Iowa Trademark Scholars' Roundtable, Session 3

Session 3: Trademark Use, Unfair Competition Law and Other Causes of Action

Introduction: Robert Burrell

Australia’s had a TM use requirement since 1905, and a modern doctrine of TM use for at least 50 years. The temptation is to take that experience and try to apply it to the US. We need to be careful about how we use comparative material; IP scholars too often take an isolated provision from someone else’s law and compare to an equivalent without asking whether the provision does the same job in both jurisdictions. Confusion doesn’t necessarily play the same role in other jurisdictions as it does in the US; it’s not the same touchstone of liability. That’s partly because registration has played such a different role outside the US. Common law: registration gives a narrow but very strong right; the plaintiff simply didn’t have to demonstrate confusion. So in those jurisdictions there’s a temptation to try to mitigate that nearly strict liability.

In Australia, the scope of registration has expanded, but confusion is still not a key trigger of liability, and courts are trying to retrofit the infringement test to build in a confusion requirement. TM use provides one way of accommodating confusion.

Is TM use anachronistic? Not at all. It plays a key role in confining TM protection. It’s not an attempt to reimpose technical requirements like affixation—it doesn’t work like that in Australia at all. The Australian experience bears out many of Barrett’s points about the competition-preserving elements of TM use. The Fender case—an attempt to prevent resale of second-hand guitars: the courts used TM use to protect that market. Johnson & Johnson case: a registration for caplets. Courts used the TM use doctrine to protect defendants who were using the invented term in a descriptive way.

Mothercare-Othercare case: an attempt by a clothing store, Mothercare, to prevent publication of a book called Mother Care/Other Care, a feminist argument that non-parental care was a fine thing. The store argued that its customers would be horrified by that argument. Free speech concepts were vindicated by application of the TM use doctrine despite Mothercare’s registration of its mark for, among other things, books.

Also courts can use TM use to positively shape consumer reactions: courts accept short-term consumer confusion for other interests.

Confusion weighs heavily against a finding of no TM use, however. The doctrine’s attractiveness is its flexibility. It’s most helpful for fashioning very clear exceptions to liability: second-hand markets; use on T-shirts; use on book covers. Parliament often responds by codifying the decision—comparative advertising, second-hand markets, and others. Is there anything about TM use that makes it uniquely suited to this role? Possibly not; but it works in practice.

Historically TM use has performed many diverse functions. Barrett’s list of factors might move us away from that flexibility. He’s also wary that TM use can serve as a gatekeeper outside the realm of very clear exceptions. In 15 cases he can think of where TM use was critical, they were split 8-7 between defendants and plaintiffs.

There are areas where prediction of Australian law is very different. 3-D marks are one example—how do you apply TM use? Use on the internet is another example. The TM use requirement might also have unexpected consequences. In Australia, TM use has contributed to a downward pressure on the distinctiveness test: issuing the registration won’t prevent other traders from using it other than as a badge of origin, so there’s less need to protect other traders by denying registrations. Now Australia accepts ridiculous things as distinctive. We can imagine similar pressure on the functionality doctrine.

We can also imagine TM use feeding back into nonuse cases. If use on a T-shirt isn’t use as a mark, then it’s not use when the TM owner does it either.

Australia has yet to confront Google/keyword buy cases. There’s also no historical contributory infringement doctrine in the way the US understands it.

Historically, deception has been considered a property of the mark, not of the conditions of the marketplace; courts are beginning to broaden into a more general confusion inquiry. TM use builds some of that in.

Eric Goldman: (1) TM law needs better channeling/gatekeeper doctrines. In his mind, the paradigmatic TM infringement is counterfeiting. The further we get from that, the more problematic the doctrine becomes. Principally we use defenses to channel today, and they aren’t enough. Functionality works pretty well in channeling claims to patent; genericide might also be pretty good. Descriptive/nominative fair use, however, are not particularly good or unified, and the burden is on the defendant. TM use promises a channeling function; it’s not an ideal solution.

(2) Looking at TM law as consumer and producer protection. From a consumer standpoint, once we get away from counterfeiting, other law does a lot better at protecting consumers than TM. Contract law, false advertising law, consumer protection law, etc. We need to retire the “order Coke, get Pepsi” example. We already know the retailer can’t do that—it breaches a warranty to the consumer and might be fraud. What does TM law bring to that party? TM law doesn’t need to weigh in, though we might want the producer to have a cause of action.

Producer policing: We don’t even really think of TM law sitting on top of retailers in the way we’ve been dealing with TM law sitting on search engines and other intermediaries. Why haven’t we had a conference on: spitting out a coupon for X when you buy Y; stocking house brands next to national; up-selling (if you like X, try Y); loss leaders—discounting one product to sell others; etc. These practices are ignored by legal doctrines and plaintiffs, who tend not to sue retailers even when it’s clear that someone’s liable. Possibly because so many other doctrines control retailer behavior, like antitrust and false advertising. What can we learn from that? If TM law doesn’t need to govern retailers’ profiting from 3d-party TMs, maybe we can cope with similar practices in new areas.

(3) TM law is not industrial-strength—it’s not good enough to do what we’re asking of it. The statutory drafting is weak—it’s been 60 years and it’s not working any more.

Discussion of Goldman’s remarks focused on the issue that, if we want to segregate behaviors out of TM, we still have the contested question of which behaviors we want to regulate. False advertising; gripe sites; etc. could all be regulated under different laws (or things like gripe sites could be affirmatively approved by different doctrines)—but we need to know what we think is harmful.

Bohannan: Thinking about issues as false advertising changes the rhetorical draw of property, which has important influences on how cases come out. If the paradigm is false advertising, a gripe site seems far from the central case; if the paradigm is trademark as property, then a gripe site seems like unfair use of the mark.

Margreth Barrett: In older cases, someone who made a false representation about source without using the mark could be sued for passing off. That’s been incorporated into the Lanham Act, but we don’t use it much. Focusing on passing off or false advertising would move us away from obsessing about business goodwill and property interests, building in a materiality requirement. In a gripe site case, you’d have to show a separate identifiable misrepresentation other than use of a mark.

Litman: Are you satisfied by how TM law deals with counterfeiting currently?

Goldman: Conceptually, it just fits in so neatly to the utilitarian rationale for TM. The Lanham Act version is serviceable.

Litman: INTA sat down to revise TM law in 1980, which became the 1988 amendments; it had all sorts of Christmas tree ornaments on it. If we were to draft a TM law of 2010, it would look a lot like INTA’s 1980s proposals, and maybe that’s okay; it would probably give a lot of powers to TM owners, as the counterfeiting provisions do now. If we need a revision, we need to think about cabining the scope of reform!

Goldman: Just from a Coaseian perspective, the statutory language is so unclear.

Lemley: But the lesson of legislation is that different language is not necessarily better and introduces its own linguistic ambiguities.

Goldman: It’s true that we need to know what we want before we start on an improvement jag. The statutory language we have now is not helpful.

McKenna: Why not try to address everything in TM and hope for robust preemption? Write TM law to allow keyword ads, and not allow another theory to supplement TM.

Goldman: Agreed, preemption and channeling go together.

Lemley: The move to say “that’s for patent law to deal with” or “that’s for Congress” is usually addressed to a court: it means, “please don’t try to fix the problem [if there is one], and we hope that nobody else will either.” Because we don’t have particularly good standards for figuring out what “unfair competition” is, punting to unfair competition is unhelpful.

Dogan: Our proposal allows search engines can be regulated under the law of false advertising, or even secondary liability for enabling passing off/TM infringement.

Lemley: He’d go further: outside TM law, there’s good reason to have false advertising law, but no reason to have a free-ranging cause of action for unfair competition.

McKenna: Lemley wants us to decide that certain cases are within the domain of TM and are allowed, such that resort to other causes of action is not allowed. Like copyright/patent preemption: the conduct allowed by TM law should not be prohibited as such by other law.

Litman: Congress thought that the Lanham Act would preempt state law, but the courts were in an anti-preemptive period when the issue reached them.

Barrett: We’ve heard ominously little from Dinwoodie & Janis! What’s realistic in terms of changing doctrine? There used to be a specific requirement that goods be similar for infringement, which created problems of its own, and of course TM owners were unsatisfied with that limitation. Materiality might be a possibility to slip into cases, but it might not be enough.

Ten or 15 years ago, courts would just have looked at validity of the mark and confusion. Now, they’re more often also asking about use of a mark. So courts’ awareness has been raised by new types of claims. Now we need to get them to focus on what that use language means. McKenna is convincing in arguing that “use as a brand” is ultimately dependent on consumer perceptions, and so we’re not off the slippery slope. She doesn’t want to find use just because consumer surveys show that people think that use X or Y, like comparative advertising or banner ads, requires permission. (My reaction, of course, is to say that we should use lots of presumptions, even irrebuttable presumptions, to get off the slope.)

Barrett would require some close perceptual connection between the mark and the defendant’s content—not necessarily visual, but something like that. And a distinct commercial impression created by the defendant’s use. She wants a standard that can be applied on a motion to dismiss or a motion for summary judgment.

She also was intrigued by Burrell’s suggestion of a hydraulic effect of tightened trademark use on other standards, like distinctiveness—making it harder for TM owners to win cases on TM use could encourage greater initial grants of rights. (This reminds me of the inverse relationship between protecting trade dress as combinations of features—which are more likely to be nonfunctional than features alone—and finding infringement—which is harder when a defendant copies only some of those features. Courts have of late been coming down hard on plaintiffs on both aspects, so there need not be a tradeoff, but I definitely see the logic Burrell articulates.)

Austin: Dinwoodie & Janis still leave him with the concern: against what are we trying to protect people?

Dinwoodie: It’s better to put the harms at issue on the table, and we can only talk about them in specific: the harms/benefits of comparative advertising. That’s why it’s more useful to focus on the particular practices on the back end, rather than sorting practices out based on some concept of “use.”

Dogan: But certain behavior hasn’t historically been thought of as branding behavior, and we can point out to the courts why that’s so, and why we require branding.

Janis: He’s concerned about the subtleties of alternatives, like materiality: we’d have to make difficult decisions about what kind of evidence we need—is materiality a requirement of specific consumer perceptions, or is it a proxy for something else? He hasn’t seen a specific enough alternative. (Comment: This strikes me as requiring perfection from alternatives when his proposal is at least as messy.)

Lemley: We could have a doctrine for pictures of buildings in public places, and one for domain names that aren’t part of the core URL, and one for search engine uses, and one for taking advantage of preexisting confusion, and one for every other use that we think is ok, but (1) there will be lots of loss in the interim, and (2) the people who will get the benefit of carveouts, especially if they’re statutory, will be the big players like Google, not the people who want to build FedEx furniture. A broad TM use doctrine gives coverage to things that historically were never sued over.

Austin: Another way to say it: what’s wrong with blunt instruments? This isn’t surgery. They may be over or underinclusive. If they’re overdetermining, what’s the loss? That’s Lemley’s point: the chilling effect without TM use, even with the availability of surgically accurate instruments down the pike in defenses, outweighs the benefits of targeting. Most of the time the harms Dinwoodie & Janis talk about don’t seem that bad: so you hear about another pizza store when you’re searching for one in particular.

McKenna: The bluntness depends on whether it’s conceptual or functional assessment. Whether a design indicates source is actually a very fine-grained assessment.