS. HANSWIRTH: I think Mr. Franken does.

THE COURT: OK.

MS. HANSWIRTH: So, yes, somebody could think that. The name of one of Ms. Coulter's books is "Liberal Lies About the American Right." It's clear that this is where Mr. Franken lifted the rest of the title of his book. So there's even --

THE COURT: Even assuming he did lift it, it seems to me he's playing on the words. That's what he's doing. It's a play on words.

MS. HANSWIRTH: It's more a blurring, your Honor, if you're taking Fox News's recognizable slogan and Ms. Coulter's title --

THE COURT: On that theory, one would be extremely restricted in the ability to criticize anybody. I mean, these are public figures who put themselves out there. And any time they are criticized in the context of the use of a phrase "fair and balanced," you're suggesting that there would be dilution and blurring and that would not be permitted?

MS. HANSWIRTH: Absolutely not, your Honor.

THE COURT: Absolutely not meaning that's not what you're saying?

MS. HANSWIRTH: That's not what I'm saying.

THE COURT: OK.

MS. HANSWIRTH: You can go on to the Internet and you can see hundreds of web pages and Internet sites that are extremely critical of the Fox News Channel. The Fox News Channel, the more popular it gets, the more criticism it gets. Fox News Channel does not take any action against those people. It's their First Amendment right to criticize Fox News. The difference here is that this is a commercial use. This is on a book cover. This is being used to sell a product. And Fox News does have an interest in the way its trademark is being used, and in fact it has a duty to protect its trademark.

THE COURT: OK. Let me ask one other question. I'm not really sure that it's germane, but I have an affidavit from Dianne Brandy, and I guess she's the vice president of legal affairs. This is an incident that has received a lot of discussion. It's the subject of affidavits. That's the exchange between Mr. Franken and Mr. O'Reilly at the book expo. And Ms. Brandy makes some factual statements in her affidavit, and I'm wondering what the basis for the factual statements are. Was she there? She says in her affidavit in paragraph 13 that Mr. O'Reilly never made the statement about winning a Peabody. How does she know that?

MS. HANSWIRTH: The basis of Ms. Brandy's knowledge is looking at public records and discussing that with Mr. O'Reilly.

THE COURT: Are there not some transcripts of O'Reilly shows where it appears from the transcripts that he did make a statement about winning a Peabody?

MS. HANSWIRTH: I don't think so, your Honor. I think the statement was that the television program "Inside Edition" won a Peabody, not that he personally did.

THE COURT: I think it says "we" in a couple of them anyway. Why is there not an affidavit from Mr. O'Reilly where he denies under oath that he made the statements?

MS. HANSWIRTH: We could provide one, but I don't think it's germane to our motion.

THE COURT: I don't know if it's germane or not, but it's in your affidavits, and it's in your brief. I mean, usually when you have an affidavit, it should be on personal knowledge unless stated otherwise. I'm just a little uncertain as to the basis for the knowledge. It doesn't say that it's --

MS. HANSWIRTH: Would you like us to provide one?

THE COURT: I don't know. You've told me the basis, the discussions with Mr. O'Reilly.

MS. HANSWIRTH: Yes.

THE COURT: And a search of the public record?

MS. HANSWIRTH: Yes.

THE COURT: OK. Fair enough. Let me hear from the defendants.

MR. ABRAMS: Good afternoon, your Honor.

THE COURT: Good afternoon. How do you respond to the blurring argument; in other words, the trademark is on the cover and it's being blurred or tarnished because of the context?

MR. ABRAMS: I respond by saying that a book is allowed to criticize the holder of a trademark and is allowed to mock the trademark as well.

There's nothing in the law which says that you can't criticize Mr. O'Reilly or Fox or anyone that holds a trademark. As that long list of titles that the Authors' League furnished to you shows, many of them are indeed extremely critical of the holder of the trademark. Beyond that, with respect to blurring and dilution, dilution falls within, as the Yankee Publishing case and other cases we've cited shows, the general ambit of intellectual property rights that have to be subjected to First Amendment scrutiny.

It would be a different country we would be living in if you couldn't publish a book -- let's change the title and make it worse -- and say Fox News is not fair and balanced. Could it possibly be the case that that's not protected by the First Amendment? In the dilution case --

THE COURT: Suppose a competitor did a commercial and used the phrase and said Fox News is not fair and balanced?

MR. ABRAMS: A competitor can say that. And the Deere case really makes very clear in the dilution area that when you are talking about social commentary as opposed to a comparison of two lawnmowers, which was what was involved there, that there is enormous First Amendment protection for the commentary.

That's just what Judge Newman was talking about in that case in the context of a dilution claim.

And it's a natural and almost an obvious I would argue result because to rule otherwise is to rule out, to make off bounds, off limits a whole realm of discussion of public figures and public events.

That's one of the reasons why in the different areas of intellectual property law that are implicated in this case the courts have in different words amounting to the same thing made clear that in the dilution area, in the Deere case, in the trademark area, in the Ginger Rogers case, in one area after another that intellectual property claims have to comport with First Amendment norms. That's why --

THE COURT: Let me ask a different question.

MR. ABRAMS: Yes.

THE COURT: The mark is registered.

MR. ABRAMS: Yes.

THE COURT: What is the import of that?

MR. ABRAMS: That it is prima facie valid, and as of December of this year, if it is not successfully challenged, it becomes not subject to challenge as a valid mark.

Now, number one, even if it is a valid mark, it has to be interpreted consistently with First Amendment norms. I mean, there was a valid mark involved in all of the cases that we've been citing to you. The only way that it would help them if this mark were incontestable is with respect to one argument we made in a footnote to you, and that relates to an issue which is not much before you, but would be before Judge Carter much later in the case. That is, if this case persists, we will argue that the trademark itself should be deemed invalid. That is something that we will argue, and if it had been initially determined that it was incontestable, then we couldn't make that argument. But that's the only way that it harms us.

All the First Amendment constraints on trademark law, all the First Amendment limitations on blurring law, all remain in effect notwithstanding the fact that they have a trademark.

I wanted to return, your Honor, to one of the very first things that you asked Ms. Hanswirth. It comes up in two ways. I think it's relevant to return to how this case began. You referred to Ms. Brandy. I'm not now talking about the legal incompetence of so much of what is in her affidavit. I'm talking about how this all started. It started with Exhibit V to her affidavit, which is a letter that she wrote to Penguin in which she said something which is utterly and totally inconsistent with what was Hanswirth has said to you today.

She said in the second paragraph, "The placement of Mr. O'Reilly's photograph on the book's cover juxtaposed with the title is false and defamatory per se of Mr. O'Reilly. Such placement unquestionably designates Mr. O'Reilly as one of the 'lying liars' to which the book's title refers. This designation is patently false. Further, it's beyond dispute that calling Mr. O'Reilly a liar is libelous per se," and it goes on to say that's not constitutionally protected.

That was the first exchange, the first volley by Fox in this case. It bears directly on the very first question that you asked. How can there be confusion? you asked. What is there that is confusing about this cover?

The answer that you got was, well, there are no signals here that this is not a Fox product. Well, the signal, of course, the first signal, and your Honor mentioned it in your question, is that the word "lies" is over the faces of Ann Coulter, Bill O'Reilly and the President and Vice President. That is precisely the position that Fox took when it wrote protesting this cover.

I think that you can properly hold them to that. That was their position, and, indeed, as your Honor has now seen and as counsel has now seen from the book itself, the book does make strong charges in that respect. You also asked, Is there anything else on the cover which answers the question of whether this is really a Fox product?

Of course, it's the title itself. The over the top, as the authors' league referred to it, the over the top first phrase, "Lies and the lying liars who tell them," not exactly an understated portrayal, followed by the obviously tongue-in-cheek, "a fair and balanced look at the right."

There is no way that any person not completely dense would be confused by this cover into thinking that Fox News was accusing Bill O'Reilly of being a liar.

That is at the essence of what they have been saying. They don't say it anymore because it obviously occurred to them, having decided not to have Mr. O'Reilly be a party in this case -- and this letter, Exhibit V, was written on his behalf, by the way, as well as Fox's. Now they think it's in their interest not to talk about that, but now to say Mr. O'Reilly is pointing his finger as if he's accusing someone else of being a liar.

The fact is it's not confusing. Even if there were no First Amendment defense, even if we were talking about lawnmowers today, there's nothing confusing about this in the sense of sending a message that Al Franken works for Fox and on behalf of Fox he's attacking Bill O'Reilly.

A final thought, your Honor, subject to any questions you may have. We are fortunate, I think, today to work in a body of law which the Second Circuit has toiled in already in terms of setting forth what seems to be a rather clear, unambiguous legal test. That is that in the Ginger Rogers case, by the way, Ginger Rogers could say and did and said truthfully, people were confused as to whether the movie "Fred and Ginger" was about her. There that was a direct statement, and she still didn't get the injunction that she wanted.

But in that case the court said, where you're talking about the title of, in that case it was a movie, but that's no different, because of First Amendment concerns, there cannot be an injunction entered and there cannot be a cause of action stated under the Lanham Act unless the title has "no artistic relevance whatever," or the title "explicitly misleads as to the source or control of the work."

Confusion, even if it existed -- and it doesn't -- wouldn't suffice to meet that test. This obviously has an artistic message, just as "Fred and Ginger" did, just as New York magazine did when it was parodying the Farmer's Almanac. Whatever else you can say, even if one could argue about confusion, it simply cannot be said that this is a situation in which there is some explicit misleading as to the source or control of the work. In our view, should end the inquiry.

THE COURT: All right. I understand the point.

MR. ABRAMS: Thank you.

THE COURT: Let's take a five-minute recess, and I'm going to come back out and rule.

(Recess)

THE COURT: The plaintiff, Fox News Network, has moved for a preliminary injunction to enjoin the defendants from using the phrase "fair and balanced" and any photographs of Bill O'Reilly or other Fox personnel in connection with Mr. Franken's book. Accordingly, the standard is whether Fox has shown irreparable harm, a likelihood of success, and a balancing of equities in its favor.

There are hard cases and there are easy cases. This is an easy case, for in my view the case is wholly without merit, both factually and legally. Accordingly, the motion for a preliminary injunction is denied.

Factually, I conclude that there is no likelihood of confusion as to the origin and sponsorship of the book. It is highly unlikely that consumers are going to be misled into believing that Fox or Mr. O'Reilly are sponsors of the book. That is evident from the cover viewed as a whole. It is evident by Mr. Franken's name being featured prominently across the top. It is evident from the word "lies" in big red letters across the faces of the other four individuals on the cover. It is evident from the phrase "the lying liars who tell them."

I don't know if there is a difference between consumers who would buy the book and Fox viewers. I don't know if Fox is arguing that its viewers are less sophisticated than those who would buy Mr. Franken's book. I don't know. But either way, I think we are talking about relatively sophisticated consumers here. We are talking about a book that offers political and social commentary and satire.

As to Fox viewers, I think it is less likely that they will be confused because they know the individuals on the cover, and they've got to conclude that Mr. O'Reilly is not endorsing this book.

The mark is a weak one. As trademarks go, the phrase "fair and balanced" is a weak mark, not because of the content of the words, but because the words are used so frequently, particularly in the context of journalism, the press and the media.

There has been no evidence of actual confusion. I conclude also that there is no bad faith. To be sure, the defendants are using the mark intentionally, but that's not bad faith. The intentional use here is in the form of parody. There certainly was no intent on the part of Mr. Franken to palm himself on off as a Fox commentator. There was no intent on his part to mislead consumers into believing that he was somehow affiliated with Fox.

From a legal point of view, I think it is highly unlikely that the phrase "fair and balanced" is a valid trademark. I can't accept that that phrase can be plucked out of the marketplace of ideas and slogans.

Even assuming for the moment that it is a valid mark, however, and even assuming there is some danger of confusion, here the First Amendment trumps. The First Amendment requires us to weigh the public interest in free expression against the public interest in avoiding confusion. In particular, titles, titles of books, movies, etc., have great protection under the First Amendment, and the Second Circuit has held in the Rogers case and the Cliff Notes case that the Lanham Act cannot could be construed narrowly to intrude on First Amendment values in this context.

The expressive element of titles requires more protection than labeling, for example, for commercial products. Mr. O'Reilly himself used the trademark phrase, or a play on the trademarked phrase "the good, the bad and the ugly" in his book entitled, "The Good, the Bad and the Completely Ridiculous in American Life." As the Authors' Guild has pointed out in its very helpful amicus brief, there is a long list of similar such uses of trademarked phrases or names.

Parody is a form of artistic expression protected by the First Amendment. The keystone to parody is imitation. Here, whether you agree with him or not, whether you like what he says or not, in using the mark, Mr. Franken clearly is mocking Fox. In setting himself up in what is apparently a news room, he is mocking Fox and O'Reilly. Mr. O'Reilly is bringing to mind in fact the cover of one of Mr. O'Reilly's books. Even though this may result in tarnishment or dilution in the general sense, it is fair criticism.

Of course, it is ironic that a media company that should be seeking to protect the First Amendment is seeking to undermine it by claiming a monopoly on the phrase "fair and balanced." The motion for a preliminary injunction is denied. We are adjourned. I gather you will hear from Judge Carter with respect to a motion to dismiss or an answer or further proceedings in the case.

We are adjourned.
(Adjourned)