Trademarks and digital goods.

• Author: McKenna, Mark P.
• Position: Negotiating IP's Boundaries in an Evolving World

BMW recently sued online virtual modeling company TurboSquid for selling digital models of BMW vehicles. (1) TurboSquid allows artists to upload to its web site and offer for sale a wide range of digital models, (2) and there are currently dozens of 3D models of cars available on the site, many from recognizable brands:

Purchasers of the digital models typically use them as inputs for video games, news reporting, commercials, and movies. (3) Some of the models available for sale on TurboSquid's site can be 3D printed by the purchaser. (4) According to BMW, TurboSquid's "marketing of 3-D virtual models" of BMW vehicles for use in video games infringed BMW's trademarks and trade dress, in addition to its design patents. (5) With respect to its trademark claims, BMW alleged that the sale of digital models of BMW cars, complete with BMW logos, was likely to confuse consumers about the source of those digital models, or about whether BMW had licensed TurboSquid to sell models of its vehicles.

BMW's case is the latest in a growing number of trademark cases dealing with uses in the digital environment. Some of those cases raise issues with which trademark law has long wrestled--cases like E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc., in which the owners of the Play Pen Gentlemen's Club claimed the defendant's digital depiction of the "Pig Pen" strip club in the Grand Theft Auto video game infringed its rights in its Play Pen mark. (6) E.S.S. happened to involve a digital work (a video game), but it raised familiar questions about the circumstances in which use of a trademark within an expressive work can give rise to liability. (7) Other cases implicate the trademark/copyright boundary, raising concerns about trademark law's overlap, or interference with copyright--cases like Marvel Enterprises, Inc. v. NCSoft Corp., in which Marvel claimed that the defendant's inclusion in its video game of a superhero character called "Statesman" infringed its copyright and trademark rights in Captain America. (8) Many of these latter cases implicate the Supreme Court's Dastar Corp. v. Twentieth Century Fox Film Corp. decision, which held that only confusion about the origin of tangible goods (and not about the origin of intangible content) is relevant for purposes of Lanham Act claims. (9)

But BMW's case against TurboSquid has a somewhat different flavor because that claim related not to the inclusion of digital BMWs in a digital work, but to the sales of the files themselves. (10) And there are reasons to think these types of claims may be more common in the future, as a variety of goods that consumers once would have purchased in physical form are increasingly beamed to computers and phones as digital files. (11) Media products are the most obvious examples here. Music once purchased on vinyl, eight-tracks, audio cassettes, or CDs is now downloaded or streamed from the cloud. (12) Movies once rented or purchased on Betamax/VHS tapes or DVDs are likewise downloaded or streamed. (13) And software once purchased on floppy disks (5.25 inch, then 3.5 inch) or CDs is now downloaded directly or, in some cases, provided as "software as a service," in which applications are stored remotely in the cloud and dispersed users utilize the program through interfaces on their individual computers. (14)

But in a world in which 3D printing technology is becoming mainstream, this phenomenon will not be limited to media products. Indeed, 3D printing technology makes possible the digitization of nearly any product that can be conceived. (15) No longer must consumers purchase physical items like toys, tools, or even handbags. Rather, they can create or obtain digital files containing 3D printing instructions and print the items in their homes or anywhere they have access to a 3D printer. (16) From trademark law's perspective, the significant point is that 3D printing technology radically separates the design and production processes. Trademarks have traditionally been understood to indicate the source of goods' production, but production and design typically went hand-in-hand. In a 3D printing world, design can be done by anyone with access to a CAD program, and production can take place anywhere there is a 3D printer, including an individual's home.

That separation has potentially destabilizing consequences for trademark law, which has overwhelmingly been oriented toward indications of the origin of physical goods. (17) For one thing, digitization brings much more of trademark law into contact with Dastar, raising difficult questions about whether, and under what circumstances, digital files count as "goods" for Lanham Act purposes. More broadly, a world of increasing digitization implicates important concerns about the boundaries of trademark law vis-a-vis other areas of IP law, and it raises profound questions about the meaning of source indication and the role of trademark law in the digital world.

We argue that the question of whether we should treat digital files as relevant goods is irreducibly one of policy, and it should not be reduced to mere formalism. Digital files should be treated as goods only when consumers' interactions with the files sufficiently resemble their interactions with physical goods that they warrant the same treatment. In particular, we argue that digital files should be treated as goods only when the origin of the files as such (not the content of those files) is material to consumers. That, we argue, may turn out to be relatively rare. Indeed, we suggest that a world of greater digitization might well be a world in which trademark law has less relevance relative to design patent and copyright.

1. DOCTRINAL CHALLENGES

   The TurboSquid website contains digital models of numerous branded products, including Hermes and Luis Vuitton handbags, Rolex watches, and Nike shoes. A shopper looking for an image of a Rolex watch, for example, would look in the collection of "Watch 3D Models." After clicking on a particular watch image, the shopper would reach a page with multiple images of the watch from various angles. That page prominently displays the name of the object depicted in the image (often by brand name) as well as the name of the artist who created the model (JGCosta, in the image below):

   These kinds of uses raise a series of difficult doctrinal questions. What role does the Rolex mark play here? Does it indicate the source of the digital model? Or would the shopper instead assume that the artist identified under the name of the product created the model? After all, the artist is the source of the digital model, even if Rolex is (presumably) the source of the watch's design. (18) What if, as in the iPad example below, the page displaying the digital model includes a clear statement that "[t]he intellectual property depicted in this model, including the brand 'apple,' is not affiliated with or endorsed by the original rights holders and must be used under editorial use restrictions"?

   Most importantly for our purposes, even if users would assume that Rolex (or Apple) created, or at least licensed, the digital models, is that assumption legally relevant? Are digital models "goods" for purposes of the Lanham Act? Does the labeling of the digital models with the name "Rolex Submariner Date" or "iPad Pro Silver" matter to that determination?

   1. Dastar and the Definition of "Goods"

      These kinds of digital trademark uses run headlong into the Supreme Court's decision in Dastar Corp. v. Tiventieth Century Fox Film Corp., which held that "origin of goods," for purposes of the Lanham Act, refers only to the origin of tangible goods; it does not, and cannot be understood, to refer to the origin of intangible creative content. (20)

      Dastar involved the unattributed use of public domain material from a television series that was based on President Dwight Eisenhower's book Crusade in Europe. (21) Though the book remained in copyright, Twentieth Century Fox failed to renew the copyright on the television series, thereby inadvertently allowing it to fall into the public domain. (22) Dastar edited footage from the television series and added some new material to make its "World War II Campaigns in Europe" video set. (23) Neither Dastar's advertising nor the videos themselves made any reference to Fox or to the Crusade television series; (24) instead Dastar advertised the series as having been "Produced and Distributed by: Entertainment Distributing,'" a Dastar subsidiary. (25)

      Fox claimed that Dastar was passing off Fox's content as though it were Dastar's own, thereby falsely designating the origin of the video series in violation of section 43(a) of the Lanham Act. (26) This was not a fanciful claim--indeed, there was some precedent for reverse passing off claims of this sort. Not only had the Ninth Circuit allowed reverse passing off claims in cases of "bodily appropriation" of a creative work, (27) the Second Circuit recognized reverse passing off claims in cases in which the defendant's unauthorized work was "substantially similar" to the plaintiff's, borrowing the test of copyright infringement. (28) Some commentators continue to endorse these claims even after Dastar, (29)

      Nevertheless, the Supreme Court rejected Fox's claim, concerned about the implications for copyright law if Lanham Act claims were allowed in these settings. Since the material Dastar copied had fallen into the public domain, the Court insisted that Dastar had an unqualified right to use it, even without attribution. (30) But the Court's concerns were not limited to claims involving public domain material, and it therefore did not rest its holding on the status of the material Dastar copied. Instead the Court resolved the case by interpreting the phrase "origin of goods" in section 43(a) to mean to "the producer of the tangible product sold in the marketplace." (31)

      The concept of origin "might be stretched," the Court allowed, "to...