Shining the Spotlight on Trademark Bullies (a Long-Delayed Recap of a Trademark Scholars Roundtable)

By Eric Goldman

[Occasionally, a blog post gets “stuck” in draft mode for months. These posts typically do not age well, as intervening developments often render the post moot or less interesting. As a result, most stuck blog posts eventually get killed without seeing the light of day. Today’s post is a stuck blog post that would have been better if I had published it when I first drafted it in April. Nevertheless, I think it's worth sharing even after 6 months of marinating.]

Last April, I attended a roundtable event at DePaul Law School where about 20 trademark scholars got together to discuss some sticky issues in trademark law. In her characteristically indefatigable fashion, Rebecca summarized our discussion (1, 2, 3). See my recap of the 2008 gathering of this group.

At the end of the roundtable, I summarized some of the discussion:

The roundtable’s theme was permissible uses of trademarks, and my experience is colored by the fact that I see too many stupid trademark disputes. For example, a number of recent trademark articles have expressed angst about lawsuits over depictions of a fictional character misusing a trademarked product. Cases in this genre include the lawsuits over depictions of Slip-n-Slide (Wham-O v. Paramount Pictures Corp., 286 F. Supp. 2d 1254 (N.D. Cal. 2003)), Caterpillar (Caterpillar Inc. v. Walt Disney Co., 287 F. Supp. 2d 913 (C.D. Ill. 2003)) and Insinkerator (Emerson v. NBC, which settled). Our group of trademark scholars reached one (and only one!) point of complete consensus during our time together–that trademark lawsuits over these fictional depictions are bogus, and defendants should have a mechanism to shut the case down early and cheaply.

We are also seeing stupid online trademark cases. My exemplar is Lifestyle Lift v. RealSelf, where the trademark owner sued a consumer review website for trademark violations because the website had “used” the trademark to permit consumers to review the brand. The case settled, but as with so many of these cases, the trademark owner’s beef was not obviously wrong to guarantee a quick and cheap exit for the defense.

Reflecting on these cases, I think trademark law needs a “fast lane” to squash bogus cases. My analogy is to a “12 items or less” lane at the grocery store; or for a legal analogy, we need the procedural efficiency that 47 USC 230 has conferred in a different context. As trademark doctrine implicates a broader array of social activity, a fast lane becomes increasingly important. However, I don’t think our group reached consensus on which allegations might qualify for fast lane terminations.

We also spent a lot of time talking about possible categorical defenses to trademark claims, but any such defense may not provide a fast lane if the defense involves an assessment of possible consumer confusion. For example, the third factor of the Ninth Circuit nominative use test effectively asks judges to consider consumer perceptions about the possible relationship between the trademark owner and the junior user. Unless a judge is willing to make an empirically unsupported conclusion about consumer perceptions, the third factor prevents judges from using nominative use as a fast lane.

More generally, a defense can serve as a fast lane only if we accept that defendant wins *even when* there consumers might be confused. However, most judges and policy-makers (and many academics) aren’t prepared to let trademark doctrine step aside when consumers might be confused, even if doing so would yield other benefits, and even if other legal doctrines might “gap fill.” See, e.g., the Second Circuit’s tortured analysis in the Rescuecom v. Google case.

Our roundtable did not discuss the rise of non-judicial “adjudicators” of trademark disputes, but we’ve seen a proliferation of such activity online: search engine trademark policies, eBay’s VeRO program, Twitter’s trademark policy, the UDRP. These private adjudication programs are relevant to the fast lane discussion for two reasons.

First, if the private adjudicators adopt private rules that are more regressive than trademark law, the statute’s doctrinal boundaries matter less. For example, if a search engine’s private trademark policy bans keyword advertisements that should qualify as nominative use (as, I have argued, is the case with Google’s trademark policy today), a judicial fast lane protection won’t help the advertiser-defendant because a lawsuit never will reach court in the first place. On the other hand, I recognize that many private trademark policies are shaped by substantive trademark law, so a liberalized trademark law might induce the private policies to liberalize as well.

Second, these private policies are important because trademark disputes are routinely adjudicated extrajudicially. A customer support representative at Google or eBay or even Twitter will resolve far more trademark “disputes” in a month than most judges will adjudicate in their careers. As a result, many of these private trademark policies represent the true state of trademark law in the field.

One take-away from the roundtable is that trademark senders face little disincentive to sending cease-and-desist letters, and the misuse/over-use of C&Ds has effectively expanded trademark law’s doctrines. Therefore, we discussed ways to thwart unmeritorious C&Ds.

One option: I learned that the UK and many Commonwealth countries have a “threats action” that allows a C&D recipient to sue the sender and get damages (including attorneys’ fees for the suit). As I’ve thought about this since April, I increasingly believe this would be a good idea. I plan to explore ways we could implement this approach.

Another option is public scrutiny of trademark owner behavior. We saw how publicity was used to great effect in the North Face/South Butt dispute. Almost certainly, North Face would have fought harder, and scored itself an easy victory, if the case had not garnered the media scrutiny it did. In effect, publicity provided substantial counterweight to North Face’s superior resources. How can we replicate this outcome in the countless other cases where trademark owners go too far? (To be clear, North Face’s arguments did not seem frivolous in light of existing trademark law, but they were unquestionably humorless).

I have two possible thoughts, and I would invite your reactions. First, I wonder if there would be a way to create a public database of trademark owner C&D letters? For example, we could require trademark owners to send a copy of every C&D letter to a public repository, which would create a database of letters that could be monitored and scrutinized. Chilling Effects serves an analogous function, but it relies on recipients voluntarily contributing C&D letters rather than forcing senders to submit them. If we go this route, we should also statutorily eliminate the bogus argument that a C&D letter can be protected under copyright law (see prior blog discussion at 1, 2), which lets C&D senders threaten a bonus copyright infringement (or other) claim if the recipient publicly shares the letter.

Second, we need a central monitor who will call attention to stupid trademark enforcement efforts. Again, Chilling Effects is a step in this direction, but it mostly publishes demand letters in a neutral format rather than openly mocking the obviously bogus ones. Ultimately, this may take a little money to buy someone’s time to do the necessary work, but the social benefits of this scrutiny could be enormous.

What do you think of these ideas? Do you have other ideas of how we might shine the spotlight on trademark bullies? Would you be willing to participate in any of these efforts? Please email me your reactions (and let me know if I can post to the blog attributed or not).


Three other recent developments relevant to this topic:

1) Some progress has been made on a proposed federal anti-SLAPP law. While this is a step in the right direction, it’s incomplete because anti-SLAPP protection only applies once the plaintiff has actually dragged the defendant into court—a subset of the problematic situations involving C&D letters. However, the anti-SLAPP law may apply to trademark lawsuits, so it may offer a useful fast lane in some cases.

2) In March, S. 2968, the Trademark Technical and Conforming Amendment Act of 2010, became law. This includes a provision instructing the Secretary of Commerce and the IP Enforcement Coordinator (Victoria Espinel) to conduct a study of “the extent to which small businesses may be harmed by litigation tactics by corporations attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner.” Oddly, it limits the inquiry to harmed “small businesses” and not other folks ensnared by the wide nets cast by trademark owners. Nevertheless, I look forward to hearing more about the study’s process—assuming it will be run publicly and isn’t being handled behind closed doors. [UPDATE: Today the PTO released a request for comments on this report. Why is the PTO involved in this process???]

3) At IPSC in Berkeley, I heard a presentation by Leah Chan Grinvald of SLU addressing many of these topics. I look forward to seeing the results of her research.