Owning mark(et)s

Michigan Law Review

Volumn 109, Issue 2, 2010, Pages 137-190

  Lemley, Mark A ^a   McKenna, Mark P ^b  

^a STANFORD LAW SCHOOL   (United States)

^b NOTRE DAME LAW SCHOOL   (United States)

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EID: 78149383425     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Note

References (218)

1. Press Release, DEWALT Partners with Eurosport to Launch New Compact Lithium Cordless Products (Oct. 6, 2009), http://www.hispanicprwire.com/News/in/15642/18/dewaltpartners-with-eurosport-to-launch-new-compact%20-lithium-cordless-products (internal quotation marks omitted). Black & Decker focused these marketing efforts primarily on "key Hispanic markets": Chicago, Houston/Austin, and Miami. Id.
2. Id. The Mexican national team is often referred to by its nickname, El Tricolor. See, e.g., La Plaza, http://latimesblogs.latimes.com/laplaza/2009/08/mexico-shows-us-is-no-match-insoccer.html (Aug. 13, 2009, 10:25 PST).
3. Complaint at 38, Soccer United Mktg., L.L.C. v. Black & Decker Corp., No. 09-CIV-10378 (S.D.N.Y. Dec. 22, 2009).
4. Id. at 15, 31.
5. Id. at 31, 36.
6. See infra notes 35-39 and accompanying text (discussing these cases).
7. See Mark P. McKenna, Testing Modern Trademark Law's Theory of Harm, 95 Iowa L. Rev. 63, 114-15 (2009) (describing marketing studies focusing on brand alliances and concluding that consumers do not routinely blame a host brand for its partner's mistakes).
8. Mark A. Lemley & Mark McKenna, Irrelevant Confusion, 62 Stan. L. Rev. 413, 436-46 (2010).
9. Complaint, supra note 3, at 37. See infra notes 16-24 and accompanying text.
10. United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97 (1918) ("The asserted doctrine is based upon the fundamental error of supposing that a trade-mark right is a right in gross or at large, like a statutory copyright or a patent for an invention, to either of which, in truth, it has little or no analogy.").
11. Lemley & McKenna, supra note 8, at 429-32; McKenna, supra note 7 at 1010-14
12. cf. Rebecca Tushnet, Gone in Sixty Milliseconds: Trademark Law and Cognitive Science, 86 Tex. L. Rev. 507 (2008) (demonstrating the weakness of empirical evidence of dilution).
13. Lemley & McKenna, supra note 8, at 432-35, 449-56.
14. See infra Section III.B and sources cited therein.
15. See William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 167-68 (2003)
16. Nicholas Economides, Trademarks, in 3 The New Palgrave Dictionary of Economics and the Law 601, 602 (Peter Newman ed., 1998) (describing the savings for consumers in product searches as one of "[t]he primary reasons for the existence and protection of trademarks")
17. Nicholas S. Economides, The Economics of Trademarks, 78 Trademark Rep. 523, 525-27 (1988) (discussing the economic benefits of marks that apprise consumers of products' unobservable features)
18. William M. Landes & Richard A. Posner, Trademark Law: An Economic Perspective, 30 J.L. & Econ. 265, 268-70 (1987) (identifying the lowering of brand recognition costs to consumers as the justification for trademark law)
19. Mark A. Lemley, The Modern Lanham Act and the Death of Common Sense, 108 Yale L.J. 1687, 1690-94 (1999) (describing economic justifications for trademarks and advertising)
20. I. P. L. Png & David Reitman, Why Are Some Products Branded and Others Not?, 38 J.L. & Econ. 207, 208-11, 218 (1995) (analyzing empirical search cost data and suggesting that "consumers of products subject to performance uncertainty will pay for brand-name assurance")
21. John F. Coverdale, Comment, Trademarks and Generic Words: An Effect-on-Competition Test, 51 U. Chi. L. Rev. 868, 869-70 (1984) (noting that trademark law encourages competition, which potentially decreases the cost to consumers)
22. Brian A. Jacobs, Note, Trademark Dilution on the Constitutional Edge, 104 Colum. L. Rev. 161, 164 (2004) (noting search costs rationale)
23. see also Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 163-64 (1995) (explaining that trademark law "reduce[s] the customer's costs of shopping and making purchasing decisions," and "helps assure a producer that it (and not an imitating competitor) will reap the financial, reputation-related rewards associated with a desirable product") (internal quotation marks omitted)
24. Union Nat'l Bank of Tex., Laredo v. Union Nat'l Bank of Tex., Austin, 909 F.2d 839, 844 (5th Cir. 1990) ("The idea is that trademarks are 'distinguishing' features which lower consumer search costs and encourage higher quality production by discouraging free-riders.")
25. cf. Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 205 (1942) ("A trademark is a merchandising short-cut which induces a purchaser to select what he wants, or what he has been led to believe he wants.").
26. Lemley & McKenna, supra note 8. For a detailed analysis of the relevant marketing literature, see McKenna, supra note 7.
27. Schechter clearly accepted this proposition: Quite apart from the destruction of the uniqueness of a mark by its use on other goods once a mark has come to indicate to the public a constant and uniform source of satisfaction, its owner should be allowed the broadest scope possible for 'the natural expansion of his trade' to other lines or fields of enterprise. Frank I. Schechter, The Rational Basis of Trademark Protection, 40 Harv. L. Rev. 813, 823 (1927).
28. See infra notes 160-168 and accompanying text. This was indeed the result in an early case, Borden Ice Cream Co. v. Borden's Condensed Milk Co., 201 F. 510, 514 (7th Cir. 1912), though we are quite confident courts would not reach the same result today. See Lemley & McKenna, supra note 8, at 428 & n.59.
29. We thank Stacey Dogan for suggesting this alternative preemption argument. Indeed, because the traditional likelihood of confusion test includes the likelihood that the plaintiff will expand into the defendant's market as a factor, AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 354 (9th Cir. 1979)
30. Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961), there is arguably no reason to assert market preemption as a separate theory of injury except in the very cases in which that expansion is unlikely. In the geographic context, the Lanham Act has long permitted such concurrent uses. See 15 U.S.C. § 1057(c) (2006).
31. We explained this in Irrelevant Confusion. See Lemley & McKenna, supra note 8, at 433-36.
32. IIA Phillip Areeda et al., Antitrust 349a (3d ed.).
33. See Am. Geophysical Union v. Texaco, Inc., 60 F.3d 913 (2d Cir. 1994)
34. Mark A. Lemley, Should a Licensing Market Require Licensing?, 70 Law & Contemp. Probs. 185 (2007).
35. See Borden Ice Cream Co. v. Borden's Condensed Milk Co., 201 F. 510 (7th Cir. 1912) (rejecting the plaintiff's claim that use of the BORDEN mark for ice cream infringed its rights in BORDEN for milk and related products)
36. see also James Love Hopkins, The Law of Trademarks, Tradenames and Unfair Competition § 3, at 12 (2d ed. 1905) ("The qualified right in the tradename [or a trademark],-a right to prevent a defendant from passing off his goods as those of the plaintiff by the use of it-exists only with regard to goods of the kind for which the plaintiff uses it, and to which the connection with his business suggested by the use of the name extends." (quoting Duncan M. Kerly, The Law of Trademarks, Trade-name, and Merchandise Marks 475 (2d ed. 1901). 247 F. 407 (2d Cir. 1917).
37. Id. at 410.
38. Id. at 409-10.
39. 166 F.2d 348 (9th Cir. 1948). Id. Because geographically remote uses cannot divert trade that otherwise would have gone to the mark owner, trademark law traditionally limited a party's rights to the geographic areas in which it actually used a mark. See, e.g., Thomas J. Carroll & Son Co. v. McIlvaine & Baldwin
40. Stork Rest., Inc., 166 F.2d at 356. 611 F. Supp. 360 (W.D. La. 1984).
41. Id. at 368. 544 F.2d 1167 (2d Cir. 1976).
42. Id. at 1172.
43. Id. The court identified two other relevant interests: the mark owner's interest in "protecting the good reputation associated with his mark from the possibility of [it] being tarnished by inferior merchandise of the junior user," and the "public's interest in not being misled by confusingly similar marks." Id.
44. See generally Stacey L. Dogan & Mark A. Lemley, The Merchandising Right: Fragile Theory or Fait Accompli?, 54 Emory L.J. 461 (2005) (discussing the recent vintage of merchandising claims).
45. 510 F.2d 1004 (5th Cir. 1975).
46. Id. at 1011.
47. Boston Athletic Ass'n v. Sullivan, 867 F.2d 22, 33 (1st Cir. 1989)
48. see also Univ. of Ga. Athletic Ass'n v. Laite, 756 F.2d 1535, 1547 (11th Cir. 1985) (enjoining use of Battlin' Bulldog beer when "the confusion stems not from the defendant's unfair competition with the plaintiff's products, but from the defendant's misuse of the plaintiff's reputation and good will as embodied in the plaintiff's mark"); Sigma Chi Fraternity v. Sethscot Collection, No. 98-CV-2102, 2000 WL 34414961, at *9 (S.D. Fla. Aug. 7, 2000) ("[T]he confusion factor is met where, as here, the registered mark...is the triggering mechanism for the sale of the product."); cf. Univ. Book Store v. Bd. of Regents, 33 U.S.P.Q.2d (BNA) 1385 (T.T.A.B. June 22, 1984) ("[The] antiquated view of trademarks as harmful monopolies which must be rigorously confined within traditional bounds [is] outmoded and not in accordance with more recent cases.").
49. Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d 465, 477-78 (5th Cir. 2008) (holding that universities' color schemes are protectable and thatothers' use of those colors on t-shirts evoking the universities infringed their rights). Id. at 488.
50. Judge Learned Hand famously described the difference between protectable and unprotectable characters in Nichols v. Universal Pictures Corp. If Twelfth Night were copyrighted, it is quite possible that a second comer might so closely imitate Sir Toby Belch or Malvolio as to infringe, but it would not be enough that for one of his characters he cast a riotous knight who kept wassail to the discomfort of the household, or a vain and foppish steward who became amorous of his mistress. These would be no more than Shakespeare's "ideas" in the play, as little capable of monopoly as Einstein's Doctrine of Relativity, or Darwin's theory of the Origin of the Species. It follows that the less developed the characters, the less they can be copyrighted; that is the penalty an author must bear for marking them too indistinctly. 724 F.2d 327 (2d Cir. 1983).
51. Id. at 334 ("It is because of that association, the identification of the toy car with its source, Warner's television series, that the toy car is bought by the public. That is enough [for an infringement claim against an imitator].").
52. See, e.g., DC Comics Inc. v. Unlimited Monkey Bus., 598 F. Supp. 110 (N.D. Ga. 1984)
53. DC Comics Inc. v. Filmation Assocs., 486 F. Supp. 1273 (S.D.N.Y. 1980).
54. Filmation, 486 F. Supp. at 1276-77. For criticism of these decisions
55. see Valerie McConnell, The Expansion of Trademark Rights in Graphic Characters and the Need for a Trademark Misuse Defense (working paper 2010) (on file with author). 468 F.3d 405 (6th Cir. 2006).
56. Id. at 405. Lanard originally produced and sold a toy vehicle called the "Mudslinger,"which was modeled after the Humvee, including a similar grille design. In fact, the box for the Mudslinger referred to the toy vehicle as a "Hyper Humvee." After correspondence with AM General, however, Lanard agreed to stop using the "Humvee" name on its toys. Lanard continued to manufacture the Mudslinger toy, but later ceased selling the Mudslinger and began producing another vehicle with a similar design called "THE CORPS! ATK." That toy was the subject of the lawsuit. Id. at 411.
57. Id. at 414.
58. Id. at 413.
59. Id. at 405. The court also rejected Lanard's functionality defense, finding that "the plain appearance of the vehicle shows that the elements which comprise its trade dress are inherently nonfunctional." Id. at 417. We don't know what "inherently non-functional" means either. This explains the court's findings that: The factors of "marketing channels used" and "likelihood of expansion of product lines" do not strongly favor either party....There appears to be no evidence of how the marketing for either product might overlap, and while General Motors states it has considered making Hummer toys, there is no real proof that the company is seriously considering this possibility. Id. at 414. It makes the finding on relatedness of goods rather odd, however.
60. Complaint, Paccar Inc. v. Malibu Int'l Ltd. (W.D. Wash. Apr. 8, 2009), available at http://seattletrademarklawyer.com/storage/Paccar%20Inc.%20v.%20Malibu%20International%20Ltd.%20-%20Complaint.pdf.
61. Id. at ¶ 16.
62. Graeme B. Dinwoodie & Mark D. Janis, Confusion Over Use: Contextualism in Trademark Law, 92 Iowa L. Rev. 1597, 1654 (2007).
63. See, e.g., Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009); Am. Airlines, Inc. v. Yahoo!, Inc., No. 4:08-CV-626-A, 2009 WL 381995 (N.D. Tex. Jan. 16, 2009); Google, Inc. v. Am. Blind & Wallpaper Factory, Inc., No. C 03-5340 JF (RS), 2007 WL 1159950 (N.D. Cal. April 18, 2007); Gov't Emps. Ins. Co. v. Google, Inc., 3 30 F. Supp 2d 700 (E.D. Va. 2004). As one of us has explained, aside from the "trademark use" issue, these claims ought to fail because they do not allege actionable infringement under the Lanham Act.
64. See Mark P. McKenna, Trademark Use and the Problem of Source, 2009 U. Ill. L. Rev. 773, 819-21 (noting that these cases fail to allege confusion about the source of the search engines' services).
65. See, e.g., Rescuecom, 562 F.3d at 129. 174 F.3d 1036 (9th Cir. 1999).
66. Id. at 1066.
67. Brookfield, 174 F.3d at 1062 ("[I]t is difficult to say that a consumer is likely to be confused about whose site he has reached or to think that Brookfield somehow sponsors West Coast's web site."). Id. (emphasis added).
68. 818 F.2d 254 (2d Cir. 1987).
69. Id. at 260.
70. Id. at 259. Importantly in that case, Mobil had used the name Pegasus in addition to its flying horse logo in its own oil business. Id. at 256. 141 F.3d 188 (5th Cir. 1998).
71. Id. at 204. 221 F.2d 464 (2d Cir. 1955).
72. Id. at 466.
73. J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 23:7, at 23-54 (4th ed. 2010). Au-Tomotive Gold Inc. v. Volkswagen of America, Inc., No. 08-16005, 2010 WL 1794018, at *5 (9th Cir. May 6, 2010).
74. See William McGeveran, Rethinking Trademark Fair Use, 94 Iowa L. Rev. 49, 66-71 (2008) (describing the ways courts tend to subject trademark defenses to the condition that the use not cause confusion). 2010 WL 1794018, at *4-5.
75. Id. at *4. This is consistent with Professor McCarthy's acknowledgement that the real concern in post-sale confusion cases is that "consumers could acquire the prestige value of the senior user's product by buying the copier's cheap imitation." McCarthy, supra note 75, § 23:7, at 23-54.
76. Au-Tomotive Gold, 2010 WL 1794018, at *5. The result is problematic as a pure doctrinal matter as well. The first-sale doctrine is a defense to a trademark cause of action. And a defense that does not apply whenever infringement is shown-which is what the court holds-isn't much of a defense. See KP Permanent Make-up, Inc. v. Lasting Impression I, 543 U.S. 111, 121 (2004) (rejecting a parallel conclusion by the Ninth Circuit about the fair use defense). This is the intuition expressed by Justice Breyer in the oral argument for American Needle, Inc. v. National Football League: And I just heard you say that...you want the Red Sox to compete in selling T-shirts with the Yankees; is that right? [MR. NAGER: The ability to compete. Yes.] Yes. Okay. I don't know a Red Sox fan who would take a Yankees sweatshirt if you gave it away. I mean, I don't know where you're going to get your expert from that is going to say there is competition...between those two products. I think they would rather-they would rather wear a baseball, a football, a hockey shirt. Transcript of Oral Argument at 17, 130 S. Ct. 2201 (No. 08-661), available at http://www. supremecourt.gov/ oral_argument_transcripts/08-661.pdf.
77. See Deere & Co. v. Farmhand, Inc., 560 F. Supp. 85, 96-98 (S.D. Iowa 1982), aff'd, 721 F.2d 253 (8th Cir. 1983) (finding the color green functional for front-end loaders because farmers prefer the coloring of their loaders to that of their tractors). See Wallace Int'l Silversmiths, Inc. v. Godinger Silver Art Co., 916 F.2d 76, 80-81 (2d Cir. 1990) (finding the design of Wallace's GRANDE BAROQUE line functional because baroque design elements are necessary to compete in the market for baroque silverware); see also Keene Corp. v. Paraflex Indus., 653 F.2d 822, 826 (3d Cir. 1981) (finding the design of a lighting fixture functional because it was designed to match the architecture of the building in which it was mounted).
78. Au-Tomotive Gold, 2010 WL 1794018, at &z.ast;6. This statement would be accurate, and unproblematic, if it were confined to cases in which the defendant's use caused confusion about the actual source of a product. Our ability to sell "M&M" candies for less than Mars, Inc., for example, should not lead courts to conclude that our use of the M&M mark does not infringe when applied to candies. But it's much different to say that trademark law protects Mars from competition from an ice cream shop that buys genuine M&M's and mixes them into its ice cream. See 15 U.S.C. § 1125(c).
79. See Dogan & Lemley, supra note 41. The other of us doubts the empirical premises on which this argument rests; cf. Tushnet, supra note 12 (exploring the foundations of blurring claims in cognitive science). But that's an argument for another day. See Jerre B. Swann, An Intuitive Approach to Dilution, 89 Trademark Rep. 907 (1999)
80. Jerre B. Swann & Theodore H. Davis, Jr., Dilution, An Idea Whose Time Has Gone; Brand Equity as Protectable Property, The New/Old Paradigm, 84 Trademark Rep. 267 (1994).
81. Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 429 (2003). Courts are not alone in this regard. Though he is careful to note that an investment in goodwill is not enough by itself to create trademark rights, Tom McCarthy, the author of the leading trademark treatise, argues that "[t]he creation of value in a trademark requires 'the expenditure of great effort, skill and ability' and a competitor should not be permitted to take a 'free ride' on the trademark owner's good will and reputation." 1 McCarthy, supra note 75, § 2:30, at 2-54. Ty Inc. v. Perryman, 306 F.3d 509, 512 (7th Cir. 2002). 306 F.2d 433 (5th Cir. 1962).
82. Id. at 437-38. But see Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449 (4th Cir. 1999) (rejecting a similar claim: that the Utah slogan "Greatest Snow on Earth" diluted the plaintiff's slogan "Greatest Show on Earth").
83. Anheuser-Busch, Inc. v. VIP Prods., LCC, 666 F. Supp. 2d 974 (E.D. Mo. 2008). Amazingly, the court also found for Anheuser-Busch on likelihood-of-confusion grounds after crediting Anheuser-Busch's survey, which purported to show "that 30.3% of those surveyed had the mistaken belief that 'Buttwiper' is made or put out by or with the approval or sponsorship of the maker of 'Budweiser'-Plaintiff-or that there is a business relationship between the maker of 'Budweiser' and the maker of 'Buttwiper.'" Id. at 983.
84. See Sarah Netter, The North Face vs. The South Butt: Entrepreneurial Teen Undaunted by Lawsuit Threat, ABCNEWS, Oct. 1, 2009, http://abcnews.go.com/Business/teens-south-buttapparel-irks-north-face/story?id=8712101.
85. Trade-marks Act, R.S.C., ch. T-13, § 22(1) (2010) ("No person shall use a trade-mark registered by another person in a manner that is likely to have the effect of depreciating the value of the goodwill attaching thereto.").
86. Clairol Int'l Corp. v. Thomas Supply & Equip. Co., [1968] 2 Ex. C.R. 552. Case C-487/07, L'Oréal SA v. Bellure NV, 2009 ECJ EUR-Lex LEXIS 532. 100. As Dev Gangjee and Robert Burrell state: It must be remembered that the [Misleading and Comparative Advertising Directive
87. ("MCAD")] exists to prevent a blanket prohibition on comparative advertising and the default position under the MCAD is that such advertising is allowed. By adopting an expansive reading of Art. 3a(1)(h), the "imitations and replicas" exclusion, the ECJ may have insulated reputed marks from a range of competitive comparisons.
88. Dev Gangjee & Robert Burrell, A Brief Note on L'Oreal and the Prohibition on Free Riding 14 (Dec. 9, 2009) (unpublished manuscript), available at http://ssrn.com/abstract=1491402. Though we rather doubt they can. On the merits of these various claims, see, for example, Lemley & McKenna, supra note 8 (sponsorship or affiliation claims); Dogan & Lemley, supra note 41 (merchandising)
89. Stacey L. Dogan & Mark A. Lemley, Trademarks and Consumer Search Costs on the Internet, 41 Hous. L. Rev. 777 (2004) (keyword advertising)
90. Eric Goldman, Deregulating Relevancy in Internet Trademark Law, 54 Emory L.J. 507 (2005)
91. Michael Grynberg, The Road Not Taken: Initial Interest Confusion, Consumer Search Costs, and the Challenge of the Internet, 28 Seattle U. L. Rev. 97 (2004) (initial interest confusion)
92. Alex Kozinski, Trademarks Unplugged, 68 N.Y.U. L. Rev. 960 (1993) (luxury goods and post-sale confusion).
93. Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449, 459 (4th Cir. 1999) ("[W]e simply cannot believe that, as a general proposition, Congress could have intended, without making its intention to do so perfectly clear, to create property rights in gross, unlimited in time (via injunction), even in 'famous' trademarks."). To that end, the Supreme Court has held: There is no such thing as property in a trade-mark except as a right appurtenant to an established business or trade in connection with which the mark is employed. The law of trademarks is but a part of the broader law of unfair competition; the right to a particular mark grows out of its use, not its mere adoption; its function is simply to designate the goods as the product of a particular trader and to protect his good will against the sale of another's product as his; and it is not the subject of property except in connection with an existing business. United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 97 (1918).
94. See Swann & Davis, supra note 89, at 269 (recognizing that courts fudge the likelihoodof-confusion analysis in cases in which the defendant is perceived to have taken a free ride). Swann and Davis argue that "[g]iven the current economic function and acceptance of trademarks, and recognition of their value and performance in the market place," evidence of the defendant using the mark as a "triggering mechanism" to capitalize on the good will created by the plaintiff "alone should mandate relief whether or not confusion is present." Id. 106. Sections III.A and B are adapted from McKenna, supra note 7, and Lemley & McKenna, supra note 8.
95. The few studies that have found some effect on global brand assessments have involved umbrella branding of extremely closely related products. In one study, for example, Tülin Erdem estimated a model using scanner data regarding purchases of umbrella-branded toothbrushes and toothpaste.
96. Tülin Erdem, An Empirical Analysis of Umbrella Branding, 35 J. Marketing Res. 339, 347 (1998).
97. Erdem concluded that variance in the quality of toothbrushes given away as free samples from the owner of a known toothpaste brand had some cross-category effects (i.e., consumers updated their quality expectations of the toothpaste and bought less of it). But even here the effects were "small in magnitude," and that was in a study in which the brand owner explicitly tied the extension product to the core product. Any uses that would fall in this category of sufficiently closely related uses almost certainly fall within the zone we describe in Irrelevant Confusion. Lemley & McKenna, supra note 8.
98. See Sanjay Sood & Kevin Lane Keller, The Effects of Brand Name Structure and Product Experience on Brand Extension Evaluations and Parent Brand Dilution (unpublished manuscript) (draft on file with authors). Sood and Keller tested extensions of the Pepsi and Tropicana brands to vitamin fortified cola and sodium free orange juice. Subjects in their pretest regarded vitamin fortified cola as similar to Pepsi but dissimilar to Tropicana, and sodium free orange juice as dissimilar to Pepsi and similar to Tropicana. Sood and Keller tested these similar and dissimilar extensions under family branding (Tropicana cola) and sub-branding (Quencher by Tropicana cola) conditions. They found that "dilution effects in parent brand evaluations are evident only when consumers 1) have a negative experience with a brand extension that 2) has a high degree of similarity (e.g., in the case of a family-branded line extension)." Id. at 21. Sood and Keller also find that "sub-branding strategies can offer the 'best of both worlds' by both enhancing extension evaluations and protecting the parent brand from any unwanted negative feedback." Id. at 22. See infra note 146. Thus, for example, Joseph Chang found that the general brand image of the parent brand of Sprite products was diluted by both of two unfavorable extension products: Sprite orangeades and Sprite washing-up liquids.
99. Joseph W. Chang, Will a Family Brand Image be Diluted by an Unfavorable Brand Extension? A Brand Trial-Based Approach, 29 Advances Consumer Res., 299, 302 (2002). At the same time, however, neither unfavorable extension diluted the image of Sprite lemonades, the original product offered under the parent brand. Id. Congruence here is defined in terms of keeping with the dominant concept of the brand, which is conceived of as primarily functional, symbolic, or experiential. Congruence differs from product category-related effects in that an extension could be seen as incongruent even when it is in a similar product class. Consumers, for example, might regard a new Rolls-Royce economy car as incongruent with the Rolls-Royce brand image, even though the new car is in the same broad category as Rolls-Royce luxury vehicles. Helge Thorbjørnsen, Brand extensions: brand concept congruency and feedback effects revisited, 14 J. Product & Brand Mgmt. 250, 250-51 (2005)
100. Thorbjørnsen, supra note 111. Sjödin & Törn, supra note 111.
101. See Stephen J. Hoch, Product Experience Is Seductive, 29 J. Consumer Res. 448, 451 (2002) ("Using a simply associative learning procedure, [researchers] showed that, in a few trials, people learn brand associations that later block the learning of new predictive attribute associations.").
102. Even Jacob Jacoby, perhaps dilution's biggest proponent, admits that truly well-known marks are essentially unshakable.
103. Maureen Morrin & Jacob Jacoby, Trademark Dilution: Empirical Measures for an Elusive Concept, 19 J. Pub. Pol'y & Marketing 265, 274 (2000) ("It appears that very strong brands are immune to dilution because their memory connections are so strong that it is difficult for consumers to alter them or create new ones with the same brand name."). There is abundant evidence outside the branding context of the robustness of initial judgments.
104. See, e.g., Jon D. Hanson & Douglas A. Kysar, Taking Behavioralism Seriously: The Problem of Market Manipulation, 74 N.Y.U. L. Rev. 630, 646-54 (1999) (discussing a number of empirical demonstrations of the persistence of initial judgments, even in the face of contradictory or ambiguous hard data). Even conscious consumers who try to reason through additional information are unlikely to change their perceptions; attempts at rationalization may actually serve to increase confidence in a faulty intuitive judgment, a phenomenon known as confirmation bias. See id. at 647-50, 660-62
105. Nicholas Epley & Thomas Gilovich, The Anchoring-and-Adjustment Heuristic: Why the Adjustments are Insufficient, 17 Psychol. Sci. 311, 312 (2006) ("[P]eople evaluate hypotheses by trying to confirm them."). See Mark A. Lemley, Ex Ante Versus Ex Post Justifications for Intellectual Property, 71 U. Chi. L. Rev. 129, 146 (2004)
106. Justin Hughes, "Recoding" Intellectual Property and Overlooked Audience Interests, 77 Tex. L. Rev. 923, 961 (1999). For a discussion of the marketing literature on why these well-known marks are essentially impervious to harm, see McKenna, supra note 7, at 105. A significant upshot of this conclusion is that the preemption and free-riding arguments are particularly important in the context of well-known brands since the feedback arguments are even weaker for those brands.
107. Daniel J. Howard et al., The Effects of Brand Name Similarity on Brand Source Confusion: Implications for Trademarks Infringement, 19 J. Pub. Pol'y & Marketing 250, 257-58 (2000). Even these findings are probably overstated. The authors of the study tested confusion by showing participants a variety of goods, including two different bottles of drain cleaner and two different containers of car wax. They varied the difference between the two brands such that the second sometimes was similar in meaning (Hurricane vs. Cyclone) and sometimes in sound (Hurricane vs. Hurri-Drain). The authors then measured confusion about common source by telling study participants: The first set of products you reviewed yesterday included a brand of drain cleaner (car wax). The second set of products you just reviewed also included a brand of drain cleaner (car wax). How likely or unlikely is it that those two brands of drain cleaner (car wax) were made by the same company?"
108. Id. They then scored the responses on a seven-point scale ranging from "very likely" (1) to "very unlikely" (7). This formulation likely led to overstated levels of confusion generally, since the question seems to have primed respondents to consider common source. Confusion also was likely overstated because the authors used the same trade dress for all the test objects (both drain cleaners, for example). See id.
109. If Thorbjørnsen is right that high familiarity correlates with higher involvement, see Thorbjørnsen, supra note 111, then it seems likely that consumers are less likely to be confused about third-party uses that are similar to familiar brands only in sight or sound. See Lemley & McKenna, supra note 8, at 416.
110. Brand alliances are "partnership[s] between two entities in which efforts are combined for a common interest or to achieve a particular aim." Nicole L. Votolato & H. Rao Unnava, Spillover of Negative Information on Brand Alliances, 16 J. Consumer Psychol. 196, 196 (2006). Such partnerships can take many forms, but the two most common forms are joint promotions (e.g., McDonald's using Kung Fu Panda toys in its Happy Meals) and co-branding arrangements (e.g., Edy's Loaded Cookie Dough Ice Cream with Nestle Toll House cookie dough).
111. Id. at 198.
112. Previous research suggested that consumers might react differently to different types of negative information-information about competence, on the one hand, and moral misdeeds on the other. Id. at 197 (citing Tom J. Brown & Peter A. Dacin, The Company and the Product: Corporate Associations and Consumer Product Responses, 61 J. Marketing 68 (1997)
113. Bogdan Wojciszke et al., Effects of Information Content and Evaluative Extremity on Positivity and Negativity Biases, 64 J. Personality & Soc. Psychol. 327 (1993)). Specifically, this earlier research suggested that consumers react more negatively to competence-based information than moral failures when the target of the information is a company; just the reverse is true when the target of the information is a person. Id. at 197.
114. Id. at 201. These findings, as the authors also note, may help explain why spillover effects are not frequently reported in practice. Id. It is also worth emphasizing that respondents in this study were told explicitly that the partner had a relationship with the third party about which the negative information was provided. Thus, there was no ambiguity about affiliation-respondents understood that the partner was affiliated with the third party. Hence, spillover is unlikely to occur absent some information-additional information, beyond the mere fact of association-demonstrating the host brand's specific culpability. In other words, as Votolato and Unnava note, the evidence suggests that "consumers do not routinely blame a host brand for its partner's mistakes." Id. at 198.
115. See Kevin Lane Keller & David A. Aaker, The Effects of Sequential Introduction of Brand Extensions, 29 J. Marketing Res. 35, 47 (1992) (discussing the factors that contribute to a successful brand extension).
116. While in one study Keller and Aaker found that extensions from high-quality brands may be evaluated favorably even when they are somewhat more remote-that is, high-quality core brands "stretch farther"-the relatively dissimilar products in that study were still quite close to those offered under the core brand. See id. at 40-44 (testing extensions deemed close, medium, and far from the core brand product, where ice cream was the "far" extension of a brand known for potato chips); Sood & Keller, supra note 108.
117. Keller & Aaker, supra note 124, at 45.
118. David A. Aaker & Kevin Lane Keller, Consumer Evaluations of Brand Extensions, 54 J. Marketing 27, 30 (1990).
119. See id. Perceived expertise and trustworthiness are highly correlated and may depend on the perception of previous extensions. The effect of previous extensions on new extension evaluation appears to depend more on the success of the previous extensions than the relative similarity of the intervening extensions. Aaker and Keller found no differences in perceived credibility (and presumably in evaluations of proposed extensions) based on fit between an intervening extension and the core brand. See id.
120. Keller & Aaker, supra note 124, at 36-37. Concrete brand attribute associations relate to tangible product characteristics, and abstract brand attribute associations relate to intangible image characteristics.
121. Valarie A. Zeithaml, Consumer Perceptions of Price, Quantity, and Value: A Means-End Model and Synthesis of Evidence, 52 J. Marketing 2, 7 (1988).
122. Aaker & Keller, supra note 127, at 29. In the studies we report, the brand extensions are in fact made by the trademark owner, not by unauthorized third parties. See Laura R. Bradford, Emotion, Dilution, and the Trademark Consumer, 23 Berkeley Tech. L.J. 1227, 1264-66 (2008).
123. It is worth emphasizing that while third parties benefit from the familiarity of the known mark in these circumstances, that third party's very use may increase the brand's familiarity and benefit the mark owner in its market as well. See McKenna, supra note 7, at 110-12. Akshay R. Rao & Robert W. Ruekert, Brand Alliances as Signals of Product Quality, 36 Sloan Mgmt. Rev. 87 (1994)
124. Bernard L. Simonin & Julie A. Ruth, Is a Company Known By the Company It Keeps? Assessing the Spillover Effects of Brand Alliances on Consumer Brand Attitudes, 35 J. Marketing Res. 30 (1998).
125. David O. James et al., Does the Tail Wag the Dog? Brand Personality in Brand Alliance Evaluation, 15 J. Product & Brand Mgmt. 173, 174 (2006).
126. Id. at 175.
127. Id. at 176.
128. As we noted before, in Aaker and Keller's study, successful brand extensions increased evaluations of later extensions and of the core brand itself, at least when the core brand was of average quality. Aaker & Keller, supra note 127, at 43 (also noting that successful extensions had no impact on high-quality core brands). Id. at 46; Erdem, supra note 107, at 347. Notably, while unsuccessful intervening extensions affected consumer evaluations of future extensions, they did not affect evaluations of the core brand. Keller & Aaker, supra note 124, at 46. And even this risk regarding future evaluations appeared significant only for moderate-quality core brands. Unsuccessful extensions had no impact on evaluation of extensions by high-quality brands. An interesting parallel finding was that an unsuccessful extension, even when it affects credibility and prevents the core brand from expanding to less similar products, does not appear to prevent the core brand from "backtracking" and later introducing a more similar extension. Id. at 48. This may be because subjects tended to find the core brand owner equally credible even after receiving information about a brand extension they regarded as a bad fit. Id. at 45.
129. See Girish N. Punj & Clayton L. Hillyer, A Cognitive Model of Consumer-Based Brand Equity for Frequently Purchased Products: Conceptual Framework and Empirical Results, 14 J. Consumer Psychol. 124, 125 (2004) (stating that consumers tend to rely predominately on attitudes toward a brand when evaluating new products); see also Bradford, supra note 139.
130. Whether it is a legal injury is a question to which we turn in the next Part. Among countless examples, consider Dell, United, American, Delta, Apple, Amazon, and Visa (notwithstanding Judge Kozinski's claim in Visa Int'l that there is only one Visa). See Visa Int'l Serv. Ass'n v. JSL Corp., 610 F.3d 1088 (9th Cir. 2010).Lemley & McKenna, supra note 8, at 438-43.
131. The "endowment effect" refers to the difference in value people attach to goods when they own them as compared to when they are considering purchasing them. People are reluctant to part with their property, and as a result, the price at which they are willing to sell it generally far exceeds the amount that others are willing to pay to acquire it.
132. See Russell Korobkin, The Endowment Effect and Legal Analysis, 97 Nw. U. L. Rev. 1227, 1231-35 (2003). For a demonstration of the endowment effect in the context of creative works
133. see Christopher J. Buccafusco & Christopher Jon Sprigman, Valuing Intellectual Property: An Experiment, 91 Cornell L. Rev. (forthcoming 2010).
134. See generally David A. Armor & Shelley E. Taylor, When Predictions Fail: The Dilemma of Unrealistic Optimism, in Heuristics and Biases: The Psychology of Intuitive Judgment 334, 334 (Thomas Gilovich et al. eds., 2002) ("By a number of metrics and across a variety of domains, people have been found to assign higher probabilities to their attainment of desirable outcomes than either objective criteria or logical analysis warrants.").
135. See also Christopher J. Buccafusco & Christopher Jon Sprigman, The Creativity Effect, 78 U. Chi. L. Rev. (forthcoming 2010), available at http://ssrn.com/abstract=1647009 (finding that creators substantially overvalue their works as compared to mere owners and attributing the difference in substantial part to optimism bias of the creators).
136. Trademarks are devices used to brand goods; characters in a book usually don't serve that purpose. Indeed, even titles of movies and books are generally not treated as trademarks unless the title is common to multiple works in a series. See Herbko Int'l, Inc. v. Kappa Books, Inc., 308 F.3d 1156, 1162 n.2 (Fed. Cir. 2002) ("While titles of single works are not registrable, they may be protected under section 43(a) of the Lanham Act upon a showing of secondary meaning."); Sugar Busters LLC v. Brennan, 177 F.3d 258, 267-69 (5th Cir. 1999) (viewing single book titles as descriptive of the contents, and requiring proof of secondary meaning); Estate of Jenkins v. Paramount Pictures Corp., 90 F. Supp. 2d 706, 710 (E.D. Va. 2000), aff'd, 7 F. App'x 270 (4th Cir. 2001) ("[T]itles of expressive works are treated differently from other trademarks, in that titles, even if suggestive, arbitrary, or fanciful, nonetheless require secondary meaning to receive trademark protection, while other suggestive, arbitrary, and fanciful marks do not.").
137. See William P. Kratzke, Normative Economic Analysis of Trademark Law, 21 Mem. St. U. L. Rev. 199, 223 (1991) (arguing that declaring competitive behavior to be "free riding" is a conclusory epithet, not a workable economic principle). We explain this in detail in our prior work. Lemley & McKenna, supra note 8, at 448-49. See 15 U.S.C. § 1114(1) (2006) (permitting court to award profits if infringement is intentional). See 17 U.S.C. § 106(2) (2006) ("Subject to section 107 through 122, the owner of copyright under this title has the exclusive right[]...(2) to prepare derivative works based upon the copyrighted work."). The Copyright Act defines a derivative work as "a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted." Id. § 101.
138. See Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984) (noting that a copyright is "intended to motivate the creative activity of authors and inventors by the provision of a special reward").
139. Paul Goldstein, Derivative Rights and Derivative Works in Copyright, 30 J. Copyright Soc'y 209, 216 (1983)
140. see also Paul Goldstein, Copyright § 5.3 (2d ed. Supp. 2004) (repeating the analysis).
141. William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law, 18 J. Legal Stud. 325, 353-57 (1989).
142. Edmund W. Kitch, The Nature and Function of the Patent System, 20 J.L. & Econ. 265, 275-76 (1977)
143. see also F. Scott Kieff, Property Rights and Property Rules for Commercializing Inventions, 85 Minn. L. Rev. 697 (2001). For an explanation of why the commercialization argument falls short in intellectual property more generally, see Lemley, supra note 116, at 132-41.
144. Stewart E. Sterk, Rhetoric and Reality in Copyright Law, 94 Mich. L. Rev. 1197, 121516 (1996). Even Landes and Posner ultimately accept that the derivative right is not necessary to give adequate incentives to create new works of authorship. Landes & Posner, supra note 163, at 354.
145. This criticism applies with almost equal force to many reproduction cases in which the defendant is deemed to have copied despite having created a new work that differs significantly from the original work. There are some alternative accounts of the derivative right.
146. See, e.g., Michael Abramowicz, A Theory of Copyright's Derivative Right and Related Doctrines, 90 Minn. L. Rev. 317, 322 (2005)
147. Arguing the derivative right "is best understood not solely as a means of furthering the incentive to create works, but more significantly as a means of providing an author control over the release of adaptations and limiting the production of adaptations that would be close substitutes for one another" and thereby reducing redundancy). But the only alternative account with any significant traction is one based on moral rights. On that argument, the right to control derivative uses flows from the author's interests in the integrity of her work. This is, as one of us has recognized, a problematic justification even for the derivative right, not least because moral rights arguments focus on authors, while the derivative right is alienable and therefore may well be held by someone other than the author.
148. Mark A. Lemley, The Economics of Improvement in Intellectual Property Law, 75 Tex. L. Rev. 989, 1031-34 (1997). And the moral rights argument would be particularly unpersuasive in the trademark context, since moral rights are thought to derive from the intimate connection an author has with her work. The "authors" of trademarks, which generally are corporate entities, have no human dignity at stake when others use their marks. We discuss this moral claim in more detail infra notes 180-192 and accompanying text.
149. Lemley, supra note 167, at 993-97. See Ralph S. Brown, Jr., Advertising and the Public Interest: Legal Protection of Trade Symbols, 57 Yale L.J. 1165, 1200-01 (1948) (disapproving of cases in which "admiration for innovation obscure[s] the soundness of rules designed to foster free and easy competition" and arguing that "the only interests in trade symbols worth protecting are those against loss of sales or loss of reputation")
150. Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Language In the Pepsi Generation, 65 Notre Dame L. Rev. 397, 399 (1990) ("[T]here is little need to create economic incentives to encourage businesses to develop a vocabulary with which to conduct commerce."). This isn't to say that there aren't any reasons to want new trademarks-at the very least, trademarks might create a placebo effect that enhances the effectiveness of certain products. But the question is not whether we want new trademarks; it's whether we need protection to incentivize their creation. Ambrosia Chocolate Co. v. Ambrosia Cake Bakery, 165 F.2d 693, 697 (4th Cir. 1947) ("[A] man of ordinary intelligence could easily devise a score of valid trade-marks in a short period of time.").
151. This might mean granting trademark rights to the marketing firms that thought up the brand names, rather than to the companies that used them. Even more certainly, we would not endow companies with ownership of marks created by the public, as many courts have. See Nat'l Cable Television Ass'n v. Am. Cinema Editors, Inc., 937 F.2d 1572, 1577-78 (Fed. Cir. 1991) ("Moreover, even without use directly by the claimant of the rights, the courts and the Board generally have recognized that abbreviations and nicknames of trademarks or names used only by the public give rise to protectable rights in the owners of the trade name or mark which the public modified. Such public use by others inures to the claimant's benefit and, where this occurs, public use can reasonably be deemed use 'by' that party in the sense of a use on its behalf.") (footnote omitted)
152. see also Johnny Blastoff, Inc. v. L.A. Rams Football Co., 188 F.3d 427, 434 (7th Cir. 1999) (quoting Nat'l Cable Television, 937 F.2d at 1577)
153. Volkswagenwerk AG v. Hoffman, 489 F. Supp. 678, 681 (D.S.C. 1980) (recognizing VW's rights in "Bug" based on public usage of the nickname without VW's protest); Coca-Cola Co. v. Busch, 44 F. Supp. 405, 407 (E.D. Pa. 1942) (finding the public use of "Coke" to refer to Coca-Cola's soft drink sufficient to create rights for Coca-Cola in that term); Am. Stock Exch., Inc. v. Am. Express Co., 207 U.S.P.Q. 356, 362-64 (T.T.A.B. 1980) (attributing to American Express rights in "AMEX" based on public use of that designation to denote American Express); Norac Co. v. Occidental Petroleum Corp., 197 U.S.P.Q. 306, 315 (T.T.A.B. 1977) (earlier use of "OXY" by public determined priority); Pieper v. Playboy Enters., 179 U.S.P.Q. 318, 320 (T.T.A.B. 1973) (recognizing Playboy's rights in "Bunny Club").
154. Landes & Posner, Trademark Law: An Economic Perspective, supra note 15, at 270.
155. Landes & Posner, The Economic Structure of Intellectual Property Law, supra note 15, at 179; Ariel Katz, Beyond Search Costs: The Linguistic and Trust Functions of Trademarks, 2010 B.Y.U. L. Rev. (forthcoming). It would be more accurate to state that protection of trademarks encourages production of products with consistent quality, rather than high quality. While it is true that trademark protection allows a mark owner the opportunity to reap the benefits of investments in quality-since consumers will know who to credit for that quality-how much any particular mark owner actually invests in quality depends on the position of the relevant goods or services in the market. There are plenty of well-known trademarks that are used with consistently low-quality products.
156. McKenna, supra note 7, at 115. 175. See Md. Stadium Auth. v. Becker, 806 F. Supp. 1236 (D. Md. 1992) (deciding a case in which the owner of the new stadium of the Baltimore Orioles, Camden Yards, brought a trademark infringement action against a vendor that used the "Camden Yards" mark on t-shirts and clothing items).
157. See 15 U.S.C. § 1051(b) (2006) (permitting applications to register on the basis of a "bona fide intention" to use a trademark in commerce).
158. See Aycock Eng'g, Inc. v. Airflite, Inc., 560 F.3d 1350, 1360 (Fed. Cir. 2009) (declining trademark protection based on mere potential to create a competing product); RealNetworks, Inc v. QSA ToolWorks, LLC, No. C07-1959MJP, 2009 WL 2512407, at *4 (W.D. Wash. Aug. 14, 2009) ("A party may not allege trademark protection or confusion based on its potential to develop a competing product.").
159. We think a similar efficiency-based argument can be made regarding the registration system more generally, particularly the nationwide priority feature. To begin with, many geographic expansions don't need a market preemption or free-riding justification because consumers are likely to believe that the Crate and Barrel store opening in their town is run or controlled by the national Crate and Barrel chain. But even when consumers in the new geographic market might not be familiar with the mark owner, registration enables that mark owner to make the necessary investments to expand without worrying those investments will be lost. But here, too, we think parties that want to claim priority beyond their actual use should have to actually file for a registration as a signal of real investment. And we think the Dawn Donut rule plays an important role in limiting the extent to which such registrations actually preempt remote geographic uses. See Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358 (2d Cir. 1959) (refusing to enjoin geographically remote use absent likely consumer confusion even when the plaintiff had a federal registration). Cf. Md. Stadium, 806 F.Supp. at 1241 (finding liability despite the fact that the plaintiff wasn't in the market because of worries about free riding).
160. See Brown, supra note 169, at 1181-83
161. Glynn S. Lunney, Jr., Trademark Monopolies, 48 Emory L.J. 367 (1999)
162. Barton Beebe, Search and Persuasion in Trademark Law, 103 Mich. L. Rev. 2020 (2005) (noting the controversy over whether advertising expenditures create irrational brand loyalty).
163. See Lemley & McKenna, supra note 8, at 439-45.
164. Thomas W. Merrill, Accession and Original Ownership, 1 J. Legal Analysis 459 (2009). To be clear, Merrill argues from the principle of accession, which he regards as a general principle of property allocation. This is not to be confused with the doctrine of accession, which is only one doctrine among many Merrill identifies as flowing from the principle of accession. See id. at 465-66. In addition to the doctrine of accession (which deals with mistaken improvers of personal property), Merrill identifies the doctrine of increase (which awards offspring to the owner of the mother), the doctrine of accretion (which provides a riparian landowner whose land is gradually augmented by alluvial formations ownership of the new land), and even the ad coelum doctrine (which declares that the owner of surface land owns from the depths to the sky) as examples of the principle of accession. See id. at 7-12.
165. Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 Tex. L. Rev. 1031 (2005)
166. Richard A. Posner, Misappropriation: A Dirge, 40 Hous. L. Rev. 621, 623 (2003) ("The only point I want to emphasize is that the free riding that creates a need for IP law is economically distinct from that involved in the theft of tangibles.") (emphasis added).
167. See, e.g., 2 William Blackstone, Commentaries *404-05; Earl C. Arnold, The Law of Accession of Personal Property, 22 Colum. L. Rev. 103, 118 (1922).
168. See, e.g., Michael Heller, The Gridlock Economy (2008)
169. Michael A. Heller, The Tragedy of the Anticommons: Property in the Transition from Marx to Markets, 111 Harv. L. Rev. 621, 623-24 (1998).
170. For critiques of the claim that real property must be owned, see, for example, Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (1990); Brett M. Frischmann, An Economic Theory of Infrastructure and Commons Management, 89 Minn. L. Rev. 917 (2005); and Carol Rose, The Comedy of the Commons: Custom, Commerce, and Inherently Public Property, 53 U. Chi. L. Rev. 711, 720-21 (1986).
171. For critiques of this assumption, see Dogan & Lemley, supra note 41, at 478-81 (critiquing unjust enrichment justification for merchandising rights in the trademark context); Lemley, supra note 116, at 144-47
172. Diane Leenheer Zimmerman, Fitting Publicity Rights into Intellectual Property and Free Speech Theory: Sam, You Made the Pants Too Long!, 10 DePaul-LCA J. Art & Ent. L. 283, 307-08 (2000).
173. Garrett Hardin, The Tragedy of the Commons, 162 Sci. 1243, 1244-45 (1968).
174. This may well be why, notwithstanding the ancient pedigree of many of the doctrines on which Merrill focuses, and grounding of the principle of accession in the writings of early English writers like Hume and Blackstone, early IP law, and particularly early trademark law, recognized nothing like a principle of accession. Derivative rights were not recognized by copyright law, and the right of reproduction was interpreted much more narrowly than it is now. And this was not because authors didn't recognize the potential value of broader rights-copyright did not extend to translations, for example, even though translations were widely used and clearly contemplated by authors and the creators of the copyright system. And trademark rights also were traditionally much narrower, explicitly limited to directly competing uses. See Mark P. McKenna, The Normative Foundations of Trademark Law, 82 Notre Dame L. Rev. 1839 (2007).
175. May, but not must. We can think of plenty of examples in which simultaneous use of an intangible asset by multiple parties increases, rather than decreases, its value. Facebook, for instance. As Ralph Brown put it, "Competition is copying."
176. Ralph S. Brown, The Joys of Copyright, 30 J. Copyright Soc'y 477, 481 (1983)
177. see also Robert C. Denicola, Freedom to Copy, 108 Yale L.J. 1661, 1661 (1999) ("[L]aws that restrain copying...restrain competition.").
178. See generally Peter Jaffery, Merchandising and the Law of Trade Marks, 3 Intell. Prop. Q. 240 (1998) (noting that trademark law does not support a general merchandising right).
179. 192. Lemley, supra note 116, at 144.
180. Id. at 145.
181. See Lanham Act of 1946 § 32, 15 U.S.C. § 1114 (2006) (prohibiting "reproduction, counterfeit, copy, or colorable imitation of a registered mark"); Mccarthy, supra note 76, § 2:9, at 2-16 to -18. The first-use rule has historical pedigree. See Am. Washboard Co. v. Saginaw Mfg. Co., 103 F. 281, 287 (6th Cir. 1900) ("It is the party who uses [a designation] first as a brand for his goods, and builds up a business under it, who is entitled to protection, and not the one who first thought of using it on similar goods, but did not use it. The law deals with acts, not intentions.") (quoting George v. Smith, 52 F. 830, 832 (C.C.N.Y. 1892)).
182. Merrill, supra note 182, at 482-88.
183. This is a big "if." Merrill does not identify a principle by which this decision is to be made; rather, he more or less simply asserts that "[a]ccession...awards ownership based on status-the status of owning something prominently connected to the disputed object" Id. at 481. But what is connected to what? Merrill argues that certain solutions have a "natural" prominence and that ownership runs from ownership of "big" things to "small" things. Merrill, supra note 182, at 25-26. But in the trademark context, it isn't obvious that use in one market is "bigger" or more valuable than the use in another market.
184. Id. at 482-93.
185. Dreyfuss, supra note 169, at 405; see also Felix Cohen, Transcendental Nonsense and the Functional Approach, 35 Colum. L. Rev. 809, 815 (1935) (noting the circularity inherent in this argument).
186. See, e.g., David J. Franklyn, Debunking Dilution Doctrine: Toward a Coherent Theory of the Anti-Free-Rider Principle in American Trademark Law, 56 Hastings L.J. 117, 140-42 (2004)
187. Swann & Davis, supra note 89, at 276-77
188. Corina I. Cacovean, Note, Is Free Riding Aided by Parody to Sneak Between the Cracks of the Trademark Dilution Revision Act?, 31 Hastings Comm. & Ent. L.J. 441, 458-59 (2009).
189. For a detailed description of that natural rights theory and its application to traditional trademark law, see McKenna, supra note 189, at 1873-95.
190. See, e.g., Lawrence Mfg. Co. v. Tenn. Mfg. Co., 138 U.S. 537, 546 (1891) (describing a mark owner's interests as "the custom and advantages to which the enterprise and skill of the first appropriator had given him a just right," which is infringed when it is "abstracted for another's use ...by deceiving the public, by inducing the public to purchase the goods and manufactures of one person supposing them to be those of another"); Wolfe v. Barnett, 24 La. Ann. 97, 99 (1872) (noting that the leading principle of the law is to secure to the "honest, skillful and industrious manufacturer or enterprising merchant...the first reward of his honesty, skill, industry or enterprise" and protect him from deprivation at the hands of another who "appropriates and applies to his productions the same or a colorable imitation of the same name, mark, device or symbol, so that the public are, or may be, deceived or misled into purchase of the productions of the one, supposing them to be those of the other" (quoting Francis H. Upton, A Treatise on the Law of Trade Marks, with a Digest and Review of the English and American Authorities 97 (1860))).
191. See, e.g., Avery & Sons v. Meikle & Co., 81 Ky. 73, 102 (1883) (referring to "that great generic rule which lies at the foundation of all law, that a man must so use his own property as not to injure the property of "another"). And it's not as if courts never considered the question of whether trademark rights should extend to noncompeting goods. Even in those different commercial times, mark owners sought protection of their marks outside their own markets, only to be consistently turned away by courts. See, e.g., Borden Ice Cream Co. v. Borden's Condensed Milk Co., 201 F. 510, 514 (7th Cir. 1912).
192. Cf. Deborah R. Gerhardt, Consumer Investment in Trademarks, 88 N.C. L. Rev. 427, 449-67 (2010) (noting the important role consumers play in determining which brands succeed in a world in which eight out of ten brands fail).
193. See, e.g., Roberta Rosenthal Kwall, Copyright and the Moral Right: Is an American Marriage Possible?, 38 Vand. L. Rev. 1 (1985).
194. See 15 U.S.C. § 1064(3) (requiring cancellation of marks for abandonment, functionality, and genericide); Century 21 Real Estate Corp. v. Lendingtree, Inc., 425 F.3d 211, 218-21 (3d Cir. 2005) (establishing the nominative use defense in that circuit). This seems to be a universal practice, not just one engaged in by discounters.
195. See Deven Desai, Why Do Competitors Set Up Shop Near Each Other?, Madisonian.net, Dec. 21, 2009, http://madisonian.net/2009/12/21/why-do-competitors-set-up-shop-near-each-other/
196. see also Eric Goldman, Brand Spillovers, 22 Harv. J.L. & Tech. 381, 384-97 (2009) (describing retailers' ubiquitous practice of capitalizing on brand spillovers yet avoiding trademark liability).
197. While one of us has argued that trademark law should apply only to defendants who use the mark as a brand, Stacey L. Dogan & Mark A. Lemley, Grounding Trademark Law Through Trademark Use, 92 Iowa L. Rev. 1669 (2007), a category that would exclude ordinary consumers, that argument has not carried the day, see, e.g., Rescuecom v. Google Inc., 562 F.3d 123 (2d Cir. 2009) (finding that a search engine engaged in "trademark use" by permitting companies to run ads opposite search results).
198. For a brief history of the competing claims to steamboat patents, see, for example, Dotan Oliar, The (Constitutional) Convention on IP: A New Reading, 57 UCLA L. Rev. 421, 449-50 (2009)
199. Frank D. Prager, The Steamboat Pioneers Before the Founding Fathers, 37 J. Pat. Off. Soc'y 486 (1955).
200. Yochai Benkler, Some Economics of Wireless Communications, 16 Harv. J.L. & Tech. 25, 25-27 (2002) (drawing an analogy to England in the 17th century, which could have defined a property right in "trading with India" and assigned that property right to a single company, a result that would certainly have been inefficient).
201. See, e.g., Dietmar Harhoff, R&D Spillovers, Technological Proximity, and Productivity Growth-Evidence from German Panel Data, 52 Schmalenbach Bus. Rev. 238, 258 (2000) ("High-technology firms react more sensitively to spillovers in terms of their R&D spending, and their direct marginal productivity gain from spillovers (in excess to the effect from enhanced R&D spending) is considerably larger than the respective gain for less technology-oriented firms."). Indeed, the positive relationship is so strong that some economists use spillovers as a measure of innovation!
202. See Tobias Schmidt, An Empirical Analysis of the Effects of Patent and Secrecy on Knowledge Spillovers 1 (Ctr. for Eur. Econ. Res., Discussion Paper No. 06-048, 2006), available at ftp://ftp.zew.de/pub/zew-docs/dp/dp06048.pdf.
203. Harhoff, supra note 211, at 258.
204. See Ronald J. Gilson, The Legal Infrastructure of High Technology Industrial Districts: Silicon Valley, Route 128, and Covenants Not to Compete, 74 N.Y.U. L. Rev. 575, 577-78 (1999)
205. AnnaLee Saxenian, Inside-Out: Regional Networks and Industrial Adaptation in Silicon Valley and Route 128, Cityscape, May 1996, at 41, 44-45.
206. Alan Hyde, Working in Silicon Valley: Economic and Legal Analysis of a High-Velocity Market 43 (2003).
207. Brett M. Frischmann & Mark A. Lemley, Spillovers, 107 Colum. L. Rev. 257, 258 (2007)
208. see also Frischmann, supra note 186, at 1018; Lemley, supra note 183, at 1032.
209. See Univ. of S. C. v. Univ. of S. Cal., No. 2009-1064, slip op. (Fed. Cir. Jan. 19, 2010) (rejecting South Carolina's attempt to register the SC mark on the grounds that it was too similar to the Southern California mark, despite absence of evidence of consumer confusion). 217. See supra notes 144-163 and accompanying text (making the argument that this is extremely unlikely).
210. Indeed, as sports leagues have tightened up on merchandise licensing, restricting the number of authorized producers of merchandise, see Am. Needle, Inc. v. Nat'l Football League, 538 F.3d 736 (7th Cir. 2008), rev'd, 130 S. Ct. 2201 (2010), they have also acted to raise prices across the board by terminating discounters
211. Ken Belson, The N.F.L. is Squeezing Discounters Over Apparel, N.Y. Times, Jan. 20, 2010, at B11.
212. Bradford, supra note 139, at 1286-96. As we noted above, in the context of competitive products, research suggests that consumers are more likely to generalize product attributes from one brand to another when their packaging is more similar. "In other words, physical appearance of the brands had a measurable influence on perceptions of brand performance and quality."
213. Ellen R. Foxman et al., An Investigation of Factors Contributing to Consumer Brand Confusion, 24 J. Consumer Affairs 170, 173-74 (1990)
214. see also George Miaoulis & Nancy D'Amato, Consumer Confusion and Trademark Infringement, 42 J. Marketing 48, 54 (1978) (finding that subjects in a field study often purchased the competitive brand because of product expectations "stimulated by the visual impact of the product"). Interestingly, according to Miaoulis and D'Amato, the primary cue for association between the two brands was not the name but the visual appearance.Laura A. Heymann, The Public's Domain in Trademark Law: A First Amendment Theory of the Consumer, 43 Ga. L. Rev. 651, 656-57 (2009).
215. Wendy J. Gordon, On Owning Information: Intellectual Property and the Restitutionary Impulse, 78 Va. L. Rev. 149, 167 (1992)
216. see also Marina Lao, Free Riding: An Overstated, and Unconvincing, Explanation for Resale Price Maintenance, in How the Chicago School Overshot the Mark: The Effect of Conservative Economic Analysis on U.S. Antitrust 196, 197 (Robert Pitofsky ed., 2009) ("[F]ree riding exists throughout the economy and the law generally does not ban it.").
217. Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104 (1986); Assoc. Gen. Contractors v. Cal. State Council of Carpenters, 459 U.S. 519, 540-45 (1983); Brunswick Corp. v. Pueblo BowlO-Mat, Inc., 429 U.S. 477, 489 (1977).
218. Cf. Christopher Sprigman, Copyright and the Rule of Reason, 7 J. Telecom. & High Tech. L. 317 (2009) (proposing to limit copyright by drawing analogous doctrines from antitrust law). Brunswick, 429 U.S. at 489.