Possessing trademarks: can Blackstone or Locke apply to fast food, grocery stores, and virtual sex toys?

• Author: Dill, Jesse R.

1. INTRODUCTION II. MCCURRY RESTAURANT V. MCDONALD'S CORP. AND GRUPO GIGANTE SA DE CV V. DALLO & CO.: TOWARD TREATING TRADEMARK AS REAL PROPERTY A. McCurry Restaurant v. McDonald's Corp. and the Problems with Trademark as Tort B. Grupo Gigante SA De CV v. Dallo & Co. III. LOCKE FOR REALITY AND BLACKSTONE FOR UTOPIA A. Locke--Labor Theory B. Blackstone's Clear-Act Principle C. Virtual Property--Second Life Offers a Second Chance for Blackstone IV. CONCLUSION I. INTRODUCTION

   Modern developments in technology and business have made the world a place where people are more connected and businesses are more competitive than ever. (1) An individual's ability to interact and do business with almost any entity around the globe has made the modern commercial world a flat plane where businesses and people are easily able to compete among each other. (2) As the global economy expands, trademark becomes more important in the commercialized world because brands are crossing borders to new markets and people are crossing borders to find new brands more than ever.

   Despite these evolving commercial interactions, trademark laws remain restrained by the territoriality principle. (3) The territoriality principle holds that an entity must undertake the appropriate means to gain trademark protection within a jurisdiction for the jurisdiction to offer its trademark protections. (4) In other words, "[t]he territoriality principles requires the use to be in the United States" for the mark to garner United States' trademark protections. (5) Although countries outside of the united States abide by the principle of territoriality, most other countries rely on registration rather than use to secure trademark rights. (6) The famous marks doctrine provides an exception in most countries. Article 6bis of the Paris Convention and Article 16.2 of the Trade Related Aspects of Intellectual Property Rights ("TRIPS") Agreement protect well-known marks not registered or used in a country where protection is sought. (7) Currently, United States federal courts are split as to whether the famous marks doctrine can protect foreign marks under the Lanham Act. (8) Most courts hold that the Paris Convention is not self-executing (9) and courts uniformly hold the TRIPS Agreement is not self-executing. (10) In particular, it appears that federal courts are reluctant to recognize Article 16.2 of TRIPS as applying to the United States. (11)

   Numerous authors have addressed whether a flat world is best suited to stringently adhere to the territoriality principle. In the United States, some authors argue for Congress to adopt legislation dropping the territoriality principle or at least recognizing exceptions to it. (12) Other authors argue for courts to take action and adopt exceptions to the territoriality principle on public policy grounds. (13) With these arguments in mind, intellectual property is confronting difficult problems in determining who possesses a trademark that is concurrently used by separate entities.

   While the battle over territoriality looms, a rising discussion in intellectual property law is taking place that addresses whether intellectual property should be legally analyzed as real property. (14) For example, Henry Smith argues that "intellectual property's close relationship to property stems from the role that information costs play in the delineation and enforcement of rights." (15) Additionally, Richard Epstein applies rules of acquisition, exclusion, and duration of property to intellectual property. (16) Sheldon Halpern acknowledges the movement toward treating trademarks as property but argues that the implications strongly stand in disfavor of this conclusion. (17) Two controversial trademark cases add to this discussion and demonstrate that at least famous trademarks should be examined as property. The next question, however, is how does one possess a trademark when it is treated as property?

   This Comment engages in that jurisprudential analysis through the lens of two of the most famous property acquisition theories. Part II explains the tensions in trademark law when it is based on a tort theory of recovery through the Malaysian case McCurry Restaurant v. McDonald's Corp. (18) This Comment will then demonstrate how this tension is resolved by relying on treating a trademark as property in Grupo Gigante SA De CV v. Dallo & Co. (19) Part III concludes that in a global economy, the Lockean theory of possessing property best applies to trademarks treated as property. In a utopian society, made possible by virtual worlds like Second Life, individuals should rely on a Blackstone approach.

2. MCCURRY RESTAURANT V. MCDONALD'S CORP. AND GRUPO GIGANTE SA DE CV V. DALLO & CO.: TOWARD TREATING TRADEMARK AS REAL PROPERTY

   Trademark protections originated in the context of torts. (20) As trademark law developed, mark owners began to claim an interest in the mark itself (21) and trademark protections moved beyond the concern of consumer confusion. (22) The disadvantages for mark owners in treating trademarks as a tort theory are prevalent in the Malaysian case of McCurry Restaurant v. McDonald's Corp. (23) The problem for mark owners is resolved, however, when the property concept of dilution is introduced to the trademark context. This solution is demonstrated by the American case of Grupo Gigante v. Dallo. (24) While treating trademarks as property may relieve these tensions, the question becomes how one can possess a property interest in trademark.

   1. McCurry Restaurant v. McDonald's Corp. and the Problems with Trademark as Tort

      One of the consequences of a world that is able to communicate and travel between distant lands is that successful businesses are entering new geographic territories. (25) Take, for example, McDonald's restaurants. (26) McDonald's first opened its doors in 1940 in San Bernardino, California. (27) Since that time, McDonald's has grown to a level of unprecedented fame throughout the world. (28) Today McDonald's has more than 30,000 locations spread across 118 countries. (29) Once an exclusively American company, McDonald's now does over $23.5 billion in international business. (30)

      In 2002 a little Malaysian restaurant called McCurry challenged that fame. (31) McCurry was also a restaurant, but it sold Indian and Malaysian cuisine. (32) McDonald's sued McCurry in Malaysian court challenging its use of the "Mc" trademark in the McCurry name. (33) Throughout the suit, the owners of McCurry claimed that their use of "Mc" stood for "Malaysian Chicken Curry." (34) The trial court initially ruled in McDonald's favor and ordered the "Mc" removed from McCurry. (35)

      On appeal, the court explained that the issue presented was whether McCurry created a false impression to its customers that its goods, mark, or business was that of McDonald's. (36) The court determined that McCurry did not misrepresent its restaurant as associated with McDonald's. (37) First, there was no semblance between the McCurry and McDonald's trademarks. (38) Whereas McDonald's logo consisted of the famous golden arches, McCurry used "Restoran McCurry" and included "a picture of a chicken giving a double thumbs up...." (39) Second, the use of "Mc" did not go beyond the sign in front of McCurry. (40) While McDonald's extensively used the "Mc" prefix on all of its menu items, McCurry did not use the "Mc" mark so extensively. (41) Third, the food offered at each establishment was significantly different. (42) Unlike McDonald's fast food, McCurry offered "typically Indian food." (43) Finally, the clientele of McDonald's and McCurry was also significantly different. (44) The court found McDonald's primarily catered to children while McCurry's clients were mainly adults. (45) Therefore, despite operating in Malaysia since 1982 with a total of 137 restaurants, (46) McDonald's was helpless to stop McCurry from using "Mc."

      The McCurry case demonstrates that relying on a tort-based theory to enforce trademarks does not provide sufficient remedies for global companies in the modern economy. The Malaysian court's analysis focused on a passing off claim that was defined by how the consuming public interpreted the mark. (47) This tort claim did not recognize the interest McDonald's has in the mark itself. McDonald's must prevent others from capitalizing on using the mark so it does not become generic. (48) McDonald's loses the right to claim trademark protections in its mark once a McDonald's mark becomes generic through common use. (49)

      The interest McDonald's holds in excluding other entities from using its marks to maintain their protected status demonstrates why trademark law must recognize trademarks as a form of real property. The right to exclude is "one of the most essential sticks in the bundle of rights that are commonly characterized as property...." (50) Without acknowledging that McDonald's has a right to exclude others from using its marks to prevent the mark from becoming generic, McDonald's must rely on consumer confusion to defend its mark. In McCurry, the court overturned a lower judge's ruling that "[w]hen 'Mc' is used in conjunction with a food item, the first impression or the first thing that comes to mind is McDonald's and the plaintiff." (51) Instead, the court ruled that "Mc" associated with the type of Indian food served by the McCurry restaurant would not create the necessary confusion to order McCurry to discontinue use of the mark. (52) Forcing trademark owners to rely on the interpretations of the consuming public, however, leaves a mark owner like McDonald's without the sufficient ability to prevent its mark from becoming generic within the international context. A trademark defense that is based on tort allows non-owners significant leeway to use a mark before it becomes unlawful infringement but also may gradually lead to making a mark generic so the mark is no longer protectable. (53)

   2. Grupo Gigante SA De CV v. Dallo &amp...