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


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III.Traditional Trademark Law’s Natural Rights Origins

Two clear conclusions emerge from this restatement of trademark law. First, “traditional” American trademark law was primarily concerned with protecting producers’ interests. In many cases protecting those interests yielded an additional benefit to consumers, but that side benefit did not motivate decisions. Second, American courts protected producers’ interests by recognizing property rights.135 Admittedly, however, courts deciding trademark cases in the eighteenth and nineteenth centuries often were not clear about the nature of the property interest at stake. In some cases courts referred to the trademark as property, in other cases it is clear that the interest is in the flow of consumers the narrow form of goodwill. This lack of clarity has allowed for some confusion about the significance and role of “property” in the trademark discourse.

The simplest explanation of the classification of trademark rights as property is formal – claimants wanted injunctions to halt and prevent trade diversion, and courts of equity had the power to enjoin invasions of property rights.136 Under that view, trademark claims were considered property claims purely as a matter of convenience. But as I alluded to above,137 the formalism explanation is too simplistic. First, claims based on invasions of property rights could be brought in courts of law even prior to the merger of law and equity.138 Thus, calling a right “property” did not determine the venue in which that right would be vindicated. Second, equity would take jurisdiction and enter injunctions to protect trade reputation even in cases where the court found that the plaintiff did not have exclusive property rights.139

The formalism explanation is therefore insufficient. Ultimately, the attractiveness of that that view derives from a misunderstanding of the dominant property theory in which most judges of that era operated.140 While the cases themselves did not always explicitly link trademark protection to the natural rights tradition,141 by looking both at what courts said in deciding cases and at the contours of the doctrine they created we can find strong evidence that courts developing trademark law were relying on a natural rights theory that focused on protecting and encouraging productive labor. In the end, it may be that the cases lack rigorous description of the property they protected because it was not particularly important to courts that they identify the property precisely. Whether the property was the underlying physical assets, the mark itself, or, as I think most plausible, the flow of honestly acquired consumers, courts focused primarily on channeling productive labor and could have constructed sensible rules under any of those understandings.

In order to evaluate competing views of the nature of the property trademark cases sought to protect, the following section briefly describes the natural rights property theory from which eighteenth and nineteenth century property decisions predominantly were derived.142

ANatural Rights Principles

Property rights, according to natural rights theory, aim to preserve for individuals a zone of free action and the ability to reap the benefits of their own labor or industry.143 This concern about labor and industry is well-known. Equally important however, natural rights theory recognized that conflicting claims were inevitable, and property rights required sensitivity to the like rights of others.144 Thus, the positive law sought to balance the legitimate interests of various property owners. Eric Claeys summarized the approach to property this way:

“[i]f one could ask nineteenth-century jurists to reduce the natural-right approach to a slogan, they might say that the object of all property regulation is to secure to every owner an ‘equal share of freedom of action’ over her own property. On this understanding, every owner is entitled to some zone of non-interference in which to use her possessions industriously, productively, and consistent with the health, safety, property, and moral needs of her neighbors.”145
This notion of “equal and free action” with respect to property is often overlooked by critics of propertization, but it is important because it provides the general normative principle that delineates the scope of property rights.146 This principle was reflected in the “regulations” of property rights nineteenth century judges accepted. The most common form of “regulation” was a “harm-prevention” law, which prevented property owners from interfering too much with other property owners’ use of their property.147 Other regulations such as conveyancing laws, traffic laws, and the locality rules in nuisance “secured an average reciprocity of advantage,”148 by applying government force to enlarge the rights of all affected.149

Translating to the trademark context, natural rights theory called on courts to protect the fruits of a producer’s honest labor by preventing competitors from stealing his trade.150 At the same time, concern about the like rights of others cautioned against interfering with legitimate competition. Courts therefore were forced to distinguish carefully between legitimate and illegitimate diversions of the mark owner’s trade.151



Keeble v. Hickeringill152 is one example of such a balancing act. In that case, the court found that an action on the case did lie when Hickeringill fired his guns near Keeble’s property with the purpose of frightening away the ducks from the decoy pond Keeble had created.153 The court said:

Every man that hath a property may employ it for his pleasure or profit, as for alluring and procuring decoy ducks to come to his pond. To learn the trade of seducing other ducks to come there in order to be taken is not prohibited either by the law of the land or the moral law; but it is as lawful to use art to seduce them, to catch them, and destroy them for the use of mankinds, as to kill and destroy wildfowl or tame cattle. Then when a man useth his art or his skill to take them, to sell and dispose of for his profit; this is his trade; and he that hinders another in his trade or livelihood is liable to an action for so hindering him.154


The Keeble court recognized a right that sprang out of productive use of other property for the purpose of establishing a “trade or livelihood.”155 At the same time, the court delineated the scope of that right so as to respect the right of others to make free productive use of their property. The court treated as the actionable only “violent or malicious” interferences with a man’s ability to generate a livelihood: “where a violent or malicious act is done to a man’s occupation, profession, or way of getting a livelihood, there an action lies in all cases.”156

This distinction between legitimate and illegitimate forms of interfering with one’s property was drawn out by the Keeble court’s discussion of the 1410 Schoolmaster case.157 In that case, “one schoolmaster set up a new school to the damage of an antient school, and thereby the scholars [were] allured from the old school to come to his new.”158 An action did not lie in such a case, the Keeble court noted, because the new schoolmaster expended his own labor in a legitimate exercise of his liberty in relation to his own property.159 But by contrast, the court noted, if Mr. Hickeringill had gone to the school with his guns and frightened the boys from going to school, and their parents would not allow the children to go there, then the schoolmaster might have an action for the loss of his scholars.160 Such an action by Mr. Hickeringill would have interfered with the older school’s trade, but not as a result of productive labor on Hickeringill’s part.

Applying the lessons of the Schoolmaster’s Case to the facts in Keeble, Chief Judge Holt concluded that Hickeringill had violated Keeble’s property rights by firing his guns because Hickeringill acted only maliciously and did not make any productive use of his property.161 He would not have violated any of Keeble’s rights, however, if he had merely set out to compete with Keeble for the ducks. “If a man doth him damage by using the same employment; as if Mr. Hickeringill had set up another decoy on his own ground near the plaintiff’s, and that had spoiled the custom of the plaintiff, no action would lie, because he had as much liberty to make and use a decoy as the plaintiff.”162

Keeble was not a trademark case, but it drew the same distinction courts in trademark cases would draw between malicious acts (which were illegitimate) and those that were merely exercises of another party’s equal liberty of action with respect to their own property (with which courts would not interfere). In fact, nineteenth and early twentieth century trademark cases routinely used very similar language to distinguish infringement from “mere competition.” In Croft v. Day,163 for example, Lord Langdale said of the defendant

He has a right to carry on the business of a blacking manufacturer honestly and fairly; he has a right to the use of his own name; I will not do anything to debar him from the use of that, or any other name calculated to benefit himself in an honest way; but I must prevent him from using it in such a way as to deceive and defraud the public, and obtain for himself, at the expense of the Plaintiffs, and undue and improper advantage.164
Likewise Senator Spencer wrote in Taylor v. Carpenter165 that

[protection of trademarks] does not at all trench upon the rights of others, by a course of conduct equally deserving and praiseworthy, to enter the lists of competition, and bear off the palm. But it will not allow them by falsehood, fraud, and forgery, to filch from another his good name, and share it in common with him, or destroy or impair it.166


In Mogul S.S. Co. v. McGregor, Gow & Co.,167 the court even spoke of this distinction between infringement and competition in terms of balancing the mark owner’s rights and the like rights of others, noting that “the right of the plaintiffs to trade is not an absolute but a qualified right, a right conditioned by the like right in the defendants and all Her Majesty’s subjects, and a right therefore to trade subject to competition.”168 The court continued

Competition exists when two or more persons seek to possess or to enjoy this same thing: it follows that the success of one must be the failure of another, and no principle of law enables us to interfere with or to moderate that success or that failure so long as it is due to mere competition. I say mere competition, for I do not doubt that it is unlawful and actionable for one man to interfere with another’s trade by fraud or misrepresentation, or by molesting his customers, or those who would be his customers, whether by physical obstruction or moral intimidation.169


When courts acted to prevent trademark infringement, they did not interfere with mere competition because, by targeting actions that misled customers, they sought only to prevent illegitimate deception. As the court said in Coats v. Merrick Thread Co.,170

[r]ival manufacturers may lawfully compete for the patronage of the public in quality and price of their goods, in the beauty and tastefulness of their inclosed packages, in the extent of their advertising, and in the employment of agents, but they have no right, by imitative devices, to beguile the public into buying their wares under the impression they are buying those of their rivals.171


This was the principle the court relied on in Canal Co. v. Clark when it refused to enjoin the defendant’s use of a geographically descriptive term, even if consumers were confused as a result of the use, because the consumers were not deceived by false representations.172 A similar principle animated the rule that the right to use one’s surname as a business name was qualified by the right of others of the same name to use it, so long as those others exercised their right so as to avoid confusion.173

Putting these cases in proper philosophical and historical context makes clear why trademark infringement was grouped with other forms of unfair competition as opposed to some type of information management policy.174 Competition was critical, and courts gave content to the “unfair” component by distinguishing between honest and dishonest actions. This distinction between legitimate and unfair competition persists, at least superficially, in The Restatement of Unfair Competition, which insists that the freedom to compete, including the right to induce prospective customers to do business with the actor rather than the actor’s competitors, is a fundamental premise of the free enterprise system.175


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