Monday, December 19, 2011

Reccommended Reading: Sandra L. Rierson, "The Myth and Reality of Dilution"

If the Board's recent dilution decisions have you scratching your head, maybe it's time to take a step back from the front line to consider what this dilution thing is all about. Here's an article by Prof. Sandra L. Rierson, entitled The Myth and Reality of Dilution, that reviews the history and development of the law of dilution, discusses its flaws, and offers a novel explanation as to why trademark owners embrace the dilution concept.

Prof. Rierson

FOB (Friend of the Blog) Professor Stacey Dogan provides a concise review of the article here. By way of introduction, Prof. Dogan observes that:

After several years of witnessing the dilution laws in action, ... the nature of the commentary has shifted. Scholars have gone from a state of wary watchfulness to one of bemused head-scratching, as they have unpacked the theoretical underpinnings of the doctrine and observed its treatment in the courts. Dilution laws, it turns out, are a solution in search of a problem, and have had little practical effect.

Professor Rierson concludes that the law of dilution should either be abolished or substantially reformed. She argues, first, that there is no empirical support for the assumption that the source-identifying function of a famous mark is dissipated when others uses the same word. Without such proof, the justification for dilution law vanishes.

Second, providing a legal claim for dilution has significant costs that outweigh the supposed harm caused by dilution. "Dilution claims inflict profound anticompetitive burdens, preclude beneficial comparative advertising, and entrench dominant (often oligopolist) firms at the expense of market entrants. Dilution has serious non-economic costs as well and prohibits protected First Amendment speech without justification."

Third, the real basis for federal dilution "lies not in alleged economic harms, but rather results from an entirely misplaced fiction of corporate personality. We do not require trademark holders to prove actual economic injury in the context of a dilution claim because, in truth, there is none. Instead, we have granted the holders of famous trademarks the equivalent of a “moral” right to these marks."

When dilution is recognized for what it really is, it becomes even harder to justify its existence. Although the Pillsbury Doughboy and Barbie may well be trademarks that are imbued with personality traits in the minds of consumers (as well as in the minds of their respective corporate parents), they do not have the type of creative “soul” that normatively warrants this type of protection. Properly viewed, the federal dilution statutes of 1995 and 2006 are legislative precursors to the type of corporate personification that gave rise to the analogous treatment of corporate entities by the United States Supreme Court in Citizens United in 2010 and are equally misplaced. Trademark owners do not have an abstract moral right to ownership of particular words. Absent anticompetitive effects, those words properly remain in the public domain. By granting monopoly protection to famous marks notwithstanding the absence of actual economic injury, the federal dilution statute turns competition on its head, and serves only to entrench and further concentrate economic power in the hands of dominant corporate firms at the expense of consumers and competitors alike.

Text Copyright John L. Welch 2011.


At 8:48 AM, Blogger Frank said...

You mean to tell me the emperor really is not wearing clothes? How refreshing a view.

At 12:51 PM, Blogger Ron Coleman said...

John, anyone but you would get tossed out of INTA just for quoting these heretical words without the requisite condemnation and appeals to "brand equity"!

Thank goodness we have you, then!

At 9:23 PM, Anonymous Orrin A. Falby said...

Is this another Occupy Wall Street protest?:-)


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