Draft July 28, 2006 Please do not circulate or cite without permission The Normative Foundations of Trademark Law

208 See Wotherspoon v. Currie, 5 Eng. & I. App. (Law R.) 508 (1872) (finding that the defendant had infringed the plaintiff’s rights in “Glenfield” for starch and noting that the defendant’s use of that term itself served as evidence of bad intent because the defendant had no need to use that term since it was not a location recognized on a map).

209 2 Sand. Ch. at 603.

210 179 U.S. 665 (1901).

211 Id. at 674. See also, Lawrence Mfg. Co. v. Tennessee Mfg. Co., 138 U.S. 537, 549 (1891).

212 See McCarthy, supra note __ at §§ 4:5, 15:1. "To establish secondary meaning, a manufacturer must show that, in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself.” Inwood Laboratories v. Ives Laboratories, 456 U.S. 844, 851 n.11 (1982). “Secondary meaning” is a term from the common law; the Lanham Act uses the phrase "has become distinctive" to refer to marks that become protectable. 15 U.S.C. § 1052(f). See also, Application of Hehr Mfg., 279 F.2d 526, 528 (C.C.P.A. 1980).

213 Plaintiffs now do not need to show fraudulent intent even in cases involving trade names, though some courts have suggested that evidence of intent can obviate the need to demonstrate secondary meaning. See McCarthy, supra note __ at § 23:106 (“Modern Common Law Rule: Intent not Essential”); Upjohn Co. v. Schwartz, 246 F.2d 254 (2d Cir. 1957) (holding that a manufacturer's intentional efforts to induce retailers to substitute his product for other products requested by buyers, constituted intentional palming off and grounds for an injunction even absent of proof of secondary meaning).

214 See Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 790-91 (5th Cir. 1983); 15 U.S.C. § 1052(e)-(f).

215 Cf. Stacey L. Dogan & Mark A. Lemley, Trademarks and Consumer Search Costs on the Internet, 41 Hous. L. Rev. 777, 792-93 (2004) (making a similar argument regarding the rule that generic terms cannot serve as trademarks).

216 Mitchell, supra note __ at 285.

217 See Lawrence Mfg. Co. v. Tennessee Mfg. Co., 138 U.S. 537, 546 (1891) (stating that a “trade-mark must, either by itself or by association, point distinctively to the origin or ownership of the article to which it is applied,” because “unless it does, neither can he who first adopted it be injured by any appropriation or imitation of it by others, nor can the public be deceived”).

218 See Alff v. Radam, 14 S.W. 164, 164-65 (Tex. 1890) (noting that a party has “no right to appropriate a sign or symbol which, from the nature of the fact that it is used to signify, others may employ with equal truth, and therefore have an equal right to employ, for the same purpose” but allowing for the possibility that a plaintiff might nevertheless prevail in such a case if the defendants intentionally simulated the peculiar device or symbol employed by the plaintiff in order to deceive consumers); Elgin Nat’l Watch, 179 U.S. at __ (noting that competitors have good reasons to use terms in their primary sense, but cannot use terms to divert a producer’s trade); Thompson v. Montgomery, 41 Ch. Div. 35 (holding that, the plaintiff’s had no exclusive right to the use of “Stone Ale” alone as against the world, or any right to prevent the defendant from selling his goods as having been made at Stone, but could prevail against a defendant who used the words fraudulently to pass off its goods).

219 See, e.g., Avery & Co. v. Meikle & Co., 4 Ky.L.Rptr. 759, __ (1883) (noting that the law allows use of terms that are common property for the ideas which those terms commonly express, so long as the use is not misleading).

220 For an articulation of the traditional rule of abandonment regardless of continuing goodwill, see Exxon Corp. v. Humble Exploration Co., 695 F.2d 96 (5th Cir. 1983).

221 See Defiance Button Machine Co. v. C & C Metal Products Corp., 759 F.2d 1053 (2d Cir. 1985), cert. denied, 474 U.S. 844 (1985); Ferrari S.p.A. Esercizio Fabriche Automobili e Corse v. McBurnie, 11 U.S.P.Q.2d 1843, (S.D. Cal. 1989) (finding no abandonment of DAYTONA SPYDER mark when cars still driven extensively and Ferrari maintained residual goodwill); American Motors Corp. v. Action-Age, Inc., 178 U.S.P.Q. 377 (T.T.A.B. 1973) (holding that the auto model mark RAMBLER was not abandoned four years after the mark owner ceased production in part because “a considerable reservoir of goodwill in the mark RAMBLER in this country that inures to [American Motors] as a consequence of the large number of RAMBLER vehicles still on the road”).

222 Borden Ice Cream Co. v. Borden’s Condensed Milk Co., 201 F. 510, 513 (7^th Cir. 1912).

223 113 F. 468 (8^th Cir. 1901).

224 Id. at 475.

225 See Restatement (Third) of Unfair Competition § 33 (1995); Nims on Unfair Competition and Trade-Marks 66 (3d ed. 1929)

226 See, e.g., Chadwick v. Covell, 151 Mass. 190, 193-95 (1890) (refusing plaintiff’s attempt to enjoin a defendant from using the same name on the ground that, although plaintiff purportedly received a gift of Dr. Spencer’s recipes and trademarks for medicines, she made the medicine with her own ingredients, tools, plant, and contrivances and did not succeed to Dr. Spencer’s manufactory or plant). Chadwick represents an era where courts equated goodwill with a physical location rather than simply ongoing business operations of the same type.

227 See Sara Stadler Nelson, The Wages of Ubiquity in Trademark Law, 88 Iowa L. Rev. 731, 776-78 (2003).

228 See Bone, Hunting Goodwill, supra note __ at 34-44.

229 Felix S. Cohen, Transcendental Nonsense and the Functional Approach, 35 Colum. L. Rev. 809, __ (1935) add parenthetical

230 See Lunney, supra note __ at 367-69 (describing the re-emergence of the “trademarks as monopoly” argument and attributing it in large part to the work of Edward Chamberlain and his work The Theory of Monopolistic Competition). Chamberlain expressed concern about the ability of firms to exercise market power on the basis of the artificial differentiation trademarks enabled. This argument was picked up, most notably, by Ralph Brown. Ralph S. Brown, Advertising and the Public Interest: Legal Protection of Trade Symbols, 57 Yale L.J. 1165 (1948). It also served as the basis for the Federal Trade Commission’s opposition to broad trademark protection. See Lunney, supra note __ at 368 n.8 (and sources cited therein).

231 When Parliament and the American Congress debated enacting trademark laws, lawmakers frequently raised concerns about fraudulent uses and sales of trademarks and about the monopolies that would result from recognition of trademarks as property. See also Schechter, Historical Foundations at 140-41, 162-64.

232 See, e.g., Pattishall, supra note __ at 979-80. These counterarguments were made during the debates over the Lanham Act. See S. Rep. No. 1333 (1946), reprinted in 1946 U.S.C.C.A.N. 1274, 1274-75 ("Trademarks, indeed, are the essence of competition, because they make possible a choice between competing articles by enabling the buyer to distinguish one from the other."). The line of argument was not altogether new, however. See Dixon Crucible Co. v. Guggenheim, 2 Brewst. 321 (Pa. 1869) (noting historical concerns about creating monopolies in trade but concluding that the “more enlightened position” is that protection of marks is an encouragement to competition).

233 See, e.g., Norwich Pharmacal Co. v. Sterling Drug, Inc., 271 F.2d 569, 570-71 (2d Cir. 1959) ("Distaste for sharp or unethical business practices has often caused the courts to lose sight of the fundamental consideration in the law of unfair competition--protection of the public."), cert. denied, 362 U.S. 919 (1960).

234 Ironically, around the same time proponents shifted their focus more to the consumer protection rationale, Frank Schechter concluded consumer protection was no longer a necessary consideration in light of development of commercial fraud courts and the Federal Trade Commission. See Schechter, Historical Foundations at 164-65

235 Jim Gibson describes one way in which trademark law suffers from this form of feedback loop as a result of consumer understanding of licensing practices. See James Gibson, Risk Aversion and Rights Accretion in Intellectual Property Law 21-39 (draft manuscript on file with author).

236 201 F. 510, 513 (7^th Cir. 1912) (finding BORDEN for milk not infringed by BORDEN for ice cream).

237 Id. at 514

238 15 U.S.C. § 96. Repealed by Lanham Act § 46(a) (1947)

239 Id.; McCarthy, supra note __ at § 24:2.

240 The rule of the 1905 Act was sometimes expressed as a requirement that the defendant’s use be for goods of the “same descriptive class” as the plaintiff’s goods. See, e.g., Beech-Nut Packing Co. v. P. Lorillard Co., 7 F.2d 967 (3d Cir. 1925); Consumers Petroleum co. v. Consumers Co. of Illinois, 169 F.2d 153 (7^th Cir. 1948); California Fruit Growers Exchange v. Sunkist Baking Co., 166 F.2d 971 (7^th Cir. 1947).

241 See Kotabs, Inc. v. Kotex Co. 50 F.2d 810 (3d Cir. 1931).

242 247 F. 407 (2d Cir. 1917).

243 Id. at 409-10.

244 Id. at 410.

245 26 F.2d 972 (2d Cir. 1928).

246 Id. at 974.

247 Id.

248 Id. at __.

249 See Arrow Distilleries, Inc. v. Globe Brewing Co., 117 F.2d 347 (4th Cir. 1941) (finding that beer and liqueur cordials were from different product “classes” and defendant’s use of the ARROW mark therefore did not infringe plaintiff’s use).

250 15 U.S.C. §§ 1052(d) 1114(1) 1125(a); McCarthy, supra note __ at § 24:4.

251 Ball v. American Trial Lawyers Ass'n, 14 Cal. App. 3d 289, 92 Cal. Rptr. 228 (2d Dist 1971) (“Although the appellation ‘unfair competition’ is still used to denominate the equitable doctrine and rules operative in the field of disputes over tradenames, direct competition between the parties is not a prerequisite to relief. Emphasis is now placed upon the word ‘unfair’ rather than upon ‘competition.’”). See also, Pike v. Ruby Foo's Den, Inc., 232 F.2d 683 (D.C. Cir. 1956) (calling the notion that there can be no unfair competition without competition “outmoded”);

252 See e.g., Standard Oil Co. v. Standard Oil Co., 56 F.2d 973 (10^th Cir. 1932); Tiffany & Co. v. Tiffany Productions, Inc., 147 Misc. 679, 264 N.Y.S. 459 (1932), aff’d 237 A.D. 801, 260 N.Y.S. 821 (1932), aff’d 262 N.Y. 482, 188 N.E. 30 (1933); Brooks Bros. v. Brooks Clothing of California, Ltd., 60 F. Supp. 442 (D. Cal. 1945), supplemental op., 5 F.R.D. 14 (D. Cal. 1945), aff'd, 158 F.2d 798 (9^th Cir. 1947), cert. denied, 331 U.S. 824 (1947); Stork Restaurant, Inc. v. Sahati, 166 F.2d 348 (9^th Cir. 1948) (recognizing claim by New York night club against use of “Stork Club” for San Francisco bar). See also, McCarthy, supra note __ at §§ 24:13-14.

253 McCarthy, supra note __ at § 24:14. (arguing that there should be “no fetish about the word ‘competition,’” because focusing on competition “puts semantics above legal and commercial reality” and is analogous to defending against a manslaughter charge on the ground that the person killed was a woman). McCarthy’s analogy is a poor one because the normative foundation of manslaughter does not depend on the sex of the person killed. The traditional normative foundation of trademark law, on the other hand, was intimately bound up with competition. Moreover, since McCarthy is arguing precisely about what the legal reality should be, it is hard to imagine how insisting on a longstanding legal tradition like the presence of competition could possibly ignore legal reality.

254 Supporters of more expansive trademark protection often quote approvingly the California Court of Appeal’s statement that “emphasis is now placed on the word “unfair” rather than upon “competition.” See Ball v. American Trial Lawyers Ass’n, 14 Cal. App. 3d 289, 303 (2d Dist. 1971).

255 The well-known Polaroid factors were developed explicitly to gauge the likelihood of confusion in the case of non-competing products. See Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir. 1961) (“Where the products are different, the prior owner’s chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant’s good faith in adopting its own mark, the quality of defendant’s product, and the sophistication of the buyers.”). Each of the federal Circuits has its own, non-exhaustive set of likelihood of confusion factors, though there is substantial overlap among them. See Restatement (Third) of Unfair Competition at § 20-23 (identifying and cataloging eight foundational factors).

256 See Gibson, supra note __ at __ (describing unpredictability and risk aversion of potential defendants).

257 Jennifer E. Rothman, Initial Interest Confusion: Standing at the Crossroads of Trademark Law, 27 Cardozo L. Rev. 105, 108 (2005) (noting that “initial interest confusion” is something of a misnomer because courts have based findings of trademark infringement on their conclusions that consumers might initially be “interested,” “attracted,” or “distracted” by the third-party’s use of a trademark).

258 Id. at 109-110 (noting that there were relatively few published cases relying on the initial interest confusion doctrine before 1990, and many more published cases between 1990 and 2005, and attributing the rise to its use in the internet context and its increasing application offline).

259 See Eric Goldman, Deregulating Relevancy, 54 Emory L.J. 507, 572-75 (2005)

260 Perhaps Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254 (2d Cir. 1987) is most susceptible of this type of characterization. In that case, Pegasus Petroleum was deemed to have infringed Mobil Oil’s flying horse (a Pegasus) by adopting the name Pegasus Petroleum for its oil trading company. The Second Circuit concluded, in characteristically speculative fashion, that an oil trader “might listen to a cold phone call from Pegasus Petroleum … when otherwise he might not, because of the possibility that Pegasus Petroleum is related to Mobil.” Id. at 259. Importantly in that case, Mobil also had used the name Pegasus, in addition to its flying horse logo, in its own oil business.

261 See Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1059 (9th Cir. 1999) (noting that the defendant, West Coast Video, used the term “moviebuff” in its slogan “The Movie Buff’s Movie Store” and that “movie buff” has generic significance as a term for movie enthusiasts.

262 Brookfield, 174 F.3d at 1062-63.

263 Only in the most extreme circumstances – where initial diversions might impose significant additional search costs and therefore jeopardize consumers’ ability to rely on a mark as an organizing principle – does recognizing initial interest confusion do much to protect consumers. It is deeply ironic then, given the relative ease of navigating through the online world, that the internet age drove expansion of the initial interest confusion doctrine.

264 221 F.2d 464 (2d Cir. 1955), cert. denied, 350 U.S. 832 (1955).

265 Id. at 466.

266 McCarthy’s characterization of the harm of post-sale confusion is typical. After admitting that the concern really is that consumers could purchase a cheaper substitute, he argues that “the senior user suffers a loss of sales diverted to the junior user, the same as if the actual buyer were confused,” because “even though the knowledgeable buyer knew that it was getting an imitation, viewers would be confused.” McCarthy, supra note __ at § 23:7. The only lost sales to which McCarthy could possibly be referring are potential future sales to viewers of the product who are turned off by the imitation and take it out on the original manufacturer.

267 McCarthy at § 23:7

268 See Lunney, supra note __ at 376-77.

269 The two most important restrictions are the requirement that product configuration, as opposed to product packaging, have secondary meaning to earn protection, and the functionality doctrine. See Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 216 (2000) (product design protectable only with secondary meaning); TrafFix Devices, Inc. v. Marketing Displays, Inc., 532 U.S. 23, 33 (2001) (a feature is functional, and therefore ineligible for trade dress protection, when it is essential to the use or purpose of the device or when it affects the cost or quality of the device).

270 Examples of cases in which the court allowed some form of licensing include McCardel v. Peck, 28 How. Pr. 120 (Sup. Ct. N.Y. 1864); Kidd v. Johnson, 100 U.S. 617 (1879); Martha Washington Creamery Buttered Flour Co. of United States v. Martien, 44 F. 473 (C.C.D. Pa. 1890); Nelson v. J.H. Winschell & Co., 89 N.E. 180 (Mass. 1909).

271 See Harry Schniderman, Trade-Mark Licensing – A Saga of Fantasy and Fact, 14 Law & Contemp. Probs. 248, 265 (1949)

272 See Dogan and Lemley, Merchandising

273 See 15 U.S.C. § 1125(a) (making actionable any use that causes confusion as to an "affiliation, connection or association" with a trademark holder, or causes confusion "as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities . . . .").

274 See Gibson, supra note __ at 35 (citing a 1983 study in which 91.2% of respondents agreed that “[n]o product can bear the

name of an entertainer, cartoon character, or some other famous person unless permission is given for its use by the owner of the name or character”). Gibson notes, correctly, that this belief cannot be attributed solely to consumers understanding of licensing practices. Id. The impression probably also results from information campaigns engaged in by mark owners, legal notices that suggest broad control, and media statements. See, e.g., http://www.wisc.edu/licensing/policies.html (“Only companies that are officially licensed by the University are permitted to produce items using University trademarks.”); http://www.whirlpoolcorp.com/general/terms/legal.asp (“Users are prohibited from using any Marks for any purpose including, but not limited to, use as metatags on other pages or sites on the World Wide Web without the written permission of Whirlpool Corporation or such third party which may own the Marks.”); Andrew Lavallee, “Hollywood’s Take on the Internet Often Favors Fun Over Facts,” The Wall Street Journal Online, May 1, 2006 (available at http://online.wsj.com/public/article/SB114417762246516812-JafduzlqqrJNqD9QzSSA0d3LIk8_20060508.html?mod=blogs) (suggesting that “[p]rominently showing an AOL email screen or Google search page, for example, requires approval from the companies”). These statements shape consumer expectations even if they are inaccurate assessments of current law.

275 Frank I. Schechter, The Rational Basis of Trademark Protection, 40 Harv. L. Rev. 813, 830-33 (1927).

276 The linkage is even more tenuous in the case of dilution by tarnishment, where the plaintiff’s claim is that the defendant used the mark in some unwholesome way that is likely to affect negatively the associations consumers have with the mark. See Restatement (Third) of Unfair Competition § 25 comment g (1995) (“To prove a case of tarnishment, the prior user must demonstrate that the subsequent use is likely to come to the attention of the prior user's prospective purchasers and that the use is likely to undermine or damage the positive associations evoked by the mark.”). In those cases, the defendant is not competing with the plaintiff, and in some cases is not even selling anything. Thus, the argument is that defendant affects the plaintiff’s ability to attract future customers, not because they would be diverted to the defendant, but because they would be turned off to the plaintiff. See Coca-Cola Co. v. Gemini Rising, Inc., 346 F.Supp. 1183, 1190-91 (E.D.N.Y. 1972) (finding that “a strong probability exists that some patrons of COCA-COLA will be “turned off” rather than “turned on” by defendant's so-called “spoof,” with resulting loss to plaintiff. … [P]laintiff's good will and business reputation are likely to suffer in the eyes of those who, believing it responsible for defendant's poster, will refuse to deal with a company which could seek commercial advantage by treating a dangerous drug in such jocular fashion.”).

277 See Long, supra note _ at __ (finding that federal dilution claims not often pursued; judicial enforcement “not robust” and eroding over time). Long’s findings are limited to litigation following enactment of the Federal Trademark Dilution Act, 15 U.S.C. 1125(c). Her conclusion that judicial enforcement is eroding is ironic because the statute was meant to regularize dilution law in the face of fairly persistent reluctance by courts to accept a cause of action de-linked from consumer confusion.

278 See 15 U.S.C. § 1125 (c) (1) (“The owner of a famous mark shall be entitled…”)

279 See Stadler Nelson, supra note _ at 805 (“As members of the trademark bar have argued for an infringement law made in the image of dilution, courts have obliged, interpreting the confusion doctrine so as to punish association--the ‘sine qua non of dilution.’"). Courts even have strained to find a likelihood of confusion in situations that seem like typical tarnishment scenarios. See Anheuser Busch, Inc. v. Balducci Pubs., 28 F.3d 769 (8^th Cir. 1994) (finding defendants “Michelob Oily” parody cartoon likely to cause confusion with plaintiff’s Michelob mark).

280 See id. at 735 (“As a result, being the owner of a trademark today is much like being a parent in Lake Wobegon, where "all the children are above average"--for under modern dilution law, nearly every trademark has become dilutible.”).

281 15 U.S.C. § 1125(d).

282 The Act states that liability is determined “without regard to the goods or services of the parties,” thus removing from consideration differences between the goods or services of the disputing parties. See 15 U.S.C. § 1125(d). Indeed, intent to divert consumers is only relevant to one of the non-exclusive factors relating to bad faith. See § 1125(d)(1)(B)(i)(V). Even then, the intent need not be to divert customers who would have purchased the mark owner’s goods, but only “intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site.”

283 Coca-Cola Co. v. Purdy, 382 F.3d 774 (8^th Cir. 2004).

284 See McCarthy § 11:73 and cases cited therein.

285 See, e.g. Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 631 F.Supp. 735, 741 (S.D.N.Y. 1985) (citing as evidence of a mark’s strength evidence of sales success, advertising expenditures, and length and exclusivity of use); Bose Corp. v. QSC Audio Prods., Inc., 293 F.3d 1367, 1371 – 72 (Fed. Cir. 2002) (citing advertising as evidence of fame of mark for purposes of likelihood of confusion analysis in opposition proceeding).

286 Cf. Victoria’s Cyber Secret Ltd. Partnership v. V Secret Catalogue, Inc., 161 F.Supp.2d 1339 (S.D.Fla. 2001) (“The taking of an identical copy of another's famous and distinctive trademark for use as a domain name creates a presumption of confusion among Internet users as a matter of law.”).

287 This expansion to protect a broader range of branding practices was by no means accidental, and it has not been lost on trademark owners and their advocates. See Julie Manning Magid, Anthony D. Cox and Dena S. Cox, Quantifying Brand Image: Empirical Evidence of Trademark Dilution, American Business Law Journal 1 (Spring 2006). (“Trademark law now endorses the branding efforts of trademark owners.”).

288 Bone criticizes the moral and economic arguments for protection of a broader notion of goodwill. Bone, Hunting Goodwill at 84-91.