Friday, August 11, 2006

IP Scholars conference, trademark as producer protection

Mark McKenna, The Normative Foundations of Trademark Law. I found this paper extremely useful for my work on dilution, because McKenna tells the story of how trademark infringement became about consumer protection, rather than producer protection. Until the consumer search costs rationale became the dominant story, infringement was about stealing business – consumer deception alone was insufficient if it didn’t divert sales. Looking to consumer perceptions to define harm puts the scope of trademark law in the hands of marketers. We need to challenge trademark owners on the kinds of interests they are asserting, and how that translates to economic harm.

Traditionally trademark was a mediator between consumers and producers – the mark was there to get them together. The definition of goodwill has changed over time; it used to be the flow of customers trying to get back to the same person to sell them the same product as before.

Modern trademark law began with Schecter, who thought that the product was central to the image of the mark. Now, the products have faded to the background, protecting associations (Apple stands for innovative, cool, etc. in the computer space). All these associations are still in connection with products, but brand extensions are possible. Marketers think some extensions work and others don’t. Consumers have to think there’s a fit between two things, but they’re also the most dangerous because bad will from a brand extension can transfer back in to the original product category. Extensions don’t work when they’re unrelated – Apple Vacations – consumers wouldn’t care about them one way or another.

Paradoxically in dilution’s terms, then, brands are only endangered by near product relatives, not use of the mark in unrelated categories. The reason illegal art showing Mickey Mouse hanging by the neck is dangerous to the Disney brand is because it’s about the product. The things that are dangerous are captured by likely confusion – so this literature gives us another way to criticize dilution. To whatever extent dilution by unrelated products is real as a cognitive matter, consumers don’t pay attention to it when they’re making decisions.

Question: What about Virgin? Answer: It’s not a very good brand. If I started an unrelated Virgin company I’d do virtually no damage to it.

Marketers are very upfront about wanting artificial differentiation so they don’t have to compete on price. But all that advertising only takes, and makes an impression on consumers, when they can tie it to a particular product or service. Products never really recede to the background. Proof is that extensions that go too far fail, because the goodwill doesn’t transfer, and that the failure doesn’t harm the value of the core products.

Barton Beebe: The history piece of this is wonderful. Can you add a historiography, explaining Schecter’s and the student notes that came after him that are right now what federal courts rely on for the history of trademark? Also, disagrees with McKenna’s reading of the marketing literature – Beebe thinks lifestyle comes first, then you get the product. Response: it’s true that lifestyle matters, but you still can’t unplug it from the particular product. (See that recent book on selling revolution as consumer culture, where marketers tried to make every product hip and countercultural, but didn’t quite succeed.)

What’s the alternative to the consumer protection view? A return to unfair competition? Mark Lemley noted that some courts seem to think “unfair competition” is redundant. Answer: but not all free riding/competition was bad in the old view, only customer-stealing deceptive free riding.

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