Monday, April 14, 2008

Iowa Trademark Scholars' Roundtable, part 1

Because of travel delays, I arrived after the discussion had begun. NB: If you don’t already have a familiarity with arguments over “trademark use,” this set of posts will likely be hard to understand; I recommend reading at least some of the sources in the previous post first.

Mark Lemley: McKenna’s argument is an incompleteness theorem: we can’t completely describe a formal system within that system. “Source” needs an outside definition. Does that mean we need abandon all hope? No, no more than Gödel’s incompleteness theory means we stop teaching math. Beebe’s study demonstrates the problems of courts deciding cases ad hoc: intent, which is entirely malleable, dominates; it’s so manipulable because we have no idea of “intent to do what?” This is a fundamental problem in confusion, and may also be so in use.

The tendency is for courts to adopt a use requirement but not do anything systematic or robust with it. Problems include ambush marketing/attempts by TM owners to stop competition. “Unfair competition” is redundant in their eyes. We need a legal doctrine to say that not all competition is unfair, and confusion isn’t it because there’s always a story about confusion over something. We need to avoid a factfinding requirement that will lead to lots of trials, especially because surveys can be so readily manipulated. Even Google, which is aggressive on this, doesn’t allow use of a TM in the text of an ad when the law clearly would (explicit comparative advertising). In practice, a search for Rescuecom no longer produces a targeted result because threatened to sue the Geek Squad etc. and drove them off of bidding on the term.

Graeme Dinwoodie: Two questions drive this first session—what is TM use, and how would it change TM policy? (Nice framing, Graeme!) There are also institutional questions about the role of courts v. Congress, which may be much more significant. Some of this is US-specific but judges v. legislators is more universal. Dinwoodie believes that, even if we want to validate certain practices, let’s accept that confusion of different kinds might cause harms, then weigh them against the costs of regulation.

(Comment: This is why I teach TM as containing a bunch of rules about how “the game isn’t worth the candle”—such balancing seems to me dangerous to competition unless it’s done at the abstract level.)

Mark Lemley and Stacey Dogan say that non-TM uses don’t increase search costs; TM use is then a redundant requirement. It’s an enforcement cost issue that leads to “TM use” as the name of the theory. Margreth Barrett focuses more on competition and free speech issues that need to be internalized to TM law. It seems from Bentley’s discussion (which I missed) that the European notion of use is circular as well. The biggest lesson: use is very fact-intensive when linked to its purpose, even when the question involves association and not confusion.

Dogan: McKenna’s position is close to hers. Can we draw a line and say that courts can determine as a matter of law that these aren’t TM uses: (1) plaintiff has a weak case—this is the kind of behavior unlikely to cause confusion because historically it’s been allowed/unchallenged; and (2) there’s an important countervailing societal value—e.g., descriptive fair use. Add a new category: people whose relation to confusion is at best secondary/contributory.

Rules are critical to shaping norms and consumer expectations. Traffix and Wal-Mart give her some hope that this can be achieved. On the issue of harms: information overload and confusion over whether search results are organic are paid, which are harms Dinwoodie and Janis invoke, are not TM issues but unfair trade practices that can and should be regulated as such, not through TM law.

Dinwoodie: Agrees these are mostly unfair competition cases.

Barrett: We can have a false marketing cause of action under §43(a)—dishonest behavior not requiring use as a mark. This is underutilized in US law. (She is not referring to §43(a)(1)(B) but a more specific cause of action.)

McKenna: Courts ought to use values to limit TM, but all those other doctrines have specific names and rationales. We need to know what links those doctrines to TM use if TM use is primarily about protecting search engines. Why push anything over to unfair competition?

Dogan: No, don’t push: if the problem is labeling of paid search results, regulate that regardless of TM law.

McKenna: Courts have fetishized “confusion” in the abstract—we should focus on the kind of confusion TM is supposed to avert.

Dogan: Playboy in the 9th Circuit mushed the ads and the organic results together.

Bob Bone: TM use can function as (1) boundary policing—what TM is supposed to cover in general, like copying in copyright: it defines a kind of activity regulated. In that view, nominative and descriptive fair use are evidence of a broader principle defining the domain of TM law. He doesn’t find that persuasive. Or it could be (2) an enforcement cost-limiting doctrine, not really about boundaries, but about the judgment that a rule creates fewer errors than case-by-case factfinding. He sees more emphasis on (2) these days and likes it better.

You need to know what kinds of errors are being made. Are courts messing up the inferences piled on inferences allowed by TM? E.g., intent to free ride à inference of intent to deceive à inference of likely confusion. In such cases, courts are implementing a different policy, not just making doctrinal mistakes. They may be mistakenly undervaluing free speech etc. So we need to find out what problem we’re trying to solve. Reeducating judges on doctrine isn’t sufficient. We need a rule at the front end. Maybe it needs to be done over smaller domains than TM law as a whole, though Bone thinks that single examples as Dinwoodie suggests may be too narrow.

Lemley: These aren’t competing but complementary stories. Search costs are the boundary definition, and the search costs theory explains where courts are going wrong. It’s true we can’t define TM use exactly, but our response is to tell the enforcement costs story. That helps us decide where to draw the line. If our only concern is that threats to sue deter certain behavior, there’s no reason to care unless there’s an underlying principle.

Bone: But it’s good to start with an analytic distinction before we recognize the complementarity. With copyright, we start with originality and copying and only then define fair use; we have a core domain. (I’m not sure I agree with this, and Bone seems to be uncertain himself—arguably, and as the CLS folks might tell us, each concept is defined by its opposition.)

Dogan: In the Netcom case, we saw that courts even define “copying” through common law interpretation, keeping the normative goals of the law in mind.

Graeme Austin: Dogan’s “weak case.” What makes a case weak? “Trivial” confusion. How will a surfer be harmed by mistaking a site for a Playboy site momentarily? In a weak case, other stories are available—the consumer is not confused, gets the joke, recognizes difference, understands that aftermarkets exist. Ambush marketing is a good example; research suggests that some people believe Nike sponsors everything. This ties into whether mere psychic harm to a guy who lands on a non-Playboy site is cognizable (like the harm in Victoria’s Secret).

Does that all go back to free speech and competition? Every counterstory maps to one or the other. So why wait until the defense stage to make this determination?

Dinwoodie: There may be other harms! A little or a lot. KP Permanent on remand is an example. If there’s 95% confusion, the counterstories are less plausible. We should make the harm story admissible for potential validation. And yes, that has a cost. Some defenses might develop as a matter of law.

McKenna: Weak cases can be weak in a lot of ways. A few people confused could mean lost sales, or a lot of people could be confused but not about anything important.

Laura Heymann: We’re discussing TM use as applying to certain relationships—defendant/mark or defendant/consumer. We could also speak of permissible relationships between plaintiffs and defendants around a mark. The expansion of infringement into sponsorship confusion is what’s causing the problem: the perception of whether defendant needed permission to use the mark.

My comment: In antitrust, courts developed a series of rules about what was automatically ok or not; most things are now rule of reason rather than per se illegal. That was driven by economic analysis; in TM it’s behavioral economics. We are suggesting a return to per se rules in order to allow more challenged behavior, or at least a requirement to prove what we now presume based on circumstantial factors like intent.

Dogan: consumer expectations/the iterative effect of rules on consumers make TM different from antitrust.

Christina Bohannon: The analogy in TM would be which practices are likely to cause confusion and which aren’t. But outside confsuion, we’re asking whether a use is the kind we want to allow. This relates to antitrust injury: is the harm due to competition—is it the kind of harm antitrust/TM cares about?

Lemley: The TM injury doctrine! You can’t sue because your harm is the wrong kind: a policy question.

Bohannon: See also harm due to substitution v. harm due to lost reputation in copyright’s fair use analysis. In copyright we’re comparing effects on creativity to each other—but in TM we aren’t comparing commensurables in the same way.

Dogan: Quick look v. rule of reason—takes pro- and anti-competitive arguments into account—that would be a way to deal with TM in weak cases.

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