Trademark Scholars Roundtable, Stanford

Trademark Scholars Roundtable

Session 1: The Current Framework  

To what extent does current trademark or unfair competition law reflect consumer expectations or seek to shape or set them?

Introduction: Stacey Dogan

Categorize rules as norm shaping v. norm following. To what extent are courts taking into account other values that may relate in some ways to consumer expectations but are often independent of them—speech, competition? Almost everything that is supposed to shape consumer expectations actually belongs on the final axis: courts not reflecting expectations of consumer perception, but decisions made recognizing some other value intrinsic to competition law or complementary/independent like deference to patent law, speech considerations.

Malleable notion of consumer confusion/distortion of economic concept allows courts to dress up anti-free riding in the language of confusion. They’re saying they’re shaping the law to intervene when consumers will be confused, but there are many doctrines like the merchandising right and early internet cases that use language of confusion to shape the market where courts think it’s just not fair for D to take advantage of economic value of P’s mark. They are often unmindful of the consequences. Might shape consumer expectations de facto in a way that disserves speech values/competition values/deference to patent law and other values.

Discussant: Mike Grynberg: one entry point may be reasonably prudent consumer; a construct the court can’t avoid. 9th Circuit moved from consumer as fool to consumer as reasonably sophisticated in internet cases. Consider consequences of cases like MTM for persuadability of consumers: allows Amazon to serve as a platform, but a different one that subjects us to algorithmic nudging; allows deemphasis on TMs online. If you use Amazon as your agent, it can mask the effect of the TM/make you less vulnerable to persuasion that Beebe talks about but does allow access to search/information. One consequence: system level effect of overall rule; people tend to start searches at Amazon.

Dev Gangjee: quality function. Consider that clothes were made in same factory for major brands; building collapse killed a thousand, but the brands were never blamed for that. Outsourcing allows them to say this has nothing to do w/me: prevents the shaping of consumer expectations. Meanwhile, Corona beer’s sales have been harmed by the virus: TM has limited amount of control.

House brand space: What’s happening there is interesting; recognizes both the power of brands but also the policy of allowing competition.

Dinwoodie: is there symmetry b/t situations in which courts find confusion because of non-perception-based reasons versus when they find confusion unlikely for non-perception based reasons/values? Are there reasons they might behave asymmetrically around articulating their reasons?  

Dogan: Sometimes, in the face of confusion; we need to think about consumers’ interests, not just their expectations. Those other factors come into play in consumers’ interests.  Wal-Mart frames itself as about consumer expectations, but it’s really about policy; KP Permanent explicitly says it’s about rules even in the face of confusion.

Fromer: consumer doing the rhetorical work as the author in ©; the consumer is invoked but has no control in TM litigation; used by two businesses to advance their own interests. Public perception of TM is not what TM is: Sussex Royal conflict; public perception is either “ this is not right” or “they can do what they want because they are royals,” whereas TM doctrine wouldn’t care whether they are in fact royal.  Broader public understanding of TM as something they can believe in, but what that means for policy is unclear.

Linford: Tendency to speak about consumers as people who can’t figure out what they want or don’t know what they want; consumers as Trojan horse for market manipulation. That’s troubling to him. Is it appropriate to think of competition as divorced from consumer needs in a market? Can competition be divorced from how consumers see the world? [If consumers are heterogeneous, then yes v. the consumers whose confusion is given priority in many of the troubling cases.]  Do we think that litigation reaches consumers or do consumers ignore the ripples from that litigation? If we think that consumers don’t react, then TM will create a mismatch b/t law & consumers’ use of TMs as we try to refine it.  Note that TM does not require the TM owner to keep consistent quality; you can’t forfeit the mark by just changing composition, as w/Twinkies. Then it becomes unclear why you can abandon the mark by transferring it and changing composition.

Lemley: hears the claim that norm entrepreneur version of TM is anti-consumer but that’s wrong. TM doctrine isn’t driven by consumers, it’s driven by [P characterization of] a small subset of the least sophisticated consumers—easy to have a one way ratchet when 10-15% confusion is enough. Neglects interests of nonconfused consumers.  How the law feeds into consumer decisionmaking: true that it rarely does so directly. But what it does is mediate in the forms of product choices that are available or not available. If the law decides that only university licensees can sell university Ts, then consumers can’t readily access non-licensed T shirts. If Amazon v. MTM comes out the other way, consumers get different choices and behave differently b/c product mix is now different. What Lemley sees is not just a battle over reasonable consumers but increasing move away from focus on consumers at all: TM is not paying attention to consumers’ interest: dilution, merchandising right, free riding, counterfeit cases. Even in classic consumer protection cases, the thing we’d theoretically care about—surveys—play a small and lessening role over time in deciding cases. Increasingly determined by judge’s perception of right answer.

Litman: consumers don’t need to make the relevant legal distinctions but that does mean it’s hard to formulate the proper question to consumers, for whom law is an undifferentiated cloud. If we took consumer reaction seriously, we have to start asking different questions.

Burrell: are there situations where courts genuinely set out to try and shape consumer expectations? A degree of consumer stupidity we’re not prepared to tolerate. Seems to come up in random ways. We’ve been told that anyone who thinks McDonald’s makes Big Mac wine is so stupid we can ignore them. But why that and not other cases when courts protect the “moron in a hurry”? Court just doesn’t like this group of consumers, is that really the reason?  Historically and to this day in EU, there is a positive dimension to trying to shape the consumer: attempt to build a European consumer as a nationbuilding exercise. [Shari Diamond: how is that done?] We have a court that takes a certain view of the linguistic competence of the average European consumers; in some way consumers in Spain/Germany are supposed to be equated. Pushing not just uniform TM but a notion of European-ness.

Gangjee: reasonably observant consumer traces back to labeling cases/free movement of goods cases: a consumer is supposed to pay enough attention to see that pasta is produced in Germany and not Italy: that’s a conscious creation of standard to enhance free movement of goods.

Dinwoodie: Explicit policy: we want to allow the capacity for businesses to be Europe-wide. The consumer is used to further a policy about businesses.

Ramsey: First Amendment goals: does regulation directly advance gov’t goal without suppressing too much speech.

RT: (1) Natural for courts to want to have their cake and eat it too in terms of saying “our policy rule won’t cause much real confusion”; not clear we want to take them that seriously, though they probably are saying something about their expectations of consumers versus the error costs of litigation. (2) Double identity/counterfeiting mean that courts don’t have to articulate their policy reasons when they’re finding actionable conduct. Maybe an argument in favor of those doctrines so courts don’t have to make up rationales that are then extended in weird ways?

Session 1, Cont’d Mid-Point Discussants: Shari Diamond, Mark McKenna, Alex Roberts, Jeremy Sheff

I had to teach so missed a bunch!

Notes from Alex Roberts:

Original prompt was about current tm law and how it reflects or seeks to shape consumer perception

Discussion has been predominantly about courts

[Linford] mentioned “consumers as the trojan horse that motivates brand manipulation of markets” –I want to talk more about that brand manipulation

b/c tm law isn’t just courts, it’s C&Ds, it’s disputes negotiated behind closed doors, it’s TM decisions made in the shadow of the law

brands can be remarkably effective in shaping consumer expectations and thus nudging the law in the direction they want

Best example is super bowl policing

We all know that in principle, NFU says it’s ok to mention an event (boston marathon case, but more commercial)—get your wings and pizza for SB, etc

BUT NFL has policed so aggressively that brands are terrified and won’t use it, pushing consumers to believe that the only co’s who can utter the words are SB are the official sponsors

When/if a court goes to enforce a claim, if it looks to consumer perception, it may find NFL has changed consumers’ minds and expectations

Another example is genericide—when brands like xerox really actively deploy an anti-gen campaign, do consumers change understanding? Does that budge the law? Maybe not in the same way

Another is look-for advertising

Trade dress may not seem to be used as a mark but co’s drawing attention to it can be persuasive both to courts and consumers

Recent ex this week when it came out that apple doesn’t let movie villains use iphones or apple computers

Whether by product placement agreements or just market pressure

Will that have an effect on consumers? Expectations about product placement seem to be all over the place

Oullette: why is it so hard to have good data in trademark cases? Outside experts thinking about how to conduct surveys, validate methodologies—could do it as distinct from any given case, test against major brands in market. [Those brands would hate that.]

Lemley: courts are surprisingly sophisticated analyzing the limits of surveys, compared to how we treat other evidence. The broader Q is whether the survey is really getting at the thing we want to get at, a tougher issue. Both sides hire survey experts whose job is to design a survey that will get the desired result to the greatest extent possible—not cheating, but shading. Neutral technical expert? Might be interesting.

McKenna: There are so many different theories of confusion it’s impossible to design a survey to capture them all; the survey is wonky because the parties are gaming their theories of confusion. Who are the relevant consumers? Also a key question that is manipulated; can’t be standardized.  Doctrinal complexity can’t be fixed by surveys.

Diamond: may be able to get more consensus, e.g. on who to survey. Such a strong adversary system that it’s hard to intervene in that. In Teflon surveys, the reports never report who flunked the test. Those people are gone and ignored in our analysis, but we shouldn’t do this—merely taking them out seems bizarre unless we just don’t care about them [which might make sense in a confusion case but not a genericity case].  Posner says that cases go to juries only when the judge can’t figure it out (and therefore when it doesn’t really matter who wins).

Ramsey: surveys don’t separate out source, sponsorship, or approval, but those aren’t the same things. Could encourage a model survey that would test these things differently. For distinctiveness surveys, we’re not asking the right questions either—compare to Roberts on failure to function. Association w/company is not necessarily identifying and distinguishing the source of goods & services (e.g., Gene Simmons hand gesture). More nuanced questions should be about whether a particular feature is acting as a TM.

Bone: there’s a point in between shaping consumer perception and trying to follow it: I have a view of what consumers should think and I make a decision in line with that view, hoping consumers will follow. If we thought about harm and not just confusion, a lot of the problems we’re identifying, though not all, would be framed differently/would go away.  TM is funny b/c we do focus on the consumer. We have a market based view of social value. If the consumer wants it, it matters from a social perspective. Compare ©, where we don’t do surveys about what authors think. We instead have a concept of authorship and of a good society that has authorship, regardless of what consumers might want. Prevents us in TM from asking similar Q about a good society and things like Veblen goods.

Sheff: Veblen goods is more complicated: for me to win a positional competition, you have to lose. So giving some consumers what they want means giving other consumers what they don’t want. And maybe more of TM than we would like to think is like that.

Grinvald: other structural institutions that shape the market: to produce a movie, you need insurance. The insurer demands all IP be cleared. That affects what gets on the screen (see recent reporting on bad guys not using iPhones in movies) and then that affects consumer perception.

Gangjee: how do you use empirical evidence to construct an abstract model of the consumer? Positional signalling: where a symbol appears on a product affects whether it functions as a mark. German case about hashtag phrase on T-shirt: the initial decision is that it’s informational, but if it’s not in use how do you know where it will be put on the T-shirt? Court ultimately says that as long as a TM use (on label) is foreseeable even if it’s not the most likely then it’s inherently distinctive, which is an easy path for TM registrants.  Lionel Messi/Massi case: if a significant proportion of the public is not confused, registration should be allowed: now at the ECJ; the lower court decision reversed the traditional rule and we need to decide which public we care about.

McKenna: In subsets of cases, we could discount consumer expectations altogether or we could weigh it with other things; consider whether we do it wholesale or retail, which connects to Fromer’s earlier point about the role of the jury. In the world of technical TMs, the proof structure was technical TM + competing goods = liability. The rules were formal and not functional. No room for jury in most cases. To the extent we want similar rules, they are likely to be best implemented on sj and similarly. Unfair competition was equity and not for a jury at all.