Saturday, February 17, 2007

Commercial speech conference: Mary LaFrance on dilution law

Mary LaFrance, Are Dilution Laws Unwarranted Restrictions upon Commercial Speech? Traditional TM and unfair competition laws easily survive First Amendment scrutiny because they target false and misleading speech, like defamation laws. Dilution laws, however, are not aimed at false or misleading speech, but at plugging a perceived gap in trademark law and allowing owners of famous marks to protect against nonconfusing uses that nonetheless affect the value of the mark. Examples of blurring: the song “Barbie Girl,” which leads consumers to think both of the song and the doll when they hear later references to Barbie; Utah’s advertising for “The Greatest Snow on Earth.” Other scholars describe this as a free-rider problem.

First Amendment concerns apply to a greater extent in the dilution context than in the traditional trademark and unfair competition context, because dilution laws lack the justification of protecting consumers, which provides built-in First Amendment insulation. Dilution penalizes nonfraudulent commercial speech, and protects only the TM owner. (Note: There is a growing tendency to justify dilution on consumer protection grounds with a theory of “internal search costs.” I’m writing about this now. I don’t think it solves dilution’s First Amendment problems, but one reason the theory is attractive is that it appears to rebut LaFrance’s position.)

The federal dilution statute has a generally effective exception for noncommercial speech referencing famous trademarks. Most state laws lack such an exception, and expressive works have unconstitutionally been subjected to liability under state laws by speech-insensitive courts. And of course the line between commercial and noncommercial speech can be elusive. People often enjoy ads as entertainment, and ads can challenge sensibilities and spark debate, as for example the Snickers Superbowl ad featuring an inadvertent male-male kiss that has been attacked as homophobic. Advertisers increasingly sponsor shows and integrate their products with storylines. Moreover, commonplace merchandise – coffee mugs and T-shirts – often have expressive meaning, whether it’s displaying the name of a sports team or making political commentary. Yet courts frequently treat these items as less entitled to First Amendment protection than traditional forms of expression. Dilution laws will chill these nontraditional yet highly effective forms of communication.

Today, however, LaFrance wants to focus on the most mundane commercial speech. If dilution laws are justifiable at all, it must be because they are justified with respect to mundane commercial speech – using marks to identify goods and services. The interest in protecting trademark owners, however, is insufficient to justify these restrictions absent a consumer protection rationale. This is especially true because injunctive relief is preferred in dilution cases, and because courts allow injunctions on proof of “likely” dilution without proof of actual harm. Blurring and tarnishment are ill-defined, and it’s difficult to see how one would find evidence of actual dilution.

Absent fraud, what property interest could justify denying commercial speakers’ ability to choose marks? Under Central Hudson, the asserted government interest must be substantial. The regulation must also advance the asserted government interest, and the government must demonstrate that the harms it identifies are real and that the restriction will alleviate those harms in a material way. Finally, there must be a reasonable fit between the ends and means – a tailoring requirement.

LaFrance believes that dilution flunks the substantial government interest prong. She is also interested in whether dilution is content-neutral. Tarnishment is not content-neutral, since the purpose is to allow the TM owner to prevent criticism and control how people feel about the mark (ultimately, this is also true of blurring, which can also dull the golden glow of a strong mark). This is why Christine Haight Farley calls dilution state-enforced mind control. LaFrance is less sure about blurring, since the defendant’s message is simply “buy my goods,” and the blurring doctrine isn’t designed to suppress that message, but rather to bar the use of a particular shortcut – copying a famous mark. (If the tarnishing use is pure commercial speech, this would also seem true of a tarnishing use – Tiffany’s strip club, for example, is using free riding to sell its product and only incidentally tarnishing the Tiffany’s mark. But perhaps this reduces to the question of whether there can be a tarnishing use that does not also blur.)

In copyright, the Supreme Court made clear that damaging a work’s reputation through parody is not tortious, but merely an expression of opinion. The same is true of tarnishing use; the government has no interest in suppressing such commentary, even in commercial speech. What about blurring? There’s never been any proof that a mark loses value by being shared. Free riding is not the same as stealing existing market value from the TM owner.

Perhaps it would be better to dispense with injunctive relief and require proof of damages. But legislative amendment in this direction is unlikely. Thus, courts should refuse injunctions on First Amendment grounds. Damages are available under the federal statute for willful dilution, if proved. If we did this, we could find out whether there is any harm from dilution, and maybe we’d get grounds for injunctive relief. LaFrance suspects, however, that no harm arises from dilution.

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