Saturday, March 01, 2014

Trademark Scholars' Roundtable part 3

Session 3: Comparing The Two Dimensions

Discussant:  Mark McKenna

Why is it difficult to stick to product/geographic markets as a topic? Both dimensions have consumer-facing concerns (how will consumers actually understand the uses in different markets) and other considerations (practical admin. of the system, interaction w/registration system, concerns about commercial interests and when/how they ought to be allowed to expand).  If we want both dimensions have similar rules, we would want to think there’s relatively the same balance between those consumer and other interests. He’s not sure they do. Geog. scope interacts w/registration, treaty obligations, sovereignty in ways that make it distinct/not motivated so much by consumer understanding. This is also somewhat true in product markets, but we’ve converged on confusion to manage all this.

Insofar as we’re trying to regulate the relations between parties/not primarily focused on consumer behavior, might treat them differently.  Accession: if granting a party an adjacent market, is it because we expect the party to have superior ability to enter/manage? Might expect that skills would be transferable to new geographic areas, but less so in other product markets.

Brand as persona: Lots of these goods were staples not individually branded; retailers had a lot of power. Marketing changed in significant part in order to change relationship between producers and retailers, so producer could connect more directly w/consumers.  This whole system has implications for how we structure relations between different levels.  A TM system that rewards advertising will give more power to brands than to retailers.  Also, then they had to focus on non-product characteristics—convince people that they should buy one kind of salt instead of another.  Our TM system supports delivering these ads where the advertised characteristics are disconnected from physical aspects of the goods.

Bill McGeveran: to the extent that branding allows producers leverage against retailers, degree of capacity to extend branding to other product might make you on the margin less interested in that. But you’re creating consumer demand for the refreshment of Coke to get better slotting fees from retailers—most significant incentive for branding is to make consumers want you and that might not change at all based on Coke’s ability or inability to extend to other product lines.

McKenna: might change the nature of the ad message.  Coke would still say “you want Coke, not some other soda.” But if you can brand other things w/Coke, you can port the brand meaning to other goods/services, so you have less incentive to focus on characteristics specific to your category and more to focus on brand personality that is portable.

Litman/Burrell suggest that an intentional/causal account of this phenomenon as driving force of change in TM law doesn’t work (esp. in terms of British law).

Bone: addition of psychological concepts to advertising does change how ads are made: become less informational.  This does push TM law to change too.

McKenna: agrees that this was a change in marketing that courts were noticing.

Litman: just doesn’t agree with the idea that TM law was “designed” to cut retailers out; maybe a wording issue.

McGeveran: consumer v. producer orientation is really important.  In product space, the product-mark association may have special meaning in TM because you can only think about distinctiveness w/r/t a particular product; exporting to different product can take away context that can be legally important, and that’s not true of geographic space. 

Does think that internet makes exposure to other, distant marks more likely—Google gives me the nearest coffee shop first, but others in other states will also show up in the search results. 

Bently is unconvinced about this increased exposure—need more evidence.

McGeveran: thinks it’s so but that it won’t necessarily increase likely confusion. If internet has shrunk geographic and product spaces, doesn’t necessarily mean consumer perception of the meaning of distance stays unchanged.

Mike Grynberg: there are a lot of doctrines that have similar effects in geog. and product markets—one could look at the Rogers test as a kind of “honest concurrent use” for geography. Lawmakers share a common baseline: tendency of TM law generally to posit inattentive consumers.  Need reason to deviate from that baseline.

Expertise in the age of the internet: not as much of a gatekeeper function; gatekeeper mattered when space in which knowledge was stored was somewhat scarce (e.g., library shelves). And now people need filters more than gatekeepers; build communities online in which people participate in the construction of truth, for good or ill. Information cosmopolitan: capable of interacting w/marks and other sources of information—possibility for multiple ways of constructing meaning. That view would provide a different foundation for Dawn Donut, saying that consumers can resist confusion while producers are operating in different markets, even w/the rise of the internet. But the same notion of consumer ability to self-protect/make meaning can also be used in product markets, as w/Sheff’s data and the many Tiffanys in the world.  Cascading amount of nonactionable uses that potentially “dilute” marks—could posit competent consumers who are able to manage this info.

But is this an elitist argument? Info resources are not evenly distributed. 

Harm stories retain their intuitive appeal.

Dinwoodie: agrees that there is change in “distance” w/out necessarily changing confusion—may lead to more sophistication.  You can see the 9th circuit, over the course of 15 years, figure this out. But processing info takes time, and it’s still unclear how much we base our decisions on immediacy and how much we use the new information.

National marketing impulse may explain both market limits erosion and territorial limits. Coexistence agreements in registration and settlements routinely divide both geographic and product markets.  Attempts to give certainty—but sometimes what you think is a clear definition becomes more complex, as in Apple v. Apple. Many countries had a concept of defensive registration—reserved a product market removed from the goods on which you actually used the mark; another way of providing certainty over who has the right to expand into a market. Problem for use-based regimes.  But now US has ITU. Though ITU has much shorter fuse than the common 5-year period for use.

Heymann: interesting that concurrent use can be divorced from consumer understanding.

Dinwoodie: finesse that by giving deference to parties’ agreement on the idea that they know better than a court how a market would naturally flow. But there definitely be a problem of overriding consumer confusion.

McKenna: parties do this all the time—sale and leaseback; create a blanket entity that leases back to both, but both are really in control of their own activities; etc.

Dinwoodie: is there marketing literature about territorial extension as there is about product market extension? Could that be brought in to help us understand confusion?

DHL case in Europe: now have the possibility, notwithstanding unitary rights, of having a TM in less than EU and someone else able to use the same mark for the same goods elsewhere in the EU.  That prospect scared the dickens out of the TM bar. Phrased objection as creating a problem with the single market. His response: the US is a much more integrated single market with free flow throughout, but is much more comfortable with geographic restrictions and concurrent use agreements!  Somehow the US survives, even though goods and people do flow.  EU is practically fractured markets, but complete skepticism about geographic limits in TM.  Is it just nationbuilding?

RT: McKenna says: Might expect that skills would be transferable to new geographic areas, but less so in other product markets.  My reaction: Really depends on cultural factors, doesn’t it?  McDonald’s, from yesterday, doesn’t just bring the Big Mac and has had trouble when it tries a fullscale import.  McGeveran says: exporting to different product can take away context that can be legally important, and that’s not true of geographic space.  Disagree.  Depending on the mark (also true of product space, e.g. Delta) a geographic distance can make a huge difference.  Recall yesterday’s multiple Tiffany restaurants and strip clubs.  Do we think there’s a chain of each?  Not likely. And that coffee shop example, where Google gives you the nearest first, fits w/my objection to the idea that geography doesn’t provide a context of its own: the search results will be presented in ways making it unlikely that you’ll think that the different similarly named coffee shops are linked.

McGeveran: didn’t mean to contrast geography/product.  Additional information can be confusion reducing as much as it can be confusion creating in either case.

Burrell: Assumptions about consumer: consumer has a smartphone (and thus is not too poor to travel, thus has fewer income constraints). People who have to buy food where they can get it are not the “consumers” of the classic cases.  The courts are talking about people who could go to Paris and would have heard about Maxim’s.  Amazing how easily a notion of the consumer inserts itself into our thinking so that we know the “consumer” has more access to information.  Gender, class are part of the differences.

Defensive registration: had to explain to the Office why a hypothetical reasonable consumer would see the mark on X there would be some kind of harm/association that would damage the TM owner. Fell out of favor because brand owners found it really hard to explain, in the absence of use and in the absence of bad faith, what harm they would be suffering.  (I really want a citation for this!)

Dinwoodie: shows again that dilution is really unfair competition because it’s always what the defendant is doing.

McKenna: agrees that transferability is not necessarily different, but it’s a question worth asking whether one set of skills is more transferable than another (new product v. new geographic market). Thinking about transferability domestically—less significant difference in expanding from NY to Texas than NY to Mexico.

Interesting how easily we all agree, in Mark Lemley’s absence, that TM is doing much more (and different) than consumer protection. That contributes to difficulty in defining the relevant consumers—in service of what?  If it’s about protecting them from disruption in their behavior, you might define them one way. If it’s about defining them in order to allocate markets/business relations, you might define them differently. In many settings, consumers are constructed largely as a stalking horse for how we want to divide up the rights and therefore need do less to figure out what they really think.

Dinwoodie: surveys, for all their flaws, may be a light on real consumers if you think there’s a big gap between your judges and your actual consumers. 

On transferability: to the extent that the owner is licensing, then all they’re selling is their ability to market, not any other skills which become beside the point.

Bone: what sort of effects should we count? We should consider TM’s effects on market structure, but we shouldn’t necessarily use TM to engineer various markets. Dangerous to use TM as engineering device.

Dinwoodie: TM does a lot of things, but that doesn’t mean it should be used to do everything.

McKenna: his claim is not normative but descriptive.

Sheff: defining the consumer is not just normative but distributive: helping richer consumers with more brand awareness may hurt others.  Judge may be mistaken about the consumer in his/her head versus the consumers actually having experience with the mark; but separately, it may be the case that consumers are heterogenous and have different experiences.  We may subsidize one by allowing (or suppressing) use that has different effects on others.

Grynberg: be also clear on what it is we’re allocating/distributing.  Information? Value?

Dinwoodie: speculates that geographic expansion creates more heterogeneity in consumers. 

RT: I think now of McDonald’s and its beef extract used on fries, and its resulting difficulties with Hindus, vegetarians, and others who cared when McDonald’s thought they wouldn’t.  There’s an example of expansion resulting in consumer heterogeneity.  More speculatively: hasn’t branding itself attempted to create more heterogeneous consumers?  Individualizing them, hailing them as unique and different?

Dinwoodie: maybe there’s convergence between geog. and product market rules, but more formal on the geog. side because it’s easier to draw arbitrary lines when political borders are at issue. Then the arbitrary lines get softened because courts think that they’re arbitrary.  (Back to crystals and mud!)

McKenna: thicker set of rules in geog. because of registration overlay, especially in the US.  In the US, registration is mostly about nationwide rights.  Geog. market cases tend to identify areas in which the parties have rights. And those rights are sticky. They stay in place.  That is less likely to happen in product spaces, which feel more ad hoc.  It’s not a coincidence that casebooks teach priority and geog. scope of rights together, and not product market space.  There’s something more systematic and crystalline about geog. scope.  Pragmatism: sovereignty, registration, etc. which is less fluid than the product market space.

Dinwoodie: the normative qs however may be more acute with geog.  Int’l markets: well-known mark doctrine has distributive consequences between developed and developing countries. Maintenance of local culture in a global context is another question.

McKenna: US lens: registration system is more likely to give you rights with a geographic scope unrelated to any consumer understanding—in areas where the mark doesn’t mean anything to consumers (subject to Dawn Donut)—than in distant product areas.

Heymann: what is it that tells you that it’s McDonald’s even if the menu/presentation is different to respond to local conditions? What lets you recognize it as different and yet the same?  Product space offers the same questions—what difference is tolerated until there’s a crossover and the consumer thinks, ok, that’s a different source.

McGeveran: told a great story about his daughter asking if the airline company made their faucet. Navigating meaning is a skill that we teach people—even at 6 she thought it was unlikely.  Learning to parse difference and similarity is a skill.

We don’t intervene to minimize cognitive load on people in many circumstances—commercial, political, etc.  We should justify intervening in TM’s name.

Dinwoodie: other jurisdictions suppress false political speech.

McGeveran: but you don’t have in any democracy rules that ensure not just that people aren’t deceived by political falsehoods but also that they don’t draw mistaken inferences.

McKenna: we don’t regulate the incredibly confusing statements from your insurance company, for example.  (Another thing that might be unique to Americans.)

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