Tuesday, February 13, 2018

Recommended Reading: Prof. Ouellette, "Does Running Out Of (Some) Trademarks Matter?"

Lisa Larimore Ouellette, Associate Professor of Law at Stanford Law School, responds to the article posted here yesterday, in a note entitled, Does Running Out Of (Some) Trademarks Matter?, 131 Harv. Law. Rev. Forum 116 (2018) [pdf here]. While praising the work of Professors Beebe and Fromer, Professor Ouellette suggests further avenues of research regarding the actual costs or the countervailing benefits of either depletion or congestion, before recommending any change in the current trademark system.

In this short space, I wish to laud the remarkable descriptive contribution of Are We Running Out of Trademarks? while sounding a note of caution on the normative implications. Beebe and Fromer’s data convincingly demonstrate that short, common word marks are becoming depleted and congested, and they present a number of plausible hypotheses about the negative welfare impact of this trend. Their findings suggest that trademark policy has been based on false assumptions and should be closely reexamined. But their data cannot elucidate the actual costs of depletion or congestion — particularly without noting how the market will adapt to reduce these costs — and cannot reveal if there are countervailing benefits. Generating concrete evidence of these costs and benefits seems like a necessary next step before recommending any significant changes to the current trademark system. After offering a laudatory evaluation of the value of Beebe and Fromer’s descriptive work, I explore why reforms in reaction to their research should proceed cautiously, and I suggest important avenues for future empirical work to build on these results.

Read comments and post your comment here.

Text Copyright John L. Welch 2018.


At 11:37 AM, Anonymous joe dreitler said...

Interesting articles but not sure of the "Solution". Anyone tackling the issue had better be very familiar with the Trademark Review Commission and purpose of the TLRA of 1988. When I began in this business, there were just over 1 million registrations that had been issued. Today, we are over 5 million.
The TRC Deadwood committee found that at least 15-20% of active registrations were not being used. This was in the pre-ITU world where token use was viewed as the problem. The TRC had proposed a procedure for getting rid of deadwood similar to that used in Canada but it never made it into the law. Here's hoping that the USPTO finally does get such a system into law because filing Cancellation actions are not an effective way to promptly get rid of a dead registration.
A couple of obvious things have happened. The first is that too many people still believe that registering and renewing registrations based upon token use is ok.
Second, a wise man spoke at the USTA mid year meeting in 1990 and predicted that if the US joined Madrid, there was going to be an influx of applications filed with no real basis to use, but with long goods Id's that would clog up the register. He was hooted down by in house lawyers who thought of how much money they would save on foreign registrations, not how hard it would be to clear a mark in their own country. And many of these garbage
registrations sit there and are renewed without use, because it is easy and cheap to do so.
Third, we used to advise clients who operated strictly local businesses that they were not eligible for federal trademark registration because they were not actually operating a business in interstate commerce, but that they could get a state registration, especially if they were not going to expand outside of their own state. Well, the internet came along and every local business started registering their names federally because they could do it themselves and the fees are cheap compared to other countries. And I tried once or twice to oppose a purely local business (like a real estate agent) on the grounds that they were not actually operating in interstate commerce (because they were only licensed in 1 state) but the decisions by the Board were that that internet presence and fact that someone from another state contacted them about moving to Utah was enough to show interstate commerce.

And so we have 500+ page trademark search reports (instead of 30 pages) today with non used and local businesses and as a result many applicants simply file and let the USPTO do their search for them, because it is a lot cheaper than the alternative.
Bottom line, a lot of it was brought on by our own behavior and not recognizing that actions and inactions have consequences.


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