Department of Commerce Releases Worthless Report on Trademark Bullying

By Eric Goldman

Trademark Litigation Tactics and Federal Government Services to Protect Trademarks and Prevent Counterfeiting, April 2011.

[For background, see my earlier blog post on trademark bullies. The term "bully" appears only 4 times in the report; as FN51 explains, the statute didn't use the term and so the report doesn't either. I don't like the term "bully" because of all the baggage associated with cyber-bullying, but I suspect the decision not to use "bully" in the report reflects the report's heavy slant towards trademark owners instead of a retreat from the term's semantic ambiguity.]

We have Sen. Leahy to thank for ordering this report last year studying how trademark owners were overenforcing their rights against weak targets. Of course, Sen. Leahy parochially raised this issue only after one of his local constituents was targeted; but however he got there, at least he realized the importance of the issue. Unfortunately, maybe we should say “thanks for nothing,” because the report he got back from the Department of Commerce got totally coopted by the trademark owner constituency and thereby was rendered worthless. Useless. A complete whiff.

The report takes two key ill-fated turns. First, the report says that the Department of Commerce got a lot of comments, but “few explicitly addressed whether and to what extent trademark abuse is a significant problem.” It later denigrates those comments as “anecdotal.” In other words: Problem? We don’t see any problems here!

Yet, the report doesn’t indicate that the Department of Commerce tried to scientifically research the problem, like conducting a survey to overcome the “anecdotal” defect. Instead, the report describes its efforts opaquely (page 7 of the PDF): it

* “reviewed data and research materials regarding trademark litigation tactics” (huh? Citations, please)

* read the submitted comments

* reached out to “a large industry organization” (INTA? Chamber of Commerce? Whoever it was, it was surely a trademark owner lobby)

* talked with its “Trademark Public Advisory Committee” (It’s conspicuous that I don’t recognize a single member of that committee, but a quick search suggests most of them are former PTO insiders or TM owner advocates–or both)

* held a roundtable in Detroit (a one-hour session bundled into a conference teaching businesses how to be IP plaintiffs), and

* reviewed an ABA IP section survey of 270 section members (basically, a survey of trademark owners or their counsel), who not surprisingly said everything was A-OK.

Given this apathetic and stacked research effort, it’s hardly surprising the Department of Commerce found any problems worth getting excited about.

Second, the report says “a trademark is a property right that an owner has a duty to police.” WHOA! Many folks would dispute the characterization of trademarks as “property”; and many folks (including me) insist that the “duty to police” is massively overstated. Later, the report says, “In view of the mark owner’s obligation to police violations, aggressive enforcement of one’s trademark rights does not automatically equate to abuse or bullying.” In effect, the report says that it doesn’t see any problem at all; but if there is a problem, it’s just the natural consequence of that pesky duty to police….oh well, c’est la vie.

Given its apathetic nature, the report doesn’t make the logical jump that any intellectually curious person would instantly make: if the “duty to police” might be driving trademark owners to be (over)zealous in their enforcement efforts, maybe we should fix the duty to police. After all, this “duty” isn’t in the statute at all; it’s barely in the caselaw; and it could be easily remedied with a statutory clarification that might very well be welcomed by both trademark owners and secondary trademark users because it might eliminate ambiguity plaguing both communities. C’mon, guys–that conclusion isn’t exactly rocket science.

From my perspective, the “duty to police” is like the proverbial monster under a child’s bed. It’s not actually there, but boy, it sure seems scary. My academic writing queue is too thick right now to tackle this issue immediately, but I don’t recall seeing a good comprehensive academic article grokking the duty to police (if I’m forgetting something, please let me know). That would be an excellent paper topic. I would be happy to work with someone on this project so that we can demonstrate just how massively the “duty to police” is overstated–typically as a business development tool for trademark litigators trying to afford their kids’ private school tuition. Naturally, the Department of Commerce report undertook no such research effort into the trademark policing duty itself.

Consistent with the (lack of) effort invested in the report, the report’s actual recommendations are also uninspired and lackadaisical. The recommendations include:

1. Engage the private sector about providing free or low-cost legal advice to small businesses via pro bono programs and intellectual property rights clinics;

2. Engage the private sector about offering continuing legal education programs focused on trademark policing measures and tactics;

3. Enhance Federal agency educational outreach programs by identifying resources that enable small businesses to further their understanding of trademark rights, enforcement measures, and available resources for protecting and enforcing trademarks.

Basically, since there’s not really a problem, let the private sector fix anything that needs fixing. Gee, that’s helpful. As I said, a WORTHLESS report.

If the report authors had even a modicum of inspiration, there are so many recommendations the report could have fruitfully explored, such as:

* as I indicated, a statutory codification/fix to the “duty” to police

* a way of capturing data so this issue could be more precisely studied in the future, such as funding for a real survey or, better yet, requiring C&D letters to be filed in a public repository so they could be studied more scientifically than the ChillingEffects database permits (given the voluntary nature of C&D tenders to the database). Leah Chan Grinvald’s paper, “Shaming Trademark Bullies,” gets into this idea more. Not surprisingly, her article wasn’t cited in the report, but it’s worth a read anyway.

* the “threats action” idea I mentioned in my prior blog post on the topic. The report expressly acknowledges that a trivial number of trademark disputes get to court, yet it fails to follow up on the possibility that the disputes “resolved” outside of court are actually the problem.

* a small claims IP court where low-stakes disputes could be adjudicated more cheaply than full-scale litigation.

* more aggressive fee-shifts to the defendant in abusive situations. Right now, the statutory standard for a fee-shift award is “exceptional,” and many courts treat it as such. The report elsewhere makes the absolutely farcical statement that “in Federal court proceedings, Rule 11 of the Federal Rules of Civil Procedure provides an effective mechanism to combat overreaching.” Another thing the report could have studied is how often courts actually award fee-shifts to the defense or assess Rule 11 sanctions against trademark plaintiffs to see if those tools effectively curb bad trademark owner behavior. That would be another good paper topic.

I could go on with more solutions, but then I would be doing the work that the report drafters should have done.

In response to this useless document, Sen. Leahy ought to haul the report drafters before him, chew them out, and ask them to redo the report properly. Instead, he’ll probably thank the authors for their attention to this important matter and stick the report in his desk drawer to be ignored forevermore. Your tax dollars at work!

UPDATE: David Pardue’s blog post is almost as harsh as mine!

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