Trademark Law’s Fundamental Purposes, part 2

The role of justifications and equitable considerations in
trademark law:  Stacey Dogan
 
Many of the early cases are limiting protection b/c of some
interest they’re trying to protect on the other side—Borden is an exception. 
Maybe a public right to use the term—e.g.,
American Washboard.  Troubled by recognizing a right in a private
party that would preclude others from truthfully describing their goods. 
 
From Borden to Aunt Jemima: in the latter, the court
says there doesn’t seem to be a reason for the D’s use of the TM—there’s
consumer deception, there’s possible harm to the P, and there’s no reason to
give access to this term w/singular meaning. 
Concept of justification does help explain case law through early-mid 20th-c.  Courts start thinking in terms of likely
confusion—instinctive/intuitive feeling that unexplained/unjustified Ds who are
trying to free ride create a costless case for judicial intervention.  That takes us through much of the contemporary
case law as well, even in cases involving counterfeit goods, post-sale
confusion.  Courts are moved by a natural
rights feeling that TM owners are entitled to the fruits of their labor unless
the D has some justification.
 
Courts initially responded to use of keywords in search
engines as “unfair,” using guise of confusion; as courts have been educated
about the value of these uses for competing or complementary products, they
scaled back the scope of TM rights, insisting on a showing of real likely
confusion.  Amazon v. MTM; Tiffany v.
eBay
; even Rescuecom.  Most limits have been imposed in the
expressive use context.  Increasingly Rogers v. Grimaldi: very
defendant-protective, and the reason courts do this is that they see the speech
value of allowing people to incorporate TMs into expressive works.
 
Wendy Gordon: Boston Hockey—merchandising right.  Investment protection rationale? Hard to tell
a good incentive story.  Cheaper
sweatshirts for poorer people—better access to status competition.
 
Dogan: Natural experiment? Europe has broad protection for
design; US has less protection for designs that integrate form and
function.  Design patent does protect
design, but much design developed in last ½ of 20th century is no
longer protected if it ever was. Lots of furniture still under protection in
Europe but not here—someone should do empirical work to figure out effects on
product diversity, price spectrum.  Recent
injunction against generic manufacturer of a drug that just went off patent—a purple
pill, and the plaintiff/brand owner sued when the generic manufacturer used the
same color, and got a PI.  There has been
some work done suggesting that old people in particular really rely on pill
color.  Compliance w/drug regimen
declines if people aren’t allowed to use pills. 
[McKenna interjects that it also supports drug effectiveness.]  To the extent that we can harness evidence
like this and present it to courts, they might be more persuaded about the
costs associated with recognizing rights.
 
Bone: Dogan is describing sort of a presumption of
protection; he would say today’s TM is about worrying about risk.  Smack
Apparel
: the D had justifications, they were just ignored.  [So basically TM owners and the courts that
enable them are as lily-livered as Donald Trump and his ilk’s fear of
refugees.]  P had an established
licensing market, and if that were impaired, who knows what would happen?
Erring on the side of the TM owner.  Same
w/prestige goods—court isn’t going to say that signalling status through purchases
is wrong.  If the Ferrari gets too
plentiful, then prestige plummets, and we don’t want that risk. Tarnishment/dilution
is the same.
 
Dogan: these aren’t unrelated.  Tarnishment is distinct because while she
doesn’t like it, there is a theoretical harm narrative there [just one whose
mechanism violates the First Amendment, NBD].
 
McKenna: courts are relying more on justifications, but the
problem is that courts don’t uniformly accept those justifications—they don’t
buy the argument for competition in luxury markets. They buy the harm argument
that P will lose customers who want snob appeal. You need justifications, but
you also need to know when justifications will trump the harm story, and courts
ever expand their willingness to accept ever more fanciful harm stories.  We don’t need to figure out what TM law was
once about to make TM law now, but the reason he wrote was that the dominant
discourse was that TM law was about search costs and we should get rid of
doctrines that don’t further that. 
Courts don’t think they’re doing search costs so they won’t be
responsive to those arguments. 
Bone/McKenna dispute is a conclusive argument against originalism, but
agreeing w/him isn’t key—wants to convince people to take on the harm story on
its own terms rather than just say cts aren’t doing what they’re supposed to
do. And you can’t do that if you say the doctrine has abandoned its old
consumer protection rules.  There is both
continuity and a radical shift.
 
Gordon: remember that Holmes reminds us that just b/c
something has value doesn’t mean that it should be property; and there are
complicated questions about courts v. legislatures.
 
McKenna: note that 1-800
(10th Cir.) channels its concerns through the harm story—it doesn’t
say “keyword ads are good so this is ok” it says no one is clicking on these
ads and therefore there’s no confusion/no harm.
 
Dogan: what is it that TM law ought to do?  Unrealistic to
go back to trade diversion. 
 
Silbey: Take seriously the idea that consumers are harmed
when they get the wrong thing.
 
Dogan: Materiality!
 
Silbey: better explanation for why mistake is a problem when
we buy.   Take the idea of impersonation seriously—is that
a consumer interest apart from market balance issues, if the consumer is
otherwise satisfied.
 
Gordon: should the P have to show that the D is making
something whose purchased by a confused consumer would hurt the consumer in
some relevant way?  Hand says TM owner
shouldn’t have to be at risk, have to wait for bad quality to materialize, but
over time Hand began to think that was too generous for Ps.  Sees the point of allowing P to vindicate
rights before the harm materializes, once you accept the theory that if it materializes it will do P harm.
 
Dogan: there’s also a consumer autonomy interest in
preventing a purchase that is caused by
deception.
 
Bone: Autonomy is a description of information/choices. Why
do we care? Maybe b/c it makes market work better—allocative efficiency.  We might care if consumers have the right to
perfect information, but that’s impossible. 
Third reason: more to do with enforcement costs—ideally, we wouldn’t
give protection where products are of equal quality, but broader rule has fewer
error and enforcement costs.
 
RT: Autonomy is more than a descriptive term.
 
Silbey: early cases focus on manufacturer autonomy.  The taking of the name is a harm in itself,
and I don’t understand that for the reasons Bone articulates for dismissing
consumer autonomy standing alone.  [That
is, it can either be market based or rights-based, and neither work well.]
 
McKenna: we can sweep consumer autonomy under the rug if you
focus on lost sales/harm to TM owner. 
Also, quality concerns: you have to start thinking about what the
components of quality are—conditions of production.  There’s no a lot of real diving into where
real consumer autonomy is.
 
Dogan: Ferrari case is an example where the harm story is
not really doing the work—it’s about free riding, and the court sees no social
value in this form of copying.
 
McKenna: features of TM promote informational clouding, not
clarity.  For example, Clorox is no
different from other bleach (Posner thinks there’s more of a guarantee that it
won’t explode but nobody else thinks this—people buy Clorox because that’s what
they’ve always done).  It’s also easy for
TM owners to obscure true ownership of company. 
It’s easy to change a TM to disguise your identity.  If goal were info clarity, TM law would restrict
these things.
 
Bone: it just doesn’t go as far as it could. That’s not
clouding.
 
Dogan: provisions for information—nominative fair use,
allowing communication about TM owners—enable others to correct problems.
 
McKenna: mismatch exists though. Comparative advertising can
reach particular components. But you can’t get the limits of TM law from “it’s
about promoting the flow of information” b/c then you need to know why it’s
about this kind of information rather than others and why it doesn’t cover
other uses involving a TM (e.g., your health insurer’s use of a TM with its
incomprehensible disclosures).
 
Gordon: Social welfare v. formalists.  Formalists would say you have a right b/c you
have a right.  Consequentialism asks why
these people have these rights in these conditions.  Law & economics answer: usually starts
w/sharp distinction b/t distribution and allocation.  Distribution = who is richer & poorer.
Allocation = how is a particular resource being used. We seem to usually make
policy arguments in TM that say let us give rights to people who will use them
in a way that gets resources to higher-valued uses.  That’s allocation, but we also worry about
the distributional aspect.  So we tend to
react to changed circumstances—we thought copying facts was great—with changed
law—1918, SCt says that problems w/news services justify new allocation.  And yet: We don’t want people who have vested
rights to suddenly lose what they have simply b/c they’re not economically
useful.  We have a few ways of protecting
that. One is the takings clause.  The
other is the gradualism w/which law operates.
 
One difficulty w/TM is that we can see distributions being
made w/out any allocational justification, b/c we assume that past allocations
had some social welfare justification. 
New prestige goods/merchandising rights etc. evolve w/o any clear sense
of why it helps society. Its recency makes it hard to credit the distributional
claims made for it.  Similar w/publicity
rights.
 
Bone: Another piece is that we’re starting to enlist TM law
for dynamic efficiency purposes, which is a new thing.  Some people are concerned about incentives in
a dynamic way—merchandising rights. Goes beyond incentives to maintain product
quality.
 
Dogan: In an unexamined way—implicit in the opinions rather
than explicit and examined and challenged. 
 
Meurer: Merchandising rights might be justified by claiming
that sports teams capturing more rents leads to bigger stadiums, bigger payouts
to players (I’m sure they’ll start building their own stadiums any day
now).  Maybe more plausible w/r/t George
Lucas and the next Star Wars
movie.  Affects incentives about which
kinds of movies to invest in. 
 
Many economists think the more ads, the better, b/c ads are
typically informative. Strong protection for goodwill might induce more
investment in advertising, which is better for society. If you think ads are
bad you’d reach an opposite conclusion. 

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