Over the last sixty years, courts and the USPTO have engaged in an ill-advised expansion of trademark subject matter. Where once only words or emblems attached to a product could serve as a trademark, today a product’s design or packaging itself may receive such protection. This expansion was and is a mistake. There may indeed be rare cases where a product’s design or packaging conveys brand-specific information and could receive protection without impairing competitor’s ability to offer substitutes. Such cases are the exception and not the rule, however. Extending the strong legal presumptions and property-like protection trademark law provides to a product’s design or packaging bases the legal rule on the exceptional case. Such an approach ensures protection for the exception but has thrown open the doors to the vast array of anticompetitive strike suits that constitute the bulk of trade dress litigation today. Courts and the USPTO have tried to reduce the costs of their mistake by recognizing a secondary meaning requirement for product design and by limiting protection for functional features. In doing so, they have attempted to design the legal rules to mimic the kind and degree of competition we would like to see in the marketplace. Unfortunately, once again, they do not see the whole picture. Trade dress plaintiffs have too much incentive to bring trade dress litigation. Whether the imitation of a product’s design or packaging produces material consumer confusion or merely competition, a trade dress plaintiff has an incentive to bring a trade dress lawsuit in order to capture the rents that a successful trade dress suit, and the resulting exclusivity in product design or packaging, offers. Trade dress plaintiffs will therefore over-enforce whatever rights we give them. Trade dress defendants, on the other hand, have too little incentive to defend their right to compete. If they prevail and establish their right to copy the pillow-shape of a shredded wheat biscuit, for example, such a victory means not just the prevailing defendant, but any would-be competitor, obtains the same right to copy. As a result, most of the benefit from a trade dress victory flows not to the prevailing defendant but to consumers in the form of lower prices. Because of these asymmetric stakes, trade dress rights will be over-enforced. To achieve the right level of protection in the marketplace, we must therefore under-define them. Courts and the USPTO should therefore correct their mistake and deny trade dress substantive protection under the Lanham Act, as Congress intended.
Oxford University Press
Irene Calboli and Martin Senftleben
The Protection of Non-Traditional Trademarks: Critical Perspectives
Non-Traditional Trademarks: The Error Costs of Making an Exception the Rule,
Available at: https://scholarship.law.tamu.edu/facscholar/1347