Trademark Extortion Revisited: A Response to Vogel and Schachter

Abstract

Trademark bullying (a.k.a. trademark extortion) is a very controversial notion in trademark litigation in the United States. There, for sure, is a lot of illegitimate trademark infringement happening. Anecdotally, we also know that trademark holders often overstep in the assertion of their otherwise legitimate rights. For the first time, this article documents how large a problem trademark bullying is and how often it happens. Trademark bullying occurs when there is evidence that a trademark holder asserts a non-famous mark against a non-competing entity on or in connection with goods or services into which the plaintiff has no reasonable expectation of expanding. Trademark bully occurs in at least 5.5% of the reported cases. This is the same rate that plaintiffs recover any money damages. In the reported cases, trademark bullying is as statistically significant and relevant as cases where the plaintiff recovers money damages. Also, 5.5% is a floor. Trademark bullying happens at least 5.5% of the time.

As there is no reporting or recording requirement in the United States, trademark bullying, if it happens at all, can only be found if we use deductive reasoning. This article is based on the deductive notion that cases where summary judgment was granted for the defendants are likely to manifest trademark bullying and it is appropriate to label them as such. In trademark bullying cases, the quality of the plaintiff’s claim is declining. This conclusion is supported by regression analysis that indicates that it is accurate to over 99% certainty. That is, plaintiffs are bringing claims that are less and less likely to succeed on the merits if tried.

As no data (just suppositions) was provided by Vogel and Schachter, it is difficult to claim they are wrong in their analysis. Of course, Rule 11 and the other potential sanctions do exist. With this study, we now know that no Rule 11 sanctions were ever applied to any trademark bullying case. Further, no data is relied on by the various trade organizations (simply outdated dicta from now ancient cases). The data here is the first attempt to prove or disproved trademark bullying. It is provided in the spirit of an academic inquiry. To me, the data here supports the idea that trademark bullying deserves the scrutiny that would be brought to bear if Congress elected to get involved. Clearly, the existing “safeguards” have been proven here to be anything but safe. If non-practicing entities is a matter worth the time and energy of States and Congress, then trademark bullying is as well as both involve entities which upset natural markets for and with intellectual property.

As such, Congress should act. Congress could go a long way in stopping trademark bullying if it amended Section 1117 of the Lanham to make it explicit that trademark infringement defendants as well as plaintiffs should be awarded its attorney’s fees when the opposing party acts egregiously. Attorney’s fees should be liberally awarded in cases where the defendant moves for summary judgment and prevails as these cases are the clearest manifestation of trademark bullying.

Keywords: trademark, bullying, extortion, litigation