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Abstract:
A deep tension lies at the heart of trademark law. On the one hand, the law's core mission is to facilitate the transmission of accurate information to the market. Hence the touchstone of liability has always been the likelihood of consumer confusion. On the other hand, it is also customary to refer to trademark law as protecting goodwill in a mark. The problems arise because these two ways of formulating the goal push in different normative directions and create a policy tension that frustrates attempts to formulate a coherent body of doctrine.

This Article examines how the goodwill concept originally entered trademark law and traces its intellectual and social history and its impact on trademark doctrine. Ever since the 1920s, and with greater frequency during the past two decades, courts have relied on the idea that trademark law protects against appropriation of goodwill to justify some rather broad, and ultimately ill-advised, doctrinal expansions. These expansions seem sensible extensions of trademark principles from the point of view of goodwill appropriation because of the elasticity of the goodwill concept, which can extend to include brand, firm, and in its broadest form, inherent goodwill. In the end, understanding this history gives a useful perspective from which to evaluate the role of goodwill in trademark law today and to propose reforms that would eliminate its pernicious effects.

Trademark, Goodwill, Misappropriation

Abstract:
The standard account holds that trademark law, at its core, aims to protect consumers from deceptive and confusing uses of source-identifying marks. However, there is a problem with the standard account. It cannot explain a number of important trademark doctrines, many of which, like the protection accorded trade dress, have expanded the scope of trademark rights in recent years. Some critics argue that these puzzling doctrines reflect a radical shift away from the standard account and toward a new property theory of trademark law that focuses not so much on the quality of information available to consumers as on the seller's ability to appropriate the full commercial value of its mark.

This Article offers a different, and less alarming, explanation for many of the puzzling doctrines, one that does not require a radical departure from the standard account. This alternative explanation focuses on the enforcement costs of implementing law based on the standard account. Enforcement costs include the administrative costs of adjudicating trademark lawsuits and the error costs of over- and under-enforcing trademark rights. For a number of reasons, trademark law generates high enforcement costs, and many of the puzzling features of trademark doctrine can be understood as legal tools to manage these high costs. In particular, courts adopt general rules or standards that protect trademarks more broadly than the standard account's substantive policies support, but those rules and standards can be justified by the administrative and error costs they save. In the end, the Article uses the enforcement cost approach to suggest two reforms to trademark law - the broader acceptance of disclaimers especially in merchandising rights cases, and the abolition of trade dress protection.

Intellectual Property, Trademark, Enforcement Costs, Trade Dress

Abstract:
This Essay critically examines the Supreme Court’s most recent decision on Rule 8(a)(2) pleading standards, Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), decided in May 2009. The essay supplements and extends the analysis in my recent article, Twombly, Pleading Rules, and the Regulation of Court Access, 94 IOWA L. REV. 874 (2009), which examined the Supreme Court’s seminal Bell Atlantic Corp. v. Twombly decision and evaluated the costs and benefits of screening meritless suits at the pleading stage. In this essay, I argue that Iqbal does much more than clarify and reinforce key points in Twombly; it takes Twombly’s plausibility standard in a new and ultimately ill-advised direction. My criticism has two parts. First, Iqbal adopts a 'two-pronged approach' that filters legal conclusions in the first prong before applying the plausibility standard to factual allegations in the second. I argue that this two-pronged approach is incoherent. There is only one prong: the judge must determine whether the complaint, interpreted as a coherent whole, plausibly supports each element of the legal claim. The second problem with Iqbal runs deeper. Iqbal screens lawsuits more aggressively than Twombly, and does so without adequate consideration of the policy stakes. In particular, Iqbal applies a thick screening model that aims to screen weak as well as meritless suits, whereas Twombly applies a thin screening model that aims to screen only truly meritless suits. The thick screening model is highly problematic on policy grounds, even in cases like Iqbal that involve qualified immunity. Moreover, the Supreme Court is not institutionally well-equipped to decide whether strict pleading is desirable, especially when it implements a thick screening model. Those decisions should be made through the formal Rules Enabling Act process or by Congress.

pleading, plausibility, case screening, Rule 8(a)(2), Ashcroft v. Iqbal, Bell Atlantic Corp. v. Twombly, two-pronged approach

Abstract:
In Bell Atlantic Corp. v. Twombly, the Supreme Court reconsidered Conley v. Gibson's very liberal notice pleading standard and held that the plaintiff must allege enough to support a plausibility of wrongdoing. This Article considers the Twombly decision within the broader framework of court access regulation and sketches a normative roadmap for designing optimal pleading and merits-based case-screening rules. The Article begins with an analysis of Twombly itself. It argues, contrary to much criticism of the decision, that the Court's plausibility standard represents only a modest departure from traditional notice pleading and that its interpretation of Rule 8(a)(2) is consistent with the text and history of the Rule and in line with the pragmatic vision of the original Federal Rule drafters. The Article then addresses the broader normative issues involved in regulating court access through stricter pleading and other case-screening devices. It argues that a pleading requirement along the lines of Twombly's thin plausibility standard might be justified by a process-based theory of fairness as reason-giving, but that anything stronger must be evaluated on outcome-based grounds. Applying utilitarian and rights-based metrics of outcome quality, the Article then explores various methods of screening meritless suits. It highlights several issues that are often ignored or misunderstood, including the importance of carefully defining the undesirable lawsuits to be screened, correctly identifying the causes of the problem, and proceeding cautiously in the absence of empirical information by designing regulatory responses to fit the most probable causes. It argues that information asymmetry is likely to be a more important cause of meritless litigation than the commonly assumed cost asymmetry, and it outlines a hybrid approach to handle the information-asymmetry cases. The Article concludes by emphasizing the importance of using formal rulemaking or the legislative process to design case-screening rules and making those rules substance-specific rather than trans-substantive.

strict pleading, notice pleading, frivolous litigation, case screening, Bell Atlantic v. Twombly

Abstract:
Rule 68, the offer of judgment rule, has been described as among the most enigmatic of the Federal Rules of Civil Procedure. This Rule allows a defendant to serve an offer of judgment on the plaintiff and makes the plaintiff who rejects the offer liable for post-offer costs if she fails to improve on the offer at trial. It is universally accepted today that Rule 68 was adopted to encourage settlements, but the Rule's text makes it an extremely poor settlement device. The Rule operates only one-way (in favor of defendants); the penalty is too small to be meaningful; the requirement of a judgment (rather than just a settlement) discourages its use, and the Rule's timing requirements are puzzling. The mystery is why intelligent lawyers and judges in 1938 would have drafted such a poor settlement promotion tool. This Article solves that mystery. Contrary to the conventional view, the 1938 drafters did not intend Rule 68 to encourage settlement in the way we understand that today. They adopted the offer of judgment rule that existed in state practice, the primary purpose of which was litigation fairness not settlement promotion. The state rules aimed to prevent plaintiffs from imposing costs unfairly when the defendant offered everything the plaintiff was entitled to receive from trial. The text of Rule 68 makes much more sense when it is viewed in fairness terms. The prevailing settlement promotion view became entrenched in the 1970s and 1980s, when concerns about litigation cost, case backlog, and litigation delay grew acute and interest in settling cases intensified. Because the settlement promotion view has caused problems for interpretation of the Rule and for efforts to revise it, clarifying the history of Rule 68 is important. Moreover, empirical work on Rule 68 is nearing completion and the Advisory Committee is considering another look at the Rule, so the time is ripe for a clearer understanding. With the FRCP about to celebrate their seventieth anniversary, the history of Rule 68 also sheds light on two of the most important changes in federal civil procedure over the past seventy years: the rise of settlement and the politicization of the rulemaking process.

settlement, Rule 68, Federal Rule of Civil Procedure 68, conditional fee-shifting, Federal Rules of Civil Procedure, rulemaking

Abstract:
Federal civil procedure today relies extensively on trial judge discretion to manage litigation, promote settlements, and otherwise tailor process to individual cases. Even those rules with decisional standards leave trial judges considerable interpretive freedom to make case-specific determinations. This Article criticizes these choices and recommends stricter rules. Many judges and procedure scholars applaud the discretionary approach, and the Advisory Committee seems content to draft vague rules that implement it. The assumption seems to be that trial judges have the expertise and experience to do a good job of tailoring procedures to the needs of particular cases. The assumption is wrong, and this Article explains why.

After surveying how discretion operates in federal procedure and explaining how it has come to dominate, the Article turns to developing the argument against case-specific discretion. It begins by identifying the primary purpose of procedure and explains why achieving quality settlements is as important as achieving quality judgments. The settlement quality and judgment quality objectives conflict, however, and designing procedures to balance them optimally is a difficult matter. The Article then identifies three serious problems that frustrate any effort by trial judges to strike an optimal balance in individual cases: bounded rationality limits, information access obstacles, and strategic interaction effects. These problems are particularly acute in procedure because of the highly strategic nature of litigation and the tightly integrated structure of a procedural system. The Article explains why the three problems are not as serious for committee-based rulemakers as for trial judges and why the cost-benefit balance therefore supports adopting stricter rules. The Article concludes by discussing four ways to limit discretion and illustrating each with concrete reform proposals in the areas of discovery, settlement promotion, and class action law.

procedural discretion, procedural rules, rulemaking, settlement, bounded rationality, strategic interaction

Abstract:
The Trademark Dilution Revision Act ("TDRA"), adopted in October 2006, was the result of an almost two-year campaign to overturn the Supreme Court's 2003 decision in Moseley v. V Secret Catalogue, Inc. This brief essay takes a critical look at the TDRA. It argues that while some of the TDRA provisions are improvements, the statute as a whole represents a setback for American trademark law. By signaling congressional interest in shoring up dilution liability, the TDRA opens the door to more aggressive judicial application of the statute and broader interpretation. A stronger Section 43(c) threatens to sever trademark law from its policy moorings and send it in directions that risk high social costs. The problem with the TDRA, and the original Section 43(c) that it amends, is the same as the problem with dilution law more generally. Dilution, and especially dilution in its blurring form, lacks a coherent policy foundation. The lack of clear normative direction gives particularly wide latitude to industry groups to influence the legislative process in ways that serve their private interests at the expense of the public interest.

dilution, federal anti-dilution statute, Section 43(c), trademark law, Trademark Dilution Revision Act

Abstract:
This essay is the published and somewhat expanded version of a presentation to the meeting of the AALS Section on Civil Procedure at the January 2008 AALS annual meeting. The essay argues that effective rulemaking in civil procedure requires not only more empirical work on how procedural rules actually operate in practice, but also more rigorous normative work on how rule choices can be justified in theory. The essay begins with a brief overview of the history of procedural reform, focusing on the Field Code reforms, the 1938 Federal Rule reforms, and the current reform movement that began roughly in the late 1970s. The essay argues that the current movement, in sharp contrast to the two earlier ones, lacks a sense of shared mission and common purpose, and that this normative gap adversely affects the quality of the rule reforms that are implemented. The essay then briefly discusses three fundamental normative issues that are in need of much more careful analysis: (1) the proper way to conceive the relationship between procedure and substantive law; (2) the proper role of settlement in civil adjudication, and (3) the proper way to value individual participation and the participation right.

procedural reform, procedure theory, rulemaking, settlement, party participation

Abstract:
Dilution is one of the great mysteries of trademark law. Ever since Frank Schechter first proposed the theory in his famous 1927 Harvard Law Review article, The Rational Basis of Trademark Protection, judges have had trouble understanding it and scholars have had difficulty justifying it. Still, dilution manages to hang on. Just when it seems that the theory might wither away, it gains new life and cycles through another period of ascendancy and then decline. The adoption of the Trademark Dilution Revision Act in October 2006 completes the latest cycle, reinvigorating Section 43(c) just when restrictive judicial interpretations threatened its viability. This Article traces the history of dilution law back to its origins in Schechter's 1927 article. It focuses on two stages: (1) Schechter's original 1927 proposal and its reception, and (2) the adoption of state anti-dilution statutes starting in the late 1940s. The Article challenges the generally accepted account of these events and situates Schechter's ideas in a richer economic, jurisprudential, and doctrinal context. Schechter was not a formalist, nor did he advocate for broad property rights in marks or rely principally on Lockean labor-desert or anti-free-riding arguments, as some have argued. Schechter was a legal realist. He believed that dilution was the real reason to protect marks because it was the reason that fit the way marks actually functioned in the marketplace, and he urged judges to acknowledge this fact openly because doing so would produce better decisions. Dilution never made any serious headway between 1927 and the early 1940s not because Schechter's contemporaries rejected the idea in theory, as some have assumed, but rather because they saw a strategic advantage to using broad confusion theories to expand trademark protection. When states began adopting anti-dilution statutes in the late 1940s, two developments played an important role. First, dilution found a strong and aggressive advocate in the person of Rudolf Callmann, and second, political factors favored action on the state level.

dilution, trademark law, legal realism, Frank Schechter

Abstract:
This essay is a contribution to a forthcoming volume on trade secret law, THE LAW AND THEORY OF TRADE SECRECY: A HANDBOOK OF CONTEMPORARY RESEARCH (Rochelle C. Dreyfuss and Katherine J. Strandburg, eds., Edward Elgar Press) (forthcoming 2010). The essay focuses on the reasonable secrecy precautions (RSP) requirement in trade secret law. In addition to proving that information is actually secret, a trade secret owner must also prove that it has used reasonable efforts to maintain the information’s secrecy. The RSP requirement is puzzling. Usually property owners can obtain legal relief for infringement without first taking self-help measures to prevent the infringement. Moreover, the RSP requirement seems wasteful since it encourages expenditures on costly precautions when information is already secret, and it generates additional social costs by making public access more difficult and thus impeding further innovation. This essay first reviews the history of the RSP requirement. It argues that the doctrine made sense in the late nineteenth century, when it was justified by a formalistic, natural-rights-based theory of property rights, but that it continued as part of trade secret law even after legal realism stripped away its property-based justification. The essay then critically examines current efforts to justify the doctrine, including arguments based on notice and on circumstantial evidence of actual secrecy, value, and improper appropriation. These particular arguments do not support a universally applicable RSP requirement, and it is also difficult to see how the doctrine follows from the standard economic and moral theories used to justify trade secret law more generally. Finally, the essay develops and critically examines three (relatively) new arguments for the RSP requirement: two based on minimizing enforcement costs, and one based on harnessing signaling benefits. Each of these arguments has promise but also suffers from major weaknesses. The essay concludes by arguing that the RSP requirement warrants more serious attention than it has received. Given the history of the doctrine and the failure of its standard justifications, it is very likely that the requirement should be eliminated. However, it is also possible, though uncertain, that the RSP requirement creates sufficient enforcement cost and/or signaling benefits to warrant retaining it on cost-benefit grounds. In any event, these potential benefits should be analyzed more carefully before any decision about the RSP requirement is made.

trade secret law, secrecy precautions, enforcement costs, signaling, Uniform Trade Secrets Act, Rockwell Graphics v. DEV Industries

Abstract:
Federal court adjudication has changed in major ways over the past thirty years. Judges are more actively involved in promoting settlements than ever before; alternative dispute resolution has moved center stage; and large-scale aggregation of related lawsuits has become much more common. These changes raise deep and difficult questions that implicate core elements of civil adjudication. This symposium Essay explores some of the challenges these developments pose for procedural law in the twenty-first century. At its most general level, the Essay calls for more rigorous normative work in civil procedure and for a better understanding of the relationship between procedure and substantive law. The springboard for the Essay's argument is Professor Robert Cover's famous 1975 article, For James Wm. Moore: Some Reflections on a Reading of the Rules. A careful reading of Cover's article provides a framework for making three main points: first, that a coherent normative account of the procedure-substance relationship is essential to crafting sound procedure; second, that Cover grasped the nature of that relationship more clearly than many proceduralists do today; and third, that we would do well to follow Cover's lead in working out answers to the difficult procedural questions that twenty-first century judges will confront. The Essay concludes by discussing some implications for three critical areas of current and future reform interest: settlement, aggregation, and the proper scope of judicial discretion.

procedural rulemaking, procedure and substance, error cost, case aggregation, settlement, procedural discretion, Robert Cover

Abstract:
This article examines the concept of procedural fairness as a limit or constraint on decisions aimed at maximizing aggregate welfare, and focuses in particular on one type of fairness argument that has received some attention in recent procedure scholarship, an argument that I call the "ex ante argument" because it is based on the notion of hypothetical ex ante agreement or choice. The ex ante argument holds that a procedure is fair if all parties would have agreed to the procedure had they been able to contract for it in advance of (i.e., "ex ante") their dispute. The ex ante argument, if valid, has remarkably broad policy implications. It is capable of justifying a number of controversial procedures that are often challenged on fairness grounds. For example, one might defend the fairness of a mandatory damages class action by arguing that the defendant and all the class members would have agreed to the procedure in advance of the dispute, at a time when they did not know whether their future cases would be strong or weak.

The article first surveys the existing process-based (dignitary) and outcome-based theories of procedural fairness and identifies shortcomings with each. This analysis sets the stage for the rest of the discussion by explaining why it is so difficult to articulate a coherent theory of procedural fairness and why, at least at first glance, the ex ante argument seems so promising. The article then critically examines the ex ante argument. First, it explains the essential link to contractarian moral theory. Second, it distinguishes between two different versions of contractarianism - egoistic and ideal. Third, it shows why neither version of contractarianism can furnish a satisfactory basis for the ex ante argument.

As for egoistic contractarianism, it is incapable of supplying the requisite moral force needed to justify imposing a hypothetical agreement on parties who have never actually agreed. This means that the ex ante argument must rest on some form of ideal contractarianism, which imagines parties bargaining through representative agents for principles or rules behind a Rawlsian-type "veil of ignorance." But there are serious problems with ideal contractarianism. The parameters of the ideal bargaining situation are difficult to specify in a sensible way for procedure. The bargaining game, as properly specified, is likely to be extremely difficult to solve, if soluble at all. And there are good reasons to believe that agents in an ideal bargaining situation would not unanimously choose hypothetical ex ante agreement as a principle of fairness; nor would they necessarily choose the specific procedural rules that proponents of the ex ante argument seek to defend.

The article concludes by recommending an alternative approach to evaluating the fairness of procedures. This alternative relies on a constructivist methodology, which develops general principles of procedural fairness from existing practice through a process of reflective equilibrium. The discussion then illustrates the constructivist approach by applying it to the question of when fairness requires the subclassing of mass tort class actions.

Abstract:
The United States Supreme Court, in its 1974 decision, Eisen v. Carlisle & Jacquelin, held that judges should not conduct a preliminary inquiry into the merits of a suit as part of the decision whether to certify a class. The federal courts ever since have struggled to honor Eisen's bar while still conducting a credible certification analysis - a task complicated by the fact that merits-related factors are often relevant to Rule 23 requirements. The result is a muddled body of case law in which courts tend to certify generously and avoid inquiring into the merits of substantive issues even when those issues are crucial to the certification analysis. This approach creates high social costs by inviting frivolous and weak class action suits.

This article argues that the Eisen rule should be abolished. Trial judges should assess competing evidence, not just allegations, and evaluate case strength, whenever the specific requirements of Rule 23 call for an inquiry into merits-related factors. For example, a party relying on a substantive issue to show commonality or predominance should have to demonstrate a significant likelihood of success on the issue. The article goes further and recommends that judges always conduct a preliminary inquiry into the merits before certifying a class, whether or not merits-related factors are directly relevant to a specific requirement of Rule 23.

The article first reviews the history of the Eisen rule and surveys the state of current law, before turning to a policy analysis of the rule's effects. The policy discussion criticizes the traditional arguments and then offers a systematic evaluation of error and process costs. Error costs must be evaluated in light of the extremely high probability of post-certification settlement. Eisen's liberal approach creates a substantial risk of erroneous certification grants that cannot be corrected later when a case settles. This risk coupled with the high likelihood of settlement invites frivolous and weak class action suits. The result is a serious error cost problem with regard to certification grants. At the same time, requiring a merits review at the certification stage increases the risk of erroneous certification denials. But for several reasons this risk is not likely to increase dramatically, and the associated costs are not likely to be large. The net result therefore supports a merits inquiry, and this conclusion remains valid even after process costs are added to the policy mix.

class action, class certification, error costs, economics of litigation

Abstract:
This article explores the likely impact of Florida Prepaid, College Savings Bank, and other recent Supreme Court Eleventh Amendment decisions on IP transactions between state universities and private industry. Since the Bayh-Dole Act was adopted in 1980, federal policy has actively encouraged IP collaborations between major research universities and the private sector. After Florida Prepaid and College Savings Bank, however, private firms face new obstacles to enforcement of IP rights. The question addressed in this article is whether and how these obstacles will affect the risk of IP appropriation and the future viability of cooperative ventures between private firms and state universities.

The answer to this question depends in large part on the incentives of state universities to appropriate IP and the likely firm responses. Critics of the Supreme Court's Eleventh Amendment jurisprudence fear widespread appropriation, while defenders anticipate voluntary state restraint. Both of these predictions are too simplistic. The effects are likely to be more subtle and indirect, yet still quite troubling.

This article first reviews the range of legal remedies against state universities still available to private firms after the recent Supreme Court decisions. While these remedies are rather limited, two stand out as most promising: state contract law and state trade secret law. The article then examines the effect of this new legal environment on university and private firm incentives. Informal mechanisms, such as nonlegal sanctions and reputation effects, will deter state appropriation to some extent, but only under limited conditions. Because of these limits, firms are likely to face a heightened risk of appropriation. But the risk will not necessarily materialize into widespread appropriation in fact.

The article predicts that firms will respond to the new risk by relying more on contract and trade secret law to protect their IP assets. While this strategy will help guard against appropriation, it will do so only at a substantial cost to society by requiring firms to keep their IP assets secret for longer periods of time. Secrecy can generate high costs by impeding cooperation and future innovation. As a result, it is possible that a broad Eleventh Amendment will produce substantial social costs without a marked increase in state appropriation or infringement. The article concludes by discussing some of the implications of these predictions for Congress's ability to deal with the problem.

intellectual property, Eleventh Amendment, university-industry R&D joint ventures, contract, trade secret

Abstract:
Since 1934, the United States Supreme Court has had the power to make Federal Rules of Civil Procedure, and it has exercised this power through a committee structure comprised of judges, lawyers and legal academics. Until the 1970s, "court rulemaking" ? as this process is commonly called ? was considered by many to be the optimal method of making procedural rules. In recent decades, however, the traditional court rulemaking model has come under attack. Critics complain about the legitimacy of a politically unaccountable process and the efficacy of the rules such a process creates. Much of this criticism reflects a profound shift in thinking about procedural law. Critics reject the idea that civil process is normatively independent of substance. They argue instead that procedure has substantive effects and involves controversial value choices, and they conclude that rulemaking is necessarily "political" and thus requires greater public and political accountability than the traditional court rulemaking model provides.

This article critically examines these claims and develops a theory of procedural rulemaking that justifies a major role for courts largely free of legislative interference. The article argues that the main features of court rulemaking ? a court-based, committee-centered, and centralized process ? are well suited to making general constitutive rules that define the basic framework of the procedural system and some of the more detailed rules that control costly forms of strategic behavior. More generally, the proper function of court rulemaking is to develop and maintain an integrated system of rules that reflects the best principled account of procedural practice. On this view, the legitimacy of court rulemaking does not depend on public participation or political accountability, but instead on a model of principled deliberation akin to common law reasoning.

After briefly surveying the history of court rulemaking and the decline of the traditional model, the article examines the relationship between procedure and substance at the heart of the modern critique, and evaluates current attempts to justify court rulemaking in the face of that critique. The article then develops a new justification for court rulemaking by analyzing the core features of the traditional model under efficiency, rights-based, and process-based theories of procedural law. The article concludes with some thoughts about the relationship between the Court and Congress under the current Rules Enabling Act.

Abstract:
Despite the keen interest today in regulating frivolous suits, regulators have little understanding of the nature or scope of the problems. This article shows, in a nontechnical way, how the formal tools of game theory can help fill this informational gap.The article concludes that the most serious frivolous suit problems are likely to arise in cases of asymmetric information. Moreover, although consequences will differ depending on precise information structure, one of the most serious effects in all settings is that frivolous suits frustrate settlement of legitimate suits. The article also develops a new model that analyzes suits made frivolous because of failure to investigate and uses this new model to derive a workable definition of a "reasonable" prefiling investigation. Finally, the article explores what the various models have to say about the relative merits of different enforcement devices, such as strict pleading, penalties, and judicial screening.