IPSC – Trademark Law I

Moderator: Mark McKenna 

Trademark Depletion in a Global, Multilingual Economy: Evidence
from the European Union (abstract)

Jeanne Fromer and Barton Beebe, NYU School of Law 

Notes on the EU system: runs in parallel with national
systems. Must be protectable in all EU nations (in theory); if generic in one nation,
unregistrable via EU. Also, EU does not review applications for relative
grounds for refusal (confusion). They generally remove diacritical marks for purposes
of generating similarity reports. Translational similarity matters: same
meaning in different language could bar registration. Not use-based as US is. 5
year grace period. Germany is biggest user of EU system, followed by US. Over
60% of applications contain English words—it’s the dominant language
commercially. 

Datasets: EUIPO applications, registrations; gathered
opposition data. Compared to corpora in English, French, German, Italian, and
Spanish, and translated words into those languages as well as looking for
positive/negative meanings. 

Results: nearly all good terms carrying positive affect are
already registered. 1000 most frequently used words are 65% registered as
single-word marks, covering 69.4% of all word usage, and of the most 20,000
frequently used words, 77.3% of all word usage is a word registered as a
single-word marks. Of the unclaimed marks, they’re not great: worst, problem,
than, thank, their, said, problems, worse, worry, etc. Some classes like apparel
are very crowded; if you look at similarity (small edit distance) then it gets
close to 90% coverage. Character, word, and number of word lengths are
increasing in applications, suggesting increasing resort to longer/less “shorthandy”
marks that may function less well as marks. Trends got really bad about 10
years ago. In other languages: About 95% of French usage is currently claimed.
Very high proportions of multi-language words are registered: of the top 1000
English words, 55 are highly intelligible in the other languages, and 54 are
registered (not REPUBLICAN). 

Opposition rates are declining, not increasing! 2017: 1 in
10. But those who bother to oppose increasingly win. 70% based on confusing similarity
resulted in a refusal either in whole or in part in 2017. 

EUIPO system is very different from US: allowing enormous TM
crowding, where lots of similar marks are registered at the same time.
Registration rate initially declines w/# of entities opposing the application.
Where no opposition, 92% registration. When # of opposers increases to 8 or
more, though, the rate increases again: the EUIPO just says: everyone gets a
registration; the field is already so crowded that there’s no problem. 

Compare to US: “all or nothing” rule may make it harder to
find marks. Is it a good system to have third parties doing the opposing/have
no examination on relative grounds? Businesses are arguably in the best
position to know what is detrimental. But also businesses might need a sense of
what’s potentially confusing, and EUIPO may not give it. Search reports of
EUIPO to ping third party businesses are really thin. CREMOLAIT triggered
nothing—they appear to identically match whole words in the registration. 

Jeremy Sheff: Disclaimer practice? Does that happen at all
where common word is disclaimed?  

Fromer: in the US, disclaimers are everything: if you
disclaim, you get your registration. Not clear what’s going on in EUIPO.

Irene Calboli: Applicants (except for largest) are usually
just looking at 2-3 countries. With enforcement still country by country, similar
rights in other nations aren’t much of a problem. Difficult to factor that in
looking just at EUIPO. Licensing/coexistence agreements may also be in place. 

Lisa Ramsey: if European companies aren’t worrying about
crowding, should we? Maybe rights should just be very narrow. Companies may
think that they can distinguish themselves with packaging etc. 

Beebe: tests our basic assumptions about TM law. Crowding may
not cause much consumer confusion; we will probably argue that European example
shows that narrow rights are generally fine; businesses aren’t very worried
about that when they have to express their preferences by paying. 

Fromer: want to be sure we’re covering large businesses v.
small businesses with less sophistication that may not know what’s actually
available. Multinationals in the US seem worried about TM depletion as a
problem, but not in the EU; legal differences or differences on the ground may
matter. 

Endorsing After Death, Andrew Gilden, Willamette University
College of Law

Exclusive rights to control post-death endorsements given to
families/heirs. While “it’s hard to argue wit h a straight face that a dead
person is endorsing a product,” we see Elvis face coverings, Marilyn Monroe
perfume, Muhammad Ali quotes selling Gatorade. Ordinarily an individual
endorsement involves voluntary association/approval; post-death endorsements
don’t fit that model, but TM increasingly supports the idea of posthumous
endorsement. Project identifies this trend and identifies serious problems.
Proposes narrower framework to better represent interests of decedents, fans,
and survivors. 

False endorsement claims: estate/heirs claim that something
will cause confusion about whether the decedent or the estate endorsed the product.
Registered “selfmarks.” Lanham Act 2(a): false association: ability to block
other registrations, gives estate leg up in establishing priority. Verified
accounts on Instagram: can get a check mark as authentic presence of a global brand
represented by a public figure. Allows estates to post and speak as if they are
the decedent. Project brackets the right of publicity, which raises different
concerns. 

First major concern: continuity problems. Fails to meaningfully
distinguish b/t decedent and successor in interest: courts require plaintiffs
to demonstrate confusion over endorsement from decedent or estate. But estate
can be practically anyone: estate of Marilyn Monroe is an entity Authentic
Brands Group that bought the rights to the Monroe IP from the wife of her acting
coach. Endorsement by Monroe means something v. different from endorsement by ABG
but courts have refused to distinguish those things. 

Second: autonomy/agency of the deceased. Endorsement signals
some desired connection b/t endorser and endorsed. Conscripting the deceased
into activities they may not have supported. Marilyn Monroe, Elvis, and
Muhammad Ali all “participated” in #blackoutuesday, but did that reflect their
views? 

Third: discursive problems: controlling cultural meanings of
the celebrity. Official account frames her as “Paris Hilton” of her day, downplaying
other issues around addiction and femininity; so too w/Whitney Houston.
Pernicious b/c posthumous endorsement gives “official voice” to the estate. 

Might still want to recognize some rights b/c they are
material to consumers. Purchasing endorsed products can be a way of mourning/processing
a celebrity’s death; may also want to support surviving family members/causes
the celebrity cared about. Posthumous endorsements can also push back against
exploitation—merchandise sold w/names & images of George Floyd and other
victims of police violence. Misrepresentations of official endorsement can be
bad. This can also happen politically—Reagan Foundation sent a C&D to the Trump
campaign for selling Reagan/Trump merchandise. 

What to do? Proposal: recognize endorsement rights not just
on the chain of title (as courts currently do) but require privity and power: a
meaningful connection b/t rightsholder & decedent. Should be empowered to
make legal decisions on behalf of the decedent—personal representative, trustee—w/corresponding
duty to their interests. Consistent with HIPAA, Stored Communications Act, attorney-client privilege. 

Finally, where there’s no entity w/legal authority to act on
behalf of the decedent but a risk of deception, false advertising law can pick
up the slack. 

Ramsey: Monroe used a different perfume than the one
proposed to endorse—should that matter? Literature on compelled speech. 

RT: different perfume example suggests that privity/power is
quite complex: (1) naked licensing/assignment in gross issue: what would it
even mean for “Monroe” to endorse a perfume; (2) conflating materiality of
decedent’s endorsement while alive w/estate’s endorsement—courts make it way
too easy by allowing conflation; (3) compelled speech arguments in this context
make me nervous b/c they are usually deployed against people who have speech interests of their own. 

A: family endorsements can sometimes be material but in a
different way—need analysis. [And of course “family” is not the same thing as “estate.”]
Would like law to disaggregate these situations. 

Mark McKenna: really stuck on the label “endorsement” for a
dead person. Consumers can’t possibly think that’s happened if they know the
person is dead. Many of these examples are more about association or dilution
than confusion—this person stood for X and is being used for Y. Where the heir
is standing in for the person, there’s an extreme level of circularity—only if
heirs have the right to license do consumers think it’s the heirs doing the
endorsing. 

Jeremy Sheff: unpleasant flashbacks to NY ROP debate. Once
you start dealing w/postmortem rights, you get into complex issues of trust
& estates & tax law, which your privity requirement brings to the
front. The idea of this being an asset passed from one generation to the next
is something those bodies of law have things to say about—taxing on its
distribution depends on its worth, which depends on its use before death, which
might be different from use after death. Or you could do an objective valuation
which would be potentially inconsistent w/decedent’s own desires and/or desires
of family. How will you engage w/ those bodies of law—Eva Subotnik has been
doing related work in © context. 

A: definitely a goal is to bring TM into dialogue with
T&E. Even weirder than ROP and © b/c it’s unclear what needs to be assigned
to bring endorsement rights. Nebraska courts say ROP is inalienable so there’s
no transferable endorsement right; NY courts said that even though there was no
post-ROP there’s still an endorsement right. 

Calboli: compare theories on moral rights postmortem. 

Trademarking “Covid,” “Covid-19” and “Coronavirus”: An
Empirical Review and Considerations of a Larger Pandemic, Irene Calboli, Texas
A&M University School of Law

Also looking at “social distancing” and “six feet apart”—using
these as a measure/example of certain issues in the system. More than 600
applications for these in less than 3 months. Looking at a sample: Medical-related
(124), unrelated existing businesses like baby clothes (64), merchandising
products/promotional goods (135), slurs (also merchandising, 7).  A considerable number disclaim “COVID” etc.
and are combination or design marks. Some could in theory be inherently
distinctive given the unrelatedness of the goods. Although she’s ok with the
merchandising right for established businesses like Mercedes cars, here there
are a bunch of clear examples of failure to function. 

Is there a problem? What are the costs for the PTO given that
vast majority will be rejected? Time invested by examiners, including possible office
actions/appeals. Costs minus fees generated: hard to determine. 

Cost to possible legitimate business from being cut off from
using descriptive terms? Costs from possible litigation—C&Ds?  There’s a backlog in the system—too many
applications? A lot of waste to sift through. 

RT: Carol Rose talks about how a property system is in some
ways a commons of its own; overuse can impose unexpected costs/externalize
harms. Here, one possible immediate result is elevating failure to function as
a free floating reason to reject registrations (or even recognition as marks).
As with slurs, even when the result might be inherently distinctive according to
our usual tools for identifying what is functioning as a mark, the non TM meaning
overwhelms the usual signals of what constitutes a mark such as placement on
the product. (This breakdown in old standards for what counts as a TM is also
happening on the other end of the Abercrombie spectrum with Booking.com telling
us that consumer perception is all.) I don’t think that Corona Legal Services
is going to work as a mark! The corrosive effect of overclaiming on our usual
tools for identifying trademark function is itself a problem, and it also
raises the question of what comes next to identify TM function. Crystals &
Mud in Property Law offers some ways of thinking about how property systems
might react to overuse. 

Ramsey: do other national systems have a similar problem?

Beebe: costs on the system are a real question. PTO
examiners might like these b/c they’re so easy to reject—helps their numbers!
Saw it as a revenue making thing, but there aren’t that many of these; still,
on balance assumed that PTO was making money off of these. Finally, people can
waste their money if they want to apply for registrations that won’t succeed—not
sure what we could do to stem the flow of these (given right to petition!). 

Alexandra Roberts: consider whether these are deceptive
marks too—grabbing attention at a desperate time is not good. Consumer health
& safety are also relevant. 

Headaches and Handbags: A Fragility Theory of Trademark
Functionality, Matthew Sipe, University of Baltimore School of Law 

Placebo effect is powerful & often mediated by TM.
Subjects who took marked Nurofen experienced much more relief than unmarked;
subjects who took Nurofen-branded sugar pills even did better than people who
took unbranded actual Nurofen. Pink is associated with soothing/care in Western
cultures, so pink Pepto-Bismol will work better than red or green. Traffix
says that a product feature is functional if it’s essential to use/purpose or if
it effects the cost/quality. If so, no need to proceed further. TM names of
drugs clearly affect quality, as do the color of drugs. We do have cases
finding color functional on these grounds, but not the names. 

Traffix language can’t mean what it says, b/c any TM
affects costs by reducing search costs and any TM affects quality by increasing
the incentives to preserve quality. So lower courts have added de jure/de
facto, aesthetic/utilitarian distinctions. But TM has fumbled towards a
consensus on functionality. 

Three themes: (1) preference for bright line heuristics; (2)
intentional focus on welfare maximization; (3) conceptual unity b/t marks and
dress. 

But Nike golf clubs improve consumer performance versus
unbranded or irrelevant branded clubs; 3M branded earplugs improve performance
on a math test in a noisy space; Red Bull improves performance on cognitive
tests v. Sprite. 

There is also social functionality: conspicuous consumption,
conspicuous giving. Organizational functionality: a certification mark allows
product manufacturers to avoid costs in warranties, demos, etc. Credibly
certifying place of origin allows producers to compel buy in for advertising,
research, etc. that would be dissipated by free riding.  And design functionality: granting protection
to one shape allows producer to introduce variation w/o losing recognizability
and brand prominence: Zippo lighter shape and Funko pop general configuration.
Also allows them to avoid tags or other marks. Interlocking functionality:
makes other products from the same producers higher quality b/c of match/fit: Lego
shapes, or Tiffany blue earrings as only match for Tiffany necklace, or John
Deere green accessories being only match for John Deere tractor. 

All these functions are fragile: the use/purpose would be
destroyed through unchecked copying. Only nonfragile functionality truly
prevents TM eligibility in practice. Pepto pink still soothes even if other
producers use pink. But the word mark Pepto-Bismol only works if exclusive and would
eventually dissipate if freely used. His proposal: any use, purpose or effect
dependent on TM exclusivity itself doesn’t count. But any time there’s a mix of
exclusivity-dependent and non-dependent functionality, secondary meaning
(fragile functionality) won’t save the matter from ineligibility.  Allows us to dispense with aesthetic
functionality b/c test no longer needs it. 

Application: overlapping TM & © protection. Fragility model:
overlapping protection shouldn’t be allowed in vast majority of cases. Traffix
tells us patented subject matter is only nonfunctional when it’s an arbitrary
embellishment. If it’s being used for its innovation, that affects cost/quality.
So too w/©. Unless © subject matter is being used for reasons unrelated to
creative expression, will affect product in impermissible ways. Of course a
Batman backpack is being used for its creativity. Dastar thus follows. 

By contrast, dilution and post-sale confusion: to prevent
unwinding of signal, have to protect exclusivity. 

Protecting fragility is welfare-enhancing. Benefits that can
be shared are, benefits that can’t be shared aren’t. Leaves space/incentives
for branding. But there are distributionally regressive outcomes: healthcare,
athletic/academic performance. Inferior products to those who can’t afford
them. Potentially anticompetitive. 

Barton Beebe: Metaphysically convoluted. Is SCt approach as
expressed in reputation-related functionality v. non reputation related
functionality already what you’re getting at? Samara Bros. does seem to
get at the distinction you’re making. How is fragility different? 

Different dichotomy: exclusivity related functionality
versus non exclusivity related functionality? Not just the high fashion brands
that advertise into our heads; all consumer goods participate in economy of
exclusivity to some extent, including K-Mart. TM law just talks about the high
end brands as a matter of class. Other things to consider: (1) Easterbrook’s
approach to functionality: a design that produces a benefit other than source
identification is functional. Bright line! (2) Consider definition of useful
article in © and recent struggles with that. Similar vibe. 

A: For “non-reputation-related”: two problems. (1) They tell
us we don’t ever hit that test if you trigger Inwood first. You can
dance around this a little w/a gloss on whether this is a two-step test. (2) It
doesn’t deal with all these functionalities. The word “significant” is
precisely what starts to look like an antitrust rule of reason. 

Fromer: lots of literature about functionality, including
Lunney, Litman, McKenna; grapple explicitly how what you say differs from or
works with what they say. 

RT: From the paper: “All trademarks affect cost and quality.
Full stop. Trademarks reduce search costs for consumers by providing a
“consistent signal,”

–assumes the existence of secondary meaning; b/c search
costs aren’t reduced w/o that, this description assumes a de facto functionality
that may not exist in mere TM function

–framing elides one of the hardest Qs in functionality: it
is good to have a mark, or to have a shape, but does that mean that every mark
or every shape is functional? No! That’s just de facto functionality.  (Can see that most clearly in the possible
response to my first point: even having an unknown TM signals that “this isn’t
the TM you know,” thus reducing search costs in some sense, but of course the
actual content of the TM is completely irrelevant to that message. The relevant
information is that the product/service is “not-known.”) Some of the paper
reads like semantic games: you’ve labeled the credence benefits of trademarks
as functional, but I think it doesn’t work without a better account of the
level of generality at which you are analyzing functionality. 

I wish I thought this reformulation worked, but because of
the level of generality issue I don’t think it does any better than current
doctrine. Consider the Apple logo or the design of a Rolex watch: they are
beautiful designs; certainly under your view of what constitutes an effect on
quality they at least marginally increase the quality of the products simply because
of their beauty: even on first exposure with no secondary meaning, they are
nice designs. I don’t see how your test helps us with the issue that has
confounded every attempt to reformulate functionality doctrine: When does that
marginal effect, which rests on generalized features of human perception like
our preference for curves, override the effect of the specific trademark
meaning?  This is why some courts ask for
a substantial non reputation related benefit in the aesthetic
functionality test. 

Defense of dilution lacks engagement w/empirical literature
where that doesn’t actually seem to happen: maybe the things you say are
fragile aren’t actually fragile. 

[[Things I didn’t have time to say: Your argument depends in part on the placebo effect being
fragile. [Similar to what McKenna is about to say.] Why not hypothesize that
the effect an effect of familiarity and allowing the brand name to become
generic would continue that familiarity, as with Pepto pink? My take:
Especially likely to persist w/pharmaceuticals b/c those are credence goods; I
understand why spitting out the generic Diet Coke in disgust would make me
distrust labels on experience goods, but the placebo effect works best on
credence goods. Might even work for Nike clubs! 

You try to deal with the placebo effect by looking at the
research on counterfeits labeled as counterfeits. But telling the consumer
they’re using a counterfeit is different than just putting the label Nurofen on
it and saying no more—among other things, the effect of telling someone they’re
using counterfeits might well be related to a generalized surprise or distrust—see
Sprigman et al on dilution: you might also find that performance using a Bic
pen also goes down after experience with a labeled-counterfeit Parker pen b/c consumers
are just more suspicious generally. Also, as far as I recall the research isn’t
conducted on the set of consumers who prefer to buy (fashion) counterfeits—hard
to test, but someone who chose counterfeits because they’re cheaper might have
a different reaction. 

Similar Q: if we could empirically show, say by looking at
China, that widespread counterfeiting and copying does not diminish the
perceived value of brands in certain categories, which is to say that
exclusivity remained somehow perhaps through subtler quality signals, would
your argument have to change? 

[Again echoing what McKenna says] The charitable signalling
& certification mark bits seem to be about false advertising: if the law
enforced a rule that everyone using the Toms mark donated a pair of shoes to
people in need, the relevant signal would continue; it would just be converted
to a certification mark, which is related to the reason that certification
marks theoretically need nondiscrimination provisions.]]

Jeremy Sheff: does fragility differ from the economic
concepts of congestion or rivalrousness, and if so how? 

Jessica Litman: why fragility and what are the other
possible terms? The term is an uncomfortable fit for the phenomenon you’re describing. 

Mike Risch: Doesn’t read cost/quality the same way the paper
does. Thinks it’s mostly about cost of manufacture, quality of physical product
outside of placebo: if made in the way it’s supposed to be made, how does it
work. There is definitely uncertainty, but cost/quality isn’t anything that might
affect how good consumers think it is or how much they’re willing to pay for
it, or you swallow all TM. 

McKenna: you have to assume quality differences for Nurofen
to stop working if freed for all to use. We could make sure that everything
labeled Nurofen had the same pharmacological characteristics. It’s really the
quality differences that derive dissipation, not mere reproduction [at least
for those things that aren’t dependent on excluding the proles].  Separately, it’s at least implicit that it has
to affect cost/quality in a way unrelated to reputation. The function has to be
distinct from reputation, but can exist along with reputation. Courts just
struggle when people want the product for non-source reasons but also want it
for source reasons. 

Overlapping and Sequential IP Rights, Lolita Darden, Suffolk
University Law School

Patent/TM and ©/TM interface: functionality takes us a long
way toward weeding out those designs that might create perpetual monopoly. Trying
to expand functionality to be more comprehensive to protect those other
systems. Distinguish types of protection available for trademark/trade dress.
Using a piece of music whose © has expired as a TM. There may be a narrow opportunity
for these things to serve as TMs. Right to copy v. need to copy can be
distinguished; functionality test proposed is built on concept of need. 

RT: Paper coming at the end made me think that something
unites all these presentations: an increased interest in bright line rules and formalism:
most of the presentations seem to be coming if not from classic formalism then from
rule utilitarianism—the case by case analysis we have been doing in a lot of
these situations has become so costly as to lead us to seek alternatives. For
this project: what is the product or service at issue? For the airline example,
does it include the advertising (theme music for the airline)? If we
confidently say no, then drawing the distinction between protectable and
unprotectable uses of music becomes easier—but why then is the Batman backpack not
a member of the class of backpacks and Batman just part of its marketing? 

A: paper does discuss Wonder Woman merchandise—may be a hard
call. 

Calboli: overlaps of protection also raise issues of
overlaps of fair use/defenses. One possibility: redesign the system from
scratch and create a “brand right” that would just tell you what you could do.

Sheff: we’ve all gone crosseyed over this problem at one
point—previous framing was often one of boundaries. Problem in functionality is
that sometimes consumers want things for both reputation and non-reputation related
reasons. Ultimately we have to make a choice about what we value more, not
necessarily as a matter of grand theory but could be tied to particular cases
like the Wonder Woman lunchbox, its markets, and its consumers.

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