Georgia IP conference, part 2

Panel 2—U.S. and EU Perspectives on Trademark and Design Law in the Next Decade

Annette Kur, Senior Research Fellow, Max Planck Institute for Intellectual Property and Competition Law; Associate Professor, Stockholm University

Two regimes coexisting at the community level and harmonized national law; both regimes are interlinked in terms of prior rights in one creating barriers to rights in another.  Obtained by registration alone, but may be lost with nonuse for five subsequent years.  Geniune use in one member state is enough to maintain a community TM.

Cluttering of register/genuine use of CTMs as problems of convergence?  How to manage the relationship between the two tiers.

Other problems: Aesthetic functionality: courts shouldn’t just look at distinctiveness, but also at competitive aspects of design.

Coexistence: there is a growing feeling that national offices, especially in smaller countries, are at risk—applications are declining drastically; an existential threat.  Fees for CTM are relatively low (not 27x national fees); “genuine use” is too easy to establish.  Result: clutter, impediments for the accessibility of new marks.  (I wonder if the EU needs a Dawn Donut rule for the new millennium.)

Her study finds: cluttering is a relative not an absolute problem.  There are not “too many marks” but “deadwood” may be accumulating.  Marks may look like huge ocean liners but have the scope of little boats.  In general, agents/attorneys are more concerned about cluttering than mark proprietors.  The density of registrations and problems therefrom appear to vary between industry sectors and types of marks.  No hard evidence that new marks were substantially hampered by clutter.  Note, though that EU system is less transparent than US system.

Proposed solutions: demand declaration of use or intended use.  Stakeholders considered this unacceptable.  Heavy burden on rightsholders and authorities if taken seriously.  If not monitored thoroughly, it would be without effect.

Benelux rejected EU’s statement that use anywhere is use everywhere, now that we have 27 members.  Political clash raging now.  Political boundaries can’t be decisive for genuine use.  Should you have to use in 2 countries?  Must accept unitary use, but should distinguish between national and community TMs.  Approximate American system: if a mark is maintained as a CTM but is just used in one corner of the market, bona fide user should be able to make a remote use in the EU, drawing inspiration from Dawn Donut (great minds think alike, and so do ours?).  Met with much resistance/criticism.

Too much money at stake to change now; EU’s basic philosophy is that oversized/unused registrations should be left for the parties to sort out.  But will that work?

Stacey Dogan, Professor, Boston University School of Law

Looking back: Legitimate goals of TM law—critics say courts have been diverging from those goals in various ways that harm speech and competition.  TM law run amuck, in need of discipline.  Legal developments are a bit more complicated: SCt has taken 5 substantive cases in the last decade, and the TM holder has lost every one.  But what about the lower courts? It’s significant that the highest court has been sending signals to constrain TM in important ways. After a fairly extraordinary and steady expansion in the 80s and 90s, the Court retrenched in important ways and started to draw some lines in the sand. Lower courts too, while we’ve seen some foolish decisions, have responded to some of these warnings.  Cases involving intermediary liability, for example.

To be sure, TDRA did expand TM protection, doing what it probably intended to do last time, but even that codified some important limits on the rights of famous TM holders.

That doesn’t mean that the critics are wrong—TM owners’ claims and C&D letters; outlier decisions that are just wacky; rogue prosecutors: criminal case in Mass. against someone selling T-shirts with the logo of the team the Bruins were playing against in the Stanley Cup with a big red line across it, and the claim is that this was criminal counterfeiting.  Still, we need to ID our successes in restraining or disciplining the growth of TM rights. IIC looked like it would kill comparative advertising on the internet, but in practice it’s been applied more sparingly, and more courts seem to be rejecting it.  Product design protection looked like it was going to threaten competition in all sorts of ways in 2000, but courts have really put limits on it since then.

What strategic lessons can be learned from these successes?

Courts and legislatures are instinctively troubled by what they perceive as unjustified free riding on TM owners’ goodwill: cybersquatting, merchandising, IIC, post-sale confusion, and even some cases involving dilution and critical commentary only make sense as responses to free riding. Yet that doesn’t dictate the outcome in all cases.  Courts favor defendant when they appreciate a precise and tangible social value promoted by the unauthorized use of the mark.  Comparative advertising: courts feel that promotes competition and is therefore good (RT: though note in Europe they often don’t!). Courts also feel that it’s important to protect the boundaries of other regimes, specifically copyright and patent—Dastar and Traffix.  Parodies: courts often think it’s speech. 

Courts don’t seem to see the value of merchandising, and some other uses like some parodies.  We need to accept the burden of persuasion that’s been thrust on us to limit rights and point to the social value of the use. We need a broad interdisciplinary conversation about the roles of brands in our society and how different uses of brands promote or discourage certain social goals.  If the last century has been the century of the brand: vessels of social status.  Draw in social scientists to engage with the implications of this development and with the impact that unauthorized uses might have on us as citizens, consumers, speakers.  We ought to address these particular uses of marks that promote identifiable social values: expressive works, show affiliation with TM owner. 

Q for Kur/Dogan:

Dogan: particularly interested in European perspective on use.  Was the concern about use, or about tying use to particular products and services, which can prove to be a morass?

Kur: both. Goes back to conceptual difference between the two systems.  TM in Europe is considered “IP rights,” just like patents/industrial designs.  Acquired by registration, full stop.  Changing that by bringing the concept of use into the acquisition/maintenance stage, with a public interest in whether the mark is in use, is pretty alien.  American system would be more than just adopting use to increase transparency; would move to regarding TM as a market mechanism rather than as an “IP right.”  Though we are getting closer in fact.

Dogan: there is an impulse that anyone who has value they can plausibly claim for themselves has an individual right to that value (as against the community that has actually contributed to producing that value)—see it also in debates over taxes/Tea Party—a lot of hard work by a lot of different people contributes to success, but we have adulation/fetishism of the individualistic notion of success, translating into the commercial context with TM law.  Why should someone be able to sell a Red Sox T-shirts?  Those players work hard.

Kur: this is a gut feeling, shared by many. Then one could ask: should that be law?  If we want a sensible economic rationale, the answer may be no; but that’s not the only possible justification.

Madison: the brand itself is assigned a kind of independent, abstract agency. The human agency is concealed; doctrine pushes us not to look at who is doing what behind the curtain. Things have to be justified relative to the brand/mark, and not with respect to the people.  Why aren’t we bothered by the fact that there are 18 coffee shops within a block of each other, even though some are free riding on the work of the others in finding a good location?  Should focus on the disappearance of agency.

Stowel: ECJ emphasizes the function of the TM; doesn’t that go in the other direction, at least potentially, if it’s not interpreted formalistically?  Does the idea of the function of the TM play some role in US law?

Kur: Function does work in some important cases, e.g. Google. But have also misused it in L’Oreal case.  That’s why we need more clarity/transparency, to create clear rules about what the functions of TMs are.

Dogan: American law has traditionally had a normative vision of what TM is supposed to be for, and scholarly commentary has tried to encourage courts to get back to that vision, and SCt has tried to be somewhat true to that.  Fair competition; limited when it impedes rather than promotes competition.  And that comes close to the idea of function: function is not threatened when used in an expressive way.  But it is a manipulable notion.

Rebecca Tushnet, Professor, Georgetown University Law Center

Design right: undertheorized in US law.  Design patent rights are visual only, which may help explain that, because courts and lawyers are really uncomfortable with visuals.  Not a substitute for copyright because despite the language of substantial similarity a different, tighter standard seems to apply: having a design patent on a Superman lunchbox wouldn’t protect against a lunchbox using a different image of Superman, whereas a character copyright would so protect (assuming there are no public domain issues).

Substantial activity around verbal descriptions, increasingly required in trade dress.  Design patent law now disfavors verbal descriptions.  Problem of verbal overshadowing.

Can you make infringement judgments just by looking at pictures, though?  Design patent argues that you can by triangulating versus prior art.  Look at whether the accused design is similar to the patented design only because of features that also appear in the prior art.

Uniqueness is the key to design patent.  Key distinction from copyright, which refuses to protect ideas, even if unique.  Even if you invent a new genre, you only control your expression in that genre (e.g., resurrected dinosaur amusement parks).  Thus I disagree with Samson Vermont who wants uniqueness to be a measure of copyright rights—a convergence of TM dilution-like ideas with copyright rights, which I think is a mistake. If you want such rights over your unique expression, get a design patent, but its scope will be limited in other ways.

But looking at pictures alone can’t fix everything: how do you triangulate when the accused design is similar but not identical to the patented design and also similar but not identical to the prior art?  What is the scope of the design patent then?

Mark P. McKenna, Professor, University of Notre Dame Law School

John Carter of Mars: early books in the public domain.  Complaint by Disney against comic company making John Carter comic books: Disney claims copyright infringement of later books and also TM infringement/false designation of origin, alleging that John Carter has secondary meaning and that using him in a work sends a false message about origin. Similar claims of both copyright & TM infringement with a self-published novel about Marion Zimmer Bradley’s Darkover.  Plaintiff is claiming rights originating out of their own expressive work and trying to enforce them using the Lanham Act.

University of Alabama sued an artist who paints pictures of Alabama games, claiming that use in picture infringes trade dress rights in uniforms.

Kai Aspire makes street art, including parody of Marlboro trade dress.  Got C&D saying the content designates the source of the work and therefore infringes.

Dastar applies: cases where the plaintiff asserts claim for TM rights arising from their creative work.  Second class: rights arise more conventionally, but D uses TM in creative work and that allegedly indicates the source of the work.  Dastar doesn’t necessarily do a good job of dealing with either one of them.

Dastar says “origin” means physical origin of goods/services.  In the Alabama case, the plaintiff argued that people would be confused simply by seeing the Alabama marks and recognizing the content.  He thinks that’s ruled out by Dastar, but it’s too easy to plead around: people will see the marks and be confused by the presence of the marks about the source of the physical goods.  That argument isn’t available to the plaintiff in Dastar because the content doesn’t have secondary meaning.

But if it’s that easy to avoid Dastar, then Dastar is practically meaningless.  Note that John Carter involves use of public domain material.  If Disney can say people will be confused about source because of the content of the physical books, then we get a major conflict with copyright law.  Imagine that Steamboat Willy were to enter the public domain.  What stops Disney from claiming that, because Mickey Mouse is in the video, people will think it’s the source?  No relevant sense in which Steamboat Willy would be in the public domain.  This is kind of what went on in the Betty Boop case.

Dastar should rule out these claims.  We could talk about this in two different ways.  (1) We could say any claim is barred if it’s based on the defendant’s use of content of the plaintiff’s that originated in a copyrighted setting.  (A kind of functionality defense, building on the old Nabisco case.)  (2)  We could focus on defendant’s use: when a defendant is using the mark in its own content, that can’t found a TM claim: mere content can’t be an implicit indicator of source (Rogers v. Grimaldi type). Either would be sufficient to bar the claim in these cases.

Dastar doesn’t itself help with the Alabama case unless we use description (2).  Think about the defendant’s expressive use. Confusion can never be actionable when it arises from implicit source suggestion created by content.  If you do it the other way, and focus on barring anything that originates in copyright, the scope could be broader than we want/courts would accept—ads, labels, etc. are copyrighted.  (2) is less clearly motivated by copyright channeling, but it does take care of the problems.  Also, a lot of these uses are potentially insulated by a bunch of other TM doctrines—Rogers v. Grimaldi/First Amendment/nominative fair use/maybe even descriptive fair use.  But real payoff to thinking about this under Dastar: it’s a tool that gets cases dismissed on motions to dismiss.  None of the other doctrines work like that—they entail balancing/appeals.  (Is that true of Rogers?)  The plaintiff is trying to control the creative content of the defendant’s work through TM law.  Leaves room for explicit claims of licensing/false advertising.

Miller: suppose I express something by putting a logo on a shirt in a different color?  Does that get the benefit of the limit?

McKenna: my rule does put pressure on what’s expressive, and that’s important, but that pressure already exists.  Court in Alabama case thought that putting a painting on a mug was different than creating a poster from the painting.  Appeals court was clearly sympathetic to that view.  Could say that confusion can’t arise from an input, but he thinks that might be too broad. Still, there are easy cases that could start at the core.

Miller: also look at Saderup/Jonah Hex cases, where California SCt has also created an expression line and seems to deal with the same issues.

Madison: Insoluble problem because so many of the cases come out of visual arts settings. They’re problematic because courts aren’t good with visuals. Visuals have a kind of psychology/authority distinct from text.  So long as you have consumer expectations/reaction built in to TM, the test will always be suboptimal; there is a plausible argument that consumers look at the picture and think it comes from Alabama.  Dastar puts pressure on the idea of having a product trade dress right in these kinds of images to begin with.

McKenna: the right is in the uniforms, then trying to enforce that against the paintings. It’s a strange use of secondary meaning, which seems to mean “recognize the content” not “recognize the source.”  Trying to draw a line independent of consumer expectation, if what consumers think is driven by implicit suggestion in the painting. Would apply to word marks in titles and songs too.

Kur: European perspective—would have to use the functions of the TM.  Any detriment to the origin function?  Danger is that once you can make plausible case of consumer assumption on basis of content that there’s a license, you’d be forced to find infringement. 

McKenna: would translate impairs function to “causes confusion.” Our courts think that confusion harms the TM’s source function, even though that’s not always true, and that leads to a feedback loop of ever-spiralling confusion. We need some clear lines.  You can also teach consumers here: they shouldn’t rely on the presence of a mark in content to convey source.  There’s no real harm to them.

Afori: Substantial similarity is a metaphor used to introduce things like defendant’s state of mind—no objective standard.

Me: I agree entirely—substantial similarity is a mess.

Janis: all important design patent cases are going to involve cases in which the accused design varies somewhat from the patented design.  There is a tradition of a penumbra around the design.  And a penumbra around prior art.  Substantial similarity comes out of a really old case during a period in which the SCt was using “substantial similarity” even in utility patent cases—did not have the vocabulary we have now about element by element infringement.  Note, however, even if you had strict infringement, there’d still be room to claim infringement by the doctrine of equivalents.

My apologies, but I have a DMCA comment due and will do a bad job on the next panel.