Friday, April 13, 2018

TM Scholars' roundtable, part 1

Trademark Scholars’ Roundtable, 10th year!
Session 1:  The Distinction Between Trademark and Unfair Competition Law

Introduction:   Mark McKenna: Until mid 20th c, could have said that TM and UC were distinct legal claims that vindicated the same right; thus cts said that TM was a species of UC.  All UC aimed at dishonest trade diversion. Use of another’s TM was an egregious example, but other things w/the same dishonest effect fit under the broader UC umbrella.  TM was a more limited category, not conceived of purely in source designating capacity: it was an ontological category of words/symbols that unambiguously indicated source, arbitrary/fanciful. Descriptive terms weren’t TMs; you could bring an UC claim against second users and the nature of the argument was the same, passing off, but not by copying a TM.  A subject matter distinction.

UC cases did involve uses that might have had legit explanations—e.g., descriptive use—so they had add’l proof requirements, such as secondary meaning and in most circumstances an intent to pass off.  UC was also usually characterized by more limited remedies.  Kellogg—SCt contemplated remedy directed not at name or shape but packaging, but here Kellogg had adequately distinguished its products.  Injunctions were highly tailored and would often include long verbal descriptions of who was making what and courts found them adequate (maybe just normatively adequate).

First federal laws were TM by definition—only technical TMs.  TM and UC then became jurisdictional—TM could be under federal statute, but UC common law.  Pre-Erie, would have been general law of UC, but post-Erie they had to admit that it was common law, so that was a big motivation for the Lanham Act.  Over the 20th c., some significant trends. First, we lost the idea that trade diversion was a central concern of UC, fundamentally altering the conceptual integrity of the whole system, b/c unified concept of nature of harm was lost.  Once TM covered non-diversion, UC became a slop bucket of ideas about things people were doing that we thought were bad. When Congress first started having hearings about child labor and convict made goods, some people suggested that a hook for Congress was unfair competition—producers in other states were at a cost disadvantage to those who were child labor users.  At first hearings (1916), that was dismissed out of hand b/c it’s not passing off, but those theories got more credence as the years went on and unfair competition is increasingly mentioned in the legislative responses (1930s).  Suspects, though doesn’t know, that you’d see same evolving thinking about narrowness of UC to a term that we apply to things we don’t like in hearings about FTC.

Problem: no new concept is put into place to substitute for trade diversion.

Second: we gave up on subject matter limits to TM proper.  Some of that is about registrable matter.  Unregistered marks become enforceable as marks under the Lanham Act.  Courts interpret Lanham Act more broadly than drafters expected.  Disuniformity concerns: courts invented the idea that the law reached unregistered and unregistrable matter; assimilated UC into TM.  Abercrombie mashes up categories of TM law with proof requirements for things that aren’t TMs.  Secondary meaning = requirement for TMs, when it began as a proof requirement for things that weren’t TMs.

Those two together leave us w/free floating doctrine, as in Blinded Veterans, that would be sensible under another system, but look strange in the modern scheme. We used to have a property-like system of TM as such, with UC as an equity system.  These days there’s a lot more pressure in identifying subject matter; the things we’re especially bad at IDing the boundaries of, like trade dress & complex marks, wouldn’t have been in TM at all in the past.

Belmora: once upon a time, it would have been entirely natural to think that even though Bayer lacks TM in Flanax, it had a right for a limited remedy for things like packaging and labeling. The reason Belmora strikes people as such a strange case is that it draws on concepts that no longer fit our system. B/c so much has been pushed into TM, the Q of rights you might have in non-TM matter is hard to ask.

Most of this is in motion in the 1920s-1940s.

Lionel Bently: The UK didn’t embrace the UC language/concept at all. Why not and what effects did not doing so have compared to the US?  Worth starting w/observation that language of UC becomes widespread from 1890s (or earlier).  US cts cite lots of case law from England in developing this distinction—buses using the same livery; 1843 case about boot polish, using label & name; Stone Ale for beer where Stone is a place in Staffordshire, but had secondary meaning and was protected.  So US doctrine is citing all these British cases to establish distinction b/t TM and UC, but British didn’t see it that way at all. British saw it as one big melange called passing off.  Engagement w/foreign countries, trying to develop bilateral relations was part of this, as well as potential multilateral treaties.  1883 Paris Convention: one British commentator thought that TM had to be defined before any progress could be made.  Ontological distinctions of Americans never really stuck in the UK.

Why not: Lots of reasons.  Has come up w/11, but won’t go through them all.  TM registration in 1875 allowed registration of only a narrow set, not even word marks.  1883: invented marks; 1905 became a general definition w/some exclusions, e.g. of geographic marks.  The effect was huge—significant uptake, and developed same disinction b/t technical TMs and UC, except done as registered TM infringement v. passing off, where there was “fraud.”  If you wanted non-fraud protection, you needed registration. 

Also, there was a House of Lords decision in 1891, Mobil v. McGregor, a combination b/t traders from which someone was excluded.  Lower ct had said that courts can’t distinguish b/t fair and unfair competition, and that was reflected in the House of Lords decision—a big signal from the top that UC wasn’t fit for purpose (at least for an imperial legal system).  Related circumspection about courts’ definition of broad legal concepts.  Fear of conflict with existing statutory regimes, e.g., copyright and patent.  Australian High Court’s rejection of INS v. AP—someone overlooking a racecourse can broadcast what occurs at the races: we have all these statutes and we shouldn’t undermine the legislature. 

Also, Germany & France had UC laws in the 1890s/1900s, and thus might well have contributed to a higher level of skepticism in the UK.  In the 1800s, Germany didn’t protect TM well, and there was a lot of counterfeiting; the US didn’t protect copyrights.  Towards the end of the century in both countries, there was a sense of a need to present the country as moral, and its businesses as moral.  Herbert Spencer was a big author for this purpose, especially in the US.  You see in American literature and case law a surprising level of pride in embracing the notion of UC.  Dennis v. Thomas, 1899 Delaware case—principles of high business morality gives “luster” to the system.  A sense that the law needs to control business behavior and also express a moral vision of US capitalism.  The British didn’t seem to need that; cases in Britain at the same time say (in case about competing seed companies that both used prizes and one copied language from the other) that the court doesn’t sit to judge “according to any high standard of honor” what should be allowed—“everything is fair in trade, as it is in war.” Totally different view.  [Talk about an imperialist legal system!]

Did it matter: Variation in US from 1920 through the Lanham Act, sometimes the UC label had effects on outcomes and sometimes less so.  In the UK, we can see more expansive tendencies from time to time even w/o UC.  We find deception in all sorts of places a right thinking human wouldn’t find deception, as a means of expansion. 

There are a lot of commentaries that say UC is just the American term for passing off—a mere terminological difference? But other people are building big conceptual frameworks to explain the relationship b/t UC in the sense of passing off and all these other laws like anti-monopoly laws more generally. Callman in the 1940s etc. start to elaborate ambitious systems for fitting these things together within a principled notion of regulation of competition.  Read first 120 pages of Callman’s 1945 book! It’s amazing, though obviously wrong.  He has an idea of competition as a relationship—very Germanic, duty of care based. You have to abide by the rules of the game—lots of sport analogies.  The umpire is the consumer, so you mustn’t mislead the consumer.  You must compete on your own feet, rather than misappropriating. 

He thinks that UC was sometimes just passing off and sometimes not, at different times/jurisdictions.  INS v. AP is the big point for misappropriation. Most INS commentary says it was a one-off and everyone just distinguished it.  But more contemporary commentary wasn’t sure—some very broad statements of the rule.  When we all leap quickly to Cheney Bros. and later cases, remember that at the time it seemed to signal some big shift.  That is a shift away from UC as passing off to UC as any form of misappropriation.  Erie, and even before Erie, INS was a casualty of the legal realists.

In the UK: noncompeting goods. 1898, Kodak bicycles infringed Kodak cameras, as passing off. Walter v. Ashton, the Times newspaper was infringed by Times for bicycles (again).  Showing the flexibility of passing off to expand well beyond what we’d think of as diversion of primary markets.  Having said that, 1947 we see a case on personality merchandising, McCulloch v. May, the High Court says that a radio presenter’s name isn’t infringed by use on breakfast cereal—you need a common field of activity for there to be passing off.

Discussant:                  Robert Burrell
Differing legal climates. Rise of legal realism in the US. Affects culture in which Schecter was writing, as Beebe has written: problematized the idea that you could throw around the label of property. It’s a conclusion, not a reason.  Never had the same influence in Commonwealth jurisdictions.  Earlier years of 20th c—passing off as protecting property in goodwill was taken very seriously by commentators.  That’s one reason why UK didn’t embrace UC—they thought they were protecting property.  However, bear in mind that these things were often close calls.  We now think of an Australian High Court case [Victoria Park, 1930s?] as the final rejection of UC in the Commonwealth, but it was a 3-2 decision.

We tend to write out of legal history: there might be a significant element of chance.  1891 McGregor case says there’s no law of UC in the Commonwealth, but a load of unregistered TM cases where you want to find the D liable.  You have to reach for some other theory.  If the House of Lords had dealt with a bad guy in 1890 maybe we would have embraced UC.  By the time the Australian High Court decides against UC, INS has fallen out of favor even in the US.

UC as nation-building: INS had an idea about nation-building.  Commonwealth had a similar dynamic, there about ensuring that other bits of the Commonwealth remained in the fold.  Imperial control, and leverage in international negotiations to create a law of the Empire.  1890s: clear imperial policy to ensure TM law uniformity, but that was when relations b/t imperial gov’t and self-governing dominions was becoming increasingly fraught. W/TM, though, happy to follow UK lead, so there was no need for Privy Council to try to harmonize through development of the common law—the self-governing dominions were playing nice and adopting UK law; no point in inflaming things w/massive expansion of law.  There was also possibly a concern about being overwhelmed: if there’s a broad law of UC, will courts throughout the empire keep coming back to the Privy Council for further instruction about what that means—a docket control concern.

Parliamentary sovereignty: no limit on what it could do. Not unimportant that in Australia, which did have those considerations, Victoria Park was in the 1930s/after the 1920s, a key moment of Australian law in which there was a massive expansion in what the federal parliament could actually do. There would have been no impediment to federal regulation of things like UC.

Bob Bone: Why create a category of technical TM infringement? Why did trade diversion drop out?  His answer to #1 involves a particular conception of property rights; sometimes concerns about difficulty with granting rights w/nontechnical TMs. 

Second, trade diversion was never a normative component, it was a standing requirement so that the firms had a reason to enforce consumer harms.  If you drop trade diversion as a normative requirement, you get reasons to protect technical and nontechnical TMs (w/more proof for the latter), but that distinction isn’t stable as soon as you start to Q the assumptions of technical TM infringement. And that begins to happen very early in the 20th c., even in the late 19th.  People recognize that once you drop out the property theory, TM and UC look very similar.  A lot of folks saying that UC is about fair dealing in the competitive market, as well as a leftover idea of UC as passing off.  That latter is largely doctrinal.  People are struggling to see how much further it can be pushed, and they recognize that UC is exactly what it says: fairness in the marketplace [but not competition?], and those principles have normative extensions, such as INS v. AP.  It’s a matter of overcoming 19th c conceptualism, which becomes legal realism; you see the boundary b/t TM and UC is porous/disappearing, and then you have the normative justification (fairness in market) for a further extension. 

Graeme Dinwoodie: Q of judicial role: extent to which courts in UK felt constrained by the statutory monopoly.  In the 1970s, in passing off cases, court says it can take inspiration from what the legislature is doing and protect under passing off.  In the US context, there’s a more developed sense of the Lanham Act as encompassing the broader subject matter—something like a delegation statute allowing the judiciary to develop the scope of rights.  Is the line b/t infringing a registered mark and UC the same as the line b/t registered & unregistered marks?  Related goods as a line?  Is any case against an unrelated good part of the slop bucket, or can they be trade diversion, given the development of businesses over the 20th c.?

McKenna: The problem was abandoning trade diversion and putting nothing solid in its place. Searching for a way to understand a theory of protection against noncompeting goods that is not limitless.  Closely related goods: he thinks that’s ok, not just vague sponsorship/affiliation. 

Dinwoodie: once late 20th c. becomes all about endorsement, that’s hard.

Beebe: confusion isn’t a limit?

McKenna: confusion about what?  You need a theory about which forms of confusion and among whom are relevant.

Bently: thinks the registration system was much more ambitious initially—designed to replace passing off.

Burrell: agrees, 1875-1900, people were speculating about whether registration was an absolute precondition.

Stacey Dogan: but it’s also important if there were no cases saying that.  We think the 20th c showed a big change, but many of the old cases rejected broad claims b/c there was an interest on the other side—the D wanted to use a geog term or their surname. There aren’t a lot of cases from the 1800s where the court says there’s a lot of confusion and no justification for the D but nonetheless we won’t intervene. Part of it is changes in commercial context through the 20th c.

Jake Linford:  Path dependence/hydraulic pressure.  Could be caused by good D’s att’ys, but cts don’t like leaving harms that they see unaddressed.  [Depends on whose, right?  Poor Joshua!]  Somewhat persuaded by affiliation/sponsorship confusion as a response to hydraulic pressure: competition could mean more than it used to mean, and that’s why such confusion is actionable. There are reasons to be troubled by that, but it is a plausible story for how expansion happened.  If trade diversion is just makeweight/standing, why can’t consumers sue for their own confusion?  Path dependence keeping consumers out of court?  Why shouldn’t consumers have more power in this space? But trying to vindicate that, w/o carefully defining confusion, leaves a lot of room for rights overexpansion.

Lisa Ramsey: Is it even possible to have a TM theory that isn’t limitless/supplies the necessary rules?  One option is a theory that guides most issues, but uses other considerations to limit it, such as free speech/competition.

Jessica Litman: in the original and 1988 legislative history, there is significant evidence that Congress (some members at least) thought that consumers could go to court, but courts slammed it down—all but unanimously didn’t want it in the courtroom. 

Ramsey: California state law.

Bill McGeveran: Almost all UDAP laws allow consumer standing.

McKenna: in a bunch of old cases, cts say TM/UC is about harm to competitors, while consumers have their own claims in fraud & deceit.  There are even a pair of parallel English cases with consumer/competitor Ps.

Bently: there are different accounts of what’s supposedly the first TM case; some accounts say it’s brought by the customer and others by the competing trader.

Dinwoodie: it might be possible to hollow out the concept of competing goods in the same way so it also doesn’t do work.

McKenna: competition is in UC for a reason.

Ramsey: “deceptive” trade diversion does more work.

McKenna: that’s another thing that happened: “deceptive” is a lot more limiting than “confusing.”

Bone: we know the theory; the problem is that it becomes really weak, if supported at all, as we push it, and the empirical basis of the theory may not be very strong. But the theory of reputational harms from association is perfectly cromulent.

Dinwoodie: once you accept that the claimant has the possibility of expansion, it’s not just lost sales but lost potential sales that matter.

Bone: all that fits the core theory; it just goes too far.

McGeveran: the content of what courts substitute in for direct competition/other traditional limits is much more inchoate than what went before: makes it easier for the next bout of hydraulic pressure to lead to expansion.

Beebe: material conditions change; the rise of brands.  Current analogy: globalization and Googlization—tech and social conditions change, and perhaps that helps explain Belmora.  Political conditions also matter: the Depression, the New Deal, concepts of antitrust/trust—how this affects concepts of TM law.  They trickle down into the law, just as current conditions do.  We’ve analyzed TM through a democratic system, which affects why we ask why consumers don’t have standing.  What would a communist/authoritarian TM system look like, where the individual serves the state and we don’t care about consumers, it’s just secondary.  How would you articulate that version of TM law or unfair competition outside a liberal democratic system?  [China?] [There’s also a really interesting book covering Nazi copyright law with a similar set of Qs.]

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