Thursday, March 23, 2017

TM scholars' roundtable part 2

Session 2: Proxies for Distinctiveness; Proving Distinctiveness (and Secondary meaning); Strength of a Mark

Do current doctrinal tests properly assess actual consumer reaction to purported marks? What is and should be the role of consumer surveys in proving secondary meaning (or genericness)? What is the role of other disciplines (linguistics, psychology, marketing) in proving consumer perception in the context of trademark litigation (as opposed to policy formation)? Are the factors identified by current doctrine ideal/helpful? Are current procedural devices such as the presumption of secondary meaning based on time of use, or the concept of incontestability, useful in identifying marks that have reached particular thresholds? What is the relevance of strength of a mark for the scope of protection it receives? Is the concept of incontestability relevant to scope? How does one assess the scope for a composite mark that is distinctiveness overall but clearly comprised of non- distinctive components?

Introduction:   Shari Diamond: has an affection for surveys.  Two kinds implicated: secondary meaning surveys are among the worst in TM law. Reasons why: low rate that seems to be enough.  Distinct from Microsoft scenario where the brand is so strong that people think everything software related is Microsoft related. Control groups can be important where you’re worried about pure guessing/yea-saying; it’s hard to imagine you won’t do better if you have some version of a control. To the extent you get “from one company” you can at least take out the bias of the particular methodology by controlling w, for example, “baking soda” as a control product. Jacoby would say this isn’t a causal Q so you don’t need a control; it’s not just a causal Q but a methodological flaw to not control for yea-saying and guessing. 

Output measures: consumer sales, use in publications.  Interested in output over input measures like marketing signals.  Spending doesn’t mean they got it right.  Weak measure at best. 

Genericness surveys: Pretzel Crisp case.  TTAB cancelled mark as generic; gave weight to dictionary definitions, use by public, including use in media and third parties in food industry, and use by D itself.  There were opposing surveys.  Fed. Cir. complained about whether the TTAB had treated the mark as a composite mark rather than two pieces put together.  Surveys on both sides sometimes trigger “plague on both houses” reaction—contributed to bad reactions to surveys, like Posner’s.  Surveyor’s “dark arts.”  Here, Fed. Cir. said that TTAB should have paid attention to surveys. 

Opposing surveys: Teflon survey: Princeton-Vanguard (registrant): 55% said it was a brand, 39% common name, 9% hadn’t heard/don’t know.  Judge in Teflon was surprised how well respondents did distinguishing brand & common names.

Frito-Lay’s survey: 41% said it was a brand, 41% common, 18% not sure.

Look at the methodology.  We haven’t resolved the best way to do these surveys.  What would have been the right way?

First one: 18+ screened for purchase of salty snacks; tested on understanding of difference b/t common and brand name, and only 64% qualified. Control brands: Cheese Nips, 85% correct, Flavor Twists, 48% correct, Sun Chips, 96% correct.  Control common names: Onion rings, 91% correct; Gourmet Popcorn, 72% correct, Macadamia Nut, 92% correct.  Pretzel Crisps, 55% Brand name.  (Flavor Twists was a related brand.) 

Frito-Lay, similar group.  Definition of brand/common given and asked whether they understood—2 said no and were excluded.  Control: Ritz Bits, 82%, Lucky Charms 87%, iPod 61%, American Airlines 89%, Triscuit 80%.  Common: Ginger ale, 72% correct, Automobile, 91%, Potato chips 90%, Newspaper 93%, Popcorn 93%.  41% said Pretzel Crisp was a brand, 41% said common name.

Is it good enough if you exclude 1/3 of the people being tested?  Details of survey construction are really important, and to the extent that we don’t have agreement on best way to conduct them we won’t get really good evidence from the surveys. 

Bently suggests broad range of common names might focus attention differently v. salty snacks.

Diamond: it’s possible—it’s an empirical question.

Ramsey: results are in the middle!

Diamond: usually in generic area, above 50% is good, but that’s a decision for the court.

McKenna: what’s the margin of error?

Diamond: has to be computed.  [My quick lookup suggests for around 250 people, it’s around 2.7% at the .05 confidence level.]

Litman: do we know what affect not training people and just asking them if they knew the difference had?

Diamond: it depends. If you think people will tell you they know but just flip a coin, it would have one result; if there is a systemic bias you might get results.  Might be difficult to exclude such a high number.

McKenna: but those people aren’t relying on marks when they buy, if they can’t tell the difference b/t car and Chevrolet.

Rebecca Tushnet: Maybe even outside inherent distinctiveness the concept of TM distinctiveness is not empirical. Tom Lee et al.’s work: putting a term in the TM place on a box makes consumers identify it as a mark, unless the term is generic.  But even if you think for efficiency reasons (even setting aside competitive need reasons) we should still be distinguishing types of word marks w/o focusing on their placement, the category of suggestiveness is not empirical, and I now think suggestiveness should simply be eliminated/collapsed into descriptiveness and secondary meaning always required.  At the same time, 5 years of exclusive use for a main word mark is probably a decent proxy for the non-empirical idea that someone should’ve shown up and made your use of that main word mark non-exclusive.  Interestingly, PTO regularly rejects 5 years alone when it’s dealing w/trade dress, and I think that’s right.  But what rules should we have other than word/trade dress?

My obsession w/the consumer who does not know enough to ask, to borrow from the Passover Seder: that is likely to be a big component, and thus particularly hard to test b/c answers so easily distorted when there’s no preexisting opinion.  Franklin & Hyman: different answers depending on what stimulus—what they imagined, what they expected, what they saw.  Perhaps this is another consideration favoring a less empirical approach.

Incontestability as proxy: increasingly makes sense to me.  Admits there’s nothing empirical about it.

Strength and scope: always been a current in the First Amendment/parody cases that strength can decrease likely confusion.  I always like to teach with Lollipops and Jellybeans for skate rinks: similarity confusing, but one reason is b/c the mark is conceptually strong for skate rinks but lacked marketplace strength.  Affiliation confusion fights back against that insight—it admits that consumers will distinguish from the well-known brand but claims that consumers will interpret the difference in a particular way that means they’re confused.  It’s a way to put a fundamentally nonempirical concept on the TM owner’s side.

What about strength of D’s mark?  House mark arguments are often made.

Fromer: composite mark issues matter—Pretzel Crisps bag has a particular appearance; might come to mind for consumers even if they’re only being asked about the word mark. Goes back to the Lee et al. study.  Not even clear what we’re pinning down in the questioning!  Trademark claiming: 2D in terms of having a mark and a class of goods/services.  Surveys ask about symbols only, but take advantage implicitly of product category—petitioner’s survey may have been using lots of salty snacks and therefore priming consumers to think about the many salty snacks out there.

Is there a way to use metastudies to help here?  Courts have a duty to understand why they get different results, and metastudies have been useful in that regard to explain why different studies come out differently.

Role of empirical work in what TM law/policy should look like?  Surveys are presenting case by case empirical work. Nonempirical line of Qs is empirical too in some sense b/c we have to decide when we want to make marks incontestable and what that will mean, and whether we want a category of arbitrary marks. May not be case by case but we have to figure out where and why to draw lines, some of which will be normative but not all.

McKenna: surveys directed at words—Gucci v. Guess case, and horrible survey accepted by court as evidence even w/net 6% confusion. General challenge w/non word marks is we don’t have good system for forcing the P to articulate its claim. So then it’s hard to figure out the right control—enormous amount of gaming.

In principle, 5 years makes sense, depending on 2 assumptions: (1) PTO’s evaluation of whether substantially exclusive use has occurred, given incentive of applicant, and (2) what happens if PTO is wrong—can parties fight?

Affiliation confusion/house marks. Affiliation confusion is a way of putting nonempirical concept on side of mark owners. See courts sometimes say that house marks help w/straightforward confusion, but affiliation confusion can make role of house mark irrelevant/complicates the role of other factors in the assessment.

Andrew Moshirnia: Empirical weaknesses of both surveys: On exclusion of respondents.  In a robust study, exclusion should happen at the end, not the beginning, and then justify why you reduced the power of your survey—people didn’t want to create a record b/c they were scared about what those excluded people would have said. Complicates metastudies by sculpting population.

Priming/cuing: pretest effect. Normally if you apply a filter, you want the application to be disguised so you’re not cuing your subject to understand what you want them to do. If you’re going to apply a pretest, create a randomized order. [But if it’s something they don’t ordinarily think about, training them on other examples seems like the best thing to do.]  If we’re demonstrating proper behavior we want them to exhibit, they want to please us.  [But they won’t know what that is, will they, other than “classify what you think the answer is”?] Better: Pure control w/pretest, pure experimental w/pretest, pure experimental w/no pretest.  That increases # of subjects by 50%, so it’s more expensive. 

[he says yes, they need to know how to do the task, but he’d do the filter last; maybe change up what examples you train them on; maybe add a query on the amount of confidence, allowing you to work backwards to deal w/lack of knowledge. Is the training itself the qualification, so people who fail are screened out? Diamond says the problem w/follow ups is that it’s consider a toggle: either the mark is generic or brand name.  Not sure what the confidence level would buy you.  Litman says: would tell us how much people are just giving us an answer just b/c they want to give us an answer.  Diamond says: controls help w/that too.  Large literature: when you give people forced choices, they express positions but if you give them a don’t know option they’ll say don’t know even when they do have opinions.  Mosnirnia: confidence can help you identify people who really did want to say don’t know but want to please you.  You can’t ask them at the original question—you have to do it afterwards, but it’s a good way to deal w/a pretest effect]

Easier way of dealing with it: Strength of feeling of subject after they’ve made their decision—how confident are you in that assessment? The logic often is priming will have a larger effect on people who are unsure.

Diamond: never seen it done in litigation, lots in academic studies.  Cost is the gorilla in the room.

Moshirnia: if both sides are deliberately shaping data, meta-analysis will be difficult.  Need to be able to regroup people.  But both parties do odd things to their data.  No exclusion is bad—asking “do you understand?” leads people to shut up.  Filtering first is also a big statistics no-no. 

Ramsey: Fine w/quieting title as to first to use but not about future competitors—it costs money to challenge, and if you’re not currently a competitor there’s nothing to do. PTO is the gatekeeper but it’s not doing any substantive examination of incontestability, and that is a problem. 

Linford: have same questions about incontestability—do we have the same sort of confidence about giving incontestability for 5 years of uncontested use after registration as we do about presuming distinctiveness from 5 years of exclusive use? 

Still wondering what to do about consumers who haven’t thought concretely about source significance—even for them, marks may be communicating in ways they are recognizing, but not recognizing consciously.  Less worried about those who can’t articulate source significance if there is a way to figure out that they are detecting it/attracted to it [how do you determine that they’re detecting source significance v. detecting some other feature they desire?].

Parody: strong mark = more effective parody. He worries about that b/c there’s something different than run of the mill likely confusion case. At least if you buy Souter’s idea that it says 2 things at once: I’m not the original/I’m the original.  Dual communicative aspect won’t be the same for close follower/ordinary copier.  Maybe a strong mark is hypersalient so consumers notice small differences, but he’s not convinced the parody cases teach that.

Beebe: Concept of TM strength v. affiliation confusion.  We’d [Beebe & Hemphill] like to think of strength as increased consumer sophistication w/r/t the signifier but also w/r/t the products w/which the brand is traditionally associated. The increased strength may result in decreased likelihood of affiliation confusion b/c of increased consumer knowledge. Population of individual consumers aggregated: as strength increases, a few percentage points of consumers are no longer confused with each increase in strength, and maybe just enough that there’s no longer justification for intervention in the form of an injunction. 

Bone: Not sure what it means to go from empirical to normative—if normative theory is dependent on some empirical results, then we still need empirical results.  Genericity is an area where we might want to think more normatively.  Canfield approach—chocolate fudge soda—when we don’t really want to survey b/c we don’t know what to ask. Ask: Is that mark/symbol really going to be very useful for designating a particular product class? We will make mistakes, but we can often tell w/o surveys.

Might think about percentage of population who uses the mark; might also think of vividness—are there many similar marks out there?  Ability to call to mind quickly when I see something similar?  Branding/the more meanings it has, the stronger it is?

Litman: incontestability: the statute separates the quiet title from the incontestability.  Congress adopted it way back when as an incentive to register, which Congress thought we’d need here b/c of the history of success in litigating unregistered marks. My guess: it’s not doing that work, ever; when you want to sell stuff in countries other than this one you have ample reasons to register and incontestability isn’t on the radar. Do practicing TM lawyers really value incontestability? Her guess: may give them as much trouble as it does joy.

Mid-Point Discussants:        Michael Grynberg: human tendency to simplify is present even if that means offloading decisions to experts, linguistics or otherwise.  Disheartening to read about how badly incontestability is done now, b/c concept has appeal.  But changes have problems of their own. Suppose descriptive/suggestive line doesn’t make any sense.  But then we have lots of fights about suggestive/arbitrary line that we don’t have to worry about today.  Fromer says Apple isn’t arbitrary for computers, Fromer’s reasons are plausible: so now what?  Another possibility: get rigorous about secondary meaning.

Reasonable consumer exercising ordinary care: is a consumer really exercising ordinary care if he perceives possible affiliation b/t Jose Cuervo and Maker’s Mark based on use of a red wax seal? Might be a way to deal w/various meanings of distinctiveness by changing standard/considering materiality.

Litman: Likes Bone’s idea of a court appointed expert. Would improve quality/probativeness of surveys.

Omri Ben-Shahar and Lior Strahilevitz have a paper suggesting that courts adopt the survey mechanism to interpret contract language.  Grass is always greener in the other field!

Our proxies for distinctiveness are stuck in the early 20th c. You gain distinctiveness by selling products to consumers for a certain amount of time; it doesn’t disappear quickly.  But today we have instant secondary meaning, as w/Chrysler’s “Imported from Detroit,” but courts don’t have a way to deal w/that. We also have secondary meaning that dissipates in part b/c distinctiveness is happening not just through sales but through social media/products getting 15 minutes of fame. Plus, different TMs have different flavors not captured by linear strength. Affiliation confusion: Tiffany guitars wouldn’t confuse anyone; Starbucks coat hangers. But Orville Redenbacher snow shovels—she’d believe there had to be a relationship—it’s not that the term is inherently distinctive. It has a kind of secondary meaning that is different from Tiffany and Starbucks.  That gives her concern not just that our categories are old and outdated, but that they’re causing us to miss something.

McGeveran: do these need to be empirical questions? Even if we think that the particular flavor we’re looking at is a Q of fact and not of law, is it a Q of fact that must and should be determined in a form of empiricism as broad as the survey? Are there more times when judges should feel they have the opportunity to make factual determinations w/o very expensive/high admin cost evidence? Geog. misdescriptiveness refusals aren’t adjudicated w/surveys.  How do we account acceptance of that other than history?

McKenna: those are almost always about registration, which uses surveys less. Why are we so willing to avoid empiricism in registration?

Affiliation confusion becomes a black box for so much of this.  Beebe says strong marks might decrease affiliation confusion. Super-strong marks: consumers more aware of differences in visual presentation. That doesn’t mean keen awareness of range of goods and services on which they’re used.  Brand extension literature operates on assumption that the source is in fact the same, but at least it talks about similarities of goods and services in possibly useful ways.  Need more empirical literature on strength and effect on consumers.

Leaffer: Conglomeratization of American life in 20th c. to today, affiliation confusion exploded.  Consider the importance of subsidizing the TM office in requiring all these submissions.

Burrell: 1920s assumptions about how consumers behave—we need to test more generally how consumers behave before we can think about how consumers might be confused.  We don’t even know what nonconfusion would look like.

Dinwoodie: role of excavation both history and normative factors embedded in distinctiveness analysis to free courts from fossilization that has occurred.  The nuance in the doctrine doesn’t match how the courts talk about it.

Ramsey: Defending Abercrombie.  So many judges aren’t grounded in TM.  Lawyers think it’s “soft” and they can step in and litigate; RT’s paper shows that courts and litigants just screw up incontestability. Doctrinal tests force parties to talk about important issues and hopefully the judge will address them.

Dogan: when what the D does has social value, the courts have the tools to allow the use. We can push hard on this area where there are so many feedback loops: room for advocacy and scholarship on how courts should think about the relationship between risk of affiliation confusion as measured against social value that comes from informational uses of TMs.

McKenna: we’ve seen courts feel increasingly free to pick factors, but we haven’t had a methodology for picking factors.  They may be clustering in particular ways. Also true of different types of confusion. I read cases that could have been presented as IIC but just weren’t; no rhyme or reason.  Same w/sponsorship or affiliation, e.g. the Cracker Barrel case.  The court says they aren’t confusing and doesn’t contemplate possibility of co-branding.

Beebe: most effective defense of Abercrombie is competitive need. Is it fair to say that the factors from Zatarain’s—use by competitors, dictionary definitions, general competitive need—compare to factors in the European or British approach? 

Bently: court of justice drew a distinction b/t the reason why we have an exclusion and the test. The reason is so traders can use descriptive terms either to describe products/services or as parts of composite marks. They put a strong emphasis on public interest underpinning purpose of exception. But what then is the test? Whether the sign is being used or is being capable of being used in a descriptive way of some characteristic of product/service. Doublemint: doesn’t have to be core/essential characteristic; can be peripheral. That means descriptiveness has quite a capacity to exclude what US calls suggestive marks under Abercrombie.  UK registry held that “sushi” for chocolate in the shape of sushi was not descriptive; inconsistent w/CJEU holding that it must merely be descriptive of a quality of the goods.

Fromer: Apple for bananas: what is it on the Abercrombie spectrum?  Level of generality issue: are apples and bananas substitutable?

Thinking about corpora as a substitute for dictionaries, as Linford suggests: they are useful for large-scale data. But computational linguistics aren’t there yet for really understanding the corpus other than on a case by case basis for an individual litigation.

Bone: imagination test: I don’t even know what that is. I don’t know why dictionaries are important. Competitive need makes sense to him for reasons we might want to demand a showing of secondary meaning.  Ultimate standard might be anticompetitiveness, then develop categories where that’s less costly than doing case by case analysis. That’s why suggestive should be thrown out—it’s not doing anything helpful in this regard. 

Grynberg: if you get rid of suggestive, what is Penguin for refrigerators?  [RT: I’d say don’t get rid of it, just make them show secondary meaning.]  Consumers who have high need for cognition may like it a lot.

Bone: sure it’s suggestive, but what does that have to do w/TM?  I can tell a story, but the story is about anticompetitive effects. 

McKenna: automatic assumptions about source by consumers as a story?

Bone: no, a different starting story: why not require secondary meaning for everything? 

McKenna: empirical presumption about what they’ll think.

Bone: just-so story.

Dogan: Might not be a problem to grant protection to suggestive marks if we’re really strict about what suggestive means.  Breadth of protection is also important. Suggestive = plays linguistic function w/r/t feature of product. Courts that say that suggestive = inherently strong make for harmful consequences. We should presume that suggestive marks w/no commercial strength are weak.

Burrell: we never truly ask people to prove distinctiveness.  We only ask some of them to prove use for a while + expenditure of enough money on the mark.  Versus you get your monopoly straight away.

Dogan: to the extent people are concerned about automatic protection for suggestive marks, those concerned are softened if we make the threshold higher & allow protection only for marks unlikely to have significant adverse effects on other players [see also: scope]

Dinwoodie: why waste time on proof when we’re pretty sure—he still sees that as valuable. [I do too, but I’d put the line for pretty sure at arbitrary rather than at suggestive.]

McGeveran: doesn’t agree about Orville Redenbacher v. Starbucks—Williams Sonoma will sell shovels and popcorn. Once something is recognized as a brand, not just as a mark, it’s probably empirically true that many consumers might think that recognizably brand thing is slapped on is use as a source ID, or at least as affiliation.  We could decide not to protect those things b/c we don’t care as much about affiliation/endorsement confusion as the current structure does, but as a descriptive matter he would expect a perfect survey to find that many people think the Orville Redenbacher shovel came from “the Orville Redenbacher people.” Why are we even asking about distinctiveness in this setting? It will always be distinctive once it passes the threshold of being a brand.

Litman: I wouldn’t assume Perdue cologne was co-branded by chicken co.  But I spend a lot of time trying to weed out of my students the notion that TM distinctiveness is the same as other kinds of distinctiveness, but that’s what’s going on.  The original Starbucks design, if I saw that on anything I’d assume that was affiliated w/Starbucks, even for toilet cleaner. That’s got something to do w/how distinctive it is not in the TM sense but rather in how unusual it is [what Beebe calls differential distinctiveness?].

McGeveran: yes, but don’t then use distinctiveness as “do you think this tells you something about where this came from.” Increasingly the empirical Q of “could this be a Julie Andrews snow shovel” will be answered, “sure, why not.”  If we hinge distinctiveness on consumer perception we’ll have increasingly extensive brand extensions.

Dinwoodie: this is really an argument about scope/enforcement, really about dilution. What range of goods you can cover.

Litman: original Starbucks design is probably not famous; would play badly in the Midwest.  But it is very unusual. 

Dinwoodie: speaks to whether fame is proper requisite for dilution.

Litman: but I’m talking confusion—there’s no reason to put her on your product unless you’re trying to say “this comes from the same place as Starbucks coffee.” In the sense of being affiliated with.

Dinwoodie: maybe affiliation is a dilution cause of action.

Ramsey: But what about the Orville Rockenbacker shovel?  Consumer would probably think it’s parody. Unrelated goods—you really need identity or virtual identity.

Linford: stronger anticompetitive = generic; weaker anticompetitive effect = descriptive. Competitive need is the first order question we’ve been assuming w/suggestive marks. We’ve been using imagination test as proxy for lack of competitive harm. Maybe courts should say expressly that they’re not trying to categorize but trying to think about what the competitive harms.

RT: Concerned about courts that call suggestive marks strong too, but interestingly I think that’s increasingly less common than it was 10 years ago (but would need to do more empirical work to be sure).  Conceptually related to the idea of whether incontestability has any effect on strength?

Want to bring in descriptive fair use and courts’ confusion about the problem of descriptiveness in that context: Car Freshner—court of appeals dodges the real issue; if D’s use is descriptive, P’s use is sure as hell descriptive.  Being more aggressive about melding suggestiveness into descriptiveness might have helpful consequences or troubling ones for descriptive FU.  See also the Victoria’s Secret case about “delicious,” where the 9th Circuit says that use of the term to describe the wearer would not be descriptive use.  Whaaaaat? Finally: consider treatment of retrievers/dog images by PTO early in internet era.  Thought the idea of the retriever dog was highly descriptive in the context of internet search; probably isn’t any more; probably didn’t do much damage by requiring retriever image users to wait, but other lessons could be taken from this episode about the ability of the PTO to predict uses.]

McKenna: Always driven me crazy for courts to say there are 2 components to strength. If it’s empirical, it’s conceptually impossible that use by a different party for different goods and services can disrupt the strength of the connection b/t my mark and my goods.  Penguin for refrigerators doesn’t affect Penguin for hot dogs.  It’s not a nonsense question if you’re giving TM owners an incentive to pick something at the higher end of the spectrum. 

All of us have gone to the really high end of the spectrum for “brands.”  But there are also run-of-the-mill TMs where they are measuring how likely the mark is to cause consumers to think that use in another field is from the same party.  

TM scholars' roundtable

Ninth Trademark Scholars Roundtable: Distinctiveness, Secondary Meaning, Reputation And Fame
Chicago-Kent College of Law

Session 1:       Distinctiveness (including Secondary Meaning) as a Legal Concept

Introduction:   Barton Beebe: different approaches. Any general claims about distinctiveness must take into account: eligibility for protection/scope of protection; reality v. policy; words v. non-words; perception by single consumers v. aggregate; consumer search costs approach v. product goodwill approach; US v. EU. 

Eligibility v. scope: Many claims about distinctiveness work in both contexts, but keep it in mind. Psychology of individual consumer v. amorphous crowd of consumers. Some might see a mark as fanciful, others as arbitrary.  Is this claim about consumer protection, or is it a claim about what consumers should think?  Doctrine as both descriptive and prescriptive. Non-words: Abercrombie doesn’t work for them (if it even works for words).  Consumer search costs approach to TM v. producer goodwill—Bob Bone’s work. If our emphasis isn’t minimizing search costs but facilitating production of goodwill, does our concept of distinctiveness work the same way?

What does it mean for a mark to ID a source?  My answer: a mark is distinctive of source in the sense that a consumer believes it refers to one source as opposed to multiple sources [or as opposed to nothing about source?].  Secondary meaning survey: you ask whether it’s one source or more than one source. This also goes to inherent distinctiveness analysis: having never heard of this before, do you think that this term is referring to one company alone or is being used by other companies?  This approach works ok for eligibility, but not as well as determining the extent of distinctiveness. Eligibility seems like a binary determination, but scope is not.

Distinctiveness of source is one thing; distinctiveness from other marks is a different thing.  Strength or scope goes to distinctiveness from other marks.  Does it stand out to the marketplace.  A lot of times law pretends to talk about distinctiveness of but is really concerned with distinctivenss from.

Jake Linford: What do we think we’re doing w/TM law?  Are consumers confused/are we protecting consumers/are we giving consumers tools to pick in market? Are we incentivizing marketers to pick clear signals/making space for new entrants/protecting property rights?  Which is most important to you will determine how important you think it is to get Abercrombie spectrum right—we want our TM validity thresholds to dovetail w/what consumers see; or you may think we want to prevent incumbents from excluding competitors; or you may think that investment should be rewarded w/right to recoup benefits. For example, Linford’s piece on per se bar on generic terms looks at what consumers might expect to see given how language changes over time; if we care most about that, we might not want a per se bar. But if we want to maximize something else, there may be no way to reconcile those goals at the margin.

My answer to Q about current tests: they don’t properly assess inherent distinctiveness. Even fixing Abercrombie wouldn’t necessarily generalize to symbols/trade dress etc.

The research we look at has its own assumptions—linguistics has a descriptive bent. Consumer marketing research is designed to help mark owners to be more persuasive. If our normative baseline is providing entry space for new competitors, marketing research may not be the best toolkit v. protecting incumbents’ ability to persuade consumers.

Assume you’re persuaded by Jacoby’s description of how minds work: chunking, spreading and activation—mark becomes salient in way that drives consumer decisionmaking. Lockean Q: is it work that owner has done that deserves to be rewarded as such? How much of that is due to consumers themselves (Litman, Breakfast w/Batman)?  Nestle cases—this Q preoccupying Euro courts is whether consumers are relying on the mark to find the product they seek, or are we just looking for association?  Affiliation sounds like association; these cases seem to be trade dress or color cases, marginal areas generally—do the things we see in limits in European law deserve importation?  Is reliance the right question?  Initial instinct is to resist, but not sure why.

Does it matter which term we use to describe distinctiveness?  Acquired distinctiveness v. secondary meaning—acquired seems Lockean/merit-based.  Secondary meaning seems to presume primacy of primary meaning. That’s what he sees as error in per se bar of generic terms acquiring distinctiveness.  Source significance seems to him to be more neutral.  Timberlake thinks only source significance matters; McKenna is worried about other things as well.

Discussant:      Stacey Dogan: Key motivator for TM is interests D is representing, either individually (justification for own use) or more generally (interest in protecting freedom to use descriptively).  Some combination of economics, informational, and moral rights concerns—protecting investments of mark owners. The way that distinctiveness comes in is that courts look at a mark as used w/a product, and they say not just is it serving source ID function but what are the costs associated w/allocating rights in the term to this one party.  Arbitrary/fanciful: the costs are low, even if they haven’t yet penetrated consumer consciousness. They don’t serve an important info function in the marketplace yet, but someone else who adopts the mark for a similar product lacks justification.  “Technical TMs.”  The reason the D is using the mark has to be unsavory.

Protecting innocent motives also reduces obligation of innocent parties to do too much search, esp if mark is fairly descriptive/not well known w/in a particular geog. area.  Similar questions w/different product markets.  W/real fame, there’s no justification for anyone anywhere to use.

RT: Beebe’s answer to What does it mean for a mark to ID a source?  Beebe’s initial answer: a mark is distinctive of source in the sense that a consumer believes it refers to one source as opposed to multiple sources. But those aren’t the only 2 possibilities: perhaps the consumer believes nothing whatsoever with respect to source.  [2 sub-options: (1) consumer believes it isn’t supposed to signify source but is something else, e.g. design or decoration; (2) consumer thinks nothing of it at all unless prompted, and thus will give random answers.]

Graeme Dinwoodie: how one operationalizes that—looking at differences b/t mark and other signs rather than the meaning of the goodwill, which Beebe may mean by distinctiveness of source.  Kind of a patent analysis—how far are you away from the prior art?  Unless a crowded field then has an effect on the first question—one kind of distinctiveness may inform the other.

Dogan’s account of distinctiveness was more normative than he teaches.  Sense that her take is more normative than evident in courts’ explicit analysis of distinctiveness.  [Though see KP Permanent/Sealed w/a Kiss case—that’s a risk the D took when it adopted a descriptive mark.]

Beebe: Seabrook test is a “distinctiveness from others” test that ultimately is used to answer “distinctive to consumers” question.

Jeanne Fromer: We conflate inherent/acquired distinctiveness in many circumstances, but the concepts are distinct. And they’re deeply distinct—people emphasize one value over another; Ramsey is interested in inherent distinctiveness more, while Linford values acquired distinctiveness.

Lionel Bently: should the fact that there is a descriptive use defense mean that we shouldn’t be so bothered about the negative effects of registering a descriptive term?  UK courts traditionally say we are still concerned b/c registration is so powerful—trader shouldn’t have to look to a defense to use a descriptive term.  The ECJ in Windsurfing decision did that too.

Agree w/RT that often consumers don’t see a TM relevant thing at all.  One thing we might want to take into account is people’s views when they’re not consumers.  Why do we arrive preformed as consumers instead of as social or political beings?

Differences b/t distinguishing as source and distinguishing from others’ marks.  We see internationally and in EU law the notion of distinctive character for maintenance purposes.  You can maintain a mark that’s different from what’s on the register as long as it’s not enough to change the distinctive character.

Mark McKenna: difference b/t priority and nonpriority dispute screams out from cases. Way courts evaluate use and distinctiveness in priority is hermetically sealed from other contexts precisely b/c they know someone is going to get the mark; it’s just a question of who.   We start w/a rough empirical cut and then layer other concerns on top—industrial policy concerns.

Ambiguity of “source”: the fact that people are used to seeing something w/one producer is often used as evidence of TM meaning, but that’s not the same thing.  Association isn’t association as an indicator of source. Hardest w/non-word mark cases; there are lots of other possible explanations for consumer reactions that we should consider. 

Robert Burrell: The market should often correct itself in terms of mark choice.  Market failure may occur when businesses are starting out they need to be encouraged to choose TMs that will serve as badge of origin rather than just being concerned w/market penetration. But that reasoning would suggest that experienced firms wouldn’t select descriptive terms, but they do.  People don’t spend a lot of time thinking about “what is the badge of origin”? They’re just buying stuff, in response to all sorts of different signals. So we are trying to protect competitive signals, knowing that consumers will be responding to lots of signals that have nothing to do with source identification. Once you’re honest about that, our perspective on infringement would have to change.

McKenna: registrations that issue with purported limitations that won’t matter at all in litigation—that’s a huge problem. B/c the PTO is thinking only about validity it doesn’t deal w/that problem.

Linford: This Q of what a registration does is implicit in the struggle w/Tam. 

Bob Bone: characteristics of the mark may be probative for consumer protection. For eligibility what we’re talking about is percentage of consumers who use mark as source ID in strong sense.  Rough, normative determination of percentage. For scope, then we are talking about strength, and how distinctive it is w/r/t other marks. But he doesn’t think we ought to do that for eligibility. Inherently distinctive marks aren’t distinctive; they’re just really likely to be distinctive.  That has to be qualified by what Fromer said—maybe we’re protecting inherently distinctive marks for incentives for firms that are beneficial down the road.  But if it’s just likelihood/probability of distinctiveness, that’s a different issue. Probability has to be assessed in some way.  Probability is both a descriptive and normative issue.

Beebe: will stick by his own definition but wants to restate it & explain why.  Distinctiveness is ten-dimensional—w/r/t inherently distinctive marks that are word marks, if you accept consumer search costs approach in the US, then we can say this. Otherwise it’s hard to say something general.  Gives the whole system a flexibility.  That’s why his approach is: one source/multiple sources. If a signifier doesn’t refer to a source at all: you ask consumer whether a plain box is used by one company or more than one company.  I want to hold on to anonymous source company.  Do you associate this box with one company or more than one company?  Or is it not associated with a company?

RT: but you didn’t offer that third option, “not associated,” in your first formulation.

Beebe: one company, more than one company, or is it meaningless to you?

McGeveran: do you associate this with one company or don’t you?

Dogan: if one company has been selling this box for 17 years, the fact that people recognize it as coming from that company is source significance, but this is where competing values like functionality come into play—even with source significance, it’s functional.

McKenna: there’s also a difference b/t association w/ a company and thinking it’s an indication of source.

Beebe: the cases in the US aren’t so much on your side.

Michael Grynberg: dichotomy of distinctiveness: do we want it simple or nuanced?  Lawyers can advise clients on the multifactor test, which is a virtue of the system v. accuracy at margins.

Dinwoodie: use as a mark as a test for validity might be a way to reframe some of this as distinct from distinctiveness.  Also, significance of inherent distinctiveness has increased as more and more applications are ITUs, which are supposed to be inherently distinctive. 

Mid-Point Discussants:           Lionel Bently: EU: Categories of marks devoid of distinctive character, descriptive, generic: overlapping, informed by different concerns but capable of being applied cumulatively—treat them as less important than Abercrombie. Devoid of distinctive character: generic, descriptive, signs that would not be recognized as TMs.  Applied in that sense primarily to nontraditional marks.  Test: whether there’s such a difference from the normal shape or presentation that the consumer would notice it.  Different tests for secondary meaning?  We could apply different tests/showings in relation to potential problems. 

Surname cases: demand to show secondary meaning is a little odd. Either the reaction is always “it’s a TM” or it sends us into a sea of uncertainty (e.g., you see “McKenna” on a bottle of beer—people will arguably automatically see that as a TM if it’s in the right place on the bottle; otherwise not).  Burrell says this is a waste of time. We should focus on normative side—what are the reasons not to make this a registered TM, which makes us think much harder about what’s wrong w/registration. That would be a good thing.  One key: depletion of marks otherwise available to competitors. Cultural signifiers—Picasso for cars may cause a different sort of harm, whether we call that dilutive or not. Distinctiveness of Red Cross.

All the considerations in determining inherent distinctiveness suddenly vanish in the face of acquired distinctiveness b/c of our interest in consumer search costs, which becomes the most important thing—protecting against even a bit of confusion trumps everything but functionality. (And genericism in the US; not in the EU.)

Lisa Ramsey: See anti-free riding impulse throughout the cases, in registration and enforcement. Plus consideration of competition and free expression.  Dilemma: Poor small businesses can’t afford to do a TM survey. Perhaps it’d be good to have a survey required for colors/designs, but small companies can’t afford that. If we really believe in competition, we need to make it easy for small companies to get protection [or hard for big companies to get monopoly rights over persuasive designs], but they can’t do that w/a high bar for protection at the PTO.

So how do we define distinctiveness? It has to be normative. Intent of TM owner: make everything a TM.

McGeveran: never had as much debate over semantic meaning of thing that’s our topic. What if we banned the use of the word distinctiveness from the conversation and forced ourselves to rechristen everything we now call distinctiveness? Which of these things would we give the same name to, and which would get different names?  Would help us think about them differently. One of Beebe’s binaries—distinctive from other marks v. distinctive as indicator of source in mind of consumer. Suppose one was source consciousness/identification v. mark differentiation? We wouldn’t use the same words b/c they’re not the same.  Market strength—is that a measure of the amount of source consciousness?  Or is it a different thing?

Most important thing Coke wants is branding, not identifying: Coke is refreshing. They use the doctrinal tools of lawyers to achieve business objectives. B/c we refuse to acknowledge that’s what they’re doing as often as we should, we tend to go down blind alleys. If we asked a marketer “how is your brand distinctive” they would not say “people know Coke when they look at it” but rather “Coke is relaxing and Americana.” That’s their distinctiveness, and our doctrine is almost blind to it.

Michael Grynberg: does Coke need our distinctiveness for theirs?

McGeveran: they certainly want that, but it’s a minority percentage of time and energy poured into the process—necessary but subjugated in broader ass’n of branding. We could make a decision that the law protects source consciousness but not other forms of marketing distinctiveness.  That’s fine.  The market will handle that. The problem is that it shapes the ways in which firms want to use these marks as tools. They’re going into battle for branding reasons; if we are blind to that as we construct doctrine, that creates problems.

Fromer: It’s really important to think about incentives here. That’s why I care more about choosing some marks over others than perceptions; over time, businesses can foster perceptions for just about everything, so we should think about the costs of allowing companies to choose certain marks over others.  Goes to Bently’s point that we want to keep some words/symbols from being branded, like Red Cross. If we have buckets for types of marks, we still have to shape the buckets and figure out which costs companies should have to bear.  Throwing dilution in: dilution gets a lot of things wrong, but one of the ways in which it’s interesting is the way it thinks about distinctiveness. Mostly equates dilution w/impairment of distinctiveness, but takes degree of inherent/acquired distinctiveness into account: might mean it’s much harder to dilute Amazon/Infiniti w/lots of other meanings out there already, but it is taking account of network of associations. 

Jacoby is so focused on his model from a marketing perspective, w/o accounting for the costs.  Apple isn’t “arbitrary” in the marketing sense—they choose a bitten apple signifying knowledge, friendliness, etc.  Maybe we didn’t connect apples-computers before that but there’s only one link in the nodes required. Maybe we want to encourage businesses to find those latent connections, but we need to think through both costs and benefits.

Shari Seidman Diamond: People out there w/no views at all. When we ask those questions, it’s not tapping into things people naturally think about. It does matter that we have asked the question.  They will obligingly give you an answer, mostly, despite filters/don’t know options.  If it’s true they’ve never given any thought at all to whether this came from one source or multiple sources, that is an important feature that we may be missing.  If it’s allegedly useful for search cost reduction, if they weren’t thinking about it before it can’t have been useful for search cost reduction.

McKenna: Dilution is hot mess. “Impairment of distinctiveness of mark” is nonsense. Doesn’t decrease identifiability of source significance in product market, though it does deal w/uniqueness, and maybe distinctiveness of mark v. distinctiveness of brand.  Distinction b/t TM and brand is really important. When you say Apple signifies knowledge, it’s still arbitrary in Abercrombie spectrum, in terms of branding/associations brought along with it.  We sometimes see push & pull about smushing those together; courts are susceptible to arguments in brand terms and it’s important to be clear about what we mean.  Context is usually the whole point of distinctiveness but dilution takes it away from context.

Marshall Leaffer: In registration context, should be pretty low bar—not necessary to spend lots of resources for something that’s fairly clearly inherently distinctive for arbitrary/fanciful. But secondary meaning is a whole different kind of utility. Not competitive entry so much—we are simply rewarding//providing incentives for those who invest in the goodwill of the mark.  There it should be a very high bar for secondary meaning.  Percentages required go quite low in some cases, though.  That is a wrong turn. We have a lot to learn from marketers: what they engage in, from brand/image aspect, is so important to developing strength.

Dinwoodie: European law: parses out different grounds, all of which look like variants: descriptiveness, void of distinctiveness, incapable of distinctiveness in 3(1)(A)—gives value to the notice function. Series of different categories for denying—failure to provide the notice necessary to competitors; distinctiveness; normative question of competitive effect; and genericness is a bit of a mix. Force courts and Office to pigeonhole them, and in fact we give different consequences.  Can’t overcome 3(1)(A).  Trying to separate predictive questions from normative—if you don’t do that consciously, the normative operations get so submerged in the analysis that we think it’s purely empirical w/o assessment of competitive concerns.

Bone: why not get rid of eligibility inquiries? Could have exclusions for non-distinctiveness reasons, like the bar on names w/o consent.  But as to 2(e) categories on descriptiveness, why bother?  When we get to likely confusion, that requires source identification.  Do we figure that we need an initial screen for likelihood of confusion?  Maybe we do. If we were to redo this w/o eligibility via Abercrombie, what sort of screens would we use?  Normative reasons—litigation costs, threats to competition/overreaching, etc.  Error costs.  We might end up with the EU/Paris Convention.

Dinwoodie: that’s a strategic reason why too much gets forced into distinctiveness. If you limit countries’ ability to create exceptions, there’s nothing for functionality/names, so the Fed. Cir. shoves everything into distinctiveness to create exceptions.

[RT] Responding to McGeveran and Leaffer. Branding: we don’t ever want to protect the branding kind of meaning of distinctiveness. It’s not unique or distinctive.  Coke: Americana, like Ford?  Refreshing, like Winterfresh gum?  Even if Coke’s branding is truly unique in its category, those are generic and functional concepts that should be available to anyone who successfully appropriates them even w/in that category. That’s precisely why we shouldn’t be embracing branding ideas and how we should distinguish: personality of mark is not what the law is or should be here to work on.  Dilution: has to arise from similarity of marks.  That singles out a specific mechanism for associations and a specific effect distinct from meaning or “brand personality.”

Factual Q: Do we know how many secondary meaning registrations rely on 5 years of exclusive use v evidence of consumer reaction or even along w/evidence of consumer reaction?

When we separate normative and descriptive Qs as many including Dinwoodie advocate we find they’re orthogonal. Look at KP Permanent: incoherent result on remand.  Tolerate more confusion—how much more?

McGeveran: not advocating using the law to protect branding components, merely to point out that those get identified as distinctiveness and that’s one reason it causes problems; clear delineation can avoid conflating them.

Linford: is there a way to figure out whether consumers have ever thought about this before, empirically?

Diamond: yeah, consumers want to sound smart and would say they’ve thought about it before.  There are some responses, not so much in design of the Q but design of the survey as a whole, also getting to the issue of needing only a low level on secondary meaning.

McKenna: Abercrombie came out of a history of sorting b/t technical TMs and unfair competition; over decades we’ve layered other considerations on top that weren’t the function of what the distinctions were for. We’re still in so many settings dealing w/cts’ merger of two areas of doctrine w/o sufficiently thinking of the relation b/t them.

Consider the fact that there was a time when if you asked anyone a computer-related Q people would associate it w/Microsoft. You can wash that out as noise but it’s real association. If you merge source significance w/association you can’t deal with that.

Beebe: 4% registered either in whole or in part on the basis of 2(f)—incredibly small.  Filings for marks acquired distinctiveness has risen in absolute numbers over the years, though decreased as a total percentage of filings.

IP writing competition for Virginia law students/law students from Virginia


Sponsored by the
Virginia State Bar Intellectual Property Law Section

The Virginia State Bar Intellectual Property Law Section is seeking papers written by law students who are attending law school in Virginia or are residents of Virginia attending law school outside of Virginia and relating to an intellectual property law issue or the practice of intellectual property law.

PRIZE: $5,000

Plus publication on the IP Section's website

The IP Section may also award a Second Place prize of $2,500 in its discretion.

for complete rules and information about prior winners.


Reading list: a credit card nudge that seemed to work

The power of light-touch financial education: A demonstration with credit card revolvers
JAN 19, 2017

Can simple guidelines, or rules to live by, help consumers reduce their credit card debt? Can they be useful as a financial education tool? The Consumer Financial Protection Bureau (CFPB) commissioned a research study to test two specially developed guidelines reminding consumers to be cognizant of credit card usage. The guidelines were tested in a randomized controlled trial with a large group of consumers who carry a credit card balance month to month. The study found that exposure to one of the two financial guidelines (“Don’t swipe the small stuff”) led to lower credit card balances. Findings suggest that rules-based messages hold promise as a low-cost, scalable method of financial education.


Wednesday, March 22, 2017

Reading list: new governors of online speech

Harvard Law Review, Forthcoming

Private online platforms have an increasingly essential role in free speech and participation in democratic culture. But while it might appear that any Internet user can publish freely and instantly online, many platforms actively curate the content posted by their users. How and why these platforms operate to moderate speech is largely opaque.

This Article provides the first analysis of what these platforms are actually doing to moderate online speech under a regulatory and First Amendment framework. Drawing from original interviews, archived materials, and leaked documents, this Article not only describes how three major online platforms—Facebook, Twitter, and YouTube—moderate content, it situates their moderation systems into a broader discussion of online governance and the evolution of free expression values in the private sphere. It reveals that private content moderation systems curate user content with an eye to First Amendment norms, corporate responsibility, and at the core, the economic necessity of creating an environment that reflects the expectations of its users. In order to accomplish this, platforms have developed a detailed system with similarities to the American legal system with regularly revised rules, trained human decision-making, and reliance on a system of external influence.

This Article argues that to best understand online speech, we must abandon traditional doctrinal and regulatory analogies, and understand these private content platforms as systems of governance operating outside the boundaries of the First Amendment. These platforms shape and allow participation in our new digital and democratic culture. They are the New Governors of online speech.

Iconic movie scene allows copyright but not TM claim against multimedia installation

Harold Lloyd Entertainment, Inc. v. Moment Factory One, Inc., No. LA CV15-01556, 2015 WL 12765142 (C.D. Cal. Oct. 29, 2015)|

Another blast for the past—I would really like to know more about the Westclip algorithm, but I can’t complain too much about the magic machine that brings new knowledge straight to my inbox.

HLE sued Moment for copyright infringement and false designation of origin based on HLE’s copyright in the 1923 silent film Safety Last, starring Harold Lloyd.  “The film’s closing scene features its principal character, played by Harold Lloyd, dangling from the hands of a large clock.”  Moment’s multimedia work, the “Time Tower,” included a video of a man dangling from the hands of a large clock.  The final chase/climb scene in Safety Last is about seven minutes long; Lloyd dangles from the clock for about a minute. HLE licensed the Clock Scene for use the films Back to the Future and Hugo for scenes in which a character dangled from the hands of large clock.
Lloyd scene

Comparison from complaint

screenshot from video of installation

The Time Tower video is 87 minutes long, with 14 distinct segments.  One segment is “Silent Movie,” lasting nearly three minutes; it features a man climbing a building past various characters, “including a knight in shining armor, a monster reading a newspaper, a conductor and a socialite.” As part of various shenanigans, the climbing man grabs the hands of a clock that is on the outside of the building, and hangs from them for about 10 seconds.  The scene was allegedly called the “Harold Lloyd tower theme” in pre-production stills. HLE alleged that numerous consumers were expressly and explicitly deceived and confused into believing that Moment’s products and/or services were affiliated with Harold Lloyd and HLE.

Moment argued that there couldn’t be substantial similarity between Safety Last, a 73-minute film, and the Time Tower video, because of the small amount of time where similarity existed.  But the court found obvious similarities in the two scenes, and that was enough to avoid a motion to dismiss, because if what has been copied is qualitatively important, a fact finder can find substantial similarity and HLE alleged that the scene at issue was “one of the most iconic” images in cinema.  Fair use also couldn’t be resolved on a motion to dismiss, including questions of transformativeness and market  harm.

However, false designation of origin/false endorsement claims failed because of Rogers.  (Or Dastar?The Time Tower video was an expressive work; the use of Lloyd and the alleged clock scene “trademark” had at least some artistic relevance, since the scene was “a tribute to the silent era.” Any reference to “one of the most iconic images in cinema” was artistically relevant to a tribute to silent movies.

And there was nothing explicitly misleading about the use.  HLE argued that the Time Tower video and the website including pre-production stills referring to the scene at issue as the “Harold Lloyd tower theme” were misleading.  But neither had any explicitly misleading content. There was no direct reference to Lloyd, and use of a mark alone isn’t explicity misleading; to hold otherwise would render Rogers a nullity.

This result also doomed the UCL and common law unfair competition claims.

Marketing method and display are functional, nondistinctive trade dress

AMID, Inc. v. Medic Alert Found. U.S. Inc., No. H-16-1137 (S.D. Tex. Mar. 16, 2017)

American Medical ID (AMID) sued MedicAlert Foundation United States for trade dress and copyright infringement. The parties compete in the market for medical-identification jewelry. One of their marketing techniques is sending unsolicited mass-mailed countertop displays with tear-off pads attached to doctors’ offices. “Both companies include a letter to each doctor’s office explaining what to do with the enclosed display and the importance of patients wearing medical-identification jewelry.”  I’m just going to pretend that the court said that AMID “registered its copyright” in its letter.  There, that feels better.  AMID also claimed that unsolicited mailing of countertop easel displays was a protected marketing method and that its countertop display was protected as trade dress that MedicAlert infringed

It all started when a former AMID marketing manager, Justin Noland, resigned from AMID and went to work at MedicAlert. MedicAlert hadn’t mailed unsolicited countertop displays to doctors’ offices for the previous six years, but resumed the mailings after Noland began working there.  

In July 2015, AMID complained to MedicAlert that Noland had violated his noncompete agreement with and confidentiality obligations to AMID, and that MedicAlert had made a “virtual carbon copy” of AMID’s display.  In August, MedicAlert responded that it wouldn’t fire Noland because the noncompete clause had already expired, and noted that MedicAlert would “remain mindful of all the operating boundaries concerning marketing materials between our two companies . . . .” MedicAlert didn’t agree to recall, stop using, or change the MedicAlert marketing displays or other marketing materials.  AMID responded in early September, mostly proposing a marketing partnership.  AMID sued in April 2016, making nearly 11 months between when AMID allegedly first saw the MedicAlert displays on the MedicAlert website and when it sued.  The court denied a preliminary injunction, despite finding a likelihood of success on the merits of the copyright claim.

The display method/display itself were not registered.  AMID claimed they were inherently distinctive.  Abercrombie doesn’t work well for non-word marks.  We know more about what can’t be inherently distinctive—color, product design—than what can.  Erring on the side of caution, as instructed by Wal-Mart, the court here found the claimed trade dress to be on the “product design” side, rather than product packaging, thereby requiring secondary meaning.

AMID proposed a number of different versions of its claimed trade dress.  After the PI hearing, AMID alleged rights in a “Marketing Plan and Scheme” that included:

a.         unsolicited mass-mailing to doctor and other professional offices of display;
b.         an easel display with integral order forms;
c.         real jewelry facsimiles in the upper portion of the display;
d.         an introductory letter;
e.         a see-through cardboard cover over the jewelry with one medal visible; and
f.          a clear mailing wrapper.

It also alleged rights in the “[p]ackaging as received by the professional office of the mailed [d]isplay,” and the “display as used in the professional offices,” specifically:

a.         an easel display having three panels on the front portion of the display;
b.         a top panel, followed by a larger central panel with real jewelry facsimiles followed by an order form on the lower portion of the display; and
c.         an order form pad below the central panel taking up approximately 2/3 of the display face with photographs of jewelry on the face of the order form.
AMID package

AMID display at Publix

display comparison

MedicAlert package

As the court noted, one cannot “coherently define exactly what the trade dress consists of and determine whether that trade dress is valid and if what the accused is doing is an infringement” until after the claimant submits the “discrete elements” making up the its claimed trade dress. AMID’s final version included for the first time “the proportion of space taken up by the order form pad, photographs of jewelry, and the number, position, and size of the panels.”  The court commented that it wasn’t clear at what point changing the definition of the claimed trade dress would require an amended complaint.  Without precise boundaries, determining infringement—and determining what a competitor could and couldn’t do without entering a courtroom—is very difficult.  The court referred to Wal-Mart’s instructions “to be cautious about applying vague, litigation-friendly tests for inherent distinctiveness,” and noted that AMID has changed its marketing materials over the years, helping to create a “moving target.” 

AMID’s witness claimed that all the variations shared a “family look,” but her testimony about what meant “was elastic and expansive.” She claimed that 80 percent of the displays distributed since 2012 had this “family look.” The court wasn’t clear which the other 20% were.  AMID used “displays with clearly different shapes, sizes, text size and font, color, artwork, layout, and materials,” and some didn’t contain any of the elements AMID identified as defining its trade dress. Thus, AMID failed to define its trade dress with sufficient clarity or consistency. 

Plus, erring on the side of caution as instructed, the court classified this ambiguous trade dress as product design, requiring secondary meaning for protection.  AMID argued that its trade dress was “akin” to product packaging, but AMID’s products are bracelets or dog tags and the purported trade dress didn’t “package” the actual jewelry AMID sells.  It was in the middle of the packaging and design spectrum.

AMID also failed to show secondary meaning.  Four of the claimed seven trade-dress elements were packaging designed to be removed by a doctor’s staff before putting it out for potential buyers (or doctors) to see.  AMID argued that these elements were seen by the “gatekeepers”—the staff in the medical office who make the decision to place the display on a counter visible to the “end users,” the patients.  The court commented that “[i]t stretches current law to analyze [gatekeeper staff] as the relevant consumer in the secondary-meaning inquiry.” Doctors might also be gatekeepers in deciding whether to place the display in their waiting room or whether to recommend medical-identification jewelry.  Ultimately, gatekeeper recognition couldn’t determine secondary meaning, because gatekeepers weren’t consumers of medical-information jewelry. “The parties have not cited cases in which a court found protectable trade dress, when, as here, most of the purported trade-dress elements are never seen by members of the buying public.”

Plus, the secondary meaning evidence was lacking as to consumers, especially given the many variations in displays AMID had used over the years.  MedicAlert put on a consumer survey finding negative secondary meaning—that is, 35.3% of the test group and 39.8% of the control group associated the two displays they saw with one company.  In the test group, 3.2% identified MedicAlert as the source of the display they saw, while 5.4% of the control group did.  Similar results obtained for a test of whether “Medical IDs Save Lives!” had attained secondary meaning.  AMID’s criticisms of the survey were unavailing, especially given that the survey properly targeted people who’d bought/were likely to buy medical identification jewelry.

Another survey found that 23.3% of the doctor-respondents currently displayed advertising or promotional literature from both AMID and MedicAlert; 58.5% didn’t currently display either; and the remainder were roughly split.  There was no evidence from this survey that either party’s marketing materials were replacing the other’s.

Annoyingly, the court quoted the line that “evidence of intentional copying shows the strong secondary meaning of [a product] because ‘there is no logical reason for the precise copying save an attempt to realize upon a secondary meaning that is in existence,’” right before it started in on functionality (which it found here).  But still, there was circumstantial evidence of intent to copy given Nolan’s employment and the resumption of mass mailings.  (The court did say that intent to copy was more relevant to infringement than to protectability in the first instance.)

Finally, the trade dress was functional and AMID didn’t meet its burden to show nonfunctionality.  Under the first TrafFix test, a feature is functional when it “is essential to the use or purpose of the article or if it affects the cost or quality of an article,” and it’s essential “if it serves any significant function other than to distinguish a firm’s goods or identify their source.” If the feature is functional under this definition, there is no need to consider competitive alternatives.

Evidence of functionality included that displays using an easel design and attached pad with tear-off sheets are covered by utility patents and are commonly used. Attaching sample products to countertop displays was also commonplace, and attached samples had to be placed so as not to make the display fall over. The combination of functional features wasn’t configured in a nonarbitrary manner.

And finally: there was no showing of irreparable harm, given AMID’s delay in seeking relief even after calling the display “an extreme knockoff” and expressing “great concerns about the use of those [displays] in the marketplace.”  AMID’s 2015 correspondence didn’t demand that MedicAlert stop distributing the displays or remove the display from its website.

The copyright infringement claim fared better.  The transmittal letter that introduces a healthcare professional to AMID’s marketing materials is “the first thing a healthcare professional sees on opening the display package.”  The court found “obvious” similarities, including virtually identical text at the bottom as well as overall look and other content.
AMID letter

MedicAlert letter

“While MedicAlert had a long history of using displays in its marketing campaigns up to 2009, MedicAlert has presented no evidence that it used a letter until the mailings sent after Noland arrived.”  However, there was still no irreparable harm, given AMID’s delay and MedicAlert’s cessation of its use of the similar letter.

The court declined to dismiss a common-law unfair-competition claim based on misappropriation of “valuable business methods, marketing plans, confidential know-how and proprietary information,” not rising to the level of trade secrets.

Monday, March 20, 2017

Who's responsible for allegedly false, concealed endorsement deals?

Woodard v. Labrada, 2017 WL 1018307, -- F. Supp. 3d ---, No. 16-00189 (C.D. Cal. Mar. 10, 2017)

I discussed this case before.  Woodard alleged misrepresentations about the effectiveness of weight loss supplements, specifically the Labrada Garcinia Cambogia Dual Action Fat Buster and Labrada Green Coffee Bean Extract Fat Loss Optimizer. 

Naturex makes Svetol, the active ingredient in the Fat Loss Optimizer.  Naturex allegedly dvertised Svetol as the “most studied and proven green bean extract,” and attributed its effectiveness to “100% premium Robusta beans” processed to yield a “high concentration of key chlorogenic acids.” InterHealth makes SuperCitrimax, the active ingredient in the Dual Action Fat Buster, and allegedly claimed “maximum stability, solubility, bioavailability, and efficacy” as well as “60% all natural HCA derived from the Garcinia Cambogia fruit.”

Labrada allegedly advertised the products as “clinically proven” “FAT BUSTERS” with “ZERO BINDERS, ZERO FILLERS, AND ZERO ARTIFICIAL INGREDIENTS.” Plaintiffs alleged that these claims were deceptive because the supplements contained artificial ingredients. For example, SuperCitrimax was allegedly a synthetic form of hydroxycitric acid.  Plaintiffs further alleged that defendants misrepresented the quantity of active ingredients in the products, the origin of the ingredients (“Made in the USA”), and the overall quality of the products. Labrada allegedly cited “peer reviewed, published” scientific studies on the labels to claim that the products “support significant weight loss.” But one such study was later “retracted by the authors after data was found to be falsified.” [So, essentially, the food is lousy and the portions are too small.]

Dr. Oz allegedly fraudulently promoted the Labrada products on his show by misrepresenting his affiliations with the brands he allegedly endorses. (E.g., he said: “I’ve warned everybody that I’m not going to mention specific brands, but I do want to go through exactly what I would look for. You’re going to look on that list of ingredients. There should be ZERO FILLERS. There should be ZERO BINDER, ZERO ARTIFICIAL INGREDIENTS...”)  He allegedly had undisclosed paid spokespersons for InterHealth and Naturex on his show to promote the products; he told his viewers that his guests were doctors or scientists, but they lacked such credentials. Dr. Oz allegedly referred to the retracted study when touting the magic of the Green Coffee Extract as a weight-loss aid to his viewers. He also described it as a “good quality” study during the Senate Hearing on “Protecting Consumers from False and Deceptive Advertising of Weight-Loss Supplement Products.”  Various media defendants allegedly aided Dr. Oz by concealing his endorsement arrangements, in violation of anti-payola rules, helping him to exploit the trust consumers place in “America’s Doctor.”

The court found various claims adequately alleged against some of the defendants, but not Sony.  EMV, a company responsible for “facilitating strategic partnerships between Dr. Oz, like endorsements, collaborations, speaking engagements, and equity deals, etc.” was sufficiently targeted by the pleadings.  Its website stated: “Our goal is for Dr. Oz to forge a direct and authentic connection between you and your demographic,” to create an “alliance” that “will ensure brand integrity, large scale awareness, and continued financial growth.” This allowed a plausible inference that EMV played a direct role in causing Dr. Oz’s affirmative misrepresentations to be disseminated to the consuming public, and that EMV aided and abetted Dr. Oz in concealing the endorsement deals. “It is plausible that any prudent business partner or representative of Dr. Oz that solicits endorsement deals on his behalf would be charged with the knowledge that Dr. Oz’s repeated disavowals of such endorsement deals constitute a breach of duty to those harmed by such representations.” Thus, the complaint plausibly alleged that EMV participated in fraud, either intentionally and directly or negligently and contributorily.  Indeed, the existence of a special duty to consumers, as required for a negligent misrepresentation claim, could plausibly be inferred from EMV’s profiting from Dr. Oz’s endorsement deals.  “[W]ithout individuals justifiably relying on Dr. Oz’s recommendations or representations, EMV would have nothing of value to offer to potential clients.”

Allegations of Sony’s direct participation were lacking, but not allegations as to media defendants ZoCo and Harpo, which “either provided substantial assistance to, aided and abetted, employed, entered a joint venture and/or were involved in a civil conspiracy with Dr. Oz, and either one of the Labrada Defendants or the Supplier Defendants.”  ZoCo produces the Dr. Oz Show and manages its website.  An archived page of the website allegedly displayed the Svetol trademark along with statements made by a spokesperson for Naturex; this was sufficient to allege that ZoCo “promotes and markets the Labrada products (and/or their proprietary active ingredients) across the United States.” An agency relationship could also plausibly be inferred from Dr. Oz’s @ ZoCo business email address at the pleading stage. There was a plausible inference that ZoCo “directly participated in the tortious conduct, had actual knowledge that Dr. Oz was breaching a duty to consumers, and provided substantial assistance to Dr. Oz and his co-defendants in this endeavor.”

The complaint did not, however, sufficiently allege Harpo’s direct liability. Harpo is ZoCo’s parent company; the allegations did make it plausible that Harpo could be vicariously liable for ZoCo and Dr. Oz’s tortious conduct as a principal. Harpo was plausibly in a position to directly control the acts of its agent, Dr. Oz, since Harpo holds and produces copyright, “creates and develops original TV programming,” and “control[s] any broader joint venture/web project with Dr. Oz.”  “As the alleged holder of the intellectual property rights to The Dr. Oz Show, one can reasonably infer that Harpo stands to gain the most from using the show as a subliminal advertising platform for deceptively marketed weight-loss supplements.”

Sony and Harpo agreed “to collaborate on a website and digital extensions” where Sony was to “provide marketing, legal/business affairs, finance, and other back office services.” That wasn’t sufficient to allege Sony’s direct involvement in the web marketing. There was also a distribution agreement stating: “Harpo will control any broader joint venture/web project with Dr. Oz but Harpo acknowledges Sony’s strong interest in partnering on a Dr. Oz branded new media venture and will discuss with Sony in good faith meaningful opportunities to participate.” The complaint didn’t sufficiently allege that Dr. Oz’s fraudulent promotion of the Products fell within the partnership’s business activities, or that Sony and Harpo “had equal rights to direct and govern the conduct of each other” with respect to the promotion or content of The Dr. Oz Show. Likewise, aiding and abetting/conspiracy allegations as to Sony were insufficient, even assuming Sony provided financial or marketing assistance to The Dr. Oz Show.  “[S]ubstantial assistance is insufficient for fraud without actual knowledge.”