WIPIP session 4: ™ & Consumers

Mary Katherine Amerine, Reasonably Careless Consumers in TM & False Advertising

How do courts treat consumers in TM and false advertising cases? Assumption dates back to at least the 1930s that consumers exercise less care for inexpensive grocery items and are thus easier to confuse: Brew nuts v. Beer Nuts, Bulls’ Eye v. Raging Bull for barbecue sauce, Powerbar v. Powerstick for sports energy bars, Huggies v. Dougies for diapers. Even say that consumers can’t be expected to examine labels carefully.

False advertising uses v different framework: consider the challenged ad as a whole, including disclaimers and qualifying language. Consumers are often expected to pick up the product, look beyond the initial ambiguous statement, and inspect further. Inconsistent with idea that consumers just toss things in their carts. Thus, court said consumers wouldn’t be confused by “Trader Joe’s Manuka Honey 10+, 100% New Zealand Manuka Honey” because they would understand that it was unlikely that the honey would be purely from bees visiting Manuka flowers; they should know that Manuka honey is graded from 0-26 and 10+ is not great. Same result with Ghirardelli “classic white chips” that don’t have any white chocolate.

This is inconsistent! The consumer who scrutinizes “classic white chips” or googles Manuka honey ratings will not be confusing Brew Nuts and Beer Nuts or Huggies and Dougies.

In fact, consumers are highly involved in grocery shopping; more care than TM cases give consumers credit for.

RT: What would you say to the argument that the different treatment is justified by the role of consumer harm in the two causes of action? That is, TM infringement is a harm to the TM owner; harm to consumers isn’t necessary so it doesn’t matter if they’re tossing without thought; but if they don’t care enough to clarify ambiguities, then there shouldn’t be a consumer claim. Doesn’t totally deal w/Lanham Act 43(a) claims, but it’s notable that your precedents on the false advertising side are California consumer protection claims.

Jake Linford: Perhaps the consequences for the defendant are different, so we expect different behavior from consumers before applying those consequences. [Although these are presumptions about how consumers will think, so we’re not just expecting, we’re hypothesizing and holding as a matter of law.]

Eric Johnson: my confusion is often intrabrand: which variety does my son want? No one is confused about diapers; they’re very careful about which diaper. [I think of Eminem’s classic line: “I can’t provide the right diaper.”] Courts love IP and don’t like torts, which is contributing.

Q: Veuve Cliquot v. Boutique Cliquot—Canadian case looks at casual consumer somewhat in a hurry.

A: What I’m taking issue with is that assumption! Doesn’t map into realistic consumer behaviors.

Cathy Gellis: May depend on what kind of consumer and what kind of product. People who bake know what they want to cook with, but they might be in a rush and get the wrong one. Is there a difference in the examples? Ingredients v. end products, or products where the consumers will care which brand they got more or less.

A: this is the problem of flattening all these things, especially in TM cases.

Betsy Rosenblatt: Social justice implications. How much care should people be taking in the grocery store? And can law make them do it? What makes people take more or less care? Poverty might mean more care than less. (Poverty makes great cognitive demands on people!) Who gets harmed by which standard?

Laura Heymann: Warning labels. Tort context: courts make assumptions about how carefully consumers will read warning labels that are also inconsistent.

Eric Goldman: Third player, often ignored: the grocery store and what it does to create meaning about presenting products, which can be inconsistent and exacerbate potential problems. If chips are presented along with other chocolate chips, that could encourage confusion.

Bita Amani: What’s the endpoint? To change the standards in false advertising, in TM, or to create a new cross-context standard? Consumers do spend more time scrutinizing labels—if the empirics show one thing or another, how much should the normative reflect the descriptive?

Felix Wu: on the TM side, consumer sophistication is just one factor; on advertising, seems more directly connected to an element of the claim itself. One way to harmonize might be to make it more important/more directly connected to TM liability. Are courts just mistaking the nature of the consumer or just ignoring it and using other factors?

Laura Heymann

Thinking about how consumers view their interactions with companies both as a matter of branding and as a matter of contracts, specifically on social media. Move to “brand persona” in marketing and law—not a producer but a collection of characteristics and impression; the source is less important than the authorization and the meaning. The new model: Dove put out a commercial about real beautyàconsumer infers that Dove cares about women—using those personality traits as a reason to engage or not engage with the brand in the future. Relational: reinforcing and facilitating the relationship so the consumer has a good experience and feels well treated, so won’t search for alternatives.

Consumer contract part: consumers don’t read most consumer contracts, which are contracts of adhesion. It’s often not rational to read the contract, since most terms won’t end up mattering. Some companies use the contract language to reflect the brand image and communicate brand persona, but even apart from that, it’s not the contract or TOS that creates the relationship promise—it’s the brand. Brand acts as umbrella unifying messages from different parts of company as if they were talking as one—marketing, legal, billing. Casual speech feels more friendly. We’ve seen this on Twitter, where people engage in dispute resolution over social media as if they were resolving a dispute with an individual—they tweet at the brand. Can lure people into thinking that the relationship is other than transactional, blur understanding of who contracting partner actually is. Different brands under helm of same producer can be surprising.

Felicia Caponigri: what happens when a brand is attached to a founder?

Jeanne Fromer: celebrity relationships/parasocial relationships seem both similar and also different in key ways. Consider relevance for TM doctrine even though cases aren’t brought by consumers. If it’s the case that people are interacting w/businesses as if they’re people, that might provoke a lens of ways in which consumers are likely to be confused or not [or what counts as acceptable criticism, given the comparison to defamation].

Glynn Lunney: why personalization matters? Most TMs that have value are from repeat purchases—Loehmann’s brand loyalty [or my loyalty to Crest toothpaste] may or may not be distinguishable w/o a humanoid relationship.

Eric Johnson: consider lay dismissiveness towards contracts—it’s just legal stuff, legal mumbo-jumbo.

A: research on what people think makes a contract valid—not a meeting of minds, but a signature.

Betsy Rosenblatt: is there some implied contract to conform to the personality you’ve projected? The tendency to attribute blame to “the legal people” who aren’t really representative. [If only the tsar knew! There’s also resonance with the defense of overreaching C&D letters—“we have to protect our trademark! The law made us threaten you, not us!”]

Sari Mazzurco, Trademark Law’s Consumer/Public Problem:

Tam & Brunetti focused on the expressive qualities of TMs, and in VIP turned that around to suppress speech. Lemley/Tushnet discuss some possibilities. More foundational conflict: who TM law is for? And why we should care! TM law is supposed to serve consumers as market participants (reduce search costs) and protect competitors’ goodwill by allowing them to associate exclusively as source of products. But TM is full of protections that don’t serve consumers as market participants selecting among alternative choices. They serve a different legal subject: the public. The public has always been an intended beneficiary. Section 2 registration bars (public morals, public order, dignity/personality interests); remedies (disgorgement and injunctions both incorporate public interest considerations); cancellation (actions can be brought by anyone who thinks they may be damaged, even if dignitary interests of goats on a roof aren’t cognizable); dilution by tarnishment; post-sale confusion; infringement defenses (nominative fair use and Rogers invoke public interest in discourse, though positioned as a check on TM law rather than internal to it).

How does this affect application or development of TM law? Only prescriptive claim: TM should endogenize the public interest. Doesn’t dictate case outcomes, but lays out paths in front of court—consumer interests v. public interests. VIP looks to consumer interests, Tam and Brunetti, look to public interest.

Practical benefits: broadens potentially relevant public interests; helps articulate conflict in ongoing disputes; guards against 1A challenges; specifies relevant arguments in, e.g., domain name litigation, personal name litigation.

Rosenblatt: Already in injunctive relief?

A: when court says public interest is against consumer confusion, but that’s consumer interest, not the public as a whole. Broadens perspective.

Jeremy Sheff: If you’re trying to lay out the interests at stake, producers also have strong interests. If we’re pretending that consumer/producer interests are aligned, that’s clearly not the case; 2(a) cases in particular, it’s producer interests that seem to win out over public or consumer interests, rather than public v consumer.

RT: Another issue to consider: lack of need to define trade dress in advance or in a way that is clearly predictable by competitors; compare European registration regime Art. 4, which requires something that is clearly defined (“An EU trade mark may consist of any signs, in particular words, including personal names, or designs, letters, numerals, colours, the shape of goods or of the packaging of goods, or sounds, provided that such signs are capable of:

a) Distinguishing the goods or services of one undertaking from those of other undertaking; and

b) Being represented on the register of European Union Trademarks, in a manner which enables the competent authorities and the public to determine the clear and precise subject matter afforded to its proprietor”). Difficult issue b/c public also has contending interest: how can Brunetti and the scandalousness bar both serve the public interests?

A: the public interest shifts and evolves over time—the idea of gov’t protecting morals was the idea of the day at one point; we don’t feel that way any more.

Lunney: do you mean competitors or TM owners? Producers is a different group from either of those! Using the public as a convenient fiction to identify and protect it without acknowledging conflicts: post-sale confusion benefits the wealthy at the expense of people who can’t afford the original. Not a monolithic group. Courts always pretend it’s about potential consumers.

A: agree that the public isn’t monolithic; courts are constructing an idea of the public.

Fromer: should explore the interests of producers, in a way analogous to what’s been done in the © context: the romantic author is often held up to serve the corporate interests behind them—it’s attractive but serves a different group. Is that going on here? Who’s bringing the lawsuits, after all?

Felix Wu: More convinced by some examples than others. Public = nonconsumers? Not sure that post-confusion is an example; the competing groups are different classes of consumers rather than nonconsumers. Dilution is also weird: the concept is that brand consumers are going to be affected somehow. Biggest example is the speech cases: expressive interests are indeed nonconsumer interests, as you see in both registration and defenses. Then the Q is whether we’re just talking about speech interests or is there some other set of nonconsumer, nonproducer interests?

Linford: Do we care about the majority of consumers? In genericity, we say that. Is the public a placeholder for protecting new entrants over incumbents?

A: Concept from environmental law article by Sagoff: how does concept of public lead you to think differently about what we owe each other? Surveying involves a thick concept of interaction with TMs that can’t just be a matter of individual cognition. Meaning-making is social, so primary meaning is necessarily socially constructed.

Chris Buccafusco: Where do you see this entering at the various levels of abstraction/generality? Sometimes you’re discussing litigation level v. basic contours of the doctrine.

A: higher level argument goes to endogenizing the public in the contours of the doctrine; that then has doctrinal payoffs for use in specific litigation contexts.

Matthew Sipe, Trademarks as Competition Law:

TM as property—historically accurate but less plausible/supported today. Search-cost reduction/quality reputation incentive: descriptively accurate as matter of function, but only to a point (monopoly would diminish search costs most)/still requires resort to other principles. Promoting competition: common in modern case law, discourse, and organization; but questionable provenance and not adequately defined or specified. So what do we mean by promoting competition?

We’re still figuring this out after 100 years of the Sherman Act. One vision: protecting producers’ investments and interests: Learned Hand, for its own sake and in spite of cost, protect small units. We do that in TM to punish confusion even w/o demonstrable harm to consumers; prohibit dilution; protect some aesthetic functionality; we allow abuse of certification marks for cartelization.

Bork’s version: consumer welfare, but smuggling in total welfare standard. In TM law: we allow total cashout in final period, harming consumers; we effectively allow transfers in gross (maybe justifiable as efficient but transfers wealth from consumers to producers); we allow protection for rivalrous functionalities, like placebo marks (again, transfers from consumers to producres); we allow price discrimination (including same product under national brand and house brands, which again capture from consumers/avoid deadweight loss). That can drift towards a thin vision of consumer welfare. Fail to recognize source, origin, and other nonconsumptive qualities as valuable—you can outsource production and keep using the same brand; freely permit abandonment, rebranding, and proliferation of different brands in same space all owned by the same company—obfuscating market concentration.

Simultaneously making key mistakes from every law]antitrust era b/c we haven’t thought about what promotion competition really means.

Structural/institutional lessons: find a common denominator of what we want. Consumer welfare might be valuable, but more robust than pure price.

Enable consumer participation and remedies: the consumer has an interest in TM but right now we don’t have standing or remedies.  

TM law is more afraid of false negatives than false positives, and it should balance them.

Move from bright-line rules to flexible standards.

Eric Goldman: the question is what should be exogenous and what we should import from other laws. What should we import from antitrust or other areas into TM? What methodologies should we use for gatekeeping? Maybe we need to rebuild antitrust law on its own merits. Rules might be better than standards! You could be legal under TM law but violating antitrust law.

A: at a minimum, TM shouldn’t frustrate competition law.

Linford: we don’t want consumers bringing their own TM actions, which is weird if TM is supposed to be about consumers. But if you take seriously about how consumers think—1/3 of them are just irredeemably confused—maybe keeping them away from the law and using others as a proxy to represent their interests is a good thing. Descriptively—are there folks you need to respond to on bright line rules? Lisa Ramsey wants more bright line rules, as does Bill McGeveran—lots of folks see standards as problematic.

Jeanne Fromer: Daniel Francis in antitrust is trying to chart a path between Bork and Kahn in common-law principles, could be helpful analogue. Antitrust standing is completely the opposite, w/consumers bringing suits—why is the decision different there?

RT: Consider false advertising as another kind of competition law. Bright line rules—where are they located in TM now? Glynn Lunney has a great paper on this.

Lunney: we don’t have antitrust nearly right, and it certainly isn’t helping the economy be optimally competitive today. Hand quote maybe doesn’t mean what you think—it’s anti monopolization (echoed by Wu).

Buccafusco: do this one doctrine at a time, not all TM. Find the best thing in antitrust that is most useful in TM and write that paper showing how it can help TM.

Wu: do you mean to import a broader consumer welfare standard, or anti-monopolization, which would mean fewer monopolies/cut against broad producer-friendly doctrines.

Heymann: another benefit of picking a problem