Friday, October 06, 2006

Works in progress: Mark McKenna

Mark McKenna, Trademarks and Contextual Meaning. Past project: consumers historically weren’t at the center of TM law, and we need a new way of attacking TM law other than saying that it’s gone way beyond consumer protection. It has always been producer-centered, with a thin candy coating of consumer protection to make it more palatable. There has been a substantial change in TM law’s focus, but not the one we’ve been thinking about.

Rather, the concept of the interest to be protected has changed. Trade diversion was the core of the old system; the new system is about protecting brand value. Traditionally, the mark’s purpose was matching, mediating a relationship between consumers and producers. It had no value in itself, only in preserving a flow of consumers finding the products they wanted. Schecter comes along and says that TMs have value in themselves, for reasons related to changing marketplaces. “Buick” means cars and related concepts, rather than simply linking car buyers to GM. Thus its ability to mean deserved protection from TM law.

The mark is now the center of a set of associations, with products receding to the background (if not gone). The mark has many meanings, but none necessarily has anything to do with the product. Thus it can attach to anything and can be harmed by distant uses.

Potential harm to the brand seems to be conceived in two ways, beyond trade diversion: (1) use by a third party not under the control of the mark owner that might create new negative associations that would impact the brand in its own markets – (a) could affect ability to recall the mark unaided, (b) could create new substantive associations; (2) use by a third party limits the scope of possible expansion of the brand, which these days is infinite.

In this new conception, all harm is dilution. Even if we’re saying consumers are confused about association in a distant market, the reason we care is that it might change the nature of what the mark means, which is dilution.

This conception ignores contextual elements, which the marketing literature recognizes. In marketing, context is everything. Most TMs have non-TM meaning. Apple isn’t just a computer (it’s a dessert topping and a floor wax!). Non-trademark meanigns compete if we are exposed to a term in a vacuum. At least Schecter was trying to focus on made-up words. Of course we’re not exposed to marks in a vacuum, which is why it’s not that hard to make the right associations and avoid the wrong ones.

When you start looking at context, whether an association will transfer from one product to another depends on fit between the products, the appropriateness of the association in the second context, whether cues are present to activate an association, and the dominance of the brand in its category (the effect of which is somewhat ambiguous). Dominance is a function of what brands you remember when cued with the category. Marketers want category dominance, but there’s some evidence that, regardless of dominance, use of the mark in other markets actually helps recall of the parent by activating its associations.

The tools of TM law map poorly onto these concepts. Strength measures exposure, not relative dominance. Distinctiveness has nothing to do with dominance; there are many dominant TMs that aren’t particularly distinctive in a TM sense – that’s because marketing is about brands, not about marks. Fame in the new statute isn’t defined with regard to market segment. We need some new tools.

Q: Marketing factors look like likelihood of confusion factors – “fit,” cues, etc. – are consumers going to make the association?

A: Except that in a lot of cases the legal analysis would find confusion where the marketing analysis would find no effect on the preexisting brand. Even if consumers think there’s a relation, they just don’t care – but the likelihood of confusion factors say that the plaintiff wins in that case.

Q: Migrating associations over time: brand managers think of brands as elastic and changeable. How does that affect the analysis? There are a wide range of brands – “Betty Crocker” doesn’t need much context to be identified.

A: Yes, there are a wide range, and a bunch of the dominant ones need context!

Q: Note that online, you may just get a contextless search using a TM term. That may affect the analysis.

A: Maybe. (But as questioner Eric Goldman has so persuasively written, lacking context for the mark doesn’t mean that we should infer confusion or dilution – other explanations are a lot more plausible when the term is used in guiding search.

Q: Is this about confusion or dilution?

A: Once you get to sponsorship/affiliation confusion, it’s only a baby step to dilution, so we should be concerned about those kinds too.

Lemley: Once you take the consumer protection out of the equation, why is it that we want to protect brands? There must be some subset of legitimate interests in brand value?

A: There’s a way to write consumer-centric TM law. But descriptively consumers haven’t been and aren’t central. McKenna doesn’t have a great answer yet – part of this is looking at the harm on its own terms. He’s not sure there’s something real left over.

Lemley: Yeah, but without the consumer, all we’ve got is “If value, then right.” (Which we know is bad.)

Q: What about free riding?

A: It’s not a harm to the market. It’s a potential harm to an individual market participant, but not a legitimate basis for law

My question: This objection to dilution makes a lot of sense. But it doesn’t deal with a separate big dilution problem: Insinkerator, Caterpillar, others who huff and puff when there are negative or humorous references to them. That relates to the fact that this presentation didn’t once use the word “tarnishment.” If you buy the associational analysis, are you committed to tarnishment?

A: Hoping no one would ask that. Harm to a brand can occur from acts that change the associations connected with the brand, so tarnishment is a potentially legitimate harm. There are reasons not to provide a legal remedy, such as the First Amendment, but at least it exists.

Q: That goes back to the question of why we care. Even if the brand owner is harmed, what justifies a cause of action? Maybe the answer in blurring is search costs.

A: He’s trying to call the search costs justification into question. The marketing literature says Buick for shoes won’t interfere with search for Buick for cars.

Irene Caboli: What other reason to protect TMs is there other than consumers? Property rights justification – people will make more of whatever they have rights to.

A: Sure, TM is industrial policy and we should speak in those terms.

Q: Is that compatible with the constitution?

A: Commerce clause these days allows a lot of breadth.

Gerard Magliocca: The standard being applied in many cases is not a reasonable consumer standard, but a dumb consumer (15% dumb) standard. You may have to deal with that to get where you want to go.

A: The marketing literature imagines consumers to be pretty dumb.

Q: Even if associations are nonharmful or beneficial, it involves risk. Why should mark owners have to bear the risk? Especially when noncommercial contexts increase risks to marks more these days, TM owners need some help from the commercial side.

A: Good question – relates to Mark Goldman’s point about mark elasticity over time. We may want to allow mark owners to control (to the extent possible).

My question: I can’t make the property rights justification work for brand value, which isn’t about maximizing the number of TMs created (the usual, not-very-good property justification) but about maximizing the associations in a person’s brain. What does it even mean to maximize brand value? How do we compare that to a situation in which there are a lot of brands, each with some value? It seems incoherent to me.

A: He’s trying to take the harms seriously and to talk about whether they’re real. Maybe they won’t justify legal protection, but we need to define them first, with less speculation.

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