Friday, March 24, 2017

Dastar/preemption bars claims based on allegedly false claims of credit for innovation

OptoLum, Inc. v. Cree, Inc., No. CV-16-03828, 2017 WL 1057924 (D. Ariz. Mar. 21, 2017)

The parties compete in the market for LED lights. OptoLum claims to be the inventor of technology used inside LED bulbs allowing them to have the look and feel of traditional incandescent bulbs.  It alleged false advertising under the Lanham Act, an unjust enrichment claim, and two patent infringement claims (which I will not discuss).

The court found that these claims were puffery:

• The “Cree Filament Tower™ Technology” is “the genius idea inside” the Cree LED bulb;
• Cree “found a way to put the LEDs in the center of the bulb like a traditional light bulb” and “we’re making an LED but we are actually inventing all the technology in between”;
• “[O]ne of the technical breakthroughs that enabled Cree to break the $10 threshold is our new Cree Filament Tower™ Technology. The Filament Tower™ is the Cree innovation that lets our LED bulb replicate the look and feel of filament based traditional lights”;
• “[Cree] engineers came up with a very elegant solution to the design issues inherent in LED bulbs. In a compact form, the Filament Tower produced the light dispersion we wanted without problematic heat building”;
• “[I]nventing the LED technology that delivers like an incandescent was hard work, but designing a bulb in a form-factor that consumers trust at a price they can afford was even harder. Designed with Cree LED Filament Tower Technology, the Cree LED bulb represents a breakthrough in LED bulb design and performance”; and
• “[Cree] invented the lighting-class LED.”

The court found these all nonactionable puffery as a matter of law.   The claim that Cree’s Filament Tower Technology was a “genius idea” was “the epitome of puffing.” Likewise, the other statements about “breakthroughs” were “not specific, not concrete, not measurable, and therefore puffery.” A “very elegant solution” was “sufficiently imprecise to constitute puffery,” as were the “look and feel,” “long useful life,” and “energy efficiency and low cost” claims.

OptoLum argued that Cree falsely claimed that it was the source of ingenuity, innovation, and technological breakthroughs attributable to OptoLum.  The court replied: Dastar.  A contrary holding would create a conflict with the Patent Act.

Similar reasoning doomed the unjust enrichment claim.  OptoLum alleged that there was significant value in being perceived by consumers as an innovator, inventor, and creator of groundbreaking technology. But patent law preempts an unjust enrichment claim based on such grounds.  Given that the plaintiff’s right to relief would depend on resolving inventorship, a substantial question of patent law, patent law preemped “any state law that purports to define rights based on inventorship.”  While a contract implied in fact could support an equitable unjust enrichment claim if no formal contract existed between the parties, those weren’t the allegations here.

Nursing homes' claims are puffery

Commonwealth of Pennsylvania v. Golden Gate National Senior Care LLC, No. 336 M.D. 2015, --- A.3d ----, 2017 WL 1075535 (Comm. Ct. Pa. Mar. 22, 2017)

Golden Gate manages and operates 36 skilled nursing facilities in Pennsylvania.  The Commonwealth sued for: (1) Unfair Trade Practices and Consumer Protection Law (UTPCPL) violations; (2) breach of contract; and (3) unjust enrichment. I’ll consider only the advertising-related claims.

The UTPCPL does not apply to providers of medical services, but nursing homes are “hybrid organizations, offering both medical and non-medical services.” They are liable under the UTPCPL only as to the non-medical services they provide. 

The Commonwealth challenged chain-wide marketing statements that the court found were puffery:

·       “We have licensed nurses and nursing assistants available to provide nursing care and help with activities of daily living (ADLs). Whatever your needs are, we have the clinical staff to meet those needs.” This claim was “expressed in broad, vague, and commendatory language.”

·       “Snacks and beverages of various types and consistencies are available at any time from your nurse or nursing assistant.” Likewise, as applied to the Commonwealth’s allegation that there was insufficient staffing to timely respond to residents’ requests.

·       “A container of fresh ice water is put right next to your bed every day, and your nursing assistant will be glad to refill or refresh it for you.” This was mere “subjective analysis or extrapolations, such as opinions, motives and intentions, or general statements of optimism.”

·       “Clean linens are provided for you on a regular basis, so you do not need to bring your own.” This claim was “vague” and undefined.

·       “Providing exceptional dining is important to us. Not only do we want to meet your nutritional needs, but we want to exceed your expectations by offering a high level of service, delicious food and an overall pleasurable dining experience. … We have a seat reserved for you in our dining room!”  This was puffery expressing Golden Gate’s “priorities and intentions for residents, rather than makes specific objective representations about the quality of the dining experience.”  Though the Commonwealth alleged that residents couldn’t use the dining facilities due to staffing shortages, the “reserved seat” claim wasn’t a promise that residents would always be brought to the dining facilities.

·       “[W]e believe that respecting your individuality and dignity is of utmost importance.”  The “we believe” was enough to signal “subjective analysis or extrapolations, such as opinions, motives and intentions.”

·       “A restorative plan of care is developed to reflect the resident’s goals and is designed to improve wellness and function. The goal is to maintain optimal physical, mental and psychosocial functioning.”  The Commonwealth didn’t allege that the plans weren’t developed, but that they were incomplete or not properly followed/updated. The description of the plan was aspirational puffery.

·       “We work with an interdisciplinary team to assess issues and nursing care that can enhance the resident’s psychological adaptation to a decrease in function, increase levels of performance in daily living activities, and prevent complications associated with inactivity.” Again, there was no allegation that there was no such interdisciplinary team; the rest was puffery.

·       “Our goal is to help you restore strength and confidence so you feel like yourself again and can get back to enjoying life the way you should. That’s The Golden Difference.”  Too subjective.

The Commonwealth also alleged facility-level misrepresentations, but statements in assessments of individual residents, care plans, and bills for services not provided weren’t advertising or promotion (borrowing the Lanham Act definition).  Statements by individual employees/agents weren’t enough, and “representations made in resident care plan development are not likely to make a difference in the purchasing decision, since such representations are made after an individual is admitted and becomes a resident.”

One judge concurred in part, agreeing with the puffery conclusion but would have held that one portion of the UTPCPL, Section 2(4)(xxi), establishes a cause of action to remedy “any ... fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding,” and doesn’t require an ad; she would have allowed the claim “insofar as it alleges deceptive conduct involving bills and care plans which could directly impact purchasing decisions.”

First Amendment bars labeling restriction for "skim milk" without added Vitamin A

Ocheesee Creamery LLC v. Putnam, 2017 WL 1046104, --- F.3d ----, No. 16-12049 (11th Cir. Mar. 20, 2017)

The Creamery here succeeded in its First Amendment claim to use the words “skim milk” to describe its product.

The Creamery produces cream by skimming it off the top of the milk; what’s left over is skim milk: “milk that has had the fat removed through skimming.”  The skimming process also removes almost all the vitamin A naturally present in whole milk because vitamin A is fat-soluble. “The Creamery prides itself on selling only all-natural, additive-free products, and therefore refuses to replace the lost vitamin A in its skim milk,” unlike most sellers.

Florida law prohibits the sale of milk and milk products that are not Grade “A,” which requires, among other things, that vitamin A lost in the skimming process must be replaced. The State told the Creamery it could sell its product without adding vitamin A so long as it bore the label “imitation milk product.” The Creamery offered alternative labels: (1) “Pasteurized Skim Milk, No Vitamin A Added;” [making Vitamin A sound bad] (2) “Pasteurized Skim Milk, No Lost Vitamin A Replaced;” [not particularly helpful] (3) “Pasteurized Skim Milk, Most Vitamin A Removed By Skimming Cream From Milk;” [possibly not bad] (4) “Non-Grade ‘A’ Skim Milk, Some Milk Vitamins Reduced By Skimming Cream From All-Natural Pasteurized Milk;” [less helpful] and (5) “The State Requires Us To Call This: ‘Non-Grade “A” Milk Product, Natural Milk Vitamins Removed.’ It Is All-Natural Skim Milk With Some Vitamin A Removed By Skimming Cream From Milk.” [why “some” now instead of “most”?]

The State proposed: “The State requires us to call this: ‘Non Grade “A” Milk Product, Natural Milk Vitamins Removed.’ All natural milk product with vitamins removed by separating cream from milk.” The Creamery alleged that it would “happily use” a disclaimer stating that its skim milk does not have the same vitamins as whole milk.

The court began, ominously, that burden of showing that the Creamery’s speech was misleading or unlawful and the burden of satisfying the other Central Hudson factors was on the government. The state said that the Creamery’s skim milk couldn’t lawfully be sold, but that wasn’t true: it was legal to sell skim milk without restored Vitamin A; it just had to be sold as “milk product” using an imitation milk permit.

The Creamery’s use of “skim milk” wasn’t inherently misleading just because it conflicted with the state’s definition. The court continued:

It is undoubtedly true that a state can propose a definition for a given term. However, it does not follow that once a state has done so, any use of the term inconsistent with the state’s preferred definition is inherently misleading. Such a per se rule would eviscerate Central Hudson, rendering all but the threshold question superfluous. All a state would need to do in order to regulate speech would be to redefine the pertinent language in accordance with its regulatory goals. Then, all usage in conflict with the regulatory agenda would be inherently misleading and fail Central Hudson’s threshold test. Such reasoning is self-evidently circular ….

[The court here indicates its lack of consideration of the wide range of speech regulations evaluated under Central Hudson, many of which could not be evaded by establishing a state standardized meaning for a term.]  “[S]tatements of objective fact, such as the Creamery’s label, are not inherently misleading absent exceptional circumstances,” and the Creamery’s choice of “skim milk” to identify its product was a statement of objective fact (citing dictionary definition).

The court continued:

This is not to say that a state’s definition of a term might not become, over time and through popular adoption, the standard meaning of a word, such that usage inconsistent with the statutory definition could indeed be inherently misleading. But the state must present evidence to that effect, and that has not been done here.

With a “but see” cite to Zauderer, where the Supreme Court upheld a regulation without further evidence where “the possibility of deception is as self-evident as it is in this case.”

Here, the State produced a study in which consumers indicated they would “expect skim milk to include the same vitamin content as whole milk.” But that wasn’t enough, because “[t]he State’s study provides no evidence that consumers expected anything other than skim milk when they read those words on the Creamery’s bottles, the State’s alternative definition notwithstanding.” [Yes, because consumers have never before had occasion to pull apart the aspects of skim milk with which they are familiar, given the regulation.  They don’t know that there’s any difference between “skim milk” and “skim milk with the same vitamins as whole milk.”] 

Because the label “skim milk” wasn’t inherently misleading applied to the Creamery’s product, the court proceeded to the Central Hudson three-part test, but even assuming the state’s interest was substantial, its method was more restrictive than necessary. “[N]umerous less burdensome alternatives existed and were discussed by the State and the Creamery during negotiations that would have involved additional disclosure without banning the term ‘skim milk,’” such as the Creamery’s willingness to accept: “It [the milk] is all-natural skim milk with some vitamin A removed by skimming cream from milk.” [Some or most?]  Although Central Hudson isn’t a least restrictive means test, the State didn’t show that barring the use of the term was “reasonable, and not more extensive than necessary to serve its interest” in avoiding deception and promoting nutrition.

TM scholars' roundtable, part 4

Research directions in Trademark Law 2017-2018
Discussants:    Bill McGeveran: History of scholarly productivity coming 1-2 years after the roundtables as seeds germinated.  Agenda-setting: boundary issues and registration.  Territorial/product dimensions; the consumers; design—picking up on something already in the air, but these others have generated some stuff though it’s early to tell.  Conversations among the papers.

Mark McKenna: conversation about distinctiveness in roles revealed we need a lot more work on the relation between registration and unfair competition, particularly on non-word marks.  Both Tam and Belmora hot mess have teed that question up and are likely to generate lots more confusion.  We can’t just pretend that we can take the same framework and apply it to everything. 

Future work: thinking more about various contexts of confusion cases. Courts feel more freedom from marching through LOC factors, but on ad hoc basis. Project: systematize how courts conceive of categories that allow them to deviate from the factors.  Factual settings: house-branded goods.  Courts tolerate much more similarities than they would in ordinary brand to brand conflict.  Also: when are courts willing to frame cases as affiliation cases, IIC cases, v. not.  These doctrines could swallow everything else, and lack of confusion at point of sale would become irrelevant. Courts intuitively shy away from that, but how do you decide when it’s in play and when not? 

W/Fromer: work on claiming in TM law.  Functionality; more issues on boundaries b/c of Star Athletica and rise of digital goods. When functionality took over, design patent fell out as a boundary condition even though Sears/Compco are design patent cases.

Grynberg: degree of care/reasonable person in tort law is lost in TM context. What would it mean to take duty more seriously if we can have an affirmative positive conception of the careful consumer.

Litman: channels these conversations into casebook, new edition on its way. 

Bone: strength of the mark has come out of this discussion as an important issue.

Beebe: papers w/Fromer, Hemphill; working paper w/Sprigman et al. testing dilution.  Morrin & Jacoby’s study, but with purchasing context. Introduction of any diluting stimuli causes dilution w/r/t all marks; they didn’t notice this super-dilution result from surprise w/Mercedes toothpaste b/c they didn’t test for it. Distinctiveness: always wanted to do history of TM thinking on distinctiveness, genealogically speaking.

Leaffer: Quebec: French requirement for descriptors when the TM is English. TM in cultural context reflects continuing concern that somehow TMs undermine local identities.  Also wants to investigate valuation of TMs as an asset and effect that should have on TM law.

Moshirnia: Not primarily TM, informatics paper to use cognitive load theory to figure out what’s communicated to consumer. Tech has changed how info is conveyed to consumers—might increase it or screen out other sensory perceptions that we usually associate w/brands (smell, sensation).  Idea of empirical practice—meta-analysis or study on what could be standards for surveys so you don’t get dueling surveys w/odd inputs and differing experimental design.

Dinwoodie: book on territorial aspects of IP internationally, EU, and US.  Normative construction of consumer; connected to registration/relation b/t TM and unfair competition—in English law, there’s a gospel that there’s a difference b/t distinctiveness and goodwill—former is for TM and latter for passing off.  Connects perhaps b/t industrial property, more abstract; goodwill could be market strength/reality.

Janis: DuMont & Janis continue work on 19th c. design patent law. One outgrowth: found evidence of people using US design patent protection to achieve quasi-TM federal rights for logo and other subject matter we’d associate today w/TM.  Need more information about the pre Lanham Act regime for TM—interest in, for example, going back to find the origins of Abercrombie factors—maybe more contingent than courts say today.

Ed Lee: Tam amicus; may focus on those issues. Registration and what it is was the heart of the discussion.  Also compare © and TM registration.

Dogan: Harm, benefit and justification in TM: normative justifications for TM have blended prevention of harm and prevention of people capturing benefit from someone else’s marks. Leads to the role of justifications: limits are placed w/eye towards third party interests like competition, speech, institutional deference, e.g. to patent system. Design patent v. TM is still undertheorized.  Another project: Secondary liability v. antitrust standards: Noninterference principle—don’t interfere w/product design—is honored in the breach.

Burrell: Similarity judgments: consumers may have overall reaction, but you always have significant outliers.  Working on claiming in TM, primarily through the registration process but maybe also outside.

Ramsey: Chapter on free speech issues w/r/t nontraditional TMs.  As w/descriptive terms, certain symbols have inherent value, flip side of inherent distinctiveness. Companies are free riding off of inherent value.

Bently: Mainly TM history.  History of disputes over newspaper/journal titles starting in 18th c. One interesting thing is blending of © thinking and emergent TM thinking that allows courts to give injunctive relief for the first time in TM cases.  Another project on first wave of globalization/territoriality—India, connections b/t US and UK.  Singer Sewing Machine is one of the first to globalize in 1870s/80s.

McGeveran: when TM questions must be considered Qs of fact rather than legal, and when they need to be developed through surveys or other patternized ways of answering empirical questions.  Given how much TM depends on injunctive relief, judicial role is paramount, so how do judges purport to be dealing w/factual questions in preliminary injunctions at that stage?

Sheff: there’s a lot of data about different registration systems in different countries; did a bit w/Japan.  Will turn to others. Implementation of Canada’s dropping of its use requirement as prerequisite for initial registration—effects on outcomes and behaviors. In Japan, their registration rate looks a lot like our publication rate, which is 20-30% higher than our registration rate b/c of the use requirement.  So 20-30% of these registers are likely pure clutter from day 1.  Seeing how it plays out in empirically rigorous way, using Canada to test the switch.

Diamond: general interest in science and law; role that experts play and ability or lack of ability of judges to substitute for other kinds of evidence. New manual on surveys for judges & lawyers; TM figures very heavily.  May update volume w/Jerre Swann on TM survey design & analysis.  Did survey of experts in TM cases in 2014; my theory has always been that TM surveys play important role that we don’t get to see b/c they help settle cases and encourage a client that maybe it shouldn’t go forward.  I’d like to understand that phenomenon better. Also interested in methodological Qs—some uses by courts of inappropriate statistical analyses; probably will do a piece on that.  Interest in cost of surveys has been reinforced; serious cost for smaller parties. Internet surveys were initial thought, but they aren’t so cheap either if they’re well done.

Linford: Forfeiture mechanisms/abandonment mechanisms piece coming out. Take is consumer-focused.  Marketing/psych folks have detected placebo effect for marks—seems to be some benefit from deceiving consumers into thinking, e.g., a putter is a Nike putter.  Is there something to the idea that dilution is about whether some marks should be treated as monosemous—all Coke comes from Coca-Cola—and why.  Whether word marks applies to non-word marks—what other literatures should he mine? 

RT: New gTLD study w/David Hyman testing what if anything is confusing/new cybersquatting.  I also agreed to write a chapter on reform of the effects or nature of registration!  Incontestability paper.

TM Scholars' roundtable part 3

Fame, Reputation and “Well-Known-ness”

Mark Janis: is fame something distinguishable from distinctiveness, or is it merely the highest degree of distinctiveness?  Possible topics: dilution thresholds v. well-known marks thresholds.  Coach v. Triumph, Fed. Cir., Coach handbags and Coach tutoring services.  Useful illustration b/c Fed. Cir. likelihood of confusion test referred to fame of prior mark, not mark strength.  Says dilution fame and confusion fame are different; court seemed to mean the two were functionally different.  Fame for dilution is either/or, while confusion is a matter of degree. That seems reasonable, given doctrinal contexts.  Creates a linedrawing problem and doesn’t tell us much about the content of fame for either purpose. Magnified if we don’t really know what mark strength or confusion fame is to begin with. Additional soundbites from Coach: fame is more stringent for dilution.  But leads back to measurement questions.  TDRA added general consuming public to eliminate niche market fame and regional fame.  Look back to FTDA, which explicitly included degree of inherent/acquired distinctiveness—that’s a message that fame is a high degree of what we talked about yesterday.

Relationship b/t fame and well-known marks: all the things/factors we talk about above presume use of marks; maybe well-known marks is instead an exogenous construct that identifies a choice to derogate from territoriality. Other sources: TRIPS, WIPO joint recommendation on well-known marks.  Leaves him wondering about basic question: how to think about fame.

Introduction: Bob Bone: I don’t know what fame is either. We don’t have a clear idea of why we have dilution, or why we would derogate from territoriality—we could be trying to do multiple things.  If we did, we can assess costs and benefits and figure out what to measure and where to have the cutoff.  Schecter assumed distinctiveness varied, but had no cutoff—never defined “how much uniqueness,” which doesn’t make much sense in the abstract. He had a different kind of theory than we would necessarily champion today.  Coming to terms w/ a concept w/o a long history.  What are the social benefits we seek from dilution protection?  Do they match up with any meaningful dimensions/metrics for measuring fame?  Anti-free-riding?  The more reputation a mark has, the more benefits there are from free riding?  Why is that relevant to tarnishment, though?  Why would we have a threshold if that’s our concern?

Theories of dilution benefits: brand identity as analogous for personal identity; free riding; prestige goods: you’re protecting/preserving a product in the market.

Well-known marks: Transitional cases: we’re in the middle of a change in the law—making exceptions to territoriality. We have yet to have a theory.  We may be heading to recognize marks in the US when they have secondary meaning; Grupo Gigante asks for something more (what more? Who knows) though there are functional reasons to require more, for example if you’re worried about the stability of the secondary meaning. Spillover of meaning may wax and wane. Bringing machinery of TM law into place may be a bad idea if a year from now there won’t be as much secondary meaning in the US.

Robert Burrell: Reputation standard in Europe differs from well-known in New Zealand differs from famous in the US. We all do something different, so if there’s one answer most of us are doing it wrong. Maybe it’s a litigation cost point: only when you reach a certain level that protection is worth it, but even then most jurisdictions might have it wrong about what that point is [though litigation costs might vary across jurisdictions for the setpoint].  If we start with harms of antidilution sought to be avoided, we might get different answers. Tarnishment isn’t about level of awareness, but about interaction w/mark.  Need to know what and how consumers think about the mark—not quantitative.  Probably also true of free riding. Still need to know what the advantage that has transferred is to the defendant. Engagement w/reputation that is more than recognition.  He’s never understood connection b/t blurring and reputation.  People who are most likely to suffer difficulty carving out marketing space are those whose marks don’t have fame.  Reputation as trigger for other types of protection—compare double identity, where we protect in absence of reputation.  That is: We do have situations protecting against these other harms w/o reputation.

The way in which we interact w/TMs is so varied—we know very little.  Adding reputation on top complicates things we are already too unclear on.  Insofar as we can say anything, reputation can cut in both directions.  At least one TM system does follow Beebe/Hemphill in holding that reputation can cut in both directions—Australian courts describe it as “double-edged sword.”  Clearly intended as substitute/direct competing product, reputation cuts against confusion. Everyone remembers Maltesers; no one will misremember Maltesers; everyone will assume that Malt Balls is an attempt to compete w/them. If there is a brand extension situation rather than competition, though, there’s an assumption that consumers might believe that there was a mark modification.  Koke cola: fame cuts against confusion.  But if you have Koke vodka, consumers might think it’s a brand extension; might think marketer would want to show connection but also signal difference.  Pfizer/Herb-agra case.

Would this rule increase uncertainty for brand owners? Uncertainty is not always a bad thing.  Depends on whether it gets you closer to a desired goal.

Shari Diamond: in the statute it says general consuming public; market can overlap for some products, but in most cases they are quite different.  Pushing by famous mark owners to get property protection; statute is a compromise/limitation on property rights, and judges have reacted to it that way, being not very friendly to dilution in most cases.  Confined to small group of lobbyists—that’s why we have ambiguity. Famous marks may be more likely to attract free riding. But there’s something else in the statute that troubles her—the use of “recognition.” For psychologists, recognition as a measurement issue is very limiting.  Very different to ask about “recall,” “come to mind” in open ended Q v. recognizing on a list.  Putting too much weight on language of statute in giving generosity to how easily you can find fame?  That’s a measurement issue.

Bone: we could just charge $10 million to bring a dilution claim.

Dinwoodie: some countries have a list of well-known marks—you pay an agency to conduct a survey.  Russian model. So that is how it works.  Japan too—but more principled in Japan.

Fame for dilution purposes: the problem is no sound foundation for cause of action; trigger should have some connection to cause of action, and we’ve moved far from Schecter’s uniqueness. Now strange to try to connect to distinctiveness. Defense of well-known marks: distinctiveness that has crossed the border, w/exactly the same harms. Difference is political overlay of nation states that we recognize for efficiency and other reasons; for political reasons we elevate the requirement of secondary meaning to limit search costs.  TRIPS: closest to international recognition of dilution. Brand owners strategically piggybacked dilution on top of well known marks. But well known marks can be grounded in consumer protection in a way dilution can’t—blending of two in international instruments in theoretically insupportable way.

Yesterday: We frequently drifted from discussion of distinctiveness to discussion of confusion—same has happened here w/ fame and connection to harm of dilution.  Differences in causes of action vary by country. Low reputation requirement for dilution in the EU: we protect more in dilution that the US would protect by confusion over association.  You can get into the dilution game more easily in the EU; we wouldn’t force you to show fame for association confusion in the US either.

McKenna: older view of TM law would also say you can’t divert trade from a company not using the mark: well known marks doctrine looks like market preemption/preservation from that perspective. Much more a political judgment than a consumer protection measure.

Temptation is to say fame is distinguishable from secondary meaning b/c it’s not about a particular product relationship; it’s a measure of broader recognition. But how does that differ from strength? That’s precisely about extending rights beyond a particular product.  Distinctiveness is a subset of strength, which is not quite the same thing as fame but is arrayed on that spectrum.  It’s really strength I can’t figure out.

Ramsey: Some argue that TRIPS require us to protect against dilution, but Australia doesn’t have that.  Others say as long as you cover dissimilar goods/services w/confusion cause of action you’re ok, as Australia does.  Different standards may deal with different harms from overprotection of right once established—rather than having to deal w/that at defense stage, high fame standard for dilution prevents entry. Same w/well-known marks protection.

Linford: If product tranches are getting broader b/c everyone makes their own t-shirts these days, then importance of fame may diminish.  W/r/t well-known marks: Perhaps we should protect well-known marks from a border country with a large population of immigrants in the US, but not marks that are well-known elsewhere.

Beebe: Morrin & Jacoby results—the very strongest brands are immune to dilution—comes into effect in dilution context.  Work w/Sprigman & others that’s empirical/experimental, finding the same thing w/superstrong brands. Associations are just so incredibly strong.  Misappropriation: selfish plug for my work on Schecter: when he wrote he was translating from German case, lifting passages. One of the decisive passages is lifted but deleted: the phrase “reap where you have not sown”—deliberately suppresses the misappropriation connection, in order to appeal to the legal realists of his time who were very suspicious of the circularity of misappropriation.

Bone: that’s a lot to infer from an omission; Schecter wasn’t a faux realist. [He was a cool realist.]  Still an intereresting insight.

Dinwoodie: “foreign influenza”—too easy importation of rights from abroad is really troubling.

Bone: tarnishment destroys the product—it’s not worth buying Tiffany jewelry if it’s just jewelry, not Tiffany.  [I point out there’s a Tiffany adult club in Texas, despite the Tiffany strip club example.]

Jeremy Sheff: As scholars, what should we do if we conclude that the fame threshold in dilution is a crass political power grab—class privilege for some and not for others. (1) Shine a light on operations of power w/different rules for strong than for weak—realist tradition.  (2) Try to rationalize it: even if it’s just power, do the best we can with what the legislature gives us, give it the best theoretical framework we can.  (3) Normative response: this is just power and that’s offensive b/c we believe in rationality of legal system/rule of law/equal treatment.  Then we could go at least 2 ways: equalize up or equalize down by getting rid of the privilege.

Grynberg: familiarity w/TM system is important—Belmora court looks at 43(a) and doesn’t see territoriality in it, so doesn’t consider rest of system, just says 43(a) is broad. Conception of fame/scope of rights that’s exogenous to TM doctrine as we know it.  That dovetails w/ongoing problem of general expansion of TM law. Cabining by doctrines internal to TM is one strategy—functionality exclusions; Dastar.  Belmora reflects the limits of this approach, though.

McKenna: Note that statute isn’t just fame, it’s fame as designation of source for goods/services of mark owner.  Bizarre question.  You’re really just asking for recognition in the abstract.  Same problem w/blurring: is it just association or is it association + something else.  Is fame more than recognition/top of mind-ness?

Dinwoodie: actually connects to UK debate about whether recognition w/o reliance or association is enough for secondary meaning.  Salience to the consumer, related to reliance.

Ed Lee: the idea of higher protection for some marks is similar to proposals for patents that have survived re-examination.

Bently: why didn’t India have a registry until 1940?  The British interests didn’t want an Indian TM registry, b/c then they’d have to go register, and they were worried that Indians would register marks in England. If there’d been a well known marks doctrine, they could have relied on that to stop colonial underlings from doing such an outrageous thing as registering a British mark in England.

Leaffer: doing a survey forces people to reveal value.  On the whole though it’s too much rent-seeking (a registry of famous marks). Well-known marks doctrine has a pretty good justification if you take the role of TM owner who has a mark w/a reputation—there’s a lot of bad faith manipulation/free riding in many countries. The cost of keeping up registrations internationally is pretty big; well-known marks doctrine applies a safety valve, especially in a globalizing world.  Even very wealthy companies have a difficulty in keeping registrations in all countries.

Thursday, March 23, 2017

TM scholars' roundtable part 2

Session 2: Proxies for Distinctiveness; Proving Distinctiveness (and Secondary meaning); Strength of a Mark

Do current doctrinal tests properly assess actual consumer reaction to purported marks? What is and should be the role of consumer surveys in proving secondary meaning (or genericness)? What is the role of other disciplines (linguistics, psychology, marketing) in proving consumer perception in the context of trademark litigation (as opposed to policy formation)? Are the factors identified by current doctrine ideal/helpful? Are current procedural devices such as the presumption of secondary meaning based on time of use, or the concept of incontestability, useful in identifying marks that have reached particular thresholds? What is the relevance of strength of a mark for the scope of protection it receives? Is the concept of incontestability relevant to scope? How does one assess the scope for a composite mark that is distinctiveness overall but clearly comprised of non- distinctive components?

Introduction:   Shari Diamond: has an affection for surveys.  Two kinds implicated: secondary meaning surveys are among the worst in TM law. Reasons why: low rate that seems to be enough.  Distinct from Microsoft scenario where the brand is so strong that people think everything software related is Microsoft related. Control groups can be important where you’re worried about pure guessing/yea-saying; it’s hard to imagine you won’t do better if you have some version of a control. To the extent you get “from one company” you can at least take out the bias of the particular methodology by controlling w, for example, “baking soda” as a control product. Jacoby would say this isn’t a causal Q so you don’t need a control; it’s not just a causal Q but a methodological flaw to not control for yea-saying and guessing. 

Output measures: consumer sales, use in publications.  Interested in output over input measures like marketing signals.  Spending doesn’t mean they got it right.  Weak measure at best. 

Genericness surveys: Pretzel Crisp case.  TTAB cancelled mark as generic; gave weight to dictionary definitions, use by public, including use in media and third parties in food industry, and use by D itself.  There were opposing surveys.  Fed. Cir. complained about whether the TTAB had treated the mark as a composite mark rather than two pieces put together.  Surveys on both sides sometimes trigger “plague on both houses” reaction—contributed to bad reactions to surveys, like Posner’s.  Surveyor’s “dark arts.”  Here, Fed. Cir. said that TTAB should have paid attention to surveys. 

Opposing surveys: Teflon survey: Princeton-Vanguard (registrant): 55% said it was a brand, 39% common name, 9% hadn’t heard/don’t know.  Judge in Teflon was surprised how well respondents did distinguishing brand & common names.

Frito-Lay’s survey: 41% said it was a brand, 41% common, 18% not sure.

Look at the methodology.  We haven’t resolved the best way to do these surveys.  What would have been the right way?

First one: 18+ screened for purchase of salty snacks; tested on understanding of difference b/t common and brand name, and only 64% qualified. Control brands: Cheese Nips, 85% correct, Flavor Twists, 48% correct, Sun Chips, 96% correct.  Control common names: Onion rings, 91% correct; Gourmet Popcorn, 72% correct, Macadamia Nut, 92% correct.  Pretzel Crisps, 55% Brand name.  (Flavor Twists was a related brand.) 

Frito-Lay, similar group.  Definition of brand/common given and asked whether they understood—2 said no and were excluded.  Control: Ritz Bits, 82%, Lucky Charms 87%, iPod 61%, American Airlines 89%, Triscuit 80%.  Common: Ginger ale, 72% correct, Automobile, 91%, Potato chips 90%, Newspaper 93%, Popcorn 93%.  41% said Pretzel Crisp was a brand, 41% said common name.

Is it good enough if you exclude 1/3 of the people being tested?  Details of survey construction are really important, and to the extent that we don’t have agreement on best way to conduct them we won’t get really good evidence from the surveys. 

Bently suggests broad range of common names might focus attention differently v. salty snacks.

Diamond: it’s possible—it’s an empirical question.

Ramsey: results are in the middle!

Diamond: usually in generic area, above 50% is good, but that’s a decision for the court.

McKenna: what’s the margin of error?

Diamond: has to be computed.  [My quick lookup suggests for around 250 people, it’s around 2.7% at the .05 confidence level.]

Litman: do we know what affect not training people and just asking them if they knew the difference had?

Diamond: it depends. If you think people will tell you they know but just flip a coin, it would have one result; if there is a systemic bias you might get results.  Might be difficult to exclude such a high number.

McKenna: but those people aren’t relying on marks when they buy, if they can’t tell the difference b/t car and Chevrolet.

Rebecca Tushnet: Maybe even outside inherent distinctiveness the concept of TM distinctiveness is not empirical. Tom Lee et al.’s work: putting a term in the TM place on a box makes consumers identify it as a mark, unless the term is generic.  But even if you think for efficiency reasons (even setting aside competitive need reasons) we should still be distinguishing types of word marks w/o focusing on their placement, the category of suggestiveness is not empirical, and I now think suggestiveness should simply be eliminated/collapsed into descriptiveness and secondary meaning always required.  At the same time, 5 years of exclusive use for a main word mark is probably a decent proxy for the non-empirical idea that someone should’ve shown up and made your use of that main word mark non-exclusive.  Interestingly, PTO regularly rejects 5 years alone when it’s dealing w/trade dress, and I think that’s right.  But what rules should we have other than word/trade dress?

My obsession w/the consumer who does not know enough to ask, to borrow from the Passover Seder: that is likely to be a big component, and thus particularly hard to test b/c answers so easily distorted when there’s no preexisting opinion.  Franklin & Hyman: different answers depending on what stimulus—what they imagined, what they expected, what they saw.  Perhaps this is another consideration favoring a less empirical approach.

Incontestability as proxy: increasingly makes sense to me.  Admits there’s nothing empirical about it.

Strength and scope: always been a current in the First Amendment/parody cases that strength can decrease likely confusion.  I always like to teach with Lollipops and Jellybeans for skate rinks: similarity confusing, but one reason is b/c the mark is conceptually strong for skate rinks but lacked marketplace strength.  Affiliation confusion fights back against that insight—it admits that consumers will distinguish from the well-known brand but claims that consumers will interpret the difference in a particular way that means they’re confused.  It’s a way to put a fundamentally nonempirical concept on the TM owner’s side.

What about strength of D’s mark?  House mark arguments are often made.

Fromer: composite mark issues matter—Pretzel Crisps bag has a particular appearance; might come to mind for consumers even if they’re only being asked about the word mark. Goes back to the Lee et al. study.  Not even clear what we’re pinning down in the questioning!  Trademark claiming: 2D in terms of having a mark and a class of goods/services.  Surveys ask about symbols only, but take advantage implicitly of product category—petitioner’s survey may have been using lots of salty snacks and therefore priming consumers to think about the many salty snacks out there.

Is there a way to use metastudies to help here?  Courts have a duty to understand why they get different results, and metastudies have been useful in that regard to explain why different studies come out differently.

Role of empirical work in what TM law/policy should look like?  Surveys are presenting case by case empirical work. Nonempirical line of Qs is empirical too in some sense b/c we have to decide when we want to make marks incontestable and what that will mean, and whether we want a category of arbitrary marks. May not be case by case but we have to figure out where and why to draw lines, some of which will be normative but not all.

McKenna: surveys directed at words—Gucci v. Guess case, and horrible survey accepted by court as evidence even w/net 6% confusion. General challenge w/non word marks is we don’t have good system for forcing the P to articulate its claim. So then it’s hard to figure out the right control—enormous amount of gaming.

In principle, 5 years makes sense, depending on 2 assumptions: (1) PTO’s evaluation of whether substantially exclusive use has occurred, given incentive of applicant, and (2) what happens if PTO is wrong—can parties fight?

Affiliation confusion/house marks. Affiliation confusion is a way of putting nonempirical concept on side of mark owners. See courts sometimes say that house marks help w/straightforward confusion, but affiliation confusion can make role of house mark irrelevant/complicates the role of other factors in the assessment.

Andrew Moshirnia: Empirical weaknesses of both surveys: On exclusion of respondents.  In a robust study, exclusion should happen at the end, not the beginning, and then justify why you reduced the power of your survey—people didn’t want to create a record b/c they were scared about what those excluded people would have said. Complicates metastudies by sculpting population.

Priming/cuing: pretest effect. Normally if you apply a filter, you want the application to be disguised so you’re not cuing your subject to understand what you want them to do. If you’re going to apply a pretest, create a randomized order. [But if it’s something they don’t ordinarily think about, training them on other examples seems like the best thing to do.]  If we’re demonstrating proper behavior we want them to exhibit, they want to please us.  [But they won’t know what that is, will they, other than “classify what you think the answer is”?] Better: Pure control w/pretest, pure experimental w/pretest, pure experimental w/no pretest.  That increases # of subjects by 50%, so it’s more expensive. 

[he says yes, they need to know how to do the task, but he’d do the filter last; maybe change up what examples you train them on; maybe add a query on the amount of confidence, allowing you to work backwards to deal w/lack of knowledge. Is the training itself the qualification, so people who fail are screened out? Diamond says the problem w/follow ups is that it’s consider a toggle: either the mark is generic or brand name.  Not sure what the confidence level would buy you.  Litman says: would tell us how much people are just giving us an answer just b/c they want to give us an answer.  Diamond says: controls help w/that too.  Large literature: when you give people forced choices, they express positions but if you give them a don’t know option they’ll say don’t know even when they do have opinions.  Mosnirnia: confidence can help you identify people who really did want to say don’t know but want to please you.  You can’t ask them at the original question—you have to do it afterwards, but it’s a good way to deal w/a pretest effect]

Easier way of dealing with it: Strength of feeling of subject after they’ve made their decision—how confident are you in that assessment? The logic often is priming will have a larger effect on people who are unsure.

Diamond: never seen it done in litigation, lots in academic studies.  Cost is the gorilla in the room.

Moshirnia: if both sides are deliberately shaping data, meta-analysis will be difficult.  Need to be able to regroup people.  But both parties do odd things to their data.  No exclusion is bad—asking “do you understand?” leads people to shut up.  Filtering first is also a big statistics no-no. 

Ramsey: Fine w/quieting title as to first to use but not about future competitors—it costs money to challenge, and if you’re not currently a competitor there’s nothing to do. PTO is the gatekeeper but it’s not doing any substantive examination of incontestability, and that is a problem. 

Linford: have same questions about incontestability—do we have the same sort of confidence about giving incontestability for 5 years of uncontested use after registration as we do about presuming distinctiveness from 5 years of exclusive use? 

Still wondering what to do about consumers who haven’t thought concretely about source significance—even for them, marks may be communicating in ways they are recognizing, but not recognizing consciously.  Less worried about those who can’t articulate source significance if there is a way to figure out that they are detecting it/attracted to it [how do you determine that they’re detecting source significance v. detecting some other feature they desire?].

Parody: strong mark = more effective parody. He worries about that b/c there’s something different than run of the mill likely confusion case. At least if you buy Souter’s idea that it says 2 things at once: I’m not the original/I’m the original.  Dual communicative aspect won’t be the same for close follower/ordinary copier.  Maybe a strong mark is hypersalient so consumers notice small differences, but he’s not convinced the parody cases teach that.

Beebe: Concept of TM strength v. affiliation confusion.  We’d [Beebe & Hemphill] like to think of strength as increased consumer sophistication w/r/t the signifier but also w/r/t the products w/which the brand is traditionally associated. The increased strength may result in decreased likelihood of affiliation confusion b/c of increased consumer knowledge. Population of individual consumers aggregated: as strength increases, a few percentage points of consumers are no longer confused with each increase in strength, and maybe just enough that there’s no longer justification for intervention in the form of an injunction. 

Bone: Not sure what it means to go from empirical to normative—if normative theory is dependent on some empirical results, then we still need empirical results.  Genericity is an area where we might want to think more normatively.  Canfield approach—chocolate fudge soda—when we don’t really want to survey b/c we don’t know what to ask. Ask: Is that mark/symbol really going to be very useful for designating a particular product class? We will make mistakes, but we can often tell w/o surveys.

Might think about percentage of population who uses the mark; might also think of vividness—are there many similar marks out there?  Ability to call to mind quickly when I see something similar?  Branding/the more meanings it has, the stronger it is?

Litman: incontestability: the statute separates the quiet title from the incontestability.  Congress adopted it way back when as an incentive to register, which Congress thought we’d need here b/c of the history of success in litigating unregistered marks. My guess: it’s not doing that work, ever; when you want to sell stuff in countries other than this one you have ample reasons to register and incontestability isn’t on the radar. Do practicing TM lawyers really value incontestability? Her guess: may give them as much trouble as it does joy.

Mid-Point Discussants:        Michael Grynberg: human tendency to simplify is present even if that means offloading decisions to experts, linguistics or otherwise.  Disheartening to read about how badly incontestability is done now, b/c concept has appeal.  But changes have problems of their own. Suppose descriptive/suggestive line doesn’t make any sense.  But then we have lots of fights about suggestive/arbitrary line that we don’t have to worry about today.  Fromer says Apple isn’t arbitrary for computers, Fromer’s reasons are plausible: so now what?  Another possibility: get rigorous about secondary meaning.

Reasonable consumer exercising ordinary care: is a consumer really exercising ordinary care if he perceives possible affiliation b/t Jose Cuervo and Maker’s Mark based on use of a red wax seal? Might be a way to deal w/various meanings of distinctiveness by changing standard/considering materiality.

Litman: Likes Bone’s idea of a court appointed expert. Would improve quality/probativeness of surveys.

Omri Ben-Shahar and Lior Strahilevitz have a paper suggesting that courts adopt the survey mechanism to interpret contract language.  Grass is always greener in the other field!

Our proxies for distinctiveness are stuck in the early 20th c. You gain distinctiveness by selling products to consumers for a certain amount of time; it doesn’t disappear quickly.  But today we have instant secondary meaning, as w/Chrysler’s “Imported from Detroit,” but courts don’t have a way to deal w/that. We also have secondary meaning that dissipates in part b/c distinctiveness is happening not just through sales but through social media/products getting 15 minutes of fame. Plus, different TMs have different flavors not captured by linear strength. Affiliation confusion: Tiffany guitars wouldn’t confuse anyone; Starbucks coat hangers. But Orville Redenbacher snow shovels—she’d believe there had to be a relationship—it’s not that the term is inherently distinctive. It has a kind of secondary meaning that is different from Tiffany and Starbucks.  That gives her concern not just that our categories are old and outdated, but that they’re causing us to miss something.

McGeveran: do these need to be empirical questions? Even if we think that the particular flavor we’re looking at is a Q of fact and not of law, is it a Q of fact that must and should be determined in a form of empiricism as broad as the survey? Are there more times when judges should feel they have the opportunity to make factual determinations w/o very expensive/high admin cost evidence? Geog. misdescriptiveness refusals aren’t adjudicated w/surveys.  How do we account acceptance of that other than history?

McKenna: those are almost always about registration, which uses surveys less. Why are we so willing to avoid empiricism in registration?

Affiliation confusion becomes a black box for so much of this.  Beebe says strong marks might decrease affiliation confusion. Super-strong marks: consumers more aware of differences in visual presentation. That doesn’t mean keen awareness of range of goods and services on which they’re used.  Brand extension literature operates on assumption that the source is in fact the same, but at least it talks about similarities of goods and services in possibly useful ways.  Need more empirical literature on strength and effect on consumers.

Leaffer: Conglomeratization of American life in 20th c. to today, affiliation confusion exploded.  Consider the importance of subsidizing the TM office in requiring all these submissions.

Burrell: 1920s assumptions about how consumers behave—we need to test more generally how consumers behave before we can think about how consumers might be confused.  We don’t even know what nonconfusion would look like.

Dinwoodie: role of excavation both history and normative factors embedded in distinctiveness analysis to free courts from fossilization that has occurred.  The nuance in the doctrine doesn’t match how the courts talk about it.

Ramsey: Defending Abercrombie.  So many judges aren’t grounded in TM.  Lawyers think it’s “soft” and they can step in and litigate; RT’s paper shows that courts and litigants just screw up incontestability. Doctrinal tests force parties to talk about important issues and hopefully the judge will address them.

Dogan: when what the D does has social value, the courts have the tools to allow the use. We can push hard on this area where there are so many feedback loops: room for advocacy and scholarship on how courts should think about the relationship between risk of affiliation confusion as measured against social value that comes from informational uses of TMs.

McKenna: we’ve seen courts feel increasingly free to pick factors, but we haven’t had a methodology for picking factors.  They may be clustering in particular ways. Also true of different types of confusion. I read cases that could have been presented as IIC but just weren’t; no rhyme or reason.  Same w/sponsorship or affiliation, e.g. the Cracker Barrel case.  The court says they aren’t confusing and doesn’t contemplate possibility of co-branding.

Beebe: most effective defense of Abercrombie is competitive need. Is it fair to say that the factors from Zatarain’s—use by competitors, dictionary definitions, general competitive need—compare to factors in the European or British approach? 

Bently: court of justice drew a distinction b/t the reason why we have an exclusion and the test. The reason is so traders can use descriptive terms either to describe products/services or as parts of composite marks. They put a strong emphasis on public interest underpinning purpose of exception. But what then is the test? Whether the sign is being used or is being capable of being used in a descriptive way of some characteristic of product/service. Doublemint: doesn’t have to be core/essential characteristic; can be peripheral. That means descriptiveness has quite a capacity to exclude what US calls suggestive marks under Abercrombie.  UK registry held that “sushi” for chocolate in the shape of sushi was not descriptive; inconsistent w/CJEU holding that it must merely be descriptive of a quality of the goods.

Fromer: Apple for bananas: what is it on the Abercrombie spectrum?  Level of generality issue: are apples and bananas substitutable?

Thinking about corpora as a substitute for dictionaries, as Linford suggests: they are useful for large-scale data. But computational linguistics aren’t there yet for really understanding the corpus other than on a case by case basis for an individual litigation.

Bone: imagination test: I don’t even know what that is. I don’t know why dictionaries are important. Competitive need makes sense to him for reasons we might want to demand a showing of secondary meaning.  Ultimate standard might be anticompetitiveness, then develop categories where that’s less costly than doing case by case analysis. That’s why suggestive should be thrown out—it’s not doing anything helpful in this regard. 

Grynberg: if you get rid of suggestive, what is Penguin for refrigerators?  [RT: I’d say don’t get rid of it, just make them show secondary meaning.]  Consumers who have high need for cognition may like it a lot.

Bone: sure it’s suggestive, but what does that have to do w/TM?  I can tell a story, but the story is about anticompetitive effects. 

McKenna: automatic assumptions about source by consumers as a story?

Bone: no, a different starting story: why not require secondary meaning for everything? 

McKenna: empirical presumption about what they’ll think.

Bone: just-so story.

Dogan: Might not be a problem to grant protection to suggestive marks if we’re really strict about what suggestive means.  Breadth of protection is also important. Suggestive = plays linguistic function w/r/t feature of product. Courts that say that suggestive = inherently strong make for harmful consequences. We should presume that suggestive marks w/no commercial strength are weak.

Burrell: we never truly ask people to prove distinctiveness.  We only ask some of them to prove use for a while + expenditure of enough money on the mark.  Versus you get your monopoly straight away.

Dogan: to the extent people are concerned about automatic protection for suggestive marks, those concerned are softened if we make the threshold higher & allow protection only for marks unlikely to have significant adverse effects on other players [see also: scope]

Dinwoodie: why waste time on proof when we’re pretty sure—he still sees that as valuable. [I do too, but I’d put the line for pretty sure at arbitrary rather than at suggestive.]

McGeveran: doesn’t agree about Orville Redenbacher v. Starbucks—Williams Sonoma will sell shovels and popcorn. Once something is recognized as a brand, not just as a mark, it’s probably empirically true that many consumers might think that recognizably brand thing is slapped on is use as a source ID, or at least as affiliation.  We could decide not to protect those things b/c we don’t care as much about affiliation/endorsement confusion as the current structure does, but as a descriptive matter he would expect a perfect survey to find that many people think the Orville Redenbacher shovel came from “the Orville Redenbacher people.” Why are we even asking about distinctiveness in this setting? It will always be distinctive once it passes the threshold of being a brand.

Litman: I wouldn’t assume Perdue cologne was co-branded by chicken co.  But I spend a lot of time trying to weed out of my students the notion that TM distinctiveness is the same as other kinds of distinctiveness, but that’s what’s going on.  The original Starbucks design, if I saw that on anything I’d assume that was affiliated w/Starbucks, even for toilet cleaner. That’s got something to do w/how distinctive it is not in the TM sense but rather in how unusual it is [what Beebe calls differential distinctiveness?].

McGeveran: yes, but don’t then use distinctiveness as “do you think this tells you something about where this came from.” Increasingly the empirical Q of “could this be a Julie Andrews snow shovel” will be answered, “sure, why not.”  If we hinge distinctiveness on consumer perception we’ll have increasingly extensive brand extensions.

Dinwoodie: this is really an argument about scope/enforcement, really about dilution. What range of goods you can cover.

Litman: original Starbucks design is probably not famous; would play badly in the Midwest.  But it is very unusual. 

Dinwoodie: speaks to whether fame is proper requisite for dilution.

Litman: but I’m talking confusion—there’s no reason to put her on your product unless you’re trying to say “this comes from the same place as Starbucks coffee.” In the sense of being affiliated with.

Dinwoodie: maybe affiliation is a dilution cause of action.

Ramsey: But what about the Orville Rockenbacker shovel?  Consumer would probably think it’s parody. Unrelated goods—you really need identity or virtual identity.

Linford: stronger anticompetitive = generic; weaker anticompetitive effect = descriptive. Competitive need is the first order question we’ve been assuming w/suggestive marks. We’ve been using imagination test as proxy for lack of competitive harm. Maybe courts should say expressly that they’re not trying to categorize but trying to think about what the competitive harms.

RT: Concerned about courts that call suggestive marks strong too, but interestingly I think that’s increasingly less common than it was 10 years ago (but would need to do more empirical work to be sure).  Conceptually related to the idea of whether incontestability has any effect on strength?

Want to bring in descriptive fair use and courts’ confusion about the problem of descriptiveness in that context: Car Freshner—court of appeals dodges the real issue; if D’s use is descriptive, P’s use is sure as hell descriptive.  Being more aggressive about melding suggestiveness into descriptiveness might have helpful consequences or troubling ones for descriptive FU.  See also the Victoria’s Secret case about “delicious,” where the 9th Circuit says that use of the term to describe the wearer would not be descriptive use.  Whaaaaat? Finally: consider treatment of retrievers/dog images by PTO early in internet era.  Thought the idea of the retriever dog was highly descriptive in the context of internet search; probably isn’t any more; probably didn’t do much damage by requiring retriever image users to wait, but other lessons could be taken from this episode about the ability of the PTO to predict uses.]

McKenna: Always driven me crazy for courts to say there are 2 components to strength. If it’s empirical, it’s conceptually impossible that use by a different party for different goods and services can disrupt the strength of the connection b/t my mark and my goods.  Penguin for refrigerators doesn’t affect Penguin for hot dogs.  It’s not a nonsense question if you’re giving TM owners an incentive to pick something at the higher end of the spectrum. 

All of us have gone to the really high end of the spectrum for “brands.”  But there are also run-of-the-mill TMs where they are measuring how likely the mark is to cause consumers to think that use in another field is from the same party.  

TM scholars' roundtable

Ninth Trademark Scholars Roundtable: Distinctiveness, Secondary Meaning, Reputation And Fame
Chicago-Kent College of Law

Session 1:       Distinctiveness (including Secondary Meaning) as a Legal Concept

Introduction:   Barton Beebe: different approaches. Any general claims about distinctiveness must take into account: eligibility for protection/scope of protection; reality v. policy; words v. non-words; perception by single consumers v. aggregate; consumer search costs approach v. product goodwill approach; US v. EU. 

Eligibility v. scope: Many claims about distinctiveness work in both contexts, but keep it in mind. Psychology of individual consumer v. amorphous crowd of consumers. Some might see a mark as fanciful, others as arbitrary.  Is this claim about consumer protection, or is it a claim about what consumers should think?  Doctrine as both descriptive and prescriptive. Non-words: Abercrombie doesn’t work for them (if it even works for words).  Consumer search costs approach to TM v. producer goodwill—Bob Bone’s work. If our emphasis isn’t minimizing search costs but facilitating production of goodwill, does our concept of distinctiveness work the same way?

What does it mean for a mark to ID a source?  My answer: a mark is distinctive of source in the sense that a consumer believes it refers to one source as opposed to multiple sources [or as opposed to nothing about source?].  Secondary meaning survey: you ask whether it’s one source or more than one source. This also goes to inherent distinctiveness analysis: having never heard of this before, do you think that this term is referring to one company alone or is being used by other companies?  This approach works ok for eligibility, but not as well as determining the extent of distinctiveness. Eligibility seems like a binary determination, but scope is not.

Distinctiveness of source is one thing; distinctiveness from other marks is a different thing.  Strength or scope goes to distinctiveness from other marks.  Does it stand out to the marketplace.  A lot of times law pretends to talk about distinctiveness of but is really concerned with distinctivenss from.

Jake Linford: What do we think we’re doing w/TM law?  Are consumers confused/are we protecting consumers/are we giving consumers tools to pick in market? Are we incentivizing marketers to pick clear signals/making space for new entrants/protecting property rights?  Which is most important to you will determine how important you think it is to get Abercrombie spectrum right—we want our TM validity thresholds to dovetail w/what consumers see; or you may think we want to prevent incumbents from excluding competitors; or you may think that investment should be rewarded w/right to recoup benefits. For example, Linford’s piece on per se bar on generic terms looks at what consumers might expect to see given how language changes over time; if we care most about that, we might not want a per se bar. But if we want to maximize something else, there may be no way to reconcile those goals at the margin.

My answer to Q about current tests: they don’t properly assess inherent distinctiveness. Even fixing Abercrombie wouldn’t necessarily generalize to symbols/trade dress etc.

The research we look at has its own assumptions—linguistics has a descriptive bent. Consumer marketing research is designed to help mark owners to be more persuasive. If our normative baseline is providing entry space for new competitors, marketing research may not be the best toolkit v. protecting incumbents’ ability to persuade consumers.

Assume you’re persuaded by Jacoby’s description of how minds work: chunking, spreading and activation—mark becomes salient in way that drives consumer decisionmaking. Lockean Q: is it work that owner has done that deserves to be rewarded as such? How much of that is due to consumers themselves (Litman, Breakfast w/Batman)?  Nestle cases—this Q preoccupying Euro courts is whether consumers are relying on the mark to find the product they seek, or are we just looking for association?  Affiliation sounds like association; these cases seem to be trade dress or color cases, marginal areas generally—do the things we see in limits in European law deserve importation?  Is reliance the right question?  Initial instinct is to resist, but not sure why.

Does it matter which term we use to describe distinctiveness?  Acquired distinctiveness v. secondary meaning—acquired seems Lockean/merit-based.  Secondary meaning seems to presume primacy of primary meaning. That’s what he sees as error in per se bar of generic terms acquiring distinctiveness.  Source significance seems to him to be more neutral.  Timberlake thinks only source significance matters; McKenna is worried about other things as well.

Discussant:      Stacey Dogan: Key motivator for TM is interests D is representing, either individually (justification for own use) or more generally (interest in protecting freedom to use descriptively).  Some combination of economics, informational, and moral rights concerns—protecting investments of mark owners. The way that distinctiveness comes in is that courts look at a mark as used w/a product, and they say not just is it serving source ID function but what are the costs associated w/allocating rights in the term to this one party.  Arbitrary/fanciful: the costs are low, even if they haven’t yet penetrated consumer consciousness. They don’t serve an important info function in the marketplace yet, but someone else who adopts the mark for a similar product lacks justification.  “Technical TMs.”  The reason the D is using the mark has to be unsavory.

Protecting innocent motives also reduces obligation of innocent parties to do too much search, esp if mark is fairly descriptive/not well known w/in a particular geog. area.  Similar questions w/different product markets.  W/real fame, there’s no justification for anyone anywhere to use.

RT: Beebe’s answer to What does it mean for a mark to ID a source?  Beebe’s initial answer: a mark is distinctive of source in the sense that a consumer believes it refers to one source as opposed to multiple sources. But those aren’t the only 2 possibilities: perhaps the consumer believes nothing whatsoever with respect to source.  [2 sub-options: (1) consumer believes it isn’t supposed to signify source but is something else, e.g. design or decoration; (2) consumer thinks nothing of it at all unless prompted, and thus will give random answers.]

Graeme Dinwoodie: how one operationalizes that—looking at differences b/t mark and other signs rather than the meaning of the goodwill, which Beebe may mean by distinctiveness of source.  Kind of a patent analysis—how far are you away from the prior art?  Unless a crowded field then has an effect on the first question—one kind of distinctiveness may inform the other.

Dogan’s account of distinctiveness was more normative than he teaches.  Sense that her take is more normative than evident in courts’ explicit analysis of distinctiveness.  [Though see KP Permanent/Sealed w/a Kiss case—that’s a risk the D took when it adopted a descriptive mark.]

Beebe: Seabrook test is a “distinctiveness from others” test that ultimately is used to answer “distinctive to consumers” question.

Jeanne Fromer: We conflate inherent/acquired distinctiveness in many circumstances, but the concepts are distinct. And they’re deeply distinct—people emphasize one value over another; Ramsey is interested in inherent distinctiveness more, while Linford values acquired distinctiveness.

Lionel Bently: should the fact that there is a descriptive use defense mean that we shouldn’t be so bothered about the negative effects of registering a descriptive term?  UK courts traditionally say we are still concerned b/c registration is so powerful—trader shouldn’t have to look to a defense to use a descriptive term.  The ECJ in Windsurfing decision did that too.

Agree w/RT that often consumers don’t see a TM relevant thing at all.  One thing we might want to take into account is people’s views when they’re not consumers.  Why do we arrive preformed as consumers instead of as social or political beings?

Differences b/t distinguishing as source and distinguishing from others’ marks.  We see internationally and in EU law the notion of distinctive character for maintenance purposes.  You can maintain a mark that’s different from what’s on the register as long as it’s not enough to change the distinctive character.

Mark McKenna: difference b/t priority and nonpriority dispute screams out from cases. Way courts evaluate use and distinctiveness in priority is hermetically sealed from other contexts precisely b/c they know someone is going to get the mark; it’s just a question of who.   We start w/a rough empirical cut and then layer other concerns on top—industrial policy concerns.

Ambiguity of “source”: the fact that people are used to seeing something w/one producer is often used as evidence of TM meaning, but that’s not the same thing.  Association isn’t association as an indicator of source. Hardest w/non-word mark cases; there are lots of other possible explanations for consumer reactions that we should consider. 

Robert Burrell: The market should often correct itself in terms of mark choice.  Market failure may occur when businesses are starting out they need to be encouraged to choose TMs that will serve as badge of origin rather than just being concerned w/market penetration. But that reasoning would suggest that experienced firms wouldn’t select descriptive terms, but they do.  People don’t spend a lot of time thinking about “what is the badge of origin”? They’re just buying stuff, in response to all sorts of different signals. So we are trying to protect competitive signals, knowing that consumers will be responding to lots of signals that have nothing to do with source identification. Once you’re honest about that, our perspective on infringement would have to change.

McKenna: registrations that issue with purported limitations that won’t matter at all in litigation—that’s a huge problem. B/c the PTO is thinking only about validity it doesn’t deal w/that problem.

Linford: This Q of what a registration does is implicit in the struggle w/Tam. 

Bob Bone: characteristics of the mark may be probative for consumer protection. For eligibility what we’re talking about is percentage of consumers who use mark as source ID in strong sense.  Rough, normative determination of percentage. For scope, then we are talking about strength, and how distinctive it is w/r/t other marks. But he doesn’t think we ought to do that for eligibility. Inherently distinctive marks aren’t distinctive; they’re just really likely to be distinctive.  That has to be qualified by what Fromer said—maybe we’re protecting inherently distinctive marks for incentives for firms that are beneficial down the road.  But if it’s just likelihood/probability of distinctiveness, that’s a different issue. Probability has to be assessed in some way.  Probability is both a descriptive and normative issue.

Beebe: will stick by his own definition but wants to restate it & explain why.  Distinctiveness is ten-dimensional—w/r/t inherently distinctive marks that are word marks, if you accept consumer search costs approach in the US, then we can say this. Otherwise it’s hard to say something general.  Gives the whole system a flexibility.  That’s why his approach is: one source/multiple sources. If a signifier doesn’t refer to a source at all: you ask consumer whether a plain box is used by one company or more than one company.  I want to hold on to anonymous source company.  Do you associate this box with one company or more than one company?  Or is it not associated with a company?

RT: but you didn’t offer that third option, “not associated,” in your first formulation.

Beebe: one company, more than one company, or is it meaningless to you?

McGeveran: do you associate this with one company or don’t you?

Dogan: if one company has been selling this box for 17 years, the fact that people recognize it as coming from that company is source significance, but this is where competing values like functionality come into play—even with source significance, it’s functional.

McKenna: there’s also a difference b/t association w/ a company and thinking it’s an indication of source.

Beebe: the cases in the US aren’t so much on your side.

Michael Grynberg: dichotomy of distinctiveness: do we want it simple or nuanced?  Lawyers can advise clients on the multifactor test, which is a virtue of the system v. accuracy at margins.

Dinwoodie: use as a mark as a test for validity might be a way to reframe some of this as distinct from distinctiveness.  Also, significance of inherent distinctiveness has increased as more and more applications are ITUs, which are supposed to be inherently distinctive. 

Mid-Point Discussants:           Lionel Bently: EU: Categories of marks devoid of distinctive character, descriptive, generic: overlapping, informed by different concerns but capable of being applied cumulatively—treat them as less important than Abercrombie. Devoid of distinctive character: generic, descriptive, signs that would not be recognized as TMs.  Applied in that sense primarily to nontraditional marks.  Test: whether there’s such a difference from the normal shape or presentation that the consumer would notice it.  Different tests for secondary meaning?  We could apply different tests/showings in relation to potential problems. 

Surname cases: demand to show secondary meaning is a little odd. Either the reaction is always “it’s a TM” or it sends us into a sea of uncertainty (e.g., you see “McKenna” on a bottle of beer—people will arguably automatically see that as a TM if it’s in the right place on the bottle; otherwise not).  Burrell says this is a waste of time. We should focus on normative side—what are the reasons not to make this a registered TM, which makes us think much harder about what’s wrong w/registration. That would be a good thing.  One key: depletion of marks otherwise available to competitors. Cultural signifiers—Picasso for cars may cause a different sort of harm, whether we call that dilutive or not. Distinctiveness of Red Cross.

All the considerations in determining inherent distinctiveness suddenly vanish in the face of acquired distinctiveness b/c of our interest in consumer search costs, which becomes the most important thing—protecting against even a bit of confusion trumps everything but functionality. (And genericism in the US; not in the EU.)

Lisa Ramsey: See anti-free riding impulse throughout the cases, in registration and enforcement. Plus consideration of competition and free expression.  Dilemma: Poor small businesses can’t afford to do a TM survey. Perhaps it’d be good to have a survey required for colors/designs, but small companies can’t afford that. If we really believe in competition, we need to make it easy for small companies to get protection [or hard for big companies to get monopoly rights over persuasive designs], but they can’t do that w/a high bar for protection at the PTO.

So how do we define distinctiveness? It has to be normative. Intent of TM owner: make everything a TM.

McGeveran: never had as much debate over semantic meaning of thing that’s our topic. What if we banned the use of the word distinctiveness from the conversation and forced ourselves to rechristen everything we now call distinctiveness? Which of these things would we give the same name to, and which would get different names?  Would help us think about them differently. One of Beebe’s binaries—distinctive from other marks v. distinctive as indicator of source in mind of consumer. Suppose one was source consciousness/identification v. mark differentiation? We wouldn’t use the same words b/c they’re not the same.  Market strength—is that a measure of the amount of source consciousness?  Or is it a different thing?

Most important thing Coke wants is branding, not identifying: Coke is refreshing. They use the doctrinal tools of lawyers to achieve business objectives. B/c we refuse to acknowledge that’s what they’re doing as often as we should, we tend to go down blind alleys. If we asked a marketer “how is your brand distinctive” they would not say “people know Coke when they look at it” but rather “Coke is relaxing and Americana.” That’s their distinctiveness, and our doctrine is almost blind to it.

Michael Grynberg: does Coke need our distinctiveness for theirs?

McGeveran: they certainly want that, but it’s a minority percentage of time and energy poured into the process—necessary but subjugated in broader ass’n of branding. We could make a decision that the law protects source consciousness but not other forms of marketing distinctiveness.  That’s fine.  The market will handle that. The problem is that it shapes the ways in which firms want to use these marks as tools. They’re going into battle for branding reasons; if we are blind to that as we construct doctrine, that creates problems.

Fromer: It’s really important to think about incentives here. That’s why I care more about choosing some marks over others than perceptions; over time, businesses can foster perceptions for just about everything, so we should think about the costs of allowing companies to choose certain marks over others.  Goes to Bently’s point that we want to keep some words/symbols from being branded, like Red Cross. If we have buckets for types of marks, we still have to shape the buckets and figure out which costs companies should have to bear.  Throwing dilution in: dilution gets a lot of things wrong, but one of the ways in which it’s interesting is the way it thinks about distinctiveness. Mostly equates dilution w/impairment of distinctiveness, but takes degree of inherent/acquired distinctiveness into account: might mean it’s much harder to dilute Amazon/Infiniti w/lots of other meanings out there already, but it is taking account of network of associations. 

Jacoby is so focused on his model from a marketing perspective, w/o accounting for the costs.  Apple isn’t “arbitrary” in the marketing sense—they choose a bitten apple signifying knowledge, friendliness, etc.  Maybe we didn’t connect apples-computers before that but there’s only one link in the nodes required. Maybe we want to encourage businesses to find those latent connections, but we need to think through both costs and benefits.

Shari Seidman Diamond: People out there w/no views at all. When we ask those questions, it’s not tapping into things people naturally think about. It does matter that we have asked the question.  They will obligingly give you an answer, mostly, despite filters/don’t know options.  If it’s true they’ve never given any thought at all to whether this came from one source or multiple sources, that is an important feature that we may be missing.  If it’s allegedly useful for search cost reduction, if they weren’t thinking about it before it can’t have been useful for search cost reduction.

McKenna: Dilution is hot mess. “Impairment of distinctiveness of mark” is nonsense. Doesn’t decrease identifiability of source significance in product market, though it does deal w/uniqueness, and maybe distinctiveness of mark v. distinctiveness of brand.  Distinction b/t TM and brand is really important. When you say Apple signifies knowledge, it’s still arbitrary in Abercrombie spectrum, in terms of branding/associations brought along with it.  We sometimes see push & pull about smushing those together; courts are susceptible to arguments in brand terms and it’s important to be clear about what we mean.  Context is usually the whole point of distinctiveness but dilution takes it away from context.

Marshall Leaffer: In registration context, should be pretty low bar—not necessary to spend lots of resources for something that’s fairly clearly inherently distinctive for arbitrary/fanciful. But secondary meaning is a whole different kind of utility. Not competitive entry so much—we are simply rewarding//providing incentives for those who invest in the goodwill of the mark.  There it should be a very high bar for secondary meaning.  Percentages required go quite low in some cases, though.  That is a wrong turn. We have a lot to learn from marketers: what they engage in, from brand/image aspect, is so important to developing strength.

Dinwoodie: European law: parses out different grounds, all of which look like variants: descriptiveness, void of distinctiveness, incapable of distinctiveness in 3(1)(A)—gives value to the notice function. Series of different categories for denying—failure to provide the notice necessary to competitors; distinctiveness; normative question of competitive effect; and genericness is a bit of a mix. Force courts and Office to pigeonhole them, and in fact we give different consequences.  Can’t overcome 3(1)(A).  Trying to separate predictive questions from normative—if you don’t do that consciously, the normative operations get so submerged in the analysis that we think it’s purely empirical w/o assessment of competitive concerns.

Bone: why not get rid of eligibility inquiries? Could have exclusions for non-distinctiveness reasons, like the bar on names w/o consent.  But as to 2(e) categories on descriptiveness, why bother?  When we get to likely confusion, that requires source identification.  Do we figure that we need an initial screen for likelihood of confusion?  Maybe we do. If we were to redo this w/o eligibility via Abercrombie, what sort of screens would we use?  Normative reasons—litigation costs, threats to competition/overreaching, etc.  Error costs.  We might end up with the EU/Paris Convention.

Dinwoodie: that’s a strategic reason why too much gets forced into distinctiveness. If you limit countries’ ability to create exceptions, there’s nothing for functionality/names, so the Fed. Cir. shoves everything into distinctiveness to create exceptions.

[RT] Responding to McGeveran and Leaffer. Branding: we don’t ever want to protect the branding kind of meaning of distinctiveness. It’s not unique or distinctive.  Coke: Americana, like Ford?  Refreshing, like Winterfresh gum?  Even if Coke’s branding is truly unique in its category, those are generic and functional concepts that should be available to anyone who successfully appropriates them even w/in that category. That’s precisely why we shouldn’t be embracing branding ideas and how we should distinguish: personality of mark is not what the law is or should be here to work on.  Dilution: has to arise from similarity of marks.  That singles out a specific mechanism for associations and a specific effect distinct from meaning or “brand personality.”

Factual Q: Do we know how many secondary meaning registrations rely on 5 years of exclusive use v evidence of consumer reaction or even along w/evidence of consumer reaction?

When we separate normative and descriptive Qs as many including Dinwoodie advocate we find they’re orthogonal. Look at KP Permanent: incoherent result on remand.  Tolerate more confusion—how much more?

McGeveran: not advocating using the law to protect branding components, merely to point out that those get identified as distinctiveness and that’s one reason it causes problems; clear delineation can avoid conflating them.

Linford: is there a way to figure out whether consumers have ever thought about this before, empirically?

Diamond: yeah, consumers want to sound smart and would say they’ve thought about it before.  There are some responses, not so much in design of the Q but design of the survey as a whole, also getting to the issue of needing only a low level on secondary meaning.

McKenna: Abercrombie came out of a history of sorting b/t technical TMs and unfair competition; over decades we’ve layered other considerations on top that weren’t the function of what the distinctions were for. We’re still in so many settings dealing w/cts’ merger of two areas of doctrine w/o sufficiently thinking of the relation b/t them.

Consider the fact that there was a time when if you asked anyone a computer-related Q people would associate it w/Microsoft. You can wash that out as noise but it’s real association. If you merge source significance w/association you can’t deal with that.

Beebe: 4% registered either in whole or in part on the basis of 2(f)—incredibly small.  Filings for marks acquired distinctiveness has risen in absolute numbers over the years, though decreased as a total percentage of filings.