Saturday, February 12, 2011

WIPIP at BU session 3

Megan M. Carpenter, Calling Bulls**t on the Lanham Act: The 2(a) Bar for Scandalous, Immoral, and Disparaging Marks

Various “bullshit” marks have been refused registration, whereas BLACK TAIL, BIG PECKER’S, and BADASS all made it through.

Can and does the Lanham Act effectively prohibit registration for scandalous/immoral or disparaging marks? Should it? Her answer to the second question is no.

Resource conservation justification—not clear it saves resources to fight about these marks. The consumer protection at the base of TM policy is source quality, not moral quality.

Whose sense of decency or propriety matters? A substantial composite of the general public—all of the key terms of which are debatable. Why is MADONNA for wine scandalous? There are references to wine in the Bible, but the evils of drinking are more widespread today. Madonna = purity in womanhood (this was before the singer) = (public acknowledgement of) drinking as particularly immoral for women. Do you look at the context of wine drinkers, those who don’t drink wine, or both? Affidavits from winedrinkers said they weren’t offended, but that wasn’t enough.

Examiners end up relying on dictionaries; existence of alternate definitions allows the mark to pass even though people who “get it” will understand the intended meaning.

Similarly, disparagement isn’t defined in the Lanham Act. The test is, circularly, whether the mark would be understood as referring to an identifiable group and perceived as disparaging by a substantial composite. Relevant group is ambiguous under existing practice. E.g., HEEB case for magazines—relevant group definition might be dispositive. Against registration: ADL, rabbis, university professor, talk show host, members of general public; on the other side, letters from prominent Jewish organizations, Jewish Fund for Justice, etc.—in the end the mark was rejected. (I don’t see why this is troubling, given that the ban is in there in the statute. True, you have to accept that it is consistent with the First Amendment, but if you take that step (as all courts to date have done), then you have to give it meaning. The standard we have is “disparaging to a substantial composite,” not “not disparaging to a substantial composite,” so the two categories of evidence do not even conflict.)

Sometimes not clear whether mark is rejected because scandalous or disparaging—MOONIES for little toy that drops its pants when you squeeze a ball. TTAB allowed registration of the dolls; the examiner focused on reference to members of Unification Church, but TTAB thought purchasers are more likely to see the reference to “mooning.” TTAB reasoned, oddly, that a major newspaper is unlikely to use disparaging terms.

Determinations are content based and subjective; the application of the standards is inevitably inconsistent, varying with time and tribunal. (My reaction: welcome to the PTO; enjoy your stay. That’s flippant, because unpredictability might be more harmful w/r/t disparagement than to descriptiveness, but it’s not as if the other standards are tons better.) Lack of standards leaves examining attorneys with little to go on. TECHNODYKE registered, DYKES IN THE CITY and SUPERDYKE rejected. Identity of applicant is often not taken into consideration. Reappropriation with the intent of empowerment might make identity very relevant.

BULLSHIT for handbags: rejected. (At which point I left to take a call I couldn’t dodge, but there was more discussion of inconsistency.)

Wendy Gordon, Copyright and Negligence as Mirror Images: On Not Mistaking for the Right Hand What the Left Hand is Doing

Mirror image argument can help copyright novices understand incentive arguments. Torts: start with the proposition that not every harm produces recovery. Causation is never sufficient; you need something else. Recognizes Coasean reciprocity. In a world with transaction costs, externalizing costs to one is internalizing to another. And when you have a whole community, you need to worry about effects on others. Just as tort internalizes negative externalities to make the careless be more careful, copyright works in a mirror image: it makes people more productive by allowing them to capture some of the benefits they generate.

We use negligence when we don’t know the level of activity that is appropriate. We have a similar sense of doubt about how far copyright should go—proper mix of internalizing versus allowing benefits to stay with public for follow-on innovation and inexpensive copies. We have some rules: can internalize benefits from expression during copyright term, but not the benefits from your idea. Like negligence, we allow nonrecovery in order to increase benefits.

Copyright is about increasing productive behavior; tort about decreasing destructive behavior. Copyright is concerned with term limits, fair use, etc. in leaving certain benefits with the nonowner; tort law is concerned with moral hazards etc. in leaving certain incentives to take care with the plaintiff. So it is a mirror image. Thinking copyright and tort are the same, rather than mirror images, leads to mistakes. CCNV case: Court ignored the necessary reversals. CCNV: question was whether sculptor was independent contractor or employee. Court used multifactor test borrowed from the Restatement, but the Restatement’s purpose was to figure out whether vicarious liability should attach, and that raises very different issues. Vicarious liability was pushed by a desire to spread costs for injured plaintiffs—not stuck with the judgment-proof truck driver but with a deep pocket that can insure, pass costs on, and has a declining marginal utility of money, in order to spread the immense losses to an unprepared person (and her family, etc.) when disaster strikes. But the mirror image of spreading is concentration: copyright is about the virtues of concentrating incentives on a particular entity.

Understanding this would allow us, among other things, to make sense of the “teacher exception” to the work for hire doctrine, which now exists only in dicta—since only the author can alter the scholarly article, it makes no sense to give the copyright to the employer. We want to concentrate incentives on those who can respond to them, but given customs of academic freedom, the professor is the only one who can do that, and we shouldn’t split copyright and control.

Another proposal: make plaintiff prove harm as part of her case. The key is the notion of baseline. When you determine, if you can, how many benefits need to be internalized to incentivize a desired set of works, that sets the baseline. Does the defendant’s act cause a shortfall from that baseline?

Tort is made of causation, duty, wrongfulness. Causation has its parallel in copyright in copying: would the work look and sound any different had the defendant had no contact with the plaintiff’s work? Copying is simply causation: that would resist the temptation to collapse two tests into one (copying and substantial similarity/wrongful copying). Duty has a parallel: what right does the statute confer? Wrongfulness: substantial similarity of taking. Setting these out separately works for torts; in copyright courts conflate the tests.

Term limits and trespass: trespass doesn’t require proof of harm. Has been explained as a way to allow owner to internalize all externalities. Poor analogy for copyright because continual monitoring of externality over lifetime of resource differs markedly from copyright’s needs. Copyright focuses on a particular moment in time, where the decision is made to create the new work. There is a natural end to the amount of future income that can be relevant to the particular point in time. We can look to the scope of the plaintiff’s expectations when s/he created the work to figure out what recovery s/he should get. Christina Bohannon and Shyam Balganesh have proposed foreseeability requirements, getting at this same point: you can’t be incentivized by the unforeseeable. But Gordon thinks that foreseeability is too expandable. In Eldred, Justice Ginsburg speculates that authors could reasonably expect that copyright terms would keep expanding. Better question; whether you are serving or stand ready to serve the particular market or have good business reasons for holding off.

Lemley: think about mental state and the negligence analogy. If copyright is strict liability (given volitional)—I don’t have to know I’m doing something wrong, or even that I’m copying—then should the analogy be strict liability in tort? And how would we think about causation then?

A: think about the law of unconsented benefits—if I paint your house without bargaining, you don’t owe me anything. Copyright: can’t make bargains with the whole world ahead of time. In ordinary situations, denying benefit generator the ability to recover generates thick markets (negotiating ahead of time). But in copyright, we want the benefit generator to have the ability to recover. But that’s not the question—she wants to use torts to critique copyright.

Negligence model would be best because of our uncertainty about who should be internalizing and who externalizing (who has the most control over the situation, in tort—the person blasting or controlling dangerous animals); when you come to activities with positives and negatives, like driving, we use negligence. Precisely because not all spillover benefits should be captured, we should use a model sensitive to allowing such spillovers.

When player pianos came in, people stopped making music at home. This substitution effect should be taken into account in allocating rights. What about unanticipated uses that make a work more valuable? Should people be entitled to collect? This is horizontal equity—the person seeking recovery for a use he never could have contemplated is seeking a windfall where there’s no substitution. To justify giving that windfall, you have to believe that the horizontal equities are strong enough to be worth the excess resources given to the initial author.

Dogan: what about Texaco?

A: Hard question, but dangers of ignoring horizontal equity are not as great as dangers of systemic overprotection.

Jeremy N. Sheff, Veblen Brands and Invisible Hands: How Trademarks Create a Market for Suppressed Speech

He’s interested in post-sale confusion: what is it and what’s its relation to status goods? Bystander confusion, downstream confusion, and status confusion: he doesn’t think any of these suffice, and the doctrine should be abolished.

Theory of injury in bystander cases: starts with a nonconfused sale to someone who knows exactly what she’s getting. Then courts presume the purchaser uses/consumes in the view of others, potential consumers of plaintiff’s product. Then the potential purchasers will be confused, and form beliefs about the quality of plaintiff’s product, which influence their purchasing behavior. This seems reasonable basis for imposing liability if the later steps were ever proven. But none of them ever are. The “potential purchasers will be confused” step is found to be likely based on the usual test, and then courts layer three or four layers of causal inference on top of what is already an inference.

Downstream confusion: two starting points—defendant sells a replica/knockoff to someone who knows what she’s getting, or defendant sells to a nonconfused purchaser a geniune, but modified, article originally made by plaintiff. Then, the purchaser will give the article as a gift to a confused recipient, or will resell the purchased article in a secondary market to a confused consumer. The problem: conflicts with longstanding Supreme Court precedent on secondary infringement liability set in Inwood Labs. These should be understood as contributory infringement claims and required to meet their standards. Second, this can interfere with first sale: Prestonettes v. Coty--quality control/material differences requirements disappear from this analysis when the issue is framed as post-sale downstream confusion. Au-tomotive Gold v. Volkswagen (9th Cir. 2009) required court to tie itself in knots because of this switch.

Status confusion: purchaser of defendant’s product acquires status of plaintiff’s product without playing the higher price. Injury is (1) to past purchasers of the genuine article who paid full price and (2) to the general public, irrespective of potential future purchases—public won’t know who’s entitled to the status of the genuine article and may accord status to the wrong people. He finds this intensely problematic both politically and as a matter of TM theory.

Information theory: market for lemons. To stop it, impose costs on sellers who mislead about quality. One way to do this is with a brand, allowing consumers to punish bad quality.

What’s the info asymmetry here? It’s not about the products. Purchasers are not confused and in fact don’t care about quality; no info asymmetry between buyers and sellers. Rather, the asymmetry is between purchasers and social audience—the “lemons” in post-sale confusion law aren’t products, they’re people.

Why do people use consumption to signal status? Social class: it’s bad manners just to say “I’m very wealthy and therefore you should respect me,” but more persuasive is the info economics explanation—status is scarce but speech isn’t: Veblen’s Theory of the Leisure Class. Courts have replaced Veblen goods with Veblen brands. Sheff argues this is wrong: government interference with claims to social status. The message couldn’t be sent without the assistance of TM law. Enforced scarcity—social speech leaves the commons and goes into the market. Inconsistent with idea that gov’t should not suppress the speech of some to enhance the relative voice of others.

What’s the gov’t’s interest in taking sides? Social policy—social norms. Misappropriation/free riding—incentivizing new forms of symbolic expression. Regulation of commerce—channeling social competition away from naturally scarce resources into artificially scarce brands.

Issues: what about the merchandising cases, some of which use post-sale confusion and some of which don’t? What are the details of the First Amendment issue—who would have standing to raise the issue? TM defendant: could it stand for its customers? Finally, false speech: the person who buys the knockoff is, at least according to some views, lying; does that change the free speech analysis.

My unfocused thoughts: effect on the law of the modern shift to being able to compare self to most well-off in the US/world, versus most well-off in one’s community and heightened feelings of relative deprivation; relationship between that and the idea of the “tournament” culture of rewards increasing inequality; possibility of a stronger claim that the message could be sent without TM’s help but only to those who were “in the know” and capable of making fine distinctions, which would counteract the importance of the masses seeing the bag on one’s arm.

Jim Gibson: if we view TM as propping up status competition, is it clear that the absence of post-sale confusion would help? That is, people might invest more in cycling.

A: Beebe makes this argument—that it’s a losing game to turn rights to this purpose; the cycle gets faster and faster and meaning dilutes faster. He’s not sure about the natural endpoint.

Q: But think about the literature on fashion—lack of protection seems not to have changed the status competition.

A: at least we’d channel into naturally scarce resources instead of artificially (e.g., I guess, handmade beading/lace, etc.).

Lemley: are we following consumer expectations or setting them? A lot of expansion has come from the “following” idea, but here the story is the opposite. There’s no evidence of confusion, and even if there were evidence for the defendant we’d still make sure the defendant lost a counterfeiting case. In the service of TM expansion, we are saying we don’t need to look at what consumers believe, creating a legal norm instead.

A: Beebe argues this too; it’s just misappropriation and a counterfeiter is not allowed to get away with it irrespective of effects on consumers. What is misappropriated is not reputation for the quality of the article but information that other people will assume about you if you carry the good.

Q: it’s kind of like tortious interference: I promised my consumers that they’d be elite and you’re taking that away.

A: but it’s circular: you can only make that promise if you have the right.

Q: isn’t this just dilution even if called confusion?

A: Plausible, for a given definition of blurring/tarnishment.

Irina Manta: what about the car salesman wearing a fake Rolex, who uses it to increase trust in customers?

A: from the First Amendment standpoint, I’d want to draw distinctions between commercial and noncommercial speech. In general these cases are about social speech, even a used car salesman. The government has less role to play in regulating that kind of expression. (My comments: my father just wrote an essay on the topic of the First Amendment regulation of lies in themselves. Also, “seeming trustworthy” is puffery; advertising law doesn’t regulate almost any of the vague presentation-oriented techniques that salespeople can use, like using your first name or getting you a snack; to say we’re regulating this one particular technique in the name of consumer protection is simply disingenuous.)

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