Sunday, October 08, 2006

Works in progress: Eric Goldman

Frank Pasquale kindly summarized my presentation here.

Eric Goldman: Online Word of Mouth and Its Implications for Trademark Law: This comes from a synthesis of previous work asking what’s new about online trademark law. Exceptionalism: what’s unique, special or different about the internet? A single answer: The rise of online word of mouth. The universe of products, consumer opinions, and competitor claims is all available for you to see.

The internet enables consumer perspectives to reach beyond traditional physical limits. I’m happy to give opinions to anyone who’ll listen. Offline that’s limited by my social network. Online it’s not. Here is where intermediaries come in, mediating the development and dissemination of word of mouth, such as, which had the business model of soliciting and packaging opinions. eBay feedback forums, bizrate/shopzilla’s merchant ratings, etc. These businesses propagate information throughout the network.

The effect has changed the paradigm for TM owners, who used to have a significant degree of control over the content shaping consumer brand perceptions, but online they’re losing that control. There’s increased competition for consumer attention online. The main way people find information is the first 20 spots on a search results page – that’s the ultimate channel for brand information in the marketplace – 10 results of editorial content (algorithmically generated) and 10 paid ads; almost no one goes beyond the first page. Even within this, the top result gets much more traffic than the 10th. TM owners now have to compete with traditional players, like competitors, but also new people like their own affiliates, consumer opinions, resellers. It’s a zero-sum game, and one that a consumer could win. Consumer opinions now follow the TM owner in a much more direct fashion. (My search for “coca cola” pulled up as the fourth result, discussing Coke’s practices in Colombia.)

So now TM owners have to compete even to have their own say. Goldman thinks this is a good thing. Consumers derive value from peer opinions and value it more than other influences. TM owners should also be accountable for their actions; reputation following them is a good thing because it means accountability. That’s what we need for the market to work!

Problem: TM law can be used to excise online word of mouth – which is another difference from the offline world. If they can, TM owners will get rid of the bad stuff and leave the praise, creating a lopsided information economy. This doesn’t work as a practical matter, since uniformly positive reviews aren’t credible – we reduce the cognitive authority assigned to it. (My reading of the literature suggests people don’t reduce the influence sufficiently to make it worthless – and they certainly don’t backlash – so it’s still worth it for TM owners to try.)

Normatively: We should ensure TM law fosters online word of mouth.

Implications for TM law: Trademark “use in commerce” should not be just a jurisdictional requirement but should have substantive bite. The statutory definition is not particularly logical but none of the interpretations he’s seen are either. Once we acknowledge there’s this thing “use in commerce” we’re not really sure what it means, because it’s hard to divide the world between commercial and noncommercial. In this case, online word of mouth – consumers talking to each other – doesn’t fit neatly, because (1) it can have commercial effect and is part of the marketplace mechanism; (2) word of mouth producers may legitimately seek compensation for what they do, like having a server and hosting a site, just as journalists get compensated for their labor even if they’re talking about brands; (3) intermediaries make commercial referential uses, talking about the brand for their own profit.

Proposed solution: “Use in commerce” should mean that the commercial vendor is using the trademark as their own source identifier, as distinguished from others in the marketplace. If they’re doing anything else, it’s not a use in commerce.

Likely confusion: Initial interest confusion, a sledgehammer against things that include online word of mouth; hugely misguided. The problem is that courts are still struggling with difference between confusion about the product source and confusion about the content source. Usually IIC online is about content source, not product source. IIC has led us astray; we need to go back to product source confusion. Presumption: there should be no likelihood of product source confusion from online word of mouth.

Fair use: Goldman sees it as fairly narrow. When people use fair use to exculpate online word of mouth, it’s a bailout for something that wasn’t a use in commerce in the first place –nominative fair use is too narrow, and not recognized in some places.

Lemley: Beebe’s study is that empirically, only the court’s determination of intent matters. In the context of new uses, that’s enormously manipulable based on the court’s perception of free riding. Lemley worries about the ability of the confusion test to deal with this because we lack a normative baseline.

A: Agree: that’s why definition of use in commerce is our savior, because it takes care of this without fighting over intent.

Mark McKenna: Under current law, we define use as a TM as any use that indicate source, which includes sponsorship or affiliation, which means there’s really no requirement – the question is whether consumers think the entity talking about your product is licensed to do so. If TM owners can convince consumers this is true, you’re screwed.

A: Sure, but use in commerce can fix this.

McKenna: But if “use as a mark” includes “use to identify yourself” and consumers think that talking about a brand indicates that you are affiliated with the TM owner, then we’re back to the problem.

A: Nah, use in commerce can cut this off. (I think this is not entirely responsive. What does affiliation, sponsorship, etc. mean under this definition? Isn’t it gone or subsumed into source and therefore meaningless?)

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