15 June 2016

Marks and deception

'The Biblical Fool and the Brander: The Law and Economics of Propertization in American Trademark Law' by William Kratzke in (2016) Cardozo Arts and Entertainment Law Journal comments
Isaiah 35:8, which tells of “fools” upon a highway who shall not err, became authority for the position that the Federal Trade Commission should protect fools from deception. This Article examines the Biblical passage in context and concludes that it does not support protection of unthinking, credulous people. Ensuing FTC orders based on witnesses’ speculation of how fools would construe particular claims actually harmed fools. The FTC retreated. Unfortunately, the objective of protecting fools from deception has taken over § 43(a) Lanham Act jurisprudence – but now sellers speculate in competitor lawsuits how fools will construe competitors’ claims and undertake to “protect” them in an expansive cycle of “propertization” of trademarks and trade dress. This propertization is the essence of “branding.” 
This Article identifies merchandising rights (“product as trademark”) and trade dress protection (“trademark as product”) as occasions when propertization occurs. The Article adapts Justice Holmes’s tort policy norm to articulate a standard against which to judge trademark doctrines, i.e., they should accomplish affirmative good by enlarging the cooperative surplus that transactions between buyers and sellers create. Pricing at marginal cost, a result of competition, maximizes such surplus and consumer capture of it. The Supreme Court’s announcement in Lexmark International, Inc. v. Static Control Components, Inc. that § 43(a) standing depends upon allegations of trade diversion or injury to reputation should accomplish affirmative good.