Saturday, June 25, 2022

Trademark Scholars’ Roundtable Session 3: Abandonment of Trademark Rights

Introduction:   Robert Burrell

Australia/NZ is probably unusual b/c abandonment plays 3 distinct roles: (1) not a purely rhetorical device. 1863 case: from the moment you first use a TM, you have a property right—no goodwill, no reputation required. There was a brief period where that just gave you a right to stop others registering; after that, UK abandoned that principle but Australia didn’t. First user can oppose/expunge if first in marketplace.  No right to injunction or damages, just keep off register in double identity cases. No age limit on the use. No statutory nonuse periods. The sole exception to that is abandonment. NZ has adopted broad concept of constructive abandonment, but may be moving away (most has been at the TM office).

(2) Goodwill can in theory be abandoned. UK cases: Discussions of abandonment/intent to abandon have taken a strange direction in that we know for certain that intent is not a necessary condition. Goodwill is perishable; if you leave it neglected long enough it can dissipate throgh neglect. What we don’t know is whether intent is a sufficient condition. No one cares in Australia b/c of statutory consumer protection regime that offers protection for registered and unregistered marks when you have a reputation. It’s clearly not a proprietary interest and clearly not subject to abandonment, so you don’t worry about intent.

(3) Discretion that courts have to preserve an unused mark on the register. Open to the TM owner sob story. Old UK case, Hermes TM: take into account whether the TM has been abandoned.

Jake Linford

Prefers forfeiture, b/c it’s not just nonuse but naked licensing and alteration. Abandoning goodwill is easier in the US than Australia but not easy. Courts don’t like [noncriminal] forfeitures in TM and elsewhere. When there’s use that creates consumer perception you have a TM, and if you lose one of those things does the TM still exist? Residual goodwill: he thinks that’s enough as he has written. Given three constituencies—incumbent mark owners, new entrants who need space to compete, and consumers—if properly cabined, goodwill should be recognized if consumers are still investing a term with source significance.

How much harm does naked licensing actually cause consumers? TM law has relaxed its rules in a modern economy. Looking for relationship w/licensee: are you doing the monitoring we expect? If so no forfeiture. If not then you are ok if you have a special relationship.

Transfer in gross/Buying TMs: powdered energy drink w/caffeine isn’t similar enough to a drink w/no similar ingredients but caffeine. This seems like the right question to him.

“Generislide”: mark becomes generic. He’s willing to give rights to a born generic term that gains secondary meaning—changes in secondary meaning should count in both directions.

Actual abandoned business/retro branding: Macy’s is still selling t-shirts for all the old stores it bought up and rebranded. And courts let them. [Court doesn’t ask whether the t-shirts have any continuity w/the old brand or anything like that.]

You could impose a materiality test—is there really still goodwill that consumers care about?

Discussant:      Jeremy Sheff

There’s no abandonment through continuity of use in a way that fails Linford’s test for continuity of goodwill—you can change your product/service and not abandon as long as you are a going concern. If we were consistent about why we care about abandonment, we should be policing for that kind of conduct which creates the same harm/exploitation of consumers that Linford says we should care about. Thinking about that inconsistency can explain what it is we really care about. Derek Parfitt’s Reasons and Persons thinks very deeply about what it means to be the same person over time. Firms are not people and raise different concerns, but his conclusion is that the question of identity is an empty question. Whether Sheff is the same person today that he was 20 years ago is not a useful question for how we should think about our actions and our future selves. What matters is a kind of psychological connection between those selves.

W/r/t abandonment in TMs and why you can’t abandon through bad use, there must be something about what we think the role of firms is in our lives and how they communicate with us. Something to do with whether consumers will blame the right person if they’re unhappy. TMs are really assurances/promises.

Linford: change in the mark can abandon former goodwill. Shahar Dilbary has a paper saying we should penalize mark owners for changing goods/services, but that didn’t happen. Posner said some similar things.

Dinwoodie: what is the general common law of abandonment in Australia?

Burrell: usually intent is required—leaving hay on a farm, you still have to demonstrate intent to abandon plus divesting of possession before the landowner can claim it as abandoned. Intangible property—that reduces to (omission +) intent.

Mike Grynberg: Residual goodwill and consumer deception: the predominant concern is: people who really like X and are happy to see its return but are deceived about its quality. But maybe brands are usually more mundane. Mentally available and familiar, but not necessarily brand loyal. If that’s true, does the residual goodwill story still matter? Is the game worth the candle of testing materiality?

Linford: then we also don’t need naked licensing and assignment in gross as doctrines either. In a strong form, we wouldn’t care about passing off either. Extreme form: no need for TM. If we take naked licensing/assignment in gross seriously, it ought to be grounded in consumer perception.

RT: I will never criticize a materiality test.

Standing: Right now the test is inconsistent—the real harm happens to other people in the market, not the abandoner. Consumers don’t have a claim. This prioritizes property over people.

[born generic: saying that linguistic change happens in both directions ignores the role of actors with agency knowing the legal regime and manipulating it, not just letting linguistics happen. A regime that works fine as long as people aren’t optimizing based on the regime’s rule can become dysfunctional if people start gaming the rule. That terrible crab house that keeps suing people arguing that it’s not generic any more is telling you what that system looks like. And if you sue individual restaurants you’ll win a lot of your cases regardless of merits.
Macy’s case: notable to me that court didn’t ask about sales under the name, also of course the t-shirts have nothing to do with what the stores were actually known for.

[Naked licensing: not usually a situation where we say this is “not a TM” but rather this is “not a TM owner.” The consumer protection concerns are very different in the two situations. I want to talk about the example of licensee estoppel. Who’s really in charge of the meaning? Is there a way to create consistent treatment of licensor behavior if we say consumer perception must control? Saying that naked licensing is about consumer perception is unlikely to help because consumers are extremely unlikely to give any thought to the Q who controls the quality of this store, except perhaps when they assume a national franchisor where there is a lot of secondary meaning—they’d need so much information, both legal and factual, to answer the question that it’s probably not worth asking.

One harm that naked licensing—or even non naked licensing in unrelated goods/promotional goods categories—does to consumers is products liability. The mark draws them in but the TM owner is not responsible for the harm done thereby.

McKenna: passing off used to say: if you’re not trying to serve people any more under the mark, then you aren’t suffering any harm. Incoherence across TM about why we would care whether consumers are able to attach a particular mark to a particular entity. In infringement, we assume that if you can’t do that, then harm to consumers follows. If that’s true, then naked licensing should be super-strong rule. And we wouldn’t care about residual goodwill b/c the entity isn’t exercising control—consumers are wrong about that. TM owners get to pick whichever characterization suits their interest at the moment. Naked licensing: right now it’s very hard to nakedly license if you wrote it into the contract, but why isn’t the rule very strong requiring serious quality control?

Jeanne Fromer: lack of symmetry b/t incumbents and other participants. One of our side findings on TM depletion is that incumbents can keep registering the same mark in other spaces that other people are having problems registering. We’re seeing the same thing here—a business that’s already operating can more easily assign in another space. TM feels very propertized here rather than based on use.

Robert Burrell: heritage brand cases in Australia, some of which produce really undesirable results. Beer company suppressed company that had actually got the old recipes and wanted to produce the old beers. Now they’ve learned their lesson and make 100 bottles under the old brand each year which is really just Foster’s under different labels.

Linford: maybe we should have an auction for the rights.

Gangjee: maybe it should be deceptive to put Foster’s in the heritage bottles.

Ansgar Ohly: Asymmetry: result of using lower quality ingredients in an old brand w/out these shenanigans.

Jennifer Davis: market for brands is huge and ongoing. Private equity firms buy businesses b/c of the brand, sack the workforce, find cheaper ways of making things, and that’s what PE is all about.  Apple can outsource all its manufacturing to China—is that abandonment? Nike does the same thing—we market Nike shoes, we don’t make Nike shoes. A lot of what we’re saying is about closing the barn door when the horses are gone. It’s a new age. Distinguish what a brand does from what a TM does.

Gangjee: can anyone raise rule (1) from Burrell’s account in Australia?

Burrell: Yes! You only need to demonstrate that the applicant/registrant is not the proprietor of the first use. Even if it’s in the same corporate group, you lose if the first owner was A and you’re C.

Dinwoodie: if TM is really a Q of industrial policy/organization of firms, then it is not clear how consumer perception matches up to that. Other common law countries have been allowing more naked licensing. [Burrell says Australia has snapped back towards the American rule.]

McKenna: we assume it’s inherently problematic for consumers to make associations in the infringement context, and those assumptions just disappear in the product liability context.

Lisa Ramsey: genericide v. abandonment. People say “we have to enforce aggressively or else we could lose the mark.” One thing this means is that, for good or ill, TM owners demand C&D rather than licensing fee (as with ©).

Ornamentality as non-TM use/nonuse. If it’s on front of T-shirt, does it really have source significance?

Linford: Consumers should be able to sue under the Lanham Act! Any one consumer might not be speaking for all consumers, but that’s not special. FTC lacks resources. More pressure on the system would be helpful. He doesn’t want to get rid of naked licensing but wants to shift to more consumer oriented view.

Firms do need to change from time to time. Coke no longer has cocaine.

Gaming is an issue, but not every business can make fetch happen. [But you don’t need to make fetch happen, you need to sue.] Two Pesos had an important insight: a system that relies on secondary meaning favors bigness, and that’s a problem of its own.

Mid-Point Discussant: Ansgar Ohly

In EU, abandonment is not a big concept. Not a use-based system, which makes it more property-like/abandonment plays less of a role. You can surrender a TM, and there’s also the possibility of revocation for nonuse and genericide and in the case it becomes likely to mislead the public. Parallel questions of residual goodwill are discussed in unfair competition law, where there are huge within-EU differences.

Revocation after 5 years without source-indicating use. There is a lower instance German case where someone registered BEATLES and used it on T-shirts and mugs; revoked for non-TM use/not a source indicating use. Also a lot of discussion of territorial scope of use for EUTMs. Is use w/in one country sufficient? The trend in the ECJ case law: borders don’t matter; if territorial market is big enough, it can suffice even without crossing borders. Use of TM in different form: directive/regulations say it’s still use where the distinctive character is not changed. All of this is much less relevant in practice than it is in the US. UK IPO study: cluttering and nonuse of TMs in Europe—found lots of deadwood on EU and UK register, much worse on the former. Usually, the catalogs of goods and services are much broader than they are in the US. Nonuse is not as strictly enforced in the EU as it would be in the UK. UK IPO envies the US a bit. Loss of UK views in EU has decreased diversity of interest groups; destroyed equilibrium b/t rights-skeptical UK approach and maximalist French approach.

Assignment/licensing/quality control: Less along these lines too. There is an ECJ case, Elizabeth Emanuel, who left her company and the co kept using her name. Was this misleading? EU says no problem b/c she transferred all her rights. Older German cases allowed licensing contracts to be voided if there wasn’t quality control, but those cases seem to have been replaced. Consumer deception is an issue under unfair competition, but only then.

Residual goodwill: not a use based system so that doesn’t play a role. Unfair competition/passing off might care—in Germany, there is a possibility of passing off where abandonment doesn’t play a role if consumers still remember the TM and link it to goodwill.

Case study: supervised a thesis on “socialist brands” in Communist countries. Some companies are trying to revive them. Why is it misappropriation? There are some cultural heritage protections, and his student argued that there should be a state authority superintending these brands. Ohly is a little skeptical, but links to questions about whether there ought to be controls over use of abandoned brands. The products today are not the same as the old ones—they’re better! And everyone in Poland knows that the state owned companies collapsed, so there’s less of an issue of consumer protection.

Fromer: In the US, relative examination matters—an abandoned registered mark will still block other registrations. In the EU it won’t, and no one will oppose, and that matters to how much crowding there is. People are comfortable coexisting, and there are a lot of secret agreements; France is the only EU country that makes people register and publish coexistence agreements. There could be a ton of “dark matter” naked licensing as long as a third party is not pushing on opposing or exposing this. It’s not registration-based v use-based but choices made about coexistence agreements, not doing relative examination, and using unfair competition as a backstop that conceals all the policy choices in the EU.

Gangjee: The searching agencies may also matter here: if you get a search result that is scary you may back off.

Fromer: never had a sense that anyone backs off.

Burrell: you search the owner company, and find that it doesn’t exist anymore and go forward.

Gangjee: depends on the entity.

Burrell: SMEs don’t use search companies like that. Once you get down to a list of 3 options you will investigate.

RT: product liability?

Gangjee: TM use is part of the multifactor analysis of who is liable under UK law.

McKenna: what is the dormant goodwill of a socialist brand? Nostalgia is not goodwill in TM’s meaning. Identity as a source is goodwill. We frequently accept in casual conversation that if a mark refers to something that I recognize, that’s a TM value. But that’s steps removed from actual goodwill.

Ohly: TM v. brand—feeling nostalgic is brand value, maybe.

McKenna: especially if you know the companies don’t exist anymore, it’s just a cultural artifact.

Sheff: labor of creation of value leads to feeling that there should be control over value.

Ramsey: like trying to get rights in a famous work of art. The options should be that everyone can use it or only one can.

McKenna: but Disney builds an empire on Grimm Brothers stories. We only notice these claims in certain circumstances.

Ohly: w/socialist businesses, it’s not just on a T-shirt; people are trying to create the products, and so you need a TM.

Linford: if it really is nostalgia, then we should treat it like Black Lives Matter—anyone can use it. But if the argument is just that consumers built the brand value with the TM owner, I would be cautious.

At the registration stage, doctrine does seem to care whether you’re lying to consumers (misdescriptiveness, deceptiveness, false association). Could we do anything for consumers later?

Burrell: one complexity of EU system is that it covers countries with very different histories. Debate over Stalin vodka is funny in England, not funny in Poland. Australia has an embarrassing protection for a specific football player. But take care about cultural heritage, which is really important in some jurisdictions.

McKenna: distinct from other TM questions.

Grynberg: but could be put in same box as Black Lives Matter—related to TM function/failure to function.

Dogan: concept of public domain: you have to base that on failure to function/expressive meaning is so important that you don’t think anyone can or should be allowed to try to develop secondary meaning in it.

RT: just want to note Dogan’s standard move here of uniting descriptive and normative—completely normal in TM but worth distinguishing b/c they have different foundations and overlapping but distinct justifications—the descriptive gives heavy weight to error costs. [Lots of discussion here: my take: if your justification for having an essentially unmeetable standard of proof is fundamentally normative then you should know why and be willing to talk about it. But also I think that the fact that people don’t in fact seem to overcome F2F refusals with evidence of secondary meaning is evidence that holding them to a high standard of proof is useful and suggests the underlying intuition about likelihood/empirics is correct. Others disagree with me about the importance of textualism/whether textualism leaves room for making these normative decisions, including the statutory language “capable of distinguishing” which is not subject to the “unless” conditions of the rest of §2. Also, I think “protecting the system against gaming” is a good and useful normative rule that you can definitely adopt.]

Ohly, in response to Q: consumer protection largely enforced by competition authorities.

McKenna: it was courts & PTO that created the rule, only later enacted into the statute, that functionality trumped secondary meaning. The statute has always recognized what courts have been doing so we shouldn’t be overly reliant on what the statute currently says.

Gangjee: Norm of protecting the system emerging in the caselaw now in bad faith. People who would file a fresh application every 5 years. The system is premised on source identification; if you’re just doing that to avoid use then that’s bad faith.

Burrell: if they file again next week, can/will the examiner acknowledge that? Will the examiner even know? How do you feed that back into the system?

Gangjee: the pattern was bad faith. But would require opposition to pick that up.

Friday, June 24, 2022

TM Scholars' Roundtable: Session 2: Relevance of Ornamentality Elsewhere in Trademark Law

Does the ornamentality doctrine have doctrinal purchase elsewhere in trademark law? For example, embedded within analysis of likely confusion factors? In the fair use calculus? As the basis for the development of “defendant-side functionality”? In what ways is the ornamental nature of a defendant’s use relevant to defences based on artistic or expressive use (or some other defence)? In other defences? Should the assessment of ornamentality relevant to the legality of a defendant’s use mirror the assessment made in the acquisition context? Is the invocation of ornamentality in the infringement context simply a re-assertion of the supposed trademark use doctrine? If so, are there lessons to be drawn from the debate over the existence of that doctrine?

Introduction:   Ilanah Simon: EU perspectives from the infringement side of things. Danger of waiting until the infringement stage, which is that you’ve already given the right to someone who can assert it. People may not understand the limits of the right. Separation of decisionmakers means that rights are granted by a completely different institution than enforcers. UKIPO/national offices will not talk about scope and have no mechanism to do so.

May be harder to show likely confusion where there’s no distinctiveness; focus on distinctive components may be part of that. But there is an assumption that registration = minimal distinctiveness unless validity is questioned. So granted mark is rarely interrogated.

Lack of concrete examples of nontraditional marks being enforced in court also makes it hard to say what’s going on.

Some courts/authorities: Mere embellishment can’t infringe because there’s no association if it’s perceived as an embellishment. But she’s not convinced this is viable. Hasn’t been raised recently in EU. EU has moved on: dilution/unfair advantage. Adidas theory: If you use two stripes, then of course you’re trying to make an association with three stripes. Even if it doesn’t blur, it takes advantage of Adidas. Even though rejected in Fitness World, still works as a general theory. A man riding a horse on the front of a t-shirt: of course you’re trying to make that association w/Polo, equestrian organizations aside. Even if you put Lettuce Turnip the Beet on the front of a shirt—though if nobody’s heard of it, perhaps you’re fine. Alluding = taking unfair advantage unless there’s no reputation. But our reputation standard is low.

Defenses: we don’t have fair use as a catchall; specific list of enumerated defenses. But there is a defense for nondistinctive use. Don’t really know the boundaries of this yet. Extended from descriptive use (sort of like US descriptive fair use).

EUIPO not as diligent as the USPTO. LTTB is registered in class 25.

Gangjee: since they removed disclaimers, there are also possibilities of using “bits” of TMs that aren’t the distinctive parts.

Rebecca Tushnet: Simon outlines the “Nose of wax” problem very well which also exists in the US. PTO very occasionally recognizes this—weave pattern for Bottega Veneta, looked at the definition of the mark and said no one would notice the millimeter width of the weave.

General problem often highlighted by legal realism: lawyers deal with complex problems by solving a related, simple problem and shoving the complexity to some other area. In TM often done with validity v. scope, which will magically solve problems with validity or at least be someone else’s problem. Development of defense side ornamentality or functionality is perhaps a natural result of this phenomenon: all other issues have been relegated to scope, so it’s not surprising that this one is too. TM use was largely rejected under that name but is too useful to give up and so it is resurrected under various names (looking at you, Louboutin).

Most functionality is bilateral by nature. Defendant-side functionality would almost qualify as a thought experiment to test what we really want functionality and ornamentality to do, except for the fact that it’s shown up at least twice at courts of appeals (Louboutin and Lettuce Turnip the Beet) both of which lacked rigorous language to identify the real problem with the litigation.

Suggestion: forced position marks? All 2D marks for goods require positional identification unless applicant shows function regardless of position? Way to deal with specimen laundering, as in LTTB and in Ohio State’s THE. PTO forces change in description of mark/goods & services all the time.

LTTB sort of uses aesthetic functionality instead of ornamentality/failure to function, but that is a concept with huge difficulties of its own and not obviously superior to the other concepts. One thing that has happened is that fashion and luxury brands have marketed themselves in ways that mean there are now two different versions of the concept “the thing the consumer is actually seeking to buy”: sometimes, if the claimed feature is the thing consumers want to buy, that makes it generic/functional, but not if the value of owning an object turns on how identifiably branded it is—This phenomenon of two different consumer motivations sharing the same name then makes it harder to understand what non-TM functionality looks like. Although Job’s Daughters is often disparaged, it does provide a possible path to distinction—social signaling of membership in a group is distinct from the existence of TM rights in the membership group. A membership group might not have brand value (Happy Valley PTA example) v signaling I can afford LV, which does depend on brand value).

Ornamentality looks better than aesthetic functionality in many situations because it serves as a shortcut to avoid aesthetic functionality’s “significant non-source related advantages” inquiry and deals with the key problem of “significance.” [Gold toe: does one need to sell gold socks to compete? But no one would think that the gold toe contrasting color TM would cover all-gold socks; how do we turn that into doctrine? F2F works pretty well.] Which is the same as the problem of market definition, with which TM law has long grappled unsuccessfully and largely silently. If we don’t have a coherent idea of TM market definition the problem will pop back up in other places no matter how hard we try to deny that. Qualitative/quantitative ideas of significance; relevance of free expression to determine significance; appropriateness of skipping market definition for registration in particular where no one registration may be likely occupy any given field but a rule allowing registration will depopulate the space of free expression.

Potential additional justification for these doctrines: Non-source significance might be too stable to be easily moved by putative TM ownership: result: deadweight loss and no consumer protection function. If courts won’t invalidate marks (or can’t in the case of incontestable registrations) then doing on the defense side at least preserves something.

Another way to say it: Carol Rose’s Crystals and Mud in property law. Ornamentality is right now part of the mud and in need of some crystals to help it out, which is worth trying even though we may recognize that mud will inevitably reenter the system.

Discussant:      Barton Beebe

Adidas v. Fitness World: Adidas even lost a case here on stripes! How often do we really talk about ornamentality and distinctiveness w/r/t defendant’s conduct? Descriptive fair use is one example in the US. Typically D argues that I’m using the term in mere advertising copy/not in a TM space. It’s text and not design so we don’t call it ornamentality. Other place we focus on D’s use is dilution, which seems to imply that the D must be using the matter as “a mark or trade name.”

Defendant’s use as aesthetically functional—Betty Boop was the beginning of LTTB, and more interesting b/c the 9th Circuit initially issued an opinion holding that BB on a t-shirt was aesthetically functional, then withdrew the opinion and held in favor of D on an entirely different made-up grounds. So we’re close to having this doctrine but courts won’t yet take the final step.

Rogers v. Grimaldi: a test for artistic functionality? Does do some work to change from aesthetic to artistic--artistic relevance seems to be a kind of D-side functionality.

Competition policy: if we took that as seriously as the 1A, aesthetic functionality would be as rigorous as Rogers. But it’s not there b/c of property rights.

Non-distinctive use: Distinctive of what? A use might be distinctive of something but not source—if use has to be non-distinctive in the general sense, D has used the sign in a way that’s meaningless? But if it is “non distinctive of source,” then that makes for a broader defense. Ps never want you to hear “distinctive of source,” only “distinctive” [of something].

Ramsey: BB is interesting because they used a public domain image on the shirt.

RT: Rogers point is connected to the idea of difficulty of defining “significant” non source related meaning: 1A interest is inherently significant in the US just as a 1A violation always causes irreparable harm. 1A and © public domain seem to answer the market definition Q.

Suggestion for textualists: Ornamentality and muddiness of FTF may also be connected to ideas about equity, which might get expressed especially easily in defenses. Lanham Act’s “subject to the principles of equity” in 1117.

Beebe: Romag makes that difficult since Alito sneered at it in his opinion.

McKenna: Lack concepts in scope that handle all the things that we say, in validity, need to be handled in scope! B/c aesthetic functionality has previously been conceived of as a validity doctrine, it lacks the texture that we need for it to work as a defense where we need to know the particulars of the use. Gold toe sock example: we’re forced to talk about all of this as a Q of the scope of the rights owned by the P b/c we have no way to limit infringement as a theory b/c of its infinite capaciousness.

Attracted to thinking of all marks as position marks. Similar to an affixation requirement. Use requires a particular type of use. We washed that out of the system but didn’t replace it with anything. Claiming became much more abstract, proved w/single specimen but allowed them to claim almost anything. Do wonder how you would prove that position was irrelevant.

Janis/Dinwoodie: position marks would lead to a lot of filings of different positions. [I might be ok with that.]

Fromer: Conclusive v. presumptive scope/claiming: we could give you what you claimed in your registration more presumptively but any commerce-based claiming should require further evidence. Supports a positional claiming idea, but extends beyond position to classes of goods/services and ornamentality.

Louboutin goes beyond mere ornamentality; there is source signification but we might not want to give it broad scope. So how do we separate merely ornamental uses by a third party from those that: confuse consumers? Don’t intend to signify source? Something else? We have to specify the question first and also think about whether there is a possibility of answering it. Maybe we get formalistic and say all-red shoes are “merely ornamental” but still weird. [That’s what’s so good about “use”—we don’t have to say there’s no confusion or no function; we just say no “use.”]

We could pierce the validity/protection-side formalism of inherent distinctiveness on the defense side and allow people to say

Dinwoodie: you get presumptions of limits on the registration in registration-based systems. But prosecution history estoppel works best if you only get the right if you register, but another way to avoid that in TM would be not to register and sue based on common-law rights and then your

Ornamentality takes hard questions of market definition out of the equation; market definition is very difficult and may not be worth doing in a TM case unless we want them to be antitrust cases [which are awful]. Inherent distinctiveness in the EU about whether this is outside the norm of the industry is likewise a way of avoiding difficult consumer perception questions. Descriptive fair use in 2d Circuit: What they’ve done by saying we won’t have a binary approach to descriptiveness, but looking at purity of the use, makes it less certain but possibly broader: a tradeoff.

Sheff: whether an individual rule is crystalline or muddy is different from how we understand doctrinal relationships.

Dinwoodie: yes, but we can also focus on the avoidance of litigation and error costs, especially when we are dealing with imprecise categories. Drawing a clear line through a grey area doesn’t get you very far.

Dogan: with TMEP’s merely ornamental/distinctive division, that may signal the importance of time: over time, something that began merely ornamental may achieve source significance.

McKenna: But the question is how you overcome that: what if there’s 5% source recognition and 95% of consumers perceive it as ornamental—is it still merely ornamental? It’s almost never either/or.

Ramsey: Ornamentality differs from aesthetic functionality in that “merely,” which allows rejections to be overcome on evidence of secondary meaning. 1A perspective: one word on the front of a t-shirt is not interchangeable with other words—Cohen v. California.

Gangjee: A line of German cases about chocolate bars: Claimant successfully claimed that acquired distinctiveness on their side infects how people would see the defendant’s use of the same shape, making it trademark use on their side as well.

Ohly: Adidas: the fact that a sign is viewed as embellishment by part of the public is not a barrier to protection, but if the relevant sector of the public views it as only embellishment then there’s no indication of origin. Exactly the same problem. At the European level, there’s no clear TM use requirement; the cases are contradictory. But in German law TM use is a requirement for infringement. Example: claimant Fisher/skis, have a sign consisting of triangle consisting of 4 triangles; D used triangle as a pattern of hoodies—Serpienski triangles. By reference to consumers in this market: claimants argued it’s now usual to print TMs all over a luxury product; court of justice said this was a different market, for hoodies. A single triangle used on the “logo spot” would have been decided differently. [I think there’s also something here about continuous perception—it’s not just that logos go all over a product; it’s also that a repeating geometric pattern is just perceptually different from a big logo or a repeating nongeometric logo.]

Linford: positional marks might not give us what we want b/c of the doctrine of equivalents. Big entities would be able to get nonpositional marks.

Beebe: how do you people do anything with ECJ opinions? #darferdas gets an opinion and then goes back to the national court, which does … what? [allowed the registration]. It may be hard for D-side aesthetic functionality to get a grip at the courts of appeals, but note: Betty Boop district court, on remand, explained what it was doing by finding as a fact that D’s use was aesthetically functional and not a source-identifying TM use.

Malleability of consumer perception: problem of circularity and greater need for formalism if we think consumers are malleable in what they perceive as marks. [The flip side being with things like the Mona Lisa and the n-word: if not malleable, then our priors will make it very hard for people to register those even after a bunch of use. And if, as is quite likely, malleability differs across different types of uses and symbols, then our task gets more difficult. Wal-Mart is, in part, an expression of the belief that consumers are not particularly malleable when it comes to product design.]

Davis: Steps before infringement analysis—there are different functions of a TM in the EU—advertising, investment/misappropriation and dilution concepts, which can be far away from the actual mark if it has a reputation. TM use doesn’t have to be about source. [But we don’t know what those functions are or how they differ from the source indication function.]

Mid-Point Discussants: Stacey Dogan

TM looks to intrinsic meaning and value of subject matter and source-related meaning and value of subject matter, and some doctrines outside of eligibility involve one, the other, or both, and that’s when courts really struggle/doctrines become incoherent. Nominative fair use involves source-related meaning and one could easily imagine circumstances in which we could think about ornamentality in the context of commentary about a TM owner or content that has come to have source signifying meaning, where the D’s message is clear we could treat it as protected under NFU. So too with Rogers v. Grimaldi: the value is in the expression, not the source identification. Descriptive fair use is interesting to think about in context of ornamentality: TM owner could have rights in visual mark that as applied to a different type of product is accurate and descriptive.

Aesthetic functionality: Distinctiveness should never be allowed to trump assessment of intrinsic value—one risk of shifting to D-side orientation could be to pollute that doctrine somewhat, allowing courts to find that a product feature that once had independent intrinsic value not related to TM significance now serves as a TM. Some risk of blending source and non-source value thus increasing TM owner rights over time.

Not sure it’s possible to have a coherent definition of markets in TM. In antitrust, scholars increasingly argue that market definition is incoherent and indeterminate. Tremendous interactivity and circularity in defining markets and assessing power in markets. Similar in TM. [So should we have aesthetic functionality at all? Or should we try to figure out what substantial non-source-identifying value means in a way distinguishable from “markets”?] Courts haven’t figured out how to disentangle aesthetic features and she’s not sure whether it’s really even possible. So can’t help but come back to iterative relationship w/protectability—if we don’t answer the necessary questions at that stage, then we need other tools to evaluate a defendant’s use and its context. Some way to link what the decisionmaker thinks they’re doing—a narrow right—with the later uses.

Luis Porangaba:

Infringement/scope approaches move away from the binary mindset of registration. Reality is too complex for that—for some or many TMs, yes or no is an easy answer, but there are others that are hard cases. EU approach on infringement is too insulated from context. This can create many problems especially since goods/services are also taken in the abstract. Policy levers and doctrinal devices created to offset the abstract registration inquiry to infuse infringement assessment with necessary context.

German examples: Adam Opel: Opel, like US Chevrolet; used to be an independent market for toy replicas where one would try to make a perfect replica miniature of a car. Opel tried to assert rights in the logo used. Looks like double identity. Language of TM functions had been used previously to expand rights to control merchandising and parallel imports, but repurposed to say that the use must require harm to the origin function to infringe, and toy cars don’t do that. The history of the toy car market as empirical evidence: TM use language, but based on the history and resulting perception of consumers as a faithful reproduction of a car in miniature.

Berlin court case involving MPA/Oscar statue. They didn’t register it as a TM, and D made miniatures and sold them. Court found infringement, but in dicta, judge said there was TM use, but other uses will not be relevant. Use in toy cars is for faithful rendering of reality; a toy racetrack simulates reality and therefore Opel mark does too. A film studio producing a dollhouse with Oscars in it would be a mere reference to reality and the Oscar in the dollhouse would be part of the scenery. [Sounds like Gordon v. Drape version of Rogers v. Grimaldi!]

Finally, a shape case—recognizable packaging w/brown bottom, but chocolate shape itself was registered. D made similar chocolates with translucent packaging, not gold foil. No TM use b/c consumers would not place much reliance on the shape given the packaging. Claimant’s use therefore bore on the consumers’ perception of the D’s use. Similar to Kit Kat, but at the infringement stage. Dicta: claimant argued that letting D off the hook would allow it to use even closer packaging, but the court said no, it would look at different package and might give different result.

So there’s still formalism in likely confusion once European courts find TM use. Forget everything contextual just discussed; a lot of the contextualization takes place under TM use.

UK developments: very few purely/mostly ornamental cases. Mostly developed in context of nominative or referential use. O2 Holdings/comparative advertising. Comparative ad used recognizable play on O2’s orange bubbles. Claimant argued: compare bubbles to bubbles, mark to mark/same services, and ignore voiceover and other elements of ad. But: no harm to origin function. Methodology of assessment: take into account context of use, not just bubbles to bubbles but bubbles to comparative ad with voiceover disclosing the ad comes from competitor.

Specsavers: mark for sign comparison, not mark for mark. Sign means integrated into surrounding context. This suggests a threshold of materiality being injected—confusion is not abstract but assesses whether the use is misleading in context. Similarly w/ BMW logo used by repair company—court says that what really matters is informative use v. misleading use. Only the latter harms the origin function.

Mike Grynberg:

Defining what we want to be doing: improving TM law as a whole, deter over-assertions of rights/avoid in terrorem effects from uncertainty, something else. Can we live with situations w/popular brands having broad merchandising rights if they’re truly popular/have a lot of goodwill, and will that change the shape of aesthetic functionality in ways we can live with? Meaning accrued over time might beat back aesthetic functionality in that world.

LTTB is very close to doing the half a loaf in that case. It is a word salad so don’t take it too literally but a lot of what’s there is close to what people here might be happy with. Treat it as an aesthetic functionality case and cite Qualitex, saying Qualitex means D wins. Au-tomotive Gold distinguished; goodwill matters not for a source claim, but for an approval claim. Established a famous mark—not just distinctive—may have broader rights, exploiting consumer interest by selling t-shirts—LTTB is not in the same position.

A formalist demand that courts reach the merits and not handwave has risks too. Circuit courts have split on whether they can just look at something and say it’s not confusing. MTM and Tabari are both like that. Recent Dropbox case: it probably isn’t confusing, but it has to go to a jury; dissent says “nobody could be confused, come on.”

If we took approval seriously: courts sometimes handwave context, as in Maker’s Mark case where dripping red wax seal is infringing despite completely different products and labels. Court says this is about association, and context doesn’t matter. But there could be a move with approval cases to focus more on goodwill, as in LTTB, as the thing that matters in the approval context. No goodwill, no approval likelihood of confusion.

McKenna: it can’t be the case that a nice-looking mark is not protectable. But that means that using aesthetic functionality as an outlet covers many things: some about the validity of the sign at all; others are about “I’m not using it in source-designating ways”—and that does threaten the strong character of the doctrine, but it’s not really what functionality is. Qualitex: Where a color serves a significant non-TM function, whether to symbolize heart medication or to satisfy the noble instinct for beauty—that’s not distinguishing types of function or demanding aesthetics. If functionality disqualifies things w/ a nonTM function, whatever that is, then we don’t have to do as much work distinguishing utilitarian and aesthetic functionality. Au-tomotive Gold isn’t aesthetic functionality, it’s use as a mark: how it’s being used in context. But this analysis is distorted b/c there’s no TM use doctrine.

Dogan: Value that is inextricably related to source is a persistent problem, as in Au-tomotive Gold. Or when someone has had exclusivity in something for a while and the court can’t figure out whether demand comes from one aspect or another.

Janis: reminds him of design patent story, which also needs labels for validity and scope.

RT: Relationship b/t ornamentality and definitions: It is possible to demand greater specificity in registration or in definition of claimed unregistered trade dress—In re Vertex/the 2d circuit case about claiming greeting cards cut in the shape of objects—both cases refused to consider secondary meaning b/c the TTAB says the definition is too broad—so broad it became functional—where 2d Circuitsays no TM owner can claim an idea. It’s possible for one to define one’s claim at a level of generality that makes it functional or otherwise unprotectable when a better claim might have something to it at least with secondary meaning. Right now we don’t have a great name for cases like these, or Betty Boop, or LTTB, or Louboutin. But if we put them together we might see how we could identify types of privileged uses.

Dogan’s point: If aesthetic functionality became primarily a D-side concept, then we might have essentially an unfair competition/labeling regime: would that be so bad? [She points out that we might not get even that given developments since Kellogg.] Compare D-side utilitarian functionality, which also does exist occasionally: Coke bottles used to package compost and other recycled products.

Penguins case: Perry Ellis/J Crew dispute where PE has registrations for specific images of penguins, then sues J Crew for having a season where penguins are one of the animals they choose to decorate their clothes: how do we want to handle that? If we don’t have flexible aesthetic functionality or TM use then Perry Ellis gets to own all penguins on clothes.

On the use of history as empirical evidence: when tech changes the analogous uses are no longer protected: compare metaverse.

Porangaba: the principle can be generalized from the history. Do you believe the virtual car comes from Opel? If not, no harm to origin function. But we cannot have a disjointed analysis in thinking only of functions in the abstract.

Dinwoodie: creating buckets of protected uses can happen, as with © fair use. There are different degrees of harm; even Rogers v. Grimaldi has limits. But it’s a difficult balance b/c there are chilling effects.

We can require precision both in registration and in court, but the problem is you’re often dealing with a wide range of uses (by P and D). Questions about whether to isolate or aggregate the different uses. Easy to look at specimen in registration context, but harder to do in infringement.

McKenna: a good argument in favor of robust unfair competition doctrine. Genuine risk of passing off=residual role, matched remedy.

Silbey: Copyright infringement is a very different test from multifactor TM infringement, and therefore may require a different fair use test in response.

TM Scholars' Roundable: Session 1: The Relevance of Ornamentality in Trademark Law: Acquisition of Rights

Intro, Graeme Dinwoodie

Ornamentality is undertheorized. Relationship to use as a trademark; symmetry b/t types of use that might allow acquisition of rights v. types of use that might infringe? Past issues like TM use and failure to function may appear in a new light through the lens of ornamentality. Janis & Dinwoodie were not fans of symmetry in P v. D, but ornamentality is interesting b/c it might divest you of rights, but also might help prove nonfunctionality for protection purposes. Some cases say that ornamentality can bolster secondary meaning even if it’s not enough in itself to establish rights. Also links to abandonment: what does it take to maintain use? Ornamental use may help to maintain rights even if core uses cease. Can it be used in different ways in TM as a thumb on the scale rather than a binary? 2d Cir in Descriptive fair use—how “pure” is the descriptive character of the use? Could we do something similar in ornamentality? But is the doctrine clear enough to make this a helpful consideration or will it just become part of the mud? In TM, if secondary meaning and nonsecondary meaning are entangled we often still protect the former, in contrast to © where merger often means unprotectability. [RT: I would say lots of courts in © also try to reduce merger to meaning that you can do anything but copy verbatim, which is a narrowing that many courts in TM don’t bother with, though some variants of Rogers v. Grimaldi are trending in that direction.]

How should the ornamental nature of a claimed mark affect whether such a claimed mark should be recognized as legally protectable or registerable? What is the statutory anchor for consideration of ornamentality; is there one? Does it need one?

Introduction:   Mark McKenna: This is a conversation about what it means to be a TM and what it means to use matter in a way that violates a TM right. Nothing special about ornamentality in this respect—it is that rather than being source-identifying, or in addition to that. It might be one reason that a use does not infringe. Ornamentality is denying it is used in a way that could cause confusion about source. But being informational or functional might do the same thing, as might descriptiveness. TM use: the return of the repressed. It’s always been clear to McKenna that TM use is everywhere in TM law, but almost always implicit or found in its absence. Thinking about its positive theorization is useful.

TM status: Distinctiveness is the 800 pound gorilla, especially in the US. Reflexively falls back on secondary meaning as demarcator of TM status, so we should think explicitly about distinctiveness and use as a mark. Distinctiveness=nature of mark, sort of thing that can be a mark. Use=is it in fact being used by this party as a TM. Ohio St. U’s registration for THE for clothing and other merchandise by putting THE on a hangtag. Highlights that our current thinking about use is overwhelmingly if not exclusively locational; overreliance on that reflects lack of any other way to think about use as a mark: if it’s in the right place, it’s fine.

Registration v. acquisition is also a big deal. Much of the law is a collection of rules of thumb from registration context. Lettuce Turnip the Beet: there just isn’t much nonregistration doctrine to explain why this result is intuitively correct. Hard to think coherently about TM status without thinking about registration v. use.

TM status and scope is also key: One use on a specimen gets you registration. But the registration is for THE in block letters, none of the limitations being implied, and courts are bad at scope so there’s no reason to think that enforcement will be limited to what’s on the specimen. So even if we’re persuaded on TM use we have to think about the scope of that right.

Validity and infringement relationship: plaintiffs can play games about whether what they’re doing is use as a mark and what defendants are doing. Roles of formalism and empiricism: Qs today ask about what standards we should use for ornamentality. Skeptical that standards can meaningfully be applied in ways that differentiate them in practice. Courts don’t know what primary significance means and won’t be good at primarily or merely ornamental either. But we should recognize that this is not either/or. Something is not a TM just b/c it may or does indicate source. Frequently consumer understanding is mixed, and responds to legal rules. We don’t need to and shouldn’t rely only on consumer understanding but we should also account for important competition, speech, and administrability reasons—courts are bad at managing scope. A healthy dose of formalism will recognize that there are other values, and that argues for rules (otherwise we end up pretending that consumer understanding encompasses those other values).

Jeanne Fromer: Ornamentality in her view adds nothing new in terms of acquisition of TM rights but gives us a category of symbols or uses of symbols that don’t qualify for TM protection. It can apply to any category of symbols—words, images, nontraditional categories—but may look different in each category. TMEP: inconsistent on ornamentality b/c it is really asking: how do we know what signifies source? TMEP suggests that if a mark is distinctive it’s not ornamental, and suggests the opposite in other places. It’s just incomplete. A symbol can be arbitrary/fanciful and still ornamental b/c we don’t consider it to be a mark.

Ornamentality: the context of the use makes us think it’s not serving as a source signifier even though in a different context it would or could be perceived as a mark. Pragmatics branch of linguistics. “How are you?” is interpreted differently depending on the context.

So how do we find salient aspects of context? A lot of that is about location. Aesthetic functionality would help if we could pin it down. External signifiers of other IP protection? If it’s about context, ornamentality is dynamic, and could mean different things at different times and does respond to consumer perception, which introduces a lot of confusion. [Note that incontestability would then be a potentially big problem.]

Different sizes: could affect the actual symbol itself. The THE registration was illuminating: even though there are lots of reasons not to protect THE on a T-shirt regardless of whether you put it on a tag, THE alone on a t-shirt is probably more likely to function as a mark than Lettuce Turnip the Beet or I [heart] NY b/c there’s so much less reason for it to be on a T-shirt than those things—it’s not an obviously cute slogan.

Other IP rights: utility patent creates presumption of functionality; wonders about whether presence of non-TM IP protection for ornamental features—design patent, ©--might create a presumption of mere ornamentality w/o further evidence of source signification. Might address overlapping rights, as well as concerns about failure to function. Opposite of the way that Copyright Office has been refusing registration for certain logos. Tommy Hilfiger logo: Office says it’s not original; they thought it was source indicating and therefore not ornamental enough.

Ornamentality as opposite of utilitarian functionality, which sounds like it supports TM status. But the concern here isn’t just ornamentality but mere ornamentality. The former isn’t a problem for protection, the latter is.

Allowing businesses to train consumers to think of ornamental matter as marks: there’s a race to the bottom aspect in ways that many have explored, including Lemley/McKenna in TM Spaces. Lululemon: consumers are likely to perceive it that omega symbol as a source signifier, now that LL has used it; normativity would push against allowing that to matter.

Discussant:      Dev Gangjee: Looseness of distinctiveness as a core TM feature. Things can be both ornamental and source signification. In the EU, distinctiveness is always negative: it’s proved not distinctive, not proved disctinctive. So that doesn’t lend itself to nuanced treatment. But some areas do acknowledge nonbinary status: descriptiveness. If one meaning is descriptive then it’s kept open; if acquired distinctiveness is proven then there can be protection. Disclaimers/Laura Heymann’s work in 2013: a consumer protection law approach to disclaimers about where you expect to find information.

#Darferdas: EU says that we help the applicant any way: if it is possible that it could function, then it is registrable. Hashtag for clothing; German objection: it’s most likely to be on the front of a T-shirt where it won’t function. EU says: if it is plausible that it could appear on the label, then it is inherently distinctive (unless it is “cotton” or “machine wash” etc.). That’s a nightmare. Similar result for chevrons on shoes, where the registrant’s only problem was that the depiction of the mark showed it stitched onto the shoe.

Banksy failed to register a bunch of his? artworks as TMs. Knocked out on bad faith, which is an interesting place to find an ornamentality objection. Banksy rejects © but tries to create a popup store for sales for TM purposes. Bad faith objection fails b/c never intended to use as TMs; they were widely circulated artworks; it’s always been a © and doesn’t function as a TM. Boils down to intentionality: never intended or intends to use as a mark.

Dinwoodie: what would have happened in LTTB if they had never gone to the PTO for registration? Profound question for US law. Affixation would be a way to add formalism—he thinks it’s bad but it’s an option. If you try some degree of formalism tied to ornamentality, what would it be? Other IP subject matter might be an option (EU: adds substantial value; if it could be protected by design right, then no TM—but doesn’t work well b/c anything can be protected by design now); anything else? Would it make sense to think of validity as a single question; is there enough room in the common law to bring this all together?

Barton Beebe: A sign can be distinctive but not distinctive of source. [Rock & Roll Hall of Fame case.] TM struggles with this b/c we used to insist on “distinctive of source,” but we now seem to think that being the exclusive user of a sign that is distinctive, your use will over time create exclusive rights. If semiotic value, then right. [You don’t even need time, with HONEY BADGER DON’T CARE] Formalism is totally justified as resistance to that formulation exclusive use=exclusive rights. Mere ornamentality is a way of saying “distinctive, but not of source.” We then struggle to find a way to operationalize that. #Darferdas is an example of that. GStar: similar case where exclusive use over time led to a finding of exclusive rights.

Pragmatics would be very appropriate b/c it goes to different context for distinctiveness, some of which are not distinctiveness of source but distinctiveness of something else. Banksy’s whole schtick is to create “difference” in a world of mass produced sameness.

RT: Distinctive, but not of source is a great formulation and we should use it. Rock ‘n Roll Hall of Fame v. Honey Badger don’t care. [Honestly, reviewing the difference b/t the LL logo and the piping they tried to register made the decision much more credible. That wasn’t the same symbol! So part of this is about limiting scope even when you’ve established secondary meaning.]

Can we get anywhere by thinking about situations where ornamentality could not be overcome by a change in context? Rejections for being really really long/songs can’t serve as TMs for themselves: (1) not serving TM function b/c that’s not how consumer perceptions work—TM is a shorthand. Is this likely to be used as a shorthand? [Lisa Ramsey suggests that’s merely informational] (2) Beebe’s work on signifier/signified—you have to be able to distinguish the two, the mark can’t be a symbol for itself. So you might be able to change the context by having a different signified entirely, but even then the mark probably wouldn’t be the whole song.

on TM spaces—consider possibility of “certification mark spaces” & resulting consumer protection implications

Conjoint analysis: given that you’re going to buy a smartphone, which features matter? Maybe a tool for this inquiry?

McKenna: If there’s a drop of source indication, it seems to be in now; it wasn’t always like that—technical TMs were a special category not b/c there weren’t other source signifiers but b/c there were other complications justifying two kinds of treatment. Losing that distinction was a mistake and it’s the reason we lack normative language to talk about things that aren’t marks. We should try to recover that; even some degree of source identification is not the end of the story.

Things like THE show TM’s inability to distinguish recognition of a reference from source-indicating significance. This is about recognizing and reintroducing the idea that TM is not source in the abstract, but source of these goods and services. TMs in the metaverse: TMs give you information about goods and services; something that doesn’t do that is not a TM.

Robert Burrell: Problem is we rely too much on proxies like how long, how much in sales. We need rules for ignoring those proxies. We want the use to have a certain quality.

Case study in regulatory capture: Australian TM manual—Gangjee’s concerns about Banksy but offices are in a difficult position. Person says “I promise I plan to use this as a TM.” In a system w/o specimens, what more can one do? 3d parties may challenge, but if you have 5 years in Europe or 3 years in Australia to set up your business, it’s really hard to know what else offices are supposed to do or demand.

Jennifer Davis: Banksy was absolutely clear that he wanted to register the TM to protect his anonymity and control sales even though he didn’t want to sell: honesty as bad faith!

Mike Grynberg: Two Pesos is a case of distinctiveness, but not of source: no acquired distinctiveness but inherent distinctiveness—the original sin of trade dress. Secondary meaning means different things at different times—not TM meaning but rights allocation b/c of other things going on. The law is ok giving rights to THE b/c of acquired distinctiveness of Ohio State in general/prevalence of merchandising, even though THE is not performing a proper TM function. LTTB: P doesn’t have acquired distinctiveness and trying to assert the same kind of rights that Ohio States of the world get as a matter of course. We don’t have a good way of explaining why that is. INTA LTTB amicus is very clear about this: you can’t possibly hold a registered TM holder to a high standard! Let’s stick up for the little guy! Secondary meaning (lack thereof) can’t possibly be a shield! Distinctiveness, but not of source, is a right we hand to TM owners but it’s not a TM right.

Ilanah Simon: In Europe, you can’t use overlap to police boundaries. Every figurative TM will be protected by ©/design, built into the system. W/o a registration requirement for the other right, the registration authority would also turn into the arbiter of what is protectable by ©/design rights, which is weird.

Jeremy Sheff: Overemphasis on distinctiveness to detriment of other values is related to desire for formalism. Proposal for greater symmetry: think about plain packaging regulation. Why not have it across all consumer markets? The only way you can distinguish the product is in this specific way! This doesn’t seem good, but why not? Articulating the reasons may help. Consumers react in certain ways to certain signs, and that’s ok/to be encouraged and harnessed. Then we get into not disallowing the use of signs, but regulating claims to exclusive rights. We want to tolerate certain forms of consumer behavior [and certain exploitations of those forms].

Beebe: East German TM regime encouraged colorful packages, tried not to fall further behind in the market.

Mid-Point Discussants: Jessica Silbey: Aesthetic theory has likewise struggled with categories/formalism. Aesthetics/art for its own sake spectacularly failed in trying to categorize by who did it, the genre, the context (museum/not), what it does (produces pure pleasure, expresses something about the world): all failed. Why care about formal categories in the first place? There are certain values behind the rules that require choices. Art/not art serves social, market, political purposes; in TM, ornamental/not merely ornamental requires us to be explicit about values underlying that choice.

Where else in TM are there formalistic categories we can feel confident about? Utilitarian functionality—formalism hasn’t worked perfectly but we are confident about Traffix as a rule shoveling some things into utility patent even if distinctive of source. Can we make any rules?

Rogers v. Grimaldi: artistic relevance above zero—should ornamentality above zero do something to exclusivity? Arbitrary word mark category may also count as formalistic, though maybe there’s uncertainty about that given THE and similar cases. It served us well as a clear rule.

Ornamentality might be able to draw some ideas from scenes a faire in copyright. So too with idea/expression.

Merchandising right: ornamenting the person—think about merchandising as art, enhancing the self-presentation of the person.

Jennifer Davis: After the Directive harmonizing TMs, all the law is what a TM isn’t and we have no positive definition of what a TM is. Courts have wanted to exclude registration of nonfunctioning matter, but TRIPS said that all kinds of matter is registrable, so they used distinctiveness to manage this. Came up with: Not distinctive unless diverges substantially from norms and customs of the sector in which the mark is used. No need to inquire into functionality if there is no substantial divergence. Mag-Torch and London taxicabs. Thus shape registration has been difficult through the use of distinctiveness. No need for consumer perception analysis if the court can examine what’s in the sector.

Ahsgar Ohly: Acquired distinctiveness is a possibility in the case of shapes and not a huge standard.

Davis: there are some safeguards there as well.

Simon: 2 successful showings in five years in her examination of EU, though it might be happening more at the national level (where it might be easier).

Luis Porangaba: Note that Lindt bunny case is an example where applicant had many national registrations in EU but couldn’t get an EU registration.

Ohly: may be able to obtain registrations in markets where it’s truly relevant even if can’t show acquired distinctiveness throughout EU.

Lisa Ramsey: Free expression and competitiveness considerations: large brands/celebrities can teach you to associate a weak mark w/their company can be problematic. DC/Marvel own a joint registration for SUPERHEROES for comic books/entertainment/apparel/toys. This term is really generic for a genre, but there’s the registration. Lifeguard Licensing owns registrations for LIFEGUARD for lots of goods including apparel. This would be considered arbitrary, but there’s a real competitive need for products for lifeguards. Yet the company is aggressive against anyone using that term. It’s informational/ornamental. Crystal Head vodka: celebrities promoting the skull bottle. If we want to leave certain matter in the public domain, we need to account for the ability to create de facto secondary meaning.

Although Lifeguard is using the mark on tags, it is also and primarily using the mark decoratively/informationally; this should matter to enforceability. A type of abandonment. [Or generic/aesthetic use by the TM owner.] More proof requirements for acquired distinctiveness will not help reduce the advantage of big companies.

Failure to qualify as a mark might be a way to highlight the normative components of failure to function. Could also read morality provisions in EU law in ways to acknowledge freedom of expression and freedom to compete.

Ohly: Vigeland case, where Oslo tried to register pictures of sculptures in the public domain to control the merchandising market/prevent distasteful merchandising. Is there a conflict w/© policy and what are the levers? Public morality exclusion, bad faith, ornamentality/lack of distinctiveness might be another one—German court dealt with attempted registration of MONA LISA, which was rejected by saying that ornamentality can never be overcome by context b/c its nonTM meaning will always dominate. Perhaps we should be explicit about ©’s affirmative values rather than hiding them in ornamentality.

Parallel cases: ECJ is Neuschwanstein—state of Bavaria tried to register for all goods, but the problem was not just that it was distinctive, but not of source; but that it was an attempt to control culture—same questions: is it source indicative? Should we extend TM to cultural heritage? Ornamentality is not really what mattered.

#darferdas: The German court made the point that this wasn’t TM distinctiveness but that never made it to the European court. Use as a mark turns into a defense; German courts always examine TM use; not clear whether EU application of double identity will prevent that assessment in #darferdas type cases.

Porangaba: we’re all trying to find a middle ground with different means. Registration/infringement divides—in Europe, we make allowances for registration, serving as a cautionary tale about excessive formalism. Manipulation of claim drafting, as discussed in paper by Gangjee. Registrations issued for goods related to goods for which the putative mark is functional—failure to function might be a good way to deal with that. Problem of having too much doctrine for what the registration system was conceived of as doing a century ago. Can we reframe the system without adding doctrine? Is this really a problem deserving a new doctrine? Access to registration for SMEs is an issue.

Beebe: we have very few failure to function court cases, but failure to function is spiking as a ground for refusing registration, even though too much doctrine is also an issue.

McKenna: Too much doctrine is a result of allowing too much into the TM category; now that unfair competition is also TM, we need a bunch of doctrines to deal with the fact that TMs are now not all the same and raise many different issues.

What happens in TM is now “if we have doubts, just make them show secondary meaning,” b/c we’re used to using distinctiveness as the measure of everything. Very frequently, courts do not accept longterm use/sales evidence as evidence of secondary meaning for shape/product configuration—they’re not sure that the supposed circumstantial markers of secondary meaning are correct signals. These aren’t really secondary meaning cases; the courts are suspicious that in fact the shape etc. is not being used as a mark. But secondary meaning is the one hammer that we have. It turns out to be unsatisfactory. What could the party do to persuade you that there should be protection? [Survey evidence? Evidence of widespread actual confusion?]

Jake Linford: what do we think consumers do if we create a huge prophylactic rule? Imagine it’s 1974 and we’re looking at the first Ralph Lauren polo shirt. Do we say it’s ornamental? Maybe we do. Or the first jean logo on the back of pants, or the SUPREME logo. Not sure how consumers respond. If there is hydraulic pressure from consumers, b/c consumers need shortcuts to find the products they want, then you get a situation where there’s lots of competition that’s confusion. Copyright is a bit different; not a big fan of Dastar.

Why are we more comfortable with utilitarian functionality? Seems more fixed than aesthetic functionality—things do what they do; courts and sellers may find it easier to understand when we tell them they can’t protect utilitarian functionality. Perhaps fanciful/arbitrary is like that, sending a fairly clear signal.

RT: Linford’s point on the alternate 1970s: confusion v. materiality—consumers wouldn’t be confused about whether the polo logo is on the shirt! If that’s what they sought, that’s what they’d get.

Mona Lisa: I think that’s what’s going on with rejections of the N-word in the US too. NonTM meaning can have levels of intensity too, which is not limited to being cultural touchstones though that’s a good example where nonTM meaning may be hard to overcome. A new joke may not have specific cultural history but its joke function may be hard to dislodge with TM meaning. What would recognizing that look like?  Honey Badger Don’t Care.

Silbey’s point about formalism and the category of arbitrary word marks: This is the Carol Rose crystals and mud stuff I’m going to talk about later: the arbitrary category served us well and therefore lots of people piled into the category and made it fail. Not yet mentioned: Grace McLaughlin’s note on weird marks that are completely indistinguishable from one another So the system can’t rest on its laurels; Abercrombie is not failing because it’s inherently flawed, it’s failing because it’s old and people have learned how to manipulate it.

Sheff: formalism could be about the relationship between doctrinal categories/rules. Traffix may work to shove a bunch of subject matter into patent. One reason might be that utilitarian functionality is easier for courts to understand. That might be true w/r/t certain prongs of Traffix, though not Morton-Norwich, related to the rules/standards division. That’s different from the relationship b/t the category functional and the category distinctive, which is governed at least in part by §2(e)(5), which says that notwithstanding distinctiveness, it’s not protectable if it’s functional. This is a formalist rule about the relationship b/t the categories: functionality overrides distinctiveness. The q for us today is “does that relationship also hold for the relationship b/t the category ‘merely ornamental’ and the category ‘distinctive.’” The TMEP says that the categories are disjoint/do not overlap. But what do we do when that’s not true: distinctive but aesthetically functional; ornamental but some distinctiveness? We might create a new categorical rule. Louboutin as generative of his thinking on this—Second Circuit rejected a formalist move to say that fashion doesn’t allow single color TM. But it didn’t replace it with anything! It still reached the same result on a particular claim, but only in reliance on a claim that there was no “use” of the TM. What do we do when the categories intersect?

Ohly: mirrored in European law in the relationship b/t distinctiveness v adding value to the product; the latter cannot be overcome by acquired distinctiveness, but the Q of what “substantial value” means does create instability.

McKenna: when you say “merely ornamental means not distinctive,” that invites at the retail the claimant saying “distinctive thus not merely ornamental.”

Sheff: so the TMEP’s claim of disjoint categories is the key issue.

Gangjee: Adidas cases with stripes on clothes presents the issue of TM function expands to alleged infringement for using other numbers of stripes—ornamentality/aesthetic functionality may give us reasons to keep the scope narrower than infringement doctrine would otherwise allow.

Registration systems and use systems are a spectrum: hyperformalism is working only in one direction in the EU to allow registration; presume a pro-registration outcome, but then you don’t actually make the TM owner commit to using that way in the future. EU disclaimers have completely collapsed b/c consumers don’t care about them—so suddenly we do care about what consumers think! Only works in one direction. Nonuse/revocation is not promising in the EU context either—only about 4600 claims in 22 years for 2.1 million registrations, nearly half figurative. We can’t expect post-5 year nonuse being any reasonable check.

Porangaba: revocation is useless b/c time is of the essence in most marketing decisions.

Davis: we’re talking about brands: if you become a brand, getting aesthetic and emotional meanings, should you lose your TM? Does it matter that Burberry was adopted by football hooligans? For them it wasn’t about source but about signalling membership in the community?

Dinwoodie: potential gap between consumer recognition and source association.

Some formal rules work better than others: Wal-Mart does some things well, but there has also been gaming of the system. McKenna wants formal solutions in TM and pushing to unfair competition which is the opposite of formalism.

McKenna: they do different things.

Dinwoodie: but then people just plead §43(a) and get around your limits on TM.

Sheff: Old, premerger TM was the crystal to premerger unfair competition’s mud. That’s different from the relationship b/t categories like functional and distinctive. Formalism may create inefficiency and uncertainty too. Wal-Mart might be worth it in avoiding a bunch of terrible claims, but not always.

Ohly: notes increasing formalization of unfair competition too in Europe.

McKenna: they depend on each other: formalism of TM was enabled by virtue of having an equitable release valve, but only worked b/c had narrow conception of what it was trying to do—it was a passing off rule (that accepted any evidence you wanted to submit about why this incident was passing off). Maybe people would recognize a polo image on the front of a shirt b/c they saw it on the hang tag first—the system could allow you to prove that—but now we have the worst of both words, with layer on layer of doctrine that gives you the inflexibility of TM and the muddiness of unfair competition.

Grynberg: equity winds up in defenses, but with a doctrinal mush as in LTTB. Both need to clarify defenses and avoid having too many boxes for the system to work. Language of registration: no mark that is distinctive shall be refused unless … But that would allow for a lot of developments about the concept before the “unless.” Federal Circuit approved refusal of .sucks on F2F grounds, but we are one bad ruling away from really messing with that.

Ramsey: focus on whether particular subject matter had substantial value at the time it was adopted as a TM. That could help distinguish value conferred by brand value/Au-tomotive Gold from attempts to register Black Lives Matter etc. Is therefore ok w/outcome of Honey Badger, as a potential compromise. [this is the collapse of TM value into value: he created the phrase as part of a video—for which he copied the footage from elsewhere, not for nothing—that had copyright value, but he didn’t create any TM meaning or value.]

Silbey: “too much nonTM meaning” and “substantial meaning when adopted” has her thinking about fame. Meaning can change over time so we should be wary of that [but then again we see lots of people trying to appropriate things with lots of nonTM meaning, so we should perhaps at least presume that it hasn’t unless the claimant shows that the nonTM meaning is no longer prevalent. This is a proposal about the kinds of claims TM systems are likely to see, not a proposal about meaning in general].

Simon: the meaning of “adds value” may be gamed. Suddenly everything adds value. Copyright overlaps may be a source of the problems.

Grynberg: free riding is a two-way street and lots of times merchandisers are free riding on someone else’s innovation.

Wednesday, June 22, 2022

warranties aren't advertising b/c it's not plausible that anyone reads them before purchase

Plateau Casualty Ins. Co. v. Securranty, Inc., 2022 WL 2205263, -- F. Supp. 3d --, No. 2:22-cv-00007 (M.D. Tenn. Jun. 22, 2022)

Held: A warranty is not “commercial advertising or promotion” under the Lanham Act.

Plaintiffs terminated an agreement to insure Securranty Inc.’s warranties for products like laptops and cell phones, but Securranty allegedly continued to represent that its warranties were still insured by them. Plaintiffs sued for breach of contract under Tennessee common law and false advertising in violation of the Lanham Act. (OK, I’m not a big false endorsement fan, but … isn’t this false endorsement? Insert your own insurance-related pun.)

Securranty’s protection plan allegedly continued to state that its obligations under the plan “are guaranteed under a reimbursement insurance policy issued by Plateau Insurance Company” located in Crossville, Tennessee; that the plan in Florida “is directly issued by the insurer ... Plateau Insurance Company”; and that the plan in Washington is “backed by the full faith and credit” of Plateau.

Securranty argued both that there was no misrepresentation in “commercial advertising or promotion” and that plaintiffs failed to allege the loss of any customers as a result of Securranty’s alleged deception, an argument the court didn’t reach but mentioned should plaintiffs amend their complaint. (Is injury required for a §43(a)(1)(A) claim? Shouldn’t it be?)

The Sixth Circuit “define[d] ‘commercial advertising or promotion’ as: (1) commercial speech; (2) for the purpose of influencing customers to buy the defendant’s goods or services; (3) that is disseminated either widely enough to the relevant purchasing public to constitute advertising or promotion within that industry or to a substantial portion of the plaintiff’s or defendant’s existing customer or client base.”

The court found no case holding that “warranty policies fall outside the scope of the Lanham Act as a matter of law.” But several decisions hold that a product insert that a consumer finds only after opening an item cannot be “commercial advertising or promotion” for Lanham Act purposes. So too with user manuals provided to the customer upon purchase of a product are not commercial advertising under the Lanham Act, even if the manuals were available at trade shows “because they were not made available to the general purchasing public or in sufficient quantities to constitute an advertisement.” [There are a handful of cases saying that product inserts/catalogs delivered with the product are commercial advertising/promotion because they are invitations to keep buying more from the same company, which I think make sense.]

The court inferred, based on Securranty’s argument and the “silence” of the complaint, that “the purchaser of a laptop or cell phone is unaware of the language in the warranty until after the purchase has been made.” This probably does pass muster under Twiqbal common sense, but it is a particularly good illustration of the way that “consent” to terms in an adhesion contract is a pure legal fiction. It is so fictional that parties other than the bound consumer don’t have to pretend that it’s true!

“The Terms and Conditions reference the past by thanking the customer for his or her purchase and speaks in terms of individuals who have ‘purchased the protection plan.’ More tellingly, the Complaint contains no allegations that purchasers are given a copy of the Terms and Conditions beforehand.” Even if the terms were also on Securranty’s website, it wasn’t plausible that website warranty terms constituted misrepresentation for “the purpose of influencing the purchasing decisions of the consuming public,” and that “the contested representations [were] part of an organized campaign to penetrate the relevant market intended to influence potential customers to purchase its product.” Also, plaintiffs didn’t allege proximate causation therefrom.

Monday, June 20, 2022

TM laches where a band broke up "for now" but its music remained on Spotify etc.

Satan Wears Suspenders, Inc. v. Jaar, 2022 WL 2181449, 21 Civ. 812 (ER) (S.D.N.Y. Jun. 16, 2022)

Where a musical group’s music remains publicly available, the fact that they stopped touring may not avoid laches if you sue only when they get back together! Laches can bar both injunctive relief and damages in trademark cases, and here the court grants a motion to dismiss based on laches.

As alleged: Plaintiff is a hardcore punk-rock band/record label operating under the name Darkside. Defendants are a musical duo that also operates as Darkside and their record label.

SWS has performed and produced sound recordings under the names “Darkside” or “Darkside NYC” continuously since at least August 1992. It has a 2014 registration for “Darkside NYC” for live musical performances by a band; the production of musical sound recordings; and websites with information about music or entertainment. Fans often call it “Darkside.”

Defendants, also based in New York formed their own Darkside in 2011, featuring an electronic, psychedelic musical style; their first album was self-titled. In December 2011, they performed as “Darkside” at the Music Hall of Williamsburg in Brooklyn, New York—a venue at which SWS has also played, and they have played at at least three other overlapping venues.

From 2011 to now, defendants continued to sell music and merchandise and to promote music videos and other media under the Darkside name, including creating a website to advertise their music and distributing sound recordings through Spotify, YouTube, and SoundCloud.

As early as 2013, SWS became aware of defendants and “made repeated objections to it via two email exchanges and three letters from Plaintiff’s then-counsel in 2013 and 2014.” In 2013, defendants’ band manager responded that the bands occupy “different enough space[s]” to “avoid confusion,” emphasizing their different musical styles, target audiences, and ticket prices. SWS rejected defendants’ offer to “demonstrate [their] best efforts to ensure that all online listings are clearly labeled: DARKSIDE (Nicolas Jaar + Dave Harrington),” and then wrote again ten months later that defendants “must either cease use of the word ‘DARKSIDE’ ... or ... amend[ ] use of the DARKSIDE mark that is sufficiently distinguishable[.]”

Defendants nonetheless continued to operate as “Darkside” through the present, and released a new song on December 21, 2020 and announced a forthcoming spring 2021 album, Spiral.

Meanwhile, in 2013 or earlier, the Matador record label signed the Jaar/Harrington Darkside and allegedly supported the band in various ways, including by coordinating tours, distributing music, promoting the band’s brand, and arranging live appearances under its label. Defendants have allegedly “garnered a significant following and have established a strong online presence,” causing confusion and harm to SWS’s goodwill given the “apparently contrasting, electronic-psychedelic musical style.”

This case was filed in early 2021. Sure sounds like laches, right? Now some additional facts: On August 17, 2014, Defendants posted on Twitter that “darkside is coming to an end, for now” and that the band “[will] be playing [its] last show in [B]rooklyn on sept 12.” But defendants continued to “conduct business” by publishing a clip of a live performance in 2015, participating in an interview with the music site Pitchfork in 2016, and continuing to list their music on Spotify.

To prevail on a laches defense, a defendant must show: “(1) that plaintiff had knowledge of defendant’s use of its marks, (2) that plaintiff inexcusably delayed in taking action with respect thereto, and (3) that defendant will be prejudiced by permitting plaintiff inequitably to assert its rights at this time.” It’s usually not appropriate on a motion to dismiss, but it can be clear on the face of the complaint.

Laches is measured by reference to the most relevant state statute of limitations for trademark claims, which in NY is six years (three for NY dilution).

SWS argued that laches is only available against equitable claims, not legal claims. The governing case law teaches otherwise: all trademark claims, both for injunctive relief and damages, can be lached. And a presumption of laches applied given the timing here; the burden is on the plaintiff to plead circumstances showing laches didn’t apply.

Did SWS reasonably and excusably delay? There was no progressive encroachment here; both bands were in NY as of 2013 with the same name and same services. SWS argued that “plaintiffs may legitimately put off filing suit when pursuing settlement negotiations with the alleged infringer.” However, such “negotiations must ordinarily be continuous and bilaterally progressing, with a fair chance of success[.]” The complaint showed otherwise: negotiations stopped in 2014.

SWS argued that its conduct was reasonable because defendants held out to the world that they dissolved the band (making their hands unclean when they argued otherwise to the court), pointing to the “darkside is coming to an end, for now. we’ll be playing our last show in [B]rooklyn on sept 12” tweet and various replies reflecting fans’ belief that the band had dissolved.

But the tweet wasn’t a final dissolution: it announced an end “for now.” Moreover, “the dispositive question for the Court is not whether Plaintiff thought Defendants had stopped performing; rather, it’s whether Plaintiff knew that Defendants were continuing to exploit the Trademark (e.g., by selling music or merchandise and publishing videos).” And the complaint conceded just that. The music on Spotify between 2014 and 2020 held “the same potential to confuse Plaintiff’s fans as it does now.”

Prejudice: “Where there is no excuse for delay ... defendants need show little prejudice” to prevail on a laches defense. The complaint didn’t rebut the presumption of prejudice. The complaint expressly alleged that defendants invested actively and constantly in their Darkside brand, which investment by itself sufficed to show that “Defendants may have branded themselves differently had Plaintiff brought forth this action sooner.” The fact that Plaintiff has chosen “to resurface ... on the cusp of [Defendants’] new album release two years in the making,” “a vulnerable time for any artist,” rendered the prejudice even stronger.

Could laches bar only the old claims but allow new ones? “The relevant authorities that have addressed this question in the context of a trademark dispute expressly reject Plaintiff’s theory of continuous infringement.” SWS’s argument was inconsistent with the policy underlying laches. All the claims (including state dilution claims and unfair competition claims) were kicked out.


Reasonable consumers don't know what every ingredient is and does

Anderson v. Unilever U.S., Inc., 2022 WL 2181575, No. 21-CV-3117 (KMK) (S.D.N.Y. Jun. 16, 2022)

Anderson alleged that Unilever’s “Deep Moisture Bodywash” label was deceptive and misleading for touting attributes such as “skin-natural nourishers” and being “microbiome gentle” when in fact the product “contains numerous ingredients which trigger negative skin reactions and are incompatible with maintaining a balanced microbiome, including essential oils, fragrances, preservatives, and surfactants.” She brought claims under NY GBL §§349 & 350 and Magnuson-Moss Warranty Act and for common law breach of express warranty/implied warranty of merchantability, negligent misrepresentation, fraud, and unjust enrichment. The court kept the consumer protection claims alive.

Unilever argued that reasonable consumers would understand that advertising that the bodywash is “microbiome gentle” means that the product as a whole was “microbiome gentle,” and not that each constituent ingredient is microbiome gentle (and therefore, non-synthetic). That was possible, but Anderson’s allegations were also plausible at the motion to dismiss stage. At this stage, “[w]here a representation is capable of two possible reasonable interpretations,” the Court is not free to reject “the misleading one ... simply because there is an alternative, non-misleading interpretation.”

The court rejected Unilever’s arguments that consumers should treat labels like they’re looking for perjury. Even if Unilever was correct that the term “microbiome gentle” was “grammatically” applied to the product as a whole, “the relevant question here is not whether Defendant’s representations as to the Product are, formally speaking, correct, but whether a reasonable consumer might be misled.” It did not matter whether a consumer who believed that the ingredients were “microbiome gentle” fell into logical fallacies (begging the question, the fallacy of composition, and the fallacy of division, if you’re wondering). “[T]he question before the Court is not whether it is correct (or the result of airtight logical reasoning) to interpret Defendant’s representations as to the Product in the manner that Plaintiff alleges, but whether a reasonable consumer could interpret Defendant’s representations as to the Product in the manner that Plaintiff alleges.”

Nor did the ingredient list resolve any “potential ambiguity” in the term.

[T]he Court fails to understand how the ingredient list on the Product could serve as a disclaimer here. It is common knowledge that cosmetic and personal care products, like the Product, are typically made up of a long list of ingredients, most of which are referred to by a scientific name with which an ordinary consumer would be unfamiliar. Thus, Defendant’s theory that a reasonable consumer could simply consult the ingredient list to confirm that the Product is microbiome gentle (and non-synthetic) would require the Court to credit the notion that a reasonable consumer would be familiar with what the many ingredients listed are and those ingredients’ properties, origins, and effects on the skin. This is plainly untenable.

Anderson also successfully pled a price premium.

On express warranty, she failed to adequately allege the required pre-suit notice, and breach of the implied warranty of merchantability failed for lack of privity.  This also got rid of the MMWA claims. Negligent misrepresentation failed for lack of a special relationship creating a duty. Fraud failed for want of sufficient scienter allegations. Unjust enrichment failed for overlapping with the other claims.