INTRODUCTION I. THIS IS NOT MY BEAUTIFUL MARK II. WELL, HOW DID WE GET HERE? III. MATERIAL AND IMMATERIAL CONFUSION A. Justifications for Expanding Confusion 1. Consumers, producers, and the quality of unrelated goods 2. Uses that confuse consumers about quality 3. Consumer perceptions in pure sponsorship cases B. Costs of Expanding Confusion C. Weighing Costs and Benefits IV. DISTINGUISHING TRADEMARK INFRINGEMENT FROM FALSE ADVERTISING V. WELL, HOW DO WE WORK THIS? CONCLUSION INTRODUCTION
In 2006, thousands of soccer fans showed up to the World Cup game between the Netherlands and the Ivory Coast wearing pants in the colors of the Dutch national team. The pants had been given out as promotional gifts by a beer company. FIFA, the governing body of international soccer, objected. It claimed trademark rights in the team colors, and giving out pants in those colors was in FIFA's view "ambush marketing" that was likely to confuse those who saw (or even those who wore) the pants into thinking that the soccer team had sponsored the pants. And in FIFA's view, not only was giving out the pants illegal, but individuals wearing them were falsely suggesting some affiliation with the Dutch national team. (1) Prohibited from wearing the pants into the stadium, more than one thousand fans dutifully took their pants off and cheered the Dutch team to victory in their (largely orange) underwear. (2) This was Europe, after all, and it was an important match.
Trademark law centers its analysis on consumer confusion. With some significant exceptions, the basic rule of trademark law is that a defendant's use of a mark is illegal if it confuses a substantial number of consumers and not otherwise.
As a general matter, this is the right rule. When it works well, trademark law facilitates the workings of modern markets by permitting producers to accurately communicate information about the quality of their products to buyers, thereby encouraging them to invest in making quality products, particularly in circumstances in which that quality wouldn't otherwise be apparent. If competitors can falsely mimic that information, they will confuse consumers, who won't know whether they are in fact getting a high quality product. Indeed, some consumers will be stuck with lemons. (3)
Unfortunately, as the FIFA case illustrates, trademark law has taken the concept of confusion too far. Over the middle part of the twentieth century, courts expanded the range of actionable confusion beyond confusion over the actual source of a product--trademark law's traditional concern--to include claims against uses that might confuse consumers about whether the trademark owner sponsors or is affiliated with the defendant's goods. This expansion began for plausible reasons: consumers might be confused to their detriment in at least some cases in which the plaintiff and the defendant do not actually compete directly. But sponsorship and affiliation confusion has taken on a life of its own, leading courts to declare as infringing a variety of practices that might be confusing in some sense, but that do not affect consumers' decision-making process.
We think trademark law needs to refocus on confusion that is actually relevant to purchasing decisions. Specifically, it should anchor once again to the core case of confusion regarding the actual source of a defendant's product or service, the type of confusion most obviously related to consumer decision making. Most cases of confusion regarding actual source will involve competitive goods, but consumers may also mistakenly believe a mark owner is the actual source of noncompetitive products that are closely related to the mark owner's. We think genuine source confusion causes the same problems whether or not the parties' goods compete directly, so trademark law should treat as infringing any use that is likely to cause confusion about the actual source of a product or service.
Some uses now viewed through the lens of sponsorship or affiliation raise concerns analogous to those posed by source confusion, particularly those that are likely to cause consumers to believe that the trademark owner stands behind or guarantees the quality of the defendant's goods or services. Even if consumers understand that individual franchisees, rather than the McDonald's Corporation, actually make their hamburgers, they are likely to expect that McDonald's assures the burgers' quality. But in those cases it is the fact that consumers believe the brand owner guarantees the quality of the product that leads to consumer harm if their belief is misguided. We therefore would define the category of trademark infringement to include cases involving confusion as to whether the plaintiff is responsible for the quality of the defendant's goods or services in addition to those involving actual source confusion. And because we believe these types of confusion will impact consumer decision making with sufficient regularity, we argue that courts should presume materiality in cases that fit in the trademark infringement category.
Cases that involve allegations of other forms of confusion, many of which are now lumped into the "sponsorship or affiliation" category, should not be regarded as trademark infringement cases. This does not mean, however, that no other forms of confusion should ever be actionable. To the contrary, we believe the law should regulate some statements that create confusion regarding other types of relationships, but that claims directed to this other type of confusion should be analogized to false advertising claims. False advertising law, like trademark law, is designed to protect the integrity of markets by allowing consumers to rely on statements made by sellers. While trademark law prevents competitors from misrepresenting the source of their products by mimicking another's brand name, logo, or trade dress, the law of false advertising prevents false or misleading statements about the nature or qualities of one's own or a competitor's products. We think uses that cause confusion about things other than control over quality are more like the statements regulated by false advertising law than those traditionally regulated by trademark law. Thus, uses that cause non-quality-related confusion should be treated more like false advertising.
Importantly, false advertising law requires the plaintiff to demonstrate that the misrepresentation is of a particular type (4) and that it is material--that it is likely to affect consumers' purchasing decisions. We think requiring proof of materiality is desirable in the absence of confusion regarding responsibility for quality, both because confusion regarding other types of relationships is less likely to impact consumer purchasing decisions and because these claims are responsible for so much of the cost of trademark law. Indeed, we think it is no accident that the cases that pose the greatest threats to speech interests are sponsorship or affiliation cases, as are many of the most troubling cases involving new technologies, like the recent suits against search engines for returning paid search results in response to search queries involving trademarks. (5)
Our argument unfolds as follows. In Part I, we identify a number of examples of "confusion" alleged by mark owners, many of which courts have found actionable even in circumstances in which that confusion was unlikely to matter to the operation of the market. Part II explains how we arrived at this unfortunate pass. In Part III, we argue that courts can begin to rein in some of these excesses by focusing their attention on confusion that is actually relevant to purchasing decisions. Uses of a trademark that cause confusion about actual source or about responsibility for quality will often impact purchasing decisions, so courts should presume materiality and impose liability when there is evidence such confusion is likely. Uses alleged to cause confusion about more nebulous relationships, on the other hand, are more analogous to false advertising claims, and those uses should be actionable only when a plaintiff can prove the alleged confusion is material to consumers' decision making. We address the scope of such false advertising-like claims in Part IV. We continue the discussion in Part V, which explores some of the implications of distinguishing between different types of confusion and conceiving of some claims as false advertising rather than trademark infringement claims, and we discuss how to handle some close cases.
THIS IS NOT MY BEAUTIFUL MARK (6)
Pantsless soccer fans (and those sitting next to them) are far from the only victims of the broad modem conception of sponsorship or affiliation confusion. In 2008, Major League Baseball began to crack down on the longstanding practice by local Little Leagues of naming kids' baseball teams after major league franchises. MLB's theory was that people watching the twelve-year-olds play for the Tinley Park Cubs would wrongly assume that the Chicago Cubs had granted permission to or otherwise sponsored their eponymous Little League counterparts. Faced with the prospect of suit, Little League teams everywhere began renaming their teams. (7)
In 2006, back when it was good, NBC's hit show Heroes depicted an indestructible cheerleader sticking her hand down a kitchen garbage disposal and mangling it (the hand quickly regenerated). It was an Insinkerator brand garbage disposal, though you might have had to watch the show in slow motion to notice; the brand name was visible for only a couple of seconds. Emerson Electric, owner of the Insinkerator brand, sued NBC, alleging the depiction of its product in an unsavory light was both an act of trademark dilution and was likely to cause consumers to believe Emerson had permitted the use. NBC denied any wrongdoing, but it obscured the Insinkerator name when it released the DVD and Web versions of the episode. (8) And not just television...