Monday, November 08, 2010

Fordham: The Rise of Unbranding in Trademark Law

Moderator: Susan Scafidi

What is unbranding? Rob Walker’s Buying In: Murketing, or murky marketing—a subspecies of that. Brands that hide corporate roots, like Starbucks creating the 15th St. Coffee and Tea Co., “inspired by Starbucks.” J. Crew does the same thing with Madewell line. Sub-brands or rebranding. Another form: advertising that doesn’t look like advertising. Reports that handbag makers send their competitors’ handbags to Snooki to create associations. Is there an ethical dilemma?

Jeremy Sheff, St. John’s Law

Divides unbranding into 2 categories: abandoning, modifying, discusing, obscuring a well known source identifier: Altria’s rebranding on a continuum with Starbucks. Guerrilla marketing is the other category.

“Unfair” competition starts with a deontological concept of wrongness but evolves into a focus on harm to consumers, which then shifts us to a consequentialist model looking at the efficiency of consumer markets.

Proposed lens: asymmetric information. Parties almost always have different levels of information about transactions. Asymmetry about product information creates an opportunity for one party to take advantage of the other. Law doesn’t think that’s entirely a bad thing; we accept it and deal with it in various ways, such as contract’s doctrine that unilateral mistake of fact is not grounds for recission whereas misrepresentation is. Securities law: generally markets are for correcting asymmetric information, except with inside information.

TM: applies generally to consumer markets, which occupy weird space between bilateral contracts and broad, liquid markets of securities law. Sellers almost always have superior information to buyers. TM law has an account that’s largely consequentialist: TM encourages voluntary provision of accurate product info through the TM itself, and discourages dissemination of false/misleading product info. TM is itself info, and spreading that info is TM law’s purpose. Either kind of unbranding challenges this premise.

First type of unbranding reduces consumer information. Takes info away they might have relied on, and looks like a kind of misrepresentation. Might say there’s reason to disfavor unbranding, but TM law countenances that type of info removal. We allow licensing; we allow assignment. Why treat unbranding differently? Potentially it might because asymmetry about the product or service isn’t the only asymmetry: marketing techniques also take advantage of asymmetry in how consumers make decisions—marketers know more about how our minds work than we do, and can change our purchasing behavior in ways not connected to the content of products or services, and that’s what category one unbranding is about. Consumer beliefs are notoriously difficult to dislodge; often easier to start over with a blank slate: quick, what was Altria before it changed? Easier than marketing to change your impression of Philip Morris. This stickiness prevails regardless of accuracy of consumers’ belief.

Unbranding that seeks to neutralize accurate beliefs is problematic consequentially. Deontologically: any kind of manipulation of how our minds work might be unfair. Category one unbranding thus presents a conflict between the two types of justifications for TM.

Different/related dilemma from category two unbranding. Is it wrong for a competitor to send Snooki somebody else’s handbag? Nominative fair use might be relevant. Marketing for handbags and status goods generally is not about product features but about social connotations largely outside of producer’s control (other than being able to set a high price). Who uses the products is essential to desirability in these markets.

Version two unbranding can only be criticized from a deontological perspective, because it is not about true or false information—the competitor is creating information about the product itself. Consequentially, that’s just not an issue. But one could (but need not) say that it is “unfair.” He personally thinks it’s wonderful.

Rebecca Tushnet, Georgetown Law

One story to tell about unbranding is that it’s about heads I win, tails you lose: the companies that want to use our credit and browsing histories to decide about us, and who tell us that to walk away from an underwater mortgage is immoral, want to be able to walk away from their own reputations whenever that would benefit them by making it harder for us to figure out who they are. Sometimes this is by rebranding, and sometimes it’s by marketing techniques that make it look like other people approve of the trademark owner—buzz marketing, stealth marketing, astroturfing, and other names. Trademark law may not have much to say about rebranding in itself, but there are definitely things that could go wrong with TM as a result of such practices, in particular the expansion of TM owners’ rights against references to them.

First example: 15th St. coffee shop run by Starbucks: “inspired by Starbucks” really means owned and operated by Starbucks. Compare to the use of the same phrase by a perfume imitator: "inspired by Obsession." You might think that this imitator’s behavior is wrongful, but it’s also a core example of legitimate comparative advertising in the US. The more subtle the references TM owners use in their own branding, the more scope TM owners have to claim ownership over all references.

The problem is even worse with product placement. Some people have argued that undisclosed placement is deceptive. I want to bracket whether and how disclosure should be required, because my interest here is in a particular argument: that disclosure is unnecessary because reasonable consumers understand that undisclosed sponsorship agreements may be in place. That person touting a dietary supplement in the comments of a blog, or writing her own blog or newsletter, may in fact be a paid shill.

If we take the position, seen in some very interesting recent work by Zahr Stauffer among others, that disclosure requirements are unnecessary because a reasonable consumer in the modern ad-saturated economy must—both as a descriptive and perhaps as a normative matter--expect an association between a trademark owner and a depiction of the trademarked good or service, then trademark owners’ control will expand unacceptably.

Consider product reviews. If the law takes the position that consumers must expect that there are lots of undisclosed connections between trademark owners and people who talk about trademarked goods and services, then trademark owners can argue actionable confusion when reviews are not to their taste. There are many plausible scenarios in which a rational trademark owner would object to a review, even one that wasn’t a vicious attack: positive but profane, racist, or otherwise untoward reviews; mixed reviews; or reviews appearing alongside content of which the trademark owner does not approve.

Stealth marketers are often accused of allowing supposedly skeptical reviews to appear alongside the positive ones, to make the overall site seem credible and to make the positive reviews seem smarter in comparison. Similar problems arise with situations like appearances in fiction (recall Tina Fey mocking sponsorship while receiving it—sponsorship by the trademark owner is filling a place that we might once have thought reserved for actual unauthorized parody). Rivalry figurines: owner-authorized, profitable self-tarnishment. 7-11 rebranded itself as Quik-E-Mart, originally a parody, as a promotional gimmick; Mattel lost its claim against Barbie Girl because the song was a legitimate parody, then licensed the song; there’s an official NYC condom using the subway logos. And the same thing can happen with factual reporting, which is already pervaded with owner-generated or approved content.

TM now faces the same problem copyright did in the past few decades: the emergence of owners who largely do not care about reputation—the Paris Hilton model—they just want to get paid. Copyright dealt with this by declaring certain markets off-limits to copyright owners’ exclusive claims despite their willingness to license in those markets. TM will need to do this too.

First Amendment doctrine could do something for us here. In First Amendment law, we are used to accepting statements about audiences that sound like they’re descriptive but are in fact normative: audiences for political speech must be treated like they’re able to make careful distinctions and judgments, and weigh evidence for themselves even when the speech at issue is probably misleading. We are committed to a particular definition of the competent citizen regardless of how competent real citizens are. Similarly, there is good reason to commit to a view of the reasonable consumer who does not expect undisclosed control or even undisclosed ties between a trademark owner and a person referencing, reviewing, parodying, or otherwise engaging with that trademark. The fact that product placement exists and is pervasive should be legally irrelevant to claims of likely confusion over unauthorized uses even if they look like product placement. And if we want an ethical hook, it should be fairness: heads I win, tails I lose: if I give up apparent control, I give up real control.

Eric Prager, KL Gates

TMs operate in different ways for different people: point to particular source or embody a bunch of ideas. Don’t impose one view of how TMs are functioning. Easy view: TMs are pointers. It is the 15th St. Coffee & Tea shop; if you care about who owns it, go find out. Once we’re outside of factual statements and implication, you are assuming that the rest of the audience is assuming the same thing you are. Importing these assumptions into TM is a mistake. Asymmetry is of course true, but not necessarily a problem. Candy bar company knows more about composition and factory conditions than I do, but I don’t worry about that; other kinds of law address fairness in marketing.

If you show that an appreciable number of consumers are misled by an implication, that’s false advertising, but once you get into a further category of “I didn’t want to buy from Starbucks,” we’re asking too much of TM law. Trying to pull the world back into another form. Bloggers laud their own company; authors review their own books; this is not surprising. If people don’t understand a new medium, that’s a learning process.

Changing company names after bad things happen: consumers understand that companies change names and hands. Let them gravitate to the mark they like; it’s not a TM problem that Kraft has its own brand identity from Altria.

Me: To me the descriptive claims Prager makes emphasize the need for a normative backstop, not least because a normative backstop for the law has consequential effects: if you have to assume everyone might be lying to you about their identity, you get the classic market for lemons: all information becomes untrustworthy. There’s also a problem of heterogeneity among sources: which ten of the 100 reviews on Amazon are from paid shills? This problem will not go away as people become more familiar with the medium.

Sheff: heterogeneity of consumers; we can’t assume consumers are all reacting the same way. Some are sophisticated, some naïve, and we shouldn’t presume that all consumers care about all the details I care about, but we also shouldn’t presume that consumers can see through and discount all kinds of marketing.

Prager: we think a lot of the public’s capacity to make decisions (we put them on juries). What normative backstop should we have? Should it mean that “TM” on a store means that the person who owns the TM owns the establishment (or licenses it)? Most people don’t care about the details of corporate relationships. As long as there’s some level of transparency in the system so people who actually care can figure it out, it will work, and that is more or less there. Companies can make it more or less difficult, but shell companies are relatively rare—never seen it in TM. Sponsorship information doesn’t matter to everyone; not a baseline requirement to carry “sponsored by” information—you don’t need to know identity of source as long as you know it is a source.

Q: It seems morally dubious when Philip Morris and AIG change their names. But would there be First Amendment problems in regulating it?

Me: No, though I don’t support such a rule. Misleading commercial speech may be banned, and a disclosure is a favored remedy.

Q: distinction between mark and brand?

Sheff: distinction today is largely illusory in fact; TM is not a separate body of law but part of a system that purports to regulate consumer markets including consumer safety regulation and false advertising law and others.

Prager: he isn’t sure the law protects brands, though it does protect marks. Brands have different images to different people.

Me: the fact that brands and other ad claims mean different things to different people is no barrier to regulation. Probabalistic proof, or proof of overall effects on the general population despite individual variation, is a keystone of the modern regulatory state, as the FDA shows. More specifically, if confusion among 20% of relevant consumers shows TM infringement, which most courts accept, then other information that would produce a 20% alteration in behavior is relevant to advertising law. This doesn’t mean that we should regulate everything that affects 20% of consumers, but lack of effect on some or even on a majority does not put regulation off the table.

1 comment:

  1. Aaron Perzanowski11:34 PM

    Sounds like a great conversation. I discuss these and related issues here: