Trademark law and industry myths.

AuthorFang, Anyu

INTRODUCTION I. A STRUCTURAL PROBLEM OF FALSE ADVERTISING LAW II. THE MYTHS OF LUXURY FASHION III. TRADEMARK LAW AND INDUSTRY MYTHS IV. A PROPOSAL A. Tarnishment B. POST-SALE CONFUSION V. CONCLUSION Cite as 13 J. High. Tech. L. 88 (2012)

Introduction

The rise of modern advertising has stoked wide ranging scholarly debate about its effect on consumer behavior and its implications for advertising and trademark law. Frank Schecter famously argued that trademark law should protect the use of a product's mark to signal its uniqueness even when such use does not have anything to do with the identification of the source of the product. (1) This idea was later challenged by advertising skeptics who believed that such protection against the dilution of a mark's distinctiveness ended up generating social wastefulness and distorting consumer choices in the marketplace. (2) Law and economics scholars then retorted that choices based on reasons other than product function and price nevertheless improve consumer welfare if consumers derive utility from them, (3) and in any case the law must make available remedies against new brands who free-ride on established brands when the latter have worked to build their reputations into values in the marketplace. (4)

This essay considers one issue to which theorists have not paid attention: I argue that advertising not only generates brand loyalty but also cultivates identification with a type of product, a type that might encompass multiple brands within an industry. I do so through the lens of puffery, which is usually known in trademark law as a defense in false advertising suits, (5) that renders the advertisement in dispute non-actionable when it constitutes "(1) an exaggerated, blustering, and boasting statement upon which no reasonable buyer would be justified in relying; or (2) a general claim of superiority over comparable products that is so vague that it can be understood as nothing more than a mere expression of opinion." (6)

Although invoked often by defendants in such cases as a defense, puffery as a phenomenon in the real world does not receive much attention as a subject of study. It languishes in a state of relative neglect in scholarly discourse on advertising and trademarks. (7) The reluctance stems perhaps from a preoccupation with some of the expansive developments in trademark and unfair competition law, such as rights of publicity, sponsorship or affiliation confusion, initial interest confusion, post-sale confusion, and misappropriation. But whatever the reason, we ignore puffery at our peril. The implicit assumption in false advertising law is that puffing does not harm anyone; when a brand employs exaggerated statements in its advertising, it is not providing literally false statements, just exaggerated ones that everyone knows are exaggerated. As I will argue in the rest of this Essay, however, a careful examination of puffery as it is practiced by actors in the marketplace would make us realize that it is much more complex than we think it is, that there are blustering and boasting statements that reasonable consumers would be justified in relying upon, and that they rely upon them to their peril such that there are real harms generated by puffery. My examination reveals a structural deficiency of false advertising law: even if we started reforming the puffery defense by weakening it and making it theoretically easier for plaintiffs to proceed with litigation, there still exists a whole category of exaggerated and boastful statements that competitors simply would not sue each other over.

Puffery, I will argue, flows from the mouths of individual brand owners, but also flourishes at the level of entire industries. This industrial dimension of puffery has gone unaddressed in the literature because of a basic flaw in our conception of puffery as a tactic employed by individual brands only. In the real world, multiple sellers might simultaneously employ the same genre of persuasive advertising and radically alter the nature of the dyadic relationship with the consumer stylized in contemporary trademark theory. Although puffery doctrine emphasizes the difference between statements of fact and statements of opinion, I argue that repeated and reproduced exaggerations by players in the same industry--what I will call industry myths--end up blurring the line between the two, certainly in the minds of consumers. Some industries, indeed, create and thrive off of industry myths that aid and abet their individual advertising tactics.

I will argue that this structural defect in false advertising law could be addressed through looking to trademark law be cause the two are intricately linked, 8 and problems that occur in one arena easily impacts the other; in the case of industry myths, I will show that the imperative of developing counter-mythical knowledge to help the consumer requires us to look beyond false advertising law and reappraise long held assumptions in trademark law. That is because at the same time that industry myths blossom and take on a life of their own with the aid of a globalized and increasingly networked business and advertising environment, trademark law has expanded its scope to protect them. For example, mark owners have a statutory right of action against uses that "tarnish" the mark. Courts have historically found tarnishment where the plaintiff showed that its mark is "linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context," so that "the public will associate the lack of quality or lack of prestige in the defendant's goods with the plaintiff's unrelated goods...." (9) Furthermore, section 43(a)(1)(A) of the Lanham Act gives a private right of action against any person who uses in commerce "any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which ... is likely to cause confusion...." (10) Courts have developed many interpretations of "confusion," (11) including the capacious concept that even if the buyer and seller of a good proceeded with their transaction with no confusion as to source or affiliation, a good could cause confusion in the minds of the general public (i.e. people in general who did not yet buy the good). (12) I will show that these causes of action are tied to the phenomenon of industry myths because at bottom, they are attempts by mark owners to block "uses that might change the way people feel about their mark" (13)--effectively blocking competition about the meaning of a mark rather than actual competition on price and quality within a given market.

This Essay proceeds in six Parts. In Part I, I lay out the landscape of trademark theory fully to contextualize puffery, followed by a longer exploration of puffery as both a phenomenon and doctrine. In Part II, I provide a case study to illustrate the industrial dimension of advertising that operates in tandem, rather than in tension, with individual brand marketing. I choose luxury fashion as a case study not only because it provides a window into the power of puffery to help brands and industries command high profit margins, but also because this particular industry has in recent years quite vociferously articulated its need for vigorous intellectual property protection.

In Part III, I describe the dramatic expansion of trademark law that has affected the market's ability to provide counter-mythical knowledge. I then propose in Part IV that the best solution to the problem I identify in this Essay is to unleash the power of the market and allow for new uses of a mark that deliberately destabilize its cultural significance. I argue for the abandonment of doctrines that protect mark owners against uses that do not compete with the owner but merely affect the mark's meaning.

Finally, I revisit the world of luxury fashion in Part V to provide a casual illustration of the implications of my argument. I consider, with the help of theorists of fashion, how the prestige of luxury products circulates as a currency in the game of the competition for meaning and, by extension, for power. Hence, the subversive potential of uses of a mark that deliberately thwart the original owner's purpose.

  1. A Structural Problem of False Advertising Law

    Traditional trademark theory assumed that trademarks serve as valuable informational tools, (14) and a large body of literature has propounded the view that trademarks communicate information to consumers to reduce their "search costs" in distinguishing one company's product from another's. (15) Buttressing this conception of trademark-as-information, false advertising law ensures that the seller communicates accurately, by giving a right of action against any party that "misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities." (16) This framework depends not only on the enforcement power of the Federal Trade Commission, (17) but also on competing mark owners to generate litigation over false advertising. (18) False advertising law, however, occupies a much more limited field than the law on trademark infringement. (19) For example, courts impose a materiality requirement on false advertising cases even though the statutory language does not contain it. (20) Courts also consider prudential standing for false advertising claims where no such consideration obtains in trademark infringement cases. (21)

    To succeed on a false advertising claim, a plaintiff can make one of two showings: that the advertisement was literally false or that it was ambiguous but likely to mislead consumers. (22) In the latter case, the burden is on the plaintiff to show actual consumer reaction to the advertisement. (23) Furthermore, the plaintiff faces the challenge of overcoming a powerful...

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