IPSC Session 2: Trademark 1

Trademark 1
 
Paul Heald, Testing Theories of Tarnishment in Trademark and
Copyright Law
 
Tarnishment should be treated like false advertising: you
should have to prove some (likely) damage to your TM to win, rather than
presumptions.  Tarnishment is a
psychological/cognitive theory. Appears similarly in © literature, mostly in
policy analysis—Landes & Posner—if we had an X-rated
Mickey Mouse
movie, the Mouse would be destroyed.  (As opposed to the super
racist versions
.)  Theory: owners “shepherd”
their marks/works better.  Theory is that
sexual association is particularly bad. 
ATM: Cookie Jar—strip club named Cookie Jar opens up across the street;
Restatement thinks this is clearest case for tarnishment, such that no evidence
is needed for relief.
 
Studies: lots of empirical work in marketing literature on
sex; increased memory for ads with sex, but decreased memory for brand. Lots of
gender effects.  Strong evidence of
congruence: sex in ads works better when product has something to do with sex—perfume,
jeans, hotel rooms v. iron skillets.
 
Experiment: show “tarnishing” version of well known
work.  Showing people two movies—poster and
short description—and ask which movie will be most successful at the box
office.  Titanic v. Good Will
Hunting.  Subjects do this for 20 filler
movie pairs and 10 target pairs. Porn examples, e.g., Bitanic, You’ve Got
Shemale.  See if treatment group exposed
to these versions ranked the originals any lower.  Theory’s prediction: Bitanic would diminish
preference for Titanic.  Instead, there
was a positive effect; overall no statistically significant diminishment for
any, and 5 of them showed statistically significant enhancement.  No significant differences between women and
men; a little, not statistically significant difference b/t conservative and
liberals.  Libertines do show a big
difference; Mechanical Turk has very few puritans.  So we tried to find a good distribution of really
conservative and really liberal people, and test sequels—damage to branding.  For sequels, there was no overall enhancement
effect or negative effect; some went down a little and some went up.  And again, no difference between gender. For
most conservative viewers: statistically significant negative effect—for them,
the presumption that sex causes tarnishment might apply. 
 
Implications: no evidence of tarnishment overall; would we
want to protect one corner of the population? 
Research calls evidentiary presumptions into question; rationales for
copyright term extension; parody/satire distinction in fair use cases; market
harm calculation in fair use cases.  We
have previously shown tarnishment in other ways: significant positive
correlation between quality of audiobook recording and perceived value of underlying
book, but no correlation between reader status or legal status and value.
 
Mark McKenna: are things getting mashed together in using
movie posters? Could there be something importantly different in creative works
v. brands attached to goods. One plausible explanation for the audiobooks is
that people think that the proprietor of the book is responsible for the
recording.  Why choose to use movie
posters rather than more conventional brands?
 
A: we did want to get at both, and the TM and © literature
both describes the same claimed harm and the same claimed mechanisms, so we
wanted to see if it would work.
 
Lunney: Why do TM owners sue over tarnishment then?  Every business has puritanical consumers, so
maybe they’re concerned about those consumers.
 
A: Third grade, intuitive mentality: this is mine and you
have no right to do this.  True, we may want
to protect a narrow proportion if the harm caused is significant, but we need
to balance that with the harm caused by absence of ability to tarnish.  Mickey Mouse porn: might benefit a slice of
the population even as it harms another slice.
 
Jessica Kiser, Market Responsiveness to Trademark Litigation
 
1997 article by Bhagat and Umesh in the Journal of Market
Focused Management: sample of approx. 60 cases mentioned in WSJ.  Focused on econometrics—stock prices when
sued, and when resolved.  Findings: TMs
are valuable; litigation is expensive; no broader context.  She decided to redo this to see if there was
a reason for TM overenforcement—do investors like your filing TM suits?  If there was a negative effect, which
traditionally comes from commercial litigation in other contexts—both parties’
stock prices go down—it shows irrational overenforcement. Began w/Ken Port’s
Mitchell Study on TM Litigation—2972 cases; adding stock prices to it; pulling
out cases w/o a publicly traded party. 
Open questions about how else to thin the herd.  Event study methodology: see what stock
prices do in relation to notice of litigation. 
Helps you figure out if the brand, not just the TM, is harmed by the
litigation.
 
Define the event and notice period; measure stock return
during that period; estimate baseline w/out event; compute abnormal return;
measure statistical/economic significance. 
 
Previous studies: 1995 study shows significant effect of
major endorsement deals; 2011 study showed that announcements about health of
Steve Jobs affected Apple stock prices.
 
How do you figure out what’s public?  Previous study used WSJ/NYT coverage, but
maybe that’s not the right measure now. 
Maybe we should look at Westlaw/LEXIS. 
Pre-and post-internet divide? 
When is the test window?  Any
effect of anticipation from C&D letters? Large company v. small company;
established v. newer company.
 
Q: Other related litigation studies: Alan Mathios & Mark
Plummer, The Regulation of Advertising by the FTC: Capital Market Effects, 12
RES. L. & ECON. 77 (1989); Sam Peltzman, The Effects of FTC Advertising
Regulation, 24 J.L & ECON. 403, 419 (1981).
 
Q: when does the fact that the alleged infringement is
occuring become known? That might be another relevant event. 
 
Q: Type of product? Some industries may not care.  Some of the most aggressive litigants, like
Louis Vuitton, are nonpublic.
 
Signe Naeve, User Generated Crafts in the Sports Industry
 
All the stuff people make as fans: knitted scarves,
etc.  Fan fiction/fair use in copyright
is different in trademark where people make and often sell stuff.  Working thesis: Met with counsel for sports
teams; came in from fan perspective wanting to argue for some permissive uses.  Now thinks this is different from fan
fiction; inherent tensions w/in TM law that lead TM owners to police
brands.  User-generated crafts raise
unique issues b/c, while TM owners can turn a blind eye to personal use, they
may need to take action to protect reputation. 
TM owners could sponsor contests, partner w/fans, license them.  Risk of losing the right creates need to
police.

Difference b/t kinds of sports—Mariners said “this is our TM, and we’re afraid
of tarnishment.”  Sounders: “there’s a
fan culture of supporters that’s different—we look for opportunities to partner
w/fans.”  Sounders have “posters by the
people” contests.  Implied or direct
licenses are even possible. 
Noncommercial fair use as a potential safety valve; only policing when
there’s broad distribution or where it competes with an exclusive license; you
could even donate older TM versions to public domain.
 
Q: Materiality? 
Matthew Kugler’s Measuring
Sponsorship Materiality
.  Counsel may
be strategically overstating risks of naked licensing: PTO decisions on Bucky
Badger mascot, UNC—uncontrolled since 1792, but university was still able to
claim TM rights.  If the risk of losing
the right is real, then maybe the problem is the risk, not the fans.
 
Heald: Harvard’s TM counsel—not afraid of people’s
perception of licensing.  Harvard says
whether it licenses or not is proprietary information—it will not admit whether
it licenses “Harvard Mercedes.”  Mariners
may be overstating their fears.  (That Harvard
practice could have really interesting consequences in litigation.)
 
Irene Calboli: There is a risk of naked licensing in the US,
but the law is still very confusing. Natural for TM owners to err on side of
caution.  If we had a system in which the
registration conferred property rights, paradoxically, that could allow TM
owners to pick and choose more like patent/© owners.  Struggle is extent to which fan use can cause
a real issue of tarnishment/loss of control. 
Real world has merchandising; we can make a difference in cabining that
and telling owners you don’t need to enforce so aggressively.
 
Rebecca Tushnet, The First Amendment Walks into a Bar:
Trademark Registration and Free Speech
 
I’m going to talk
fast so you have maximum time to yell at me. 
My paper analyzes the First Amendment arguments against §2(a)’s
disparagement bar with reference to the consequences of any invalidation on the
rest of the trademark statute. 
Ultimately, given the differences—or lack thereof—between disparagement
and other bars in the statute, I conclude that §2(a) is generally constitutional
as a government determination about what speech it is willing to approve, if
not endorse.  If the Supreme Court
disagrees, it will face a difficult job distinguishing other aspects of
trademark law.  And these difficulties
signal a greater problem: the Court has lost touch with the reasons that some
content-based distinctions might deserve special scrutiny. 
 
Arguments I’m
playing with that haven’t yet made it into the paper: Consider this argument:
disparagement + false connection taken together is viewpoint neutral ban on use
of the identity of a person or group of which one is not a part: if it
disparages, probably doesn’t cause a false connection; if it causes a false
connection, probably doesn’t disparage, but together they make up one unified
content-based but not viewpoint-based prohibition on taking advantage of
another entity’s reputation in a mark [except that doesn’t explain Tam—but
perhaps that’s not necessary if the overall scheme is content neutral].
 
Vagueness objection:
the standard for disparagement is vague and hard to apply with predictability.
This is perfectly true, as the cases discussed by the majority indicate—but
it’s also a problem with the rest of the bars! 
If vagueness is a constitutional flaw in disparagement, consider if any
of the other bars—or even the “use as a mark” precedents requiring trademark
use instead of ornamental use for registration—they are no less vague.
 
There are over a
hundred thousand applications each year. 
It would be actively astonishing if even the consistency available in
obscenity cases were achievable in this flood. 
In fact, the inherent inconsistency in a merits-based system is one
reason why the Court has granted government flexibility in making content-based
decisions: many systems of government grants couldn’t survive if held to strict
First Amendment consistency in every case, and the costs of not having
trademark registration are greater than the costs of not having lots of
obscenity prosecutions.  This is what it
means to have a regulatory state, and it’s another reason why, if the state is
going to maintain a trademark system granting the benefits of registration
after substantive examination, it needs some flexibility and tolerance
inconsistent with traditional strict scrutiny.
 
Q: why isn’t disparagement viewpoint-based?  Very surprised if even before Tam RACISTS
SUCK would get rejected, precisely because we distinguish b/t things
disparaging to a discrete and insular minority and things not—lots of marks say
bad things about people.  [Law treats
only certain groups as if they can’t take care of themselves]; actual practice
discriminates b/t use of racist terminology by members of racial minorities:
dykes on bikes treats the content differently b/c of who the speaker is and
that seems an indication.
 
RT: [relevance of individualized determinations—Dykes on
Bikes had a different record about what the targeted group would think when
they saw the mark.]  The bar itself doesn’t
care what your viewpoint is; it rejects disparaging terms in context of their
use.  Also, dispute the paternalism
point: one way people take care of themselves is through the political process.
Antidiscrimination laws generally are ways to prevent some people from harming
others.
 
Sheff: nature of gov’t interest in different bars.  False consumer beliefs as to facts they encounter
is different in salience than interest in preventing gov’t support of
particular kinds of content  which is
different in interest in free competition. 
[treaty compliance in provisions on wines and spirits; if we can have
multiple interests implemented in §2, preventing gov’t endorsement of
disparagement is one of them]
 
Farley: if it were all about false association you wouldn’t
need the other bars besides false association. 
Very clear that viewpoint of speaker doesn’t matter, but the current
test makes the viewpoint of the listener matter.
 
Q: but the other bars are about levels of generality.
 
RT: yes, as predictions that, say, use of a flag will be
confusing in some relevant sense—but if we apply 1A scrutiny, those predictions
seem highly vulnerable.  RE/MAX case
makes that clear: (1) nobody knew the mark was the flag of the Netherlands, so
couldn’t be confused; (2) though the registration was for the flag, in practice
it always had the balloon in front of the flag, so nobody could be confused
even if they would have recognized the flag. 
The level of generality is unwarranted if we let strict or even
intermediate scrutiny apply.
 
Q: where do consequences of registration fit into theory? If
law prohibited these forms of speech outright, this would be unconstitutional.
 
Q: if SCt affirms Tam, does it have to strike down Gay
Olympics?

RT: G-d willing.  Yes, when gov’t seeks
to suppress speech instead of just not support it, I want gov’t to be held to
higher standards of proof as to the harms it seeks to avoid.
 
Calboli: what is the minority group?  Asian-Americans?  Self-identified Asian-Americans?  Difficult to pinpoint potentially offended
community.  Also exclusive registration
prevents others from using the name: if Tam has a First Amendment right, why
don’t other potential users of the SLANTS have First Amendment rights to
commercial use?
 
RT: shift would have to be, as Sheff says, in nature of gov’t
justification—Tam’s first appropriation of the term.
 
Lucas Osborn, presentation (didn’t catch title): TM outsider
perspective: use in commerce required, but that doesn’t mean what it means in
the dictionary; confusion is actionable, but not what you think confusion means—can
include uncertainty among people looking creepily close at your stuff.
 
Effects of 3D printing: manufactured at home; TM owners will
want to police CAD files because they can’t control what goes on at home as
easily. Knockoffs will become easier and more diverse; creativity and
personalization will increase. 
Modifications, mashups (I love the connectors for multiple kids’
construction sets).  Normative shift:
source of the goods no longer mean the manufacturer; the important source is
the CAD file source.  CAD files can be
literally duplicated, so no further quality protection rationale if the CAD
file is the same (or if the person knows that it’s an unauthorized CAD
file).  Left with property based theory
of TM.
 
Pragmatically, TM owners want to police CAD files directly.
Tech and procedural hurdles as w/DMCA. 
Can protect CAD file with TM—IC 009: downloadable virtual goods, namely
computer programs featuring [specify] for use in virtual worlds.
 
Some but not all TM owners will embrace 3D printing, maybe
even allow you to personalize.  Will a
CAD file directly infringe a physical good? 
Related goods?  Dilution?  Indirect infringement/dilution based on web
host—eBay v. Tiffany means that knowledge
standard will apply; maybe we won’t need DMTA, but eBay requires at least some policing.  [Expect to hear about “notice and staydown”
with these as well.]
 
Knockoffs and counterfeits will proliferate, magnifying
existing concerns with post-sale confusion. Many more uses will proliferate for
free: circulating the CAD file will be less likely to be paid-for.  3D printing can undercut the mobs/criminals
funded by counterfeits.
 
Normative shifts with personal manufacturing: if I can take
a picture of something and reproduce it, creativity and personalization will
increase.
 
Lemley: post-sale confusion theories aren’t persuasive on
their merits; used instead to get proxy for design rights.  We will probably decide that posting the CAD
file is advertising for sale.
 
McKenna: creates a Dastar
problem: do people care about the “source” of the file when what they want is
the content?  Is a file a “good”?  (Could you even be confused about the source
when you know where you got it?)

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