Abusive trademark litigation and the incredible shrinking confusion doctrine - trademark abuse in the context of entertainment media and cyberspace.

• Author: Greene, K.J.

1. THEORETICAL UNDERPINNINGS OF IP PROTECTION 615 A. Underlying Theories of IP Protection 615 1. Labor/Investment Rationales 615 2. Economic Incentive/Efficiency Rationales 616 3. Misappropriation Rationales 617 4. Personality-Based Rationales 618 B. The Theoretical Basis of Trademark Law 619 1. Confusion Doctrine/Likelihood of Confusion 620 2. Unfair Competition/Section 43(a) 621 3. Dilution Theory: Blurring and Tarnishment 622 4. Cybersquatting 624 II. TRADEMARK OWNERS' RIGHTS AND THE PUBLIC INTEREST 625 III. TRADEMARK LAW IN THE CONTEXT OF ENTERTAINMENT MEDIA 628 IV. ABUSIVE TRADEMARK LITIGATION 631 A. Characteristics of Abusive Trademark Litigation 631 B. Trademark Wars: Legitimate Claims and Abusive Claims 633 1. Film Title Cases 633 2. Spa'am Case 635 3. Internet Cases 636 C. Boomerang Effect of Abusive Trademark Litigation Strategies 637 V. SUGGESTED PROPOSALS 638 A. Coordinate a Sensible Policy on IP Lawsuits in Entertainment Industry 638 B. Clarify Acquiescence and Laches Standards 639 C. Eliminate Injunctive Relief as the Primary Relief in Dilution Cases 641 VI. CONCLUSION 641 The recent legal challenge to the extension of the copyright term was grounded in the notion that Congress was giving away benefits to intellectual property ("IP") owners, typically large corporate entities, without any corresponding public benefit that underlies the constitutional authority for IP grants. (1) The giant conglomerates of the copyright industry--such as Time Warner, Disney, and Viacom-ultimately won that battle before the U.S. Supreme Court. (2) Yet, in another case, the Court limited the rights of big corporations with famous trademarks to attack smaller companies under the theory of trademark dilution by requiring a showing of actual economic harm rather than a mere likelihood of dilution. (3)

   Courts have generally taken a more conservative view toward the expansion of IP rights and trademark rights in particular, (4) whereas Congress has recently enacted federal trademark dilution protection, (5) federalized the law of trade secrets, (6) outlawed cybersquatting, (7) increased damages for copyright infringement, (8) and extended the term of copyright protection. (9) Such expansion by Congress arguably reflects the political muscle of big businesses, including companies in the high-tech sector and the entertainment industry, and their ability to influence the legislative process. (10)

   The expansion of trademark rights has been particularly dramatic, prompting one commentator to charge, with ample support, that Congress appears intent on "a course of annihilating the common law of trademarks.... [W]ith no real conceptual justification, American trademark law has quickly come to emulate trademark jurisprudence of [some civil law countries], where the trademark itself is considered subject to property ownership." (11) Trademark law blossomed in an environment of robber capitalism and was designed to prevent acts of fraud such as removing a competitor's cereal from its boxes, placing the cereal in boxes with one's own mark, and passing it off as one's own. (12) Today, the explosion of computer technology and the rise of the Interact have profoundly impacted every area of IP, including copyright, (13) trade secret, (14) the right of publicity, (15) and trademark law. (16) In trademark law specifically, the ascendance of the Internet has spawned new legal terminology for wrongful conduct in the virtual world--"cybersquatting," "reverse domain name hijacking," "typo-pirating," and "metatag infringement." (17)

   The Internet explosion has created a surge in litigation, legislation, and academic commentary about the future of IP protection in cyberspace and specifically the appropriate role of trademark law. A formerly rather stodgy area of IP, trademark law is now arguably the hottest field of all. Indeed, commentators have noted that "[n]o area of law has seen more Internet-related litigation than trademark law." (18) The ongoing expansion of the rights of trademark holders reached its zenith when Congress singled out "cybersquatters" as the new bogeymen of trademark law with the enactment of the AntiCybersquatting Consumer Protection Act of 1999 ("ACPA"). (19) The ACPA creates rights in domain names that do not exist "in any other context under modern trademark law ... [and] allows for a finding of infringement for domain name registrations that would be non-infringing uses under any other application of trademark law." (20)

   Corresponding with the expansion of trademark rights in internet-related cases, trademark litigation in entertainment-related products such as film and music seems to come from the theatre of the absurd. Cases suggest that trademark law is being used in an abusive manner, out of sync with any traditional trademark rationale. For example, owners of old footage of the "Three Stooges" for which copyright protection had expired sued a filmmaker for thirty seconds worth of use in the film The Long Kiss Goodnight. (21) Similarly, the "owner" of the phrase "Let's Get Ready to Rumble" has admittedly instituted "maybe over one hundred" actions regarding the phrase, (22) and Mattel sued a record label for use of the title "Barbie Girl" and lyrics that offended Mattel in that song. (23) The poster child for abusive trademark litigation could be the case of Fox News v. Franken. (24) There, Fox sued satirist Al Franken over the title and cover of his book, Lies and the Lying Liars Who Tell Them: A Fair and Balanced Look at the Right. The fact that such patently absurd lawsuits ultimately do not succeed in litigation in no way weakens the contention that the suits are abusive. Lawsuits such as the Fox suit require enormous expenditures in legal fees, time, and energy, and particularly disadvantage those least able to afford the expense. (25) This article examines and critiques the expansion of trademark law in the context of the entertainment industry and the Interact. Entertainment-media issues in film, music, art, and publishing frequently stand at the center of IP disputes. In such disputes we see the convergence of (and conflict between) owner interests, the public domain, and the marketplace of ideas. This article contends that the aggressive trademark litigation strategy of companies such as Playboy (26) and others (27) may deplete the public domain, (28) stunt the free exchange of ideas, (29) and debase cardinal trademark principles based on preventing consumer confusion. (30) Further, the use of trademark litigation to silence dissent from corporate mega-companies poses as great, if not greater, a threat to social discourse as does copyright extension and expansion. (31) Trademark law lacks a broad fair use doctrine. Trademark cases in cyberspace and entertainment cannot be justified under any of the traditional theories of IP or trademark-specific theories, except that of protecting owners' personality interests, which, as the lawsuits reveal, lack a strong analytical basis and do not necessarily coincide with the public interest. (32) Such cases validate the notion that as trademark law moves away from confusion theory, abusive trademark litigation may chill the expression of ideas. Trademark, no less than other IP regimes, should "set demanding standards" in exchange for the grant of exclusive rights. (33) As has been noted, trademark law based on conceptions of property rather than confusion "risks creating 'trademark monopolies', [sic] not merely in a neutral economic sense, but in the ordinary and pejorative sense of unjustified and inappropriate market power." (34)

   Part I of this essay summarizes the theoretical underpinnings of IP protection and the four paradigms of trademark law--confusion theory, unfair competition/false endorsement, dilution, and cybersquatting. Part II explores the interests of trademark owners and the public interest. Part III examines the paradigms and the relevant interests in the context of entertainment media. Part IV analyzes abusive trademark litigation. Part V suggests a policy framework for the entertainment industry in approaching IP litigation.

1. THEORETICAL UNDERPINNINGS OF IP PROTECTION

   1. Underlying Theories of IP Protection

      Identifying underlying rationales for IP protection is critically important from a policy perspective for two reasons. First, even more so than traditional forms of property, IP protection imposes unique burdens on society, requiring justification for IP monopolies. (35) Second, underlying rationales may be outcome-determinative in assessing IP entitlements. Although characterized with various terms, legal justification for IP protection rests upon the foundation of four underlying theoretical rationales: labor/investment, (36) economic incentive/efficiency, (37) misappropriation, (38) and personality-based theories. (39)

      1. Labor/Investment Rationales

         A labor theory resonates in the writings of John Locke, who argued that men have property rights in the fruits of their labor. (40) At its full extension, a labor theory of IP postulates that "one has the right to reap the full value of one's creation." (41) Historically, labor theories of IP have played an important role in the development of IP doctrine although they have fallen into disfavor by the courts in recent decades. (42)

         A corollary of labor theory is investment theory, which provides that the law should protect value created when an IP owner invests significant time, effort, and money in IP. The courts frequently recognize the investment rationale in the context of trade secrets. The more a trade secret owner has invested in maintaining secrecy in an invention or process, the more likely the court will enjoin appropriation of the trade secret. (43) Similarly, courts have recognized that inventors would not invest millions of dollars in research and development without the carrot of a twenty-year patent monopoly. (44)

      2. Economic Incentive/Efficiency Rationales

         Economic...