Tuesday, April 03, 2007

What Ifs? Trademark Law II

Barton Beebe, Benjamin N. Cardozo School of Law, What if the Supreme Court Had Affirmed in Dastar?

First: the Court held that “origin of goods” refers to producers of tangible goods, not any idea, concept, or communication therein embodied. Thus, Dastar need not attribute to Fox its copies of a series Fox formerly produced. The Court admitted that some reverse passing off might be allowed by this ruling, especially with communicative products, but the alternative was to create a mutant/perpetual patent & copyright law. Moreover, the Court didn’t want to put defendants in the position of tracing the source of all the ideas etc. from the public domain in its products. Future defendants would be in a double bind; attribution would create a risk of passing off liability, and omission would be reverse passing off. The Court doesn’t give an affirmative reason for ruling in Dastar’s favor, but a bunch of negative reasons for ruling against Fox.

What might the Court have done differently? Ruling in favor of Fox can be justified through goodwill: someone else is gaining the goodwill from Fox’s product. And that might create a false expectation about the future quality of Dastar’s products. The Court could have ruled narrowly, remanding the case for evaluation of the TM aspects – was there any real evidence of consumer confusion about source? Fox made no showing of confusion – consumers might not care about or consider the source of the expression. The Court could have rejected the physical/communicative distinction – we don’t think that the maker of a watch invented the watch; we might not think Dastar was the source of the footage.

A much better way to rule in favor of Fox: Even if consumers don’t care, the Court could have ruled prescriptively that consumers should care about origin and source of ideas, innovations, expressions, and the rest. Beyond issues of goodwill and search costs, consumers should be taught in general how little in IP is knew. Culture is almost entirely recombinant. IP tries to efface tradition. If we take attribution seriously, we’d encounter a huge thicket. But attribution doesn’t equal authorization. Dastar was an expression of the forgetfulness of modernity – we no longer care about the geneaology of things or ideas, but what they can do for us. History is bunk. We say that to avoid property rights, but at the same time the Court is radically effacing tradition.

Imagine a world in which attribution is more important than progress, in which commodities must tell their origin stories. (I’m reminded of the discussion of GIs, and origin stories, at the gender conference a few weeks back.) It would be sort of like open source software. It could help to defetishize commodities, so that they no longer seem to appear as if by their own nature on the store shelves. The tennis shoes we wear come from Nike. We don’t know what that means, but we certainly don’t imagine them coming from sweatshops overseas. The fear: that forgetfulness is shifting over into intellectual property as well.

“I created it, it’s mine” is a powerful claim. But maybe if we insisted on footnotes we’d be less likely to grant control rights. We’d tear up ideas about novelty, originality, independent creation. Dastar is a recent chapter in the fetishization of IP, even though Scalia’s opinion is strongly materialist in its focus on tangible goods. Ideas are allowed to seem as if they spring from nothing. Information seems to be alive and searching for us. This is a bad idea, because we are alive and ideas are objects. We should see them as property, not disembedded subjects.

John T. Cross, University of Louisville, What if The Trademark Cases had been decided the other way?

After the TM cases, Congress waited until 1905 to bite the Commerce Clause bullet, though there was a proposed constitutional amendment (to carry out international treaties!) to grant the right to protect TMs.

There are two tracks for the Court to have upheld the Act. (1) Under the Commerce Clause: could have avoided tooth-gnashing about the Commerce Clause for the next 40-50 years. As for TM, the 1870 TM act was incredibly radical: you could register based on use or adoption – no 100-year-wait for ITUs.

(2) Under the IP Clause: Kevin Saunders’ notions of alternate worlds are very important here. TMs could be considered writings by an author. Or you could say that the Clause doesn’t require originality. For the first, a TM is a form of communication. A writing under the IP clause is something that communicates. Consumer Reports explains product attributes; so too does a TM communicate attributes and source. A musician borrows existing notes and arranges them in a new way. Likewise, a TM owner may adopt an existing term, but uses it in a new expressive way.

The second argument would be that originality isn’t a constitutional requirement. The TM Cases themselves set out that point, but the Court’s reasoning is facile. “Discoveries” is loaded with newness, but “authors” and “writings” aren’t. The purpose those terms serve is to limit the power granted “to promote the progress of science and the useful arts.”

Under this second, more radical argument, what would IP law look like today? It might not look all that different. Databases would be different. But that’s pretty marginal. All the IP clause does is empower Congress, and Congress wouldn’t necessarily have gone out of its way to grant copyrights to random nonoriginal works. It would have made Feist different, though it could have been a statutory interpretation case.

Lisa P. Ramsey, University of San Diego School of Law, What if there were no First Amendment distinction between commercial and noncommercial speech: would trademark law be constitutional?

Mostly, yes. It would raise serious questions for certain trademark doctrines.

Most TM cases involve commercial speech and misleading use of a TM. If TMs aren’t being used in a misleading manner, you have to go to Central Hudson analysis (though courts don’t). Usually courts don’t use an independent First Amendment defense, but incorporate various doctrines to limit TM rights, and Congress does the same thing. Courts go out of their way to characterize speech as commercial when they’re going to find for the plaintiff.

Without Central Hudson, all this is cast into doubt. What level of scrutiny would be applied? Start with the government’s purpose: content/viewpoint regulation? In San Francisco Arts & Athletics – the Gay Olympics case -- the Court applied O’Brien intermediate scrutiny analysis to the noncommercial elements of the speech at issue. That assumes content neutrality and might produce results very similar to Central Hudson. Yet, as Eugene Volokh says, TM cares about the communicative impact of the speech, so that seems content-based. It’s like regulating the use of profanity in public. That would mean applying strict scrutiny unless the speech is otherwise unprotected.

Some have argued that Turner scrutiny should apply in copyright – if the government is allocating speech entitlements, you use intermediate scrutiny, but rigorously to make sure the government is getting it right. That could be the case here as well.

What about a threshold requirement for misleading use? Would you ask first whether the use was misleading, then apply strict scrutiny? Or would you start with strict scrutiny and say that the government interest in suppressing misleading speech is compelling? Scholars disagree over whether case-by-case or wholesale analysis is preferable. But either way, misleading speech is unlikely to be constitutionally protected.

Ramsey agrees that IP laws are content-based, or at least deserve Turner scrutiny. Effects on TM doctrine: Substantively, TM can offer a good fit between the government interest in regulating TMs and the law, whether that interest is protecting consumers, encouraging the production of goods of consistent quality, or protecting producers’ investment in goodwill. Congress would, however, have to set forth exactly the interest it was trying to protect to survive narrow tailoring analysis.

Possibly unconstitutional doctrines: Protection for descriptive TMs, since it’s not misleading to accurately describe the qualities of your products. Protection for more than one mark per brand – product name, but not slogan or multiple slogans. Dilution! It regulates nonmisleading uses. An expanded descriptive fair use doctrine might be required.

Procedurally, prior restraint doctrine could be applied to all TM cases, not just noncommercial uses.

Rebecca Tushnet, Georgetown, What if comparative advertising were infringing?

Start with a heresy for a US lawyer: You can have a free market economy without comparative advertising. There’s a robust debate in the marketing literature over whether comparative advertising is even a good idea for a challenger brand.

Background: in 1969, the FTC decided to encourage naming competitors in ads because names were more useful to consumers than comparisons with “Brand X.” There were no barriers in US TM law, because of decisions like 1968’s Chanel v. Smith, in which the 9th Circuit approved the practice of advertising a smellalike perfume. US law doesn’t consider advertising unfair in the absence of false or misleading claims. Even newer dilution laws don’t cover comparative advertising, either by assumption (state laws) or by explicit exception (federal).

An alternative path exists, and was taken by most European and Commonwealth countries, holding comparative advertising unfair for several reasons. First, it disparages the competitor – here disparagement doesn’t have to be false. Examples of conduct held unfair: publicizing a court decision against a competitor; making comparisons of efficacy supported by scientific evidence; posting a sign that says “compare and make up your mind before you buy” (which incurred a 10,000-franc fine in France); and advertising that consuming cookies is more dangerous than breathing secondhand smoke. On the last one, the cookie makers aren’t competitors, and they might well protest that they’re being hauled into a public debate over tobacco in which they had no interest.

Second, comparative advertising takes unfair advantage of a competitor’s reputation. It’s free riding, like initial interest confusion without the confusion. (And since IIC is really initial interest confusion without the confusion in a lot of cases in the US as well, it’s not as far from our system as we might pretend.) Third, comparative advertising creates an inherent temptation to mislead and distort the truth, because people are naturally biased in favor of their own causes, so a comparative advertising ban serves as a prophylactic against false advertising. Fourth, comparative advertising takes a competitor’s property in its TM. Fifth, comparative advertising is against general commercial propriety. A ban protects sellers from outsiders who don’t play by the rules, and indirectly protects consumers because a seller who rides roughshod over competitors’ interests is likely to do the same to consumers.

NB: I am not saying I agree with these claims; they are my summary of reasons given to ban comparative advertising.

In recent years, Europe has seen some loosening: the 2001 European Directive approved of some comparative advertising, though the restrictions still seem odd to US TM lawyers. Examples: comparisons have to be objective, material, relevant, and verifiable. No taste tests, no puffery, no “if you like X, then you’ll love Y.” You can’t discredit or denigrate a competitor’s marks or goods. You can’t compare products with different designations of origin. You can’t take unfair advantage of a competitor’s mark or designation of origin. You can’t present goods as imitations or replicas of goods bearing a protected mark. Even under the Directive, it’s unfair to advertise cheaper prices on glasses without disclosing a difference in the lenses.

What if this had been the rule in the US? My story is that it would no longer be, not after NYT v. Sullivan and the rise of protection for truthful commercial speech. Sullivan is the core of the modern mythos of the First Amendment; the more you look like the NYT, the more First Amendment protection you get, and advertisers making truthful claims that anger competitors look very much like the NYT. Especially once Virginia Pharmacy entered the picture, comparative advertising bans would have been obvious candidates for constitutional invalidation. Indeed, the pharmacy board’s concern in Virginia Pharmacy – that price advertising would wrongly induce consumers to focus on price at the expense of service and would harm small pharmacies as against large chains – is exactly the kind of concern that justifies comparative advertising bans.

Under those circumstances, and to the extent that the ban was explained as a feature of trademark law, the First Amendment would have arrived at the core of trademark law much earlier, and it’s not clear how much would have survived. The history of the First Amendment is one of imperialism – once-robust fields reduced to shadows of their former selves, much to the surprise of practitioners and experts in those subjects. Blasphemy, obscenity, libel, privacy/intentional infliction of emotional distress – all have found themselves minimized when doused with the battery acid of the First Amendment.

The one thing trademark law might have going for it is the concept of property, which serves to fend off First Amendment challenges – you don’t have a First Amendment right to use my printing press without my consent. But, San Francisco Arts & Athletics notwithstanding, I don’t think property would (or will) ultimately protect trademark from First Amendment attack, because the structurally similar interest in reputation – which can be seen as a property interest – has not been enough to preserve libel law.

Q for Beebe: What about trying for the best of both worlds with an attribution misuse doctrine? You get attribution rights if you’ve attributed to everyone in your chain of creation.

Beebe: Sounds cool.

Lemley for Ramsey: Why isn’t dilution unconstitutional even under Central Hudson? You can’t stretch property rights too far.

Ramsey: True, dilution is already suspect. Heightened scrutiny would make courts ask what Congress is really trying to do.

McKenna for Beebe: How would consumers learn that attribution isn’t permission?

Beebe: The hard way. There’d be confusion for a while.

McKenna: If not backstopped with a rule barring Fox from suing, consumers will never learn that Dastar doesn’t need Fox’s permission.

Beebe: The Court could have set out statements a secondary user could include. A norm of attribution as in open source software could develop. The Court could also have set out factors, as in KP Permanent, without absolute rules.

Vetter for Beebe: The open source license implies authorization because of its context; citing Mark Lemley doesn’t. You could imagine a rule requiring nonmisleading attribution, from which norms could develop.

Beebe: To the extent something is on the market, the implication is that it can be cited.

Q: Assuming the Court followed your approach, even with disclaimers consumers would still risk confusion over endorsement.

Beebe: A bibliography at the end of a book doesn’t imply permission.

My response: This is a prescriptive norm dressed as a rule about consumer understanding. There’s no evidence that disclaimers, disclosures, or other forms of attribution are even noticed by consumers. (And before you trust courts to draft such language, even if you think it exists, take a look at the non-effects of the language the Pearson v. Shalala court thought would be obviously adequate to avoid any deception about the scientific support for dietary supplement claims.)

Beebe: He’s fighting against the modern tide in which attribution isn’t important to people.

Q for Ramsey/me: Isn’t this why the Supreme Court is unlikely to change the level of protection for commercial speech? TM and securities law are the parade of horribles that preserve this otherwise difficult distinction.

Ramsey: The Court would get it right, preserving securities law, as Kozinski & Banner suggested.

Me: I disagree. Kozinski & Banner are disingenous when they suggest that commercial fraud would still be constitutional, so the modern regulatory state would be mostly untouched. Setting aside that political fraud isn’t actionable and assuming that commercial fraud would be, the differences between the common law and modern securities, false advertising, food & drug, etc. regulation are profound, from the replacement of intent with strict liability to disclosure requirements to a variety of presumptions that couldn’t survive strict scrutiny unless – as others have argued – the Court made strict scrutiny a lot more lax.

Congratulations to Peter Yu for an excellent conference, both well-run and jam-packed with good content.

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