The title of this article – “ensuring consumers get what they want”’ – consciously evokes language from the Senate Report that accompanied the enactment in 1946 of the Lanham Act, the modern US trademark statute. That report identified one of the main purposes of US trademark law as being:
to protect the public so that it may be confident that, in purchasing a product bearing a particular trade-mark which it favorably knows, it will get the product which it asks for and wants to get.Footnote 1
Similar consumer protection sentiments underlie, at least in part, the grant of trademark protection in most, if not all, countries.Footnote 2
This article considers how courts and legislatures should interpret this commitment today – how should trademark law ensure that consumers “get what they want”? To explore that question, Part I of this article reflects upon the role of the consumer protection rationale in recent expansions of trademark rights. Part II then considers several ways in which the basic objective of validating consumer expectations might now be pursued by trademark law. The article suggests in Part III that, without disregarding the core consumer protection purpose of trademark law, courts should consider the ultimate objective of ensuring that consumers “get what they want” more broadly. Essential to this inquiry is a richer view of consumer interests and more explicit attention to a wider array of values implicated by trademark protection.Footnote 3 Part IV concludes by noting the different challenges presented by the institutional context in which trademark law is developed in the UK and the US.
I. The Expansion of Trademark Rights
In 1946, there was a rather defined sense of what trademark law had to do to make good on its commitment to protect the consumer. That certainty arose in part because there was a much more defined sense of what trademarks did, both for producers and for consumers. Their original function, and perhaps at one time, their only function, was to identify the manufacturer of goods. The word “UTOPIA” stamped on bed sheets made by a particular producer told the consumer who made the sheets. This was how traders used marks and it was how consumers understood them – as indications of the “source” or “origin” of goods.
As a result, a consumer later seeing bed sheets marked with the UTOPIA mark would expect that the goods in question came from the first producer, from whom the consumer had previously purchased UTOPIA bed sheets. To protect that consumer expectation, trademark law prevented rival traders from making and selling different bed sheets marked with the UTOPIA mark. This narrow cause of action was sufficient to provide assurance that consumers would get what they wanted.
The scope of this assurance has expanded in many ways since 1946.Footnote 4 The type of uses against which relief can be secured now encompasses confusion as to matters other than the source of goods,Footnote 5 to consumers other than purchasers,Footnote 6 at times other than at point of sale,Footnote 7 and new causes of action have been created that provide relief without confusion.Footnote 8 One result of this expansion is that trademark not only protects the maker of UTOPIA sheets against the use of that mark on the bed sheets of a competitor, but also gives protection against use of the UTOPIA mark, or anything confusingly similar to it, on related but non-competing goods.Footnote 9 Thus, trademark law might now prevent a third party from using the mark UTOPIA on kimonos, bed slippers, and possibly also on bedside tables. If the UTOPIA mark was sufficiently well-known to be famous (in US terminology) or have a reputation (in the EU and UK vernacular), dilution protection might even restrain its use on radically different products, such as food mixers.Footnote 10
In some countries, trademark infringement can now be made out if a rival online supplier of much cheaper KAZOOM bed linens inserted the mark UTOPIA as part of invisible meta tags in the source code of its website, such that the KAZOOM website would appear high on the list of search results generated by a consumer’s query for “UTOPIA”.Footnote 11 (This could be the effect, at least, before most search engines revised their search algorithms to diminish the relevance of meta tags.) Courts in the US have found that an action for infringement might lie even though a visitor to the KAZOOM website would never be under any misapprehension that she was being offered UTOPIA, rather than much cheaper and unaffiliated KAZOOM, bed linens. Such an action would be founded on the so-called “initial interest” of the consumer in the KAZOOM product, which was the product of confusion, even if that confusion were dispelled by the time of sale.Footnote 12
Why has this ongoing expansion of trademark rights happened, and to what extent is it connected to the goal of ensuring that “consumers get what they want”? Several reasons for the expansion have been proffered by courts and scholars. One group of scholars has argued that the expansion in trademark rights that has occurred in recent decades can be attributed to a reconceptualisation (and, critics would assert, misconceptualisation) of trademarks as property.Footnote 13 The label of property flows, it is claimed, from regarding trademarks as valuable in their own right. As courts and scholars searched for the source of that value, so the argument goes, they were blinded into offering something approaching full dominion over the mark to the producer, whose investment in the mark has created the underlying asset.
However, this contention, which Professor Glynn Lunney described as courts and legislatures succumbing to “property mania”,Footnote 14 pins too much on the label of “property”. Many property rights are far from absolute and instead subject to limitations which protect public interests. Moreover, as work by scholars on both sides of the Atlantic has shown,Footnote 15 trademark infringement in the nineteenth century was a relatively narrow claim – notwithstanding courts’ invocation of the language of property. There is, therefore, no inevitable link between the language of property and the scope of trademark rights.
If there is any rhetorical tool that is more often used to support expansive forms of trademark rights, it is the protection of producer investment against unfair appropriation of investment – to prevent “reaping where you have not sown”.Footnote 16 The Senate Report with which this article began explicitly recognised such a rationale for trademark protection, identifying that a second purpose of trademark law is to ensure that “where the owner of a trade-mark has spent energy, time and money in presenting to the public the product, he is protected in his investment from its appropriation by pirates and cheats.”Footnote 17
This colourful rhetoric has clearly had bite in decided cases. For example, in the Boston Hockey case,Footnote 18 which was one of the first appellate US cases to endorse a trademark owner’s control over merchandising of the mark itself, the court mentioned three features of the dispute that persuaded it to “slightly tilt the trademark laws from the purpose of protecting the public to the protection of the business interests of plaintiffs”. These included the fact that that “the major commercial value of the [sports team’s] emblems is derived from the efforts of [the] plaintiffs”.Footnote 19 Arresting attempts to free-ride on those efforts remains a strong instinct of courts, even absent a cause of action expressly aimed at such conduct.Footnote 20
II. The Expansionist Role of Consumer Expectations
So, what does this account of why there has been an expansion in trademark rights have to do with ensuring that consumers “get what they want”? It might appear that validating consumer expectations has played little role in fashioning the expanded trademark rights we now have. Indeed, many critics of strong protection would claim that it is the departure from the consumer protection model that lies at the root of these developments.Footnote 21 In fact, the protection of consumer expectations has been an important device for both creating, and perhaps more importantly, legitimating and consolidating expansions in trademark rights. Allowing the manufacturer of UTOPIA bed sheets to stop the use of its mark on a much broader scope of products, such as kimonos, bedside tables and food mixers, and allowing the manufacturer of UTOPIA bed sheets to stop the use of its mark by KAZOOM in its meta tags, is a result also now justified by the goal of ensuring that consumers get what they want.
This result has been enabled by three basic, related, methodological choices that trademark law has made in its efforts to ensure that consumers get what they want. These features are most obvious in US trademark law, but one can see them – sometimes in varying degrees of strength – in other systems, including within the UK and the EU. The first methodological choice made by courts has been to give precedence to evolving social and commercial understandings and uses of marks. Second, courts have viewed core trademark questions, such as likely consumer confusion, as essentially descriptive tasks involving nothing more than an empirical inquiry.Footnote 22 Third, the reformulation of the consumer protection rationale in the language of law and economics, more particularly in terms of reducing consumer search costs, has helped lessen the level of interference with a brand signal that is necessary to make out trademark infringement.Footnote 23 The following sections discuss these three features in greater detail.
A. Social Development of Trademarks
Tying trademark law to social understandings of trademarks has not always fuelled expansion of trademark rights. In the nineteenth century, legal rules reflected the commercial function of marks and were tied to consumer understandings of those marks. Marks functioned to identify origin. Trademark law protected that origin function, but it did so by conferring a narrow right.Footnote 24 Trademark law today nominally remains primarily concerned with the source or origin function of marks,Footnote 25 but the scope of protection now offered by the law under the guise of protecting the “origin” function is much broader than in 1946. In large part this is because of changes in the structure of our economy and changes in how marks are understood by consumers. At least three such changes can be identified.
1. Licensing of marks
The person who sells goods or services today under a particular mark is often not their manufacturer, but someone in one of several possible commercial relationships with the manufacturer – the most common being franchisor–franchisee, licensor–licensee and foreign manufacturer–local distributor. As these commercial relationships increasingly determine the consumer experience, the trademark has evolved from a term designating the manufacturer as such, into the commercial actor who “stands behind” or “vouches for” the goods in question. Consumers now understand that the mark owner does not necessarily make all the goods or services for which it vouches. Trademarks have become more generally a guarantor of the consistent quality of goods.
Adapting to this change requires no radical shift in trademark law. After all, consistent quality of goods was one of the expectations protected by trademarks as source-identifiers in the narrow sense. A consumer who purchased UTOPIA bed sheets had some confidence that the next set of UTOPIA bed sheets would be of a quality that is consistent quality with the previous ones, even if that assurance once stemmed from the fact that the same manufacturer made the sheets in question rather than that they “stood behind” the sheets.
2. Related goods
Protection against use on what came to be known as “related goods”, upon which the mark owner had not yet used the mark, was another major expansion of protection in the second half of the twentieth century. This expansion can again be explained by changes to the structure of business organisation. Specifically, companies began to diversify their product range. As consumers became aware of that practice, they expected that the use of a mark on a related good did signal a connection with the first mark owner (perhaps as manufacturer, perhaps as licensee). If that connection was something that consumers valued, so the argument went, trademark law should provide consumers with assurance regarding that connection.
3. Associative meanings
Once it is accepted that a trademark may reflect broader commercial relationships, there is little that can stop the expansion in what trademarks mean. Thus, consumers now understand that a mark may simply reflect the endorsement of the goods by the mark owner, or some affiliation or connection between the two. When David Beckham lends his name to an aftershave, he does not personally concoct the product that bears his name, and is unlikely even to be checking its quality, and so stands behind it only in a very loose sense. But that does not matter to a trademark law resolutely committed to ensuring that consumers “get what they want”. Consumers may be buying the David Beckham aftershave because of the consistent quality of chemicals that they know he will insist on being part of any product bearing his name. They may. But they may also – and this is increasingly the case in our brand- and celebrity-obsessed culture – want the product because of its association with all things Beckham. It simply says, to everyone who smells the aroma, “cool, sexy, just like Beckham”. If that is what consumers want, then that, it is said, is what trademark law needs to ensure they get. It needs to protect against uses of the mark that cause confusion about association.
4. The response of trademark law
From these changes, it is apparent that although the basic objective of trademark law has remained quite constant – ensuring consumers get what they want – the scope of protection offered by that principle has expanded to reflect how trademarks are now understood by consumers.
That evolution in trademark protection reflects, at least in part, an appropriate regard for social reality. It is important, as an initial matter, for trademark law to take account of the broader functions being served by trademarks. In order to identify harms for which courts may or may not decide to give redress, they must first have a proper understanding of the real-life effects of trademarks. Put another way, if trademark law seeks to protect consumer expectations, it first needs to know what those expectations are. However, by unquestioningly protecting consumer understandings, trademark law has failed to ask whether protecting some consumer expectations is a good thing. It has assimilated descriptive questions with prescriptive ones.
B. Empirical Inquiries
This failure to recognise the prescriptive dimension to trademark protection is closely related to a second methodological decision that has contributed to the expansion of trademark law. Formally, US infringement law asks whether the defendant’s use would confuse an “appreciable number of ordinarily prudent purchasers”;Footnote 26 European law constructs a similar, though differently denominated, character, the “average consumer”.Footnote 27
Courts tend to frame and often view the test of likely confusion as an empirical inquiry about whether consumers would be confused by the defendant’s behaviour.Footnote 28 This is particularly true in the US, where the existence of survey evidence – though historically, and currently, much less favoured in the UK – is routinely characterised as the best evidence of likely confusion.Footnote 29 This can lead to absurd results, as in one case where the plaintiffs introduced surveys showing that a certain percentage of consumers in a shopping mall in St. Louis believed that the defendant would have needed permission to use the plaintiff’s mark for a joke in its parody magazine.Footnote 30 The court granted an injunction to restrain publication on the basis that an endorsement was somehow suggested between the magazine and the plaintiff. Such a result indicates how courts have become hostage to the conviction that trademark law should protect whatever consumer expectations (surveys suggest) actually exist, regardless of whether we should care about such confusion because those expectations depend in part upon consumers’ (mistaken) views of trademark law.Footnote 31
Of course, the notion of an “ordinarily prudent purchaser” or “average consumer” (in UK or EU lingo) is a legal fiction. One might argue that it is a legal fiction designed to help courts get at the reality of the marketplace for consumers and, hence, to ensure consumers “get what they want”. This is true to some extent. In reality, individuals react differently to trademarks, so the idea of a homogeneous consumer is inevitably a contrivance. For what purpose the contrivance is applied remains unclear. In some cases, courts seem to be asking whether a consumer in the “middle of the pack” would be confused, while in others they seem to be attempting a calculation of aggregate social welfare, taking into account how most consumers would react. And neither of these conceptualisations appears consistent with decisions that grant injunctions in cases where as few as 15 per cent of consumers were confused,Footnote 32 while the vast majority of consumers were not.
Judges should not ignore reality or wholly foreswear devices designed to inform them of that reality. Properly constructed surveys may be useful devices by which to immunise courts against biases and preconceptions. Plaintiffs should be compelled to prove a case on something other than mere speculation. However, courts should not, to paraphrase Judge Posner in a trade dress case, “make a fetish of testimony, expert or otherwise”.Footnote 33 Courts determining whether a defendant’s conduct is likely to confuse an appreciable number of ordinarily prudent purchasers are engaged in more than an empirical inquiry. Courts are essentially establishing a level of market regulation designed to further the several purposes of trademark law.
In a patent case, Lord Hoffmann, then on the Court of Appeal, expressed scepticism about over-reliance on the cast of fictional beings that have been developed to explore the boundaries of different legal doctrines. He suggested that the basic doctrinal questions had to be resolved, ultimately, through examination of the facts in line with the “general policy” of the statute at issue.Footnote 34 In trademark law, the type of conduct permitted or enjoined must take account of whether consumers will be confused, but it must also take account of the broader range of policies implicated by trademark law, most notably the maintenance of a competitive market.
As Jacob L.J. said in L’Oréal S.A. v Bellure N.V.: “[the public] are not stupid.”Footnote 35 This is a worthy assumption upon which trademark law should operate, for otherwise we would burden the market with undue regulation. But, at least for some members of the public, it is probably not actually true. Some people are stupid. Despite this, as a prescriptive matter, trademark law should not blithely set the standard of protection accordingly, lest we make the market unworkable.
In the US, decisions on actionable confusion have paid relatively little attention to the fact that these doctrinal assessments are not simply empirical questions, but instead embody fundamental policy decisions. The doctrines through which courts ensure that consumers “get what they want” are, or should be, rough proxies for protecting consumer expectations, informed and tempered by a variety of other normative commitments. By discounting some level of consumer confusion, current trademark law already makes such prescriptive choices in a number of settings, and it would hardly be radical to make them more explicitly and more frequently.Footnote 36
C. Search Costs
A third contributing factor to the expansion of trademark rights under the guise of consumer protection has been the reformulation of the consumer protection rationale in economic terms. Thus, William M. Landes and Richard A. Posner have explained that “[t]he value of a trademark … is the saving in consumers’ search costs made possible by the information that the trademark conveys or embodies about the quality of the firm’s brand”.Footnote 37
These Chicago School arguments have resonated with many scholars and courts, including the US Supreme Court.Footnote 38 But rephrasing the consumer protection explanation for trademark law exclusively in terms of search costs has also provided an expansive basis for protection, since it is difficult on that rubric alone to posit any increase in consumer search costs which does not justify trademark protection. For example, in the context of initial interest confusion, as seen in the UTOPIA/KAZOOM meta tag hypothetical, the increase in search costs experienced by a consumer who is presented with the KAZOOM website is measured roughly by the click of a mouse to the previous page. Yet, if one is committed to the reduction of search costs, there may be a basis for finding infringement.
Likewise, Posner J. has explained protection against dilution by blurring in terms of the search costs it imposes on the consumer:
Suppose an upscale restaurant calls itself “Tiffany.” … [W]hen consumers next see the name “Tiffany” they may think about both the restaurant and the jewelry store …. Consumers will have to think harder – incur as it were a higher imagination cost – to recognize the name as the name of the store.Footnote 39
To be fair, a fuller evaluation of search costs as part of a more expansive analysis of competition might still permit trademark doctrine to reach the conclusion that permitting certain third-party uses enhances overall market efficiency.Footnote 40 But the “economic-lite” version of the theory that dominates discussion of trademark law tends to the opposite: making consumers think a bit harder or a bit longer creates trademark problems. The Chicago School is surely right that one of the benefits of trademark protection is that it reduces search costs for consumers. However, the level and extent of assurance that courts should, as a prescriptive matter, seek to provide through trademark protection is arguably a question of more than making shoppers think less.
D. Consolidation and Legitimation
This discussion suggests that the protection of consumer expectations has been an important justification for expanding trademark rights. Perhaps more significantly, however, consumer expectations have also played an important role in consolidating and legitimating those expansions.
The role of consumer expectations in consolidating expansions of trademark rights is perhaps best exemplified by the development of merchandising case law. The Boston Hockey case, mentioned above, was one of the first appellate decisions to endorse a trademark owner’s control over merchandising. Such control was initially justified in terms of protecting producer investment. However, after Boston Hockey, producers and consumers each internalised the implications of the case. The accretion of further case law, and the development of licensing programs, led to consumer understanding that the presence of the mark of a sports team on a product meant that it was official merchandise, which the sport team had endorsed. Merchandising cases can now be litigated as confusion cases, without reference to the protection of investment.
The deployment of consumer expectations also has a legitimating effect. The first impulse behind the Boston Hockey decision – the protection of producer investment – is a controversial subject in intellectual property. Consider again how the 1946 Senate Report formulated the producer investment rationale for trademark protection in terms of protection from misappropriation from “pirates and cheats”.Footnote 41 What supporters of broader rights see as appropriation of investment by “pirates and cheats”, others see as socially beneficial use by the mark owner’s competitors and critics. That phrase – appropriation by “pirates and cheats” – compresses several highly contested value judgments.
In contrast, consumer protection offers a far more seductive rhetoric than protection of producers, both to legislators and perhaps to judges. It does not, on its face, present the kind of controversial value choices embedded in the producer protection justification. Who doesn’t want to protect consumers? This is particularly so if one views, as many courts have, the objective of “ensuring consumers get what they want” as presenting essentially empirical or descriptive challenges. Indeed, the apparent policy neutrality of such a sentiment may explain why courts are attracted to a supposedly empirical approach.
III. A More Nuanced Role for Consumer Expectations
It may sound as though these evolutions to make trademark law correspond with actual uses and understandings of marks are inevitably bad things. That is not necessarily so. The basic purpose of trademark law – of preventing consumers from being confused – is surely a valuable one. And any legislator or court that intends to protect consumer expectations must first ask what those expectations are. Moreover, there is something immensely valuable in the ability of trademark law to adapt dynamically to changes in social and commercial circumstances without legislative intervention. Business is always faster to act than legislators are to react. In light of this, it might well be suggested that courts should continue to adopt such an approach, even if there are some developments at the margins of trademark law with which one may disagree.
This Part thus focuses on whether, and in what ways, trademark law should take a different route to ensuring that consumers “get what they want”. First, it considers what might happen if courts continue down the current path and allow trademark law to be guided exclusively by actual social and commercial understandings of what trademarks mean. Second, it examines how the modern functions of trademarks are changing, and why these changes might necessitate a different approach to protection. Third, it analyses several alternative ways in which courts might approach the question of ensuring that consumers “get what they want”. Finally, it resituates the discussion within the broader context of unfair competition law.
A. Deferring to Wants
The history of the merchandising case law might suggest that a consumer-focussed approach would result in expansive forms of trademark protection. The size and power of producer advertising budgets can easily impress understandings on consumers, while small businesses wishing to make unauthorised use of marks are, in particular, likely to be risk-averse and respond submissively to a single mark owner victory.Footnote 42 As a result of these forces, validating public understandings about marks is likely to consolidate a culture of trademark owner control.
However, it is possible that there are contexts where understandings about marks can be reversed, and consumers can be educated that marks indicate genuine competition, and hence lead to the law conferring reduced mark owner exclusivity. One example where this has occurred may be private label practices in many American and European supermarkets, to which consumers have clearly become accustomed.Footnote 43 Beside every branded product, there is a store brand look-alike, labelled with the house brand. As a result, following evolving social understandings about marks in such settings, courts have constrained the ability of large brand owners to prevent the sale of competing store-branded look-alikes.Footnote 44
The private label phenomenon highlights one important variable which affects how consumers can be conditioned to accept a culture of non-exclusive use of marks. That is, although the merchandising battles pitted large institutions against smaller and less well-resourced defendants, the private label litigations are far more evenly balanced. To be sure, large brand owners are still involved. But the defendants in these cases are often equally well-resourced, large supermarket chains which have the money and ubiquity necessary to develop house marks strong enough to dispel confusion. And perhaps even more importantly, such well-heeled companies are able to absorb occasional litigation losses and resist threats of extended litigation by succumbing to a licence.
It is unclear whether this pattern exists pervasively outside the private label context. If it does, one might become less worried about the inevitability of a one-way ratchet in expanding protection as a result of deference to social practices and consumer understandings. At least in the online environment, some of the most controversial recent trademark battles have involved claims asserted against intermediaries rather than other producers.Footnote 45 Those companies (such as Google or eBay) had both the resources and the inclination to resist the threat of litigation. They made the calculation that there were long-term gains from incurring short-term litigation costs and risks.
This climate is to some extent also informed by the increasing involvement, at least in the US, of pro bono organisations committed to representation of clients pushing countervailing interests that resist producer exclusivity.Footnote 46 To similar effect, resistance by individuals, usually taking the form of civilly disobedient behaviour toward marks, is growing, mirroring some of the dynamics seen recently in certain copyright markets.Footnote 47 Professor Ed Lee has usefully described this behaviour as “warming”,Footnote 48 which might thaw some of the “chill” induced by the threat of litigation by large right holders. However, despite these data points, there remains something disheartening about turning over the demarcation of legal rights to the persuasive effects of big-budget litigation by (self-interested) large commercial actors, buttressed by well-intentioned legal activists and others willing to risk liability for points of principle.
B. Changed Importance
Of course, expanded rights are not inherently undesirable if they are serving the basic consumer protection purpose of trademark law. Much of today’s trademark law scholarship assumes that expanded rights are necessarily a bad thing, and that constraints on the scope of rights must be good. But consumer protection is still a worthy goal, and brand owners are investing substantially in the marketplace. Brands are, indeed, it seems, far more socially important than they were 100 years ago. If that is the case, should we not be more solicitous of their protection?
This part suggests that it is precisely because trademarks have become so important, and serve such valuable roles, that courts should resist a reflexive expansionist treatment of trademark rights. Ensuring that consumers get what they want may require an approach which recognises that marks can have value when used not just by producers, but also by consumers, competitors and the public generally.
1. Control over the product market
Trademark law increasingly plays an important role in determining what goods are available, and on what terms, rather than simply specifying the names that are applied to those goods. Trademarks have become assets in themselves, capable of positive economic exploitation rather than mere tools to protect the legitimate market of other tangible goods. As such, their treatment becomes more integral to the industrial policy of a nation.
To some extent, this argument simply restates the competition law critiques levelled at trademark protection throughout the twentieth century.Footnote 49 However, this article does not advance the strong form of the argument that trademarks are anti-competitive. Instead, it makes the smaller claim that their increased capacity to serve significant industrial and economic policy objectives – both useful and harmful – requires that courts subject them to more rigorous scrutiny than blithely deferring to actual consumer understanding.
Three examples serve to illustrate how the economic importance of trademarks has grown. First, when I bought a Manchester United scarf to keep me warm, or because I liked the red colour, Manchester United’s control of the various Manchester United marks that might adorn the scarf gave them little control of the scarf market, or even the red scarf market. But when I (and the rest of the marketplace) buy that scarf instead for the mark that adorns the scarf, then the market power that the producer has is potentially far more harmful to competition. Trademark law already contains doctrines that reflect concern where trademark rights, instead of encouraging product differentiation within a market, actually give a single producer exclusive control over that market. That might reasonably explain our reluctance to protect generic terms and it also informs the functionality doctrine that limits the protection of product design marks.Footnote 50 This is not a new argument, of course, and it is not an argument for repealing all merchandising rights. However, in an era of brand obsession, the competitive argument becomes far more compelling and more weighty.
Second, Chris Anderson, former editor-in-chief of Wired Magazine and author of the influential book The Long Tail, has written of the growth for some time of the “free economy”, dominated by pricing models where goods are dispensed for free and companies will make profits on ancillary or related goods or services.Footnote 51 This is not an entirely new business model: it fairly describes some of the early strategies of the Gillette company. Trademark law clearly affected the capacity of rivals who wished to develop complementary or interoperable products, such as, for example, razors that are “compatible” with the Gillette razor handle, and to advertise that compatibility. But Anderson suggested as far back as 2008 that this may become a dominant business model in our new economy.Footnote 52 Whether or not Anderson has been proven correct, it is clear that such a model has become far more prevalent in recent years. The extent to which trademark law treats complementary goods as dissimilar in conducting analysis of likely confusion, or affirmatively allows use of the mark by a rival to indicate compatibility, will influence how much of the profit-generating market is allocated to the exclusive control of the mark owner.Footnote 53 Again, this is not a new concern, just one the importance of which is heightened by changes in the economy.
Third, to return to my earlier hypothetical, if one searches for the term “UTOPIA” on the Google search engine, one will likely be presented with search results that show not only a link to the UTOPIA bed sheets site, but a link to a store where UTOPIA bed sheets are sold, a discount shop where KAZOOM bed sheets are sold cut-rate, and possibly – if KAZOOM had made the right keyword purchases – a link to the KAZOOM web site. If one really wanted UTOPIA and only UTOPIA bed sheets, this is unwanted clutter. If one searched for UTOPIA because one was looking for bed sheets generally – and surveys suggest some ambiguity about how consumers use marks in constructing search queriesFootnote 54 – one would have gotten precisely what one wanted. It is at least arguable that economic efficiency is served by derogating from exclusive use of the UTOPIA mark. That is, trademarks have become so meaningful to consumers that they have acquired important informational functions for third parties in the economy. As such, assessing the economic effect of arrogating control to a single producer becomes more complex.
2. Speech concerns
The importance of brands has not only heightened the need to reconsider the scope of rights for reasons of competition. In our brand-conscious environment, trademarks have become extremely effective tools of communication. They compress huge amounts of information into extremely short amounts of time and space. This makes trademarks very valuable as tools of expression and communication.
For example, 35 years ago, a group of gay and lesbian sporting enthusiasts wished to start a regular sports event to dispel the myth that gay, lesbian and bisexual communities did not include many who possessed sporting prowess. They proposed to call this event the “GAY OLYMPICS”. Ultimately, the US Supreme Court upheld the right of the US Olympic Committee to stop that use,Footnote 55 but the alternatives clearly did not communicate the political message nearly as efficiently. As Judge Alex Kozinski explained in his dissent from denial of rehearing en banc at the Ninth Circuit, “The Best and Most Accomplished Amateur Gay Athletes Competition” just does not quite make the same point.Footnote 56 Again, this is not a new concern: the Gay Olympics case was 35 years ago. However, in an environment where brands have become increasingly valuable signals for social values about which we wish to communicate, these become more weighty concerns.
It should perhaps thus be no surprise that the US Supreme Court has recently re-entered the fray on this point. But more telling about the role of brands in our contemporary society is that, in two recent cases, the court held that constitutional free-speech principles mandated the grant of trademark registrations to applicants who wished to use the marks politically, whether in order to reclaim offensive terms for minority communities or to use vulgar language expressively.Footnote 57 A third challenge of this nature is pending in Vidal v Elster, where the Court is considering a challenge to denial of registration of TRUMP TOO SMALL for T-shirts by a person not named Trump under a provision that prohibits registration of a mark that “[c]onsists of or comprises a name, portrait, or signature identifying a particular living individual except by his written consent”.Footnote 58
The cases decided by the Supreme Court to date have provided no clear answer on the test the Court will apply to First Amendment challenges to trademark laws. But the latest cases presented to the Court highlight the multi-sided nature of the speech inquiry in a brand-suffused marketplace of ideas. Most recently, the Court sidestepped the core First Amendment challenge in Jack Daniel’s, when the defendant producer of dog toys that parodied large brands argued that free-speech principles should require the Court to adapt standard infringement analysis and permit the sale of its product.Footnote 59 But it is expected that defendants in dilution claims will challenge the compatibility of such claims with the First Amendment in the near future, requiring the Court to flesh out further how trademark law reconciles consumer protection with the enhanced importance of brands for a wide range of actors seeking to speak in the marketplace.Footnote 60
C. Alternative Approaches
If the increased importance of trademarks both in economic and non-economic terms means that trademark law should not simply defer to any evolution in consumer uses of marks, a new way is needed to approach the question of how to ensure that consumers “get what they want”. This section considers three possibilities:
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(1) first, redefining actionable harm by defining “what consumers want” as a matter of law;
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(2) second, broadening the notion of “what consumers want” to encompass concerns other than those presently considered by courts; and
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(3) third, recognising that “what consumers want” is only part of the broader objectives of trademark law.
1. Redefining the harm
One way to detach trademark law from evolutions in consumer understandings would simply be to ignore what consumers actually want and define, as a matter of policy, which consumer desires should be valued and protected by law as a normative matter. It is not uncommon to exclude whole categories of harm from liability as a matter of law so, it might be argued, a similar approach could be taken in trademark law.Footnote 61
Some scholars have argued for a materiality requirement for trademark infringement claims, which would restrict liability only to confusion that was material to a consumer’s purchase decision.Footnote 62 This might, for example, preclude causes of action founded upon initial interest confusion. This could address the problems caused by reformulating the consumer protection rationale in terms of search costs, because having to think harder as a shopper – as Judge Posner might put it – would not necessarily affect the purchase decision. However, the scope of protection would still partially remain hostage to consumer understanding, because a range of extraneous factors might be (or later become) material to modern consumers’ purchase decisions.
Another approach is to define the type of confusion that is actionable. Some scholars have argued that confusion regarding approval or endorsement should not be actionable;Footnote 63 as a matter of law, consumers would not want goods because they are endorsed or approved by a particular person. Leaving to one side whether such a reform would be consistent with international instruments,Footnote 64 trademark scholars have advanced few convincing arguments – besides embracing relatively elitist assertions about why one should not purchase goods on the basis of celebrity endorsements – for why the basis for one consumer’s purchasing decision should be valued more highly than the basis for another consumer’s decision.
2. Looking at benefits
Rather than narrowing the scope of legally relevant consumer concerns, an alternative new approach to ensuring consumers get what they want might involve broadening the way that courts examine consumer concerns. Thus, a consumer may want more than certainty about who made a product, who endorses and is profiting from it, and guarantees about its exclusivity.
In addition to those consumer interests, which we might term “assurance interests”, consumers may want the products to be available at a competitive price; indeed, absent such competition, some consumers may be unable to purchase the products regardless of how much they want to do so. Consumers may want to be able to compare goods so that they can obtain the one that is best for them, a task perhaps aided by the ability of third parties to use a trader’s mark. They may value choice more highly than assurance. They may want certainty that the product they buy is compatible or interoperable with another product.
In short, what consumers want may involve much more than offering the maximum amount of paternalism. At the very least, that might not be all they want. It is unnecessary to jettison the notion that consumers want protection from deception or confusion in order to recognise that what they want may actually be a much more complex inquiry.
Professor Mike Grynberg has argued that trademark litigation should be understood as what he calls “consumer conflict”.Footnote 65 He suggests that trademark disputes are battles between the interests of confused consumers and those of the non-confused (often, a majority) or between different consumer interests (certainty versus choice, for example). Such an understanding, he argues, would minimise the paternalism that might naturally flow from the rhetorical seduction of vindicating the interests of consumers. Grynberg tries to recast several current doctrines in these terms and urges courts to view trademark disputes through the lens of consumer conflict. In specific cases, the notion that courts should act as referees between competing classes of consumers raises various difficulties of application. Further, as observed previously, trademark law has arguably not been helped by delving too deeply or empirically into the reactions of actual consumers. To broaden that empirical inquiry therefore seems unwise. Nevertheless, Grynberg is right to identify this basic assumption: if trademark law is concerned with consumers’ interests, it is somewhat myopic to elevate the assurance interests over all others. However, those interests may be better protected by legal doctrines than yet more empirical inquiries.
3. Situating consumer protection rationales within a broader framework
A final alternative approach to “ensuring consumers get what they want” is to reconsider where that objective fits in the larger scheme of trademark and unfair competition law.
As a starting point, this article suggests that courts should think of consumer confusion less empirically and more as a vehicle through which to make informed policy judgments about appropriate levels of market regulation. Mark McKenna has argued that historically, while consumer confusion did involve an empirical inquiry, it was directed more at identifying the evidence which showed harm to the producer, such as lost sales. McKenna suggests that a better balance might be struck by insisting more rigorously on the existence of producer harm.Footnote 66 It is unclear whether limits to the scope of protection are any easier to find by looking at the harms, or lack thereof, suffered by the producer as opposed to those suffered by consumers. After all, producers suffer harms from legitimate competition and legitimate criticism, and the language of harms offers little assistance in drawing the line between “pirates and cheats” on the one hand, and “competitors and critics” on the other. Drawing a principled line is hard.
Accordingly, treating the consumer protection rationale as merely an evidentiary device for ascertaining producer harm seems at first blush unlikely to lead easily to appropriate limits on trademark rights.Footnote 67 A better approach may be to focus on accentuating two existing aspects of trademark law: first, courts deciding trademark cases have historically allowed their decisions to be informed by a range of values other than simply ensuring that consumers get what they want; and, second, trademark law is part of the broader law of unfair competition.
Other values. Courts and legislatures have often articulated (or relied on) values that are relevant to, and that might support limits on, trademark law by setting up a countervailing interest that needs to be balanced against paternalistic forms of consumer protection. Examples include allowing free speech, valuing free competition, facilitating public health concerns, enabling artistic creativity, allowing comparative advertising, offering certainty for innovators, avoiding the chill of abuse of rights in litigation, and respecting commercial ethics. One can find these values, and many more, in trademark history, with varying levels of judicial enthusiasm in different countries at different times.Footnote 68 Often, these values have received explicit doctrinal recognition; sometimes they are implicit or embedded deep in decisions. But as trademark law comes to affect so much of the social and economic fabric of our lives, it becomes ever more important to validate them, perhaps much more explicitly than before.
Importantly, courts have been willing to give effect to such values even though sometimes this might interfere with ensuring that consumers get what they want. For example, American courts implicitly override (some levels of) confusion by confining liability under classic trademark infringement to uses that would confuse an “appreciable number of ordinarily prudent purchasers”. Likewise, under the functionality doctrine, if a mark is functional it will be unprotected by trademark law notwithstanding that it might have meaning for some consumers as a source-identifier. This doctrine, long-accepted in the US as a mechanism to protect competition, is reflected in the EU Trade Mark Directive and the UK Trade Marks Act 1994.Footnote 69 Indeed, in the US, this approach reaches its apotheosis in the context of a product shape covered by an expired patent, where consumers may well have developed source identification because of patent-conferred exclusivity, but for competing policy reasons trademark law allows the shape to be copied.Footnote 70 The US Supreme Court has interpreted the fair use defence to allow a competitor to make a descriptive use of a mark without bearing the burden of showing that the use would not be likely to confuse consumers.Footnote 71
The broader law of unfair competition. A second aspect of trademark law of which courts should not lose sight is that trademark law is but one subspecies of the broader body of unfair competition law. By its name, this body of law recognises that uses of trademarks are regulated to ensure an appropriate environment of competition.Footnote 72 In its strong form, one might argue that trademark rights should be subservient to this objective, as Laddie J. observed in Wagamama Ltd. v City Centre Restaurants Plc.: “what justifies the monopoly is not the monopoly itself but the extent to which it gives, or is hoped to give, a benefit to commerce which compensates for the temporary restraint on competition. The monopoly is an adjunct to, and is designed to promote, commerce.”Footnote 73
In O2 Holdings Ltd. v Hutchison 3G Ltd., Jacob L.J. also noted the connection between trademark rights and competition in the context of a dispute about the scope for use of a rival’s trademark in comparative advertising. Jacob L.J. identified the underlying policy issue in the following terms: “the question deep down involves a decision based upon the philosophy of how competitive the law allows European industry to be”.Footnote 74
Of course, viewing trademark claims simply through the lens of competitive effect presents interpretative challenges. Trademark law is part of unfair competition law, not simply competition law. “Fairness” is capable of quite varied understanding.Footnote 75 The passage from the Senate Report quoted at the start of this article also spoke about ensuring that, “where the owner of a trademark has spent energy, time, and money in presenting to the public the product, he is protected in his investment from its misappropriation by pirates and cheats”.Footnote 76 It requires some degree of methodological myopia to limit the category of such defendants to “those who increase search costs for consumers and thus impede the efficiency of the marketplace”, as advocates of law and economics are wont to do. Moreover, the meaning of “unfair competition” has neither been uniform internationallyFootnote 77 nor stable domestically.Footnote 78 Within the US, it took only two decades for the US Supreme Court to move from an approach grounded in misappropriation to one focused on misrepresentation.Footnote 79 In reverse, although the UK courts have steadfastly resisted much movement away from a misrepresentation-based law of passing off towards a law of unfair competition focused on misappropriation, the adoption of an unfair advantage claim during the period that the UK was within the EU may have installed something of the sort in UK trademark law.Footnote 80
These challenges are not insurmountable, however. And having regard to the relationship of trademark law and unfair competition should be embraced if it offers new means of mediating the variety of concerns at issue with the modern use of brands. One of the most notable evolutions of the twentieth century was the slow incorporation of unfair competition claims into the body of US trademark law proper. This assimilation of trademark and unfair competition principles is particularly pronounced in the US – in part because of its retention of a use-based system of trademarks – but in many trademark systems a host of claims that might have been pursued under the heading of unfair competition and passing off have now been brought within trademark law.Footnote 81 If that is the case, then regard for competition, and some of the lawmaking dynamics that characterised unfair competition law, should surely be given even more prominence in the trademark law calculus. This would not only allow dynamic development of the law in accordance with the complexity of the evolving commercial and social landscape, but might alert current courts to the range of policy levers that can be deployed to balance competing values.Footnote 82
IV. Institutional Issues
The recognition of other values at play in trademark law might be thought to create uncertainty and other difficulties in trademark adjudication. To the extent these arguments are addressed to legislatures, this is a smaller problem; legislatures make difficult value judgments all the time. To the extent that courts are asked to start making these judgments, there is a risk that this will overstep their practical competence and legitimacy.
In the US, this is less troubling because of the theory underlying the Lanham Act. Trademarks exist as a matter of common law; the Lanham Act is primarily a device by which to facilitate federal registration and enforcement of rights already recognised at common law.Footnote 83 The Lanham Act was, in essence, a delegating statute.Footnote 84 As Judge Pierre Leval has put it: “The words of the statute simply will not provide the answers and were not intended by the legislature to do so. In passing delegating statutes, legislatures recognize that they function together with courts in a law-making partnership, each having its proper role.”Footnote 85
Although unfair competition law has largely been assimilated within US trademark law, the assimilation has been less complete in the UK. The evolution of passing off, some of the tenets of which (such as protection of product design or the development of dilution claims) might now have been incorporated into the trademark regime established by implementation of the different EU Trade Mark Directives, has rested much more firmly in the hands of the national judiciary. As Laddie J. said, passing off “is a judge-made law” which “responds to changes in the nature of trade”.Footnote 86 His Honour noted that this is important because “the commercial environment is in a constant state of flux”.Footnote 87
To what extent can it be argued that there is at least a sufficient convergence such that some of the adjudicatory influences might appropriately leak from one to the other? If so, it surely cannot mean that the only adaptations of the law to the commercial environment that can result are those that effect expansions of mark owners’ rights, since the rights of traders include the rights of competitors. Adaptation is not a synonym for aggrandisement.
In his opinion in Erven Warnink B.V. v J. Townend & Sons (Hull) Ltd. (No. 1), Lord Diplock noted that:
Where … there can be discerned a steady trend in legislation which reflects the view of successive Parliaments as to what the public interest demands in a particular field of law, development of the common law in that part of the same field which has been left to it ought to proceed upon a parallel rather than a diverging course.Footnote 88
This commendable principle of lawmaking efficiency surely applies with equal force to interpreting statutory regimes that transpose directives and rationalise common law rules. As Jacob J. said in Philips Electronics N.V. v Remington Consumer Products Ltd.:
We now have a new European law and one cannot get any help from the details of the old law of any particular European country. But it does not follow that the sort of concepts and safeguards provided for in the old laws (or indeed the laws of countries outside the European Union) have no place under the law. On the contrary one is bound to bump up against the same sort of problem under the new law as under other laws. For some matters are basic to any rational law of trade marks.Footnote 89
One possibility is to extrapolate general principles of fair competition from those endorsed in individual legislative instruments, such as specific conditions of the Comparative Advertising Directive.Footnote 90 Could Parliament’s embrace of principles of consumer choice inform a view of what a consumer wants, or could one rely on Parliament’s adoption of laws protecting freedom of expression to inform the scope of trademark rights? It might even be possible for the insistence upon proof of harm found in unfair competition law to inform trademark law.
V. Conclusion
To argue for such judicial creativity is certainly harder in the UK than on the other side of the Atlantic. As a result, submissions that might in the US be made to courts might, in the UK, need to be addressed instead to the legislature. However, regardless of the audience, the message should be clear: ensuring consumers get what they want is what trademark law has long been, and should still be, about. But it is not all that trademark law is about.
