Rethinking Post-Sale Confusion

Abstract

Are trademark owners harmed when observers on the street mistake knockoffs for the real thing? The concept of "post-sale confusion"—which has resulted in verdicts over over $300 million—is predicated on the notion that trademarks can be harmed even if no consumer is ever confused about what they are purchasing. In this commentary, we critique the concept of post-sale confusion and unpack the logic and empirics that undergird efforts to base liability on it. We lay out the conditions under which post-sale confusion might exist. First, we explain why the real-world conditions required to generate post-sale confusion are more difficult to prove than courts and litigants have previously recognized. Those conditions are fairly limited, and the resulting path to a defensible assertion of post-sale confusion is narrow. We conclude that post-sale confusion is real, but rare. Next, we consider the type of harm that may ensue when onlookers are confused post-sale. We identify two types of possible harm: (1) harm to the senior brand's reputation for quality; and (2) harm to the ability of either the senior brand or consumers to signal status via exclusivity. We explain the circumstances under which each of these forms of harm may occur. But it is important to underscore that post-sale confusion often produces neither form of harm. Indeed, we go further. In some cases, post-sale confusion may even benefit mark owners, consumers, or both.

Keywords: trademark, post-sale confusion, law and economics, intellectual property, luxury goods