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Monday, 3 May 2010

"IP Golden Oldies": The First Salvo

Following the call from our earlier blogpost, this Kat will be taking a crack at the first of what he hopes is a regular series of discussions on "IP Golden Oldies". At the suggestion of Bob Sacoff from the Patttishall law firm in Chicago, I have now had an opportunity to consider one of the classic articles on trad emark law, "Trade-Marks and the Monopoly Phobia", written by Beverly Pattishall and published in the Michigan Law Review in 1952. The gist of the Pattishall article was to argue elegantly against what he perceived as the shift from seeing trade mark rights based on the likelihood of confusion test to a monopolistic view that tended to view trade mark rights as innimical to competition.

Pattishall described the problem in the following words:
"Business concerns now often find, when in court seeking simply to prevent encroachments upon their individual identify, and thus, good will, that they are accused of striving to preserve unto themselves a monopoly in words and symbols which were and are the heritage of all."
The starkest expression of this view had been stated by Judge Jerome Frank in the Eastern Wine Case of 1943. There, Judge Frank wrote:
"The magna carta of competition of competition, Adam Smith's The Wealth of Nations, made it clear that the consumer's interests were to be the dominant aim of the competitive system ....But the legal protection of trade-names does not engender competition; on the contrary, it creates lawful monopolies, immunities from competition."
Indeed, Pattishall could have reached back to the middle of the 19th century. At that time, when Parliament was first considering the enactment of statutory protection for trade marks, the view was already being expressed, questioning the wisdom of providing an additional form of exclusionary protection for incorporeal rights. Concern over the alleged anti-competitive nature of trade marks was also highlighted by the U.S. Justice Department in connection with the legislation that ultimately took form as the Lanham Act in the U.S. in 1946.

In any event, Pattishall sought to refute this alleged tension between trade marks and free competition by a simple exercise of logical argument:
"Obviously, trade, as we know it, is impossible without individual identify; and equally obviously, identity in trade without trade-marks cannot be had. The avowed purpose of the anti-trust acts is to encourage competitive trade and to prohibit unfair monopoly. Thus, to affirm and further the doctrines of the anti-trust acts, but to inhibit the protection of trade-marks and other means of commercial identification, is patently contradictory."
Pattishall then went on the elaborate the nature of the likelihood of confusion test as the raison d'etre of trade mark protection and to explain how trademark protection, properly understood in this way, does not implicate any concern about any restraint on competition. He wrote:
"What the law need protect is the right to individual identity, not the word or mark which, used in a certain finite way, is the means for achieving it....In a trade-mark or similar case no court is required to make any academic determination of whether the mark involved is a part of the public property. It need have no fear that in protecting a trade-mark a monopoly may be granted that is public property so long as it adheres to the likelihood of confusion test." (Emphasis added.)
Pattishall devoted particular attention to what he perceived as the unfortunate use of certain terms, namely, "monopoly", "infringement", "property", and "ownership". In his view, reliance on these terms "only lead to error and contradiction in resolving the questions which arise in trade identification cases." The reason for this is that "there is actually involved no vesting of specific proprietary right in any word or mark in protecting trade identity within the limits of the area of likelihood of confusion." If there is any property right that is involved, "it is in the trader's good-will."

Towards the end of the article, Pattishall also addresses the issue of whether a given word is desirable because, in and of itself, it has value in promoting the sale of the product. If so, words threaten to imbue such trade marks with a potentially anticompetitive character. This is so, because they confer on the owner of such word not simply the right to have its product identified by the mark but also an exclusionary right to enjoy the inherent commercial drawing power of the mark.

Pattishall dismissed this claim in the following terms:
"But when it is comprehended that by the likelihood of confusion test, all that can be protected as to any trade-mark is its identification function, it is clear there can be no argument that, certain words being eminently desirable as trade-marks, a denial of their identifying use to the latecomer grants an unjust monopoly to the prior user."
From the distance of nearly 60 years fast-forward, what do we make of Pattishall's arguments?

First, Pattishall does not address the current of argument that had been raised by Frank Schechter in 1927 ("The Rational Basis of Trademark Protection") in favour of what we now recognize as trade mark dilution. That said, it can be said that Schechter was not proposing a proprietary view of trade marks, but rather an extension of the way that trade marks might function within trade in certain circumstances. On the "likelihood of confusion"/"proprietary monoply" spectrum, "dilution" is more in line with the former rather than the latter view of trade marks.

Second, one wonders how Pattishall would weave his arguments into a trade mark system that does not require use as a prerequisite for establishing the goods and services to be protected by the registration. The window of time within which goods and services may be protected even in the absence of actual use would seem to straddle the boundary between the two poles considered by Pattishall.

Third, there remains the "dirty little secret" of likelihood of confusion. By this I mean that a pure confusion-based system should ideally rest on a showing of actual confusion only. The "likelihood of confusion" test can be seen as extending the scope of trade mark protection in a way that argubably goes beyond what is strictly required. But a fuller consideration of this point is for another time.

When all is said and done, a consideration of the Pattishall article forces one to consider once again the first principles of trade mark law. In so doing, and in reminding us, in an elegant and tighly reasoned fashion, of the "likelihood of confusion" foundation of trademark law, he has left the trade mark profession with a continuing rich conceptual legacy.

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