A consumer decision-making theory of trademark law

Virginia Law Review

Volumn 98, Issue 1, 2012, Pages 67-142

  McKenna, Mark P ^a  

^a NOTRE DAME LAW SCHOOL   (United States)

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EID: 84859918933     PISSN: 00426601     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (274)

1. Futurama: Attack of the Killer App (Comedy Central television broadcast July 1, 2010).
2. I am on record arguing that they should not need permission, Mark A. Lemley & Mark McKenna, Irrelevant Confusion, 62 Stan. L. Rev. 413, 415-16, 450 (2010)
3. [hereinafter Lemley & McKenna, Irrelevant Confusion], and that is likely to be the result at the end of the day. William McGeveran, Rethinking Trademark Fair Use, 94 Iowa L. Rev. 49, 59-61 (2008) (describing courts' tendency to protect expressive uses of a mark and arguing that trademark doctrine is problematic for free speech interests primarily because resolution of speech cases comes too late and too uncertainly)
4. See Kos Pharm. v. Andrx Corp., 369 F.3d 700, 711 (3d Cir. 2004) ("The Act is now broad enough to cover 'the use of trademarks which are likely to cause confusion, mistake, or deception of any kind, not merely of purchasers nor simply as to source of origin.'"
5. (emphasis omitted) (quoting Syntex Labs. v. Norwich Pharmacal Co., 437 F.2d 566, 568 (2d Cir. 1971))).
6. See Mark P. McKenna, The Normative Foundations of Trademark Law, 82 Notre Dame L. Rev. 1839, 1866-71 (2007) [hereinafter McKenna, Normative Foundations].
7. Cf. Palsgraf v. Long Island R.R. Co., 162 N.E. 99, 102 (N.Y. 1928) (conceiving of negligence in relational terms and noting that "[p]roof of negligence in the air, so to speak, will not do").
8. The terminology of "negligence in the air" is generally attributed to Sir Frederick Pollock. Sir Frederick Pollock, The Law of Torts: A Treatise on the Principles of Obligations Arising from Civil Wrongs in the Common Law 455 (11th ed. 1920).
9. The meaning of "source" has broadened over time to include sponsorship or affiliation relationships. See Mark P. McKenna, Trademark Use and the Problem of Source, 2009 U. Ill. L. Rev. 773, 822-23 (2009) [hereinafter McKenna, Problem of Source]. This dramatically expanded the scope of trademark law, often in problematic ways. Nevertheless, it remains the case that trademark law ignores lots of confusion.
10. William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 167 (6th ed. 2003) [hereinafter Landes & Posner, Economic Structure of IP].
11. Id.; see also William M. Landes & Richard A. Posner, Trademark Law: An Economic Perspective, 30 J.L. & Econ. 265, 274-79, 285 (1987) [hereinafter Landes & Posner, An Economic Perspective]. According to Landes and Posner, the total cost of a good is an aggregate of the nominal price and the cost of searching with respect to that good. When search costs are reduced, social welfare is increased because the premium a brand owner charges for trademarked goods is less than the cost of a search without the trademarks.
12. John F. Coverdale, Trademarks and Generic Words: An Effect-on-Competition Test, 51 U. Chi. L. Rev. 868, 869-70 (1984) (arguing that, unlike patent and copyright laws, trademark protection is intended to "promote competition by facilitating a consumer's effort to distinguish among the goods of competing producers")
13. Stacey L. Dogan & Mark A. Lemley, A Search-Costs Theory of Limiting Doctrines in Trademark Law, 97 Trademark Rep. 1223, 1223 (2007) [hereinafter Dogan & Lemley, A Search-Costs Theory] (noting that commentators and courts generally endorse the search costs theory and arguing that the theory also limits trademark rights in underappreciated ways)
14. Stacey L. Dogan & Mark A. Lemley, Grounding Trademark Law Through Trademark Use, 92 Iowa L. Rev. 1669, 1689-90 (2007) (arguing that a trademark use requirement is necessary to "keep trademark law true to its core mission of protecting consumers by improving the quality of information in the marketplace")
15. Stacey L. Dogan & Mark A. Lemley, Trademarks and Consumer Search Costs on the Internet, 41 Hous. L. Rev. 777, 778 (2004) (arguing that the historical normative goal of trademark law is to foster the flow of information in markets, thereby reducing search costs for consumers) [hereinafter Dogan & Lemley, Search Costs on the Internet]
16. Nicholas S. Economides, The Economics of Trademarks, 78 Trademark Rep. 523, 525-27 (1988) (suggesting that trademarks primarily exist to en hance consumer decisions and to create incentives for firms to produce desirable products)
17. Michael Grynberg, The Road Not Taken: Initial Interest Confusion, Consumer Search Costs, and the Challenge of the Internet, 28 Seattle U. L. Rev. 97, 97-99 (2004) (arguing that courts should find initial interest confusion actionable only when the use causes more confusion than it creates benefit to consumers in the form of better information)
18. William M. Landes & Richard A. Posner, The Economics of Trademark Law, 78 Trademark Rep. 267, 272 (1988) (explaining the search costs theory of trademark law)
19. Mark A. Lemley, The Modern Lanham Act and the Death of Common Sense, 108 Yale L.J. 1687, 1695-96 (1999) [hereinafter Lemley, The Modern Lanham Act] (stating that the single purpose of trademark law is "to enable the public to identify easily a particular product from a particular source")
20. Clarisa Long, Dilution, 106 Colum. L. Rev. 1029, 1033-34 (2006) (contrasting dilution protection with traditional trademark protection and arguing that the former is producer-centered while the latter is consumer-centered)
21. Glynn S. Lunney, Jr., Trademark Monopolies, 48 Emory L.J. 367, 432 (1999)
22. I.P.L. Png & David Reitman, Why Are Some Products Branded and Others Not?, 38 J.L. & Econ. 207, 208-11 (1995)(presenting empirical evidence in support of the search costs rationale).
23. Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163-64 (1995) ("[T]rademark law, by preventing others from copying a source-identifying mark, 'reduce[s] the customer's costs of shopping and making purchasing decisions,' for it quickly and easily assures a potential customer that this item-the item with this mark-is made by the same producer as other similarly marked items that he or she liked (or disliked) in the past." (citation omitted)
24. (quoting 1 J. McCarthy, McCarthy on Trademarks and Unfair Competition § 2.01[2], at 2-3 (3d ed. 1994) [hereinafter McCarthy]))
25. see also Scandia Down Corp. v. Euroquilt, Inc., 772 F.2d 1423, 1429-30 (7th Cir. 1985)
26. Barton Beebe, The Semiotic Analysis of Trademark Law, 51 UCLA L. Rev. 621, 623-24 (2004).
27. See Boudewijn Bouckaert & Gerrit De Geest, Patent Law, in 2 Encyclopedia of Law and Economics 129, 216
28. (Boudewijn Bouckaert & Gerrit De Geest eds., 2000) (bibliography of law and economics articles on patent law)
29. Peter S. Menell, Intellectual Property: General Theories, in 2 Encyclopedia of Law and Economics, supra, 129, 133, 149-150.
30. Mark A. Lemley & Mark P. McKenna, Owning Mark(et)s, 109 Mich. L. Rev. 137, 146-47 (2010) [hereinafter Lemley & McKenna, Owning Mark(et)s].
31. Qualitex, 514 U.S. at 163-64 (stating that, in addition to reducing the customer's costs of shopping, it "helps assure a producer that it (and not an imitating competitor) will reap the financial, reputation-related rewards associated with a desirable product"
32. Union Nat'l Bank, Laredo v. Union Nat'l Bank, 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.")
33. Eric Goldman, Deregulating Relevancy in Internet Trademark Law, 54 Emory L.J. 507, 552 (2005) (describing trademark law's purposes as "protecting consumers from confusion" and "protecting producers' investments in quality that creates consumer goodwill towards them").
34. see also Stephen L. Carter, The Trouble with Trademark, 99 Yale L.J. 759, 761 (1990) ("Suc cessful trademarks are valuable because of the information that they convey.").
35. For a somewhat different take on the brand premium, see Mark P. McKenna, An Alternate Approach to Channeling?, 51 Wm. & Mary L. Rev. 873, 878-84 (2009) (arguing that producers can at times achieve through branding some of the economic benefits patent law is presumed necessary to create, such that some parties may be able to extract additional rents by leveraging multiple forms of protection).
36. See, e.g., Big O Tire Dealers v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1371-72, (10th Cir. 1977) (holding that Goodyear's use and massive advertising of a brand that was plaintiff's registered mark amounted to unfair competition even though few if any consumers would be confused).
37. See, e.g., Brookfield Commc'ns v. W. Coast Entm't Corp., 174 F.3d 1036, 1057 (9th Cir. 1999)
38. Elvis Presley Enters. v. Capece, 141 F.3d 188, 204 (5th Cir. 1998)
39. Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 382 (7th Cir. 1996)
40. HRL Assocs. v. Weiss Assocs., 12 U.S.P.Q.2d (BNA) 1819, 1821-23 (T.T.A.B. 1989), aff'd on other grounds, 14 U.S.P.Q.2d (BNA) 1840 (Fed. Cir. 1990)
41. Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 259-60 (2d Cir. 1987)
42. Commc'ns Satellite Corp. v. Comcet, Inc., 429 F.2d 1245, 1251 (4th Cir. 1970)
43. Hearts on Fire Co. v. Blue Nile, Inc., 603 F. Supp. 2d 274, 283 (D. Mass. 2009)
44. Television Enter. Network v. Entm't Network, 630 F. Supp. 244, 247-48 (D.N.J. 1986)
45. Dreyfus Fund, Inc. v. Royal Bank of Can., 525 F. Supp. 1108, 1121-22 (S.D.N.Y. 1981)
46. Koppers Co. v. Krupp-Koppers GmbH, 517 F. Supp. 836, 843-45 (W.D. Pa. 1981)
47. Grotrian, Helfferich, Schulz, Th. Steinweg Nachf. v. Steinway & Sons, 365 F. Supp. 707, 716-17 (S.D.N.Y. 1973), modified, 523 F.2d 1331, 1341-42 (2d Cir. 1975)
48. Blaw-Knox Co. v. Siegerist, 300 F. Supp. 507, 512-13 (E.D. Mo. 1968), aff'd and modified, 414 F.2d 375 (8th Cir. 1969).
49. Hermès Int'l v. Lederer de Paris Fifth Ave., Inc., 219 F.3d 104, 109 (2d Cir. 2000) ("[A] loss occurs when a sophisticated buyer purchases a knockoff and passes it off to the public as the genuine article, thereby confusing the viewing public and achieving the status of owning the genuine article at a knockoff price.")
50. Ferrari S.P.A. Esercizio v. Roberts, 944 F.2d 1235, 1244-45 (6th Cir. 1991)
51. Krueger Int'l. v. Nightingale, Inc., 915 F. Supp. 595, 610 (S.D.N.Y. 1996)
52. See generally Anne M. McCarthy, The Post-Sale Confusion Doctrine: Why the General Public Should Be Included in the Likelihood of Confusion Inquiry, 67 Fordham L. Rev. 3337, 3338 (1999) (suggesting that "in light of the dual aim of trademark law to protect the interests of both the public and the trademark owner, the use of a trademark likely to cause confusion among the general public in a post-sale context should be actionable under federal trademark law").
53. See, e.g., Goldman, supra note 21, at 565-70 (criticizing the initial interest confusion doctrine); Wendy J. Gordon, Introduction, Symposium, Ralph Sharp Brown, Intellectual Property, and the Public Interest, 108 Yale L.J. 1611, 1614-15 (1999) ("One can only hope that Congress's recent decision to allow the owners of famous marks to sue in the absence of 'consumer confusion' will not prove a disaster in terms of increased litigation costs and, most importantly, market constraints.")
54. Jennifer E. Rothman, Initial Interest Confusion: Standing at the Crossroads of Trademark Law, 27 Cardozo L. Rev. 105, 121-59 (2005) (criticizing the initial interest confusion doctrine).
55. Mark P. McKenna, Testing Modern Trademark Law's Theory of Harm, 95 Iowa L. Rev. 63, 67-68 (2009) [hereinafter McKenna, Testing Modern Trademark] (demonstrating the lack of empirical support for the purported harms to mark owners from use of their marks for noncompeting goods).
56. See, e.g., Phoenix of Broward, Inc. v. McDonald's Corp., 489 F.3d 1156, 1167 (11th Cir. 2007)
57. Conte Bros. Auto. v. Quaker State-Slick 50, 165 F.3d 221, 233-34 (3d Cir. 1998).
58. See, e.g., Cashmere & Camel Hair Mfrs. Inst. v. Saks Fifth Ave., 284 F.3d 302, 311-12 (1st Cir. 2002) (noting the requirement that the plaintiff prove materiality and that "[o]ne method of establishing materiality involves showing that the false or misleading statement relates to an 'inherent quality or characteristic' of the product"
59. quoting Nat'l Basketball Ass'n v. Motorola, 105 F.3d 841, 855 (2d Cir. 1997)
60. Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997) (articulating the elements of a false advertising claim, including the requirement that "the deception [be] material, in that it [be] likely to influence the purchasing decision")
61. Johnson & Johnson, Merck Consumer Pharms. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 297 (2d Cir. 1992) (requiring proof of materiality)
62. Johnson & Johnson v. GAC Int'l, 862 F.2d 975, 977 (2d Cir. 1988) (holding that materiality is presumed if statements are literally false but must otherwise be proven).
63. Pizza Hut v. Papa John's Int'l, 227 F.3d 489, 496 (5th Cir. 2000) ("Bald assertions of superiority or general statements of opinion cannot form the basis of Lanham Act liability. Rather, the statements at issue must be 'specific and measurable claim[s], capable of being prove[n] false or of being reasonably interpreted as a statement of objective fact.'" (citations omitted)
64. (quoting Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 731 (9th Cir. 1999))).
65. 34 See, e.g., Phoenix of Broward, 489 F.3d at 1167 (stating that "the Conte Bros. test is designed to determine whether the injury alleged is the type of injury that the Lanham Act was designed to redress-harm to the plaintiff's 'ability to compete' in the marketplace and erosion of the plaintiff's 'good will [sic] and reputation' that has been directly and proximately caused by the defendant's false advertising"
66. quoting Conte Bros., 165 F.3d at 234-36)
67. Procter & Gamble Co. v. Amway Corp., 242 F.3d 539, 563 (5th Cir. 2001) (focusing on "whether the alleged injury is of a type Congress sought to redress in providing a private remedy for violations of the Lanham Act," specifically "commercial interests" that have been harmed by a false statement)
68. Conte Bros. 165 F.3d at 234 (noting that the focus of § 43(a) is on protecting "commercial interests [that] have been harmed by a competitor's false advertising, and in secur[ing] to the business community the advantages of reputation and good will [sic] by preventing their diversion from those who have created them to those who have not" (citations omitted)
69. (quoting Granite State Ins. Co. v. Aamco Transmissions, Inc., 57 F.3d 316, 321 (3d Cir. 1995)
70. S. Rep. No. 1333, at 4 (1946), reprinted in 1946 U.S.C.C.A.N. 1274, 1275)).
71. Made in the USA Found. v. Phillips Foods, 365 F.3d 278, 281 (4th Cir. 2004) (citing cases).
72. See Conte Bros., 165 F.3d at 229 (noting that allowing consumer standing would "ignore the purpose of the Lanham Act")
73. Barrus v. Sylvania, 55 F.3d 468, 470 (9th Cir. 1995).
74. Phoenix of Broward, 489 F.3d at 1170-71
75. Ford v. NYLCare Health Plans of the Gulf Coast, 301 F.3d 329, 338 (5th Cir. 2002) (Benavides, J., concurring).
76. Phoenix of Broward, 489 F.3d at 1172
77. quoting Joint Stock Soc'y v. UDV N. Am., Inc., 266 F.3d 164, 184 (3d Cir. 2001).
78. 39 Occasionally courts seem to understand this, though it is not clear that their recognition shapes any decisions. See Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163-64 (1995) (claiming that trademark law "reduce[s] the customer's costs of shopping and making purchasing decisions"
79. Wham-O, Inc. v. Paramount Pictures Corp., 286 F. Supp. 2d 1254, 1255-58 (N.D. Cal. 2003).
80. See, e.g., Tim Cronin, MLB to Youth: You're Out, Herald News, May 27, 2008, at A8
81. see also Katie Thomas, In Cape Cod League, It's Tradition vs. Trademark, N.Y. Times, Oct. 24, 2008, at B11 (discussing a similar claim brought by MLB against the amateur Cape Cod League).
82. Cf. Laura A. Heymann, Naming, Identity, and Trademark Law, 86 Ind. L.J. 381, 441-42 (2011) ("Name or trademark changes that make it more difficult for others to retrieve information about the person or entity are not legally prohibited, even though such changes can result in increased search costs, and even though others may have been induced to act in a way in which they would not have acted if they had known about the person's or the company's history. . . . In short, despite more expansive statements to the contrary in the trademark literature, both trademark law and the law of personal names care about only one type of effect on search costs: confusion as between sources, not deception as to a single source.").
83. Even if we did not think there were particular reasons to focus on consumers' behavior as consumers, it is not clear we would want trademark law to eliminate confusion anyway. Confusion actually has real benefits in some circumstances. Recent cognitive psychology demonstrates that humor, for example, often depends on resolution of some level of incongruity (confusion). See, e.g., Rod A. Martin, The Psychology of Humor: An Integrative Approach 85-89 (2007) A variety of techniques-from simple jokes to more complicated parodies or satires-rely on a disconnection between two different mental models. Id.; see also id. at 98-99 (explaining the humor of ironic statements and noting that "[t]o understand the ironic statement, the listener first activates its salient (literal) meaning, but, since this does not make sense in the context, must then activate an 'unmarked' interpretation (the 'implicature'), and both of these meanings remain activated in order for them to be compared. The incongruity between the two activated meanings causes the irony to be humorous"). "Take my wife . . . please" is humorous because it first calls to mind one model ("take my wife" as in "my wife, for example") and then asks the listener to resolve a possible second model ("take my wife" as in "please take my wife off my hands"). This particular joke may no longer be funny, of course, since it is now familiar. But that is only because we are now beyond those initial moments where we had to work to resolve the conflict. And while certain kinds of jokes might be protected through affirmative defenses in the trademark system, a simpler way of handling them would be to focus more narrowly on confusion that affects a consumer's decision making.
84. Indeed, the Supreme Court has rejected the argument that horizontal agreements to eliminate credit sales can be justified under the antitrust laws on the ground that an industry-wide agreement reduces the cost of learning price and credit terms. See Catalano, Inc. v. Target Sales, 446 U.S. 643, 649-50 (1980) ("Nor can the informing function of the agreement, the increased price visibility, justify its restraint on the individual wholesaler's freedom to select his own prices and terms of sale. For, again, it is obvious that any industrywide [sic] agreement on prices will result in a more accurate understanding of the terms offered by all parties to the agreement. As the Sugar Institute case demonstrates, however, there is a plain distinction between the lawful right to publish prices and terms of sale, on the one hand, and an agreement among competitiors [sic] limiting action with respect to the published prices, on the other."). I thank Christopher Leslie for bringing this case to my attention.
85. See TrafFix Devices v. Mktg. Displays, 532 U.S. 23, 34-35 (2001) ("The Lanham Act . . . does not protect trade dress in a functional design simply because an investment has been made to encourage the public to associate a particular functional feature with a single manufacturer or seller.").
86. KP Permanent Make-Up v. Lasting Impression I, 543 U.S. 111, 121 (2004).
87. Some search costs advocates have recognized this and have tried to ground their search costs arguments in competition more generally. Stacey Dogan and Mark Lemley, for example, argue that "[t]rademark law . . . aims to promote more competitive markets by improving the quality of information in those markets." Stacey L. Dogan & Mark A. Lemley, The Merchandising Right: Fragile Theory or Fait Accompli?, 54 Emory L.J. 461, 467 (2005) [hereinafter Dogan & Lemley, The Merchandising Right]
88. See Mark P. McKenna, (Dys)Functionality, 48 Hous. L. Rev. 823 (2012).
89. To be clear, motivation and ability are both relevant, but they are distinct concepts. See generally Thomas R. Lee, Glenn L. Christensen & Eric D. DeRosia, Trademarks, Consumer Psychology, and the Sophisticated Consumer, 57 Emory L.J. 575 (2008) (summarizing much of the literature on consumer sophistication).
90. Involvement relates to the level of personal relevance or salience a consumer perceives with respect to the product or service, and that involvement may be an "enduring involvement" or simply "situational involvement." A consumer has enduring involvement with a product when her involvement transcends any particular encounter with the product and continues to motivate her across multiple product interactions. Richard L. Celsi & Jerry C. Olson, The Role of Involvement in Attention and Comprehension Processes, 15 J. Consumer Res. 210, 212 (1988).
91. John W. Schouten & James H. McAlexander, Subcultures of Consumption: An Ethnography of the New Bikers, 22 J. Consumer Res. 43, 55 (1995)
92. (focusing on Harley Davidson consumers). Situational involvement, by contrast, is cued by the purchase situation, including those elements of the situation that are directly related to the perceived risk of purchasing and consuming the product. The greater risk a consumer perceives in a particular purchase, the more situational involvement she will have, and that situational involvement will likely motivate her to exercise greater care. See Peter H. Bloch & Marsha L. Richins, A Theoretical Model for the Study of Product Importance Perceptions, 47 J. Marketing 69, 70 (1983)
93. Utpal M. Dholakia, A Motivational Process Model of Product Involvement and Consumer Risk Perception, 35 European J. Marketing 1340, 1342-43 (2001)
94. For a discussion of how consumer involvement with brands contributes to their value, see Deborah R. Gerhardt, Consumer Investment in Trademarks, 88 N.C. L. Rev. 427, 449-58 (2010).
95. John T. Cacioppo & Richard E. Petty, The Need for Cognition, 42 J. Personality & Soc. Psychol. 116, 116-17 (1982).
96. See Curtis P. Haugtvedt, Richard E. Petty & John T. Cacioppo, Need for Cognition and Advertising: Understanding the Role of Personality Variables in Consumer Behavior, 1 J. Consumer Psychol. 239, 240-41 (1992).
97. Consumers are frequently referred to as "cognitive misers" in that they use as few mental resources as possible when making consumption choices. See, e.g., James M. Olson & Mark P. Zanna, Attitudes and Attitude Change, 44 Ann. Rev. Psychol. 117, 135-36 (1993)
98. John T. Cacioppo et al., Central and Peripheral Routes to Persuasion: An Individual Difference Perspective, 51 J. Personality & Soc. Psychol. 1032, 1033 (1986).
99. see also John T. Cacioppo et al., Dispositional Differences in Cognitive Motivation: The Life and Times of Individuals Varying in Need for Cognition, 119 Psychol. Bull. 197, 207 (1996) (noting low correlations between need for cognition and measures of intellectual ability).
100. "Product displacement typically occurs when a studio or broadcaster want [sic] to avoid giving a product/brand free publicity. Displacement is also used when companies refuse to allow their brands and logos from being [sic] shown, especially in scenes and story-lines that portray their products in a negative way." Gladys Santiago, Product Displacements Explained: Part 1 (Apr. 16, 2009), http://gladyssantiago.wordpress.com/2009/04/16/product- displacements-explainedpart- 1/. Product displacement can be done through fictionalization or unbranding. "Fictionalized product displacements are created by referencing recognizable characteristics of real brands," unlike fictional brands which exist only in the movies or shows in which they are used.
101. An entire web site is devoted to cataloging examples of product displacement. See Gladys Santiago, Product Displacement, http:// productdisplacement.tumblr.com/ (last visited Feb. 12, 2012).
102. See Gladys Santiago, Product Displacements as Catalysts to Engagement, Gnovis (Jan. 29, 2009), http://gnovisjournal.org/2009/01/29/product- displacements-ascatalysts- to-engagement/ ("It requires no stretch of the imagination to recognize 'Tit Tat' and 'Coffee Bucks' as stand-ins for real brands, but that recognition allows audiences to engage with product placements in a manner that is significantly more en unincompassing than simply spotting a branded product onscreen. Referencing these product displacements to their real world counterparts requires audiences to actively draw upon their cultural capital and awareness, therefore they have more resonance than a strategically placed can of Coca-Cola or a character mindlessly raving about his/her T-Mobile phone. Ultimately, product displacements have the opportunity to flatter the intelligence of viewers, especially if they are parodic and satirical in nature."). The connection to parody is particularly apt since it is precisely the incongruity between parodic speech and its target that makes a parody work.
103. See Deborah F. Rossen-Knill & Richard Henry, The Pragmatics of Verbal Parody, 27 J. Pragmatics 719, 728 (1997) ("[For a parody to work,] the hearer must be aware of the original action [that is the target of the parody] and be directed to it. This enables him/her to reconstruct the original act, hold it up next to the parodying version, and work out the parodist's commentary on the original.")
104. cf. Laura A. Heymann, Reading the Product: Warning, Disclaimers, and Literary Theory, 22 Yale J.L. & Human. 393, 410 (2010) ("And, as marketing scholars have noted, modern advertising often depends on irony, parody, and other literary tropes that involve facially contradictory texts.").
105. Rob Walker, Banana Democracy, N.Y. Times Mag., Aug. 22, 2010, at 18.
106. See Hungry Beast, Product DISplacement, YouTube (Mar. 10, 2010), http://www.youtube.com/watch?v=VIvCfNKg8qM (discussing a number of examples of de-branding or product displacement, including Pepsi's deliberate misspelling of its mark as "Pecsi" in Brazil, and Coca-Cola's creation of the "Open Happiness" campaign, which included a music video devoid of any branding that was created on the belief that consumers would like the video and want to go online to learn more about it, at which point they would see the brand)
107. Dina Mayzlin & Jiwoong Shin, Uninformative Advertising as an Invitation to Search, 30 Marketing Sci. 666, 667 (2011).
108. Tobi Elkin, Rare Prime-Time Teaser Campaign Gets MLife Off to a Running Start, Advertising Age, Apr. 15, 2002, at S4, available at http://adage.com/ article?article-id=52422 ("Befuddled construction workers peering at taxi-tops emblazoned with "mLife" were overheard wondering, 'What's this mLife thing?' Cryptic teaser ads on TV and online appeared sans the AT&T logo.").
109. For a similar argument that the law should not always try to reduce transaction costs because transaction costs are sometimes efficient, see David Driesen & Shubha Ghosh, The Functions of Transaction Costs: Rethinking Transaction Cost Minimization in a World of Friction, 47 Ariz. L. Rev. 61, 64 (2005).
110. See Robert G. Bone, Enforcement Costs and Trademark Puzzles, 90 Va. L. Rev. 2099, 2135-36 (2004) (focusing on enforcement costs to explain various doctrinal rules in trademark law).
111. In case you were living under a rock, it turns out he was not. See, e.g., Larry Dorman, Woods Says He'll Take Break, But How Long is 'Indefinite'?, N.Y. Times, Dec. 12, 2009, at A1.
112. Kos Pharms. v. Andrx Corp., 369 F.3d 700, 711 (3d Cir. 2004) (emphasis omitted)
113. quoting Syntex Labs. v. Norwich Pharmacal Co., 437 F.2d 566, 568 (2d Cir. 1971).
114. 201 F. 510, 515 (7th Cir. 1912).
115. This is also how courts legitimated licensing practices that had previously been forbidden. In order to distinguish uses by affiliated companies from infringing uses by third parties, courts began to hold that, even when it did not actually produce the products bearing its mark, a mark owner could be considered the legal "source" of those products if it exercised sufficient control over their quality. See, e.g., Keebler Weyl Baking Co. v. J.S. Ivins' Son, 7 F. Supp. 211, 214 (E.D. Pa. 1934) ("An article need not be actually manufactured by the owner of the trade-mark it being enough that it is manufactured under his supervision and according to his directions thus securing both the right of the owner and the right of the public.").
116. Congress later codified this understanding of source in § 5 of the Lanham Act, which provides that use of a mark by "related companies" inures to the benefit of the mark owner. 15 U.S.C. § 1055 (2006).
117. see also Triangle Publ'ns v. Rohrlich, 167 F.2d 969, 972 (2d Cir. 1948) (finding defendant's use of "Miss Seventeen Foundations Co." as the partnership name to make and sell girdles, and "Miss Seventeen" as the trademark for the girdles, infringing of the magazine publisher's rights: "[T]he defendants' use of 'Seventeen' created a likelihood that the public would erroneously believe that defendants' dresses were advertised in or sponsored by the magazine and that the plaintiff's reputation and good will [sic] would thereby be injured")
118. Esquire, Inc. v. Esquire Bar, 37 F. Supp. 875, 876 (S.D. Fla. 1941) (finding the defendant's use of Esquire for a bar infringing of the magazine publisher's rights: "The Court finds from the evidence that the defendant's use of plaintiff's name 'Esquire' is calculated to, and does, cause the public (not otherwise fully informed) to believe there is some connection between the two, either that the plaintiff owns or controls the business of the defendant, or sponsors it, or has given leave to conduct the business under some contract, and that the defendant's business has the approval of plaintiff, or that the defendant's business is in some manner related to the plaintiff's business, Esquire, Inc., and thereby constitutes unfair competition in violation of plaintiff's rights").
119. 15 U.S.C. § 1125(a)(1)(A) (2006) (providing a civil cause of action against anyone who "uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which . . . is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person").
120. See James Gibson, Risk Aversion and Rights Accretion in Intellectual Property Law, 116 Yale L.J. 882, 907 (2007) ("The definitions of sponsorship and approval, however, are notoriously broad and ambiguous, making liability a significant possibility for any use of a mark from which consumers might infer acquiescence by the mark owner.").
121. See Adolph Kastor & Bros. v. FTC, 138 F.2d 824, 825 (2d Cir. 1943) ("At the outset we hold therefore that the word, 'Scout,' when applied to a boy's pocket knife, suggests, if indeed it does not actually indicate, that the knife is in some way sponsored by the Boy Scouts of America.")
122. Copacabana, Inc. v. Breslauer, 101 U.S.P.Q. 467, 468 (Dec. Comm'r Pat. 1954) (rejecting an application to register Copacabana for cosmetics in light of the prior use of Copacabana for a nightclub and restaurant despite the finding that cosmetics are "entirely different" from the nightclub and restau rant because customers may assume that the cosmetics were "made by, sponsored by, or in some way connected with" Copacabana, Inc.).
123. See McDonald's Corp. v. McBagel's, Inc., 649 F. Supp. 1268, 1273-74 (S.D.N.Y. 1986) (holding that actionable confusion exists when consumers associate McBagel's with McDonald's, "however fleetingly," because "confusion of any type" is sufficient).
124. See, e.g., Univ. of Ga. Athletic Ass'n v. Laite, 756 F.2d 1535, 1546 (11th Cir. 1985) (holding that actionable confusion "may relate to the public's knowledge that the trademark, which is 'the triggering mechanism' for the sale of the product, originates with the plaintiff")
125. Bos. Prof'l Hockey Ass'n v. Dall. Cap & Emblem Mfg., 510 F.2d 1004, 1012 (5th Cir. 1975) ("The certain knowledge of the buyer that the source and origin of the trademark symbols were in plaintiffs satisfies the requirement of the act.")
126. Nat'l Football League Props. v. Consumer Enters., 327 N.E.2d 242, 246 (Ill. App. Ct. 1975) (finding infringement because "the buying public has come to associ uniate the trademark with the sponsorship of the NFL or of the particular member team involved").
127. See Boston Hockey, 510 F.2d at 1012 (noting that "the act was amended to eliminate the source of origin as being the only focal point of confusion" and finding "[t]he argument that confusion must be as to the source of the manufacture of the emblem itself . . . unpersuasive, where the trademark, originated by the team, is the triggering mechanism for the sale of the emblem"). 87 510 F.2d 1004 (5th Cir. 1975).
128. 549 F.2d 368, 389 (5th Cir. 1977)
129. see also Supreme Assembly, Order of Rainbow for Girls v. J.H. Ray Jewelry Co., 676 F.2d 1079, 1082 n.3 5th Cir. (1982) (explaining that, even after Boston Hockey "a claimant must still prove a likelihood of confusion, mistake or deceit of 'typical' purchasers, or potential purchasers, as to the connection of the trademark owner with the infringing product").
130. See, e.g., Bd. of Governors of the Univ. of N.C. v. Helpingstine, 714 F. Supp. 167, 173 (M.D.N.C. 1989) (rejecting the plaintiff's claim on the ground it failed to provide "evidence establishing that individuals do make the critical distinction as to sponsorship or endorsement, or direct evidence of actual confusion")
131. Univ. of Pittsburgh v. Champion Prods., 566 F. Supp. 711, 713, 716 (W.D. Pa. 1983) (finding no likelihood of confusion, in part because Champion clearly indicated it was the source of origin of the goods, and finding the logos functional as used by Champion).
132. 174 F.3d 1036, 1062 (9th Cir. 1999). Notably, the court recognized that the defendant, West Coast Video, had actually used the term "Movie Buff" in its slogan "The Movie Buff's Movie Store" and that "Movie Buff" has generic significance as a term for movie enthusiasts. Id. at 1042, 1066.
133. See, e.g., Lamparello v. Falwell, 420 F.3d 309, 315-18 (4th Cir. 2005) (noting that the U.S. Court of Appeals for the Fourth Circuit had never explicitly accepted the initial interest confusion doctrine and refusing to apply it where the defendant's website made clear that the site was not sponsored by the plaintiff and the defendant did not use the domain name to derive financial benefit)
134. Playboy Enters. v. Netscape Commc'ns Corp., 354 F.3d 1020, 1034 (9th Cir. 2004) (Berzon, J., concurring) ("Brookfield might suggest that there could be a Lanham Act violation even if the banner advertisements [at issue in that case] were clearly labeled, either by the advertiser or by the search engine. I do not believe that to be so. So read, the metatag holding in Brookfield would expand the reach of initial interest confusion from situations in which a party is initially confused to situations in which a party is never confused. I do not think it is reasonable to find initial interest confusion when a consumer is never confused as to source or affiliation . . . .").
135. See, e.g., McNeil Nutritionals, L.L.C. v. Heartland Sweeteners, L.L.C., 511 F.3d 350, 358 (3d Cir. 2007) ("We reaffirm the holding that initial interest confusion is an independently sufficient theory that may be used to prove likelihood of confusion.")
136. Checkpoint Sys. v. Check Point Software Techs., 269 F.3d 270, 294 (3d Cir. 2001) ("We join [other] circuits in holding that initial interest confusion is probative of a Lanham Act violation.")
137. Eli Lilly & Co. v. Natural Answers, 233 F.3d 456, 464 (7th Cir. 2000) ("[Initial interest] confusion, which is actionable under the Lanham Act, occurs when a consumer is lured to a product by its similarity to a known mark, even though the consumer realizes the true identity and origin of the product before consummating a purchase.")
138. Interstellar Starship Servs. v. Epix, Inc., 184 F.3d 1107, 1110 (9th Cir. 1999) ("We recognize a brand of confusion called 'initial interest' confusion, which permits a finding of a likelihood of confusion although the consumer quickly becomes aware of the source's actual identity and no purchase is made as a result of the confusion.")
139. Pebble Beach Co. v. Tour 18 I, 155 F.3d 526, 543-45 (5th Cir. 1998)
140. See Brookfield, 174 F.3d at 1064 ("Suppose West Coast's competitor (let's call it 'Blockbuster') puts up a billboard on a highway reading-'West Coast Video: 2 miles ahead at Exit 7'-where West Coast is really located at Exit 8 but Blockbuster is located at Exit 7. Customers looking for West Coast's store will pull off at Exit 7 and drive around looking for it. Unable to locate West Coast, but seeing the Blockbuster store right by the highway entrance, they may simply rent there. Even consumers who prefer West Coast may find it not worth the trouble to continue searching for West Coast since there is a Blockbuster right there.").
141. Other courts have used similar "bait and switch" language, see AM Gen. Corp. v. DaimlerChrysler Corp., 311 F.3d 796, 828 (7th Cir. 2002) (refusing claim of initial interest confusion where there was no "bait and switch"), but the analogies have been persuasively criticized in the internet context, where most initial interest confusion is found.
142. 141 F.3d 188, 204 (5th Cir. 1998).
143. 354 F.3d 1020, 1025 (9th Cir. 2004).
144. See, e.g., Hermès Int'l v. Lederer de Paris Fifth Avenue, 219 F.3d 104, 106, 108 (2d Cir. 2000) (handbags)
145. see also Polo Fashions v. Craftex, Inc., 816 F.2d 145, 147 (4th Cir. 1987) (clothes)
146. United States v. Gantos, 817 F.2d 41, 42-43 (8th Cir. 1987) (watches)
147. United States v. Torkington, 812 F.2d 1347, 1349 (11th Cir. 1987) (watches)
148. Levi Strauss & Co. v. Blue Bell, Inc., 632 F.2d 817, 822 (9th Cir. 1980) (jeans)
149. A.T. Cross Co. v. Jonathan Bradley Pens, 470 F.2d 689, 690, 692 (2d Cir. 1972) (pens)
150. Reebok Int'l v. Sung Hwa Int'l Corp., 6 U.S.P.Q.2d 1233, 1234 (S.D.N.Y. 1987) (shoes)
151. Rolex Watch U.S.A. v. Canner, 645 F. Supp. 484, 493 (S.D. Fla. 1986) (watches)
152. United States v. Gonzalez, 630 F. Supp. 894, 895-96 (S.D. Fla. 1986) (watches)
153. Lois Sportswear U.S.A. v. Levi Strauss & Co., 631 F. Supp. 735, 745 (S.D.N.Y. 1985), aff'd 799 F.2d 867 (2d Cir. 1986) (jeans)
154. T&T Mfg. Co. v. A.T. Cross Co., 449 F. Supp. 813, 823 (D.R.I. 1978), aff'd 587 F.2d 533 (1st Cir. 1978) (pens). Other cases have not relied on the arguably special case of status goods.
155. See General Motors Corp. v. Keystone Auto. Indus., 453 F.3d 351, 358 (6th Cir. 2006)
156. (car parts); Bos. Prof'l Hockey Ass'n v. Dall. Cap & Emblem Mfg., 510 F.2d 1004, 1012 (5th Cir. 1975)
157. (professional hockey team's symbol on an embroidered emblem). 102 944 F.2d 1235, 1245 (6th Cir. 1991)
158. see also Rolls-Royce Motors v. A & A Fiberglass, 428 F. Supp. 689, 694 (N.D. Ga. 1976) (finding that the defendant's customizing kits infringed Rolls-Royce's grill and hood ornamentation designs on the ground that "confusion need not always be that of a potential purchaser but can exist where 'the defendant duplicated the protected trademarks and sold them to the public knowing that the public would identify them as being the [plaintiffs'] trademarks'"
159. (quoting Boston Hockey, 510 F.2d at 1012)).
160. Jeremy Sheff calls this theory "bystander" confusion, which allegedly arises when "a defendant sells its product to a non-confused purchaser, observers who see the non-confused purchaser using the defendant's [knockoff] product mistake it for the plaintiff's [genuine] product, and those observers draw conclusions from their observations that influence their future purchasing decisions." See Jeremy N. Sheff, Veblen Brands, 96 Minn. L. Rev. (forthcoming 2012) (manuscript at 8, available at http://ssrn.com/abstract= 1798867). As Sheff acknowledges when he notes that sometimes the "chain of events culminating in a trademark injury appears to be assumed sub silentio," this description might even give courts too much credit, since courts frequently do not even tie observers' confusion to future purchasing decisions, suggesting liability is appropriate where observers simply mistake the defendant's product for the genuine product, even without more.
161. see, e.g., Rolex Watch, 645 F. Supp. at 493 n.3, 495 (admitting that it could "only speculate as to the forms [that] . . . cheapening or dilution [of the Rolex brand] might take and the injuries that might ensue" but imposing liability anyway on the possibility that, for example, airport security guards might be confused when a counterfeit watch set off a metal detector). Sheff identifies "downstream confusion"-confusion among purchasers in a secondary market-as another theory of post-sale confusion that depends (albeit speculatively) on consumer confusion about the source of the goods.
162. This was one of the court's claims in Rolex Watch, 645 F. Supp. at 495.
163. 221 F.2d 464 (2d Cir. 1955).
164. 944 F.2d 1235, 1245 (6th Cir. 1991) (quoting Ferrari S.P.A. Esercizio v. McBurnie, 11 U.S.P.Q.2d 1843, 1848 (S.D. Cal. 1989)).
165. Compare Ferrari, 944 F.2d at 1251 (Kennedy, J., dissenting) ("The majority does more than implicitly recognize a dilution cause of action by its misapplication of the eight-factor test; it expressly reads such a cause of action into the statute. To justify this interpretation, the majority points out that Congress deleted the word 'purchasers' from the statutory language in 1967. According to the majority, this congressional act demonstrates that Congress intended 'to protect against the cheapening and dilution of the genuine product, and to protect the manufacturer's reputation.'"), with id. at 1244 (majority opinion) (noting that, although Congress rejected an anti-dilution provision when it amended the language of the Lanham Act in 1967 (to remove language specifically referring to purchasers and to confusion regarding the source of origin), "it made no effort to amend or delete this language clearly protecting the confusion of goods in commerce"-language that makes actionable any confusion in commerce).
166. 437 F.2d 566, 568 (2d Cir. 1971)
167. see also Rolex Watch, 645 F. Supp. at 492 (describing the 1962 amendment as intended to broaden the protection afforded by the Act to "prevent mistake, deception, and confusion in the market place at large").
168. Frank I. Schechter, The Rational Basis of Trademark Protection, 40 Harv. L. Rev. 813, 825 (1927).
169. I should say the mark's "alleged" singularity because supporters of dilution have always relied more on intuition than empirical evidence in identifying the marks worthy of dilution protection. See Robert Brauneis & Paul J. Heald, Trademark Infringement, Trademark Dilution, and the Decline in Sharing of Famous Brand Names: An Introduction and Empirical Study, 59 Buff. L. Rev 141, 143, 164 (2011) (demonstrating through examination of business names in the white pages telephone directories of Chicago, Philadelphia, and Manhattan widespread sharing of 131 famous brand names, including BUICK, CADILLAC, and TIFFANY-all marks long identified as precisely the marks dilution law should protect). Obviously this thirdparty use did not destroy the singularity of the famous marks in the minds of dilution advocates.
170. See Sara Stadler Nelson, The Wages of Ubiquity in Trademark Law, 88 Iowa L. Rev. 731, 805 (2003) ("As members of the trademark bar have argued for an infringement law made in the image of dilution, courts have obliged, interpreting the confusion doctrine so as to punish association-the 'sine qua non of dilution.'"
171. (quoting Jerre B. Swann, Sr., Dilution Redefined for the Year 2000, 90 Trademark Rep. 823, 860 (2000))). Courts even have strained to find a likelihood of confusion in situations that seem like typical tarnishment scenarios.
172. See Anheuser Busch, Inc. v. Balducci Publ'ns, 28 F.3d 769, 777 (8th Cir. 1994) (finding defendant's "Michelob Oily" parody cartoon likely to cause confusion with plaintiff's "Michelob" mark)
173. Coca-Cola Co. v. Gemini Rising, Inc., 346 F. Supp. 1183, 1190-91 (E.D.N.Y. 1972) ("[A] strong probability exists that some patrons of Coca-Cola will be 'turned off' rather than 'turned on' by defendant's so-called 'spoof,' [posters that said 'Enjoy Cocaine' and which were written in Coca-Cola's distinctive script] with resulting immeasurable loss to plaintiff. . . . [P]laintiff's good will [sic] and business reputation are likely to suffer in the eyes of those who, believing it responsible for defendant's poster, will refuse to deal with a company which would seek commercial advantage by treating a dangerous drug in such jocular fashion.") (footnote omitted).
174. Graeme W. Austin, Trademarks and the Burdened Imagination, 69 Brook. L. Rev. 827, 890-95 (2004).
175. More recently, Posner and Landes have returned to dilution and the Tiffany example, though this time without expressly emphasizing thought burdens: dilution "protects trademark owners from the loss of value resulting from nonconfusing duplication of their trademarks (as where a hot dog stand adopts the name 'Tiffany's')." William M. Landes & Richard A. Posner, Indefinitely Renewable Copyright, 70 U. Chi. L. Rev. 471, 485 (2003)
176. see also Richard A. Posner, When Is Parody Fair Use?, 21 J. Legal Stud. 67, 75 (1992) ("A trademark seeks to economize on information costs by providing a compact, memorable, and unambiguous identifier of a product or service. The economy is less when, because the trademark has other associations, a person seeing it must think for a moment before recognizing it as the mark of the product or service.").
177. Stacey L. Dogan & Mark A. Lemley, What the Right of Publicity Can Learn from Trademark Law, 58 Stan. L. Rev. 1161, 1197 (2006) ("[L]ike traditional trademark law, dilution properly understood is targeted at reducing consumer search costs.")
178. Lee Goldman, Proving Dilution, 58 U. Miami L. Rev. 569, 575-76 (2004) ("Finally, as Judge Posner argued, trademarks provide information to consumers. To the extent junior users adopt the trademarks of others, the resultant 'clutter' imposes real costs upon consumers. This problem is exacerbated in the information age. To the extent other companies use the same name, finding the senior user's location on the World Wide Web can prove difficult.") (footnotes omitted)
179. Daniel Klerman, Trademark Dilution, Search Costs, and Naked Licensing, 74 Fordham L. Rev. 1759, 1767 (2006) (arguing that a dilution by blurring claim is only justified where the diluting use increases search costs, which it might do by impairing memory about product attributes or by causing consumer confusion as to product origin that courts mistakenly assume would not exist, but positing that these harms might be relatively small compared to the significant cost of recognizing such a claim)
180. J. Thomas McCarthy, Proving a Trademark Has Been Diluted: Theories or Facts?, 41 Hous. L. Rev. 713, 727-28 (2004) ("[I]f a once-unique designation loses its uniqueness[,] . . . it [is] harder for consumers to link that designation with a single source-the hallmark of a strong trademark. Under this theory, dilution increases the consumer's search costs by diffusing the identification power of that designation.")
181. Maureen A. O'Rourke, Defining the Limits of Free-Riding in Cyberspace: Trademark Liability for Metatagging, 33 Gonz. L. Rev. 277, 307 n.114 (1998) ("Dilution by blurring is concerned with preventing the erosion of the distinctiveness of the mark because of its use on non-related products. The 'noise' that this creates around the mark may increase consumer search costs.").
182. Cf. Rebecca Tushnet, Gone in Sixty Milliseconds: Trademark Law and Cognitive Science, 86 Tex. L. Rev. 507, 529 (2008) ("Consider: Have you ever put your suitcases into a cab in a major U.S. city, asked for 'American' or 'United,' and received the response 'Which one?'").
183. See, e.g., Tiffany Holiday, Registration No. 3,406,974
184. Tiffany Rose U.S. Trademark Registration No. 3 032 171
185. Nurse Tiffany, U.S. Trademark Registration No. 3,020,138
186. Tiffany Lawn and Garden, U.S. Trademark Registration No. 3,547,322
187. Tiffany Division, U.S. Trademark Registration No. 532,991
188. Tiffany's Cabaret, U.S. Trademark Registration No. 3,782,449
189. Tiffany's Table, U.S. Trademark Registration No. 1,299,136
190. Tiffany Designs, www.tiffanydesigns.com (last visited Jan. 4, 2012)
191. Tiffany's Restaurants, www.tiffanysrestaurant.com (last visited Jan. 4, 2012).
192. 610 F.3d 1088, 1091 (9th Cir. 2010).
193. See, e.g., U.S. Trademark Registration No. 3,320,577 (CAMEL for "containment structures for large scale spills or releases from primary mobile storage containers, namely, berms made of polymers reinforced with fiberglass and/or metal")
194. U.S. Trademark Registration No. 3 863 961 (CAMEL and design for "accumulator jars; battery chargers; chargers for batteries; electric accumulators; electric accumulators for vehicles; plates for batteries")
195. U.S. Trademark Registration No. 3,560,450 (CAMEL for "flour; rice; spices")
196. U.S. Trademark Registration No. 3,631,151 (THE TIDE for newsletters in the field of Christian music and various entertainment services)
197. U.S. Trademark Registration No. 3,824,991 (New Tide for "microphone connector, chassis mount, adapter and transformer").
198. This is undoubtedly why older cases, which required direct competition, largely spoke of the deception of consumers rather than their confusion. See, e.g., Coats v. Holbrook, 2 Sand. Ch. 586, 594 (N.Y. Ch. 1845) (holding that a person is not allowed to imitate the product of another and "thereby attract to himself the patronage that without such deceptive use of such names . . . would have inured to the benefit of that other person")
199. Amoskeag Mfg. Co. v. Spear, 2 Sand. 599, 605-06 (N.Y. Sup. Ct. 1849) ("He who affixes to his own goods an imitation of an original trademark, by which those of another are distinguished and known, seeks, by deceiving the public, to divert and appropriate to his own use, the profits to which the superior skill and en terprise of the other had given him a prior and exclusive title.")
200. Alff v. Radam, 14 S.W. 164, 165 (Tex. 1890) (holding that the plaintiff was entitled to protection against deception not because of his trademark but because of fraud and deception practiced by the defendant upon the plaintiff and the public).
201. See Rebecca Tushnet, Running the Gamut from A to B: Federal Trademark and False Advertising Law, 159 U. Pa. L. Rev. 1305, 1312 (2011) (arguing that trademark and false advertising law each have something to teach the other and that trademark infringement should be conceived of as a type of false advertising).
202. Ralph S. Brown, Jr., Advertising and the Public Interest: Legal Protection of Trade Symbols, 57 Yale L.J. 1165 (1948).
203. And advertising enables the sellers of bottled water, which frequently comes from municipal water supplies, to convince consumers their products are somehow superior to the water that comes out of your tap. See Phil Lempert, Is Your Bottled Water Coming from a Faucet?, Today Food (July 21, 2004, 11:07 AM), http://www.msnbc.msn.com/id/5467759/
204. National Resources Defense Council, Bottled Water: Pure Drink or Pure Hype? (1999), available at http://www.nrdc.org/water/drinking/bw/bwinx.asp (documenting misleading suggestions that bottled water is purer).
205. Paul Milgrom & John Roberts, Price and Advertising Signals of Product Quality, 94 J. Pol. Econ. 796, 799 (1986).
206. See Lee Benham, The Effect of Advertising on the Price of Eyeglasses, 15 J.L. & Econ. 337, 338 (1972).
207. See, e.g., Am. Italian Pasta Co. v. New World Pasta Co., 371 F.3d 387, 391 (8th Cir. 2004) ("Defining puffery broadly provides advertisers and manufacturers considerable leeway to craft their statements" which "ensur[es] vigorous competition.")
208. See also Katya Assaf, Magical Thinking in Trademark Law 20-22 (April 14, 2011) unpublished manuscript), available at http://ssrn.com/abstract=1606907 (arguing that courts and the FTC define puffery broadly in order to protect commercial speech).
209. Lillian R. BeVier, Competitor Suits for False Advertising Under Section 43(a) of the Lanham Act: A Puzzle in the Law of Deception, 78 Va. L. Rev. 1, 8 (1992) ("Advertising contributes to consumer welfare by providing information, which lowers consumer search costs, which in turn facilitates competition.").
210. Gregory S. Carpenter, Rashi Glazer & Kent Nakamoto, Meaningful Brands from Meaningless Differentiation: The Dependence on Irrelevant Attributes, 31 J. Marketing Res. 339, 339 (1994). (Pubitemid 24809837)
211. Susan Strasser, Satisfaction Guaranteed: The Making of the American Mass Market 27 (1989)
212. Deven R. Desai & Spencer W. Waller, Brands, Competition, and the Law, 2010 BYU L. Rev. 1425, 1436-442 (describing the development of the advertising industry and the way branding enables producers to differentiate their products and insulate them from price competition).
213. 119 F.T.C. 39, 46 (1995). This statement, of course, cannot be squared with traditional notions of competition. In the classical model, if competing sugar products are in fact homogenous, then competition should be limited to price.
214. Michael R. Baye & John Morgan, Brand and Price Advertising in Online Markets, 55 Mgmt. Sci. 1139, 1145 (2009)
215. see also Dhaval Dave & Henry Saffer, The Impact of Direct-to-Consumer Advertising on Pharmaceutical Prices and Demand 1-3, 28-29 (May 2010) (Nat'l Bureau of Econ. Research, Working Paper No. 15969), available at http://www.nber.org/papers/w15969.pdf (finding that broadcast direct- to-consumer advertising ("DTCA") positively affects the advertiser's own sales and price and that expansion in broadcast DTCA may be responsible for about nineteen percent of the overall growth in prescription drug expenditures over the sample period, with over two-thirds of this impact due to an increase in demand as a result of the DTCA expansion and the remainder due to higher prices).
216. These increased prices cannot be justified on the ground that the advertiser's willingness to spend money advertising itself signals quality. See Phillip Nelson, Advertising as Information, 82 J. Pol. Econ. 729, 730 (1974)
217. See Barton Beebe, Search and Persuasion in Trademark Law, 103 Mich. L. Rev. 2020, 2025 (2005).
218. Dominique Olie Lauga, Persuasive Advertising with Sophisticated but Impressionable Consumers 1 (Feb. 2010) (unpublished manuscript, available at http://management.ucsd.edu/faculty/directory/lauga/docs/persuasive-advertising. pdf).
219. For a lively debate about the desirability and efficacy of regulating some of these practices, see Zahr Said, Embedded Advertising and the Venture Consumer, 89 N.C. L. Rev. 99, 105 (2010) (arguing that the law should "take into account the evolution of the 'venture consumer,' who knows what she wants out of her media, knows where to get it, and is aware of the risks and costs involved")
220. Eric Goldman, Stealth Risks of Regulating Stealth Marketing: A Comment on Ellen Goodman's Stealth Marketing and Editorial Integrity, 85 Tex. L. Rev.
221. See Also 11 (2007), http://www.texaslrev.com/seealso/vol/85/responses/ goldman (questioning the efficacy and desirability of mandatory disclosure requirements)
222. Ellen P. Goodman, Stealth Marketing and Editorial Integrity, 85 Tex. L. Rev. 83, 83 (2006) (arguing that undisclosed ponsorship in media degrades the "robust public discourse that is necessary to a democracy and is possible even in a highly commercialized media sphere" and proposing "revamping and extending sponsorship disclosure law beyond broadcasting in a manner that is technology- neutral and sensitive to the evolution of digital technologies").
223. On the difficulty the FTC has had identifying grounds on which to proceed against non-deceptive advertising, see Richard Craswell, The Identification of Unfair Acts and Practices by the Federal Trade Commission, 1981 Wis. L. Rev. 107, 139-51.
224. See Sanjoy Dhose & Oded Lowengart, Taste Tests: Impacts of Consumer Perceptions and Preferences on Brand Positioning Strategies, 10 J. Targeting, Measurement & Analysis for Marketing 26, 30 (2001). 158
225. See Martin Lindstrom, Buy-Ology: Truth and Lies About Why We Buy 26 (2008).
226. The results of the underlying study are presented in Samuel M. McClure et al. Neural Correlates of Behavioral Preference for Culturally Familiar Drinks, 44 Neuron 379 (2004).
227. This phenomenon is not necessarily the result of advertising. For example, Mexican Coke has developed a significant cult following despite the fact it is neither advertised nor sold in the United States. The urban legend surrounding Mexican Coke is that it is sweeter than regular Coke, and that sweetness has been attributed to the use of table sugar rather than the high fructose corn syrup used in regular Coke. See Rob Walker, Cult Classic, N.Y. Times Mag., Oct. 8, 2009, at 22 ("Mexican Coke cultists of course have a rational explanation: Coca-Cola bottled in Mexico is sweetened with sugar, while the U.S. version is (almost) always made with high-fructose corn syrup. That is so.").
228. Except Mexican Coke's sweetness is a cognitive illusion. See Emily E. Ventura, Jaimie N. Davis & Michael I. Goran, Sugar Content of Popular Sweetened Beverages Based on Objective Laboratory Analysis: Focus on Fructose Content, 19 Obesity 868 873 (2011) (investigating the sugar content of a number of popular drinks and failing to find any sucrose, but plenty of glucose and fructose, in Mexican Coke, which suggests Mexican Coke is also made with high fructose corn syrup or that the sucrose (table sugar) had at least been split into its constituent glucose and fructose).
229. See Barton Beebe, Intellectual Property Law and the Sumptuary Code, 123 Harv. L. Rev. 809, 812-13 (2010) (describing intellectual property law, and trademark law in particular, as a modern sumptuary code-a system of consumption practices by which individuals in a society signal through their consumption their differences from and similarities to others).
230. See Laura A. Heymann, The Public's Domain in Trademark Law: A First Amendment Theory of the Consumer, 43 Ga. L. Rev. 651, 667-97 (2009) (noting the language of autonomy used by the Supreme Court in commercial speech cases outside of the trademark context and arguing that trademark cases ought to reflect the same understanding of consumers).
231. 44 Liquormart v. Rhode Island, 517 U.S. 484, 503 (1996) (plurality opinion) (citation omitted). The Court made this view even clearer in its earlier decision in Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council: It appears to be feared that if the pharmacist who wishes to provide low cost, and assertedly low quality, services is permitted to advertise, he will be taken up on his offer by too many unwitting customers. . . . They will respond only to costly and excessive advertising, and end up paying the price. . . . All this is not in their best interests, and all this can be avoided if they are not permitted to know who is charging what. There is, of course, an alternative to this highly paternalistic approach. That alternative is to assume that this information is not in itself harmful, that people will perceive their own best interests if only they are well enough informed, and that the best means to that end is to open the channels of communication rather than to close them. If they are truly open, nothing prevents the "professional" pharmacist from marketing his own assertedly superior product, and contrasting it with that of the low-cost, high-volume prescription drug retailer. But the choice among these alternative approaches is not ours to make or the Virginia General Assembly's. It is precisely this kind of choice, between the dangers of suppressing information, and the dangers of its misuse if it is freely available, that the First Amendment makes for us.
232. U.S. 748, 769-70 (1976)
233. see also Lyrissa Barnett Lidsky, Nobody's Fools: The Rational Audience as First Amendment Ideal, 2010 U. Ill. L. Rev. 799, 801 ("Instead, the Court defaults to a set of normative assumptions which, taken together, reflects an idealized vision of the audience of core speech. The first of these assumptions is that audiences are capable of rationally assessing the truth, quality, and credibility of core speech.").
234. 371 F.3d 387, 391 (8th Cir. 2004).
235. See, e.g., Johnson & Johnson Merck Consumer Pharms. Co. v. Smithkline Beecham Corp., 960 F.2d 294, 300 (2d Cir. 1992) (relying on trademark precedent to evaluate survey evidence for false advertising claim).
236. See Pizza Hut v. Papa John's Int'l, 227 F.3d 489, 497 (5th Cir. 2000) ("[N]onactionable 'puffery' comes in at least two possible forms: (1) an exaggerated, blustering, and boasting statement upon which no reasonable buyer would be justified in relying; or (2) a general claim of superiority over comparable products that is so vague that it can be understood as nothing more than a mere expression of opinion.") (emphasis added).
237. See Am. Dairy Queen Corp. v. New Line Prods., 35 F. Supp. 2d 727, 728-29, 735 (D. Minn. 1998) (preliminarily enjoining release of the film with that title). The film was ultimately released under the title "Drop Dead Gorgeous."
238. See A Satirical Salute to America's Version of 'Gorgeous,' USA Today, Feb. 19, 1999, at 3E.
239. This has not stopped Major League Baseball from threatening Little League teams. See, e.g., Tim Cronin, MLB to Youth: You're Out, Herald News, May 27, 2008, at A8.
240. 510 F.2d 1004, 1011 (5th Cir. 1975).
241. 867 F.2d 22, 33 (1st Cir. 1989)
242. see also Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co. 550 F.3d 465 477-78 (Cir. 2008) (holding that universities' color schemes are protectable and that others' use of those colors on T-shirts evoking the universities infringed the universities' rights)
243. 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 [sic] as embodied in the plaintiff's mark")
244. Sigma Chi Fraternity v. Sethscot Collection, No. 98-CV-2102, 2000 WL 34414961, at *9 (S.D. Fla. Apr. 7, 2000) ("[T]he confusion factor is met where, as here, the registered mark . . . is the triggering mechanism for the sale of the product."
245. citing Boston Hockey, 510 F.2d at 1012)
246. cf. Univ. Book Store v. Univ. of Wis. Bd. of Regents, 33 U.S.P.Q.2d 1385, 1394 (T.T.A.B. 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.") (footnote omitted).
247. (quoting Coca-Cola Co. v. Gemini Rising, Inc., 346 F. Supp. 1183, 1189 (E.D.N.Y. 1972)).
248. 836 F.2d 397, 398 (8th Cir. 1987).
249. There are many other cases that fit this pattern. See, e.g., Anheuser-Busch, Inc. v. Balducci Publ'ns, 28 F.3d 769, 772, 777 (8th Cir. 1994) (finding infringing a parody "ad" in a humor magazine called Snicker for a mythical product called "Michelob Oily")
250. Coca-Cola Co. 346 F. Supp. at 1186-1188 (granting a preliminary injunction where defendant produced a poster which added "ine" to Coca-Cola's trademark such that it read "Enjoy Cocaine").
251. See, e.g., Brookfield Commc'ns v. W. Coast Entm't Corp., 174 F.3d 1036, 1062 (9th Cir. 1999) (conceding that confusion was unlikely but finding actionable use anyway because consumers, now presented with both parties' websites in response to a search employing "MovieBuff" as a search term, might choose the defendant's website rather than the plaintiff's). Other cases are ambiguous about whether the initial interest must be the result of confusion.
252. See Eli Lilly & Co. v. Natural Answers, 233 F.3d 456, 464 (7th Cir. 2000) ("[Initial interest] confusion, which is actionable under the Lanham Act, occurs when a consumer is lured to a product by its similarity to a known mark, even though the consumer realizes the true identity and origin of the product before consummating a purchase."
253. citing Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 382 (7th Cir. 1996)
254. 141 F.3d 188, 204 (5th Cir. 1998).
255. 944 F.2d 1235, 1245 (6th Cir. 1991)
256. (quoting Ferrari S.P.A. Esercizio v. McBurnie, 11 U.S.P.Q.2d 1843, 1848 (S.D. Cal. 1989)).
257. 645 F. Supp. 484, 495 (S.D. Fla. 1986).
258. As a doctrinal matter, it is not legitimate to do so. The Lanham Act quite clearly focuses the relevant inquiry on confusion regarding the source of the defendant's goods or services. See 15 U.S.C. § 1125(a)(1)(A) (2006) ("Any person who . . . uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which . . . is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person) (emphases added).
259. See Mark P. McKenna, Probabilistic Knowledge of Third-Party Trademark Infringement, 2011 Stan. Tech. L. Rev. 10, 12-15 (discussing the low probability of harm to consumers in secondary markets for luxury goods).
260. Jacob Jacoby, a frequent plaintiff's-side expert in trademark cases, has published studies claiming to have shown the dilutive effect. See Maureen Morrin & Jacob Jacoby, Trademark Dilution: Empirical Measures for an Elusive Concept, 19 J. Pub. Pol'y & Mktg. 265, 269 (2000) (showing that the average time it took for participants to recognize famous brands after exposure to advertisements showing dilutive brands was 770 milliseconds, twenty-two milliseconds longer than the average time after exposure to unrelated advertisements and ninety-five milliseconds longer than the average time after exposure to reinforcing advertisements)
261. see also Jacob Jacoby, The Psychological Foundations of Trademark Law: Secondary Meaning, Genericism, Fame, Confusion and Dilution, 91 Trademark Rep. 1013, 1048 (2001) (using the same study to support the conclusion that dilution increases the cognitive effort required to recognize a brand). Jacoby even claims to have empirically demonstrated the effect of tarnishing uses by showing the associational links generated by a parodic use of a famous mark.
262. 507 F.3d 252, 258 (4th Cir. 2007).
263. Cf. Hormel Foods Corp. v. Jim Henson Prods., 73 F.3d 497, 507 (2d Cir. 1996) ("Hormel argues that the image of Spa'am, as a 'grotesque,' 'untidy' wild boar will 'inspire negative and unsavory associations with SPAM® luncheon meat.'").
264. In Mattel, Inc. v. 3894207 Canada Inc., [2006] 1 S.C.R. 22, 57 (Can.) (quoting Michelin & Cie v. Astro Tire & Rubber Co. of Canada (1982), 69 C.P.R. (2d) 260, 263 (Can. F.C.T.D.)), the Supreme Court of Canada held that consumers ought to be regarded as capable, making clear that "one must not proceed on the assumption that the prospective customers or members of the public generally are completely devoid of intelligence or of normal powers of recollection or are totally unaware or uninformed as to what goes on around them."
265. Several studies have determined that use of a sub-brand or other mechanism for differentiating an extension from the parent brand effectively insulates the parent brand from any feedback effects. See, e.g., Amna Kirmani, Sanjay Sood & Sheri Bridges, The Ownership Effect in Consumer Responses to Brand Line Stretches, 63 J. Mktg. 88, 94-95 (1999) (finding that sub-branding was sufficient to insulate the BMW and Acura brands from any negative feedback)
266. Sandra J. Milberg, C. Whan Park & Michael S. McCarthy, Managing Negative Feedback Effects Associated With Brand Extensions: The Impact of Alternative Branding Strategies, 6 J. Consumer Psychol. 119, 136 (1997) (finding that sub-branding may prevent negatively evaluated extensions from harming the parent brand). This research suggests that consumers are relatively adept at recognizing attempts to differentiate and that they are able to categorize brand attitudes finely when they have reason to differentiate.
267. See, e.g., McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, 511 F.3d 350, 360 (3d Cir. 2007) (rejecting plaintiff's trade dress claim based on store brand's use of same colors for packaging, and particularly focusing on the prominence of the store label)
268. Conopco, Inc. v. May Dep't Stores Co., 46 F.3d 1556, 1559-60, 1565 (Fed. Cir. 1994) (rejecting plaintiff's claim that the packaging of Venture's private label lotion infringed that of Vaseline Intensive Care Lotion, partly because of the prominence of the Venture store name on the packaging).
269. While there is no absolute quantitative threshold for determining what level of confusion is "appreciable," courts have generally been persuaded by evidence of fifteen percent confusion. See, e.g., Exxon Corp. v. Tex. Motor Exch. of Hous., 628 F.2d 500, 507 (5th Cir. 1980) (finding "a high possibility of confusion" between TEXON and EXXON where approximately fifteen percent of the individuals surveyed associated the TEXON sign with EXXON, another twenty-three percent associated the sign with gasoline, a gas station, or an oil company, and only seven percent associated the sign with Texas Motor Exchange)
270. RJR Foods v. White Rock Corp., 603 F.2d 1058, 1061 (2d Cir. 1979) (noting that survey results showing fifteen to twenty percent confusion corroborates likelihood of confusion)
271. James Burrough, Ltd. v. Sign of Beefeater, 540 F.2d 266, 279 (7th Cir. 1976) (noting that a fifteen percent level of confusion is neither small nor de minimis). In one case, the Second Circuit called evidence of 8.5% confusion "strong evidence."
272. Grotrian, Helfferich, Schulz, Th. Steinweg Nachf. v. Steinway & Sons, 365 F. Supp. 707, 716 (S.D.N.Y. 1973), modified, 523 F.2d 1331 (2d Cir. 1975)
273. 425 F.3d 211 (3d Cir. 2005).
274. See generally Mark P. McKenna, Back to the Future: Rediscovering Equitable Discretion in Trademark Cases, 14 Lewis & Clark L. Rev. 537 (2010) [hereinafter McKenna, Back to the Future] (describing how modern courts have tended to view injunctive relief in trademark cases as an all-or-nothing proposition and urging the use instead of more finely tailored equitable remedies).