Trademark Scholars' Roundtable part 2 continued

Section 2, continued

Eric Goldman: Libertarian view.  Any gov’t agency that charges fees for services eventually gets to an awkward place, trying to maintain revenues and franchises.  Melissa Wasserman has work in the PTO area—it changes behavior to maintain revenue. But they’re charged with protecting the public interest, and their acts have legal and market effect.

What notice function could market solutions offer?  Private solutions for registrations.  Industry-specific registration schemes for horses, band names, roller derby. If there’s a legal payoff to companies for giving notice of something, they’ll pay for that privilege. That payment incentivizes market entry. Scam opportunities: people think there’s some benefit to paying for a “TM registry.” If there were a legit benefit, we might want that.  Outsource registration using minimum standards.

Domain name system: registrars compete and basically make zero profit. The fees are almost exclusively the tax imposed by ICANN.  Very stiff price competition.

OTOH, domain names give cautionary tales about private and public solutions. ICANN: proliferation registries; different ways to buy things from ICANN. Also selling the right to tell people that they can’t buy things (right to block registrations). They make money on every end. Driven by registry providers.

Other private providers: Google, Twitter, Facebook—if there is space for those usernames, the business may be ready to go without a TM search.

Bill McGeveran: we are talking about moving on a spectrum, since registration isn’t going away—could move from nearly-deposit-only to full-bore examination, from copyright to patent.  What do we need to fulfill our international obligations?  And for our businesses to get reciprocity?  Not that much—deposit-like structure works; also that only matters to a small number of applicants, given the lack of interest in Madrid filings.

National scope: you can see Dawn Donut as an elegant solution. You get constructive notice, but can only oust local user if they come after the registration and the registrant actually takes steps to move in. For national scope you wouldn’t need active examination as a necessary consequence unless we want subsequent presumptions of validity. 

The question is only do we believe that an agency as registrant will do a better job of identifying that signal than a court would in a situation when it arose. Not persuaded that it would.  Capture and self-preservation. We delegate in other areas because we believe in indirect political accountability as compared to countermajoritarian courts; doesn’t make as much sense with respect to this kind of regulation, and doesn’t really describe how the PTO functions.  So is specialized expertise particularly significant here? This isn’t parts per million of particulate matter, or a specialized healthcare industry that requires lots of stakeholder interactions. We know this from teaching it. Complicated fact patterns exist, but the rules aren’t that complicated. So if you need a pretty good reason to move to an agency given the capture problems, he’s not convinced that anything beyond deposit-like functions are valuable. So don’t worry about examination quality but also don’t give presumptive validity!  Have the TM office be ministerial and let the courts do the rest.

Litman: Private market registry story is a little too simple. They don’t make money from registering, but they make lots of money from parking. Just as I don’t pay ABC to broadcast TV, ABC somehow manages to sell eyeballs.  Arguably you’re building consumer confusion into the architecture. The business of ad sites parking may not rise to the level of an emergency, but it increases rather than reduces consumer confusion. So if you want to structure a system of market incentives, you get some of that, and that’s not clearly better than the gov’t charging fees. ICANN is a hybrid, partly private; couldn’t get away with that otherwise.

Dinwoodie: Temporal aspect to drive-by rights/deposit system. Disproportionate costs to smaller businesses? PTO may lessen those costs.

There are different types of expertise that might make an agency better than dispersed courts.

McKenna: if registration is inexpensive and easy, you get more of them.  And then you get more cease and desists.

McGeveran: wouldn’t have to make it cheaper even if you made it less rigorous, but concedes we’d have many more registrations. Thought experiment.

McKenna: people will have an affirmative incentive to file things they wouldn’t have filed before.

Burrell: At the moment, registry systems often act as a surrogate for litigation—oppositions or cancellations rather than litigating.  Especially in a loser pays system, this is a lot cheaper. When there are US-style relative grounds for refusal, there will be some marks where examiners knock back a potentially confusing mark where a small entity would never dream of litigating.  (Facebook/Timeline—sometimes they do dream of litigating!)

Bone: push the proposal further: registrations are given for a specific purpose. Thought experiment: You can’t represent that you have a registered mark, only use it for instrumental purposes like foreign use.  Then you wouldn’t have threats.

We might want errors distributed over multiple decisionmakers because errors will be more random rather than biased in a particular direction as examiners talk to each other. (Don’t judges talk to each other?)

PTO examination process has the advantage of centralization, coordinating particular policy positions in a favorable way—different from individual decisions/applications.  Still need to trust the PTO, but there’s value in considering the questions from a more abstract point of view than having always to consider it in facts.

RT: what would it take to prevent Leo Stoller?  Would need not just a no-impact registration but an affirmative cause of action against someone asserting a registered right.

Dinwoodie: procedure really does affect substance in terms of rights. IP Translator case shows that.  Question: does a registration have a greater chilling effect than a simple letter claiming TM rights?  That affects the critique of easy registration.  (Consider the effects of having a registration, with its idea of government imprimatur, on willingness to assert rights.)

Kur: we are doing a real world experiment on this with design rights.

McGeveran: how much in terrorem effect does a copyright registration have versus just having a valid copyright?

Goldman: Statutory damages.

Dinwoodie: chilling effect thus depends on the scope of the right.  A fully examined right with a presumption of validity should have more of a chilling effect, if the recipient understands the law.

McKenna: having written the letters, it’s no accident that you emphasize the registrations even when writing to another sophisticated entity who knows about §43(a).  Whether that difference is enough to justify some action is a separate question.

McGeveran: what if we got rid of national scope too? Would registration numbers still be enough to use in a C&D?  Large entities would register for international effect, and then would have serial numbers to put in the letters.

McKenna: notice that criminal counterfeiting also depends on registration. Every consequence of registration increases value a little bit. 

McGeveran: thought experiment is what is the minimum necessary internationally.

McKenna: impossible to imagine a system in which the gov’t grants a right and the court gives it no weight at all.  (Though in copyright it doesn’t seem to matter too much.)

Goldman: could look for C&Ds sent based on supplemental register. Also, almost every business claims national scope now given internet presence—may be less important.

Bone: externalities—are there benefits and costs of registration that aren’t internalized by the market?  Goes back to the point of registration.  Notice may confer external benefits.  Could reduce litigation costs.

McKenna: difficulty with private systems: work well among people who are similarly situated, but not with outsiders—derby name registration won’t tell you what should happen if someone uses the same name outside roller derby/in a movie.

Burrell: old system: you got strong rights from registration, abstracted slightly away from the exact goods you made and exact font; you didn’t have to claim confusion. However, apart from same mark/same goods, you had to show real confusion. It didn’t work that badly.

Dinwoodie: at one point Tushnet was willing to accept rights in gross for supermarks against absolutely identical uses: strong but small property rights, with more limited rights outside that competing use.

McKenna: what’s the carrot of registration? You’d win against a direct competitor under §43(a).

Dinwoodie: national scope and international reciprocity.

Burrell: proving infringement is expensive; people used to register in the UK under the old system.

Goldman: market demand!

Bone: reason that unfair competition became coextensive w/TM was that there was no longer normative justification for excluding subject matter from TM.

Dinwoodie: that explains subject matter, not scope of rights. Could have a merchandising right and wouldn’t need false designation of origin.

Beebe: what will the future look like?

Dinwoodie: move to less examination, as is typical outside the US? We’ve done that with design systems too.

Beebe: but why? Shifting costs of validity determinations to litigation?

Dinwoodie: in initial instance, just outsourcing costs, but now we’re on that trajectory and it’s hard to stop.

Kur: what should be the core rights? We’re no longer talking registration/nonregistration—the rights should be determined in any event.  Have to accept more coexistence: this will not necessarily cause confusion.

McKenna: when everyone’s ready to admit that on the infringement side, great. Problem now: people are willing to admit coexistence on the register, but not with infringement.

Dogan: coexistence of two older marks isn’t incompatible with saying a new user will cause confusion. They have preexisting rights legally respected in other jurisdictions—that’s a different issue than allowing a completely new mark.

Sheff: Priority in time and priority in geography/economic activity: like Dawn Donut. Well-known mark can run into earlier use in a zone of expansion. 

Clarity of rights v. reflection of actual consumer expectations.  Challenge of registration is the move to global TM regime, forcing us to resolve more of these issues. Irreconcilable desires to protect local interests at home … and when they move abroad.

Goldman: could create registries for fame; could create fastlanes for registration, as we’re seeing experiments at the Patent Office. Seeing proliferation of options in ICANN; people may be willing to pay for different statuses. Hard to see how the PTO would resist.

Dogan: TM owners actually wanted more rigorous examination because it provides a more meaningful right; they’re eager for a system that is more robust. If we’re moving to a global system where there’s no review (except in US), then there may be a drive to some sort of “gold standard” review that provides more meaningful rights.

Burrell: sees no prospect for greater harmonization outside of Europe.  Can’t imagine what would take Australia, US, NZ, Singapore away from their systems, especially with trade deals being negotiated to lock them into US system anyway. We’ll see some regional harmonization; European exceptionalism instead of convergence.

Sheff: but what if emerging markets want EU access?

Burrell: don’t need to harmonize to do that. Wouldn’t use OHIM for a Madrid application because you’re vulnerable to central attack.

Dinwoodie: would be last choice in US because of specification of goods and services; people use European subsidiaries for their Madrid applications. EU is a big player and its speed/lack of review puts pressure on USPTO.

McGeveran: to the extent there’s increased Madridification, we might see more forum shopping; weakened concept of territoriality. Multinational picks a place to start and takes advantage of reciprocity everywhere else. (Sounds like Delaware for corporations.) While he might wish for more tolerance of coexistence, many products will be digital and borderless so coexistence will be difficult.