Tuesday, March 27, 2018

Are We Running out of Trademarks? College Sports Edition

As I watched the Kansas State Wildcats play the Kentucky Wildcats in the Sweet Sixteen this year, it occurred to me that there are an awful lot of Wildcats in the tournament (five, to be exact, or nearly 7.5% of the teams).  This made me think of the interesting new paper by Jeanne Fromer and Barton Beebe, called Are We Running Out of Trademarks? An Empirical Study of Trademark Depletion and Congestion. The paper is on SSRN, and is notable because it is the rare a) IP and b) empirical paper published by the Harvard Law Review. The abstract of the paper is here:
American trademark law has long operated on the assumption that there exists an inexhaustible supply of unclaimed trademarks that are at least as competitively effective as those already claimed. This core empirical assumption underpins nearly every aspect of trademark law and policy. This Article presents empirical evidence showing that this conventional wisdom is wrong. The supply of competitively effective trademarks is, in fact, exhaustible and has already reached severe levels of what we term trademark depletion and trademark congestion. We systematically study all 6.7 million trademark applications filed at the U.S. Patent and Trademark Office (PTO) from 1985 through 2016 together with the 300,000 trademarks already registered at the PTO as of 1985. We analyze these data in light of the most frequently used words and syllables in American English, the most frequently occurring surnames in the United States, and an original dataset consisting of phonetic representations of each applied-for or registered word mark included in the PTO’s Trademark Case Files Dataset. We further incorporate data consisting of all 128 million domain names registered in the .com top-level domain and an original dataset of all 2.1 million trademark office actions issued by the PTO from 2003 through 2016. These data show that rates of word-mark depletion and congestion are increasing and have reached chronic levels, particularly in certain important economic sectors. The data further show that new trademark applicants are increasingly being forced to resort to second-best, less competitively effective marks. Yet registration refusal rates continue to rise. The result is that the ecology of the trademark system is breaking down, with mounting barriers to entry, increasing consumer search costs, and an eroding public domain. In light of our empirical findings, we propose a mix of reforms to trademark law that will help to preserve the proper functioning of the trademark system and further its core purposes of promoting competition and enhancing consumer welfare.
The paper is really well developed and interesting. They consider common law marks as well as domain names. Also worth a read is Written Description's own Lisa Larrimore Ouellette's response, called Does Running Out of (Some) Trademarks Matter?, also in Harvard Law Review and on SSRN.

I think this is a great article, and worth a read. It is hard to argue with the results of their study, though there are definitely implicit assumptions in there, such as shorter is better. But, as Lisa points out, the policy proscriptions are difficult. Some are easy - strictly enforce use requirements, for example. But some of the other policy suggestions--especially those that would make it easier to register marks--strike me as less plausible (at least with respect to the problem that the authors purport to be addressing).  What struck me early in the article was this statement:
Two firms can use exactly the same mark provided that their uses would not confuse consum ers as to source (for example, DELTA for faucets and DELTA for airlines). Nevertheless, a trademark owner would prefer to be at best the only firm in the economy using a particular mark and at least the only firm in its economic sector doing so. Parallel uses may not confuse consumers as to source, but each use destroys the uniqueness and blurs the distinctiveness of the other, particularly for newer entrants. They also increase consumer search costs. Yet the data show steady increases in parallel registrations of frequently used English words and common surnames both across and within classes of goods and services. Firms appear to be increasingly settling for sharing marks with others.
This statement seems unassailably true, and the data shows that congestion only enhances this problem. But the solution cannot be to make it easier to have a trademark that overlaps. If firms want the only mark, but settle for a few marks in non-overlapping goods and services, I'm hard pressed to see how allowing even more firms to use the same mark will help generate distinctiveness. If I'm a mark holder, I would want policy to go in the other direction. Indeed, even if you made it easier to register, it's unclear that people would want to use the marks.

Which leads us to college sports. There is surely congestion in team names. In the tournament this year alone, there were 5 Wildcats, 4 Tigers, 2 Wolf Packs, 2 Bull Dogs, 2 Spartans, 2 Cougars, and 2 Bison(s)(!). It's much worse in college sports generally, where there are 41 Tigers, 33 Wildcats, 26 Bears, 10 Bison(s), and 5 Wolf Packs. The lesson here is that the Wolf Pack is over represented, the Wildcats are doing OK, and the Bears are seriously underrepresented in college basketball.

But the other lessons are that a) congestion isn't limited to product marks, b) workable overlap of one word trademarks is possible, especially where that mark is coupled with some other distinguishing feature, be it college, sport, region, etc., and c) this article could be the first of a series of fruitful studies on the topic.

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