Aug 2, 2010 Sara Stadlerip
Mark A. Lemley & Mark P. McKenna,
Owning Mark(et)s,
Stanford Law and Economics Olin Working Paper No. 395 (May 2010), available at
SSRN.
There’s nothing like the realpolitik of copyright to push you into the arms of trademark law (see Dotan Oliar on Bill Patry, supra), but as Mark Lemley and Mark McKenna reveal in Owning Mark(et)s, there’s plenty of corporatism at work in the evolution of trademark law, too. Lemley and McKenna don’t put it that way, and they probably wouldn’t. But it’s hard to read Owning Mark(et)s without reflecting on how thoroughly legal rules are changing to favor the great and powerful, whose primary goal, as ever, is to foreclose markets to new entrants—including markets that the great and powerful haven’t entered.
Knowing that it doesn’t pay to be a bully, trademark owners have styled themselves victims of junior users who, in using established marks in “unrelated” markets, “are mere free-riders, reaping where they have not sown.” This may sound appealing, but trademark rights are supposed to flow from use in trade. One who hasn’t entered a market isn’t supposed to “own” it. As Lemley and McKenna write, “[t]he idea that a mark owner is harmed because a defendant interferes with its ability to expand operates on a presumption that the mark owner ought to have the right to expand without interference.” But the trademark owner doesn’t have that right unless the law says it does. This is the circularity that “seems to have carried the day in copyright,” and as Lemley and McKenna demonstrate, it’s transforming trademark law, too, as courts give trademark owners priority in markets that their trade hasn’t entered, but to which it might conceivably extend.
Fortunately, the authors have a plan.
I’ve divided Owning Mark(et)s into three parts: the law; the evidence; and the proposal. In the first part, Lemley and McKenna relate the “traditional” case for trademark protection—namely, the prevention and punishment of source confusion—and then describe how, beyond that, things “get a little more complicated.” The complication lies in the fact that trademark owners now allege, as harm, not the diversion of existing trade, but the usurpation or destruction of future trading opportunities. If, for example, a third party were to offer Apple watches for sale, Apple’s complaint wouldn’t be, “They deceived my customers,” but instead would be that “the existence of another Apple in the watch market impedes the original Apple’s ability to expand—either into the watch market or other related markets.”
This is a powerful argument for trademark owners precisely because it’s always available, regardless of how little proximity there is between plaintiff and defendant in the marketplace. Lemley and McKenna illustrate the point by describing a handful of recent trademark cases in which source confusion was absent, but in which, nonetheless, courts acted to remedy the “harms” of market preemption and free riding. None of these cases should be news to trademark scholars (or practitioners), but taken together, they tell an interesting story. It’s a coherent and engaging read.
This part also contains more than a few sentences that made me reach for my pen. In revealing how trademark owners characterize benefits to defendants as harms to themselves, for example, Lemley and McKenna write, “[i]n fact, however, these claims of harm and claims of benefit run together, particularly in [intellectual property], where the entire concept of harm is in some sense an artificial construct based on the government’s decision to create a right.” The authors’ focus on the relationship between harms and benefits is one of the more intriguing aspects to Owning Mark(et)s. As they point out, we now appear to live in a world in which it’s not enough to suffer no harm; others must not be allowed to benefit, either. Copyright already has embraced this orthodoxy, which is why it’s so hard to care about copyright law any longer. Et tu, trademark? As Lemley and McKenna observe, “a right to control ancillary markets bears striking resemblance to the derivative work right in copyright law.” It’s all coming together now, and not in a good way for consumers.
The second part of the article discusses marketing studies showing that brand extension doesn’t damage consumers’ perceptions of the “core brand” (e.g., Neutrogena hand lotion) but, at worst, damages their perceptions of the “parent brand” (e.g., Neutrogena) in an abstract sense. According to Lemley and McKenna, this doesn’t translate to much, if any, harm to brand value, and I think they’re right, although I’ve always been suspicious of the sorts of studies on which they rely. The problem is that trademark owners aren’t likely to take much, if any, comfort from this, which means they aren’t likely to stay their hands as a result. The great majority of trademark scholars know, in their hearts, that these harms to brands aren’t occurring. But we’re not the ones bringing the cases.
Which brings me to the third part of the article. A solution to the problem that Lemley and McKenna describe isn’t obvious, primarily because courts have used a variety of doctrines to satisfy the demands of trademark owners. Lemley and McKenna resolve this difficulty by proposing to require plaintiffs in trademark actions to show “trademark injury,” which the authors define as a material amount of “confus[ion] about actual source or about responsibility for quality.” This is a nifty solution because, like antitrust injury, the doctrine could be created by courts. Congress is not about to adopt such a thing because the International Trademark Association, which drafts the bills, is not about to propose it. Now, I’m the last person to ask courts to legislate, but when Congress uses lawmaking to cultivate its most powerful constituents, it’s hard not to look to courts for help—particularly where, as here, there’s precedent for courts to act. Of course, “[a] trademark injury doctrine is not a panacea.” But at least it’s something workable, and maybe even wise. That, in itself, is worth celebrating.
Jul 29, 2010 Charlotte Cranetax
The Virginia Tax Review always includes something that I end up chewing on for far longer than I expect to, and the most recent number to cross my desk (Spring 2009) is no exception. It includes a piece entitled The Recovery of Unlawful Taxes by Jacob Nussim of the Bar-Ilan Law faculty in Israel. The piece is an English language version of work that apparently has appeared in Hebrew, and a technical version of the piece has been available on SSRN for a while now. But the food for my thoughts is all in the readily accessible VTLR version.
Issues relating to refunds of illegal taxes have reemerged recently, at least in the federal system. First came the government’s defeat in the International Court of Trade in the Harbor Maintenance Tax litigation in the 1990’s, and then came continuing litigation despite the government’s recent concessions regarding the Telephone Excise Tax. Neither case involved major threats to the fisc, but both involve potentially significant changes in the procedural rules that historically have discouraged taxpayers from pursuing claims that federal taxes were unlawfully collected. If Congress is forced in the coming years to invent new tax instruments, the ground rules for handing challenges to these new tax instruments will become increasingly important.
A word of warning is probably appropriate here: although I am fairly sure that I do not agree with many of the premises of the article (since I think that the burden should be on taxpayers to challenge potentially unlawful taxes both politically and early on in the courts, before nonstatutory judicial remedies must be invented), and I am not sure that I fully understand the part that is Nussim’s original contribution (since there is a little bit of unexplicated legerdemain in the layman’s version of the mathematics). What appeals to me is the effort that he has put into situating his micro-economic analysis in the real world in which it might be applied.
Nussim’s principal claim is that our instincts about the “passing on” defense, at least as applied to claims for refunds of unpaid taxes, are simply wrong. Under this defense, a taxpayer is not entitled to a refund of taxes that should not have been paid (whether because they were illegal or because they were simply paid by mistake) unless the taxpayer can show that it bore the economic burden of the tax. The commonly articulated justification for this defense is that the taxpayer should not recover taxes for which it was reimbursed by its customers, because such payment would amount to a windfall. Nussim’s insight is that this analysis fails to take into account the fact that the taxpayer will rarely have actually passed on the full amount of the tax because the taxpayer will have taken into account the fact that it might turn out to be illegal. Even if there are no other market constraints on the taxpayer’s ability to pass the burden of the tax on, it will only try to pass on the expected burden of the tax, taking into account the possibility that the tax will be refunded.
In laying out his conclusions (p. 929), Nussim points out that the use of passing on defense itself amounts to a tax increase above and beyond the nominal tax that can be legally collected under the tax instrument in question. On the one hand, this is obvious, and has always been, since the whole point of the passing on defense is that the government gets to keep the taxes that it should not have collected in the first place. This is, as Nussim admits, pretty obvious. (He, perhaps a bit unfairly, accuses courts and legislatures of failing to appreciate this. More on that below.) But how bad is it if such expropriative schemes are allowed? An amount of taxes greater than was authorized by law was collected, and governments constrained by law should not be permitted to engage in such expropriative schemes. That is not a particularly original point, and applies to any defense against refunds of unlawful taxes, not just the passing on defense. Nussim’s original contribution ultimately is that the actual relative burdens involved in imposing this possibly unlawful tax, should it prove to have been unlawful, will depend upon whether taxpayers viewed their potential refund as limited by the passing on defense.
In the VTLR version of his thesis, Nussim has taken great pains to provide the reader with a full view of the legal sources of the passing on defense. That in and of itself would distinguish it from many other works using microeconomic approaches to analyze tax instruments and thus merit my praise, even if he does leave the reader with the impression that as a matter of positive law the passing on defense is far more commonly invoked than it actually is. But my greatest praise is for the fact that he clearly sees that one cannot assess the burden of a tax simply by looking at what the law on the books says. The procedural aspects of collection and the refund process—and not just the structure of the audit lottery or ways of calculating winning on the merits—are important factors that must be taken into account in determining what the tax instrument put in play by the legislature actually is.
Nussim does stop a bit short. To me, the passing on defense is best seen as a substantive hurdle embraced by judges and legislators who are relieved to be able to provide a plausible reason for refusing to refund taxes. The next step should be to provide them with something coherent to replace it.
Jul 26, 2010 Ian Kerrcyber
Jennifer A. Chandler,
The Autonomy of Technology: Do Courts Control Technology or Do They Just Legitimize its Social Acceptance?, 27
Bull. Sci. Tech. & Soc. 339 (2007), available at
SSRN.There’s this feeling I sometimes get browsing law review articles. It happens, like, once or twice in a decade. When it happens, I am so utterly struck by an article’s hypothesis that its supporting arguments practically fall by the wayside. Not because those arguments aren’t important or convincing. Ultimately, they are crucial. But, on rare occasions, the arguments are eclipsed by the author’s incredible insight in the formulation of the research question itself. This feeling that I am describing is the academic’s equivalent to a Jerry McGuire moment.
And, let me just say, Jennifer Chandler’s “The Autonomy of Technology” had me at hello.
Chandler examines the “autonomy of technology” thesis—a rather odd philosophical notion made famous by Jacques Ellul and Langdon Winner, that “technology tends to move along a trajectory that is relatively impervious to deliberate social control and that society instead tends to adapt its values to technological change.” (P. 341.) While this particular philosophy of technology has in recent years suffered many slings and arrows from the social constructivist camp (who argue that “technologies are very much shaped by social factors and the appearance of determinism arises because the social interests at stake in technological design are forgotten once the technology is completed” (P.342[/note], Chandler wonders whether the “autonomy of technology” thesis might be useful in illuminating the role of courts in the social control of technology. As she asks in her subtitle: do courts control technology or do they just legitimize its social acceptance?
Offering three interesting case studies, Chandler tries to demonstrate the possibility that “the courts may be systematically supporting the social acceptance of technology and technological values as they develop and apply the private law of tort and contract.” (P.342.) This possibility, she thinks, is reminiscent of the “autonomy of technology” thesis: “despite our belief that we direct the development of technologies and choose whether or not to use them, this control is more or less illusory.” (P.341.)
Chandler draws on several philosophical concepts, including Langdon Winner’s “reverse adaptation”—the phenomenon that, “[a]s a technology emerges, human ends are adjusted to match the available means.” (P. 341.) Chandler’s hypothesis is that judges, though they believe themselves to be autonomous, authoritative regulators of emerging technologies, are in some sense compelled through various private law principles and legal techniques to support and legitimize novel technologies within society. As Winner himself once put it, “[w]e may firmly believe that we are developing ways of regulating technology. But is it perhaps more likely that the effort will merely succeed in putting a more elegant administrative façade on old layers of reverse adapted rules, regulations and practices?”
My favorite of Chandler’s three case studies examines the judicial construct that “harm is caused by rejecting technology.”(P. 342.) The discussion centers around one of Canada’s most interesting tort cases in recent years, a class action suit commenced on behalf of a group of organic farmers seeking damages from agricultural biotech giants Monsanto and Bayer. According to the farmers, the foreseeable pollen drift from Monsanto’s and Bayer’s genetically modified canola products contaminated their crops, causing harm by thwarting their ability to grow certified organic canola. However, Monsanto and Bayer responded by claiming that the harm was not caused by their corporate release of genetically modified canola but rather only by the standards required to obtain organic certification (those standards being incompatible with the products’ inevitable drift) as well as by the farmers’ own attempts to adhere to those standards.
As Chandler very astutely observes, by favoring the defendants’ position on this issue, the court’s line of reasoning provides a classic illustration of Winner’s reverse adaptation thesis. Adapting human ends to available technological means, “it is not the parties modifying the environment with a novel technology that cause harm to others, but the parties seeking to avoid the use of the new technology that bring harm upon themselves.” (P. 343.) According to Chandler, “[t]he courts … are helping to make the technology an invisible part of the ‘cultural’ wallpaper, such that a rejection of available technology is irrational and is the source of any harm suffered.” (P. 344.)
Interestingly, Chandler goes on to demonstrate that the court’s reverse adaptation rule is not a one–off phenomenon. In her second case study, she offers a fascinating explication of the doctrine of mitigation in tort law to show that courts expect individuals to submit to technologies considered reasonable (from the perspective of rational risk) in order to mitigate harms caused by others. According to the mitigation doctrine, where the majority has embraced a particular technology, a plaintiff will also be required to adopt it if the technology would assist in mitigating the plaintiff’s losses. As Chandler points out in a detailed discussion of the existing Canadian case law, “[t]his becomes particularly troubling in the context of medical technologies, where a plaintiff must submit to [an unwanted] treatment if he or she wishes to recover compensation for injuries… [T]he economic duress faced by persons unable to work as a result of their injuries will in some cases exert serious pressure to comply with the mitigation requirement in order to obtain compensation through the courts.” (P. 344.)
The mitigation doctrine, Chandler concludes, is a means by which the private law renders various emerging technologies reasonable. Its tenets require judges to “promot[e] the cultural integration of technologies by labeling as unreasonable an attempt to avoid them.” (P. 346.) Chandler sees the mitigation doctrine as part of a systematic tendency “to legitimize certain technologies and to put pressure on dissentients to submit to them.” (P. 346.)
These case studies on private law’s notion of harm and its potential mitigation (and a third study on standard form/shrinkwrap contracts) provide a measure of support for Chandler’s working hypothesis, “that judges, through various private law principles, support and legitimize novel technologies.”(P. 348.) At the same time, by carefully referring to hers as a “working hypothesis”, Chandler remains open to the possibility of refutation, expressly stating that “further work would be helpful in identifying counter-examples and in studying other legal doctrines to see if they support or undermine the hypothesis.” (P. 348.)
Without trying to ram it down our throats, Chandler presents a very interesting, plausible and intuitive prima facie legal case for the rather implausible and generally counter-intuitive “autonomy of technology” thesis. When I said at the outset that she “had me at hello”, I meant that even if it turned out that her overall argument is incomplete, incorrect or unconvincing, her article offers up some extremely tasty food for thought: do the structures, doctrines, and methods of private law have the systematic effect of legitimizing the social acceptance of certain technologies?
Now, that is one very cool question for cyberlaw scholars to consider!
So cool, in fact, that I think Chandler ought to be forgiven for stacking the deck in favor of her working hypothesis by “tak[ing] a narrow approach” (P. 348) and by “looking only at certain private law doctrines” (P. 348). The better understanding of her work is to see it as a challenge to herself and others to further investigate the rather bold assertion that courts have a systematic bias in favor of technology. I am hopeful that she will continue to do so. The topic certainly merits a full-length monograph, graduate dissertations and further published law review articles.
I also loved this article because it epitomizes the breadth and depth of Chandler’s thinking and the beauty of her insight. Through her exploration of the philosophical debate on technological determinism across three doctrines in private law, Chandler invites cyberlaw scholars to ask and answer questions that will not only help to ground policy discussions about particular emerging technologies, but will also allow us to carefully reflect upon deeper juridical questions and issues surrounding the nature of law itself.
And, that’s a tall order.
Let me finish with just a few of the questions burning in my mind.
If courts really are biased in favor of technology, what exactly is the cause of the bias? And, what makes the bias systematic? Can and should this bias be undone? Or, do core private law values (e.g., reasonableness, efficiency) necessarily favor the technological society? And, if so, how so? Is the advancement of technology impervious to judicial conservatism or discretion? Should law itself be understood as a kind of technology? If so, what does the “autonomy of technology” thesis teach us about the nature of law or our (in)ability to control it?
Although the “autonomy of technology” thesis may seem farfetched to some, it is important for cyberlaw scholars to remember that our entire field is in fact premised upon one of its core tenets. Joel Reidenberg’s lex informatica, Lawrence Lessig’s code is law, are both derivative of Langdon Winner’s famous idea that artifacts have politics. As Winner put it, “A crucial turning point comes when one is able to acknowledge that modern technics, much more than politics as conventionally understood, now legislates the conditions of human existence.” In large measure, cyberlaw and technology policy analysis begin with this acknowledgement.
One of Jennifer Chandler’s central insights, though she never expresses it as such, is that the “autonomy of technology” thesis does not entail a wholesale adoption of technological determinism. As Winner so eloquently stated: “It is somnambulism (rather than determinism) that characterizes technological politics—on the left, right and center equally.” Like Langdon Winner, Jennifer Chandler seeks to wake up those who would simply assume that technology is neutral and that judges (and other regulators) control technology through the application of rules. In her excellent preliminary work on the subject, she encourages a deeper understanding of the relationship between law and technology, beckoning a reconsideration of Thoreau’s famous remark that perhaps, “we do not ride on the railroad; it rides upon us.”
Jun 17, 2010 Test Contributorzetasec3
John Hart Ely, The Wages of Crying Wolf: A Comment on Roe v. Wade, 82 Yale L.J. 920 (1973).
Of course the acid test will be Zeta.
And that is next.
Soon.
Jun 17, 2010 Michael Froomkin
Michael Froomkin
Autoupdate was smoother from WP3.0 RC3 than from WP 2.9.2.
Things look OK.
I hope.
Jun 17, 2010 Michael Froomkin
Zeta-section is now upgraded to WordPress 3.0.
I used the automatic upgrade feature.
Let’s hope it works well.
Jun 14, 2010 Michael Froomkin
Michael Froomkin
Zetasec2 is now running WordPress 3.0, Release Candidate 3.
Details about the release are at 3.0 RC3.
Please check around for oddities.
Jun 2, 2010 Test Contributorzetasec3
Welcome to WordPress. This is your first post. Edit or delete it, then start blogging!
May 27, 2010 Michael Froomkin
For this post, I turned off all write permissions to the plugin directory in both the zeta-section and the zeta directories.
Let’s see if it still works. If it does it might help fight the evil pharma hack.
If not….
May 23, 2010 Michael Froomkin
Michael Froomkin
I wrote this on Sat, May, 22 at 5pm, but set it to publish on Sunday at 9am.
This year we are going to reorganize the article submission and editing process in the hopes of making it easier, and also reducing the chance of any article falling through the cracks. (We’ll probably use the old system during the 2010 summer, then move to the new system in late August 2010.)
Authors will be asked to send their text to jot@sectionname.jotwell.com. This address will automatically forward to the section editors and the student editor assigned to that section.
If an author should email you directly (which was what we asked them to do in the first year), please forward the article to jot@sectionname.jotwell.com to ensure that everyone who should have a copy gets a copy.
