Trademark and Copyright Enforcement in the Shadow of IP Law

I. INTRODUCTION: UMDERSTANDING IP ENFORCEMENT AND ITS CONSEQUENCS In recent years, as Congress has created new intellectual property (IP) rights and courts have often interpreted those rights broadly, (1) legal scholars have frequently decried the expanded scope of protection afforded IP owners in most substantive areas of IP law--including patents, (2) copyrights, (3) trademarks, (4) and rights of publicity. (5) According to this critique, the over-expansion of IP rights throughout the past two decades harms competition, chills free speech, and diminishes the public domain as increasingly broad areas of social life are brought within the scope of strong IP protection. (6) While this overexpansion theory reflects an important-indeed, foundational-policy debate concerning the proper balance between IP owners' rights and the public's rights of access to the information, ideas, and expressions that IP protects, (7) it is incomplete precisely because it focuses largely on what Congress or the courts do. In reality, most enforcement of IP rights takes place not in court, but in the everyday practices of IP owners and their lawyers. (8) "Cease and desist" letters, phone calls, and negotiations with alleged infringers constitute the bulk of IP enforcement efforts in trademark and copyright practice. (9) To be sure, these efforts take place in the "shadow" of IP law and are therefore influenced by it. (10) But it is in these everyday practices-and not in trial or appellate courts-that most IP rights are asserted, resisted, and negotiated. Thus, if we want to know whether IP rights are over-enforced or over-extended, we need to know how, why, and to what effect these rights are exercised in daily life. (11) To date, however, IP scholarship has focused virtually no attention on this critical arena of everyday practice. (12) Most IP scholarship is primarily doctrinal, focusing on published appellate cases. (13) Even the growing empirical scholarship on IP focuses largely on published or, at least, filed cases. (14) As in every other area of civil justice, however, most IP disputes do not result in litigation, and most litigation settles well before trial. (15) Certainly, published appellate decisions and even filed cases represent only a small percentage of IP disputes. Thus, in order to more fully understand whether IP rights affect competition, chill free speech, diminish the public domain, or impede creativity, it is necessary to explore how IP claims are made and resolved in private negotiation rather than in litigation, which is the focus of this Article. It presents findings from a qualitative empirical study of the trademark and copyright disputing process outside of court, based on original data derived from semi-structured interviews with experienced IP attorneys who advise clients on how to enforce their rights. This research is one of the first studies to examine how trademark and copyright claims are actually enforced in practice. A. From Bobbleheads to Bullies One impetus for the present research was the outcome of a widely reported IP case that presented important legal issues of first impression, but which settled before those issues were adjudicated in court. (16) Although this case did not involve trademarks or copyrights, its resolution highlighted how IP owners may be able to use the threat of litigation to coerce advantageous settlements outside of court, even in cases where the asserted IP rights are weak or where the courts would likely limit those rights in litigation. The case and its lessons thus merit brief discussion here. In 2004, Oak Productions, Inc. ("Oak Productions"), the licensing company for then-California Governor and Hollywood movie star Arnold Schwarzenegger, filed a lawsuit in Los Angeles against a small Ohio manufacturing company, Ohio Discount Merchandise ("ODM"), that made and sold bobblehead dolls depicting Schwarzenegger dressed in a suit while brandishing an automatic rifle and bandolier of bullets. …