The (Boundedly) Rational Basis of Trademark Liability

Abstract:     
The confusion that has accompanied the effort to graft a dilution remedy onto federal trademark law has sown deep uncertainty about the remedy's proper scope and purpose. This confusion is an outgrowth of the peculiar history of dilution theory in the development of trademark law, and the resulting tension between uniqueness-based theories of dilution and theories based on free-riding concerns. This article takes the position that the current conceptual framework for trademark liability is misguided. By focusing its analysis on consumer beliefs about the relationship between a mark and a manufacturer, current trademark doctrine is ignoring a far more persuasive justification for the imposition of liability: debiasing. This article argues that trademark liability is best understood as a legal regime designed to harness the efficiencies of boundedly rational consumer decision-making, while minimizing the effects of resulting biases and errors. An overview of trademark cases reveals that while courts purport to analyze consumer beliefs about the mark/maker nexus, they in fact rely on a limited set of proxy measurements that have little to do with those beliefs. Instead, the proxy factors appear to represent features of the marketplace with strong potential to trigger cognitive phenomena that can generate bias and error. Understanding these phenomena and using them as a guide to set the boundaries of liability provides a more coherent and persuasive justification for the trademark regime than current competing rationales, and offers a potential solution to the long-standing debate between free-riding and uniqueness theories of dilution that would harmonize those theories with infringement policy.

Number of Pages in PDF File: 56

Keywords: law, trademark, dilution, infringement, behavioralism, behavioralist, bounded rationality

Accepted Paper Series