Trademarks and Social Media, Towards Algorithmic Justice

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Trademarks and Social Media

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Trademarks and Social Media Towards Algorithmic Justice

Danny Friedmann Faculty of Law, The Chinese University of Hong Kong

Cheltenham, UK + Northampton, MA, USA

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher.

Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK

Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library

Library of Congress Control Number: 2015938631

This book is available electronically in the Law subject collection DOI 10.4337/9781783479542

ISBN 978 1 78347 953 5 (cased) ISBN 978 1 78347 954 2 (eBook)

Typeset by Columns Design XML Ltd, Reading Printed and bound in Great Britain by T.J. International Ltd, Padstow

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Contents

Preface x Significance of the book x Scope of the book xi

List of abbreviations xv Table of cases xvii

1 Introduction 1 1.1 Basics 1 Paradigm shift 2 Literature review 3 Outline of the book 18

PART I STAGE, PROTAGONISTSAND LEGAL CONFLICT

2 Stage of the legal conflict 23 2.1 Introduction 23 2.2 Relevant international treaties 24 2.3 Definition of the trademark 28 2.4 Two roots of the trademark 29 2.5 Inherent and acquired distinctiveness 30 2.6 Conventional and unconventional trademarks 31 2.7 Misrepresentation and misappropriation 32 Sponsorship and affiliation confusion 33 Initial-interest confusion 34 Post-sale confusion 34 Reverse confusion 35 Misappropriation 35 Dilution by blurring 37 Dilution by tarnishment 38 2.8 Dichotomous functions of the trademark 38 Consumer interest-related functions of trademark infringement 39 Consumer interest-related function of trademark dilution 42 Proprietary functions 43

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2.9 Brief history of trademark infringement and dilution 49 Trademark infringement legislation 52 Trademark infringement tests 53 TDRA test for trademark dilution by blurring 57 Virgin Enterprises Ltd v Bodtrade likelihood of confusion principles 59 Legislation against trademark dilution 61

3 Protagonists of the legal conflict 65 3.1 Introduction 65 3.2 Trademark holders 65 3.3 Social media providers 68 Power asymmetry between social media providers and internet users 70 3.4 Internet users 71 3.5 Trademark logo 83

4 Analysis of the legal conflict 92 4.1 Introduction 92 4.2 Perception of internet users, social media providers and search engines 93 4.3 Ample access to the unauthorized trademark logo 93 4.4 Proliferation, scale and speed of contentious content 95 4.5 Permanence of uploaded logos 98 4.6 Uncertain boundaries 101 4.7 Trademark holders and OSP’s are overwhelmed, internet users are ignorant of infringement 102 4.8 Loss of control 104 4.9 Technologies such as cloud computing 105 4.10 Conclusion 107

PART II INADEQUACY OF THE LAW

5 Trademark infringement and its defences 111 5.1 Introduction 111 5.2 Commercial use 112 5.3 Descriptive use defences 119 Classic fair use defence 121 Nominative fair use defence 125 5.4 Legitimate and illegitimate use of the unauthorized trademark 131 5.5 Conclusion 134

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Contents vii

6 Trademark dilution and its defences 137 6.1 Introduction 137 6.2 Rationale of the trademark dilution doctrine 138 Article 6bis Paris Convention 141 Article 10bis Paris Convention 142 6.3 Legislation and case law 143 Legislation and case law in the EU 153 Preconditions for protection against trademark dilution 165 Degrees of distinctiveness 165 Degree of fame, reputation or well-knownness 170 Famous trademark in the US 170 Trademarks with a reputation in the EU 172 Famous trademarks, trademarks with a reputation and well-known trademarks 176 Problems with identical trademarks for dissimilar goods or services 178 6.4 Defences 182 Bases of defence, and defence against defence 184 Freedom of expression v property 187 Defence of fair use in the case of trademark dilution in the US 189 Defence of limitations/exceptions of unfair advantage or detriment to the distinctive character or repute of the mark in the EU 191 Parody 198 Parody and dilution by blurring/detriment to distinctiveness 210 Parody and dilution by tarnishment/detriment to repute 211 Free-riding/unfair advantage of distinctive character or repute 221 Criticizing and commenting 221 Current trademark law’s insufficient protection of the trademark logo on social media 222

7 Intermediary liability 225 7.1 Introduction 225 7.2 Safe harbour provisions 228 DMCA and CDA 228 Lanham Act 233 E-Commerce Directive 235 7.3 Knowledge 237 Contributory liability 240

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Vicarious liability 244 7.4 Weakening incentives of social media to filter 246 Market forces: attractiveness over accountability 247 Excessive yielding to complainants 249 Bargaining power of trademark holders 251 Self-regulation 252 Legislation 253 Seminal cases 254 7.5 Obligation to monitor 260 Technology 264 7.6 Lack of legal certainty 268

PART III PARADIGM CHANGE

8 Moral right of integrity 273 8.1 Introduction 273 8.2 Origin of moral rights 274 Theories on moral rights 274 Moral rights avant la lettre 275 French and mainstream moral rights 276 8.3 International treaties 279 Economic rights and moral rights dichotomy 280 Right of attribution and/or right of integrity 281 8.4 Common law’s functional equivalents of moral rights 282 Moral rights in the US 283 Moral rights legislation in the UK 288 Moral rights legislation in the US 288 8.5 Trademark logo and moral rights 290 Trademark as a vehicle of communication 291 8.6 Trademark as personification of the trademark holder 292 Personality rights 292 Personality of the trademark 296 8.7 Trademark dilution seen as moral right 297 Why trademark dilution does not pre-empt the need for a moral right for the trademark logo 298 8.8 Rationale for moral right of integrity for the trademark logo 299

9 Implementation of a paradigm shift 303 9.1 Introduction 303 9.2 Juridical solution 304 Right to disclose and withdraw 305

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Contents ix

Right of attribution 305 Right of integrity 306 9.3 Contractual solution 307 Walled garden phenomenon 307 Diversity 310 Market forces will shape law in the private sphere 311 Technological developments 313 9.4 Making authorized trademark use transparent 314 Licence conditions 315 9.5 Making unauthorized trademark use disappear 318 9.6 Pre-upload filtering to substitute safe harbour provisions 319 9.7 Optimizing policy goals 322 Trademark law 322 Copyright law 323 9.8 Algorithmic justice 324

PART IV CONCLUSIONS

10 Conclusions 329

Bibliography 331

Index 365

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Preface

Legal conflicts between trademark holders, social media providers and internet users have become manifest in light of wide scale, unauthorized use of the trademark logo on social media in recent decades. Arguing for the protection of the trademark logo against unauthorized use in a commercial environment, this book explores why protection enforcement should be made automatic. A number of issues are discussed, including the scalability of litigation on a case-by-case basis and whether safe harbour provisions for online service providers should be substituted for strict liability.

SIGNIFICANCE OF THE BOOK

This book is a revised adaptation of Danny Friedmann’s dissertation ‘A Paradigm Shift of the Trademark Logo: Toward Algorithmic Justice’ (PhD in Laws, The Chinese University of Hong Kong, December 2013). It is written for scholars and students in the field of trademark law, social media, internet intermediary liability and contract law, but also for practitioners such as trademark lawyers, in-house counsel, trademark holders, marketeers and policy makers interested in the legal aspects of user generated content on social media in regard to the trademark logo. Brands, which represent a combination of the trademark and the reputation built up in the trademark, can be extremely valuable to trademark holders, consumers and society at large. Some trademarks are assigned or licensed for millions of US dollars or euros. In 2011, the three most valuable brands were Apple, valued at more than 153 billion US dollars; Google, valued at more than 111 billion US dollars; and IBM, valued at more than 100 billion US dollars.1 As pointed out above, the unauthorized use of the trademark logo on social media can be very harmful to the trademark holder.

1 WPP/Millward Brown, ‘BrandZ Top 100 Most Valuable Global Brands 2011’, (2011), accessed 13 June 2015 at: http://c3232792.r92.cf0.rackcdn.com/ WPP_BrandZ_2011.pdf.

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Preface xi

As detailed below existing literature does not cover the conflict of trademark holders, social media providers and internet users over the unauthorized use of the trademark logo on social media and how to protect and enforce the trademark logo on social media. This book aims to fill that gap. This book builds upon the work of multiple intellectual property scholars and others. The book is novel in that it explores whether the trademark logo inherently contains certain characteristics which deserve to be protected beyond other forms of the trademark, and that it excludes a solution that includes predominantly litigation, since courts of law are non-scalable. The protection and enforcement of the trademark logo is not only seen as a problem, but also as a solution. The reason is that the trademark logo is not susceptible to any nominative use defence and can avoid confusion when a trademark is used in keyword triggered advertisements. After analysing the challenges facing the trademark logo on social media, this book proposes a paradigm shift. The solution to the problems associated with protection and enforcement needs to correspond to the principle that it needs to bring clarity, legal certainty and business predictability to all stakeholders involved, and be more economical than the current legal conflicts between trademark holders and social media, and trademark holders and internet users. This book not only proposes a change of the law, but until that is realized, it advances contractual solutions via walled gardens of social media, which can be used as testing grounds to automatically enforce the proposed solution.

SCOPE OF THE BOOK

The current trademark law in the US and EU can be characterized as being narrowly interpreted. The protection and consequently the enforcement of the trademark, including the trademark logo on social media, are limited to the use of the trademark in the course of trade. However, this book is dealing with the trademark logo used both in and outside the course of trade, as long as it was used without the permission of the trademark holder. In addition, this book will assess the merits of the ‘non-commercial use’ doctrine, and that of nominative fair use defences against trademark infringement based on confusion, and fair use defences against trademark dilution, in light of social media. Logos can be divided into unregistered and registered trademark logos. This book will exclusively explore the latter for goods or services which are placed on social media. However, the jurisprudence of unauthorized placement of trademarks on other forms of media that are applicable to

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those involving trademark logos on social media will be referred to. Therefore some of the cases are about auction sites and keyword triggered advertisements. In other words, this book elaborates on the trademark law in general only to see whether it can be applied in the case of the protection and automatic enforcement of the trademark logo on social media in particular. Copyright law has the potential to protect and enforce those logos with some measure of originality. However, protecting and enforcing copyrighted pictures that were reproduced, displayed and distributed as thumbnails can be more problematic.2 Recent jurisprudence demonstrates this difficulty. For example, in Perfect 10 v Google3 the District Court and on appeal4 the 9th Circuit both favoured the server test5 instead of the incorporation test,6 holding that Google Images was not liable for direct copyright infringement since the frames and in-line links it displayed were not stored on and served by Google. Likewise, in Kelly v Arriba Soft Corp. the District Court7 and 9th Circuit8 held that irrespective of whether the source was authorized or not, Arriba Soft Corp.’s reproduction, display and distribution of thumbnails of copyright pictures was transformative and therefore fair use.9 Thus, it seems that with this recent jurisprudence copyright law is not suitable as a remedy in case of unauthorized use of a trademark logo on social media. That being said, this book frequently returns to copyright

2 Miquel Peguera, Copyright Issues Regarding Google Images and Google Cache, in GOOGLE AND THE LAW: IT AND THE LAW (Aurelio Lopez- Tarruella, ed., The Hague: T.M.C. Asser, 2012). 3 Perfect 10, Inc. v Google, Inc., 416 F. Supp. 2d 828 (D. Cal. 2006). 4 Perfect 10, Inc. v Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007). 5 The server test is to see whether a party is sending ones and zeroes over the internet to the user’s browser. In case of the copyrighted pictures Google was not sending the pictures, but only displaying them via in-line linking. Peguera, supra note 2, at 177. 6 In the incorporation test it is sufficient when content is incorporated into a web page and then pulled by the browser. When this test would have been applied Google would be held liable for direct copyright right infringement. Peguera, supra note 2, at 177–8. 7 Kelly v Arriba Soft Corp., 77 F. Supp. 2d 1116 (C.D. Cal. 1999). 8 Kelly v Ariba Soft Corp., 280 F.3d 934 (9th Circuit 2002) withdrawn, re-filed at 336 F.3d 811 (9th Circuit 2003). 9 The Ninth Circuit held that Arriba’s use of the images, namely access to information, serves a different function than Kelly’s use, which was considered artistic. Kelly v Arriba Soft Corp., supra note 8, at 819.

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Preface xiii

law as it has been a fertile breeding ground for many doctrines that later were codified into or analogously applied to trademark law.10 Although technical protection measures and digital rights management systems are a way to protect against the unauthorized copying of pictures that represent trademark logos, and the removal, disablement or circumvention of these technical protection measures is prohibited by law,11 the topic will only implicitly be addressed when Google Images is discussed. To infer from the lack of technical protection measures that a trademark holder gives permission to copy and paste a trademark logo on social media, by implied licence, will not be dealt with, since they are not compatible with an automatic enforcement which employs a system of explicit licences. Just as with technical protection measures and digital rights management systems, opt-out requirements by social media will not be taken into account, since they have not been used as a defence by social media, thus far, and from an ethical point of view could be better completely avoided.12 The largest part of the most valuable trademark logos in the world are in the hands of trademark holders who are located in the US or EU. Moreover, the most important social media sites are based in the US, with affiliate sites in the languages used by and/or top level domain names of the respective EU member states. Thus, the laws and jurisprudence of the US and EU feature prominently throughout this book, with a focus on the federal law system in the US and directives and regulations in the EU. Although in reality there are many more relevant stakeholders, including the federal and state legislators in the US and the respective EU

10 Berne Convention for the Protection of Literary and Artistic Works (infra, Chapter 2, note 3), with its three-step test of fair-use, fair-use in general, and the safe harbour provisions, originated from copyright law. Implied licence doctrine comes from patent law and then jumped to copyright law and trademark law, respectively. Moral rights doctrine also originated from copyright law. 11 Articles 11 and 12 WIPO Copyright Treaty, implemented in the US via § 103 (17 U.S.C § 1201 Digital Millennium Copyright Act); and in the EU via Article 6 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. 12 Opt-out requirements would better be avoided completely, since they deviate from the ‘principle of qui tacet consentire videtur’ (he who is silent is taken to agree) whereby a respondent is explicitly asked. To assume that if someone does not opt-out that that person in some way has consented is arguably problematic.

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member states’ legislators, national and international industry groups for trademark holders, internet intermediary service providers, and consumers, this book exclusively deals with: trademark holders, social media providers and internet users. This book aspires not just to provide an analysis of the law as it is, but will also propose the law as it ought to be, by proposing a paradigm shift and a comprehensive solution.

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Abbreviations

ADR Alternative Dispute Resolution Basic Law Basic Law for the Federal Republic of Germany (Grundgesetz) BBC British Broadcasting Company Berne Convention Berne Convention for the Protection of Literary and Artistic Works CDA Communications Decency Act CDPA Copyright, Designs and Patents Act CJEU Court of Justice of the European Union CMI copyright management information Community Council Regulation (EC) No. 40/94 of 20 December Trademark 1993 on the Community trade mark Regulation DMCA Digital Millennium Copyright Act ECHR European Convention for the Protection of Human Rights and Fundamental Freedoms ECJ European Court of Justice EU Charter Charter of Fundamental Rights of the European Union FBX Facebook Ad Exchange FIFA Fédération Internationale de Football Association FTC Federal Trade Commission FTDA Federal Trademark Dilution Act ICC International Chamber of Commerce IOC International Olympic Committee IP intellectual property MarkenG Markengesetz Nice Agreement Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks NOCI notice of claimed infringement

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OHIM Office for the Harmonization of the Internal Market OSP Online Service Provider Paris Convention Paris Convention for the Protection of Industrial Property Protocol to ECHR Protocol to the European Convention for the Protection of Human Rights and Fundamental Freedoms, Paris, 20 March 1952 ROI return on investment SEO search engine optimization TDRA Trademark Dilution Revision Act Trademark First Council Directive 89/104/EEC of 21 December Directive 1988 to approximate the laws of the Member States relating to trade marks TRIPS Agreement on Trade-related Aspects of Intellectual Property Rights USPTO United States Patent and Trademark Office VARA Visual Artists Rights Act VeRO Verified Rights Owners WIPO World Intellectual Property Organization WIPO WIPO Joint Recommendation Concerning Provisions Recommendation on the Protection of Well-Known Marks WTO World Trade Organization WTO panel report WTO document WT/DS160/R, 15 June 2000, panel copyright report United States – Section 110(5) of the United States Copyright Act WTO panel report WTO document WT/DS114/R, 17 March 2000, patent panel report Canada – Patent Protection of Pharmaceutical Products Case WTO panel report WTO document WT/DS174/R, 15 March 2005, trademark panel report European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs

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1. Introduction Building blocks of the research; why, what, how, and what was done before, plus five questions

1.1 BASICS

If another poaches upon the commercial magnetism of the symbol he has created, the owner can obtain legal redress.1

In 1942, Justice Frankfurter stated the abovementioned quote. At its core, this book questions whether such optimism remains valid in times of social media. More specifically, this book investigates whether the trademark logo that is uploaded on social media without permission of the trademark holder is sufficiently protected and enforced. Answering this question in the negative, the book proposes a paradigm shift. The unauthorized use of the trademark logo on social media can spread exponentially, because of the dynamics and topology of and interactivity between social networks.2 In a relatively short period of time this can damage beyond repair a reputation3 which had been diligently built up over a relatively long period of time. The damage to the reputation can devalue the trademark, alienate customers and erode shareholder value. In addition, capital can be destroyed in the ensuing legal conflicts between stakeholders. These legal battles potentially repress commerce

1 Frankfurter J. in Mishawaka Rubber & Wollen Mfg. v S.S. Kresge Co. (Mishawaka Rubber), 316 U.S. 203, 205 (1942). 2 Maziar Nekovee, Y. Moreno, G. Bianconi and M. Marsili, Theory of Rumour Spreading in Complex Social Networks, 374 PHYS. A 457 (2007). 3 ‘Who steals my purse steals trash; ‘tis something, nothing; / ‘Twas mine, ‘tis his, and has been slave to thousands; / But he that filches from me my good name / Robs me of that which not enriches him, / And makes me poor indeed’. William Shakespeare, THE TRAGEDY OF OTHELLO, THE MOOR OF VENICE 1605 (Gretchen Schultz, ed., Newburyport: Focus Publishing 2010), Act 3, Sc. 3.

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2 Trademarks and social media

of the trademark holder, distract social media providers from their primary activities and stifle creativity of internet users. The parlous state of the present situation is bound to lead to an unacceptable level of legal uncertainty for all stakeholders involved.

Paradigm Shift

The possible scope, scale and impact of damage resulting from unauthorized use of a trademark logo on social media are incomparable with that of a trademark logo offline. The social media phenomenon has radically changed the balance of interest between trademark holders and third party users of their trademark, without any adaptation to the laws of trademark infringement and trademark dilution. After determining that the current system is not sufficient to control the new situation, this book proposes a paradigm change to lay the foundation for the protection and enforcement of the trademark logo on social media. In so doing, the book will demonstrate that on the one hand the trademark logo is worth protecting on social media, and on the other hand, that the enforcement without judicial review is both needed and compatible with the fundaments of a democratic society. Throughout the book, two assumptions are made: first, that the trademark holder should be protected against unauthorized use of his trademark logo on social media; second, that technology should be used to restore an equitable equilibrium. The unauthorized use of the trademark logo is a serious problem. In order to resolve it the authorized use of the trademark logo on social media should be made transparent,4 otherwise any transgression remains undeterminable for even the most well-intentioned internet users. The sheer volume of the number of cases of unauthorized use of the trademark logo makes a case-by-case solution unfeasible. Therefore, this book advances automatic enforcement as a prerequisite for a solution. The limitations to internet intermediary liability regimes, relevant to social media providers, do not provide any real safety against legal conflicts for any of the stakeholders; instead, they aggravate the problem. This book therefore asserts that an abolition of these so-called safe harbour provisions is another prerequisite for a solution.5

4 Not unlike Creative Commons’ licence system, which enables copyright holders to make transparent what kind of use of their works is authorized. Creative Commons, accessed 9 February 2015 at: http://creativecommons.org. 5 In the US the safe harbour provisions can be found in the Digital Millennium Copyright Act (DMCA), 1998, which can be found in the United

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Introduction 3

The paradigm shift does not require any derogation of the acquis in the US and EU to guarantee the right to freedom of speech, parody and critical comments. One should realize, however, that rights to freedom of speech, parody and critical comments are in no jurisdiction absolute. This paradigm shift leaves enough room for an equitable balancing of the interests of the stakeholders. Based on the paradigm change and the special properties of the trademark logo, the solution proposed is the protection and automatic enforcement of the moral rights of integrity of the trademark logo, the abolishment of the safe harbour provisions, while allowing freedom of speech, parody and critical comments taking into account a few fair formalities. This solution can be either enacted into law or, pending any such codification, tested as a contractual solution in the ‘walled gardens’ of social media.6

Literature Review

Since the problem of the unauthorized use of the trademark logo on social media is underdeveloped in the literature, the review below will give a broad overview of the epistemology on the theories of the trademark in general. This review can serve as theoretical building blocks and context in regard to the specific challenges the stakeholders face over the conflict of the unauthorized use of the trademark logo on social media. Also, the interrelationships between the themes will be demonstrated. Trademarks can be seen as monologic or dialogic. The philosopher Bakthin7 came up with this distinction, related to literature. Monologic literature only gives its opinion, while dialogic literature carries on a continual dialogue with other works of literature and other authors. If one perceives the trademark as monologic, then its meaning, defined by the trademark holder will remain unchanged if the trademark holder so wishes. However, if one perceives the trademark as dialogic, then consumers are able to change the meaning given by the trademark

States Code, Title 17 Chapter 5, Article 512. In the EU, in Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce). Chapter 7 is dedicated to this subject. 6 The term ‘walled gardens’ will be explained in Chapter 9.3 ‘Walled Garden Phenomenon’. 7 Mikhail Mikhailovich Bakhtin, THE DIALOGIC IMAGINATION: FOUR ESSAYS (Austin: University of Texas Press 1981).

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4 Trademarks and social media

holder.8 The implications of a dialogic perspective are serious, since internet users can easily find, copy and paste unauthorized trademark logos that can be uploaded and shared on and among social media sites. Coombe9 asserted that creating meaning to an image is not a top-down process, but instead involves dialogue between the corporate author and the consumer. According to Coombe,10 intellectual property laws stifle dialogic practices and prevent other people from expressing their identity. A trademark holder codifies his trademark with meaning, the consumer decodes that meaning, and third parties might be able to recodify meaning to the trademark. According to Professor Aoki, trademark holders should know that ‘recodifications of symbols are always capable of being deployed against the grain’.11 A person that appropriates pre-existing materials and then re-creates improvised structures is called a bricoleur, a term coined by the anthropologist Claude Lévi-Strauss, as the visual semiotician Chandler explained.12 On social media one can assert that internet users that recodify the trademark logo are such virtual bricoleurs. In his book Remix, Professor Lessig made a case for the freedom of internet users to remix existing copyright works, to improve, integrate or change these

8 The trademark Lonsdale was hijacked by white supremacists in the Netherlands, Belgium, France and Germany who reinterpreted the Lonsdale name by revealing just the third, fourth, fifth and sixth letters, ‘NSDA’, short for NSDAP, the former Nazi party, under their bomber jackets. Lonsdale tried to change these associations with the brand by supporting anti-racist initiatives. Joerie van den Bergh, and Mattias Behrer, Chapter Seven Happiness: Gen Y’s Adoration for Branded Emotions, in BRANDING TO GENERATION Y: HOW COOL BRANDS STAY HOT 181 (London: Kogan Page, 2009). 9 Rosemary J. Coombe, Objects of Property and Subjects of Politics: Intellectual Property Laws and Democratic Dialogue, 69 TEX. L. REV. 1853 (1991). 10 Id, at 1854. 11 Keith Aoki, How the World Dreams Itself to be American: Reflections on the Relationship Between the Expanding Scope of Trademark Protection and Free Speech Norms,17 LOY. L.A. ENT. L. REV. 523, 542 (1997). 12 Daniel Chandler, SEMIOTICS: THE BASICS (London: Routledge 2002). Beebe has applied this theory on trademark doctrine. See Barton Beebe, The Semiotic Account of Trademark Doctrine and Trademark Culture, Chapter 2, in TRADEMARK LAW AND THEORY: A HANDBOOK OF CONTEMPORARY RESEARCH (Graeme B. Dinwoodie and Mark D. Janis, eds, Cheltenham UK and Northampton, MA, USA: Edward Elgar 2008).

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Introduction 5

works into new works.13 Although Remix is about copyright law, it is also relevant to the study of the trademark logo. Professor Wilf explained that authorship in trademark could be redefined to include a public act of interpretive association, because it lacks the idea of individual authorial production.14 Coombe characterized trademarks as free-floating symbols, which she considered to be in the public consciousness, and which are vulnerable to people who assume the right to reinterpret and change them.15 According to Professor Fisher all persons in an attractive society would be able to participate in the process of meaning-making.16 Professor Litman asserted that trademark symbols earn value when the public invests in the meaning of these brands.17 Professor Dreyfuss also held that the public can contribute to a brand’s value.18 According to Lessig, there is a connection between the possibilities of internet users to participate in a remix procedure and the flourishing of culture. Once the trademark logo is unauthorizedly used in an environment such as social media, recodification can take place. This recodification is obviously aggravated where the internet users upload an altered version of the trademark logo. According to Professor Katyal, trademarks are paradoxically im- mutable, but instable entities open to constant reinterpretation and re-signification.19 Instable trademarks caused, according to sociologist and philosopher Baudrillard, a hyper-reality, which can be characterized as the fragmentation of the public sphere and a lack of commonly shared meaning of signs.20 Professor Hughes articulated that the interests of non-owners in

13 Lawrence Lessig, REMIX: MAKING ART AND COMMERCE THRIVE IN THE HYBRID ECONOMY, (New York: Bloomsbury Academic Press 2008). 14 Steven Wilf, Who Authors Trademarks?, 17 CARDOZO ARTS & ENT. L.J. 4, 10 (1999). 15 Coombe, supra note 9, at 1880. 16 William Fisher, Property and Contract on the Internet, 73 CHI.-KENT. L. REV. 1203, 1217 (1998). 17 Jessica Litman, Breakfast with Batman: The Public Interest in the Advertising Age, 108 YALE L.J. 1717, 1730 (1999). 18 Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Lan- guage in the Pepsi Generation, 65 NOTRE DAME L. REV. 397, 402 (1990). 19 Sonia K. Katyal, Stealth Marketing and Antibranding: The Love that Dare Not Speak Its Name, 58 BUFF. L. REV. 795 (2010). 20 Jean Baudrillard, SYMBOLIC EXCHANGE AND DEATH, (London: Sage Publications 1993); Jean Baudrillard, SIMULACRA AND SIMULATION, (Ann Arbor: University of Michigan Press 1994).

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stable trademarks might outweigh groups that want to be able to change the meaning of trademarks.21 Hughes clarified that even for the latter group the knowledge of the original meaning of the mark is essential as a reference to the recodification, otherwise no one will notice a difference of meaning. Professor Assaf explained that the interest in protecting cultural heritage coincides with a need to fix the meaning of that heritage.22 Holders of trademark logos that are unauthorizedly used on social media might be most harmed by the instability of meaning. Already in 1899 the economist and sociologist Veblen explained the evolution of social classes through the consumption of goods.23 Professor Pollack gave a description of the trademarks used as signifiers of social status throughout history.24 A modern example of using a trademark to signify social status can be observed on social media where for this purpose often trademark logos of luxury goods are unauthorizedly uploaded and shared. That consumers use the trademark to help them assume an identity is outlined by Drescher.25 Hughes wrote that the trademark is used on the one hand to express a need for individuality, but on the other hand to identify with a collective.26 From an economic or moral point of view it is challenging to use trademark law to protect the status-signalling qualities of the mark, according to Professor Harrison.27 Frankfurter wrote that ‘the creation of a market through an established symbol implies that people float on a psychological current engendered

21 Justin Hughes, ‘Recoding’ Intellectual Property and Overlooked Audience Interests, 77 TEX. L. REV. 923, 941 (1999). 22 Katya Assaf, The Dilution of Culture and the Law of Trademarks,49 IDEA: THE J. OF L. AND TECH. 1 (2008). 23 Thorstein Veblen, THE THEORY OF THE LEISURE CLASS: AN ECONOMIC STUDY IN THE EVOLUTION OF INSTITUTIONS (New York, London: Macmillan Company 1899). 24 Malla Pollack, Your Image Is My Image: When Advertising Dedicates Trademarks to the Public Domain – with an Example from the Trademark Counterfeiting Act of 1984, 14 CARDOZO L. REV. 1391 (1993). 25 Thomas D. Drescher, The Transformation and Evolution of Trademarks: From Signals to Symbols to Myth, 82 T.M.R. 301, 309 (1992). 26 Hughes, supra note 21, at 956–7. See also Shahar J. Dilbary, Famous Trademarks and the Rational Basis for Protecting ‘Irrational Beliefs’, 14 GEO. MASON L. REV. 605, 634–6 (2007). 27 Jeffrey L. Harrison, Trademark Law and Status Signaling: Tattoos for the Privileged, 59 FLA. L. REV. 195, 196 (2007).

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by the various advertising devices which give a trademark its potency’.28 Professor Ralph Brown stated that the goodwill and advertising function might not be beneficial to society at large.29 Heath and Scott argued that products with a trademark logo might be purchased, even though this might be based on irrational projections, for reasons of self-realization through the internalization of the portrayed values.30 The consumer, however, purchases the advertised mental image together with the physical commodity of a product, as Professor Economides explained.31 Brown found out that, although it might be irrational to buy illusions, the reality is that consumers are irrational.32 Lemley stated hesitantly, in a free market, everybody should perhaps be able to make their own choices, whether these choices are irrational or not.33 Author and activist Klein in her international bestseller No Logo criticized the philosophy of brands in the global economy that value the image bestowed on their trademarks more than the products they are manufacturing.34 One implication of such a philosophy is that these brands outsource their production to Third World countries where the production takes place under suboptimal circumstances, to put it euphemistically, cutting loose the link between trademark and source of origin. However, trademark logos can also help make the trademark holder accountable. Rogers argued in 1909 that the trademark is not that important since ‘it is just the shadow of the goodwill’.35 This perception has definitely changed. After the gap between mark and source, and between mark and product, became so wide, the mark only referred to itself, as professor of

28 Mishawaka Rubber, supra note 1. 29 Ralph S. Brown, Jr., Advertising and the Public Interest: Legal Protection of Trade Symbols, 57 YALE L.J. 1165, 1181 (1948). 30 A.P. Heath and D. Scott, The Self-Concept and Image Congruence Hypothesis, 32 EUR. J. MARKETING 1110 (1997). 31 Nicholas S. Economides, The Economics of Trademarks, 78 T.M.R. 523, 533 (1988). 32 Ralph S. Brown, Jr., supra note 29, at 1181. 33 Mark Lemley, The Modern Lanham Act and the Death of Common Sense, 108 YALE L.J. 1687, 1692 (1999). 34 Naomi Klein, NO LOGO: TAKING AIM AT THE BRAND BULLIES (Toronto: Knopf Canada, 2000). 35 Edward S. Rogers, Comments on the Modern Law of Unfair Trade, 3 ILL. L. REV. 551, 555 (1909).

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history, film and media studies Poster observed.36 Later, Coombe also described the mark as quintessentially self-referential.37 Professor Welkowitz stated that the trademark is the product.38 Judge Kozinski wrote about the use of the logo used as a separate commodity, totally distinct from its original and traditional function.39 Lemley contended trademarks as assets with their own intrinsic value.40 Anthropologist and geographer Harvey asserted that ‘given the ability to produce images as commodities more or less at will, it becomes feasible for accumulation to proceed at least in part on the basis of pure image production and marketing’.41 The author and lawyer Johnson made clear that a trademark holder does want to give his trademark enough meaning, but not too much so that it will be threatened by genericide42 when its meaning includes a product category.43 Professor Dreyfuss, who observed that trademarks have become independent commodities, proposed the protection of the expressive

36 Mark Poster, THE MODE OF INFORMATION, POST- STRUCTURALISM AND SOCIAL CONTEXTS 13 (Chicago: University of Chicago Press 1990). 37 Rosemary Coombe, THE CULTURAL LIFE OF INTELLECTUAL PROPERTIES: AUTHORSHIP, APPROPRIATION, AND THE LAW 55 (Dur- ham, NC: Duke University Press 1998). 38 David S. Welkowitz, TRADEMARK DILUTION: FEDERAL, STATE, AND INTERNATIONAL LAW 117 (Arlington, VA: Bloomberg BNA 2002). 39 Alex Kozinski, Trademarks Unplugged, 68 N.Y.U. L. REV. 960, 961 (1993). 40 Lemley, supra note 33, at 1693. 41 David Harvey, THE CONDITION OF POSTMODERNITY 89 (Cam- bridge MA, Oxford: Blackwell Publishers, 1989). 42 An example is Walkman; in the Netherlands Sony made a mistake in advertisements by referring to mobile tape-players of its competitors as ‘walk- men of other brands’, committing genericide to their own trademark name ‘Walkman’. Lecture by Professor Bernt P. Hugenholtz, attended at IViR, Univer- sity of Amsterdam, 2006. 43 Peter Johnson, Book Review: Can You Quote Donald Duck? Intellectual Property in Cyberculture – Rosemary J. Coombe, The Cultural Life of Intellec- tual Properties: Authorship, Appropriation, and the Law, 13 YALE J.L. & HUMAN. 451, 459 (2001).

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dimension of trademarks.44 Trademarks have become valuable commodities, according to Litman.45 She also described the value of the trademark as being more dependent on the perception of consumers than the product itself.46 Even before social media, Judge Kozinski noticed a growing tendency of consumers that use trademarks not just to identify products, ‘but also to enhance or adorn them, even to create new commodities altogether’.47 Half a century before, Frankfurter in the Mishawaka Rubber case formulated it like this: trademarks are used to ‘impregnate the atmos- phere of the market with the drawing power of a congenial symbol’.48 Frankfurter also wrote: ‘If it is true that we live by symbols, it is no less true that we purchase goods by them’.49 The internet can be described as a platform for free social, cultural and political discourse and production,50 with information being communicated that is crucial to a democratic society. The division between producers and consumers is no longer useful since each can generate content, according to Professor Tushnet.51 Johnson wrote that the rapid development of the internet has meant an explosion in unauthorized use of commoditized trademark signs in new and innovative ways by internet users, which led to a flood of trademark- related litigation and legislation.52 Beside trademark law, cyberlaw and information law are possible theoretical frameworks to study these challenges. Lipton asserted that cyberlaw does not suggest a focal point other than internet-related technologies53 and deals with a plethora of different topics, including fair use or other exceptions to propertization, formation and interpretation of contracts made electronically and freedom of speech in relation to internet communications. Lipton argued that information law with its focal point on information has a better chance to develop into a coherent framework of law, which comprises a set of principles that can exist

44 Dreyfuss, supra note 18. 45 Litman, supra note 17, at 1728. 46 Id. 47 Kozinski, supra note 39, at 961. 48 Mishawaka Rubber, supra note 1. 49 Id. 50 Lawrence Lessig, FREE CULTURE, (New York: Penguin Press 2004). 51 Rebecca Tushnet, Copy This Essay: How Fair Use Harms Free Speech and How Copying Serves It, 114 YALE L.J. 535, 566 (2005). 52 Johnson, supra note 43. 53 Jacqueline Lipton, A Framework for Information Law and Policy,82OR. L. REV. 695, 714 (2003).

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alongside other laws such as tort, contract and intellectual property laws. The normative framework of information law, suggested by Lipton, is balancing the control rights of property and privacy with the access right in information. This might be partly relevant for the trademark, which has arguably informational components, for example the source of origin. Property implies ownership, which implies possession, which implies exclusory control, even though the control is never absolute.54 Intellectual property rights such as trademarks are intangible, but they have owners. To look at intellectual property as property is useful since property is a highly efficient way to support commercial transactions of an asset.55 Professor Llewelyn highlighted the potential of the commercialization of intellectual property rights.56 Litman wrote that the reason for the existence of property is its alienability, to sell or license it.57 Professor Calabresis and Melamed introduced a classification of property, liability and alienability rules that can partly be applied to the trademark logo: the trademark holder can assign or license them according to these views.58 However, there has also been criticism about seeing trademarks as property. Lipton expressed her concern about the potential of over- propertization of information rights.59 Professor Lemley opposed the propertization of trademark law, in particular merchandising rights, and recommended courts to use other rationales for its protection.60 Professor Denicola made an analysis of the merchandising of famous symbols.61 Professors Dogan and Lemley suggested weighing the costs and benefits of the property rationale.62 One implication of seeing trademark

54 Even though information cannot be physically possessed, it can be controlled, although not in an absolute sense. Id., at 730. 55 Jessica Litman, Information Privacy/Information Property, 52 STAN. L. REV. 1283, 1295 (2000). 56 David Llewelyn, INVISIBLE GOLD IN ASIA: CREATING WEALTH THROUGH INTELLECTUAL PROPERTY (Singapore: Marshall Cavendish Business, 2010). 57 Litman, supra note 55, at 1295. 58 Guido Calabresi and A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089 (1972). 59 Jacqueline Lipton, Information Wants to Be Property: Legal Commodifi- cation of E-Commerce Assets, 16 INT’L REV. L. COMP. & TECH. 53 (2002). 60 Lemley, supra note 33, at 1714. 61 Robert C. Denicola, Institutional Publicity Rights: An Analysis of the Merchandising of Famous Symbols, 62 N.C. L. REV. 603, 606 (1984). 62 Mark Lemley and Stacey Dogan, Merchandising Right: Fragile Theory or Fait Accompli, 54 EMORY L.J. 461, 478 (2005).

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Introduction 11

as a property right, as Professors Desai and Rierson suggested, is that the investment in the brand is seen as an indicator of potential harm.63 Jou wrestled with the question when the moral rights of the newcomer outweigh those of the existing trademark holder.64 Many authors are defeatist in the challenge to control their trademarks on social media. Examples are Sammons, who suggested that trademark holders should accept that they lost control and focus on what they can control,65 and Standfield, who advised for the same reason to focus on one’s own websites.66 Hughes argued that ‘society’s increasing dependency on trademarks creates a pressure to remove them from private control’.67 According to Schaffer-Goldman, ‘words and images do not worm their way into our discourse by accident; they’re generally thrust there by well-orchestrated campaigns intended to burn them into our collective consciousness. Having embarked on that endeavour, the originator of the symbol necessarily – and justly – must give up some measure of control’.68 In other words: trademark holders expose the public to countless advertisements and therefore the public is entitled to take some control over the trademarks and their meaning. Professor Coombe observed law as a central locus for the control and dissemination of those signifying forms with which identities and differences are made and remade.69

63 Deven R. Desai and Sandra L. Rierson, Confronting the Genericism Conundrum, 28 CARDOZO L. REV. 1789, 1797–9 (2007). 64 Chi-Ru Jou, The Perils of a Mental Association Standard of Liability: The Case Against the Subliminal Confusion Cause of Action, 11 VA. J.L. & TECH. 2, 66 (2006). 65 Stephanie Sammons, ‘With Blogging and Social Media, Focus on What You Can Control’, 18 September 2010, Build Online Influence, accessed 13 June 2015 at: http://www.stephaniesammons.com/with-blogging-and-social-media- focus-on-what-you-can-control/. 66 Alyson Standfield, ‘Social Media Is only a Tool’, Artbizblog, 23 February 2011, accessed 14 June 2015 at: http://www.artbizblog.com/2011/02/social- media-is-a-tool.html. 67 Justin Hughes, The Philosophy of Intellectual Property, 77 GEO. L.J. 287, 322 (1988). 68 Regina Schaffer-Goldman, Cease-and-Desist: Tarnishment’s Blunt Sword in Its Battle Against the Unseemly, the Unwholesome, and the Unsavory,20 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 1241, (2010). 69 Rosemary J. Coombe, Tenth Anniversary Symposium: New Direction – Critical Cultural Legal Studies, 10 YALE J.L. & HUMAN. 463 (1998).

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The expansion of trademark law, with trademark dilution, based on investment and advertising functions, has been both criticized and advocated at the same time. Professor Coombe asserted that an expansion of intellectual property could strip us of our humanity,70 nothing less, while Professor Beebe discussed the trademark holders’ need for a broadened scope of trademark protection.71 Professor Lemley reluctantly made the point that the goal of continued expansion of trademark rights is to obtain property rights in trademarks.72 Matos counted the blessings of the use of brands as source identification in order to prevent opaqueness of the source which leads to deception and confusion of consumers.73 The only function of trademarks, from symbols to myths, was as a signifier of the source of origin, according to Ralph Brown.74 Beebe analysed trademark law semiotically: one can distinguish between the signifier (trademark), signified (goodwill) and represent (source and/or product).75 The essential function of the trademark is considered to indicate the source of origin, so that consumer confusion or misrepresentation is avoided. Diamond, commissioner of patents and trademarks, made clear that the function of trademarks as an indicator of source could already be found in Ancient Rome.76 The essential function of the trademark can be divided into source identification, product distinction and quality functions, argued Professor Simon Fhima,77 which all protect against confusion. According to Professor Dreyfuss, some level of confusion might be unavoidable in times of keyword triggered advertisements.78

70 Coombe, supra note 9. 71 Barton Beebe, Search and Persuasion in Trademark Law, 103 MICH. L. REV. 2020, 2029 (2005). 72 Lemley, supra note 33, 1687–714. 73 Cassi G. Matos, The Unbranding of Brands: Advocating for Source Disclosure in Corporate America, 20 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 1307 (2010). 74 Brown, Jr., supra note 29, at 1167. 75 Barton Beebe, The Semiotic Analysis of Trademark Law, 51 UCLA L. REV. 621, 658 (2004). 76 Sidney A. Diamond, The Historical Development of Trademarks,65 T.M.R. 265 (1975). 77 Ilanah Simon Fhima, How Does ‘Essential Function’ Doctrine Drive European Trade Mark Law? 36 INT’L REV. INTELL. PROP. & COM- PETITION L. 401 (2005). 78 Rochelle Cooper Dreyfuss, Reconciling Trademark Rights and Expressive Values: How to Stop Worrying and Learn to Love Ambiguity, in TRADEMARK

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Justice Frankfurter,79 the economist Stigler,80 and the economist Landes and judge Posner proposed that trademarks are crucial to shorthand the economic search costs for consumers, to repeat enjoyable purchases and avoid those one did not enjoy.81 In contrast, Larson gave examples of sites that use the trademark logo in a confusing and deceptive way.82 For Schechter, who introduced the dilution doctrine to the US, the preservation of the uniqueness of a trademark should constitute the only rational basis for its protection.83 According to the economist Aldred, it is assumed that trademark holders invest in the reputation of their trademark by keeping the quality of the products or services constant.84 Professors Altman and Pollack asserted that a trademark is sometimes a more convincing selling point than the quality of the product to which it refers and that often the competition is between trademarks rather than between the quality of the products.85 Levin stated that consumers associate some product features with the product, rather than with the brand.86 Therefore the goodwill can be misappropriated when an unauthorized manufacturer uses a feature to

LAW AND THEORY: A HANDBOOK OF CONTEMPORARY RESEARCH, (Graeme B. Dinwoodie and Mark D. Janis, eds.,Cheltenham: Edward Elgar Publishing, 2007), 261–93, at 286. 79 Frankfurter J: ‘A trademark is a merchandising shortcut which induces a purchaser to select what he wants, or what he has been led to believe he wants’. Mishawaka Rubber, supra note 1. 80 George J. Stigler, The Economics of Information, 69 J. POLIT. ECON. 213 (1961). 81 Landes, William M. Landes and Richard A. Posner, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW 166–209 (Cambridge, MA: Harvard University Press, 2003). 82 Joseph A. Larson, Taming the Wild West: An Examination of Private Student Loan Consolidation Companies’ Violations of § 43(A) of the Lanhan Act by Using Trade Names and Logos that Closely Resemble Those Used by the United States Department of Education, 41 CREIGHTON L. REV. 515 (2008). 83 Frank I. Schechter, The Rational Basis of Trademark Protection, 40 HARV. L. REV. 813 (1927). 84 Jonathan Aldred, The Economic Rationale of Trademarks: An Econo- mist’s Critique, in TRADE MARKS AND BRANDS: AN INTERDISCIPLI- NARY CRITIQUE (L. Bently, J. Davis and J.C. Ginsburg, eds., Cambridge: Cambridge University Press, 2008), at 270. 85 Louis Altman and Malla Pollack, CALLMANN ON UNFAIR COM- PETITION, TRADEMARKS AND MONOPOLIES, (Eagan: Thomson Reuters/ West 2008) at § 17:4. 86 Gabrielle Levin, Misappropriation of Goodwill, 5 WAKE FOREST INTELL. PROP. L.J. 89 (2005).

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benefit from the status or social image that the brand owner has developed, without confusing consumers as to the source of the goods. After trademarks could be assigned and licensors failed to exercise adequate control over the licensee’s level of quality in the case of a so-called naked licence, the connection between trademark and its source of origin was lost, explained Beebe.87 Subsequently, it was thought that the trademark could indicate the product which had a certain quality, independent from the source. This led to the anonymous source theory, where the source is deemed constant but not known, according to scholar Sakulin.88 In 197589 and 198990 there were the ‘patch’ cases with which US courts wrestled. It was about companies that unauthorizedly reproduced the trademark as a patch unattached to any product. Therefore it was hard to determine trademark infringement, since the mark did not refer to the source. The actual product that the defendant sold, the court wrote, is not the ‘trademark symbol’, but ‘fabric and thread emblems’.91 The use of trademark rights to enforce a monopoly in the production of merchandise of, for example, a sports team in the absence of confusion, has been met with criticism, including that of the philosophers Scott, Oliver and Ley-Pineda.92 Shull posed the question whether universities should allow their students to use their trademark logos.93 It is an interesting question that could be applied to the use of trademark logos on social media by internet users: should trademark holders authorize internet users to use their trademark logos under certain conditions?

87 Beebe, supra note 71, at 2029. 88 Wolfgang Sakulin, ‘Trademark Protection and Freedom of Expression, An Inquiry into the Conflict between Trademark Rights and Freedom of Expression under European, German, and Dutch Law’, PhD Dissertation IViR, University of Amsterdam, 27 April 2010, at 37. 89 Boston Prof’l Hockey Ass’n v Dallas Cap & Emblem Mfg., 510 F.2d 1004 (5th Cir. 1975). 90 Boston Athletic Ass’n v Sullivan, 867 F.2d 22 (1st Cir. 1989). 91 Id. 92 Dominic Scott, Alex Oliver and Miguel Ley-Pineda, Trade Marks as Property: A Philosophical Perspective, in TRADE MARKS AND BRANDS: AN INTERDISCIPLINARY CRITIQUE (Lionel Bently, Jennifer Davis and Jane C. Ginsburg, eds., Cambridge: Cambridge University Press, 2008), 285–305, at 297. 93 Michael C. Shull, Biting the Hand that Feeds: How Trademark Protection Might Threaten School Spirit, 21 MARQ. SPORTS L. REV. 641 (2011).

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Introduction 15

Manas used the example of gripe sites such as NoHarvard to see whether they are confusing or not to the public.94 Consumer opinion websites do not tend to lead the viewer to believe the trademark owner is the sponsor of the site, according to Rochat.95 By asking visitors to click on another entity’s trademark logo to gain access to their own site would raise trademark infringement concerns if those seeing the link were led to believe that the one who linked was affiliated with the owner of the trademark mark logo, explained Professor Effross.96 Scott Brown explained how third party programmes can use trademark logos without authorization, implying false endorsements or by naming the application in a way that supports a generic understanding of the trademark.97 Brown also showed how third party applications that integrate two or more original programmes can lead to confusion.98 Aoki stated that ‘symbols have the ability to convey meaning across the globe because they are not restricted by language barriers, and they often have a uniformity of meaning that is understood across cultures’.99 Because of these special characteristics, a trademark logo can also be used as a solution to potential trademark infringement challenges. Professor Strowel and Ide100 dealt with the Shetland Times case, whereby it was settled that Shetland News could use the Shetland Times’ headlines, as long as the Shetland Times logo was put next to the links, to show the source. However, in the Total News case the opposite was settled: the links of Total News could be used, but without the Total News logo.101 Professor O’Rourke realized that the trademark logo is special and stated that using

94 Alayne E. Manas, Harvard as a Model in Trademark and Domain Name Protection, 29 RUTGERS COMPUTER & TECH. L.J. 475 (2003). 95 Leslie C. Rochat, ‘I See What You’re Saying’: Trademarked Terms and Symbols as Protected Consumer Commentary in Consumer Opinion Websites,24 SEATTLE U. L. REV. 599 (2000). 96 Walter A. Effross, Withdrawal of the Reference: Rights, Rules, and Remedies for Unwelcomed Web-Linking, Summer, 49 S.C. L. REV. 651 (1998). 97 Scott Brown, ‘I Tweeted on Facebook Today: Re-Evaluating Trademark Genericide of Internet-Based Trademarks’, 7 I/S: J.L. & POL’Y FOR INFO. SOC’Y 457 (2012). 98 Id. 99 Aoki, supra note 11, at 541. 100 Alain Strowel and Nicolas Ide, Liability with Regard to Hyperlinks,24 COLUM.-VLA J.L. & ARTS 403 (2001). 101 Total News, No. 97 Civ. 1190 (PKL) (S.D.N.Y. filed 28 February 1997).

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an address as a hyperlink intrudes less on the linked site’s trademark rights than would use of a fanciful logo.102 The trademarked logo is also being used as a deterrent to copyists in fashion, asserted Molho, who wrote a biography about Giorgio Armani, an Italian fashion designer.103 Likewise, Blakley asserted that trademarks are the only effective way of protection for the fashion industry.104 Professor Baker argued that commercial expression does not induce people to think critically, therefore does not qualify for protection under the right to freedom of expression.105 In contrast, according to Kozinski, the link between commercial and non-commercial use has not merely blurred but disappeared.106 Schaffer-Goldman wrote: ‘If the anti-dilution statute were construed as permitting a trademark owner to enjoin the use of his mark in a non-commercial context found to be negative or offensive, then a corporation could shield itself from criticism by forbidding the use of its name in commentaries critical of its conduct’.107 Gatewood also pointed to the challenges to freedom of expression when non-commercial use of trademarks is banned.108 Professor Blanke gave an overview of the history of parody.109 Parody coincides with being famous asserted Cantwell. According to him trademark holders, ‘like public figures, who seek the public spotlight must accept the concomitant risk of public ridicule in the form of

102 Maureen A. O’Rourke, Fencing Cyberspace: Drawing Borders in a Virtual World, 82 MINN. L. REV. 609, 619 (1998). 103 Renata Molho, BEING ARMANI: A BIOGRAPHY 91–2 (Antony Shugaar trans., Milan: Baldini Castoldi Dalai, 2007). 104 Johanna Blakley, ‘Lessons from Fashion’s Free Culture’, presentation TEDxUSC, filmed April 2010, accessed 9 February 2015 at: http://www.ted.com/ talks/lang/en/johanna_blakley_lessons_from_fashion_s_free_culture.html. 105 C. Edwin Baker, Commercial Speech: A Problem in the Theory of Freedom, 62 IOWA L. REV. 1 (1976); C. Edwin Baker, Paternalism, Politics, and Citizen Freedom: The Commercial Speech Quandry in Nike, 54 CASE W. RES L. REV. 1161 (2004). 106 White v Samsung Elec., 989 F.2d 1512, 1520–21 (9th Cir.) (Kozinski, J., dissenting), cert. denied, 508 U.S. 951 (1993). 107 Regina Schaffer-Goldman, supra note 68. 108 Christopher E. Gatewood, Web Links, Trademarks and the First Amend- ment, 5 RICH. J.L. & TECH. 12 (1999). 109 Jordan M. Blanke, Victor’s Little Secret: Supreme Court Decision Means More Protection for Trademark Parody, 13 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 1053 (2003).

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Introduction 17

parody’.110 Cantwell asserted that if humans had to bear this fate, than certainly the trademark logo does not deserve greater protection than is afforded to a human.111 Denicola stated that famous trademarks are the functional equivalent of famous names, and found it not surprising that the US Constitution – which does not explicitly mention the protection of the trademark – demands restraint in the recognition of trademark right when the right to freedom of speech is at stake.112 Professor Dreier applied some reservation to the freedom of speech, based on the relatively new US constitutional law and human rights law in comparison to the much older private law.113 Sakulin asserted that intellectual property lawyers might have the same concerns.114 The protection of the right of speakers is very important, but as Professor Heymann demonstrated, it is also important to protect the right of listeners: they deserve to receive non-fraudulent information.115 Hey- mann was afraid that the presence of a trademark logo can convey to consumers the false message of affiliation, even though the entity might have used the trademark logo unauthorizedly, so that the trademark holder of the used trademark logo had no involvement with the production of the goods.116 It is argued that the mere brandishing of intellectual property laws can be sufficient to not only stop offensive uses but also innocent uses. This is called the ‘chilling effect’.117 As Coombe observed: ‘Hegemonic power is operative when threats of legal action are made as well as when they

110 Michael K. Cantwell, Confusion, Dilution, and Speech: First Amendment Limitations on the Trademark Estate, 87 T.M.R. 547, 583 (1997). 111 Id. 112 Robert C. Denicola, Trademarks as Speech: Constitutional Implications of the Emerging Rationales for the Protection of the Trade Symbols, WIS. L. REV. 158, 198 (1982). 113 Thomas Dreier, Balancing Proprietary and Public Domain Interests: Inside or Outside of Proprietary Rights?, in EXPANDING THE BOUNDARIES OF INTELLECTUAL PROPERTY, INNOVATION POLICY FOR THE KNOW- LEDGE SOCIETY (R. Dreyfuss, D. Leenheer Zimmerman and H. First, eds., Oxford, Oxford University Press, 2001) 295–316 at 310. 114 Sakulin, supra note 88, at 110. 115 Laura A. Heymann, The Public’s Domain in Trademark Law: A First Amendment Theory of the Consumer, 43 GA. L. REV. 651 (2009). 116 Id. 117 Chilling effect: the mere brandishing of intellectual property laws is usually sufficient to stop offensive uses. Examples can be found on the site ‘Chilling Effects’, accessed 13 June 2015 at: http://www.chillingeffects.org/.

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are actually acted upon’.118 Beside the chilling effects of trademark infringement, there are the chilling effects of trademark dilution on corporate parody, which is dealt with by Schlosser.119

Outline of the Book

Part I (Chapters 2–4) introduces the conflict, under the ambit of trademark law (stage of the legal conflict), between trademark holders, social media providers and internet users (protagonists of the legal conflict) over the unauthorized use of the trademark logo on social media. After that the conflict is deconstructed into its constituent elements (analysis of the legal conflict). In Part I the question will be answered whether an automated enforcement solution for the unauthorized trademark logo on social media is the only feasible solution. Part II (Chapters 5–7) elaborates on the problems of protection and enforcement of the trademark logo on social media. It explores the misrepresentation of the trademark logo, and covers confusion or a likelihood of confusion that lead to trademark infringements, and the defences of trademark infringement: trademark use outside the course of trade and nominative fair use. It then deals with the misappropriation of the trademark logo, trademark dilution or a likelihood of dilution. This will be followed by the defences against dilution: fair use and exceptions, including parody, satire and comments. Finally, Part II covers the internet intermediary liability, notice-and-takedown obligations and the limitation on internet intermediary liability (also known as the safe harbour provisions). Part II answers two questions: whether the current trademark law is insufficient to protect against the unauthorized use of a trademark logo, and whether the safe harbour provisions of the law of intermediary liability of trademark infringement are ineffective. Part III (Chapters 8–9) offers a paradigm shift: toward the moral right of integrity of the trademark logo. The question to be answered is why this has not been the case yet? and how this can be changed? A rationale will be proposed for a moral right of integrity of the trademarked logo, which is a feasible solution for the problems outlined in Part II. Finally a description will be given of the walled gardens of social media as testing grounds for the proposed solution. Part III answers two questions: whether the unauthorized use (including non-commercial use) of the

118 Coombe, supra note 69, at 9. 119 Sarah Mayhew Schlosser, The High Price of (Criticizing) Coffee: The Chilling Effect of the Federal Trademark Dilution Act on Corporate Parody,43 ARIZ. L. REV. 931 (2001).

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Introduction 19

trademark logo on social media should be protected by the moral right of integrity? and whether a contractual solution (walled gardens of social media) can pave the way for an automated solution for the trademark logo on social media? Part IV (Chapter 10) provides the conclusion.

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PART I

Stage, protagonists and legal conflict

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2. Stage of the legal conflict Mapping the lawscape before routing a way out of the legal conflict

2.1 INTRODUCTION

Reputation, reputation, reputation! O, I have lost my reputation! I have lost the immortal part of myself, and what remains is bestial. My reputation, Iago, my reputation!1

Understanding the context in which the legal conflict takes place, the trademark law in the US and EU, is crucial to find a solution. As one appreciates the intricacies of these legal systems under which the trademark logo on social media should be protected and enforced, one can see that these laws are ill-equipped to address the problem. This is exacerbated by international treaties such as the Berne and Paris Conven- tions, partly incorporated by Trade-related Aspects of Intellectual Prop- erty Rights (TRIPS) and interpreted by the World Trade Organization (WTO) panel reports, that give the US and EU the bandwidth within which these jurisdictions can operate. Therefore, in order to provide the necessary context the chapter provides a brief introduction to the relevant international treaties (Chapter 2.2) and a comprehensive review of the basis of US and EU trademark law. Chapter 2.3 provides a definition of the trademark; Chapter 2.4 explicates the two roots of trademark law and demonstrates that the US has federal and state trademarks, and the EU has community and national trademarks; Chapter 2.5 makes a distinction between inherent and acquired distinctiveness; Chapter 2.6 gives an overview of conventional and unconventional trademarks; Chapter 2.7 reviews the doctrines to avoid misrepresentation and misappropriation and Chapter 2.8 sets out the dichotomous functions of the trademark based on these doctrines.

1 Cassio in OTHELLO, Shakespeare, supra, Chapter 1, note 3, Act 2, Sc. 3, 262–5.

24 Trademarks and social media

Finally, Chapter 2.9 provides a brief history of trademark infringement and trademark dilution in both the US and EU.

2.2 RELEVANT INTERNATIONAL TREATIES

The international treaties relevant to the trademark logo on social media will be introduced below. Why they are germane will be explained in depth in the designated Chapters. One can argue that intellectual property law has been harmonized to a greater extent than any other field of law. This is due to the Paris Convention for the Protection of Industrial Property2 (Paris Convention) of 1883, the Berne Convention for the Protection of Literary and Artistic Works3 (Berne Convention) of 1886, the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks4 (Nice Agreement) of 1957 and TRIPS of 1994. They will be dealt with below, as well as the WTO panel reports,5 relevant for interpretations of some legal terms, and the European

2 Paris Convention for the Protection of Industrial Property (Paris Conven- tion), signed in Paris 1883, revised at Brussels in 1900 (Brussels Act), Washing- ton in 1911 (Washington Act), The Hague in 1925 (The Hague Act), London in 1934 (London Act), Lisbon in 1958 (Lisbon Act), Stockholm in 1967 (Stockholm Act) and amended in 1979. The Paris Convention is administered by World Intellectual Property Organization (WIPO). 3 Berne Convention for the Protection of Literary and Artistic Works (Berne Convention), signed in Berne in 1886, completed at Paris in 1896, revised at Berlin in 1908, completed at Berne in 1914, revised at Rome in 1928, revised at Brussels in 1948, revised at Stockholm in 1967, and revised at Paris in 1971, and amended in 1979. The Berne Convention is administered by WIPO. 4 The Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (Nice Agreement) of 15 June 1957, as revised at Stockholm on 14 July 1967, and at Geneva on 13 May 1977, and amended on 28 September 1979. The Nice Agreement is administered by WIPO. 5 World Trade Organization (WTO) document WT/DS114/R, 17 March 2000, panel report Canada – Patent Protection of Pharmaceutical Products Case (WTO panel report patent; WTO document WT/DS160/R, 15 June 2000, panel report United States – Section 110(5) of the United States Copyright Act (WTO panel report copyright); WTO document WT/DS174/R, 15 March 2005, panel report European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs (WTO panel report trademark.

Stage of the legal conflict 25

Convention for the Protection of Human Rights and Fundamental Free- doms6 (ECHR) and Protocol to the ECHR,7 which must guarantee freedom of speech, but also the protection of property. Unfortunately there is much legal uncertainty over what constitutes protectable freedom of speech, parody or critical comment, and how to balance it with proprietary rights. Chapter 6 ‘Trademark Dilution and Its Defences’ deals extensively with this problem. The Paris Convention8 is highly relevant for trademark law. The US9 and all members of the EU10 are members of the first important intellectual property treaty in history: the Paris Convention, which was signed in 1883 by 11 countries. The EU11 and US jurisdictions are bound by the Paris Convention, and their legislations must comply with it. The Paris Convention, which covers marks and trade names as well as patents, utility models and industrial designs, contains two fundamental principles: national treatment12 and priority right.13 These two principles

6 European Convention for the Protection of Human Rights and Funda- mental Rights (ECHR), Rome, 6 November 1950. 7 Protocol to the European Convention for the Protection of Human Rights and Fundamental Freedoms (Protocol to ECHR), Paris, 20 March 1952, at 31. 8 Paris Convention, supra note 2. 9 The United States acceded to the Paris Convention on 18 March 1887 and the treaty came into force as of 30 May 1887. 10 The Paris Convention came into effect in all 27 members of the European Union: Belgium 1884, France 1884, Italy 1884, Netherlands 1884, Portugal 1884, Spain 1884, United Kingdom 1884, Sweden 1885, Denmark 1894, Germany 1903, Hungary 1909, Austria 1909, Poland 1919, Romania 1920, Bulgaria 1921, Finland 1921, Luxembourg 1922, Greece 1924, Ireland 1925, Cyprus 1966, Malta 1967, Slovenia 1991, Czech Republic 1993, Latvia 1993, Slovakia 1993, Estonia 1994, and Lithuania 1994. Supra note 2. 11 Last paragraph of the Preamble of the First Council Directive 89/104/ EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks (Trademark Directive): ‘Whereas all Member States of the Community are bound by the Paris Convention for the Protection of Industrial Property; whereas it is necessary that the provisions of this Directive are entirely consistent with those of the Paris Convention; whereas the obligations of the Member States resulting from this Convention are not affected by this Directive …’. 12 National Treatment means that each member of the treaty must treat nationals of other members in respect of industrial property in the same way as their own nationals. See Article 2 Paris Convention, supra note 2. 13 The priority right in regard to trademark rights provides an applicant from one treaty member with the possibility to use the filing date in one of the treaty members as the effective filing date in another contracting state, provided that the

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have internationally harmonized the procedural law of trademarks to some degree. For this book Articles 6-10ter Paris Convention are especially relevant: they include well-known marks,14 prohibitions concerning state emblems and so on,15 assignment of marks,16 nature of the goods to which the mark is applied,17 collective marks,18 trade names,19 goods unlawfully bearing a mark or trade name,20 false indications as to their source or the identity of the producer21 and unfair competition.22 Although the Berne Convention23 covers the protection of authors’ rights and neighbouring rights, it is also relevant for this book. In particular Articles 9(2), 10 and 10bis Berne Convention, which deal with the three-step test and certain free use of works, in other words with fair use, which are sometimes analogously applied to trademark use. Besides, Article 9(2) Berne Convention applies to works and other subject matter, and therefore might be applicable to trademarks. Another international treaty relevant for this book is the Nice Agree- ment24 of 1957, under which goods are classified into classes 1–34, and services into classes 35–45. Under Article 19 Paris Convention, the states to which it applies reserve the right to make separately between themselves special agreements for the protection of industrial property. The Nice Agreement is signed by the US and all members of the EU, except for Cyprus and Malta.25

applicant files another application within 6 months from the first filing. Article 4 Paris Convention, id. 14 Article 6bis id. 15 Article 6ter id. 16 Article 6quarter id. 17 Article 7 id. 18 Article 7bis id. 19 Article 8 id. 20 Article 9 id. 21 Article 10 id. 22 Article 10bis id. 23 Supra note 3. 24 Supra note 4. 25 Nevertheless, these two countries also use the Nice Classification system. Cyprus and Malta are not party to the Nice Classification, but nevertheless use the classification. Trademark Classification in Cyprus, accessed 9 February 2015 at: http://www.ldlaw.com.cy/services/intellectual.htm. Trademark Classification in Malta, accessed 9 February 2015 at: http://www.euromalta.net/trademark/ attorneys.htm.

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In Chapter 6.3 ‘Problems with identical trademarks for dissimilar goods and services’ it will be argued that the fundament of the Nice Classification, to divide the trademarks according to class, is artificial and not fair to trademark holders that should be able to extend the use of their trademark to other goods and services. The relevance of the Paris and Berne Conventions has only increased since all members of the WTO have to comply with TRIPS,26 which has incorporated Articles 1 through 12 and Article 19 of the Paris Conven- tion27 and the Berne Convention.28 TRIPS provides minimum standards to enforce intellectual property rights. The three-step test of Article 9(2) Berne Convention was curtailed into a two-step test of Article 17 TRIPS, which deprives trademark holders from the ‘normal exploitation’ criterion. This will be extensively covered in Chapter 6 ‘Trademark Dilution and Its Defences’. To interpret the terms used in the two-step test of Article 17 TRIPS to see whether the limitations and exceptions should be applied or not by legislators or courts there are three relevant WTO panel reports:

– Canada – patent protection of pharmaceutical products29 (WTO patent panel); – United States – § 110(5) of the US Copyright Act30 (WTO copyright panel), and; – EU – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs31 (WTO trademark panel).

Chapter 6 ‘Trademark Dilution and Its Defences’ elaborates on these interpretations.

26 Trade-related Aspects of Intellectual Property Rights (TRIPS) is Annex 1C of the Marrakesh Agreement on the Establishment of the WTO, 15 April 1994. 27 Article 2(1) TRIPS: ‘In respect of Parts II, III and IV of this Agreement, Members shall comply with Articles 1 through 12, and Article 19, of the Paris Convention (1967)’, id. 28 Article 2(2) TRIPS: ‘Nothing in Parts I to IV of this Agreement shall derogate from existing obligations that Members may have to each other under the Paris Convention, the Berne Convention, the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits’, id. 29 WTO panel report patent, supra note 5. 30 WTO panel report copyright, id. 31 WTO panel report trademark, id.

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An international treaty relevant for the limitations of the exclusive rights of trademarks in the EU and the US is the ECHR,32 especially Article 10 of this convention which covers freedom of expression, and Article 1 Protocol to the ECHR,33 which covers the protection of property. The Charter of Fundamental Rights of the EU (Charter),34 based on the ECHR, is relevant for the countries of the EU. Just like the ECHR, Article 11 Charter protects the right to freedom of expression and information, and Article 17 Charter protects the right to property. How to balance these two rights is dealt with in Chapter 6 ‘Trademark Dilution and its Defences’.

2.3 DEFINITION OF THE TRADEMARK

The Paris Convention and TRIPS, to which both the member countries of the EU and US are contracting parties, do not give any definition of a trademark. It is up to the sovereignty of the contracting parties to come up with their own version. As a definition, both the EU and US have promulgated a non-exhaustive list of examples of what could constitute a trademark. In the EU the Trademark Directive35 and the Community Trademark Regulation36 both give the same broad definition of a trademark:

A trademark [or Community Trademark] may consist of any sign capable of being represented graphically, particularly words, including personal names, designs, letters, numerals, the shape of goods or of their packaging, provided that such signs are capable of distinguishing the goods or services of one undertaking from those of other undertakings.37

In the US there are federal trademarks under the Lanham Act. Just as with the EU definition of a trademark, the Lanham Act provides a broad definition of a trademark: ‘The term “trademark” includes any word, name, symbol, or device, or any combination thereof …’, that identifies

32 ECHR, supra note 6. 33 Protocol to ECHR, supra note 7. 34 Charter of Fundamental Rights of the EU (EU Charter), proclaimed in 2000 and binding in December 2009. 35 Article 2 Trademark Directive, supra note 11. 36 Article 4 Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark (Community Trademark Regulation). 37 Article 2 Trademark Directive, supra note 11 and Article 4 Community Trademark Regulation, supra note 36.

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and distinguishes the goods or services of one undertaking from those of another, and that indicates the source of the goods or services.38

2.4 TWO ROOTS OF THE TRADEMARK

According to the famous trademark scholar Schechter, the trademark has two roots: the voluntary merchant’s personal or proprietary mark on the one hand to establish ownership, and the compulsory production marks on the other hand, to identify the collective origin of the goods.39 ‘Strictly speaking, marks designating ownership are not trade-marks at all but merely proprietary marks, which may or may not incidentally serve to designate the origin or source of the goods to which they are affixed’.40 Meanwhile, the raison d’être for the regulatory production mark was to be able to ‘trace back defective goods to the craftsman, and thus protection against deceit and safeguarding the collective good will and monopoly of the gild’.41 The expansion of the trademark function shows that the proprietary part of the function that protects trademark holders has become just as important as the source of origin-related function that protects consumers. Just as with some trees these two roots of trademarks have fused. Its result is inseparable and the two different functions of the trademark amplify each other. According to the Paris Convention42 the conditions for the filing and registration of trademarks will be determined in each country of the Paris Union by its domestic legislation.43 In the EU there are two kinds of trademark. The national trademark of each member state and the Community Trademark. The national trademark is governed by the national laws relating to trademarks in combination with the Trademark Directive to approximate the laws of each of the member states.44 The Community Trademark is ruled by the Com- munity Trademark Directive, which is binding in its entirety and directly

38 15 U.S.C. § 1127. 39 Neil J. Wilkof and Daniel Burkitt, TRADE MARK LICENSING (2nd ed., London: Sweet & Maxwell, 2005), at 22. 40 Schechter, supra, Chapter 1, note 83, at 819. 41 Id., at 825. 42 Paris Convention, supra note 2. 43 Article 6(1) Paris Convention, id. 44 Third sentence of Article 189 Treaty Establishing the European Economic Community (Treaty of Rome), 25 March 1957: ‘A directive shall be binding, as

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applicable in all member states.45 Each of the member countries of the EU uses a first-to-file system for their national trademarks, and the Office for the Harmonization of the Internal Market (OHIM) also uses a first-to-file system to register the Community Trademarks. In the US there are also two kinds of trademark. Each American state can register state trademarks. Beside state trademarks, one can register federal trademarks at the US Patent and Trademark Office (USPTO). The US follows the first-to-use rule for trademark registration, which means that the rights to a trademark can be acquired either through being the first to use the mark in commerce, or being the first to register the mark with the trademark office.46

2.5 INHERENT AND ACQUIRED DISTINCTIVENESS

In both the US and EU if a word is not inherently distinctive it is incapable of becoming a valid trademark, for example if it is only descriptive. However, even descriptive marks can acquire secondary meaning47 by using the mark intensively, for example via advertising, so that it can be protected by unfair competition law in the US48 and trademark law in the EU. Standard Oil is an example in the US49 and Windsurfing Chiemsee in the EU50 of descriptive marks that have

to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods’. 45 Second sentence of Article 189 Treaty of Rome: ‘A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States’. Id. 46 15 U.S.C. § 1127(a). 47 A trade name has acquired ‘secondary meaning’ when ‘a substantial number of present or prospective purchasers understand the designation, when used in connection with goods, services, or a business, not in its primary lexicographical sense, but as referring to a particular place or association’ Restatement of Torts § 716 (b) and comment b (1938). 48 ‘In the absence of secondary meaning, the law of unfair competition does not protect a name which is based on or is truly descriptive of the construction common to, or characteristics of an article’. Harry D. Nims, THE LAW OF UNFAIR COMPETITION AND TRADE-MARKS § 50 (3rd ed., New York: Baker, Voorhis & Co., 1929). 49 Standard Oil Co. of Maine v Standard Oil Co. of N.Y., 45 F.2d 309, 310 (1st Cir. 1930. 50 Windsurfing Chiemsee Produktions- und Vertriebs GmbH (WSC) v Boots- und Segelzubehör Walter Huber and Franz Attenberger (Windsurfing Chiemsee) (Joint cases C108/97 and 109/97), Judgment of the ECJ, 4 May 1999

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acquired distinctiveness. The inverse route is also possible; so that a distinctive trademark becomes a generic one, see Chapter 6.3 ‘Degrees of distinctiveness’.

2.6 CONVENTIONAL AND UNCONVENTIONAL TRADEMARKS

In both the EU and US conventional trademarks are signs that are visible, such as brand names, slogans and logos. Although this book covers exclusively conventional trademarks, one should realize that there are a growing number of unconventional trademarks.51 These include in the EU gustatory, scent,52 touch,53 sound,54 colour55 and 3-D56 trademarks that in an increasing number of jurisdictions can be registered as trademarks, as long as the source identification,57 graphical representation, non-functionality58 and distinctiveness criteria are met. In the 1988 amendment of the US Lanham Act, Congress retained the words ‘symbol’ and ‘device’ ‘so as not to preclude the registration of colours, shapes, smells, sounds or configurations where they function as trademarks’.59 More concisely, the US Supreme Court made it clear in Qualitex Co. v Jacobson Products Co. that a trademark can be ‘almost

51 John T. Gabrielides and Thomas M. Williams, ‘The Sound of Unconven- tional Marks in the United States’, WORLD TM REV., July/August 2007, 94–5. 52 Dr. Ralf Sieckmann v Deutsches Patent- und Markenambt (C-273/00) Judgment of the ECJ, 12 December 2002 53 The distinctive texture of Louis Vuitton bags might be entitled to protection in some jurisdictions as a touch trademark. INTA, Global Trademark Research, ‘Fact Sheets, Types of Protection: Nontraditional Trademarks’, accessed 9 February 2015 at: http://www.inta.org/TrademarkBasics/FactSheets/ Pages/NontraditionalTrademarksFactSheet.aspx. 54 Shield Mark BV v Kist (C-283/1), Judgment of the ECJ, 27 November 2003 55 Libertel Groep BV Benelux-Merkenbureau (C-104/01), Judgment of the ECJ, 6 May 2003 56 Koninklijke Philips Electronics NV v Remington Consumer Products Ltd (C-299/99) Judgment of the ECJ, 18 June 2002. See Danny Friedmann, The Bottle is the Message: Only the Distinctive Survive as 3D Community Trade Marks, 10(1) JOURNAL OF INTELLECTUAL PROPERTY LAW AND PRAC- TICE 35–42 (2015). 57 Oliveira v Frito-Lay Inc., 251 F3d 56 (2d Cir 2001). 58 In re NV Organon, 79 USPQ2d 1639 (TTAB 2006). 59 S Rep 515, 100th Cong 2d Sess 44 (1988).

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anything at all that is capable of carrying meaning’.60 A recent example of the special features mark is the red dripping wax seal of Maker’s Mark, a brand of bourbon.61

2.7 MISREPRESENTATION AND MISAPPROPRIATION

There are two doctrines on which the protection and enforcement of the trademark is based in the US and in the EU: the doctrine to avoid misrepresentation, and the doctrine to avoid misappropriation. Misrepresentation leads to a likelihood of confusion, which constitutes liability for trademark infringement. When an identical or similar sign is used as the trademark without authorization of the trademark holder in the identical or similar product or service class, the trademark holder can prevent the sign being registered or, if it is registered, to cancel it. The result of a misrepresentation of the trademark, where a link between the trademark and an entity is suggested that does not exist, consumers might get confused. Therefore consumers need to be protected against this likelihood of confusion. McKenna criticizes the likelihood of confusion being sufficient to sustain a claim, even where it has no effect on consumers’ purchasing decisions:62

[a] trademark law focused on consumer decision making and committed to respecting consumer autonomy should treat consumer preferences as fixed and exogenous; it should intervene only when use of a trademark threatens to prevent consumers from acting on pre-existing preferences. It should specifically decline to regulate non-deceptive attempts to shape those preferences.63

60 Qualitex Co. v Jacobson Products Co., 514 U.S. 159 (1995). 61 The 6th Circuit decided in Maker’s Mark (bourbon) v Jose Cuervo (tequila) that the red dripping wax seal on the bottle is a protected trade dress. Josh Block interviews Chris Spigman at Bloomberg Law, 23 May 2012, accessed 9 February 2015 at: http://www.youtube.com/watch?v=9Pgl4V9AURU. 62 McKenna defined trademark search narrowly: ‘targeting search costs or confusion in and of themselves, trademark law should instead focus on deceptive practices that interfere with consumers’ purchasing decisions’. Mark P. McK- enna, A Consumer Decision-Making Theory of Trademark Law, 98 VA. L. REV. 67, 70 (2012). See also: Mark A. Lemley and Mark McKenna, Irrelevant Confusion, 62 STAN. L. REV. 413, 415–16, 450 (2010). 63 McKenna, A Consumer Decision-Making Theory of Trademark Law, id., at 122.

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Besides enjoining the use or cancellation of an existing trademark, likelihood of confusion is also a reason not to allow the registration of a trademark.64 On the one hand it has become more difficult to claim that a likelihood of confusion has taken place, because of the relaxation of the source of origin function into a constant source doctrine and the gradual abandonment of the quality control requirement (see below). On the other hand, it has become easier, because of four controversial doctrines: sponsorship and affiliation confusion; initial-interest confusion; post-sale confusion; and reverse confusion. Lemley and McKenna argued that these four forms of confusion should only be actionable when the plaintiff can prove the confusion is likely to materially impact consumer purchasing decisions.65

Sponsorship andAffiliation Confusion

Derived from the source of origin function, if a trademark is used for a product or service and the consumer knows that it is not part of the core activities of the trademark holder, he or she assumes66 that the trademark holder has ‘sponsored, endorsed, or otherwise approved of defendant’s use of the mark’.67 Here too, a likelihood of confusion can happen when a link between trademark and sponsor is suggested, but does not really exist. Dogan and Lemley compared sponsorship and affiliation confusion to the right of publicity.68

64 Besides, trademark infringement, Article 4(1)(b) Trademark Directive, supra note 11, states that ‘if because of its identity with, or similarity to, the earlier trade mark and the identity or similarity of the goods or services covered by the trade marks, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the earlier trade mark’. 65 Lemley and McKenna, supra note 62, at 414–15. 66 ‘[A]n appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question …’ Savin Corp. v Savin Group, 391 F.3d (2d Cir. 2004 at 456 (citing Mushroom Makers, Inc. v R.G. Barry Corp., 580 F.2d 44, 47 (2d Cir. 1978. 67 Tommy Hilfiger Licensing, Inc. v Nature Labs LLC (Tommy Hilfiger), 221 F. Supp. 2d 410, 414 (S.D.N.Y. 2002 (citing Dallas Cowboys Cheerleaders, Inc. v Pussycat Cinema, Ltd., 604 F.2d 200, 204–5 (2d Cir. 1979). 68 Stacey L. Dogan and Mark A. Lemley, What the Right of Publicity Can Learn from Trademark Law, 58 STAN. L. REV. 1161, 1193 (2006).

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Initial-Interest Confusion

Initial-interest confusion takes place when the purchaser is initially confused and during the purchase he knows he is purchasing a product from another source than he initially intended. The Brookfield case showed that Blockbuster Video put up a billboard on the highway with the words: ‘West Coast Video next exit’. Consumers expecting West Coast Video will only find a Blockbuster Video store there.69 Gasparek criticized Brookfield as an outcome determinative decision.70 Metatags can also lead to initial-interest confusion. McCuaig argued that the initial-interest confusion theory in the metatag context is debat- able since consumers are aware that search engines do not always produce relevant results.71 O’Rourke argued that the use of a trademark on the face of a web page may manipulate search engines more than those in metatags, since many search engines do not consider metatags anymore in producing search results.72

Post-Sale Confusion

Post-sale confusion is when a potential customer is confused and believes someone else has bought a product of brand A, even though the actual customer knew it bought a product of brand B. If the quality of brand B is inferior to brand A, potential customers of brand A can be deterred from purchasing products from brand A. McKenna asserted that post-sale confusion does not matter as long as we have some reason to think that those observers would otherwise be potential customers. However, in principle every consumer is a potential customer.73 Therefore one can

69 Brookfield Communications, Inc. v W. Coast Entm’t Corp., 174 F.3d 1036, 1044 (9th Cir. 1999). 70 ‘The circuit court, having found intent or bad faith on the part of the alleged infringer, set out to find a theory that would allow them to hold against that party’. Katherine E. Gasparek, Applying the Fair Use Defense in Traditional Trademark Infringement and Dilution Cases to Internet Meta Tagging or Linking Cases, 7 GEO. MASON L. REV. 787, 795 (1999). 71 Dan McCuaig, Halve the Baby: An Obvious Solution to the Troubling Use of Trademarks as Metatags, 18 J. MARSHALL J. COMPUTER & INFO. L. 643, 654, 658–64 (2000). 72 Maureen A. O’Rourke, Defining the Limits of Free-Riding in Cyberspace: Trademark Liability for Metatagging, 33 GONZ. L. REV. 277, 285 (1997–98). 73 Chances that potential customers become actual customers are of course higher in societies with high socio-economic mobility.

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argue that McKenna demonstrated, in contrast to his intention, that the post-sale confusion is relevant.74

Reverse Confusion

Ford, a brand better known than Westward, used Mustang for its experimental cars in 1962, even though it knew that Westward had a federal registration of the mark and used it for its trailers and campers. Ford spent 16 million US dollars advertising the Mustang.75 Therefore consumers might be confused into thinking that the senior brand, in this case Westward, is the infringer. In 1974, the 10th Circuit for the first time recognized reverse confusion in the case of the senior use of the trademark Big Foot by the lesser known brand Big O Tire against the junior user of the mark, but better known brand, Goodyear.76 It is obvious that the lesser known brand which is the senior user has a property interest in protecting the mark. However, Feldman asserted that ‘the public may benefit more from the junior user’s [the better known brand] adoption of the mark because they only identify the mark with the junior user and are not confused by the dual uses of the mark’.77 The junior user might not directly take away business from the senior user. However, one can argue that reverse confusion leads to the senior user’s loss of control of the significance and distinctiveness of its trademark, comparable to trademark dilution, see below.

Misappropriation

Misappropriation leads to what is called liability for ‘trademark dilution’ in the US and ‘unfair advantage of or causing detriment to the distinctive character or repute of the trademark’ in the EU. In the EU marks with a reputation, and in the US famous marks, are given extra protection by permitting the registrant of a mark with a reputation, or a famous mark to prevent the use or registration of a diluting trademark, or institute

74 McKenna, supra note 62, at 103. 75 The 7th Circuit refused to recognize reverse confusion, instead the 7th Circuit determined that the trademark of the senior Westward brand was not strong, therefore there was no trademark infringement. Westward Coach Mfg. Co. v Ford Motor Co., 388 F.2d 627 (7th Cir. 1968 76 Big O Tire Dealers, Inc. v Goodyear Tire & Rubber Co., 561 F.2d 1365 (10th Cir. 1977). 77 Joel R. Feldman, Reverse Confusion in Trademarks: Balancing the Interest of the Public, the Trademark Owner, and the Infringer, 8 J. TECH. L. & POL’Y 163, 164 (2003).

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cancellation proceedings based on the validity of its earlier registration,78 even for goods or services in non-competing categories. Schechter introduced the dilution doctrine in 1927 to the US as ‘the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non-competing goods’.79 Callmann, an advocate of incorporating the protection of the advertising function of the trademark in trademark law, coined the word dilution for this doctrine.80 However, when the doctrine was made into law in the US, Schechter’s suggestion to apply it to fancy and arbitrary marks was not followed, and he did not mention dilution by tarnishment. Instead it was applied only to famous marks and marks with a reputation and dilution by tarnishment was included. Rierson argued that ‘[i]f marks are nonrivalrous and therefore function more like words than disposable goods, the economic justification for the dilution cause of action ceases to exist’.81 But a strong argument for the protection against trademark dilution is that the freedom of holders of a famous mark to extend the use of their trademark to different product categories would otherwise be restricted.82 This reasoning was self-evident to Justice Pitney in the 1916 Hanover Star Milling case:

Common Law trademarks, and the right to their exclusive use, are of course, to be classed among property rights, but only in the sense that a man’s right to the continued enjoyment of his trade reputation and the good will that flows

78 Marshall A. Leaffer, The New World of Intellectual Trademark Law,2 MARQ. INTELL. PROP. L. REV. 1, 9 (1998). 79 Schechter, supra, Chapter 1, note 83, at 825. Schechter referred to the Odol case, where the Landgericht Elberfeld substantiated the right to prevent others from using the trademark Odol in a non-confusing way on general principles of civil code and the law against unfair competition. Landgericht Elberfeld, 11 September 1924, Juristische Wochenschrift 1925, 502, Anselm Kamperman Sanders, Ch. 4. Odol: The Introduction of a Watery Concept with Steeled Resilience, in LANDMARK INTELLECTUAL PROPERTY CASES AND THEIR LEGACY 51 (Christopher Heath and Anselm Kamperman Sanders, eds., Alphen aan den Rijn: Kluwer Law International, 2011). 80 Id., at 54. 81 Sandra L. Rierson, The Myth and Reality of Dilution, 11 DUKE L. & TECH. REV. 212, 213 (2012). 82 Learned Hand: ‘However, it has of recent years been recognized that a merchant may have a sufficient economic interest in the use of his mark outside the field of his own exploitation to justify interposition by a court’. Yale Elec. Corp. v Robertson, 26 F.2d 972, 974 (2 Cir. 1928).

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from it, free from unwarranted interference by others, is a property right, for the protection of which a trademark is an instrumentality.83

Nelson criticized this line of reasoning by asserting that the supply by more competitors of a good or service can be beneficial to consumers.84 This might be the case, but one can equally argue that competitors can supply a good or service using a trademark name, and especially in the case of a trademark logo, that is distinctive enough from any senior mark. Not using the names that are already taken leaves enough room, as Schechter put it eloquently: ‘All the rest of infinity is open to defendant’.85 One can argue it would be fair if trademark holders were able to determine whether they would like to use their mark to provide an unrelated product or service, or whether they would like to license the use of their mark to other providers. Drescher identified this phenomenon as ‘brand extension’ and noted that one can stretch a brand ‘only so far as its reservoir of good will, its “brand equity” will allow’.86 Below the two forms of trademark dilution will be analysed.87

Dilution by Blurring

One can argue that dilution by blurring impairs the distinctiveness of the trademark. Schechter wrote:

If ‘Kodak’ may be used for bath tubs and cakes, ‘Mazda’ for cameras and shoes, or ‘Ritz-Carlton’ for coffee, these marks must inevitably be lost in the common- place words of the language, despite the originality and ingenuity of their contrivance, and the vast expenditures in advertising them which the courts concede should be protected to the same extent as plant and machinery.88

This loss of distinctiveness could lead to a ‘death by a thousand cuts’.89

83 Hanover Star Milling Co. v Metcalf, 240 U.S. 403, at 412–13 (1916). 84 Sara Stadler Nelson, The Wages of Ubiquity in Trademark Law,88IOWA L. REV. 731, 776–83 (2003). 85 Schechter, supra, Chapter 1, note 83, at 833. 86 Drescher, supra, Chapter 1, note 25, at 338. 87 Beebe makes a threefold division which distinguishes next to dilution by blurring and dilution by tarnishment, the dilution of uniqueness, because Schechter meant to refer to the impairment of uniqueness. Barton Beebe, A Defense of the New Federal Trademark Antidilution Law, 16 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 1143, 1145 (2006). 88 Schechter, supra, Chapter 1, note 83, at 830. 89 Beebe, supra note 87, at 1163 footnote 102.

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One could define it also as genericism not for the products or services, but for the trademark name itself.90

Dilution by Tarnishment

Dilution by tarnishment happens when an association arising from the similarity between a mark or trade name and a famous mark harms the reputation of the latter. For example the junior mark is used on inferior products, or sexually suggestive products. As stated by the Second Circuit: ‘[t]he sine qua non of tarnishment is a finding that plaintiff’s mark will suffer negative associations through defendant’s use’.91 Taran argued that it is not up to the judge to be a gatekeeper of culture and asserted that no matter whether it is vulgar or refined humour, low and high brow art, all expressions of the freedom of speech deserve the same level of protection.92 Schaffer-Goldman argued that even though tarnishment actions are often rejected by courts, cease-and-desist letters can still stifle expressions that are unseemly, unwholesome and unsavoury in the sensitive eyes of the trademark holder.93

2.8 DICHOTOMOUS FUNCTIONS OF THE TRADEMARK

One can argue that the functions of the trademark are the justifications, or at least the efforts to justify for its very existence, for the protection and enforcement of a trademark. Besides the indication of a source of origin and quality being the dominant functions of a trademark, there is no consensus about which other functions a trademark covers or should cover. It is established law by the Court of Justice of the EU (CJEU)94 that, if an action has an adverse effect on the functions of the trademark, the trademark holder should be able to stop it.95

90 Bayer Co. v United Drug Co., 272 F. 505, 510 (S.D.N.Y. 1921). 91 Hormel Foods Corp. v Jim Henson Productions, Inc. (Hormel Foods), 73 F.3d 497, 507 (2d Cir. 1996). 92 Jessica Taran, Dilution by Tarnishment: A Case for Vulgar Humor, 7 INTELL. PROP. L. BULL. 1 (2002). 93 Schaffer-Goldman, supra, Chapter 1, note 68, at 1305. 94 CJEU, before 1 December 2009, when the Treaty of Lisbon went into force, known as the European Court of Justice. 95 Google France and Google (Google France SARL and Google Inc. v Louis Vuitton Malletier SA (C-236/08), Google France SARL v Viaticum SA and Luteciel SARL (C-237/08) and Google France SARL v Centre national de

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It is clear that the universe of trademark functions in the EU and US has expanded from exclusively consumer interest-related functions to include proprietary functions.

Consumer Interest-Related Functions of Trademark Infringement

Below, one can find a taxonomy of trademark functions that can rejoice in varying degrees of popularity. Landes and Posner argued that each trademark function confers its own benefit to the owner and to society under an economic analysis which justifies conferring a ‘property’ right under a costs/benefits model.96 Professor McKenna argued that trademark law traditionally sought to protect a trademark owner’s interests by preventing competitors from dishonestly diverting the trademark holder’s trade.97 According to McKenna, trademark doctrine is better explained through that historical proprietary lens than through the ‘search costs’ consumer interest lens.98 The essential function of the trademark is considered to indicate the origin or trade source of a product or service.99 This makes the search process more efficient for consumers;100 they can again find products

recherche en relations humaines (CNRRH) SARL and Others (C-238/08)), Judgment of the ECJ, 23 March 2010, para. 79; Die BergSpechte Outdoor Reisen und Alpinschule Edi Koblmüller GmbH v Günther Guni and trekking.at Reisen GmbH. (C-278/08), Judgment of the CJEU, 25 March 2010, para. 21; Portakabin Ltd and Portakabin BV v Primakabin BV (Portakabin) (C-558/08), Judgment of the CJEU, 8 July 2010, para. 29; L’Oréal SA, Lancôme parfums et beauté & Cie SNC and Laboratoire Garnier & Cie v Bellure NV, Malaika Investments Ltd and Starion International Ltd. (L’Oréal and Others) (C-487/07), Judgment of the ECJ, 18 June 2009, para. 60. 96 William M. Landes and Richard A. Posner, The Economics of Trademark Law, 78 TMR 267, 270 (1988). 97 Mark P. McKenna, The Normative Foundations of Trademark Law,82 NOTRE DAME L. REV. 1839, 1866–71 (2007). 98 McKenna, id. 99 ‘A significant function of a trade mark is to link goods or services to a source of supply, whether the original producer or a commercial intermediary’. Intel Corporation Inc. v CPM United Kingdom Ltd., Case C-252/07, Opinion Advocate General Sharpston, 26 June 2008 100 McKenna points out that consumers are a diverse group, some have a high need for cognition in the purchase decision making, others like to make intuitive purchase decisions. McKenna, supra note 62, at 90.

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they like101 and avoid products they do not like.102 The shortcut in the search process is a more efficient alternative for assessing the quality each time one needs a product or service. The advantages for the trademark holders to reach ‘their hands over the retail tradesman’s shoulder, so to speak, and offering their goods in their own name to the customer’103 are that their products can be distinguished from other products, so that the customer can appreciate their reputation. Then again, search cost reduction might also reduce competition, which might not be in the consumers’ interest.104 McKenna asserted that increasing search costs can actually benefit brands, by more actively engaging consumers.105 The function of the trademark to indicate a source of origin has been eclipsed by the constant source function, even though that source might be unknown.106 The latter case can be relevant if trademarks are transferred independently of the undertaking.107 Trademarks are an incentive to trademark holders to produce high- quality goods and services, because competitors are not allowed to mimic

101 ‘The true functions of the trademark are, then, to identify a product as satisfactory and thereby to stimulate purchases by the consuming public’. Schechter, supra, Chapter 1, note 83, at 817. 102 ‘[O]nce consumer learns that he does not want particular goods, the mark, name or get-up becomes a significant warning signal’. William Cornish and David Llewelyn, INTELLECTUAL PROPERTY: PATENTS, COPYRIGHTS, TRADEMARKS & ALLIED RIGHTS (6th ed., London: Sweet & Maxwell 2007), at 587. 103 H.G. Wells, THE WORLD OF WILLIAM CLISSOLD, Vol. 1 (London: Faber and Faber, 1926), at 237. 104 McKenna, supra note 62, at 87. 105 An example could be Google that every now and then changes the logo of its search engine into a Google Doodle, which is a themed masquerade of the Google logo. Accessed 9 February 2015 at: http://www.google.com/doodles/ finder/2012/All%20doodles. McKenna, supra note 62, at 91. 106 Schechter: ‘[T]hat the goods in connection with which it is used emanate from the same – possibly anonymous – source or have reached the consumer through the same channels as certain other goods that have already given the consumer satisfaction, and that bore the same trademark’. Schechter, supra, Chapter 1, note 83, at 816. A trademark ‘to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown’. 15 U.S.C. § 1127. The same principle applies in the EU, see Sakulin, supra, Chapter 1, note 88, at 37. 107 Article 19 Trademark Directive, supra note 11.

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their mark and free-ride off their work.108 Quality is linked to the source of origin, since stability of source designation is considered a proxy for consistent quality.109 Making sure that the quality associated by consumers is at least as high as consumers expect is crucial for taking advantage of the link between trademark and trademark holder. Without consistency in quality, it would adversely affect the source of origin function of the trademark. It can be argued that a trademark can be protected in the absence of a connection between the trademark and the producer in the mind of the consumer, if the consumer uses the connection between trademark and trade source as a sign of quality.110 The naked or bare licence is a US and UK doctrine. In the US the Lanham Act § 45, 15 U.S.C. § 1127111 prescribes that the licensor of a registered trademark controls the quality of his mark by licensees, so that consumers will not be misled. Failure to exercise quality control, deemed to be ‘naked licensing’, may result in the unintentional abandonment of the trademark,112 because as Wilkof put it: ‘the user of the mark is not the owner of the mark, and the owner of the mark is not the user of the mark’.113

108 William Fisher, Theories of Intellectual Property, in NEW ESSAYS IN THE LEGAL AND POLITICAL THEORY OF PROPERTY (Stephen R. Munzer, ed., Cambridge: Cambridge University Press, 2001) 169–70. 109 ‘From the standpoint of realities, the consumer does not regard the trade-mark as an indication of origin but rather as a guaranty that the goods purchased under the trade-mark will have the same meritorious qualities as those previously noted by him in his purchase of other goods bearing the same mark. The mark “sells the goods”’. Frank I. Schechter, THE HISTORICAL FOUN- DATION OF THE LAW RELATING TO TRADEMARKS (1925) (Reprint, New Jersey, The Lawbook Exchange 2002), at 149–50. 110 Westbury as Lord Chancellor insisted that a mark or name could be protected even though the public did not know the producer as such but used the connection with a trade source simply as a sign of quality. Cornish and Llewelyn, supra note 102, at 574 footnote 21; Hall v Barrows (1863) 4 De G.J. & S. 150, at 157. 111 ‘The term “related company” means any person whose use of a mark is controlled by the owner of the mark with respect to the nature and quality of the goods or services on or in connection with which the mark is used’. Lanham Act § 45, 15 U.S.C. § 1127. 112 Lanning Bryer and Matthew Asbell, Combining Trademarks in a Jointly Owned IP Holding Company, 98 TMR 834, 838. 113 Neil Wilkof, ‘When Rodney Dangerfield Meets the Naked Trade Mark Licence’, The IPKat, 3 January 2011, accessed 9 February 2015 at: http:// ipkitten.blogspot.com/2011/01/when-rodney-dangerfield-meets-naked.html.

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However, Professor Calboli made clear that unfortunately the ‘statute neither provided a definition of “quality” and “control” nor indicated how much control must be used for licensing to be valid’.114 However, the interpretation of control has been loosened from ‘adequate’ to ‘sufficient’ to ‘minimal’.115 In the UK, since the Scandecor case,116 the bare trademark licence doctrine seems to be no longer applied. According to Lord Nicholls, the Trade Marks Act of 1994117 has swept away the remaining restrictions on licensing.118 Wilkof and Burkitt wrote:

[q]uality control is no longer relevant in assuring that, as a legal matter, the licensor remains the source of the good. What is crucial for determining source is that during the term of the licence, the exclusive licensee has been authorised to use the mark and that the consumer identifies the exclusive licensee as the source of the goods.119

Trademarks are signifiers used to distinguish a good or service produced by one undertaking from the goods or services of other undertakings.120 This function is a precondition for all the other trademark functions. For example, if one cannot distinguish one product from the other, there is no point in knowing what the source of origin is of that product.

Consumer Interest-Related Function of Trademark Dilution

A special consumer interest-related function is the one that should avert trademark dilution. Scholars have tried to align trademark dilution with the confusion doctrine to state that dilution negatively influences the source of origin function that shortcuts the search process. In the words of Dogan and Lemley: ‘Dilution of a unique mark increases consumer search costs by making consumers who once associated any mention of

114 Irene Calboli, The Sunset of ‘Quality Control’ in Modern Trademark Licensing, 57 AM. U. L. REV. 341, 345 (2007). 115 Id., at 346. 116 Scandecor Developments AB v Scandecor Marketing AB and Others, 2001, UKHL 21, 2001, E.T.M.R. 74, 2002, F.S.R. 122. The opinion of the High Court is reported in 1998, F.S.R. 500; the opinion of the Court of Appeal is reported in 1999, F.S.R. 26. 117 Trade Marks Act 1994 (UK). 118 Scandecor Developments AB v Scandecor Marketing AB and Others, supra note 116, para. 33. 119 Wilkof and Burkitt, supra note 39, at 133. 120 Article 2 Trademark Directive, supra note 11; Article 4 Trademark Regulation, supra note 36.

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the trademark with its owner look further for context’.121 Or, as Austin put it succinctly: dilution leads to ‘burdened imagination’.122 Rose argued that there are few scholars that identify ‘dilution rights as protecting this earned property against subliminal association/confusion, which would ultimately dilute the value of the quality image/persona of famous and highly distinctive marks’.123

Proprietary Functions

In the EU and US legislatures124 and case law125 one can find ample evidence for the existence of other relevant functions of the trademark. But it can be argued126 the trademark includes the following functions of the trademark, which overlap each other somewhat, each separately and in combination can be seen as instruments of commercial strategy used, inter alia, for advertising purposes or to acquire a reputation in order to develop consumer loyalty. This is not only concerned with rational evaluation of information, but also with the feelings and subconscious

121 Stacey L. Dogan and Mark A. Lemley, Trademarks and Consumer Search Costs on the Internet, 41 HOUS. L. REV. 777 (2004). 122 Graeme W. Austin, Trademarks and the Burdened Imagination,69 BROOK. L. REV. 827, 890–95 (2004). 123 Simone A. Rose, Will Atlas Shrug? Dilution Protection for ‘Famous’ Trademarks: Anti-Competitive ‘Monopoly’ or Earned ‘Property’ Right?, 47 FLA. L. REV. 653, 702–3 (1995). 124 The wording of the EU legislature when describing the functions of the trademark includes ‘in particular’ in the tenth recital to the Trademark Directive, supra note 11, and seventh recital to the Community Trademark Regulation, supra note 36. In the US, Congress removed reference to confusion in the Lanham Act ‘as to the source of origin’, to also allow the protection of other functions of the trademark. S. Rep. No. 2107, 87th Cong., 2d Sess. 4, reprinted in 1962 U.S.C.C.A.N. 2844, 2847. Read also Kozinski, supra, Chapter 1, note 39, at 973. 125 In Arsenal Football Club the plural word ‘functions’ of the mark was first used in nine different paras. Since that time L’Oréal and Others and Google France and Google have also dealt with functions of the trademark. Arsenal Football Club plc v Matthew Reed (Arsenal Football Club), (Case C-206/01), Judgment of the ECJ, 12 November 2002; L’Oréal and Others, supra note 95, paras 63 and 65; Google France and Google, supra note 95, paras 77 and 79. 126 The use of marks to actually tell consumers specifically where goods or services come from, and also a looser usage, to distinguish one line of goods or services from another on the market, in cases where consumers have no interest in source as such only as a key to qualities, was labelled by Advocate-General Colomer of the ECJ as ‘simplistic reductionism’ in Arsenal Football Club (Case C-206/01), Opinion of the Advocate-General, 13 June 2002, at para. 46.

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appreciation of consumers.127 One can assume that both trademark holders with and without a reputation are capable of having functions other than that of indicating the source of origin.128 Callmann observed that courts are reluctant to define trademarks as property, because of the erroneous view that a trademark has no independent ‘advertising’ value or ‘persona’, but is instead limited to its source identification and ‘good will’ function.129 McKenna stated that trademark law’s expansive confusion doctrines were developed, often explicitly, for the purpose of protecting trademark holders’ interests. However, McKenna asserted that courts preferred to cast their decisions in consumer interest function terms ‘since their emphasis on confusion is so compatible with the dominant theoretical account of trademark law – namely, the search costs theory’.130 In order to communicate the values of a brand, the integrity of the trademark is crucial. The constituent parts of a trademark logo and name should be complete. The context in which a trademark is communicated is also crucial. If the consumers are aware of the brand’s sustainability principle it would be damaging to the brand if their trademark was used on non-degradable plastic bags, or used on a Hummer, not known for its efficient use of fossil fuels. In Google France and Google the CJEU clarified when there is an adverse effect on the advertising function of the trademark:

[T]he proprietor of a trade mark is entitled to prohibit a third party from using, without the proprietor’s consent, a sign identical with its trade mark in relation to goods or services which are identical with those for which that trade mark is registered, in the case where that use adversely affects the proprietor’s use of its mark as a factor in sales promotion or as an instrument of commercial strategy.131

The advertising function is used by the trademark holder to acquire or preserve a reputation capable of attracting consumers and retaining their

127 Cornish and Llewelyn, supra note 102, at 590. 128 Interflora Inc. and Interflora British Unit v Marks & Spencer plc et Flowers Direct Online Ltd (Interflora), (C-323/09), Judgment of the CJEU, 22 July 2011, para. 40. 129 Rudolf Callmann, Unfair Competition Without Competition? The Import- ance of the Property Concept in the Law of Trade-Marks, 95 U. PA. L. REV. 443, 458–60 (1947). 130 McKenna, supra note 62, at 71. 131 Google France and Google, supra note 95, para. 92.

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loyalty.132 For example in 2002–03 Samsung spent 200 million US dollars in advertising to try to link its image to the lifestyle its customers were looking for.133 According to Cornish and Llewelyn, investments in the promotion of the trademark deserve to be protected on their own merits, apart from the protection against abuse arising from misrepresentation or inferior quality.134 According to Gilson, the term advertising function of the trademark is not used in the US.135 Of course, in the US it is dealt with implicitly to support a trademark infringement or dilution claim, when the defendant is harming the plaintiff’s ability to advertise effectively by confusion or when the trademark’s attributes cannot be promoted due to dilution. Dilution could be grounded in deceit and trespass, according to Rose.136 She argued that the protection of the advertising value or, as Pattishall, following the example of Frankfurter,137 called it, ‘commercial magnetism’138 of a mark is an acknowledged function of anti-dilution measures. The investment function is just as the advertising function used to acquire or preserve a reputation, however, not only advertising is employed, but also various other commercial techniques.139 When a competitor is using a sign that is identical with the trademark which ‘substantially interferes with the proprietor’s use of its trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty, the third party’s use must be regarded as adversely affecting the trade mark’s investment function’.140 In such cases the

132 Interflora, supra note 128, para. 60. 133 Gerry Khermouch, ‘The Best Global Brands’, BusinessWeek, 4 August 2002. 134 ‘Marks are ciphers around which investment in the promotion of a product is built and that investment is a value, which deserves protection is such, even when there is no abuse arising from misrepresentation either about origin or quality’. Cornish and Llewelyn, supra note 102, at 586–7. 135 Jerome Gilson, Trademarks: The Future of the Advertising Function (an American Perspective), University College London Institute of Brand and Innovation Law, London, 23 March 2011, accessed 9 February 2015 at: http://www.ucl.ac.uk/laws/ibil/docs/11_brands_gilson.pdf. 136 Rose, supra note 123. 137 Mishawaka Rubber, supra, Chapter 1, note 1, at 205. 138 Beverly W. Pattishall, The Dilution Rationale for Trademark-Trade Iden- tity Protection, Its Progress and Prospects, 67 TMR 607, 621–2 (1977). 139 Interflora, supra note 128, para. 61. 140 Id., para. 62.

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trademark holder should be able, by virtue of the exclusive right conferred upon it by the mark, to prevent such use.141 Simon Fhima wrote that ‘the law does not automatically protect intangibles just because they are valuable, and intellectual property rights (IPRs) are generally only created where the public interest in incentivis- ing that form of investment outweighs the public detriment in restricting use of the intangible’.142 However, Simon Fhima has reservations about protecting the investments in the reputation in the image of a trademark: ‘However, we must be careful not to let the image take on too much of a life of its own, ultimately, the role of a trademark is to identify goods or services’.143 In contrast, Poster144 and Coombe145 declared the trademark quintessentially self-referential, as already mentioned in the literature review. Trademarks can be seen as visible manifestations of goodwill,146 or as Rogers put it ‘good will is the substance, the trademark merely the shadow’.147 But this does not accurately state the function of trademarks. Schechter acknowledged that trademarks are not just symbols of goodwill, but that they are an agency for the actual creation and perpetuation of goodwill:148 ‘[T]he trademark is not merely the symbol of good will but often the most effective agent for the creation of good will, imprinting upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfactions’.149 Consumers have the need to know the reputation, which is the collective judgement of others, of a product or service. Schechter decoupled creation and retention from the source of origin doctrine.150

141 L’Oréal and Others, supra note 95; Interflora, supra note 128, para. 63. 142 Ilanah Simon Fhima, TRADE MARK DILUTION IN EUROPE AND THE UNITED STATES (Oxford: OUP 2011), at 163. 143 Id., at 164. 144 Poster, supra, Chapter 1, note 36. 145 Coombe, supra, Chapter 1, note 37. 146 ‘Goodwill is an intangible asset that comprises a good name and/or reputation as well as regular customer satisfaction or technical efficiency’. Sakulin, supra, Chapter 1, note 88, at 40. 147 Edward Sidney Rogers, Comments on the Modern Law of Unfair Trade,3 ILL. L. REV. 551, 555 (1909). 148 Schechter, supra, Chapter 1, note 83, at 818. 149 Id., at 819. 150 Ainsworth v Walmsley: ‘If he does not carry on a trade in iron, but carries on a trade in linen and stamps a lion on his linen, another person my stamp a lion on iron’. (L. R. 1 Eq. 518, 524–5 (1866)). The equitable principle that you may not palm off goods of another and that the sole injury resulting from the use of

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There seems to be a virtuous circle of trademark products or services with a reputation. The reputable goods/services attract consumers, so that manufacturers are willing to invest in the quality and innovation of the products/services, which on their turn increase the reputation of the goods/services, and so on.151 Heymann posed the question whether reputation should be better protected by advertising law than by trademark law, or in the same way as with defamation, trade libel or product disparagement claims.152 But she also warned that the desire to move reputational claims outside of trademark law leads to discount of the existence of the reputational interests of the brand.153 Nock proposed a definition of reputation: ‘a shared, or collective, perception about a person’, based on judgements on a mosaic of information available.154 The same could be applied to the trademark’s reputation, including the trademark logo’s reputation. According to Post, reputation is a form of property. Post’s Lockean vision is that people earn the esteem of others by ‘the fruit of personal exertion’.155 The other side of the coin of reputation is self-image. Humans partly form their self-image on how they are perceived by other people,156 or in

the same ‘lion’ mark on linen and iron might be a confusion as to the source of these two dissimilar products. This ignores the fact that creation and retention of custom (instead of designation of source) is the primary function of a trademark. ‘[T]he preservation of uniqueness and individuality of the trademark is of paramount importance to its owner’. Schechter, supra, Chapter 1, note 83, at 822. 151 ‘The assumption is that a company is a going concern, and has no incentive to exploit its reputation, but wants to maintain it, if not improve it’. Norman Siebrasse, ‘Comparative Advertising, Dilution: And the Meaning of Section 22 of the Trade-Marks Act’, 18 (1) CAN. I.P. REV. 277 (2001). 152 Laura A. Heymann, The Scope of Trademark Law in the Age of the Brand Persona, 98 VA. L. REV. In Brief 68 (2012). 153 Id. 154 Steven L. Nock, THE COSTS OF PRIVACY: SURVEILLANCE AND REPUTATION IN AMERICA (New York: Aldine de Gruyter, 1993), at 2. See Daniel Solove, THE FUTURE OF REPUTATION, GOSSIP, RUMOR, AND PRIVACY ON THE INTERNET (New Haven, CT: Yale University Press 2007), at 30. 155 Robert C. Post, The Social Foundations of Defamation Law: Reputation and the Constitution, 74 CAL. L. REV. 691, 694 (1986) (quoting Joel Hawes, LECTURES ADDRESSED TO THE YOUNG MEN OF HARTFORD AND NEW HAVEN, AND PUBLISHED AT THEIR UNITED REQUEST, 95 (Hart- ford: O. D. Cooke, 1828)). 156 The looking glass self. Charles H. Cooley, HUMAN NATURE AND THE SOCIAL ORDER (New York: Charles Scribner’s Sons, 1906).

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the case of trademark holders how internet users perceive the trademark logo of the trademark holders on social media. More companies are starting to realize that their brands equal their identity or persona.157

We consider the Polo brands to be the essence of our company. They are our identity, our face, our worth – in other words, our property. For Polo Ralph Lauren, and many other American companies, the most valuable piece of property that they own is their good name, or, as we say in the industry, their brand …158

Gerhardt argued that consumers do not use trademarks just as a shorthand for the physical qualities of a product, ‘but as a way of signalling their own emotional participation and identity, which then feeds back into the meaning of the brand in a continuous loop’.159 Consumers have bonds with their favourite brands that mimic the dynamics of a personal relationship. And just like relationships between friends can go awry, so can the relationships between brands and consumers.160 The link between trademark and trademark holders can also be seen as a way to make trademark holders accountable for their actions, not just the quality of their products and services but also in regard to the way their products are manufactured, the way they deal with corporate social

157 ‘“Persona” has been defined as the “quality of distinctiveness and uniqueness”, quite apart from its [the trademark’s] function of identifying the source of goods and services’. Ellen P. Winner, Right of Identity: Right of Publicity and Protection for a Trademark’s ‘Persona’, 71 TRM 193 (1981). 158 Oral Statement of Sherry L. Jetter, Vice President, Intellectual Property, Polo Ralph Lauren Corporation, before the Hearing of the Subcommittee on Courts, the Internet, and Intellectual Property of the Committee on the Judiciary, 107th Cong., 2d Sess., Serial No. 53 (14 February 2003). 159 Deborah R. Gerhardt, Consumer Investment in Trademarks, 88 N.C. L. REV. 427, 455 (2010). Read more about the signalling properties of the trademark in Drescher, supra, Chapter 1, note 25, at 309. 160 When Frederic Rouzaud, managing director of Louis Roederer, was asked in The Economist what he thought of the embracement by the hip-hop community of their Cristal champagne, he distanced himself from the hip-hop community. This triggered hip-hop artist and producer Jay-Z to call for a boycott. ‘Bubbles and Bling’, The Economist, 8 May 2006, accessed 9 February 2015 at: http://www.economist.com/node/6905921. ‘Jay-Z Launches Bubbly Boycott of Cristal’, Associated Press, 15 June 2006, via USA Today, accessed 9 February 2015 at: http://www.usatoday.com/life/people/2006-06-15-jayz-cristal_x.htm. Douglas Century, ‘Jay-Z Puts a Cap on Cristal’, New York Times, 2 July 2006, at H1, accessed 9 February 2015 at: http://select.nytimes.com/gst/abstract.html?res= F40815FE3E540C718CDDAE0894DE404482.

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responsibility and environmental issues.161 One of the biggest reasons the questionable working conditions and, as a consequence, suicides that took place at Foxconn in Shenzhen China were picked up by the mainstream media was because they are the biggest manufacturer for Apple, Inc. Therefore, one can argue that the title of Klein’s bestseller No Logo pointed to a problem instead of a solution, because without a trademark logo, the ultimate principles cannot be traced.162

2.9 BRIEF HISTORY OF TRADEMARK INFRINGEMENT AND DILUTION

Trademark infringement, based on the misrepresentation doctrine, and trademark dilution, based on the doctrine of misappropriation, have developed in both the US and EU, under the constraints of international treaties to which both are members. The result is that trademark infringement and trademark dilution in both jurisdictions are similar, but still deserve their own analysis. Trademark law in the US pursues two related goals: to protect against deception, fraud and misrepresentation, which is actionable via trademark infringement and to protect against misappropriation and the protection of property,163 actionable via trademark dilution. Below a brief overview is given of the evolution of the trademark in US legislation. Although it can be argued that trademark law plays an equally important role in American society as patent and copyright law, it was never drafted into the US. Constitution164 as something Congress should

161 Since brands and their corporate parents are becoming ever more entwined – both in the public perception and commercial reality – it follows that consumers can increasingly influence the behaviour of companies. ‘It is absurd to say that brands can be too powerful’, concludes Interbrand’s Ms Clifton. ‘Brands are the ultimate accountable institution. If people fall out of love with your brand, you go out of business’. ‘Who’s Wearing the Trousers?’, The Economist, 6 September 2001 accessed 9 February 2015 at: http://www. economist.com/node/770992?story_id=770992. 162 Klein, supra, Chapter 1, note 34. 163 Ameritech Inc. v American Info. Tech. Corp., 811 F.2d 960, 964 (6th Cir. 1987). 164 According to the US Const. art. I, § 8, US Congress is given the power ‘[t]o promote the Progress of Science and Useful Arts, by securing for limited Times to Authors and Inventors the Exclusive Right to their respective Writings and Discoveries’. Federal Convention of 1787.

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promote.165 Instead, trademark law developed from tort-based causes of action, misappropriation and misrepresentation. The tort of misappropriation of the goodwill of the trademark owner is based on the Lockean concept that people should not be able to reap where they have not sown,166 in other words free-riding on the reputation of another, if doing so interferes with the incentive to engage in creative activity so that society would suffer.167 The tort of deception of the consumer became the fundament under the likelihood of confusion doctrine. Initially one must prove that the defendant was deliberately attempting to pass off his goods as those of the plaintiff to establish fraud. ‘No man has a right to use names, symbols, signs or marks which are intended, or calculated, to represent that his business is that of another’.168 In 1925, generic descriptive words could be enjoined if there was actual fraud or intent to deceive.169 ‘The universal test [of unfair competition] is whether the public is likely to be deceived’.170 A non-arbitrary trademark that has acquired secondary meaning can be restrained in the case of actual or likelihood of confusion.171 ‘The determining factor is not that people have actually been deceived but that there is a likelihood of that happening’.172 Chafee observed that ‘[f]raud has been squeezed out of’ cases involving trade names and trademarks.173

165 The author,ity of Congress (re: Patent and Copyright Acts) is exercised in the hope that ‘[t]he productive effort thereby fostered will have a positive effect on society through the introduction of new products and processes of manufac- ture into the economy, and the emanations by way of increased employment and better lives for our citizens’. Diamond v Chakrabarty, 447 U.S. 303, 307 (1980) (quoting Kewanee Oil Co. v Bicron Corp., 416 U.S. 470, 480 (1974)). One can argue that trademarks are justified by a similar rationale. 166 John Locke, THE SECOND TREATISE OF CIVIL GOVERNMENT (1690) (Peter Laslett, ed., Cambridge: Cambridge University Press, 1988), Chapter 5 ‘Property’. 167 The creative activity of a trademark is that it endows symbols with information carrying capacity. David W. Barnes, Misappropriation of Trademark, 9 N.C. J.L. & TECH. 171 (2008). 168 Hilson Co. v Foster, 80 F. 896, 897 (C.C.N.Y. 1897). 169 Drive It Yourself Co. v North, 130 A. 57, 59 (Md. App. 1925). 170 Boice v Stevenson, 187 P.2d 648, 653 (Ariz. 1947). 171 Sartor v Schaden, 101 N.W. 511, 513 (Iowa 1904). 172 New York World’s Fair v World’s Fair News, 256 A.D. 373, 374 (N.Y. App. 1939). 173 Zechariah Chafee, Unfair Competition, 53 HARV. L. REV. 1289, 1296–7 (1940).

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In Hanover Star Milling, the US Supreme Court made it clear that the essential element, the sale of the goods of one manufacturer for those of another, is the same in trademark cases as in cases of unfair competition unaccompanied by trademark infringement.174 Therefore, the doctrine was embraced to treat trademarks and trade names under unfair competition law in the same way. Trademark law is often seen as a subset of the law of unfair competition.175 However, in contrast to this belief Derenberg asserted that the law of unfair competition developed at the beginning of the 20th century and was considered an outgrowth of trademark law.176 According to Chafee, the only important difference between trade names and trademarks was the eligibility for federal registration of the latter.177 Handler and Pickett wrote that since trademarks and trade names functioned much the same in practice, there is no justification to discriminate the level of protection of one of the two.178 Rogers observed:

The notion that there is ‘property’ in trademarks as a separate thing was once quite generally entertained and for a while it served well enough, but it was very soon perceived that a trader’s customers might be diverted by the imitation of things which were not trademarks and in which property rights could not be maintained, such as the misuse of personal names, descriptive words and the like.179

174 Hanover Star Milling Co., 240 U.S. (1916) at 412–13. 175 ‘Trademark law is really just a part of the broader law of unfair competition’. Gasparek, supra note 70, at 795. 176 Walter J. Derenberg, TRADE-MARK PROTECTION AND UNFAIR TRADING 48 (Albany: Matthew Bender & Company 1936), at 39–40. 177 Zechariah Chafee, Unfair Competition, 53 HARV. L. REV. 1289, at 1298 (1940). 178 ‘Whether or not there is property in trademarks or trade names seems to us a fruitless and unhelpful inquiry. Both types of mark frequently are the most valuable assets of a business’. Milton Handler and Charles Pickettt, Trade-Marks and Trade Names: An Analysis and Synthesis: II, 30 COLUM. L. REV. 168, 759, 776 (1930). 179 Edward Sidney Rogers, New Concepts of Unfair Competition under the Lanham Act, 38 TMR 259, 260 (1948).

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Trademark Infringement Legislation

The first federal trademark law was enacted on 5 July 1946: the Lanham Act.180 The Lanham Act was introduced as a bill ‘to place all matters relating to trademarks in one statute and to eliminate judicial obscurity … and [to make] relief against infringement prompt and effective’. It promotes three policies: it prevents consumer confusion,181 protects the goodwill of businesses, and encourages competition within the market.182 There are two trademark registers in the US: the Principal Register183 if trademarks meet the qualifications, including that of distinctiveness. If not, they still can be listed on the Supplemental Register.184 The protection for federal trademarks on the Principle Register is stronger than on the Supplemental Register or for unregistered marks. If registered on the Principle Register, one can enforce one’s trademark against trademark infringement. Paragraph 43(a) Lanham Act also protects against violations of false advertising or unfair competition,185 without the need to have a federally registered trademark. Rogers asserted that:

[u]nder the modern law … unfair competition includes any act, not necessarily fraudulent, which artificially interferes with the normal course of trade to the disadvantage of another. There need be no competition if the artificial interference is present. It is true, of course, that most of the cases have arisen between competitors in business, but the fact of competition or its absence ought not to be controlling. It is the nature or the result of the act, not the occupation of the actor which should determine its character.186

180 The Lanham Act was passed on 5 July 1946 and was named after congressman Frederick (Fritz) Garland Lanham, representative for Texas and a Democrat. 181 The trademark infringement claim can be found in § 32(1) Lanham Act, 15 U.S.C. § 1114(1). 182 Fara S. Sunderji, Protecting Online Auction Sites from the Contributory Trademark Liability Storm: A Legislative Solution to the Tiffany Inc. v eBay Inc. Problem, 74 FORDHAM L. REV. 909, 917–18 (2005). 183 15 U.S.C. § 1051–72. 184 15 U.S.C. § 1091–6. To meet the requirement of some countries that require that the mark has been first registered in the home country. 185 ‘Section 43(a) Lanham Act proscribes false statements or representations that are made in commercial advertising or promotion, are likely to deceive consumers, and are likely to cause injury to the plaintiff’. Court L. Reichman and M. Melissa Cannady, False Advertising under the Lanham Act, 21 FRAN. L.J. 187, 187 (2002). 186 Rogers, supra note 179, at 262.

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The 1905 Trademark Act prevented registration of a mark that was likely to cause confusion with an already registered mark, but only if the marks were placed on goods of the ‘same descriptive properties’ as those of the senior user. The Lanham Act of 1946 eliminated this requirement. Under the revised version of the Act, a junior user could not register or use a mark ‘in connection with the sale, offering for sale, or advertising of any goods or services on or in connection with which such use is likely to cause confusion or mistake or to deceive purchasers as to the source of origin of such goods or services’.187 Handler and Pickett had already advocated in 1930 that all types of marks will be entitled to protection under the likelihood of confusion standard.188

Trademark Infringement Tests

Although there are more tests, as will be pointed out below, the Polaroid test is still the most authoritative. In 1961 the Second Circuit formulated the Polaroid factors189 to determine whether a likelihood of confusion exists:190

(1) strength of plaintiff’s mark; (2) similarity of competing marks; (3) competitive proximity of the products; (4) likelihood that plaintiff will ‘bridge the gap’ and offer a product like defendants’ product; (5) actual confusion; (6) defendants’ good faith; (7) quality of defendants’ product; (8) sophistication of the buyers.

In 1962 Congress broadened the scope of the likelihood of confusion standard by removing the reference to ‘purchasers’ in the statute.191 It

187 Trademark Act of 1946, ch. 540, § 43(a)(1)(A), 60 Stat. 444, 15 U.S.C. § 1125(a)(1)(A) (1946). 188 Handler and Pickett, supra note 178. 189 Polaroid Corp. v Polarad Elecs. Corp., 287 F.2d 492, 495 (2d. Cir. 1961), cert. denied, 368 U.S. 820 (1961). 190 These factors must not be applied in a mechanical way, and the focus needs to be on whether consumers are likely to be confused. Nabisco, Inc. v Warner-Lambert Co., 220 F.3d 43, 46 (2d Cir. 2000). 191 S. Rep. No. 2107, 87th Cong., 2d Sess. 4, reprinted in 1962 U.S.C.C.A.N. 2844, 2847.

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now prohibits all uses of a trademark that are ‘likely to cause confusion or to cause mistake or to deceive’.192 Congress also removed reference to confusion ‘as to the source of origin’, so now also confusion as to sponsorship or endorsement of a good or service are within the scope of protection and thus prohibited.193 In 1979 the 9th Circuit came up with an eight-factor balancing test for the likelihood of confusion:194

(1) strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendant’s intent in selecting the mark; (8) likelihood of expansion of the product lines.

In 2000 the 7th Circuit used a slightly different seven-factor balancing test:195

(1) the similarity between the marks in appearance and suggestion; (2) the similarity of the products; (3) the area and manner of concurrent use of the products; (4) the degree of care likely to be exercised by consumers; (5) the strength of the complainant’s mark; (6) any evidence of actual confusion; (7) the defendant’s intent (or lack thereof) to palm off its product as that of another.

In contrast to what Schechter proposed, namely the protection of the distinctiveness of arbitrary or fancy trademarks, the US legislator chose to only protect famous trademarks.196 Rierson pointed out that Schechter did not intend that it would apply to words or terms that were not

192 Since 1962 Lanham Act: 15 U.S.C. § 1125(a)(1)(A) (2006). 193 S. Rep. No. 2107, 87th Cong., 2d Sess. 4, reprinted in 1962 U.S.C.C.A.N. 2844, 2847. 194 AMF, Inc. v Sleekcraft Boats, 599 F.2d 341, 348–9 (9th Cir. 1979). 195 Eli Lilly & Co. v Natural Answers, Inc., 233 F.3d 456, 461–2 (7th Cir. 2000). 196 Beebe, supra note 87, at 1162–3.

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inherently distinctive: ‘His argument in favor of separating the two classes of marks was in fact directly contrary to the definite trend in favor of conflating them’.197 McClure characterized Schechter’s trademark dilution theory as a proposal to re-propertize certain categories of trademarks.198 Locke’s labour theory of property,199 which argues that the fruits of one’s labour are one’s own because one has worked for it, cannot be employed, according to Port, because the trademark holder has not exerted any work on the mark in non-competing markets.200 However, Locke developed the homestead principle: one gains just ownership of an unowned resource by performing an act of original appropriation. It can be argued that to register and use a trademark in one product category can be seen as such an act of original appropriation for all categories. Property can be used in any way the property owner sees fit,201 as long as it has no detrimental effects to society. Callmann, after Schechter one of the most prolific advocates of codifying the trademark dilution doctrine, asserted that ‘trade-mark infringement includes both “passing-off”, which is found when competitors infringe upon a mark, and “trespass of trademark property”, which is found most commonly when the infringing mark is used on non- competing goods’.202 Since 1947 trademark dilution has been enacted in some of the US states.203 But only in 1995 did Congress enact the Federal Trademark

197 Rierson, supra note 81, at 9. 198 Daniel M. McClure, Trademarks and Unfair Competition: A Critical History of Legal Thought, 69 TMR 320, 323–4 (1979). 199 Locke, supra note 166. 200 Kenneth L. Port, The ‘Unnatural’ Expansion of Trademark Rights: Is a Federal Dilution Statute Necessary?, 18 SETON HALL LEGIS. J. 433, 473–4, 487 (1994). 201 This can be compared to someone who claims land and uses it in one way, and does not have to allow anyone to exploit the same land in other ways that do not interfere with the exploitation of the activity of the landowner. 202 Callmann, supra note 129, at 465–6. 203 Massachusetts enacted the first dilution statute: Act of 2 May 1947, Ch. 307, § 7a, 1947 Mass. Acts 300 (codified as amended at MASS. GEN. LAWS ANN. Ch. 110H § 13 (West Supp. 2007)). Massachusetts was followed by New York, Illinois and Georgia. Dilution materialized in state statutes as early as 1947, and many states still recognize a dilution cause of action. See: N.Y. GEN. BUS. LAW § 368-d (1961 N.Y. Laws 1806, 1813) (recodified at N.Y. GEN. BUS. LAW § 360-l in MCKINNEY’S CONSOLIDATED LAWS OF NEW YORK (St Paul, MN: West Publishing 1996 & Supp. 2008)); 140 ILL. COMP. STAT. ANN. 22 (St Paul, MN:

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Dilution Act (FTDA).204 The FTDA was replaced by the Trademark Dilution Revision Act (TDRA)205 after the Supreme Court had interpreted the FTDA in the Victoria’s Secret case206 as having an actual dilution standard: after the District Court207 decided to favour the dilution claim and the Sixth Circuit208 confirmed, the Supreme Court reversed. There needed to be more than mere association between them to demonstrate that the defendant had ‘impaired the distinctiveness’ of and thereby diluted the plaintiff’s famous trademark. The actual dilution standard articulated in Victoria’s Secret was criticized by the holders of famous trademarks. Then, Congress amended the Act because of the Supreme Court’s decision209 and passed the TDRA. Paragraph 43(c) US Trademark Act of 1946, as amended by the TDRA of 2006,210 is codified in U.S.C. Title 15 § 1125211 and includes dilution by

West Publishing, 1986) (superseded by 765 ILL. COMP. STAT. ANN. §§ 1036/5, 1036/65 (St Paul, MN: West Publishing 2001)); GA. CODE ANN. § 10-1-451 (LexisNexis, 2000). Robert G. Bone, Schechter’s Ideas in Historical Context and Dilution’s Rocky Road, 24 SANTA CLARA COMP. & HIGH TECH. L.J. 469, 497–504 (2008). 204 Federal Trademark Dilution Act of 1995, Pub. L. No. 104-98, § 4, 109 Stat. 985, 986 (codified at 15 U.S.C. § 1127 (2000). 205 Trademark Dilution Revision Act of 2006, Pub. L. No. 109-312, § 2, 120 Stat. 1730 (codified at 15 U.S.C. § 1125(c) (2006). 206 Moseley v V Secret Catalogue, Inc., (01-1015) 537 U.S. 418 (2003) 259 F.3d 464, reversed and remanded. 207 V Secret Catalogue, Inc. v. Moseley, No. 3:98CV-395-S, 2000 WL 370525, at 1 (W.D. Ky. Feb. 9, 2000). 208 V Secret Catalogue, Inc. v Moseley, 259 F.3d 464, 476–7 (6th Cir. 2001). 209 As was pointed out in Starbucks Corp. v Wolfe’s Borough Coffee, Inc., 588 F.3d 97, 104 (2d Cir. 2009). 210 The Trademark Dilution Revision Act (TDRA) of 2006 was implemented as a correction to the Supreme Court’s interpretation of the Federal Trademark Dilution Act of 1995 in Moseley v V Secret Catalogue, Inc., supra note 206. TDRA made clear that no actual trademark dilution was needed, but that a likelihood of trademark dilution was enough for protection. Famous mark was redefined as recognized by a member of the general public, instead of a member of a niche market. The fair use defence was also changed. See Chapter 6 ‘Trademark Dilution and Its Defences’. 211 Trademark dilution legislation, in the U.S. Title 15, Ch. 22, subCh. III, § 1125, ‘False designations of origin, false descriptions, and dilution forbidden’ (c) Dilution by blurring, dilution by tarnishment.

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blurring212 and tarnishment.213 It modified the statutory language in a manner that effectively decreased the importance of mark similarity and increased the relevance of mark association in trademark dilution cases. In the next Victoria Secret’s case, the District Court214 applied the likelihood of dilution standard, which was confirmed by the Sixth Circuit.215

TDRA Test for Trademark Dilution by Blurring

The six TDRA factors about what could constitute trademark dilution by blurring216 are non-exclusionary:

(1) the degree of similarity between the mark or trade name and the famous mark; (2) the degree of inherent or acquired distinctiveness of the famous mark; (3) the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark; (4) the degree of recognition of the famous mark; (5) whether the user of the mark or trade name intended to create an association with the famous mark; (6) any actual association between the mark or trade name and the famous mark.

If one approaches the dilution doctrine from a relational perspective it makes sense that a mere association instead of likelihood of dilution can be damaging. If one associates oneself with the wrong kind of people, it reduces one’s reputation in the job market and might also decrease the opportunities one is getting in one’s career.

212 U.S. Code, Title 15, Ch. 22, subCh. III, § 1125(c)(2)(B), see note 9. 213 Code, Title 15, Ch. 22, sub Ch. III, § 1125(c)(2)(C), see note 9. 214 V Secret Catalogue, Inc. v Moseley, 558 F. Supp. 2d 734, 750 (W.D. Ky. 2008). 215 V Secret Catalogue, Inc. v Moseley, 605 F.3d 382, 390 (6th Cir. 2010), cert. denied, 79 U.S.L.W. 3301 (U.S. 18 January 2011) (No. 10-604). 216 15 U.S.C. § 1125(c)(2)(B).

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In regard to dilution by tarnishment Horn’s criticism was that when a defendant’s trademark has lewd or sexual associations a ‘likelihood of dilution’ is presumed and must be rebutted by the defendant.217 Under the TDRA, injunctive relief is the primary form of remedy.218 Damages and attorney fees can be compensated by the defendant, in cases of ‘willful’ dilution.219 In the 1990s the EC harmonized the trademark, this led to the First Council Directive 89/104/EEC (Trademark Directive).220 Harmonization has made the differences between the rules in the separate EU member jurisdictions smaller.221 However, it did not lead to a uniform set of agreed rules. Rather, it merely ‘directs a change of rules, standards or processes in order to avoid conflicts and bring about equivalence’.222 Which on its turn set the stage for unifying community trademark law into the Community Trademark Regulation.223 Unification did eliminate the differences between the rules in the jurisdictions of the separate member countries of the EU for the community trademark. One can observe an evolution in what can prevent a likelihood of confusion. It started with the precondition of a single undertaking that is the source of origin and who is in control of the quality of the products:

For the trade mark to be able to fulfil its essential role in the system of undistorted competition which the Treaty seeks to establish, it must offer a guarantee that all the goods or services bearing it have originated under the control of a single undertaking which is responsible for their quality.224

217 Greg Horn and Matthew Malm, Sex Changes Everything, but the Trade- mark Dilution Revision Act Shouldn’t: V Secret Catalogue, Inc. v. Moseley and the Burden of Proof in Trademark Dilution Actions, 79 U. CIN. L. REV. 1583, 1584 (2011). 218 15 U.S.C. § 1125(c)(1). 219 15 U.S.C. § 1125(c)(5)(B)(i) and (ii). 220 Supra note 11. 221 Harmonization of laws has been called the ‘dominant impulse’ for international lawmaking initiatives. Timothy W. Blakely, Comment: Beyond the International Harmonization of Trademark Law: The Community Trade Mark as a Model of Unitary Transnational Trademark Protection, 149 U. PA. L. REV. 309, 309 (2000). 222 George A. Zaphiriou, Unification and Harmonization of Law Relating to Global and Regional Trading, 14 N. ILL. U. L. REV. 407, 407 (1994). 223 Supra note 36. 224 HAG GF (HAG II), (Case C-10/89), Judgment of the ECJ, 17 October 1990, paras 13 and 14.

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The requirement for a single undertaking was first that it had to be known, later the requirement sufficed that it be constant. The one responsible for the quality was broadened to economically linked undertakings in Canon Kabushiki Kaisha v Metro-Goldwyn-Meyer Inc.225 As pointed out in Chap- ter 2.8 on the quality function, the interpretation of control over the quality has shifted from adequate to sufficient to minimal. Distinctiveness is part of the likelihood of confusion test. ‘[T]he distinctive character of the earlier trade mark, and in particular its reputation, must be taken into account when determining whether the similarity between the goods or services covered by the two trade marks is sufficient to give rise to the likelihood of confusion’.226 It was established that there is a relation between the degree of similarity between goods or services of the sign and the trademark and the degree of similarity between the sign and the trademark.227 In other words: if two entities use very similar signs but their products are very dissimilar it might be not confusing.

Virgin Enterprises Ltd v Bodtrade Likelihood of Confusion Principles

In La Chemise Lacoste SA v Baker Street Clothing Ltd 228 Geoffrey Hobbs QC sitting as the Appointed Person quoted the following summary earlier used by Mr Allan James in Virgin Enterprises Ltd v Bodtrade229 to give an overview of the principles established in regard to whether a similar trademark for identical or similar products can co-exist:

(a) the likelihood of confusion must be appreciated globally, taking account of all relevant factors;230 (b) the matter must be judged through the eyes of the average consumer of the goods or services in question,231 who is deemed to be reasonably well

225 Canon Kabushiki Kaisha v Metro-Goldwyn-Meyer Inc (Canon Kabushiki Kaisha), (Case C-39/97), Judgment of the ECJ, 29 September 1998, para. 30. 226 Id., para. 24. 227 ‘[A] lesser degree of similarity between those goods or services may be offset by a greater degree of similarity between the marks, and vice versa’. Id., para. 17. 228 La Chemise Lacoste SA v Baker Street Clothing Ltd, The Appointed Person (Geoffrey Hobbs, Q.C.): 128 R.P.C. 165 (2011). 229 Virgin Enterprises Ltd v Bodtrade 54 (Pty) Ltd (BL O-216/09; 23 July 2009). 230 SABEL BV v Puma AG (SABEL BV) (Case C-251/95), Judgment of the ECJ, 11 November 1997, para. 22. 231 Id., para. 23.

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informed and reasonably circumspect and observant,232 but who rarely has the chance to make direct comparisons between marks and must instead rely upon the imperfect picture of them he has kept in his mind, and whose attention varies according to the category of goods or services in question;233 (c) the average consumer normally perceives a mark as a whole and does not proceed to analyse its various details;234 (d) the visual, aural and conceptual similarities of the marks must normally be assessed by reference to the overall impressions created by the marks bearing in mind their distinctive and dominant components, but it is only when all other components of a complex mark are negligible that it is permissible to make the comparison solely on the basis of the dominant elements;235 (e) nevertheless, the overall impression conveyed to the public by a composite trade mark may, in certain circumstances, be dominated by one or more of its components;236 (f) and beyond the usual case, where the overall impression created by a mark depends heavily on the dominant features of the mark, it is quite possible that in a particular case an element corresponding to an earlier trade mark may retain an independent distinctive role in a composite mark, without necessarily constituting a dominant element of that mark;237 (g) a lesser degree of similarity between the goods or services may be offset by a great degree of similarity between the marks, and vice versa;238 (h) there is a greater likelihood of confusion where the earlier mark has a highly distinctive character, either per se or because of the use that has been made of it;239 (i) mere association, in the strict sense that the later mark brings the earlier mark to mind, is not sufficient;240

232 Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt – Amt für Lebensmittelüberwachung, (Case C-210/96), Judg- ment of the ECJ, 16 July 1998, para. 31. 233 Lloyd Schuhfabrik Meyer & Co. GmbH v Klijsen Handel BV, (Case C-342/97), Judgment of the ECJ, 22 June 1999, para. 26. 234 SABEL BV, supra note 230, para. 6. 235 Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV, supra note 233, para. 25. 236 Matratzen Concord v OHIM Hukla Germany (MATRATZEN), (Case T-6/01), Judgment of the Court of First Instance, 23 October 2002, para. XXXV. 237 Medion AG v Thomson Sales Germany & Austria GmbH (Case C-120/ 04), Judgment of the ECJ, 6 October 2005, paras 35–7. 238 SABEL BV v Puma AG, supra note 230, para. 22. 239 Canon Kabushiki Kaisha, supra note 225, para. 24. 240 SABEL BV, supra note 230, para. 26.

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(j) the reputation of a mark does not give grounds for presuming a likelihood of confusion simply because of a likelihood of association in the strict sense;241 (k) if the association between the marks causes the public to wrongly believe that the respective goods [or services] come from the same or economically-linked undertakings, there is a likelihood of confusion.

The European Court of Justice (ECJ) made clear in O2 v Hutchison (the ‘bubbles’ case)242 that the plaintiff can take action for trademark infringement in the case of a likelihood of confusion, even in respect of a comparative advertisement. Besides, a plaintiff can bring a complaint under the current Misleading and Comparative Advertising Directive.243

Legislation against Trademark Dilution

Although the word dilution cannot be found anywhere in the directive or regulation, the doctrine to protect marks with a reputation against use on dissimilar goods or services as taking unfair advantage of or causing detriment to the distinctive character or repute of the trademark can be found in both: Article 5(2) Trademark Directive244 and its equivalent: Article 9(1)(c) Community Trademark Regulation.245 In a case between the competitors Puma v Sabel,246 the ECJ rejected the interpretation that a likelihood of association meant that the accused mark merely calls to mind the senior mark and that the concept of likelihood of association is not an alternative to that of likelihood of confusion, but serves to define its scope.247 In Davidoff v Gofkid the ECJ decided that member states can also allow action against a competitor for causing detriment to, or taking unfair advantage of the distinctive

241 Marca Mode CV v Adidas AG, (Case C-425/98), Judgment of the ECJ, 22 June 2000, para. 41. 242 O2 Holdings Ltd and O2 (UK) Limited v Hutchison 3G Limited, (C-533/ 06) Judgment of the ECJ, 12 June 2008. 243 Misleading and Comparative Advertising Directive 2006/114/EC. 244 Supra note 11. 245 Council Regulation 40/94, supra note 36, and updated by Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark. 246 SABEL BV, supra note 230, para. 26. 247 SABEL BV, id., at para. 18. Also Canon Kabushiki Kaisha, supra note 225.

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character or repute of a trademark, rather than someone who uses the sign on dissimilar goods or services.248 Article 5(2) Trademark Directive249 ‘cannot be given an interpretation which would lead to marks with a reputation having less protection where a sign is used for identical or similar goods’.250 In Intel v CPM the ECJ could not find any likelihood of confusion.251 However, it decided that causing detriment to the distinctive character of the mark is actionable when:

Such detriment is caused when that mark’s ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark. That is notably the case when the earlier mark, which used to arouse immediate association with the goods and services for which it is registered, is no longer capable of doing so.252

The ECJ in Intel v CPM also held that in order to prove detriment to the distinctive character of the mark with a reputation, the proprietor must present evidence of a change in economic behaviour of the average consumer of the earlier goods or services as a consequence of the use of the later mark, or a likelihood that such a change will occur in the future.253 L’Oréal v Bellure was about comparison lists of smell-alike per- fumes.254 The ECJ decided:

Since, under Directive 84/450, comparative advertising which represents the advertiser’s products as an imitation of a product bearing a trade mark is inconsistent with fair competition and thus unlawful, any advantage gained by the advertiser through such advertising will have been achieved as the result

248 Davidoff & Cie SA and Zino Davidoff SA v Gofkid Ltd (Davidoff) (Case C-292/00), Judgment of the ECJ, 9 January 2003. 249 Trademark Directive, supra note 11. 250 Davidoff, supra note 248, para. 25. Adidas-Salomon AG and Adidas Benelux BV v Fitnessworld Trading Ltd. (Adidas v Fitnessworld), (C-408/01), Judgment of the ECJ, 23 October 2003, confirmed Davidoff in paras. 14, 16 and 19. 251 Intel Corporation Inc. v CPM United Kingdom Ltd. (Intel v CPM) (Case C-252/07), Judgment of the ECJ, 27 November 2008. 252 Id. 253 Jukka Palm, ‘The ECJ’s Puzzling Concept of a “Change in Economic Behaviour”’, Brands in the Boardroom 2009, IAM-MAGAZINE 20 (2009). 254 L’Oréal v Others, supra note 95.

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of unfair competition and must, accordingly, be regarded as taking unfair advantage of the reputation of that mark.255

In Interflora the mere fact that a competitor by using an identical sign with the trademark in relation to services identical for which that mark is registered forces a trademark holder to intensify its advertising in order to maintain or enhance its profile with consumers is not a sufficient basis, in every case, for concluding that the trade mark’s advertising function is adversely affected.256 According to the CJEU: the trademark holder is not protected against practices inherent in competition and keyword advertising as a general rule is deemed as ‘merely to offer internet users alternatives to the goods or services of the proprietors of those trade marks’.257 In Interflora, Marks & Spencer (M&S) selected keywords, including Interflora.com.258 It can be argued that a website address, which literally indicates the origin and should link to that source, leaves no doubt as to where the internet user wants to go. But instead of linking the internet user to Interflora.com, the M&S advertisement or M&S website was triggered, something the CJEU did not qualify as an adverse effect on the source of origin function of the trademark, nor a likelihood of confusion. However, empirical research by Bechtold and Tucker showed that, instead of shortening the search process, the use of trademarks in keyword-triggered advertising caused people to need more time to find the brand, which suggests that it adversely affects the source of origin function of the trademark.259

255 Id., para. 79. 256 Interflora, supra note 128, at para. 57. 257 Google France, supra note 95, para. 69, Interflora, supra note 128, para. 58. 258 Using Google’s AdWords referencing service, M&S selected as keywords the word ‘Interflora’, as well as variants made up of that word with minor errors and expressions containing the word ‘Interflora’, including: ‘Interflora.com’. ‘Consequently, when internet users entered the word “Interflora” or one of those variants or expressions as a search term in the Google search engine, an M&S advertisement appeared under the heading “sponsored links”’. Interflora, supra note 128, para. 18. 259 Stefan Bechtold and Catherine Tucker, Trademarks, Triggers and Online Search, Working Paper, December 2012. Presentation at Overlapping IP Rights: The Rise of Functional and Empirical Perspectives, Conference ‘Searching for the Boundaries of Intellectual Property Law’, University of Hong Kong, 15 December 2012.

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According to the CJEU in Interflora the trademark holder should accept the situation in which his trademark is used ‘in conditions of fair competition that respect the trademark’s function as an indication of origin’260 and where the only consequence is that the trademark holder is obliged ‘to adapt its efforts to acquire or preserve a reputation of that trademark capable of attracting consumers and retaining their loyalty’.261 That some consumers are prompted to switch from the trademark holder to competitors is all in the game and part of fair competition.262

260 Interflora, supra note 128, para. 64. 261 Id. 262 Id.

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3. Protagonists of the legal conflict Why all parties affected by the conflict would gain equally by its dissolution

3.1 INTRODUCTION

The trademark logo in the centre of a love/hate triangle.

As Chapter 2 set out the stage of the legal conflict, this chapter introduces the perspective, interests and idiosyncrasies of each of the protagonists: trademark holders (Chapter 3.2), social media providers (Chapter 3.3) and internet users (Chapter 3.4) who interact in a kind of ‘love/hate triangle’. Each of this trinity of stakeholders is connected to each other via the trademark logo (Chapter 3.5).

3.2 TRADEMARK HOLDERS

The trademark holder, trademark and brand, although often used inter- changeably in common parlance, each have their own specific meaning, measures and scope. The brand is the perception people experience when they come into contact with the trademark of the trademark holder.1 Marketing author Godin succinctly stated the definition of a brand as a ‘set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another’.2 A definition of a trademark holder could simply be an entity that has either registered or acquired a registered trademark. Licensees, including internet users, that use the trademark in an authorized way, are not

1 Tim Calkins, The Challenge of Branding, in KELLOG ON BRANDING (Tim Calkins and Alice Tybout, eds.,Hoboken, NJ: John Wiley & Sons, 2005) at 1.1. 2 Seth Godin, ‘Define: Brand’, 13 December 2009, accessed 13 June 2015 at: http://sethgodin.typepad.com/seths_blog/2009/12/define-brand.html.

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considered trademark holders, since they do not have the right to alienate the trademark. Trademark holders identify themselves and are publicly identified by their trademark. As set out in Chapter 2, the trademark is a sign that is distinctive or has become distinctive and has been registered at the designated trademark office. The interests of the trademark holder are complex: the trademark holder does not want to allow the functions of the trademark to be infringed and diluted. On the one hand trademark holders can become enthusiastic if internet users refer to their mark on social media in a positive way. On the other hand, trademark holders do not approve if internet users refer to their trademark in a negative way. Also, even if internet users have good intentions, they might use the trademark in new ways. This can precipitate a resignification of the trademark, so that trademark holders de facto lose control over their trademarks. Trademark holders try to prevent this from happening outside of the boundaries they have set. This could be the case when competitors use their trademark in a descriptive way to promote their competing or non-competing product or service, or in comparative advertising, or when internet users use their trademark for parody, satire or to make critical comments (see Chapter 6 ‘Trademark Dilution and Its Defences’). So on the one side it is in the trademark holders’ interest to mitigate the space in which their trademark is used without their permission. On the other side, each potential trademark holder needs to have the freedom to find a suitable name for his trademark and promote their products using descriptive words in advertisements that might already be claimed by other trademark holders, so it is in their interest to maximize the space where fair competition can flourish. Therefore a balance needs to be struck between these contradictory forces. A trademark holder was once considered to be the exclusive source to which his trademark refers. Then licensees were authorized to use the trademark, so that they too could be the source to which the trademark refers, which necessitated the abandonment of this idea of exclusive reference.3 For the trademark holder the value is predominantly in the trademark, not in the product itself.4 Although often not exclusive anymore, the link between trademark holder and trademark still exists.

3 See in Chapter 2.8 ‘Consumer Interest-Related Functions of Trademark Infringement’: source of origin. 4 Carlton Curtis, VP Corporate Communications, Coca Cola. Laurent Muzellec, What is in a Name Change? Re-Joycing Corporate Names to Create Corporate Brands, 8 CORP. REPUTATION REV. 305 (2006).

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The trademark enables the policy in regard to, for example corporate social responsibility or sustainability, to be traced back to the trademark holder. Thus, the trademark facilitates accountability of the trademark holder.5 In this sense, the trademark not only gives trademark holders a face, but also makes it possible for them to lose their face. The activities of trademark holders vary widely, from for-profit companies to non-profit organizations, and from holders of well-known marks,6 service marks,7 collective marks8 to certification marks.9 The latter category might even be defined so as to include geographical indications.10 Although trademark holders have such different back- grounds, and can be each other’s competitors, they have demonstrated the ability to form powerful lobbyist and interest groups.11 If trademark holders, who are of course the main advertisers on social media, would unite in the fight against infringement of their trademark logos on social media sites, they would be a formidable force to advocate a paradigm change to protect and enforce their trademark logos on social media.12

5 See in Chapter 2.8 ‘Proprietary Functions’: accountability. 6 Article 6bis Paris Convention, supra, Chapter 2, note 2. 7 Article 6sexies Paris Convention, id. 8 ‘A collective membership mark is a mark adopted for the purpose of indicating membership in an organized collective group, such as a union, an association, or other organization. Neither the collective nor its members use the collective membership mark to identify and distinguish goods or services; rather, the sole function of such a mark is to indicate that the person displaying the mark is a member of the organized collective group’. Geographical Indication Protec- tion in the United States, United States Patent and Trademark Office, p. 5. Article 7bis Paris Convention, supra, Chapter 2, note 2. 9 ‘The owner of a certification mark does not use it. A certification mark does not indicate commercial source nor distinguish the goods or services of one person from those of another person. Certification marks are only source- identifying in the sense that they identify the nature and quality of the goods and affirm that these goods have met certain defined standards’. Geographical Indication Protection in the United States, United States Patent and Trademark Office, p. 3. 10 Articles 22 and 23 TRIPS, supra, Chapter 2, note 26. 11 Examples are: International Trademark Association (INTA), American Intellectual Property Law Association (AIPLA), European Communities Trade Mark Association (ECTA). 12 How trademark holders use social media themselves will be dealt with in Chapter 3.3.

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Trademark holders play a crucial role in society, and not only because they offer a product or service of a certain quality13 and reputation that people recognize and sometimes even want to identify with.14 They also provide a source of employment, which can stretch over multiple generations. In contrast to all other intellectual property rights, trademark rights can be extended indefinitely. In fact, some trademark holders continue to thrive on trademarks registered in the late 19th century.15

3.3 SOCIAL MEDIA PROVIDERS

The social media provider is, next to the internet user and trademark holder, the newest of the trinity of protagonists of the legal conflict, as social media is a relatively new phenomenon this section describes at length several aspects of social media. First it classifies and describes the functions of the dominant social media services, before providing a brief history of the social media phenomenon and the commonalities of social media providers. Next the section analyses the terms of service and community guidelines of five important examples of social media sites: Facebook, Twitter, YouTube, Flickr and Pinterest. The section will look at issues of ownership and responsibility of these social media providers, the differences between measures taken to protect third parties against intellectual property rights infringements and the policies they set up to protect their own intellectual property rights. Finally, the section dis- closes what procedures are put in place in case of trademark infringements, and to compare these findings to cases of copyright infringements. ‘Social Media is a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content’.16 Prashant

13 See in Chapter 2.8 ‘Proprietary Functions’ about the communication function. 14 Drescher, supra, Chapter 1, note 25, at 309. 15 The Bass Red Triangle was the first trademark logo to be registered under the UK’s Trade Mark Registration Act of 1875, as trade mark number 1. Filing date, 1 January 1886. Next renewal date, 1 January 2022, accessed 9 February 2015 at: http://www.ipo.gov.uk/tm/t-find/t-find-number?detailsrequested=C& trademark=1. 16 Andreas M. Kaplan and Michael Haenlein, Users of the World, Unite! The Challenges and Opportunities of Social Media, 53 BUSINESS HORIZONS 59, 61 (2010). A definition of User Generated Content (UGC) could be: content that is published on publicly accessible websites or social networking sites accessible to selected groups, demonstrating some creative effort and created outside of

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described Web 2.0 as a concept that takes the network as a platform for information sharing, interoperability, user-centred design and collabor- ation on the World Wide Web.17 Social media are provided on a growing arsenal of digital platforms, such as PCs, tablets and smart phones, and are accessed with an internet connection. Kaplan and Haenlein classified social media sites according to theories in the field of media research:18 social presence, media richness, social processes, self-presentation and self-disclosure. These theories might help explain why some intrinsic features of some social media sites are more prone to stimulate the use of unauthorized trademark logos. If someone with high social influence has uploaded an unauthorized trademark logo on his social media page, chances are higher that his connections will share this trademark logo on their social media pages. Most social media sites now include the feature to post pictures, including unauthorized trademark logos. The more a social media site allows self-disclosure, the higher the chances are that unauthorized trademark logos are uploaded for their status-signalling properties (see status-signalling properties in the literature review of Chapter 1). The sharing of content can even take place between different social media services. For example there are deals between different social media service providers and there are independent service integrators that connect social media services. This interoperability increases the distribution, extent and rate of content, including contentious content (see Chapter 4.4 ‘Proliferation, scale and speed of contentious content’). Another shared characteristic is that they are ‘walled gardens’, which means that they can set their own rules within the space that can be accessed by internet users that have agreed to their shrink-wrapped agreements. These aspects of social media sites will be elaborated in Chapter 9 ‘Implementation of a Paradigm Shift’. As the respective social media sites evolve, a convergence between the different functions can be observed. Internet users can now share pictures and videos on microblogging site Twitter without leaving the site;

professional routines and practices. OECD, ‘Participative Web: User-Created Content’, document DSTI/ICCP/IE(2006)7/Final, dated 12 April 2007. 17 Prashant Sharma, ‘Core Characteristics of Web 2.0 Services’, TechPluto, 28 November 2008, accessed 14 June 2015 at: http://www.techpluto.com/web- 20-services/. Read Tim O’Reilly, ‘What Is Web 2.0’, 30 September 2005, accessed 13 June 2015 at: http://oreilly.com/pub/a/web2/archive/what-is-web- 20.html. 18 Kaplan and Haenlein, supra note 16, at 61.

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Facebook has chat functionality just like chat applications such as Skype; and one can share pictures on Skype. One can add a contact/connection/friend on a social media site if that party agrees. Generally one can register uni-directionally at a blog as a fan or at Twitter as a follower,19 and reciprocity is not needed. The business model of social media providers is based on three sources: a stream of revenues of advertisements; data on the behaviour and content of the users; and gaming applications.

PowerAsymmetry between Social Media Providers and Internet Users

In the terms of service of most social media providers one can see that the internet user gives permission to the social media provider to grant a non-exclusive, tranferable, sub-licensable, royalty-free, worldwide license to use any intellectual property content.20 Each social media provider prohibits intellectual property (IP) infringement by the internet users. All make clear that they are not responsible for any IP infringement by the users. Social media providers are strict when protecting and enforcing their own intellectual property rights. The contrast of their stance in regard to the intellectual property infringement of trademark holders is salient. Social media providers invite internet users to share content, and once they do, they appropriate the intellectual property rights, irrevocably and perpetually. Social media providers, especially Facebook, appear deeply concerned with protecting their own trademarks, but are much less interested in protecting other companies’ trademarks, even though they are Facebook’s customers of advertisements and data on the behaviour and content of internet users. Likewise, Pinterest uses a double standard: on the one hand it allows internet users to pin any picture, including trademark logos, on their

19 Unless the permission to follow is selected by the Twitter user. In that case the follower can also send direct messages. 20 See Statement of Rights and Responsibilities, Facebook’s Terms of Service, 8 June 2012, accessed 9 February 2015 at: http://www.facebook.com/ legal/terms; 5. Your Rights, Terms of Service Twitter, 25 June 2012, accessed 9 February 2015 at: http://twitter.com/tos/; 5.A. Terms of Service YouTube, 9 June 2010, accessed 9 February 2015 at: http://www.youtube.com/static?gl=US& template=terms; 9. Content submitted or made available for inclusion on the Yahoo! Services, Terms of Service Yahoo!, accessed 9 February 2015 at: http://info.yahoo.com/legal/us/yahoo/utos/utos-173.html; Pinterest Terms of Ser- vice, effective 6 April 2012, accessed 9 February 2015 at: http://pinterest.com/ about/terms/.

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electronic pinboard without any verification of authorization; on the other hand, if the trademark logo happened to be of Pinterest the internet user needs to ask written permission first. Social media providers such as Flickr require people that use their trademarks to use symbols such as ®, while others such as Facebook do not. Chapter 9.4 ‘Making authorized trademark use transparent’ looks at whether such symbols can play a significant role in the protection of trademark logos. Moreover, Twitter is the only social media provider that allows internet users to use their moral right to revoke or withdraw a work completely. Of course, each social media provider goes to great lengths to try to indemnify themselves for content submitted by internet users that violate or infringe law, including intellectual property rights of third parties. An argument Chapter 7 ‘Intermediary Liability’ further investigates is whether social media sites merely host content which reflects society and therefore reject any form of intermediary liability in regard to intellectual property infringements.21

3.4 INTERNET USERS

The internet user is the last of the trinity of protagonists in the legal conflict to be explored. Internet users aggregated in communities are influential groups acknowledged by both trademark holders and social media providers. One can simply define internet users as those who make use of the internet. This book focuses on internet users that make use of social media services. ‘User’ was historically used for computer operators/creators of code or digital rules, which made further content generation possible.22 In this book ‘a user’ generates content for social media, based on co7de created by social media providers.

21 Twitter made explicit the argument that they have so much content, that they cannot really monitor or control it. The other social media providers would be likely to concur. Many companies and governments made some huge mistakes in the beginning with Twitter. Kristin Burnham, ‘Sweden Teaches Us How Not to Do Social Media’, Social Media Matters, 13 June 2012, accessed 9 February 2015 at: http://blogs.cio.com/twitter/17162/sweden-teaches-us-how-not-do- social-media. 22 Director Steven Lisberger, Tron, 1982, accessed 9 February 2015 at: http://www.imdb.com/title/tt0084827/.

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An aggregation of internet users can be more than the sum of its individuals. This is caused by interactive influence of the internet users and group dynamics. Substrata of the internet can form communities, with their own values and norms. One can find a wide variety of communities online. Social media can be seen as the most vibrant communities online. Some online service providers allow anonymity23 or pseudonymity,24 while others require internet users to use their real name. Different pseudonyms can be distinguished, which have a different degree of linkability25 and observability.26 Pseudonymity allows internet users to be perceived online differently from their real-life identity. Advocates of pseudonymity are against real name policies, because of some inherent disadvantages for some groups and in some situations.27 However, anonymity can make accountability for trademark infringements impossible and pseudonymity can make it very difficult. Therefore, Online Service Providers (OSPs) that do not want to assume liability for the acts of their internet users, and also content rights holders, might also want to push for real name policies.28

23 ‘Anonymity is the state of not being identifiable within a set of subjects, the anonymity set’. Andreas Pfitzmann and Marit Hansen, ‘Anonymity, Unlink- ability, Unobservability, Pseudonymity, and Identity Management: A Consoli- dated Proposal for Terminology, Version v0.25’ (2005), at 6, accessed 9 February 2015: http://freehaven.net/anonbib/cache/terminology.pdf. 24 ‘Being pseudonymous is the state of using a pseudonym as ID’. Id., at 13. 25 Pfitzmann and Hansen describe the degrees of linkability due to the use of a pseudonym in different contexts. Id., at 17. 26 ‘Unobservability is the state of items of interest (IOIs) being indistin- guishable from any IOI (of the same type) at all’. Id., at 10. 27 The Geek Feminism Wiki catagorizes the harm to the following groups and situations: the marginalized and endangered groups, people with direct identity concerns, subject-related considerations, employment-related, people whose ‘real name’ is more complicated than you think, people with long- standing pseudonyms, people whose real names are extremely common or rare, but also people who are comfortable using their uncomplicated real name in certain situations. Geek Feminism Wiki, ‘Who is Harmed by a “Real Names” Policy?’, undated, accessed 9 February 2015 at: http://geekfeminism.wikia.com/ wiki/Who_is_harmed_by_a_“Real_Names”_policy%3F. 28 Winer points out an additional reason: the ability to cross-relate your account in a ‘commerce-ready way’ and ‘to give them information about what you do on the Internet, without obfuscation of pseudonyms’. Dave Winer, ‘Why Google Cares if You Use Your Real Name’, Scripting News, 25 July 2011, accessed 9 February 2015 at: http://scripting.com/stories/2011/07/25/whyGoogle CaresIfYouUseYour.html. Madrigal understands why Facebook and Google

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Social networking site Friendster required real name registration in 2003,29 and Facebook required real name registration in 2007.30 Google+, what Google calls a social is described by Google as ‘the name your friends, family or co-workers usually call you’.31 This triggered the so-called nymwars.32 Only real persons were allowed to have a profile, therefore it banned company names.33 Singel argued that:

Google is likely trying to defer the difficult problems around trademark issues and fake business profiles, because any social network with scale ends up having to deal with the same thorny naming problems that plague the net (essentially inheriting all the problems of ICANN [Internet Corporation for Assigned Names and Numbers], though without the formalities).34

Google deactivated company names, from Google+, but the Mashable blog was allowed to change its profile name to that of its founder.35

favour real name policies: ‘It’s bad for their marketing teams. It generates social problems when people don’t act responsibly under the cloak of their assumed identity. It messes up the clarity and coherence of their data. And maybe those costs do outweigh the benefits pseudonymity brings to social networks’. Alexis Madrigal, ‘Why Facebook and Google’s Concept of “Real Names” Is Revolu- tionary’, The Atlantic, 5 August 2011, accessed 9 February 2015 at: http://www. theatlantic.com/technology/archive/2011/08/why-facebook-and-googles-concept- of-real-names-is-revolutionary/243171/. 29 Mike Masnick, ‘Friendster Fakesters: Goodster or Badster’, TechDirt, 13 August 2003, accessed 9 February 2015 at: http://www.techdirt.com/articles/ 20030813/2010251.shtml. 30 Mike Masnick, ‘Does No One Remember the Friendster Fakester Fiasco? Facebook now Dealing with Fakebookers’, TechDirt, 2 November 2007, accessed 9 February 2015 at: http://www.techdirt.com/articles/20071101/194615.shtml. 31 Google+ Page and Profile Names, accessed 9 February 2015 at: http:// support.google.com/plus/bin/answer.py?hl=en&answer=1228271. 32 Nymwars is a neologism, and consists partly of the word ‘pseudonym’ and the word ‘wars’. Nymwars, Wikipedia, accessed 9 February 2015 at: http://en.wikipedia.org/wiki/Nymwars. 33 Ryan Singel, ‘Kicking Square Pegs out of Round Circles: Why Google’s Banishment of Companies from Google+ is a Bad Sign’, Wired, 22 July 2011, accessed 9 February 2015 at: http://www.wired.com/business/2011/07/ companies-google-plus/. 34 Id. 35 Ben Popper, ‘Anti-Social Networking, Google+ Clarifies Brand Pages and Mashable Drops Profile’, Betabeat, 21 July 2011, accessed 9 February 2015 at: http://betabeat.com/2011/07/has-the-google-brand-purge-begun-ford-motors-next- web-down-yet-mashable-remains/.

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However, in November 2011,36 Google made it possible for companies to use Google+ Pages,37 if these companies first get an owner to obtain a profile on Google+ first.38 Three out of four of the top 100 brands can now be found on Google+ Pages.39 Facebook has had a real name policy40 since 2005. However, Facebook revealed that 4.8 percent of its accounts are duplicate, 2.4 percent misclassified and 1.5 percent undesirable, which accounted for 83.09 million ‘fake’ Facebook accounts.41 Apparently in an effort to fight this substantial number, Facebook is using pop-up surveys that ask users to point out if a certain friend named in that survey is using his or her real name.42 The use of a pseudonym, or a real name, has implications to identity, and touches upon cultural sensitivity, public and private identity, privacy, and the role of social media in modern discourse. Anonymity, pseudonymity and privacy already seem to get weaker in society43 while they can, under some circumstances,44 be beneficial to society. Therefore this

36 Azam Khan, ‘Google Launches Business Pages’, Social Times, 7 Novem- ber 2011, accessed 9 February 2015 at: http://socialtimes.com/google-launches- business-pages_b83409. 37 About Google+ Pages, accessed 9 February 2015 at: http://support. google.com/plus/bin/answer.py?hl=en&answer=1710600. Three out of four companies of the top 100 brands are now on Google+ Pages. 38 Each Google+ Page can have one owner and up to 50 managers. Owners and managers on Google+ Pages, accessed 9 February 2015 at: http://support. google.com/plus/bin/answer.py?hl=en&answer=2380625. 39 Miranda Miller, ‘Google+ Adoption Among Big Brands Growing: Pages Featured More in SERPs’, 1 August 2012, accessed 9 February 2015 at: http:// searchenginewatch.com/article/2196139/Google-Adoption-Among-Big-Brands- Growing-Pages-Featured-More-in-SERPs. 40 Facebook’s Name Policy, accessed 9 February 2015 at: http://www. facebook.com/help/292517374180078/. 41 Emil Protalinski, ‘Facebook: 8.7 Percent Are Fake Users’, CNET, 1 August 2012, accessed 9 February 2015 at: http://news.cnet.com/8301-1023_3- 57484991-93/facebook-8.7-percent-are-fake-users/. 42 Carl Franzen, ‘Facebook Surveying Users about Their Friends’ Fake Usernames’, TPMIdeaLab, 20 September 2012, accessed 13 June 2015 at: http:// alkingpointsmemo.com/idealab/facebook-surveying-users-about-their-friends- fake-usernames. 43 Eva Galperin, ‘Randi Zuckerberg Runs in the Wrong Direction on Pseudonymity Online’, EFF, 2 August 2011, accessed 9 February 2015 at: https://www.eff.org/deeplinks/2011/08/randi-zuckerberg-runs-wrong-direction- pseudonymity. 44 Geek Feminism Wiki, supra note 27.

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book does not advocate any real name policy for its proposed solution, a fortiori, since real name policies are costly and burdensome to implement and enforce, even in China.45 Social media have made it possible for internet users and communities to engage in expressive activities that were first the prerogative of mainstream media and professionals. Each internet user can publish46 his activities as a journalist,47 photographer, radio or television maker.48 Using social media gives each internet user a platform on which he can, theoretically, reach the whole online population.49 Communities can engage in putting some political or social goals on the agenda, using social media. One can argue that social media were the catalysts for communities that wanted social change during the Arab Spring.50

45 The real name registration was tried before and is expected to be too costly for social media sites to be implemented in the short term. Bill Bishop, ‘Rumors of a Real Name Registration Requirement Coming for Weibo and Other Chinese Social Media?’, DigiCha, 29 August 2011, accessed 9 February 2015 at: http://digicha.com/index.php/2011/08/real-name-registration-requirement-coming- for-weibo-and-other-chinese-social-media/. 46 Four revolutions in the production of knowledge: language, writing, printing press and the internet. M. Warschauer and T. Matuchniak, New Tech- nology and Digital Worlds: Analyzing Evidence of Equity in Access, Use, and Outcomes, 34 REV. RES. EDU. 179, 179 (2010), referring to S. Harnad, Post-Gutenberg Galaxy: The Fourth Revolution in the Means of Production and Knowledge, 2 PUB.-ACCESS COMP. SYS. REV. 39, 39 (1991). 47 The following blogs rank numbers 1 to 5 respectively in the Technorati Top 100 (8 August 2012): Huffington Post, BuzzFeed, Mashable!, Business Insider and The Verge. ‘Technorati’s Top100 blogs’, 8 August 2012, accessed 9 February 2015 at: http://technorati.com/blogs/top100/. One can argue that these blogs have become mainstream media themselves. For example, the Huffington Post was bought by AOL for 315 million US dollars. Richard Adams, ‘Huffing- ton Post Sold to AOL for $315m’, The Guardian, accessed 9 February 2015 at: http://www.guardian.co.uk/world/richard-adams-blog/2011/feb/07/huffington- post-sale-aol-ariana. 48 ‘Individuals can now post content to an audience that previously would have been available only through the mass media, leading to a convergence in audience and producer’. Jacob Rowbottom, To Rant, Vent and Converse: Protect- ing Low Level Digital Speech, 71 C.L.J. 365 (2012). 49 Gillmor asserts that civil journalism and independent journalists challenge the traditional media. Dan Gillmor, WE THE MEDIA: GRASSROOTS JOUR- NALISM BY THE PEOPLE, FOR THE PEOPLE (Sebastopol, CA: O’Reilly Media 2004–08). 50 Eric Voeten, ‘Similarities and Differences between Eastern Europe in 1989 and the Middle East in 2011: Summarized Remarks from a Panel Discussion Sponsored by Middle East Studies’, AM. U., 30 May 2011, accessed

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MacKinnon argued that internet users not only have the right to express themselves individually, but also have an obligation to assert their rights and responsibilities as citizens of nation-states.51 The question that remains is whether the law and regulations that govern intellectual property should reflect the norms of the internet users/community or should the law be used instrumentally to impose a policy choice. Chapter 4 ‘Analysis of The Legal Conflict’ will demonstrate that the norms of the internet users/community have caused a great deal of problems. This chapter will demonstrate it is preferable to use the instrumentality of the law to impose a policy choice that benefits all stakeholders. Disintermediation had led to a massive expression by internet users. The drawback is that after the middle person is cut out of the equation, this is not necessarily conducive to the quality of the content. A side effect of the lack of monitoring, quality control and/or editing has led to online intellectual property infringement on a massive scale. A growing percentage of all internet users have grown up with digital media and are able to express themselves digitally. Social media providers have made it possible for everyone with access to the uncensored internet52 to gather, share and add information, accessible from a growing range of electronic devices. The internet in combination with inexpensive cameras and microphones has led to a democratization of film, photo- graphy and written journalism and disintermediation of publishing. This has resulted in an enormous content generation by internet users. For example: 72 hours of video are uploaded on YouTube every minute. In one month, more content was generated on YouTube than the major US television networks created in 60 years. Seventy percent of YouTube’s traffic comes from outside the US.53 The world population is more than 7 billion people,54 and Flickr hosts over 6 billion photos.55

9 February 2015 at: http://themonkeycage.org/blog/2011/05/30/similarities-and- differences-between-eastern-europe-in-1989-and-the-middle-east-in-2011/. 51 Rebecca MacKinnon, The Netizen, 55 DEVELOPMENT 201 (2012). 52 Danny Friedmann, Paradoxes, Google and China: How Censorship Can Harm and Intellectual Property Can Harness Innovation, in GOOGLE AND THE LAW, supra note 2. 53 Statistics, YouTube, accessed 9 February 2015 at: http://www.youtube. com/t/press_statistics. 54 Population Reference Bureau, world population clock, 15 July 2015, accessed 9 February 2015 at: http://www.prb.org/. 55 Kay Kremerskothen, ‘6,000,000,000’, Flickr, 4 August 2011, accessed 9 February 2015 at: http://blog.flickr.net/en/2011/08/04/6000000000/.

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One can argue that the right to freedom of expression is indispensable for a well-functioning democracy. Since social media has empowered so many internet users, it can be seen as one of the foremost platforms for political, artistic and commercial expression. Therefore, a discussion whether the right to internet access is a human right was articulated in light of a potential implementation of a ‘graduated response’56 in case of repeat infringers of copyright law, and possibly trademark law. In Estonia,57 Finland,58 France59 and Greece60 internet access is considered a human right.61 And according to the Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, internet access is a human right.62 Cerf, one of the fathers of the internet and now vice-president of Google, did not agree: ‘technology is not a right, but an enabler of rights’ and the protection of human rights

56 Peter K. Yu, The Graduated Response, 62 FLA. L. REV. 1373 (2010). 57 Public Information Act of Estonia, 15 November 2000, as amended 2003, accessed 9 February 2015 at: http://www.legaltext.ee/text/en/X40095K4.htm. Oana Lungescu, ‘Tiny Estonia Leads Internet Revolution’, BBC News, 7 April 2004, accessed 9 February 2015 at: http://news.bbc.co.uk/2/hi/europe/36039 43.stm. 58 Decree no. 732/2009 of the Finnish Ministry of Transport and Communi- cations on the Minimum Rate of a Functional Internet Access as a Universal Service, 14 October 2009, accessed 9 February 2015 at: http://www.finlex.fi/en/ laki/kaannokset/2009/en20090732.pdf. Bobbie Johnson, ‘Finland Makes Broad- band Access a Legal Right’, The Guardian, 14 October 2009, accessed 9 February 2015 at: http://www.guardian.co.uk/technology/2009/oct/14/finland- broadband. 59 French Act furthering the diffusion and protection of creation on the Internet, Decision 2009-580, 10 June 2009, accessed 9 February 2015 at: http://www.conseil-constitutionnel.fr/conseil-constitutionnel/root/bank/download/ 2009580DC2009_580dc.pdf. 60 2001 Syntagma Constitution art. 5A of Greece. The Constitution of Greece: as revised by the parliamentary resolution of April 6th 2001, of the VIIth Revisionary Parliament (2004), accessed 9 February 2015 at: http://www. hellenicparliament.gr/UserFiles/f3c70a23-7696-49db-9148-f24dce6a27c8/001-15 6%20aggliko.pdf. 61 Charter of Human Rights and Principles for the Internet, Version 1.1. Draft, Internet Rights & Principles Coalition, 2011; Commentary on the Charter of Human Rights and Principles for the Internet, Internet Rights & Principles Coalition, Centre for Law and Democracy, October 2011. 62 Frank La Rue, ‘Document U.N. Report: Internet Access Is a Human Right’, 16 May 2011, accessed 9 February 2015 at: http://documents. latimes.com/un-report-internet-rights/.

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should be reserved to the most basic rights.63 In any case, it can be argued that the output of internet user generated content has a profound amplifying effect on culture, society and economics. Freedom of expression, commentary, criticism and parody are all conducive to a democratic society. The question remains of when using content in an unauthorized way becomes abusing content.64 In the book Remix, Lessig argued that recombining and building on existing copyrighted content and mash-ups always happened and that it could have transformative effects.65 How- ever, Lessig did not elaborate on the unauthorized use of trademarks. In Chapter 6 ‘Trademark Dilution and Its Defences’, a proposal will be made about where to draw the line in commentary, criticism and parody in the case of unauthorized use of a trademark logo on social media. Trademark holders are not just challenged by social media, but they can also benefit from setting up their own pages, advertising and buying data for behavioural targeting. The CEO of luxury goods company Gucci considered social media even as a marketeer’s dream.66 Setting up fan pages to engage in a two-way conversation with the target group can build and strengthen the bond between brand and customer or potential customer. Trademark holders can monitor and study what is said by the internet users on social media about their brands. Blackshaw wrote that satisfied customers tell 3 friends, but angry customers tell 3,000 people about a bad experience with a product or service.67 Social media make it possible for companies to respond to specific issues and adjust their public relations and marketing actions,68

63 Vinton G. Cerf, ‘Internet Access Is Not a Human Right’, New York Times, 4 January 2012, accessed 9 February 2015 at: http://www.nytimes.com/ 2012/01/05/opinion/internet-access-is-not-a-human-right.html?_r=0. 64 Since the abuse of content is shared online, it can be followed by ‘abusement’, which is described by Urban Dictionary as ‘deriving amusement from the abuse of others’, accessed 9 February 2015 at: http://www.urban dictionary.com/define.php?term=Abusement. 65 Lessig, supra, Chapter 1, note 13. 66 As Robert Polet, President, CEO and Chairman of the Managing Board of Gucci Group, pointed out during Google Zeitgeist Europe 2010, 17 May 2010, accessed 9 February 2015 at: http://www.youtube.com/user/eurozeitgeist#p/u/13/ B8v2tMJmeg0. 67 Pete Blackshaw, SATISFIED CUSTOMERS TELL THREE FRIENDS, ANGRY CUSTOMERS TELL 3,000: RUNNING A BUSINESS IN TODAY’S CONSUMER-DRIVEN WORLD (New York: Crown Publishing Group, 2008). 68 For instance Gap Inc., an American apparel and accessories retailer reintroduced its original logo after a week long of massive protests from fans on

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and in the case of intellectual property infringements decide to take enforcement measures. Facebook users can subscribe to so-called ‘fan pages’ about a brand, either set up by the trademark holder or by a third party, fan or foe. The idea is that after each status update by the brand, it will be shown in the news feeds69 of the users, to which comments can be added. These comments will be shared with the user’s Facebook contacts, who on their turn can subscribe again to these fan pages by ‘liking’ them. However, there has been some controversy about the so-called News Feed algorithm,70 which regulates the distribution of status updates of the fan pages to the news feed of the subscribed users. It was alleged that the News Feed algorithm deliberately prevented between 50 and 85 percent of these status updates to be distributed to users.71 This was allegedly done in order to stimulate the brands to compensate for their loss of visibility in these news feeds by advertising in the sponsored posts that are also distributed in the news feeds.72 This was denied by Phil Zigoris, software engineer at Facebook’s sponsored posts products.73 Just as many companies use search engine optimization (SEO) to rank as high as possible in Google’s organic search results, increasingly they also want to apply EdgeRank/News Feed optimization, by optimizing the

social media. Fredrix, Emily, ‘Gap’s Logo Back to Blue after Fans Gripe about New’, 11 October 2010 accessed 13 June 2015 at: http://news.yahoo.com/gaps- logo-back-blue-fans-gripe.html. 69 News feeds are constantly updating lists of actions of Facebook connections. 70 The News Feed algorithm is often called EdgeRank, however, this is denied by Zigoris. Howard Greenstein, ‘5 Things You Don’t Know about Facebook Exposure, Inc.com’, 25 July 2012, accessed 9 February 2015 at: http://www.inc.com/howard-greenstein/facebook-promoted-posts-for-small- business.html. 71 Geoffrey Colon, ‘Thinking Social/Value, Facebook Algorithmic Change to Decrease Reach on Brand Page Posts’, Social@Ogilvy, 25 September 2012, accessed 9 February 2015 at: https://social.ogilvy.com/facebook-algorithmic- change-to-decrease-reach-on-brand-page-posts/. Jim Edwards, ‘Facebook Accused of Changing a Key Algorithm to Hurt Advertisers’, Business Insider, 3 October 2012, accessed 9 February 2015 at: http://www.businessinsider.com/ facebook-changed-edgerank-algorithm-to-hurt-advertisers-2012-10. Ryan Holi- day, ‘Broken on Purpose: Why Getting It Wrong Pays More Than Getting It Right’, New York Observer, 11 November 2012, accessed 9 February 2015 at: http://observer.com/2012/09/broken-on-purpose/. 72 Peter Olsthoorn, ‘IT’S COMPLICATED’: THE POWER OF FACEBOOK – EXTENDED EDITION Amsterdam: Peter Olsthoorn Publishing, 2012. 73 Greenstein, supra note 71.

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timing of a post, type of post (video, text or photo), frequency of posts and content of a post.74 Social media have special characteristics that make them particularly suitable as advertisement platforms of trademark holders. Facebook, for example, makes it possible for trademark holders to advertise based on user generated content, behavioural targeting and social marketing.75 Trademark holders know that social media are more effective vehicles for advertisements than traditional media such as newspapers or broadcasting.76 According to Favier, former research director of Forrester Research, the return on investment (ROI) of the best social media is four times that of traditional media.77 Nielsen market research measured that people notice brands in Facebook’s news feeds thirty percent better than brands using advertisements that have not been endorsed by the connections of a Facebook user.78 Facebook, with its more than a billion active internet users in the US, EU but also emerging economies, excluding China,79 is a convenient one-stop shop for companies. They can reach with their advertisements

74 Tomio Geron, ‘PostRocket’s “News Feed Optimization” for Facebook Raises Seed Funding’, Forbes, 31 May 2012, accessed 9 February 2015 at: http://www.forbes.com/sites/tomiogeron/2012/05/31/postrockets-news-feed- optimization-for-facebook-raises-seed-funding/. 75 McGeveran has mapped the problems that can appear when using social marketing: William McGeveran, Disclosure, Endorsement, and Identity in Social Marketing, 4 U. ILL. L. REV. 1105 (2009). 76 Ethan Smith, ‘How Old Media Can Survive in a New World’, Wall Street Journal, 23 May 2005, accessed 9 February 2015 at: http://online.wsj.com/ public/article/SB111643067458336994-dZdpfVsBBc8Y17yRcFtFhF_8YWk_20 060522.html?mod=blogs. 77 ‘The best social media programs also convert the consumer’s social time into a brand premium, reaching a return on investment (ROI) up to four times as high as the ROI of a TV commercial’. Jaap Favier, ‘Calculate the ROI of Social Media’, Brian Solis, 8 October 2012, accessed 9 February 2015 at: http://www. briansolis.com/2012/10/calculate-the-roi-of-social-media/. ‘In the US, around $150 billion per year is spent on advertising. Per American, that is roughly 500 dollars. Of that figure, television brings in around 25 percent and the internet 20 percent. Internet advertising has grown the most rapidly in recent years, in particular at the expense of newspapers and magazines’. Olsthoorn, supra note 73. 78 Jack Neff, ‘Nielsen: Facebook’s Ads Work Pretty Well’, Advertisement Age, 19 April 2010, accessed 9 February 2015 at: http://adage.com/digital/article ?article_id=143381. 79 According to SocialBakers 2012–13.

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specific target groups, based on individual profiles80 and behavioural patterns. Facebook is increasingly used mobile: 23 percent of the total time spent on Android and iOS applications in the US goes to Face- book.81 The commercial return on Facebook per user was about 5 dollars during 2012, with only a 1.30 dollar margin (with a 5 billion dollar total revenue and 1.3 billion net result). Around 85 percent of company profits came from advertising.82 Facebook Advertisements tries to increase the growth of its audience, to convert more advertisements into clicks, make internet users more aware and engage them. Internet users with Facebook use this social media 25 percent of the time.83 Facebook tracks all the actions of its users on Facebook, and other sites with Facebook plugins or where one can login with Facebook, even after they log out of Facebook. Therefore, Facebook is being sued in a 15 billion dollar class action.84 After tracking the users’ actions, preferences, interactions and cross-references with affiliated sites Facebook can base its predictions and offer advertisements that are tailor-made to individuals, these include re-targeting advertisements.85 Companies can bid on advertisement space based on the behavioural patterns of a target group and are able to capitalize on, for example, events, called Facebook Ad Exchange (FBX). Besides providing a platform for advertising, Facebook will probably also become more active in commerce: ‘F-commerce’, including a ‘Buy button’ for advertisers. Facebook already provides the possibility to buy gifts via its site.

80 ‘Thanks to the internet passport, Facebook is the ultimate medium for marketing, because it identifies you as an individual customer under your own name’. Olsthoorn, supra note 73. 81 Dara Kerr, ‘Facebook’s Mobile-Only Use Jumps 23 Percent since March’, CNET, 31 July 2012, accessed 9 February 2015 at: http://news.cnet.com/8301- 1023_3-57484036-93/facebooks-mobile-only-use-jumps-23-percent-since-march/. 82 Olsthoorn, supra note 73. 83 Olsthoorn, supra note 73. 84 Emil Protalinski, ‘Facebook Hit with $15 Billion Class Action User Tracking Lawsuit’, ZDNET, 18 May 2012, accessed 9 February 2015 at: http:// www.zdnet.com/blog/facebook/facebook-hit-with-15-billion-class-action-user- tracking-lawsuit/13358. 85 Re-targeting advertisements: after Facebook finds out that a Facebook user had clicked a certain advertisement outside Facebook by recognizing the cookies, Facebook offers the same relevant advertisement.

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For some time, trademark holders have been laggards in the usage of social media. This has led to considerable cybersquatting of the names of social media profiles, also known as brandjacking.86 Now many trademark holders have become avid users of social media and made it an integral part of their brand strategy. ‘As these communication tools become more important the allocation of the unique identi- fiers (user names), also becomes more important’.87 Allemann is concerned that trademark lawyers will expand the definition of domain names to include user names.88 This process of registering user names of social media without the authorization of the trademark holder is easy and without extra costs.89 Some trademark holders have pre-emptively registered user names using their trademarks on all important social

86 A third party can impersonate an employee or representative of the brand or company, or suggest a link with the brand. For example, ExxonMobil was brandjacked by a certain Janet who registered the ExxonMobil Twitter account, posing as an employee of the oil company. Jeremiah Owyang, ‘How “Janet” Fooled the Twittersphere (and Me): She’s the Voice of ExxonMobil’, 1 August 2008, accessed 9 February 2015 at: http://www.web-strategist.com/blog/2008/08/ 01/how-janet-fooled-the-twittersphere-shes-the-voice-of-exxonmobil/. See also Lisa P. Ramsey, Brandjacking on Social Networks: Trademark Infringement by Impersonation of Markholders, 58 BUFF. L. REV. 851 (2010). 87 Adam Strong, ‘Social Media User Names Becoming More Like Domain Names’, Domain Name News, 22 December 2008, accessed 9 February 2015 at: http://www.domainnamenews.com/miscellaneous/social-media-user-names- becoming-more-like-domainnames/3556. 88 Andrew Allemann, ‘Facebook Usernames Set Dangerous Precedent’, 23 June 2009, Domain Name Wire, accessed 9 February 2015 at: http://domain namewire.com/2009/06/23/facebook-usernames-set-dangerous-precedent/. 89 The Coca-Cola user name was cybersquatted on both Facebook and Twitter by Dusty Sorg and Michael Jedrzejewski.www.facebook.com/coca-cola, August 2008. And only in November 2009, Facebook started to enforce a policy that anyone who creates a branded Facebook page must be authorized by or associated with the brand. Still, independent Facebook users can create homages to brands, but they must live as a ‘group’ or fan club. Abbey Klaassen, ‘How Two Coke Fans Brought the Brand to Facebook Fame’, 16 March 2009, accessed 9 February 2015 at: http://adage.com/digital/article?article_id=135238. Coca-Cola Company came up with an elegant solution, whereby Coca-Cola works together with the founders of the page. Justin Smith, ‘How Do You Treat a Fan Who Owns Your Facebook Page?’, Inside Facebook, 18 March 2009, accessed 9 February 2015 at: http://www.insidefacebook.com/2009/03/18/how-do-you-treat- a-fan-who-owns-your-facebook-page/.

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media sites.90 But after registering, brand owners need not use the social media sites, despite the hoax that if they do not use Facebook for two weeks, they risk their account being removed.91 However, even the process of pre-emptive registering can be a time-consuming and costly exercise for trademark holders. Even after pre-emptively registering social media user names, trademark holders can avoid a lot of problems by developing a clear social media policy92 that is known company-wide and by which every employee or even ex-employee is contractually bound.

3.5 TRADEMARK LOGO

The trademark logo can be seen as the locus on the stage where the protagonists of the legal conflict, trademark holder, social media providers and internet users, find each other. Below the following questions will be answered: where does the logo come from, how is its function evolving and what will be its future? Then a definition of the trademark logo will be provided and a rationale for the trademark logo, some unique characteristics and a taxonomy of the different types of trademark logo. Etymologically, the English word logo means a sign or character representing a word, and was used for the first time in 1937.93 Its origin

90 Dell Inc. is a good example, according to Seidenburg: ‘The Texas-based computer giant has created three photo streams on Flickr, 26 pages and 23 groups on Facebook and 34 Twitter feeds’. 91 Brett M. Christensen, ‘Hoax-Slayer, Facebook Deleting Inactive Users Hoax’, 19 September 2007, accessed 9 February 2015 at: http://www.hoax- slayer.com/facebook-overpopulated-hoax.shtml. ‘34 percent of all Twitter accounts have no tweets, in comparison to 37.1 percent in June 2009’, Paul Judge, ‘Barracuda Labs: Annual Report 2009’, at 7, accessed 9 February 2015 at: http://barracudalabs.com/downloads/BarracudaLabs2009AnnualReport-FINAL. pdf. 92 Fleet has compiled a list of 57 links to social media policies of companies such as American Express, BBC, Cisco, Coca-Cola, Dell, General Motors, Harvard Law School, IBM, Intel, and so on, published online. Dave Fleet, ‘57 Social Media Policy Examples and Resources’, Social Media Today, 26 July 2010, accessed 13 June 2015 at: http://www.socialmediatoday.com/content/57- social-media-policy-examples-and-resources. 93 First known use of logo in 1937, according to the online Merriam- Webster dictionary, accessed 9 February 2015 at: http://www.merriam- webster.com/dictionary/logo.

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is probably an abbreviation of logogram,94 which means a letter, symbol or sign used to represent an entire word, and was coined in 1840. The modern logo has many predecessors, which include cylinder seals (c.2300 BCE), coins (c.600 BCE), coats of arms, watermarks, silver hallmarks,95 banners96 and stickers.97 Just like cloth banners before, the logo can make the communication of the brand coherent. Logos have made the transition to online media. With the advent of social media they started to populate these platforms both intentionally and unintentionally. This in combination with the characteristics of the digital media, which makes the logo easily copy-and-pastable and highly diffusible, resulted in many corporations’ perception that they have lost control over their own trademark logo. The logo has evolved together with the trademark: from an indicator of the source of origin and of quality to a ‘visual distillation of a cultural

94 Online Etymology Dictionary, accessed 9 February 2015 at: http://www. etymonline.com/index.php?term=logo. 95 Logo, Wikipedia, accessed 9 February 2015 at: http://en.wikipedia.org/ wiki/Logo. 96 Banners were used for identification purposes. There are among others, heraldic, religious, trade union and, most relevant for this book, advertising banners, which can include a logo. , accessed 9 February 2015 at: http://en. wikipedia.org/wiki/Banner. 97 Before the time of user generated content and social media, the brand- scape was divided dichotomously into content producers and consumers. In the 1970s and 1980s, brand holders that wanted to promote their brands sometimes distributed stickers with their logo at shops or exhibitions. By giving away stickers, the brand holders gave away some of their control: they had no influence over where the people would stick them. The hope was that fans and youngsters would stick the adhesives, for example, on their door of their room, so that they and their family will see it daily or in the street so that people will be exposed to it frequently. In the worst case the stickers were put on traffic signs, cars, windows or garage doors of strangers. The trademark holders had to weigh the costs of manufacturing and distributing the stickers and the negative brand exposure that connected to sticker abuse with the positive brand exposure. One way to minimize sticker abuse was to try to give them only to fans. But nobody had to sign an agreement about how they could use the sticker with the brand logo before they received it. As long as the acquirer of the trademark logo, whether or not depicted on a sticker, does not use it as a way to counterfeit goods or deceive people into believing that the trademark holder sponsored the relationship between the acquirer’s goods and the acquirer, the use of the trademark is considered not in the course of trade. Whether this is justified or not will be looked into below.

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ideal’.98 Many trademark logos are no longer exclusively influenced by the trademark holder. Customers, potential customers and even non- customers invest meaning in the logo to give expression to part of their personality, thereby partly appropriating control of the logo. Many individual logos evolve over the years. Although with trademarks, there is no need for evergreening,99 since trademarks are in principle perpetual if one keeps using them and paying the fees for them to the trademark office. But still some brands decide to redesign their logo in such a way to keep some connection to the old logo, so that the mnemonic value is maintained. At the same time the update often implies progressiveness.100 adidas’ 3-Stripes,101 then its Trefoil and three bars logos were developed.102 Nike’s swoosh is an example103 of a logo that

98 Dan Redding, ‘The Evolution of the Logo’, Smashing Magazine, 6 July 2010, accessed 9 February 2015 at: http://www.smashingmagazine.com/2010/07/ 06/the-evolution-of-the-logo/. 99 Evergreening is the strategy of extending the patent, by the patenting of nonessential features of products, including aspects of their formulation, their metabolites, or methods of administration. Aaron S. Kesselheim, Intellectual Property Policy in the Pharmaceutical Sciences: The Effect of Inappropriate Patents and Market Exclusivity Extensions on the Health Care System, 9 AAPS J. E306 (2007). Evergreening also exists in copyright law: the creation of slightly new works, so that the work will be protected again by copyright. Duncan Bucknell, ‘Copyright “Evergreening”’, 2 March 2008, accessed 9 February 2015 at: http://www.thinkipstrategy.com/ipthinktank/273/copyright-evergreening/. 100 Paul Rand, graphic designer of corporate logos, including the ABC, UPS and IBM logos: ‘My take on redesigning logos is that if possible, try to have some connection to the old logo so that there is a frame of reference, there is nostalgia, there is the value of the mnemonic device, that you can recognize. And if you can do it and update it, you have this double advantage. Updating implies progressiveness and so on’. Transcript of video: Miggs Burroughs, ‘Interview with Paul Rand’, filmed for the television show ‘Miggs B. on TV’ in Connecti- cut, 1991, accessed 9 February 2015 at: http://www.paul-rand.com/foundation/ video_miggsInterview_1991/#.UDA3sKkgcR8. 101 If three stripes were purely an embellishment it would not infringe, adidas’ trademark. adidas AG and adidas Benelux BV v Marca Mode CV and Others (adidas v Marca II), Case C-102/07, Judgment of the ECJ, 10 April 2008. See also Adidas v Fitnessworld, supra, Chapter 2, note 250. Timothy Pinto, Too Stripy for Adidas, 3 J.I.P.L.P. 624 (2008). 102 Adidas, ‘The Story of a Logo’, accessed 13 June 2015 at: http:// tamuagcj.com/docs/74843_logohistory-adidas.pdf. The trademark adidas was registered in lower case on 18 August 1949. 103 Sports apparel company Nike has a logo called the Swoosh, designed by Carolyn Davidson, which is recognized widely to represent Nike. Heritage, ‘The Origin of the Swoosh’, Nikebiz.com, available via the Internet Archive, accessed

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has evolved over the years. Sometimes the customers of a brand demand the return of the old version of the trademark logo.104 Redding anticipated the future of the logo in a deconstructionist way.105 Louis Vuitton has already registered as trademarks the constituent elements of its trademarked Monogram Canvas.106 After the Court of Appeal in Singapore107 rejected its claim of trademark infringement and passing off of its Flower Quatrefoil and Flower Quatrefoil Diamond108 on a Solvil watch, it started to use the constituent elements of its Monogram Canvas independently.109

13 June 2015 at: http://web.archive.org/web/20070408190641/http://www.nike. com/nikebiz/nikebiz.jhtml?page=5&item=origin. 104 Supra note 69. 105 ‘How else can a logo break the rules to adapt? Is there a way to explode the logo, to decentralize it? What about a logo that consisted of separate elements that could be displayed on their own or joined together to create a unified whole? If branded products exist on a molecular level that’s invisible to the naked eye, could they project external holographic brand identity?’ Dan Redding, ‘The Evolution of The Logo’, Smashing Magazine, 6 July 2010, accessed 9 February 2015 at: http://www.smashingmagazine.com/2010/07/06/the-evolution-of-the- logo/. 106 The Toile Monogram consists of the LV monogram (a motif made by overlapping or combining two or more letters or other graphemes to form one symbol), a circle with a four-leaved flower inset (flower quatrefoil), a curved beige diamond with a four-point star inset (flower quatrefoil diamond), and its negative, as explained by Michael Pantalony, Director of Civil Enforcement, North America, Louis Vuitton Malletier, who sent cease-and-desist letter to dean of University of Pennsylvania Law School, 29 February 2012, accessed 9 February 2015 at: https://www.law.upenn.edu/fac/pwagner/DropBox/lv_letter. pdf. 107 City Chain Stores (S) Pte Ltd v Louis Vuitton Malletier ([2009] SGCA 53, 6 November 2009). 108 With regard to passing off, the court held that Louis Vuitton was required to show the existence of goodwill in the ‘flower quatrefoil’ mark itself. However, on the facts, the court found that the mark had never been used alone, but was used either as part of Louis Vuitton’s monogram or with the trademark LOUIS VUITTON. Therefore, the court held that Louis Vuitton had failed to prove that it possessed goodwill in the ‘flower quatrefoil’ mark’. Regina Quek, ‘Louis Vuitton Defeated on Appeal in “Quatrefoil” Case’, 15 January 2010, accessed 9 February 2015 at: http://www.onelegal.sg/pdf/Louis%20Vuitton%20defeated% 20on%20appeal%20in%20quatrefoil%20case.pdf. 109 David Tan, ‘The Business of Luxury Brands and Trademark Protection’, Powerpoint presentation at NUS, (2011), at 21, accessed 9 February 2015 at: http://www.lawtech.hk/wp-content/uploads/2011/01/Presentation-powerpoint1. pdf.

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The Paris Convention110 makes no mention of logos and Article 6(1) Paris Convention leaves the pre-conditions for the filing and registration of trademarks with the respective member states (countries of the Paris Union ).111 Article 6ter Paris Convention does prohibit state emblems, official hallmarks, and emblems of intergovernmental organizations.112 Both Article 15 TRIPS113 and Article 2 Trademark Directive114 provide a non-exhaustive overview of the signs a trademark may constitute. At least TRIPS, the Trademark Directive and the Community Trademark Regulation state the capability of signs to be represented graphically and to distinguish one undertaking from another as pre-conditions to function as a trademark. Article 2 TRIPS115 incorporates Article 6ter Paris Convention about the prohibition of state emblems, official hallmarks, and emblems of intergovernmental organizations. In the US, 15 U.S.C. § 1127 gives the definition of trademark: ‘The term “trademark” includes any word, name, symbol, or device, or any combination thereof’.116 Therefore one can conclude that no precise definition of the word ‘sign’ is given, and not any definition of the word symbol nor the word

110 Supra, Chapter 2, note 2. 111 Article 6(1) Paris Convention: ‘The conditions for the filing and registration of trademarks shall be determined in each country of the Union by its domestic legislation’. Id. 112 Article 6ter id. 113 ‘Any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs, in particular words including personal names, letters, numerals, figurative elements and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks. Where signs are not inherently capable of distinguishing the relevant goods or services, Members may make registrability depend on distinctiveness acquired through use. Members may require, as a condition of registration, that signs be visually perceptible’. Article 15 TRIPS, supra, Chapter 2, note 26. 114 ‘A trade mark may consist of any sign capable of being represented graphically, particularly words, including personal names, designs, letters, numerals, the shape of goods or of their packaging, provided that such signs are capable of distinguishing the goods or services of one undertaking from those of other undertakings’. Trademark Directive, supra, Chapter 2, note 11. 115 Article 2(1) TRIPS: ‘In respect of Parts II, III and IV of this Agreement, Members shall comply with Articles 1 through 12, and Article 19, of the Paris Convention (1967)’. So including Article 6ter Paris Convention. Supra, Chapter 2, note 26. 116 15 U.S.C. § 1127.

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logo. It is uncontested that a logo is both a symbol and a sign, and that a symbol or a sign is not necessarily a logo. Therefore, this book prefers to use the word logo. Wikipedia’s non-legal definition of the logo is: ‘a graphic mark or emblem commonly used by commercial enterprises, organizations and even individuals to aid and promote instant public recognition’.117 This book proposes a shorter definition for the logo as a corporate or organizational avatar under which the company or individual118 engages not just in the marketplace, but everywhere in the virtual and non-virtual world. In the case of the tobacco industry, the logo and its dimensions are well defined in a legal sense. The plain package controversy between Philip Morris and Australia119 illustrated that the banishment of the logo from the package is perceived as a defacement of the company, allegedly commercially crippling them. According to Rand, who designed the logos for ABC, UPS and IBM, the logo is not, what is often assumed, an illustration of what the

117 Logo, Wikipedia, supra note 96. 118 After a conflict with Warner Bros. in 1992, musician Prince started to refer to himself by an unpronounceable symbol, which is now called ‘Love symbol no. 2’, which looks like a combination of the symbols for man (Mars symbol) and woman (Venus symbol), and Ankh, which is the Egyptian symbol for eternal life. Wikipedia, accessed 9 February 2015 at: http://en.wikipedia.org/ wiki/Ankh. In 1993 Pickett made a guitar in the form of Love symbol no. 2 (see Wikipedia, accessed 9 February 2015 at: http://en.wikipedia.org/wiki/Prince_ (musician). After Picket showed Prince the guitar, he let someone else make a guitar in the same Love symbol no. 2 form. Picket sued Prince in 1994. ‘Pickett claims the right to copyright a work derivative from another person’s copyright without that person’s permission and then to sue that person for infringement by the person’s own derivative work’. Ferdinand Pickett v Prince, 207 F.3d 402 (7th Cir. 2000), 14 March 2000, para. 4. In 1997 Prince registered the logo as a copyright of visual art, not as a trademark, although Judge Posner wrote that the symbol is Prince’s trademark, he probably spoke in a figurative way. Ferdinand Pickett v Prince, 207 F.3d 402 (7th Cir. 2000), 14 March 2000, para. 1. Judge Posner decided that Pickett could not make a derivative work based on the Prince symbol without Prince’s authorization even if Pickett’s guitar would have showed the incremental originality needed. Ferdinand Pickett v Prince, 207 F.3d 402 (7th Cir. 2000), 14 March 2000, paras 5 and 7. 119 Bryan Christopher Mercurio, Awakening the Sleeping Giant: Intellectual Property Rights in International Investment Agreements, 15 J. INT’L ECON. L. 871 (2012).

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company does or what it represents.120 Instead Rand asserted that after the logo is used, it can become a suitable vehicle for associating the brand, product or corporation with its goodwill, reputation and identity/ personality. The raison d’être of the logo is the need for an association with an otherwise faceless brand, product or organization. Most natural persons are gifted with a face which distinguishes them from other people and makes them recognizable as a unique individual.121 Legal persons might not have a face of flesh and bones and sometimes they even have the same name if they are active in another product or service category. So the trademark logo can be crucial to distinguish products or companies122 from each other, a distinct appearance with which they can link themselves to the outside world. One can argue that some brands, such as those of Nike and Apple, are presenting themselves as lifestyle brands. This has led to a situation whereby consumers use the logos to express some part of their personality.123 The one-way communication from the trademark holder to the public via television, radio and print advertisements has been substituted with two-way communication between the trademark holder and internet users on social media.124

120 ‘People don’t understand how or why a logo is designed. They don’t understand. Most clients or people on the street think that the important thing about a logo is that it illustrate what the business does or what it represents, which is nonsense. I think it’s proven by this logo (IBM logo, DF). I mean a logo becomes meaningful only after it’s used. In other words the illustration that represents the logo is the product and not the logo. So that comes after the logo, and that requires that the thing is seen and associated. And the association is what makes the logo’. Supra note 101. 121 Twins, look-alikes and doubles undermine this uniqueness, and Prosopag- nosia, whose sufferers cannot recognize faces, makes this uniqueness ineffective. Prosopagnosia, Wikipedia, accessed 9 February 2015 at: http://en.wikipedia.org/ wiki/Prosopagnosia. 122 A company’s logo is often synonymous with its trademark. Aline Wheeler, DESIGNING BRAND IDENTITY, (Hoboken NJ: John Wiley & Sons, Inc. 2006), at 4. 123 Drescher, supra, Chapter 1, note 25, at 309. 124 ‘Advertising thus seeks to control the behaviour of recipients or consumers. Amongst others, trademark rights help in protecting this kind of communication and, thus, ensure that right holders have undistorted access to consumers and the latter’s undivided attention. By contrast, freedom of expression seeks to ensure dialogic communication, which results in dialogue or discussion, with the intention of bringing forth truth and the advancement of society’. Sakulin, supra, Chapter 1, note 88, at 7–8.

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Research has demonstrated that the human brain can absorb and remember125 visual information much faster than verbal information.126 A picture is worth a thousand words.127 There are, however, also word marks and letter marks, but the use of the font or the design of the letters make those logos more recognizable and distinguishable than a plain package with a generic font as a badge of recognition. As will be dealt with in Chapter 5 ‘Trademark Infringement and Its Defences’, it can be argued that trademark logos, unlike trademark names, are immune to legal issues in regard to nominative fair-use issues and legal issues could be solved in an automatic way. This gives trademark logos a unique way of guaranteeing the functions of the trademark. There is a non-exhaustive number of ways to classify the different types of logos: for example, in three,128 five,129 six130 or seven131 different logo types.

125 Ancient Roman rhetorical treatises, for example Cicero’s De Oratore, explain the principles of memory palace: items can be remembered by visualiz- ing them in specific physical locations. Method of Loci, Wikipedia, accessed 9 February 2015 at: http://en.wikipedia.org/wiki/Method_of_loci. 126 Susumu Kobayashi, Theoretical Issues Concerning Superiority of Pictures over Words and Sentences in Memory, 63 PERCEPTUAL & MOTOR SKILLS 783 (1986). 127 McCarthy is using this logic to suggest the inverse: ‘As the Chinese say, 1001 words is worth more than a picture’. John McCarthy, ‘The Sayings of John McCarthy’, 1 March 2007, accessed 9 February 2015 at: http://www-formal. stanford.edu/jmc/sayings.html. 128 Three basic types of logos: 1. iconic/symbolic, 2. logotype/wordmark, 3. combinationmark. Logodesignsource.com, ‘Types of Logodesign’, 2005, accessed 9 February 2015 at: http://www.logodesignsource.com/types.html. 129 Five different types of logos: 1. wordmark, 2. lettermark, 3. brandmark 4. combination mark, 5. emblem. Vladimir Gendelman, ‘The 5 Different Logo Design Styles: Which Type Fits Your Brand?’, Company Folders September 10, 2013, accessed 13 June 2013 at: http://www.companyfolders.com/blog/5- different-logo-design-styles-which-type-fits-your-brand. 130 Six different types of logos: 1. type-based logos, 2. symbol-based logos, 3. abstract-based logos, 4. initial-based logos, 5. badge-style logos, 6. mascot logos. Nora Reed, ‘6 Different Types of Logo Designs: Choose the Right One!’, Logo blog, 2 April 2012, accessed 13 June 2015 at: http://www.logoinlogo.com/ Gallery/Company-Logo-Design-Ideas-6-Different-Types-of-Logo-Designs-Choose- The-Right-One–437.htm. 131 Seven different types of logos: 1. abstract, 2. descriptive, 3. emblematic, 4. illustrative, 5. letterform, 6. typographic, 7. wordmark. Tatiana Hindes, ‘7 Different Types of Logos for Small to Medium Businesses: Which One Is the

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The categorization of logos into five groups has the advantage that the groups are not too big, as in the categorization of logos into three groups, and do not seem to overlap, as might be the case in the categorization into six and seven different logo types, respectively. The five different categories of logo are:132

1. wordmark; for example the Sony logo; 2. lettermark; for example the IBM logo, with the horizontal stripes; 3. brandmark; for example the apple logo of Apple; 4. combination mark, of a brandmark and a wordmark for example the Unilever logo; 5. emblem, a wordmark or lettermark in an emblem; for example the Harley-Davidson logo.

Another distinction is between static and dynamic logos. Most logos are static, because it is easier to memorize and recall a logo that is always presented in the same consistent way with the same dimensions. How- ever, some brands, such as Google, Michelin, MTV, Morton Salt and Saks Fifth Avenue, made the decision to use dynamic logos. MTV, for example, wanted a logo that fits with a rock music image.133 Therefore, the logo was animated all the time in new ways. However, in the end the contours could be seen from the letters M and TV. Also Google invites all kinds of designers to come up with their renditions of the logo, which it calls Doodles.134 However, the ‘doodles’ are alternated with the Google logo that is static.

Right for Yours?’, 10 June 2011, accessed 13 June 2015 at: http://www.soul space.com.au/graphic-design-news-and-blog/the-7-different-types-of-logos-for- small-to-medium-businesses-which-one-is-the-right-for-yours/. 132 Supra note 130. 133 ‘Knowing that many animators, designers, ad agencies, etc. were going to be working with the logo made them think how, just like rock music always changes, the logo should also. This was a concept that had never been used on a logo before. The “M” and the “TV” could be made of any colors and/or materials’. Frank Olinsky, ‘MTV Logo Story’, undated, accessed 9 February 2015 at: http://www.frankolinsky.com/mtvstory1.html. 134 Google Doodles, accessed 9 February 2015 at: http://www.google.com/ doodles/finder/2012/All%20doodles.

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4. Analysis of the legal conflict The non-scalability of litigation and arbitration necessitates the prerequisite of automation for any solution

4.1 INTRODUCTION

Quantity has a quality all its own1

This chapter provides a description of aspects of social media which lead to legal conflicts between internet users, trademark holders and social media providers. The unauthorized use of the trademark logo on social media has been so widespread, massive and fast paced that it places the protagonists – trademark holders, social media providers and internet users – in an uncertain legal position. The sections below (Chapter 4.2–9) will distinguish eight elements of the legal conflict between trademark holders, social media providers and internet users:

– a perception by internet users, social media providers and image search engines that the trademark logo is without protection; – the ample access to the unauthorizsed use of the trademark logo; – the proliferation, scale and speed of the unauthorized use of the trademark logo; – the permanence of the uploaded unauthorized trademark logos on the internet; – the uncertain boundaries of the trademark logo; – stakeholders that are either overwhelmed or ignorant to the infringement; – a loss of control for trademark holders; and – the emergence of new technology such as cloud computing.

1 Quote attributed to Mao, Lenin and Trotsky. Peter Roberts, ‘Quality of Quantity Still Has Resonance’, Financial Times, 2 March 2014.

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The current case-by-case solution2 using existing IP laws or alternative dispute resolution (ADR) is not sustainable, nor is it advisable. Chapter 4.10 concludes that a paradigm shift is necessary.

4.2 PERCEPTION OF INTERNET USERS, SOCIAL MEDIA PROVIDERS AND SEARCH ENGINES

Internet users make unauthorized use of trademark logos as if there are no restrictions. Despite some prohibitory words in the Terms of Service of social media sites against intellectual property infringements by third parties, the unauthorized use of the trademark logo is not mentioned. Instead, image search engines and social media providers have technically enabled internet users to use trademark logos, regardless of whether the trademark holder has authorized such use, which simply reinforces the perception of internet users that using trademark logos without authorization is legitimate. Internet users share trademark logos for a variety of reasons. Some internet users want to share with their social media relations their love or hate for a brand of which the logo is the symbol. Meanwhile, others see the logo as an expression of part of their personality.3 And some internet users perceive the trademark logo as raw material which they may freely use to express some commercial, artistic or political message (see Chapter 6 ‘Trademark Dilution and Its Defences’, about the use of trademark for parody, satire and critical comment).

4.3 AMPLE ACCESS TO THE UNAUTHORIZED TRADEMARK LOGO

Search engines, such as Google, Bing and Baidu, each have a special search engine for images, called Google Images,4 Bing Images5 and Baidu Images,6 respectively.

2 Where the parties are willing to bind themselves to the award, arbitration might be a more efficient way to resolve a dispute than litigation. However, the massiveness of the legal conflicts also outnumbers the arbitrators’ capacity. 3 Drescher, supra, Chapter 1, note 25, at 338. 4 Google Images, accessed 9 February 2015 at: http://images.google.com/. 5 Bing Images, accessed 9 February 2015 at: http://bing.com/images. 6 Baidu Images, accessed 9 February 2015 at: http://image.baidu.com/.

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One can argue that these image indexing sites are the biggest enablers or inducers of unauthorized use of trademark logos. The search engines index all the pictures their webspiders come across on the internet. Some of those pictures are trademark logos, that have been uploaded somewhere on the internet without permission of the trademark holder. Once these trademark logos are indexed on the search engine, they can be selected with two right clicks on the mouse, copy-and-pasted, and uploaded somewhere else on the internet, for example on a social media site. For instance in a simple search for Louis Vuitton’s LV logo, one gets 493,000,000 results, spread out over many pages, with 24 pictures per page related in some way to the LV trademark logo.7 One can directly copy-and-paste a picture from these search result pages, without ever seeing any warning against possible infringement of intellectual property rights. If one clicks on any picture on the Google Images site one will be taken to a page where one will see in a column which takes in a fourth of the complete page some information about the website where Google found the image, the dimensions of the image, the type of the image (the format, for example jpeg), and the sentence: ‘Images may be subject to copyright.’ The possibility that images may be subject to trademark law is not even suggested. The rest of the column remains empty. Internet users might see the technical possibility to copy-and-paste any trademark logo as an implied consent by the search engine that gives them those options. This book asserts that a trademark holder should be able to freely determine whether Google can index a picture of its trademark. Google gave some advice to those with a website, so that their images will be indexed successfully.8 Moreover, there are two possibilities for trademark holders to opt out of Google Images so that the trademark logos they have placed online will not be indexed.9 However, these efforts do not

7 It becomes immediately clear that many images related to the LV logo were not uploaded by Louis Vuitton, and worse, violate the integrity of the logo, and dilute by blurring or tarnishment. 8 Illyes explained that when it is not clear from the URL that there are pictures, then Googlebot will crawl the URL first, and if an image was found Googlebot-Image will revisit. Gary Illyes, ‘1000 Words about Images’, Google Webmaster Central Blog, 25 April 2012, accessed 13 June 2015 at: http://google webmastercentral.blogspot.in/2012/04/1000-words-about-images.html?utm_source =twitterfeed&utm_medium=facebook. 9 Google attempted to educate users on the possibility of opting out of Google Images by providing a meta-tag in the HTML code of the page, or to put

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solve the problem that Google Images still indexes trademark logos that have been uploaded from sites that were not under the control of the trademark holder.

4.4 PROLIFERATION, SCALE AND SPEED OF CONTENTIOUS CONTENT

Before the popularity of social media, false information could already spread very rapidly. In 1996 a false rumour about the clothing designer Tommy Hilfiger erupted on the internet. According to the rumour, Hilfiger had said: ‘If I had known that African-Americans, Hispanics, and Asians would buy my clothes, I would not have made them so nice.’10 One of the components of the rumour was that Hilfiger had made the statement on The Oprah Winfrey Show. However, Hilfiger never appeared on The Oprah Winfrey Show. The false rumour was very damaging to the brand value of Tommy Hilfiger.11 Social media sites created the unprecedented possibility for every internet user to communicate and share information efficiently and effectively, thanks to the interoperability between different platforms. With minimum effort internet users can use social media to amplify the diffusion of information. In fact, this scalability is one of the great advantages of social media.12 With the same amount of programming one’s social media site can provide the same service, no matter whether

a robots.txt file in the server root. Robots Pages, accessed 9 February 2015 at: http://www.robstxt.org. 10 Barbara Mikkelson and David P. Mikkelson, ‘Tommy Rot, Urban Legends Reference Pages’, 6 May 2006, accessed 9 February 2015 at: http://www. snopes.com/racial/business/Hilﬁger.asp; About.com, ‘Tommy Hilﬁger “Racist” Rumor Is Fashionable Again’, accessed 9 February 2015 at: http://urbanlegends. about.com/library/weekly/aa121698.htm. 11 Id. 12 Insights about value of a network and its scalability have developed via laws developed by Sarnoff, Metcalfe and Reed. Sarnoff’s law, which states that the value of a broadcast network is proportional to the number of viewers, can be applied to networks: the value of a network corresponds proportionately with the number of users of a network. David Sarnoff, Wikipedia. Metcalfe’s law (Robert Metcalfe): the value of a telecommunications network is proportional to the square of the number of connected users of the system n(n-1)/2. Metcalfe’s law, Wikipedia. Reed’s law: the utility of large networks, particularly social networks, can scale exponentially with the size of the network, which goes faster than Sarnoff’s or Metcalfe’s law. See David Reed, Reed’s Law, Wikipedia.

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there are just a few or millions of internet users.13 The other side of the coin is that the same can be said for the challenges of unauthorized use of trademark logos. Suppose one internet user uploads an unauthorized trademark logo, or worse, a mutilated version of the trademark logo. After a short time, the unauthorized and mutilated trademark logo may have spread epidemically among social media sites, and have come to the attention of thousands or even hundreds of thousands of internet users.14 Such actions might have devastating effects on the reputation and goodwill of the trademark logo. One complicating factor is that some internet users have not changed their privacy settings and thus share their information with everybody. If an internet user has set up his social media profile in such a way that he is only sharing the content he uploads with his social media connections, he can assume that his content will only reach this limited audience. However, despite the internet user’s privacy settings, the distribution of the content can reach a much bigger audience than intended,15 including the government.16 Moreover, search engines index even the content that is ‘locked’ within social media. Social media connections can republish17 content so that the content will be exposed to their respective social networks too, or they can republish it outside this social media site.18

13 The only difference is that one has to buy more server space. 14 Stephanie Clifford, ‘Video Prank at Domino’s Taints Brand’, New York Times, 15 April 2009, accessed 13 June 2015 at: http://www.nytimes.com/2009/ 04/16/business/media/16dominos.html. 15 ‘Digitised communications also allow the expression to come to the attention of people beyond the speaker’s intended audience’. Rowbottom, supra, Chapter 3, note 49, at 366. 16 Facebook users have no control with whom their friends shares their profile. Jeff John Roberts, ‘“Friends” Can Share Your Facebook Profile with the Government, Court Rules’, PaidContent, 15 August 2012, accessed 13 June 2015 at: http://gigaom.com/2012/08/15/friends-can-share-your-facebook-profile-with- the-government-court-rules/?utm_source=General+Users&utm_campaign=cd049 c36d7-c%3Amed+d%3A08-16&utm_medium=email. 17 Republication includes linking, re-tweeting, embedding, re-posting and re-blogging. See, Jason J. Lunardi, Guerrilla Video: Potential Copyright Liability for Websites that Index Links to Unauthorized Streaming Content, 19 FORD- HAM INTELL. PROPO. MEDIA & ENT. L.J. 1077, 1081 (2009); Seth A. Metsch, Embedded Media: Apps, Widgets, RSS and Embedded Content, 978 PLI/PAT 235 (2009). 18 One can pose the question whether an author of a post will also be liable for republication on other websites. M. Collins, THE LAW OF DEFAMATION AND THE INTERNET (3rd ed., Oxford: Oxford University Press, 2010), at 5.38–5.41.

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Since platforms have converged in respect to the media they provide, content can jump seamlessly from one platform to the other. And many internet users make use of interoperability sites that make it possible to automatically republish across many platforms. Therefore, both good and bad news can spread like wildfire. An interesting case is the dissemination of the prank video by two Domino’s Pizza employees in 2009.19 The video, which showed unhygienic acts with pizzas, to put it euphemistically, was uploaded to YouTube.20 Within two days half a million people saw the video on YouTube, many more via other social media sites such as Twitter. References to the video could be found in 5 of the 12 results on the first page of a Google search for ‘Domino’s’. Domino’s Pizza’s reputation was damaged and the perception of its quality among consumers went from positive to negative in just days.21 Then again, social media also helped to identify the perpetrators.22 Domino’s Pizza reacted with a counter-offensive public relations campaign, of course using social media to express its views.23

19 Jaram Park, Meeyoung Cha, Hoh Kim, and Jaeseung Jeong , ‘Sentiment Analysis on Bad News Spreading’, CSCW Workshop on Design, Influence, and Social Technologies (DIST) Seattle, 11-12 February 2012, accessed 9 February 2015 at: http://distworkshop.files.wordpress.com/2012/02/dist2012-workshop_2- 2.pdf. 20 Fragments of the prank video that was removed from YouTube can be seen here, in a reportage of WCBC, ‘Charlotte New Caroline’, accessed 9 February 2015 at: http://www.youtube.com/watch?v=OhBmWxQpedI; ‘Dominos Pizza on the Today Show: Workers Fired for Dominos Prank Video’, 17 April 2009, accessed 9 February 2015 at: http://www.youtube.com/watch?v=xaNuE3DsJHM. 21 ‘In just a few days, Domino’s reputation was damaged. The perception of its quality among consumers went from positive to negative since Monday, according to the research firm YouGov, which holds online surveys of about 1,000 consumers every day regarding hundreds of brands’. Clifford, supra note 14. 22 The perpetrators were fired by Domino’s Pizza and held in custody at the Conover police department on felony charges of tampering and distributing food. Russell Goldman and Jason Stine, ‘Star of Domino’s Pizza Gross-Out Video Is Sorry’, ABC Good Morning America, May 2009, accessed 9 February 2015 at: http://abcnews.go.com/GMA/Business/story?id=7500551#.UYjfKqIhpDM. Whether the perpetrators were convicted or not, could not be found. 23 Domino’s created a Twitter account: @dpzinfo and uploaded a YouTube video by its chief-executive, which was later removed. More generally, they started a website called Pizza Turnaround.Patrick Doyle, president of Domino’s Pizza stated: ‘You can even use negative comments to put you down or you use them to excite you and energize your process to make a better pizza. We did the latter’. 21 December 2009, accessed 9 February 2015 at: http://www.youtube.

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The libel case Cairns v Modi in the UK illustrated the connection between scope and spread of the injurious information on the one hand and the damages awarded on the other hand. In this case, £90,000 in libel damages was awarded after defamatory allegations of cricket match fixing were made on Twitter24 and an online journal, where it was seen by 65 and 1,000 people, respectively. It was recognized that the spread via social media was an aggravating factor; thus, the ordinarily £75,000 award was supplemented with an additional £15,000. The scope of dissemination on social media sites cannot really be contained, because republishing between social media connections and between different social media platforms is so easy. Therefore equitable remedies are often not possible. Instead an action on the basis of the legal remedy of compensatory damages is available for the injured party.25 However, as will be shown in Chapters 5 and 6, the available courses of action are not sufficient.

4.5 PERMANENCE OF UPLOADED LOGOS

As Judge Benjamin Cardozo wrote in 1931: ‘What gives the sting to writing is its permanence in form. The spoken word dissolves, but the written one abides and perpetuates the scandal.’26 Cardozo’s words are relevant in the era of social media, perhaps to even a greater extent; user-generated content has led to a democratization and disintermediation of content, but the lack of gatekeepers is not only a strength, it is also a weakness. This can lead not only to a fountain of creativity, but also potentially flood the system with adulterated content that can have negative effects on rights holders and the public at large. There are two opposing technological developments in social media. On the one hand it has become increasingly easy to upload, post, publish

com/watch?v=AH5R56jILag. Jaram Park, Meeyoung Cha, Hoh Kim and Jaeseung Jeong, ‘Managing Bad News in Social Media: A Case Study on Domino’s Pizza Crisis’, Workshop Lightning 1 (Diffusion and Propagation; topics, sentiments and emotion). International AAAI Conference on Weblogs and Social Media (ICWSM) Dublin 5 June 2012 ), accessed 9 February 2015 at: http://mia.kaist.ac.kr/publication/icwsm2012_park.pdf. 24 Cairns v Modi, [2012] EWHC 756 (QB). 25 ‘[I]n some cases content can be republished so quickly and in so many places that an adjudication by a court or agency may be futile and the only remedy is an award of damages, assuming the author’s identity is known’. Rowbottom, supra, Chapter 3, note 49, at 381. 26 Ostrowe v Lee, 175 N.E. 505, 506 (N.Y. Ct. App. 1931).

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or link to content. Indeed, the gap between thought and expression to the outside world has become smaller.27 On the other hand, once something is uploaded, posted or linked somewhere on the internet, it is difficult if not impossible to remove. This level of persistence varies with social media sites.28 Twitter keeps messages accessible to the public for a limited period of time, but is making its entire archive accessible to the US Library of Congress,29 based on its users’ consent for disclosure by virtue of its Private Policy. Because messages can be republished and because there is considerable interoperability between the different social media, messages can always jump to other persistent platforms before they could be retracted. Since the threshold is so low and implications for internet users seem to be inconsequential, internet users might be tempted to spontaneous actions of generating content. But because content can stay forever online a rights holder can ultimately find the content and take legal steps against the internet user and/or internet service provider.30 The lack of a possibility to reformulate, perfect and retract (see Chapter 8 on the moral right of withdrawal) can potentially lead to serious legal problems which seem disproportionate.31 It is interesting to realize that a virtual medium can also be so lapidary. Solove stated:

27 ‘When a person says whatever is on his mind, the gap between the thought and its expression to the outside world is minimal. It is not mediated by further reflection, research or verification’. Rowbottom, supra, Chapter 3, note 49, at 374. 28 Danah Boyd, Social Network Sites as Networked Publics: Affordances, Dynamics, and Implications, in NETWORKED SELF: IDENTITY, COM- MUNITY, AND CULTURE ON SOCIAL NETWORK SITES (Z. Papacharissi, ed., New York: Routledge, 2010). 29 Matt Raymond, ‘How Tweet It Is! Library Acquires Entire Twitter Archive’, Library of Congress, 14 April 2010, accessed 9 February 2015 at: http://blogs.loc.gov/loc/2010/04/how-tweet-it-is-library-acquires-entire-twitter- archive/. See also: Audrey Watters, ‘How the Library of Congress is Building the Twitter Archive’, O’reilly Radar, 2 June 2011, accessed 9 February 2015 at: http://radar.oreilly.com/2011/06/library-of-congress-twitter-archive.html. 30 Rowbottom compared the situation in which internet users take into account the possibility that they are being surveyed with a digital version of Jeremy Bentam’s panopticon. Rowbottom, supra, Chapter 3, note 49, at 367. See also Panopticon, Wikipedia, accessed 9 February 2015 at: http://en.wikipedia.org/ wiki/Panopticon. 31 The Strasbourg Court has considered the factor of dissemination, looking at whether there was any ‘possibility of reformulating, perfecting or retracting’ a statement before putting it into the public domain. Fuentes Bobo v Spain (2001) 31 E.H.R.R. 50 at [46].

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‘There is a grave danger that people will enslave themselves and each other by making past mistakes permanently and readily available for the rest of their lives.’32 As Solove continued: ‘Information that was once scattered, forgettable, and localized is becoming permanent and searchable. Ironically, the free ﬂow of information threatens to undermine our freedom in the future.’33 However, one can also argue that because of this characteristic the massive amount of infringing content stays online forever. An interesting question that might ultimately be answered by the US Supreme Court is whether a message that has been deleted and made inaccessible to internet users is no longer accessible for the government, unprotected by state or federal privacy protection.34 Judge Sciarinno, Jr. compared messages on social media with messages on the street: ‘Well today, the street is an online, information superhighway, and the witnesses can be the third party providers like Twitter, Facebook, Instagram, Pinterest, or the next hot social media application.’35 He continued: ‘If you post a

32 Daniel Solove, Speech, Privacy and Reputation on the Internet, in THE OFFENSIVE INTERNET (Martha Nussbaum and Saul Levmore, eds., Cam- bridge MA: Harvard University Press, 2011), at 16. 33 Solove, supra, Chapter 2, note 154, at 4. 34 A subpoena issued by the New York County District Attorney’s Office to Twitter ordered that it provide all possible information, including tweets, and ‘non-public location and movement information’. (Amicus Curiae Brief of American Civil Liberties Union, New York Civil Liberties Union, Electronic Frontier Foundation, and Public Citizen, Inc., in Support of Twitter, Inc.’s Appeal, 27 August 2012, at 1), that can be derived from the internet protocol address of an Occupy Wall Street protester, without the need to get a search warrant. Criminal Court of the City of New York judge Matthew Sciarrino, Jr. upheld the district attorney’s order (Criminal Court of the City of New York, County of New York, JURY 2, The People of the State of New New York v Malcolm Harris – 30 June Decision and Order, Docket No: 2011NY080152) (The People of the State of NY v Harris. Judge Sciarinno, Jr. compares messages on social media with messages on the street, at 4: ‘Well today, the street is an online, information superhighway, and the witnesses can be the third party providers like Twitter, Facebook, Instagram, Pinterest, or the next hot social media application’; and at 6: ‘If you post a tweet, just like if you scream it out the window, there is no reasonable expectation of privacy’, which is now being appealed by Twitter. Aden Fine, ‘Twitter Appeals Ruling in Battle over Occupy Wall Street Protester’s Information’, 27 August 2012, ACLU, accessed 9 February 2015 at: http://www.aclu.org/blog/technology-and-liberty-national- security-free-speech/twitter-appeals-ruling-battle-over-occupy. 35 People of the State of NY v Harris, id., at 4.

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tweet, just like if you scream it out the window, there is no reasonable expectation of privacy.’36

4.6 UNCERTAIN BOUNDARIES

Bessen and Meuren asserted that ‘if you can’t tell the boundaries, it ain’t property’.37 It is sometimes argued that jurisdictions have not provided any bright-line rules for what internet users can and can not do with a trademark logo for which they have no authorization and thus confusion exists. This is combined with the fact that there seems to be an uninformed laissez-faire, if not hostile, attitude towards IP rights among internet users. In contrast with the technological possibilities, it can, admittedly, be sometimes difficult for internet users to find out what is authorized use of a trademark logo (see Chapter 9 ‘Implementation of a Paradigm Shift’, which proposes a uniform solution that makes transparent which use of the trademark logo on social media is authorized) or even to verify whether a trademark is registered or not.38 This can make it difficult for even the most benign of internet users that want to use a trademark logo in an authorized way on social media.39 Thus, the relevant provisions of trademark law are either not known or ignored by most internet users. Of course, even the knowledge of these legal provisions is sometimes not enough. For example one cannot use a trademark logo without authorization in a commercial way. An internet user might not use the trademark logo he or she uploaded on social media in a commercial way, but what if a social media site takes

36 People of the State of NY v Harris, id., at 6. 37 Read Chapter 3 ‘If You Can’t Tell the Boundaries, Then It Ain’t Property’ of James Bessen and Michael James Meurer, PATENT FAILURE: HOW JUDGES, BUREAUCRATS, AND LAWYERS PUT INNOVATORS AT RISK, 47– 72 (Princeton, NJ: Princeton University Press, 2008). 38 Problems related to logo: difficult to find whether the trademarks have been registered, RODYK, ‘Watch Out! You Might Be Infringing Someone’s Trade Mark’, accessed 9 February 2015 at: http://www.rodyk.com/front/poppage/ 261. 39 Many trademark holders do not explain what is authorized use of their trademark logo. And those that do explain it, do this in a non-uniform way. Therefore, each time an internet user has learned how to find what is authorized use of one trademark logo, he has to unlearn this when he wants to know what is authorized use of another trademark logo. For more about this intransparency challenge, see Chapter 9 ‘Implementation of a Paradigm Shift’.

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commercial advantage of the trademark logo uploaded by the internet user? In other words: where does commercial use start and where does it end? Chapter 5 ‘Trademark Infringement and Its Defences’ will elaborate on this question. The same question can be asked in regard to parody, satire and critical comments (see Chapter 6 ‘Trademark Dilution and Its Defences’).

4.7 TRADEMARK HOLDERS AND OSP’S ARE OVERWHELMED, INTERNET USERS ARE IGNORANT OF INFRINGEMENT

The scale of unauthorized use of intellectual property rights on the internet is massive. Even where OSPs attempt to enforce intellectual property rights, they cannot keep up with the pace of infringements. For instance, Google is transparent about copyright removals,40 and in August 2012 it claimed ‘to remove more than 4.3 million URLs in the last 30 days alone’, and, moreover, Google take valid copyright removal notices into account in its ranking search algorithm to rank them into obscurity.41 One month later Google received more than 8.5 million copyright removal receipts.42 Again Google did not publish information on the number of requests to remove trademarks, including trademark logos. One can assume that these numbers follow the trend of the number of copyright removal requests. Given the sheer numbers, to enforce unauthorized trademark logos on a case-by-case basis seems infeasible. In other words: litigation and arbitration are not scalable.

40 An overview of the scale can be found at Google Transparency Report, accessed 9 February 2015 at: http://www.google.com/transparencyreport/ removals/copyright/. 41 ‘Since we re-booted our copyright removals over two years ago, we’ve been given much more data by copyright owners about infringing content online. In fact, we’re now receiving and processing more copyright removal notices every day than we did in all of 2009 – more than 4.3 million URLs in the last 30 days alone. We will now be using this data as a signal in our search rankings’. Amit Singhal, ‘An Update to Our Search Algorithms’, Inside Search, The official Google Search blog, 10 August 2012, accessed 9 February 2015 at: http:// insidesearch.blogspot.ca/2012/08/an-update-to-our-search-algorithms.html?m=1. 42 Google received 16,107,468 copyright removal requests in the last month (July 2013), supra note 40.

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The problem is bigger than the number of actions taken by trademark holders, because of so-called tolerated use.43 Some of the trademark holders think they cannot do anything about it or they do not want to do anything about it. The scope of the problem is further blurred by second level agreements between content holders and social media providers,44 in which social media providers share the revenues they make from the infringing content with the content holders. Aretz wrote that operators of photo-sharing platforms never entered any second level agreement so that rights holders in images still bear the costs of tracking their content over the internet.45 Aretz further speculated that because of privity of contract46 the second level agreements do not have any impact on internet users’ legal status, unless they are interpreted as implied licence and estoppel to exculpate the user.47 It is hard for trademark holders to vindicate their rights. The current legal environment, with prescribed notice-and-takedown requirements allows OSPs, including social media providers, to invoke the safe harbour provisions provided that OSPs take down any content after a notice sent by trademark holders and at the same time do not proactively filter before content is uploaded (see Chapter 7 ‘Intermediary Liability’). Because social media sites, such as Facebook, Twitter and YouTube get millions of notifications, they have tried to automate the takedown process. But since this process is far from perfect, trademark holders try to enforce their rights against the primary and secondary infringers. Because real name policy is not implemented and probably will not be in the future, trademark holders try to enforce their trademark rights against OSPs if they cannot track down the internet users (see Chapter 7 ‘Intermediary Liability’).

43 Wu describes tolerated use for copyright: ‘Tolerated use occurs when a copyright owner knows about infringing activity but does not act to halt it or seek to be compensated for it. This informal practice may be grounded in a copyright owner’s laziness, expansive enforcement costs, a desire to create goodwill, or a strategic decision to enjoy the benefit of the unauthorized use’. Tim Wu, Tolerated Use, 31 COLUM. J.L. & ARTS 617, 619 (2008). 44 ‘Second Level Agreements are preemptive licences granted by copyright owners to platforms operators, with the purpose of ratifying the mass usage of copyrighted content by their users’. Yafit Lev Aretz, Second Level Agreements, 45 AKRON L. REV. 137 (2012). 45 Id. 46 Privity of contract is when rights cannot be conferred to or obligations imposed on anyone else than the parties of the contract. 47 Aretz, supra note 44.

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The internet users do not know what kind of use is authorized or not authorized and what is legal or illegal. And after being exposed to so much unauthorized content on social media, on image search engines, and having a technology available that can copy-and-paste unauthorized content stripped from any metatags, many an internet user assumes that uploading unauthorized content is legal. This had led to, as Lee put it, a ‘warming up’ instead of a chilling effect on user-generated content (which will be further discussed in Chapter 8.8 ‘Rationale for moral right of integrity for the trademark logo’). Thus, there is much room for improvement here.

4.8 LOSS OF CONTROL

The ascent of social media sites precipitated the perception of a loss of control48 for trademark holders in regard to the unauthorized use of their trademark logo on social media; and for social media providers in regard to secondary liability and for internet users in regard of direct liability, in case of content infringement. However, there is no reason for defeatism for the protagonists involved. After sometimes decades of investing labour, effort and investment in their trademark logo, trademark holders have found out that social media sites and Google Images have de facto outlawed the use of their trademark logo by making it possible for every internet user to copy-and- paste and upload pictures stripped of metadata. Some trademark holders perceive that they have lost control over the use of their own trademark logo on social media.49 Social media policy,50 marketing51 and public

48 ‘It is no wonder that content industries feel threatened, not just because people recirculate what they regard as their property, but also because they are no longer able to exercise the kind of control over the marketplace that they imagine they used to have’. Christina Spiesel, Responding to Rebecca Tushnet: Worth a Thousand Words – The Images of Copyright, 125 HARV. L. REV. 683 (2012). 49 McGeveran, supra, Chapter 3, note 76. 50 Boudreaux has set up a database of social media policy papers of many famous brands and organizations. Chris Boudreaux, ‘Policy Database, Social Media Governance, 2009–2013’, accessed 13 June 2015 at: http://socialmedia governance.com/policies.php. 51 Gaines-Ross proposes six reactionary strategies to defend a company’s reputation on social media: proportionate reaction; respond quickly, tell your organization’s side of the story, use social media for your message, find third parties that can amplify your message, stockpile credentials. See Leslie Gaines- Ross, Reputational Warfare, HARV. BUS. REV. 70, 73 (December 2010). O’Dell

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relations52 experts tend to focus on reactionary strategies for social media. This book goes beyond this and proposes a paradigm shift which will give back some measure of control to trademark holders, but also to social media providers and internet users. On the one hand by making OSPs fully liable for secondary liability of trademark infringement, and on the other hand, by providing some degree of control to the internet users by making transparent which use is authorized. Social media providers perceive a loss of control since, even though they operate under the aegis of the safe harbour provisions, they are still held liable for secondary liability of content infringement (as will be discussed further in Chapter 7 ‘Intermediary Liability’). Also internet users can perceive a loss of control. If internet users have uploaded some infringing content online, it might have spread already to different platforms and they might not be able to remove the infringing content completely, damaging the reputation and goodwill of the trademark holder. Then, when the internet user is sued by the trademark holder, the latter has the advantage in the evolving asymmetric legal conflict.

4.9 TECHNOLOGIES SUCH AS CLOUD COMPUTING

Technologies that have emerged can make enforcement of intellectual property rights, including the trademark logo, on social media more difficult. For example if a social media provider makes use of cloud computing,53 it is not or not exclusively making use of its own servers. If a trademark holder wants to enforce its trademark logo on a social media

interviewed six experts: Jolie O’Dell, ‘6 Challenges to Managing a Brand on the Social Web’, 30 June 2010, accessed 9 February 2015 at: http://mashable.com/ 2010/06/30/brands-social-web. 52 Andres Wittermann, ‘The Global Social Media Challenge: A Social Marketer’s Guide to Managing Brands across Borders, IPRA, 10 April 2013, accessed 9 February 2015 at: http://ipra.org/itl/04/2013/the-global-social-media- challenge-a-social-marketer-s-guide-to-managing-brands-across-borders. 53 Dotcom: ‘There are many other sites that provide the same service as ours. Mediafire is based in the US offers exactly the same service as us. Rapidshare, Filesurf, Filesonic. Microsoft has their own service called Skydrive, Google is launching a new service called Drive. Everyone is in this cloud arena, in the same business, and has the same problems as we have, battling piracy. But we are not responsible for the problem’. Kim Dotcom (Schmitz), founder of Megaupload, was interviewed by John Campbell of 3NewsNz, 1 March 2012, accessed 9 August at: http://www.youtube.com/watch?v=ZvrRaeHD5TE.

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site whose content is uploaded in the cloud, this makes the social media provider not the only possible addressee of such an enforcement action: other candidate addressees are the cloud infrastructure provider and the cloud service provider. Complicating factors from a forensic point of view include: that data held in the cloud are likely to be replicated for reasons of performance, availability, back-up and redundancy;54 that the data are stored in a distributed way via techniques that include sharding55 and other forms of partitioning, which means ‘that the data will likely be stored as fragments across a range of machines, logically linked and reassembled on demand, rather than as a single contiguous data set’;56 that the data are encrypted; and it is difficult, if not impossible, to establish a link between the internet user who uploaded the content and the content in the cloud, especially where user applications are allegedly configured not to record such interactions.57 Once the infringing content is located in the cloud it might be that the data are distributed over servers in different jurisdictions, with possibly different and conflicting intellectual property rights, privacy, data protection and evidential rules. Even if the cloud user, cloud service provider or cloud infrastructure provider would comply with these requests, the identified internet users might be located in a place where, although the jurisdiction could be asserted, because harm was experienced locally,58 it is not economical to do so.

54 Ian Walden, Accessing Data in the Cloud: The Long Arm of the Law Enforcement Agent, QUEEN MARY SCHOOL OF LAW LEGAL STUDIES RESEARCH PAPER No. 74/2011, at 3. 55 ‘Sharding is a type of database partitioning that separates very large databases into smaller, faster, more easily managed parts called data shards’. Margaret Rouse, ‘Definition: What Is Sharding?’, Search Cloud Computing, December 2011, accessed 9 February 2015 at: http://searchcloudcomputing. techtarget.com/definition/sharding. 56 Walden, supra note 54. 57 ‘One of the world’s most popular browsers, Internet Explorer from Microsoft allows for “InPrivate” browsing that, at least allegedly, does not leave any trace of the computer user having gone to any particular web site’. Joseph J. Schwerha IV, in ‘Law Enforcement Challenges in Transborder Acquisition of Electronic Evidence from “Cloud Computing Providers”’, Draft Discussion Paper, Council of Europe, 15 January 2010, at 1. 58 Michael Geist, Is There a There There: Toward Greater Certainty for Internet Jurisdiction, 16 BERKELEY TECH. L.J. 1345 (2002).

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4.10 CONCLUSION

This chapter demonstrates that the following aspects either complicate the effective enforcement of the trademark logo on social media or make it sheerly impossible. Because of ample availability of copy-and-pastable pictures of unauthorized trademark logos on image search engines and social media sites, many internet users assume that they can upload trademark logos to social media without the authorization of the trademark holder. These uploaded pictures of unauthorized trademark logos on social media can spread rapidly over different social media platforms, so that they can become impossible to remove completely. Thus, after uploading, the internet user and possibly also the social media site can be held liable at some point in the future. The uncertain boundaries of the trademark logo in the law make enforcement nearly impossible, aggravated by new technologies, such as cloud computing, that are making enforcement even more complex. Thus, this problem makes trademark holders, social media providers and internet users, each in their own way, vulnerable after they have lost some of their control. The vast extent of the unauthorized use of the trademark logo in combination with the non-scalability of litigation and arbitration leads to the prerequisite for any feasible solution that it is automated.

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PART II

Inadequacy of the law

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5. Trademark infringement and its defences Why use of trademarks on social media is commercial and trademark logos are incompatible with the descriptive use defence

5.1 INTRODUCTION

Just as there is no continuum in being pregnant, there is no continuum in commercial use of a trademark. Either one uses a trademark commercially or not.

This chapter demonstrates why the trademark logo on social media is not adequately protected against trademark infringement. When the mark used by a defendant is too similar or identical with the trademark of a plaintiff on similar or identical goods or services, one would assume that the resulting likelihood of confusion can be remedied with a measure against trademark infringement. However, the protection of the trademark right is not absolute: if the mark that causes a likelihood of confusion is used in a descriptive way, the descriptive use defences can be invoked. The prerequisite of the trademark right is that the trademark must be used in a commercial way. Therefore the defence of non-commercial use of a trademark is often invoked when trademark infringement is alleged. If the trademark is used in a commercial way without permission of the trademark holder so that it would cause actual confusion or a likelihood of confusion, it becomes clear that the freedom of expression exemptions do not apply. Kozinski illustrated this in the context of US law: ‘Whatever first amendment rights you may have in calling the brew you make in your bathtub “Pepsi” are easily outweighed by the buyer’s interest in not being fooled into buying it’.1

1 Kozinski, supra, Chapter 1, note 39, at 973.

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Chapter 5.2 will first describe and evaluate US and EU legislation in relation to commercial use, together with the relevant jurisprudence. Following this introduction, the book will argue that in the case of unauthorized trademark use of the trademark logo on social media it would be difficult to maintain that there is no commercial use of the trademark. Chapter 5.3 will look into the descriptive use defences in the US and in the EU, as applicable in the case of trademark infringement, including on social media sites. Chapter 5.4 follows by looking at the bright line between legitimate and illegitimate unauthorized use of a trademark. Finally Chapter 5.5 concludes that the use of a trademark on social media is nearly always commercial and that the trademark logo is immune from descriptive use defences.

5.2 COMMERCIAL USE

This section reviews commercial use of the trademark in the trademark law of the US and the EU, respectively. Since this book is about the trademark logo on social media, it is appropriate to focus on these two jurisdictions, since the most valuable trademarks originate from the US and the EU, and most social media were developed in the US. In the US, the Lanham Act makes clear that if someone, without consent of the trademark holder, uses the trademark in a commercial way and this leads to a likelihood of confusion or actual confusion he will be held liable for trademark infringement.2 In other words: the use of a trademark in a commercial way is a precondition to imposing liability for trademark infringement. This makes the non-commercial use of the trademark a defence for trademark infringement. The Lanham Act gives two examples of the term ‘use in commerce’,3 in connection with goods and in connection with services: A mark is used in commerce in connection with goods when;

it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and … the goods are sold or transported in commerce.4

2 15 U.S.C. § 1114. 3 15 U.S.C. § 1127. 4 15 U.S.C. § 1127(1).

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One could argue that the use of a trademark logo on social media pages could be seen as digital versions of documents that are associated with goods or their sale. A mark is used in commerce in connection with services when ‘it is used or displayed in the sale or advertising of services and the services are rendered in commerce’.5 So, use in commerce is the use of the trademark in bona fide business activities. The non-commercial use exclusion is designed to be used as an affirmative defence. This means that the defendant can affirm that the trademark has been used, but not in a commercial way – therefore the defendant should be exonerated. There is no case law regarding ‘commercial use’ in the context of social media, yet. However, this book argues that the unauthorized use of the trademark logo on social media sites that all include advertisements can be qualified as commercial use of the social media provider: to de facto allow the placement of the trademark logo on social media pages helps make these pages more popular and one can argue that as a consequence the social media provider could be held liable for secondary liability. In the absence of case law regarding ‘commercial use’ in the context of social media, there is, however, relevant case law. In 1-800 Contacts, Inc. v WhenU.com, Inc.6 the Second Circuit decided in 2005 that the purchasing of adware and pop-ups does not qualify as a use in commerce: ‘[c]ommercial use is not the equivalent of “use in commerce”’.7 The Second Circuit decided that:

Not only are ‘use’, ‘in commerce’, and ‘likelihood of confusion’ three distinct elements of a trademark infringement claim, but ‘use’ must be decided as a threshold matter because, while any number of activities may be ‘in commerce’ or create a likelihood of confusion, no such activity is actionable under the Lanham Act absent the ‘use’ of a trademark. Because 1-800 had failed to establish such ‘use’, its trademark infringement claims fail.8

However, in this case the court did not explicitly rule out that the provider of adware and pop-ups could not be held liable for secondary liability for trademark infringement.

5 15 U.S.C. § 1127(2). 6 1-800 Contacts, Inc. v WhenU.com, Inc., Docket Nos. 04-0026-cv and 04-0446-cv (2d Cir. 27 June 2005). 7 Merck & Co. v MediPlan Health Consulting, Inc., 431 F. Supp. 2d 425, 427 (S.D.N.Y. 2006). 8 1-800 Contacts, Inc. v WhenU.com, Inc., supra note 6.

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In Merck & Co. v Mediplan Health Consulting, Inc.9 in 2006, the District Court for the Southern District of New York extended the 1-800 Contacts doctrine to the realm of keyword triggered advertisements.10 Here too, the position of the provider of the keyword triggered advertisements was not questioned. In this case some of the defendants, Canadian online pharmacies, purchased Merck’s trademark name Zocor as a keyword for the search engines of Google and Yahoo! to trigger their own advertisements or link to their own sites in special designated places next to or above the search results. Judge Chin determined that using Zocor as a keyword to trigger the advertisement or website of the defendants in a search engine cannot be considered as use of the mark in the sense of a trademark, as promulgated by 15 U.S.C. § 1127(1), since it is not:

placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale, and … the goods are sold or transported in commerce.11

Judge Chin considered it ‘internal use of the keyword “Zocor” [which] is not use of the mark in the trademark sense’.12

9 ‘Here, in the search engine context, defendants do not “place” the ZOCOR marks on any goods or containers or displays or associated documents, nor do they use them in any way to indicate source or sponsorship. Rather, the ZOCOR mark is “used” only in the sense that a computer user’s search of the keyword “Zocor” will trigger the display of sponsored links to defendants’ websites. This internal use of the mark “Zocor” as a key word to trigger the display of sponsored links is not use of the mark in a trademark sense’. Merck & Co. v Mediplan Health Consulting, Inc., supra note 7, at 22. 10 Read also Jonathan Moskin, Virtual Trademark Use: The Parallel World of Keyword Ads, 98 TMR 873. 11 Merck & Co. v Mediplan Health Consulting, Inc., supra note 7, at 415. 12 With ‘internal use’ Judge Chin refers to 1-800 Contacts, Inc. v WhenU. com, Inc. ‘A company’s internal utilization of a trademark in a way that does not communicate it to the public is analogous to an individual’s private thoughts about a trademark. Such conduct simply does not violate the Lanham Act, which is concerned with the use of trademarks in connection with the sale of goods or services in a manner likely to lead to consumer confusion as to the source of the goods or services’. 1-800 Contacts, Inc. v WhenU.com, Inc., supra note 6, at 409.

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In so deciding it appears Judge Chin is following Second Circuit law that treats ‘use in commerce’ the same for goods and services.13 However, one could also assert that the advertisements that will be displayed after the purchased keywords are typed in search engines is a service and constitutes use in commerce.14 And besides the primary liability of the buyers of a keyword triggered advertisement, it is difficult to qualify the unauthorized use of the trademark by providers of keyword triggered advertisements other than as secondary liability for trademark infringement. Use of the trademark ‘in the course of trade’ is the EU equivalent of ‘commercial use’ of a trademark in the US. Here too, use of the trademark ‘in the course of trade’ is a precondition for the determination of a liability for trademark infringement. According to Article 5(1)a-b Trademark Directive 89/104/EEC,15 the trademark holder is only entitled to prevent all third parties that use their trademark unauthorizedly in the course of trade. The equivalent of this provision can be found in Article 9(1)a-b Community Trademark Regulation 40/94/EC.16 So, just as in the US, non-commercial use of the trademark can be used as a defence in case of trademark infringement. The use in the course of trade was interpreted by the ECJ in Arsenal Football Club v Matthew Reed in 2002 as use that ‘takes place in the context of commercial activity with a view to economic advantage and not as a private matter’.17 Two related cases in 2006 and 2011 revolving around use by the European Commission of the trademark Galileo for a satellite navigation system18 further clarified the law. In the Galileo cases first the ECJ and

13 See Rebecca Tushnet, ‘Keywords Revisited: Goods versus Services’, Rebecca Tushnet’s 43(B)log, 26 May 2006, accessed 9 February 2015 at: http://tushnet.blogspot.hk/2006/05/keywords-revisited-goods-versus_26.html. 14 Tushnet, id. 15 Trademark Directive, supra, Chapter 2, note 11. In 2008, Directive 89/104/EEC was substituted by Directive 2008/95/EEC of the European Parlia- ment and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trademarks. 16 Community Trademark Regulation, supra, Chapter 2, note 36. In 2009, Regulation 40/94 was substituted by Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trademark. 17 Arsenal Football Club, supra, Chapter 2, note 125, para. 40. 18 CFI, Galileo International Technology and others v Commission (Galileo v Commission) (Case T-279/03), Judgment of the Court of First Instance, 10 May 2006, para. 114 and Galileo International Technology v OHMI – Galileo

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later the CJEU held that the Commission was not offering goods or services on the market.

By using the word ‘Galileo’ in the context of the research, development and deployment phases of the project, which precede the economic operational phase proper, the Commission is not seeking to obtain an economic advantage over other operators, given that there are no operators in competition with it in that field.19

It is questionable whether research in the pre-market phase is non- commercial. Research forms the building blocks for all market activities. Whether research is for profit or not-for-profit, its results represent added value, which arguably could all be qualified as commercial and commercially quantified. The qualification ‘seeking to obtain an economic advantage over other operators’ is definitely applicable in the case of use of the trademark for keyword triggered advertisements. The same can be said for the advertisements on social media sites which de facto allow the placement of unauthorized trademark logos. An affirmative defence of trademark infringement is that, although the trademark is operated in a commercial way, it is not commercially used by the defendant. In Google France and Google, the CJEU joined three cases in which Google operated as a reference service provider, permitting advertisers to select keywords that are trademarks of Louis Vuitton, Viaticum and CNRRH.20 The keyword triggered advertisements are displayed under the heading ‘sponsored links’ or links to the sites of these competitors or counterfeiters. The CJEU stated:

Although it is clear from those factors that the referencing service provider operates ‘in the course of trade’ when it permits advertisers to select, as keywords, signs identical to trade marks, stores those signs and displays its clients’ ‘ads’ on the basis thereof, it does not follow, however, from those factors that that service provider itself ‘uses’ those signs within the terms of Article 5 Directive 89/104 and Article 9 Regulation No 40/94.21

Sistemas y Servicios (GSS Galileo Sistemas y Servicios)(Galileo v OHMI) (Case T-488/08), Judgment of the CJEU, 6 October 2011. 19 Galileo v Commission, id. and Galileo v OHMI, id. 20 Google France and Google, supra, Chapter 2, note 95. 21 Id., para. 55.

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Thus, according to the CJEU, even though Google did operate in the course of trade, it did not itself use the trademark: ‘The fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign’.22 In L’Oréal and Others, the CJEU held that if due to ‘their volume, their frequency or other characteristics, the sales made on a marketplace such as eBay went beyond the realms of a private activity’,23 sellers on eBay were acting in the course of trade. However, eBay, the operator of the online marketplace, did not use the trademark if it ‘provides a service consisting in enabling its customers to display on its website, in the course of their commercial activities such as their offers for sale, signs corresponding to trade marks, it does not itself use those signs within the meaning of that EU legislation’.24 Therefore, EU case law demonstrates, just as in the US, that one can operate a trademark in the commercial way with impunity as long as one is not using the trademark directly for oneself. The interpretation of use in the course of trade (‘seeking to obtain an economic advantage over other operators’) in the EU differs from the definition of commercial use (attached to a product or document associated with the product or sale, or advertised as a service) in the US. However, it seems that the courts in both jurisdictions use these interpretations in their discretion, to rational- ize what they consider is fair and reasonable. One can argue that trademarks used on social media pages are always used in a commercial way. Social media providers exploit advertisements on their social media sites. If internet users upload unauthorized trademark logos on the social media sites, these can be perceived as more attractive to internet users. Below are two examples that show how the use of the unauthorized trademark on a site with one or more advertisements can be judged as commercial use of that trademark by the operator of that site: In People for the Ethical Treatment of Animals v Doughney,25 Dough- ney registered and operated the gripe-site peta.org. The Fourth Circuit held that Doughney was liable for trademark infringement, because of his use of the PETA trademark with which he intended to divert consumers from the PETA website to his own website, either for commercial gain or

22 Id., para. 57. 23 L’Oréal and Others, supra, Chapter 2, note 95. 24 Id. 25 People for the Ethical Treatment of Animals v Doughney, 263 F.3d 359 (4th Cir. 2001).

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with the intent to tarnish the mark by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site.26 Doughney’s website provided links to over 30 commercial operations offering goods and services: ‘By providing links to these commercial operations, Doughney’s use of PETA’s mark is “in connection with” the sale of goods or services’.27 Another useful illustration of how the combination of unauthorized use of a trademark and advertisements on the same site can lead to a determination of commerciality is the I Hate Ryan Air case.28 Although there was no confusion for consumers about the source of the criticism, because of the name and address of the website (www.ihateryanair.org), the respondent was forced to hand over the website address to the trademark holder. The reason was that the respondent received revenue of £322 from the commercial links on the site, and therefore took unfair advantage of the complainant’s trademark, according to the expert of the dispute resolution provider. One can only conclude that no continuum of commerce exists. Just as one is either pregnant or not, one receives money using a third party’s unauthorized trademark or not. In the case of social media it would therefore be reasonable that the social media provider would be held liable for secondary liability, since he has both the control to prevent the uploading of unauthorized trademark logos onto social media pages and benefits financially from the increased popularity of the uploaded unauthorized trademark logos (see Chapter 7.3 ‘Vicarious Liability’). One can argue there cannot be a secondary infringer without a direct infringer. However, one can argue that internet users benefit in a commercially expressible way from the increased attractiveness that is associated with unauthorized use of the trademark logos. For example Facebook users upload a trademark logo unauthorizedly. These trademark logos make Facebook more attractive (because they embellish their site or the Facebook users can signal their personality to other Facebook users in a better way, potentially attracting more internet users to or attract them more frequently to Facebook). By uploading trademark logos

26 Id., at 12. 27 Id., at 8. 28 Ryanair Limited v Robert Tyler, Dispute Resolution Service, D00008527, Decision of Independent Expert, available at: Nominet Dispute-Resolution Ser- vice Policy, 28 July 2008, accessed 9 February 2015 at: http://www.nic.uk/ disputes/drs/decisions/decisionssearch/?searchText=Ryanair&x=28&y=14. The URL ihateryanair.co.uk is offline, but Robert Tyler has already registered the URL ihateryanair.org, which is online.

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unauthorizedly the value of the service the Facebook users receive from Facebook increases, because of the network effects (the more Facebook users the merrier Facebook will become and the more valuable the service is to Facebook users). To quantify the increase in value of the service of Facebook users is difficult, but it is clear that neither Facebook users nor Facebook pays anything for the increase in attractiveness of the service in return, save the costs for notice-and-takedown procedures and litigation. The value the Facebook user extracts from the trademark holder he adds to the service he receives from Facebook. Therefore one can argue that the trademark logo is used in a commercial way by the Facebook users, bartering the attractiveness of the trademark logo for an improved Facebook service (more users and more frequent users).

5.3 DESCRIPTIVE USE DEFENCES

The descriptive use defence for the descriptive use of a trademark can be found in the legislation of both the US and EU, see below. However, one can argue that the descriptive use defence for the descriptive use of the trademark logo, given its unique characteristics, is never possible (see Chapter 5.4 ‘Legitimate and Illegitimate Use of the Unauthorized Trade- mark’), so also not on social media sites. In fact, as both US and EU case law underlines, one can argue that the descriptive use defence for the trademark name is no longer applicable when the trademark logo is also used. First some comments are made about the risks of allowing descriptive use of the trademark name. Frey argued that the public has an interest in not allowing individuals to create monopolies or other ‘barriers to competition by improperly using trademark law to remove words’, symbols, or product features from general use.29 In the same vein Mencken wrote: ‘Life’s apologies, but the Goodrich Company must be aware that its trademark has passed into the English language’.30 However, this process leads ultimately to

29 Michael G. Frey, Comment, Is it Fair to Confuse? An Examination of Trademark Protection, the Fair Use Defense, and the First Amendment,65U. CIN. L. REV. 1255, 1260–61 (1997). 30 BF Goodrich Company claimed to have exclusive right in the use of their trademark ‘zipper’. Mencken refers toLIFE magazine’s reply to BF Goodrich Company. Henry L. Mencken, THE AMERICAN LANGUAGE (2nd ed., New York: A.A. Knopf, 1921).

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genericide,31 as can be illustrated by the Aspirin case, which metamor- phosed from Bayer’s trademark into a product category name in 1921,32 since it is easier to remember Aspirin than acetyl salicylic acid. Thus, Google’s opposition to33 the inclusion of the verb ‘to google’ in Merriam- Webster’s Collegiate Dictionary34 is in light of imminent genericide understandable. Although the definition is ‘to use the Google search engine to obtain information about (as a person) on the World Wide Web’,35 Google’s problem with it is that the verb is lower-cased. And as the American Press had already warned in 1952: ‘A trademark or business can be lower-cased or misspelled to death’.36 When a plaintiff alleges that a third party is using his trademark unauthorizedly in a commercial way and is holding the defendant liable for trademark infringement, there are two varieties of the fair use defence the defendant can invoke in the US. The defendant can make either a classic fair use or a nominative fair use claim. Although the fair use defences are mutually exclusive, some defendants use both and let the judge determine which variety applies.37 When analysing which of the two fair use defences can be applied, if at all, one should first make a basic distinction: is the trademark used in a primary, descriptive sense or in a secondary, trademark sense.38 In the latter case, no claim on the fair use defences can be made. The difference can be explained with the following example: in the case of the trademark Beach Boys, if one uses the mark to describe boys who

31 Genericide is when a protectable trademark becomes generic. Gary H. Fechter and Elina Slavin, Practical Tips on Avoiding Genericide, 66 INTA BULL. 20 (2011). 32 Bayer Co. v United Drug Co., supra, Chapter 2, note 90. 33 Elinor Mills, ‘Google Says No “Googling” in Trademark Warning’, CNET, 14 August 2006, accessed 9 February 2015 at: http://news.cnet.com/8301- 10784_3-6105481-7.html. 34 Candace Lombardi, ‘Google Joins Xerox as a Verb’, CNET, 6 July 2006, accessed 9 February 2015 at: http://news.cnet.com/Google-joins-Xerox-as-a- verb/2100-1025_3-6091289.html. 35 Definition of ‘google’ in Merriam-Webster online dictionary, supra, Chapter 3, note 94. 36 DEATH OF A TRADEMARK, The American Press, February 1952, p. 20. Mentioned in Walter J. Derenberg, The Problem of Trademark Dilution and the Antidilution Statutes, 44 CAL. L. REV. 439, 464 (1956) at footnote 115. 37 Brother Records, Inc. v Jardine, 318 F.3d 900 (9th Cir. 2003). 38 ‘The fair use defense [allows] a junior user to use a descriptive term in good faith in its primary, descriptive sense other than as a trademark”. J. Thomas McCarthy, MCCARTHY ON TRADEMARK AND UNFAIR COMPETITION, 11:45 (4th ed., New York: Thomson Reuters, 2001).

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frequent a stretch of sand beside the sea, it would be use of a trademark in a primary, descriptive sense. However, if one uses the trademark Beach Boys to indicate the music band it would be trademark use in a secondary, trademark sense.39 Brookfield Communications, Inc. v West Coast Entertainment Corp40 demonstrated that the line between primary and secondary meaning can be thin. For instance, West Coast was deemed not to be infringing Brookfield Communications’ trademark ‘MovieBuff’ when it used ‘Movie Buff’ as a metatag. The Ninth Circuit held that ‘Movie Buff’ was the primary, descriptive use of the trademark, referring to someone who is enthusiastic for watching movies, and ‘MovieBuff’ as the secondary, trademark use of the trademark.41 The space between the two words made the difference.

Classic Fair Use Defence

A brief definition of the classic fair use defence can be found in Nihon Keizai Shimbun v Comline Business Data: ‘[F]air use permits others to use a protected mark to describe aspects of their own goods’.42 The classic fair use defence is codified in the Lanham Act, 15 U.S.C. § 1115(b)(4)43 and applies when the trademark is used in its primary, descriptive sense:44 when a defendant uses the plaintiff’s trademark name, term or device of geographic indication to describe its own products. This way the public’s right to use descriptive words in their ordinary descriptive sense prevails over the exclusivity claims of the

39 Brother Records, Inc. v Jardine, supra note 37. 40 Brookfield Communications, Inc. v West Coast Entertainment Corp., 174 F.3d. 1036 (9th Cir. 1999). 41 Id. 42 Nihon Keizai Shimbun, Inc. v Comline Bus. Data, Inc., 166 F.3d 65, 73 (2d Cir.1999). 43 Lanham Act, 15 U.S.C. § 1115(b)(4): ‘That the use of the name, term, or device charged to be an infringement is a use, otherwise than as a mark, of the party’s individual name in his own business, or of the individual name of anyone in privity with such party, or of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin’. 44 Use of a mark not in a trademark sense, but in a descriptive sense, and in good faith. EMI Catalogue P’ship v Hill, Holliday, Connors, Cosmopulus, Inc., 228 F.3d 56, 64 (2d Cir. 2000).

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trademark holder.45 In other words: because of this defence, descriptive words are not monopolized by trademark holders who registered them, but can still be used to describe things needed for commercial and non-commercial expressions.46 The provision includes the preconditions that the trademark is ‘used fairly’ and ‘in good faith’ which seem superfluous since the trademark will already be used in a descriptive way.47 The 2004 Supreme Court case of KP Permanent Make-Up, Inc. v Lasting Impression I, Inc.48 was about the generic words, and if not generic then descriptive words: ‘micro colors’ that were part of Lasting Impression’s trademark logo. The Supreme Court agreed with the District Court49 and overturned the Ninth Circuit Appellate Court, when it determined that these words did not acquire secondary meaning for the parties. At the District Court, KP Permanent claimed prior use of the words ‘micro colors’ before Lasting Impression’s registration and also claimed the fair use defence.50 When Lasting Impression conceded that KP Permanent did not use the words as a trademark, they gave KP Permanent the possibility of relying on the classic fair use defence that the words were used merely to describe their product.51 KP Permanent clarified that a likelihood of confusion does not preclude a classic fair use defence.52 Just as the 1924 case Warner & Co. v Eli Lilly & Co. had already demonstrated: the use of a similar name by

45 CarFreshner Corp. v S.C. Johnson & Son, Inc., 70 F.3d 267, 269 (2d Cir. 1995). 46 KP Permanent Make-Up, Inc. v Lasting Impression I, Inc., 543 U.S. 111, 122, 125 S.Ct. 542, 160 L.Ed.2d 440 (2004). 47 Lanham Act, 15 U.S.C. § 1115(b)(4), supra note 43. 48 KP Permanent Make-Up, Inc., v Lasting Impression I, Inc., supra note 46. 49 KP Permanent was allowed declaratory relief against Lasting Impression in the US District Court for the Central District of California. Judgment, Case No. SA-CV-00-276-GLT, (EEx) (C.D. Cal., 17 May 2001). 50 Abel and Sieber argued that the focus of the District Court in KP Permanent Make-Up should have been on prior use defence instead of on the fair use defence. Then again, they remarked, the case would never have gone to the Supreme Court. Sally Abel and Albert Sieber, ‘The Supreme Court’s KP Permanent Decision Opens a Can of Worms’, Fenwick & West LLP, 2006, accessed 13 June 2015 at: http://www.fenwick.com/FenwickDocuments/fair_ use_palooza.pdf. 51 KP Permanent Make-Up, Inc., v Lasting Impression I, Inc., supra note 46. 52 Id.

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another to describe one’s own product can be legal even if it confused the public about the origin of the goods.53 The Supreme Court concurred with the District Court and applied the three-pronged test54 of 15 U.S.C. § 1115(b)4 for the classic fair use defence:

1. the term only describes goods or services; 2. the term is not used as a mark; 3. the term is used fairly and in good faith.

It would be conceivable to include the absence of the use of a trademark logo as a fourth prerequisite, as the Volkswagen Aktiengesellschaft 55 case below will illuminate. However, one can also argue that the use of a trademark logo is not compatible with the third prerequisite that the term should be used fairly and in good faith. The Supreme Court interpreted the classic fair use defence of 15 U.S.C. § 1115(b)4 strictly, so that the defendant claiming a classic fair use defence has no burden to negate any likelihood that the practice complained of will confuse consumers about the origin of the goods or services affected.56 In other words, mirroring the legal principle that the burden is on the challenger, instead of on the party being challenged. Machat concluded that any resulting confusion in these cases is not due to the strength of a plaintiff’s mark, but rather due to its weakness.57 The Supreme Court did not rule out that some degree of confusion could

53 ‘The use of a similar name by another to truthfully describe his own product does not constitute a legal or moral wrong, even if its effect be to cause the public to mistake the origin or ownership of the product’. William R. Warner & Co. v Eli Lilly & Co., 265 U.S. 526, 528 (1924). 54 ‘After finding that Lasting had conceded that KP used the term only to describe its goods and not as a mark, the District Court held that KP was acting fairly and in good faith because undisputed facts showed that KP had employed the term “microcolor” continuously from a time before Lasting adopted the two-word, plural variant as a mark’. Supreme Court, KP Permanent Make-Up, Inc., v Lasting Impression I, Inc., supra note 46, at 3. 55 Volkswagen Aktiengesellschaft v Church (Volkswagen Aktiengesellschaft), 411 F.2d 350 (9th Cir. 1969). 56 In contrast to the view of the Court of Appeals for the Ninth Circuit that there cannot be a fair use defence that leads to a likelihood of confusion. KP Permanent Make-Up, Inc., v Lasting Impression I, Inc., 328 F.3d 1061, 1073 (9th Cir. 2003). 57 Michael Machat, The Practical Significance of the Supreme Court Deci- sion in KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 95 TMR 825, 831 (2005).

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influence the fairness of the application of the fair use defence.58 But the question remains how much consumer confusion precludes a successful claim on the classic fair use defence.59 The classic fair use doctrine is also applicable in the social media realm: when an undertaking that uses a trademark without authorization of the trademark holder uses the words merely in their ordinary, descriptive meaning to sell its products or services, it can invoke the classic fair use defence.60 Instead of internet users on social media, social media providers can also themselves try to invoke the descriptive fair use defence. On 29 September 2011, Facebook was sued by Timelines, Inc. before the US District Court for the Northern District of Illinois61 for using the name Timeline for one of its main features,62 as introduced at the F8 Develop- ers Conference on 22 September 2011.63 Facebook argued before the court that Timelines and Timeline are generic terms64 and tried to substantiate this by a survey in which 68 percent agreed with this statement.65 Then Facebook asserted that Timelines’ mark is merely

58 ‘While we thus recognize that mere risk of confusion will not rule out fair use, we think it would be improvident to go further in this case, for deciding anything more would take us beyond the Ninth Circuit’s consideration of the subject. It suffices to realize that our holding that fair use can occur along with some degree of confusion does not foreclose the relevance of the extent of any likely consumer confusion in assessing whether a defendant’s use is objectively fair’. Supreme Court, KP Permanent Make-Up, Inc., v Lasting Impression I, Inc., supra note 46, at 10. 59 Michael Fuller, ‘“Fair Use” Trumps Likelihood of Confusion in Trade- mark Law: The Supreme Court Rules in KP Permanent Make-Up, Inc. v Lasting Impression I, Inc.’, B.C. INTELL. PROP. & TECH. F. 011001 (2006). 60 ‘In the social media space, a company that markets its product in a way that merely uses words for their ordinary, descriptive meaning does not constitute trademark use sufficient to offend the Lanham Act – even if those words happen to be someone’s trademark’. Michael G. Atkins, ‘Social Media Law: Trademark Issues’, Seattle Trademark Lawyer, undated, at 2, accessed 9 February 2015 at: http://seattletrademarklawyer.com/storage/Social%20Media%20Law.pdf. 61 Timelines, Inc. v Facebook, Inc., No. 11-cv-6867 (N.D. Ill. 1 April 2013), at 1. 62 Facebook Timeline can include a summary of a user’s life since birth, using updates made to a user’s profile on the website. Facebook, ‘Introducing Timeline: A new kind of Profile’, 22 September 2011, accessed 13 June 2015 at: https://www.facebook.com/facebook/videos/2203694005397/. 63 Timelines, Inc. v Facebook, Inc., supra note 61, at 12. 64 Id., at 14. 65 Id., at 13.

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descriptive and had not acquired the secondary meaning.66 However, the court deemed the evidence for this inadequate to support a motion for a summary judgment.67 Facebook then tried to invoke the fair use defence68 and alleged that it did not use Timeline as a trademark and its use was merely descriptive of its offering, and it used the mark fairly and in good faith.69 However, Facebook founder and CEO Mark Zuckerberg undermined this assertion, because he had referred to ‘Timeline’ as Facebook’s ‘most important brand’,70 intended to replace its trademarked ‘Wall’.71 According to the document Facebook filed at the Securities and Exchange Commission on 2 May 2013, the case with Timelines, Inc. was settled.72

Nominative Fair Use Defence

Just as with the classic fair use defence, the nominative fair use defence can be applied in the social media realm. In the absence of any social media-related jurisprudence, physical world examples can illustrate the doctrine. A brief definition of nominative fair use can be found in Saxlehner v Wagner: ‘defendants are not trying to get the good will of the name, but the good will of the good’.73 It also makes clear that ‘[t]he Lanham Act does not prohibit commercial rival’s truthfully denominating his goods a copy of a design in the public domain, though he uses the name of the designer to do so’,74 even if this leads to a substitution for another’s product, which is ‘a common method of advertisement that encourages competition’.75 Just as with the classic fair use defence, the nominative fair use defence can be based on 15 U.S.C. § 1115(b)(4).76

66 Id., at 14. 67 Id. at 19. 68 Which could be qualified as a classic fair use defence. 69 Timelines, Inc. v Facebook, Inc., supra note 61, at 14. 70 Id., at 10. 71 Id., at 11. 72 Facebook, Inc., Securities and Exchange Commission, Form 10-Q, (Quar- terly Report), 2 May 2013, at 33. 73 Saxlehner v Wagner, 216 U.S. 375, 380–81, 30 S.Ct. 298, 54 L.Ed. 525 (1910). 74 Société Comptoir de L’Industrie v Alexander’s Dep’t Stores, Inc., 299 F.2d 33, 36 (2d Cir. 1962). 75 Neutrik AG v Switchcraft, Inc., No. 99 Civ. 11931 (JSM), 2001 WL 286722, at 3 (S.D.N.Y. 23 March 2001). 76 Lanham Act, 15 U.S.C. § 1115(b)(4), supra note 43.

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Since the New Kids on the Block case77 the nominative fair use defence acknowledges that there are cases where, for the purposes of comparison, critique or point of reference, there are no alternatives for the defendant but to describe the plaintiff’s trademark. ‘Where a mark incorporates a term that is the only reasonably available means of describing a characteristic of another’s goods, the other’s use of that term in a descriptive sense is usually protected by the fair use doctrine’.78 Two publishers could not refrain from mentioning the trademark New Kids on the Block in a survey, otherwise the respondents would not have known about which band they should give their opinion. In New Kids on the Block,79 the judge provided a three-pronged test:

1. The product or service in question must be one not readily identifiable without use of the trademark. One could call this the subsidiarity principle. 2. Only so much of the mark or marks may be used as is reasonably necessary to identify the product or service. The defendant has to minimize its referral to the trademark. One could call this the proportionality principle. The principle was applied in this way: ‘[b]oth The Star and USA Today reference the New Kids only to the extent necessary to identify them as the subject of the polls; they do not use the New Kids’ distinctive logo or anything else that isn’t needed to make the announcements intelligible to readers’.80 3. The user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder. This indicates that using a trademark logo is not compatible with the avoidance of affiliation confusion. One could call this the passivity principle.

There has been criticism of the New Kids on the Block81 doctrine concerning the burden of proof. As mentioned above, it is a well- established principle of law that the plaintiff has the burden of proof, which was also applied in the classic fair use defence case KP Permanent Make-Up.82 However, in New Kids on the Block83 the plaintiff did not

77 New Kids on the Block v News America Publishing, Inc., case (971 F.2d 302 (9th Cir.1992). 78 Id. 79 Id. 80 Id., at 23. 81 Id. 82 KP Permanent Make-Up, Inc. v Lasting Impression I, Inc., supra note 46.

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have to prove that the consumers perceived a likelihood of confusion by, for example, applying the Sleekcraft test.84 But New Kids on the Block inverted this by shifting the burden of proof to the defendant to negate that he did nothing to suggest an affiliation between him and the plaintiff’s trademark,85 which is, in the words of Professor McCarthy, ‘merely the other side of the confusion coin’.86 Doellinger noticed that the nominative fair use defence, created in the New Kids on the Block case, is more difficult to prove than the Sleekcraft test requires.87 This could lead to a situation whereby on the one hand defendants could not prove that they were not involved in any affiliation confusion so that the court would not allow the nominative fair use defence,88 and on the other hand, the court would allow the plaintiff summary judgment, even in cases where the plaintiff would not be able to prove a likelihood of confusion. The other Circuit courts have not followed the New Kids on the Block doctrine.89 In Brother Records, Inc. v Jardine90 in 2003, the same Ninth Circuit that decided New Kids on the Block91 considered applying a stronger likelihood of confusion doctrine in the nominative fair use analysis. However, the Ninth Circuit argued that the application of the Sleekcraft test,92 which focuses on the similarity of the trademark used by the plaintiff and the defendant, would lead to the wrong conclusion that all nominative fair uses are confusing. Then the Ninth Circuit combined the nominative fair use analysis with the likelihood of confusion theory by arguing that the third step of the New Kids on the Block test, the passivity principle which aims to prevent any suggestion that the plaintiff’s trademark has sponsored or endorsed the mark of the defendant, is a derivative of the likelihood of confusion doctrine.

83 New Kids on the Block v News America Publishing, Inc., supra note 77. 84 AMF, Inc. v Sleekcraft Boats, supra, Chapter 2, note 194. 85 Chad J. Doellinger, Nominative Fair Use: Jardine and the Demise of a Doctrine, 1 NW. J. TECH. & INTELL. PROP. 66 (2003). 86 Brother Records, Inc. v Jardine, supra note 37. 87 Doellinger, supra note 85. 88 Number 3 of the New Kids on the Block test. Although one could argue that indirectly a similarity between plaintiff and defendant’s mark could lead to confusion about some kind of affiliation between the two. Supra note 77. 89 ‘The Second Circuit has come closest to adopting the test, simply by accepting its use by its district courts below’. Abel and Sieber, supra note 50. 90 Brother Records, Inc. v Jardine, supra note 37, at 900. 91 New Kids on the Block, supra note 77. 92 AMF, Inc. v Sleekcraft Boats, supra, Chapter 2, note 194.

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Should there be a likelihood of confusion test for nominative fair use defence? Abel and Sieber93 criticize and discuss whether the test should be changed, and in doing so referred to the controversial Century 21 case,94 decided by the Court of Appeals for the Third Circuit in 2005, which even added a preliminary likelihood of confusion test to the three-pronged New Kids on the Block test.95 Despite using a trademark without authorization in a commercial way and in a confusing way one could still invoke the classic or nominative fair use defence. One could conclude that the common denominator of both the classic and nominative fair use defence is their incompatibility with the use of trademark logos. Besides, one can argue that the nominative fair use defence principles of subsidiarity, proportionality and passivity should be applied to the classic fair use defence as well. Comparable to the US, defendants in the EU can invoke defences based on a primary, descriptive use of the trademark. These defences are also applicable in the realm of social media. And just as with the case law in the US, one can learn from the EU case law that the use of unauthorized trademark logos is an indication that an invocation of the descriptive use defence will be unsuccessful. The EU limits the effects of trademarks in the course of trade in Article 6 Directive 2008/95/EC96 and in its parallel provision of Article 12 Regulation 207/2009/EC,97 if a third party uses his own name or address, or if indications are used that concern kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services (comparable to the classic fair use defence in the US, see above). Additionally, a trademark holder cannot prohibit a third party from using a trademark in the course of trade, where it is necessary to indicate the intended purpose of a product or service (comparable to the nominative fair use defence in the US, see above), in particular as accessories or spare parts. The condition is, however, that the person uses the trademark ‘in accordance with honest practices in industrial or commercial matters’.98

93 Abel and Sieber, supra note 50. 94 Century 21 Real Estate Corp. v Lendingtree, Inc., 425 F.3d 211, 221, 229–31 (3d Cir. 2005). 95 New Kids on the Block v News America Publishing, Inc., supra note 77. 96 Supra note 15. 97 Supra note 16. 98 Article 6 Directive 2008/95/EC, supra note 15. Article 12 Council Regulation No 207/2009/EC, supra note 16.

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In Portakabin Ltd v Primakabin B.V., Primakabin made use of the trademark Portakabin as a keyword, to sell second-hand Portakabin and Primakabin mobile homes.99 So it made sense that Primakabin’s advertisements that were triggered included the Portakabin trademark name to indicate that the retailer sells second-hand Portakabins. However, Primakabin ‘did not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the trade mark proprietor or from an undertaking economically linked to it or originate from a third party’,100 which would correspond to a breach of the passivity principle in the US.101 But Primakabin lost its chance to successfully invoke a defence based on Article 6 Trademark Directive 2008/95/EEC,102 since it had removed some of Portakabin’s trademark logos from the mobile homes, so called debranding. Therefore, the CJEU held that Primakabin could not claim to have acted in accordance with honest practices in industrial or commercial matters, but it was up to the national court to carry out the overall assessment of all relevant circumstances to determine whether there is any evidence to justify the contrary.103 In Hölterhoff v Freiesleben, Hölterhoff offered for sale particular cuts of precious stones.104 In order to describe these special characteristics of the precious stones, Hölterhoff refers to trademarks Spirit Sun and Context Sun, owned by Freiesleben, that cover these particular cuts. According to the ECJ, the reference cannot be interpreted by potential customers as indicating the source of origin of the products. No trademark logo was used, which would be confusing to potential customers as indicating the source of origin of the product or suggesting an affiliation to the trademark holder. But one can argue that the addition of the words ‘style’ or ‘like’ to the trademark names Spirit Sun and Context Sun would completely eliminate every likelihood of confusion.

99 Portakabin, supra, Chapter 2, note 95. 100 Portakabin, id., paras 54, 68. 101 Third Factor of the New Kids on the Block test: ‘The user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the trademark holder. Again this indicates that using a trademark logo is not compatible to avoid sponsorship or affiliation confusion. One could call this the passivity principle’. Supra note 77. 102 Supra note 15. 103 Portakabin, supra, Chapter 2, note 95. 104 Michael Hölterhoff v Ulrich Freiesleben (C-2/00), Judgment of the ECJ, 14 May 2002.

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In O2 Holdings v Hutchison,105 Hutchison, which owns the mobile phone company 3, used bubbles imagery that was similar to the O2 trademark logo which includes bubbles in a comparative advertisement campaign.106 O2 was not entitled to prevent the use of a sign that is similar to its trademark logo in a comparative advertisement:

where such use does not give rise to a likelihood of confusion and that is so irrespective of whether or not the comparative advertisement satisfies all the conditions laid down in Article 3a of Directive 84/450107 concerning misleading advertising and comparative advertising, as amended by Directive 97/55,108 under which comparative advertising is permitted.109

The question whether Article 3a(1) Directive 84/450/EEC110 must be interpreted as meaning that a comparative advertisement in which the advertiser uses the trademark of a competitor or a sign similar to that mark is permitted only if that use is indispensable in order to make a comparison between the advertiser’s goods or services and those of the competitor. One can argue that a sign that is identical or similar to a trademark logo of a competitor is never indispensable, since one can refer to the trademark name. This way the distinctiveness of the trademark will not be harmed. In Adam Opel v Autec, the latter manufactured toy cars that are replicas of Opel and include the Opel trademark logo.111 The Federal Supreme Court of Germany asked the ECJ for a preliminary ruling on whether Opel should be able to prevent this unauthorized use of its trademark logo. The ECJ ruled that there could only be trademark infringement

105 O2 Holdings Ltd and O2 (UK) Ltd v Hutchison 3G UK Ltd, supra, Chapter 2, note 242. 106 ‘3 Bubble Advert: Subject of O2 Bubble Case’, campaign video, accessed 13 June 2015 at: http://www.youtube.com/watch?v=U_XFVYrQbzg&feature= plcp. 107 Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising. 108 Directive 97/55/EC of European Parliament and of the Council of 6 October 1997, amending Directive 84/450/EEC concerning misleading advertising so as to include comparative advertising. 109 O2 Holdings Ltd and O2 (UK) Ltd v Hutchison 3G UK Ltd, supra, Chapter 2, note 242. 110 Council Directive 84/450/EEC, supra note 107. 111 Adam Opel v Autec (Case C-48/05), Judgment of the ECJ, 25 January 2007, para. 23.

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where the use adversely affects the functions of the trademark, in particular, its essential function. Opel registered its trademark logo for cars but also for toys. One can argue that the ECJ’s determination, based on an explanation by the referring German court, that the average consumer will understand ‘that the Opel logo appearing on Autec’s products indicates that this is a reduced-scale reproduction of an Opel car’,112 does not preclude any likelihood of confusion as to the origin or affiliation of the product with the trademark. When the trademark logo is on a toy that seems to be a miniature version of the product of the same product, one would expect that the trademark holder would authorize the dimensions and design. However, the German Federal Supreme Court confirmed that despite the registration of the Opel trademark for toys that the essential function of the trademark was not harmed.113 Since this is a double identity case,114 one should expect that not only the origin and quality functions of the trademark are protected, but also the advertisement, communication and investment functions of the trademark (see Chapter 6 ‘Trademark Dilution and Its Defences’), just as in the L’Oréal case.115 But a likelihood of a loss of distinctiveness of the trademark logo was not even mentioned.

5.4 LEGITIMATE AND ILLEGITIMATE USE OF THE UNAUTHORIZED TRADEMARK

Since a trademark used on social media can almost exclusively be qualified as commercial use of the trademark, so that the non-commercial defence can be excluded, the question remains when does commercial use of a third party’s trademark on social media without explicit permission constitute trademark infringement? If an undertaking uses a trademark name to inform the public that it is providing a product or service related to the trademark product, it is in the interest of fair competition and society at large that the undertaking is able to do so,

112 Id. 113 Bundesgerichtshof, Opel Blitz II (Adam Opel v Autec), I ZR 88/08, Judgment of 14 January 2010. 114 ‘[I]f it is identical with the earlier trade mark and the goods or services for which registration is applied for are identical with the goods or services for which the earlier trade mark is protected’. OHIM The Manual Concerning Opposition Part 2, Ch. 1: Identity, at 4. 115 L’Oréal and Others, supra, Chapter 2, note 95, paras 2, 58 and 63.

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basing its conduct on a descriptive use defence. However, these defences are accepted by jurisprudence in the US and EU only under certain conditions. What is the bright line between legitimate and illegitimate unauthorized commercial use of a third party’s trademark? The boundaries of unauthorized commercial use of the trademark can be illuminated by two comparable automobile repair cases, one in the US, the other in the EU. Volkswagen Aktiengesellschaft v Church is a case in the US decided in 1969 by the Ninth Circuit.116 The defendant, Douglas Church, opened an automobile repair business, specializing in the repair of Volkswagen and Porsche vehicles. He did this first under the name ‘Modern Volkswagen Porsche Service’. In response to objections by Volkswagen, Church changed the name into ‘Modern Specialist’. Also in response to objections by Volkswagen, Church started to add the word ‘Independent’ in his advertising, to distinguish his business from those of Volkswagen’s authorized or franchised dealers. Church used a large sign on the front of his premises which read ‘Modern Volkswagen Porsche Service’ and changed it when the action was filed by Volkswagen into ‘Independent Volkswagen Porsche Service’. The court held that Church’s early use of the word ‘Volkswagen’ as part of his former business name ‘Modern Volkswagen Porsche Service’ was unlawful. However, none of his subsequent practices infringed Volkswagen’s rights, because of Church’s ‘extensive use of the word “Independent” sufficiently distinguished his business from those affiliated with appellant’.117 According to the court ‘the terms “Volkswagen Service” and “VW Service” did not belong exclusively to Volkswagen, but have come to mean in the mind of the public only that the advertiser services Volkswagen vehicles’.118 It was not expected from Church that he avoid the use of the trademark names Volkswagen or VW, which are the normal terms to signify the type of cars Church repairs. However, Church should not advertise in a manner ‘which is likely to suggest to his prospective customers that he is part of Volkswagen’s organization of franchised dealers and repair- men’.119 The Ninth Circuit upheld the District Court’s decision that Church’s advertising did not constitute trademark infringement nor unfair competition. ‘The size, style and appearance of the advertising articles and

116 Volkswagen Aktiengesellschaft, supra note 55. 117 Id., at 9. 118 Id., at 9. 119 Id., at 10.

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displays were among these factors. Another was the fact that Church did not use Volkswagen’s distinctive lettering style or color scheme, nor did he display the encircled “VW” emblem’.120 BMW v Deenik is a case of 1999 decided by the ECJ,121 and is comparable to the Volkswagen Aktiengesellschaft v Church case.122 It dealt with the alleged unauthorized use in advertisements of the trademark of another famous car brand, BMW, for a garage business, which included the sale of second-hand cars, repairs and maintenance of BMW vehicles. The ECJ was asked by the Supreme Court of the Netherlands to give a preliminary ruling that, based on the Trademark Directive 89/104/ EEC,123 the trademark proprietor can only prevent the person of using the mark if he creates the impression that his undertaking is affiliated to the trademark proprietor’s network.124 BMW argued that:

the high probability that the manner in which the trade mark is used for those announcements may create an impression among the public that the trade mark is in that regard being used to an appreciable extent for the purpose of advertising his own business as such by creating a specific suggestion of quality125

was not taken seriously by the court. The use of the trademark was seen as unavoidable. Both the Volkswagen and BMW cases show that there is a broad consensus in the US and EU that proprietors cannot prevent undertakings that can only sell their product or service by referring to a third party’s trademark. They must be able to do so, because it furthers fair competition. So they use the trademark of a third party in a commercial way which constitutes trademark infringement, but they can claim a descriptive use defence, under the condition that they do not suggest any sponsorship, endorsement or affiliation by the brand whose trademark they use. Therefore, as the Volkswagen case makes explicit and the BMW implicit, the unauthorized use of the trademark logo and the use of

120 Id., at 12. 121 Bayerische Motorenwerke AG (BMW) and BMW Nederland BV v Ronald Karel Deenik (Case C-63/97), Judgment of the ECJ, 23 February 1999. See also the Opinion of the Advocate General in Google France and Google (Google France SARL and Google Inc. v Louis Vuitton Malletier SA) (C-236/08), 22 September 2009. 122 Volkswagen Aktiengesellschaft, supra note 55. 123 Supra Chapter 2, note 11. 124 Bayerische Motorenwerke AG (BMW), supra note 121, para. 44. 125 Id.

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distinctive lettering and style should be avoided and could be grounds for which any recourse to a descriptive use defence become ineffective. Proprietors of trademarks sometimes need to tolerate the limitation of their exclusive rights, so that the competition in a fair market will not be stifled.126 However, one can argue that these restrictions need to be limited, by applying the principles of subsidiarity, proportionality and non-affiliation. The trademark logo has such special characteristics which exclude any descriptive use defences in case of a trademark infringement claim,127 since the trademark logo, representing a brand, can be accurately described by the trademark name of the brand, without the need to use the trademark logo.

5.5 CONCLUSION

To apply fair use defences ‘fairly and in good faith’128 in the US or the descriptive use defence ‘in accordance with honest practices in industrial or commercial matters’129 in the EU, it seems reasonable to apply the New Kids on the Block doctrine, so that the use of the trademark will be tested against principles of subsidiarity, proportionality and passivity (non-affiliation). One can argue that these three principles can be satisfied when:

1. The use of a trademark logo is precluded, because the defendant can substitute the trademark logo for a trademark name, which already clarifies to which the product the defendant is referring to (subsidiarity principle);

126 A rare exception is honest concurrent use. An example is Budejovicky Budvar v Anheuser-Busch where both use the identical trademark name Bud- weiser registered for an identical product, although they have different trademark logos. Budweiser case Budejovicky Budvar Narodni Podnik v Anheuser-Busch, Inc. [2012] EWCA Civ 880. 127 ‘… using a trademark owner’s logo often crosses the line, because its word mark alone almost always would suffice to convey the desired message’. Atkins, supra note 60, at 4. 128 Lanham Act, 15 U.S.C. § 1115(b)(4). 129 Article 6 Directive 2008/95/EC, supra note 15. The parallel provision can be found in article 12 Regulation 207/2009/EC, supra note 16.

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2. Trademark logos do not lend themselves well to be used in a minimal way130 (proportionality principle); 3. One can argue that any use of a trademark logo by the defendant directly suggests some kind of affiliation with the plaintiff’s trademark (passivity principle). The passivity principle might be over- come if there comes into being a convention of using trademark logos in a distinctive way that makes clear that there is no endorsement, sponsorship or affiliation between the trademark holder and trademark user.131

One can also deduce from the EU case law some principles applicable to descriptive use defences. In the Galileo cases, OHIM132 and the General Court133 came to the conclusion that the conceptual comparison between two identical trademark names should take into consideration the context of the entire mark: including the figurative elements, size and overall dominant impression and in relation with the goods and services for which it is registered. The Galileo134 and Portakabin135 cases confirmed that the trademark logo can make the difference. The source-identifying function of the trademark is favourably affected if a keyword was enriched with a trademark logo, so that it would enable normally informed and reasonably attentive internet users, or enables them only with little difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trademark or an undertaking economically connected to it or, on the contrary, originate from a third party.136 These cases show that courts in the US and in the EU confirm the importance of the trademark logo in determining whether a user of the

130 If one insists on using trademark logos, could think about thumbnails or low resolution versions of the trademark logo. 131 For example, one can think of a red ring around the logo. 132 Galileo v Commission, supra note 18. 133 Galileo v OHMI, id. 134 Galileo v Commission, id., Galileo v OHMI, id. 135 Portakabin, supra, Chapter 2, note 95. 136 In contrast to the wording: ‘The function of indicating the origin of the mark is adversely affected if the ad does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the ad originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party’. Portakabin, supra, Chapter 2, note 95, and Google France, supra, Chapter 2, note 95, paras 83, 84.

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trademark is suggesting sponsorship, endorsement or affiliation. There- fore it seems peculiar that legislation in neither jurisdiction is providing adequate protection against unauthorized use of trademark logos on social media. Especially since it can be determined that social media sites exploit advertisements, so that unauthorized trademark logos on social media will be used in a commercial way.

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6. Trademark dilution and its defences How to reconcile freedom of expression with the protection of the trademark logo

6.1 INTRODUCTION

Reputation comes on foot and leaves on horseback.1

The last chapter demonstrated trademark law’s lack of adequate protection of the trademark logo on social media against trademark infringement. One of the main problems was that, despite counter-indications, commerciality was not always assumed. This chapter will examine whether trademark law is protecting the trademark logo on social media against trademark dilution in the US or its equivalent in the EU, called ‘unfair advantage or detriment to the distinctive character or repute of the trademark’. Where measures against trademark infringement should protect against misrepresentation via confusion-related functions of the trademark (as discussed in Chapter 2.8), measures against trademark dilution are supposed to protect against misappropriation of the famous trademark or the trademark with a reputation via the proprietary functions of the trademark that protect the communication, advertising and investment functions of the trademark and that must guarantee its reputation, goodwill, signalling identity and accountability. Justice Arnold remarked that courts have found it difficult to develop coherent and workable principles within the field of dilution.2 This points

1 Translation of ‘Reputatie komt te voet en gaat te paard’, which is a Dutch saying. 2 ‘Although the thinking behind it goes back as far as Schechter’s seminal 1927 article in the Harvard Law Review [supra, Chapter 1, note 83] the legislative provisions are still relatively new to our law and indeed most European laws. As of yet the courts have found it difficult to develop coherent and workable principles within this field. It is possible that extended protection simply is incapable to being developed into a clear body of law. But I suggest it

137

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to some of the challenges ahead. Unintimidated, this chapter attempts to develop coherent and workable principles so that the right of the trademark holder to protect the trademark logo on social media against trademark dilution can be reconciled with the right to freedom of expression by third parties, including internet users. The chapter consists of two sections: trademark dilution (Chapter 6.2–3) and the defences against trademark dilution (Chapter 6.4). This chapter answers the question why the current trademark dilution law and the defences provide insufficient protection for the trademark logo on social media. Firstly, Chapter 6.2 discusses the rationale of the trademark dilution doctrine. Chapter 6.3 then examines the legislation and case law about trademark dilution in the US and about the unfair advantage of or detriment to the distinctive character or repute of the trademark in the EU.. Finally, Chapter 6.4 looks into the trademark dilution defences in the case of parody, comment or criticism.

6.2 RATIONALE OF THE TRADEMARK DILUTION DOCTRINE

The rationale for the trademark dilution law against non-confusing,3 non-competing use of a famous trademark or a trademark with a reputation is to protect it against any negative impact it might have on its distinctiveness, individuality, originality, uniqueness, identity, reputation, goodwill, significance, drawing power, selling power,4 advertising power,5 commercial magnetism6 and prestige. Handler succinctly stated: ‘Dilution protects the mark while confusion protects the business’.7

is a bit premature to reach that conclusion just yet’. Justice Arnold, ‘Brand Protection and Competition’, IBIL, UCL, 27 January 2010, accessed 13 June 2015 at: http://www.ucl.ac.uk/laws/ibil/index.shtml?events_past. 3 Article 8(5) does not require proof of likelihood of confusion, even where there is no similarity between the goods in question. SABEL BV, supra, Chapter 2, note 230. 4 Schechter, supra, Chapter 1, note 83, at 831. 5 Beverly W. Pattishall, Dawning Acceptance of the Dilution Rationale for Trade-Mark Identity Protection, 74 TMR 289, 297 (1984). 6 Mishawaka Rubber, supra, Chapter 1, note 1, at 205. 7 With protecting the mark, Handler meant protection against the impairment of distinctiveness or the harm of reputation. With protecting business Handler meant that the doctrine protects against trademark use for competing

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The discussion of trademark dilution as ‘the gradual whittling away or dispersion of the identity and hold upon the public’s mind of the mark or name by its use upon non-competing goods’8 was initiated by Schechter’s article in the Harvard Law Review in 1927.9 Schechter was an advocate for the right of trademark holders to extend the use of their trademark for activities that involved other products or services, and this was not necessarily limited to famous trademarks or trademarks with a reputation (as will be discussed in Chapter 6.3). In contrast to Schechter’s substantial legacy, modern defences against trademark dilution do not take into account whether the future ‘normal exploitation’ of the mark will be conflicted (conform the second step of the three-step test for copyright limitations and exceptions in the EU, but not according to the two-step test for trademark limitations and exceptions in the EU, as will be discussed in Chapter 6.4) or whether the effect of the use upon the potential market is negatively influenced (conform step four of the fair use test for copyright in the US, but not according to the fair use test for trademark in the US, see below). Another problem of contemporary trademark law is its flawed classification system for trademark registration (see Chapter 6.3). The argument for the use of an identical trademark name used by multiple proprietors active in different fields is that it would not be a problem if they operated in separate markets as it is not likely that the public will be confused. However, in times of internet and globalization, exclusive protection for famous trademarks or trademarks with a reputation across the different designated goods or services classes is unfeasible and outdated (see Chapter 6.3 ‘Problems with identical trademarks for dissimilar goods and services’). Schechter posed the question whether ‘the preservation of the uniqueness of a trademark should constitute the only rational basis for its protection’.10 The unique character of the trademark, especially the trademark logo, could be interpreted as ‘one of its kind’ and implies that it needs to remain unique for all activities. This chapter will answer the question why trademark logos, besides those that are famous or have a reputation, have such a Schechterian quality of singularity that a higher level of protection in comparison to the current level of protection becomes imperative.

products or services. Milton W. Handler, Are the State Anti-Dilution Laws Compatible with the National Protection of Trademarks?, 88 TMR 419 (1998). 8 Schechter, supra, Chapter 1, note 83. 9 Schechter, id. 10 Schechter, id., at 831.

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A distinction between the trademark dilution by blurring doctrine and the trademark dilution by tarnishment doctrine is made below. After that the relevance will be discussed for the trademark dilution doctrine of Article 6bis Paris Convention and Article 10bis Paris Convention, respectively. The gradual whittling away, lessening, watering down, debilitating, undermining, eroding and insidious gnawing away of the distinctiveness of the trademark has been described as trademark dilution by blurring, or hyperbolically as ‘death by a thousand cuts’,11 ‘stung by a hundred bees’,12 or euphemistically as ‘picking the proverbial cherry from the top of their cake’.13 An important but unjustly ignored rationale for the trademark dilution doctrine is that trademark holders of famous marks or marks with a reputation deserve to keep the possibility to extend the use of their trademark and enter into new related14 or non-related fields themselves or allow others via licensing (see Chapter 6.3). Where the source-identifying function of the trademark is adversely affected, and the search costs for consumers are not cut short but extended, liability for trademark infringement can be determined, as already discussed in Chapter 5. However, Judge Posner asserted15 that trademark dilution can also lead to increased mental search costs for consumers.16 If every product one comes across is called Coca-Cola, one would have to think twice in case an advertisement of Coca-Cola by the senior user of the mark selling carbonated soft drink was shown. Trademark infringement deals with the question whether two products or services are from the same source. In contrast, trademark dilution deals with the question of whether the famous trademark or trademark with a reputation for a product or service can be retrieved from memory.17

11 Beebe, supra, Chapter 2, note 87, at 1143, 1163. 12 McCarthy, supra, Chapter 5, note 38, § 24:94. 13 Anca Musat, ‘Trademark Infringement: Any Room for the Parody Defense in Romania?’, Business Review /Bucharest Lawyer, June 2007, at 10, accessed 9 February 2015 at: http://www.musat.ro/pdf/Bucharest%20Lawyer% 20-%20Anca%20Musat%20-%20June.pdf. 14 Hormel Foods, supra, Chapter 2, note 91, at 504. 15 Ty, Inc. v Perryman, 306 F.3d 509 (7th Cir. 2002). 16 ‘The mark holder surely benefits from the FTDA’s preservation of her mark’s uniqueness, but consumers also benefit, as they experience a more efficient market’. Brian A. Jacobs, Note, Trademark Dilution on the Constitu- tional Edge, 104 COLUM. L. REV. 161, 188 (2004). 17 Rebecca Tushnet, Truth and Advertising: The Lanham Act and Commer- cial Speech Doctrine, 58 S.C. L. REV. 737 (2007).

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The trademark dilution doctrine is also relevant for trademark logos of collective trademarks and certification trademarks. A distinction must be made between members and non-members, in the case of collective trademarks, and between companies that did and those that did not pass a certain standard, in the case of certification trademarks. So here too trademark dilution by blurring or trademark dilution by tarnishment can occur if a non-member uses the collective trademark or if a company that did not pass a certain standard uses the certification mark. Trademark dilution by tarnishment could be defined as the harm to the reputation or goodwill that was caused by the unauthorized use of a trademark in an unsavoury way. However, there must be the assumption that the consumer, after seeing the junior mark used in an unsavoury way, will blame the famous senior mark/mark with a reputation. Pattishall18 and Moskin19 have questioned the efficacy of this contagion theory.20 However, it seems safe to assume that, for example, it will not be conducive for the commercial magnetism of a trademark such as Louis Vuitton, if a Louis Vuitton aficionado is exposed to a streetscape dominated by fake Louis Vuitton products. A more radical view on trademark dilution is espoused by Magliocca.21 He asserted that all second uses of trademarks are per definition infringing,22 which makes enforcement potentially simple and effective.

Article 6bis Paris Convention

Article 6bis was added to the Paris Convention in 1925,23 especially to protect those first users in a member country of the Union of the Paris Convention that have not registered or used it in another member country of the Union, against those that register or have registered a mark that is already well known in the country of origin and in the country where protection is sought, for identical or similar goods or services, and which

18 Pattishall, supra note 5, at 307. 19 Jonathan Moskin, Dilution or Delusion: The Rational Limits of Trade- mark Protection, 83 TMR 122, 146 (1993). 20 Simon Fhima, supra, Chapter 2, note 142, at 161, footnote 7. 21 Gerard N. Magliocca, One and Inseparable: Dilution and Infringement in Trademark Law, 85 MINN. L. REV. 949, 983 (2001). 22 Magliocca, id., at 983. 23 Article 6bis Paris Convention, supra, Chapter 2, note 2.

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use could be confusing.24 Callmann25 appealed to no avail to include protection against non-confusing marks for non-competing goods or services. Also the International Chamber of Commerce (ICC) proposed in vain an amendment to Article 6bis Paris Convention, to make the protection applicable to marks registered or used for dissimilar products.26 Only in 1994 did Callmann and the ICC’s dream become a reality: Article 16(3) TRIPS27 extended the scope of Article 6bis Paris Conven- tion’s protection to dissimilar goods and services, under the conditions that the use of the trademark would indicate a connection between the goods/services and the trademark holder, and that it would likely cause damage to the trademark.28 Therefore, the Article 16(3) TRIPS29 incarnation of Article 6bis Paris Convention is relevant to this book.

Article 10bis Paris Convention

Article 10bis Paris Convention30 prescribes that countries of the Union must assure their nationals effective protection against unfair competition. Article 10bis(2) Paris Convention states that ‘[a]ny act of

24 Article 6bis(1) Paris Convention, since the revision of Stockholm in 1967. The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well-known mark or an imitation liable to create confusion therewith. See id. 25 Rudolf Callmann, Thoughts on the Protection of World Marks, 44 TMR 1134 (1954). 26 Stephen P. Ladas and Charles Magnin, ‘Well-Known Trade Marks’, presentation at 13th International Chamber of Commerce Congress, Lisbon, June 1951. Derenberg, supra, Chapter 5, note 36, at 484, footnote 194. 27 Article 16(3) TRIPS, supra, Chapter 2, note 26. 28 Article 16(3) TRIPS, id.: ‘Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to goods or services which are not similar to those in respect of which a trademark is registered, provided that use of that trademark in relation to those goods or services would indicate a connection between those goods or services and the owner of the registered trademark and provided that the interests of the owner of the registered trademark are likely to be damaged by such use’. 29 Article 16(3) TRIPS, id. 30 Article 10bis Paris Convention, supra, Chapter 2, note 2.

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competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition’.31 Trademark dilution arguably falls within this collection of acts of unfair competition. Especially since the wording of Article 10bis(3) Paris Convention32 is ‘The following in particular shall be prohibited’, which makes clear this is a non-exhaustive list which could include trademark dilution. At the Quebec Congress of the ICC33 it was proposed to amend Article 10bis Paris Convention34 to include: ‘The use or registration by a person of a mark which by reason of its originality and uniqueness or of its long and exclusive use by another has come to symbolize and identify his entire business or commercial activity shall be deemed an act of unfair competition ‘.35 The wording of ‘originality and uniqueness’ is interesting, since it is in the spirit of Schechter’s proposal to protect coined, invented, fanciful or arbitrary marks, which fit within the description of ‘original’, instead of the famous or well-known marks. The word ‘uniqueness’, which can be defined as ‘one of its kind’, could be interpreted as to point to the right of the trademark holder to extend the activities of its trademark (see below).

6.3 LEGISLATION AND CASE LAW

This section examines the legislation and case law, starting with some cases of trademark dilution avant la letter and followed by an examination of the legislation and case law in the US, where a distinction is made between dilution by blurring, dilution by tarnishment and free- riding. Then a discussion on the legislation and case law in the EU makes a distinction between detriment of distinctiveness, detriment of repute and use without due cause. It also analyses the double-identity case of Davidoff,36 and the keyword triggered advertising case of Interflora,37 which sheds a light on both the source function and the advertising/ investment function of the trademark.

31 Article 10bis Paris Convention, id. 32 Article 10bis Paris Convention, id. 33 Quebec Congress of the International Chamber of Commerce, 12th Congress, Summer 1949. Derenberg, supra, Chapter 5, note 36, at 487, footnote 212. 34 Article 10bis Paris Convention, supra, Chapter 2, note 2, revision of The Hague, 6 November 1925. 35 Derenberg, supra, Chapter 5, note 36, at 488. 36 Davidoff, supra, Chapter 2, note 248. 37 Interflora, supra, Chapter 2, note 128.

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In the UK, in Eastman Photographic Materials Co. Ltd. v John Griffiths Cycle Corp. Ltd., the trademark name Kodak, manufacturer of photographic material, was used by a defendant to sell bicycles in 1898,38 benefiting from the plaintiff’s investments in the mark, the British court under Justice Romer wrestled to come up with a solution that served justice using the doctrines that were available at the time. For this purpose Justice Romer determined that there was an ‘intimate connection between the bicycle trade and camera trade’,39 which, according to him, caused a likelihood of confusion. One can argue that the judge was trying to put a square peg into a round hole, and applying a trademark dilution by blurring doctrine avant la lettre in the process. Another example which could be qualified as dilution by blurring avant la lettre is the Duro Pump & Mfg. Co. v Cal. Cedar Products Co. case of 1926,40 in which Justice Robb wrote: ‘If the Californian Cedar Products Company were permitted to use this mark, which has come to represent the Duro Company and its product to the public, other companies likewise might use it, with resultant loss of identity of the Duro Company’.41 The judge determined that the mark Duro registered for pneumatic pressure systems by one proprietor could not also be registered for manufacturing wall board materials by another proprietor. In the US, the German émigré Schechter was familiar with the German Odol case,42 in which the loss of drawing power of a mark for non-competing products was protectable.43 Schechter’s insights on

38 Eastman Photographic Materials Ltd. v John Griffiths Cycle Corp. Ltd. (1898) 15 R.P.C. 105. 39 Romer J., at 110 wrote: ‘At one recent large cycle show the Plaintiff company had a stall, and the evidence shows that between the two trades, the bicycle trade and the camera trade, there is an intimate connection’. Id. 40 Duro Pump & Mfg. Co. v. Cal. Cedar Products Co., 11 F. (2nd) 205 (Ct. of Appeal D.C. 1926). Read also Anonymous, Trade-Marks, Manufacturer of Wall Board Materials Not Entitled to Registration of Mark Used for Pneumatic Pressure Systems, 8 BUS. L.J. 51 (1926). 41 Id. 42 ‘Odol’ Landgericht Elberfeld, 11 September 1924, Juristische Wochen- schrift 1925, 502. Kamperman Sanders, supra, Chapter 2, note 79, at 51. 43 Regarding the junior mark being registered for non-competing goods or services, the German Court wrote: ‘That, however, is beside the point. The complainant has created a demand for its goods, while employing thereon a word having drawing power, for only through the year-long activity of complainant was its selling power acquired … Complainant’s ability to compete with other manufacturers of mouth wash will be impaired if the significance of its mark is lessened’. Id.

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‘dilution’44 can be found in his influential Harvard Law Review article of 1927 entitled ‘The Rational Basis of Trademark Protection’, in which he advocated the protection against ‘[t]he gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non-competing goods’.45 Schechter testified before a Congressional Commission in 193246 about a revision of the trademark law, called the Perkins Bill,47 which he drafted and in which he did not propose the protection of famous marks or marks with a reputation but did propose the protection of registered marks that are ‘coined or invented or fanciful or arbitrary’ against confusing marks but also against users that ‘injure the good will, reputation, business credit or securities of the owner of the previous used trade-mark’.48 In 1934, after Irving’s Yeast-Vite Ltd. v Horsenail,49 in which the House of Lords held that a reference to the Horsenail’s yeast tablet as being ‘a substitute for Yeast-Vite’ was not use of the plaintiff’s ‘Yeast- Vite’ mark in the trademark sense, the Goschen Committee in the US recommended changing the trademark law in regard to collateral references, which used disclaimers such as ‘a substitute for’, ‘an equivalent of’, ‘as good as’ or ‘X-type’.50 Despite the recommendation, the trademark law remained unchanged in this respect. In 1963, in Polaroid Corp. v Polaraid, Inc.51 the Seventh Circuit made it clear that the plaintiff should not have to share with anyone the ‘effort and expenditure of large amounts of money’, in other words: the investments made by the plaintiff which gained him his reputation. In 1977, in Allied Maintenance Corp. v Allied Mechanical Trades, Inc.,52 the defendant’s use of the plaintiff’s trademark for dissimilar products

44 However, Schechter did not actually use the term dilution. Supra, Chapter 1, note 83. 45 Schechter, id. 46 Frank I. Schechter’s testimony: Hearings before the House Committee on Patents, 72d Cong., 1st Sess. 15 (1932). 47 Perkins Bill, H.R. 11592, 72d Cong., 1 Sess. (1932). 48 Id., § 2(d)(3). 49 Irving’s Yeast-Vite Ltd. v Horsenail, 51 R.P.C. 110 (1934). 50 Goschen Committee, Board of Trade, Report of the Departmental Com- mittee on the Law and Practice Relating to Trade Marks 80, § 185 (1934), at 50. 51 Polaroid Corporation v Polaraid, Inc., 319 F.2d 830, 837 (7th Cir, 1963). 52 Allied Maintenance Corporation v Allied Mechanical Trades, Inc.,42NY 2d 538, 369 NE 2d 1162, 399 NYS 2d 628, 198 USPQ 418, 422 (1977).

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had been compared with ‘cancerlike growth’ which ‘feeds upon the business reputation of an established distinctive trademark or name’.53 During the long formation of the Lanham Act, the dilution doctrine was never implemented. Callmann, another German émigré trademark scholar in the US,54 became a prolific advocate of Schechter’s ideas after he passed away in 1937. Several states implemented anti-dilution laws in their common law legislation, which showed some variety.55 Only much later, in 1995, were Schechter’s ideas on dilution implemented in a federal statute, although in an adulterated form: the Federal Trademark Dilution Act (FTDA).56 Trademarks eligible for the protection of the FTDA have to be famous, which is a radical departure from the premise that trademarks with coined, arbitrary and fancy terms would be eligible for protection, as Schechter had imagined. In 2003, in Moseley v V Secret Catalogue, Inc.,57 the US Supreme Court held that the FTDA applied only when the plaintiff could prove actual dilution instead of a likelihood of dilution. However, an actual dilution standard necessarily means that the harm first must have manifested itself. Therefore, Congress preferred a likelihood of dilution standard,58 so that the harm could be prevented and at the same time clarify that famous trademarks are federally protected against dilution, no matter whether they are inherently distinctive or have acquired distinctiveness.59 Dilution by tarnishment was also to become an explicit measure for action. This led to a revised dilution act: the Trademark Dilution Revision Act (TDRA)60 of 2006.

53 Id. 54 Rudolf Callmann, Trademark Infringement and Unfair Competition,14 LAW & CONTEMP. PROB. 185 (1949); Callmann, supra, Chapter 2, note 129. 55 ‘A man’s rights in his trade-marks in one State may differ widely from the rights which he enjoys in another’. Although Derenberg explains that the New York and Massachusetts State statutes and those of Georgia and Illinois are identical. Derenberg, supra, Chapter 5, note 36, at 439. 56 Federal Trademark Dilution Act (FTDA) 15 U.S.C. § 1125(c). 57 Supra, Chapter 2, note 206. 58 Stacey Dogan and Mark Lemley, The Trademark Use Requirement in Dilution Cases, 24 SANTA CLARA COMPUTER & HIGH TECH. L.J. 541, 547 (2008). 59 Overturning a precedent of the Second Circuit. TCPIP Holding Co. v Haar Commc’ns, Inc., 244 F.3d 88, 96 (2d Cir. 2001). 60 Trademark Dilution Revision Act (TDRA), § 43(c) of the United States Trademark Act of 1946 amended by U.S. Title 15, Chapter 22, subchapter III, § 1125, ‘False designations of origin, false descriptions, and dilution forbidden’ (c) Dilution by blurring, dilution by tarnishment.

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Besides the two forms of dilution recognized in the TDRA, dilution by blurring61 and dilution by tarnishment,62 Judge Posner distinguished free-riding as a third form of non-confusing use by third parties that the trademark holders should be able to prevent.63 This corresponds with the ‘unfair advantage of the distinctive character or repute of a trademark’ in the EU. However, in the US it is not codified as such.

Dilution by blurring Dilution by blurring arises from the use of a similar junior mark in non-competing goods or services that impairs the distinctiveness of the senior famous mark.64 Schechter illustrated this danger: ‘[I]f you allow Rolls Royce restaurants and Rolls Royce cafeterias, and Rolls Royce pants, and Rolls Royce candy, in 10 years you will not have the Rolls Royce mark any more’.65 In other words dilution by blurring could ultimately lead to a situation where the distinctive character of the trademark is lost, and genericide takes place. Barber proposed three factors for the TDRA to see whether dilution by blurring is applicable: the degree of fame of the plaintiff’s mark, the uniqueness of the plaintiff’s mark and the similarity of the defendant’s mark to the plaintiff’s mark.66 The TDRA provision, however, is more extensive and sums up six non-exhaustive factors the court can consider when making a decision whether dilution by blurring is applicable:

1. the degree of similarity between the mark and the famous mark; 2. the degree of inherent or acquired distinctiveness of the famous mark; 3. the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark; 4. the degree of recognition of the famous mark; 5. whether the user of the mark or trade name intended to create an association with the famous mark; 6. any actual association between the mark or trade name and the famous mark.

61 U.S. Code, Title 15, Chapter 22, subchapter III, § 1125(c)(2)(B). 62 U.S. Code, Title 15, Chapter 22, subchapter III, § 1125(c)(2)(C). 63 Ty, Inc. v Perryman, supra note 15. 64 U.S. Code, Title 15, Chapter 22, subchapter III, § 1125(c)(2)(B). 65 Schechter’s testimony, supra note 46. 66 William G. Barber, A ‘Rational’ Approach for Analyzing Dilution Claims: The Three Hallmarks of True Trademark Dilution, 33 AIPLA Q.J. 25, 40 (2005).

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These six factors will be assessed in light of their compatibility to be applied in case of an automatic enforcement of the trademark logo on social media, as Chapter 4 determined this prerequisite crucial to any solution. Two factors, 1 and 5, are about the role of the alleged dilutor. Factor 1, the degree of similarity between a junior trademark logo and the famous senior trademark logo, can be determined in an objective and automatic way.67 Currently, software already exists that is able to detect copyrighted video on YouTube. Therefore from a technological point of view it is even easier to find static trademark logos. However, it is more difficult to find out whether the user of the mark or trade name intended to create an association68 with the famous mark,69 since intention is subjective. Therefore factor 5 is not suitable for an automatic test. In factors 2 and 3, the trademark holder is the protagonist. Factor 2, to determine the degree of inherent or acquired distinctiveness of the famous mark,70 seems superfluous, since the trademark has already passed the required minimum standard of distinctiveness, otherwise it would not have been registered in the first place. In any case, one can argue that it qualifies for protection. Factor 3, the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark, is irrelevant.71 It is completely to the discretion of the trademark holder whether he wants to engage in exclusive use of its trademark, or whether he wants to license its trademark. Factors 4 and 6 use external information from the relevant public: the degree of recognition of the famous mark,72 and the actual association between the mark or trade name and the famous mark.73 Factor 4, to find the relevant public and test whether they recognize the mark can be costly and difficult to automate. So is factor 6, to measure any actual association between the sign and the famous trademark. These factors are therefore less suitable for automation. The extent of proximity between the products or services of the senior famous mark and those of the junior mark has been suggested as another factor. One could imagine a continuum where, for example, steam

67 U.S. Code, Title 15, Chapter 22, subchapter III, § 1125(c)(2)(B)(i). 68 Read more about the associative pathways to the mind of the consumer by Alexander Simonson, How and When Do Trademarks Dilute: A Behavioral Framework to Judge Likelihood of Dilution, 83 TMR 149, 159–62 (1993). 69 U.S. Code, Title 15, Chapter 22, subchapter III, § 112 (c)(2)(B)(v). 70 Id., § 112 (c)(2)(B)(ii). 71 Id., § 112 (c)(2)(B)(iii). 72 Id., § 112 (c)(2)(B)(iv). 73 Id., §112 (c)(2)(B)(vi).

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shovels and lipstick are situated at each other’s extremes.74 One could come up with an algorithm which could be fed information about trademark class, customer class, ingredients used, and so on, so that the relative distance between goods or between services could be estimated (read about more problems related to classification of goods and services in Chapter 6.3). Until the advent of a workable algorithm the proximity between goods or services cannot be automatically measured. In short: only factor 1 is suitable for an automated way to determine whether there is a case of trademark dilution by blurring.

Trademark dilution by tarnishment In 1963 Anheuser-Busch brewery had spent 40 million dollars to promote their slogan ‘Where there’s life, there’s Bud’. Then Chemical Corp. of America, manufacturer of a floor wax with insecticide, modified this slogan by changing ‘Bud’ for ‘bugs’, thereby disparaging Budweiser, according to Anheuser-Busch, who tried to enjoin Chemical Corp.’s use of the modified slogan. The latter’s rebuttal was that their inspiration was John Gay’s famous line: ‘While there’s life, there’s hope, he cried’. In a temporary injunction the court ruled that Chemical Corp. should apply the word ‘bug killer’ to its slogan75 to avoid a ‘peculiarly unwholesome association of ideas’. One can question whether this is a big improvement, but the reasoning in Chemical Corp. of America, Inc. v Anheuser- Busch, Inc.76 was to make the two slogans more distinct from each other. In 1964 an interesting anonymous note was published in the Harvard Law Review that examined whether the scope of protection should include not only trademark dilution by blurring, but also trademark dilution by tarnishment.77 The anonymous writer determined that non- confusing use may also tarnish the affirmative mental associations which form part of the advertising value of the mark.78

74 Judge Learned Hand: ‘[I]t would be hard … for the seller of a steam shovel to find ground for complaint in the use of his trade-mark on a lipstick’. L.E. Waterman Co. v Gordon, 72 F.2nd 272, 273 (2d Cir. 1934). 75 Chemical Corp. of America v Anheuser-Busch, Inc., 306 F.2d 433, 437 (5th Cir. 1962), cert. denied, 372 U.S. 965 (1963). 76 Id. 77 ‘Tarnishment may even be an independent ground of relief’. Anonymous, Dilution: Trademark Infringement or Will-o-the-Wisp, 77 HARV. L. REV. 520, 525 (1963–64). 78 Id., at 522.

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In 1994, the Second Circuit decided Deere & Co. v MTD Products, Inc.,79 a double-identity dilution case: famous senior mark and junior mark were identical and used for competing products or services. MTD, a competing manufacturer of lawn tractors, developed and showed an animated commercial in which their MTD tractor altered Deere & Co.’s trademarked deer ‘from a proud, majestic deer, to one that was cowardly and afraid’.80 The court judged that the distorted version of the senior trademark in the commercial, although not confusing, could lead consumers to attribute unfavourable characteristics to the trademark and ultimately to the goods. In 1995 the FTDA81 became effective, which did not explicitly include dilution by tarnishment as a cause of action,82 but was nevertheless recognized in the Mattel cases in 200283 and 2003.84 But only since the TDRA of 2006 was dilution by tarnishment mentioned explicitly as a course of action.85 In 2009, in Starbucks Corp. v Wolfe’s Borough Coffee, Inc., Starbucks could not convince the court that Charbucks caused consumers to attribute unfavourable characteristics to their mark and ultimately associate their mark with inferior goods and services.86

79 Deere & Co. v MTD Products, Inc., 41 F.3d 39, 43 (2nd Cir 1994). 80 Id. 81 FTDA, supra note 56. 82 15 U.S.C. § 1125(c)(1). 83 Mattel, Inc. v MCA Records (Mattel), 296 F.3d 894 (9th Cir. 2002), paras 22 and 23. However, Judge Kozinski recognizes the possibility of tarnishment, ‘inappropriate for young girls’ and ‘tarnishing with negative associations’, he described the use as non-commercial, which constituted a statutory ‘exemption’ from the FTDA. 84 Mattel, Inc. v Walking Mountain Prods., 353 F.3d 792, 812 (9th Cir. 2003). The court held that Thomas Forsythe’s 78 ‘Food Chain Barbie’ photos portraying Barbie ‘in various absurd and often sexualized positions’ were artistic and parodic works and therefore non-commercial speech not subject to a trademark dilution claim. Rebecca Tushnet, Make Me Walk, Make Me Talk, Do Whatever You Please: Barbie and Exceptions, in INTELLECTUAL PROPERTY AT THE EDGE (Rochelle Dreyfuss and Jane Ginsburg, eds., Cambridge: Cambridge University Press, 2014), at 10. 85 Trademark Dilution Revision Act (TDRA), § 43(c) of the United States Trademark Act of 1946 amended by U.S. Title 15, Chapter 22, subchapter III, § 1125, ‘False designations of origin, false descriptions, and dilution forbidden’ (c) Dilution by blurring, dilution by tarnishment. 86 Supra, Chapter 2, note 209.

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Interestingly enough, the law does not give any factors that can be taken into account in relation to what constitutes trademark dilution by tarnishment.87 In the TDRA of 2006, dilution by tarnishment became an explicit ground for action.88 Dilution by tarnishment is an association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark,89 or in the words of the court in Deer & Co. v MTD Products, Inc.: ‘to evoke unflattering thoughts about the owner’s product’90 or service. Or to put it in another way: when the mark may lose its ability to serve as a ‘wholesome identifier’ of plaintiff’s product. As already pointed out above, there is no test for tarnishment in the US. Generally trademark dilution by tarnishment is assumed to be easier to recognize than trademark dilution by blurring. Deere & Co. v MTD Products, Inc.91 illuminated that dilution by tarnishment ‘is usually found where a distinctive mark is depicted in a context of sexual activity,92 obscenity,93 or illegal activity’.94

87 Simon Fhima, supra, Chapter 2, note 142, at 178. 88 Trademark Dilution Revision Act (TDRA), § 43(c)(2)(C): association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark. 89 U.S. Code, Title 15, Chapter 22, subchapter III, § 1125 (c)(2)(C). 90 Deere & Co. v MTD Prods., Inc., note 79, para 17. 91 Id., para. 20. 92 Joe-College.com sells without any authorization a number of T-shirts with trademarks of Kansas University which refer to sex and alcohol. University of Kansas v Sinks, 565 F.Supp.2d 1216 (D. Kan. 2008). In an earlier case, the uniforms of the Dallas Cowboys Cheerleaders were used in a sex movie, so that the business reputation of the Dallas Cowboys was injured. Dallas Cowboy Cheerleaders, Inc. v Pussycat Cinema, Ltd., 604 F.2d 200 (2d Cir. 1979). A recent example is Rodax Distributors Inc., which does business as Caballero Video, which received a temporary restraining order, barring it from selling its Ben & Cherry’s series of 10 DVDs with titles including ‘Peanut Butter D-Cups’ and ‘Boston Cream Thigh’ while a trademark suit is under way. Ben & Jerry’s Homemade Inc. v Rodax Distributors Inc., 12-cv-6734 (S.D.N.Y. 2012). 93 It is easy to see, after a video prank was posted on YouTube by two Domino employees doing distasteful things with food, that caused the revenue stream of the pizza chain to decrease significantly, supra, Chapter 4, note 19. 94 Coca-Cola sued Gemini Rising for selling a poster in the colours of Coca-Cola and text written in the characteristic curved lettering ‘enjoy Cocaine’, which was held not only to be distasteful but tarnishing to the Coca-Cola trademark. Coca-Cola Co. v Gemini Rising, Inc., 346 F. Supp. 1183 (DCNY 1972), at 1189.

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Denicola proposed to limit the scope of trademark dilution by tarnishment to only those cases where a junior user of the mark uses it for his own goods.95 However, this means that competitors can easily avoid claims of trademark dilution by tarnishment if they hire parodists to degrade the senior mark. Just like there is already filter software against pornography, it is possible to filter pornography or illegal activity in combination with a trademark. In other words one can ‘teach’ software to find by itself96 these categories of unsavoury content to which famous marks cannot be exposed on social media. Until that time there are broad categories of tarnishing use of a trademark that cannot be automatically recognized. In Chapter 9 it will be explained how trademark holders in case of ‘outbreaks’ of tarnishing use on social media can ‘vaccinate’ these systems, so that tarnishing use of trademarks on social media provision- ally can be tackled in a semi-automatic way. Hormel Foods97 made clear that a trademark may be tarnished when it is linked to products of shoddy quality,98 poor customer service,99 internet usage100 or is portrayed in an unwholesome or unsavoury context, with the result that the public will associate the lack of quality or lack of prestige in the defendant’s goods with the plaintiff’s unrelated goods.101 To automatically assess the subjective qualifications associated with a junior mark is not possible. In short: even before tarnishment was codified in the TDRA it was part of established case law. In contrast to trademark dilution by blurring, trademark dilution by tarnishment does not have any test which courts

95 Denicola, supra, Chapter 1, note 112, 202–3. 96 Nancy Owano, ‘Google Team: Self-Teaching Computers Recognize Cats’, Phys.org, 26 June 2012, accessed 9 February 2015 at: http://phys.org/ news/2012-06-google-team-self-teaching-cats.html. 97 Hormel Foods, supra, Chapter 2, note 91. 98 Use of the trademark on poor quality goods. Chewy Vuiton: Louis Vuitton Malletier SA v Haute Diggity Dog (Haute Diggity Dog), LLC 507 F. 3d 252, 268–9 (CA4 2007). In Dallas Cowboys v America’s Team, the defendants had used the trademark on products that misspelled the word basketball. Dallas Cowboys Football Club, Ltd. v America’s Team Properties, 616 F. Supp. 2d 622, 643 (ND Tex. 2009). 99 The New York City Triathlon, LLC v NYC Triath-Lon Club, Inc., 704 F. Supp. 2d 305, 323 (SDNY 2010), para. 36. 100 Nissan Motor Co. v Nissan Computer Corp., 2007 U.S. Dist LEXIS 90487 (CD Cal. 2007). 101 Hormel Foods, supra, Chapter 2, note 91.

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can apply. However, one can draw from the jurisprudence that for famous trademarks used in an unsavoury way, especially when associated with sexuality, obscenity or illegality, courts recognize that they can qualify this as tarnishing, but can decide to exempt the tarnishing trademark dilutor under certain circumstances (as will be discussed in Chapter 6.4).

Free-riding Although free-riding, misappropriation, or unfair competition, has not been included explicitly in the federal statutory protection against trademark dilution, it was recognized in Tiffany & Company v Tiffany Productions, Inc.102 Here, the defendant, a film producer, had chosen the jeweller’s mark with no plausible reason ‘except the desire to obtain the benefit of the reputation built up by the plaintiff at a great expense over a long period of years, even though there was no competition between the two undertakings’.103 Some more recent judgments where free-riding has been dealt with include Johnny W. Carson v Here’s Johnny Portable Toilets, Inc.104 in 1983 and Ty, Inc. v Perryman105 in 2002. To automate the enforcement of trademark use that is free-riding, separate from an automatic inference of trademark dilution by blurring, is difficult. If there is also dilution by blurring, they overlap and there is no need for any separate inference of free-riding.

Legislation and Case Law in the EU

Below a review of the most important legislation and case law in the EU will be provided, followed by an analysis of Article 5(2) Trademark Directive (parallel to Article 9(1)(c) Community Trademark Regulation), which provides a clear definition of trademark dilution. After this analysis one can assess the controversial judgment of the CJEU in Interflora, which derogates Article 5(2) Trademark Directive’s protection against unfair competition in favour of ‘principles inherent to competition’, in the absence of any trademark dilution, trademark infringement or trademark use adversely affecting the trademark functions.

102 Tiffany & Company v Tiffany Productions, Inc., 147 Misc 679, 264 NYS 459 (1932, NY Sup Ct), affd 237 App Div 801, 262 NYS, at 682. 103 Id. 104 Johnny W. Carson v Here’s Johnny Portable Toilets, Inc., 698 F.2d 831, 6 February 1983, (6th Cir. 1983). 105 Ty, Inc. v Perryman, supra note 15. Read Ilanah Simon Fhima, Dilution by Blurring: A Conceptual Roadmap, IPQ 44, 56 (2010).

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An ‘act of unfair competition’ means any act of competition contrary to honest business practices in industrial or commercial matters as defined in Article 10bis Paris Convention.106 Taking ‘unfair advantage of the distinctive character or the repute of the trade mark’ is the EU equivalent of free-riding, a term sometimes used in the US. It relates not to the detriment caused to the mark but to the advantage taken by the third party as a result of the use of the identical or similar sign. In other words, ‘an exploitation on the coat-tails of the mark with a reputation’.107 Trademark holders can protect their mark against trademark dilution in the EU according to Article 5(2) Trademark Directive,108 and its equivalent Article 9(1)(c) Community Trademark Regulation.109 Both deal with preventing third parties that, without permission, use in the course of trade a sign that is identical with or similar to a trademark with a reputation in relation to goods or services which are not similar to those for which the trademark is registered, and where use of that sign takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark. Trademark dilution can happen when the average consumer is able to attach the sign to inferior goods or to those whose connotations are incompatible with those of the trademark with a reputation. There needs to be a sufficient degree of knowledge of that senior trademark so that the public, when confronted by the junior mark, may possibly make an association between the two marks.110 ‘The Court of Justice has interpreted that wording as requiring a degree of similarity between the two marks which need not be such as to give rise to a likelihood of confusion but may merely have the effect that the relevant section of the public “establishes a link” between them’.111 Despite the formulation in Article 5(2) Trademark Directive and Article 9(1)(c) Community Trademark Regulation, trademarks can be protected against trademark dilution not only in relation to dissimilar goods and services, but also in relation to

106 Paris Convention, supra, Chapter 2, note 2. 107 Interflora refers to L’Oréal and Others, supra, Chapter 2, note 95, para. 41. Interflora, supra, Chapter 2, note 128, para. 74. 108 Supra, Chapter 2, note 11, and updated by Directive 2008/95/EC, supra, Chapter 5, note 15. 109 Supra, Chapter 2, note 36, and updated by Council Regulation (EC) No. 207/2009, supra, Chapter 5, note 16. 110 General Motors Corp. v Yplon SA (General Motors) (Case C-375/97), Judgment of the ECJ, 14 September 1999. Adidas v Marca Mode I (Case C-425/98), Judgment of the ECJ, 22 June 2000. 111 Intel v CPM, supra, Chapter 2, note 251.

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identical or similar goods or services as the ECJ explained in Davidoff112 and confirmed in Interflora.113 These so-called double-identity cases fall within the ambit of Article 5(1) and (2) Trademark Directive,114 which provides harmonized trademark dilution criteria (see the section below: ‘In relation to dissimilar goods’). Article 5(5) Trademark Directive115 states:

Paragraphs 1 to 4 shall not affect provisions in any Member State relating to the protection against the use of a sign other than for the purposes of distinguishing goods or services, where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.

Therefore, EU members might come up with legislation that protects the use of a sign other than for the purposes of distinguishing goods or services where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark. Interestingly enough Article 5(5) Trademark Directive116 lacks any criterion of ‘use in the course of trade’ which is explicitly mentioned in Article 5(1) and (2) Trademark Directive.117 Since Robelco NV v Robeco NV,118 it became clear that the implementation of Article 5(5) Trademark Directive119 is not part of harmonized EU law.120 As a consequence it cannot be dealt with by the CJEU. Any decision to implement such provision in the national law falls within the sovereign competence of each EU member state. Article 5(5) Trademark Directive121 was implemented into Article 2.20(1)(d) Benelux

112 Davidoff, supra, Chapter 2, note 248. 113 Interflora refers to other double-identity cases: Davidoff, supra, Chapter 2, note 248, para. 30; Adidas v Fitnessworld, supra, Chapter 2, note 250, paras 18–22, and Google France, supra, Chapter 2, note 95, para. 48. Interflora, supra, Chapter 2, note 128, para. 68. 114 Supra, Chapter 2, note 11. 115 Id. 116 Id. 117 Id. 118 Robelco NV v Robeco NV (Case C-23/01), Judgment of ECJ, 21 Novem- ber 2002. 119 Supra, Chapter 2, note 11. 120 Robelco NV v Robeco NV, supra note 118, paras 25, 30 and 31. 121 Id.

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Convention on Intellectual Property,122 a Belgium, Dutch and Luxem- bourg organization that grants so-called Benelux trademarks. Since 2002 the Benelux-Trademark Office has referred to the ECJ for preliminary rulings.123 Article 2.20 Benelux Convention on Intellectual Property states:124

(1) A registered trademark shall provide its owner with an exclusive right. Without prejudice to the possible application of ordinary law in matters of civil liability, the exclusive right to a trademark shall permit the owner to prevent any third party, without its consent, from: (d) using a sign for purposes other than those of distinguishing the goods or services, where use of the sign without due cause would take unfair advantage of or be detrimental to the distinctive character or the repute of the trademark.

To summarize the abovementioned legislation and case law: since 1991 the EU members have to implement the Trademark Directive which includes a provision to protect against dilution of their national trademarks. Since 1993 the provision in the Community Trademark Regu- lation to protect against dilution of the Community trademarks is binding on the EU members and directly applicable. The ECJ made clear that the public must be able to make an association between the junior and senior mark before there can be trademark dilution, and that a proprietor should be able to protect its trademark against trademark dilution in relation to not just dissimilar goods or services, but also in the case of identical goods or services. The protection of a trademark outside the course of trade, as Article 5(5) Trademark Directive makes possible, falls outside harmonized EU law, and is left to the member states. The Benelux member states have implemented Article 5(5) Trademark Directive via Article 2.20(1)(d) Benelux Convention on Intellectual Property. The EU provision of a protection against trademark dilution is formulated rather descriptively. Article 5(2) Trademark Directive states that a proprietor can prevent third parties from using a sign without permission that is identical or similar to its trademark with a reputation in relation to dissimilar goods or services if it ‘without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark’.

122 Benelux Convention on Intellectual Property (Trademarks and Designs) of 25 February 2005. 123 Campina Melkunie BV v Benelux-Merkenbureau (Case C-265/00), Judg- ment of ECJ, 12 February 2004. 124 Benelux Convention on Intellectual Property (Trademarks and Designs), supra note 122.

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The constituent parts of this definition will be analysed below:

– In relation to dissimilar goods or services; – Detriment to distinctiveness; – Detriment to repute; – Unfair advantage of the distinctive character; – Unfair advantage of repute; use without due cause

The distinctive feature of trademark dilution is that it protects trademarks with a reputation against unauthorized use of an identical or similar sign for dissimilar goods or services. However, the ECJ in Davidoff 125 made clear that the scope of protection against trademark dilution includes identical or similar signs in relation to identical or similar goods: so-called double-identity cases. These double-identity cases which take unfair advantage of or are detrimental to the distinctive character or the repute of the earlier trademark are controversial, since one can argue that the application of the trademark confusion doctrine is preferable in such a situation. Article 5(2) Trademark Directive’s wording126 seemed to exclude similar goods, according to Advocate General Jacobs’ opinion.127 The ECJ in David- off128 disagreed, and held that one should not interpret the Trademark Directive129 solely on the basis of its wording: one should take into account the overall scheme and objectives of the system of which it is a part.130 But the ECJ in Davidoff 131 contended that non-confusing double- identity cases should also be protectable. Article 5(1)(b) Trademark Directive132 is not suitable because it relates to cases with a likelihood of confusion. Therefore the ECJ made clear that non-confusing double- identity cases are eligible for protection under Article 5(2) Trademark

125 Davidoff, supra, Chapter 2, note 248. 126 Supra, Chapter 2, note 11. 127 Davidoff & Cie SA and Zino Davidoff SA v Gofkid Ltd (Case C-292/00), Opinion of Advocate General, 21 March 2002. 128 The ECJ interpreted Articles 4(4)(a) and 5(2) Trademark Directive ‘as entitling the Member States to provide specific protection for trade marks with a reputation in cases where the later mark is intended to be used or is used for goods or services identical with or similar to those covered by the earlier mark’. Davidoff, supra, Chapter 2, note 248. 129 Supra, Chapter 2, note 11. 130 Compare Article 31(2) Vienna Convention on the Law of Treaties, United Nations, 23 May 1969. 131 Davidoff, supra, Chapter 2, note 248. 132 Supra, Chapter 2, note 11.

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Directive. The ECJ reasoned that if Article 5(2) Trademark Directive133 was applicable to dissimilar goods then it would be a fortiori applicable to identical and similar goods and services, which could arguably be a bigger danger to a senior trademark.134

Detriment to distinctiveness Detriment to the distinctive character of a trademark with a reputation is the EU’s version of dilution by blurring.135 This occurs when the ability of the trademark to identify goods or services for which it is registered is weakened.136 The proprietor of a trademark with a reputation does not have to wait until dilution has destroyed its distinctive character, a likelihood of detriment of distinctiveness is sufficient.137 One can argue that it is detrimental to the distinctive character of a trademark logo if other proprietors use the identical trademark logo, gradually persuading internet users that the trademark logo is not a trademark designating the goods or services provided by one particular trademark holder, but a generic symbol for different goods or services that the trademarked logo is registered for (or in double-identity cases a generic symbol for the identical or similar goods or services). Just as with dilution by blurring in the US, the detriment to the distinctive character of the trademark could be automatically and objectively determined by comparing the degree of similarity between a junior trademark and a senior trademark with a reputation.

133 Id. 134 Davidoff, supra, Chapter 2, note 248. 135 ‘In my opinion blurring in the sense of watering down is analogous to a family name losing its ability to distinguish between different families as groups with a common origin’. Advocate General Jääskinen in Interﬂora Inc., Interflora British Unit v Marks & Spencer plc et Flowers Direct Online Limited (Case C-323/09), Opinion of Advocate General, 24 March 2011, footnote 65. 136 Interflora refers to L’Oréal and Others, supra, Chapter 2, note 95, paras 39 and 40. Interflora, supra, Chapter 2, note 128, para. 73. Interflora also refers to Advocate General Jääskinen in Interflora, id., para. 80: ‘detriment is caused to the distinctive character of a trade mark with a reputation when the use of a sign identical with or similar to that mark reduces the ability of the mark to distinguish the goods or services of its proprietor from those which have a different origin. At the end of the process of dilution, the trade mark is no longer capable of creating an immediate association, in the minds of consumers, with a specific commercial origin’. 137 ‘[W]ithout it being required to wait for the end of the process of dilution, that is to say, the total loss of the trade mark’s distinctive character’. Interflora refers to L’Oréal and Others, supra, Chapter 2, note 95, paras 39 and 40. Interflora, supra, Chapter 2, note 128, para. 77.

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Detriment to repute Detriment to the repute of a trademark with a reputation is the EU’s equivalent of dilution by tarnishment. It is caused when the goods or services for which the identical or similar sign is used by the third party may be perceived by the public in such a way that the trademark’s power of attraction is reduced.138

The reputation tainted or debased, devalued without due reason in such a way that the capacity of the mark to stimulate the desire to buy the kinds of good for which it is registered might be impaired. This can occur when the mark has been put in a context that is obscene or degrading or inappropriate or inherently unpleasant, or incompatible with the special image the earlier trademark has acquired in the eyes of the public, due to the promotional efforts of its owner.139

A clear illustration is the Claeryn/Klarein decision140 of the Benelux Court of Justice which asserted that the use of the Klarein detergent would negatively affect the persuasive advertising power of the mark for the Claeryn gin, which is pronounced the same way in Dutch. Simon Fhima pointed out that attention in the EU was focused on so-called dissonant goods.141 Then again, she explained that, so far, the CJEU has not expressed itself on the scope of tarnishment, in contrast to some Advocates General.142 Just like the US, there is no test for tarnishment in the EU.143

138 Interflora refers to L’Oréal and Others, supra, Chapter 2, note 95, paras 39 and 40. Interflora, supra, Chapter 2, note 128, para. 73. 139 OHIM, The Manual Concerning Opposition – Part 5, Article 8(5) CTMR, at 38. 140 Colgate-Palmolive v Bols (Claeryn v Klarein), Benelux Court of Justice, 1 March 1975, N 1975, 472. Kamperman Sanders, supra, Chapter 2, note 79, at 57. 141 Simon Fhima, supra, Chapter 2, note 142, at 175. 142 Id., at 175. An example is Advocate General Sharpton, who proposed criteria for what constitutes liability for damage of the reputation of the trademark, in relation to repackaging and parallel import. One can avoid becoming liable by ensuring that the packaging is not defective, of poor quality or untidy; and that the importer gives notice to the trademark owner before the repackaged product is put on sale, and, on demand, supplies him with a specimen of the repackaged product. Boehringer Ingelheim KG and Others v Swingward Ltd and Dowelhurst Ltd (Case C-348/04), Opinion Advocate General, 26 April 2007, para. 17(4) and (5). 143 Id., at 178.

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Just as with dilution by tarnishment in the US, the protection against the detriment to the repute of the trademark could be semi-automated against ‘outbreaks’ that are detrimental to the reputation of the trademark, as will be explained in Chapter 9 ‘Implementation of a Paradigm Shift’.

Unfair advantage of the distinctive character If an unauthorized use of the trademark did not cause detriment to the distinctiveness of the trademark it can still take unfair advantage of the distinctive character of the trademark. ‘Unfair advantage of distinctiveness covers cases where the applicant benefits from the attractiveness of the earlier right by affixing on his goods a sign which is widely known in the market, misappropriating thus its attractive powers and advertising value’.144 Misappropriation of the distinctiveness of the trademark with a reputation, also known as free-riding or commercial parasitism, can happen when there is an association between the senior and junior trademark which renders possible the transfer of attractiveness to the junior trademark.145 Three opposition cases illustrate in what kind of scenarios a transfer of the attractiveness of the senior trademark to a junior mark can take place. In Comité International Olympique v Belmont Olympic S.A., the International Olympic Committee opposed the registration of the Com- munity trademark ‘Family Club Belmont Olympic’, which included the word ‘Olympic’, which would ‘immediately add value thereto, because it will make it both easier to remember as a whole, as it is built around a reputed sign, and more attractive, as all the highly regarded concepts relating to the Olympic Games will be also reflected in the later mark’.146 In the Lipostatin/Lipostat case, the Community Trademark application of Lipostatin for the product classes which included hair lotion and food was opposed by Lipostat, which was registered in the product class for pharmaceuticals. It was held that there was the risk that some of the qualities of Lipostat’s goods would be attributed to those of Lipostatin, especially because of the proximity of the markets in the respective

144 OHIM Opposition Guidelines, Part 5, Article 8(5) Community Trademark Regulation – Status: March 2004, at 40. 145 Id. 146 Decision No. 81/2000 of the Opposition Division of 25 January 2000, Comité International Olympique v Belmont Olympic S.A.,at12.

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product classes, so that the extension of Lipostat into Lipostatin’s product classes was conceivable.147 In Formula One Licensing B.V. v Produits Petroliers Organisation S.A., Formula One Licensing appealed, to no avail, the rejection of its opposition against the registration of Community trademark Kennol f1. Based on earlier rights, all variations of Formule 1 trademarks, which are known for goods and services associated with the motor sport and/or motor industry in general and the Championship in particular would therefore take unfair advantage of the distinctiveness of Formula One,148 and would also preclude this trademark holder the possibility of further licensing and merchandizing even outside its natural market sector.149 In other words, the chance that taking unfair advantage of distinctiveness occurs is especially high where the trademark’s distinctiveness is very strong, or if the junior mark is used for products that are within the reach of the trademark’s natural extension of products, or outside of this extension when the distinctiveness of the trademark is very suitable for licensing or merchandizing.150 The intention of the party that takes unfair advantage of distinctiveness is not relevant.151 Just as with free-riding in the US, it is difficult to automatically determine that there is unfair advantage of the distinctive character of the trademark.

Unfair advantage of repute Instead of detriment of repute, there can be an unfair advantage of repute. Unfair advantage of repute cases concern those where the defendant profits from the renown of the opponent’s trademark by unduly exploiting its prestige. In L’Oréal and Others,152 unfair advantage of repute was described as ‘exploitation on the coat-tails of the mark with a reputation’.153 Unfair advantage of repute is focused on the quality image of the mark. So, the mark has acquired not only a high degree of recognition

147 Lipostatin/Lipostat, (Case R 1007/2000-1), OHIM decision 30 November 2001. See also European Perspectives, ‘Make Your Marks’, accessed 9 February 2015 at: http://www.jenkins.eu/mym-autumn-2002/alicante-abstracts-.asp. 148 Formula One Licensing B.V. v Produits Petroliers Organisation S.A. (Case R 957/2001-1), OHIM decision, 17 December 2002, at 5, para. 6. 149 OHIM Opposition Guidelines, supra note 144, at 41. 150 Id. 151 Id. 152 L’Oréal and Others, supra, Chapter 2, note 95. 153 Id., para. 41.

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amongst consumers, but a good or special reputation as well. The plaintiff needs to prove this added value. This is especially difficult if not impossible to automate.

Use without due cause Even though ‘use without due cause’154 is a necessary element of protection against trademark dilution, it is not reasonable to expect that the opponent proves a negative fact, such as the absence of due cause. Simon Fhima explained that in the absence of any indications on the face of the evidence providing an apparent justification for the applicant’s acts, the lack of due cause must be generally presumed.155 However, the applicant may avail himself of the possibility of rebutting such a presumption by showing that he has one of the legitimate justifications that entitles him to act in this particular manner. Chapter 6.4 ‘Defences’ elaborates on how the phrase ‘use without due cause’ provides a link between trademark dilution and the defences and discretion of the court to exempt trademark use.

Interflora In 2011, in Interflora,156 trademarks were unauthorizedly used as keywords triggering advertisements. The CJEU confirmed that Article 5(2) Trademark Directive157 and Article 9(1)(c) Community Trademark Regu- lation158 must be interpreted so that a proprietor can prevent a competitor from advertising on the basis of a keyword corresponding to that trademark, whereby the competitor takes unfair advantage of the distinctive character or repute of the trademark (free-riding), or where the advertising is detrimental to that distinctive character (trademark dilution by blurring) or to that repute (trademark dilution by tarnishment).159 But then the CJEU held that a proprietor is not entitled to prevent keyword triggered advertisements by competitors which put forward an alternative

154 Article 5(2) Trademark Directive states that reputation in the member state of the trademark is an express precondition for proprietors to prevent third parties not having their consent using their trademark in the course of trade for dissimilar products or services where the latter has a reputation in the member state and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark. Supra, Chapter 2, note 11. 155 Simon Fhima, supra, Chapter 2, note 142, at 228. 156 Interflora, supra Chapter 2, note 128. 157 Supra, Chapter 2, note 11. 158 Supra, Chapter 2, note 36. 159 Interflora, supra, Chapter 2, note 128, para. 96(2).

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to the goods or services of the proprietor of that mark, if the competitor is not offering a mere imitation of the goods or services of the proprietor of that trademark, without causing dilution or tarnishment and without adversely affecting the functions of the trademark with a reputation. In short the CJEU held that if a competitor uses a trademark unauthorizedly for keyword triggered advertising of a competitor, it is able to do so, if it withholds from dilution by blurring, dilution by tarnishment and is not adversely affecting the functions of the trademark. Article 5(2) Trademark Directive160 provides a separate protection against ‘unfair advantage to the distinctive character or repute of the trademark’, also known as free-riding or unfair competition. Advocate General Jääskinen in his opinion on Interflora seems to take free-riding more seriously: proprietors should be able to prevent use of their trademark if an ‘advertiser attempts thereby to benefit from its power of attraction, its reputation or its prestige, and to exploit the marketing effort expended by the proprietor of that mark in order to create and maintain the image of that mark’.161 However, the CJEU held that in this keyword triggered advertising case the protection ground against unfair competition lost out against ‘practices inherent in competition’. Apparently the CJEU finds the possibility of keyword triggered advertisements more important than protecting proprietors against trademark dilution. The CJEU, however, agrees with the Advocate General162 that keyword triggered advertising is detrimental to the distinctive character of a trademark with a reputation if it contributes to turning that trademark into a generic term.163 In other words, proprietors should be able to protect their trademark against trademark dilution by blurring. One can question whether the competitor making use of the proprietor’s trademark reputation via keyword triggered advertising really withheld from dilution by tarnishment and from adversely affecting the advertising and investment functions of the trademark by diverting potential consumers. Besides, trademarks used as keyword triggered advertisements could lead to dilution by tarnishment. The proximity of the keyword triggered advertisement to the organic results of the famous trademark can influence internet users’ perceptions in such a way that the famous mark will be tarnished. There have not been many dilution by tarnishment

160 Supra, Chapter 2, note 11 161 Supra note 135, para. 107(2)(B). 162 Id. 163 Interflora, supra, Chapter 2, note 128, para. 96(2).

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cases thus far for keyword triggered advertisements, but an example could be: a non-exclusive outlet known for shoddy products using the trademark Louis Vuitton for selling genuine Louis Vuitton products. Competitors that unauthorizedly use a trademark of a third party as a keyword triggering advertisement piggyback on the reputation of this trademark, thereby saving money the third party has invested in marketing and advertising, this adversely affects the advertising function of the proprietor’s trademark. One can also argue that the investment function of the trademark will be adversely affected, because if a famous mark wants to buy advertisements that are triggered by its own name it has to pay a premium because of the bids by junior marks. The CJEU failed to appreciate that trademarks with a reputation that are unauthorizedly used as keyword triggering advertisements of a competitor adversely affect the essential function of the trademark: as an indicator of the source of origin. Instead of shortcutting the search process of internet users, their search process is diverted away from the trademark they were looking for, although Google makes a minor distinction using a slight colour difference and placement between keyword triggered advertisements and organic results.164 Philips posed the useful question how the advertiser is attempting to benefit from the power of attraction,165 reputation, prestige of a trademark and exploit the marketing effort of the trademark holder, if the internet user already typed in the trademark as keyword.166 To give an answer to this question, one could compare the situation of keyword triggered advertisements with that of asking where one can find a certain brand of product in a supermarket. A supermarket employee takes one along the aisles to the right shelf. Here one sees the branded product flanked by house branded products. The difference between the search in the supermarket and on the internet is that the latter concerns a digital medium that has the potential to be much more effective and efficient in

164 ‘People are only noticing retrospectively that the visual distinction between Google search results and advertising has diminished over the years. You hardly see the difference between paid links on top of the page and search results beneath. So it is easier to click on advertisements (including accidentally) and generate Google revenue’. Olsthoorn, supra, Chapter 3, note 73. 165 Intel v CPM, supra, Chapter 2, note 251, at 18, quoting Adidas v Fitnessworld, supra, Chapter 2, note 250. 166 Jeremy Philips, Google AdWords: Trade Mark Law and Liability of Internet Service Providers, in GOOGLE AND THE LAW, supra, Preface, note 2, at 66.

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shortcutting one’s search process. Bechtold and Tucker researched the influence of keyword triggered advertisements on the search process of two groups of internet users.167 One group was looking for a certain brand and the other group for a certain product. The group looking for a certain brand needed a bit more time to find what they were looking for, and the group looking for a certain product found it a bit faster. Therefore, one can conclude that when trademarks are used as keyword triggering advertisements the internet users looking for a certain brand need more time, hence adversely affecting the source function of the trademark of which shortcutting the search process is its raison d’être.

Preconditions for ProtectionAgainst Trademark Dilution

After the legislation and case law of trademark dilution in the US and unfair advantage of or detriment to the distinctive character or repute of the trademark in the EU, this chapter follows with prerequisites of the anti-trademark dilution measures. First the degrees of distinctiveness will be covered, including a classification of trademarks into four categories (generic, descriptive, suggestive and arbitrary marks), dependent on their distinctiveness. Then the degree of fame, reputation or well-knownness, the precondition to trademark dilution in the US and in the EU will be examined. Finally the chapter discusses the problems with identical trademarks for dissimilar goods or services, which are caused by globalization and the internet and unclear boundaries of goods and services classifications.

Degrees of Distinctiveness

Distinctiveness plays a dual role in trademark law. The first role: to register a sign as a trademark it needs to qualify as inherently distinctive or otherwise have acquired distinctiveness.168 The second role is that the degree of distinctiveness determines the scope of protection granted to a

167 Bechtold, Stefan, and Catherine Tucker, Trademarks, Triggers and Online Search, March 2013 11(4) J. OF EMP. LEG. STUDIES 718 (2014). 168 A non-distinctive trademark can be registered once it has acquired distinctiveness/secondary meaning recognized in a relevant universe of consumers after that mark was extensively used, for example via advertising. This concept of having acquired secondary meaning is known in German as Frei- haltebedürfnis.

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trademark.169 If the distinctiveness of a trademark is to be evaluated to see whether a trademark deserves extended protection against trademark dilution, then its distinctiveness is being evaluated for a second time. The first time was to see whether the sign reached the threshold of sufficient distinctiveness so that it could be registered as a trademark. To do a distinctiveness evaluation twice is redundant. In ‘The Rational Basis of Trademark Protection’,170 Schechter clarified the relation between the need for protection and the degree of distinctiveness: ‘The more distinctive or unique the mark, the deeper is its impress upon the public consciousness, and the greater its need for protection against vitiation or dissociation from the particular product in connection with which it has been used’.171 Schechter asserted that the more distinctive the mark, the more effective is its selling power.172 Therefore it was his opinion that ‘coined, invented, fanciful or arbitrary marks’ deserve to have extensive protection, that is, beyond protection against confusion.173 Simon Fhima’s critique of Schechter was that his only criterion for protection is coined, arbitrary or fanciful marks, regardless whether these goods are perceived as satisfactory or unsatisfactory: ‘This conveyance of poor quality could serve a useful consumer information function, but then it seems strange to vest such rights in the mark owner who has produced such unsatisfactory products’.174 However, this author begs to differ: whether a good is perceived as satisfactory or unsatisfactory is subjective and can differ from one customer to the next. Therefore, it can be argued that the protection of goods that are unique, since their marks are coined, arbitrary or fanciful, and therefore can be recognized no matter whether they are valued in a positive or negative way, is rational. The need for protection of this uniqueness is arguably a fortiori of importance in case a good is perceived as unsatisfactory, so that it can be avoided in the future.

169 ‘As the distinctiveness of the mark is the quality that the statute endeavors to protect, the more distinctiveness the mark possesses, the greater the interest to be protected’. Nabisco, Inc. v PF Brands, Inc, 191 F.3d 208; (31 August 1999) U.S. App. LEXIS 20786; 51 U.S.P.Q.2D (BNA) 1882. 170 Schechter, supra, Chapter 1, note 83. 171 Schechter, id., at 825. 172 Schechter, id., at 819. 173 Schechter, id., at 829. 174 Simon Fhima, supra note 105, at 6.

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In Zatarains, Inc. v Oak Grove Smokehouse, Inc.,175 a classification of trademarks is given. Four categories of trademarks can be distinguished: generic, descriptive, suggestive and arbitrary marks. The generic trademark, also known as proprietary eponym, is the common name for the kind of product instead of indicating the source of the product. Generic marks are not protected under the Lanham Act and are subject to cancellation of registration.176 Advocate General Jääskinen in Interflora177 makes a distinction between a trademark becoming banal and thereby losing its distinctiveness, caused by dilution of the trademark for dissimilar goods, and the risk of degeneration, the trademark becoming a generic term or common noun, so that genericide of the trademark takes place for the same kind of products. The latter also ‘indicates a loss of distinctiveness but of a different nature than dilution in the sense of the trade mark becoming watered down’.178 In Alvin M. Marks v Polaroid Corp,179 the court gave a definition of genericide: ‘That a well known trademark does not become generic unless it has lost all trademark meaning, not only within part of the general public but within the entire industry and trade’.180 Examples of genericide happened to Aspirin,181 Cellophane182 and Shred- ded Wheat.183 Trademark holders need to create a body of proof for the purpose of avoiding a charge of constructive abandonment in the future.184 That is why, for example, a company such as Google explicitly

175 Zatarains, Inc. v Oak Grove Smokehouse, Inc., 698 F.2d 786, 791 (5th Cir. 1983). 176 15 U.S.C. § 1064(3), Lanham Act. 177 Opinion of Advocate General Jääskinen, Interﬂora, supra note 135, para. 82. 178 Id. 179 Alvin M. Marks v Polaroid Corp., 129 F. Supp. 243, 105 U.S.P.Q. 10 (D. Mass. 1955). 180 Id. 181 Aspirin: Bayer & Co., Inc. v United Drug Co., supra, Chapter 2, note 90. 182 Cellophane: DuPont de Nemours & Co. v Waxed Products Co., 85 F.2d 75 (2d Cir. 1936), modifying 6 F. Supp. 958 (E.D.N.Y. 1934) cert. denied, 299 U.S. 601 (1936). 183 Shredded Wheat: Kellogg Co. v National Biscuit Co., 305 U.S. 111 (1938). 184 Constructive abandonment of a trademark can be by commission, acts that use the trademark in a generic way, or by omission, lacking to write letters protesting the use of the trademark in a generic way.

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objects internationally that its trademark Google is used as a verb, conjugated or not.185 A descriptive trademark describes the qualities or laudatory characteristics of a product. If a term requires imagination, thought and perception to reach a conclusion as to the nature of goods it is not descriptive. Another test is whether competitors would be likely to need the terms used in the trademark in describing their products. If so, the trademark is descriptive. Another indication is the extent to which a term actually has been used by others marketing a similar service or product. Descriptive marks are only protected if and to the extent that they have acquired secondary meaning in the minds of the consuming public. Machat wrote that if one incorporates a descriptive or generic word in a trademarked name or logo, it can advertise to or inform the public about the function or attributes of a product.186 The other side of the coin is, however, that the chances increase that the public will get confused because other businesses use those same descriptive or generic words to describe their product. For this reason the trademark registrar can oblige the registrant to disclaim the use of the descriptive or generic words in the logo or name as a precondition to registration. A suggestive mark ‘suggests, rather than describes, some particular characteristic of the goods or services to which it applies and requires the consumer to exercise the imagination in order to draw a conclusion as to the nature of the goods and services’.187 In Coca-Cola Co. v Koke Co.,188 the infringer of Coca-Cola tried to use as a defence that the trademark Coca-Cola in combination with an illustration of coca leaves and nut suggested that cocaine was still used, and because of this alleged fraudulent representations to the public, the plaintiff had lost its claim to any help from the court. Justice Holmes did not concur: ‘Coca-Cola probably means to most persons the plaintiff’s familiar product to be had everywhere, rather than a compound of particular substances’.189 Arbitrary or fanciful marks, which come into being out of the imagination, are invented marks. They do not bear any relationship to the products or services to which they are applied.

185 Mike Wheatley, ‘Google Wins “Ungoogleable” Usage Fight in Sweden, but at What Cost to Its Brand?’, Silicon Angle, 26 March 2013, accessed 9 February 2015 at: http://siliconangle.com/blog/2013/03/26/google-wins- ungoogleable-usage-fight-in-sweden-but-at-what-cost-to-its-image/. 186 Machat, supra, Chapter 5, note 57, at 832–3. 187 Zatarains, Inc. v Oak Grove Smokehouse, Inc., supra note 175, para. 20. 188 Coca-Cola Co. v Koke Co., 254 U.S. 143 (1920), at 146. 189 Id.

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Suggestive, arbitrary and fanciful marks are considered per definition distinctive and are protected without proof of secondary meaning. However, as pointed out in Abercrombie & Fitch,190 the lines of de- marcation between distinctive and invented marks are not always bright:

Moreover, the difficulties are compounded because a term that is in one category for a particular product may be in quite a different one for another, because a term may shift from one category to another in light of differences in usage through time, because a term may have one meaning to one group of users and a different one to others, and because the same term may be put to different uses with respect to a single product.191

Heymann asserted that the hierarchy used in Abercrombie & Fitch,192 which rewards the creativity inherent in a trademark and supported a Lockean notion of trademarks, should be substituted by a linguistic analysis.193 In such an analysis only trademarks that are not meta- phorically used, do not appear in lower case and are exclusively used as an adjective and never as a noun or verb, are to be preferred over those that do.194 Since the distinctiveness of trademarks can be acquired, a more useful distinction might be between those trademarks that symbolize a brand with a personality and those that symbolize a brand without personality. Professor Tan called the first kind alpha brands.195 The implication for these alpha brands is that they should accept that they will be referenced more by other brands. In a similar vein, Beebe advocated that only extraordinary marks would be eligible for the extended protection against trademark dilution.196

190 Abercrombie & Fitch Co. v Hunting World, Inc. (Abercrombie & Fitch), 537 F.2d 4 (2d Cir. 1976). 191 Id. 192 Id. 193 Laura A. Heymann, The Grammar of Trademarks, 14 LEWIS & CLARK L. REV. 1313, 1332–3 (2010). 194 Heymann, id., 1330–43. 195 David Tan, Affective Transfer and the Appropriation of Commercial Value: A Cultural Analysis of the Right of Publicity, 9 VA. SPORTS & ENT. L.J. 272 (2010). 196 Beebe, supra, Chapter 2, note 87, 1158 (2006).

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Degree of Fame, Reputation or Well-Knownness

Despite Schechter’s proposal to give arbitrary, coined or fanciful trademarks extended protection against dilution, the prerequisite for extended protection against dilution was and is still given to those marks that are famous in the US or have a reputation in the EU. Schechter did not propose his criteria because unusual names sell per se. Instead, he proposed these as prerequisites for extended protection, because the uniqueness or arbitrariness, which one could see as a manifestation of a strong mark197 is important, simply to be able to distinguish one trademark from the other. The idea behind the precondition for trademark dilution is that if the trademark is not famous or does not have a reputation there is nothing to dilute. However, this assumes that famous trademarks or trademarks with a reputation deserve to be more protected than non-famous trademarks or trademarks without a reputation, an untenable position as this chapter will demonstrate. The prior mark must have obtained its famous status, or reputation, prior to the first use of the allegedly diluting mark to qualify for dilution protection. To prove that one’s trademark was famous or had a reputation, sometimes years ago, might be a more practical challenge.

Famous Trademark in the US

When the TDRA came into effect, 15 U.S.C. § 1125(c)(2)(A)198 codified some factors that courts could take into account when determining whether a trademark possesses ‘the requisite degree of recognition’:

(i) The duration, extent, and geographic reach of advertising and publicity of the mark, whether advertised or publicized by the owner or third parties. (ii) The amount, volume, and geographic extent of sales of goods or services offered under the mark. (iii) The extent of actual recognition of the mark. (iv) Whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register’.

197 Norman Siebrasse, supra, Chapter 2, note 151, at 33, footnote 106. 198 15 U.S.C. § 1125(c)(2)(A).

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This non-exhaustive list of factors substitutes the Nabisco, Inc. v PF Brands, Inc.199 factors that were applied under the FTDA. The TDRA200 changed the fact that a trademark could be famous with some niche of the population, as was decided in the pre-TDRA Moseley v V Secret Catalogue, Inc.201 case by the Supreme Court. As of 2006, a famous mark must be ‘widely recognized by the general consuming public of the United States’.202 According to Professor Fisher, US courts use in practice the following eight-factor test to see whether a mark is famous,203 which is predominantly the same as 15 U.S.C. § 1125(c)(2)(A),204 except for factor 7:

1. the degree of inherent or acquired distinctiveness of the mark;205 2. the duration and extent of use of the mark in the identified field; 3. advertising and publicity; 4. the geographic area in which the mark is used; 5. the channels of trade; 6. the trade’s recognition of the mark; 7. whether third parties also use the mark; and 8. whether the mark is federally registered.

199 The Second Circuit in Nabisco, Inc. v PF Brands, Inc. provided a five-factor test to see whether a claim of dilution under the FTDA is justified: (1) the senior mark must be famous; (2) it must be distinctive; (3) the junior use must be a commercial use in commerce; (4) it must begin after the senior mark has become famous; and (5) it must cause dilution of the distinctive quality of the senior mark. Nabisco, Inc. v PF Brands, Inc., supra note 169. 200 Trademark Dilution Revision Act (TDRA), § 43(c) of the United States Trademark Act of 1946 amended by U.S. Title 15, Chapter 22, subchapter III, § 1125, ‘False designations of origin, false descriptions, and dilution forbidden’ (c) Dilution by blurring, dilution by tarnishment. 201 Supra, Chapter 2, note 206. 202 15 U.S.C. § 1125(c)(2)(A). 203 William Fisher, ‘Overview of Trademark Law’, Harvard Law School, accessed 9 February 2015 at: http://cyber.law.harvard.edu/metaschool/fisher/ domain/tm.htm#8. 204 15 U.S.C. § 1125(c)(2)(A). 205 In contrast to FTDA, TDRA explicitly includes the protection against dilution by including the degree of ‘inherent or acquired distinctiveness’ as one of the relevant factors.

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Trademarks with a Reputation in the EU

Advocate General Sharpston articulated in her opinion on Intel Corp. v CPM UK Ltd.206 in 2008 the paradox that trademarks with a reputation are especially vulnerable to the existence of similar marks in dissimilar product areas where actual confusion is unlikely. To counter these challenges member states have the option to grant extended protection to trademarks with a reputation.207 All member states effectively have done so. First the relevant articles of the Trademark Directive208 and Com- munity Trademark Regulation209 will be provided. Then the word ‘reputation’ is clarified.

Reputation Article 5(2) Trademark Directive210 states that reputation in the member state of the trademark is an express precondition for proprietors to prevent third parties not having their consent using their trademark in the course of trade for dissimilar goods or services where the latter has a reputation in the member state and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trademark. The ECJ in PAGO International GmbH 211 explained that a Community trademark must be known by a significant part of the public concerned by the goods or services covered by that trademark in a substantial part of the territory of the European Community and that the territory of one member state of the EU may be considered such a substantial part.212

206 ‘In an apparent paradox, the best known trade marks are particularly vulnerable to the existence of similar marks even in highly dissimilar product areas, where actual confusion is unlikely’. Advocate General Sharpston in Intel Corporation Inc. v CPM United Kingdom Ltd (Case C-252/07), Opinion of Advocate General, 26 June 2008, para 8. 207 Preamble 10 Trademark Directive. Notice that the geographical scope of the reputation is not mentioned here. Supra, Chapter 2, note 11. 208 Id. 209 Supra, Chapter 2, note 36. 210 Id. 211 PAGO International GmbH v Tirolmilch registrierte Genossenschaft mbH (PAGO International GmbH) (Case C-301/07), Judgment of the ECJ, 6 October 2009. 212 Id., para. 30.

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Article 9(1)(c) Community Trademark Regulation213 is the parallel provision to Article 5(2) Trademark Directive.214 Besides an article to avert use of the trademark for dissimilar use, both the Trademark Directive215 and Community Trademark Regulation216 also have an article to refuse or invalidate the registration of the already registered trademark for dissimilar use, as described below. Article 4(3) Trademark Directive217 provides grounds for refusal or invalidity of a trademark that is registered for dissimilar goods or services of an earlier Community trademark which has a reputation in the Community and where the use of the later trademark without due cause would take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier Community trademark. Article 4(4)(a) Trademark Directive218 is the optional version of Article 4(3) Trademark Directive219 and is focused on protecting the earlier national trademark. An express condition for Article 4(4)(a) Trademark Directive220 is that the earlier trademark has a reputation in the member state concerned. Article 8(5) Community Trademark Regulation221 is the parallel provision to Article 4(3) Trademark Directive.222 The only difference is that the regulation distinguishes between an earlier Community trademark which needs to have a reputation in the Community, and an earlier national trademark which needs to have a reputation in the member state concerned. There is no definition of ‘reputation’ in the Trademark Directive,223 nor in the Community Trademark Regulation.224 In General Motors,225 the ECJ explained that the translations of the word ‘reputation’ into the different languages of the EU can be divided into two groups. The first group consisting of translations of the word ‘reputation’ into German, Dutch and Swedish are words that signify that the trademark must be

213 Supra, Chapter 2, note 36. 214 Supra, Chapter 2, note 11. 215 Id. 216 Supra, Chapter 2, note 36. 217 Supra, Chapter 2, note 11. 218 Id. 219 Id. 220 Id. 221 Supra, Chapter 2, note 36. 222 Supra, Chapter 2, note 11. 223 Id. 224 Supra, Chapter 2, note 36. 225 General Motors, supra note 110, para. 21.

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known without indicating the extent of knowledge required. The second group of words consisting of translations of the word ‘reputation’ are words that imply a quantitative level of a certain degree of knowledge required amongst the public.226 The ECJ confirmed that the degree of knowledge required must be considered to be reached when the earlier mark is known by a significant part of the public concerned by the goods or services covered by that trademark,227 conforming to Article 5(2) Trademark Directive.228 This knowledge threshold229 is deemed to have been reached when a trademark is known by a significant part of the public concerned by the products or services covered by the mark.230 To assess whether a significant part of the public knows the trademark, it is not sufficient to apply a percentage, as General Motors explained.231 Instead, the ECJ made it clear that all relevant facts of the case must be taken into account, ‘in particular the market share held by the trade mark, the intensity, geographical extent and duration of its use, and the size of the investment made by the undertaking in promoting it’.232 Because of these interpretations of reputation, the EU trademark system has a broader eligibility for dilution protection than that of the US trademark system. Then again, the US trademark system compensates for its narrower eligibility for dilution protection with a broader protection

226 Id. 227 Id., para. 26. 228 ‘In so far as Article 5(2) of the Directive, unlike Article 5(1), protects trade marks registered for non-similar products or services, its first condition implies a certain degree of knowledge of the earlier trade mark among the public. It is only where there is a sufficient degree of knowledge of that mark that the public, when confronted by the later trade mark, may possibly make an association between the two trade marks, even when used for non-similar products or services, and that the earlier trade mark may consequently be damaged’. General Motors, supra note 110, para. 23. 229 ‘The degree of knowledge required must be considered to be reached when the earlier mark is known by a significant part of the public concerned by the products or services covered by that trade mark’. General Motors, supra note 110, para. 26. 230 ‘The public amongst which the earlier trade mark must have acquired a reputation is that concerned by that trade mark, that is to say, depending on the product or service marketed, either the public at large or a more specialised public, for example traders in a specific sector’. General Motors, supra note 110, para. 24. 231 ‘It cannot be inferred from either the letter or the spirit of Article 5(2) of the Directive that the trade mark must be known by a given percentage of the public so defined’. General Motors, supra note 110, para. 25. 232 General Motors, supra note 110, para. 27.

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under the trademark infringement, using the likelihood of confusion doctrine, so that the two legal systems de facto lead to similar outcomes.233 ‘Reputation’ in the Community Trademark Regulation234 has the same meaning as in the Trademark Directive.235 The OHIM Manual Concern- ing Opposition confirmed that ‘the limited size of the relevant market should not be regarded in itself as a factor capable of preventing a mark from acquiring a reputation within the meaning of Article 8(5) [Com- munity Trademark Regulation], as reputation is more a question of proportions and less of absolute numbers’.236 It continued that: ‘[a]s the economic value of reputation is also the protected subject-matter of this provision, any qualitative aspects thereof are of relevance when assessing the possibility of detriment or unfair advantage ‘.237 A difference between the Trademark Directive238 and the Community Trademark Regulation239 is that the Community trademark should have a reputation in a substantial part of the territory of the Community. As already pointed out above in PAGO International GmbH,240 the CJEU interpreted substantial part of the territory of the Community to be at least one member state. Simon Fhima wrote that in the case of proving detriment of repute, the EU version of dilution by tarnishment, trademark holders need not only to show that their senior trademark has a reputation, but also what kind of reputation: for example, that those consumers have a positive image.241 Simon Fhima rightly argued that one might expect an automatic assumption that trademarks have positive reputation: the plaintiff should not be unnecessarily burdened to prove a positive image of his trademark, instead, the defendant should have the burden to prove otherwise.242

233 Marcus Luepke, Taking Unfair Advantage or Diluting a Famous Mark: A 20/20 Perspective on the Blurred Differences Between U.S. and E.U. Dilution Law, 98 TMR 789 (2008). 234 Supra, Chapter 2, note 36. 235 Supra, Chapter 2, note 11. 236 Supra, note 144, at 11. 237 Id., at 10. 238 Supra, Chapter 2, note 11. 239 Supra, Chapter 2, note 36. 240 PAGO International GmbH, supra note 211. 241 Simon Fhima, supra, Chapter 2, note 142, at 175. 242 Id., at 177.

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Famous Trademarks, Trademarks with a Reputation and Well-Known Trademarks

The WIPO Recommendation concerning provisions on the protection of well-known marks confirmed that the term wellknown can be explained in a quantitative sense. Article 2(2)(b) WIPO Recommendation243: ‘Where a mark is determined to be well known in at least one relevant sector of the public in a Member State, the mark shall be considered by the Member State to be a well-known mark’. Article 2(2)(c) WIPO Recommendations: ‘Where a mark is determined to be known in at least one relevant sector of the public in a Member State, the mark may be considered by the Member State to be a well-known mark’. Advocate General Jacobs explained the difference between the term ‘well-known’ in Article 6bis Paris Convention, which has a quantitative connotation, whereas the term ‘reputation’ in Articles 4(3), 4(4)(a) and 5(2) Trademark Directive244 can be associated with qualitative criteria. Just as with the ECJ, the Advocate General also noticed differences in the terms used in the other official languages in which the Trademark Directive has been written.245 However, Article 16(2) TRIPS246 which explains how to determine whether a trademark is well known according to Article 6bis Paris Convention247 and the guidelines of the Joint Recommendation Concerning Provision of Well-Known Marks leave enough room for

243 WIPO Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, adopted by the Assembly of the Paris Union for the Protection of Industrial Property and the General Assembly of the World Intellectual Property Organization at the Thirty-Fourth Series of Meetings of the Assemblies of the Member States of WIPO September 20 to 29, 1999. 244 Supra, Chapter 2, note 11. 245 Advocate General Jacobs in General Motors v Yplon SA (Case C-375/97), Opinion of the Advocate General, 26 November 1998, paras 34–6. 246 Article 16(2) TRIPS, supra, Chapter 2, note 26: ‘Article 6bis of the Paris Convention (1967) shall apply, mutatis mutandis, to services. In determining whether a trademark is well-known, Members shall take account of the knowledge of the trademark in the relevant sector of the public, including knowledge in the Member concerned which has been obtained as a result of the promotion of the trademark’. 247 Article 6bis Paris Convention, supra, Chapter 2, note 2.

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member states to determine the degree of knowledge or recognition on qualitative factors.248 Arguably the most important difference between a trademark with a reputation and a well-known trademark is that the first needs to be registered, whereas this is not necessary for the latter. Trademarks with a reputation can be protected against unauthorized use for similar goods or services or non-competing goods or services, whereas a well-known mark only protects in case of similar products and services, according to Article 6bis Paris Convention,249 although in the Article 16(3) TRIPS incarnation250 of Article 6bis Paris Convention the protection is extended to non-similar goods and services.251 The US has been a member of the Paris Convention since 1887, including the revision of the Hague Act in 1925252 and TRIPS in 1995.253 Nevertheless the applicability of the protection of well-known marks for dissimilar goods and services guaranteed in Articles 6bis and 10bis Paris Convention254 in combination with Article 16(3) TRIPS,255 within the US remains controversial. In 1936, in Maison Prunier v Prunie’s Rest. & Café,256 the well-known marks doctrine, which in the jurisprudence is called the well-known/famous marks doctrine, was recognized for the first time by a New York trial court in a common law action for unfair

248 Article 2(1)(b)1–6, WIPO Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks, adopted by the Assembly of the Paris Union for the Protection of Industrial Property and the General Assembly of the World Intellectual Property Organization at the Thirty-Fourth Series of Meetings of the Assemblies of the Member States of WIPO September 20 to 29, 1999. 249 Article 6bis Paris Convention, revision of The Hague, 6 November 1925, supra, Chapter 2, note 2. 250 Article 16(3) TRIPS, supra, Chapter 2, note 26. 251 First sentence of Article 16(2) TRIPS: ‘Article 6bis of the Paris Conven- tion (1967) shall apply, mutatis mutandis, to services’. Id. 252 The US has been a member of the Paris Convention since 30 May 1887 and the Hague Act which revised the Paris Convention on 6 November 1925 introducing Article 6bis Paris Convention entered into force in the US after 6 March 1931. See WIPO Treaties and Contracting Parties. 253 The US has been a member of the Marrakesh Agreement Establishing the World Trade Organization (WTO) since 1 January 1995, of which the Agreement on Trade-Related Aspects of Intellectual Property Rights is an integral part, see Annex 1C of the Agreement Establishing the WTO. 254 Article 6bis Paris Convention, revision of The Hague, 6 November 1925, supra, Chapter 2, note 2. 255 Article 16(3) TRIPS, supra, Chapter 2, note 26. 256 Maison Prunier v Prunier’s Rest. & Café, 159 Misc. 551, 557–8, 288 N.Y.S. 529, 535–6 (N.Y.Sup.Ct.1936).

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competition. In 2007, in ITC Ltd. v Punchgini, Inc., the Second Circuit relied on Trademark Board rulings which did not recognize that the well-known/famous marks doctrine derives from any provision of the Lanham Act or other federal law.257 According to the Second Circuit the case needed to be resolved under state common law and therefore sent certified questions to the New York Court of Appeals.258 The latter court made clear in an advisory opinion that it ‘recognises common law unfair competition law, but not the “famous” or “well-known” marks doctrine’.259

Problems with Identical Trademarks for Dissimilar Goods or Services

Orthodox trademark law protects only famous trademarks or trademarks with a reputation against identical trademarks for dissimilar goods or services against trademark dilution. In other words: it has been assumed that the connection of a senior trademark for goods or services that did not reach the threshold of fame or reputation and an identical junior trademark with different products or services can peacefully coexist. The premise was: if there is no competition, then there can be no unfair competition. However, if a trademark is not famous yet or if it only has reached a reputation in some niche market, one can argue that the trademark holders’ investments in advertisements in the trademark might have charged it with personality, and that the investments in advertisements deserve it to be protected. Just as important, in order to distinguish non-famous identical trademarks for dissimilar goods or services from each other it can be argued that the use of different trademark logos can be crucial. Even if one really would believe that only famous trademarks or trademarks with a reputation deserve to be protected against trademark dilution, the automatic determination of whether a trademark is famous enough or has enough reputation is impossible if there is no special list for that kind of trademark. If trademarks that are well known according to the Paris Convention are not registered, they are still protected. However, in most cases the trademark holders of well-known trademarks have enough resources to

257 ITC Ltd. v Punchgini, Inc., 482 F.3d 135 (2d Circuit), 28 March 2007, para. 83. 258 ITC Ltd. and ITC Hotels Ltd., Appellants, v Punchgini, Inc., New York Court of Appeals, 2007 NY Int. 164, number 165, 13 December 2007. 259 Id.

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register them in a special list for well-known trademarks, which would be conducive to automatic enforcement. Orthodox trademark law assumes that if an identical trademark for dissimilar goods or services is used or registered for geographically separate markets this is not a problem, irrespective of whether the trademark is famous or has a reputation. This is a misconception, as the 1961 Lincoln Restaurant Corp. v Wolfies Restaurant, Inc.260 case of two seemingly separate markets already has demonstrated. A famous restaurant from Miami Beach, Florida, sued a company for using the identical name in Brooklyn, New York. The judge found that there was unfair competition, because many people from Brooklyn frequented Miami and patronized the restaurants there.261 The trend that could already be perceived in 1961262 was extrapolated and amplified by globalization and the internet. Non-famous trademarks or trademarks without enough reputation are only protected in the designated classes of goods or services for which they are registered according to the Nice Classification,263 conforming to the specificity principle. IP Legislator 264 demonstrated the unclear boundaries of the Nice Classification. First the OHIM President in Communication No. 4/03265 explained that OHIM did ‘not object to the use of the general indications and class headings as being too vague or indefinite, contrary to the practice which is applied by some national offices in the EU and in third countries in respect of some of the class headings and general indications’.266 However, the CJEU held that applicants who use all the general indications of a particular class heading of the Classification must specify whether their application for registration is intended to cover all the goods or services included in the

260 Lincoln Restaurant Corp. v Wolfies Restaurant, Inc., 291 F.2d 302, 303 (2d Cir. 1961). 261 Id. 262 Id. 263 The Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, of 15 June 1957, as revised at Stockholm on 14 July 1967, and at Geneva on 13 May 1977, and amended on 28 September 1979. Supra, Chapter 2, note 4. 264 Chartered Institute of Patent Attorneys v Registrar of Trade Marks (IP Legislator) (Case C-307/10), Judgment of the ECJ, 19 June 2012. 265 Communication No. 4/03 of OHIM President, 16 June 2003, concerning the use of class headings in lists of goods and services for Community trade mark applications and registrations. 266 Second para. Point III Communication No. 4/03, id.

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alphabetical list of that class or only some of those goods or services.267 After IP Legislator, OHIM President’s Communication No. 2/12268 rescinded Communication No. 4/03.269 Besides the scope of the class headings, another practical problem of classifying trademarks is the difficulty of determining the scope of some goods and services. This has resulted in literal and rigid application of classes. Schechter already noted this problem by giving an illustration:

Thus bread and flour, pancake flour and syrup are in the same class, while, on the other hand, ‘straight’ wheat flour and ‘prepared flours’ – such as ‘pancake flour’ – are declared not to be of the same ‘class of commodities ‘. Chewing gum, held to be a ‘food’, and chewing tobacco, held to be a ‘narcotic’, ice cream and milk, cheese and butter are likewise found not [sic] of different classes.270

Since the convergence of different technologies, such as phone, camera, audio-player, gaming console, reading device and computer into one smart phone, this trend might have been aggravated. In Intel v CPM,271 the ECJ explained the boundaries problem in a spatial way and showed the relation between the similarity of mark and the similarity of product/service:

267 IP Legislator, supra note 264, para 64, third point. Ashmead rightly pointed out that the Court’s linkage of the validity of class heading registrations to a mixture of intent and deemed coverage of Nice class alphabetical lists is inconsistent with the Court’s requirement of clarity and precision. According to Ashmead this is ‘likely to involve goods scope broadening’, which, he argued, cannot be lawful within the international legal framework. Richard Ashmead, ‘IP Translator: A Sun-Drenched Perspective’, IPKat, 9 July 2012, accessed 9 February 2015 at: http://ipkitten.blogspot.hk/2012/07/ip-translator-sun-drenched- perspective.html. 268 Communication No. 2/12 of OHIM President, 20 June 2012, concerning the use of class headings in lists of goods and services for Community trade mark applications and registrations. 269 See supra note 265. 270 Schechter, supra, Chapter 1, note 83, at 823. See also Fox: ‘[T]obacco pipes were not wares similar to cigarettes and tobacco, that canned chicken products including chicken sandwich spread on the one hand and jams, jellies, pickles, sauces and vinegar on the other hand were not similar wares and that leather footware and rubber footware were not similar’. Harold G. Fox, THE CANDADIAN LAW OF TRADE MARKS AND UNFAIR COMPETITION (2nd ed., Toronto: Carswell, 1956). 271 Intel v CPM, supra, Chapter 2, note 251.

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[a]round each trade mark there is an ‘exclusion zone’ which other marks may not enter. The extent of that zone will vary according to circumstances. An identical or extremely similar mark must be kept at a greater distance in terms of the goods or services covered. Conversely, a mark used for identical or extremely similar products must be kept at a greater distance in terms of similarity with the protected mark.272

Recital 10 Community Trademark Regulation273 postulates trademark as property, because it exists separately from the trademark holders, and can be assigned, licensed, or charged as security.274 Nevertheless, the doctrine that the same trademarks may be used in different classes by different owners is premised on the idea that there is no property in a trademark apart from the business or trade in connection with which it is employed.275 Schechter contended that ‘[o]nce a mark has come to indicate to the public a constant and uniform source of satisfaction, its owner should be allowed the broadest scope possible for “the natural expansion of trade” to other lines of fields of enterprise’.276 In other words, Schechter advocated a right for the trademark holder to extend the use of the trademark to other activities, which includes the possibility to license his trademark. However, the Trademark Law Review Committee was concerned about extended protection for trademarks for dissimilar goods or services:277 ‘There was also some concern that allowing trade mark protection for an indefinite range of goods would lead to the exhaustion of possible trade mark names, hence the Committee’s remark regarding the “designing ingenuity of man.”’278 To withhold from trademark holders the right to extend the use of their trademark for new entrepreneurial activities, because otherwise the creatively challenged cannot copy already used trademark names for their activities, seems to be economically suboptimal.

272 Id. 273 Supra, Chapter 2, note 36. 274 Recital 10 Community Trademark Regulation: ‘Whereas a Community trade mark is to be regarded as an object of property which exists separately from the undertakings whose goods or services are designated by it; whereas accordingly, it must be capable of being transferred, subject to the overriding need to prevent the public being misled as a result of the transfer. It must also be capable of being charged as security in favour of a third party and of being the subject matter of licences;’, id. 275 American Steel Foundries v Robertson, 269 U.S. 372 (1926). 276 Schechter, supra, Chapter 1, note 83, at 823. 277 Siebrasse, supra, Chapter 2, note 151, at 19. 278 Id.

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Nelson proposed that dilution protection should be limited to trademarks that are identified with one product.279 According to Nelson, if a trademark holder is using the trademark for more than one product, the proprietor would be responsible for his own dilution by blurring.280 However, one can argue that each trademark holder should have the right of self-determination to use his trademark at his own discretion and risk. If a company uses a similar or identical trademark of a third party that is not famous or has not enough reputation, in a commercial way, but in a different good or service class than the third party had registered for, both the US and EU jurisdictions do not impose any restrictions. This leads to a coexistence of similar or identical trademarks. To give an example: although one can argue that Ajax, the Amsterdam football club listed at the Euronext exchange,281 might be a trademark with a reputation, it does coexist with trademark namesakes in different product classes, including a detergent282 and a manufacturer of fire extinguish- ers.283 As pointed out before, this can lead to potential problems of trademark confusion and dilution. These problems play to an even greater extent when the trademark concerns a trademark logo. Imagine the three Ajax companies with their different activities using one identical or very similar trademark logo. As will be argued in Chapter 8, there is no reason why any company, including those who lack a famous trademark or trademark without reputation, should allow other companies to use a similar or identical trademark logo in a commercial way for a good or service in another class, without their express authorization.

6.4 DEFENCES

After the legislation and case law of trademark dilution in the US and unfair advantage of or detriment to the distinctive character or repute of the trademark in the EU, and their respective prerequisites for the anti-dilution measures are examined, this section will examine how the protection against trademark dilution and the freedom of expression can be reconciled.

279 Nelson, supra, Chapter 2, note 84, 731–5. 280 Id. 281 Amsterdam Football Club Ajax. 282 Colgate Ajax, accessed 9 February 2015 at: http://www.colgate.com/app/ Colgate/US/HC/Products/Dishwashing/Ajax.cvsp. 283 Ajax Chubb Varel, accessed 9 February 2015 at: http://www.ajaxfire.nl.

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Trademark dilution claims and defences based on the freedom of expression are well matched, better than trademark infringement and defences based on the freedom of expression. Trademark infringement is premised on the need to prevent a likelihood of consumer confusion, while trademark dilution is premised on the need to prevent against harming the trademark. Averting fraud via a claim of trademark infringement is considered to forfeit any defence based on the First Amend- ment284 or human rights treaties.285 While averting harm to the trademark is more complex, since it should take into account both the right to freedom of expression, which includes parody and critical comments, and the right to protect property286 or intellectual property.287 Or as Judge Kozinski argued in Mattel, Inc. v MCA Records, Inc. in 2000: trademark dilution injunctions lack a First Amendment compass.288 In order to determine whether the protection against trademark dilution is adequate one needs to take the defences against trademark dilution into account. In the US the fair use defences against trademark dilution and in the EU the limitations and exclusions against unfair advantage or detriment to the distinctive character or repute of the trademark are examined. The right to freedom of expression, from which the parody defence and critical comments defence derive, needs to be weighed against the right of the trademark holder to protect his trademark against trademark dilution. The chapter first examines the bases of the defences: for the defendants, the right to freedom of expression, and for the plaintiffs, the defence against this defence: the right to protect their property. Then the chapter poses the question which kind of expression deserves to fall under the right to freedom of expression to limit the protection against trademark dilution, and makes the distinction between commercial and non- commercial expression, and includes factors of general interest, damage, dispersion and prejudice. After that an examination will be provided of the fair use defences and limitations/exclusions to the exclusive rights, derived from the right to freedom of expression. This includes the defence of fair use in the case of trademark dilution in the US and in the EU the unfair advantage or detriment to the distinctive character or repute of the trademark. The

284 U.S. Const. amend. I (1791). 285 EU Charter, supra, Chapter 2, note 34. 286 Article 11(1), id. 287 Article 17(2), id. 288 Mattel, supra note 83, para. 33.

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three-step test for copyright law will be compared with the two-step test for trademark law. Parody aims to amuse instead of to confuse. The chapter questions whether trademark law should have a sense of humour at the expense of trademark holders, and is followed by the parody/satire, non-competing/ competing, non-commercial/commercial, high culture/low culture and transformative use/non-transformative use dichotomies to see whether they can function as criteria to decide whether or not the parodic use of a trademark should be allowed. The chapter also examines free-riding/ unfair advantage of distinctive character or repute. Next to the parodic use of the trademark, the chapter explains that the trademark can also be used in a criticizing or commenting way. The chapter demonstrates why the current trademark law insufficiently protects the trademark logo on social media against trademark dilution, and alludes to a solution.

Bases of Defence, and DefenceAgainst Defence

In both the US and EU the right to freedom of expression is considered of crucial importance to the effective functioning of a democratic society and as ‘a fundamental requirement for culture to continue’.289 However, the human right of freedom of expression is not absolute and must be weighed against another human right: the protection of property.290 The First Amendment to the Constitution291 guarantees the right to freedom of expression in the US. New York Times v Sullivan292 confirmed the importance of the right where the Supreme Court held that the First Amendment can be considered even if it is not claimed by the parties.293 As already pointed out, the right to freedom of expression is not absolute and needs to be weighed against the right to protect property. The

289 ‘Fair use, a fundamental requirement for culture to continue, meets the First Amendment all over the Internet’. Spiesel, supra, Chapter 4, note 48. 290 That the protection of property is a human right becomes clear after the realization that people own their own bodies. 291 ‘Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances’. U.S. Const. amend. I (1791). 292 New York Times v Sullivan, 376 U.S. 254, 84 S. Ct. 710 U.S. Ala. 1964, at 724–30. 293 Id.

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Constitution294 treated the latter right impliedly, and also expressly in the Fifth295 and Fourteenth Amendments,296 via ‘due process’ provisions. These include the rule, based on international law, that prescribes compensation in case of expropriation, where a redistribution of private property took place or where the use of private property was restrained in the public interest. However, lex specialis derogat legi generali.297 Fair use in case of parody is such a lex specialis (see Chapter 6.4), and although the right of parody is arguably in the general interest, it can also be seen as an act that restrains the use of the trademark holder’s property, constituting an expropriation, which, however, does not need to be compensated under this lex specialis. In the Council of Europe, which includes the EU member states and twenty other countries,298 Article 10 ECHR299 guarantees the right to freedom of expression. If one assumes that trademark rights are a property then Article 10 ECHR must be balanced with Article 1 of

294 ‘[T]he Framers [of the Constitution] simply assumed the existence of such [property] rights, defined and protected mainly by state law, because the common law, grounded in property, was the background for all they did’. Roger Pilon, THE CONSTITUTIONAL PROTECTION OF PROPERTY RIGHTS: AMERICA AND EUROPE, Economic Education Bulletin, AIER, 2008, at 8. 295 ‘No person shall … be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation’. U.S. Const. amend. V (1791). 296 ‘No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law;’ U.S. Const. amend. XIV (1868). 297 Latin maxim which means: ‘special law derogates from the general law’. 298 The US has observer status. 299 Article 10 ECHR: (1) Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises. (2) The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or the rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary. Supra, Chapter 2, note 6.

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Protocol No. 1 to ECHR,300 which provides the right to protection of property. Article 11 EU Charter,301 which binds EU members, except for the UK and Poland that signed an opt-out protocol and the Czech Republic that will be included in this opt-out protocol,302 prescribes the right to freedom of expression, which should be balanced with Article 17(2) EU Charter, which prescribes that ‘Intellectual Property shall be protected’.303 The relation between the ECHR and the EU Charter is explained in Article 52(3) EU Charter: that the level of protection of the EU Charter should at least be as high as that of the ECHR. In 1987, Judge Bownes in L.L. Bean, Inc. v Drake Publishers, Inc. wrote that ‘trademark rights do not entitle the owner to quash an unauthorized use of the mark by another who is communicating ideas or expressing points of view’.304 However, whether or not a trademark holder can protect its trademark, despite a third party’s right to freedom of expression, needs to be balanced against one another, and is arguably fact specific.

300 Article 1 Protocol No. 1 to ECHR: ‘Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law’. Supra, Chapter 2, note 7. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. 301 Article 11(1) EU Charter: ‘Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers’. EU Charter, supra, Chapter 2, note 34. 302 UK and Poland fall under an opt-out protocol (Protocol No. 30 on the application of the Charter of Fundamental Rights of the European Union to Poland and to the United Kingdom, annexed to the Treaty on the EU and to the Treaty on the Functioning of the European Union), which effectiveness in Joined Cases C-411/10 and C-493/11 NS v Secretary of State for the Home Department and Others, was denied by the ECJ. The Czech Republic’s condition of signing the Lisbon Treaty in 2007 was that it would be added to Protocol 30. EU-Rights Clinic, ‘Background Note: ECAS’s Requests for Access to Commission Docu- ments Concerning the Opt-Out from the EU Charter of Fundamental Rights’, accessed 9 February 2015 at: http://blogs.kent.ac.uk/eu-rights-clinic/files/2013/ 03/Background-Note-Access-to-Documents-on-Charter-Opt-Out-04.03.13.pdf. 303 Article 17(2) EU Charter, supra, Chapter 2, note 34. 304 L.L. Bean, Inc. v Drake Publishers, Inc., 811 F.2d 26, 29 (1st Cir.1987).

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Freedom of Expression v Property

Sakulin described the tension between trademark protection and the freedom of expression:

In practical terms, the freedom of commercial and non-commercial expression may include the freedom to use trademarks of third parties, in particular in artistic and political expression, but also in commercial expression, like comparative advertising, use as a reference, or use as a descriptive indication. Freedom of expression may thus conflict with the rights of the trademark holder to prohibit the use of his trademarks.305

Farber argued that courts have applied a higher standard for commercial expressions to be communicated: ‘If a political candidate can lie without fear of legal intervention, why can’t a used car dealer? Why should a cigarette manufacturer be required to publicize disagreeable facts about his product when a newspaper commentator cannot be penalized for incomplete disclosure?’306 Once communicated, the courts dealt with this commercial speech in comparison to non-commercial speech arguably in a discriminatory manner.307 To summarize the case law: first the courts decided that freedom of expression covers all speech, of both a commercial and non-commercial nature.308 Later, the courts decided that there exists an intermediate level of protection: if commercial communications were intertwined with non-commercial communications, they were regarded as the latter and protected by the First Amendment.309 However,

305 Sakulin, supra, Chapter 1, note 88. 306 Daniel A. Farber, Commercial Speech and First Amendment Theory,74 NW. U. L. REV. 372, 373 (1979). 307 See the rise and demise of the commercial speech doctrine in the following case law: Valentine v Chrestensen, Supreme Court of the U.S., 316 U.S. 52 (1942), United States v O’Brien, 391 U.S. 367 (1968), Bigalow v Virginia, 421 U.S. 809 (1975), Virginia State Board of Pharmacy v Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976), Ohralik v Ohio State Bar Ass’n, 436 U.S. 447 (1978), Vill. of Schaumberg v Citizens for a Better Env’t, 444 U.S. 620, 632 (1980), Bolger v Youngs Drug Products Corp., 463 U.S. 60 (1983), National Federation of Blind v Riley, 487 U.S. 796 (1988), Dr. Seuss Enterprises v Penguin Books USA Inc. (Dr. Seuss) 924 F. Supp. 1559, 1574 (S.D. Cal. 1996), and Hoffman v Capital Cities/ABC, Inc., 255 F.3d 1180, 1184 (9th Cir. 2001). 308 Virginia State Board of Pharmacy v Virginia Citizens Consumer Council, Inc., supra note 307, at 1825–31. 309 Riley v National Federation of Blind, Inc., 487 U.S. 781 (1988), at 795–801.

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courts have varied their motivations by referring to one of the above mentioned jurisprudence.310 One can argue that for a long period of time trademarks were seen as exclusively commercial. As pointed out in ‘status-signalling quality’ in the ‘Literature Review’ of Chapter 1, their function as social, political and cultural signifier has become more prominent, which made the character of the communication arguably more non-commercial, therefore more deserving of protection. Next to the ratio between the commercial nature of the expression and the public or general interest nature of the matter, Sakulin provided a non-exhaustive list of criteria to assess whether there is a fair balance between the right to freedom of expression and the right to protect property:311 the extent and intensity of the damage as a result of the expression; the fame of the protected object;312 extent of dispersion; whether the use unnecessarily prejudices the reputation of the object of protection.313 Van den Berg and Haak asserted that another factor should be taken into account: the extent to which it has been attempted to prevent the risk of confusion.314 Based on the freedom of expression rationale are the defences for trademark dilution: fair use in the US and limitations and exclusions in the EU. To be able to assess whether trademark law provides sufficient protection against trademark dilution, one has to take into account these defences. For a better comprehension of the potential of the fair use test for trademark law in the US, one first needs to take a look at the fair use test for copyright law. In the same vein, if one wants to understand the

310 Lee Ann W. Lockridge, When Is a Use in Commerce a Noncommercial Use? 37 FLA. ST. U. L. REV. 337 (2010). 311 Wolfgang Sakulin, Note under Vzr. Rb. The Hague May 4, 2011, Plesner v Louis Vuitton, LJN BQ3525; IEPT20110504, IER 39 (2011); NJF 264 (2011). 312 ‘It is true that large public companies inevitably and knowingly lay themselves open to close scrutiny of their acts … and the limits of acceptable criticism are wider in the case of such companies’. Fayed v the United Kingdom, 21 September 1994, ECHR Series A no. 294-B. Steel and Morris v the United Kingdom, no. 68416/01, ECHR 2005-II, para. 94. 313 Guibault also contended that for examining the level of protection more factors need to be taken into account and weighed: the extent and intensity of the damage and the extent of dissemination, in order to see whether the use unduly affects the reputation. Lucie Guibault, The Netherlands: Darfurnica, Miffy and the Right to Parody!, 3 JIPITEC 237 (2011), para. 3. 314 Josine van den Berg and Maarten Haak, IE-Rechten en uitingsvrijheid, naar een fair balance, 39 BMM BULLETIN 2 (2013).

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development and possibilities of an open term for limitations and exceptions in the EU that can provide flexibility for trademark law, one needs to first examine the three-step test that was drafted for copyright law under the Berne Convention.315 This section will show that the fair use defences to trademark dilution or the limitations and exceptions to the ‘unfair advantage of or detriment to the distinctive character or repute of the trademark’ and a sufficient protection of the trademark logo can be combined, under the condition that only a simple formality is taken into account, as will be explicated in Chapter 9.

Defence of Fair Use in the Case of Trademark Dilution in the US

Defendants of a trademark dilution action can invoke a fair use defence based on the Lanham Act § 43(c), now codified in 15 U.S.C. § 1125(c)(3)(A–C),316 which gives some exclusions from what is actionable under the dilution by blurring and dilution by tarnishment provisions:

(A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person’s own goods or services, including use in connection with – (i) advertising or promotion that permits consumers to compare goods or services; or (ii) identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. (B) All forms of news reporting and news commentary. (C) Any noncommercial use of a mark’.

U.S.C. § 1125(c)(3)(A)

Dilution is not actionable317 in case of fair use, including nominative or descriptive fair use, or facilitation of such fair use (as discussed in Chapter 5).

315 Berne Convention, supra, Chapter 2, note 3. 316 15 U.S.C. § 1125. 317 U.S. Code, Title 15, Chapter 22, subchapter III, § 1125(c)(2)(B).

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U.S.C. § 1125(c)(3)(A)(i) Comparative advertising318 is legitimate in the US and in the EU319 jurisdictions. In such advertising often the trademark logo is presented of both companies that are compared by one of the companies that asserts it has the best product attributes or price/quality relationship. An actual comparison, not being a comparative advertisement is hard to distinguish these days from those that are. One has to do a lot of research to find out whether the website that is comparing has no interest in the company that happens to be selected as the best. There are even bloggers that are paid by companies to promote particular brands. If only authorized trademark holder users were allowed to use the trademark logo, the uncertainty about the source of a message will be solved. If one is not authorized to use a trademark logo, one can still describe, critique, inform, present in proximity, learn, comment, report or satirize brands without actually using the trademark logo.

U.S.C. § 1125(c)(3)(A)(ii) Thus there is a fair use defence in case of trademark dilution when the trademark is used for:

– identifying and parodying; – criticizing or commenting; – upon the famous mark owner; or – the goods or services of the famous mark owner.320

Mentioning ‘identifying’ after it was already clear that ‘fair use, including a nominative or descriptive fair use’ is included, seems to be superfluous.

318 According to Siebrasse comparative advertising does not injure the goodwill in the mark. ‘On the contrary, because it attempts to lure customers from one supplier to another, though it emphasizes the similarity between the goods, at the same time it emphasizes the distinction between the two manufacturers, and so does not weaken the association between the first supplier and its mark’. Siebrasse, supra, Chapter 2, note 151. 319 Misleading and Comparative Advertising Directive 2006/114/EC of the European Parliament and of the Council, 12 December 2006. 320 15 U.S.C. § 1125(c)(3)(A)(ii).

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Defence of Limitations/Exceptions of UnfairAdvantage or Detriment to the Distinctive Character or Repute of the Mark in the EU

In order to analyse the two-step test for the limitations and exceptions of trademark law it is useful to first look at its predecessor: the three-step test for copyright law, which might even apply to trademark rights directly. Article 5(3)(k) Information Society Directive321 allows member states of the EU to legislate exemptions of copyright use for the purpose of caricature, parody or pastiche without defining these purposes any further. However, EU copyright law does provide an open three-step test, in Article 5(5) Information Society Directive,322 based on Article 9(2) Berne Convention,323 which tests whether exceptions and limitations, such as parody, must be applied or not. The three-step test originated at the Stockholm Conference revision of the Berne Convention in 1967.324 Article 9(2) Berne Convention325 applies to works or other subject matter, and therefore might include trademarks.

Three-step test The limitations of the Berne Convention can only be applied:

Step 1. in certain special cases; Step 2. which do not conflict with the normal exploitation of the work or other subject matter; and

321 Article 5 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (Information Society Directive): ‘(3) Member States may provide for exceptions or limitations to the rights provided for in Articles 2 and 3 in the following cases: … (k) use for the purpose of caricature, parody or pastiche’. 322 Article 5(5) Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (Information Society Directive): ‘The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder’. 323 Article 9(2) Berne Convention: ‘It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author’. Supra, Chapter 2, note 3. 324 Berne Convention, id. 325 Berne Convention, id.

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Step 3. do not unreasonably prejudice the legitimate interests of the right holder.

Limitations can only be applied in ‘certain special cases’, when they serve some public policy objective326 (step one). ‘[T]ake account of the legitimate interests of the owner of the trademark and of third parties’ (step 3) can be interpreted as ‘do not unreasonably prejudice the legitimate interests of the right holder’. Remuneration might be able to make the prejudice ‘reasonable’.327 One could see step two as part of step three: where the exceptions and limitations conflict with the normal exploitation of the work or other subject matter, then one can argue that the legitimate interests of the right holder have been unreasonably prejudiced. There is no consensus on how to interpret the three-step test. Should the test be applied to the limitations in legislation or in concrete cases by judges? Also there is uncertainty as how to apply the test. Ficsor argued, based on two WTO cases,328 that ‘the test must be applied step by step in a way that, if the exception or limitation fails the criterion of a step, it fails the test in general and there is no need to proceed to the next step’.329 Geiger made the point that the imprecise formulation of conflict with the normal exploitation of the work of step two could pre-empt the more meaningful assessment of unreasonable prejudice of legitimate interests of step three. The WTO Panel’s interpretation of ‘normal exploitation’ strengthens this point: it makes clear that it not only covers current forms of exploitation that create sufficient income, but also those that have the potential to do so in the future.330 In such scenarios Geiger proposed to start with step three ‘and to use the second step afterwards as a corrective measure to eliminate the most abusive conflicts with the exploitation of the work’.331 Thirty prominent intellectual property scholars have drafted a declaration that states that ‘[t]he three steps are to be considered together and

326 Kamiel Koelman, Fixing the Three-Step Test, EIPR 3 (2006). 327 Id. 328 WTO panel report patent, supra, Chapter 2, note 5. 329 Mihály Ficsor, ‘“Munich Declaration” on the Three-Step Test: Respect- able Objective – Wrong Way to Try to Achieve It’, 11 May 2012, accessed 9 February 2015 at: http://www.copyrightseesaw.net/data/documents/documents/0/ 6/6/0665a0ebfa425ceb829cc8fb4f3bf03f.doc. 330 WTO panel report copyright, supra, Chapter 2, note 5. 331 Christophe Geiger, The Role of the Three-Step Test in the Adaptation of Copyright Law to the Information Society, UNESCO, e-Copyright Bulletin, January–March, 2002, at 18.

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as a whole in a comprehensive overall assessment’.332 Koelman asserted that the three-step test should be redesigned, inspired by the fair use test, from three hurdles to three factors that must be weighed together and to let legislators and courts consider all interests involved. Griffiths pointed to a more radical interpretation of the three-step test: not as a secondary constraint to see whether the statutory exceptions are acceptable, but as a safety net to see whether the scope of the exclusive rights of the copyright holder are legitimate.333 Open terms such as ‘special’, ‘normal’, ‘unreasonably’ and ‘legitimate’ give sovereignty to legislators and flexibility to judges, but also cause legal uncertainty, which could have chilling effects. For example, it can be costly to prove via studies that a limitation conflicts with the normal exploitation, and the judge might not be have the means to assess this conflict with an alternative study.334 Whether the limitations to the exclusive rights are checked by open norms or the scope of the exclusive rights are checked via open norms, in both cases the advantage of open norms is flexibility which could lead to fair decisions in unforeseen new concrete cases. This is especially welcome to keep up with the ever increasing rate of technological change. Besides the lack of predictability and legal uncertainty, open norms could result in courts that make de facto laws. This cannot be justified because the courts’ lawmaking process lacks any democratic legitimacy.335

Two-step test The Trademark Directive336 and the Community Trademark Regulation337 both lack an explicit provision which allows member states to exempt trademark use for the purpose of parody or pastiche, in contrast to Article

332 Christophe Geiger, Reto Hilty, Jonathan Griffiths and Uma Suthersanen, Declaration: A Balanced Interpretation of the ‘Three-Step Test’ in Copyright Law, 1 JIPITEC 119 (2010). 333 Jonathan Griffiths, The ‘Three-Step Test’ in European Copyright Law: Problems and Solutions, QUEEN MARY SCHOOL OF LAW LEGAL STUD- IES RESEARCH PAPER No. 31/2009, at 14. 334 Geiger, supra note 331, at 16. 335 P. Bernt Hugenholtz and Martin Senftleben, Fair Use in Europe: In Search of Flexibilities (study commissioned by Google) 14 November 2011, at 8. 336 Article 5(2) and 5(5) Trademark Directive, supra, Chapter 2, note 11. 337 Article 9(1)(c) Community Trademark Regulation, supra, Chapter 2, note 36.

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5(3)(k) Information Society Directive,338 which does provide these limitations for copyright law. However, the trademark regulations give trademark holders the rights to prevent others from using their trademark ‘without due cause’. This gives courts the possibility to interpret the invocation of the fundamental guarantee of freedom of expression and information of Article 11 EU Charter339 and Article 10 ECHR340 as ‘due cause’ after weighing them against the right to protection of intellectual property341 or more broadly property.342 In TRIPS343 one can find different incarnations of Article 9(2) Berne Convention: Article 13 TRIPS344 gives a three-step test to assess whether limitations to copyright might be applied by legislatures or courts. Article 26(2) TRIPS345 also gives a three-step test for limitations to the right of industrial designs, and Article 30 TRIPS346 does the same for patent rights. This section mainly deals with Article 17 TRIPS which gives a two-step test for limitations to trademark rights. Three WTO disputes347 dealt with the tests for limitations and have shed some light on how to interpret the terms used in the limitations to trademark rights. It is interesting to see how the incorporation of the provisions of the Berne and Paris Conventions in TRIPS348 have led to a situation where the panels of the WTO dispute settlement system have

338 Article 5 Information Society Directive: ‘(3) Member States may provide for exceptions or limitations to the rights provided for in Articles 2 and 3 in the following cases: … (k) use for the purpose of caricature, parody or pastiche;’. Supra note 322. 339 EU Charter, supra, Chapter 2, note 34. 340 ECHR, supra, Chapter 2, note 6. 341 Article 17(2) ECHR, id. 342 Article 1 Protocol No. 1 to ECHR, supra, Chapter 2, note 7. 343 TRIPS, supra, Chapter 2, note 26. 344 Id. 345 Article 26(2) TRIPS: ‘Members may provide limited exceptions to the protection of industrial designs, provided that such exceptions do not unreasonably conflict with the normal exploitation of protected industrial designs and do not unreasonably prejudice the legitimate interests of the owner of the protected design, taking account of the legitimate interests of third parties’. Id. 346 Article 30 TRIPS: ‘Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties’. Supra, Chapter 2, note 26. 347 WTO panel report patent; WTO panel report trademark, supra, Chapter 2, note 5. 348 TRIPS, supra, Chapter 2, note 26.

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become de facto the ultimate interpreters of these intellectual property treaties under the auspices of WIPO.349 Article 17 TRIPS350 allows members of the WTO, which include the US and EU, to provide ‘limited exceptions to the rights conferred by a trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties’. So in contrast to the three-step test for limitations to the rights of copyright, industrial design and patent, TRIPS provides a two-step test for limitations to trademark rights:

Two-step test351

Step 1: limited exceptions (and fair use of descriptive terms is given as an example of such limited exceptions); Step 2: taking account of the legitimate interests of the trademark holder and of third parties.

How to interpret these terms? Interpretation of step 1: ‘limited exceptions’ is similar to ‘certain special cases’ for copyright. The trademark panel agreed with the patent panel352 that the term ‘exceptions’ connotes a ‘limited derogation, one that does not undercut the body of rules from which it is made’.353 ‘Limited’ was used to emphasize that the exception must be narrow and permit only a small diminution of rights.354 Interpretation of step 2: the trademark panel agrees with the patent panel’s interpretation of ‘legitimate interests’:

To make sense of the term ‘legitimate interests’ in this context, that term must be defined in the way that it is often used in legal discourse – as a normative claim calling for protection of interests that are ‘justifiable’ in the sense that they are supported by relevant public policies or other social norms.355

349 The two international organizations signed a cooperation agreement, which excluded an arrangement on the interpretation of each other’s treaties. WTO–WIPO Cooperation Agreement, 22 December 1995. 350 TRIPS, supra, Chapter 2, note 26. 351 Article 17 TRIPS, id. 352 WTO panel report patent, supra, Chapter 2, note 5. 353 WTO panel report trademark, id., para. 7.650. 354 Id. 355 WTO panel report trademark, supra, Chapter 2, note 5, para. 7.663.

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Due to the ‘limited exceptions’ the ‘legitimate interests’ of the trademark holders are not equal to the full enjoyment of the trademark right. To put it in two formulas:

For trademark holders: Full enjoyment of rights conferred by trademark – limited exceptions = legitimate interests

For third parties: No enjoyment of rights conferred by trademark + limited exceptions = legitimate interests

The trademark panel states that the ‘legitimate interests’ of the trademark holders are different from ‘third parties’, who have no rights conferred by the trademark, and that this difference is confirmed by the use of the verb ‘take account of’, which is less than ‘protect’.356 However, in this view the wording of the second step should be: ‘provided that such exceptions protect the legitimate interests of the owner of the trademark and take account of third parties account’. In contrast to the other limitations tests, Article 17 TRIPS357 misses the ‘normal exploitation’ criterion. Senftleben wrote that the negotiating history of TRIPS does not necessarily explain the reasons of adopting different tests for the limitations of respectively copyright and trademark rights.358 To include the ‘normal exploitation’ criterion in Article 17 TRIPS would deviate from international trademark law, according to Senftleben.359 This author does not concur: normal exploitation is one of the rationales for the dilution doctrine that is prevalent in both the EU and US: that trademark holders should be able to extend the use of their trademark with a reputation or famous trademark to new products and services that are outside the classes of goods or services for which they designated their trademark registrations. Article 16 (2) and (3) TRIPS360 prescribe that Article 6bis Paris Convention, which protects well-known marks for identical and similar goods, also protects goods and services

356 Id., para. 7.662. 357 TRIPS, supra, Chapter 2, note 26. 358 Martin Senftleben, Towards a Horizontal Standard for Limiting Intellec- tual Property Rights? WTO Panel Reports Shed Light on the Three-Step Test in Copyright Law and Related Tests in Patent and Trademark Law (1 March 2006). 37 IRIPC 407, 412 (2006). 359 Id., at 422. 360 Article 16 (2) and (3) TRIPS, supra, Chapter 2, note 26.

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for dissimilar goods and services.361 Moreover, the WTO trademark panel acknowledges the advertising and investment functions of the trademark,362 which need protection against harm by non-competing goods that use an identical or similar mark. One can argue that the principle to protect against confusion and dilution is enshrined in international trademark law. The trademark panel does recognize the trademark holders’ legitimate interest in preserving the distinctiveness or capacity to distinguish, which refers to a trademark’s essential function as an indicator of origin preventing confusion, but also acknowledges the trademark’s advertising and investment functions, to prevent dilution by blurring and tarnishment: ‘Taking account of that legitimate interest will also take account of the trademark owner’s interest in the economic value of its mark arising from the reputation that it enjoys and the quality that it denotes’.363 The trademark limitations test could benefit from the normal exploitation criterion, as constituted by the patent panel: normal is defined on the one hand by ‘an empirical conclusion about what is common within a relevant community’.364 On the other hand it means ‘a normative standard of entitlement’.365 The copyright panel interpreted normal exploitation as the current activities that led to extraction of economic value, but also the activities that could lead to important financial gains in the future.366 Why should trademark holders be deprived of the normal exploitation criterion that is granted to copyright and patent right holders? The deprivation might be caused by the constitutional status of copyrights and patents in the US: ‘To promote the progress of science and useful arts, by

361 This WIPO explanation of well-known marks associates Article 16(2) TRIPS with dilution. WIPO, ‘Well-Known Marks’, accessed 9 February 2015 at: http://www.wipo.int/sme/en/ip_business/marks/well_known_marks.htm. 362 WTO panel report trademark, supra, Chapter 2, note 5, para. 7.664. 363 Id., para 7.664. 364 WTO panel report patent, supra, Chapter 2, note 5, para. 7.53. 365 Id. 366 ‘We believe that an exception or limitation to an exclusive right in domestic legislation rises to the level of a conflict with a normal exploitation of a work (ie, the copyright or rather the whole bundle of exclusive rights conferred by the ownership of the copyright), if users, that in principle are covered by that right but exempted under the exception or limitation, enter into economic competition with the ways that right holders normally extract economic value from that right to the work (ie the copyright) and thereby deprive them of significant or tangible commercial gains’. WTO panel report copyright, supra, Chapter 2, note 5, para 6.183.

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securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries’.367 However, trademarks play such a crucial role in society as the facilitator of the normal exploitation of copyrighted works, protected industrial designs and patented inventions. Furthermore, trademarks play an, often intergenerational,368 role in the creation of wealth for society and the extent to which a trademark holder is prevented from the normal exploitation of his trademark should at least be taken into account, just as in the case where copyright holders and patent holders are prevented from the normal exploitation of their works and patents, respectively.

Parody

The parody defence, based on the right to freedom of expression doctrine, was expressly postulated in the US as a fair use defence in U.S.C. § 1125(c)(3)(A)(ii).369 In the EU, parody can be implied as a limitation or exception to unfair advantage of or detriment to the distinctive character or repute of the mark, because it can fall within the ‘due cause’ clause of Articles 5(2) Trademark Directive370 and 9(1)(c) Community Trademark Regulation371 in combination with the two-step test of Article 17 TRIPS372 mentioned above. The fact that parody is expressly or impliedly a defence against a claim of trademark dilution means that it still needs to be justified. In other words: that the advantage of a parodic work outweighs the disadvantage of a likelihood of trademark dilution. In Gucci Shops, Inc. v R.H. Macy & Co., Inc., where consumers see the trademark name Gucchi Goo, the court held that it is not unreasonable for them to assume that the defendant’s use of the Gucci mark and the stripe on ‘diaper bags’ would mislead members of the public into

367 U.S. Const. Art. I, § 8, Cl. 8. 368 This author disagrees with the anonymous writer of the Harvard Law Review note in 1963. He or she wrote: ‘Unlike the confusion case, there is no public interest here to tip the balance in favor of the owner’. But this does not take intergenerational employment into account. Anonymous, supra note 77, at 529. 369 15 U.S.C. § 1125(c)(3)(A)(ii). 370 Supra, Chapter 2, note 11. 371 Article 9(1)(c) Community Trademark Regulation, supra, Chapter 2, note 36. 372 TRIPS, supra, Chapter 2, note 26.

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believing that the plaintiff is somehow connected with the diaper bag.373 However, in Haute Diggity Dog ‘dog bags’ were offered with parodic names such as Chewy Vuiton, ‘which by their attempted humorous, satirical association’ distinguished them from Louis Vuitton bags.374 As these above mentioned cases signify, comparable parody defence cases often have opposite outcomes. This lack of consistency has led to legal uncertainty and unpredictability. Chapter 6.4 will demonstrate how a change in doctrine coupled with a simple formality can lead to legal certainty and automatic enforcement. In 1908 it was already known that a parody manifests at the same time its difference as well as its resemblance with the famous trademark.375 Ninety-nine years later, in 2007, the court in Haute Diggity Dog376 confirmed this:

A parody must convey two simultaneous – and contradictory – messages: that it is the original, but also that it is not the original and is instead a parody. This second message must not only differentiate the alleged parody from the original but must also communicate some articulate element of satire, ridicule, joking, or amusement. Thus parody relies upon a difference from the original mark, presumably a humorous difference, in order to produce its desired effect.377

If one chooses to mimic an existing trademark name, despite the possibility of choosing one’s own trademark, courts presume that the junior trademark intentionally tries to confuse the public with the more recognizable senior mark. However, the junior mark can use this fact for a fair use defence:378 this recognisability of the trademark makes it easier

373 Gucci Shops, Inc. v R.H. Macy & Co., Inc., 446 F. Supp. 838, 840 (S.D.N.Y. 1977). 374 Haute Diggity Dog, supra note 98. 375 ‘Parody is permissible, but then, parody shows at the very time that it is [imitating] that it is an imitation, it shows the difference as well as the resemblance’. Tate v Fulbrook, 98 L.T.R. 706 (C.A. 1908). 376 Haute Diggity Dog, supra note 98. 377 Id. 378 15 U.S.C. § 1125(c)(3)(A)(ii) was added to the Trademark Dilution Revision Act in 2006: (A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person’s own goods or services, including use in connection with (i) advertising or promotion that permits consumers to compare goods or services; or

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for the audience to realize that the use is a parody and a joke on the qualities embodied in a trademark word or image.379 Where a third party chooses to parodically use a trademark, the intent is not necessarily to confuse the public but rather to amuse.380 Judge Kozinski illustrated this reasoning in Mattel, Inc. v MCA Records, Inc.: ‘If we see a painting titled “Campbell’s Chicken Noodle Soup,” we’re unlikely to believe that Campbell’s has branched into the art business. Nor, upon hearing Janis Joplin croon, ‘Oh Lord, won’t you buy me a Mercedes-Benz?’ would we suspect that she and the carmaker had entered into a joint venture’.381 Humorist Will Rogers wrote in 1974: ‘Now everything is funny as long as it is happening to somebody Else, but when it happens to you, why it seems to lose some of its Humor, and if it keeps on happening, why the entire laughter kinder Fades out of it’.382 In 1977, the court in Gucci Shops, Inc. v R.H. Macy & Co., Inc.383 held that a validly established trademark may be protected from ridicule which rises to the level of infringement of the mark. This seems reasonable if one considers the asymmetry between trademark holders and parodists. Parodists can destroy a brand’s reputation in little time and without much cost, while trademark holders need a lot of time, money and effort to build up the reputation of their trademarks. Who really should own a trademark? The court in Jordache held that the owner of the mark ‘does not own in gross the penumbral customer awareness of its name, nor the fallout from its advertising’.384 Does the public co-own trademarks they are involuntarily exposed to via advertisements online and in the streets? One can see parody in trademark as a

(ii) identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. (B) All forms of news reporting and news commentary. (C) Any noncommercial use of a mark. 379 Tommy Hilfiger, supra, Chapter 2, note 67, quoting McCarthy, supra, Chapter 5, note 38, 31:153. 380 Jordache Enterprises, Inc. v Hogg Wyld Ltd. (Jordache), 828 F. 2d 1482 (10 Cir. 1987) para. 26. 381 Mattel, supra note 83, para. 14. 382 Will Rogers, Warning to Jokers: Lay Off the Prince, in THE ILLITER- ATE DIGEST, I-3 THE WRITINGS OF WILL ROGERS (1975) (Whitefish, MT: Kessinger Publishing, 2003). 383 Supra note 373. 384 Supra note 380.

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way to appropriate or expropriate the fruits of intellectual labour in a legal way, or as a counter-balance to the power trademark holders have over consumers and the public in general.385 See also the topic ‘loss of control’ in the ‘Literature Review’ of Chapter 1. One could assume the proverb ‘High trees catch much wind’386 would apply to famous trademarks or trademarks with a reputation. In other words: that famous trademarks or trademarks with a reputation should be more willing to accept the fact that they will be parodied and criticized in comparison with lesser known trademarks. Just like the burden of proof in defamation actions is higher where the plaintiff is a public figure than where the plaintiff is a private figure,387 one would expect that the same principle would apply for parodic use of a famous trademark or a trademark with a reputation in comparison to a lesser known trademark. However, holders of famous trademarks and trademarks with a reputation can invoke an action based on trademark dilution in the case of a likelihood of trademark dilution, while the holders of lesser known trademarks are deprived of this right. The spectrum of opinions on parody and protection against trademark dilution have two extremes: one can assert that one can parody any trademark, unless the parodic use of the trademark competes directly with the original trademark in the same market, or as Judge Carter asserted, there is enough material in the public domain available for parody388 and therefore there is no need to use any trademarks for parody. In order to come up with a more nuanced view courts have developed dichotomous criteria to decide whether the parodic use of a trademark is

385 ‘Parody serves the public interest by ridiculing the power of these symbols, by achieving a provocative effect and by producing laughter’. James Richard Banko, ‘Schlurppes Tonic Bubble Bath’: In Defense of Parody,11U. PA. J. INT’L BUS. L. 627, 634 (1990). 386 Dutch proverb: ‘Hoge bomen vangen veel wind’. 387 A plaintiff who is a public figure must be able to prove malice, typically by the higher clear and convincing evidence standard, and actual damages. A plaintiff who is a private figure must be able to prove negligence by a ‘preponderance of the evidence’, actual damages or in case of ‘per se’-cases about one’s criminal background, business character, chastity, and so on, actual damages are presumed. Defamation Act 1996 (UK). 388 Judge Carter’s remark in a dicta, Loew’s Incorporated v. Columbia Broadcasting System, 131 F. Supp. 165 (S.D. Cal. 1955), affd sub nom. Benny v Loew’s Inc., 239 F.2d 532 (9th Cir. 1956), affd per curiam by an equally divided Court, 356 U.S. 43 (1957) (Douglas, J. abstaining), reh’g denied, 356 U.S. 934 (1958).

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allowed, including the parody/satire, non-competing/competing, non- commercial/commercial, high culture/low culture and transformative use/ non-transformative use dichotomies.

Parody/satire dichotomy The difference between parody and satire was tersely explained in 2002 in Mattel:389 ‘The song does not rely on the Barbie mark to poke fun at another subject but targets Barbie herself’390 and is therefore considered parody. In 1994, Campbell v Acuff-Rose Music, Inc.391 explicated it more elaborately: ‘Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s (or collective victims’) imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing’.392 Because parodists of trademarks necessarily need to use the trademark, they are given considerably more leeway than in the case of claimed parodic use that makes no comment on the trademark.393 An example of satiric use of the trademark is the 1999 case of Harley-Davidson, Inc. v Grottanelli.394 The defendant made no comment with his mark on the Harley-Davidson mark, but ‘simply use[d] it somewhat humorously to promote his own products and services’, therefore he was held to be infringing Harley-Davidson’s trademark. The same criterion was applied in Dr. Seuss,395 in 1996, in which case the defendant had published a book called The Cat NOT in the Hat!, thereby

389 Mattel sued MCA Records because the band Aqua had made the song ‘Barbie Girl’. Mattel, supra note 83, para. 14. 390 Id. 391 Acuff-Rose Music had sued 2 Live Crew for covering Roy Orbison’s song ‘Oh Pretty Woman’ in a rap version. Campbell petitioned at the Supreme Court: Campbell v Acuff-Rose Music, Inc., 510 U.S. 569 (1994) at 581. It also adds some definitions it found in dictionaries in footnote 14: ‘Satire has been defined as a work “in which prevalent follies or vices are assailed with ridicule,” 14 Oxford English Dictionary, or are “attacked through irony, derision, or wit,” American Heritage Dictionary. 392 For an overview of the parody/satire cases from the pre-Trademark Dilution Revision Act era: Juli Marshall and Nicholas Siciliano, ‘The Satire/ Parody Distinction in Copyright and Trademark Law: Can Satire Ever Be a Fair Use?’, ABA Section of Litigation Intellectual Property Litigation Committee Roundtable Discussion Online, accessed 9 February 2015 at: http://apps. americanbar.org/litigation/committees/intellectual/roundtables/0506_outline.pdf. 393 Harley-Davidson, Inc. v Grottanelli, 164 F.3d 806, 812–13 (2d Cir.1999). 394 Id. 395 Dr. Seuss, supra note 307.

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using Dr. Seuss’s trademarked title The Cat in the Hat! to get attention, instead of mocking the original. An example of parody can be found in Tommy Hilfiger in 1987,396 in which the juxtaposition of ‘the irreverent representation of the trademark with the idealized image created by the mark’s owner’ resulted in parody.397 Twenty years later in Haute Diggity Dog398 the same criterion was used: ‘a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark’s owner’.399

Non-competition/competition dichotomy As discussed in the introduction of this chapter, where the right to freedom of expression, or one of its derivations such as the right to use a trademark parodically, is weighed against trademark infringement, generally the latter will prevail. In 2011, in Ate My Heart v Mind Candy,400 such a case was submitted to the High Court of England and Wales. Mind Candy tried to invoke the right to use a trademark parodically as a defence against the claim by Ate My Heart of trademark infringement. Ate My Heart, Stefani Germanotta (Lady Gaga)’s company, was granted an interim injunction to restrain an infringement of trademark, so that ‘The Moshi Dance’, a song sung by the animated character Lady Goo Goo from the Moshi Monsters Game, which has similarities with Lady Gaga’s song ‘Bad Romance’, will have to be removed from YouTube.401 To see whether or not the trademark use was ‘without due cause’, according to Justice Vos, the similarities between the song of Lady Gaga and Lady Goo Goo were clear even to the untutored ear.402 Justice Vos held that although Lady Goo Goo started out as a parody within a game, when this animated character was going into direct competition with Lady Gaga this was no longer the case.403

396 Tommy Hilfiger, supra, Chapter 2, note 67. 397 Id., citing L.L. Bean, Inc. v Drake Publishers, Inc., 811 F.2d 26, 34 (1st Cir. 1987). 398 Haute Diggity Dog, supra note 98. 399 Id. 400 Ate My Heart Inc. v Mind Candy Ltd & Anr (Ate My Heart Inc.)(VosJ; [2011] EWHC 2741 (Ch); 10 October 2011). 401 David Tan, Goo Goo Gaga: The Chilling Effect of the Trade Mark Monster, 17 MALR 84 (2012). 402 Id. at 85. 403 ‘Lady Goo Goo, when she and the other take-off pop stars were born in the Underground Disco in the Game, were indeed parodies of the real stars that inspired them. But, as it seems to me, it is at least arguable that at some point

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Professor Tan did not agree with the logical chain of linkages drawn by the judge: between evocation, association and confusion.404 In contrast to the Ate My Heart v Mind Candy case, Haute Diggity Dog showed that evocation in itself is not enough reason to find confusion.405 ‘Despite Haute Diggity Dog’s obvious intent to profit from its use of parodies, this action does not amount to a bad faith intent to create consumer confusion. To the contrary, the intent is to do just the opposite – to evoke a humorous, satirical association that distinguishes the products’.406 Professor Tan asserted that in the case of ‘transformative play’ and based on the right to freedom of expression it should be possible to parody a trademark.407

Non-commercial/commercial dichotomy Just as trademark infringement is not possible in the case of non- trademark use (see Chapter 5), McCarthy asserted that trademark dilution in the case of non-commercial use of a trademark408 would be precluded.409 The same can be said for trademark use outside the course of trade in the EU.410 In Mattel,411 the toy manufacturing company claimed that consumers that hear Barbie’s name think of the song ‘Barbie Girl’, in addition to the doll, or potentially exclusively of the song. The Ninth Circuit decided that there was no dilution by blurring, because the use of the Barbie mark in the song was non-commercial and therefore exempted.412

Lady Goo Goo morphed into something rather different, namely a character who is being used to enhance the commercial success of the Moshi Monsters brand, and now to sell records’. Supra note 400, para. 46. 404 Supra note 401, at 86. 405 Haute Diggity Dog, supra note 98, at 260. 406 Id., at 263. 407 Tan, supra note 401. 408 15 U.S.C. § 1125(c)(3)(C). 409 ‘Non-trademark use does not dilute: in content of expressive works, e.g. novels; in content of TV and movies; prestige claims: “Moose River wine the Rolls-Royce of Idaho wines”; art, for example Andy Warhol’. J. Thomas McCarthy, The American Experience with Trademark Anti-Dilution Law, IBIL, February 2009, presentation slides, at 9, accessed 9 February 2015 at: http:// www.ucl.ac.uk/laws/ibil/docs/ibil_11feb09_mccarthy_ppt.pdf. 410 See Article 5(2) Trademark Directive, supra, Chapter 2, note 11, and Article 9(1)(c) Community Trademark Regulation, supra, Chapter 2, note 36. 411 Mattel, supra note 83. 412 15 U.S.C. § 1125(c)(3)(C).

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One could describe non-commercial parodic use of a trademark as use of a trademark that consists entirely of non-commercial, or fully consti- tutionally protected, speech.413 However, non-commercial parodic use of the mark does not really exist. Just as the ‘Barbie Girl’ song, sung by Aqua, was and still is commercial.414 The one who is using the trademark for parodic purposes is getting attention, which has a market value. To qualify commercial income as marginal as the court did in the Bild Dir Keine Meinung415 case or to assert that the trademark is not only used commercially, therefore the freedom of art was given priority, as the court did in Lila Postkarte416 ignores the binary character of commercial use: either any income is received or not. Even if the trademark is made for art, one can argue that the use of the trademark is commercial: Nadia Plesner made a painting, which she called Darfurnica,417 allegedly as a protest against the lack of public attention for the human tragedy taking place in Darfur while at the same time full page advertisements were placed for luxury products, such as those of Louis Vuitton. The painting includes an emaciated boy holding a Louis Vuitton bag. Plesner argued that she did not take advantage of Louis Vuitton in a commercial418 sense. However, she not only capital- ized on the attention she was getting as an artist because of the controversy that ensued, but she also was and, at the time of writing, still

413 Jerome Gilson et al., Trademark Protection and Practice § 5.12[1][c][vi], at 5-240. 414 At the time of writing, ‘Barbie Girl’ from the album Aquarium, sung by Aqua, could be downloaded for 1.29 dollars at Amazon.com, accessed 9 February 2015 at: http://www.amazon.com/Barbie-Girl/dp/B000V66VGA or iTunes, accessed 9 February 2015 at: https://itunes.apple.com/us/artist/aqua/id 62978. 415 Bild Dir Keine Meinung, OLG Hamburg, 4 June 1998, NJW-RR 1990, 1060. 416 Lila-Postkarte, Federal Court of Justice (BGH), Decision of 3 February 2005 – Az. I ZR 159/02; OLG Hamm. 417 The name Darfurnica is a reference to Guernica, painted by Pablo Picasso in response to the bombing of a Basque country village during the Spanish Civil War. 418 District Court of The Hague, 4 May 2011, IER 2011/39 with commentary from Wolfgang Sakulin (Nadia Plesner Joensen/Louis Vuitton Malletier SA) overturning the ex parte Court decision in preliminary proceedings of The Hague of 27 January 2011, LJN: BP9616 KG RK 10-214 (Louis Vuitton Malletier SA/ Nadia Plesner Joensen). The unofficial translation of the decision of the Court of Appeal was made by Kennedy Van der Laan, attorneys in Amsterdam, representing defendant Nadia Plesner, accessed 9 February 2015 at: http://www.nadia plesner.com/Website/Verdict_English.pdf.

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is selling merchandise with the depiction in question via her online shop,419 besides selling controversial original works. It does not matter how the money is spent and whether it is a non-profit organization that receives the revenues.420 Another example of ‘art’ that uses a trademark in a commercial way were pigs that were tattooed with the Louis Vuitton trademark logo without the authorization of Louis Vuitton.421 Besides the obvious animal rights abuse, the trademark logo has been abused422 in a commercial way, because after the pigs were tattooed, they were killed and stuffed, and sold for 106,000 pounds sterling per pig. The trademark holder suffers from the parodic use of his trademark by third parties: humour at his expense, which can have severe economic consequences. An example from the pre-social media era which illumi- nates the devastating effects of so-called non-commercial parodic use of a trademark is the Buckler case.423 In the summer of 1988, Dutch beer brewer Heineken introduced a beer with a low alcohol percentage under the trademark Buckler. Initially Buckler thrived, taking over Clausthaler, market leader in the low alcohol beer segment. Then, on the evening of 31 December 1989, a Dutch cabaret performer Youp van ‘t Hek mocked the brand and its users on a

419 Previously, Plesner sold T-shirts depicting only the boy with the bag that has the Louis Vuitton pattern protected by a Community Design. Plesner is still monetizing on the Louis Vuitton pattern, by selling replicas of the Darfurnica painting, 25 euros per poster. Nadia Plesner Foundation Shop, accessed 9 February 2015 at: http://www.nadiaplesnerfoundation.org/shop. 420 In Hong Kong so-called vanity licence plates, which included names such as Louis Vuitton and Gucci, were auctioned off by the Hong Kong government. The respective trademark holders argued that this constitutes trademark infringement. However, the Hong Kong court decided that it was not, since the revenues of the auction were given to charity and therefore the trademark was not used in a commercial way. Author’s interview with Mayank Vaid, IP Director of LVMH Fashion, 21 February 2012. Read more about the phenomenon of vanity plates: Laura Santini, ‘Market for Vanity Plates Grows Despite Hard Economic Times’, Wall Street Journal, 27 January 2010, accessed 9 February 2015 at: http://online. wsj.com/article/SB10001424052748703410004575028380283025678.html. 421 Urmee Khan, ‘Tattooed Pigs Banned from Modern Art Exhibition’, The Telegraph, 4 November 2008, accessed 9 February 2015 at: http://www. telegraph.co.uk/news/newstopics/howaboutthat/3382201/Tattooed-pigs-banned- from-modern-art-exhibition.html. 422 This abuse can be categorized as trademark dilution by tarnishment. See Chapter 4. 423 Marnix Langeveld, BUCKLER? PROOST! (Amsterdam: Otto Cram- winckel 2004).

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widely watched Dutch television programme. Van ‘t Hek’s point was mainly that people who drink Buckler are losers. After the evening, sales of Buckler plummeted. In 1993 Heineken had to withdraw Buckler from the Dutch market. Cause (the ‘humorous’ expressions) and effect (actual damages) were easy to prove. Therefore, according to Langeveld, under the former Dutch trademark law, Heineken would have won a lawsuit, but chose not to sue the cabaret performer,424 because the beer brewer was afraid of even more negative attention. The Buckler example belies the expression that any publicity is good publicity. Although it is often dubious whether the use of a trademark is really non-commercial, it is clear that even non-commercial use of an unauthorized trademark logo can lead to a likelihood of damages. If, for example, a trademark logo is known to be the symbol of high quality of the products that bear the trademark logo, then, this trademark’s reputation can be harmed if people associate its trademark logo with a substandard product. Louis Vuitton is perceived to attract designers with a refined taste, so its trademark logo can be tarnished when a Rolls-Royce is modified by a private individual, by covering the outer skin in Louis Vuitton trademark logos, which can give an overall impression of vulgarity425 and concomitant attention in the media.426 Dogan and Lemley discussed the use of the trademark ‘in a non- branding way’ when it is not used to indicate the source or sponsorship.427 However, branding is not a legal term, and one can argue that ‘comparing, describing, critiquing, informing, presenting in proximity, learning, commenting, reporting, or simply poking fun’ at or with the trademark are all included in the activity of branding. Siebrasse argued that given the dominant doctrine of source, if there is no likelihood of confusion, that all references of a mark with an unauthorized trademark

424 Id. 425 This also raises questions to what extent Rolls-Royce can enjoin the modification of one of its designs, based on moral rights: le droit moral d’intégrité de l’auteur. 426 Stern, Jared Paul, ‘The Brothel Prince & His Louis Vuitton Rolls-Royce’, Luxist, 11 May 2009, accessed 14 June 2015 at: http://royalwedding.aol.com/ www.luxist.com/2009/05/11/the-brothel-prince-and-his-louis-vuitton-rolls-royce/. 427 ‘The requirement thus distinguishes between those who brand their products using the plaintiff’s mark or some version thereof and others who use the plaintiff’s trademark in some non-branding way – for example, by comparing, describing, critiquing, informing, presenting in proximity, learning, commenting, reporting, or simply poking fun’. Dogan and Lemley, supra note 58, at 542.

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are permitted.428 On the other hand, if one takes the damaging effects of non-commercial parody into account, one could argue that such cases would ask for a broader interpretation of dilution: that trademark dilution by tarnishment or blurring is possible even in non-commercial settings. In the EU, member countries could already implement Article 5(5) Trademark Directive429 in order to provide protection against non- commercial use (see Chapter 6.3 ‘Legislation and Case Law in the EU’ under ‘Unfair advantage of repute’).

High culture/low culture dichotomy The distinction between commercial and non-commercial is hard to make and therefore not the best of criteria to decide whether parody should trump trademark dilution. Another controversial criterion to decide whether an expression deserves to be protected against trademark dilution is to give a value judgement. In Bleistein v Donaldson Lithographing Co. in 1903,430 Justice Holmes was concerned to let ‘professionals’ judge over the worth of pictorial illustrations: ‘It would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of pictorial illustrations, outside of the narrow- est and most obvious limits’.431 A value judgement on which expressions are worth protection is per definition subjective. As Justice Harlan put it in 1971 in Cohen v California: ‘[I]t is … often true that one man’s vulgarity is another’s lyric. Indeed, we think it is largely because governmental officials cannot make principled distinctions in this area that the Constitution leaves matters of taste and style so largely to the individual’.432 This opinion was confirmed in 1993 by the Supreme Court in Edenfield v Fane.433 Rowbottom disagreed and preferred that the courts distinguish between high and low levels of expression, for the

428 ‘It is a corollary of source theory that unauthorized use of the mark other than as a mark, and in particular use of the mark to refer to the goods with which the mark is normally associated, is permitted’. Siebrasse, supra, Chapter 2, note 151. 429 Supra, Chapter 2, note 11. 430 Bleistein v Donaldson Lithographing Co., 188 U.S. 239, 251 (1903). 431 Attorney Steve Baird’s remark on radio KYW Newsradio, quoted by Pat Loeb. 432 Cohen v California, 403 U.S. 15, 25 (1971). 433 ‘The commercial marketplace, like other spheres of our social and cultural life, provides a forum where ideas and information flourish. Some of the ideas and information are vital, some of slight worth. But the general rule is that the speaker and the audience, not the government, assess the value of the information presented’. Edenfield v Fane, 507 U.S. 761, 767 (1993).

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latter of which he wanted to provide some kind of proportional protection.434 However, one can argue that the difference between high and low expressions are arbitrary and elitist. The question of what kind of expressions overrule the right to protect against trademark dilution can also be inversed: when is the restriction of the freedom of expression legitimate in order to protect against trademark dilution? As an attorney pointed out on the radio: ‘One person’s bully is another’s legitimate trademark enforcement’.435 One can argue that the indignation, oftentimes vented in the media436 against companies defend- ing their trademarks, is one-sided.

Transformative/non-transformative dichotomy A more promising criterion to distinguish between expressions worth protecting and those that should give way to protection against trademark dilution is sufficient transformative use. Transformative use, a doctrine established in copyright law could also be applied to trademark law. If a parodist uses a substantial part of a work but also adds something to that work, the work will be original to the extent of that something, and it will be infringing for the remainder.437 The question is when the exact point arrives that the changes are sufficient to determine that the work has been transformed. In other words: when ‘use of a trademark’ has been transferred into ‘inspired by a trademark’.

434 Rowbottom, supra, Chapter 3, note 49, at 370. 435 Pat Loeb, ‘Penn Law Goes Head-to-Head Against Copyright Lawyer over Student Poster’, 20 March 2012, accessed 9 February 2015 at: http:// philadelphia.cbslocal.com/2012/03/20/penn-law-goes-head-to-head-against-copy right-lawyer-over-student-poster/. 436 Matthew Yglesias, ‘Louis Vuitton’s Campaign Against Free Speech’, Slate, 9 March 2012, accessed 9 February 2015 at: http://www.slate.com/blogs/ moneybox/2012/03/09/louis_vuitton_s_campaign_against_free_speech.html. 437 ‘At one time it was thought “that no infringement was committed if the amount of effort and skill which the parodist expended upon his work was so great that the parody could be regarded as an original work in its own right. This view, which was only obiter, was founded upon the misapprehension that a work was either an original work or an infringing one. Since a work can be both original and infringing” it is not surprising that, in Schweppes Ltd. v Wellington, Falconer, J. held that parody could not of itself affect the question of infringement: either a substantial part of a work was copied or it was not’. Jeremy Phillips, INTRODUCTION TO INTELLECTUAL PROPERTY LAW, 106 (Lon- don: Butterworths, 1986), quoting Millar v Taylor [1769] 4 Burr. 2303, at 2334–5. See R. Deazley, ‘Commentary on Millar v. Taylor (1769)’, in Primary Sources on Copyright (1450-1900), (eds L. Bently & M. Kretschmer, www.copy righthistory.org, 2008).

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Just as described within the fair use test for copyright there is a relationship between the extent the parody is substituting the original and the extent it is transformative. One can compensate for the other.438 So far that point was determined in a qualitative way by the court, for example via the formulation ‘not more than necessary’,439 which makes any effort to predict this proportional level elusive. Besides the legal uncertainty it creates, it renders automatic determination impossible. On the other hand, if one could come up with a certain quantitative standard, for example: ‘if more than 50 percent of the content has been changed there is transformative use’, it would lead to legal certainty and enforcement could be automated. Such a quantitative standard could be implemented for copyright and for trademark use by parodists on social media. The inconsistent way of how courts deal with parody defences will be illustrated below by examples from both sides of the Atlantic.

Parody and Dilution by Blurring/Detriment to Distinctiveness

In 2002, in the US, the courts in Tommy Hilfiger 440 and also in 2003 in WWE Inc. v Big Dog Holdings441 held that parody products would rather increase public identification with the senior marks instead of dilution by blurring. In contrast to these US decisions, the High Court of England and Wales in Ate My Heart Inc. v Mind Candy Ltd 442 of 2011 rejected a parody defence. Justice Vos in this case remarked that: ‘[t]he distinction

438 ‘A parody that more loosely targets an original than the parody presented here may still be sufficiently aimed at an original work to come within our analysis of parody. If a parody whose wide dissemination in the market runs the risk of serving as a substitute for the original or licensed derivatives, it is more incumbent on one claiming fair use to establish the extent of transformation and the parody’s critical relationship to the original. By contrast, when there is little or no risk of market substitution, whether because of the large extent of transformation of the earlier work, the new work’s minimal distribution in the market, the small extent to which it borrows from an original, or other factors, taking parodic aim at an original is a less critical factor in the analysis, and looser forms of parody may be found to be fair use, as may satire with lesser justification for the borrowing than would otherwise be required’. Campbell v Acuff-Rose Music, Inc., supra note 391, footnote 14. 439 Columbia Pictures Corp. v National Broadcasting Co., 137 F. Supp. 348, 350 (S.D. Cal. 1955). 440 Tommy Hilfiger, supra, Chapter 2, note 67. 441 World Wrestling Fed’n Entm’t, Inc. v Big Dog Holdings, Inc., 280 F. Supp. 2d 413, 441–2 (W.D. Pa. 2003) citing both Hormel Foods, supra, Chapter 2, note 91, and Jordache, supra note 380. 442 Ate My Heart Inc., supra note 400.

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between Lady Goo Goo and Lady Gaga has been blurred by the defendants in the way that I have mentioned, for example, by the use of the tag on the YouTube video and indeed the choice of the name, Goo Goo, similar as it is to Gaga’.443

Parody and Dilution by Tarnishment/Detriment to Repute

One would assume that the parody defence in Mutual of Omaha v Novak444 in 1986 would be unsuccessful and that the dilution by tarnishment claim would prevail. A designer called Novak produced a design using the words ‘Mutant of Omaha’ and was sued by Mutual of Omaha, an insurance company. The design, as found by the District Court, utilized ‘an accompanying logo depicting a side view of a war bonneted and emaciated human face’.445 The design initially was placed on T-shirts but later also on sweatshirts, caps, buttons and coffee mugs. In the spring of 1984 Novak produced designs using the words ‘Mutant Kingdom’ and ‘Mutant of Omaha’s Mutant Kingdom’ and an accompanying logo depicting a one-eyed tiger. With these designs Novak often used the phrase ‘Nuclear Holocaust Insurance’ or ‘Sponsored by Mutant of Omaha Nuclear Insurance Company’.446 The District Court granted a permanent injunction based on trademark infringement, but rejected the trademark dilution claim, which it called trademark disparagement.447 According to the court, Novak’s design might be considered to be in poor taste by some consumers but ‘it was not likely to create in the mind of consumers a particularly unwholesome, unsavory, or degrading association with Mutual’s name and marks’.448 On appeal the Eighth Circuit confirmed trademark infringement, but unfortunately did not reach the trademark disparagement (dilution) issue.449 In 1996, in Hormel Foods,450 Hormel Foods, Inc., the proprietor of the Spam trademark, unsuccessfully sued Jim Henson Productions for trademark dilution by tarnishment, because of the use of a character in the

443 Id., para. 65. 444 In the Mutual of Omaha v Novak case, trademark by tarnishment is called trademark disparagement. Mutual of Omaha v Novak, 648 F. Supp. 905 D.Neb.1986. 445 Id. 446 Id., at 398 and 401. 447 Id. 448 Id. 449 Mutual of Omaha Insurance Company v Novak, 836 F.2d 397 (8th Circ. 1987). 450 Hormel Foods, supra, Chapter 2, note 91.

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film Muppet Treasure Island called ‘Spa’am’. Hormel described the fictitious character as ‘evil in porcine form’ and the boar as unhygienic. The District Court, however, found ‘that Spa’am, a likeable, positive character, will not generate any negative associations’.451 Moreover, contrary to Hormel’s contentions, the District Court also found no evidence that Spa’am is unhygienic or that his character places Hormel’s mark in an unsavoury context.452 According to the court, the reference to the fact that Spam is made from pork is unlikely to tarnish Hormel’s mark, and absent any showing that Henson’s use will create negative associations with the Spam mark, there was little chance of a likelihood of dilution.453 In the 2002 Tommy Hilfiger 454 case, it was held that the mere association with pets, especially where the association is considered light-hearted, is not sufficient to find dilution by tarnishment. Also in 2002, in Kraft Food Holdings, Inc. v Helm,455 it was held that the connection between the defendant’s mark VelVeeda with sexually explicit content likely tarnished the plaintiff’s Velveeta mark. Therefore there could be no parody of Kraft’s cheese products. In 2003, in Caterpillar Inc. v Walt Disney Co.,456 where in the movie George of the Jungle 2 Caterpillar bulldozers tried to destroy the home of George, Caterpillar’s claim of dilution by tarnishment was rejected. According to the court the Caterpillar bulldozers were not cast in an unwholesome or unsavoury light as viewers would understand the fantastic nature of the movie. In the same year, in WWE, Inc. v Big Dog Holdings,457 it was held that the sine qua non of dilution by tarnishment is a finding that the plaintiff’s mark will suffer negative associations through the defendant’s use. Because the Big Dog graphics were considered humorous and family friendly there could be no negative association and thus no tarnishment.

451 Id. 452 Id. 453 Id. 454 Tommy Hilfiger, supra, Chapter 2, note 67. 455 Kraft Food Holdings, Inc. v Helm, 205 F. Supp. 2d 942, 949–50, 953 (N.D. Ill. 2002). 456 Caterpillar Inc. v Walt Disney Co., 287 F. Supp. 2d 913 (CD Ill 2003). 457 World Wrestling Fed’n Entm’t, Inc. v Big Dog Holdings, Inc., 280 F. Supp. 2d 413, 442–3 (W.D. Pa. 2003) citing Hormel Foods, supra, Chapter 2, note 91.

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Based on 15 U.S.C. § 1125(c)(3)(A),458 in 2009 Starbucks v Char- bucks,459 Black Bear’s use of the Charbucks trademark could not qualify under the parody exception, because it was used as a designation of source for its own goods.460 In the UK in 2011, in Ate My Heart Inc.,461 besides the likelihood of confusion standard that was held sufficient, Justice Vos held that, based on Article 9(1)(c) Community Trademark Regulation, there was a real risk of actual tarnishment of the Lady Gaga trademark.462 The German Trademarks Act, Markengesetz (MarkenG),463 does not have any explicit parody exception. However, Article 14(2)(3) MarkenG includes: ‘ohne rechtfertigenden Grund’, which is the German equivalent of the ‘use without due cause’ clause of Article 5(2) Trademark Directive. An example of due cause in the German context would be parody based on Article 5(1) Basic Law464 which protects the right to freedom of expression. Schneider argues that until the Lila Postkarte case465 in 2005 German courts assessed whether the parody defence was successful or not predominantly based on whether the trademark was used to identify the source.466 An overview of the most salient pre-Lila Postkarte cases will be given below: Mordoro-Poker in 1981, Lusthansa in 1982, adihash in 1992, Mars condoms in 1994, Shell-Totenkopf in 1998 and Deutsche Pest in 2000.

458 15 U.S.C. § 1125. 459 Supra, Chapter 2, note 209. 460 However, since the case was decided before the Trademark Dilution Revision Act, the parody exception may still apply even if the parody were used to ‘identify the source of the defendants’ goods’. Just like Haute Diggity Dog, supra note 98. 461 Ate My Heart Inc., supra note 400. 462 Id. 463 Gesetz über den Schutz von Marken und sonstigen Kennzeichen (Mark- engesetz – MarkenG), effective since 25 October 1994, Article 15 was amended on 24 November 2011. 464 Basic Law for the Federal Republic of Germany 1949, translated by professors Christian Tomuschat and David P. Currie, 2012. 465 Lila-Postkarte, supra note 416. 466 Bernadette Schneider, DIE MARKENPARODIE IN DEUTSCHLAND (University dissertation, Cologne: Peter Lang Internationaler Verlag der Wissen- schaft 2010), at 45.

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In 1981, in Mordoro-Poker,467 the Federal Court of Justice held that freedom of expression of the non-smoking organization, based on Article 5(1) Basic Law, which was manifested via a parodic non-commercial calendar for its members outweighed Philip Morris’s ‘encroachment upon established and practiced business operations’. In 1982, in Lusthansa, the Higher Regional Court of Frankfurt held that the parody defence claimed by Harlekin, a company that sold Lusthansa adhesive stickers, as a parody on Lufthansa was successful, because it did not use the mark to identify to the source, nor did they use the trademark in the course of trade. The Higher Regional Court interpreted ‘in the course of trade’ narrowly: Harlekin was selling joke articles, not airline flights.468 In 1992, in adihash, the Higher Regional Court of Hamburg held that the use of the slogan ‘adihash gives you speed’ printed on a T-shirt, and thereby using a mark similar to the trademark adidas was not allowed.469 The court held that the possibility of confusion could not be excluded,

467 Mordoro-Poker: Manufacturer of Marlboro cigarettes, Philip Morris, filed a law suit at the Regional Court of Munich against the non-smoking organization Aktive Heidelberger Nichtraucher in 1981 for using their altered advertisement on a calendar. The original advertisement was ‘Grand Marlboro-Poker with 1000 prizes worth 150,000 Mark’ (Großes Marlboro-Poker mit 1000 Gewinnen im Wert von 150 000 Mark) for sponsoring an evening school. Ernst-Günther Krause, ‘Nichtraucher-Initiative München e.V.’, 18 May 2011, accessed 9 February 2015 at: http://www.ni-muenchen.de/content/view/331/20/. This was changed into ‘Grand Murder-Poker, with the prizes 1. gastric ulcer, 2. heart attack, 3. lung cancer’ (Großes Mordoro-Poker mit den Preisen 1. Magen- geschwür, 2, Herzinfarkt, 3. Lungenkrebs). One day before the hearing, Philip Morris withdrew its claim. Then the non-smoking organization demanded from Philip Morris that they would issue a declaration of non-infringement for the calendar. Philip Morris refused, and was sued at the Regional Court of Munich, which rejected the claim of the non-smoking organization. The latter appealed successfully at the Higher Regional Court. In 1984 Philip Morris asked for a revision in the Mordoro-Poker case at the Federal Court of Justice, to no avail. Philip Morris’s claim of ‘encroachment upon established and practiced business operations’ were outweighed by the freedom of expression based on Article 5(1) Basic Law. It must have helped that the spread of the calendar was not for commercial reasons but to promote public health. BGH GRUR 1984, 684, sec. 823 I BGB, 17 April 1984. 468 Lusthansa: In Germany the long s, which is written as an f, can be found in the blackletter typeface ‘fraktur’, which increases a likelihood of confusion between Lufthansa and Lusthansa. Lusthansa, OLG Frankfurt, BGH GRUR 1982, 319, 320. The site Lusthansa was accessed 9 February 2015 at: http:// www.lusthansa.de/. 469 Adihash, OLG Hamburg GRUR 1992, 58.

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since one needed knowledge of the English language to appreciate the difference between ‘adihash’ and ‘adidas’. In 1994, in Mars condoms, the Federal Constitutional Court held that ‘Mars macht mobil bei Sex, Sport und Spiel’, which was meant as a parody on a similar slogan by the chocolate bar producer, was considered to be use of a designation in a trademark context which is not intended to be covered by the protective scope of the freedom of expression (Article 5(1) Basic Law).470 Therefore the parody defence was unsuccessful.471 In 1998, in Shell-Totenkopf, the Higher Regional Court of Hamburg472 held that the parody defence of a company selling T-shirts equipped with the trademark logo of Shell in an altered form was not successful. Although there was no direct competition between the oil company and the T-shirt company, the latter engaged in unfair competition, within the meaning of the unfair competition law; § 1 gesetz gegen den unlauteren Wettbewerb (UWG), because the sales of the T-shirts took advantage of the repute of the trademark.473 Also in 1998, in Bild Dir Keine Meinung, artist Kuno Klaboschke made postcards with the text ‘Bild Dir Keine Meinung’ (Do not form your own opinion), which is a parody on the slogan used by the newspaper Bild:‘Bild Dir Deine Meinung’ (Form your own opinion). The Court of Appeals of Hamburg held that Klaboschke’s parody defence was successful.474 Shell-Totenkopf and Bild Dir Keine Meinung were both decided by the Higher Regional Court of Hamburg in 1998. The difference is that the court in Bild Dir Keine Meinung determined that the trademark was used more artistically than commercially, and that the commercial income was marginal.

470 Basic Law for the Federal Republic of Germany 1949, supra note 464. 471 Mars condoms: In the 1970s chocolate bar producer Mars used the slogan in Germany ‘Mars macht mobil bei Arbeit, Sport und Spiel’) (Mars makes you mobile at work, sports and games). Mars (Schokoriegel), Wikipedia, accessed 9 February 2015 at: http://de.wikipedia.org/wiki/Mars_(Schokoriegel). Marskon- dom, Markenverunglimpfung I, BGH GRUR 1994, 808, NJW 1994, 3342, decision of 27 May 1994. See also Sönke Becker, PARODIE UND KOMMERZ, EINE RECHTSVERGLEICHENDE UNTERSUCHUNG DES AMERIKANIS- CHEN UND DEUTSCHEN URHEBER- UND MARKENRECHTS (Heidelberg: C.F. Müller Wissenschaft, 2004), at 52. 472 Shell-Totenkopf, OLG Hamburg, GRUR 1998, 1121 (1122), 11 June 1997 3 U 222/96 operating consultant in 1998, 235. 473 Id. See also Schneider, supra note 466, at 183. 474 Bild Dir Keine Meinung, OLG Hamburg, 4 June 1998, NJW-RR 1990, 1060.

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In 2000, in Deutsche Pest, the Regional Court of Hamburg held that a van in the yellow colour of the German post office Deutsche Post with the words ‘Deutsche Pest’ (German plague) was used by a trade-fair construction company.475 In weighing the interests of the freedom of expression and the ‘general personality rights’ of the trademark holder, the court held that the ‘defamatory disparaging criticism’476 does not prevail because a key part of the fundamental rights of the trademark holder was affected. These examples of German case law demonstrate the variety in which the courts are weighing parodic but tarnishing use of trademarks based on the freedom of expression, with the origin of source doctrine,477 general personality rights of the trademark holder or use in a designating context. According to Schneider, Lila Postkarte was the watershed moment when German courts no longer based their parody decisions predominantly on whether there is confusion or not.478 As discussed in the introduction to Chapter 5, Kozinski pointed out that general confusion excludes any claim based on the right to freedom of expression.479 From the above mentioned cases one can determine that the courts in Lusthansa, adihash and Mars condoms based their parody decision predominantly on confusion, but the other cases did not. However, Lila Postkarte can be indicative of German courts following the structure of their implementation of Article 5(2) Trademark Directive more stringently.480 In Lila Postkarte, a postcard using the word Milka, with the purple background colour trademarked by chocolate manufacturer Milka, was published. The partly purple cow that was used in some of Milka’s advertisements was described as a word in the following poem:481

Über allen Wipfeln is Ruh, irgendwo blökt eine Kuh. Muh! Rainer Maria Milka482

475 Deutsche Pest, LG Hamburg GRUR 2000, 514. 476 The Regional Court of Hamburg stated that ‘die ehrverletzende herabwür- digende Kritik nicht obsiegen, weil ein Kernbereich der Grundrechte der Markeninhaberin berührt sei’. LG Hamburg GRUR 2000, 514. 477 Schneider, supra note 466, at 45. 478 Id. 479 Kozinski, supra, Chapter 1, note 39, at 973. 480 Para. 14 Abs. 2 nr. 3 MarkenG, which conforms to Article 5(2) Trademark Directive, supra, Chapter 2, note 11. 481 Schneider, supra note 466, at 46–7. 482 An English translation is: ‘Over all the mountains is peace, bleats a cow somewhere. Moo!’ The case in German plus an illustration of the Lila Postkarte

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The imaginary poet Rainer Maria Milka was attributed, which is an allusion to Rainer Maria Rilke.483 In 2005, the Federal Court of Justice weighed the freedom of art of Article 5(3) Basic Law484 against the guarantee of property protection of Article 14(1) Basic Law.485 The court held that that there was no disparagement of the trademark and that the trademark was not only used commercially, therefore the freedom of art was given priority.486 So the parodic use of the trademark was with ‘rechtfertigenden Grund’ (due cause), conforming to para. 14 Abs. 2 nr. 3 MarkenG,487 Germany’s equivalent of Article 5(2) Trademark Directive’s ‘use with due cause’ clause. Comparable to Lila Postkarte488 in the sense that it also follows the structure of Article 5(2) Trademark Directive, but with an opposite result, is the Styriagra489 case of 2010: Richard Mandl, a producer of pumpkin seeds from the Austrian province Steiermark, coated the pumpkin seeds in a blue coloured sugar and sold them under the trademark Styriagra, alluding to the alleged aphrodisiacal properties of pumpkin seeds. Pfizer, holder of the Viagra trademark, sued the producer. The court of first instance held that the reputation of Viagra’s trademark was not affected. However, the court of appeal and the supreme court held that Mandl used

can be found here: ‘Verwendung einer bekannten Marke in humorvoller Weise’ Kanzlei Prof. Schweizer – Urteilsdatenbank, (accessed 30 May 2015) http:// www.schweizer.eu/bibliothek/urteile/index.html?id=12725. 483 Rainer Maria Rilke was a famous German-language poet, 4 December 1875 – 29 December 1926. Rainer Maria Rilke, Wikipedia. 484 Article 5(3) Basic Law for the Federal Republic of Germany (Grundge- setz): Art and science, research and teaching are free. The freedom of teaching does not absolve from loyalty to the constitution (Kunst und Wissenschaft, Forschung und Lehre sind frei. Die Freiheit der Lehre entbindet nicht von der Treue zur Verfassung). 485 First sentence of Article 14(1) Basic Law for the Federal Republic of Germany (Grundgesetz): Property and inheritance shall be guaranteed (Das Eigentum und das Erbrecht werden gewährleistet). 486 Lila-Postkarte, supra note 416, para. 34. 487 Supra note 480. 488 The Austrian Supreme Court also refers explicitly to this case, Styriagra, Austrian Supreme Court, 22 September 2009; 17 Ob 15/09v, paras 3.1 and 3.3. 489 Id. Read Maximilian Schubert, ‘Styriagra: Pfizer Getting Seriously “Excited” about the Sale of Blue Coloured Pumpkin Seeds’, Austrotrabant, 3 December 2009, accessed 9 February 2015 at: http://austrotrabant.wordpress. com/2009/12/03/styriagra-pfizer-getting-seriously-excited-about-the-sale-of-blue- coloured-pumpkin-seeds/, and also Stephanie Bauer, ‘Austria: Trademark Parody – Humour is …’, 17 February 2010, accessed 9 February 2015 at: http://www. mondaq.com/x/94072/.

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the Viagra trademark to attract the public’s attention to the Styriagra trademark and benefit from Viagra’s reputation,490 even though it recognized the humorous allusion of Styriagra to Viagra.491 Therefore, by using the trademark Styriagra, Mandl had taken unfair advantage of or had acted detrimentally to the distinctive character or repute of Pfizer, on the basis of Articles 5(2) Trademark Directive and 9(1)c Community Trademark Regulation. In France, in the Je boycott Danone case (2001–03), Olivier Malnuit used the trademark Danone in the name of the website Jeboycottdanone. net, which was advocating employers’ interests, and reproduced the trademark logo of Danone wherein the red bar was substituted by a black bar, and added the words ‘Je boycott’ (I boycott) above and ‘.net’ next to the name Danone. The Paris High Court492 in two summary proceedings ordered Olivier Malnuit and Voltaire Network who were exploiting the website to cease using the sign similar to Danone.493 The Paris High Court asserted that the use of the semi-figurative trademark (trademark logo of which the trademark name is a part) on the website jeboycottdanone.net exceeded the requirements of the right to freedom of expression, and took the consequences of a possible weakening of the trademark into account.494

490 The Supreme Court cited para. 49 of L’Oréal and Others, supra, Chapter 2, note 95: ‘to ride on the coat-tails of that mark in order to benefit from its power of attraction, its reputation and its prestige, and to exploit, without paying any financial compensation …’ Styriagra, supra note 488, para. 3. 491 ‘Undoubtedly, the emphasis is, however, an attempt by the defendant to create by the reference to a well known brand awareness for its own product’. (Zweifellos im Vordergrund steht jedoch der Versuch des Beklagten, durch die Anlehnung an eine bekannte Marke Aufmerksamkeit für sein eigenes Produkt zu erregen.) Styriagra, supra note 488, para. 3.4. 492 Paris High Court is the ‘Tribunal de Grande Instance de Paris’. 493 Je boycott Danone, Paris High Court (Tribunal de Grande Instance de Paris), preliminary injunction of 23 April 2001, Compagnie Gervais Danone/ Olivier M., 7 Ways, ELB Multimédia. Paris High Court preliminary injunction of 14 May 2001. 494 The Paris High Court also asserted that the weakening of the trademark would cause greater harm to the employees of the Danone group, without proven benefit for wages affected by the closure (Attendu que le recours à la reproduction des marques semi-figuratives Danone excède donc les besoins de la liberté d’expression; qu’il peut avoir, au contraire, un effet d’affaiblissement desdites marques pour le plus grand préjudice des salariés du groupe et sans gain avéré pour les salaires concernés par les mesures de fermeture). Paris High Court preliminary injunction of 14 May 2001.

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In a separate decision the Paris High Court held simply that the parody, pastiche or caricature exception to author’s right is not applicable to trademark law.495 Olivier Malnuit and Voltaire Network successfully appealed.496 The Paris Court of Appeal stated that jeboycottdanone.net clearly does not intend to promote products competing with Danone. Instead the court considered that the defendants strictly exercised their right to freedom of expression by using the sign similar to Danone which was necessary and purely used in a polemical way, and that remarks about the products were not in any way denigrating, but instead positive statements.497 In 2002, in CNMTR v societé JT,498 the Paris Court of Appeal held that the parody defence was admissible after CNMTR used the trademark ‘Camel’, in the context of an anti-smoking campaign in combination with

495 ‘L’exception de parodie, de pastiche ou de caricature, propre à la législation des droits d’auteur, n’existe pas en droit des marques’. Paris High Court (Tribunal de Grande Instance de Paris) third chamber, first section, decision of 4 July 2001, Sté Compagnie Gervais Danone et Sté Groupe Danone/Olivier M., SA 7 Ways, Sté ELB Multimédia, association ‘Le Réseau Voltaire Pour la Liberté d’expression’ (ci-après ‘Réseau Voltaire’), Sté Gandi et Valentin L. (exerçant sous le nom commercial ‘Altern B’). 496 Paris Court of Appeal (Cour d’appel de Paris) fourth chamber, section A, judgment of 30 April 2003, Olivier M., Réseau Voltaire/Compagnie Gervais Danone, Groupe Danone. 497 ‘Que, en effet, même s’il est fait, pour partie, référence aux marques verbales et à la reproduction des marques semi figuratives appartenant à la société Compagnie Gervais Danone, à la seule différence tenant à la substitution d’un trait noir dans la partie inférieure du cartouche au trait rouge de l’original, les signes “jeboycottedanone.net” et “jeboycottedanone.com” ne visent mani- festement pas à promouvoir la commercialisation de produits ou de services, concurrents de ceux des sociétés intimées, en faveur de l’association Réseau Voltaire et de Olivier M. mais relève au contraire d’un usage purement polémique étranger à la vie des affaires; qu’il résulte des éléments du dossier que, d’une part, la référence à la marque Danone était nécessaire pour expliquer le caractère politique ou polémique de la campagne et, d’autre part, que, contrairement aux allégations des sociétés Groupe Danone et Compagnie Gervais Danone, leurs produits n’étaient nullement dénigrés ni même visés, puisque, sur les sites litigieux, on relève, tout au contraire, des mentions telles que “on aime vos produits. On a envie de continuer à les fabriquer, on a envie que les gens continuent à les acheter”;’ Paris Court of Appeal (Cour d’appel de Paris) fourth chamber, section A, judgment of 30 April 2003, Olivier M., Réseau Voltaire/Compagnie Gervais Danone, Groupe Danone. 498 Comité national contre les maladies respiratoires et la tuberculose CNMTR v société JT International GmbH et autre (CNMTR v société JT), Paris Court of Appeal (Cour d’appel de Paris), 2002.

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a picture of a dromedary lying on the ground with his legs folded underneath his emaciated body, in combination with the text ‘let yourself be fooled by the smoke’.499 The French Supreme Court, however, overruled the decision because it held that a parody at the expense of a cigarette brand for the public health goal pursued by CNMTR and its right to freedom of expression do not justify the violation of the rights of a cigarette brand that operates within the law.500 So in summary: in the Je boycott Danone case, the Paris High Court applied the principle of proportionality, and determined separately that parody, pastiche and caricature are incompatible with trademark law. The Paris Court of Appeal, however, held that the defendants had used the trademark within their freedom of expression, and had not used the website to promote competing products. The court seems to contend that the website was not used in the course of trade. In CNMTR v societé JT, the Paris Court of Appeal accepted the parody defence. However, then the French Supreme Court did not allow a parody defence at the expense of the cigarette company that acted within the law, even though it was to further the public health goals. The different approaches to parody as a defence in cases of trademark dilution by the courts in the different EU member countries demonstrate that parody is a constant source of legal uncertainty. Further EU-wide harmonization might be desirable. Olson argued that parody defences in the US case law are not balanced with the trademark holders’ exclusive rights: ‘Under the current statutory framework, if a mark holder seeks injunctive relief for an artist’s tarnishing use, he will fail every time’.501 One can argue that this view can be nuanced: in the US if the trademark holder can prove that his trademark is used in a sexually explicit context a dilution by tarnishment claim has a substantial chance of being successful. In the EU, however, trademark holders seem to be quite successful in proving detriment to the character or repute of their trademark. Olson proposed to apply a

499 ‘[T]e laisse pas rouler par la cigarette’, CNMTR v société JT, Paris Court of Appeal (Cour d’appel de Paris), 2002. 500 CNMTR v société JT, Supreme Court (Cour de cassation) – Deuxième chambre civile, judgment number 1601, 05-13.489, 19 October 2006. 501 Alexandra Olson, Dilution by Tarnishment: An Unworkable Cause of Action in Cases of Artistic Expression, 53 B. C. L. REV. 693, 734 (2012).

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balancing test conform the fair use test for copyright law which should replace the non-commercial use requirement and broad fair use exclusions.502

Free-Riding/UnfairAdvantage of Distinctive Character or Repute

Justice Vos explained that Ate My Heart Inc. v Mind Candy Ltd dealt not with amusingly similar referential names such as Broccoli Spears. Lady Goo Goo was known on the internet and therefore could not exploit her name without taking unfair advantage of the Lady Gaga trademark.503

Criticizing and Commenting

It seems obvious that news reporters, commentators and criticasters must be permitted to use trademarks to report, comment or criticize the trademarked product or service or the trademark holder.504 Critique on a perceived lack of social or environmental responsibility can be especially useful to the public at large and is arguably indispensable for the democratic process. However, when journalists use a trademark logo to illustrate an article that has nothing to do with a particular trademark or trademark holder, then an approach comparable to the parody/satire dichotomy would be welcome, in which the trademark can only be used in cases where the trademark or the trademark holder is the subject. Rowbottom argued that there should be different norms for professional and amateur writers: ‘That condition specifically refers to the norms of the mass media professional, and as a result the defence will offer limited protection to the amateur digital speaker that is not acquainted with those journalistic practices’.505 One can argue that to distinguish between amateur and professional journalists is untenable and artificial. Instead this book will propose the formality of linking back to the original site as a precondition for the use of the trademark logo on social media and this can be used as a defence against trademark dilution claims. Linking back conforms to the journalistic norm of the adversarial process, see Chapter 8.

502 Id., at 729. 503 Ate My Heart Inc., supra note 400, para. 50. 504 In the US, this is permitted under U.S.C. § 1125(c)(3)(B), in the EU, Article 10 ECHR. 505 Rowbottom, supra, Chapter 3, note 49, at 359.

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Current Trademark Law’s Insufficient Protection of the Trademark Logo on Social Media

Anti-trademark dilution protects the public interest, but also the individual rights of the trademark holders,506 which now indirectly adds to the public interest by the added wealth and broadened products and services assortments the trademark holders create. Therefore from both a trademark holder and public interest point of view one can argue that trademark holders have a need to protect their expenditure of time, effort, labour, money and skills and strategies507 they have put into the goodwill and reputation of their trademarks.508 The anti-dilution laws in the US and EU are insufficient to turn the tide of massive unauthorized use of the trademark logo on social media. Google received more than 35 million copyright removal requests in a month.509 Although Google did not publish information on the number of requests to remove trademarks, including trademark logos, one can assume that these numbers follow the trend of the copyright removal requests. To deal with these on a case by case basis via litigation seems not feasible due to the sheer quantity. The role of the trademark in society has expanded, from signifier of the source of origin to a signifier of reputation and goodwill,510 and the

506 ‘… great importance to the public interests as well as to the individual rights, of maintaining inviolate, that peculiar property which serves to designate and identify the goods, and wares, and merchandise of the artisan, the manufacturer, and the merchant, which minister to the constant necessities of all, and which furnish the sole assurance and guarantee of their genuineness, purity and integrity’. Derenberg, supra, Chapter 5, note 36, at 445. 507 ‘Any expenditure of mental or physical effort, as a result of which there is created an entity, whether tangible or intangible, vests in the person who brought the entity into being, a proprietary right to the commercial exploitation of that entity, which right is separate and independent from the ownership of that entity’. D.F. Libling, The Concept of Property: Property in Intangibles,92LAWQ. REV. 103, 103–19 (1978). 508 David Tan juxtaposes the point of view that companies spend a lot of money building their brands, and hence want greater protection for their trademarks, and whether there should be greater public usage because brands derive their economic value as a result of the emotional investments by consumers? Comments via email, on file with the author, 19 October 2010. 509 Google copyright removal receipts in the last month (35,754,665): 30 May 2015, accessed 30 May 2015 at: http://www.google.com/transparencyreport/ removals/copyright/. 510 ‘Moreover, such marks frequently perform functions which go beyond linking goods or services to a uniform source. They present a powerful image of

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expansion of trademark law has followed this development beyond the rationale of decreasing economic search costs. However, the anti-dilution laws suffer from some fundamental flaws, which have arisen because the ideas of Schechter have only been partially implemented. Instead of his proposal to protect trademarks that are original and unique so that they can be distinctive from any other, the concept of famous trademark or trademark with a reputation has been implemented, probably inspired by the well-known trademark doctrine, which was a Fremdkörper (alien body) in regard to the dilution doctrine until it was incorporated by TRIPS.511 The situation whereby multiple proprietors can use the identical trademark as long as they operate in different trademark classes is untenable in the era of globalization and the internet, where markets are physically and virtually connected, where travellers and internet users come into contact with any trademark. The fair use test in the US and the limitations and exceptions in combination with the two-step test can only partly be automated. They are largely based on qualitative, and thus per definition subjective, criteria, while only those factors that are based on quantitative, and thus objective, criteria are suitable for automation. It is an illusion to presume that litigation in a court of law could have the resources or priority to evaluate a flood of trademark abuse cases on a case by case basis. As already concluded in Chapter 4, litigation is not scalable.

Visuality of the trademark logo ‘[a] reputation like a face is the symbol of its possessor and creator, and another can only use it as a mask’.512 Just as trademarks tell stories, so do trademark logos, arguably in a condensed form.513 One can see the trademark logo as a symbol with a cluster of meanings. The OHIM acknowledges that trademarks do not only serve to indicate the origin of

quality, exclusivity, youth, fun, luxury, adventure, glamour or other reputedly desirable lifestyle attributes, not necessarily associated with specific products but capable of presenting a strong marketing message in itself’. Advocate General Sharpston in Intel Corp. Inc. v CPM United Kingdom Ltd (Case C-252/07), Opinion of Advocate General, 26 June 2008, para. 8. 511 Article 16(3) TRIPS, supra, Chapter 2, note 26. 512 Judge Learned Hand in Yale Elec. Corp. v Robertson, supra, Chapter 2, note 82. 513 ‘[T]rade marks tell stories. Their expressiveness is the basis of commercial activity, the trader-author the conduit of meaning, and the market-audience the monitor and arbiter of taste’. Megan Richardson, Trade Marks and Language, 26 SYDNEY L. REV. 193, 196 (2004).

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a product, but also to convey a certain message or image to the consumer.514 Spiesel remarked that to determine whether the picture was used fairly rests largely on a judgement about whether its meaning has shifted.515 She also noted that this recoding is assessed by translating that which has been observed into words. On social media trademark logos are encoded by the trademark holder with meanings to associate it with, for example, desirability and luxury. These attributes in turn are then decoded by internet users. However, the user-generated content characteristics of social media make it possible that internet users recode the meaning of trademark logos in harmful ways. Tushnet demonstrated that pictures have an immediacy and therefore their meaning is context-bound.516 Because the context is so relevant, trademark logos are vulnerable to unsavoury contexts. This book will propose that only those trademark dilution defences against trademark dilution claims of unauthorized trademark logos on social media will be effective under the condition of linking back the trademark logo to the original site (see Chapter 8).

514 ‘It follows that trade marks do not only serve to indicate the origin of a product, but also to convey a certain message or image to the consumer, which is incorporated in the sign mostly through use and, once acquired, forms part of its distinctiveness and repute. In most cases of reputation these features of the trade mark will be particularly developed, as the commercial success of a brand is usually based on product quality, successful promotion, or both and, for this reason, they will be especially valuable to the trade mark owner. This added value of a mark with reputation is precisely what Article 8(5) intends to protect against undue detriment or unfair advantage’. OHIM, The Manual Concerning Opposition – Part 5, Article 8(5) CTMR, at 35. 515 Spiesel, supra, Chapter 4, note 48. 516 Rebecca Tushnet, Worth a Thousand Words: The Images of Copyright Law, 125 HARV. L. REV. 683 (2012).

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7. Intermediary liability Why the safe harbour provisions must be substituted for strict intermediary liability

7.1 INTRODUCTION

With great power comes great responsibility.1

Before the advent of social media, towards the end of the ‘dot.com bubble’,2 the idea took root that electronic commerce would be crucial for society. Because of ‘the embryonic state of electronic commerce, policies should be crafted with care and with due recognition of its fragile and evolving nature’.3 In this light it was thought that, among other internet intermediaries, the online service providers (OSPs),4 who merely host content posted by third parties, needed to be protected against a flood of legal conflicts because of alleged copyright and trademark infringements.5 Legislators on both sides of the Atlantic assumed that this would ‘ensure that the efficiency of the internet [would] continue to improve and that the variety and quality of services on the internet [would]

1 Voltaire. Adrien Jean Quentin Beuchot, Pierre-Auguste-Marie Miger ŒUVRES DE VOLTAIRE, VOLUME 48 (Paris: Lefèvre, 1832). 2 The ‘dot.com bubble’ took place between 1995 and 2000. Exuberant expectations about technological advances led to speculation that anything related to the internet would prosper. 3 Andrew Wyckoff and Alessandra Colecchia, The Economic and Social Impact of Electronic Commerce, Preliminary Findings and Research Agenda, OECD (1998), at 12. 4 Online service provider (OSP) means an intermediary that is called an internet society service in the E-Commerce Directive and a service provider in the DMCA, supra, Chapter 1, note 5. 5 In this book copyright and trademark infringements on the internet together are called content infringements.

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continue to expand’.6 The development of e-commerce proved to be robust and user generated content on social media started to blossom, and the foreseen problems never materialized. Therefore, one can assert that this eliminated the raison d’être for the safe harbour provisions.7 The safe harbour provisions are supposed to give internet intermediaries, including OSPs, immunity in case of intermediary liability,8 because of content infringements by internet users,9 if they met two prerequisites. The first prerequisite is that an OSP has no actual knowledge nor constructive knowledge.10 And where it obtains such knowledge or awareness it must expeditiously remove or disable access to such content.11 In the case of the safe harbour provisions in the Lanham Act the first prerequisite is preventing future presentations of trademark infringements. The second prerequisite is that OSPs should act neutrally in relation to content uploaded by third parties, for example user generated content on social media or internet auctions. However, this is in conflict with OSPs’ desire to harness technology to further their entrepreneurial interests. The jurisprudence shows that knowledge (the first prerequisite) is narrowly interpreted, while neutrality (the second prerequisite) is broadly interpreted. All these safe harbour provisions were introduced before the ascent of one subspecies of OSP: the social media provider. An additional advantage of the concept of the safe harbour provisions, it was assumed, would be that they would not have to filter inappropriate content, so that they could primarily focus on their core activities,12 without having to fear

6 Viacom Int’l Inc. v YouTube, Inc., 718 F. Supp. 2d 514, 519 (S.D.N.Y. 2010). Quoting ‘The Senate Committee on the Judiciary Report’, S. REP. NO. 105-190 (1998), at 8. 7 Danny Friedmann, Sinking the Safe Harbour with the Legal Certainty of Strict Liability in Sight, 9(2) JOURNAL OF INTELLECTUAL PROPERTY LAW AND PRACTICE 148–55 (2014). 8 Secondary liability is also called third party liability, applied to internet intermediaries this is also called intermediary liability. 9 The internet users that upload infringing content are the primary infringers. 10 Awareness of facts or circumstances that infringing activity is apparent. 11 17 U.S.C. § 512(c)(3); and Recital 46 of the preamble to and Article 14(1)(b) of the E-Commerce Directive, supra, Chapter 1, note 5. 12 The US Congress was concerned that internet service providers were forced to operate a human compiled directory of websites or to monitor a site for inappropriate content. In the legislative history it becomes clear that Congress

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being sued for intellectual property infringements. However, this idea does not correspond well with reality. For social media providers the risks of being sued by content holders have become substantial, because of the massive amount of user generated content they are hosting. Social media are already swamped by notice and takedown requests by alleged content holders. This chapter will answer why the safe harbour provisions that exclude social media from intermediary liability for trademark infringement under certain conditions is not effective. First the relevant safe harbour provisions in the case of trademark infringements are briefly introduced in Chapter 7.2. The question will be answered why safe harbour provisions only give a false sense of safety and do not provide real protection to social media providers. Chapter 7.3 will investigate why OSPs in general and social media providers in particular are not incentivized to proactively monitor for infringing material and whether this could be changed via self-regulation, market power or legislation. Followed by why and how the intermediary liability could provide relief to trademark holders. Chapter 7.4 will explain the grounds that can pierce the veil of the safe harbour provisions and enable trademark holders to sue the OSPs, including social media providers: contributory liability, inducement as part of contributory liability, and vicarious liability. This section also investigates inducement as a possible stand-alone action and some interesting developments to use Facebook to sue primary infringers, the internet users, on social media. Chapter 7.5 will provide an overview of some seminal case law in which trademark and copyright holders have filed lawsuits against eBay and Google France. Although the internet auction and reference service are not purely social media, these cases illuminate the filter conditions of the safe harbour provisions relevant to OSPs, including social media. Chapter 7.6 will answer the question to what degree OSPs, including social media providers, should be obligated to filter infringing content. Chapter 7.7 examines what the implications are of the safe harbour provisions in case of trademark infringement in regard to the legal certainty of social media providers, trademark holders and internet users.

wants liability to arise only in such cases if the infringement was ‘obvious’, such as a ‘“pirate” site’, such that ‘online editors and catalogers would not be required to make discriminating judgments about potential copyright infringement’. H.R. Rep. No. 105-551 pt. 2 at 57–8; S. Rep. 105-190, at 48–9.

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7.2 SAFE HARBOUR PROVISIONS

We cannot be liable for actions of third parties. As long as we follow a regime of taking things down that are reported to us, which we have done over all these years, we are protected according to the law. Transcription of Kim Dotcom in 2012.13 The DMCA14 and the Communications Decency Act (CDA)15 are both not applicable to trademark infringements. However, the DMCA is relevant to the subject, because it has been used as an inspiration for the E-Commerce Directive16 in the EU and also for the notice and takedown procedures de facto used by eBay and social media providers. Case law on the CDA is also relevant since it has pointed the way to the applicability of the safe harbour provisions in the Lanham Act in the case of trademark infringements. Then the safe harbour provisions of the Lanham Act that are partly applicable in the case of trademark infringements in the US will be examined, followed by the safe harbour provisions of the E-Commerce Directive,17 applicable in the case of all intellectual property infringements in the EU, including trademark infringements.

DMCA and CDA

On 12 October 1998, the US Congress passed the DMCA,18 which for the most part became effective on the same date.19 The DMCA has the most prominent safe harbour provisions in the US, or arguably worldwide. Although it is only applicable in the case of copyright infringement and not trademark infringements, it is relevant for this book: it inspired the safe harbour provisions in the EU which has led to the safe harbour provisions in the E-Commerce Directive, applicable to all intellectual

13 Dotcom, supra, Chapter 4, note 53. 14 Supra, Chapter 1, note 5. 15 47 U.S.C. § 230 (2000). 16 Directive 2000/31, supra, Chapter 1, note 5. 17 Id. 18 DMCA, supra, Chapter 1, note 5. 19 Most provisions of the DMCA are effective on the date of enactment. However, those provisions that are related to the WIPO copyright treaties became effective until these relevant treaties came into force. WIPO Performances and Phonograms Treaty, effective on 20 May 2002. WIPO Copyright Treaty effective on 6 March 2002, supra, Preface, note 11. The prohibition on the act of circumvention of access control measures does not take effect until two years from enactment (28 October 2000).

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property infringements, including trademark infringements. Also, the DMCA20 has set a de facto standard in regard to notice and takedown procedures; its structure has been followed by eBay and many social media providers. It also provides a context to demonstrate how the safe harbour provisions in the Lanham Act differ from those in the DMCA. In short: the DMCA21 exempts internet intermediaries for secondary liability of copyright infringements, as long as they expeditiously remove infringing copyright material or disable access of such material after being notified, conforming to a specified notice and takedown procedure,22 or after they are aware of facts or circumstances that infringing activity is apparent. The alleged copyright infringer has the opportunity to counter-notify the one who alleged to be authorized by the copyright holder, in order to get the content back online.23 The copyright holder then has 10 to 14 days to avoid the content being placed back by notifying the designated agent of the OSP that he has filed a court order to restrain the user from engaging in infringing activity on the servers of the OSP.24 Internet intermediaries can be divided into five categories: to provide transitory digital network communications,25 system caching26 or information residing on systems or networks at the direction of users,27 search engines and hyperlinks.28 The latter two, called together information location tools, can only be found in the DMCA.29 The member states of the EU deal with information location tools in a way similar to hosting.30 The DMCA and in slightly different wording the E-Commerce Direct- ive31 both distinguish between the different internet intermediaries’ activities:

20 Supra, Chapter 1, note 5. 21 Id. 22 § 512(c)(1)(A)iii DMCA, id. 23 § 512(g)(2)(B) DMCA, id. 24 § 512(g)(2)(C) DMCA, id. 25 § 512(a) DMCA, id. 26 § 512(b) DMCA, id. 27 § 512(c) DMCA, id. 28 § 512(d) DMCA, id. 29 Id. 30 Google France and Google, supra, Chapter 2, note 95, para. 110. Read Thibault Verbiest Gerald Spindler, Giovanni Maria Riccio, Aurélie van der Perre, Study on the Liability of the Internet Intermediaries, Markt/2006/09/E, 12 November 2007, at 18–19/115. 31 Supra, Chapter 1, note 5.

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– transitory digital network communication32/mere conduit;33 – system caching34/caching,35 and; – information residing on systems or networks at the direction of users36/hosting,37 respectively.

The difference between these activities is how long the internet intermediaries store the information. The DMCA38 is not applicable in the case of trademark infringements. However, the Lanham Act has its own safe harbour provisions39 for so-called innocent infringers and innocent violators, where the trademark infringement or trademark violation complained of is contained in or is part of paid advertising matter.40 The following three groups of protagonists are eligible for these Lanham Act safe harbour provisions:

– those engaged in the business of printing;41 – publishers or distributors of newspapers, magazines or electronic communications;42 – domain name registrars.43

Only publishers of electronic communications will be discussed below, because social media providers fit in this category. As already mentioned above the DMCA44 has set a standard for other safe harbour provisions in regard to its notice and takedown procedures. Social media providers flooded by takedown requests by trademark holders have tried to find refuge in DMCA45 style notice and takedown procedures, as discussed in Chapter 3.3. Also being sued frequently by trademark holders, internet auction eBay has implemented a Verified Rights Owners (VeRO) programme which uses a notice and takedown

32 § 512(a) DMCA, id. 33 Article 12 E-Commerce Directive, id. 34 § 512(b) DMCA, id. 35 Article 13 E-Commerce Directive, id. 36 § 512(c) DMCA, id. 37 Article 14 E-Commerce Directive, id. 38 DMCA, id. 39 § 32(2) Lanham Act, as codified into 15 U.S.C. § 1114(2) (2000). 40 Id., § 1114(2)(B) Lanham Act. 41 Id., § 1114(2)(A) Lanham Act. 42 Id., § 1114(2)(B) Lanham Act. 43 Id., § 1114(2)(C) Lanham Act. 44 DMCA, supra, Chapter 1, note 5. 45 Id.

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procedure with nearly the same six elements required in § 512(c)(3)i-vi DMCA, which eBay called: notice of claimed infringement (NOCI).46 The sixth element of NOCI: ‘a statement by you, made under penalty of perjury, that the information in your notice is accurate and that you are the copyright or intellectual property owner or authorized to act on the copyright or intellectual property[47] owner’s behalf’,48 is putting the penalty of perjury under the statement which includes that the information in the notice is accurate and that the complainant is authorized to act on the copyright or intellectual property owner’s behalf. This makes NOCI’s penalty more inclusive than § 512(c)(3)vi DMCA which, due to the positioning of the comma, only puts the penalty of perjury on the second part: ‘A statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed’.49 Just as the DMCA prescribes that the complainant should be able to send his complaint to a designated agent of the internet intermediary,50 so does eBay have a designated agent to whom complainants can send their complaints.51 Under the DMCA the liability of internet intermediaries that provide hosting applies under the condition that they remove or disable material upon notification52 sent to their designated agent53 by the alleged rights holder and notify the subscriber. Upon receipt of a counter-notification to the claimant, the hosting provider must replace the removed material or enable disabled material, in not less than 10 days nor more than 14 working days54 if he wants to remain immune to secondary liability,

46 eBay: VeRO Reporting and Infringement, accessed 9 February 2015 at: http://pages.ebay.com/vero/notice.html. 47 To state ‘copyright or intellectual property’ is a tautological formulation, since copyright is part of the category of intellectual property. A more precise but still broad formulation would be ‘copyright or industrial property’. Industrial property includes trademark rights, design rights and patent rights. 48 Supra note 46. 49 § 512(c)(3)vi DMCA, supra, Chapter 1, note 5. 50 § 512(c)(2) DMCA, id. 51 Supra note 46. 52 According to elements mentioned in § 512(c)(3) DMCA, supra, Chapter 1, note 5. 53 § 512(c)(2) DMCA, id. 54 § 512(g)(2)(C) DMCA, id.

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unless the designated agent first received a notification from the alleged rights holders that he filed an action seeking a court order to restrain the OSP.55 Unlike the DMCA notice and takedown procedure,56 eBay’s NOCI does not include the possibility of a counterclaim. Just as the DMCA prescribes that internet intermediaries implement a policy against repeat infringers,57 ‘eBay has adopted and implements a policy that provides for the termination in appropriate circumstances of the accounts of users who repeatedly infringe copyrights or other intellectual property rights of eBay and/or others’.58 Another set of safe harbour provisions was created in 2000: CDA.59 These safe harbour provisions indemnify internet intermediaries from intermediary liability arising from third party generated content: ‘No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider’.60 However, these safe harbour provisions have so far been interpreted as granting internet service providers immunity from state and federal causes of action, such as torts including defamation and negligence.61 The question whether it was applicable to intellectual property was answered in 2001, in Gucci Am., Inc. v Hall & Assocs.62 The court held that § 230(e)(2) CDA needed to be interpreted in such a way that ‘it would neither limit or expand any law pertaining to intellectual property’.63 However, the court in Gucci Am., Inc. v Hall & Assocs.64 did refer to safe harbour provisions of the Lanham Act,65 thereby clarifying that these apply.

55 § 512(g)(2)(C) DMCA, id. 56 § 512(g)(2)(C)DMCA, id. 57 § 512(i)(1)(A) DMCA, id. 58 Supra note 46. 59 Communications Decency Act (CDA) codified in 47 U.S.C. § 230 (2000). 60 47 U.S.C. § 230(c)(1) (2000), id. 61 The Electronic Frontier Foundation gives an overview of cases when CDA was claimed. Electronic Frontier Foundation, ‘Defamation: CDA Cases’, EFF, (undated), accessed 9 February 2015 at: https://ilt.eff.org/index.php/ Defamation:_CDA_Cases. 62 Gucci Am., Inc. v. Hall & Assocs., 135 F. Supp. 2d 409, 413 (S.D.N.Y. 2001). 63 Id. 64 Id. 65 § 32(2) Lanham Act, as codified into 15 U.S.C. § 1114(2) 2000.

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LanhamAct

The safe harbour provisions in the Lanham Act, established in 2000,66 are not well known among scholars.67 Perhaps they are overshadowed by the attention bestowed on the safe harbour provisions of the DMCA. However, § 1114(2) Lanham Act protects ‘innocent infringing and violating’ publishers of ‘newspaper, magazine, or other similar periodical or in an electronic communication’68 against intermediary liability for trademark infringement, including OSPs that host user generated content.69 Social media providers that publish content written by its users (user generated content as discussed in Chapter 3.3) can be defined as electronic communications.70 § 1114(2)(B) and (C) Lanham Act are relevant.71

66 Id. US TRADEMARK LAW, RULES OF PRACTICE & FEDERAL STATUTES, USPTO, 9 August 2012, 205–7. 67 For example, Kaiser wrote an interesting paper about contributory trademark infringement and that this should be limited, but not a word was mentioned about special safe harbour provisions in case of trademark infringements. Brian Kaiser, Contributory Trademark Infringement by Internet Service Providers: An Argument for Limitation, 7 J. TECH. L. & POL’Y 65 (2002). Chilling Effects Clearinghouse does not mention it either, Alexandri, Maya, Chilling Effects Clearinghouse, ‘Frequently Asked Questions (and Answers) about Trademark: What to Expect When You’re Expecting to Be Sued for Trademark Infringe- ment’, accessed 13 June 2015 at: http://www.chillingeffects.org/trademark/ faq.cgi. Levin did point it out. Elizabeth Levin, A Safe Harbor For Trademark: Reevaluating Secondary Trademark Liability after Tiffany v. Ebay, 24 BERK. TECH. L.J. 491, 520. 68 15 U.S.C. § 1114(2), supra note 65. 69 15 U.S.C. § 1114(2)(B)–(C), id. 70 Electronic Communications Privacy Act of 1986 codified in 18 U.S.C. § 2510(12). 71 15 U.S.C. § 1114(2)A, supra note 65, is not relevant for social media sites. Where an innocent infringer or innocent violator is engaged solely in the business of printing the mark or violating matter for others, the trademark holder shall be entitled as against such infringer or violator only to an injunction against future printing. 15 U.S.C. § 1114(2)D is not relevant for social media sites. A domain name registrar, a domain name registry, or other domain name registration authority that takes any action described under clause (ii) affecting a domain name shall not be liable for monetary relief or, except as provided in subclause (II), for injunctive relief, to any person for such action, regardless of whether the domain name is finally determined to infringe or dilute the mark.

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§ 1114(2)(B) Lanham Act makes clear that the publishers of electronic communications, including social media, can be exempted from intermediary liability of trademark infringements if they are innocent infringers or innocent violators of trademark rights, although they have to abide by an injunction against the presentation of such infringing advertising matter in future transmissions of such electronic communications. What ‘innocent infringer or innocent violator’ means can be inferred from § 1114(2)(A), namely that the infringer or violator is engaged solely in hosting infringing or violating matter for others,72 which in this book’s context could mean that the social media provider is hosting infringing user generated content. § 1114(2)(C) Lanham Act explains that the trademark holder’s injunctive relief against future infringement shall not be available if restraining the dissemination of such infringing matter would delay the normal transmission of such electronic communication, in accordance with sound business practice. Therefore the conditions under which the safe harbour provisions in the Lanham Act apply significantly differ from those in the DMCA.73 Under the DMCA the internet intermediary can make use of the safe harbour provisions if he expeditiously removes or disables access to infringing material after a complaint by an alleged copyright holder.74 Also, the one who uploaded the work is notified that the work will be removed, but he can oppose this procedure by counter-notification.75 Under the Lanham Act, the OSP only has to prevent infringing matter being presented in the future,76 but only if this is not incompatible with a sound business practice.77 And the Lanham Act lacks any notice and takedown and counter-notification procedure as the DMCA specifies.78 As will be discussed below the safe harbour provisions of the E-Commerce Directive79 apply in the case of all intellectual property

72 § 1114(2)(A) Lanham Act: ‘Where an infringer or violator is engaged solely in the business of printing the mark or violating matter for others and establishes that he or she was an innocent infringer or innocent violator …’ Supra note 65. 73 Supra, Chapter 1, note 5. 74 § 512(c)(1)(A)iii DMCA, id. 75 § 512(g)(2)(B–C) DMCA, id. 76 15 U.S.C. § 1114(2)B, supra note 65. 77 15 U.S.C. § 1114(2)C, id. 78 § 512(g)(2)(B–C) DMCA, supra, Chapter 1, note 5. 79 Id.

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infringements, including all trademark infringements. In contrast, under the Lanham Act the safe harbour provisions seem to apply to only a subspecies of trademark infringements: those trademark infringements that are part of paid advertising matter; for example, via keyword triggered advertisements or banners. This means that the safe harbour provisions in the Lanham Act do not give any refuge to social media providers in the case of trademark infringements or violations that are not part of paid advertising matter and might render them liable for intermediary liability. Examples include violations of trademark dilution by blurring and tarnishment. Non- commercial use of the trademark logo on social media is unlikely, since social media almost always include advertisements, as discussed in Chapter 5.4. However, trademark infringement as part of paid advertising matter can be distinguished from trademark infringement in a context with paid advertisements. And the latter also could fall outside the safe harbour provisions of the Lanham Act and make the social media provider liable for intermediary liability.

E-Commerce Directive

In 1997 the European Commission had already considered the need for an E-Commerce Directive.80 In March of 1998 the European Commis- sioner for the internal market, services customs and taxation, Mario Monti, stated that action should be taken on intellectual property legislation.81 In November of 1998, the European Commission proposed a legal framework for a directive which included the concept of liability of intermediaries:

To eliminate existing legal uncertainties and to avoid divergent approaches at Member State level, the proposal would establish an exemption from liability for intermediaries where they play a passive role as a ‘mere conduit’ of information from third parties and limit service providers’ liability for other ‘intermediary’ activities such as the storage of information.82

The ambition of the proposal was to strike ‘a careful balance between the different interests involved in order to stimulate co-operation between

80 European Commission, ‘Electronic Commerce: Commission Presents Framework for Future Action’, IP/97/313, 16 April 1997. 81 Mario Monti, ‘Orientations for Electronic Commerce: Discussion at Council of Economy and Finance Ministers’, 10 March 1998. 82 European Commission, ‘Electronic Commerce: Commission Proposes Legal Framework’, IP/98/999, 18 November 1998.

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different parties and so reduce the risk of illegal activity on-line’.83 An amended proposal in 1999 for the directive did not change the safe harbour provisions contained therein.84 On 4 May 2000, the European Parliament approved the E-Commerce Directive.85 The E-Commerce Directive86 was implemented to protect the development of electronic commerce within the information society,87 which ‘offers significant employment opportunities in the Community, particularly in small and medium-sized enterprises, and will stimulate economic growth and investment in innovation by European companies, and can also enhance the competitiveness of European industry, provided that everyone has access to the Internet’.88 The E-Commerce Directive includes safe harbour provisions for ‘information society services’,89 including OSPs and applies horizontally.90 Recital 46 of the preamble to the E-Commerce Directive states:

In order to benefit from a limitation of liability, the provider of an information society service, consisting of the storage of information, upon obtaining actual knowledge or awareness of illegal activities has to act expeditiously to remove or to disable access to the information concerned; the removal or disabling of access has to be undertaken in the observance of the principle of freedom of expression and of procedures established for this purpose at national level; this Directive does not affect Member States’ possibility of establishing

83 Id. 84 European Commission, ‘Electronic Commerce: Amended Proposal for a Coherent Legal Framework in the Single Market’, IP/99/652, 1 September 1999. 85 European Commission, ‘Electronic Commerce: Commission Welcomes Final Adoption of Legal Framework Directive’, IP/00/442, 4 May 2000. 86 Supra, Chapter 1, note 5. 87 Information society is the EU term for the internet. 88 Supra, Chapter 1, note 5. 89 Information society service is the EU description of an internet intermediary. 90 ‘Horizontally’ means that it applies to all kinds of infringements, including trademark infringements. ‘[T]he European legislature has opted for an all-encompassing “horizontal” approach, the US have dealt with copyright liability within the framework of the copyright law’. P. Bernt Hugenholtz and Kamiel Koelman, ‘Online Service Provider Liability for Copright Infringement’, WIPO Workshop on Service Provider Liability, Geneva, 9–10 December 1999, accessed 9 February 2015 at: http://www.ivir.nl/publicaties/hugenholtz/wipo99. pdf. See also the Explanatory Memorandum to the Commission’s original proposal COM (1998) 586 final.

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specific requirements which must be fulfilled expeditiously prior to the removal or disabling of information.91

The E-Commerce Directive leaves open the possibility for member states to establish procedures to remove or disable access to alleged infringing information after notification.92 However, since January 2012, the EU is in the process of drafting its own version of notice and takedown procedures, called notice-and-action procedure.93 Since the E-Commerce Directive94 has not developed a Notice-and- action procedure, yet, there are no procedures of counter-notice and replacement prescribed, yet.95 So instead of the notice and takedown procedures, some member states have chosen to give the power to assume actual knowledge exclusively to a specialized authority or to courts.96

7.3 KNOWLEDGE

A similarity between the DMCA and the E-Commerce Directive97 is that both contend that the immunity of intermediary liability is under the condition that the OSP does not have actual98 or constructive knowledge,99 and if they do so, that they expeditiously remove or disable access to the alleged infringing material.100 Compare these two sets of provisions:

§ 512(c)(1)(A) DMCA

‘(i): does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

91 Recital 46 of the preamble to the E-Commerce Directive, supra, Chapter 1, note 5. 92 Recital 51 of the preamble to the E-Commerce Directive and Article 14 (3) E-Commerce Directive, id. 93 European Commission, ‘Notice-and-Action Procedures’, announced Janu- ary 2012, accessed 9 February 2015 at: http://ec.europa.eu/internal_market/e- commerce/notice-and-action/index_en.htm. 94 Supra, Chapter 1, note 5. 95 Supra note 93. 96 Verbiest et al., supra note 30, at 41–6/115. 97 Supra, Chapter 1, note 5. 98 § 512(c)(1)(A)i DMCA and Article 14(1)(a) E-Commerce Directive, id. 99 § 512(c)(1)(A)ii DMCA and Article 14(1)(a) E-Commerce Directive, id. 100 § 512(c)(1)(A)iii DMCA and Article 14(1)(b) E-Commerce Directive, id.

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(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material’.

Article 14(1) E-Commerce Directive:

‘(a) the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or (b) the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information’.

Recital 46 of the preamble to the E-Commerce Directive puts it succinctly: the OSP ‘upon obtaining actual knowledge or awareness of illegal activities has to act expeditiously to remove or to disable access to the information concerned’. There is no definition of the term actual knowledge. Member states have each implemented this legislation in different ways and their courts have developed different practices on the interpretation of that term.101 As an example, the German Federal Court of Justice decided that actual knowledge can be interpreted as specific actual human knowledge, as opposed to computer knowledge or general awareness of the past presence of illegal material on a server. Besides, negligence and con- ditional intent do not constitute actual knowledge.102 In the US, the common law doctrine of wilful blindness occurs when someone suspects wrongdoing and deliberately fails to investigate.103 In 1992 in Hard Rock Café, the Seventh Circuit clarified that ‘wilful blindness is equivalent to actual knowledge for purposes of the Lanham Act’.104 Then again, wilful blindness is limited by the Hard Rock Café’s

101 Verbiest et al., supra note 30, at 36–7/115. 102 Haftung des Internetproviders (Liability of the internet provider) BGH, 23/09/2003, VI ZR 335/02, NJW 2003, 3764. 103 Hard Rock Café Licensing Corp. v Concession Services, Inc., 955 F.2d 1143, 1149 (7th Cir. 1992). 104 Id. In 2010 in Tiffany (NJ) Inc. v eBay, Inc., the Second Circuit held that in the case of trademark infringement ‘[a] service provider is not … permitted wilful blindness. When it has reason to suspect that users of its service are infringing a protected mark, it may not shield itself from learning of the particular infringing transactions by looking the other way’. Tiffany (NJ) Inc. v eBay, Inc., 600 F.3d 93 (2d Cir. 2010).

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standard to only be able to ‘understand what a reasonably prudent person would understand’ and not impose any duty of care that goes beyond that requirement.105 The concept of constructive knowledge or ‘facts or circumstances’ from which ‘illegal activity’106 or ‘illegal activity or information’107 becomes apparent is also called ‘a red flag’,108 which means that if the OSP comes across these it must pay special attention to them and act, otherwise the exemption of intermediary liability will be lifted (see Chapter 7.6 about the required level of monitoring). Bliley of the Commission on Commerce of the US House of Representa- tives, explained the subjective and objective element of the red flag test:

In determining whether the service provider was aware of a ‘red flag’, the subjective awareness of the service provider of the facts or circumstances in question must be determined. However, in deciding whether those facts or circumstances constitute a ‘red flag’ – in other words, whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances – an objective standard should be used.109

Ginsburg pointed out that US case law, such as developed in Perfect 10, Inc. v Cybernet Ventures, Inc.,110 interprets the red flag in such a way that ‘the flag may need to be an immense crimson banner before the service provider’s obligation to intervene comes into play’.111 Recent case law, such as Viacom International, Inc. vYouTube, Inc. of 2013, confirms this view.112

105 Supra note 103. 106 17 U.S.C. § 512(c)(1)(A)(ii), supra, Chapter 1, note 5. 107 Article 14(1)(a) E-Commerce Directive, supra, Chapter 1, note 5. 108 ‘In determining whether the service provider was aware of a “red flag” the subjective awareness of the service provider of the facts or circumstances in question must be determined. However, in deciding whether those facts or circumstances constitute a “red flag” – in other words, whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances – an objective standard should be used’. (Thomas Bliley, Committee on Commerce, submitted the following report to the Commit- tee of the Whole US House of Representatives, together with additional views to accompany H.R. 2281, 1998, at 53. 109 Id. 110 Perfect 10, Inc. v Cybernet Ventures, Inc., 213 F. Supp. 2d 1146, 22 April 2002, (C.D. Cal. 2002) at 1177. 111 Jane C. Ginsburg, Part II User-Generated Content Sites and Section 512 of the US Copyright Act, in COPYRIGHT ENFORCEMENT AND THE INTERNET (Irini A. Stamatoudi, ed., Alphen aan den Rijn: Kluwer Law International, 2010), at 190. 112 The decision by the District Court of the Southern District of New York of 18 April 2013 was not yet published on 19 April 2013. Jonathan Stempel,

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Trademark holders can only hold OSPs liable if they can prove that they have actual or constructive knowledge, as the DMCA and E-Commerce Directive113 require. This is different from the Lanham Act which states that trademark holders cannot recover profits or damages from the infringement, unless they can prove that ‘the acts have been committed with knowledge that such imitation is intended to be used to cause confusion, or to cause mistake, or to deceive’.114 However, to prove intent of the infringers might be prohibitively difficult for trademark holders.

Contributory Liability

In 1972 the contributory liability for copyright infringement doctrine was established in the Gershwin Publishing Corp. v Columbia Artists Man- agement, Inc. case.115 Then, in 1982, in Inwood Labs., Inc. v Ives Labs., Inc.,116 the Supreme Court established contributory liability as a course of action under trademark law. The Inwood test for contributory liability is to determine whether a party induces another to infringe a trademark, or continues its service where he knows or has reason to know the other party is engaging in trademark infringement. In 1984, in Sony Corp. of America v Universal City Studios, Inc.,117 the Supreme Court ‘consistently rejected the proposition that a similar kinship exists between copyright law and trademark law, and recognized the basic similarities between copyrights and patents’118 in the process. Because of these differences, the Supreme Court did not want to apply

‘Google again Beats Viacom in YouTube Copyright Case’, Reuters, 18 April 2013, accessed 9 February 2015 at: http://www.reuters.com/article/2013/04/18/ entertainment-us-google-viacom-idUSBRE93H17S20130418. 113 Supra, Chapter 1, note 5. 114 § 1114(1)(b) Lanham Act included: ‘Under subsection (b) hereof, the registrant shall not be entitled to recover profits or damages unless the acts have been committed with knowledge that such imitation is intended to be used to cause confusion, or to cause mistake, or to deceive’. 15 U.S.C. § 1114, supra note 65. 115 Gershwin Publ’g Corp. v Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971). 116 Inwood Labs., Inc. v Ives Labs., Inc. 456 U.S. 844, 854 (1982). 117 Sony Corp. of America v Universal City Studios, Inc., 464 U.S. 417, 439 n.19 (1984). 118 Id. An explanation is that the US Constitution is referring to the promotion of works and inventions via the protection of copyright and patents, supra, Chapter 2, note 164, but not to trademark rights.

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the Inwood119 trademark standard for contributory infringement in the copyright case of Sony Corp. of America v Universal City Studios, Inc.120 The Supreme Court observed that in Inwood:121

[a] manufacturer or distributor could be held liable to the owner of a trademark if it intentionally induced a merchant down the chain of distribution to pass off its product as that of the trademark owner’s or if it continued to supply a product which could readily be passed off to a particular merchant whom it knew was mislabeling the product with the trademark owner’s mark.122

In 2004, in UMG Recordings, Inc. v Bertelsmann AG,123 a copyright case, the question was raised how strong the causality must be between the defendant’s action and the infringement to hold that he attracted contributory liability. In this case, UMG, a record label, sued Bertels- mann, an investor in Napster, because it claimed this investor had assumed control over Napster’s operations and directed the infringing activities that gave rise to Napster’s liability. The court refused to dismiss the claims.124 One can argue that Bertelsmann attracted contributory liability on the contributory liability of Napster. The same can be said for vicarious liability:125 vicarious liability on the vicarious liability of Napster. One could speak of secondary liability to the second degree. In the 2003 and 2004 MGM Studios, Inc. v Grokster, Ltd. cases, the District Court126 and the Ninth Circuit,127 respectively, concluded that Grokster was not liable for contributory or vicarious copyright infringement. The reason was that in contrast to the Napster case,128 Grokster ‘may have intentionally structured their businesses to avoid secondary liability for copyright infringement, while benefiting financially from the

119 Supra note 116. 120 Supra note 117. 121 Supra note 116. 122 Supra note 117. 123 UMG Recordings, Inc. v Bertelsmann AG, 222 F.R.D. 408 (N.D. Cal. 2004). 124 Eventually Bertelsmann and UMG settled the case. John Ottaviani, ‘The End Is Near: Bertelsmann Settles EMI Claims over Napster’, Eric Goldman Blog, 28 March 2007, accessed 9 February 2015 at: http://blog.ericgoldman.org/ archives/2007/03/the_end_is_near.htm. 125 Vicarious liability will be explained below, Chapter 7.3. 126 MGM Studios, Inc. v Grokster, Ltd., 259 F. Supp. 2d 1029 (C.D. Cal. 2003). 127 MGM Studios, Inc. v Grokster, Ltd., 380 F.3d 1154 (9th Cir. 2004). 128 A&M Records, Inc. v Napster, Inc., 239 F.3d 1004 (9th Cir. 2001).

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illicit draw of their wares’,129 by using a decentralized search index it did not control. Some US senators, disappointed by the Ninth Circuit’s decision on Grokster, tried to make inducement a separate form of secondary infringement in the absence of control to directly prevent infringements. They drafted the Inducing Infringement of Copyrights Act,130 which would have been also applicable in the case of trademark infringements. By amending § 501 of Title 17 of the U.S. Code, an interpretation of the term ‘intentionally induces’ was given: ‘intentionally aids, abets, induces, or procures, and intent may be shown by acts from which a reasonable person would find intent to induce infringement based upon all relevant information about such acts then reasonably available to the actor, including whether the activity relies on infringement for its commercial viability’.131 The proposal was not accepted. In 2005 the Supreme Court made a final decision132 about whether Grokster had attracted intermediary liability: ‘[O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for resulting acts of infringement by third parties’.133 Thus the Supreme Court overturned the Ninth Circuit’s decision. According to Reese, the Grokster test for contributory liability consists of two questions that both need to be answered affirmatively.134 Did the defendant take active steps or affirmative steps to induce, promote, foster, encourage, stimulate, bring about, or cause, the infringement? Did the defendant act with intent, object or purpose? The defendant’s business model could be a complement, not the sole reason, to direct evidence in the establishment of intent to encourage infringement.135 If an OSP has attracted contributory or vicarious liability or induced the direct infringer to infringe, the safe harbour provisions do not apply.136 One can imagine social media providers contributorily liable for

129 Supra note 126, at 33. 130 Inducing Infringement of Copyrights Act of 2004 (S. 2560). 131 Id. 132 MGM Studios, Inc. v Grokster, Ltd., 545 U.S. 913 (2005). 133 Id. 134 Anthony Reese, The Relationship Between the ISP Safe Harbors and Liability for Inducement, 8 STAN. TECH. L. REV. 1, 43 (2011). 135 Reese, id. 136 The court said that ‘inducement liability and the Digital Millennium Copyright Act safe harbors are inherently contradictory. Inducement liability is based on active bad faith conduct aimed at promoting infringement; the statutory safe harbors are based on passive good faith conduct aimed at operating a legitimate internet business’. Columbia Pictures Indus., Inc. v Fung, No. CV

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trademark infringement of the trademark logo, since social media providers do have the technology available to know who is engaging in trademark infringement and can actually prevent it (see Chapter 9 ‘Implementation of a Paradigm Shift’).

Inducement As discussed above, in Inwood,137 there are two ways to render a third party liable for contributory liability in the case of trademark infringement:

– when a party induces another to infringe a trademark; – when a party continues its service where he knows or has reason to know that the other party is engaging in trademark infringement

Inducement, as one of the bases for contributory liability, has been recognized in case law. In the 1971 case Gershwin Publishing Corp. v Columbia Artists Management, Inc.138 the court stated: ‘[O]ne who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another, may be held liable as a “contributory” infringer’. One can argue that Google Images induces internet users to copy and paste protected copyright pictures and protected trademark logos thumbnails. The only guidance Google Images gives is: ‘Images might be subject to copyright’. There is no mention of trademark rights. There is no reason why Google has to make copy-and-pastable copies of all protected copyright pictures and trademark logos, even bigger than the original and with the same resolution. This goes further than Kelly v Arriba Soft Corporation139 and Perfect 10 v Google, Inc., et al.140 (as was already discussed in the Preface).

06-5578 SVW(JCx), 2009 WL 6355911 (C.D. Cal. 21 December 2009). The Ninth Circuit was scheduled to hear argument in the appeal from the District Court’s decision on 6 May 2011, at 8. 137 Inwood Labs., Inc. v Ives Labs., Inc. 456 U.S. 844, 854 (1982). 138 Supra note 115, at 18. 139 Kelly v Arriba Soft Corp. (280 F.3d 934 (CA9 2002) withdrawn, re-filed at 336 F.3d 811 (CA9 2003)). 140 Perfect 10 v Google, Inc., et al., 416 F. Supp. 2d 828 (C.D. Cal. 2006).

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In 2005 in the EU, a directive called the Intellectual Property Rights Enforcement Directive 2 (IPRED2)141 was proposed to supplement IPRED1142 of 2004, to no avail. The draft included Article 3: ‘Member States shall ensure that all intentional infringements of an intellectual property right on a commercial scale, and attempting, aiding or abetting and inciting such infringements, are treated as criminal offences’.143 Here too, the idea was to make this form of inducement independent from other forms of secondary liability for internet intermediaries as laid down in Articles 12 to 15 E-Commerce Directive.144 An important aspect of inducement is that there needs to be intent to cause another to violate the right. This element might be difficult to prove.

Vicarious Liability

Vicarious liability attaches to one who ‘has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities’.145 One can argue that if social media is profiting from infringing activities by internet users, because they attract more internet users and therefore more revenue streams based on advertising and data-mining, it is not difficult to prove the right and ability to supervise this infringing activity. Especially now that social media provide the technical means to infringe, while they also can use their technological skills to prevent content infringements on a massive scale (see Chapter 9 ‘Implementation of a Paradigm Shift’). The DMCA explicitly states vicarious liability, receiving financial benefit and having control over the infringing activity,146 as a reason to exclude the limitation of secondary liability for copyright infringement. In contrast, in the Lanham Act vicarious liability is not mentioned.

141 IPRED2, Proposal for a European Parliament and Council Directive on criminal measures aimed at ensuring the enforcement of intellectual property rights, 12 July 2005. 142 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (Enforcement Directive). 143 Supra note 141. 144 Supra, Chapter 1, note 5. 145 Gershwin Publ’g Corp. v Columbia Artists Mgmt., Inc., supra note 115. 146 § 512(c)(1)(B) DMCA, supra, Chapter 1, note 5.

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Coleman wrote that ‘the Supreme Court has not articulated a standard for finding vicarious liability for trademark infringement’.147 However, the federal courts have developed two doctrines for vicarious liability that can be relevant trademark infringements:

– doctrine of the application of agency principles to parties involved in trademark infringement;148 – doctrine of the joint tortfeasor liability.149

Agency doctrine

In 1994, in Am. Tel. & Tel. Co. v Winback & Conserve Program, Inc., the Third Circuit held that the sales representatives (agents) of one of AT&T’s resellers Winback & Conserve Program, Inc. (principal) were directly infringing AT&T’s trademarks. Because there was apparent authority between Winback & Conserve Program and its sales representatives, the common law principles of agency could be applied. The Third Circuit held that the ‘applicability of common law doctrines in litigation under federal statutes depends on whether those principles advance the goal of the particular federal statute which plaintiffs allege has been violated’.150 The Lanham Act derived from tort common law, therefore ‘it is self-evident that application of at least some tort concepts of liability will “advance the goals of [the Lanham Act]”’.151

The only feasible way for AT&T to assert its federal rights, would be to sue the principal, who, if an agency relationship is established, is able to exercise at least some control over its agents, who authorized the sales representatives to enter into contracts on its behalf, and who receives direct financial benefits from those contracts.152

147 Jane Coleman, ‘III. Vicarious Trademark Infringement: A. In General, Secondary Trademark Infringement’, undated, accessed 9 February 2015 at: http://www.secondarytrademarkinfringement.com/?p=105. 148 Am. Tel. & Tel. Co. v Winback & Conserve Program, Inc., 42 F.3d 1421, 1437 (3d Cir. 1994). 149 David Berg & Co. v Gatto Int’l Trading Co., 884 F2d 306, 311 (7th Cir. 1989). 150 Supra note 148, at 1429, citing Petro-Tech, Inc. v Western Co. of North America, 824 F.2d 1349, 1356 (3d Cir. 1987). 151 Id., at 1433, citing Petro-Tech, Inc. v Western Co. of North America, 824 F.2d at 1356. 152 Id., at 1434.

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A more recent case of 2001 is Fare Deals, Ltd. v World Choice Travel.com, Inc.153 which follows the same reasoning.

Joint tortfeaser liability In 1984, in David Berg & Co. v Gatto Int’l Trading Co.,154 a manufacturer of processed meat David Berg agreed with distributor Gatto to sell him substandard meat that the distributor was supposed to sell outside of the US without using Berg’s trademark. The distributor Gatto sold the substandard meat to Lake Erie Food Sales, Inc., who sold the substandard meat partly in the US and also used the Berg trademark in advertisements. Berg not only sued Lake Erie but also Gatto, arguing that the distributor had formed a partnership with the seller Lake Erie. The Seventh Circuit held that ‘[b]ecause unfair competition and trademark infringement are tortious, the doctrine of joint tortfeasors does apply’.155 However, based on findings of fact, including the lack of any partnership agreement:

[T]hat there was no evidence that Gatto and Lake Erie had any type of partnership agreement, that they held themselves out to the public or operated as a partnership, that either had authority to bind the other in any transaction with any third party, or that they exercised joint ownership of, or control over, the meat products after they were sold to Lake Erie.156

The E-Commerce Directive157 contains no vicarious liability provision. It is left to member states’ legislation whether vicarious liability can be used to derogate the exemptions of intermediary liability under the E-Commerce Directive.158

7.4 WEAKENING INCENTIVES OF SOCIAL MEDIA TO FILTER

This section will first explain why market forces either prevent social media from protecting and enforcing trademark logos or stifle the right to freedom of expression. Trademark holders face considerable challenges

153 Fare Deals, Ltd. v World Choice Travel.com, Inc. 180 F.Supp.2d 678, 684 (D.Md. 2001). 154 Supra note 149. 155 Id., at 311. 156 Id. 157 Supra, Chapter 1, note 5. 158 Id.

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when they pursue direct infringers, that is, the internet users. Therefore they often pursue social media providers instead. There are effective methods to incentivize OSPs to play a constructive role to keep their walled gardens clean of content infringements: via the bargaining power of the trademark holders; or less effective methods, such as self- regulation between OSPs and trademark holders; or a method that solves the problem in its entirety: legislation that abolishes the safe harbour provisions and establishes strict liability instead.

Market Forces:Attractiveness overAccountability

Due to the network effects,159 it is in the interest of social media providers to have as many internet users as possible, because then the value of the advertisements they sell increases and they will be able to mine and sell more behavioural data from the internet users. There is nothing immoral about the ambition of a social media provider to become as attractive as possible in the eyes of the internet users. However, this changes where social media impose insufficient restrictions to internet users, at the expense of trademark holders. One cannot avoid the impression that the internal emails between the founders of YouTube that emerged during Viacom International, Inc. v YouTube, Inc.160 are indicative of the temptations social media providers face. Once the founders of YouTube had to choose on the one hand between monitoring proactively and subsequently removing infringing content from their servers or on the other hand leaving infringing content on their servers as long as possible so that the popularity of their service would increase with internet users under the cover of the safe harbour provisions. Especially as co-founder Chen’s reasoning demonstrates, he made a calculated risk and clearly chose the latter option:

[In] a July 4, 2005 e-mail exchange, YouTube founder Chad Hurley sent an e-mail to his co-founders Steve Chen and Jawed Karim with the subject line ‘budlight commercials’, and stated: ‘we need to reject these too’. [Hurley wanted to reject the takedown request by Anheuser-Busch, because of the use of Budweiser Light]

159 Arun Sundararajan, ‘An Overview of Network Effects’, NYU Stern School of Business, 2006, accessed 9 February 2015 at: http://oz.stern.nyu.edu/ io/network.html. 160 Viacom International, Inc., v YouTube, Inc., 10-3270-cv, 2012 WL 1130851 (2d Cir. 5 April 2012).

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Steve Chen responded, ‘can we please leave these in a bit longer? another week or two can’t hurt’. Karim also replied, indicating that he ‘added back in all 28 bud videos’. Similarly, in an August 9, 2005 e-mail exchange, Hurley urged his colleagues ‘to start being diligent about rejecting copyrighted/ inappropriate content’, noting that ‘there is a cnn clip of the shuttle clip on the site today, if the boys from Turner would come to the site, they might be pissed?’ Again, Chen resisted: ‘but we should just keep that stuff on the site. i really don’t see what will happen. what? someone from cnn sees it? he happens to be someone with power? he happens to want to take it down right away. he gets in touch with cnn legal. 2 weeks later, we get a cease & desist letter. we take the video down’. And again, Karim agreed, indicating that ‘the CNN space shuttle clip, I like. we can remove it once we’re bigger and better known, but for now that clip is fine’.161

However, the Second Circuit was not sure whether these clips mentioned in the emails were part of the current clips-in-suit.162 The Second Circuit made clear that although ‘the willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA’,163 it apparently did not consider the emails as evidence of wilful blindness. Besides, the ‘DMCA safe harbor protection cannot be conditioned on affirmative monitoring by a service provider’.164 The Second Circuit concluded that the District Court correctly held that the safe harbour provisions require knowledge or awareness of specific infringing activity, but it vacated the order granting summary judgment because ‘a reasonable jury would find that YouTube had actual knowledge or awareness of specific infringing activity on its website’.165 However, when it was remanded to the District Court, it rejected the notion that YouTube exhibited wilful blindness or had the ability to control infringing activity or ‘interacted with infringing users to a point where it might be said to have participated in their infringing activity’.166 It held that the burden of proof remained on Viacom, rejecting its ‘ingenious’ yet ‘extravagant’ argument that YouTube did not deserve the safe harbour, and should instead monitor the contents of videos being uploaded at a rate of more than 24 hours of viewing time per minute.167 It is very probable that Viacom will also appeal this latest decision.

161 Id., at 21. 162 Id., at 22. 163 Id. 164 Id., at 23. 165 Id., at 9. 166 Supra note 112. 167 Id.

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ExcessiveYielding to Complainants

Some social media want to avoid any conflict with trademark holders and either let them remove content manually or automatically after any request by complainants, without checking whether the complainants are authorized by the right holders and whether removal or disabling of access is really needed. This can have serious chilling effects to the right to freedom of expression. Uncritical removal of mistaken or bad faith complaints168 has nothing to do with filtering, which is distinguishing infringing from non-infringing material. In 2004 the Dutch organization Bits of Freedom uploaded a work of the famous Dutch writer Multatuli169 from 1871, which was reprinted in 1981, with the explicit disclaimer that it is in the public domain, to ten Dutch OSPs. Subsequently Bits of Freedom let a fake copyright holder request the OSPs to take down the work, which resulted in seven out of ten OSPs taking down the allegedly infringing material.170 Urban and Quilter investigated the DMCA notice and takedown procedures and found that 9 percent of all complaints were statutorily insufficient, 30 percent of DMCA notices appeared to present an obvious question for courts, and that no less than 57 percent of DMCA notices referred to competitors.171 This can have serious chilling effects to the freedom of expression.

Challenges to enforce trademark rights against direct infringers For practical reasons trademark holders forgo suing the direct infringers which are the internet users that uploaded the infringing material: the internet user cannot be traced, or if this is possible, he might not be in a jurisdiction where the trademark holder likes to litigate, or he might not have enough financial resources to compensate for the damages.

168 Timothy Lee, ‘Warner Bros: We Issued Takedowns for Files We Never Saw, Didn’t Own Copyright To’, Ars Technica, 10 November 2011, accessed 9 February 2015 at: http://arstechnica.com/tech-policy/news/2011/11/warner- admits-it-issues-takedowns-for-files-it-hasnt-looked-at.ars. 169 In the Netherlands, Multatuli is the well-known pseudonym of Eduard Douwes Dekker, who ranks number one as the greatest Dutch writer of classical literature. 170 Sjoera Nas, ‘The Multatuli Project, ISP Notice & Take Down’, Bits of Freedom, 27 October 2004, accessed 13 June 2015 at: https://www-old.bof.nl/ docs/researchpaperSANE.pdf. 171 Jennifer M. Urban and Laura Quilter, Efficient Process or Chilling Effects: Takedown Notices under Section 512 of the Digital Millennium Copy- right Act, 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 621 (2005).

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In the case of social media, the identity is hard to verify since most social media do not have a real identity policy, and if they do, the execution of the policy might not be very reliable.172 And privacy legislation and an unwillingness to share customer information may make it difficult but not necessarily impossible.173 Last but not least, one can argue it is not conducive to sue one’s current or potential customers. As Hugenholtz and Koelman point out: this can lead to situations where the trademark holder cannot protect its rights effectively.174 Because social media are traceable and have financial means, they are frequently sued by trademark holders in different jurisdictions. This adds to the legal uncertainty for social media providers. An interesting development that might be beneficial for trademark holders to go after the direct infringers is to serve them a summons via social media. In Federal Trade Commission v PCCARE247 INC., et al.,175 the US District Court of the Southern District of New York allowed the Federal Trade Commission (FTC) to serve documents through email to five India-based defendants. ‘For the sake of thoroughness, however, the FTC also proposes to serve the defendants by means of Facebook’.176 If defendants only serve via Facebook the question is whether due process was followed. The condition that the Facebook accounts actually were operated by defendants was met, and a likelihood could be demonstrated that service by Facebook message would reach the defendants.177

172 Even if social media have a real name requirement, such as Facebook does, it does not necessarily mean that the execution of the policy is not flawed. Protalinski, supra, Chapter 3, note 42. 173 After an exigent circumstances information request, because a New Zealand boy put a message on his fake Texas Facebook page that he would start a killing spree in Texas, Facebook responded and investigators traced the internet protocol address back to an ISP out of Auckland within eight minutes. Stuff- .co.nz, ‘NZ Teen’s Facebook Threat Sparks US Alarm’, 5 November 2011, accessed 9 February 2015 at: http://www.stuff.co.nz/national/5914950/NZ-teens- Facebook-threat-sparks-US-alarm. 174 ‘The intermediary may escape liability because the requirements of the liability limitations are fulfilled, whereas the actual infringer cannot be held accountable simply because his identity is unknown’. Hugenholtz and Koelman, supra note 90, at 31. 175 Federal Trade Commission v PCCARE247 Inc., Case 1:12-cv-07189-PAE Document 87, 7 March 2013. 176 Id., at 8. 177 Id., at 9.

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Prior to Federal Trade Commission v PCCARE247 INC., et al.,178 Jeff Leach, state representative of Texas, introduced Bill HB 1989,179 which proposed Texas courts approve substituted service via social media. The conditions are that the court finds that the defendant could be reasonably expected to receive actual notice, that there is confirmation that the account is authentic and that the defendant regularly uses it.180 However, one of the challenges is that it is difficult to establish that a social media account is genuine. As already pointed out, even social media with a real name policy, such as Facebook, have problems enforcing it.181 Despite these challenges, serving a suit via social media seems promising, especially if they have the functionality to notify a receipt of the message, as for example Facebook provides. In case of service of suits, Facebook could switch off the possibility for users to avoid sidestepping the ‘receipts read’ functionality.182

Bargaining Power of Trademark Holders

In theory trademark holders are more powerful than social media, because of the business model of social media providers that depends on selling advertisements and data mined from internet users’ behaviour to the trademark holders. In practice, however, trademark holders are divided,183 they seem to lack empathy for trademark holders in different industries, and if they are competing in the same industry, they often do not want to cooperate. However, the dominance of the social media in combination with the legal lag, to paraphrase Veblen,184 necessitates trademark holders to unite. By legal lag, this book means technologies and business models develop faster than the law can catch up with these developments. One of the important developments is that the filtering of servers is becoming cost-efficient. One can compare it to scanning an anti-virus

178 Id. 179 Bill HB 1989, filed 27 February 2013. 180 If accepted, Bill HB 1989 would take effective on 1 September 2013. 181 Protalinski, supra, Chapter 3, note 42. 182 Jason Cipriani, ‘Stop Facebook from Marking Messages as “Seen”’, CNET, 21 August 2012, accessed 9 February 2015 at: http://howto.cnet.com/ 8301-11310_39-57497485-285/stop-facebook-from-marking-messages-as-seen/. 183 One of the trademark holders’ leaders, who wants to remain anonymous, described them as divided as loose sand. 184 Veblen contributed heavily to the theory of cultural lag, that institutions are looking backwards, while technology is oriented toward change. Veblen, supra, Chapter 1, note 23, at 191, 195.

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programme. A proactive filter system that automatically enforces infringed content would save social media providers and trademark holders the trouble of continuing a never-ending stream of notice and takedown procedures and avoid legal conflicts with trademark holders and internet users that result in costly litigation (see Chapter 9 ‘Implementation of a Paradigm Shift’). In short: filtering can prevent this conflict and increase legal certainty for social media providers, trademark holders and internet users. One can also consider a reciprocal connection. Trademark holders unharmed by legal conflicts have more budget to invest in advertising and behavioural data of internet users. This can benefit social media. The inverse is also true: if trademarks are hurt on social media, capital is destroyed and the capacity to safely advertise on social media will diminish and will stimulate trademark holders to bundle their forces or find alternative avenues to advertise.

Self-Regulation

Self-regulation seems preferable from a perspective of the principle of freedom of self-determination. Avoiding legal conflicts is in all stakeholders’ interest. A consortium of 13 companies, copyright owners and OSPs ‘Content User Generated Services’ supports the rather conservative ‘Principles for User Generated Content Services’185 to improve filter technology and remove infringing content. Article 13 clarifies that the principles do not ‘support disqualification from any limitation on direct186 or indirect liability relating to material online under the Copy- right Act or substantively similar status of any applicable jurisdiction outside the United States’. Therefore, unfortunately this consortium will not be the catalyst for an improvement of the status quo. In Hong Kong, the government has set up a tripartite forum of OSPs, copyright holders and internet users to come up with a voluntary framework to prevent the unauthorized copying and dissemination of electronically stored products.187 Unfortunately, it did not work. The

185 On 18 October 2007 Principles for User Generated Content Services was founded, accessed 9 February 2015 at: http://www.ugcprinciples.com/. 186 Remarkably, Article 13 of the Principles states ‘direct liability’. There is no limitation for direct liability. 187 ‘Tripartite Forum for Drawing up a Code of Practice for Online Service Providers in Protecting Copyright in the Digital Environment: Analysis of Possible Cooperative Items’, TF Paper No. 5/2008 (12 September 2008), accessed 9 February 2015 at: http://www.inmediahk.net/files/t%20forum.pdf.

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same problems can arise in a tripartite forum of OSPs, trademark holders and internet users. Because of the asymmetric distribution of power, OSPs are not inclined to change the status quo. Francis Gurry, Director General of World Intellectual Property Organ- ization (WIPO), realized that the problem of multilateralism is that it is a slow process of reaching agreements that will not catch up with the exponential speed of technology’s development. Mr Gurry asked the rhetorical question whether treaties can bring about social change, just as with Facebook, Twitter and other social media. His answer:

No, it is a technology which has enabled an international change of behaviour. Whether that change of behaviour is good or bad is a different question. But the method has been a platform. So what I think we are seeing is the emergence of an increasing number of public private partnerships using platforms to try to achieve policy outcomes that once we may have tried to achieve through a treaty.188

Public private partnerships using platforms seems a logical step forward in organic cooperation and self-regulation but so far it remains elusive.

Legislation

After more than a decade after the safe harbour provisions were implemented in the US and EU, respectively, one can determine that the objectives of the US Congress and EU Parliament and Council, to develop electronic commerce, have been successful. However, one can argue that this is not because of the safe harbour provisions, but despite of it.189 The effects of the safe harbour provisions include that social media providers are incentivized to filter content infringements passively and act only reactively after a formal notice and takedown request. This has led to a flood of legal conflicts between trademark holders and social media providers, which causes social media providers to further entrench

188 Francis Gurry, ‘Interview Carried Out on the Occasion of the Lecture: Changing International Landscape of Innovation and Intellectual Property (14 December 2010), starting at 10:26, accessed at: http://www.youtube.com/watch ?v=h3uRGkkf56o. 189 The causal link between the development of e-commerce and the existence of safe harbour rules can be doubted. In Hong Kong there are no safe harbour rules, and nevertheless, here too e-commerce seems to prosper. Professor Michael Pendleton, during a lecture on digital intellectual property rights, Chinese University of Hong Kong, Graduate Law Centre, Central, 3 November 2010.

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into their passivity and reactionary behaviour in order to comply with the safe harbour provisions, and which on its turn leads to more legal actions by trademark holders against social media providers and internet users. In order to break this vicious circle this chapter proposes to abolish the safe harbour provisions, so that the concomitant impediments to proactive filtering must yield.

Seminal Cases

Before the introduction of safe harbour provisions, case law did not clarify much about intermediary liability.190 The advent of the safe harbour provisions in the Lanham Act and E-Commerce Directive191 did not really change the capriciousness of case law. This has been illustrated by comparable cases between trademark holders and internet auction eBay in different jurisdictions which have resulted in opposite rulings. This demonstrates a lack of international consensus on the duty of care of the internet intermediary hosting content uploaded by third parties and whether the safe harbour provisions apply to exempt the internet intermediary from secondary liability. In the US, Tiffany, Inc. v eBay, Inc. was won by eBay at first instance192 and on appeal,193 while in France both Hermès194 and LVMH 195 won cases at first instance against eBay. But in Belgium, Lancôme lost against eBay.196 First an overview will be provided of these seminal cases. Then an explanation will be given why the rulings of the US and French courts, and the French courts and Belgian court have resulted in diametrically

190 Even before the DMCA there was controversy over ISP liability: Playboy Enters., Inc. v Frena, 839 F. Supp. 1552, 1556 (M.D. Fla. 1993) where the court ruled that the service provider was liable and Religious Tech. Ctr. v Netcom, Inc., 907 F. Supp. 1361, 1372 (N.D. Cal. 1995), where the court did not find the ISP liable. 191 Supra, Chapter 1, note 5. 192 Tiffany Inc. v eBay, Inc., 576 F. Supp. 2d 463, 527 (S.D.N.Y. 2008). 193 Supra note 104. The Second Circuit ruled in favour of the service provider. 194 HermèsInt’l v eBay, Inc., Tribunaux de grande instance (court of first instance) Troyes, 4 June 2008, 14 (Fr.). 195 Christian Dior Couture v eBay, Inc., eBay Int’l,( better known as LVMH v eBay, Inc)., Tribunal de commerce (commercial court) Paris, 1ere ch. B, 30 June 2008, No. 2006077799, 1 (Fr.). 196 Lancôme Parfums et Beaute v eBay Int’l AG, Tribunal de commerce, Brussels, 31 July 2008, No. A/07/06032, 1–3.

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different outcomes. After that some salient CJEU cases that can shine a light on the matter of intermediary liability: L’Oréal and Others and Google France and Google will be explored. The jurisprudence shows that courts narrowly interpret actual knowledge, but broadly interpret neutrality of the OSPs, so that they fall within the liability exemption. In Tiffany, Inc. v eBay, Inc.,197 Tiffany sued the internet auction eBay for trademark infringement, trademark dilution and false advertising based on its allegations that eBay was selling counterfeit Tiffany merchandise. The US court found that when eBay was informed that infringing goods were posted on its site, it immediately worked to remove the seller from its site. According to the court it is the trademark holder’s burden to police its mark, and companies like eBay cannot be held liable for trademark infringement based solely on their general knowledge that trademark infringement might be occurring on their websites. Goldwasser concluded that therefore eBay is not required to take pre-emptive measures to remove possible or anticipated infringing products.198 France, as a member of the EU, implemented the E-Commerce Directive in its national law.199 Article 14 E-Commerce Directive200 states that an information society service is not liable provided that the host site ‘does not have actual knowledge of illegal activity or information … or … upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information’. How- ever, in 2008 in Hermès v eBay,201 the French court held that eBay is not just hosting, but ‘provides tools, permitting to market the sold goods to the sellers, organise object presentation on their site … and create functioning rules and architecture of their auction service, [and] must be considered as authors of on-line communication services for intermedia- tion purposes’.202 As an ‘author’ of online services, eBay should police its own site according to the High Court of Troyes. eBay should ‘ask the

197 Supra note 192. 198 Kate Goldwasser, Knock it off: An Analysis of Trademark Counterfeit Goods Regulation in the United States, France, and Belgium, 18 CARDOZO J. INT’L & COMP. L. 207, 220 (2010). 199 Section 6 Law for Confidence in the Digital Economy Law, No. 2004-575 of 21 June 2004, Journal Officiel de la Republique Francaise, 22 June 2004, at 11168. 200 Article 14 E-Commerce Directive, supra, Chapter 1, note 5. 201 Hermès Int’l v eBay, Inc., Troyes High Court (4 June 2008), Docket No. 06/0264. 202 Id.

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sellers who specify in their ads the sold merchandise identification means (product reference, serial number, type number, certificate of authenticity, etc.) by any means and post the references, obtained in this way in clearly legible print, absence of knowledge of such elements or lack of response’.203 Because eBay was not considered as just a host, but an ‘author’ it should have taken pre-emptive measures to protect itself from contributory liability. Therefore the court ordered eBay to pay Hermès 20,000 euro for the sale of three counterfeit bags.204 In three cases, which are called LVMH v eBay by some scholars, because LVMH or one or more of its companies were the plaintiffs: in 2008 in the Paris Court of Commerce;205 in 2010 the Paris Court of Appeal,206 and in 2012 the French Supreme Court,207 it was confirmed that eBay failed to carry out its duty to ensure that its activity does not generate illegal acts harming other economic operators. It also confirmed eBay’s willingness to accept clearly illegal listings on all its sites which encourage infringement. eBay bought misspelled versions of Louis Vuitton as keyword for Google and Yahoo that triggered advertisements to counterfeit brands of LVMH. Therefore the French courts held that eBay was not merely hosting, but also brokering and therefore does not qualify for the safe harbour exception of Article 6.1.2 Law Number

203 Id. 204 Dan Goodin, ‘French Court Fines eBay for Sale of Counterfeit Hand- bags’, The Register, 5 June 2008, http://www.theregister.co.uk/2008/06/05/ebay_ counterfeit_ruling/. 205 Parfums Christian Dior et autres/eBay Inc, eBay International AG, Tribunal de commerce de Paris 1ère chambre B Jugement du 30 juin 2008. Louis Vuitton Malletier/eBay Inc., eBay International AG, Tribunal de commerce de Paris 1ère chambre B Jugement du 30 juin 2008. Christian Dior Couture/eBay Inc., eBay International AG, Tribunal de commerce de Paris 1ère chambre B Jugement du 30 juin 2008. 206 eBay/Parfums Christian Dior, Kenzo Parfums, Parfums Givenchy, Guer- lain, Cour d’appel de Paris Pôle 5, chambre 2 Arrêt du 03 septembre 2010. eBay Inc et eBay International AG/Louis Vuitton Malletier, Cour d’appel de Paris Pôle 5, chambre 2 Arrêt du 03 septembre 2010. eBay Inc, eBay International/ Christian Dior Couture, Cour d’appel de Paris Pôle 5, chambre 2 Arrêt du 3 septembre 2010. 207 eBay Inc., eBay International/LVMH et autres, Cour de cassation Cham- bre commerciale, financière et économique Arrêt du 3 mai 2012. eBay Inc., eBay International/Louis Vuitton Malletier, Cour de cassation Chambre commerciale, financière et économique Arrêt du 3 mai 2012. eBay Inc., eBay International/ Christian Dior Couture, Cour de cassation Chambre commerciale, financière et économique Arrêt du 3 mai 2012.

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2004-575 on the confidence of the digital economy,208 which is France’s implementation of Article 14(1) E-Commerce Directive. eBay was held to be a major participant in the sales on its sites and played a very active role, in particular in commercial campaigns meant to increase the number of transactions. The French court came to the conclusion that eBay, despite its Verified Rights Owners (VeRO) programme ‘deliberately refused to establish sufficient and appropriate means to fight against counterfeiting’. Therefore the immunity for hosting does not apply. Just as in Hermès v eBay,209 the court suggested concrete methods to remove counterfeit goods that eBay should have used, including ‘obliging the sellers to provide … a certificate of authenticity of the products … punishing any seller of counterfeit merchandise by permanently closing their accounts upon first violation, and immediately with- drawing illegal advertising, reported by LVMH’.210 So the internet intermediary needs to prove that it implemented pre-emptive measures in order to avoid contributory liability for trademark infringement. In 2008 in Lancôme v eBay,211 the Belgian court found that eBay acted merely as a host for the advertisements on its site. Despite Lancôme’s argument that eBay was utilizing the advertisements, eBay argued successfully that it had no control over the advertisements. The court held that eBay fell under the safe harbour provisions of the Belgian law212 implementing Article 14 E-Commerce Directive and that it did not have an obligation to monitor the information it was hosting and did not have

208 Article 6.2. Law number 2004-575 of 21 June 2004, on the confidence of the digital economy: ‘Natural or legal persons who host even free of charge, for the provision of public services by public communication online, storing signals, writing, images, sounds or messages of any kind provided by recipients of those services, can not be held civilly liable as a result of activities or information stored at the request of a recipient of services, if the provider did not have actual knowledge of the illicit nature or of facts and circumstances showing that character, and from the time when they had this knowledge, they acted promptly to remove the data or make access impossible. The preceding paragraph does not apply when the recipient of the service is acting under the authority or control of the person referred to in that paragraph’. 209 Supra note 201. 210 eBay Inc., eBay International/LVMH et autres, Cour de cassation Cham- bre commerciale, financière et économique Arrêt du 3 mai 2012. 211 Lancôme Parfums et Beaute v eBay Int’l AG, Tribunal de Commerce de Bruxelles, 31 July 2008. 212 Article 20 Loi sur certains aspects juridiques des services de la société de l’information – Wet betreffende bepaalde juridische aspecten van de diensten van de informatiemaatschappij, MB 17 March 2003.

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to actively search for illegal counterfeiting activities of its users. Like France, Belgium is a member of the EU. But the outcome of the Belgian court was diametrically different from the French courts. So why are the outcomes different? In Tiffany the US court held that eBay was just a hosting site that only had general knowledge and no actual knowledge of infringed trademarks. Therefore it had no affirmative duty to search for counterfeit goods. In the French cases Hermès and LVMH, eBay was not found to be a host, and therefore generalized knowledge was sufficient to establish contributory liability, because eBay did not adhere to its affirmative duty as an ‘author’ of content to search for counterfeit goods. The safe harbour provisions of the E-Commerce Directive have been implemented in both France and Belgium. However, in Lancôme the Belgian court decided that eBay was merely a host, and therefore it needed to be proven that it had actual knowledge of infringing material on its site. As pointed out in Chapter 7.2, actual knowledge of infringement is a key issue in determining whether a host is liable.

CJEU cases In L’Oréal and Others213 the CJEU decided that Article 14(1) E-Commerce Directive214 could be applied: the operator of an online marketplace had not played an active role, had no knowledge nor control of the data stored. Therefore the operator of the online marketplace could not be held liable as long as he expeditiously removes or disables access to infringing content when the trademark holder has made him aware of this. However, the CJEU made clear that the operator plays an active role when he ‘has provided assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting those offers’.215 In such a case he cannot rely on the exemption from secondary liability. Google offered the possibility to not just select keywords, which correspond to the trademark Louis Vuitton or LV, but also in combination with words such as ‘imitation’ and ‘copy’, which triggered the advertisement of a counterfeiter.216 However, in 2010 in Google France and Google217 the CJEU held that Google did not use the trademark in the

213 L’Oréal and Others, supra, Chapter 2, note 95. 214 Supra, Chapter 1, note 5. 215 L’Oréal and Others, supra, Chapter 2, note 95, para. 116. 216 Google France and Google, id., para. 29. 217 Id.

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course of trade. This is questionable since Google is applying AdWords Broad Match,218 which means that the AdWords system automatically runs advertisements on variations of the advertiser’s keywords, even if these words are not in the keyword list the advertiser selected. One can argue that where Google suggests alternative trademarks as keywords, Google no longer is merely a host of third party content, and therefore the exemption of secondary liability under the safe harbour provisions should not apply. Recital 42 of the preamble to the E-Commerce Directive219 makes clear that the exemptions from liability established in that directive cover only cases in which the activity of the OSP is ‘of a mere technical, automatic and passive nature’, which implies that the OSP ‘has neither knowledge of, nor control over the information which is transmitted or stored’.220 Google probably used an algorithm that maximizes the impressions and conversion of the keywords. eBay had a similar system that bought keywords that trigger advertisements based on keywords people type into Google. When keywords such as ‘imitation’ and ‘copy’ are suggested by Google,221 the reference service should be vicariously liable under US law since Google has control222 over the infringing activity and a direct financial interest in such activities. However, the CJEU left the decision whether Google was neutral or not to the national courts.223

218 Google AdWords Broad Match explanatory, accessed 9 February 2015 at: http://support.google.com/adwords/bin/answer.py?hl=en&answer=6136. 219 Supra, Chapter 1, note 5. 220 Id. 221 Google France and Google, supra, Chapter 2, note 95, para. 101. 222 The question is also whether Google had control over the keywords African Slaves it suggested to eBay in 2005. eBay had automatically bought the keywords African Slaves from Google, which automatically triggered the sponsored link ‘African Slaves for Sale, eBay.co.uk, Low Prices! Big Selection!’. Lester Haines, ‘Need an African Slave? Try eBay. Low Prices! Big Selection!’, The Register, accessed 9 February 2015 at: http://www.theregister.co.uk/2005/01/ 24/ebay_african_slaves/. 223 Google France and Google, supra, Chapter 2, note 95, para. 119.

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7.5 OBLIGATION TO MONITOR

Who will guard the guardians?224

A pressing question for social media providers, legislators and scholars, is to what extent should OSPs implement and operate filtering and control mechanisms?225 If OSPs fail to monitor, would they be held liable to comply with a duty of care? And if they have a filtering system in place, but fail to remove infringing material, is it considered that they should have been able to identify that material?226 Or if some infringements are found, is there an obligation to prevent ‘similar’ infringements of the same trademark? Schellekens argued that social media providers’ resistance against filtering content infringements is caused by a fear that if they start filtering to protect content holders, more parties will demand them to filter, ‘making the social media slide down to the bottom’.227 In the US, the level of the duty of care of OSPs in the case of trademark infringement is unclear. The safe harbour provisions of the Lanham Act do not give any guidance. However, the Second Circuit in Tiffany Inc. v eBay, Inc.228 makes clear that even though eBay knew as a general matter that infringement of the Tiffany trademark took place at its site, this knowledge is insufficient to trigger liability under Inwood.229 Only when eBay was intentionally shielding itself from discovering specific infringements, would it probably trigger secondary liability.230

224 ‘[Q]uis custodiet ipsos custodes?’ Juvenal, SATIRE VI (around 115 AD) (G.G. Ramsey, transl. London: William Heinemann, 1918), lines 347–8. 225 Boyden: ‘There is thus no hard-and-fast rule in tort law or in copyright law what level of specificity is required to obligate an ISP to take action’. Bruce E. Boyden, Viacom International Inc., Comedy Partners, Country Music Tele- vision, Inc., Paramount Pictures Corporation, Black Entertainment Television LLC, Brief of Amici Curiae Intellectual Property Law Professors in Support of Plaintiffs-appellants and Urging Reversal, 10 December 2010, accessed 9 Febru- ary 2015 at: http://news.viacom.com/pdf/2010-12-10-IP_Law_profs_Boyden_et_ al.pdf. 226 Kamiel Koelman and Rosa Julià-Barceló, Intermediary Liability in the E-Commerce Directive: So Far So Good, But It’s Not Enough, 4 COMPUTER L. & SEC. REP. 231, 231–9 (2000). 227 Maurice Schellekens, Liability of Internet Intermediaries: A Slippery Slope?, 8 SCRIPTED 154 (2011). 228 Supra note 192. 229 Id., at 110. 230 Id.

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Until there are statutory rules on the duty of care of OSPs to avoid intermediary liability in case of trademark infringements, one can look at the duty of care in the DMCA as a guidance: § 512(m)(1) DMCA states that service providers do not have any obligation to provide monitoring of its service or affirmatively seek facts indicating infringing activity, except to the extent consistent with a standard technical measure com- plying with the provisions of § 512(i) DMCA. In other words: ‘§ 512(m) is incompatible with a broad common law duty to monitor or otherwise seek out infringing activity based on general awareness that infringement may be occurring’.231 OSPs are eligible for the liability limitations if they adopt and implement a filter system that conforms to the standard technical measures of § 512(i)(2):

‘(A) have been developed pursuant to a broad consensus of copyright owners and service providers in an open, fair, voluntary, multi- industry standards process; (B) are available to any person on reasonable and nondiscriminatory terms; and (C) do not impose substantial costs on service providers or substantial burdens on their systems or networks’.

However, such a standard for monitoring copyright infringements does not exist. Below it will be explained why § 512(i)(2)(C) DMCA is no longer relevant. A ‘best available technology standard’ of filtering was suggested by Helman and Parchomovsky, but remains elusive.232 Ginsburg wrote that ‘the more reliable and less burdensome the filter, the more likely courts are to favor its implementation’.233 In the EU, Recital 47 of the preamble to and Article 15(1) of the E-Commerce Directive234 articulate that member states of the EU are prevented from imposing a general monitoring obligation on OSPs. Monitoring obligations in a specific case are allowed, and do not affect

231 Viacom International, Inc., v. YouTube, Inc., supra note 160, at 23–4. 232 Lital Helman and Gideon Parchomovsky, The Best Available Technology Standard, 111 COLUM. L. REV. 1194 (2011). 233 Jane C. Ginsburg, Separating the Sony Sheep from the Grokster Goats: Reckoning the Future Business Plans of Copyright-Dependent Technology Entre- preneurs, 50 ARIZ. L. REV. 577, 591 (2008). 234 Supra, Chapter 1, note 5.

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orders by national courts.235 Recital 48 of the preamble to and Articles 14(3) and 15(2) of the E-Commerce Directive236 explain that member states can require OSPs that host content provided by third parties to apply a duty of care which can reasonably be expected from them and which are specified by national law to monitor, detect and prevent infringements.237 In L’Oréal and Others238 the CJEU explained that:

First, it follows from Article 15(1) of Directive 2000/31, in conjunction with Article 2(3) of Directive 2004/48, that the measures required of the online service provider concerned cannot consist in an active monitoring of all the data of each of its customers in order to prevent any future infringement of intellectual property rights via that provider’s website. Furthermore, a general monitoring obligation would be incompatible with Article 3 of Directive 2004/48, which states that the measures referred to by the directive must be fair and proportionate and must not be excessively costly.239

In 2011, in Scarlet Extended NV v SABAM,240 the CJEU held that member states cannot obligate internet intermediaries to ‘implement a filter system for all electronic communication via its services, without any distinction between its customers, works preventative, and is exclusively funded by the ISP [internet service provider] and does not know

235 Recital 47 of the preamble to the E-Commerce Directive, id.: ‘Member States are prevented from imposing a monitoring obligation on service providers only with respect to obligations of a general nature; this does not concern monitoring obligations in a specific case and, in particular, does not affect orders by national authorities in accordance with national legislation’. Article 14(3) E-Commerce Directive: ‘This Article shall not affect the possibility for a court or administrative authority, in accordance with Member States’ legal systems, of requiring the service provider to terminate or prevent an infringement, nor does it affect the possibility for Member States of establishing procedures governing the removal or disabling of access to information’. 236 Id. 237 Recital 48 of the preamble to the E-Commerce Directive, id.: ‘This Directive does not affect the possibility for Member States of requiring service providers, who host information provided by recipients of their service, to apply duties of care, which can reasonably be expected from them and which are specified by national law, in order to detect and prevent certain types of illegal activities’. 238 L’Oréal and Others, supra note 213, para. 139. 239 Id. 240 Scarlet Extended NV v SABAM (Case C-70/1024), Judgment of the CJEU, 24 November 2011.

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any restriction in time’.241 The CJEU seemed fearful that such an extensive filter system would be incompatible with guaranteeing a balance between protecting intellectual property on the one hand and allowing free enterprise, the right of privacy protection and the right to receive or send information on the other hand. Unfortunately, the CJEU did not use the opportunity to clarify exactly the degree to which internet intermediaries need to pre-emptively filter and sustain a business climate which is conducive to both trademark holders and internet intermediaries. The solution envisioned by the Belgian government, to obligate OSPs to filter pre-emptively, is best suitable with the solution envisaged in this book. Even though an OSP that meets the criteria of Article 14(1) E-Commerce Directive,242 so that it is exempted from liability, it can still be required to filter, based on Article 14(3) E-Commerce Directive,243 which promulgates that member states’ legal systems can require the service provider to terminate or prevent an infringement or establishing procedures governing the removal or disabling of access to information.244 Between 2005 and 2008 the German Federal Court of Justice245 demonstrated in Internet Auction I,246 II 247 and III 248 that even though an OSP falls within the safe harbour against intermediary liability of § 10 Sentence 1 Telemediagesetz,249 which is Germany’s implementation of Article 14(1) E-Commerce Directive,250 it can still be held liable based on so-called Störerhaftung.251 The ‘Störerhaftung’ could be interpreted as

241 Id. 242 Supra, Chapter 1, note 5. 243 Id. 244 Recital 48 of the preamble to the E-Commerce Directive, id.: ‘This Directive does not affect the possibility for Member States of requiring service providers, who host information provided by recipients of their service, to apply duties of care, which can reasonably be expected from them and which are specified by national law, in order to detect and prevent certain types of illegal activities’. 245 Bundesgerichtshof (BGH), the Federal Court of Justice, is the highest court in the system of general, that is, civil and criminal jurisdiction in Germany. 246 Internet Auction Case I ZR 304/01 I, [2005] ETMR 25, 11 March 2004. 247 Internet Auction II Case I ZR 35/04, [2007] ETMR 70, 17 April 2007. 248 Internet Auction III Case I ZR 73/05 [2008] 30 April 2008. 249 § 10 Sentence 1 Telemediagesetz = § 11 Satz 1 Teledienstegesetz 2001. 250 Supra, Chapter 1, note 5. 251 Interferer liability is a specific German doctrine codified in § 823 German Civil Code (Liability in damages) and § 1004 German Civil Code Right (Right to

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the German implementation of the third sentence of Article 11 Enforce- ment Directive,252 which prescribes that member states shall ensure that proprietors are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe intellectual property.253 The consequence of this ‘interferer liability’, which excludes the possibility of criminal enforcement or compensation of damages,254 is that a preventive injunction against the intermediary can still be issued. When pointed by a rights holder to a clearly recognizable infringement, the intermediary should not only immediately stop the specific infringement, but also take fundamental precautions to safeguard that no further corresponding infringement will take place. By applying Störerhaftung based on Article 11 Enforcement Directive,255 the Federal Court of Justice demonstrated that the safe harbour provision of Article 14(1) E-Commerce Directive256 does not relieve OSPs from an obligation to preventive filtering.

Technology

Paragraph 512(i)(2)(C) DMCA prescribes that a technical standard for filtering should not impose substantial costs on service providers or substantial burdens on their systems or networks. In the same vein on the other side of the Atlantic, the CJEU implied in L’Oreal and Others257 that filtering all data would be disproportionate, and excessively costly.

satisfaction of the possessor). German Civil Code (Bürgerlichen Gesetzbuches), 2 January 2002. 252 Supra note 142. 253 Article 11 third sentence Enforcement Directive, id.: ‘Member States shall also ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right, without prejudice to Article 8(3) of Directive 2001/29/ EC’. 254 If someone, intentionally or negligently, harms the property of someone else, and causality can be established to the infringement of a protected right they can be subject to an injunction. Although fault needs to be proven for a compensation claim or intent in the case of criminal enforcement, it is not needed for an injunction. 255 Supra note 142. 256 Id. 257 L’Oréal and Others, supra note 213, para. 139.

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In 2012, in Stokke v Marktplaats,258 the Dutch Court of Appeal in Leeuwarden weighed the pecuniary disadvantages for the proprietor Stokke of having to outsource the monitoring and notification process for infringements on the internet auction and those of the internet auction to filter in such a way that repeat infringements will be prevented. The Court of Appeal reasoned that since Stokke had to spend 700 euros, per year, and adaption of the internet auction’s system to filter its servers would cost a multitude of 700 euros, per year, that the proportionality principle of Article 3(2) Enforcement Directive would preclude that the internet auction needed to adapt its system.259 However, the Court of Appeal seems to have forgotten that if one wants to make an economic trade-off, one should realize that not only Stokke but a multitude of other proprietors have to bear the costs of monitoring and notifying the internet auction. If this had been taken into account, the equation would have looked different. Since filtering technology is based on computing performance, and therefore subject to Moore’s law,260 which is the observation that computing performance doubles every two years, the costs have decreased exponentially. Just as the performance of virus and spam filter technologies have increased, while the costs have decreased, the performance of intellectual property filtering software will increase while the costs will further decrease. So the problem of substantial or excessive costs of filtering technology is fictitious.261 It is bittersweet that the worldwide rise in censorship also is boosting filter technology.262

258 Stokke v Marktplaats, Gerechtshof (Court of Appeal) Leeuwarden, 107.001.948/01, BW6296, 22 May 2012. 259 Id., para 10.5. 260 Gordon E. Moore, ‘Cramming More Components onto Integrated Cir- cuits’, Electronics Magazine, 1965, at 4, accessed 9 February 2015 at: http://download.intel.com/museum/Moores_Law/Articles-Press_Releases/Gordon_ Moore_1965_Article.pdf; Intel Corporation, ‘Excerpts from a Conversation with Gordon Moore: Moore’s Law’, Video transcripts, 2005, at 1, accessed at: http:// large.stanford.edu/courses/2012/ph250/lee1/docs/Excepts_A_Conversation_with_ Gordon_Moore.pdf. 261 A fortiori, when the safe harbour provisions could be abolished and social media providers made liable for content infringements this would increase the demand for filter technology so that investments into its innovation increasing its efficacy decreases its costs. 262 Danny Friedmann, Paradoxes, Google and China: How Censorship Can Harm and Intellectual Property Can Harness Innovation, in GOOGLE AND THE LAW, supra, Preface, note 2, 316–328.

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In Scarlet,263 the CJEU came up with three more principled arguments against the obligation to filter all data: that an extensive filter would be incompatible with guaranteeing a balance between protecting intellectual property on the one hand and allowing free enterprise, the right of privacy protection and the right to receive or send information on the other hand. The right of privacy protection is under pressure from social media, because they sell the behavioural data of its users. Then again, this is one of the conditions under which internet users can make ‘free’ use of the service. However, filtering against content infringements does not interfere with the right of privacy protection to a greater extent than in regard to behavioural data-mining. For social media the right to receive or send information will only be restrained where it concerns infringed content (see Chapter 6.4 which has already demonstrated that protecting intellectual property is compatible with the right to freedom of expression). The CJEU deemed filtering of all data incompatible with allowing free enterprise. However, one can argue that social media should allow only non-infringing free enterprise: that the freedom of one enterprise stops where it infringes the freedom of another enterprise to exploit its intellectual property rights.264 Therefore these reasons are invalid to justify a prohibition to filter all data against content infringements.

Social media providers are best positioned to monitor Because of the safe harbour provisions social media providers only filter in reaction to instigations by the content holders. This means that the content holders need to search for the infringements themselves or pay third parties for this service or the social media providers to do this for them. One can argue that social media are morally in the best position to filter, since it falls within their control and at the same time they benefit financially from it. However, the District Court in Tiffany (NJ) Inc. v eBay, Inc. held that ‘right holders bear the principal responsibility to police their trademarks’.265 The Second Circuit in Tiffany (NJ) Inc. v eBay, Inc.266 held that private forces give internet intermediaries ‘a strong

263 Supra note 240. 264 Paraphrasing ‘Your right to swing your arms ends just where the other man’s nose begins’. Zechariah Chafee, Freedom of Speech in Wartime,32HARV. L. REV. 932, 957 (1919). 265 Citing MDT Corp. v New York Stock Exch., 858 F. Supp. 1028, 1034 (C.D.Cal.1994). ‘The owner of a trade name must do its own police work’. Supra note 192, at 518. 266 Supra note 104, at 109.

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incentive to minimize’ intellectual property infringements.267 For online auction sites this might be so to a degree, but this does not apply for social media, as pointed out in Chapter 7.4 ‘Market Forces: Attractive- ness over Accountability’. One can also argue that social media are technologically in the best position to filter,268 since they know their service from the inside out, have the right technical people on staff, and have access to all of the information on their servers. A fortiori, social media can set up and organize their services in such a way which makes filtering against content infringements effective, efficient and fast. One can distinguish two groups of monitoring obligations: before and after any notification of infringement. The latter group can be divided into the following monitoring obligations to prevent further infringements:269

– Where the identity of the infringer is known and the identity of the goods that are being infringed are known. This degree of monitoring is suggested by the Advocate General in L’Oréal v eBay.270 This seems arbitrary, since it would not address known infringers who infringe a slightly different copyright or trademark; nor would it address a repeat infringer operating under a different name. – Where the identity of the infringer or his internet protocol address is known. This would enable checking whether the known infringer has changed his ways for the good.

267 ‘But we are also disposed to think, and the record suggests, that private market forces give eBay and those operating similar businesses a strong incentive to minimize the counterfeit goods sold on their websites’. Id. 268 eBay suggested that Tiffany use technological tools, like Ranger Online. Tiffany rejected this technology and did not have the staff to do the monitoring. Tiffany Inc. v eBay, Inc., supra note 192, at 484. 269 ‘[O]nce a right has been infringed, the host provider may be required not only to terminate the infringement but also to prevent further infringements (ex post situation). Injunctive relief as to further infringements would therefore not be ruled out’. Judge Bornkamm, E-Commerce Directive vs. IP Rights Enforce- ment: Legal Balance Achieved, presentation at GRUR Meets Brussels; Enforce- ment of IP Rights in the Digital Environment – Concern, Challenges and Actions Required for the Protection of the Single Market, Brussels 6 March 2007 GRUR INT’L 642, 643 (2007). 270 L’Oréal SA Lancôme parfums et beauté & Cie Laboratoire Garnier & Cie v Bellure NV Malaika Investments Ltd Starion International Ltd (L’Oréal and Others) (Case C-487/07), Opinion of the Advocate General, 10 February 2009, para. 182.

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– Where the kind of infringement is known. This can provide clues of how to prevent similar infringements. For example, in the Internet Auction cases,271 one could monitor watches that were offered as new Rolex hours, under a certain price. Or obviously keywords that Google AdWords suggested, such as ‘imitation’ or ‘copy’, in combination with the trademark Louis Vuitton, as was established in Google France and Google.272

However, preventing content infringements before they are uploaded in an automatic way makes post-upload filtering and the costly manual notice and takedown procedures unnecessary and prevents litigation altogether (see Chapter 9 ‘Implementation of a Paradigm Shift’).

7.6 LACK OF LEGAL CERTAINTY

‘In all mercantile transactions the great object should be certainty: and therefore, it is of more consequence that a rule should be certain, than whether the rule is established one way or the other: because speculators in trade then know which ground to go upon’.273 Although cost-efficient technology is already available to social media providers to monitor and enforce against content infringements, the safe harbour provisions force them to feign that ignorance is bliss.274 The opposite is true: the feigned ignorance makes social media providers vulnerable, since there is little space between being considered an OSP

271 Supra notes 246, 247 and 248. 272 Google France and Google, supra, Chapter 2, note 95, para 101. 273 Shrieval lecture of Lord Bingham in which he quoted Lord Mansfield, in Vallejo v Wheeler (1774) 1 COWP. 143, 153. Lord Mance, ‘Should the Law Be Certain?’, The Oxford Shrieval lecture, 11 October 2011, accessed 9 February 2015 at: http://www.supremecourt.gov.uk/docs/speech_111011.pdf. 274 Reed argued that Google Images’ biggest threat is when social media sites, such as Pinterest, Facebook and Twitter, start with an effective and complete search function. ‘The worst thing that could happen for Google is that each of the other social outlets like Facebook, Twitter, Pinterest etc develop robust, functional and complete search functions’. Frank Reed, ‘In the Age of Pinterest, Google Wants to Know How to Index Images’, Marketing Pilgrim, 25 April 2012, accessed 9 February 2015 at: http://www.marketingpilgrim.com/ 2012/04/in-the-age-of-pinterest-google-wants-you-to-know-how-to-index-images. html. If these social media providers start with such a search function, it becomes even harder for them to hide behind the argument that they cannot know what has been uploaded to their sites, which is relevant to fall within the safe harbour provisions which indemnifies them from intermediary liability.

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and protected under the safe harbour provisions and being held liable for intermediary liability, as the jurisprudence shows. In particular, one can argue that safe harbour provisions provide legal uncertainty to social media, trademark holders and internet users. In the US the safe harbour provisions of the Lanham Act apply only partly to trademark infringements, but if they do apply, just as with the E-Commerce Directive275 safe harbour provisions, they do not provide any real refuge for social media providers, due to their multi-interpretable terms and uncertain duty of care to filter, as discussed in Chapter 7.6. If the safe harbour provisions do not apply, then social media providers could be held contributorily or vicariously liable for infringing user generated content. In the EU the safe harbour provisions of the E-Commerce Directive do apply to all trademark infringements, but here too, the unknown required level of filtering provides for legal uncertainty. Trademark holders file lawsuits against OSPs if they cannot get hold of the direct infringers, the internet users. US and EU case law, as discussed in Chapter 7.6, demonstrate that no predictable outcomes are to be expected. Urban and Quilter have researched DMCA notices and found out ‘that copyright claims have stated concerns beyond or in addition to copyright infringement, including trademark-type claims’,276 which only increases the legal uncertainty. The excessive and uncritical removal of alleged infringing content, as discussed in Chapter 7.3, also does not contribute to legal certainty for those internet users, including trademark holders in the role of internet user, that upload authorized content. Many internet users do not know what is authorized use of a trademark logo on social media. Transparency about what use of a trademark is authorized can be a first step in increasing legal certainty for social media providers, trademark holders and internet users (see Chapter 9 ‘Implementation of a Paradigm Shift’). Social media are resistant to filtering actively and on their own initiative for infringing content, because that can expel them from the safe harbour. However, OSPs have discovered that they have been

275 Supra, Chapter 1, note 5. 276 ‘A number of notices (193) appear to include claims in addition to, or instead of, copyright infringement – such as unfair competition, trademark-type claims, or privacy concerns. In some instances, a sender may have had a cognizable copyright claim, but they stated concerns beyond or in addition to copyright infringement’. Urban and Quilter, supra note 171, at 678.

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positioned in the ‘squeezed middle’.277 They may seek refuge in a safe harbour, but they are still a target of litigation by content holders, because moored they are an easy target. Therefore, ultimately, the question of whether the safe harbour provisions in the law of intermediary liability of trademark infringement are not effective can be confirmed. In order to close the gap, the safe harbour provisions should be abolished. Instead strict liability of OSPs, including social media providers, over intellectual property infringements on their servers should be introduced, after a transition period.

277 The word combination ‘squeezed middle’ of the year 2011 could apply to OSPs, because they are the ‘squeezed middle’ of the internet, between trademark holders and the users. ‘Squeezed middle’, Oxford University Press (US and UK) word of the year 2011, accessed 9 February 2015 at: http://www.prnewswire. com/news-releases/squeezed-middle-is-named-oxford-dictionaries-word-of-the- year-2011-134361588.html.

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PART III

Paradigm change

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8. Moral right of integrity Moral right of integrity applicable to unauthorized and non-commercial use of the trademark logo, regardless of the level of fame/reputation

8.1. INTRODUCTION

Although corporations may embrace their brands with fervor and take pride in their creation, they do not have the type of soul that cries out for protection via a moral right.1

This chapter poses questions about that statement and asks whether trademark holders have the ‘type of soul’ that cries out for protection of their trademark logo on social media via moral rights. Moral rights predominantly apply to copyright works and neighbouring rights, but in regard to attribution also to patent law.2 One can find the first theories on the legal position of the author which included non-economical aspects in Germany, while in France they coined the name ‘droit moral’ (moral right), and France was most successful in propagating its version of moral rights doctrine (Chapter 8.2). Chapter 8.3 will discuss how moral rights made their way into some international treaties. After that Chapter 8.4 will investigate the reception of the concept in two common law countries, the UK and US. Then Chapter 8.5 examines the relation between the trademark logo and moral rights. Chapter 8.6 examines the

1 Rierson, supra, Chapter 2, note 81, at 305. 2 35 U.S.C. § 111: ‘An application for patent shall be made, or authorized to be made, by the inventor, except as otherwise provided …’ The European Patent Convention (EPC) has a rule to publish the mention of the inventor, unless he has waived this right. Rule 20(1) EPC: ‘The designated inventor shall be mentioned in the published European patent application and the European patent specification, unless he informs the European Patent Office in writing that he has waived his right to be thus mentioned’.

273

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trademark logo as personification of the trademark holder, followed by trademark dilution as de facto moral rights for trademarks (Chapter 8.7 and a rationale of moral rights for the trademark logo (Chapter 8.8).

8.2 ORIGIN OF MORAL RIGHTS

Theories on Moral Rights

Strömholm wrote that towards the end of the 1880s German legal writers had created three schools of thought on the legal position of the author:3 The first school of thought is based on the work of Josef Kohler, who was a proponent of a dualistic theory of copyright. Kohler distinguished between economic and personal rights and advocated that the latter falls outside the law of intellectual property.4 The second school of thought is based on the work of Otto von Gierke, who was a proponent of a monistic theory of copyright and asserted that the whole of copyright was of a personal character.5 This prevailed in German copyright law and was implemented in § 11 German Copyright Act (Urheberrechtsgesetz) since 1965:

Copyright law protects the author in his intellectual and personal relations to the work and in the exploitation of the work. At the same time it also serves to guarantee an appropriate reimbursement for exploitation of the work.6

3 Stig Strömholm, Droit Moral: The International and Comparative Scene from a Scandinavian Viewpoint, 14 INT’L REV. INDUS. PROP. & COPYRIGHT L. 1 (1983). 4 Friedemann Kawohl, Commentary on Josef Kohler’s The Author’s Right (1880), in PRIMARY SOURCES ON COPYRIGHT (1450–1900) (eds., L. Bently and M. Kretschmer, 2008). 5 Otto von Gierke, DEUTSCHES PRIVATRECHT, Band I (1868), 756. Cited by Artur-Axel Wandtke, Zukunft des Urheberrechts und eine monistisch geprägte Urheberrechtskonzeption – Entwicklungslinien seit Josef Kohler,in FESTSCHRIFT 200 JAHRE JURISTISCHE FAKULTÄT DER HUMBOLDT- UNIVERSITÄT ZU BERLIN: GESCHICHTE, GEGENWART UND ZUKUNFT, (Stefan Grundmann et al., Walter de Gruyter 2010), at 1180. 6 § 11 German Copyright Act (Urheberrechtsgesetz) 9 September 1965 (BGBl. I S. 1273), last amended by Article 12 § 4 Law of 13 December 2007 (BGBl. I S. 2897): ‘Das Urheberrecht schützt den Urheber in seinen geistigen und persönlichen Beziehungen zum Werk und in der Nutzung des Werkes. Es dient zugleich der Sicherung einer angemessenen Vergütung für die Nutzung des Werkes’.

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The third school of thought is based on the work of Philipp Allfeld, who advocated that copyright was a right with both economic and personal elements, each having its own special rules.7 This hybrid theory became the prevailing doctrine in France and other EU member states except for the UK and Ireland, since they are common law countries. Interestingly, the EU has consistently excluded the harmonization of moral rights in the case of author’s rights.8

Moral Rights avant la letter

Even earlier, in 1769, in Millar v Taylor,9 the Court of King’s Bench decided that despite the Statute of Anne10 an author enjoyed the exclusive right of publishing his work in perpetuity and recognized de facto:

– the right of attribution (‘It is just, that Another should not use his Name, without his consent’);11 – the right of disclosure (‘It is fit, that He should judge when to publish, or whether he will ever publish. It is fit he should not only choose the Time, but the Manner of Publication; how Many; what Volume; what Print’);12 – the right of integrity (‘It is fit, that he should choose to Whose care he will Trust the Accuracy and Correctness of the Impression; in whose Honesty he will confide it, not to foist in Additions’).13

7 Philipp Allfeld, DAS URHEBERRECHT AN WERKEN DER LITERA- TUR UND DER TONKUNST. KOMMENTAR ZU DEM GESETZ VOM 19.JUNI 1901 SOWIE DEN INTERNATIONALEN VERTRÄGEN ZUM SCHUTZE DES URHEBERRECHTES. 2., (vielfach veränd. Aufl., München: C.H. Beck 1928). 8 Rigamonti, supra note 33, at 357. 9 Millar v Taylor, London (1769), supra, Chapter 6, note 437. 10 The Statute of Anne prescribed a copyright term of 14 years. An Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors or Purchasers of such Copies, during the Times therein mentioned (Statute of Anne), commenced on 10 April 1710. Copyright History, accessed 9 February 2015 at: http://www.copyrighthistory.com/anne.html. 11 Millar v Taylor, London (1769), supra, Chapter 6, note 437. Text can be found Millar v Taylor (1769), Copyright, Plagiarism and … McGuffey’s Readers, ‘A Critical Resource on Intellectual Property in the Eighteenth and Nineteenth Centuries’, accessed 9 February 2015 at: http://web.ics.purdue.edu/~epflugfe/ McGuffey%20project/624.3.html. 12 Id. Millar v Taylor, London (1769), supra, Chapter 6, note 437. 13 Id.

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Only the right of withdrawal was not de facto recognized. However, in 1774 in Donaldson v Becket14 the fledgling right of disclosure and the future of moral rights in the UK were at one fell swoop sidelined, until the introduction of the Copyright, Designs and Patents Act in 198815 (see Chapter 8.5).

French and Mainstream Moral Rights

Morillot coined the term moral rights in 1878.16 ‘Even if Morillot was the first one to identify moral rights as a bundle of prerogatives they are distinct from the exclusive right of the author, he merely founded it on rules of civil responsibility’.17 Lucas asserted that the moral rights doctrine in France was developed first in case law, followed by some scholarly writings18 and only in 1957 were moral rights codified in the version as advocated by Desbois, in which ‘the relation that exists between the author and the work, the mirror of his personality’.19

14 Text of Donaldson v Becket (1774), supra note, Chapter 6, note 437. 15 Copyright, Designs and Patents Act, 1988, c. 48. 16 André Morillot, DE LA PROTECTION ACCORDÉE AUX OEUVRES D’ART, AUX PHOTOGRAPHIES, AUX DESSINS ET MODÈLES INDUSTRI- ELS ET AUX BREVETS D’INVENTION DANS L’EMPIRE D’ALLEMAGNE (Paris: Cotillon, 1878). 17 André Lucas, ‘Moral Right in France: Toward a Pragmatic Approach? ALAI 2009 Congress from 1710 to Cyberspace: Celebrating 300 Years of Copyright and Looking to Its Future’, bla©a, (2009), accessed 9 February 2015 at: http://www.blaca.org/Moral%20right%20in%20France%20by%20Professor% 20Andre%20Lucas.pdf. bla©a is the UK national group of the International Literary and Artistic Association (ALAI) founded in Paris in 1878 under the presidency of Victor Hugo. 18 Louis Marie Eugène Pouillet, TRAITÉ THÉORIQUE ET PRATIQUE DE LA PROPRIÉTÉ LITTÉRAIRE ET ARTISTIQUE ET DU DROIT DE REPRE- SENTATION (3d ed., Georges Maillard and Charles Claro, eds., Paris: Marchal et Billard, 1908). 19 Henri Desbois, LE DROIT D’AUTEUR EN FRANCE: PROPRIÉTÉ LITTÉRAIRE ET ARTISTIQUE, viii (Paris: Dalloz, 1978).

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The current French author’s right is codified20 in the Code propriété intellectuelle (1992) as Articles L121-1 to L121-9,21 which previously was scattered throughout La propriété littéraire et artistique of 1957.22 Article L121-1 Code de la propriété intellectuelle (1992) gives a definition of moral rights: ‘The author has the right to respect for his name, his quality and his work. This right is attached to his person. It is perpetual, inalienable and absolute. It is transferable upon death to the heirs of the author. The exercise can be given to a third party under a will’.23 There are four different kind of moral rights: right of disclosure, right of withdrawal, right of attribution and right of integrity.

Right of disclosure24 Articles L121-2 and L121-8 Code de la propriété intellectuelle (1992): The author has the sole right to make his work available to the public and no one can force him.25 This doctrine was developed in the French Eden v Whistler case,26 in which the painter Eden did not want to disclose the painting of Whistler’s wife, ordered by Whistler, because they disagreed about the price.

Right of withdrawal27 Article L121-3 Code de la propriété intellectuelle (1992) points to the high court in the case of manifest abuse in the use or non-use of the right of disclosure. Articles L121-4 and L121-7-1(2) Code de la propriété intellectuelle (1992) deal with the right to reconsider or withdraw, in case an author can no longer reconcile the publication of his work with his

20 Law No. 92-597 of 1 July 1992, Journal Officiel de la Republique Francaise [J.O.] [Official Gazette of France], 3 July 1992, at 8801. 21 Articles L121-1 to L121-9 Code de la propriété intellectuelle, 1 July 1992. 22 Law numbers 57-298 of 11 March 1957 sur la propriété littéraire et artistique. 23 Supra note 21. 24 Right of disclosure is called droit de divulgation in French. 25 André Lucas, Henri-Jacques Lucas and Agnès Lucas-Schloetter, TRAITÉ DE LA PROPRIÉTÉ LITTÉRAIRE ET ARTISTIQUE, 307 (2d ed., Dayton, OH, Lexis Nexis, 2001) at 309. Rigamonti, supra note 33, at 364 and 362 footnote 57. 26 Eden v Whistler, Cour de cassation, ch. civ., 14 Mar. 1900, D.P. 1900, I, 497 (Fr.). 27 Right of withdrawal is called droit de retrait et de repentir in French.

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personal convictions. Merely pecuniary reasons are not sufficient according to the Cour de cassation.28 However, courts rarely exercise this right of withdrawal.29 After the publication of his work, the author can reconsider or withdraw the work, as long as he indemnifies the assignee beforehand for any prejudice the reconsideration or withdrawal may cause him.

Right of attribution30 Article L121-1 Code de la propriété intellectuelle (1992) prescribes respect for the name of the author, also known as the right of paternity. Hughes articulated that the right of attribution ‘guarantees that the author’s selected form of identification with the work remains – whether the author used her own name, used a pseudonym, or wanted to remain anonymous’.31

Right of integrity32 Article L121-1 Code de la propriété intellectuelle (1992) states that the quality and work should be respected, regardless of the objectively positive or objectively negative influence of the modification on the work.33 This includes dividing the work so that it is no longer complete, resizing a work for reproduction on a stamp34 and putting the work in an undesirable context according to the author.35 France’s and Germany’s right of integrity goes further than Article 6bis Berne Convention, which only protects the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory

28 Cour de cassation, le civ., 14 May 1991, 151 RIDA 1992, 272, note Sirinelli (Fr.). 29 Cornish and Llewelyn, supra, Chapter 2, note 102, at 461. 30 Right of attribution is called droit de paternité in French. 31 Justin Hughes, American Moral Rights and Fixing the Dastar ‘Gap’, UTAH L. REV. 659, 660 (2007). 32 Right of integrity is called droit au respect de l’intégrité de l’oeuvre in French. 33 Cyrill P. Rigamonti, Deconstructing Moral Rights, 47(2) HARV. INT. L. J. 353 (2006) at 364. 34 Echaurren v Italian Post Office [2001] E.C.D.R. 14 (Court of Rome). 35 This is well illustrated by the Hundertwasser case in Germany. The court held that putting a painting in a frame which extends the patterns of the painting can be perceived as a new ‘Gesamtkunstwerk’, made by the author, and therefore violates the right of integrity of the work. Hundertwasser, BGHZ 150, 32. Relevant are §§ 14 and 23 Gesetz über Urheberrecht und verwandte Schutzrechte (Urheberrechtsgesetz), 9 September 1965 amended on 22 December 2011.

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action in relation to, the said work, if it would be prejudicial to the author’s honour or reputation. However, in France the exceptions are the modification of software (Article L121-7(1) Code de la propriété intellectuelle (1992)) and work-for-hire (Article L121-7-1(1) Code de la propriété intellectuelle (1992)), which are as restrictive as Article 6bis Berne Convention. The same can be said for Germany’s motion pictures or works in motion pictures.36 The wording that moral rights are inalienable,37 even after the death of the author, was tested in 2004 when an heir of Victor Hugo claimed that the author of a publication of two sequels to Les Misérables, a work in the public domain, violated Hugo’s right of integrity.38

8.3 INTERNATIONAL TREATIES

Moral rights doctrine spread successfully via a number of international treaties, including the Universal Declaration of Human Rights39 and International Covenant on Economic, Social, and Cultural Rights.40 One can argue that these two treaties cover all moral rights as discussed in Chapter 8.2. A more limited set of moral rights, namely the moral rights of attribution and integrity, is codified in the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention).41 Article 6bis(1) Berne Convention42 was added with the Rome Act in 1928:

Independently of the author’s economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work

36 § 93(1) Urheberrechtsgesetz: ‘only grossly disfigurement or other grossly impairments to their works can be banned’. Id. 37 In France Article L121-1 Code de la propriété intellectuelle. 38 CA Paris, 4e ch., 31 Mar. 2004, 202 RIDA 2004, 292, note Pollaud- Dulian (Fr.). 39 Universal Declaration of Human Rights, G.A. Res 217A (III), Article 27(2), U.N. Doc. A/810 (10 December 1948): ‘the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author’. 40 International Covenant on Economic, Social, and Cultural Rights (ICESC), G.A. Res 2200A (XXI), Article 15(1)(c), U.N. GAOR, 21st Sess., Supp. No. 16, at 49, U.N. Doc. A/6316 (1966), 993 U.N.T.S. 3: ‘benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author’. 41 Supra, Chapter 2, note 3. 42 Id.

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and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honor or reputation.

Article 1(4) WIPO Copyright Treaty43 incorporates Article 6bis Berne Convention44 and Article 5(1) WIPO Performances and Phonograms Treaty45 provided the moral right of attribution and integrity to perform- ers, followed by Article 5 Beijing Treaty on Audiovisual Performances.46 The right of attribution of Article 6bis Berne Convention47 ‘the author shall have the right to claim authorship of the work’, does not merely mean a right to prevent non-attribution. Hughes explained the comprehensive character of the provision that is generally understood to mean the right to publish anonymously or pseudonymously and to prevent misattribution of other works and to prevent others’ names attached to one’s works.48

Economic Rights and Moral Rights Dichotomy

Where a trademark is used in a non-commercial way, the trademark, including the trademark logo, cannot be protected against trademark infringement (as discussed in Chapter 5) nor trademark dilution (as discussed in Chapter 6). Moral rights stem from the fact that the work is a reflection of the personality of its creator. Economic and moral rights belong to each other just as a body belongs to a soul, as the WIPO Guide to the Berne Convention poetically puts it.49

43 Supra, Preface, note 11. 44 Supra, Chapter 2, note 3. 45 Article 5(1) WIPO Performances and Phonograms Treaty: ‘Independently of a performer’s economic rights, and even after the transfer of those rights, the performer shall, as regards his live aural performances or performances fixed in phonograms, have the right to claim to be identified as the performer of his performances, except where omission is dictated by the manner of the use of the performance, and to object to any distortion, mutilation or other modification of his performances that would be prejudicial to his reputation’. WIPO Perfor- mances and Phonograms Treaty, 20 December 1996. 46 Beijing Treaty on Audiovisual Performances, adopted by the Diplomatic Conference on 24 June 2012. 47 Supra, Chapter 2, note 3. 48 Hughes, supra note 31, at 662–3. 49 Claude Masouyé, Guide to the Berne Convention for the Protection of Literary and Artistic Works (Paris Act, 1971), WIPO PUBL. No. 615(E) (Geneva 1978), at 41.

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Moral rights of author’s rights are called non-economic rights to distinguish them from the economic or exploitive rights of author’s rights. A better term would be non-exploitive rights, since moral rights can have a severe economic impact on the author, just as in the case of trademark dilution or trademark infringement or unauthorized non- commercial use of the trademark logo on social media. In the case of unauthorized use by third parties, the copyright holder can use his economic rights to stop them. The only benefit in this situation is that claiming both economic and moral rights might result in increased damages awards.50 In the case of unauthorized non-commercial51 use of the trademark logo by internet users on social media, the trademark holder cannot assert his economic rights, since trademark infringement and trademark dilution are not applicable. Therefore, one can argue that it would be desirable that the law would enable trademark holders to apply moral rights in such situations.

Right ofAttribution and/or Right of Integrity

Article 6bis(1) Berne Convention52 provides at least one of the prerogatives to the author:53 either to claim authorship of the work, also known as the right of paternity, or the right of attribution or the right of integrity, also known as the right of respect, or both these rights. According to WIPO Guide to the Berne Convention the author can assert that he is the creator of the work.54 This right may be exercised by the author in the way he wishes, including publishing under his pseudonym or anonymously. The author can at any time change his mind and reject his pseudonym or abandon his anonymity. Under the right of attribution an author can refuse that his name is used for a work that is not his. The right of attribution is exercisable against those permitted to reproduce the work or to take excerpts from it.

50 Rigamonti, supra note 33, at 369. 51 Although as already discussed in Chapter 5, on social media the non- commercial use of unauthorized trademarks is highly unlikely, because the social media provider uses advertisements and the data of the internet users. 52 Berne Convention for the Protection of Literary and Artistic Works, 24 July 1971. 53 Masouyé, supra note 49, at 44. 54 Id., at 41.

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According to Article 6bis(1) Berne Convention55 the author can object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the work which would be prejudicial to the author’s honour or reputation. According to WIPO Guide to the Berne Conven- tion, the formula for the right of integrity is very elastic and leaves room for discretion to the courts. A person permitted to make a reproduction cannot omit or add to the work. In case of adaptations this can become problematic. In general one can assume that one violates the moral rights if one changes the nature of the work or the author’s basic message.56 Article 6bis(2) Berne Convention57 states that the moral rights will be exercisable after the death of the author at least until the expiry of his economic rights, but the countries that do not provide protection of all the rights in the work after the death of the author may provide that some of these rights may, after the death of the author, cease to be maintained.58 This means that after the death of the author those countries still need to protect either the right of attribution or the right of integrity.59

8.4 COMMON LAW’S FUNCTIONAL EQUIVALENTS OF MORAL RIGHTS

In Drummond v Altemus60 in 1894, the court enjoined a publisher from selling a book that contained lectures by a professor that included additions and omissions. The plaintiff based his claim not on copyright law, but ‘upon his right, quite distinct from any conferred by copyright, to protection against having any literary matter published as his work which is not actually his creation, and, incidentally, to prevent fraud upon purchasers. That such right exists is too well settled, upon reason and authority, to require demonstration’.61 Common law countries, including the US and UK, have proved that one does not need to implement Article 6bis Berne Convention62 by implementing explicit moral rights legislation, instead court decisions can apply other doctrines that de facto protect moral rights.

55 Supra, Chapter 2, note 3. 56 Masouyé, supra note 49, at 42. 57 Supra, Chapter 2, note 3. 58 Masouyé, supra note 49, at 43. 59 Id., at 44. 60 Drummond v Altemus, 60 F. 338 (C.C.E.D. Pa. 1894). 61 Id., at 338–9. 62 Supra, Chapter 2, note 3.

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The patchwork of laws based on ‘breach of implied license, unfair competition, libel, and other relatively flexible legal categories that were shown to be expandable to include something like a moral right’,63 are being used as what Kwall called ‘vehicles for redressing alleged violations of interests’64 protected elsewhere by moral rights. This has led to similar results as in civil law countries with a moral rights doctrine.65 There are also some state laws that are used for this purpose.66

Moral Rights in the US

The right of withdrawal in the US and other common law countries can be found, if at all, in contracts.67 The right to prepare derivative works, based upon the copyright work,68 can provide a right of integrity. Common law courts have recognized that even if a contract is silent about modification of a work, the assignee or licensee of a copyright may not modify the work to the point where the publication of the modified work would harm the author’s reputation, as that would amount to libel.69 According to

63 John Henry Merryman, The Refrigerator of Bernard Buffet, 27 HAST- INGS L.J. 1023, 1038 (1976). 64 ‘[T]he increasingly liberal applications of unfair competition law generally and § 43(a) of the Lanham Act in particular’ had made these causes of action popular ‘vehicles for redressing alleged violations of interests protected elsewhere by the right of integrity and paternity’. Roberta Rosenthal Kwall, Copyright and the Moral Right: Is an American Marriage Possible?, 38 VAND. L. REV. 1, 18 (1985). 65 William Strauss, The Moral Right of the Author (1959) reprinted in 2 STUDIES ON COPYRIGHT (Arthur Fisher, ed., Washington, DC: Senate Committee Prints 1963), at 991. 66 Some states have laws with moral rights implications. These will not be explored in this book. See Hughes, supra note 31, at 666. 67 Neil Netanel, Alienability Restrictions and the Enhancement of Author Autonomy in United States and Continental Copyright Law, 12 CARDOZO ARTS & ENT. L.J. 1 (1994) at 29–30. 68 17 U.S.C. § 106(2). 69 In Carroll v Paramount Pictures, Inc., plaintiff libellant filed an action against defendant libeller for alleged breach of contract and libel, arising out of the release and publication of a motion picture of ‘poor quality and vastly inferior to the plays and motion pictures with which the plaintiff has been associated as producer in the past and reflects adversely on his name, standing and reputation’. Carroll v Paramount Pictures, Inc., 3 F.R.D. 95 (S.D.N.Y. 1942). In Ben-Oliel v Press Publ’g Co. the court held that the newspaper need not directly attack the writer as ignorant to libel her; the same result would be

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Masouyé, the law of defamation is especially used as a common law protection for moral right protection.70 Another example of the right of integrity by different means is in the case of compulsory licences for making a musical arrangement of a work, the arrangement cannot change the basic melody or fundamental character of the work.71 The author or after his death his heirs can terminate a grant of a transfer or licence of copyright or of any right under a copyright, including the right of attribution or the right of integrity, in the five year period after the grant was executed for thirty-five years (in certain cases forty years).72 The protection of the integrity of the copyright management information (CMI) in the DMCA73 can be seen as a source of the rights of attribution and integrity under certain conditions.74 If the name of the author was put in the CMI, it needs to be protected against the removal or alteration of this information that facilitates copyright infringement. However, Ginsburg pointed out that outside the narrow context of the Visual Artists Rights Act, which will be discussed below, there is no right under copyright to attribute authorship.75 The equivalent of the right of disclosure was recognized in the US after Warren and Brandeis’ seminal Harvard Law Review article;76 as the author’s right to object to the unauthorized disclosure of unpublished works that laid the foundation for the doctrinal construction of the right

accomplished by attributing statements to her that would make her appear so. Ben-Oliel v Press Publ’g Co., 167 N.E. 432 (N.Y. 1929). In Ellis v Hurst the court held that the author who has disclosed his work to the public, but did want attribution under his pseudonym rather than his own name, could do so, relying on his state privacy rights. Because, using his name for the purpose of trade and advertising was without his consent. Ellis v Hurst, 121 N.Y.S. 438 (Sup. Ct. 1910). 70 Masouyé, supra note 49, at 44. 71 17 U.S.C. § 115(a)(2). 72 17 U.S.C. § 203. See Mary LaFrance, Authorship and Termination Rights in Sound Recordings, 75 S. CAL. L. REV. 375 (2002). 73 Supra, Chapter 1, note 5. 74 17 U.S.C. § 1202. 75 Jane C. Ginsburg, Thirtieth Anniversary Special Issue Updates and Reflections: Article – Moral Rights in the U.S.: Still in Need of a Guardian Ad Litem, 30 CARDOZO ARTS & ENT. L.J. 73, 74 (2012). 76 Samuel D. Warren and Louis D. Brandeis, The Right to Privacy, 4 HARV. L. REV. 193, 198 (1890).

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of privacy. Privacy is also a cause of action in case of an infringement of the right of attribution.77 Via contract law the contract parties have the freedom to agree on whatever right of integrity or attribution.78 In contrast to moral rights doctrine assignees or licensees of a copyright do not have the general obligation to give attribution to the author’s name, if they did not arrange this contractually.79 Cornish and Llewelyn pointed to collective bargaining agreements that avoid non-attribution of screen credits.80 Sprigman, Buccafusco and Burns have done some interesting experiments to determine the perception of the value of attribution of creative works.81 The tort of unfair competition82 can also be used as an equivalent for moral rights.83 Paragraph 43(a) Lanham Act84 can be seen as the federal counterpart to state unfair competition laws. Misrepresentation of the product’s origin has also been used as a cause of action to protect the right of attribution.85 Attribution and integrity are linked: one can argue that if the integrity of a work is breached one cannot use the name of the author of the work as if its integrity was still maintained.

77 In Kerby v Hal Roach Studios, the court reversed in appeal, holding that to suggest that the plaintiff, who was a woman, wrote an compromising invitation letter to men whom she did not know was to impute to her a laxness of character, and to spread such imputations abroad, as defendants did, was an invasion of the right of privacy. Kerby v Hal Roach Studios, Inc., 127 P.2d 577 (Cal. Dist. Ct. App. 1942). 78 The court in Granz v Harris held that substantially abbreviating recordings constituted breach of contract or unfair competition. Granz v Harris, 198 F.2d 585 (2d Cir. 1952). 79 Cleary v News Corp., 30 F.3d 1255, 1259–60 (9th Cir. 1994). 80 Cornish and Llewlyn, supra, Chapter 2, note 102, at 458. 81 Sprigman, Buccafusco and Burns have found out that when creators are given a right to attribution as a default they value credit four times higher than when attribution is not the default option. Because of the ‘creativity effect’, that creators over-value their works too much, so that they will not be used, they prefer to make the non-attribution the default option. Christopher Jon Sprigman, Christopher J. Buccafusco and Zachery C. Burns, What’s a Name Worth? Experimental Tests of the Value of Attribution in Intellectual Property. 93 B.U. L. REV. 1 (2012). 82 Granz v Harris, 198 F.2d 585 (2d Cir. 1952). 83 Prouty v National Broadcasting Co., 26 F. Supp. 265 (D. Mass. 1939). 84 § 43(a) Lanham Act, 15 U.S.C. § 1125(a). 85 Id.

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In 1968 in Geisel v Poynter Prods. Inc.86 the court held that defendants violated plaintiff’s trade name by their use of plaintiff’s trade name in connection with the advertising and sale of dolls prior to a certain date. However, the most famous misappropriation case is Gilliam v Ameri- can Broadcasting Cos.87 in 1976. Paragraph 43(a) Lanham Act was used as one of the claims made in the famous misappropriation case. The Monty Python group had written and performed three television programmes originally to be broadcast for the British Broadcasting Com- pany (BBC). The Monty Python group and the BBC had a script writers’ agreement in which the procedure for the BBC was detailed in case they wanted to make minor alterations before the recording of the programme.88 Time-Life Films acquired the right to distribute in the US BBC programmes including Monty Python. ABC and Time-Life Films agreed that ABC had the right to broadcast two ninetyminute specials, each comprising three thirty minute Monty Python programmes.89 How- ever, of the ninetyminute special ABC omitted 24 minutes, to make space for commercials and to accommodate the interests of the advertisers by removing ‘offensive or obscene matters’.90 Monty Python sought a preliminary injunction but although Judge Lasker of the US District Court of the Southern District found impairment of the integrity of the work and damages, he rejected the request.91 Instead Judge Lasker ruled that ABC needed to broadcast a disclaimer, that the Monty Python group dissociated itself from the programme because of the editing. However, a panel of the court granted a stay of the order that required ABC to broadcast a disclaimer that ABC had edited the programme, until Monty Python’s appeal could be heard and permitted ABC to broadcast.92 The Monty Python group sought review of this decision by the US District Court that denied them injunctive relief in their action against

86 Geisel v Poynter Prods., Inc., 295 F. Supp. 331 (S.D.N.Y. 1968). 87 Gilliam v. American Broadcasting Cos., 538 F.2d 14 (2d Cir. 1976). 88 Id., at 2. 89 Id., at 4–5. 90 Id., at 6. 91 According to Judge Lasker it was unclear who owned the copyright and that ABC would suffer significant financial loss if it were enjoined a week before the scheduled broadcast; and that Monty Python displayed a ‘somewhat disturb- ing casualness’ in their pursuance of the matter. However, Judge Lumbard acknowledged that ‘even if BBC owned the copyright in the recorded program, its use of that work would be limited by the license granted to BBC by Monty Python for use of the underlying script’. Id., 6–7, 10. 92 Id., at 7.

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ABC for copyright infringement, breach of contract, and unfair competition and violation of § 43(a) Lanham Act.93 The court held that the editing and cuts made to the work constituted an actionable mutilation of Monty Python’s work.94 Because the editing and cuts constituted an unauthorized creation of a derivative work of the underlying script and therefore copyright infringement, the question whether ABC had the ownership of the copyright became irrelevant. The public would attribute the distorted work to Monty Python and, therefore, Monty Python would suffer irreparable injury to its professional reputation. The misrepresentation of the product’s origin is cause of action under § 43(a) Lanham Act.95 In 1980 in Follett v New American Library, Inc.96 The court granted plaintiff author’s motion under § 43 Lanham Act, codified as 15 U.S.C § 1125, although plaintiff editor’s revisions were more substantial than those which an editor would ordinarily perform, it was misleading to depict him as principal. The Lanham Act was designed to prevent the presentation of an author’s work to the public in a distorted form and to protect the public and artist from misrepresentations of the artist’s contribution to a finished work. The court held that defendants were required to make some accommodation to prevent such misrepresentation. In 1981 in Smith v Montoro97 it was held that misattribution can be seen as false description or representation in advertising. In 1992 in King v Innovation Books,98 author Stephen King sought to enjoin defendants, a movie production company and distributor, from associating plaintiff’s name with defendants’ movie, titled after plaintiff’s short story, based on claims under § 43(a) Lanham Act, 15 U.S.C. § 1125(a).99 The order granting plaintiff’s preliminary injunction was affirmed to the extent it prohibited use of a possessory credit, but reversed to the extent it prohibited use of a ‘based upon’ credit.

93 § 43(a) Lanham Act, 15 U.S.C. § 1125(a). 94 Gilliam v American Broadcasting Cos., supra note 87, at 25. 95 § 43(a) Lanham Act, 15 U.S.C. § 1125(a). 96 Follett v New Am. Library, Inc., 497 F. Supp. 304 (S.D.N.Y. 1980). 97 Smith v Montoro, 648 F.2d 602 (9th Cir. 1981). 98 King v Innovation Books, 976 F.2d 824 (2d Cir. 1992). 99 § 43(a) Lanham Act, 15 U.S.C. § 1125(a).

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Moral Rights Legislation in the UK

Instead of the author’s inalienable right to determine when his work is fit for publication, in English law if an author fails to publish according to his contractual obligation, he cannot be held to his specific performance but he will be held liable for damages.100 To explicitly implement Article 6bis Berne Convention, which was introduced with the Rome Act in 1928, and which was in force in the UK since 1931, the Copyright, Designs and Patents Act (CDPA)101 was enacted in 1988, which laid a second layer of moral rights102 over the above mentioned rights and privileges under the common law.103 The moral rights in the CDPA are the right of attribution,104 the right of integrity,105 the right against false attribution of authorship,106 and the right of privacy relating to certain photographs and films.107 However, the waiver provisions under the CDPA108 can be extremely broad and any unconditional blanket waivers counteract with the theory of inalienability.

Moral Rights Legislation in the US

Although according to the House Report on the implementation of the Berne Convention,109 to which the US acceded only in 1988,110 the existence of ‘a composite of laws’111 justified that no changes were needed to provide protection according to Article 6bis Berne Convention.112

100 Clarke v Price (1819) 37 Eng. Rep. 270 (Ch.). 101 Copyright, Designs and Patents Act (CDPA), 1988, c. 48. 102 § 77–89, 94–95, 103 CDPA, id. 103 § 171(4) CDPA, id. 104 § 77 CDPA, id. 105 § 80 CDPA, id. 106 § 84 CDPA, id. 107 § 85 CDPA, id. 108 § 87 CDPA, id. 109 H.R. Rep. No. 100-609 at 34 (1988). 110 The US acceded to the Berne Convention for the Protection of Literary and Artistic Works on 16 November 1988. The treaty entered in force for the US on 1 March 1989. 111 H.R. Rep. No. 100-609 at 34 (1988). 112 Hughes, supra note 31, at 665–6.

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However, on 1 December 1990, a very select group of works of visual art113 was favoured for the right of attribution via the Visual Artists Rights Act (VARA),114 only ‘accentuating the lack of such rights for other expressive works’.115 In VARA the right of attribution means: the right to claim authorship of that work,116 right to prevent the use of his or her name as the author of any work of visual art which he or she did not create,117 the right to prevent the use of his or her name as the author of the work of visual art in the event of a distortion, mutilation or other modification of the work which would be prejudicial to his or her honour or reputation.118 In VARA the right of integrity means the right to prevent any intentional distortion, mutilation or other modification of that work which would be prejudicial to his or her honour or reputation, and any intentional distortion, mutilation or modification of that work is a

113 17 U.S.C. § 101 VARA gives a definition of what is a work of visual art and what is not: A ‘work of visual art’ is – (1) a painting, drawing, print, or sculpture, existing in a single copy, in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author, or, in the case of a sculpture, in multiple cast, carved, or fabricated sculptures of 200 or fewer that are consecutively numbered by the author and bear the signature or other identifying mark of the author; or (2) a still photographic image produced for exhibition purposes only, existing in a single copy that is signed by the author, or in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the author. A work of visual art does not include – (A) (i) any poster, map, globe, chart, technical drawing, diagram, model, applied art, motion picture or other audiovisual work, book, magazine, newspaper, periodical, data base, electronic information service, electronic publication, or similar publication; (ii) any merchandising item or advertising, promotional, descriptive, covering, or packaging material or container; (iii) any portion or part of any item described in clause (i) or (ii); (B) any work made for hire; or (C) any work not subject to copyright protection under this title. 114 Edward J. Damich, The Visual Artists Rights Act of 1990: Toward a Federal System of Moral Rights Protection for Visual Art, 39 CATH. U. L. REV. 945, 958–64 (1990). Dana L. Burton, Artists’ Moral Rights: Controversy and the Visual Artists Rights Act of 1990, 13 VAND. J. ENT. & TECH. L. 463, 505 (2011). 115 Hughes, supra note 31, at 673. 116 17 U.S.C. § 106A (a)(1)(A). 117 17 U.S.C. § 106A (a)(1)(B). 118 17 U.S.C. § 106A (a)(2).

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violation of that right,119 to prevent any destruction of a work of recognized stature, and any intentional or grossly negligent destruction of that work is a violation of that right.120 These rights of attribution and of integrity are protected only during the author’s lifetime.121 Works outside this definition can only rely on the above mentioned common law causes of action. To waive the moral rights unconditionally is not possible.122

8.5 TRADEMARK LOGO AND MORAL RIGHTS

In Gilliam v American Broadcasting Co.,123 a misattribution case in the pre-VARA US, the connection between trademark and moral rights seemed natural. Although concurring, Judge Gurfein noted that the Lanham Act is ‘not a substitute for droit moral which authors in Europe enjoy’, because the ‘Lanham Act does not deal with artistic integrity. It only goes to misdescription of origin and the like’.124 In 2003, the US Supreme Court in Dastar Corp. v Twentieth Century Fox Film Corp.125 ruled that § 43(a)(1) Lanham Act,126 cannot be used as a cause of action for non-attribution. Fox, SFM Entertainment and New Line Home Video accused Dastar of reverse passing off, because it marketed the Fox video (whose film rights were in the public domain) as its own. However, the Supreme Court interpreted that ‘origin’ in § 43(a)(1)(A) Lanham Act127 did not mean the source of any idea, concept or communication.128 ‘Recognizing a § 43(a) 15 U.S.C. § 1125(a), cause of action here would render superfluous the provisions of the Visual Artists Rights Act that grant an artistic work’s author “the

119 17 U.S.C. § 106A (a)(3)(A). 120 17 U.S.C. § 106A (a)(3)(B). 121 17 U.S.C. § 106A (d)(1). 122 An exception: ‘In the case of a joint work prepared by two or more authors, a waiver of rights under this paragraph made by one such author waives such rights for all such authors’. Last sentence of 17 U.S.C. § 106A (e)(1). 123 Gilliam v American Broadcasting Co., supra note 87. 124 Id., para. 4. 125 Dastar Corp. v Twentieth Century Fox Film Corp. et al, 539 U.S. 23 (2003). 126 Trademark (Lanham) Act of 1946 § 43(a)(1), Pub. L. 79-489, 60 Stat. 441 15 U.S.C. § 1125(a)(1) (2006). 127 Id. 128 Supra note 125, at 37.

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right … to claim authorship.”’129 However, the substitution argument is not convincing since VARA provides its protection to a very select group of visual artists. Hughes pointed out that § 43(a)(1) Lanham Act130 used the word ‘or’ no less than 16 times.131 To demonstrate that Hughes’ qualification of § 43(a)(1) Lanham Act as ‘unencumbered by clarity’132 was well chosen, § 43(a)(1)(A–B) Lanham Act will be displayed whereby the word ‘or’ has been shown every time in bold:133

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which – (A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or, (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

Trademark as aVehicle of Communication

As Schechter asserted, trademarks do not only symbolize the proprietor’s goodwill but also create it.134 The trademark functions to identify a product as satisfactory and thereby to stimulate further purchases by the consuming public.135 By asserting that origin in § 43(a)(1)(A) Lanham Act does not mean the source of any idea, concept or communication, the Supreme Court in Dastar136 is ignoring the communication function of the trademark.

129 Supra note 125, at 24. 130 Supra note 126. 131 Hughes, supra note 31, at 686. 132 Id., at 682. 133 One can argue since § 43(a)(1)(A) Lanham Act refers to (B) using another ‘or’, that the number is for (A) is 17 plus the 6 times ‘or’ in (B), which brings the total to 23. 134 Schechter, supra, Chapter 1, note 83, at 818. 135 Id., at 818. 136 Supra note 125.

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Judge Scalia asserted that brand-loyal consumers do not believe that brands such as Coca-Cola Company or PepsiCo were the companies that were the origin of the drink, in the sense that they were the first to devise the formula. ‘The consumer who buys a branded product does not automatically assume that the brand-name company is the same entity that came up with the idea for the product, or designed the product – and typically does not care whether it is’.137 Hughes refuted Judge Scalia’s examples by showing the unbroken line between the persons who devised the formula, name and logo, and the respective corporations. Hughes made clear that neither company produces most of the cola marketed under their names and that origin here does not mean manufacturing entity, but rather licensing of their brands.138 One can also think about original equipment manufacturers (OEM) in China and EU and US licensors. Judge Scalia acknowledges that origin of goods ‘might be stretched … to include not only the actual producer, but also the trademark owner who commissioned or assumed responsibility for (“stood behind”) production of the physical product, so that “origin” can be interpreted as “sponsorship” or “approval,” conform § 43(a)(1)(A)’,139 which can be categorized as protection against a likelihood of confusion. Excluding a likelihood of confusion, what is the link between moral rights and trademark dilution?

8.6 TRADEMARK AS PERSONIFICATION OF THE TRADEMARK HOLDER

One must make a distinction between personality rights on the one hand and the personality of the copyright holder on the other. Here the personification of the trademark by the trademark holder will be proposed as a linkage between the personalities of trademark holder and trademark.

Personality Rights

Doctrinarily, the distinction between moral rights and personality rights is that the rights of personality is a category of rights that includes but is not limited to the moral rights. The rights of personality are also

137 Id., at 32. 138 Hughes, supra note 31, at 687. 139 Hughes points out that § 43(a)(1) Lanham Act has no less than 16 times the word ‘or’ in the provision. Id., at 688.

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inalienable and are premised on the personality and not on the existence of any work.140 Patrimonial rights141 in Swiss law could be protected via rights of personality even before Switzerland introduced moral rights into its Law on Copyright and Neighbouring Rights which entered into force on 1 July 1993.142

Stability-dynamism paradox According to Heraclitus one never enters the same river twice.143 But when one enters the river for the second time, the river is still named the same. The same can be said of authors, who regenerate all of their cells every seven years144 and accumulate experiences which might influence their work, but often still go by the same name. Trademark holders’ products and services oftentimes change over time due to changes in the market demands and innovation. However, oftentimes, the trademark remains stable during these changes of the product, in order to accumulate goodwill and not destroy the investments made via advertisements in the brand. The trademark holders cultivate their trademark logo as a beacon of goodwill, welcoming customers back and inviting new ones. In some civil law countries the author has moral rights even after his life, in order to protect the honour of the family of the author. In this way, moral rights can be seen as intergenerational. Like the family of an author that passed away and that share the name with the deceased, trademark holders operate under the same logo as their predecessors. Just as families cultivate values and pass them on to the next generation, so have trademark holders corporate cultures they cultivate and continue.

140 Rigamonti, supra note 33, at 393. 141 Rigamonti points to Friedrich Carl von Savigny, SYSTEM DES HEUTI- GEN RÖMISCHEN RECHTS 1 (Berlin: Veit, 1840), at 339–40, for a classic definition of patrimony: the totality of an individual’s property rights and obligations. Id., at 392, footnote 221. 142 François Dessemontet, ‘Letter from Switzerland: The New Copyright Act’, at 6–8, accessed 9 February 2015 at: http://www.unil.ch/webdav/site/ cedidac/shared/Articles/New%20Copyright%20Act.pdf. 143 ‘Everything changes and nothing remains still … and … you cannot step twice into the same stream’. Plato, CRATYLUS (360 BCE) (Benjamin Jowett, transl. 1871, New York: Vintage Books, 1991), para. 402, sect. a line 8. 144 ‘Every single cell in our skeleton is replaced every 7 years’. Institute for Stem Cell Biology and Regenerative Medicine, Stanford School of Medicine, ‘Research’, accessed 9 February 2015 at: http://stemcell.stanford.edu/research/.

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Trademark holders can continuously keep a trademark registered for generations.145 As already pointed out in the literature review, Hughes clarified the interest of non-owners in stable marks, that might outweigh the interests of those who want to be able to recode the mark.146 And paradoxically some kind of stability is required in order to recode at all, because otherwise the difference of the recode in relation to the encoded version cannot even be perceived.147

Personification of the trademark holder in the trademark Just as the work includes constant idiosyncrasies of its author, the trademark has unique everlasting DNA of its trademark holder. Feldman does not concur with this assertion.148 To continue the metaphor used above, the name of the ever changing river might stay the same, but what if someone without permission is changing the stones in the river so that the course of the river is repositioned and that some shores will be inundated? When the content of a copyright work is adapted a bit without the permission of the copyright holder, this would constitute copyright infringement and a violation of the right of integrity of the work. But if the work is adapted in such a rigorous way, a transformation could take place, so that a new work comes into being of which the transformer is the author. A trademark is encoded with meaning by the trademark holders, then the trademark is decoded by the consumers who come across it. Just as the copyright of a work can be infringed and the right of integrity of its content violated, the recoding can constitute trademark dilution if the famous trademark, or trademark with a reputation is used in an unsavoury way (as discussed in Chapter 6 ‘Trademark Dilution and Its Defences’). Copyright can be assigned but the moral right of the work cannot. The question is whether a trademark can be assigned or transferred without the accompanying goodwill. For example, when The Body Shop, a cosmetics chain that was known for its corporate social responsibility and environmental policies, was sold to cosmetics manufacturer L’Oréal,

145 The iconic red triangle trademark of Bass Brewery was registered in 1875 and has been registered continuously ever since. 146 Justin Hughes, ‘Recoding’ Intellectual Property and Overlooked Audience Interests, 77 TEX. L. REV. 923, 941 (1999). 147 Id. 148 ‘Unlike copyrights, trademarks do not equally express the “personality” of the creator’. Feldman, supra, Chapter 2, note 77, at 173 (2003).

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some were concerned that the goodwill that The Body Shop built up with social activism would de facto be lost. In particular there was a controversy about whether The Body Shop as part of L’Oréal would still honour their pledge not to test on animals.149

Art becoming commoditized, trademarks becoming art Professor Tang proposed to shift away from art’s classic ‘personhood’ or ‘anti-commodification’ arguments, and asserted that due to the commodification of art, moral rights can do for art what trademark law has done for other commodities by ‘avoiding post-sale consumer confusion, promoting truthful source identification, and encouraging active mark polic- ing’.150 Based on the fact that trademarks have developed from commodious vehicles to carriers of meaning, and that there is a continuum from commerce to culture, it can be argued that the trademark logo can be well aligned with personhood. This book asserts that the trademark could be better protected if moral rights were added to the actionable rights for trademark infringement and dilution.

Transforming and trans-coding Transformation can be understood as the introduction of new insights, understandings, expression and meaning to a work. Therefore it looks a lot like recoding of a trademark. When trademarks are recoded in a counter-majoritarian manner, which media scholar Stuart Hall would call ‘trans-coding’,151 Tan argued that they should be able to obtain protection under the freedom of speech guarantees.152

149 Founder of The Body Shop Roddick countered the criticism. ‘Rather, she sees herself as a kind of “trojan horse” who by selling her business to a huge firm will be able to influence the decisions it makes’. Claudia Cahalane, ‘Interview: Anita Roddick, “I Believe They Are Honourable and the Work They Do Is Honourable”’, The Guardian, 3 November 2006, accessed 9 February 2015 at: http://www.guardian.co.uk/business/2006/nov/03/ethicalliving.environment. 150 Xiyin Tang, The Artist as Brand: Toward a Trademark Conception of Moral Rights, 122 YALE L.J. 218, 222, 248–9 (2012). 151 ‘[T]aking an existing meaning and re-appropriating it for new meanings’. Stuart Hall, The Spectacle of the ‘Other’, in REPRESENTATION: CULTURAL REPRESENTATIONS AND SIGNIFYING PRACTICES (Stuart Hall, ed., Lon- don: Sage Publications, 1997), at 270. 152 David Tan, ‘Lady Gaga and Popular Culture: Rethinking Personality Rights and Trademarks’, presentation, University of Hong Kong, 10 October 2012, at 7, accessed 9 February 2015 at: http://www.lawtech.hk/wp-content/ uploads/2012/10/David-Tan-HKU-Oct-2012amend.pdf.

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No bright line test is available to determine when transformation has taken place. However in Kelly v Ariba Soft Corp.153 and in Perfect 10, Inc. v Google Inc.154 each court determined that repurposing of a work to aid identification of the original work is transformative. This repurposing of a work to aid identification of the original work is similar to the descriptive use of trademarks as discussed in Chapter 5 ‘Trademark Infringement and Its Defences’. In Kelly155 and Perfect 10,156 thumbnail representations of images were allowed to make these images searchable via search engines Ditto.com and Google. In these cases the objects of contention were the reproduc- tions of copyrighted photographs by Les Kelly and Perfect 10, respectively. The question remains why these search engines have to make the images copy-and-pasteable, and why Google Images has only a ‘Images may be subject to copyright’ disclaimer. Google Images does not limit itself to indexing the pictures and providing thumbnails which link to the original websites. Instead it provides first an overview with thumbnails, then after clicking on one thumbnail the image is given in high resolution and in a bigger size than even the original imposed over the original website, so that the picture can be copied without even visiting the original website. On the right hand side there is a link to the original site, a link to a full-size image, that also does not show anything of the original site. Chapters 1 III iii and 7.4, discusses that this presentation of images, including trademark logos can pose serious problems for trademark holders.

Personality of the Trademark

‘For what are our faculties, but the extension of our personality? and what is property, but an extension of our faculties’.157 Rierson described famous trademarks as ‘anthropomorphized corporate children that have fictional personalities and “friends” on Facebook’.158 She illustrated this phenomenon with the Barbie trademark owned by Mattel. The doll Barbie has over 2.5 million Facebook friends. ‘Mattel deliberately uses Barbie’s online image to create a specific persona

153 Supra, Preface, note 8. 154 Supra, Preface, note 3. 155 Supra, Preface, note 8. 156 Supra, Preface, note 3. 157 Frédéric Bastiat, THE LAW (1850) (Auburn, AL: Ludwig von Mises Institute, republished 2007), at 2. 158 Rierson, supra, Chapter 2, note 81, at 214.

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associated with the famous Barbie trademark’.159 Rierson pointed out that one should consider the intensely personal relationship the corporate world has with its brands to understand the analogy between moral rights law and dilution.160 Trademarks often become at least as famous as celebrities. Trademark holders often follow the same path as celebrated personalities, by presenting their trademark as a persona. Therefore Tan’s scholarly work on celebrity, culture studies and the right of publicity has been enlight- ening.161 David Marshall’s Celebrity and Power citation162 by Tan, the word ‘celebrities’ can be substituted for ‘trademarks’ without compromising any of its veracity:

[Celebrities] are the active agents that in the public spectacle stand in for the people … Celebrities, in this fluid construction of identity through consumption, represent flags, markers, or buoys for the clustering of cultural significance through patterns of consumption … The celebrity functions as a semistable identity and cultural icon that runs through several cultural forms and establishes an identity through which an audience can estimate the cultural forms’ relative value.163

8.7 TRADEMARK DILUTION SEEN AS MORAL RIGHT

Bird compared trademark dilution with moral rights in 2009.164 Port remarked that the trademark right in the US has become ‘more similar to the nature and extent of moral right protection, rather than the mere right to exclude’.165 Port argued that ‘[t]he only justification that makes sense [for US dilution laws] is to say that the holders of famous marks obtain a personality right in and to that mark much like the notion of a moral

159 Id., at 274. 160 Id. 161 David Tan, Beyond Trademark Law: What the Right of Publicity Can Learn from Cultural Studies, 25 CARDOZO ARTS & ENT. L.J. 913 (2008). 162 David Marshall, CELEBRITY AND POWER: FAME IN CONTEMPOR- ARY CULTURE 61, 244–5 (Minnesota: U of Minnesota Press, 1997). Tan, supra note 161, at 947, footnote 165. 163 Marshall, id., Tan, supra note 161, at 947, footnote 165. 164 Robert C. Bird, Moral Rights: Diagnosis and Rehabilitation, 46 AM. BUS. L.J. 407, 438–9 (2009). 165 Kenneth L. Port, The Expansion Trajectory: Trademark Jurisprudence in the Modern Age, 92 J. PAT. & TRADEMARK OFF. SOC’Y 474 (2010).

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right’.166 Rierson asserted that trademark dilution is an unjustifiable moral right for trademark owners and recommended that it be amended or eliminated:

A better explanation for dilution, as well as its practical utilization, is that it is a moral right that has been statutorily conferred upon the corporations that create, nurture, and profit from famous trademarks. Like the authors of creative works, these corporate entities would like to control all uses of their marks, particularly those that are offensive to them, and not just those that cause them economic harm.167

One can argue that use of trademarks that is offensive has a negative impact on the value of the trademark therefore causes economic harm. In contrast, Port asserted that the only justification for trademark dilution law is that holders of famous marks obtain a personality right, much like the notion of a moral right.168 However, trademark dilution law does not protect any non-famous trademark logo.

Why Trademark Dilution Does Not Pre-Empt the Need for a Moral Right for the Trademark Logo

As illustrated above by proponents and opponents trademark dilution law can be seen as a kind of moral right for trademarks. However, trademark dilution only protects those trademark logos that are famous or have a reputation. However, Chapters 5 and 6 made clear that the unauthorized non-commercial use of a trademark logo, that has not reached the requested level of fame or reputation, can cause substantial damages to the reputation and goodwill of the trademark logo. Arguably, the unauthorized non-commercial use of the trademark logo can lead to confusion and/or to a violation of the integrity of the trademark logo, therefore a special moral right to integrity for the trademark logo, in contrast to trademark names, could be a remedy that could be automatically enforced, as will be demonstrated in Chapter 9 ‘Implementation of a Paradigm Shift’. Trademark dilution doctrine is discriminatory against trademarks that have not yet reached a certain level of fame or reputation, as concluded in Chapter 6. There is no convincing reason, but a semantic one, to provide only famous trademarks or trademarks with a reputation the

166 Kenneth L. Port, Judging Dilution in the United States and Japan,17 TRANSN’L L. & CONTEMP. PROBS 667, 681–2 (2008). 167 Rierson, supra, Chapter 2, note 81, at 269. 168 Port, supra note 166, at 681.

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protection against trademark dilution. Often the argument is made that because if a trademark is not famous or has no reputation there is nothing to dilute. A glass of wine can be diluted by adding water. However, fame, notoriety or reputation of a trademark is unlike wine. The difference between a trademark that is considered famous and one that is, for example, famous in a smaller market is relative. To withhold the protection against trademark dilution by tarnishment only for famous brands seems to be arbitrary and perverse. Why should it be possible to tarnish a trademark that is only famous in a small market? Besides, each trademark that is not recognized as famous has the potential to reach that stage at some moment. One can also argue that to reward a trademark with extra protection once it has become famous or gained a reputation becomes effective and cannot be seen as an ex ante incentive. Compare this with the sensible principle in author’s right that the moral right protects the reputation or honour of each author, regardless of his level of reputation. To automatically enforce famous trademark logos against trademark dilution is not possible, unless these trademarks are first acknowledged as famous or in the possession of a reputation by the relevant trademark authority and a database is set up in which the famous trademark logos can be distinguished from the non-famous trademarks. This book holds it preferable that logos that have passed the threshold of distinctiveness, inherent or acquired, and are registered as trademarks should be protected against unauthorized use, including non-commercial use by the moral right of integrity. As already alluded to in Chapter 6, the moral right of integrity is fully compatible with the right to freedom of expression on social media, by linking back to the original trademark logo. As will be explained in Chapter 9, the application of the moral right of integrity opens up the possibility of automatic enforcement.

8.8 RATIONALE FOR MORAL RIGHT OF INTEGRITY FOR THE TRADEMARK LOGO

‘Trademarks, trade names, logos, and the other symbols of commerce have evolved. The law must evolve with them’. Judge Kozinski of the Ninth Circuit (1993)169

To copy-and-paste a trademark logo on social media and profit from its attractiveness or reputation, is reaping where one has not sown. This

169 Kozinski, supra, Chapter 1, note 39.

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equals misappropriation of or unjust enrichment from the trademark holder who has expended labour, skills and money170 on its trademark logo. The rationale for moral right of integrity for the trademark logo is not only its proprietary171 nature172 which deserves protection against plunder,173 but also the destruction of capital invested in its reputation and the need for stable trademark logos, as discussed in Chapter 8.4. Aoki asserted that a trademark logo can be seen as the result of a creative process ‘which leads to their ability to be owned’.174 Lastowka demonstrated that some courts use trademark law to protect creativity,175 which leads to a call to limit the scope of ownership when third persons use existing trademarks for their successive creative efforts.176 Trademark logos are nothing more than, but also nothing less than, signifiers of the source of origin and carriers of reputation. Therefore the trademark holder should not only be the sole determinant of this property when used in a commercial manner, but also in a non-commercial manner,177 just like the proprietor of any property used for commercial

170 Compare for misappropriation in copyright law Internat’l News Service v Associated Press, 248 U.S. 215 (Sup Ct, 1918). 171 Locke: ‘Whatsoever then [man] removes out of the State that Nature hath provided, and left it in, he hath mixed his Labour with, and joyned to it something that is his own, and thereby makes it his Property ‘. Locke, supra, Chapter 2, note 166, Ch. 5, § 27. 172 The Lockean notion that one is entitled to the fruits of one’s labor – and the converse, that one is not entitled to profit from the results of someone’s else’s labor – was dominant in the 19th century and prevalent in early trademark law. Mark P. McKenna, The Normative Foundations of Trademark Law,82NOTRE DAME L. REV. 1839 (2007). 173 ‘Man can only derive life and enjoyment from a perpetual search and appropriation; that is, from a perpetual application of his faculties to objects, or from labor. This is the origin of property. ‘But also he may live and enjoy, by seizing and appropriating the productions of the faculties of his fellow men. This is the origin of plunder’. Bastiat, supra note 157, at 5. 174 Keith Aoki, Authors, Inventors and Trademark Owners: Private Intellec- tual Property and the Public Domain, Part II, 18 COLUM.-VLA J.L. & ARTS 191, 242 (1994). 175 Greg Lastowka, Trademark’s Daemons, 48 HOUS. L. REV. 779, 791–8 (2011). 176 Dreyfuss, supra, Chapter 1, note 18. 177 When testifying before Congress on the subject of the Federal Trademark Dilution Act, counsel for Warner Brothers Studios said: ‘[T]he trademark owner, who has spent the time and investment needed to create and maintain the property, should be the sole determinant of how that property is to be used in a

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purposes does not have to tolerate third parties using his property if he is not using it commercially.

No excuse for copying someone’s trademark name, even more so for someone’s trademark logo According to Professor Beebe: ‘[o]ne reason why trademark law has traditionally granted broader protection to inherently distinctive marks is to provide an incentive to trademark producers to generate new words rather than appropriate from the language preexisting words for commercial purposes’.178 Judge Kozinski in Dreamwerks Prod. Group Inc. v SKG Studio179 cast doubt on the defendant’s contention that ‘almost every combination of words has been taken by someone doing business somewhere in what may be a loosely related field’,180 suggesting that the defendant could easily have authored a new trademark. ‘A clever new trademark’, Judge Kozinski wrote, ‘diversifies both the marketplace and the marketplace of ideas; a takeoff or copy of a mark, even if accidental, adds nothing but confusion. This dispute could have been avoided had DreamWorks been more careful, or a tad more creative, in choosing its name’. Judge Kozinski’s words are a fortiori applicable to the trademark logo.

‘Warming up’of undesirable user generated content Lessig explained that online behaviour is influenced by ‘laws, market forces, social norms, and code, the equivalent of architecture in real-life, the physical and digital infrastructure of what we call cyberspace’.181 Norms are ‘social attitudes of approval and disapproval’, according to Sunstein.182 Many internet users do not know that there is anything wrong with copying and pasting a trademark on social media without the authorization of the trademark holder. Their idea is that they can use everything they find on Google Images which is copy-and-pasteable.

commercial manner’. Federal Trademark Dilution Act of 1995: Hearing Before the Subcomm. on Courts and Intellectual Property of the H. Comm. on the Judiciary, 104th Cong. 111 (1995) (statement of Nils Victor Montan, Vice President and Senior Intellectual Property Counsel, Warner Brothers). 178 Beebe, supra, Chapter 1, note 75, at 673. 179 Dreamwerks Prod. Grp., Inc. v SKG Studio, 142 F.3d 1127 (9th Cir. 1998). 180 Id., at 1132. 181 Lawrence Lessig, CODE V.2.0 (New York: Basic Books 2006), at 5–6, 24. 182 Cass R. Sunstein, Social Norms and Social Roles, 96 COLUM. L. REV. 903, 914 (1996).

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‘Why otherwise did Google make this technically possible?’ This rhetorical question is understandable. The norm of the internet users and the social media providers clearly differs from that of the trademark holders. The trademark holders have been overwhelmed by the opportunities but also risks of social media, and some have been defeatist about what can be done to teach internet users a norm that they should not use the trademark logo unauthorizedly and respect its moral right of integrity. Because internet users see others use trademark logos unauthorizedly, Lee argued that this can lead to a ‘warming up’ instead of a chilling effect on user generated content.183 Smith wrote that ‘[w]here the harms of imprecise exclusion outweigh the benefits of simple interface conditions, a governance regime, using more complex interface conditions, is justified’.184 The implication is that trademark law would be expanded with the moral right of integrity for the trademark logo. Therefore, one can conclude that the unauthorized use (including the non-commercial use) of the trademark logo should be protected by the moral right of integrity. However, until this becomes a reality trademark holders can already start protecting their trademark logo on social media in a contractual way, see Chapter 9.3 ‘Contractual Solution’.

183 E. Lee, Warming Up to User-Generated Content, U. ILL. L. REV. 1459, 1459 (2008). 184 Henry E. Smith, Intellectual Property as Property: Delineating Entitle- ments in Information, 116 YALE L.J. 1742, 1765 (2007).

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9. Implementation of a paradigm shift Proactive solutions in walled gardens of social media as testing grounds towards algorithmic justice

9.1 INTRODUCTION

When commerce writes code, then code can be controlled, because commercial entities can be controlled.1

Lessig prophetically added to the quote above that: ‘Commerce has a purpose, and government can exploit that to its own end. It will, increasingly and more frequently, and when it does, the character of the Net will change. Radically so’.2 However, this does not need to be dystopian as will be shown in this chapter. In order to provide sufficient protection of the trademark logo on social media, a paradigm shift is needed. Chapter 9.2 proposes an amendment of the law. Until the legislation has been adapted, a contractual solution with a comparable outcome could be implemented as a testing ground for the juridical solution, as will be proposed in Chapter 9.3. Mindful of the automatic enforcement requirement, Chapter 9.4 makes the authorized use of the trademark transparent. Then, Chapter 9.5 explains that the unauthorized use of the trademark needs to be removed. Chapter 9.6 suggests instead of the ineffective safe harbour provisions an effective pre-upload filtering solution. Besides the advantage of automatic enforcement, Chapter 9.7 makes clear that the pre-upload filtering system also provides the possibility of optimizing policy goals. Chapter 9.8 discusses that when the above mentioned system has been implemented the paradigm will shift which can lead to a situation that can be called algorithmic justice. If that happens, legal certainty and predictability for

1 Lessig, supra, Chapter 8, note 181, at 72. 2 Id., at 80.

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all stakeholders can be enhanced and trust3 in a fair system where the trademark logo is respected can be restored.

9.2 JURIDICAL SOLUTION

‘For every day we stand entrenched in the legacy models of the past we are denying the opportunity of the future.’4

Often, law is perceived as lapidary. But it is a living creature. It can give birth to more law, or if it is cut off from the oxygen of societal utility, it can become obsolete and perish. In 1927, Schechter placed his vision of trademark expansion in a historical perspective: ‘There is no part of the law which is more plastic than unfair competition, and what was not reckoned an actionable wrong 25 years ago may have become such today’.5 Schechter’s vision of trademark expansion was partly implemented 68 years later and only in a diluted form (as pointed out in Chapter 6 ‘Trademark Dilution and Its Defences’). Then, the protection and enforcement of content was impacted by the most disrupting medium so far: the internet, which led to accommodations in the US and EU via safe harbour provisions which lead to undesirable behaviour and which increased legal uncertainty (see Chapter 7 ‘Intermediary Liability’). But the rise of social media with its user generated content was not factored in, thanks to the legal lag.6 Therefore a right to protect and enforce the moral rights for the trademark logo is proposed (see also Chapter 8 ‘Moral Right of Integrity’). One can distinguish three moral rights, which

3 ‘Trust is the expectation that arises within a community of regular, honest, and cooperative behavior, based on commonly shared norms, on the part of members of that community’. Francis Fukuyama, TRUST: THE SOCIAL VIRTUES AND THE CREATION OF PROPERITY (New York: Free Press Paperback, 1995), at 26. 4 Brian Fitzgerald, Ch. 9: Copyright 2010 – the Future of Copyright Law,in COPYRIGHT LAW, DIGITAL CONTENT AND THE INTERNET IN THE ASIA-PACIFIC (Brian Fitzgerald, Fuping Gao, Damien O’Brien and Sampsung Xiaoxiang Shi, eds., Sydney: Sydney University Press, 2008), at 173. 5 Schechter opens his 1927 article, which became the fundament of the dilution doctrine, with a sentence from the case Ely-Norris Safe Co. v Mosler Safe Co., 7 F. (2nd) 603, 604 (C.C.A. 2nd, 1925). Supra, Chapter 1, note 83, at 813, footnote 1. 6 This author proposes to apply the theory of the cultural lag by Veblen on the fact that the law is drafted in response to changes in society, but when the law is implemented, after a complex and lengthy legislative cycle, new changes in society require new law. Veblen, supra, Chapter 1, note 23.

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will be demonstrated in Chapter 9.2, respectively as ‘the right to disclose and withdraw’, ‘the right of attribution’ and ‘the right of integrity’. These rights could be implemented together with a proactive model of OSP liability that must substitute the de facto defunct safe harbour provisions.

Right to Disclose and Withdraw

The right to disclose and withdraw a trademark logo should be reserved for trademark holders. Just as an author is the only one who can decide when and where his work will be disclosed, so too should the trademark holder be the only one who decides when and where his trademark logo will be disclosed or withdrawn. Internet users should exclusively be able to use a trademark with the permission of the trademark holder as long as the trademark holder does not want to withdraw its trademark logo from the social media sites, which is more practical than one would expect at first glance, as can be read below (see Chapter 9.5 ‘Making unauthorized trademark use disappear’).

Right ofAttribution

The trademark logo has been described as a way to clarify what the origin of the source is (see Chapter 2.8 ‘Consumer interest-related functions of trademark infringement’). This could be seen as the trademark version of the right of attribution. Chapter 6 ‘Trademark Dilution and Its Defences’ concluded that the right to extend the trademark logo to other activities should be protected. This would make dilution by blurring superfluous, because at least the trademark logo could distinguish between two companies that use the same trademark name. The right to extend the trademark logo can be compared in copyright to the protection of a derivative work that can only take place with the permission of the author. If the trademark logo is used as an illustration with a critical comment, this book argues that it would show respect for the journalistic principle of a fair hearing to all parties involved to link back to the site of the trademark holder as proposed in Chapter 6 ‘Trademark Dilution and Its Defences’. Metadata is now exclusively used or abused7 for copyright

7 Jonathan Bailey, ‘Facebook, Flickr Strip Copyright Data from Images’, Plagiarism Today, 5 November 2008, accessed 9 February 2015 at: http:// www.plagiarismtoday.com/2008/11/05/facebook-flickr-strip-copyright-data-from- images/.

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protection,8 but there is no reason why the use of metadata cannot be extended to the protection of the trademark logo as well.

Right of Integrity

Dilution by tarnishment, in which a trademark with a reputation or a famous trademark is protected against usage in an unsavoury way, is comparable to the right of integrity that protects against any distortion, mutilation or other modification of, or other derogatory action in relation to, a copyright work. This book opines that all trademark logos should be protected from tarnishment and not just the trademark logos from famous trademarks or trademarks with a reputation. Trademark logos that fall outside the scope of a famous trademark or trademark with a reputation can still be famous or have a reputation within a more limited market or will be famous in the future.9 Thus, there is no reason why such trademark logos should be declared outlaws. The right to freedom of expression can be respected together with the right of integrity of the trademark. For example, if the trademark logo is used in an online parody, the right of integrity of the trademark logo can be maintained by linking back to the original version of the trademark logo.10

8 Conrad Chavez, ‘Facebook now Displays Image Copyright and Caption Metadata in Photo Albums’, Conrad Chaves Blog, 27 June 2011, accessed 9 February 2015 at: http://blog.conradchavez.com/2011/06/27/facebook-now- displays-image-copyright-caption-metadata/. Exchangeable image file format (Exif) is a standard that specifies the formats for images, sound, using metadata tags, covering a broad spectrum, including copyright information. Exchangeable image file format, Wikipedia, accessed 9 February 2015 at: http://en.wikipedia.org/wiki/Exchangeable_image_file_format. 9 As pointed out in Chapter 8, the stability-dynamism paradox makes any determination of the fame or reputation of a trademark logo a historic snapshot. 10 It is relevant to also read Litman on linking back for copyright works: ‘Authors have a legitimate concern, and that concern is often shared by the public. Finding the authentic version of whatever document you are seeking can in many cases be vitally important’. Jessica Litman, Symposium: Innovation and the Information Environment: Revising Copyright Law for the Information Age, 75 OR. L. REV. 19, 47 (1996).

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9.3 CONTRACTUAL SOLUTION

Until the law is amended, the protection and enforcement of the trademark logo on social media can be tested using contractual solutions.11 Samuelson’s words can be used again: ‘Both bodies of law [contract law and intellectual property law] must have to work together if the information economy is to achieve its full potential’.12 Chapter 9.3 explains the walled garden phenomenon, then discusses the advantages of diversity, and investigates how market forces shape law in the private sphere. Finally Chapter 9.3 looks at how technological developments can benefit a contractual solution.

Walled Garden Phenomenon

Social media, such as Facebook, Twitter and Pinterest, have brought applications together behind what can be called walled gardens, whose functions once could only be found at different places on the internet. Helmond and Gerlitz articulated it thus: ‘The move from link to like as the dominant web currency symbolizes the shift in the attention economy from search-driven navigation to the self-referential or gated dwelling in social media’.13 The implications are that these applications can amplify each other, but also that all of these applications, where internet users used to have a more private relationship with the applications, were brought into a more public place. However, although the character of

11 Anthony Lester’s remark about UK defamation law could be applied here to trademark law: ‘Our law suffers from the twin vices of uncertainty and overbreadth. The litigation that it engenders is costly and often protracted. It has a severe chilling effect on the freedom of expression …’ Anthony Lester, ‘These Disgraceful Libel Laws Must Be Torn Up, The Times’, 15 March 2011, accessed 9 February 2015 at: http://www.thetimes.co.uk/tto/opinion/columnists/article 2946193.ece. 12 Pamela Samuelson, Intellectual Property and Contract Law for the Infor- mation Age: Foreword to a Symposium, 87 CAL. L. REV. 1 (1999). 13 Anne Helmond and Carolin Gerlitz, Hit, Link, Like and Share: Organizing the Social and the Fabric of the Web in a Like Economy, DMI-mini conference, University of Amsterdam, 24–5 January 2011, accessed 14 June 2015 at: http://www.annehelmond.nl/wordpress/wp-content/uploads//2011/04/Gerlitz Helmond-HitLinkLikeShare.pdf.

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these walled gardens might seem in some aspects rather public,14 they are walled and fall within the contractual barriers set by the walled garden owner. Therefore, inside a walled garden a different micro-ecology of rules and regulations prevail in comparison to the outside. To demonstrate the walled garden phenomenon first some physical world examples will be given, such as the football World Cup and the Olympic Summer and Winter Games, where more restrictive rules of brand use are imposed in and even outside the stadiums.15 Cities that want to have a chance to host one of the above mentioned international sports events have to abide by the rules of the organizers, thanks to the fierce competition between bidding countries. The Fédéra- tion Internationale de Football Association (FIFA) and the International Olympic Committee (IOC) demand that candidate countries agree with a long list of requirements: from investments in infrastructure to rules in regard to advertisements and marketing activities. These so-called Rights Protection Programmes are rules to guarantee sponsors of these events complete exclusivity, prevent ambush marketing,16 combat counterfeit merchandise and trade, and to keep ‘clean venues’, where no advertising or commercial identification is allowed.17 By purchasing a ticket the visitor agrees to abide by the rules of the stadium, including the rules on

14 Social media allow the internet user’s profile to be partially searched and found by people that are not a connection of that particular internet user, depending on the privacy settings of the internet user. 15 For example, within a one kilometre radius of a stadium no advertising activity is allowed except with the prior approval of the municipality; see Article 2.1.2.2. of the 2010 FIFA World Cup South Africa By-laws of the eThekwini Municipality, Published in terms of Municipal Systems Act 32 of 2000, at 25, accessed 9 February 2015 at: http://ccs.ukzn.ac.za/files/Fifa%20ethekwini% 20law.pdf. Aparna Watal gives a workable definition for ambush marketing: ‘Casted as an “amorphous concept” by some academics, ambush marketing can be broadly described to encompass activities that exploit the publicity value of an event without incurring any obligations of a sponsor’. Aparna Watal, ‘FIFA World Cup 2010: An Analytical Study of the Effectiveness of South African Intellectual Property Regime to Combat Ambush Marketing and Counterfeiting’ (29 June 2010), at 4, accessed 9 February 2015 at: http://ssrn.com/abstract= 1699722. 16 Engaging in ‘ambush marketing’ is prohibited by Article 2.1.1.1. of the 2010 FIFA World Cup South Africa By-laws of the eThewkini Municipality, id., at 25, footnote 58. 17 FIFA’s Rights Protection in the run-up to the World Cup 2010, accessed 9 February 2015 at: http://www.fifa.com/mm/document/affederation/marketing/01/ 18/98/99/march2010rightsprotection_a5_20100308.pdf.

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brand use.18 One should realize that in the case of ambush marketing the perpetrator is not using the trademark in a trademark sense, because it is not in the course of trade or in a commercial way (see Chapter 5.2 ‘Commercial use’). That the rules can be more restrictive for users of a brand inside the walled gardens than outside could also be observed during the match between the Netherlands and Denmark, at the football World Cup in South Africa.19 A group of women, who were first dressed in the Danish colours, changed into orange skirts. That raised a lot of attention.20 Although the dresses did not bear any logo of beer brewer Bavaria, who initiated the action, the women became rapidly known as the ‘Bavaria Babes’ after they were expelled from the stadium. The action by Bavaria, a competitor of Anheuser-Busch who was an official sponsor of FIFA’s World Cup, was considered ambush marketing, and was therefore prohibited in the stadium. FIFA had pressured the South African authorities to intervene, which they did. Two women were charged with ‘unauthorised use of a trademark at a protected event’ and ‘entry into a designated area while in possession of a prohibited commercial object’.21 In other words, organizations such as FIFA and IOC can stop the use of brands that compete with the brands of their sponsors in their stadiums. Outside these walled gardens such an exclusion of competition would be unthink- able. Interestingly, the walled garden phenomenon can be applied to the online world as well. Here too, the contractual solution can be more restrictive than the law. This can be illustrated by comparing the law on registration of trademark names in the Lanham Act22 with the terms of service of Second Life,23 where users can build virtual objects and engage in commerce. In the outside world, a refusal to register a

18 A distinction must be made between use of a trademark in a commercial way, or use of a trademark not as such, which will be called here brand use, using the jargon of the organizing entity. 19 Match between the Netherlands and Denmark, FIFA’s World Cup football in South Africa, 20 June 2010. 20 ‘Bavaria Babes’ in action on YouTube. ‘Nederland Denemarken Bavaria Babes’, 14 June 2010, accessed 9 February 2015 at: http://www.youtube.com/ watch?v=U7Ih7hPTn4w&feature=player_embedded. 21 Based on South Africa’s Article 9(d) Trade Practice Act 1976 and Article 15A Merchandise Marks Act number 17, 1941, which outlaw the misuse of registered marks and unfair competition. 22 Lanham Act § 2(a), 15 U.S.C. § 1052(a). 23 Second Life, ‘Terms of Service’, accessed 9 February 2015 at: http:// secondlife.com/corporate/tos.php.

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trademark cannot prevent that an unregistered trademark will be still used in commerce. However, an account name that is considered ‘vulgar, offensive, or otherwise inappropriate’ by Second Life will be prohibited for all uses. One of the first social media sites, The Well, described itself as ‘one of the most noted “walled gardens” in the world’.24 Conditions at one social media site are different from another, which is reflected in the respective terms of use (as discussed in Chapter 3.3). Heymann wrote that ‘in any online environment, the system’s corporate owner can control almost every aspect of the experience, either through the architecture of the system or by policies that exact compliance as a condition of participation’.25 Heymann pointed out that especially in large or disparate communities or social networks that are not cohesive one can argue that the OSP has the responsibility to make the recognition more formal and to enforce such interests.26

Diversity

A plethora of walled gardens, each with a different set of contractual conditions, leads to a diversity that can lead to real innovations in systems. An example could be chartered cities, as proposed by economist Paul Romer.27 Chartered cities are city-scale administrative zones, with their own rules and regulations and institutions, which could be governed by another government than that for the rest of the country.28 Seasteading,29 a system for living and working, whereby working units connect to sea settlements, are floating walled gardens, and each owner of a unit has the power to connect to or disconnect from these

24 The Well, ‘The WELL: Learn about The WELL’, accessed 9 February 2015 at: http://www.well.com/aboutwell.html. 25 Laura A. Heymann, A Name I Call Myself: Creativity and Naming, 2 U.C. IRVINE L. REV., 585, 614 (2012). 26 Id., at 624. 27 Paul Romer, ‘Why the World Needs Charter Cities’, TED presentation, July 2009, accessed 9 February 2015 at: http://www.ted.com/talks/paul_ romer.html. 28 Chana Joffe-Walt and Jacob Goldstein, ‘Almost a Chartered City, Named Dot, Was Established in Honduras’, 483: Self-Improvement Kick, Act Two, Some Like it Dot, This American Life radio, 4 January 2013, accessed 9 February 2015 at: http://www.thisamericanlife.org/radio-archives/episode/483/ self-improvement-kick?act=2#play. 29 The Seasteading Institute, accessed 14 June 2015, undated at: http://www. seasteading.org/.

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settlements. This could make the doctrine of social contract from a fictitious to a pragmatic one. Seasteading founder Patri Friedman fore- sees ‘a Cambrium explosion of governance’30 at the different settlements. Those floating walled gardens that attract the most units obviously have the most attractive contract. This can lead to competition by the other settlements to come up with an even better contract. Social media, the online walled gardens, can also be hatcheries of innovation.31 In respect of technical features: Facebook first made it possible to put pictures and video on its Facebook page, then Twitter followed with the same features. In respect of terms of use: theoretically one could imagine one social media becoming more popular by protecting and enforcing a better privacy policy. However, in practice social media have high exit barriers. In the case where there might be an alternative for Facebook with the same or better fundamental features and a better privacy policy, the fact is that one is connected to friends, family, business connections and acquaintances through this particular social media. The advantages of a better social media will be weighed against the disadvantages of having to learn how the new social media works, build up a new profile, again uploading cherished content, inviting the old connections to the new social media and losing some of the existing connections in the process. Also there is the fear of a fragmentation of one’s activities over several similar social media to keep contact with all one’s connections, which locks in most internet users to one particular social media for a certain purpose. Just as with the chartered cities or sea settlements, the walled gardens of social media are exclusively based on the opt-in principle.

Market Forces Will Shape Law in the Private Sphere

Mayer-Schönberger and Crowley wrote that the experience of Lambda- Moo, one of the first user generated content sites, demonstrated that it is difficult to establish a legitimate, transparent and inclusive mechanism

30 Patri Friedman, ‘Our Oceans and the Evolution of Societies’, TEDxSF, 30 April 2012, accessed 9 February 2015 at: http://www.youtube.com/watch?v= BU92FVeO0qs. 31 Here competition induced innovation is meant. Not the ad hoc innovation by the internet users. Axel Bruns, Ad Hoc Innovation by Users of Social Networks: The Case of Twitter, ZSI DISCUSSION PAPER, Zentrum für Soziale Innovation, Vienna (2012).

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governed by the internet users themselves.32 And as pointed out in Chapter 3 ‘Protagonists of the Legal Conflict’, internet users are just one of the relevant parties in the trinity of social media. Trademark holders, united, could hold the key to improving the protection and enforcement of their trademark logos. ‘No taxation without representation!’33 was one of the sparks that caused the American revolution. The rationale that the one who pays should be able to determine its own faith, could also be applied in the case of trademark holders and social media. As pointed out in Chapter 3.3, the business model of service providers, such as Face- book, Twitter and Blogger, is based on the revenue streams generated by the advertisements of trademark holders, and on the data these social media sites sell to the trademark holders. In other words, the trademark holders are the most important clients for the social media sites, and therefore it is reasonable that the trademark holders expect that their interests are taken into account by social media providers. The service providers have invested money in social media sites and can expect the users to abide by the rules they set. Each extra user adds value to social media, because of the network effect:34 actively by creating user generated content, and passively by watching advertisements, and by exposing their habits on the internet which are assessed, analysed and sold. The Hong Kong government proposed that the copyright holders and social media start to work together to solve emergent problems.35 Another laudable objective would be that trademark holders and social media work together. A proactive system of protection and enforcement

32 Viktor Mayer-Schönberger and John Crowley, Napster’s Second Life? The Regulatory Challenges of Virtual Worlds, 100 N.W. U.L. REV. 1775, 1796 (2006). 33 ‘No taxation without representation!’, is a slogan originating during the 1750s and 1760s that summarized a primary grievance of the British colonists in the Thirteen Colonies, which was one of the major causes of the American Revolution. ‘No taxation without representation’, Jerome R. Reich, BRITISH FRIENDS OF THE AMERICAN REVOLUTION (New York: M.E. Sharp, 1998) at 41. 34 Network effects or network externalities. ‘We say that there are network effects if one agent’s adoption of a good (a) benefits other adopters of the good (a “total effect”) and (b) increases others’ incentives to adopt it (a “marginal effect”)’, Joseph Farrell and Paul Klemperer, Chapter 31 Coordination and Lock-In: Competition with Switching Costs and Network Effects, in HAND- BOOK OF INDUSTRIAL ORGANIZATION, VOLUME 3 (M. Armstrong and R. Porter, eds., Amsterdam: Elsevier BV, 2007). 35 Supra, Chapter 7, note 187.

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of trademark logos, as will be proposed below, could play the role of trait d’union between these parties. Because social media service providers set up the rules, they should be held liable for upholding these rules (see Chapter 7 ‘Intermediary Liability’). If they will be held liable, it will push them to set up only enforceable rules. Given the scale of the internet users on social media, the only rules that are capable of being enforced are automatically enforced rules. If trademark holders are financially healthy, service providers can benefit. But the inverse is also true.

Technological Developments

To monitor whether a word mark is used on a website without authorization has been possible for a long time. And the possibilities to monitor pictures of trademarked logos are being fine-tuned. This monitoring of unauthorized use of a trademark by the trademark holder can be done by the OSPs36 in combination with trademark holders or third parties, in a completely automatic way. But the workload starts when unauthorized use is determined and a follow-up is needed. So far the course of action has been to look into the matter more closely, and then decide whether a notice-and-takedown action is required. If this happens, the user can complain and the process can continue. The uploader can sue the OSP for illicit removal and breach of contract, and the trademark holder can sue the OSP for primary and secondary liability for trademark infringement. Harper argued that to the maximum extent possible wrongdoers should be held responsible for the wrongdoing.37 Technology improves at an exponential rate.38 This makes the acquisition of knowledge about the user generated content faster and more

36 ‘[The] specific characteristics of the internet make intermediary liability relatively more attractive than it has been in traditional offline contexts: the ease of identifying intermediaries, the relative ease of intermediary monitoring of end-users; and the relative difficulty of direct regulation of the conduct of the end-user’. Ronald J. Mann and Seth R. Belzley, The Promise of Internet Intermediary Liability, 47 WM. & MARY L. REV. 1, 8 (2005). 37 ‘To the maximum extent possible, responsibility for wrongdoing must stay with wrongdoers. Responsibility for protection must stay at the edges with users’. Jim Harper, Against ISP Liability, Telecommunications & Technology, 28 REGUL. MAG. 30, 33 (2005). 38 Ray Kurzweil, ‘The Law of Accelerating Returns’, Kurzweil AI, 7 March 2001, accessed 9 February 2015 at: http://www.kurzweilai.net/the-law-of- accelerating-returns.

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predictable39 and exercising actual control: monitoring, analysing and enforcing, over this user generated content easier and more precise. Therefore, it is arguable that the duty of care for service providers needs to be upgraded, so it is aligned to the available technology.

9.4 MAKING AUTHORIZED TRADEMARK USE TRANSPARENT

Unlike copyright law,40 trademark law does not have any prohibition on formalities. Next to registration, one can imagine that there is an extra formality for the trademark logo: namely to make transparent what kind of use is authorized. A substantial problem is that many internet users do not know what they can do with a trademark logo on social media sites. Madison posed the question whether the laws and regulations should reflect the norms and preferences that have developed over time in particular communities or should impose policy choices on those subjects to its reach?41 However, it does not have to be an either/or question. Until now the internet users do not know what they can do with the trademark logo. At best, if internet users are diligent, they can read the terms of use of the OSP. In order to increase the legal certainty for all stakeholders involved, this book proposes the following proactive standardized solution.

1. Trademark holders go to a database filled with trademark logos, authorized by the trademark holders;

39 David Kirkpatrick writes in his book THE FACEBOOK EFFECT (2010) that Facebook founder Mark Zuckerberg asserts that based on friend relationships and communication patterns he can forecast with a 33 percent accuracy who is going to be in a relationship in a week from now, according to Nick O’Neill, ‘Facebook Knows Your Relationship Will End in a Week’, All Face- book, May 17, 2010, accessed 9 February 2015 at: http://www.allfacebook.com/ facebook-knows-that-your-relationship-will-end-in-a-week-2010-05. 40 Stef van Gompel, Formalities in the Digital Era: An Obstacle or Oppor- tunity?, in GLOBAL COPYRIGHT: THREE HUNDRED YEARS SINCE THE STATUTE OF ANNE, FROM 1709 TO CYBERSPACE (Lionel Bently, Uma Suthersanen and Paul Torremans, eds., Cheltenham: Edward Elgar Publishing, 2010), at 395–424. Read James Gibson, Once and Future Copyright,81NOTRE DAME L. REV. 167 (2005) and Christopher Sprigman, Reform(aliz)ing Copy- right, 57 STAN. L. REV. 485 (2004). 41 Michael J. Madison, A Pattern-Oriented Approach to Fair Use, 45 WM. & MARY L. REV. 1525 (2004).

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2. Trademark holders can upload a picture of their trademarked logo; 3. With proprietary technology this picture can be changed into a link; 4. The trademark holder selects the conditions under which the link of their trademark logo can be used by internet users;42 5. The link to the trademark logo with the licence conditions that authorize certain use will be findable directly via the database online, or via search engines after they have been indexed.

Current trademark logos on digital media are often accompanied with the ®, to symbolize that the trademark logo has been registered. However, this book proposes that the symbol of ® or preferably another symbol is made into a link to a pop-up screen to make transparent what is authorized use of that particular trademark logo on social media sites.

Licence Conditions

Conforming to the licence system of Creative Commons,43 which makes attribution and use of online copyright works transparent, one can imagine a similar system for trademark logos on social media sites. Below a set of licence conditions is suggested.

Non-commercial licence If you sell any product or service, even though they have nothing to do with the products or services of the trademark logo, it is considered commercial use, and not allowed under this condition. Any attempt to remove, edit, override or hack this feature will be viewed as unauthorized use. It will result in immediate loss of control over the use of this logo, liability and may lead to a lawsuit. This licence condition is symbolized in Figure 9.1.

42 Click-wrap is a shrink-wrapped contract used on digital media, including the internet, which can be read and accepted by the consumer after clicking. Batya Goodman, Honey, I Shrink-Wrapped the Consumer: The Shrink-Wrap Agreement as an Adhesion Contract, 21 CARDOZO L. REV. 319 (1999); Charles R. McManis, The Privatization (or ‘Shrink-Wrapping’) of American Copyright Law, 87 CAL. L. REV. 173 (1999); Dan Streeter, Into Contract’s Undiscovered Country: A Defense of Browse-Wrap Licenses, 39 SAN DIEGO L. REV. 1363 (2002). 43 Creative Commons, co-founded by Lawrence Lessig in 2001, accessed 9 February 2015 at: http://creativecommons.org.

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Figure 9.1 Icon: non-commercial licence Newest version licence This condition guarantees that the newest version of the logo is used. Most trademark holders propagate a standardized trademark solution. Any attempt to remove, edit, override or hack this feature will be viewed as unauthorized use. It will result in immediate loss of control over the use of this logo, liability and may lead to a lawsuit. This licence condition is symbolized in Figure 9.2.

Figure 9.2 Icon: newest version licence Linked licence To make sure that the logo is not linked to a competitor, which would lead to confusion, or an unrelated subject, which would lead to dilution. In the case where the trademark logo is used for criticism purposes, internet users can easily get information of the brand according to the adversarial principle. Any attempt to remove, edit, override or hack this feature will be viewed as unauthorized use. It will result in immediate loss of control over the use of this logo, liability and may lead to a lawsuit. This licence condition is symbolized in Figure 9.3.

Unchanged licence In order not to destroy the value invested in the brand and advertising, by building goodwill and reputation, the integrity of the trademark is

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Figure 9.3 Icon: linked licence guaranteed. Any attempt to remove, edit, override or hack this feature will be viewed as unauthorized use. It will result in immediate loss of control over the use of this logo, liability and may lead to a lawsuit. This licence condition is symbolized in Figure 9.4.

Figure 9.4 Icon: unchanged licence

Open licence The trademark holder invites users to use their trademark in creative ways, so that the trademark becomes part of art and culture and has maximum opportunities to spread. This licence condition is symbolised in 9.5.

Figure 9.5 Icon: open licence

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It is expected that the licences chosen by the brands are based on their brand personalities. One can argue that brands have, just as people do, different personalities, that vary along a continuum, with on one side of the spectrum complete introvertedness and on the other side complete extravertedness. A brand such as United Colors of Benetton might choose for an open licence, given its history to actively link itself with societally relevant topics such as hunger, war and AIDS, shunned by most other brands, in the words of co-founder Luciano Benetton, ‘to develop citizen consciousness’.44

9.5 MAKING UNAUTHORIZED TRADEMARK USE DISAPPEAR

If the user is using the trademark logo in an authorized way he knows his use is legitimate. If after agreeing with the licence conditions he is using the trademark logo from the database in an unauthorized way he can be held liable, traced and sued. Any trademark logo, even edited ones, can be found with reverse image search.45 However, if the licence system is used in combination with the pre-upload filtering system, as will be outlined in Chapter 9.6, unauthorized logos can no longer be uploaded at all. Another method would be if social media sites agree that a trademark holder will be able to remove content that was put on the social media without his permission. Compare this with Megaupload’s system where, according to its founder Kim Dotcom, content holders could remove infringing links by themselves.46

44 ‘Top 10 Controversial United Colors of Benetton Ads, Buzz!’, 22 March 2012, accessed 9 February 2015 at: http://top10buzz.com/top-ten-controversial- united-colors-of-benetton-ads/. 45 TinEye Reverse Image Search, available at: http://www.tineye.com/. By 23 May 2012, TinEye had indexed 2,155,840,279 pictures. On its blog TinEye gives an example of what you can do to find back even edited photos. Read also Leila Boujnane, ‘How to use image recognition?’, TinEye, accessed 9 February 2015 at: http://blog.tineye.com/category/image-recognition/. 46 ‘Of course everybody knows that the internet is being used for legitimate and illegitimate uses. And I think every online service provider has the same challenges that we had; YouTube, Google, everybody is in the same boat. What you need to understand here is that we provided the content owners with an opportunity to remove links that were infringing on their rights. So not only did they have an online form where they could take down infringing links, they had direct delete access to our service. So they could access our system and remove

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9.6 PRE-UPLOAD FILTERING TO SUBSTITUTE SAFE HARBOUR PROVISIONS

Content holders have been suing OSPs frequently for secondary liability for soaring copyright and trademark infringements, contrary to what the US legislator intended,47 since the introduction48 of the safe harbour provisions for secondary liability for copyright49 and trademark infringement,50 respectively (see Chapter 7 ‘Intermediary Liability’). The same happened in the EU.51 In the EU, SABAM v Scarlet 52 made clear that there is no general monitoring requirement for internet intermediaries, yet. But the space for OSPs to look the other way, also known as wilful blindness, is getting smaller. In trademark law wilful blindness is

any link that they would find anywhere on the internet without us involved. They had full access. And we are talking about 180 partners, including every major movie studio, including Microsoft, and all big content producers. And they have used that system heavily. And you need to understand that that system was not even something that was required by the law, we provided that voluntarily. And they have removed over 15 million links’. Dotcom, supra, Chapter 4, note 53. 47 The US Congress was concerned that OSPs were forced to operate a human compiled directory of websites or to monitoring a site for inappropriate content. Liability should only arise if the infringement was ‘obvious’. H.R. Rep. No. 105-551 pt. 2 at 57–58; S. Rep. 105-190 at 48–49. 48 Patry alleged that the Commerce Commission was ‘captured’ by the OSPs and therefore advocated for a safe harbour in the DMCA. William F. Patry, Chief Copyright Counsel, Google Inc., presentation: ‘What Would Leadership in Copyright Policy Look Like?’, UCL IBIL Lecture, London, 3 April 2012. 49 17 U.S.C. § 512 Digital Millennium Copyright Act 1998, which gives a safe harbour for secondary liability of copyright infringement to passive OSPs that provide transitory digital network communications, system caching, information residing on systems or networks at direction of users, information location tools or non-profit educational institutions, and remove copyright infringements expeditiously after a notification. 17 USC. § 111(a)(3) deals with cable retransmission, any ‘passive carrier’ who has no direct or indirect control over the content or selection of the primary transmission, and whose activities with respect to secondary transmission consist solely of providing wires, cables, or other communication channels, is exempted from liability, but only with respect to the restricted acts of performing and publicly displaying a work. 50 § 32(2) Lanham Act codified into 15 U.S.C. § 1114(2) 2000. 51 The safe harbour for secondary liability for all infringing material can be found in the Articles 12–15 E-Commerce Directive, supra, Chapter 1, note 5. 52 Although the dispute concerned whether there can be a general obligation to filter file sharing activities and thus deep package inspection, no reference was made to the respect for communications, Article 7 EU Charter, supra, Chapter 2, note 34. SABAM v Scarlet, supra, Chapter 7, note 240.

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accepted as knowledge in Louis Vuitton S.A. v Lee.53 The concept of wilful blindness was revisited in the copyright infringement case Viacom v YouTube,54 where the Second Circuit explained that,c in the case of constructive or red flag knowledge, it is not a question between specific or generalized knowledge, but instead between a subjective and objective standard. The court distinguishes ‘actual knowledge’, which refers to subjective awareness of specific infringing acts, from the red flag provision, an objective standard asking whether the service provider was aware of facts from which a reasonable person would have inferred the existence of specific infringing acts.55 The Ninth Circuit used the same red flag doctrine in UMG Recordings v Shelter Capital Partners,56 and it is unlikely that the matter will be revisited by the Supreme Court anytime soon. The questions are: how to spot red flags, and which shades of colour are still considered red. It seems that the safe harbour still caused OSPs to have become colour blind. How to transform the vicious circle, where internet intermediaries, including social media providers, filter less to be more passive and eligible for the safe harbour, and therefore are being sued more for secondary liability, and forge it into a virtuous circle?57 Goldman argued probably too optimistically that there is a ‘tertiary visible hand’ that stops OSPs from a race to the bottom: they care about their reputation.58 Some content owners have sought refuge in software that will detect and automatically send the notice-and-takedown requests to the OSP. This has helped to further deluge OSPs with notice-and-takedown

53 Louis Vuitton SA v Lee, 875 F.2d 584, 590 (7th Cir. 1989). 54 Viacom International, Inc. v YouTube, Inc., 676 F.3d 19 (2d Cir. 2012). 55 Anonymous, Copyright Law: Willful Blindness – Second Circuit Holds that Willful Blindness Is Knowledge in Digital Millennium Copyright Act Safe Harbor Provision – Viacom International, Inc. v YouTube, Inc., 676 F.3d 19 (2d Cir. 2012), 126 HARV. L. REV. 645. 56 UMG Recordings, Inc. v Shelter Capital Partners LLC, 667 F.3d 1022 (9th Cir. 2011). 57 Self-regulation is not working if these incentives are continued. 58 Sites want to be perceived as credible. Then again, Goldman makes clear he understands that the reputation as an infringer of copyright might be profitable for some sites. Eric Goldman, The Regulation of Reputational Information, in THE NEXT DIGITAL DECADE: ESSAYS ON THE FUTURE OF THE INTERNET (Berin Szoka and Adam Marcus, eds., Washington, DC: TechFreedom, 2010).

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requests,59 to which some of these OSPs have responded by implementing overly accommodating and uncritical removal policies (see Chapter 7.4 ‘Market forces: attractiveness over accountability’ and ‘Excessive yielding to complainants’). A call for online service providers to proactively filter is becoming louder and seems inevitable. This book recommends the following model for liability for OSPs as a substitute for the safe harbour provisions:

1. Content holders (trademark and copyright holders) upload their content to the database of the OSPs. The data remain hidden for internet users. It works according to a first-to-file system and applies the legal fiction that the one who uploads the content first is authorized to do so. 2. The OSPs filter all information to be hosted on their sites and compare it with the content already in their database. If there is a match, it will not be possible to upload the unauthorized version or if only later the match is discovered it will be still removed. Parodies and critical comments that take the licence conditions into account will not be removed. 3. If a content holder is unable to upload content60 or whose content is automatically removed, he or she can sue the content holder who uploaded that content first but illegally. After a court order the OSP will substitute the content of the illegal content holder for the content of the legal content holder. 4. By logging in to the database, content holders can make their content visible to internet users via dedicated sites hosted by the OSP. So, when the filter technology comes across this content, it knows it is authorized. Even after disclosing content, content

59 According to Von Lohmann, Google receives 3 million notice-and- takedown requests, in more than 70 languages each year. Fred von Lohmann, Secondary and Intermediary Liability on the Internet, presentation at Stanford Technology Law Review, 3 March 2011 Symposium. Gibbons wrote that 37 percent of the DMCA notices it receives are invalid. T. Gibbons, ‘Google Submission Hammer Section 92A’, PC World, 16 March 2009, cited in Disney Enterprises Inc. et al., v Hotfile Corp. et al. amicus brief final, Electronic Frontier Foundation, 5 May 2012, at 5, footnote 3. 60 This goes much further than, for example, the terms of service of Megaupload, which lets its users tick a box with: ‘I accept the Terms of Service’, which include ‘You can not upload anything that is infringing anybody’s rights. You can only upload things that belongs to you’. ‘So we have a legally binding agreement with these users that they are not supposed to upload anything that does not belong to them’. Dotcom, supra, Chapter 4, note 53.

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holders can withdraw it again, so that filter technology will remove this content, conforming to the moral right of withdrawal (see Chapter 8.2 ‘Origin of moral rights’). 5. Content holders who put their content on an OSP in the hidden mode and still find out that their content is published on some site hosted by the OSP can hold the OSP liable. 6. If content holders find that someone uploaded for the first time their content, because that person has appropriated that content, then they can sue that uploader. The content will be removed after a court order. Only if the OSP refuses to remove the content, will the OSP be held liable. The illegal uploader can be sanctioned by the OSP and by the law. 7. This way content holders can upload their content at the databases of OSPs, so that they have complete control over their content on these OSPs and are guaranteed that infringing material cannot be uploaded or is removed automatically.

Compared to the flood of notice-and-takedown requests, the proactive system of OSP liability is much more effective, especially since the litigious scenarios as sketched under points 3 and 6 will only rarely take place.

9.7 OPTIMIZING POLICY GOALS

Besides automatic enforcement by pre-upload filtering, this proactive system of OSP liability has the potential to make trademark law and copyright law more effective in achieving policy goals.

Trademark Law

The proactive system can prevent internet users using a trademarked logo on a site that is incompatible with the trademark logo’s licence conditions. For example, when the internet user is authorized to use the trademarked logo in a non-commercial environment, and he or she is using it in an environment with advertisements, the trademark logo will automatically be removed. Certain use of trademarked logos, that have been judged by a court as tarnishing, can be stored on the database of the OSP but not visible for the users, so that any uploading of this infringing material on the servers of the OSP will not be possible, or when found will be automatically

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removed. In this way, the storing of the infringing material on the OSP’s database can be seen as ‘vaccinating’ against this kind of trademark abuse.

Experiments can be done with the automatic protection of copyrights with variable durations. For example, the amount of visitors some content gets can be made proportional to the duration of the copyright. For example: the more visitors the content is attracting, the longer it is automatically protected. This system does not deviate from the regular copyright law since it never exceeds the legal copyright terms of duration, but offers variable degrees of automatic protection within the legal term. In the US, ‘the amount and substantiality of the portion used in relation to the copyrighted work as a whole’61 is partly to assess whether the use of a copyright work is within the scope of fair use. Experiments can be done with allowing a certain percentage of the work to be used without permission, and removing the surplus automatically. This refers to the ‘amount of the work’. In the UK, ‘a substantial part is not defined in copyright law but has been interpreted by the courts to mean a “qualitatively significant part of a work” even where this is not a large part of the work’.62 However, quantity has a quality all its own63 and will make an automatic enforcement possible. One can argue that this suggested system is compatible with the prohibition on formalities of the Berne Convention.64 The benefits of automatic enforcement and the avoidance of a lot of legal procedures is a benefit that outweighs the full liability.

61 17 U.S.C. § 107: Limitations on Exclusive Rights: Fair Use. 62 What is meant by a substantial part of a copyright work? IPO UK ‘The defendants had infringed the plaintiffs’ copyright in the compilation by reproduc- ing a substantial part of it, even though large parts of the coupon had not been copied. The test of infringement depended on the worth of the part taken, not the quantity’, Ladbroke (Football) Ltd. v William Hill (Football) Ltd., (1962). Reports of Patent, Design and Trade Mark Cases (1980) 97 (25): 539–52. Read also ‘Taking a Substantial Part of a Copyright Work’ by Michael Pendleton and Alice Lee, INTELLECTUAL PROPERTY IN HONG KONG (Hong Kong: LexisNexis 2008), at 147. 63 Attributed to Mao, Lenin and Trotsky. Roberts, supra, Chapter 4, note 1. 64 Article 5(2) Berne Convention, supra, Chapter 2, note 3. Whether this prohibition is in the interest of copyright holders in the digital era is discussed by van Gompel, supra note 40.

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9.8 ALGORITHMIC JUSTICE

If the above mentioned proposals for pre-upload filtering in combination with a proactive system of OSP liability are implemented so that a paradigm shift is made, it will lead to algorithmic justice. Judges or arbitrators are humans and their interpretations of the law or contracts are by definition subjective, and their capacity is not scalable. Automated enforcement is scalable, and has an air of objectivity. But, as Lessig made clear,65 the choices that go into the programming are subjective too. As discussed in Chapter 9.7 ‘Copyright law’, algorithmic justice can make the protection and enforcement of intellectual property rights effective and much more refined towards social policy goals. Although, it is to be expected that there will also be a cat and mouse game between developers of enforcement systems66 that use fair-use algorithms to filter infringing material on the one hand and those that want to abuse these systems67 on the other hand. But even a good faith effort to automatically distinguish infringements from fair use will have its fair share of challenges.68 Yen would perhaps argue that it is still fair use, because eventually in the end everybody will make mistakes.69 In contrast to this view one could also argue, like the EFF 70 did, that because one does not take into account the fact that mistakes are going to be made, this will qualify as wilful blindness, which in its turn can be seen as knowledge.71 In 1998 Goldsmith had already articulated a rational assessment of control of the online realm thus: ‘the question is whether regulation will heighten the cost of the activity sufficiently to achieve its acceptable control from whatever normative perspective is appropriate’.72 This book applied a rational assessment, and concluded that the current trademark laws are insufficient, that a paradigm shift to the proactive protection and

65 Lessig, supra, Chapter 8, note 181. 66 This happened before with filtering spam and viruses and is still happening. 67 Ginsburg, supra, Chapter 7, note 233, at 589–91. 68 Von Lohmann, Supra note 59, at 5. 69 Alfred C. Yen, Torts and the Construction of Inducement and Contributory Liability in Amazon and Visa, 32 COLUM. J. L. & ARTS 513 (2009). 70 Von LohmannSupra note 59, at 7–8, footnote 6. 71 In re Barboza, 545 F.3d 702, 707, 708 (9th Cir. 2008). 72 J. Goldsmith, Against Cyberanarchy, 65 U. CHI. L. REV. 1199, 1223–4 (1998).

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enforcement of the trademark logo via the moral right of integrity in legislation or via contractual solutions in the walled gardens of social media is needed, which will inevitably lead to algorithmic justice.

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PART IV

Conclusions

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10. Conclusions

Given the massive unauthorized use of the trademark logo on social media, and the frequent legal conflicts it causes between trademark holders, social media providers and internet users, this book determines that the current trademark legislation in the US and EU – where the most valuable brands in the world are located and popular social media sites originated – is insufficient to solve the problem and subsequently proposes a paradigm shift that takes into account the special signalling properties of the trademark logo and the public desirability of its stability. The ample access to the unauthorized use of the trademark logo has led to the massive proliferation, scale and speed of the unauthorized use of the trademark logo. This in combination with the permanence of the uploaded unauthorized trademark logos on the internet has led to the perception by internet users, social media providers and image search engines that the trademark logo is without protection. Trademark holders feel a loss of control, and all parties involved suffer from the uncertain boundaries of the trademark logo. The emergence of new technology complicates the resolution of the legal conflict. Given the massive number of unauthorized use of trademark logos and the non-scalability of litigation and arbitration, automation is a sine qua non for any feasible solution. The laws against trademark infringement in the US and EU are insufficient to solve the legal conflict. One of the problems is that non-commerciality of trademark use has been broadly interpreted, while this book asserts that every trademark use on a social media which includes advertisements is commercial use. The descriptive use defence is not compatible with any unauthorized use of a trademark logo. Although some courts have explicitly or implicitly acknowledged this, it has not been codified in a statute. Also, this book argues that the choice for the Nice Classification doctrine has non-favourable outcomes for the trademark holders in particular and society at large, since it excludes the protection of the non-famous trademark to non-related goods or services and therefore stifles an expansion of the trademark holder into new activities, whereby he does not need to start up building a reputation from scratch but can profit from his reputation (which might be high within a certain market or region) in

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an unrelated field. Therefore Schechter’s proposal of protection against identical trademarks for non-competing products is still relevant. This book contends that unauthorized use of the trademark logo on social media should be prevented. However, the use of the trademark logo on social media will be always authorized where it is applied to exercise one’s right to freedom of expression, parody or critical comment, with the proviso that the trademark logo links back to the website of the trademark holder. This small formality is beneficial to the adversarial process, which is a well-established doctrine within the courts and also meets the journalistic standard, and decreases legal uncertainty for all parties involved. As the massive number of litigation cases against OSPs demonstrate, the safe harbour provisions are not effective. This book asserts that the premium for ignorance has adverse effects on the willingness of OSPs, including social media providers, to monitor, although they are best positioned to proactively filter infringing unauthorized use of content, including trademark logos. Therefore this book asserts that the safe harbour provisions must be replaced with strict intermediary liability. The trademark logo can be seen as the personification of the trademark holder, and one can argue that the stability of the trademark logo is not only in the interest of the trademark holder but also of society at large. One can argue that trademark dilution already provides a kind of moral right of integrity for the trademark logo. However, this right is limited to trademark logos that are considered famous or have a reputation, and, moreover, that are used in a commercial way. This book argues that the trademark logo that did not reach the requested level of fame or reputation and is used in a non-commercial way should also be protected against unauthorized use on social media. Therefore the moral right of integrity is proposed for the trademark logo. Until the law is amended to include a moral right of integrity for the trademark logo, so that it will be protected in the case of unauthorized use, regardless of whether it is commercial or not and regardless of its level of fame/reputation, this book suggests the implementation of proactive solutions in the walled gardens of social media as a testing ground for potential legislation. First authorized use of the trademark logo on social media should be made transparent, so that the internet user can contractually agree to abide by the authorized use of the trademark logo. Then the unauthorized use of the trademark logo can be filtered during the upload process, or removed after the upload process. This automated solution is scalable, makes intellectual property protection and enforcement not only effective but also more calibratable to social policy goals, such as fair use, and will ineluctably lead to algorithmic justice.

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