Trademark Law’s Fundamental Purposes at BU

IP Conversations: 
Trademark Law’s Fundamental Purposes, Boston University School of Law
 
The debate over normative foundations:  Mark McKenna: up until the 1920s-40s, courts
uniformly understood that unfair competition was about trade diversion,
illegitimately getting business that should have gone to someone else.
Structuring competitive relationship between commercial actors.  Case from 1871: in all cases, invariably held
that essence of wrong is sale of goods as those of another.  Direct competition was required; source
confusion was required, not something like affiliation confusion. 
 
Difference b/t TM and unfair competition in this light,
oversimplified, was about being attentive to the fact that attempts to divert
trade by competitors is the definition of competition: unfair competition had
to be distinguished from competition. 
Focus on deception allowed these distinctions.  Where P’s mark didn’t indicate anything about
the goods, no plausible explanation of use of same mark for same goods, so
illegitimacy could be presumed.  “Trademarks”
or “technical trademarks”—no separate need to prove intent to pass off. But
other designations, like geographic references, descriptive terms, trade dress:
more ambiguous, could be used in deceptive or nondeceptive ways, and courts dug
into the use more deeply: that was the law of unfair competition.  Initially had to show intent to pass off/rule
out legitimate explanation.
 
Confusion of consumers was not itself enough to intervene—these
courts weren’t unclear about why they denied relief.  Deception wasn’t enough; if you couldn’t show
that deception was going to divert your
customers, or if you couldn’t show that it wasn’t deception that diverted your customers, then you lost—American Washboard, false use of “aluminum”
wasn’t actionable even though consumers might well be confused.  Fraud on the public isn’t enough; incidental
effect of protecting P’s property right is to protect the public.  Consumers might have their own claims, or the
gov’t might intervene on behalf of consumers to protect them.
 
Natural rights reasoning shifted to legal realism; also the
commercial marketplace changed compared to the 19th century—geographic
and product markets expanded.  Modern
branding put pressure on courts maintaining their notion of harm.  The earlier courts clearly understood and
ruled out claims involving noncompeting goods. 
Also, they didn’t encounter noncompeting goods cases very often because
companies didn’t often offer multiple products. 
Later courts didn’t want to stop there, not because of harm to the
consumer but because of more recognition of harms to producers.  Bone documents the rise of the previously
unneccessary likelihood of confusion factors—weren’t needed in a world where TM
is about direct competition, and the only question is whether there’s
sufficient similarity.  When courts
started considering other harms, they were thinking of harms to producers—market
foreclosure, reputational harm.
 
Radical shift therefore is not that they started caring more
about mark owners than they used to—the Progressive era didn’t care more about
producers than the Lochner era courts
did.   But that means the law hasn’t recognized many
limits—confusion itself is the harm, rather than confusion being a predicate to
some other harm.  That has proven
infinitely pliable to mark owners. Often they don’t have to be pinned down
about the consequence of that confusion. 
Paying more attention to harm = progress.  Also limiting principles from outside:
interference w/patent, copyright. 
Increasingly necessary because there are no internal limits.  Doesn’t think we should go all the way back
to trade diversion, but there has to be something in between.
 
Robert Bone: Interpretive exercise: what did the late 19th
century/early 20th century courts think they were doing?  Distinguish 2 questions: (1) Why do we
condemn certain practices as TM infringement/unfair competition. (2) What are
the requirements for a private right of action. 
Some judges during this period separated these questions—we might call
(2) today standing.  Guard against
anachronism.  We are policy analysts, but
they didn’t think of themselves that way.
 
His interpretation of the history: One reason for (1):
protect sellers from harm to reputation, loss of sales.  Another reason, equally important: to protect
purchasing public from fraud—not prioritized behind protecting sellers.  Why protect reputation?  Labor/desert. 
Consumers?  Morality, and
promoting market competition, both.
 
McKenna recognizes both purposes but wants to prioritize
seller protection; Bone doesn’t see that. 
Canal Co. v. Clark: no secondary meaning = no injury from appropriation;
nor can the public be deceived—no need to say the second thing if only the
first mattered.  [I myself think that
courts do the “have your cake and eat it too” thing all the time.]
 
Common law was natural law—TM was property right.  McKenna and Bone disagree—McKenna sees it as
a right to customer flow/patronage, w/harm being trade diversion.  Bone sees it as a right to goodwill as
property. Trade diversion isn’t at the core of unfair competition, but rather
appropriation of/injury to reputation/goodwill. 
Goodwill is the thing drawing customers, not the customers
themselves.  He doesn’t want to accept
that taking customers away could, even at the beginning of the analysis, impair
a property right.  More importantly,
McKenna’s focus on deception doesn’t come from the nature of these rights. It’s
superimposed on the right to customer flow. But why deception, if it doesn’t
follow from the nature of the right? 
Because of public harm.  Bone’s
approach derives the deception limitation from the right itself: the goodwill
of the 19th c. is the goodwill of the product sold by the
seller.  The way you take that goodwill
is by representing yourself to be the seller.
 
McKenna’s concerns go to (2)/standing—Bone doesn’t think
answers to (2) tell us enough about (1). 
Aluminum Washboard court finds
no private right of action, even though there’s trade diversion.  If you didn’t buy an aluminum washboard from
P, you had to buy one (marked as such) from D. 
No property right, so no cause of action, not that there’s no fraud.  Fear of vexatious litigation.  FTC doesn’t change the name of the thing it
can pursue—unfair competition. If trade diversion were the essence, we wouldn’t
call the thing the FTC goes after is unfair competition.
 
Borden is the
strongest case for McKenna—the court says there’s no property right; you need
direct competition. This follows from notion that goodwill was limited to the P’s
particular product.  That goodwill wasn’t
taken.  At the end of the opinion, the
court says there might be some equity jurisdiction if the defendant’s products
were inferior, notwithstanding lack of competition. 
 
Bone also thinks the noncompeting goods expansion was
earlier than McKenna does—could be accommodated easily by expanding goodwill of
product to goodwill of firm, which was logical once firms diversified. Natural
property right superstructure was jettisoned, as a major change, resulting from
legal realists’ attack on natural common law property right. Period of
policy-based functionalism, no longer limited because there was no “property.”  Policies were in conflict; needed to be
balanced.  But the same 2 policies hung
around in a general sense—protecting consumers and protecting sellers. What’s
changed: mainly, once we start looking at those policies, views about
appropriate balance/weighting differ across different folks.  One big thing is the rise of psychological
advertising. Notion that advertising can give you an “identity.”  Concerns about monopoly weigh on the other
side. 
 
Multifactor confusion test tries to paper over the
underlying policy conflicts, but that conflict remains.  Goodwill gets expanded even further, from
firm goodwill to “inherent” goodwill—popularity/value of the mark itself.
 
McKenna: doesn’t think we can say about the later 19th
c. cases that the problem was lack of a property right—that was the whole
difference between TM proper and unfair competition—if property were the real
explanation, we wouldn’t have an unfair competition cause of action.  Bone says it’s hard to think that competition
is a harm, but McK’s point is that the idea was to protect legitimate exercises of one’s own property
interests, not a stream of consumers—Keeble
v. Hickeringell
is about when it’s legitimate to divert ducks—yes by
building your own duck pond, no by firing guns. So deception does naturally
limit the scope of the right.
 
Unfair competition: Bone has a whole article about the
changing meaning of “goodwill”—so too the meaning of “unfair competition”
changed over time.  You can see in the
same era, FTC hearings, child labor, convict-made goods—at the beginning,
somebody suggests that we call that unfair competition. At the beginning of
that period, people say that’s crazy, unfair competition is about passing
off.  A few years later, people say “if
my competitor can use child labor in another state, that’s unfair competition,”
and everyone nods—a big shift.
 
Bone: yes, unfair competition is expansive. But American Washboard is an unfair
competition case that rejects a claim b/c there’s no property. There’s no
uniform view of this in 19th c—there are tensions.  It wasn’t stable.
 
Prof. Chronopolous: English common law allowed tort of
deceit, to be brought by consumer.
 
Wendy Gordon: One thing that intrigues her was the rise of
rights in marks as such/licensing marks as objects of value.  What policies should TM serve, regardless of the history?
 
Prof. Alexandra Roberts: What did practitioners, producers,
consumers think?  Are the judges
similar?  Assumption of consistency: can
we make overarching claims about what the goals of TM were?  Modern doctrines—no such consistency.
 
Dogan: relationship between normative/policy considerations
driving doctrine and doctrine itself. 
Natural rights approach/Lockean labor approach—to its logical
conclusion, that doesn’t have limiting principles either, certainly not limited
to trade diversion.  Given that goodwill,
as long as enough and as good is left for others, I should be entitled to
prevent others from appropriating it. Doctrinally, the early cases did tend to
limit rights to trade diversion, but that can’t be equated to a natural rights
theory that is limited to trade diversion as a matter of principle. Relatedly,
in terms of what’s driving expansion of TM in 20th c, the likelihood
of confusion standard is loosey-goosey and enabled expansion, but when we think
about what motivated that expansion, the cases that push the boundaries involve
explanations that aren’t focused on confusion so much as they are focused on a
kind of natural rights impulse—Boston Hockey, Smack Apparel, early initial
interest confusion cases.  Courts seem to
be interested in protecting producer’s ability to capture full value associated
with their reputation.  Likely confusion
is enabler, but not the real focus of courts that want to protect producers.
 
Jessica Silbey: What work is the word property doing in the
early cases, in the story Bone is telling? 
The market has a character and she can see how that moves doctrine, but
not property.  In the early cases she
sees impersonation, taking people’s names.  Relation to defamation, injury to reputation,
might give us more information about ephemeral harms/kinds of harms that do
produce standing.  (Robert Post’s excellent
article about legal models of reputation
has a lot of relevance here.)
 
Michael Meurer: what was the mix between consequentialism
& deontology among judges at this time? 
 
Rebecca Curtin: Both McKenna and Bone commented on relation
between commercial practice and law. But why? 
What are the consequences of that for principled limits on TM?

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