Thursday, August 06, 2015

IPSC First Breakout Session, Trademark Registration

Barton Beebe & Jeanne Fromer, New York University School of Law Is the Frontier Closing?: Registration Rates of Frequently Used Words on the PTO’s Trademark Register 
Much of TM literature claims that the range of marks is infinite; Qualitex discusses color depletion but treats it as an exception. Is this right?  Some press questioning: marketers have difficulty finding new names for craft beer, band names.  Another piece of conventional wisdom: marks are an easy shorthand, and thus should be short and easy to remember/not complicated b/c you want to use it to refer to a complicated set of attributes that’s hard to articulate: shared by Landes & Posner and Branding for Dummies.
USPTO TM case files dataset: 1870-2014 with 7.4 million applications, 1.8 million live registrations that include one or more letters at end of 2013, out of 1.9 million live registrations. 820,000 live single word registrations in 2013.  45 total classes.  Compare to Corpus of Contemporary American English, BYU; 450 million word corpus with lots of sources.
What proportion of words in English are subject to TM registration?  Across how many classes of goods/services?  Are there changes in the proportion of fanciful, image, and phrase marks over time?  We suspect that marks are becoming more complicated over time, more image marks.  Finally, what are the distances among marks along various dimensions, such as sound, sight, and meaning.
Start with identical matches: word is registered on its own.
1000 most frequently used words: 718 or 71.8% are registered as single word TMs.
5000 most: 2928 = 58.6%
10,000 most: 5236 = 52.4%
Not registered: disease, die, lose, violence, despite, problems, difficult, daughter, nearly—makes sense they wouldn’t be registered.
Whole-word matches: of 1000, 997 or 99.7% are registered somewhere in principal register, except although, showed, and seemed.
What about identical matches in classes: in class 41 (entertainment), 291 of the most popular 1000 are registered.
Whole word, the percentage in each class gets much much higher. 946 in class 41.
Levenshtein matching: edit distance—how close is it to another word? Dramatic results: most words are registered in most classes. 
The frontier is closing.  Declining proportion of TM applications by year consists of single words.  Less than 1/10 are standard English words in 2000; decline is quite steady with internet-era dip.  Steady increase in applied-for marks’ length as well.  Eclipse – single most applied-for single word marks.  535 single word applications 1983-2013.  Publication rates for single-word applications: if you are basing your application on a registration you already own, you do well; otherwise success rates are declining. Likewise for Elite, Titan, etc.  We think this is evidence of congestion.  200 most frequently applied for words: declining publication rate over time (except for incumbents).  People are still trying, but they can’t get registrations.
Surnames: 1000 most common surnames are 41% of population; 982 appear as a term within a registered TM.  82% are registered as single words in some category.  In class 42, 668 are registered (computers/tech related)—33% of population has their surname registered in computers.  Might help explain declining publication rates for single-word applications for surnames (except for incumbents—95% success rate for them).  When there are 100s of registrations of the surname already, even incumbents’ success rate is declining some; nonincumbents’ success rate is going down further.
What remains: phrase marks in more detail; misspellings and concatenations (which would make our results even more impressive; PTO has instructions for how to search misspellings which we will use); acronyms; non-English words; how many n-character words are possible in English given phonetic constraints; means of measuring phonetic, visual, and conceptual similarity; syntactic structure; measures of distance other than Levenshtein; number of descriptive marks per class.
Policy implications: tighten protectability/registration standards?  Instruct examiners differently in different classes?  Requiring fanciful marks seems extreme (why?); increased consumer search costs as complexity and congestion increase; effects on competition—transaction costs, additional barrier for new entrants.
Sheff: incumbency effects could be related to inexperience w/TM office [though to me that wouldn’t change the policy implications]
Rebecca Tushnet, Georgetown Law, Registering Discontent 
Carol Rose, Crystals and Mud in Property Law: Legislatures make hard-edged rules and courts tend to soften them for equitable reasons.  They go back and forth in her accounts, but in TM they haven’t gone back and forth, just an initial rule that seems to have gotten muddier and muddier.
The forehand: Registration is substantive: Incontestability for descriptive terms; nationwide scope for local registered marks.  But the backhand: registration is procedural: the same infringement standard is applied to registered and unregistered marks; incontestable marks can be limited to essentially zero rights; Dawn Donut takes back almost all of what nationwide scope gave.  B&B v. Hargis is consistent w/ the procedural approach: b/c registration and infringement are judged by the same standards, preclusion can apply.  Substantive: majority comments and Ginsburg’s concurrence emphasizes that this will rarely happen. 
Substantive: Pro-Football court says cancellation doesn’t preclude protection.  Procedural: Judge Moore’s additional views in In re Tam say it does.
Substantive: registration of standard character mark gives broader rights than a word in a particular font/design in PTO proceedings.  But procedural: court say that it doesn’t in infringement proceedings, if you actually use the mark in a particular font/design; courts also tend to ignore the registration as design/font and evaluate words more heavily; they don’t notice that there’s a difference between a picture and a 3D version of the depicted thing, as in the Mardi Gras Bead Dog case.  Similar issues arise with dilution, Exxon v. Fox for Fox’s FX logo.
(1)   Should we choose? [My bias is yes.]
(2)   If so, which? [I am leaning to arguing substantive]
Lunney: small business often misunderstands importance of registration—they think state registration/state corporate name register means something, and it doesn’t.  Is registration meant to be what you can use or just an initial cut/fence?  Even if it doesn’t mean much to courts most disputes never get to courts/never even become disputes.
RT: I think that’s a reason to go substantive—it turns out big entities aren’t deterred in the same way if they really really want to use the term. [iPhone, etc.]  Equity suggests that they should be treated the same way.
Q: likewise, cautious companies won’t file even if there’s just substantial common law usage. That may help account for Beebe/Fromer findings.
Q: What implications on First Amendment/treatment of commercial speech?
RT: Trying to avoid that here, but I have no problem making wholesale rules about preventing misleading speech.
Beebe: disclaimers: how they interact w/registration. Courts ignore them/compare marks as a whole.
RT: substantive approach would provide a basis for changing that.  Disclaimer = confusing similarity can’t result from the disclaimed term, just like functional feature.
Q: other countries have more substantive approach: what would that look like?  What about approach of int’l companies?
RT: Int’l companies planning for substantive approach is another reason that US should consider it if their behavior won’t change.  Other countries have double identity, which could be good if accompanied by a lot of retrenchment in non-double identity cases; other countries have robust TM use; many of our differences are not internal to TM but come from broader traditions around advertising and the First Amendment.
Dinwoodie: if you want substantive approach, should rights contract over time if use is limited in a particular way?  Also must deal with overlap w/43/44—people will just plead in the alternative if there’s not a clear doctrine.
Melissa Wasserman, University of Illinois College of Law
What Administrative Law Can Teach the Trademark System 
Intersection of administrative law & TM—proper standards of review for TTAB determinations.  Growing issue.  Guideposts in SCt cases about deference due to informal-type review.  Fed. Cir. caselaw: decides that the review should be de novo.  Chevron came out after that; Fed. Cir. never revisited the issue.  In 1993, Fed. Cir. inexplicably applied Chevron to TTAB’s legal constructions of an ambiguous statutory provision—no Chevron step zero analysis at all (were they granted such authority); then proceeded to ignore that in the future.  What about Skidmore deference?  If you appeal to the Fed. Cir. you can’t put new evidence in, so at a minimum there should be Skidmore deference.  Likewise w/factual Qs the Fed. Cir. isn’t giving enough deference.
Normatively: deference would be desirable.  Comparative institutional analysis: expertise and capture.  Changes to PTO would be helpful to improve it.  Not many structures set up on TM side to bias it to granting TMs.  TM fees are set much more to cover costs; 11% is from actual registrations.  In comparison to patent side, TM office understudied for particular incentives.  It’s all comparative—Fed. Cir. is pro-IP as well.
PTO just makes registration determinations, not validity determinations. If we give more deference to TTAB on validity, think about how that would affect TM infringement.
Lunney: allowing bottle shape to be registered—PTO acted and CCPA ultimately accepted.  Single color registration: Fed. Cir. reversed denial and then Qualitex relied on “PTO accepts them!” even though that was only because they’d been forced to. 
TTAB lacks consumer understanding.
A: would like to improve their capacity through creation of guidelines. 
Jeremy Sheff: nervous about institutional analysis in the abstract. Interactions b/t PTO & Congress, PTO is now lobbying to take away de novo review before district courts & make exclusive avenue of review of inter partes review at the Fed. Cir. Which is weird if you think of them as different bodies w/different institutional interests.  PTO is generally P first and T second; patent office tends to drive policy on these issues.  If the prerogatives of a TM administrative agency were exercised by a patent administrative agency, results might differ.
RT: I worry about capture—PTO is trying to get © too (look at recent best practices in DMCA takedowns run by the PTO) and that would make a huge difference in amount of industry capture; with the recent project on whether renewals were actually of TMs in use, no one even considered a stronger use requirement, which is evidence of being only devoted to people who have lots of registrations.
Charles Colman: TTAB doesn’t worry about long term implications of granting registrations, especially w/district courts—thinks it’s just a presumption of validity and won’t be incontestable for 5 years.  TTAB also doesn’t know what to do w/parody.
A: she proposes a policy group; not just TTAB judges v. federal district court judges.
Megan Carpenter, Texas A&M University School of Law
NSFW: An Empirical Study of Scandalous Trademarks
What’s really happening in practice?  26.72% of office actions discussed context; remainder did not.  TTAB has held that dictionaries alone can establish scandalousness.  TM examiners have high quarterly quotas and they have limited time.  To be outstanding, need 515-575 “balanced disposals” per quota; goals are that complete examination should occur from search to notice of allowance/office action w/in 7 calendar days of receipt. EAs are under serious pressure to process applications quickly; dictionaries are easier than assessing meaning in social context of the day.
Dictionaries were primary source of support for rejection 91% of the time, 70% of the time as the only evidence.  17% used media evidence.  Same pattern in niche (adult) markets.  Also cite applicant’s ads.  Almost always used in refusing registration.  If it’s an adult market, then it’s evidence that the scandalous meaning is intended/understood.  If it’s a general market, more likely to be scandalous.  Catch-22.  FAT COCK beer, even with an image of a plump rooster, was rejected b/c available to general audience.  Same result w/goods or services: if goods are scandalous then that’s evidence the mark will be scandalous: MR. HORSE COCK for adult movies.  Deodorant: MY SHIT DON’T STINK—because it was on nonscandalous goods, it would be available to everyone. Examiners often recognize the relevance of context de jure, but abandon that de facto.
In our data, success rate was less than 5%, compared to 44% for small businesses generally—small businesses were over 97% of applications in her data.  Low probability of response = related to lack of representation by attorney.  Applicants don’t respond to office actions very much—about 20% of the time.  80% = abandonment.  Applicants who do respond argue contextual factors.  Top arguments: alternate meanings of words; marketplace context; actual goods.  Only 2 of 232 were successfully passed to registration.
Where you see both approved and rejected: general trends exist.  Bitch has a larger number than whore, slut, and pothead. Examiners say that other registrations don’t matter, but examiners do consider them informally.

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