WIPIP Session 2: Trademark 1

Trademark 1

 

Paul Heald, Testing Theories of Tarnishment in Trademark and Copyright Law

 

Tarnishment should be treated like false advertising: you should have to prove some (likely) damage to your TM to win, rather than presumptions.  Tarnishment is a psychological/cognitive theory. Appears similarly in © literature, mostly in policy analysis—Landes & Posner—if we had an X-rated Mickey Mouse movie, the Mouse would be destroyed.  (As opposed to the super racist versions.)  Theory: owners “shepherd” their marks/works better.  Theory is that sexual association is particularly bad.  ATM: Cookie Jar—strip club named Cookie Jar opens up across the street; Restatement thinks this is clearest case for tarnishment, such that no evidence is needed for relief.

 

Studies: lots of empirical work in marketing literature on sex; increased memory for ads with sex, but decreased memory for brand. Lots of gender effects.  Strong evidence of congruence: sex in ads works better when product has something to do with sex—perfume, jeans, hotel rooms v. iron skillets.

 

Experiment: show “tarnishing” version of well known work.  Showing people two movies—poster and short description—and ask which movie will be most successful at the box office.  Titanic v. Good Will Hunting.  Subjects do this for 20 filler movie pairs and 10 target pairs. Porn examples, e.g., Bitanic, You’ve Got Shemale.  See if treatment group exposed to these versions ranked the originals any lower.  Theory’s prediction: Bitanic would diminish preference for Titanic.  Instead, there was a positive effect; overall no statistically significant diminishment for any, and 5 of them showed statistically significant enhancement.  No significant differences between women and men; a little, not statistically significant difference b/t conservative and liberals.  Libertines do show a big difference; Mechanical Turk has very few puritans.  So we tried to find a good distribution of really conservative and really liberal people, and test sequels—damage to branding.  For sequels, there was no overall enhancement effect or negative effect; some went down a little and some went up.  And again, no difference between gender. For most conservative viewers: statistically significant negative effect—for them, the presumption that sex causes tarnishment might apply. 

 

Implications: no evidence of tarnishment overall; would we want to protect one corner of the population?  Research calls evidentiary presumptions into question; rationales for copyright term extension; parody/satire distinction in fair use cases; market harm calculation in fair use cases.  We have previously shown tarnishment in other ways: significant positive correlation between quality of audiobook recording and perceived value of underlying book, but no correlation between reader status or legal status and value.

 

Mark McKenna: are things getting mashed together in using movie posters? Could there be something importantly different in creative works v. brands attached to goods. One plausible explanation for the audiobooks is that people think that the proprietor of the book is responsible for the recording.  Why choose to use movie posters rather than more conventional brands?

 

A: we did want to get at both, and the TM and © literature both describes the same claimed harm and the same claimed mechanisms, so we wanted to see if it would work.

 

Lunney: Why do TM owners sue over tarnishment then?  Every business has puritanical consumers, so maybe they’re concerned about those consumers.

 

A: Third grade, intuitive mentality: this is mine and you have no right to do this.  True, we may want to protect a narrow proportion if the harm caused is significant, but we need to balance that with the harm caused by absence of ability to tarnish.  Mickey Mouse porn: might benefit a slice of the population even as it harms another slice.

 

Jessica Kiser, Market Responsiveness to Trademark Litigation

 

1997 article by Bhagat and Umesh in the Journal of Market Focused Management: sample of approx. 60 cases mentioned in WSJ.  Focused on econometrics—stock prices when sued, and when resolved.  Findings: TMs are valuable; litigation is expensive; no broader context.  She decided to redo this to see if there was a reason for TM overenforcement—do investors like your filing TM suits?  If there was a negative effect, which traditionally comes from commercial litigation in other contexts—both parties’ stock prices go down—it shows irrational overenforcement. Began w/Ken Port’s Mitchell Study on TM Litigation—2972 cases; adding stock prices to it; pulling out cases w/o a publicly traded party.  Open questions about how else to thin the herd.  Event study methodology: see what stock prices do in relation to notice of litigation.  Helps you figure out if the brand, not just the TM, is harmed by the litigation.

 

Define the event and notice period; measure stock return during that period; estimate baseline w/out event; compute abnormal return; measure statistical/economic significance. 

 

Previous studies: 1995 study shows significant effect of major endorsement deals; 2011 study showed that announcements about health of Steve Jobs affected Apple stock prices.

 

How do you figure out what’s public?  Previous study used WSJ/NYT coverage, but maybe that’s not the right measure now.  Maybe we should look at Westlaw/LEXIS.  Pre-and post-internet divide?  When is the test window?  Any effect of anticipation from C&D letters? Large company v. small company; established v. newer company.

 

Q: Other related litigation studies: Alan Mathios & Mark Plummer, The Regulation of Advertising by the FTC: Capital Market Effects, 12 RES. L. & ECON. 77 (1989); Sam Peltzman, The Effects of FTC Advertising Regulation, 24 J.L & ECON. 403, 419 (1981).

 

Q: when does the fact that the alleged infringement is occuring become known? That might be another relevant event. 

 

Q: Type of product? Some industries may not care.  Some of the most aggressive litigants, like Louis Vuitton, are nonpublic.

 

Signe Naeve, User Generated Crafts in the Sports Industry

 

All the stuff people make as fans: knitted scarves, etc.  Fan fiction/fair use in copyright is different in trademark where people make and often sell stuff.  Working thesis: Met with counsel for sports teams; came in from fan perspective wanting to argue for some permissive uses.  Now thinks this is different from fan fiction; inherent tensions w/in TM law that lead TM owners to police brands.  User-generated crafts raise unique issues b/c, while TM owners can turn a blind eye to personal use, they may need to take action to protect reputation.  TM owners could sponsor contests, partner w/fans, license them.  Risk of losing the right creates need to police.

Difference b/t kinds of sports—Mariners said “this is our TM, and we’re afraid of tarnishment.”  Sounders: “there’s a fan culture of supporters that’s different—we look for opportunities to partner w/fans.”  Sounders have “posters by the people” contests.  Implied or direct licenses are even possible.  Noncommercial fair use as a potential safety valve; only policing when there’s broad distribution or where it competes with an exclusive license; you could even donate older TM versions to public domain.

 

Q: Materiality?  Matthew Kugler’s Measuring Sponsorship Materiality.  Counsel may be strategically overstating risks of naked licensing: PTO decisions on Bucky Badger mascot, UNC—uncontrolled since 1792, but university was still able to claim TM rights.  If the risk of losing the right is real, then maybe the problem is the risk, not the fans.

 

Heald: Harvard’s TM counsel—not afraid of people’s perception of licensing.  Harvard says whether it licenses or not is proprietary information—it will not admit whether it licenses “Harvard Mercedes.”  Mariners may be overstating their fears.  (That Harvard practice could have really interesting consequences in litigation.)

 

Irene Calboli: There is a risk of naked licensing in the US, but the law is still very confusing. Natural for TM owners to err on side of caution.  If we had a system in which the registration conferred property rights, paradoxically, that could allow TM owners to pick and choose more like patent/© owners.  Struggle is extent to which fan use can cause a real issue of tarnishment/loss of control.  Real world has merchandising; we can make a difference in cabining that and telling owners you don’t need to enforce so aggressively.

 

Rebecca Tushnet, The First Amendment Walks into a Bar: Trademark Registration and Free Speech

 

I’m going to talk fast so you have maximum time to yell at me.  My paper analyzes the First Amendment arguments against §2(a)’s disparagement bar with reference to the consequences of any invalidation on the rest of the trademark statute.  Ultimately, given the differences—or lack thereof—between disparagement and other bars in the statute, I conclude that §2(a) is generally constitutional as a government determination about what speech it is willing to approve, if not endorse.  If the Supreme Court disagrees, it will face a difficult job distinguishing other aspects of trademark law.  And these difficulties signal a greater problem: the Court has lost touch with the reasons that some content-based distinctions might deserve special scrutiny. 

 

Arguments I’m playing with that haven’t yet made it into the paper: Consider this argument: disparagement + false connection taken together is viewpoint neutral ban on use of the identity of a person or group of which one is not a part: if it disparages, probably doesn’t cause a false connection; if it causes a false connection, probably doesn’t disparage, but together they make up one unified content-based but not viewpoint-based prohibition on taking advantage of another entity’s reputation in a mark [except that doesn’t explain Tam—but perhaps that’s not necessary if the overall scheme is content neutral].

 

Vagueness objection: the standard for disparagement is vague and hard to apply with predictability. This is perfectly true, as the cases discussed by the majority indicate—but it’s also a problem with the rest of the bars!  If vagueness is a constitutional flaw in disparagement, consider if any of the other bars—or even the “use as a mark” precedents requiring trademark use instead of ornamental use for registration—they are no less vague.

 

There are over a hundred thousand applications each year.  It would be actively astonishing if even the consistency available in obscenity cases were achievable in this flood.  In fact, the inherent inconsistency in a merits-based system is one reason why the Court has granted government flexibility in making content-based decisions: many systems of government grants couldn’t survive if held to strict First Amendment consistency in every case, and the costs of not having trademark registration are greater than the costs of not having lots of obscenity prosecutions.  This is what it means to have a regulatory state, and it’s another reason why, if the state is going to maintain a trademark system granting the benefits of registration after substantive examination, it needs some flexibility and tolerance inconsistent with traditional strict scrutiny.

 

Q: why isn’t disparagement viewpoint-based?  Very surprised if even before Tam RACISTS SUCK would get rejected, precisely because we distinguish b/t things disparaging to a discrete and insular minority and things not—lots of marks say bad things about people.  [Law treats only certain groups as if they can’t take care of themselves]; actual practice discriminates b/t use of racist terminology by members of racial minorities: dykes on bikes treats the content differently b/c of who the speaker is and that seems an indication.

 

RT: [relevance of individualized determinations—Dykes on Bikes had a different record about what the targeted group would think when they saw the mark.]  The bar itself doesn’t care what your viewpoint is; it rejects disparaging terms in context of their use.  Also, dispute the paternalism point: one way people take care of themselves is through the political process. Antidiscrimination laws generally are ways to prevent some people from harming others.

 

Sheff: nature of gov’t interest in different bars.  False consumer beliefs as to facts they encounter is different in salience than interest in preventing gov’t support of particular kinds of content  which is different in interest in free competition.  [treaty compliance in provisions on wines and spirits; if we can have multiple interests implemented in §2, preventing gov’t endorsement of disparagement is one of them]

 

Farley: if it were all about false association you wouldn’t need the other bars besides false association.  Very clear that viewpoint of speaker doesn’t matter, but the current test makes the viewpoint of the listener matter.

 

Q: but the other bars are about levels of generality.

 

RT: yes, as predictions that, say, use of a flag will be confusing in some relevant sense—but if we apply 1A scrutiny, those predictions seem highly vulnerable.  RE/MAX case makes that clear: (1) nobody knew the mark was the flag of the Netherlands, so couldn’t be confused; (2) though the registration was for the flag, in practice it always had the balloon in front of the flag, so nobody could be confused even if they would have recognized the flag.  The level of generality is unwarranted if we let strict or even intermediate scrutiny apply.

 

Q: where do consequences of registration fit into theory? If law prohibited these forms of speech outright, this would be unconstitutional.

 

Q: if SCt affirms Tam, does it have to strike down Gay Olympics?

RT: G-d willing.  Yes, when gov’t seeks to suppress speech instead of just not support it, I want gov’t to be held to higher standards of proof as to the harms it seeks to avoid.

 

Calboli: what is the minority group?  Asian-Americans?  Self-identified Asian-Americans?  Difficult to pinpoint potentially offended community.  Also exclusive registration prevents others from using the name: if Tam has a First Amendment right, why don’t other potential users of the SLANTS have First Amendment rights to commercial use?

 

RT: shift would have to be, as Sheff says, in nature of gov’t justification—Tam’s first appropriation of the term.

 

Lucas Osborn, presentation (didn’t catch title): TM outsider perspective: use in commerce required, but that doesn’t mean what it means in the dictionary; confusion is actionable, but not what you think confusion means—can include uncertainty among people looking creepily close at your stuff.

 

Effects of 3D printing: manufactured at home; TM owners will want to police CAD files because they can’t control what goes on at home as easily. Knockoffs will become easier and more diverse; creativity and personalization will increase.  Modifications, mashups (I love the connectors for multiple kids’ construction sets).  Normative shift: source of the goods no longer mean the manufacturer; the important source is the CAD file source.  CAD files can be literally duplicated, so no further quality protection rationale if the CAD file is the same (or if the person knows that it’s an unauthorized CAD file).  Left with property based theory of TM.

 

Pragmatically, TM owners want to police CAD files directly. Tech and procedural hurdles as w/DMCA.  Can protect CAD file with TM—IC 009: downloadable virtual goods, namely computer programs featuring [specify] for use in virtual worlds.

 

Some but not all TM owners will embrace 3D printing, maybe even allow you to personalize.  Will a CAD file directly infringe a physical good?  Related goods?  Dilution?  Indirect infringement/dilution based on web host—eBay v. Tiffany means that knowledge standard will apply; maybe we won’t need DMTA, but eBay requires at least some policing.  [Expect to hear about “notice and staydown” with these as well.]

 

Knockoffs and counterfeits will proliferate, magnifying existing concerns with post-sale confusion. Many more uses will proliferate for free: circulating the CAD file will be less likely to be paid-for.  3D printing can undercut the mobs/criminals funded by counterfeits.

 

Normative shifts with personal manufacturing: if I can take a picture of something and reproduce it, creativity and personalization will increase.

 

Lemley: post-sale confusion theories aren’t persuasive on their merits; used instead to get proxy for design rights.  We will probably decide that posting the CAD file is advertising for sale.

 

McKenna: creates a Dastar problem: do people care about the “source” of the file when what they want is the content?  Is a file a “good”?  (Could you even be confused about the source when you know where you got it?)