Table of Contents Introduction I. The Certification Mark as a Species of Trademark A. The Similarities B. Statutory Differences C. Consumer Perceptions of Certification Standards II. Exclusive Certification or Certification Exclusion? A. The Kosher Certification of Jezebel B. Movie Rating for Henry: Portrait of a Serial Killer C. Geographical Indication for Swiss Watches III. Counterproductive Certification Marks A. Certifier Incentives B. Counterproductive Worries 1. Flexible standards 2. Certifier and downstream market power IV. Fixing Certification Marks A. Substantive Regulation B. Procedural Regulation 1. Regulation of certification standardmaking a. Disclosure of the certification test b. Review of standard clarity and comprehensiveness c. Notice-and-comment standardmaking and revisions 2. Regulation of certification decisionmaking a. Disclosure of certification decisions and reasoning b. Procedural protections for businesses in decisionmaking c. Certification audits C. Antitrust Scrutiny Conclusion Introduction
What do a trendy kosher restaurant in SoHo, an independent movie about a serial killer, and a Swiss watchmaker have in common? Each has been excluded by a certifier from employing its legally protected certification mark in ways that seem to run counter to the certification mark's purposes of consumer protection and promotion of competition. Each of these businesses has either been disqualified by a certifier from getting a certification mark or been manipulated by a certifier into securing a certification mark: a kosher food certification withheld from the restaurant until it changed its name; an R movie rating withheld from the independent movie, whose producer claimed the rating was being given to far gorier--yet non-independent--movies; and a withheld geographical certification of SWISS MADE for the watchmaker located in Switzerland and much of whose watches' value--but not all--originates in Switzerland. The inability of each of these businesses to be certified as is--without any clear certification standard or procedural regularity--can have adverse, and sometimes catastrophic, consequences for the businesses, their consumers, and competition writ large. This is no fringe issue. Not only are major certifiers, like those here, making many millions of dollars annually in certification fees, (1) but revenues for the goods and services they certify can turn, often significantly, on these certifications. (2)
This Article explores more generally how certification mark law--a branch of trademark law--itself enables counterproductive consequences through inadequate regulation or oversight. Because the law allows certification standards to be vague, high-level, and underdeveloped, a certifier can choose to exclude certain businesses inconsistently or arbitrarily, even when these businesses' goods or services would seem to qualify for the certification mark (particularly to consumers). Moreover, certifiers can wield their marks anticompetitively, even when a certification standard is clear and complete. They can do so through redefinition--something certification mark law currently allows without oversight--to ensure that certain businesses' goods or services will not qualify for the mark. Both of these forms of certification mark manipulation undermine the goals of certification marks: (1) to protect consumers by providing them with succinct information--via the marks--on goods' or services' characteristics and (2) to promote competition by ensuring that any businesses' goods or services sharing certain characteristics salient to consumers qualify for a mark certifying those characteristics.
After demonstrating that these two types of potentially harmful behavior can readily transpire under current trademark law, this Article proposes that the law be restructured to curb this conduct in the first instance. Because there can be good procompetitive reasons for certification standards to be defined and redefined over time, there is no absolute need for clearer static standards. (3) Rather, this Article advocates for robust procedural regulation of certification standardmaking and decisionmaking that would stop, or at the very least expose, poor certification behavior. As discussed in greater detail below, such processes could include public disclosure of certification standards and reasoned certification decisions, opportunities for affected businesses to engage in something akin to notice-and-comment rulemaking for potential changes to certification standards, and random audits of certifiers' decisionmaking. Moreover, attentive antitrust scrutiny ought to be arrayed to catch anticompetitive behavior that nonetheless slips through the regulatory cracks.
Despite the important ways in which certification marks operate differently from trademarks, this Article concludes by arguing that certification marks are properly maintained as a branch of trademark law.
Part I describes the law and theory of certification marks, situating them in trademark law. To explore the ways in which counterproductive behavior might arise in certification markets, Part II sets out three case studies with regard to different certifications: for kosher food, movie ratings, and geographical indications. Part III moves to generalize by exploring how certifiers' incentives can lead them to exclude in ways that can run counter to the purposes of trademark law and can sometimes even be anticompetitive. It then investigates how the lack of regulation in the law of certification marks exacerbates this problem. Part IV explores how these harmful forms of certifier behavior might be curbed through a combination of procedural regulations in trademark law and antitrust scrutiny.
The Certification Mark as a Species of Trademark
The Lanham Act provides for federal protection of trademarks, including certification marks. (4) According to the statute, a certification mark is
any word, name, symbol, or device, or any combination thereof ... to certify regional or other origin, material, mode of manufacture, quality, accuracy, or other characteristics of such person's goods or services or that the work or labor on the goods or services was performed by members of a union or other organization. (5) Examples of certification marks abound: Underwriters Laboratories' UL mark to certify the safety of a vast range of products (such as fire extinguishers, band saws, and carts powered by electric battery); (6) the Orthodox Union's OU mark to certify that food is kosher according to rabbinic standards; (7) the IDAHO and GROWN IN IDAHO certification marks used by the Idaho Potato Commission to signify potatoes grown in the state of Idaho; (8) the G, PG, PG-13, R, and NC-17 movie ratings employed by the Motion Picture Association of America (MPAA); (9) and the GOOD HOUSEKEEPING seal of approval mark to warrant that tested products "perform as intended." (10)
This regime contemplates that certifiers themselves establish the particular standard that products or services must meet to be certified. (11) Consumers who see a certification mark on a good or associated with a service can reasonably infer that the good or service meets the certification's established standard. (12)
Although there are some crucial differences, the certification mark is a species--or perhaps a sibling--of the trademark. (13) Most trademark scholarship focuses not on certification marks but rather on trademarks. (14) Therefore, in the following Subparts, I explain how the certification mark fits into, and diverges from, trademark law and theory.
Trademarks identify and distinguish particular sources of goods or services. (15) A focus on fair competition drives trademark law. (16) According to one classic take, trademarks bolster trade by "identify[ing] a product as satisfactory and thereby ... stimulating] further purchases by the consuming public." (17) Per this notion, producers of trademarked goods will be encouraged to invest in the goods' quality because consumers will use the trademark as a way to identify a desirable good only if their past experiences with a particular producer's goods reliably forecast the good's worth. (18) Protecting against trademark infringement, from this vantage point, thus prevents others from trading on the goodwill that is represented by the trademark and helps consumers be certain they can easily find the products they seek. (19) In all of these ways, trademarks reduce consumers' otherwise steep search costs--the expenditures they must make to discern important but hard-to-ascertain qualities of goods or services--by conveying this information succinctly. (20) Trademarks, then, ought to promote trade and enable consumer decisionmaking. To achieve these goals, trademark law guards against use of a too-similar mark that causes consumer confusion as to goods' or services' origins. (21)
Certification marks serve a similar role in providing shorthand information to consumers that certified goods or services comply with standards about which they might care, such as complex religious rules for being kosher. Margaret Chon theorizes that certification marks--if implemented properly by "represent[ing] accurately the standards purported to be embodied within the products (and services) being purchased by consumers"--can "facilitate consumer protection and access to quality market information." (22) Certification marks can facilitate consumer trust in buying compliant goods or services from sources they do not otherwise know (or those that are distantly located). (23) Like trademarks, certification marks can also encourage purveyors of goods and services to provide quality goods or services that conform to those marks' standards, to the extent that consumers care about them. Similarly, prohibiting certification mark infringement safeguards the investments of both certifiers and businesses with certified goods or services...