TMSR, part 2

Session 2:  Defining
Markets: Doctrinal Settings for Market Analysis in Trademark Law
Trademark law clearly already undertakes market definition
in the analysis of genericism and also for functionality. Are current
approaches adequate? Are markets defined the same way, through the same
inquiries, in both settings?   Should
they be?   If so, what are the essential inquiries?  How does market definition operate within the
factors test for likelihood of confusion – superficially, through the similarity-of-products
or similarity-of-market-channels factors? Or more profoundly? Is market
definition in fact ubiquitous in trademark law analysis because it is an
inquiry implicitly undertaken whenever a mark owner defines the underlying
goods or services with which the mark is used? In which other trademark
doctrines—if any—is market definition doing substantial work, even if below the
surface? Is there a coherent concept of market definition in operation across
trademark law doctrines? If not, should such a concept be developed and
imposed?
Introduction:   Jessica
Litman [sadly missed, due to teaching]
Bob Bone [midtalk]: How careful we want to be about market
definition may depend on error costs. If we’re worried about anticompetitive
effects of product trade dress protection and we know other marks are
available, we may tilt in favor of narrowing market definition.
If we cared more about commercial morality, market
definition would be less important. 
[Unless we thought that the TM owner’s market gave it preemptive rights
in nearby markets.]
Discussant:      Bill
McGeveran: in what sense is this even a market? Is that word even meaningful for
some of the things that are packed into this prompt?  Two roofing contractors; one claimed a TM in
orange and had a registration in orange, more or less. For what, though?  In one sense, clearly a defined market—two geog.
competing providers of identical services. Scope? Hue?  Claimed orange on T-shirts that workers wore—but
orange for safety equipment is pretty functional.  Is the market “the market for orange
T-shirted workers”? Market definition is often not about defining markets.
Second, increasing detachment of modern brand-oriented law
from TM is putting pressure on markets as a working concept. Increasing
merchandising; detachment of online purchasing from presence; cross-licensing—all
involve assertions of rights well outside the traditional “market.” One reason
those doctrines have been so messy is that we’re using market-anchored concepts
to talk about marks that are no longer anchored in markets.  This work is necessary, but if every doctrine
instructs you to go back and consult the market, and you can’t identify the
market, the doctrine is broken.
Dinwoodie: we’re more concerned as a group seemingly about
defining the mark than defining the market. But if TM law is a law of
competition, that matters; why be so comfortable w/allowing parties
opportunistic definitions in litigation v. mark definition?
Silbey: Interaction b/t TM and other fields matters here—bankruptcy.
Lemley: Lynn LoPucki suggested that we could take
franchising more seriously—if you hold yourself out as a McDonald’s, you’re a
McDonald’s and your employees are McDonald’s employees.
McKenna: confusion isn’t found in nature; you have to know
where to look to do a survey and once you ask a set of people you’ve defined a
market.  Happens all the time if we’re
trying to think about confusion. Happens implicitly every time an examining att’y
decides that goods/services are remote enough to avoid confusion. Almost always
done by uninformed, intuitive judgments.
RT: it seems as if one difference from antitrust is that
antitrust takes markets as they are. Functionality in TM at least takes markets
as they could be, if there were perfect information—we’re not going interfere
w/ the potential, even if people don’t understand that this design produces
some specific benefits.  Similarly
infringement takes markets as they could be with the idea that producers can be
in multiple markets and consumers can expect that cross-market presence—the
lack of substitutability of salt for sugar doesn’t directly bear on whether a
producer of one would produce (or license its marks for production of) the
other.
Dinwoodie: bridging the gap; ITU/non use based systems are
allocation of future markets—TM law in some ways constructs markets rather than
reacting to them.
Grynberg: Market definition does little work b/c of approval
confusion in cases like Diageo/red dripping wax for alcohol, or court just
makes up its idea of the market.
Linford: path dependencies? Do you take Simon Tam at his
word that he can’t get a record label to sign him without a ® for his
band? 
McGeveran: we’re not defining a market any more, we’re defining
a class of potential harm (poorly) and a class of potential perceivers of the mark.
Dinwoodie: vehicle for implementing levels of
paternalism/competition/choice.
Austin: TM law assumes everyone wants to use a “virgin” mark
and put it on everything, but doesn’t often ask whether that’s what producers
or consumers want.  UK SCt: Starbucks
decision gives an embarrassing attempt to segregate markets internationally. Eschewed
consumer perceptions/desires and segregated markets along geopolitical borders,
incoherently. Maybe there’s a degree of relaxation about defining markets b/c
there’s so many ways to do it badly.
McKenna: maybe we’re using market in different ways compared
to RT’s example (sugar/salt related?). 
TM law says that if people think both would produce, then they’re in the
same market. But we’d still look at the D’s consumers: if Morton’s Salt sued
Morton’s Sugar, we’d still look at sugar consumers—if they overlap that’s fine,
but we shouldn’t assume that.  That’s one
way Ps manipulate their surveys: by baking that in to the structure of the
survey [no pun intended, I assume]. If you find confusion among sugar
consumers, you could find that Morton’s should own the rights in sugar, but you
can’t assume you found in nature an existing set of consumers.
Dinwoodie: he thinks you’re allocating the sugar market to
the salt producer, but it’s still two markets.
Mike Meurer: antitrust considers things like whether a
producer might enter the market if there were a price rise by existing
producers—could that be analogized to anything like TM and what the TM owner
might like to do if things change?
Linford: Belmora as a case where US consumers may be tricked,
though maybe not problematic if the chemical composition is the same; the party
seeking to vindicate this harm may be the wrong party.  Is the Morton Salt company the right enforcer
of rights against Morton Sugar?
Gangjee: Market highly relevant/picky definitions for
registration.  Exhaustion/first sale:
markets matter a lot. But by the time you get to infringement, we’re just
interested in perceivers (per McGeveran).
Beebe: dilution signals a a fundamental issue about size of “market”
and disappearance of market inquiry; dilution makes the mark everything.
Expansive doctrines like IIC, approval, and post sale confusion tend to be
market-limit-busting arguments.
Dogan: if we define markets broadly consumers come to expect
more crossover/more easily confused. [I wonder about this.  How do we know how consumers learn the rules?
In my class the other day we were talking about the public understanding that
use of a hashtag on Twitter is not controlled by TM owners. Is it just a matter
of its there-ness for us?]
Heymann: aesthetic functionality: what is the market in
which a ring pop/baroque silverware producer is seeking to compete?  The court there wanted to know who they
thought their competitors were.
Dinwoodie: are courts better on this for product
design/functionality than for other issues? 
It’s more important to define the market in such cases.
Dogan: TM owner meaning v. intrinsic appeal—very hard to
segregate those things (which turn out to be important to resolve the issue of
what the market is). No one would argue that Burberry plaid lacked substitutes
before Burberry developed secondary meaning [though no one would dispute it had
intrinsic appeal before that, I think, forcing us to figure out whether there
was something nonsubstitutable about the intrinsic appeal].
Gordon: as a Veblenite, wants to reject the idea that
consumers’ desire to purchase status should be part of the TM.  Burberry plaid purchase often has nothing to
do w/actual appearance of Burberry, or with quality of product; they want to
wear something that will signal status. That’s functionality to her.
Diamond: the survey expert is the person who does market
definition in a TM case. We often make immediate assumptions and there might be
different perspectives upon a deeper dive. 
Session 2,  Cont’d
Mark Lemley: point of TM law from producer perspective is
product differentiation. That shouldn’t matter in a world in which I own the
market for another reason; if I own the only patent, I shouldn’t need a brand,
and using it is just preparation against impending expiration. TMs, to have
value, should operate against a background of differentiated competitors. But how
imperfect is the competition? A function of how broad the differentiation is
and how broad IP rights are. And there is an antitrust/IP mismatch.  One implication: there may well be
circumstances in which the brand defines its own market.  RT wouldn’t respond to a small, significant,
nontransitory price increase of Diet Coke; if enough are like her, it’s its own
market.
We reach beyond the market in lots of doctrines—post-sale
confusion, dilution, etc.—look beyond expected consumers to a completely
different group. The core may be about differentiated product competition, but
we’re also starting to think of the brand itself as a market. Part of that is
abandoning similarity of goods as a touchstone for confusion. Luxury goods,
team logos, school colors: the thing I want is the identifier/participation in
the group.  Has tried to resist this
change, but it seems to be the way the law has gone.
If we took brand as market seriously for antitrust purposes—fine,
you want to own the market, we will treat you as a monopolist for antitrust
purposes—lawfully acquired monopolies are ok but get scrutiny of some of their
practices.
Further emphasizes need for materiality/TM injury doctrine
to measure when we should care. D’s benefit theory of remedies is completely
circular once we’ve abandoned a market definition attempt; thus we should look
for actual injury to TM owner, even injury that goes beyond lost sales.  Why do consumers care about this confusion?
What is the connection b/t D’s benefit and P’s harm?
Right now we seem to reject the weight similarity of goods
as a factor when it might help Ds and consider it very significant when it favors
Ps; perhaps we should be more evenhanded. [I thought Beebe’s empirical survey
suggested that similarity of goods could be dispositive when it favored Ds.]
Shari Diamond: Dilution and markets: fame is general consuming
public. But when you get to tarnishment, what’s the relevant market? Can you be
tarnished among nonconsumers? The statute is silent.
Courts spend a lot of time thinking about relevant population—it’s
relatively easy for court to look at universe to decide whether the survey is
helpful to the position the court has decided will prevail. Flexibility to
declare the survey universe too broad or too narrow. For a prescription drug:
is it physicians? Physicians who can prescribe the drug?  Users who might take the drug?  For toys: who buys the toys? But who sees it
advertised and lobbies for it?
How much do surveys cost? 
Online surveys have helped a bit for demographic diversity w/o too much
costs. But it depends.  It can be
$50,000-$100,000.  It depends on how hard
it is to get a respondent who’s qualified. If you want a physician, you’ll pay
a lot b/c the panels pay them a lot. If you have toothpaste, it’s much cheaper.
Though that wouldn’t include expert time—just the survey itself.
Discussant:      Leah
Chan Grinvald: real world consequences for how we operate for SMEs and
others—uncertainty about how a court would treat a survey even if you have one.
This really squishy notion of market definition hurts b/c they will narrow the market
definition if they can or they may have a less visionary view of future market
as they try to make it in their small market category. This has a feedback
effect and contrasts w/ Amazon getting bigger and bigger.
McKenna: TM as information but we presume that TM owner has
control over production of goods. As design and production separate (3D
printers at home) it will be more an abstract notion of design rather than
production quality. That’s another path to making the mark its own market.
Goldman: there are multiple market segments for any product.  Some may be confused and others may not
be. 
Diamond: what is a judge supposed to do with that?
Goldman: may allow more defense arguments; when he sees 15%
confusion, he thinks about the other consumers who aren’t confused.

Bone: the brand may not be a market in itself if it competes w/other marks that
communicate the same kind of information. But at the end of the day, a brand is
not a TM.
[much discussion about brands v. TMs, rights in gross v.
rights appurtenant to particular products, rights that are appropriated from
preexisting meaning (e.g. rights claimed in the Mona Lisa) versus supposedly
self-generated value (versus strong sentiment that no one makes value on their
own/Felix Cohen was right)]
McKenna: Any use of Coca-Cola [as a mark] would cause
confusion under current doctrine. And that also affects what counts as “use as
a mark.”  The only limits that allow
other people to use Coca-Cola are nominative use, Rogers, etc. However: The
doctrines we have created so that Coca-Cola can do that are not limited to
Coca-Cola strength marks and that’s what creates havoc.
McGeveran: Basically any brand will get the right to put its
mark on a T-shirt: undifferentiated licensing markets, in places like PacSun
and Hot Topic, where NASA and movies and bands and all sorts of other things
are simply displayed as possibilities.
Austin: classic view: seeing a Rubik’s cube on a T-shirt
doesn’t mean you think it’s from there—we look at the label.
Lemley: but post-sale confusion gets rid of that. Proposal:
when suing actual competitors, give latitude on mark similarity
(Cyclone/Tornado for fencing). Maybe for brands, with this new vision, we’ve
given them every right in the world except for the old carve-outs [first sale, Rogers],
but that applies only to identical marks.  Schecter, but modified.  He wouldn’t allow rights in pure text, only
the copying of the logo.  There are some
cases where courts happily distinguish between using the word mark to talk
about the TM owner, but don’t allow use of the logo. People might well
distinguish in their minds b/t those two corresponding to TM v. brand.
Dinwoodie: Europeans are familiar w/ the difficulties that
come from “same mark” standards.
Lemley: yeah, but it’s better than nothing.
Dogan: what do we do to emphasize social benefits of limits?
Cheaper spare parts; price of T-shirts may go down. Numbers matter.
Linford: he’s not sure that maximizing price competition is
always good. Consumers can lose, whether from Veblen satisfaction or otherwise.
Lemley: he agrees to an extent, but his reaction is yeah,
that seems like a real social value and I don’t see why people would give it to
the TM owner. If people putt better b/c they have a Nike putter, then we should
let everyone call their putters Nike. Veblen goods are harder b/c barring the
great unwashed is what gives value, but the power of a placebo should belong to
the public.
Linford: you’re presuming it’s sticky—that if copying is
allowed that value won’t be lost. But that’s an empirical question.

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