Sunday, December 10, 2006

Clarisa Long on dilution

Session 2 of the NYU conference on dilution: Protection in practice: Legal and evidentiary tools for defining the scope of dilution law.

Clarisa Long, Columbia University School of Law: What we see with dilution is push and pushback between Congress and the courts of roughly equal magnitude, and relatively quickly; we don’t see this in patents (where courts have been dominant) or copyright (where Congress has been dominant). In TM, courts have been actively shaping the law and Congress has responded.

Long has done empirical work on enforcement of the FTDA over its first 9½ years, looking at reported cases, set forth in greater detail in her excellent article on the subject. Except for willful dilution, the only remedy in a dilution case is an injunction, which makes a nice empirical on-off measure of success. There’s a sharp and steady decline in willingness to grant injunctions for dilution. It starts at about 54% just after enactment, going down to 12% by 2005. She also sampled 742 unreported dilution cases from 10 district courts around the country with the largest TM dockets. In unreported cases, the same pattern repeated: almost 50% at the beginning, down to 14% by 2005.

She took out domain name cases to see if cybersquatting was the cause, but the same general result persisted and in fact became more pronounced.

Questions: What kind of doctrinal moves are courts making? And why are TM owners bothering to bring cases? If the enforcement is dropping that fast, the parties should internalize that and the quality of claims that are brought should improve.

For the first few years, courts say: "we don’t like the result in this case, but we’re following the terms of the statute." From 1999-2001, you start to see more rhetoric saying that Congress can’t have intended this result, refusing to grant an injunction but not really explaining why. After that, judicial creativity starts to reveal itself and courts add flourishes: no protection for non-inherently distinctive marks; no protection for trade dress; no protection without actual dilution; etc. Courts also steadily raise the ground level by raising fame requirements.

Why are parties continuing to bring dilution claims if they know or should know the deck is stacked against them? Purely subjective sense: The quality of the claims did rise a little, but not enough to offset the downward slope of judges’ unwillingness to grant injunction. Nobody pleads dilution as a standalone claim. It’s with at least one other thing, usually confusion, along with state unfair competition/tort claims. The marginal cost of pleading it is just very low. The cases are moves to maintain market positions; plaintiffs are using dilution law as a form of competition law.

Without exception, by the end of her studied period, the only time courts would grant injunctions was when there was some sort of counterfeiting/consumer protection issue.

In the TDRA, Congress pushed back – not all the way back to 1996, but strengthening the statute in some ways and internalizing other limitations adopted by courts (such as the bar on niche market fame). One thing that’s received less discussion is that Congress specifically provided for protection of trade dress, rejecting the First Circuit’s rule against same. Free riding is now out as a theory on which courts can base protection. Of course there’s still room for courts to interpret and push the statute around. Use in commerce will create many future opportunities for interpretation.

Predictions: Surveys are going to be back in. This statute is more likely to be stable than the FTDA. Courts have less ground on which to push against the statute, but at the same time it gives them interpretive leeway (on what counts as blurring), so courts may not feel the need to carve out some territory for themselves by just making up new requirements.

Specific issues: the weight of inherent distinctiveness; clever theories of what constitutes blurring and tarnishment, which may allow courts to expand or contract protection; use in commerce.

What concerns her the most: how courts will interpret and apply the exceptions for speech/expression.

My thought: The three-part story of mechanical application giving way to creative judicial invention of new requirements is a bit like the story of DMCA anticircumvention law.

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