Source: https://writtendescription.blogspot.com/2018/11/recent-critiques-of-post-sale-confusion.html
Timestamp: 2019-01-19 05:09:36
Document Index: 775717672

Matched Legal Cases: ['§ 1114', '§ 1125', '§ 43', '§ 32', '§ 43', '§ 32', '§ 43']

Written Description: Recent Critiques of Post-Sale Confusion: Is Materiality the Answer?
Recent Critiques of Post-Sale Confusion: Is Materiality the Answer?
Kal Raustiala and Christopher Sprigman are well known as the authors of the book, The Knock-Off Economy: How Imitation Sparks Innovation (2012). In their new article, Rethinking Post-Sale Confusion, Raustiala and Sprigman level a critique at "post-sale confusion" theory that supports many of their book's conclusions about the virtues of so-called knock-offs. In post-sale confusion cases, courts find infringement even when it is abundantly clear that consumers of obvious knock-offs are not confused at the time of purchase.
Raustiala and Sprigman's critique of post-sale confusion theory adds to similarly critical scholarship by others such as Jeremy Sheff and Mark McKenna, whose articles Veblen Brands and A Consumer Decision-Making Theory of Trademark Law, respectively, provide the backbone for much of the discussion in this post. Professor Sheff also has a forthcoming book chapter in the Cambridge Handbook on Comparative and International Trademark Law, where he places American post-sale confusion doctrine in perspective by comparing it to the European approach.
This post attempts to synthesize this scholarship, though cannot hope to serve as a replacement for the much more comprehensive and eloquent original work by these experts. The post also draws attention to a growing refrain by trademark scholars such as Rebecca Tushnet, Mark McKenna, and Mark Lemley: that a possible response to trademark courts' embrace of alternative theories of confusion is to institute a materiality requirement, like courts use for false advertising claims.
What Is Post-Sale Confusion?
Post-sale confusion is a theory of trademark infringement in which consumer confusion occurs not when purchasers buy the defendant's product at the point of sale, but when third parties observe the product at a later time, and wrongly believe the trademark owner is the source. The alleged harm to the trademark owner is not that the third party observers will go on to wrongly buy defendant's product. That would be point-of-sale confusion. Rather, the harm is that the third party observers will not buy plaintiff's product due to misinformation they received upon viewing the defendant's fake, such as the notion that the real item is low quality.
Post-sale confusion theory is especially relevant for so-called counterfeit goods (same mark, same product), such as the remarkably cheap Gucci-ish bags sold on the Upper West Side of Manhattan or the "Rolex" watches sold in Chinatown. Buyers know full well what they are getting. The concern is that others who see the fakes, "observers" (sometimes called "bystanders"), do not know, and will be affected in their own purchasing decisions by the misinformation.
As Professor McKenna has explained, despite the fact that purchasers are not confused in these cases, courts "have not been content to let the copyists off the hook [.]" Rather, they have "managed to squeeze them into trademark law by focusing on observers of the goods rather than purchasers." (McKenna, 102). This district court's analysis, in a classic fake Rolex lawsuit, is representative of the standard understanding of post-sale confusion theory:
Individuals examining the counterfeits, believing them to be genuine Rolex watches, might find themselves unimpressed with the quality of the item and consequently be inhibited from purchasing the real time piece.
(McKenna, 104-105) (quoting Rolex Watch U.S.A. v. Canner, 645 F. Supp. 484, 493 (S.D. Fla. 1986)).
The ultimate harm, that observers will not buy plaintiff's real Rolex watches after being "unimpressed with the quality" of the fakes, is different, and arguably lesser, than if purchasers were confused at the point-of-sale and consequently chose to buy defendant's watch instead of plaintiff's. But the harm is still legally cognizable. As Professor Sheff puts it, this traditional understanding of post-sale confusion theory is "entirely consistent with broadly accepted policy justifications for trademark enforcement." The harm is not just that observers will one day become misinformed purchasers, but also that "honest producers of quality goods may lose sales as a result[.]" Both injuries, Sheff writes, are ones that conventional trademark law and policy seek to prevent. (Sheff, 779-780).
According to the courts, post-sale confusion is actionable trademark infringement. However, post-sale confusion's statutory hook is less clear than traditional point-of-sale confusion's or even than dilution's. Whereas with dilution, Congress expressly amended the Lanham Act twice to address it (once in 1996 and once in 2006), post-sale confusion is present for the civil liability only by inference.
Section 32(a), states, with respect to registered marks, that
[a]ny person who shall, without the consent of the registrant...use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion ... [is liable to the owner of the mark.]
15 U.S.C. § 1114(1)(a)(1).
Section 43(a)(1)(A) states, with respect to unregistered marks, that
[a]ny person who, on or in connection with any goods or services, or any container for goods, 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 ... as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person ...[is liable to the owner of the mark.]
If you are looking for details as to when confusion must occur, they are not there. Rather, we have to assume that when the Act says "likely to cause confusion," it includes confusion that occurs not at the primary point-of-sale.
Historically the statutory hook for post-sale confusion was actually clearer than it is today. As Sheff recounts in his forthcoming book chapter, under the 1905 Act, federal registrants had the right to prevent others from “reproduc[ing], counterfeit[ing], copy[ing], or colorably imitat[ing]” their registered mark on goods with “substantially the same descriptive properties” as the goods for which the mark was registered. This meant that even though the 1905 Act limited liability to the "double identity" category of misconduct, where both the mark and the goods were identical, courts did not have to address whether there was in fact a likelihood of confusion at the point of sale. (Sheff, book chapter draft, 4-7) (discussing 1905 Act and comparing the European approach).
Today, in contrast to the early twentieth century, the Lanham Act is not limited to infringements that meet the double-identity standard. Instead, Section 32(a) and 43(a)(1)(A) target a broader variety of conduct so long as it is "likely to cause confusion." This includes confusion regarding products sold in different markets, such as BORDEN ice cream vs. BORDEN milk, and confusion with respect to mere sponsorship or approval—where defendant's use of plaintiff's mark implies some form of endorsement by plaintiff, if not necessarily that plaintiff is the source. Professor McKenna, with Mark Lemley, give the excellent example of soccer fans wearing pants bearing their team's color scheme to a World Cup game, and removing their pants after being accused of misleading people into thinking the soccer team was a sponsor of their gambit.
Yet, despite targeting a wider variety of confusing conduct, modern confusion analysis is less explicit about what happens when the purchaser of a product that bears plaintiff's mark in precisely the same market (watches and watches) knows that they are purchasing a knock-off. Here, the question becomes whether, given that purchasers are fully aware of what they are getting, the Lanham Act's likelihood of confusion standard can extend to confusion of observers who have not actually (yet) purchased the product.
Professors Raustiala and Sprigman highlight the vagueness of the statutory text with respect to post-sale confusion, but nonetheless concede that the legislative history "does suggest that Congress intended to extend the Lanham Act's protections at least to those with an intent to purchase, not merely those who have purchased or are in the process of purchasing." (Raustiala and Sprigman, 7) (emphasis added). Professor Sheff reaches a similar conclusion about the legislative history, noting that "bystander confusion" (his term for post-sale confusion based on a false perception of poor quality) is consistent with "the Lanham Act’s stated purpose of extending infringement liability to confusion of potential purchasers." (Sheff, 777-778) (discussing a 1962 amendment that eliminated language limiting liability to conduct that confused "purchasers.") (quoting Act of Oct. 9, 1962).
McKenna, for his part, is not convinced, contending that it is illegitimate for trademark infringement law to "focus on the purchasing decisions of the plaintiff’s customers rather than the defendant’s..." (McKenna, 132, n. 198) (discussing the text of 15 U.S.C. § 1125(a)(1)(A) (2006)). In McKenna's view, infringement would have to result from confusion that results in erroneous purchases of defendant's products, not of plaintiff's.
I think McKenna's view is somewhat controversial given the legislative history and how courts have responded. Irrespective of statutory ambiguities, the courts have apparently been keen to embrace post-sale confusion. All of the authors collect numerous cases in which circuit courts have held post-sale confusion to be actionable, ranging from fake Hermes handbags to fake Rolexes and other luxury watches. (Raustiala and Sprigman, 16-17; Sheff, 5772 note 18; McKenna, 102-106).
On the criminal side, it appears somewhat clearer that post-sale confusion is actionable. In his article on the Trademark Counterfeiting Act (TCA), blogged on previously here, Professor McKenna concedes that Congress had post-sale confusion in mind when it passed the TCA in 1984. McKenna argues this extension is contrary to sound policy and not precisely authorized by the text of the TCA. (McKenna, 865-866). As said previously, I think this is a controversial stance.
The Changing Nature of Post-Sale Confusion Cases: from Poor Quality to Low Status
Classically, the "confusion" that is said to taint observers in post-sale confusion cases has consisted of the false perception that the (admittedly not-confused) purchaser is in possession of a real brand name product, such as a Rolex watch or a Gucci bag, and the false perception that this product is poor quality. This false perception in turn leads observers to eschew the real thing, leading plaintiff to lose sales. (Rausitala and Sprigman, 13).
However, Raustiala and Sprigman, along with Sheff and McKenna, demonstrate that courts have increasingly accepted a new version of the post-sale confusion theory. Rather than receiving a false perception of poor quality, observers receive a sort-of false perception of lesser exclusivity, and therefore of lesser status, associated with luxury goods. As Rausitala and Sprigman put it, when observers see a knock-off like a fake Gucci bag, they believe the true luxury item on which the knock-off is based has become more "common," and therefore less desirable. (Rausitala and Sprigman, 18). Sheff's prior article, Veblen Brands, and McKenna's article, A Consumer Decision-Making Theory of Trademark Law, convincingly show that courts reasoning in post-sale confusion cases has come to reflect this new notion of harm, wherein a perception of lesser exclusivity rather than poor quality drives a loss in plaintiff's profits.
All of these authors draw on prior work by Barton Beebe, who argued in his masterful article, Intellectual Property and the Sumptuary Code, that the purpose of some intellectual property regimes has been to preserve the status of luxury goods. Identifying "the emerging phenomenon in which consumers display obvious fakes of high-status luxury goods as especially recherché signs of distinction," Beebe provocatively argued that trademark law plays a role in preserving the exclusive status of luxury goods. (Beebe, 823). "[I]if our goal were to perpetuate a system of consumption-based social distinction," he writes,
then we would offer exclusive rights in the intangible designs of distinctive goods or at least in some distinguishing characteristic of those designs (such as a word- or image-mark or other design feature) in order to prevent the unauthorized copying of them. This is, of course, what intellectual property law is already doing ... Our national trademark systems ... quite deliberately offer exclusive rights in status symbols ...
Beebe, 837-839) (emphasis added(.
Due to this shift in how post-sale confusion is theorized, Sheff, as well as Rausitala and Sprigman, divide the post-sale confusion cases into different categories. Sheff refers to the classic version, where the perception of poor quality drives observers decision to forego plaintiff's product, as “bystander confusion." Sheff coins the phrase “status confusion" to refer to the alternative form of post-sale confusion, wherein loss of exclusivity and status drives observers decisions to forego purchase. (Sheff, 774) ("Status confusion is the legal theory that most often serves to justify liability against the manufacturers of knockoff luxury branded goods, even though the purchasers of those goods know full well what they are buying.").
Despite the changed terminology, however, all of these cases share in common that the point of confusion is "post-sale," rather than point-of-sale. The risk is that observers, bystanders, third-parties, etc., are the people who are confused, not purchasers. The ultimate harm in all cases is theoretically the same: that plaintiff will lose sales, whether as a result of a perception of low quality or as a result of a perception of lesser exclusivity.
There is one point on which (I hope) we can all agree: if there is no confusion at all, whether at the point-of-sale or by observers post-sale, this should not be actionable trademark infringement. At most, this is potentially actionable dilution. This court's statement in Ferrari S.P.A. Esercizio v. Roberts, as described by Professor McKenna, would seem therefore seem to be error in a trademark infringement case:
[i]f the country is populated with hundreds, if not thousands, of replicas of rare, distinct, and unique vintage cars, obviously they are no longer unique. Even if a person seeing one of these replicas driving down the road is not confused, Ferrari’s exclusive association with this design has been diluted and eroded.
(McKenna, 131) (quoting Ferrari S.P.A. Esercizio v. McBurnie, 944 F.2d 1235, 1245 (6th Cir. 1991) (quoting 11 U.S.P.Q.2d 1843, 1848 (S.D. Cal. 1989)) (emphasis added).
This statement, made before a federal cause of action for dilution went into effect in 1996, would presumably be error today. The case would instead be treated under the dilution framework in Section 43(c), which accepts that the viewers of the Ferrari might not be confused and instead asks whether the distinctiveness of Ferrari's mark would be impaired or its reputation tarnished. (The dissent made this point in the actual case, complaining that the majority had "misconstrue[d] the scope of protection afforded by the Lanham Act by misapplying the 'likelihood of confusion' test and reading an anti-dilution provision into the language of section 43(a)." 944 F.2d 1235, 1248 (6th Cir. 1991) (dissent).)
The more difficult case is where plaintiff is not bringing a dilution claim or conceding absence of confusion, but is instead trying to win on an exceptionally weak "post-sale confusion" case. Accordingly, it is immensely important to determine precisely what plaintiff must prove to demonstrate post-sale confusion. How much confusion, and how much actual harm for that matter, is required? This is precisely what Raustiala and Sprigman seek to determine in their new piece.
The Critique: What's the Harm?
Raustiala and Sprigman's take, in short, is that while post-sale confusion may be real in some cases, it probably usually is not. In many instances, they write, "post-sale confusion is either unlikely to exist or, even if it does exist among some observers of the goods at issue, it is unlikely to harm either consumers or mark owners." (Raustiala and Sprigman, 3). To use the fake Ferrari case above, no one driving down the road seeing the Ferrari replicas is confused; and even if they are confused, they do not draw any negative perceptions that would lead them to buy fewer real Ferraris.
The problem is as follows. As said, post-sale confusion focuses on observers, rather than purchasers. The alleged harm is not that these third party observers will mistakenly buy defendant's product. If that were so, then this would just be a point-of-sale confusion theory. Rather, the alleged harm is that third party bystanders will not buy plaintiff's products. But for this harm to occur, a long chain of events is necessary. (Raustiala and Sprigman, 8).
Sheff's article provides a comprehensive list of the five (5) necessary steps, copied verbatim below:
The defendant sells its product—which incorporates some feature or combination of features that resembles a protectable mark of the plaintiff—to an admittedly non-confused consumer;
The consumer uses the product in view of a potential purchaser of the plaintiff’s product;
The potential purchaser is confused as to the source of the observed product, misidentifying it as having originated with the plaintiff;
The potential purchaser, observing the defendant’s product in use, makes some negative evaluation about the qualities of the observed product, mistakenly ascribing that evaluation to the plaintiff’s products;
Under this mistaken understanding of the qualities of the plaintiff’s products, the potential purchaser refrains from future purchases of the plaintiff’s products, and potentially recommends that others do likewise.
(Sheff, 779).
If steps 1-4 occur, then the third-party observer is almost in the position of the consumer in the point-of-sale situation. (e.g. observer has seen a fake Ferrari on the road and observed that it is slow and clunky). The observer is now in the marketplace with misinformation about the qualities of the plaintiff’s product, which might lead to the harm depicted in step 5, where the observer-come-potential-purchaser "refrains from future purchases of the plaintiff’s products, and potentially recommends that others do likewise." (e.g. "I saw a Ferrari on the road the other day, and it was crap. Don't buy it!")
It might theoretically be feasible for plaintiffs to prove this series of steps by at least a preponderance of the evidence. But courts in trademark infringement cases do not ask plaintiffs to do so. Instead, they typically make only one evidentiary finding: "likelihood of confusion." Regardless of whether plaintiff's case is based on point-of-sale confusion or post-sale confusion theory, courts consider a variety of factors to determine whether there is statutory likelihood of confusion, including similarity of the marks, similarity of the products on which they appear, and whether there is any evidence of actual confusion in the marketplace, such as surveys of consumers stating they are confused in real-world situations. Courts have accepted very low findings of actual confusion as being sufficient under the law. Quality Inns Intern., Inc. v. McDonald's Corp., 695 F. Supp. 198, 219 (D. Ct. D. Maryland 1988) ("Even the 16.3 percent is an appreciable number that cannot be dismissed.").
When the theory is point-of-sale confusion, even seemingly minimal findings of consumer confusion can be significant. If 16% of people think defendant's product originates from plaintiff, it is not too much of a leap to infer that a mistaken purchase will happen soon if it has not already. For post-sale confusion, however, even if plaintiff shows a likelihood of confusion on all the basic criteria, the alleged harm is not necessarily present or imminent in any single case. Steps 1-5, above, still have to occur.
For instance, if Ferrari submits a survey showing that 16% of drivers who see the fake Ferraris driving on the road believe they are the real thing, this still does not demonstrate that they have gleaned any false perception about Ferrari's quality. or even about Ferrari's exclusivity and status in the car marketplace. The survey also says nothing about whether this perception would lead observers to forego buying Ferraris in future. In fact, the result might be the opposite: observers may see the fake Ferraris and desire a real one as a result. As Raustiala and Sprigman put it, "under certain circumstances confusion can actually be beneficial. A confused observer ... may be spurred by her observation of the knockoff to buy the senior mark holder’s good."(Raustiala and Sprigman, 20). It's like free advertising.
Is "Materiality" the Answer?
To summarize, trademark infringement cases that are based on a post-sale confusion theory, from fake Rolexes to fake Ferraris, create what is ultimately a problem of proof. The linkage between the defendant's acts and legally cognizable trademark confusion, let alone actual trademark harm, is far more attenuated than in a point-of-sale confusion case. But courts have not responded to this problem. Instead, they seem willing to find for plaintiffs in post-sale confusion cases, even with quite minimal findings of confusion.
What is the solution to this problem? Sheff recommends placing a higher burden on plaintiff's to bring evidence appropriate to their cause of action. Courts might
put the burden on the bystander confusion plaintiff to prove that its actual or potential customers are likely to be in a position to observe the defendant’s goods in use by others, and moreover that they are the type of consumers whose purchasing behaviors are likely to be influenced by such observations (as opposed to, for example, advertising, point-of-sale inspection, or third-party reviews).
(Sheff, 784).
A less extreme variation of this option, which I think is worth considering, is to withhold an injunction in post-sale confusion cases. Courts could refuse to grant an injunction until plaintiffs show proof of imminent harm. Withholding of remedies prior to proof of harm has precedent in trademark law: many circuits already use the so-called Dawn Donut rule to limit injunctive relief for cases where there is no evidence of actual harm, because plaintiff doesn't operate in defendant's geographic region yet. Even when plaintiff has a registered mark and wins at trial on likelihood of confusion, the court will decline to enjoin defendant if defendant is in a remote part of the country that plaintiff has no intent to enter. In the post-sale confusion context, courts could hold for plaintiff if there is a likelihood of confusion under the usual factors, but withhold injunctive relief unless plaintiff demonstrates that third-party observers will more likely than not see the infringing products and actually make erroneous inferences about them.
Professors Sprigman and Raustiala take a more extreme route. They argue courts should place a new burden on the trademark plaintiff "to establish a clear connection to harm" to the mark holder. (Sprigman and Raustiala, 23). "[T]he sort of consumer confusion that should be actionable as trademark infringement is the sort that is relevant to consumers’ purchase decisions. (Sprigman and Raustiala, 4-5) (emphasis added).
The upshot is that Sprigman and Raustiala join a growing rank of trademark scholars who want to introduce an express "materiality" requirement into trademark infringement claims. Those arguing for a materiality requirement include, to name a few, Rebecca Tushnet, as well as Mark Lemley and McKenna, who proposed, in Irrelevant Confusion, that materiality be required with respect to trademark infringement claims that are based merely on contentions of sponsorship confusion, rather than confusion regarding source or quality assurance. More generally, Lemley and McKenna propose in Owning Mark(et)s that there be a “trademark injury” requirement,
akin to the “antitrust injury” requirement currently used to weed out undeserving antitrust plaintiffs: to sustain an infringement claim, a plaintiff should have to demonstrate that the defendant’s conduct is likely to cause material confusion in the minds of consumers, and allegations of other types of “harm” should be insufficient.
(Lemley and McKenna, 141) (emphasis added).
Materiality means, as a general matter, that defendant's actions are likely to actually affect a reasonable consumer's purchasing behavior. Professor Tushnet's article, Running the Gamut from from A to B: Federal Trademark and False Advertising, explains how it works for false advertising claims. In that context, plaintiffs have to show, at minimum, that defendant made a false or misleading statement in a commercial advertisement; that the statement actually deceives or is likely to deceive a substantial segment of the advertisement’s audience; and that the statement relates to a subject that is material to consumers' decision to purchase the goods. (Tushnet, 1344-1345) (citing case law).
At present, materiality is not required for trademark infringement claims as opposed to in false advertising claims. This means if Rolex sells watches that it falsely contends are "water resistant", a Lanham Act 43(a)(1)(B) false advertising plaintiff would have to show consumers care about this feature or obtain a presumption due to the nature of the false statement. In contrast, an infringement plaintiff suing a seller of fake Rolexes need not show any actual impact on consumer behavior. Trademark owners just have to show defendant's use creates a likelihood of confusion under the factors discussed above. They do not have to show consumers actually care about the subject of confusion (i.e. that Rolex is the source of the watch) enough to change their behavior.
In Tushnet's view, materiality was, in a sense, always there, because "[i]nfringement was, by definition, material." (Tushnet, 1352). The materiality requirement was inherent in a trademark infringement claim when the claim was based on the argument that defendant was selling an infringing good bearing a roughly identical mark, in the same market, at a roughly similar price. "Now," she writes, "a likelihood of confusion about source, sponsorship, affiliation, or distant relationship between a plaintiff and a defendant regularly results in injunctive relief" even though there is no evidence consumers "care one whit" about defendant's representation of a connection to plaintiff. (Tushnet, 1352).
Notwithstanding Tushnet's point, requiring plaintiffs to affirmatively prove materiality in a trademark infringement lawsuit is a controversial proposal. The Lanham Act has not historically been read to expressly require materiality for trademark infringement under Sections 32(a) and 43(a)(1)(A). As Professor Tushnet notes, with some exceptions, "[o]nly occasionally do traces of materiality resurface in trademark cases." (Tushnet, 1356-1357).
If materiality were required in plaintiff's prima facie case, I think this would substantially alter case outcomes. Major trademark plaintiffs like Starbucks might win a lot fewer cases or choose not to bring them in the first place. In litigation against a pop-up coffee shop called Dumb Starbucks, for instance, Starbucks would have to show consumers are likely to purchase defendant's coffee because they think it is Starbucks, versus because they think it is a liquid substance that contains caffeine.
I also question how this would work in the post-sale confusion context, in particular. I presume the materiality requirement would be instituted in a similar way as in false advertising cases. There, the materiality prong asks whether defendant's false statement relates to a feature consumers care enough about to affect their decision to purchase the good. This requirement could be imported with relative ease into infringement analysis under a point-of-sale confusion theory. The chart below illustrates how this would work in the false advertising and point-of-sale infringement context, respectively, for a case involving a Rolex watch.
False advertising, Lanham Act § 43(a)(1)(B)
“Rolex® is water-resistant”
Do consumers care enough about whether the watch is water-resistant to affect their decision to purchase?
Trademark infringement under a point-of-sale confusion theory, Lanham Act § 32(a) or § 43(a)(1)(A)
“Rolex® is the source of this watch”
Do consumers care enough about whether the watch is a real Rolex® to change their decision to purchase?
On Sprigman and Raustiala's view, when plaintiff argues defendant's fake Rolex sales infringe on a post-sale confusion theory, plaintiff would also have to prove "materiality." But what precisely would the post-sale confusion plaintiff have to show? That observers care enough about the Rolex brand to alter a subsequent purchase decision? That observers perceive quality problems that are significant enough to alter a subsequent purchase decision? Would it be sufficient for plaintiff to prove that observers perceive a loss of exclusivity due to the presence of numerous knock-offs? Would plaintiff further have to show that observers accordingly might realistically choose not to buy real Rolex watches? This seems a nearly impossible evidentiary burden. The modified chart below spells out some of these possibilities (drawing again on Sheff's steps 1-5 quoted above).
Trademark infringement under a post-sale confusion theory, Lanham Act § 32(a) or § 43(a)(1)(A)
· Do observers see others wearing the fake Rolex® watch?
· Do observers make a wrong inference about the source?
· Do observers recognize Rolex® as a known brand?
· Do observers care about whether the watch is a real Rolex® enough to affect their decision to purchase a real Rolex®?
· Do observers see differences in quality, or status, that affect their decision to purchase a real Rolex®?
Also, why wouldn't we presume impact on consumer behavior given that the seller of the fake Rolex has made a "literally false" statement by selling watches that are falsely labeled as Rolex? This is what courts do in at least some circuits in the false advertising context. Pizza Hut, Inc. v. Papa John's Intern., Inc., 227 F. 3d 489, 497 (5th Cir. 2000) ("With respect to materiality, when the statements of fact at issue are shown to be literally false, the plaintiff need not introduce evidence on the issue of the impact the statements had on consumers."). Importing this law into the post-sale confusion context, courts may well presume that, since defendant sold watches bearing the literally falsely statement that "Rolex® is the source of this watch," plaintiff should not have to prove actual impact on consumer behavior. Perhaps this is what courts are effectively doing already.
As a more general matter, while I see promise in the idea of importing materiality into trademark infringement claims, I remain uncertain about what exactly critics of alternative confusion theories would like to happen, beyond importing some semblance of a "materiality" requirement from the false advertising context into trademark infringement.
All commentary aside, I learned a tremendous amount from reading Raustiala and Sprigman's article, and all of the insightful and engaging scholarship cited. I enhanced my understanding of post-sale confusion tremendously, and highly recommend that others working in this area read these articles.
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