Trademark Law and Industry Myths

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INTRODUCTION  I.     A STRUCTURAL PROBLEM OF FALSE ADVERTISING LAW II.    THE MYTHS OF LUXURY FASHION III.   TRADEMARK LAW AND INDUSTRY MYTHS IV.    A PROPOSAL A.     Tarnishment B.     POST-SALE CONFUSION V.     CONCLUSION 

Cite as 13 J. High. Tech. L. 88 (2012)

Introduction

The rise of modern advertising has stoked wide ranging scholarly debate about its effect on consumer behavior and its implications for advertising and trademark law. Frank Schecter famously argued that trademark law should protect the use of a product's mark to signal its uniqueness even when such use does not have anything to do with the identification of the source of the product. (1) This idea was later challenged by advertising skeptics who believed that such protection against the dilution of a mark's distinctiveness ended up generating social wastefulness and distorting consumer choices in the marketplace. (2) Law and economics scholars then retorted that choices based on reasons other than product function and price nevertheless improve consumer welfare if consumers derive utility from them, (3) and in any case the law must make available remedies against new brands who free-ride on established brands when the latter have worked to build their reputations into values in the marketplace. (4)

This essay considers one issue to which theorists have not paid attention: I argue that advertising not only generates brand loyalty but also cultivates identification with a type of product, a type that might encompass multiple brands within an industry. I do so through the lens of puffery, which is usually known in trademark law as a defense in false advertising suits, (5) that renders the advertisement in dispute non-actionable when it constitutes "(1) an exaggerated, blustering, and boasting statement upon which no reasonable buyer would be justified in relying; or (2) a general claim of superiority over comparable products that is so vague that it can be understood as nothing more than a mere expression of opinion." (6)

Although invoked often by defendants in such cases as a defense, puffery as a phenomenon in the real world does not receive much attention as a subject of study. It languishes in a state of relative neglect in scholarly discourse on advertising and trademarks. (7) The reluctance stems perhaps from a preoccupation with some of the expansive developments in trademark and unfair competition law, such as rights of publicity, sponsorship or affiliation confusion, initial interest confusion, post-sale confusion, and misappropriation. But whatever the reason, we ignore puffery at our peril. The implicit assumption in false advertising law is that puffing does not harm anyone; when a brand employs exaggerated statements in its advertising, it is not providing literally false statements, just exaggerated ones that everyone knows are exaggerated. As I will argue in the rest of this Essay, however, a careful examination of puffery as it is practiced by actors in the marketplace would make us realize that it is much more complex than we think it is, that there are blustering and boasting statements that reasonable consumers would be justified in relying upon, and that they rely upon them to their peril such that there are real harms generated by puffery. My examination reveals a structural deficiency of false advertising law: even if we started reforming the puffery defense by weakening it and making it theoretically easier for plaintiffs to proceed with litigation, there still exists a whole category of exaggerated and boastful statements that competitors simply would not sue each other over.

Puffery, I will argue, flows from the mouths of individual brand owners, but also flourishes at the level of entire industries. This industrial dimension of puffery has gone unaddressed in the literature because of a basic flaw in our conception of puffery as a tactic employed by individual brands only. …