Trademark Extortion: The End of Trademark Law

Abstract

Trademark litigation in America today is undergoing a profound change. Based on a review of all trademark cases reported since the Lanham Act took effect, this article concludes that this profound change is due to "trademark extortion," the use of strike suits and the like to deter market entrants. All 7,500 reported trademark decisions between 1947 and 2005 were read. Of those, 2,659 were truly substantive cases that terminated a trademark law suit. The claimant of a trademark right prevailed only 51% of the time. They prevailed in getting an injunction in only 55% of those cases demanding one. Only 5.5% of cases found damages at all; however, if damages were found, today, that amount will be over $2 million. There were only 218 reported federal dilution cases and 29 cybersquatting cases. There were far fewer dilution cases and cybersquatting cases reported than trademark scholars and lawyers would be lead to believe given the rhetoric of the proponents of these laws. Today, all data regarding trademark litigation is dropping precipitously while the number claims initially made increases. In the 60 year history of the Lanham Act, this is the first time that this gap has occurred. Although other explanations are considered, this article concludes that this gap is most likely caused by trademark extortion.

Keywords: trademark, litigation, database, damages, injunction, infringement, dilution, cybersquatting, success-rate, attorney fees