Stacey L. Dogan

A Search-Costs Theory of Limiting Doctrines in Trademark Law

Trademarks have value because they reduce consumer search costs and thus promote overall efficiency in the economy. While the search costs theory provides a compelling argument for trademark rights, it also compels an equally important - but often overlooked - set of principles for defining and limiting those rights. Certainly, trademark laws can make it easier and cheaper for consumers to locate products with desired qualities, thus making markets more competitive. Yet if carried too far, trademark law can do the opposite: it can entrench market dominance by leading firms and make it harder for competitors to crack new markets. The evolution of trademark law reflects a continual balancing act that seeks to maximize the informational value of marks while avoiding their use to suppress competitive information. Most of the literature on the search costs theory of trademark law has focused on the theory as a rationale for trademark protection. In this article, we examine its role in supporting trademark defenses. We find that some trademark defenses unambiguously lower consumer search costs and thus promote the goals of trademark law. Another group of defenses, however, involves behavior that increases consumer search costs for some individuals even as it improves economic conditions for others. We believe that these latter defenses - genericness, functionality, and abandonment - may sometimes go too far in accepting increased consumer search costs as the cost of achieving competition. Rather than the all-or-nothing approach suggested by these doctrines, we suggest that consumers would benefit from a more nuanced approach in these doctrines.

Principled Standards vs. Boundless Discretion: A Tale of Two Approaches to Intermediary Trademark Liability Online

Over the past decade, courts have developed two distinct approaches in evaluating trademark claims against online intermediaries. The first and most common method frames the issue as one of secondary liability: should the intermediary face liability for wrongdoing committed by its advertisers, subscribers, or other users of its services? In this approach, courts struggle with the tension between preserving legitimate, non-infringing uses of technologies on the one hand, and minimizing infringement on the other. While no clear doctrinal consensus has formed, courts are converging on a framework centered on specific knowledge, reasonable response and inducement—principles derived from trademark law but mirroring their counterparts in copyright.1 At the same time, some opinions have suggested a different form of trademark liability focused on the intermediary’s choices in designing services that use—or allow others to use—trademarks in various ways.2 Though branded as direct trademark infringement, the doctrine bears little resemblance to historical direct infringement law. Instead, it resembles a roving unfair competition law, leaving discretion with the fact finder to assess the intermediary’s culpability in enabling confusion.3 Because the likelihood-of-confusion factors map poorly onto such an inquiry,4 this form of direct infringement has no clear doctrinal framework. Nor have courts articulated a coherent normative vision to guide lower courts in shaping and applying the law. Most troubling, the scant case law has paid little attention to issues at the core of secondary liability analysis—namely, the need to strike a balance between infringing and non-infringing uses, and the worry that liability might threaten legitimate uses of trademarks that enhance competition and increase consumer choice. If this mutant form of direct infringement is here to stay, courts must recognize it as a new cause of action, and must define its normative objectives with an eye to