Missing the (Certification) Mark: How the Lanham Act Unnecessarily Restricts State and Local Governments as Certifiers.

Author:Rubin, Nathaniel F.
 
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Abstract. The law regulating certification marks--a close cousin of trademarks--is inadequate to handle the needs of state governments as certifiers. While states play important roles in certifying products, the Lanham Act's certification mark provisions impose restrictions on certifiers that are designed to rein in self-dealing and anticompetitive conduct by private businesses and trade groups. Although these restrictions help ensure that certifiers stick to standards that they promulgate for themselves, this Note argues that these same restrictions do not account for states' need to consistently update certification standards to fulfill public policy imperatives that are distinct from the commercial motives that private certifiers face. This Note argues that because the Lanham Act is so restrictive, courts, agencies, and Congress should all work to give more latitude to states as certifiers. In doing so, this Note also examines some of the underdeveloped doctrinal areas surrounding certification marks, including the ability to amend a certification mark and the rights-remedies gap for many violations of the Lanham Act's certification mark provisions.

Table of Contents Introduction I. Background A. What Is a Certification Mark? B. States as Certifiers II. State Certification Marks and the Limits of Federal Law A. State Certifiers and the Constitution B. States Versus the Lanham Act 1. Discrimination and expansion 2. Participation in the marketplace III. What Happens When State Policy and the Lanham Act Collide? A. Looking at the Lanham Act B. Constitutional Considerations IV. What to Do with the Lanham Act? A. The Politics of Public Policy B. Potential Paths Forward Conclusion Introduction

When Alaska voters approved a ballot initiative purporting to "regulate marijuana like alcohol," the State, like others with similar initiatives, faced a thicket of unanswered regulatory questions. (1) Some questions--like how cannabis would be distributed, labeled, and secured--had been widely anticipated and discussed in the run-up to the vote. (2) But as the State worked over the following years to implement its voters' decision, it found itself making choices in less high-profile realms.

Among those were two state-run programs applying federally registered certification marks to Alaskan products. Certification marks are a close cousin of trademarks that a third-party certifier applies to producers to indicate that their goods meet certain standards of origin, quality, or manufacture. (3) Unlike trademarks indicating that goods come from a single producer--such as NIKE (4)--certification marks like OPRAH'S BOOK CLUB (5) or Good Housekeeping's warranty guarantee (6) can appear on any manufacturer's product meeting the certification mark's standards. (7) Through one such program, the Alaska Department of Natural Resources's Division of Agriculture administers the ALASKA GROWN mark, which certifies that plant products are, in fact, grown in Alaska and meet quality standards. (8) Per the Division's policy, a qualifying product includes "a plant ... grown to a finished product in the state." (9) And in Alaska's legal marijuana industry, each cannabis plant is grown, harvested, and sold within the state. (10) But nonetheless, the Division has elected not to certify them with the ALASKA GROWN mark, citing the potential for the Division to lose its federal funding. (11)

While the State's rationale--maintaining federal funds--is a reasonable one, (12) it comes into conflict with federal law in its own right. Section 4 of the Lanham Act regulates states' federally registered certification marks alongside the broader body of trademark law, (13) and one of the Act's key provisions, section 14(5), states that no certifier may "discriminately refuse[] to certify or to continue to certify the goods or services of any person who maintains the standards or conditions which such mark certifies." (14) Though the State may never have anticipated the need to decide whether or not it would apply the ALASKA GROWN mark to marijuana when the program began in the 1980s, (15) the Lanham Act now binds its hands. (16)

Colorado's attention to the marijuana question, on the other hand, may have led the State to create a similar problem. After Coloradans voted to legalize recreational marijuana in 2012, (17) the State established its "byColorado" program, which allows many businesses and state agencies to use several related certification marks to advertise their Colorado roots. (18) While the State's motives included fostering local businesses' development, (19) the State also wanted to create a distinctive Coloradan brand excluding marijuana-related businesses. (20) The State's foresight led it to explicitly exclude the marijuana industry from the program's certification marks. (21) Even though Colorado created its policy when roughly half of Americans favored marijuana legalization, (22) approximately one-third thought that smoking marijuana is immoral, (23) and marijuana remained illegal at the federal level. (24)

In the years since Colorado established its byColorado program, national support for marijuana legalization has already climbed to slightly less than two-thirds of the American public, (25) and support for federal legalization is emerging as an issue on at least one side of the 2020 presidential election. (26) These rapidly evolving attitudes call into question the proposition that Colorado, which has no bar on certifying the State's well-regarded brewers, (27) and whose tourism bureau advertises the State's craft distilleries, (28) will continue to want to distance itself from marijuana. Instead, the State may someday want to bolster its now-nascent cannabis industry alongside its more established sectors. However, despite the State's potential interest in the future in certifying marijuana-related businesses alongside others, the Lanham Act would likely bar it from doing so. Just as the Act prohibits certifiers from denying certification marks to producers who meet a mark's standards, (29) the Act also prevents certifiers from failing to control a mark's use, (30) which likely includes applying the mark to goods outside the scope of the certification statement. (31)

Although both of these scenarios occur in the context of states navigating the regulatory shoals around marijuana legalization, they reflect a deeper underlying tension: The Lanham Act's rules governing certification marks, which Congress crafted with an eye toward preventing anticompetitive conduct, instead come into conflict with states' public policy goals that stand apart from narrow commercial interests. (32) While the procompetitive aspects of the law of certification marks serve private parties well, they serve states poorly, creating a tension in the law that calls for resolution. The law thus constrains states in their ability to use certification marks, despite certification marks' capacity to serve states' interests. This Note examines whether the Lanham Act's limits on certification marks can give way to state public policy interests when the two conflict, and finds that they cannot. This Note argues that to the extent states have already enacted policies that contravene the Lanham Act, they are likely to do so in the future, and to the extent the Act fails to properly balance state and federal interests, courts, agencies, and Congress should reassess and ultimately interpret or amend section 14(5) to let states deviate from the Act's standards when acting in accordance with public policy interests separate from commercial motives. (33)

Part I of this Note briefly reviews the relatively underdeveloped law of certification marks--including how they differ from ordinary trademarks-- before examining states' role as certifiers. Next, Part II examines the unique issues facing states as certifiers bound by federal law. Part III then considers whether either the U.S. Constitution or the Lanham Act might allow states to override the ordinary restrictions the Lanham Act places on certifiers, before concluding that both sources of law are unlikely to do so. Part IV therefore argues that courts, agencies, and Congress should modify certification mark law to allow latitude for state public policy, and concludes with some suggestions as to how.

  1. Background

    Certification marks are a cousin of trademarks. Like trademarks, they convey information about goods to consumers, but unlike trademarks, this information typically indicates goods' geographic origins, compliance with standards, and union-made status. Certification marks face legal restrictions that trademarks do not, especially insofar as a unique device called the "certification statement" limits their use, and the Lanham Act limits remedies against deviant certifiers. This Note begins with these aspects of certification mark law, and then turns to states' role as certifiers--which typically arises in the context of indicating the geographic origins of agricultural and manufactured goods.

    1. What Is a Certification Mark?

      Certification marks are a type of specialized mark that the Lanham Act protects alongside its better-known trademark provisions. While ordinary trademarks, like DUNKIN' (34) or BOEING, (35) identify an individual producer's goods in the marketplace, certification marks instead signify that the goods meet certain standards a third party promulgates. (36) Though trademarks and certification marks convey different messages, both increase consumers' power in the marketplace by reducing search costs and incentivizing manufacturers to invest in product quality. (37) As a functional matter, certification marks typically indicate one of three qualities: that a product comes from a certain geographic area (such as DARJEELING tea (38) or ALASKA GROWN produce (39)), that the product meets certain quality control standards for manufacture (such as WOOLMARK (40) or UL CERTIFIED (41)), or that a...

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