Notice Failure and Defenses in Trademark Law

Abstract

Notice is important in intellectual property law, but notice works differently in trademark law than in copyright and patent. Trademark law is not based on a property theory and the rights it creates are not property rights in the usual sense. As a result, the costs of notice failure are not necessarily as high in trademark as in patent and copyright, and solutions to notice problems take a somewhat different form. This Article examines notice problems in trademark law, identifies their source, evaluates their costs, and explores ways to remedy them. The principal notice deficiency has to do with uncertainty in determining the scope of trademark rights (rather than the existence or boundaries of protected subject matter), and the main source of the problem is the vague likelihood-of-confusion test for liability, which produces high litigation costs and risks. These costs and risks can chill the descriptive and expressive use of marks, the use of marks in resale markets, and the use of trade dress to compete in product markets. The seriousness of these chilling effects, however, depends on the user and the type of use. After linking notice failure to chilling effects, the Article then explores possible ways to reduce the chilling effect problem. In this regard, an important distinction must be drawn between uses that implicate rights and uses that are valued only for efficiency reasons. Categorical exclusions work well for the former but not very well for the latter (except perhaps for product-design trade dress). For cases involving non-expressive descriptive and nominative uses and resale uses, trademark owners should be required to plead (and prove) sufficient facts to support the existence of actual source or sponsorship confusion (not just a likelihood) and a significant risk of serious trademark-related harm, and judges should review preliminary injunction motions strictly. These reforms should go far toward reducing chilling effects while still allowing trademark relief in those exceptional cases involving serious confusion-related harm.

Keywords: Trademark Law, Trademark Policy, Notice Failure, Chilling Effects, Trademark Fair Use, Expressive Trademark Use, Trade Dress, Intellectual Property, Economics of Trademark Law

JEL Classification: K00, K11, K19, K29