eBay and injunctions

Mark P. Gergen, John M. Golden & Henry E. Smith, The Supreme Court’s Accidental Revolution? The Test For Permanent Injunctions, 112 Colum. L. Rev. 203 (2012). Very good article, though I don’t share the authors’ preference for injunctions in IP cases based on “IP is property” reasoning.

Message in (on) a bottle

Schutz Container Systems, Inc. v. Mauser Corp., 2012 WL 1073153 (N.D. Ga.)

(Note: the umlaut was missing in the Westlaw caption.)  The parties make and sell intermediate bulk containers (IBCs), which are used to store and move goods.  They have an outer cage and an inner bottle.  The outer cage attaches to a pallet and can be metal, wood, or plastic, while the cube-like plastic bottle will hold between 170 and 330 gallons.  The pallet and cage help the bottle keep its form and protect it from impacts or contact with other containers.

Schütz is the leading seller of IBCs in the US.  Its new IBCs have metal cages and bottles made of high density polyethylene (“HDPE”) designed to fit in them.  Schütz also sells used IBCs that it has either washed or rebottled (both pretty much what they sound like: Schütz either cleans or also provides replacement bottles).  Schütz marks both the outer cages and the inner bottles with its name.

Defendants Mauser and NCG are affiliates.  They compete with Schütz; Mauser makes new IBCs with bottles designed to fit Mauser cages.  Unlike the Schütz bottle, which is basically flat on all four sides, the Mauser bottle has indentations on its side walls to line up with the bars on the Mauser cage.  NCG reconditions IBCs, which includes washing and rebottling.  The key issue here is “cross-bottling,” which involves putting non-OEM bottles in existing cages.  NCG is the biggest cross-bottler in the US; it generally cross-bottles with Mauser bottles, which it has in ready supply, and with Schütz outer cages.  It doesn’t remove the Schütz name from the outer cage.  According to defendants—though the court says it’s not relying on this—the cross-bottled IBCs have been certified, like Schütz IBCs, for transport of hazardous materials in accordance with the governing regulations.

“Schütz is a staunch critic of the practice of cross-bottling, generally, and of NCG's cross-bottling using a Schütz cage, in particular, summing up its views on the issue as follows: ‘retention of the SCHÜTZ mark on an IBC not manufactured, tested or sold by Schütz confuses consumers, harms the Schütz brand, poses unclear liabilities, and is an extreme and unacceptable risk to consumers.’”  Schütz believes that cross-bottling creates a danger that performance failures of a cross-bottled IBC will be attributed falsely to the original manufacturer, whose certificates may not have been removed.  Further, Schütz contends that cross-bottling confuses consumers about who they should contact for service or information. “Finally, Schütz argues that cross-bottled IBCs are subject to less testing, do not perform as well, and are of lower quality than non-cross-bottled IBCs.”  Schütz has said these things to IBC trade associations and regulatory agencies as well as to customers.

Schütz sued defendants for trademark infringement, false advertising, and unjust enrichment based on defendants’ cross-bottling in bottles still bearing the Schütz mark and on statements that allegedly falsely equated the quality and performance of cross-bottled products to that of a Schütz IBC.  NCG counterclaimed for false advertising and product disparagement.

The court first addressed Schütz’s motion for summary judgment on the false advertising/product disparagement counterclaims.  Some statements weren’t actionable under the Lanham Act because they weren’t made to consumers.  The remaining statements were basically designed to create FUD about non-OEM parts.  (And let me be clear: I have no dog in this hunt and nothing to go on other than what the court says and a general but not strong skepticism about OEM claims to special purity.)  E.g.: “[T]he use of non-OEM parts for certain components means that the entire system can no longer be considered tested and approved: the results of interaction between original and non-OEM components are unknown.”  “Unclear legal, liability, and warranty questions.”  (Sometimes Schütz used exclamation points.)

NCG argued only literal falsity, not misleadingness.  In the full context, the court held, these statements were part of Schütz’s claims for its own decades of experience and safety testing of complete systems.  The court found that Schütz’s basic claims were (1) that an IBC with a non-OEM part “cannot be considered tested and proven,” and (2) that the results of interaction between original and non-OEM parts in an IBC “are unknown.”  NCG argued that this was false, and that cross-bottled IBCs could be considered “tested and proven,” with known interactions.  NCG’s cross-bottled IBCs have in fact been tested and certified to transport hazardous materials in accordance with UN regulations.

Schütz responded that its concerns about “rogue” or improper cross-bottling was shared in the industry.  Moreover, cross-bottled IBCs didn’t undergo the same testing and quality controls as Schütz IBCs.  And as to NCG particularly, Schütz argued that it sells non-UN/USDOT certified cross-bottled IBCs and that, until 2010, neither NCG nor the industry generally collected data about the performance of cross-bottled IBCs.

The court concluded that the statements weren’t literally false.  Many of Schütz’s arguments failed to hold water, so to speak.  Even if there were industry-wide concerns over cross-bottling or if certain cross-bottled IBCs weren’t UN/USDOT certified, that wouldn’t mean that cross-bottled IBCs, “in the absolute, cannot be considered tested and proven, or that the interaction between original and non-OEM parts is absolutely unknown.”  To the contrary, the existence of UN/USDOT certified cross-bottled IBCs disproved the claim that cross-bottled IBCs couldn’t be considered tested or proven, and therefore also disproved the claim that the interaction of original and non-OEM components was unknown.  However, a reasonable jury might conclude that, in context, Schütz was claiming that cross-bottled IBC’s aren’t subjected to Schütz’s internal testing and quality controls (and that the effect of the interaction between OEM and non-OEM parts on performance in those tests was unknown), and thus the statements were ambiguous.  Each statement appeared in the context of a broader discussion of Schütz’s own design and testing process.

One other statement remained: “Unclear legal, liability and warranty questions: … Who is to blame, who is to be contacted?”  The court found that this was a nonactionable statement of opinion, despite NCG’s argument that UN/USDOT regulations governed the relevant legal and liability issues and mande the remanufacturer responsible.  NCG failed to show that the regulations made “legal, liability, and warranty questions absolutely clear as a factual matter. Indeed, as any observer of the legal system knows, the existence of a law on point does not end all controversy or confusion regarding the issue it governs. In other words, while a regulation may exist, reasonable minds can still differ as to the regulation's meaning, scope, or, as in this case, clarity.”  Thus, summary judgment on this statement was also appropriate.

These holdings were also dispositive of the Georgia UDTPA counterclaims as to those statements.  NCG argued that statements to non-customers were actionable as product disparagement under state law, however, and the court agreed: While the standard false advertising provision in the UDTPA tracks the Lanham Act in interpretation, its product disparagement provision requires only publication, following traditional defamation principles.

Schütz then argued that it was privileged to make the remaining statements, each of which was made to a regulatory agency or trade association.  Under the Georgia statute, “Statements made with a good faith intent on the part of the speaker to protect his or her interest in a matter in which it is concerned” are deemed to be privileged communications, provided that publication isn’t unnecessarily made to people other than those whom the publisher honestly believes are concerned.  Each of the statements did relate to Schütz’s concerns with the practice of cross-bottling, which Schütz believed to be harmful to the IBC industry and thus adverse to its business interests.  There was no evidence of dissemination beyond trade associations and regulatory bodies, nor any evidence of malice, and thus the statements were privileged.

Defendants Mauser and NCG also moved for summary judgment on Schütz’s trademark claims.  They allegedly infringed by inserting Mauser bottles into used Schütz cages and selling the resulting cross-bottled product without removing the Schütz mark.  Defendants first challenged Schütz’s common-law rights in the mark, but the court found that a reasonable jury could find that Schütz did have secondary meaning in the name; defendants even admitted that the Schütz name was widely recognized by the relevant customers.  Though they argued that Schütz abandoned the mark by failing to act against other alleged infringers, there was no proof of actual abandonment, nor did they show that the mark had become generic through use by at least six other entities for cross-bottling.  Failure to take action against these (whose number was a matter of dispute), was “woefully” insufficient evidence of abandonment/genericide.

The next question was what the test should be for confusion: the multifactor test?  Or Schütz’s preferred alternative, whether there were any material differences between the parties’ products?  “Material differences” is a limit on the first sale/exhaustion rights that allow people to resell genuine goods.  “[M]aterially different products bearing the same trademark are inherently likely to confuse.”  The threshold for materiality must be kept low because many considerations may influence consumer preferences.  (Here we have an example of a substitute for the confusion test that favors the plaintiff, like some early treatments of domain names/keyword ads.  Despite its longer pedigree, at least with respect to products sold to the general consuming public, this test on its face fails to ask a fairly obvious question: do the relevant consumers know about the material differences and buy the thing anyway?)

The court was inclined to the material differences test, but found that under either test there was sufficient evidence from which a reasonable jury could find likely confusion.  First, there was evidence that the cross-bottled IBC was materially structurally different and tested to different performance standards, “such that retention of the Schütz mark is likely to cause consumer confusion as to the source of the cross-bottled product.”  The UN/USDOT even distinguished using an OEM bottle to repair an IBC from using a bottle from a new source, the latter of which requires recertification before it can be used for dangerous goods.

Likewise, under the multifactor test, a reasonable jury could conclude that retaining the Schütz mark is likely to cause confusion.  Intent: Schütz argued that intent to misappropriate goodwill could be inferred from defendants’ retention of the Schütz mark on their products, and defendants’ use of Schütz’s name in price quotes.  A flyer advertising the Mauser IBC also depicts it next to a Schütz IBC.  The court found this only “minimally probative” of an intent to misappropriate.  “Because NCG is in the reconditioning business, and because it cross-bottles, it is not surprising that quotes to customers would reference cages manufactured by Schütz or other non-Mauser entities. Similarly, given that the parties are competitors, it is not surprising that Defendants would show a picture of its product next to Plaintiff's to highlight the features it contends make its product more desirable. In short, the evidence cited by Plaintiff is equally indicative of an effort to compete than an effort to trade on Plaintiff's name.”  (Equally?  I don’t get how it’s anything other than the clearest possible disclosure of what defendants have to sell.)

The court also found “little to no evidence” of actual consumer confusion, mentioning none.  Instead, Schütz argued that under the material differences test, likely confusion may be presumed. (Because buyers shipping dangerous liquids are completely careless about the source of their IBCs?)  But that wasn’t enough to grant summary judgment to defendants because the marks were identical and the products were marketed through the same channels and to similar customers, so a reasonable jury could still find confusion. 

Defendants argued that no reasonable consumer could be confused given that NCG puts a sticker on the IBCs:  “Remanufactured IBC: Original cage and pallet from Schütz Container Systems provided with a new inner tank manufactured by Mauser. Remanufacturer: National Container Group. Schütz has not reconditioned this product and is not affiliated in any way with National Container Group and/or Mauser.”  Mercifully, the court at least agreed that this sticker would preclude confusion by a reasonable consumer as a matter of law, holding that, to the extent that the foundational Champion Spark Plugs suggested the contrary, that language was dicta.  Champion stated that a change in a product might go so far that retention of the original mark would be infringing notwithstanding use of the terms “used” or “reconditioned.”  Here, however, the sticker went well beyond “used,” and disclosed that the IBC had been remanufactured, with a new inner tank from Mauser, without Schütz’s contribution.  “In light of the sticker's detailed and explicit contents, the Court finds that no reasonable consumer could be confused as to the source of a cross-bottled IBC bearing this sticker.”

There was, however, a genuine dispute of material fact about whether NCG placed the sticker on every cross-bottled IBC it sold.  (By this logic, of course, if NCG showed that it had explained what it was doing to its customers sufficiently that a reasonable customer would have understood, there could still be no confusion as a matter of law.)  Along with testimony generally suggesting that not all NCG cross-bottled IBCs had the sticker, the court also thought that it mattered that when NCG receives a cross-bottled IBC only in need of washing, it didn’t apply its own sticker: “if we place the bottle in the cage, we affix the label. If in six months the exact same container is returned to us, we do not affix a label.”  That was evidence from which a reasonable jury could find that the “remanufactured” label isn’t affixed to each NCG cross-bottled IBC.  I don’t get it: if all NCG is doing is washing and not performing any new alteration, how can it be responsible for any act constituting TM infringement?  Also, presumably that sticker would not be accurate with respect to all cross-bottled IBCs NCG just washes, since there other OEMs and other cross-bottlers on the market, so why should the sticker be applied to IBCs that NCG washes?  That testimony sounds like it’s about the defendants’ process when an IBC, from whatever source, is simply cleaned.  Even if the stickers rub off eventually, I still don’t see how that could lead a reasonable consumer to experience source confusion.

So, despite having kicked out most of the infringement claim, and provided defendants a roadmap for absolute protection going forward, the court let the case limp on.

On to Schütz’s false advertising/unjust enrichment claims.  Schütz challenged claims that defendants’ cross-bottled IBCs were comparable to Schütz’s in terms of overall condition or performance, e.g., “it is assured that every remanufactured IBC has a performance that can be compared to that of a new one”; “This program is your guarantee that the IBC mirrors new units”; etc.  Defendants argued that a number of the statements weren’t disseminated outside defendants’ own corporate entities, and that others weren’t sufficiently disseminated to constitute advertising or promotion since they only went to one or two customers or only to non-US customers.

Schütz argued that statements in documents created for internal purposes only, which were never sent or presented to customers, were actionable because similar statements had been disseminated to customers as part of a broader ad campaign, according to depositions of sales reps.  The court disagreed; “commercial advertising or promotion” requires dissemination to consumers.  “[T]estimony that a general message is or has been conveyed to unspecified customers, at an unspecified time, in an unspecified manner, and by unspecified persons is insufficient to satisfy the threshold requirement of a Lanham Act claim--that the accused statements were made in ‘commercial advertising or promotion.’”  

Were statements made to customers sufficiently disseminated under the standard test for advertising/promotion?  Schütz argued that Mauser used a standard PowerPoint template for its customer presentations, while defendants argued that the identified statements were only made to one or two customers.  A key question was whether the accused statement was part of an organized campaign to penetrate the relevant market, as opposed to isolated statements by sales personnel to individual customers.  Here, Schütz failed to present sufficient evidence that would allow a reasonable jury to conclude that the particular identified statements had been sufficiently disseminated.  It identifed statements made to only one or two customers, and it didn’t put forward any evidencce about the number of potential customers in the IBC market or the size and importance of the customers to whom the statements were made.  (I don’t see why you couldn’t put this evidence together with the deposition testimony that product equivalence in performance would be part of the sales pitch to conclude that a reasonable jury could find sufficient dissemination.)

Defendants sought summary judgment on the remaining statements in brochures and on NCG’s website, as to which Schütz also argued only literal falsity.  These statements claimed that defendants restore used IBCs to their “original” conditions or performance standards, e.g., “We clean it [container] completely, conduct thorough inspections, and replace worn closures, thus restoring the container to its original condition. So you can depend on getting exactly the performance and quality you bargained for.”  Defendants argued that, since they didn’t mention cross-bottled IBCs specifically in these statements, the statements couldn’t be literally false.

The court disagreed: “the statements need not explicitly reference cross-bottled products to be found literally false with respect to them. The statements unambigously assert that NCG restores all of its products to their original condition when it reconditions them. This would include cross-bottled products.”  So, based on the summary judgment, could a reasonable jury find these assertions to be literally false as applied to the cross-bottled products at issue?  Schütz argued literal falsity because the resulting product is materially different: a Schütz bottle has been replaced with a Mauser bottle, when NCG could in theory replace a used Schütz bottle with another Schütz bottle.  The bottle designs are different, and the Mauser bottle’s indentations don’t match up with the bars of the Schütz cage.  Thus, the resulting IBC “is of a different design and cannot be said to have been restored to its original condition.”  This was sufficient for a reasonable jury to be able to find falsity.  As to performance, Schütz also argued that NCG’s cross-bottled IBCs don’t perform as well as the original, according to tests by its expert.  This was also enough to create an issue of material fact.

Defendants also contended that Schütz couldn’t prove injury or a causal link between the injury and the accused statements.  The court held that Schütz wasn’t required to prove actual injury to prevail on a false advertising claim.

Because TM and false advertising claims survived, so did the state law unjust enrichment claim.  There was evidence that defendants benefited from the alleged wrongdoing through increased customer accounts and sales.

Niche fame

Slate article on YKK and zippers: my knowledge of YKK before this came mostly from the case about its failed attempt to use Eflon as a TM in the US.  Despite its fight with the makers of Teflon, it apparently has substantial goodwill in the garment industry.

Political remix video

By way of the NYT, this video on African men and Hollywood stereotypes is a great example of transformative, critical use of footage for commentary that wouldn't be as powerful any other way.

New tip: don't use promotions as a cover for legal investigations

It's bad PR at a minimum, and in some countries you might rouse the relevant competition authority, as Hasbro may be about to find out.

Watch the MPAA grit its teeth

Patriotic bootlegger.

Is a Facebook app inherently commercial promotion?

And will California courts decide to limit the right of publicity to commercial promotion?  It is perhaps of interest that many notable expansions of California right of publicity law have come from the federal courts rather than from state courts.  I wonder if Samsung will remove this lawsuit over its Olympic Genome Project app. 

Settlement agreement not specific enough to bar slamming the "competition"

Cogent Solutions Group, LLC v. Hyalogic, LLC, 2012 WL 1083513 (E.D. Ky.)

Cogent Solutions Group and Hyalogic compete in the joint supplement market. Hyaluronic acid ("HA") is a key component in their respective products. In 2011, CSG sued Hyalogic and another company for misleading ads, primarily focusing on the defendants' use of a "Competitive Analysis Chart" comparing the competing products. The parties settled shortly thereafter, and defendants agreed to remove all copies of the chart from circulation.  They also agreed to refrain from making "false or misleading statements about the other [p]arty's products," and Hyalogic agreed not to say that Cogent’s product Baxyl contained preservatives that break down hyaluronan, a key ingredient.

CSG argued that Hyalogic breached the settlement based on a YouTube video of a speech given by Dr. Karen Brown at a trade show, and based on Hyalogic’s alleged failure to timely remove the chart from circulation.  The court found that CSG failed to prove breach.

The liquidated damages provision of the settlement agreement listed statements that, if proven by clear and convincing evidence to have been knowingly used by Hyalogic in print for sales or marketing purposes, would result in damages.  The statements included claims that Baxyl was not bio-available, couldn’t be absorbed sublingually, or might have a pro-inflammatory effect, along with claims that the human body can only absorb 3 mg or HA or that the joints only need 3 mg of HA.

First, CSG couldn’t show by clear and convincing evidence that Hyalogic was responsible for the YouTube video.  Hyalogic argued that it was posted by an unrelated Malaysian company.  CSG responded that Hyalogic’s website had contact information for many international partners, including Malaysian ones.  That was only enough for a weak inference, not clear and convincing evidence, especially when Hyalogic’s affidavit specifically stated that the only relationship between the companies was that the Malaysian company sold Hyalogic’s products.

Second, CSG couldn’t show that a verbal statement in a YouTube video was “in print.”  Settlement drafters, grab your track changes: “noticeably absent from the plain language of this clause is the term ‘Internet,’” which was especially important because, in another part of the settlement agreement, Hyalogic agreed to make changes on the chart on any future use "in print or on the Internet."  By inference, internet uses weren’t covered by the liquidated damages provisions.

Third, CSG couldn’t show that the statement was used for sales or marketing purposes after the date specified by the agreement, May 17, 2011.  The videos were originally put on Hyalogic’s website in June 2010, and were unchanged after the settlement.  Thus, the YouTube video was “in the public domain” prior to the key date, according to the court.  (I don’t get why this is a separate reason than the rationale that Hyalogic was not responsible for the Malaysian company’s use.)

CSG separately alleged breach of a separate prohibition on false or misleading statements about CSG’s products.  The court again found no breach.  The YouTube statement that Hyalogic’s product is “more than 6 times that of the competition” wasn’t enough: Hyalogic presented a sworn statement that there were at least 13 other liquid HA supplements on the market competing directly with the parties’.  Thus, the YouTube statement didn’t contain the necessary reference to the “other Party’s products”—a reference to “the competition” wasn’t enough.  Likewise, references to “others” who “use preservatives and fillers that break down HA in their product” were insufficient.

Nor did CSG show that Hyalogic failed to make its best efforts to remove the chart attacking CSG from circulation.  It didn’t show a single instance of Hyalogic using the chart post-settlement.

Finally, CSG argued that Dr. Brown’s statements in the YouTube video were false and misleading, such as "you only need ... 3 milligrams."  Even assuming falsity, it wasn’t an explicit reference to CSG’s product, given the other products on the market.  CSG argued that the reference was targeted, because she spoke about "competitors" that "use citric acid and/or potassium sorbate as preservatives," and two out of the three products that contain trace amounts of these preservatives are made by CSG.  But Hyalogic’s sworn statement said that there were 9 such non-CSG products, and there still wasn’t a specific reference to Baxyl.

Publishing exec: why I break DRM

Because s/he wants to read the content.  (At last count I'm now up to 5 e-reading apps on my phone.)  And yet we still need to have DMCA exemption hearings. Thanks, inflexible law!

No "lack of substantiation" claim under Cal. law

Stanley v. Bayer Healthcare LLC, 2012 WL 1132920 (S.D. Cal.)

Stanley brought a putative class action under the CLRA and UCL as well as for breach of express warranty, based on Bayer’s sales of probiotic supplements.  Her doctor recommended probiotics for diarrhea, and she bought Bayer’s caps on her pharmacist’s recommendation.  She also read the outside of the box, which said, “Helps Defend against Occasional DIARRHEA.”  She used the product for 6-7 days but stopped when she got no relief.  Her claims covered the caps along with variants sold as a supplement and as fiber.  All the products prominently claim benefits to digestive and immune health. 

Stanley argued that Bayer’s claims lacked scientific or clinical substantiation.  Bayer moved for summary judgment on the ground that lack of substantiation is not a basis for relief under the UCL or CLRA.  The court agreed that it was the plaintiff’s burden to show falsity or misleadingness, and that there was no private cause of action for substantiation.  Only public authorities can seek substantiation under California law to prevent undue harassment of advertisers and provide the least burdensome method of obtaining substantiation.

The court noted that material omissions could found a private claim if the defendant had a duty to disclose.  Stanley’s basic argument was that the health claims themselves inherently, and here misleadingly, implied scientific substantiation.  In particular, she argued that the claims were misleading because there was insufficient evidence to support the general claim that the product

promoted overall digestive health and helped defend against occasional diarrhea and other gastrointestinal problems, and because Bayer didn’t conduct strain specific studies of the 3 strains of probiotics in combination, as touted on its packaging and in ads.  (The claims included “Contains the most common and most studied bacteria for digestive health (Lactobacillus and Bifidobacterium which closely resemble your body's natural good bacteria),” and “There's scientific evidence that Lactobacillus and Bifidobacterium help relieve gas, diarrhea, constipation and other GI discomforts.”)

Stanley contended that the weight of the evidence from peer-reviewed, double-blind, placebo-controlled studies suggested that probiotics have little effect on digestive or immune health.  However, none of her experts opined that the claims “Helps Defend Against Occasional constipation, diarrhea, gas and bloating” or “promotes overall digestive health” were actually false or misleading. 

Scientists are likely to sigh at this, but the court concluded that “At his deposition, [one of plaintiff’s experts] testified that probiotics may provide benefits to some people,” based on his testimony that the results of studies varied dramatically.  Asked, “So in essence are you saying here, then, that probiotics provide health benefits to some people and … don't provide health benefits to others?” he said, “You can't say, because of the variation. There's no—you can't scientifically conclude anything.”  Asked “So you can't rule out that probiotics do work for some people?” he said “It's inconclusive.”  xkcd covers this better than I ever could, on the related issue of significance.  (This is not to say that there weren’t weaknesses in the expert opinions; the court suggested that there was some gobbledegook involved, and the experts apparently didn’t review the articles on which Bayer relied for its claims.)  Another plaintiff’s expert more clearly said that probiotics can benefit some people and harm others, or help the same person at some times and harm at others—though the court thought that was detrimental to Stanley’s case, it seems to me that a reasonable person might consider there to be a significant difference between “this product helps support digestive health” and “this product might help support digestive health or might harm it, and we don’t know how to predict who experiences which result.”

Because the court thought this case was essentially about lack of substantiation, it just said that there’s no private cause of action for lack thereof, rather than addressing the idea—which competitors have occasionally had some success with in Lanham Act cases—that a health claim inherently contains implied representations about substantiation, which can then be misleading.

Stanley also couldn’t show a genuine issue of material fact about whether Bayer complied with federal standards for substantiation, assuming that this would be “unlawful” under the UCL.  Because it’s a dietary supplement, Bayer isn’t required to do much.  It submitted the structure/function claims to the FDA as required and the FDA didn’t object.  Plaintiff’s expert lacked the regulatory expertise of Bayer’s expert and couldn’t explain why Bayer should have been required to do more.

Stanley’s reading of the statement “helps defend against occasional diarrhea” as promising that she would get relief from her diarrhea wasn’t evidence of likely deception.  The side panel said “[t]his product is not intended to diagnose, treat, cure, or prevent any disease,” and her doctor, though recommending probiotics, didn’t recommend Bayer’s product in particular.  Nothing on the package etc. represents that it would relieve diarrhea; a reasonable consumer wouldn’t be misled into believing that it was a diarrhea medication, especially since there are a host of products on the market to treat ongoing diarrhea.  Thus, there was no evidence that the product didn’t work as advertised, “to promote overall digestive health and to defend against occasional diarrhea and other gastrointestinal issues.”  Nor did Stanley identify exactly what Bayer should have disclosed other than that, to be effective, the product would need to be taken continuously for an unknown period; the packaging itself says it’s a “daily” or “everyday” supplement.

The court then turned to Stanley’s arguments that the packages affirmatively represented that Bayer conducted clinical studies of the combined effectiveness of the 3 probiotics.  The back of the 45-count caps says “[c]ontains a proprietary blend of 3 clinically tested strains of good bacteria.”  But the back of the 30-count caps, which Stanley bought, didn’t have that language, and she didn’t recall reading or relying on any claims other than the diarrhea one on the front of the box.  Bayer made a similar claim to pharmacists, but not to the public, and there was no evidence that Stanley’s pharmacist saw the letter.

Stanley’s express warranty claim also failed because nothing on the product warranted that use for 6-7 days would relieve her diarrhea.

New stromboli in old boxes

Leonetti's Frozen Foods, Inc. v. American Kitchen Delights, Inc., 2012 WL 1138590 (E.D. Pa.)

Leonetti’s sells stromboli throughout the mid-Atlantic region, and from 2000-2007 made stromboli for Maglio Fresh Food.  Defendant American Kitchen makes ready to eat foods as private label/store brands.  In 2007, it began making stromboli for Maglio, which distributed them through the same region.  Leonetti’s alleged that American Kitchen’s versions had different ingredients and nutrition facts, were folded differently, looked substantially different, and were made using less meat and less expensive ingredients, but American Kitchen nevver advised its customers of the change.

In 2010, Leonetti’s allegedly discovered that American Kitchen was distributing stromboli under the same packaging that Leonetti’s had used to distribute Leonetti’s stromboli under the Maglio brand.  Leonetti’s argued that it didn’t give defendants permission to use the images of Leonetti’s hand-made stromboli to market the new products.  American Kitchen’s use of pictures, ingredients, and nutrition facts for Leonetti’s-made stromboli allegedly prevented customers from learning that the stromboli had changed and allowed American Kitchen to continue to benefit from the goodwill created by Leonetti’s previous production of premium, hand-made stromboli for Maglio, allegedly misleading retail and food service customers.

American Kitchen allegedly learned of customers’ complaints about the new products in 2007-2008.  Sysco requested samples from American Kitchen and Leonetti’s.  American Kitchen allegedly obtained Leonetti’s samples to use as a model, and its samples then contained more ingredients, were handmade, and were folded differently than American Kitchen’s actual stromboli.  But for this deception, Leonetti’s alleged, it would have obtained the Sysco account, and Leonetti’s alleged that American Kitchen did the same with samples to other customers.

In 2010, the USDA investigated American Kitchen to see whether it used accurate and properly approved labels for the stromboli it made for Maglio, and found that American Kitchen lacked proper approval.  Despite this, Leonetti’s alleged that American Kitchen made at least 3 shipments of stromboli using rescinded labels, and never stopped sending stromboli to Maglio using the rescinded labels.

Most of a year later, after having obtained new label approval from the USDA, American Kitchen began using new boxes.  Leonetti’s alleged that the new boxes used pictures that were substantially different from the products inside, with samples submitted to a photographer that contained additional ingredients and were folded differently than the actual stromboli.  Leonetti’s alleged that this misrepresentation continued to harm it by confusing consumers and increasing American Kitchen’s sales.

First, the court noted that district courts in the Third Circuit have applied an “intermediate” pleading standard to false advertising Lanham Act claims (why not TM claims? because TM is favored over false advertising, apparently; don’t ask for a reason).  Since Leonetti’s alleged that American Kitchen made false statements, it was important to provide sufficiently detailed allegations to allow a proper defense.  Leonetti’s allegations were indeed sufficient to meet this standard. Further, Leonetti’s sufficiently alleged literal falsity: that the photos and nutritional and ingredient information on the packages didn’t correspond to the stromboli in the boxes.  It didn’t matter that Maglio’s name was on the packages and not American Kitchen’s, since false representations about another person’s goods are also barred.  Moreover, other cases have found that it’s false advertising for the defendant to use pictures of a plaintiff’s product to sell its own when the pictured product wasn’t identical to the one the defendant was prepared to deliver.  American Kitchen argued that the photos were generic, but they were “clearly intended to represent the stromboli contained inside the boxes—the stromboli manufactured by American Kitchen—when, if Leonetti's allegations are true, they did not.”

The court also found that the photos and information on the boxes were sufficiently alleged to be “commercial advertising or promotion,” using the standard test: Leonetti’s plausibly alleged that they were “designed to influence customers to buy” and “sufficiently disseminated to the relevant purchasing public to constitute advertising or promotion within the industry” (as one would think the package would have to be), for over four years.  Photos and labels are primary means of promoting the stromboli when customers can’t taste before purchase.  “If the packaging in question were merely functional and not intended to also promote the product within, there would be no need to include anything other than identifying information on the box (i.e., a label unadorned by photographs, noting only that the box contains ‘stromboli’ and including required nutritional information would suffice). Instead, on the package in question, embellished text next to a glossy photograph of a cheese and pepperoni filled stromboli induces potential customers to ‘Taste the Tradition.’”

As one does these days, American Kitchen also argued that Leonetti’s lacked prudential standing.  The court disagreed: Leonetti’s alleged that both manufactured strombolis for sale to food service and retail customers, whether under their own names or private labels.  Moreover, the court found that the Conte Bros. test was satisfied: (1) the nature of the alleged injury was lost sales/goodwill due to false advertising, exactly what the Lanham Act targets; (2) the asserted injury was sufficiently direct; (3) Leonetti’s was proximate to the alleged injurious conduct given that Leonetti’s alleged a direct impact on its ability to sell its own stromboli; (4) even if damages were speculative, they were sufficiently pled; and (5) there was little risk of duplicative damages or complexity in apportioning damages because the market for stromboli was not alleged to be complex and recognizing Leonetti's right to bring a damages action was not likely to “subject the defendant firm to multiple liability for the same conduct and result in complex damages proceedings.”  (Even recitations of successful traverses of Conte Bros. make clear how overlapping the factors are and how inappropriate these considerations are for motions to dismiss.)

American Kitchen also tried the doctrine of primary jurisdiction, suggesting that the complaint should be dismissed because there was no allegation that the FTC had determined that the USDA label on the boxes was misleading.  Nope.  “Although conclusions made by the FTC or the USDA with respect to information included on the stromboli labels might ultimately affect American Kitchen's defense against Leonetti's claims, the issue before me is not whether the labeling on American Kitchen's stromboli complied with FTC or USDA regulations.”  Falsity/misleadingness was a matter within the court’s competence.

challenge to "innovative" claim isn't barred by Dastar

Abarca Health, LLC v. PharmPix Corp., 2012 WL 1123611 (D. Puerto Rico)

Abarca sued PharmPix and others for copyright infringement, Lanham Act violations/trademark infringement, misuse of trade secrets, and so on.  PharmPix counterclaimed for violation of the Sherman Act and Puerto Rican law; the court dismissed most of the counterclaims, but I’m only going to look at the Dastar aspect of the ruling.  “These claims arise out of a tangled dispute regarding the parties' conduct in the pharmacy benefits industry, touching on their alleged use of computer software, misappropriation of business plans, and communications with prospective customers.”

PharmPix makes web based pharmacy benefit management (PBM) software, for which it has registered a copyright.  Abarca allegedly told various “peers and clients” that it was going to sue for copyright infringement, allegedly to prevent PharmPix from doing business.

PharmPix sought to dismiss the Lanham Act (and coordinate Puerto Rico law) allegations as Dastar-barred.

Although Dastar purported to allow certain false advertising claims, it “did not invite plaintiffs to recast their false authorship claims in the style of false advertising. Courts presented with similar claims post-Dastar uniformly look past the plaintiff's nomenclature and test whether the ‘characteristic’ or ‘quality’ that is allegedly misrepresented is simply the product's creative authorship.”  Abarca’s claim was that PharmPix misleadingly claimed to have an “innovative” “proprietary” software application.  While “proprietary” is just about ownership, Abarca’s challenge to “innovative” could fall outside Dastar, though it might fail at the summary judgment stage.

TM Scholars' Roundtable part 3

Session 3: Lessons from Boundary Problems

Introduction: Bill McGeveran

What’s on the other side of the boundary?  It’s not the case that overlap alone for its own sake is problematic.  Why is TM the bad guy here that has to give way?  The value judgments are in play because TM’s structure is (1) less explicit about freedom to copy as a value, with the bargain expressed more explicitly with other regimes, and (2) less certain about what TM is for.  Tidy boundaries are a means not an end, embodying value judgments.

We spent a lot of time on aesthetic functionality and Dastar.  Other overlap issues were mentioned—what about TM extensively overlapping with other regimes when we let it do so?  E.g., defamation and dilution.  Celebrities in ads: federal and state infringement, federal and state dilution, false endorsement, defamation, and right of publicity are all possibilities.  Maybe we don’t have the same concerns about freedom to copy the celebrity, but why not talk about our willingness to get rid of these overlapping rights (no int’l barriers to doing so in comparison)?  Maybe we don’t think that the redundancies there are troubling—value clashes/inconsistencies.  (That’s unlikely to be true!  TM’s boundaries look a lot better than right of publicity’s, though.)

Boundaries also help you think about what the interior is.

Jessica Litman: goal is to improve results in real cases/prevent bad cases from being filed.  Legal realism must creep in: if TM owners can tell a free riding story, finders of fact will be sympathetic.  (I wonder how inherent this is.  There are some people whose efforts seem to be free to ride on, because of ideas about contract and (presumed) consent.  I don’t think those have always been the same sets of people even in the past 100 years, so is there room for change?)  Some best tools are not doctrinal but stories of overreaching and greed.  The flyonthewall case: the court says “no further.”

International harmonization might help sell the idea of limiting §43(a) to false representations and not protecting unregistered marks; it’s not very doctrinally pure, though, and she’s grabbing at an available tool.

Primary Discussants: Michael Grynberg

Distinction between learning from another doctrine and blindly importing from another doctrine. Consider the regulatory nature of a lot of consumer protection law—often administered by an agency. One boundary in IP should be a greater appreciation of the power dispensed by courts/legislatures to private actors to exercise a kind of regulatory power. We have skepticism about this delegation in admin law; have evolved doctrines to ensure that they exercise it legitimately.  You see some attempts to limit the scope—Tushnet’s written about prudential standing in false advertising—but the principle that we should be careful who we let muck around with the free market—is a sound one.  This may also help explain the appeal of materiality.

Copying elements of trade dress/keywords as a way to communicate category similarity: I am like X.  Mostly people in the room think that’s salutory, and if communication of similarity is false we can deal with it through false advertising. If you’re communicating “I’m a generic of drug X,” we might have more discomfort offloading that to false advertising but since we have the FDA behind this it’s not troubling.  We are making an implicit judgment of the quality of an underlying regulatory regime in another area.  If such cases are common, which they might or might not be, we have to consider the state of play in other areas of law (*cough*antitrust*cough*).

Mark Lemley: Tendency to interpret boundaries as “limits.”  Boundary against what?  It’s one thing to say TM stops and something else starts, and another to say TM just stops (and then perhaps the right to copy/compete begins).  Articulating what’s on the other side of the border helps our theory of why we want to limit TM law.

Group of TM lawyers: no one actually questioned supremacy of patent/copyright in cases of conflict.  Why?  Could tell a constitutional story, but not clear that works given the Commerce Clause.  Could tell a historical story: longer pedigree, though that too isn’t necessarily satisfying.  Could tell an earlier vesting story: you don’t get TM until well after whatever actions would have vested a patent/copyright, though after ITU it’s not clear that story works either.  Maybe TM just has a less well articulated theory of the public domain—but he thinks patent and copyright don’t have them either, and to the extent articulated it’s been done so in a statutory vacuum.

We do presume TM dominates state and common law doctrines, and to the extent that unfair competition/misappropriation runs afoul of TM’s animating principles, TM wins out. Maybe a federalism story makes sense, but he’s been thinking about maybe a numerus clausus principle for legislation protecting IP. Maybe we need not one but some limited number of some legal regimes and 10 causes of action might not be the right number.

Starting to question whether we need 2 functionality doctrines. You can articulate the rationale/desirability of functionality in a single unified way, which might help a.f. not be treated as the poor stepchild.  Part of that articulation might not actually be most desirable as a boundary condition, channeling patent/copyright and TM, but instead as an intrinsic limit. Boundary conditions make the implicit assumption “there’s got to be some law out there that protects this thing,” but that’s corrosive to the idea that market competition is the default unless there’s some significant market failure.  Right to copy as a right against which we must bump up is needed if that’s the boundary.

Dogan: patent in particular tends to come in tension w/TM only in product configuration trade dress. Assumption that patent trumps comes from idea that TMs are about information, and there’s some widely shared skepticism about how much info is actually conveyed by design and how hard it is to convey that info by alternate means. Thus the benefit gained from TM feels thin relative to the costs of granting TM protection over things that could threaten patent values.  False positive mistakes are costly and true positives are not all that beneficial.

Lemley: he gets that because the protection is at the fringe of TM anyway; but what about copyright?

Dogan: much harder in copyright.  Had different instincts about copyrightable works created as logos v. use of Snoopy, created for other purposes, then transferred into TM by licensing.

Functionality convergence: attractive but comes with risks.  It does seem like the right thing to do but Lemley thinks it will make a.f. more robust and it might actually water down Traffix functionality if courts have to define it.  We think: any time a feature adds utility, it should be functional. That’s appealing, but as a practical matter courts have too much accumulated case law that it’s ok to pick an attractive feature as an identifier and that we should encourage people to choose attractive trade dress. 

McKenna: you don’t have to make judgments about other regimes.  You should say ‘this doesn’t belong in TM, and if some other system isn’t working then we should fix that system instead.’  Why TM gives way: it’s TM that has grown into patent’s space and not the other way around. It’s not that patentable subject matter has expanded, it’s encroachment into patent’s area.  Lemley: copyright is tougher.  McKenna: agreed.  We have trouble figuring out how this would work in copyright.  But one could imagine focusing on boundaries in copyright law—useful articles; limiting protection for logos (which used to be the case!).  Staying out of each other’s space need not create a rank ordering.  (Feminist me is skeptical of this claim.)

Grynberg: Litman says courts don’t necessarily care about working doctrine pure; Grynberg thinks that they can be attracted to doing so in appropriate circumstances.  That’s a consideration in thinking of “this isn’t TM’s job” as an argument.

Kur: in logos/labels, copyright has grown into TM, but that’s not watertight.

McKenna: he’s just making a descriptive argument.

Kur: don’t build a hierarchy on that gut feeling. 

TM law doesn’t protect something valuable as such/achievement as such. Everyone is free to copy the thing designated by the TM, but must use another sign to indicate origin.  Thus the interference with first-order creation/competition is less.  Only true insofar as acquisition of TM remains competition neutral in the sense of not giving competitive advantage to registration. General theory is that this is not the case because TM signs exist in infinite numbers and a different one isn’t competitively disadvantageous. But that’s not true—some signs are limited.  Colors, descriptive designations, shapes.  Implications: no registration for configuration without secondary meaning, contrary to current EU approach.  (Discussion: there is not formally a post-sale confusion doctrine in the EU, but some suggest it is coming soon.)

Dinwoodie: before functionality was added to defenses to incontestability, US courts got around that by calling functionality descriptiveness.

Kur: “used as a mark” can also be deployed this way. 

Bently: ECJ has ruled out descriptive use in this way in a case concerning toy replicas of cars (though did use “use”).

Barrett: Rosetta Stone district court was following that instinct, but used the wrong label.  More sense to say use is a fair use.  It’s the nature of d’s use that matters.

Dinwoodie: benefit is also that it doesn’t knock out p’s mark in its entirety.

McKenna: it doesn’t fit in any of these existing boxes—it’s all the same instinct, d’s using this for something other than source.

Dinwoodie: Kur suggests you can fit it in the box if you understand “descriptive” in a non-literal sense.

Kur: words and drawings can all be descriptive.

McGeveran: so the Louboutin red sole is describing red?

McKenna: if you can use descriptive this way, why not functionality?

Dinwoodie: Vornado uses descriptiveness this way.

McKenna: interesting that we want a harder meaning for functionality.

Dinwoodie: but that’s because of the consequence of invalidating the mark.

McKenna: that need not be the consequence!  (This is my Louboutin argument.)  Courts are the ones that created the consequence.

Bone: but we run up against the expectation that it would invalidate the mark.  So why not shift over to fair use, which might also accomplish the result more effectively.  True that we don’t have to make functionality work that way.

Lemley: but to use fair use we have to change the parameters of that doctrine too.

Dinwoodie: true, requires more expansive reading; but if courts are conceiving of product designs as descriptive, it’s not alien.  Shakespear/Silstar was a classic example because they couldn’t use functionality as a statutory matter at the time.

Dogan: if there’s actual passing off, the court should be able to require labeling. A cleaner way of getting there than saying the thing is protectable and that people acting in good faith to copy it.

Litman: cleanest way is to say these uses don’t cause likely confusion.

Lemley: but we have to take that to trial.

Heymann: we want to say even if they do cause a little confusion it’s still fair use.  Descriptive fair use is like that, use of generic terms with de facto secondary meaning, etc.  Unify a bunch of different kinds of activity that are appropriate even if there is some confusion.

Janis: design patent law: there are two types of functionality—a line of cases that uses functionality to restrict scope, as well as to invalidate rights.  So it’s conceivable to do that though it’s sub silentio.

Bone: why copyright ought to trump TM in certain respects: one intuition is legislation v. common law. We think of copyright fair use as being a fairly well crafted statute that tries to strike a balance—at least a legislative effort—between protection and copying.  While the Lanham Act is so heavily common law; there may be less willingness to intrude in copyright.  (But as Litman has pointed out, most of the expansion of copyright came from the courts too, so that is a story but it doesn’t track the cases.) 

Boundaries are, in theory, defined in more general terms than other limits, which tend to be more case by case.  Our boundary doctrines tend to be case-focused though.  Some case-specific things may not be about boundaries.

Sheff: going back to distinction between info with value in itself and info with value that can be realized in other ways because it’s functioning as source indicator and there’s always another source indicator you can use. Does that mean that these distinctions should be embodied in limits on subject matter? Scope?  Defenses? Just the remedies?  Maybe the last is the most promising.

Grynberg’s point on consumer protection regulation: the interesting Q in that boundary is what conditions are necessary to get the administrative state to move on consumer protection, which may be industry specific.  Industries in which TM is alive and well, but there’s some other uncorrected market failure requiring command and control.  TM not only serves as info facilitator but can also serve to manipulate consumer decisions in ways that lead to undesirable results, and food and drugs are clear examples of that.  Marketing can influence decisions even if not “unfair competition” in ways that lead to very high social costs. That might trigger the regulatory state. The boundary problem is identifying those industries/those conditions.  Perhaps we need to say TM is not enough and we need additional measures. 

Dinwoodie: note that in Australia Google got hit by the regulators for unfair competition in keyword ads.  So we have to ask institutional questions of competence.

Both Dastar and Samara, the Court says, don’t worry there’s another regime out there to take care of abuse. This helps make design patent relevant—but are we comfortable that design patent is effective in the US?

Why prefer patent/copyright to TM?  Maybe we need to kick stuff out of copyright where TM does a better job. Two examples of kicking copyright to design instead.  Britain has a slightly strange rule that Kur now thinks invalid: restricts term of copyright once there’s an industrial application. If you look at conceptual separability: the idea was to push these claims into the design regime, not destroy them entirely. 

Lemley: Omega is an obvious case—copyright is treading on TM’s territory.

RT: Actually, when it comes to tobacco and marketing unhealthy foods to kids, activists and increasingly regulators, though mainly not in the US, say TM should not be allowed.  Plain packaging and ad restrictions are about pushing TM out of the realm of certain segments of the market.

My note re: functionality.  McCarthy attempts to unify it too!  He does it differently than watering down Traffix functionality, but by talking about market demand and pretending there’s no such thing as a.f. while still using the a.f. cases to define the scope of functionality.  That’s worth noting as a possible outcome of unification as well.

McGeveran: will courts go for the broad definition of “utility.”  We talk about what “courts” generally would be willing to do; the Supreme Court might well be willing to do this if there were proper briefing.  If we had an impact litigator willing to try to fix TM, you could design the kind of case to address these problems.  The SCt seems to have a very different view of freedom to copy than the circuit courts, especially the Fed. Cir.  Doesn’t know why that is, but descriptively true, and it’s a prescription for anyone who actually wanted judicial reform.

Lemley: possible theory: SCt views its job as articulation of principles across cases, at least in theory. Lower cts view their job as resolving cases on facts in front of them. Latter makes you more susceptible to bad facts/free rider feelings.  Clearly not always true, but harder to articulate “free riding bad” as a general principle.

McKenna: note that these cases are never close. 

Janis: SCt also sees itself as the arbiter of boundaries—taking cases framed as boundary cases. 

McKenna: and it sees patent cases and the 7^th Circuit doesn’t.

McGeveran: boundary framing as a useful rhetorical tool in amicus briefs and so on?

Austin: we are compartmentalizing what we see as the SCt’s drive to enforce a right to copy from regulatory responses that occur outside the IP appellate decisions.  (Also Golan, which can be seen as affirming such a regulatory response.)

McKenna: dangerous to keep things in TM because we think the other schemes aren’t working because of the collateral damage to TM. 

Dinwoodie: there has to be some affirmative justification for applying TM—secondary meaning of a product design, for example.  But since that also creates problems we can think about whether there are other better regimes.

Sheff: the problem is that allowing TM protection for harmful medicines/devices leads to bad results, which can be dealt with not by limiting TM protection but by setting up a collateral regime to address the bad results in the industry.

RT: I think there’s some ground here to think about the right of publicity/false endorsement, which we haven’t talked much about—courts are hopelessly confused about whether false endorsement is a matter of §43(a)(1)(A) or (a)(1)(B), and that’s no surprise.

Dinwoodie: but it’s picked up because there’s some justification in TM.

Dogan: bleed between false endorsement and the right of publicity. NCAA cases: you see the players saying ‘the NCAA is getting paid, so we should get paid too.’  That’s not without intuitive appeal.

McKenna: that’s the basic RoP theory.

Dogan: but it’s reinforced by the breadth of TM rights—if TM holders are getting paid, that’s juxtaposed to the unpaid use of the players’ images.

Lemley: but that’s contextual.  Universities sell T-shirts and tickets, and no one looks at that and says the students have a RoP to share in those benefits.

Dogan: but it’s a self-reinforcing.

Lemley: and it’s about framing.  In many other contexts we accept the asymmetry.

Heymann: you see bleed the other way too; in L’Oreal you see the 7^th Circuit say the RoP requires false endorsement.  (That’s TM trumping RoP, it seems to me, if we want to talk about supremacy.)

Bone: suppose a TM owner licenses a symbol, but it turns out that there’s no protectable mark. Is the contract still enforceable?  (E.g., the Facebook ToS.)

McKenna: licensee estoppel?

Lemley: that was thrown out in patent law because of a policy judgment that we want people to challenge overbroad/invalid patents.

McKenna: hasn’t been accepted in TM cases.

Bone: Market solutions can come in to provide consumers with info, not just regulatory solutions.

McGeveran: a lot of RoP cases would be subject to nominative fair use; you’re reporting facts about Lew Alcindor; the court’s just not interested in that as a limit.  Interesting that a regime on the other side of TM that doesn’t have baked into it any acceptance of freedom to copy, resulting in no pressure to manage the boundary between TM and RoP.

Mid-point summary: Eric Goldman

Absolutist: TM law is designed to fix only specific defects in a marketplace.  Of course TM law does much more than that, and he’s not trying to go back to some halcyon time, but he does think that first principles can help.  Institutional competence question is quite helpful.  We know that competitor lawsuits are an essential part of an advertising regulatory system—competitors know what’s going on and are willing to sue to protect their interests, but there are also defects in relying on them because they don’t put consumers first.  That’s why we have agencies designed to enforce for consumers where industries are more likely to collude/ignore falsity; that’s also why we have consumer lawsuits, foreign TM; then we have certification bodies/private solutions; and the market itself can correct some problems. TM fits into a broader advertising law space.  Might be empowering to know TM doesn’t have to be everything to everyone.

He’s a big fan of tidiness for tidiness’ sake.  And he thinks tidiness diminishes transaction costs.

Lionel Bently

Do we think it’s easier to manipulate TM law?  Compare ease of modifying copyright’s originality requirement to exclude logos (and ease of dealing with Snoopy as advertising mechanism). 

TM as regulatory mechanism to shape the behavior of potential TM owners when they select their marks. He is very keen on this notion. Producing behavior rather than merely reflecting it.

How TRIPS-compatible is US false advertising law, with our without Litman’s suggestion?  Although Paris Convention art. 10bis is not very clear, might not be compatible.  What would it be like without protection for unregistered marks? Huge explosion in application for registration? Difficulty policing marks, though will force ex ante specificity.  But TM office won’t really look for aesthetic functionality ex ante, especially when many marks turn out to be completely valueless.

Litman: there’d be transition problems, as well as First Amendment problems from things like exclusion of disparaging marks from registration. 

Bently: Registration has its own fears and costs.  Registered product designs have chilling effects too.

Kur: has been threatened with suit for mentioning a TM as an example of a bad case—use for teaching purposes, noncommercial purposes, etc. should be thrown into discussion as explicit exceptions/limitations as a charter of users’ speech rights applicable across IP rights.

Lemley: the problem with regulatory agencies is that they tend to regulate. It’s what they do.  Australian Competition Commission ruling on Google: wasn’t that supposed to promote competition?  FTC having a false advertising mandate is fine as actually experienced, but there’s a real worry about bringing in a regulatory agency with concurrent/overlapping authority because the end effect is more restriction on freedom of competition.

RT: What we fear depends on where we stand.  Don’t think anyone is suggesting roving TM enforcement, but FTC also does antitrust; maybe the enforcers should take harder looks at anticompetitive uses of TMs. 

Heymann: thinking more concretely about overlaps/conflicts.  I can perform Romeo & Juliet without permission, but not in the middle of 5^th Avenue. That’s unobjectionable.  Why are some overlaps more objectionable?  Is there a higher order consideration about the First Amendment or the public domain? 

Think about how we educate our students. The classic issue-spotter: here’s a set of facts; identify as many causes of action as you can.  We’re training them to be plaintiff’s lawyers and cautious defense lawyers. 

Goldman: You could say “what’s the best theory, what’s the best defense” and still have an issue-spotter.  Never underestimate the costs to people who want to do the right thing in the market but can’t figure it out.

Some discussion of fee-shifting in cases where there are some successful claims and some unsuccessful, though Lemley notes that often success is all or nothing at least in patent cases.

McGeveran: multiple theories are a problem when they aren’t doing independent work. That doesn’t necessarily mean that every behavior should have only one legal theory that applies. It’s a criticism of needless duplication. But maybe sometimes there’s more than one troubling thing going on.  So kitchen sink complaints are bad (fed infringement, state infringement, fed dilution, state dilution—though they tend to stand or fall together)—but we need some ability to say “several bad things happened.” 

TM law is more than a time, place, or manner restriction, as in ‘no performances on 5^th Avenue.’  If a TM in Popeye effectively constrains me from making any use I can share with other people, that’s a much bigger problem.

Dinwoodie: TM is affected by the intensity of the interest on the other side of the wall.  Lessons for proposed short-term design laws: if the slightly watery conviction we have that there’s limited TM harm here, is our analysis different if we have a design law on the other side of TM instead of the free market?

Dogan: We don’t know!  This is an empirical question of whether there’s a market failure in design/whether we’d incentivize more design, and whether the amount incentivized is worth the competitive price.  European experiment strikes her as terrifying from a notice perspective—unregistered design rights for any design; you don’t know which feature is protected.  (But if you could actually trade product design trade dress as per Litman’s suggestion for short-term design, incentives wouldn’t be the only consideration.)

Goldman: at this point, his energies are going to safe harbors and immunities cutting across doctrines that can protect against cumulation of rights for activities that we want to have happen. §512 fixes only one problem (maybe); §230’s brilliance is that it fixes all doctrines except for those specifically enumerated, so it doesn’t matter if you plead IIED, unjust enrichment, unfair competition, and tortious interference.  That works really well.

Dogan: for the intermediary!

Goldman: fixing the transaction cost problem.  We need a doctrine that cuts across all advertising law claims, including TM.

Litman: aren’t there costs for the woman who wants Yahoo! to take the bad information down?  Many people would like to get intermediaries to remove stuff and might have reasons for that.  Transaction costs of finding and going after the original poster go up for her.

Goldman: consider the right to forget.  Has received threats based on reporting on the fact that a case was filed. The immunities/safe harbors cut through all this.  The problem is not that the threatener is irrational, the problem is that there are so many claims he could at least theoretically allege (e.g., interference with employment opportunities).

McKenna: back to Heymann’s 5^th Avenue example: one difference is the meaningfulness with which you’re able to use a work.  Vornado says ‘you can use the design however you like, just not to cause confusion,’ but in that case the only reasonable use was as part of a fan.  The promise was empty unless you can use it in a meaningful way. Dastar: there’s no meaningful right to use the work if you can’t use the work without attribution, because you’ll be sued if you do use it with attribution.

Grynberg: would we be willing to trade design protection in TM for a short term design right?  If that bargain could be struck, we’d have a negative space issue—not knowing what the boundary between patent/copyright and TM is, we’d have the same questions about a design right. So you’d need a very explicit definition/negotiation/preemption provision (Dogan suggests election).

TM roundtable part 2

Session 2: Boundary Policing Devices.

Introduction: Margreth Barrett

Devices: Sears/Compco/Bonito Boats/Traffix/Dastar: patent/copyright trump TM at least some of the time.  SCt keeps coming back to the same thing: TM shouldn’t be expanded in a way that interferes with the line Congress drew for the public domain.  Dastar has had a broader effect than most foresaw; the courts have really taken Dastar as a serious limitation on uses of §43(a).  Functionality more specifically addresses boundaries with patent.  Traffix rejects de facto functionality—but how effective has it been in clarifying boundaries?  Not in the Federal Circuit, not much in the 9^th, but in the other circuits the focus has largely shifted from whether there are alternatives to the feature. 

Moving in the right direction for defining boundaries, so post-sale and initial interest confusion pose the biggest threat of unwarranted expansion of TM into other fields.  At least in the case of product design, US courts have hesitated on the brink when asked to combine product design and post-sale confusion. 

Subject matter restrictions as boundaries: courts aren’t very interested in that, as per Qualitex.  Doctrines of election: would like to know more about how that might work. Her initial response is that it’s formalism and we’ve been there and rejected it already.  (Misuse as a modern version of election?)  Tailored remedies? Disclaimers over injunctions.

Mark McKenna

External concerns—interference with other IP regimes—or internal concerns that identify firm boundaries for TM itself, determined by TM’s own policies.  Worth distinguishing though we need no hard commitment to one.  If you look historically, there are many examples of the latter and very few of the former—courts talking about the nature of the right, e.g., Prestonettes v. Coty—the word is not taboo: that’s about TM as a limited right.  Overwhelmingly true of the things we think of as exceptions or channeling devices.  We have to bounce back and forth between external and internal.

More than just growing rights; coherence of the TM right itself has broken down because there’s no consensus about what TM is supposed to do.  Puts more pressure on creating doctrines that come in externally.

Qualitex: Aesthetic functionality is conceived of purely as a matter of competitive need, not as channeling.  Lost/absent is the idea that aesthetic functionality might police the boundary with design patent. This puts a lot of pressure on the idea of a significant non-reputation related disadvantage. Courts struggle hugely figuring out what is “non-reputation related,” since features tend to offer a source signal and a product feature that’s desirable.  In Aut-omotive Gold, the source significance may be inescapable.  Also, defendants’ needs may vary—easy to tell a story where the need for an all-red shoe is greater than the need for a red sole on a black shoe. But the consequence of functionality is usually no protection at all. But there’s no reason why functionality has to be applied that way—could be based on the defendant’s use.  Elements unprotectable in a product like color that indicates taste may be protectable in a logo.

Aesthetic functionality is a very nice example of the problems attending rules that require case by case decisions.  If you follow the Teller debate among IP profs, everyone agreed on the result but substantial disagreement on the right doctrinal route, and that’s not surprising because the defenses boil down to “defendant needs this for some non-source-related reason,” but in different ways; this requires difficult case by case analysis of whether confusion overrides need.

Dastar: A chameleon case.  Could well be a significant boundary policing case, but there are things that make its application unclear.  What about cases where the content at issue has secondary meaning, so P asserts ordinary forward confusion case?  Dastar could be read to have nothing to say, in which case it’s extraordinarily narrow.  What if there is an explicit misrepresentation?  Court seems to want to leave false advertising open, but lower courts haven’t taken up that invitation.

Primary Discussants: Graeme Austin

The old Trademark Cases were about saying what the Commerce Clause means; Bonito Boats is about federalism, federal/state boundaries.  Traffix had a statutory basis for the concern over functionality, but Court specifically held back from internal constitutional preemption points.  In Dastar, the Court took upon itself a determination to reconcile a body of different congressional statutes against background principles that Congress is sensible and that IP reflects a carefully crafted balance.  Where did they get those ideas?  Congressional lawmaking in IP is siloed with nary a concern for fit.  Do we want the judicial branch to be purifying the law or living with the messiness?  Dastar had a way out: could’ve interrogated much more carefully the bizarre doctrine of “bodily appropriation,” a very unstable doctrine that was just about copying.  For the lower court to say that subsumed likely confusion analysis was already very problematic.  These strong statements in Dastar can’t be meant to be legislative in approach.

There is strong language in other cases, like Coty, about what TM is and isn’t supposed to do w/r/t mere reproduction.  But reproduction of the mark itself is a key factor.  Dilution is also a body of cases nudged by the Supreme Court; copying of mark nudges towards finding; secondary meaning also takes deliberate copying into account; merchandising rights are a place where copying leads to a P win.  Loosening of licensing/assignment rules also means the goodwill doesn’t have to go w/the TM, what people are buying/selling are the marks themselves. If we’re going to engage with boundaries, we should also engage with the instincts courts have about copying.

TRIPS/double identity: same goods/same mark is getting close to an anti-copying rule; counterfeiting as another anxiety running through international agreements.  Should think of counterfeiting/what’s called counterfeiting, too.

Can channeling theories be reconciled with international treaties?  Are they legitimate exceptions as provided for in TRIPS?

Annette Kur: European version—functionality for shapes necessary to obtain certain technical results; shapes that give substantial value to the goods.  The latter is troubling and doesn’t work very well in practice.  What is the objective?  If we’re talking in the end about competition, and you can’t ever protect something no matter how much secondary meaning it acquires, that’s troublesome. We have mandatory protection for 3D shapes (that otherwise qualify) and design protection as well.  So it doesn’t work.  You could say that particular shapes should be excluded if they can get design protection, but the threshold for design protection is extremely low.  The judge would then have to make a protectability determination, and most 3D shapes would pass, preventing them from getting TM protection in the first place unless they were very commonplace or plain (which raises problems of its own). What would make sense, if you want to exclude overlap between TM and design, then prohibit TM protection for 3D shapes.  But then you have to change the law.

Doesn’t want to make the judge into a design jury looking for some outstanding quality.  Whether a shape has secondary meaning/quality of indicating origin—should make the requirement for showing that very strong.  Uniqueness could help measure that.  But high degree of market recognition could work.  Even if there is a high degree, she would still require a balancing as to whether in spite of the secondary meaning there is still an overriding need for competitors to use.

Dogan: Kur highlights the difficulty of aesthetic functionality.  She thinks a.f. is an intrinsic boundary within TM law, and that may be a different view of the normative function of TM in the US compared to Europe.  We think of TM as promoting competition—idea of protecting a design that gives independent aesthetic value to the object, in perpetuity, is problematic from a competition oriented tradition—consider the Barcelona chair or other modern furniture design.  Maybe there is a secondary meaning argument, but it’s troubling to think that this aesthetically interesting object can never be copied by anyone else.  Maybe this intractability ultimately leads us to the idea of abandoning this kind of protection entirely.  Force people to use other methods of branding! But there’s not a lot of appeal to an intermediate protection that only kicks in with really really strong secondary meaning, or limits for really really strong competitive needs, which is just too hard.

Kur: but note international obligations.

Lemley: A.f. as a doctrinal/channeling device that maps to regular functionality: design patent and utility patent.  Coming around to the view, though, that it’s not exactly channeling but internal boundary: things that are purchased because they are aesthetically desirable are not the proper subject of TM, and that’s true whether design patent or copyright would be available to them or not (as they would not for a sole of a single color).  Hard part is disentanglement.  Things are often both desirable because aesthetically pleasing and desirable because they have brand significance.  What we do in similar circumstances, like genericide: we ask people why they’re buying the product and go with the majority.  We do it all the time on the infringement side, but could do it on the defense side as well.  Some people will say “both,” and that will require you to make hard calls in genericide.

McKenna: what’s the survey question?

Lemley: why did you buy?  Do you care who made it?  What if I told you it was made by X, would you still buy it/pay less?  Yes, surveys are awful, but what are the alternatives?  The TM bar wants to say aesthetic functionality doesn’t exist.

Janis: maybe a.f. shouldn’t be called functionality at all. 

McKenna: McCarthy likes the results, but hates the label—he says something that’s functional for market purposes = not protectable (e.g., a heart-shaped box for Valentine’s Day chocolates), but he won’t call it aesthetic functionality.

RT: Lemley’s comments show that a.f. is connected not just to genericity but to materiality—look at the Qs he suggests asking.  Possible counterfactual analysis: would the feature still be desirable in a world without secondary meaning?  Courts can do that without surveys and though it’s not without flaws we do use counterfactual analysis in other tort cases on a regular basis.

Burrell: Australia uses various policing devices—sometimes refuses protection; sometimes apply doctrine of election; sometimes infringement; sometimes defenses; sometimes TM protection that ends when the other IP right ends: 2 years after a patent ends. Say you’re the sole producer, which therefore is identified with you, during the patent period. 

McKenna: what’s the point of the TM then?

Burrell: well, the D might not be infringing the patent; or maybe the designer who individually owns the design right isn’t interested in enforcing that. 

TMEP writes aesthetic functionality out of US law; it’s not just McCarthy.

Sheff: let’s say an ugly design becomes beautiful because the right kinds of people are consuming it.  We may still want to bound TM rights so as not to protect that particular kind of consumer motivation, notwithstanding the source identification aspects.

Mark Lemley: Functionalicide?  (Of course the green farm equipment case already did this.)  Most people are buying it now because they’ve learned the new language in which the designer spoke, so to speak, and not because of its brand features.

Sheff: they could do both: know it’s a brand and consider it attractive and desirable.  We still might not want to protect that.

Leaffer: ordinarily Xerox tries to avoid genericide by trying to convince people it’s a brand.  How would a TM owner protect itself against losing a mark in this way?

Sheff: if the argument is that abandonment is a series of actions of omission or commission that causes loss of source significance, one meaning might be that it’s acquired some significance that trumps source significance, and one significance might be social.

Bone: Louboutin builds up aesthetic value through source significance—it’s hopeless to try to separate.  (Why won’t counterfactual reasoning help.)

We read Dastar for more than it gives us—it’s just the Bonito Boats of horizontal rather than vertical IP law.  Scalia sees the claim as mini-copyright.

He doesn’t see Traffix as a channeling case but as a continuation of Wal-Mart.  Courts see competitive necessity as important still; they haven’t read Traffix as channeling to patent.  Just as in Wal-Mart, we made something suitable for summary judgment.  By making Inwood Labs into something that involves issues that can be decided by judges, we can get rid of potentially harmful strike suits.

It is harder to monitor boundaries in a common law field because courts feel free to borrow.  This is both a cause and a symptom; legislative intervention may not be the desirable outcome either.

McKenna: It’s really the Fed. Cir. that isn’t willing to go along with Traffix; the rest of them are falling in line.  Easterbrook in Jay Franco moves away from Morton Norwich, which is now in the minority.  Lemley tried to distinguish mechanical and aesthetic functionality as external and internal limits, but McKenna doesn’t think that works.  Mech. functionality too involves people buying because the product works and not because of source significance; a.f. also has a channeling function.

Lemley: imagine a Vornado-like case in which it turns out that there’s absolutely no benefit to the fan shape but it’s the subject of an expired utility patent—do we care just because of the expired patent?

RT: but the standard argument is that even if so, assuming there are 15 equivalent designs, we don’t want 14 of them to be appropriable by competitors so that the remaining competitors all have only one choice.

Lemley: that’s merger, really.  Patent is not really the issue here.

McKenna: would be more robust if courts thought of functionality both as competition and as channeling.  Though he’d vote for Bone’s position that design protection isn’t worth it.

Beebe: one origin of the problem with a.f. is the bar on making aesthetic judgments in copyright and design patent.  Copyright and design patent we won’t make aesthetic calls; ornamentality standard is really only distinctiveness, so low it’s borderline Feist. So there’s nothing over there claiming that space for aesthetic values. Comes back to haunt other areas of IP when it has to confront the nature of aesthetic judgment because patent and copyright refuse to do so.  Inwood: judge can avoid a trial by looking at a product in a vacuum: if I break off this piece, will the product continue to work? If no, it’s functional and we’re done.  If the issue is a.f., though, you can’t do that; you need to know that ugliness can become beautiful if it walks down the runway.  We have no standards for progress in a.f.

Litman: most helpful formulation is Posner’s: both kinds of functionality look at utility in the economists’ sense. TM law shouldn’t protect any feature that is useful in that sense.  We need to try and distinguish between the product, whatever it is, that people want to buy, and anything that tells you where the product comes from/who makes it.  A.f. is a bad label because it encourages us to construe it too narrowly.  Not about aesthetics nor about functionality. 

Bone: example: goats on a roof—TTAB dealt with it as aesthetic/utilitarian functionality and allowed the registration of goats on a roof as a design element.

Mid-point summary: Laura Heymann

How does change happen?  Statutes or case law?  Need to ask how judges see their role: not just resolving particular disputes but also trying to make sense of the law more generally.  Descriptive fair use in the Lanham Act—even after KP Permanent, hasn’t had the effect one might have thought it would.

Functionality from the defendant’s side: could be analogous to descriptive fair use, where TM owner doesn’t lose all rights but simply can’t stop a particular kind of use.  (This is what the amicus brief I worked on in Louboutin argued for.)  Def’t is not using a mark as a mark but for other purposes.  Defendant’s use may appear the same as a visual matter but should be conceptually distinct. 

Procedural v. substantive.  Why is it that we might look for boundaries? An intrinsic sense that we prefer limits to the law?  Concerned about overlap with particular doctrines?  Or is it procedural, wanting bright-line rules with the risk of rigidity but the benefit of predictability and resolution at earlier stages of litigation?

Ability to extricate what the appeal of a feature is: interesting that we talk about Louboutin as an a.f. case.  Is it aesthetic because it’s source-identifying?   (This is why I find the counterfactual approach appealing.)  Louboutin is overclaiming the scope of the mark, which really should be the red sole in contrast to the black pump.  No one is looking to match that configuration to their outfits, but becomes socially appealing as part of display to other people, but that’s also because of source-identifying function in that people want others to know that they have the money to buy these kinds of shoes.  The all-red shoe doesn’t involve any of this—red sole isn’t contrasting; doesn’t serve as display of wealth because the whole shoe is red.

Stacey Dogan: Different kinds of boundaries that have come up, most obviously boundaries between different forms of IP.  TM law deferring to its own pro-competition objectives—a.f. may be like that in part.  Conceive of functionality through the lens of economics, as Litman suggests?  Maybe the term should be aesthetic utility v. Traffix utility. 

What is pragmatically achievable?  In an ideal world we might do X, in this world we need to think of ways at coming at these questions that will influence the development of the law.

Kur: could it be that utility is the same as competitive essentiality?

Litman: a difference is if you talk about competitive necessity narrowly, courts will ID other alternatives and say it’s not “necessary.”  Utility = competitively desirable is enough.

Goldman: question of mislabeling of a.f. got him thinking about Rosetta Stone and keyword as functional.  Makes him question all the semantics. In any lay sense, using a keyword to trigger ads is functional—in the reporting on the case, the pundits from the practicing bar were all focused on the court’s reversal on that point.  Should TM law treat keyword trigger use as functional?  Could we create a bunch of kinds of functionality?

Lemley: it’s not about the mark, it’s about D’s use of the mark. 

Litman: it’s a nominative use.

Goldman: he thinks nominative use is a fine place to house it, but the factors we have now aren’t the right place to house it—I may not be referring to the P in my ad at all, but just trying to attract P’s customers.  (Much cross talk about whether this would count as nominative fair use because of the implicit reference to P or reliance on P to target.)

Austin: TRIPS says registrability can depend on acquired distinctiveness, and a.f. offers opportunity to push on that point, and require a factual record that there is such beyond the aesthetic nature of the product or design.  Rights standard talking about confusion also invites such analysis because of the question of whether something has source designating significance—these are internal mechanisms for policing these concerns.  Show us that there’s a TM rather than accepting a doctrinal shorthand, as the lower courts did in Dastar.

He worries that saying that US doctrine manifests concern for the public domain is overly hopeful.  Golan, Kewanee, Park-n-Fly are not cases that wave the pennant for the public domain at all.  We should look coldly at the full body of cases, including solicitude under state law for post-Dastar claims.  Maybe we need to push harder on remedies, survey evidence requirements, etc. if the grand principles aren’t there.

Bently: As Kur said, EU deals with boundary problems through subject matter exclusions, very different from US; reflects our focus on registration.  But Kur’s response to problems of a.f.—to get rid of the exclusion—isn’t a great answer. We all agree there’s some public interest served by the a.f. exclusion, but it’s a problem having it in the subject matter. Could it be better placed? Bone’s hope to get rid of 3D marks is unlikely and under TRIPS couldn’t be gotten rid of for foreign marks; note that the USTR goes around forcing countries to protect marks like the lion’s roar.  Could we exclude the aesthetic component from the likely confusion analysis?  That’s probably ok under TRIPS.  Kur says she wants to do that as a matter of EU law.

Might also be there already; one case said competitive need is irrelevant, but another said that progress to genericity is relevant in a likely confusion analysis, leaving a.f. somewhere in the middle.  If one problem with a.f. is timing (beautiful things can be beautiful because of fashion created by P), then maybe timing can be taken into account in the analysis.

Kur: wants a new limitation on descriptive uses to include also use of signs that are not distinctive—a limitation that can be used to make clear that someone is not using a feature to indicate commercial origin but rather for its aesthetic function.

Bently: but is having it as an exclusion problematic under TRIPS?

Dinwoodie: Kur also proposed expanding functionality in other ways, including colors. 

McGeveran: In the past I didn’t think we properly defined “internal” and “external” and we’re still doing it. Some of the values driving TM doctrine of course also drive the construction of these other doctrines the values of which we are policing. Both copyright and TM care about expression and leaving language open to competitors/authors.  What is presented in case law as channeling—utilitarian functionality excluded from TM  on patent’s behalf—also serves to further TM’s competition values.  Boundaries however still make rhetorical sense, because courts do pay attention to the idea of a wall that prevents TM expansion: utilitarian functionality again—there’s a complex and intricate patent machine that shouldn’t be disturbed; that may be more forceful/persuasive way of upholding competition values that could also be described as internal to TM.  He sees the same thing happening with the “First Amendment,” even though the doctrine that then gets applied has scant resemblance to First Amendment doctrine in other areas.  Can be successful and can also impoverish our sense of what TM law is up to on its own theories & terms.

RT: Left over from the prior session: I worry that we are reifying utilitarian functionality, or Traffix utility if you like, in our discussion of aesthetics. What it means to “work” is socially dependent in many cases just as beauty is, e.g. does the Segway “function”?  Does a skateboard?  What about a scooter?  What about high heels--if you break them off they can be easier to walk in!  Ken Alder’s Engineering the Revolution about the meaning of interchangeable parts for guns in the period surrounding the French Revolution is a good book on this point.  But I only have to look at the shattered glass back of my iPhone to know that it’s still true.

McKenna: courts frequently say that aesthetic features aren’t competitively necessary—they have this sense that utilitarian competition is normal, but you should create your own design; it’s normative all the way down despite the empirical reality that aesthetic features matter to consumers. They feel there’s more there there with mechanical features.

Leaffer: but you do frequently have more satisfactory alternatives with aesthetics?

McKenna: no, that’s not true!  (I’d add: look at the various wheeled ways to get around—lots of alternatives there!  More than with many “aesthetic” choices.) If you’ve already predetermined that you don’t need to compete in the aesthetic market, then of course it won’t be competitively necessary—you need a definition of the market first!

Lemley: why do we need two functionality doctrines?  What we really care about is intrinsic value, which is pretty much expressed in cases like Traffix: does it affect cost/quality of the article. Quality: we have to take to mean appeal of the article. But if it affects appeal for reasons unrelated to source identification/brand (Sheff interjects that those could be 2 different things), why not just stop talking about a.f. and start talking about a color that gets more people to buy it as affecting the quality of the product.

Grynberg: doctrine has become very cloudy, and when courts try to clear things up they often cut away things some of us like: Dastar is a prime example where some in the room think the Court went too far on attribution.

McKenna: quest to create TM rules that allowed owners to capture every little bit of TM value is what led courts to go way overboard, so he’s ok with some roughness.  Teller: all these doctrines speak to a defendant who wants to use something not as a mark, but we have bunches of names for the doctrines that allow this. The boxes exist because courts keep finding new manifestations of the problem—so we’ll create a new one if we can’t fit it in. Or we could have a broad doctrine (not TM use!) about access to the thing for a particular type of defendant.

Litman: another border worth thinking about—the border between registered and unregistered. TRIPS would allow us to eliminate protection for unregistered marks/at least product design marks. PTO is not terrible at making these distinctions.  Not even politically impossible.  INTA has an interest in “everyone should register their TMs.”  A lot of trouble comes from claiming TM without ever having to go through a registration gatekeeper, at which point a court says “this is free riding and defendant loses.”  If you had to persuade the PTO that secondary meaning existed, that would be a big help.

Dinwoodie: same thing with unregistered design right in EU, where you can define the right in litigation, and the abuses that creates are substantial.

Bone: Likes that idea!  Not just for gatekeeping aspect, but also as a proxy for whether the firm really is thinking of the “mark” as a source identifier or is just objecting to copying. 

External/internal: one could pull the idea of facilitating downstream innovation into TM law, but be careful: that would mean that incentivizing the adoption of creative & interesting marks would seem to become a relevant policy consideration.  (McKenna points out that Two Pesos is replete with this language, but Bone says that’s always been unstable and he wants to keep it that way.) Internal coherence of TM policy justifies keeping incentives outside.

Dinwoodie: Litman’s idea makes a doctrine of election much more workable.

McGeveran: Doesn’t consider rhetoric to be a bad word.  Just be clear that internal/external rhetoric is not as clear as it might seem.  Functionality can’t be explained only as respect for patent/TM boundary, because there’s plenty of nonpatentable functional stuff.  (My reaction: But the theory is that patent law wants those, largely, to be freely copied, so the patent boundary exists in its negative space as well.)

Dogan: but it can lead to very different outcomes if considered internal v. pushing back against something.

McKenna: says my reaction: patent’s exclusions reflect patent policy as well.  There’s a reason stuff isn’t patentable.

McGeveran: there’s stuff that’s patentable, there’s stuff that’s excluded by patent, and a third category that while not covered by patent might be covered by TM.  How will we figure out when patent’s “no” is TM’s “yes, you can get rights in this”?

Lemley: “no, you can’t get a patent” v. “no, this is the kind of thing we want to be freely copied.”

McGeveran: but that requires you to know something about TM and what TM wants to be controlled.

McKenna: it’s not enough to say that patent law has already made a specific call about a feature.  Instead if it’s the kind of thing patent law speaks to, TM should stay out.

Litman: so any arguably patentable design.

McKenna: yes.  No trade dress protection!

Austin: what about Kellogg: you can use it, but you have to use it fairly (labeling etc.).

McKenna: he’s fine with that as long as there are no rights to the design.