Robert Bone – Notice Failure and Defenses in Trademark Law
Bone’s basic argument: Principal notice issue in TM is uncertainty about scope, and principal problem is chilling effects. Bone finds an important distinction between unauthorized uses that implicate rights and uses that are valued only for efficiency reasons. Categorical exclusions work well for uses that implicate rights but not very well for uses valued only for efficiency reasons (except for trade dress). Proposal: non-expressive nominative/descriptive fair use cases, and trade dress cases, should require proof of actual confusion (not just likely confusion) and significant risk of substantial TM-related injury to receive relief.
Favored/socially valued uses and possible susceptibility to chilling effects: four kinds. (1) Copying/use of trade dress product design to compete in the underlying market. (2) uses to inform consumers/the market about aspects of the D’s product—descriptive fair uses, nominative fair use, resale uses. (3) a special subset is use of the mark in technological contexts, such as metatags/AdWords. (4) Expressive uses—gripe sites, parody, etc.
Causes of notice deficiencies & seriousness of the problem. Less problem w/identifying a claimant to the mark, usually, b/c of public use requirement. Some favored uses even involve copying or knowing something about the P’s mark. Real problem is the problem of defining the scope of the rights. Likely confusion, dilution. Two features contribute to uncertainty of likely confusion: it’s difficult to tell whether your use is infringing; fact-dependence generates litigation costs/risks that can be strategically leveraged to chill favored uses.
How serious are these problems? Chilling effect is identified in the literature, but when you think about costs it creates, it’s not so much about impeding innovation, b/c that’s not what TM is for (unless you’re European), and it’s not about interfering w/ a licensing market; it’s not about info costs. It’s just chilling favored uses through litigation cost/risk. Break this down for different uses and users.
Trade dress uses: can they be chilled? Large firms using marks to communicate information about their products? Expressive/tech related uses are more susceptible to chilling effects b/c of risk aversion & resource constraints.
Maybe someone is chilled from a favored use b/c litigation cost/risk exceeds benefit. Expressive uses are an example. Magnified by risk aversion on the part of the expressive user. Startups may be chilled—suffer from resource constraints and susceptibility to risk. But trade dress involving established firms copying to compete in the underlying market, the benefit to them is large; don’t have resource constraints; don’t have high risk aversion. Instead, the cost may be greater than the benefit if preliminary injunctions are granted routinely. But we need to think a little harder about why we have the problems and therefore how serious they are. We assume they’re equally serious across the board, but maybe not.
What do we do? A number of proposals floating around. One way: narrow TM liability w/r/t sponsorship/affiliation confusion; post-sale and initial interest confusion. I support that to some extent but you can cut back and still have chilling costs from likely confusion test—b/c it’s fact dependent it’s hard to get summary judgment/early decision.
Second way: categorical exclusions—defenses that protect favored uses, or some subset. Courts tend to resist that except in expressive use cases. Problems of defining a favored use—descriptive use test has to figure out whether the use is descriptive; we could look at intent, but that doesn’t fit TM policy well; we could look at consumer understanding, but then the meaning of a use is contextual and must be assessed by reference to the market. That reintroduces difficult factual issues. Second problem: it’s not easy to justify, w/in TM policy, an absolute categorical exclusion. Much easier for uses that are protected by rights. A right trumps/constrains utility; if TM is fundamentally utilitarian, a rights-protected use may simply override utility/TM policy. However, for the rest of the uses, the policy goals of those uses/values of those uses is understood in utilitarian terms.
Use procedural law & modify substantive test for favored uses other than expressive uses, nor trade dress which is also ok with a categorical rule. For infringement liability, TM owner must plead and prove secondary meaning + D’s use creates actual confusion about source or sponsorship + significant risk of TM related harm that’s serious. Tighten up on preliminary injunctions. Escape valve/early exit from litigation for most favored uses.
Rebecca Tushnet: This is part of a story about what we lost when we abandoned theories of TM harm and shifted to theories only of confusion. Also a story of First Amendment exceptionalism: expressive use? Except for functional trade dress, constitutional lawyers would say it’s all expressive uses. Even applying Central Hudson, current treatment of TM is, to say the least, underjustified.
Bone says: Categorical exclusions from coverage don’t fit well with TM and balancing tests are a better fit w/TM’s market focus, except with rights that serve as trumps (like the First Amendment). (Which others? The Second?) But lack of actual evidence used in most balancing test cases makes this conclusion complicated. True, courts say they are concerned with confusion, but then they routinely just eyeball the use—9th Circuit and 7th are the worst offenders. The multifactor confusion test isn’t a trump-based rule, true, but it’s not really a marketplace test either—it’s an “imagine the marketplace” test and the question of whether that’s on balance better than a bunch of categorical rules is even more complex once we consider the costs of foregoing actual marketplace inquiry along with the benefits.
Bone says we lack the empirical evidence to know whether the error costs from a rule in terms of missing actual confusion versus suppressing uses that aren’t confusing are greater or lesser than the error costs from a case by case standard, esp. in descriptive fair use/trade dress cases. But that is true both in the context of rights as trumps and non-trumps. Bone therefore attempts to set out when we should, for reasons based on our prior assessments of the costs of over and underenforcement, choose a rule or a standard.
Bone opposes rules (at least in non-trump cases) because a blanket rule encourages TM users to push the limits, and if consumers do blame the TM owner for a bad experience, then its ability to communicate will be impaired. But in each case I’d want to ask: what is the TM user’s incentive to push the limits? Maybe the argument is that we can expect a normal distribution of uses either affected by fear of TM liability or indifferent to that fear, so we can expect more confusion with a rule that is more protective of unauthorized users, but is that plausible? For the example of expressive uses of marks, the likely motive is realism, as far as we can tell, or commentary on reality (in the Grand Theft Auto/Pig Pen case). Those motives seem worth encouraging, and there is little reason to expect consumers are incapable of distinguishing the performance of a video game helicopter from that of an actual helicopter, even if they are customers of both (unlikely). Interference with social meaning—Veblen goods functions of a TM—seems distinctly possible, but that’s very different harm.
Compare the incentive in a descriptive use case: the decided cases don’t give us a random sample of the relevant situations, but I can’t say I see many with motives to appropriate the plaintiff’s goodwill—instead at most I see indifference to the plaintiff’s goodwill and interest in using the descriptive benefits of the term at issue, from “Gatorade is Thirst Aid” to “Sealed with a Kiss” to “Own Your Power.” If we look at descriptive fair use as another doctrine that gives trademark owners an incentive to choose inherently distinctive terms, then the argument for favoring trademark owners in cases of doubt gets weaker because such a rule diminishes the incentive function of the rule for trademark owners/choosers. So we have to balance a lot of competing interests and policies. (Also a related question: are the descriptive and nominative fair use tests rules or standards in Bone’s formulation? Nominative fair use looks more rule-like, but concepts like using no more of the mark than necessary might seem standard-like.)
Really interesting argument in the paper: trade dress is good candidate for rules even though it’s not (always) a rights-based limitation b/c other identification means are always available w/r/t any given design. TM owners may contest that—in Qualitex, would there be an equally perceptible symbol for non-English speaking users? Or are you implicitly also disavowing post-sale confusion and similar doctrines in order to reach this conclusion.
Another important point from the paper: Descriptive use and trade dress provide us with big classes of cases in which even limiting liability to source confusion doesn’t do much to limit the scope of threats that can deter use. So the many proposals academics have made to cut back on the idea of sponsorship confusion won’t help there.
Proposal: require secondary meaning in all cases involving nominative use, descriptive use, or trade dress, even w/inherent distinctiveness. To prevail, plaintiff must show substantial confusion, likely with a survey, + serious risk of TM harm. If defendant’s products/services are high quality, then irreparable harm isn’t likely. (1) Note that eBay may be doing this in all cases—any need for a TM specific theory? TM owners abandoned harm stories and the confusion branch broke under them once eBay applied.
(2) Is this really a shift from standards to rules or a hike in the burden of proof? That is, suppose we didn’t require secondary meaning in all cases, just substantial confusion + serious risk of TM harm. Wouldn’t we get the same results? Is there any reason not to apply this standard to the entire universe of TM cases? I take it Bone’s response will be that overenforcement isn’t as much of a problem in classic “does Borden for ice cream infringe Borden for milk?” cases as underenforcement is. But do we actually know this? [Side note: any role for incontestability here?]
Stacey Dogan – Bullying and Opportunism in Trademark and Right-of-Publicity Law
Notice can sometimes feel like an undisciplined concept, applicable to any legal ambiguity. Existence of notice failures that wouldn’t lead to bargaining failure—the accused infringer would just walk away. That’s a broader conception of notice, but really helpful nonetheless.
Paper contends that features of TM and right of publicity law make it costly and sometimes impossible to know when you need permission to engage in certain behavior or refrain from it. A couple of wrinkles: motivated initially by an INTA panel on TM bullying. Overclaiming or as PTO report to Congress said, abusive litigation strategies, enabled by ambiguities about contours of TM owners’ legal rights. At the same time, working on right of publicity law, and people also worry about overclaiming in that context. In both cases, ambiguity about outer limits of rightsholders’ interests generates overclaiming; this makes sense from rightsholders’ POV for several reasons.
(1) Notice failure about purpose, existence, and shape of legal rights. (2) Unique to TM: notice failures in enforcement process. (3) Legal incentives to assert rights against uses that neither harm them nor explicitly exploit the value of their mark in a merchandising way. Trying to limit concerns about lack of notice, but hard to separate those concerns from substantive concerns—you really don’t like the scope of the right. That’s true.
Why, what, and how: some of us like to talk about TM as protecting integrity of information to make markets more competitive. If that were the clear normative focus of the law, then even standards rather than rules could move towards a harm-focused regime that moved toward that normative goal. But in many cases the law broadened away from competition-oriented focus, not always explicitly—protecting against the exploitation of parties’ trademarks. This normative ambivalence makes it challenging to say clearly why we have TM and its limits.
Ambiguity in the what: not just likely confusion, but also protectability. Whether trade dress has secondary meaning—who knows?
How: for right of publicity, expressive uses are the biggest source of ambiguity. Where in TM Rogers v. Grimaldi we’ve moved towards clarity, right of publicity claims remain indeterminate.
Notice failure in enforcement: C&D practice is a primary source of actual practice of TM holders’ and users’ rights in marketplace, which raises real transparency concerns. Lawyers send letters; people back down either b/c they think the claims are plausible or it’s early enough in their business that they can change with less trouble. You persuade the first recipients of your letters to back down, and then you have a record of enforcement that’s scary when you list the people who’ve already acquiesced in subsequent letters—a sort of common law. Adjudication/rules/decided cases have notice functions of their own; if C&Ds are the de facto ways people decide what to do, risks a ratcheting up, similar to Jim Gibson’s work.
Exacerbating doctrines, most pertinent in TM: vagueness of boundaries explain veneer of plausibility for questionable claims. Econ incentive to assert in many cases. NFL threatens anyone who tries to refer to the Super Bowl nominatively in advertising. It’s ridiculous. But they actually have an economic reason to do that. What if there’s no harm/loss? B/c the rules of TM law encourage owners to stick their elbows out so the mark seems “strong.” Monster Cable & Monster Energy behave badly—Monster Cable went after Monster Mini-Golf.
Bruce Keller, DOJ (formerly of Debevoise & Plimpton)
TM and right of publicity cause problems when cut loose to doctrinal moorings. Some lawsuits are stupid and should be litigated to the point where that’s proven in court.
Concept of bullying: I’ve written lots of C&D letters and responded to lots of dumb ones and never felt abused. Didn’t reflect personal experiences [representing very well-represented and well-heeled parties!]—a lot of these complaints are anecdotal. The label bullying/abusive masks a lot of what’s really going on. A large company going after a small one isn’t the only scenario—a small one going after a large one for reverse confusion is also a possibility for use. And this has happened for a while. Oasis was sued by a small Italian wedding band from New Jersey in the 1990s—that’s not large v. small bullying but a small co. with a classic failure of notice.
Represented four companies getting demand letters from “History Makers” used in connection with educational services in relation to African-American history. Those demand letters are silly, but not abusive. Maine Lobster Promotional Council: “the ultimate white meat.” Pork producers sued the council; went away after pretrial conference, and they were shamed by publicity. When dismissed, the council issued a press release: “We’re glad to have this behind us; we’re happy as pigs in mud.” Bullying doesn’t explain these cases. [Note that the pork producers went on to harass women selling pro-breastfeeding “The Other White Milk” shirts, so they may not have learned the lesson.]
Useful constraint: The concept of TM use: a material use in a purchasing context should be rigorously enforced; same with advertising or trade purposes in right of publicity cases. Dryer v. NFL case, pending in 8th Circuit. Classic expressive speech about old NFL games. There’s nothing wrong with sponsorship/endorsement being used in the right circumstances. If you invigorate trademark use, you won’t end up with very many bad decisions.
There’s a huge difference between asserting a claim and trying a case to a successful conclusion. It’s easy to bring a claim and not so easy to win it. [I say it as: when someone asks if they can be sued over activity X, I always respond ‘It’s America—someone can always sue. But can they win?’] Example: Spiderman case, where the owner of building in Times Square sued for infringement b/c billboards had been edited to show ads for Sony’s co-promotion partners. Laughed out of court, b/c Sony’s counsel said: the P’s theory of the case was that the billboards in the movies weren’t real. But Spiderman’s not real either. No TM use.
Lemley: sure, you can make a weak letter go away—if you can afford to hire Debevoise. The worry is the people who can’t, with no lawyer/solo practitioners. Don’t we need more than “I can win this suit”?
Keller: True, though I was pro bono in some of these. The question is whether there’s a problem w/the law or with resource allocation of lawyers to people in need. Not clear that retrofitting TM is necessary—overreaction.
Von Lohmann: I would love additional empirical evidence on chilling effects. Beebe’s research can’t help us, b/c chilling effect comes from demand letters and not cases. I’d love it if lawyers were required to send demand letters to chillingeffects.org. But without that, we’re left w/anecdotes. 9 years at EFF = plenty of anecdotes of abusive demand letters.
Keller: True, but we have much more transparency now than we did in the early 1990s. Eat More Kale guy—more ability to spread the information than there was 20 years ago. Do we need dramatic changes to the law?
Q: Early adjudications and sanctions should be more aggressively employed. Judges let cases go on so long that they become very expensive.
Keller: It’s very difficult to get—judges are reluctant, for lots of reasons.
Dogan: Part of the reason is the incredibly fact intensive subjective inquiry—makes it hard to reject out of hand in some of these cases.
Bone: Sanctions can be part of a solution; there are costs to that.
RT: move in © cases to dismiss on motion to dismiss in fair use cases. We could do better in TM too. Have fees—if you bring a Rogers v. Grimaldi-barred claim that can be dismissed on a motion to dismiss, then you should pay D’s fees.
Dogan: if courts take irreparable harm seriously, see fewer injunctions. (I think this also affects plausibility of pleading harm, which may also be evaluated on a motion to dismiss.)
Bone: responding to RT: If eBay is fully implemented, then many of the problems we have may go away.
Q: practicing lawyer: People who start a business never imagine that they may succeed enough to get a C&D. If we could teach solo practitioners to have TM search done at the outset that would be very helpful.
Bone: Note on expressive uses—I’m not talking about the constitutional right, but about the justification for the constitutional right—a moral justification that serves as a trump to TM utilitarianism. If utilitarian/consequentialist justifications exist for the constitutional right, matters get more complicated. (As indeed the justification for truthful commercial speech is.)