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.