Friday, November 20, 2015

Trademark Law's Fundamental Purposes, part 3

Purposes and limits (or not) in modern trademark law:  Wendy Gordon, Rebecca Tushnet
RT: Stacey Dogan’s statement that as a practical matter we need justifications for copying/free riding—I didn’t want to believe it, but I’m coming around to that view.  Mark Lemley says no, all we need to make the trademark system work is protection of consumers, properly understood.  But I don’t think that’s sustainable in part because there are so many different ways to protect consumers, so many aspects on which competition might help or hurt them—price, quality, diversity.  Because of the factual indeterminacy of many consumer protection justifications, we have a hard time making headway on consumer protection “properly understood.”  So, it’s much better to admit that sometimes we are letting other interests serve as trumps.  Not everyone will agree on what’s a useful heuristic for determining likely trademark meaning or likely confusion; therefore concepts like trademark use (which implicitly accepts the difficulty and expense of factfinding as a reason that consumer confusion can’t always be the relevant inquiry) should be supplemented with other structuring purposes. 
[A different point about static efficiency than Bone made: Strong TM/dilution as producer protection: it struck me how static that language is: when in fact protecting a producer who already exists is narrowing the choices of future producers.  Maybe we get at that by talking about competition, not competitors, but is that enough?  The static/dynamic tradeoff is better accepted in copyright and patent; does it have a role in TM?  I don’t think TM as incentive makes any sense (and listening to Europeans talk about it just puzzles me further), but incentive isn’t the only way to produce dynamic effects.]
What I’m particularly interested in now are the functions served by the registration system.  Registration in a consumer-protection-only world has a very limited and puzzling role—it isn’t actually a signal of rights or lack of rights.  Usual American suspects for non-confusion-related purposes are free speech and competition/protection of the utility patent and copyright systems.  I would add notice and signalling, a main function of registration—allowing businesses to order their affairs as among one another. International trade/extension of protection is a related function of registration.  These are different flavors of producer protection even as there are different flavors of consumer protection.  Registration is inside the system, not external as McKenna has said of other limits; maybe the other limits are internal too.
Things I learned by doing the reading for this discussion:
From the law reviews: Edward Rogers, primary drafter of Lanham Act: 1909 article.  Very interesting that he didn’t see any problem with granting plaintiffs practical monopolies over particular products—that’s not his problem.  If secondary meaning is shown, he advocates, then no one can use the term.  Trademark is not a consumer protection device at all in this view.  Producer protection, with the consumer as the mechanism by which harm is done to producers. Note that this didn’t entirely prevail, either in the Lanham Act then or now—the legislation, like much legislation, represents a series of compromises in many cases kicking the policy questions that the legislature couldn’t resolve into the courts, which turn out not to be able to resolve them either.
Milton Handler & Charles Pickett, Trade-Marks and Trade Names-An Analysis and Synthesis: I, 30 Colum. L. Rev. 168 (1930)
See the development of the idea that arbitrary use doesn’t mean actual monopoly (as with what would come to be called descriptive or nominative use, but they called non-trademark or non-denominative use), therefore there is no need to exclude descriptive terms w/secondary meaning from the category of protectable trademarks and no need for the category of technical trademarks. Also argued that court should grant relief as far as possible to the senior user in restricting TM like or large print uses on D’s goods of descriptive terms w/secondary meaning. Again saw less concern for competition.
Milton Handler & Charles Pickett, Trade-Marks and Trade Names-An Analysis and Synthesis: II, 30 Colum. L. Rev. 759 (1930)
Dilution is a component of this approach: don’t require confusion when there’s uniqueness—not when there’s technical TMs.
From the cases: NY & R Cement Co v. Coplay Cement Co., 44 F 277: no cause of action for false advertising of geographic origin b/c of Pandora’s box—no one can sue for public nuisance w/o specific injury/invasion of property right.  Still an issue today!  Big split, finally resolved by Lexmark, holding that standing for false advertising requires proximate causation, but what proximate causation is in a multicompetitor market remains really, really unclear.  Maybe all we can do is shift the same considerations around in a hydraulic legal system.
Incredibly important to keep talking about harm.  It’s problems with confining the concept of harm that lead us to have to fight about purposes, it seems to me.  Classic statement: Yale Elec. Corp. v. Robertson, 26 F.2d 972 (2d Cir. 1928): “If another uses [the trademark], he borrows the owner’s reputation, whose quality no longer lies within his own control. This is an injury, even though the borrower does not tarnish it, or divert any sales by its use ….” [Compare to debate over whether Congress can create standing for a party when their injury would not satisfy Article III in the absence of a statutory right (Spokeo): this is Hand literally admitting that the only harm is the loss of the legal right to control.  That loss of control may if it is really true impose other risks but risks and actual harm are not, we are usually told, the same thing.  Back to Felix Cohen’s transcendental nonsense: the modern conception that the TM owner suffers harm from loss of control/free riding is a result of allocating the legal right to the TM owner, but the “property” concept obscures that the exact same dynamics are operating here as where Congress creates legal rights for consumers.  The political implications for a conservative legal system that recognizes property rights but not other forms of rights as important and “natural” or prepolitical, even when recognized by the legislature, are obvious.]
Gordon: TM law is a form of speech regulation with a property label, which makes it hard to call for recognition of the P’s interest.  And that is political.
Internalization of positive effects: money can come in that becomes too great/non-incentivizing—super-high salaries.  Surprised that the understanding in copyright is so much more advanced—some commentators seem to think you may have perfect internalization, but it’s always two people who create any effect.  Therefore the allocation of all the benefit to the TM owner is likely to be unjustified.
Can’t expect perfection in incorporation of various doctrines.  Doctrines don’t have to be fully protective to be considered by courts—it’s not persuasive to say that “if courts considered this a value they’d be making different decisions across the board.” They might have reasons to limit.
Our rights are most stable when different policies converge to support them. No such convergence in the modern cases.  Persuading judges will require greater clarity on the purposes.
McKenna: at the core, interests of producers and consumers do converge.  You do open up a gap at the periphery.  His reading of Lackawanna Coal is that the courts were interested in a particular kind of deception—deception about identity, not about other aspects of the goods. Not surprising that courts then developed a common law of false advertising that could address other kinds of deception.
Every type of doctrine will have some things and cases that don’t fit perfectly.  I’m just looking for a better fit.  I think my account fits more naturally to more of the cases.
Bone: American Washboard: court’s policy reasons to refuse to allow P to proceed against falsely advertising competitor, maker of zinc washboards advertised as aluminum, are not reasons but rhetorical questions.  There’s clearly a concern that if we extend this cause of action to false advertising, we’ll end up with anticompetitive effects, b/c pure aluminum washboard P could go after others w/perfectly good products that are only partially aluminum.  But what’s wrong with that if they’re advertising falsely?  We don’t want courts mucking around in degrees of aluminum?  [Note later development of materiality/puffery to deal with this.]
Dogan: Political aspect—idea that when people have something that they’ve invested in developing, or that they inherited, it’s theirs, regardless of the structures that nurtured it and the contributions others made (keep your hands off my Medicare!). Even if you accept that, shouldn’t be transferrable to the IP context.  Visceral in many courts’ minds, and certainly in TM holders’ minds: it’s mine. 
Silbey: feeling that it’s mine v. feeling that something is being taken.  When a big Apple store opens up, the restaurant next door benefits.  The restaurant is free riding, but we don’t think that restaurant owes anything to Apple. But if I trespass on your property, we recognize a harm and a cause of action even though there’s been no change in wealth.
Dogan: courts intuitively think that “happening” to be next door is different.
McKenna: but we can give an example where the person just moves in afterwards to take advantage. Any time there’s a Walgreen’s, there’s a CVS on the other corner.  One of them does market research and the other free rides on the information about the local market on which the other relied.  There’s no instinct that this was unfair.
Discussion about whether free riding on a trademark can ever occur without the risk of harm.  [What if it's not confusing?  Then the "bad publicity from bad quality" risk can't materialize.]  Students are attracted to the idea that there's always some risk of harm if someone else is using the same mark on the same goods [presumably without further identifying marks].

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