The Constructive Role of Confusion in Trademark

BY Alfred C. Yen

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This Article argues that consumer confusion plays a pervasive and important role in our trademark system. This argument directly challenges well-established orthodoxy. Numerous Supreme Court opinions and leading academics take the position that trademark law exists to reduce consumer confusion as much as possible. Indeed, courts generally justify aggressive creation and enforcement of trademark rights on the ground that these rights reduce consumer confusion or its economic equivalent, consumer search costs. Unfortunately, this construction of trademark law rests on a fundamental misunderstanding about how consumer confusion, the trademark system, and the operation of markets relate to one another. In particular, trademark orthodoxy considers consumer confusion always harmful. Aggressive elimination of even modest confusion therefore improves our trademark system and, by extension, the operation of markets because such modest confusion hinders the ability of consumers to find the goods they want. Two observations expose the inaccuracy of this orthodoxy. First, trademark law frequently accepts, creates, and even promotes the very sort of modest confusion that trademark orthodoxy despises. The ubiquitous presence of this confusion suggests that consumers should find their preferences seriously disrupted, but consumers generally find the goods they prefer without undue difficulty. Accordingly, it appears that modest confusion does not disrupt markets as badly as trademark orthodoxy states. Second, and more importantly, there is ample reason to think that low-level, modest confusion actually helps consumers avoid confusion by teaching them to identify and distinguish trademarks more effectively. Indeed, consumer research suggests that exposure to confusion spurs consumers to develop and implement cognitive strategies that avoid confusion and that consumers become more and more adept at using these strategies over time. This shows that trademark theory should change to embrace, and even encourage, low levels of modest confusion in order to improve consumer abilities and, by extension, the operation of the trademark system itself.

Introduction

In this Article, I argue that consumer confusion plays a pervasive and important role in the proper functioning of our trademark system. By doing so, I challenge the conventional view that trademark law exists to reduce consumer confusion (or, in economic terms, consumer search costs) as much as possible.[1] Indeed, I contend that our trademark system will not operate well unless consumers regularly experience manageable amounts of confusion.[2] Trademark theory should therefore be reformed to explicitly accept, and even encourage, the presence of modest confusion in our trademark system.

The idea advanced here leads to subtle but meaningful change in the theoretical structure and interpretation of trademark law. Today, conventional trademark theory is animated by what I call the “eradicate confusion norm.” This norm stands on the premise that consumer confusion serves no constructive purpose in our trademark system. It is always a bad thing when consumers are confused, even slightly, and it is the purpose of trademark law to shield consumers from such confusion.[3] Accordingly, trademark law should try to eradicate consumer confusion whenever possible, unless doing so would lead to unwanted side effects like the unintended monopolization of product features[4] or burdensome restrictions on the ability of people to accurately describe various goods and services.[5]

The eradicate confusion norm rests on a very specific understanding about consumer confusion, the operation of our trademark system, and the proper functioning of markets. Basic economic theory states that markets work best under conditions of perfect information.[6] Ideally, consumers should instantly know everything about goods for sale so they can immediately buy the items that best fit their needs.[7] Trademarks help create this ideal state of affairs by acting as words or symbols that capture a wide range of information about a product and its producer. Consumers who see a product’s mark therefore quickly learn a great deal about the product’s quality.[8]

According to the convention behind the eradicate confusion norm, society needs trademark law to prevent the damage that markets suffer when conflicting or inaccurate meanings get associated with marks.[9] This harm arises in two distinct ways. First, consumers could become mistaken about the meaning of a mark. This happens when rival producers use identical marks on competing goods. In these cases, consumers cannot accurately identify the producer of particular goods, and this can lead to mistaken purchases from the wrong source. Second, consumers who confront conflicting or inaccurate meanings may be able to figure out the correct meaning, but the market’s operation would still be compromised because consumers must spend time and effort resolving ambiguities and errors. These search costs impede the satisfaction of consumer preferences.[10] Trademark law addresses these problems by preventing behavior that leads to confusion, broadly defined, about the meaning of marks. Because perfect information leads to the proper functioning of markets, shielding consumers from any doubt or delay about the meaning of a mark presumably helps markets work better.[11] It therefore makes sense to eradicate consumer confusion whenever possible.[12]

The eradicate confusion norm exerts great influence over contemporary trademark law. Courts and theorists alike constantly state that the purpose of trademark law is the reduction of consumer search costs, a term synonymous with reducing consumer confusion.[13] More importantly, the eradicate confusion norm provides vital support for an expansive, but often controversial, interpretation of trademark rights.[14] On the one hand, some judges allow trademark holders to prevent only confusion that causes consumers to mistakenly purchase one producer’s goods in favor of another’s goods.[15] On the other hand, modern courts generally allow trademark holders to prevent modest or speculative confusion that is unlikely to result in mistaken purchases.[16] For example, it is apparently trademark infringement to use the title “Dairy Queens” for a satirical movie about beauty pageants in rural Minnesota because it makes consumers think of the Dairy Queen restaurant chain,[17] and it is also infringement for a travel company to entitle itself “G.A.P. Adventures” (an acronym for “great adventure people”) because that name will trigger memories of the GAP clothing company.[18] These decisions get criticized as misapplications of trademark law,[19] but they continue to flourish, and even multiply,[20] because the eradicate confusion norm powerfully connects the elimination of even minor consumer confusion to the generally accepted purpose of trademark law.[21]

I believe that the eradicate confusion norm fundamentally misunderstands the relationship between confusion and the operation of our trademark system. I also believe that it is a mistake to treat consumer confusion as something that must be eliminated in order to properly support commercial markets. My skepticism arises from two sources.

First, despite conventional trademark theory’s supposed zeal for eliminating consumer confusion, the law itself frequently accepts, creates, and even welcomes consumer confusion.[22] In some cases, confusion arises because trademark law concerns itself with facts that can exist only after consumers have faced confusion.[23] At other times, confusion occurs because the very process of creating, assigning, and enforcing trademark rights opens the door to confusion.[24] At still other times, trademark law explicitly accepts some degree of consumer confusion.[25] If the conventional understanding about confusion were indeed correct, such ubiquitous confusion should seriously disrupt consumer markets. Of course, such disruption does not occur. Consumers generally find the goods they want, and this implies that some level of confusion does not compromise the operation of markets as trademark convention holds.

Second, there is ample reason to believe that modest levels of confusion actually help consumers develop cognitive skills that avoid confusion in ways that, in at least some instances, improve the operation of our trademark system. Remember, trademark law’s very focus on consumer confusion implies that consumers have cognitive skills that make it possible to identify and distinguish trademarks.[26] Furthermore, although these skills may be based on inherent, hard-wired neurological characteristics of the human brain, it is important to understand that they do not arise in a vacuum divorced from trademark law. Instead, they develop precisely because consumers encounter confusion and learn how to deal with it.

To use a metaphor with which we are all familiar, people are not born knowing how to read. Once people learn how to read basic works, they become more able readers by encountering and adapting to the challenges presented by more complicated texts. These complicated texts initially confuse readers, but readers adapt by developing skills that make comprehension possible. Over time, this process gives readers the ability to understand subtle and nuanced messages embedded in complicated texts.[27] This ability could not exist without the struggles inherent in learning how to handle sophisticated “confusing” texts, and—more importantly—this ability is vital to the existence and maintenance of effective written communication. Without this process, the vast majority of people would have only low-level reading skills, and many sophisticated, complicated texts would lose social value because people would not be able to understand them. Indeed, most people would find those texts confusing.

Things are no different for trademarks. Trademarks often take the form of written texts, and consumers surely are not born knowing what a trademark is. Consumers therefore develop the ability to identify and distinguish trademarks by learning from life-long exposure to trademarks, whose existence and features trademark law prescribes.[28] In effect, consumers learn to “read” trademarks by experience, and they get better and better at it with practice, which includes encounters with confusing situations. This developed skill supports the operation of an effective trademark system.[29]

For example, if there were no legal protection for trademarks, consumers would react to them cautiously because trademarks, at least as we know them, would not reliably indicate the source of goods since more than one producer could be using the mark. Of course, once trademark protection exists, only one producer can use a given mark, and it becomes a reliable source indicator. Consumers would experience this and adopt trademarks as proof of authenticity. Similarly, if trademark law permitted producers to use similar marks that are distinguishable with modest attention, consumers would learn to pay reasonable attention to the details of marks. By contrast, if producers were legally required to use marks that bear no resemblance to each other, consumers would learn that the details of marks are unimportant and behave accordingly.

Once we recognize that consumers respond to trademark law, it becomes possible to understand why exposing consumers to confusion does not necessarily harm the trademark system. To the contrary, some degree of confusion is valuable—and even necessary—because it teaches consumers to identify and distinguish trademarks. This is important because consumers who improve these skills become less easily confused about the meaning of trademarks. Even better, those consumers generally develop a sophisticated understanding of trademarks that enables the trademark system to convey better information to consumers through the equivalent of sophisticated texts. In short, we should not theorize trademark law as a shield that protects consumers from all instances of confusion. Instead, we should think of trademark law as a tool for managing confusion in ways that help consumers develop the cognitive skills necessary to support a complex market economy. It makes good sense for trademark law to prevent confusion when the confusion is so serious that consumers probably will not straighten things out on their own. In situations like this, meaningful disruption to markets is relatively likely, and this disruption will probably outweigh the benefits of any increase in consumers’ cognitive skills that results from exposure to confusion. By contrast, it makes little sense for trademark law to intervene when consumers face minor confusion that they likely will resolve on their own. In these situations, the likelihood of meaningful disruption to markets is low, so society will probably gain overall by tolerating minor confusion in exchange for the benefits that arise from consumers’ exposure to confusion.

Unfortunately, modern trademark convention discourages thinking about trademark law this way because it relies so heavily on the eradicate confusion norm.[30] Judicial opinions occasionally recognize that trademark decisions can shape consumer expectations over the long run,[31] but this has led to neither a systematic description of how consumer confusion in trademark affects consumers nor open consideration of how confusion can affect consumer behavior in socially beneficial ways. Instead, courts have frequently acted to eliminate rather modest instances of confusion on the understandable but mistaken premise that complete eradication of consumer confusion serves the public interest.[32] These instances of confusion are often precisely the ones that would otherwise teach consumers to become more sophisticated users of trademarks.

In the pages that follow, I will describe how confusion educates consumers about trademarks and how modest confusion supports the operation of our trademark system. Part I describes trademark’s conventional emphasis on the immediate elimination of consumer confusion. Part II shows that trademark law frequently permits and even embraces consumer confusion. Borrowing insights from research about consumer learning, Part III analyzes how the confusion identified in Part II affects consumers.[33] Part IV discusses how the beneficial effects of confusion imply that trademark should change its focus from simply eliminating confusion to managing confusion in ways that help consumers develop the skills they need to navigate modern marketplaces effectively.

I. The Role and Effect of the Eradicate Confusion Norm

Our inquiry begins by describing how the eradicate confusion norm and its associated understandings influence modern trademark law. As this Part shows, the norm and its emphasis on shielding consumers both describe and justify important and sometimes controversial expansions of modern trademark rights. First, I will describe how courts use the eradicate confusion norm to extend the scope of trademark’s subject matter well beyond what is necessary to permit the accurate identification of goods. Second, I will show how the norm identifies a form of actionable confusion that supports the imposition of trademark liability even when consumers are not confused about the source of goods they buy. In both of these areas, the argument is the same: trademark rights must be broad because the law should, per the eradicate confusion norm, wipe out all possibility of even fleeting consumer confusion.

A. Subject Matter

Although the law grants trademark protection to words, logos, and even product features that producers use to identify and distinguish their products,[34] producers do not get rights to every mark they propose.[35] Because trademark protection rests on a mark’s ability to identify and distinguish one producer’s goods from another’s, a mark does not receive protection unless it identifies a particular source for a good or, in trademark parlance, is “distinctive.”[36] Some proposed marks are automatically protected as “inherently distinctive” because their “intrinsic nature[s] serve[] to identify a particular source of a product.”[37] Inherently distinctive marks include word marks that are “ ‘arbitrary’ (‘Camel’ cigarettes), ‘fanciful’ (‘Kodak’ film), or ‘suggestive’ (‘Tide’ laundry detergent),”[38] as well as logos and packaging.[39]

By contrast, some other proposed marks do not receive automatic protection because it is unclear whether they actually identify a source.[40] However, these marks will receive protection if the user of the mark can establish distinctiveness.[41] For example, a clothing manufacturer may decide to market a line of “Safari” clothing.[42] Consumers could identify that clothing as the type worn by people on safaris,[43] or they could identify it as clothing coming from a specific manufacturer.[44] Similarly, a shoe manufacturer may decide to use a specific color in the design of its shoe.[45] Consumers might buy the shoe because they find the color attractive,[46] or they might do so because it signifies the manufacturer.[47] In cases like this, trademark protection exists only upon a showing that consumers have come to understand the proposed mark as a source identifier.[48] Marks for which such a showing has been made are sometimes said to exhibit “acquired distinctiveness.”[49]

The wisdom of allowing acquired distinctiveness to establish trademark protection is far from obvious because trademark protection for marks that lack inherent distinctiveness can harm free market competition. If one clothing maker successfully monopolizes the use of “Safari” to describe clothing, rivals producing similar clothes will lose the ability to fairly describe their goods. And, to the extent that only one shoemaker can use red on the soles of its shoes, others may find it difficult to offer a competing product for sale at all. This would ultimately harm consumers because the trademark holder would leverage its trademark rights into a monopoly over red-soled shoes.[50]

These problems suggest that trademark law ought to protect only inherently distinctive marks.[51] If the law did this, then producers who care about the benefits of trademark protection would use only inherently distinctive marks. Consumers would find it easy to identify new marks, and the anti-competitive effects outlined above would disappear.

Concerns about free competition do lead to a few limits on the scope of trademark’s subject matter. Trademark law will not protect a word mark when competitors genuinely need to use a word to describe their products.[52] Similarly, it will not protect a product feature as a mark when the feature is functional and therefore essential to product quality.[53] On the whole, however, trademark law generally looks past competition-related concerns and grants protection quite freely upon showings of acquired distinctiveness because courts believe that doing so protects consumers from confusion.[54]

The Supreme Court provided a clear example of such reasoning in Qualitex Co. v. Jacobsen Products Co.,[55] a case in which the Court considered whether trademark law protects color.[56] The Qualitex facts were entirely typical. For forty years, the plaintiff, Qualitex, had used a particular shade of green-gold on its dry-cleaning press pads.[57] When the defendant, Jacobsen, began selling pads in a similar color, Qualitex sued for trademark infringement.[58] Qualitex prevailed in the district court, but the Ninth Circuit ruled in Jacobsen’s favor on the grounds that color alone was ineligible for trademark protection.[59] Qualitex appealed, and the Supreme Court reversed, holding that there is no rule barring trademark protection for a color.[60]

In so ruling, the Court considered and rejected the arguments against trademark protection for marks lacking inherent distinctiveness.[61] Justice Breyer’s majority opinion recognized that consumers do not naturally treat color as a source identifier[62] and that protecting colors could damage free competition because consumers sometimes want products in certain colors for reasons unrelated to source identification.[63] Nevertheless, it implicitly embraced the eradicate confusion norm, stating that these concerns did not warrant categorically denying trademark protection to color because, according to the Court, doing so would permit consumer confusion.[64] If consumers had learned to use a color as a source identifier, denying trademark protection to that color would have the same effect as denying protection to an inherently distinctive mark.[65] Either way, consumers would be confused, and trademark’s very purpose is to prevent that confusion.[66] The Court therefore allowed trademark protection for color upon proof of acquired distinctiveness.[67] Numerous other courts have used similar reasoning to extend trademark protection to words and product features that lack inherent distinctiveness.[68] Together, these cases show that conventional trademark theory and the eradicate confusion norm support protection for a broad range of marks for the stated purpose of shielding consumers from as much confusion as possible.

B. Basic Trademark Infringement

Trademark infringement exists when a defendant’s behavior creates a “likelihood of consumer confusion.”[69] As one might imagine, the precise meaning of confusion is unclear and contested. At one end of the spectrum, it has been held that infringing confusion exists only when consumers might mistakenly buy the defendant’s products instead of the plaintiff’s.[70] At the other end of the spectrum, many courts have held that infringing confusion can exist even when there is no meaningful risk of a mistaken purchase.[71] Instead, a plaintiff can establish infringement by showing only that more than one association for a mark enters a consumer’s mind.[72]

To appreciate the difference between these understandings of confusion and the role of the eradicate confusion norm, let us begin with Aunt Jemima Mills Co. v. Rigney & Co.[73] In that case, the plaintiff Aunt Jemima sold self-rising flour under the mark “Aunt Jemima’s,” and the defendant Rigney sold pancake syrup and sugar cream under the identical mark.[74] When negotiations about the possible joint use of the mark to sell pancake flour apparently foundered, Aunt Jemima sued Rigney for trademark infringement.[75] Although it is easy to imagine that consumers might have thought that the same manufacturer made pancake flour and syrup, the district court ruled against Aunt Jemima.[76] The rationale for doing so reflected a very narrow understanding of consumer confusion, extending protection to plaintiffs only when a defendant’s use of a confusing mark directly diverted sales that the plaintiff would have otherwise enjoyed. This meant that the district court had to rule in favor of the defendant because sales of syrup and sugar cream do not replace sales of flour.[77] The Second Circuit, however, reversed and found in Aunt Jemima’s favor.[78] In so ruling, the court articulated reasons for broadening trademark’s scope. As an initial matter, the court objected to the defendant’s attempt “either to get the benefit of the complainant’s reputation or of its advertisement or to forestall the extension of its trade.”[79] Additionally, the court noted that syrup and flour are commonly used together and that consumers could easily believe that syrup marketed under the Aunt Jemima’s mark was actually made by the plaintiff.[80]

Two distinct interpretations of the Second Circuit’s Aunt Jemima decision exist. First, the court might simply have been recognizing that two manufacturers who do not presently compete might do so in the future. If such competition is reasonably foreseeable, then simple consumer uncertainty about the meaning of marks used by the manufacturers could easily turn into the mistaken substitutions considered actionable by the district court. Preventing this would represent a fairly straightforward extension of the district court’s guiding rationale. Second, the court might have been altering the meaning of consumer confusion by separating it from the risk of mistaken substitution. Note the court’s objection to the defendant getting “the benefit of the complainant’s reputation or of its advertisement or to forestall the extension of its trade,”[81] something apparently considered undesirable even though it carried no risk of substitution.

It is of course impossible to know exactly what the Aunt Jemima court intended. Although some courts continue to anchor trademark infringement to some meaningful likelihood of consumer mistake about the source of goods,[82] it is clear that modern courts have generally followed the second understanding of Aunt Jemima and have found trademark infringement even when there is little risk of confusion about the maker of the goods.[83]

For example, in Mobil Oil Corp. v. Pegasus Petroleum Corp.,[84] the plaintiff, Mobil Oil, made wide use of its red-flying-horse mark in conjunction with a wide range of petroleum products and services.[85] Mobil sued the defendant, Pegasus Petroleum, contending that the use of “Pegasus” in conjunction with the defendant’s oil trading business infringed the flying-horse mark.[86] The Second Circuit agreed, finding that the defendant’s use of “Pegasus” created a likelihood of confusion.[87] In this case, the possibility of mistaken purchases from Pegasus was effectively nonexistent. As the Second Circuit noted, Pegasus Petroleum restricted its business to oil trading, never selling to ordinary consumers.[88] Since oil traders are relatively sophisticated buyers who know the players in their industry,[89] it was highly unlikely that anyone would ever buy oil from Pegasus Petroleum under the mistaken belief that she was doing business with Mobil Oil. The Second Circuit understood this, and it made no serious claim that Pegasus Petroleum’s behavior would divert any sales from Mobil. Instead, the court found a likelihood of confusion because Pegasus Petroleum’s mark would remind people of Mobil,[90] giving Pegasus commercial credibility not because oil traders believed that Pegasus was formally affiliated with Mobil, but because there was a possibility of such association that purchasers would have to consider briefly and dismiss.[91]

Similarly, in Beer Nuts, Inc. v. Clover Club Foods Co.,[92] the plaintiff, Beer Nuts, sold mixed nuts under the name “Beer Nuts,”[93] and it sued the defendant, Clover Club, for selling its own mixed nuts under the name “Brew Nuts.”[94] Because “Beer Nuts” differs from “Brew Nuts,” one could easily imagine a court finding that Clover Club caused no likelihood of confusion, and the district court so found.[95] However, the Tenth Circuit reversed.[96] The circuit court acknowledged that clear differences between the two marks existed.[97] Nevertheless, the court stated that the general similarities mattered more than these differences.[98] Among other things, the words “beer” and “brew” both contained four letters, began with “b,” and were synonyms for beer.[99] According to the court, a likelihood of confusion was particularly likely because consumers were unlikely to pay attention to small differences like these when buying nuts.[100]

Beer Nuts is hard to understand if liability rested on a reasonable probability that consumers would buy Brew Nuts thinking that they would be doing business with Beer Nuts. Although portions of the opinion claim (rather unconvincingly) that consumers would make this very mistake,[101] it is unlikely that consumers truly could not distinguish Beer Nuts from Brew Nuts. Beer Nuts makes much more sense, however, if emphasis is given to the portions of the opinion suggesting that Brew Nuts became associated with Beer Nuts because both are mixed nuts that go with beer. As the court noted, the mark “Beer Nuts” tied one producer’s mixed nuts to beer.[102] Accordingly, when Clover Club used the mark “Brew Nuts,” it also associated its nuts with beer and raised the possibility that consumers would think of Beer Nuts upon encountering Brew Nuts.[103] This created the risk that some of Beer Nuts’ reputation would “rub off” on Brew Nuts even though consumers knew that the two were distinct products made by different manufacturers.

Finally, in American Dairy Queen Corp. v. New Line Productions, Inc.,[104] a Minnesota district court found a likelihood of confusion when the Dairy Queen fast food chain sued the producer of a movie entitled “Dairy Queens,” which satirized beauty pageants held in rural Minnesota.[105] Some of the satire involved off-color humor.[106] If the court believed that trademark law only protects against consumers mistakenly buying goods from the wrong producer, then liability would not have existed, for it is highly unlikely that moviegoers would see a movie entitled “Dairy Queens” thinking it was made by the Dairy Queen restaurant chain. However, if trademark’s concerns include the possibility that consumers will associate multiple meanings with a trademark, then liability makes sense. After all, the “Dairy Queens” title would probably remind many consumers of the restaurant chain. Those consumers would then simultaneously think of the movie, its satirical off-color content, the restaurant chain, and its food. This would force consumers to spend time and effort untangling all of these associations with “Dairy Queens” and “Dairy Queen” when going to see the movie or eat at the restaurant chain. Not surprisingly, the American Dairy Queen court expressed concern about the possibility of multiple associations.[107] According to the court, “[American Dairy Queen] is particularly concerned that the title ‘Dairy Queens’ will cause the public to associate its trademarked name with the unwholesome content of the film. [American Dairy Queen] fears this association will create negative impressions and confuse its customers, thereby demeaning and disparaging its mark.”[108] This led to the court’s finding that a likelihood of confusion existed.[109]

Cases like Pegasus Petroleum, Brew Nuts, and American Dairy Queen[110] pose significant challenges to modern trademark law because, according to these cases, liability exists only when the defendant’s behavior creates a likelihood of consumer confusion.[111] If modern trademark law were to restrict infringement to cases in which a reasonable chance of mistaken substitution exists, then it would be easy to see why consumer confusion exists and why preventing it makes sense. However, when infringement includes cases in which the risk of substitution is very small, the existence of confusion becomes questionable. If consumers do not make mistaken purchases, how have they been confused? And, if they have not been confused, why does trademark law impose liability? The eradicate confusion norm answers these questions. As the norm holds, markets work correctly when consumers can instantly identify the goods they want.[112] Whenever consumers even temporarily associate a trademark with something other than the trademark holder or its goods, the process of identification is disrupted.[113] Such disruption compromises markets, and trademark law should therefore eradicate this confusion to help markets operate smoothly, even when there is no meaningful risk of mistaken consumer purchases.[114] This conclusion implies that cases like Pegasus Petroleum, Beer Nuts, and American Dairy Queen were all correctly decided.

The eradicate confusion norm seemingly offers a theoretically coherent and powerful foundation for modern trademark law. There is a seductive elegance to the norm’s explanation of how even slight confusion harms the public interest, and it is easy to understand why courts and theorists place the elimination of consumer confusion at the center of modern trademark theory.[115] It is therefore quite interesting and instructive to note that many areas of trademark law appear inconsistent with the eradicate confusion norm. As the next Part will discuss, those areas of trademark law accept and even encourage consumer confusion, and they often do so because such confusion advances the public interest. This contrast draws the descriptive and normative values of the eradicate confusion norm into question.

II. Persistent and Inevitable Confusion in Trademark

The above-described aversion to consumer confusion implies that trademark law should prohibit even relatively small instances of confusion wherever possible. Curiously, however, trademark law does not consistently pursue this objective. Although courts have expanded the subject matter and scope of trademark rights for the stated purpose of eliminating consumer confusion, there are many instances in which the law accepts and even encourages the very confusion that trademark convention and the eradicate confusion norm find so odious. This happens in three ways. First, trademark decisions often depend on facts that exist only after consumers have faced confusion. Second, trademark law operates in ways that are almost certain to create consumer confusion. Third, courts sometimes explicitly decline opportunities to reduce confusion. I will now describe this persistent and, in some cases, inevitable confusion in trademark in order to question conventional wisdom about the role of confusion in our trademark system.

A. Decisions Based on Facts That Exist Only After Consumer Confusion

  1. Another Look at Acquired Distinctiveness

In Part I, we saw that trademark law protects certain marks only after they acquire distinctiveness. The reason for this protection is simple. As Qualitex[116] explained, failure to protect a mark after it gains distinctiveness would mean allowing consumers to be confused.[117] This reasoning clearly establishes a strong connection between protecting marks that become distinctive and preventing consumer confusion.[118] Interestingly, however, the very process of protecting marks that become distinctive also involves confusing consumers and having consumers overcome that confusion. Indeed, consumer confusion is a prerequisite to the protection of marks that acquire distinctiveness.

A mark lacks inherent distinctiveness when consumers do not instantly recognize it as a source identifier. Consumers already give meanings other than source identification to proposed marks like “Safari” because the marks have well-settled meanings in the English language.[119] A trademark claimant therefore cannot gain protection on the basis of acquired distinctiveness without changing the meaning of things already familiar to consumers. In turn, this change cannot happen without exposing consumers to confusion because consumers cannot give new meaning to a familiar item until they encounter the familiar item attached to its new meaning. That new meaning may eventually become sufficiently established to gain trademark protection, but consumers must first sort through the confusion of considering both meanings and deciding how to use both meanings.

For example, the first time consumers encounter “Safari” shoes, they cannot know whether they are dealing with shoes designed for safaris, or shoes made by a particular manufacturer, or even both. They may eventually learn that “Safari” designates a particular source for shoes, but not without experiencing and overcoming confusion. This process shows that trademark law, at least in this area, does not operate simply by shielding consumers from confusion. Rather, trademark law invites and encourages producers to expose consumers to confusion by holding out the promise of trademark protection if a producer can teach consumers to recognize familiar words or product features as source identifiers.[120]

  1. Private-Label Goods

A focus on facts that exist only after consumers have overcome confusion also exists in the case law concerning so-called private-label (also known as “store-brand”) goods.[121] Retailers typically sell private-label products in packaging that resembles the packaging for name-brand goods, and the private-label products are typically sold immediately alongside name-brand goods.[122] Undoubtedly, many readers have had the experience of shopping and mistakenly picking up or even buying a store-brand product instead of the desired name-brand one. I surmise that many readers have further learned from that mistake and can now distinguish name-brand and store-brand products quite effectively.

Not surprisingly, name-brand manufacturers object to the packaging practices of their private-label competitors, and they have often asserted claims for trademark infringement.[123] When these cases were first litigated, courts often decided them in favor of the name-brand plaintiffs.[124] After all, the private-label sellers deliberately chose similar packaging for directly competing goods, and the errors made by shoppers represented precisely the sort of confusion trademark is supposed to eliminate.

Over time, however, courts have come to understand these cases differently. Instead of finding that private-label packaging confuses consumers, opinions now generally state that consumers are not confused because they have learned from prior experience to distinguish private-label goods from their name-brand referents.[125] For example, in Conopco, Inc. v. May Department Stores Company,[126] the Federal Circuit rejected a trademark claim against a private-label seller of hand lotion by writing as follows:

The retailer packages its product in a manner to make it clear to the consumer that the product is similar to the national brand, and is intended for the same purposes. At the same time, the retailer clearly marks its product with its private logo, and expressly invites the consumer to compare its product with that of the national brand, by name. With the rise of regional and national discount retailers with established names and logos, retailers who market both national brands and their own private label brands in direct competition, this form of competition has become commonplace and well-known in the marketplace. When such packaging is clearly labelled [sic] and differentiated . . . we are unwilling to attribute to the Eighth Circuit, absent clear precedent so requiring, a rule that would make such competition presumptively unlawful.[127]

Look carefully at the premise of this argument. By rejecting the plaintiff’s claim on the ground that consumers have become familiar with the practice of private-label packaging, Conopco focuses on facts that can exist only after consumers have encountered confusion.[128] When private-label packaging was introduced, consumers certainly were confused because they were unfamiliar with the practice and did not pay attention to distinguishing characteristics that they now spot easily.[129] Accordingly, if consumers are no longer confused, it is because they experienced and overcame confusion of the very sort that often supports a finding of trademark infringement.

  1. Internet Domain Names

A similar embrace of confusion exists in the case law concerning Internet domain names. As readers are surely aware, it is quite common for two websites to share domain names that associate them with a recognized mark. This similarity could easily confuse consumers about the true proprietor of the site. For example, the URL “www.buyorleasealexus.com” could belong to the Toyota Motor Company or any other party selling Lexus cars. A consumer who encounters this website surely experiences the kind of confusion that trademarks have eliminated in other cases.

The Ninth Circuit, however, refused to find infringement on these very facts. In Toyota Motor Sales, U.S.A., Inc. v. Tabari,[130] the court stated that consumers who use the Internet have become quite sophisticated about similar domain names and are fully prepared to discover that domain names do not always accurately identify the proprietor of a given website.[131] This statement meant that consumers encountering “www.buyorleasealexus.com” would avoid premature conclusions about the website’s proprietor until more evidence became available. Importantly, the court did not consider this delay in accurate identification to be a form of confusion. Instead, the court called it “sensible agnosticism.”[132] Other courts have reached similar results.[133]

Here, as in the case of private labeling, trademark law has again focused on facts that can exist only after consumers have experienced and overcome confusion. A consumer who does not know the proprietor of “www.buyorleasealexus.com” expends effort and resources to clear his confusion. This seems comparable to the market disruption caused by “Beer Nuts” and “Brew Nuts,” “Dairy Queen” and “Dairy Queens,” and “Pegasus Petroleum” and Mobil Oil’s red flying horse logo.[134] By saying that confusion does not exist because consumers have become familiar with this lack of clarity, trademark law focuses on facts that cannot exist without confusing consumers first.

B. Trademark Law’s Inevitable Introduction of Confusion

Ironically, persistent consumer confusion also comes from the very process of assigning and enforcing trademark rights. Although federal law provides for the national registration of marks,[135] our trademark system does a relatively poor job of making sure that only one producer claims ownership of a given mark. Indeed, our trademark law contemplates that, in some cases, multiple producers can use the same mark on competing products, and this permitted use practically guarantees the eventual confusion of consumers.[136] Even in cases where ownership of a mark is clear, the very process of enforcing trademark rights confuses consumers. This confusion happens because findings of trademark infringement generally result in injunctions that force losing defendants to rebrand their products.[137] This rebranding confuses consumers familiar with the defendant’s now-prohibited brand by making it impossible for those consumers to use the previously familiar, but now outlawed, mark to find their preferred goods.

  1. Confusion Introduced by the Initial Assignment of Trademark Rights

According to trademark convention, consumers ideally should never have to consider two competitors who use the same mark on competing products, for doing so implies confusion over the true maker of competing goods. Of course, trademark law cannot completely prevent rivals from independently using identical or similar marks. Nevertheless, the rules used to assign ownership of marks can make it easier for rivals to avoid claiming rights to similar marks.

For example, the law could assign ownership of a mark to the first claimant who registers the mark. Such a rule would be clear and relatively easy to enforce. More importantly, registration as a condition of ownership ensures that those adopting a new mark are practically certain to know if someone else already owns the mark. Such knowledge would make it highly unlikely that more than one party would use and claim ownership of a given mark.

Interestingly, U.S. law does not assign trademark rights on this basis. Instead, our trademark system grants rights to those who first make bona fide use of a trademark in commerce.[138] This rule means that a producer adopting a new mark does not have to make a formal claim with the government to gain rights in the mark.[139] It can simply affix the mark to goods that are sold to the public.[140] The producer may apply to register the mark with the federal government, but the application will fail unless the producer has used the mark.[141] Even if successful, registration does not guarantee complete rights to the mark, for anyone who has used the mark before registration becomes effective may continue to make limited use of the mark.[142]

Assigning trademark rights this way leads to consumer confusion. By making ownership dependent on use, our trademark system practically guarantees that rivals will sometimes try to claim ownership in the same mark. Those rivals will try to perfect their claims to the mark by using the marks in commerce. This frequently leads to competing marketing campaigns designed to make consumers aware of the new mark followed by the formal use of the mark on goods sold to the public. Of course, these rival campaigns and product launches mean that consumers will encounter and be confused by two producers using the same mark on competing goods.

In theory, this confusion might be short lived if trademark law quickly settled competing claims to the same mark and gave one party all rights to use the mark. This quick settlement does not happen, though, because our trademark system limits the initial award of trademark rights to the geographical areas where a trademark claimant has actually used the mark.

The cases of United Drug Co. v. Theodore Rectanus Co.[143] and Dawn Donut Co. v. Hart’s Food Stores[144] illustrate this point. In United Drug, the petitioner’s predecessor in interest began using the mark “Rex” in Massachusetts for the sale of medicine.[145] That use began in 1877 and continued for some time as the plaintiff introduced its products in a wider geographic area.[146] In 1883, the respondent began using “Rex” on medicine in and around Louisville, Kentucky.[147] At that time, the plaintiff had not begun the sale of Rex medicines in Kentucky, and indeed, the defendant did not know about the plaintiff’s use of “Rex” in remote areas.[148] In 1912, the plaintiff began selling Rex medicine in the Louisville area.[149] When the conflicting uses of the mark became apparent, litigation followed.[150] The district court ruled that the petitioner’s prior adoption of the mark gave the petitioner exclusive rights to the mark.[151] The court of appeals reversed, and the Supreme Court agreed.[152]

In so ruling, the Court clearly established the principle that trademark rights arise from an established business use of the mark.[153] Accordingly, use alone does not establish national rights to a trademark.[154] Instead, the right extends only so far as the geographic reach of the trademark claimant’s actual use.[155] This limitation means that a trademark claimant has no rights against good faith junior users of the same mark who conduct business in areas geographically remote from the claimant’s use. Indeed, the Court held that such a junior user would actually have rights superior to the senior user in the areas where the junior user moved first.[156] This holding meant that the United Drug petitioner, despite adopting “Rex” as its mark before the respondent, actually had no right to use “Rex” in the Louisville, Kentucky area.[157]

The principle laid down in United Drug practically guarantees that consumer confusion will eventually arise. Inevitably, two potential rivals will occasionally use the same or similar marks on competing goods in separate markets. If they do so in good faith, they both establish rights in the mark and will begin expanding their businesses. And, when the two businesses finally meet in a shared market, consumer confusion is certain because the two rivals will sell competing products under the same mark. Of course, this problem could be ameliorated if registration of a mark conferred national rights on the first person to register the mark. However, geographic limits on trademark rights exist even when a trademark owner successfully registers.

For example, in Dawn Donut, the plaintiff, Dawn Donut, used the marks “Dawn” and “Dawn Donut” to sell doughnut mix and retail doughnuts in a number of states, including Michigan and New York.[158] Dawn first used the marks in 1922 and registered them in 1927.[159] Starting in 1951, the defendant, Hart’s Food, used the “Dawn” mark to sell retail doughnuts in the area of Rochester, New York.[160] Dawn Donut objected and filed suit.[161]

Dawn Donut’s claim was quite simple. Federal registration meant that the defendant had constructive notice of Dawn Donut’s prior use of the mark, and Dawn Donut could therefore prevent Hart’s from making use of the mark.[162] The Second Circuit disagreed. In ruling for Hart’s, the Second Circuit noted that Dawn Donut had not used the “Dawn” mark to sell retail doughnuts around Rochester for decades.[163] Accordingly, Hart’s use of the mark was highly unlikely to cause consumers confusion because Rochester area customers would not be familiar with Dawn Donuts sold at retail.[164] Accordingly, Dawn Donuts could not stop Hart’s from using the mark unless Dawn Donuts actually began using the “Dawn” mark on retail doughnuts in the Rochester area.[165]

Note again that trademark’s rules for assigning and enforcing ownership of marks practically guarantee confusion. Sooner or later, a mark owner like Dawn Donuts will move into an area analogous to Rochester where a business like Hart’s will have already been using the mark. The senior user may enjoy the satisfaction of making the junior user of the mark stop, but confusion will already be inevitable because consumers who see the senior user’s goods sold under the mark will naturally wonder if the goods were actually made by the junior user. This confusion cannot be easily reduced or avoided without changing existing law about the initial assignment and enforcement of trademark rights.

  1. Confusion Introduced by Trademark Judgments

The process of assigning and enforcing trademark rights creates confusion even when rules of geographic priority have no effect. In almost every trademark case worth litigating, the plaintiff makes a plausible claim that consumers will be confused, and the defendant makes a credible claim to the contrary. Frequently, both litigants are right because consumers vary in their responses to trademarks. Some consumers will mistakenly believe that the plaintiff’s and defendant’s marks indicate the same source, while others will correctly distinguish between the marks. These contrasting responses set the stage for confusion.

If a court decides a case like this for the defendant, it obviously permits some degree of consumer confusion to continue. While the court may believe that, on the whole, most consumers are not confused, this does nothing to help the minority of consumers who are confused. The court’s decision for the defendant means that those consumers will continue to face confusion until they figure things out for themselves.

The persistence of confusion after a decision against infringement may help explain why judges seem willing to find infringement even when the likelihood of confusion seems small. Finding infringement seems to eliminate confusion at little cost. The minority of consumers who face confusion will no longer do so. And, presumably, the majority of consumers who were not confused will still be able to distinguish between the two marks.

Unfortunately, this thinking overlooks the likelihood that eliminating confusion for those unable to distinguish between the two marks will introduce new and different confusion for those who were not initially confused. Remember, the usual consequence of a decision in favor of the plaintiff is an injunction forbidding the defendant from using its mark.[166] This injunction forces the defendant to rebrand its goods, impairing the ability of previously unconfused consumers to find their preferred products. As an initial matter, their preferred product disappears because it is pulled off the market as an infringing product. Then, when it is reintroduced to the market under a new name, consumers will be confused because they will not initially know that the product sold under the new name is actually their preferred brand made by their preferred manufacturer. In short, trademark law will, under the guise of reducing confusion, do the very thing it is supposed to prevent—namely, make it harder for some consumers to identify and purchase their preferred goods.[167]

To see a concrete example of how this might happen, consider E. & J. Gallo Winery v. Consorzio del Gallo Nero,[168] a case involving the well-known American wine producer, Gallo, and Consorzio del Gallo Nero, an Italian trade association promoting Italian Chianti Classico wines.[169] Consorzio chose its name “Consorzio del Gallo Nero” because its members had used the symbol of a black rooster (“gallo nero” in Italian) on their wines.[170] When Consorzio decided to mount a campaign to promote the sale of Chianti Classico wines in the United States, it used the words “Gallo Nero” in advertisements for its wine.[171] Gallo objected and sent Consorzio a cease and desist letter, but Consorzio eventually went ahead with its campaign.[172] Gallo then sued for trademark infringement.[173]

It is easy to imagine how this case could have come out in favor of either party. On the one hand, some consumers might have confused “Gallo” and “Gallo Nero,” perhaps believing that Gallo had begun marketing a special line of Gallo Nero wines. On the other hand, other consumers probably suffered no confusion at all. These consumers included those who already knew the precise identity of Consorzio del Gallo Nero as the trade association for Chianti Classico wines. Some of these consumers surely liked Consorzio del Gallo Nero wines (perhaps because they had experienced the wines in Italy), deliberately searched for them, and bought them.

The Gallo court found that a likelihood of confusion existed and enjoined Consorzio del Gallo Nero from using “Gallo” when marketing its wines in the United States.[174] When Consorzio del Gallo Nero chose a new name under which to market its wines, consumers not confused by its use of “Gallo” probably experienced confusion when they encountered the new name. Even if that name bore reasonable resemblance to “Consorzio del Gallo Nero,” it is likely that consumers had to consider the possibility that a rival seller of Chianti Classico wines had entered the market. The time consumers spent learning the correct meaning of the new name therefore represents confusion caused by trademark law.[175]

  1. Confusion Introduced by the Abandonment of Trademark Rights

A trademark holder does not necessarily own rights in a mark forever. Among other things, a trademark holder risks forfeiting ownership of its marks if it stops using them. Under federal law, a trademark holder abandons its mark by discontinuing use with no intent to resume.[176] Three consecutive years of nonuse provides prima facie evidence of the intent to abandon.[177]

At first blush, one might conclude that abandonment through nonuse carries little risk of consumer confusion. A mark that disappears from use for three years surely loses a great deal of its value as a source identifier. If a new producer then comes forward to use an abandoned mark and establish new rights, one might think that consumers will adopt the new meaning for the mark fairly easily.

Closer reflection suggests that consumer confusion is not so easily avoided. In many cases, trademarks retain considerable source identification power long after they are no longer in use. For example, the mark “Pan-Am” evokes strong memories of the defunct airline.[178] If this mark is considered abandoned, new users of “Pan-Am” will surely confuse consumers, who will wonder if the old airline has somehow come back into business. This suggests that marks retaining power as source identifiers should not be considered abandoned, even if use has been stopped with no intent to resume. For better or worse, courts have not interpreted the law in this way.

In Silverman v. CBS Inc.,[179] the Second Circuit found that the plaintiff, CBS, could not stop the defendant, Silverman, from developing a musical based on the Amos ‘N’ Andy radio and television shows created by CBS.[180] Among other things, the court ruled that CBS had abandoned the Amos ‘N’ Andy Show trademark because the network had not commercially exploited the mark in twenty years.[181] CBS’s case had considerable equitable appeal. The network stopped broadcasting the show primarily because the show caused racial controversy.[182] Accordingly, CBS could plausibly argue that it had no intent to abandon the work and that it hoped to revive the show someday.[183] This argument fell on deaf ears. The court held that because CBS had no reasonably foreseeable plans to use its mark, the necessary intent to abandon existed.[184] CBS therefore no longer had rights to the mark.[185]

Whatever one thinks about whether CBS had the statutorily defined intent to cause abandonment, it is quite likely that the public had not forgotten about the Amos ‘N’ Andy show and its affiliation with CBS. The show originated on radio as one of the country’s most popular programs,[186] and the television series was shown from 1951 to 1966.[187] Accordingly, when Silverman brought his show to the public, consumers surely would wonder if CBS had revived the Amos ‘N’ Andy show or was otherwise involved in the musical. Such confusion is precisely the kind of confusion that trademark law considers actionable in other cases, but this confusion obviously did not stop the court from ruling against CBS. Accordingly, it is quite clear that, in at least some cases, judicial findings of abandonment introduce consumer confusion.[188]

C. Deliberately Accepting Consumer Confusion

A final source of persistent consumer confusion comes from accepting such confusion in order to prevent undue harm to free competition. Such a phenomenon should come as no surprise. After all, the purpose of trademark law is the prevention of confusion that damages the operation of markets.[189] It therefore makes sense for trademark law to avoid imposing liability if doing so would undermine the very competition that makes markets work in the first place. Nevertheless, trademark plaintiffs have argued that preventing consumer confusion is more important than other competition-related concerns, and courts have often rejected these arguments by refusing to follow the eradicate confusion norm as vigorously as they could.[190] The doctrines of fair use and functionality offer good examples of how trademark law violates the eradicate confusion norm by accepting consumer confusion.[191]

  1. Fair Use

A previously known word may acquire sufficient distinctiveness to become a trademark, but this does not mean that old meanings associated with the word completely disappear. It is therefore possible that a potential defendant will use a mark merely to describe the defendant’s goods in a non-source-identifying way and that the trademark holder will nevertheless consider such a use confusing. For example, a candy manufacturer could gain a trademark in the word “Sweetart” for candies, and a juice manufacturer might use the word “sweet-tart” to describe its juice.[192] Such behavior arguably creates a likelihood of confusion over whether the same manufacturer makes the candies and juice. However, trademark law generally excuses defendants in cases like this under the affirmative defense of fair use if the mark has been used in good faith and solely in a manner “descriptive of the actor’s goods.”[193]

The fair use defense raises an important question about the priorities of trademark law. If the defense did not exist, defendants could not make good faith, descriptive uses of marks, and this restriction would impair the ability of defendants to inform consumers about the basic qualities of their products. At the same time, however, the fair use defense could prevent trademark holders from eliminating consumer confusion. This issue raises the question of whether a defendant first should have to establish that its behavior creates no likelihood of consumer confusion before claiming fair use. If trademark law values the elimination of confusion more than the accurate description of products, the answer to this question would presumably be “yes.” Conversely, if accurate description is more important than eliminating confusion, the answer would be “no.”

The Supreme Court considered this very question in KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc.[194] KP Permanent Make-Up involved a dispute between two make-up manufacturers who both used a version of the term “micro color” in marketing their products.[195] The defendant, Lasting, registered the term as a mark in 1992, and the plaintiff, KP, produced a brochure using “micro color” in prominent type in 1999.[196] KP justified its use of “micro color” under the fair use defense.[197] Lasting countered KP’s fair use claim by arguing that fair use could not exist unless the defendant had proved the absence of a likelihood of confusion.[198] Such an argument would, if accepted, shield consumers from the confusion of seeing the term “micro color” used in different ways.

The Supreme Court rejected Lasting’s contention, holding instead that some undefined level of confusion was entirely compatible with a finding of fair use.[199] The Court recognized that consumer confusion could affect whether a given use was fair, but the mere existence of confusion could not automatically negate the defense because of the interests served by the accurate descriptions of goods.[200] The Court supported this reasoning by noting that “the common law of unfair competition also tolerated some degree of confusion from a descriptive use of words contained in another person’s trademark.”[201] This led to the conclusion “that some possibility of consumer confusion must be compatible with fair use.”[202]

  1. Functionality

Like fair use, the doctrine of functionality also permits some degree of consumer confusion in order to preserve free competition. Functionality assumes importance when a plaintiff makes a trademark claim over a product feature that not only has acquired distinctiveness but also serves an important physical purpose in the value of the product itself.[203] If trademark law protected such product features, it would prevent consumer confusion by preserving an exclusive association between the product feature and the trademark claimant. However, this would also prevent competitors from making competing products with the same desired features, thus hindering free-market competition.

For example, in Traffix Devices, Inc. v. Marketing Displays, Inc.,[204] the plaintiff, Marketing Displays, made temporary road signs with an unusual dual-spring design that kept the signs from blowing down in strong gusts of wind.[205] Because Marketing Displays held patents over this technology, it was the only producer of these signs and consumers arguably came to rely on these springs as source identifiers associated with Marketing Displays.[206] When Marketing Displays’ patents expired, the defendant, Traffix, began making and selling signs using the same dual-spring technology.[207] Marketing Displays then sued for trade-dress infringement.[208]

The Supreme Court found in favor of Traffix.[209] In so ruling, the Court expressed concern that allowing protection for functional features, like the dual-spring, would harm free competition.[210] Preventing competitors like Traffix from using the dual-spring feature would be tantamount to giving patent protection to Marketing Displays despite the springs being part of the public domain.[211] The Court refused to accept this result, stating that concerns about competition were, at least in this case, more important than preventing consumer confusion.[212] Trademark protection would therefore be denied even if the dual-spring technology had acquired distinctiveness.[213] This meant accepting the confusion of any consumers who used the dual-spring feature as a source identifier.[214]

The pervasive and persistent confusion described in this Part challenges conventional wisdom about consumer confusion. As noted earlier, trademark convention advocates eliminating modest confusion precisely because such confusion supposedly impairs the proper operation of markets.[215] This impairment implies that widespread failure to eliminate such confusion would leave our markets seriously damaged. Indeed, the aggressive expansion of trademark rights and the eradicate confusion norm can be seen as the implementation of this very line of thinking.

What then are we to make of the many instances of confusion that trademark law accepts or even encourages? If trademark law’s conventional wisdom about confusion is correct, then our trademark system ought to have some pretty significant problems because—as Part II has described—consumers face minor confusion all the time and trademark law accepts it. If modest confusion really does damage markets, then we should see consumer preferences regularly frustrated by the confusion that trademark law fails to eliminate. Of course, this does not happen. On the whole, consumers find the goods they want, which suggests that trademark convention is wrong about the harms associated with modest consumer confusion. Indeed, as Part III shall argue, it is far more likely that modest consumer confusion actually plays a constructive role for our trademark system and, by extension, our markets.

III. The Benefits of Persistent Confusion in Trademark

The constructive value of confusion emerges from realizing that trademark law can reduce consumer confusion only if consumers have some basic ability to identify and distinguish between trademarks. At first blush, one might think that consumers are born with a full understanding of trademarks and naturally know how to navigate a modern commercial marketplace. In fact, however, even the most basic consumer abilities develop over time from exposure to trademarks encountered in daily life.[216]

This process begins during childhood.[217] As consumer researchers explain, a child progresses through many stages of consumer socialization that reflect a growing awareness of and ability to deal with the complex messages found in commercial marketplaces.[218] Although the relevant research does not focus specifically on trademarks, it does say a great deal about the development of consumer knowledge, decision making, and brand awareness.[219] It therefore seems appropriate to apply knowledge about general consumer development and learning to our understanding of trademark law.

Professor Deborah Roedder John presents the development of the child consumer in three stages: the perceptual stage (ages three to seven), the analytical stage (ages seven to eleven), and the reflective stage (age eleven to adult).[220] In the perceptual stage, children begin their development as consumers with a relatively simple egocentric outlook that does not recognize how others perceive products or the consumer process.[221] Consumers in the perceptual stage focus on what they can readily perceive and develop familiarity with brands, but they rarely exhibit complex decision making skills or strategies.[222] These consumers often make choices on the basis of limited information that is easy to perceive and comprehend, such as size.[223] Nevertheless, these children begin to develop brand preferences and an understanding of the consumer search process.[224]

Things change rapidly as young consumers progress through the analytical stage, in which children learn to consider multiple perspectives about products and choices.[225] These young consumers can name multiple brands, develop abstract and detailed knowledge of products, and learn more sophisticated search strategies that focus attention on relevant information.[226] These children even begin to understand the subtle meanings society attaches to possessions, a skill crucial to the effective comprehension of modern trademarks.[227]

By the time a young consumer reaches the reflective stage, he has begun to acquire adult consumer habits and skills.[228] Brand knowledge becomes more detailed and sophisticated as the awareness and recall of brand names rises.[229] The consumer pays even more attention to the social aspects of consumption and understands the status and prestige associated with certain brands.[230] Search sophistication increases as well.[231] Consumers in the reflective stage adapt search strategies to different situations.[232] They respond to complex situations by focusing more effectively on the relevant information, and they seek out additional information from trusted sources.[233]

Of course, consumer development does not end with adulthood.[234] Rather, the skills developed in childhood allow adult consumers to continue adapting to the trademarks they encounter.[235] Research on adult-consumer learning confirms the common intuition that continued exposure to products increases consumer familiarity with those products.[236] That familiarity leads to expertise, as consumers learn from their accumulated product experiences.[237] Finally, and most importantly, increased expertise makes people better at finding the products they want quickly and accurately.[238] [[238]] In short, consumers learn to navigate the markets they encounter, and they get better and better at doing so over time.

The process by which this improvement occurs involves the combination of unconscious and conscious thought. As Professor Daniel Kahneman explains, the human mind operates simultaneously in two different modes.[239] The first, which he labels System 1, “operates automatically and quickly, with little or no effort and no sense of voluntary control.”[240] The second, which he calls System 2, “allocates attention to the effortful mental activities that demand it, including complex computations. The operations of System 2 are often associated with the subjective experience of agency, choice, and concentration.”[241] Both of these systems operate when a person is awake.[242] System 1 handles most functions.[243] It governs the tasks that are familiar, routine, and automatic.[244] These include understanding simple sentences, walking, and recognizing facial expressions.[245] By contrast, System 2 handles complex, novel, and challenging tasks that require significant thought and concentration.[246] These tasks include logical argument, math problems, and searching memory when confronted with a surprising situation.[247]

System 1 and System 2 matter to the study of trademark law because consumers use both to understand marks. A consumer walking through a grocery store has a number of ingrained shopping preferences that System 1 executes. If she eats Kellogg’s Frosted Flakes every day, System 1 probably scans the shelf quickly for something like Tony the Tiger, and she puts the cereal in her shopping cart without further reflection.

Importantly, however, System 1 is doing more than searching for Tony the Tiger in supermarkets. System 1 is also busy collecting impressions of everything the consumer encounters. Using System 1 is not a process of conscious memorization. Rather, System 1 unconsciously notices things, associates them with other things, and files the associations away for future use.[248] These associations include spontaneous evaluations of product qualities (“Frosted Flakes taste sweet”), impressions collected from casual encounters with advertisements (“Apple computers are cool”), and information gleaned from daily life (“Harvard is a prestigious university”).[249] It is entirely possible, and even likely, that this hypothetical consumer learned in this very manner to buy Frosted Flakes by searching for Tony the Tiger. She liked the cereal, noticed the packaging, and formed an association confirmed over time by the experience of many satisfactory purchases.[250] Because the human mind tends to be lazy,[251] it will allow System 1 to continue accumulating and acting on unexamined information in this very manner as long as the results are satisfactory. As long as the consumer gets her Frosted Flakes and other desired products, she will shop with whatever strategies System 1 has produced, including System 1’s approach to trademarks.[252]

Things work differently, however, when consumers encounter surprises and challenges. Because System 1 deals with the familiar and routine, surprises and challenges give System 1 trouble.[253] When this happens, System 2 gets involved and formulates a strategy for dealing with the problem at hand.[254] For example, our hypothetical consumer might be jolted from her System 1 shopping habits by encountering new packaging for Kellogg’s Frosted Flakes. If she came across a box without Tony the Tiger on it, she might be unsure about what was inside. System 2 would then examine the new package carefully, looking for clues about the meaning of the new packaging. If System 2 concluded that the box did contain Kellogg’s Frosted Flakes, she would buy the product, and, if System 2’s prediction proved correct, she would begin associating the new packaging with Kellogg’s Frosted Flakes. Remembering this new association and acting upon it might take effort at first. However, as she repeated her new System 2 strategy, it would become progressively easier to execute. Eventually, System 1 would learn from System 2 and adopt the previously costly and difficult System 2 association. The new packaging would become as familiar and easy to use as the old packaging graced by Tony the Tiger.[255]

Over time, unconscious and conscious adaptations of the sort described above result in consumers whose behaviors and skills reflect the trademark environments in which they live. This adaptation makes perfect sense. Consumers must learn to navigate marketplaces to live successfully in modern society. Indeed, consumers have the incentive to improve their skills because nuanced and sophisticated understandings of marketplace signals like trademarks help consumers identify the goods they want more quickly and more accurately. Consumer researchers describe several ways in which this happens.

First, market experience speeds up consumer decision making because a person can recall a memorized fact more quickly than he can derive it. A person responds almost instantly to “What is 2 + 2?” because he used System 2 to learn and commit the answer to his memory long ago, and System 1 can now quickly retrieve it. By contrast, giving the answer to “What is 17 x 24?” takes much longer because he has not memorized the answer and System 2 must figure it out.[256] When it comes to the functioning of our trademark system, things work well in part because consumers remember various marks through repeated exposure. This allows consumers to quickly identify and distinguish marks from one another, even when considerable similarities exist.[257]

Second, market experience helps consumers remember and make sense of new situations they encounter. A chess master remembers chess positions better than a chess novice because the many positions seen and studied by the master give her a larger set of experiences from which to draw.[258] Prior exposure to and analysis of multiple games give the master ways to connect new situations (i.e., new chess positions) to knowledge she already has. She understands deeper structures that make it easier for her to remember and analyze new situations. By contrast, the chess novice has no such experience to draw from, so his ability to remember and analyze new chess positions effectively is comparatively weak. Similarly, for trademarks, repeated exposure to trademarks gives consumers a frame of reference in which to place new marks. Someone already familiar with how producers use marks will understand quickly how to make sense of new marks and their relationship to existing ones. By contrast, someone who knows little about marks and their use will be easily confused.[259]

Third, experience helps consumers generate new knowledge about products, both consciously and unconsciously. Psychological studies have shown that people subconsciously acquire knowledge about the systematically organized patterns they are exposed to, even if they are completely unaware that any organized pattern exists.[260] In particular, their ability to act on the basis of that pattern actually increases with exposure to the pattern, even though they have no conscious awareness of learning or improvement.[261] This suggests that people will get better at responding to subtle cues about trademarks with repeated exposure to marks—precisely the kind of exposure that begins with early childhood and continues into adulthood. They will, whether consciously or unconsciously, learn to predict how producers signal their use of a trademark, how trademarks can be distinguished, and how to determine just what those trademarks mean.

Fourth, and perhaps most importantly, consumers will change their search strategies to make them more effective. To be sure, consumers at any given time use ingrained, habitual search strategies that System 1 executes, and System 1 continues to use and reinforce them as long as the strategy works.[262] However, when System 1 makes an error or encounters an unfamiliar situation, System 2 steps in to figure out a search strategy that avoids the problem.[263] If System 2 comes up with a successful strategy, our consumer will plan to use this strategy the next time he is in a similar situation. This may require effort, for ingrained, familiar behavior can be difficult to change. However, if this new strategy proves successful, the consumer will use it more and more frequently until System 1 adopts it as routine.[264] The end result is a change in consumer behavior brought about by adaptation to the trademark “puzzle.”

The interplay between System 1 and System 2 reveals how modest confusion plays a vital role in helping consumers develop important cognitive skills. In order for our trademark system to work, consumers must gain two crucial skills. First, they need the ability to identify and distinguish between trademarks. Second, they must be able to receive and understand the subtle messages conveyed by trademarks. Both of these skills develop because consumers experience confusion. Inexperienced consumers make mistakes because they fail to perceive distinctions between marks or do not understand the informational significance of perceived features of marks. Consumers experience these problems as confusion that arises when using System 1, but that confusion spurs System 2 to create solutions that ultimately improve the performance of System 1 and—by extension—our trademark system.

Consider an analogy to the reading of written texts. Like trademarks, written texts often have obvious meanings as well as less obvious, subtle ones. Indeed, the majority of our society’s most important and communicative texts fit this general description. Because writers use texts to convey information explicitly and implicitly, our system of written texts cannot function at its highest level unless readers have the ability to identify and distinguish similar words (such as “there” and “their” or “affect” and “effect”) and understand the varied and subtle meanings conveyed when those words are strung together. Of course, people are not born with the ability to read effectively. Instead, people develop as readers by being exposed to textual challenges that confuse them and by learning from the experience. For example, early readers learn first to sound out words, letter by letter, before progressing to whole-word reading and then more advanced, fluent comprehension.[265] Over time, this process creates the sophisticated reader with the vocabulary and comprehension skills that our system of written texts requires.[266]

The same can be said for trademarks. Unless consumers encounter challenging (i.e., confusing) trademark situations, they will not develop into sophisticated “readers” of trademarks. It may be tempting to use trademark law for the purpose of simplifying trademarks to the point that consumers can rely solely on System 1 to comprehend all of the information that trademarks convey.[267] It is, of course, highly questionable whether such an effort would succeed. However, if it did, the result would be consumers who lack the ability to identify and distinguish trademarks or comprehend the messages that trademarks convey. By contrast, exposing consumers to occasional trademark confusion will activate the use of System 2 to resolve confusion and, over time, teach System 1 to deal with such complexity automatically and routinely. In short, society benefits from allowing confusion to develop sophisticated “readers” of trademarks, just as society benefits from allowing confusion to develop sophisticated readers of written texts.

The foregoing generally explains how confusion plays an important and constructive role in our trademark system. At the very least, modest confusion concerning trademarks actually helps consumers avoid confusion by helping them develop valuable cognitive skills that make distinguishing and understanding trademarks possible. This process of education occurs over the consumers’ entire lives and, although individual instances of confusion may be challenging and costly to overcome, the intellectual habits developed become ingrained to the point that System 1 uses them effectively as “second nature,” allowing consumers to avoid confusion more easily in the long run.[268] More importantly, in some cases, increased consumer abilities actually improve our trademark system by making it possible for the system to transmit more information to consumers more efficiently.[269] We can see these beneficial effects arise in a number of areas where modest confusion persists.

A. Protection of Marks Lacking Inherent Distinctiveness

Let us return again to the protection of marks that lack inherent distinctiveness. If producers used trademarks only to convey identity, there would be relatively little reason to protect marks that lack inherent distinctiveness because inherently distinctive marks can identify producers more effectively and with fewer social costs.

As noted earlier, consumers instantly recognize inherently distinctive marks as source identifiers.[270] Protecting these marks makes sense because they are very good at helping consumers make the desired associations between producers and their products. Consumers immediately know that they are dealing with a source identifier, so they do not consider the possibility that the mark is simply a descriptive term or a product feature. The connection between producer and product therefore emerges quickly and with a low possibility of error.

By contrast, the case for protecting marks that lack inherent distinctiveness is much weaker. Consumers do not normally regard descriptive words, colors, odors, or other product features as source identifiers.[271] Accordingly, these marks do not always create the desired association between producer and product because consumers must consider the possibility that they are dealing with something other than a trademark. For example, as noted earlier, consumers may not immediately understand that a “Safari hat” is a product sold by a particular manufacturer, instead of a hat designed for hunting trips in Africa. This raises a real possibility of error.

Moreover, even if consumers figure out that they are dealing with source identifiers, marks lacking inherent distinctiveness also frequently embody characteristics that consumers value for reasons other than source identification. A scent, color, or decorative fabric pattern may be aesthetically pleasing. Distinctive product configuration also may have functional significance that affects the quality of the good. This makes trademark protection socially costly. If the proposed mark is a word, then there is the risk that the trademark holder will prevent or hinder competitors from using the same word to convey non-source-related information about similar goods.[272] If the proposed mark is a product feature, we must worry that trademark holders will prevent competition—not in information about goods, but in the goods themselves.[273] For example, if a bicycle maker somehow gets protection for the color of its bikes, no one else can sell bikes in the same color. If consumers are indifferent to bike color, this may pose no problem. But if consumers prefer bikes in the trademark holder’s color (perhaps because consumers find the color attractive or valuable for being seen in traffic), then the trademark holder will face reduced competition for its goods and can raise its prices.

The foregoing shows that there are good reasons to protect only inherently distinctive marks, for those marks convey the simple identity of a producer more effectively and at lower social cost than marks lacking inherent distinctiveness. Nevertheless, trademark law protects both kinds of marks and for good reason. Subtle messages that producers want to convey often lend themselves to marks that lack inherent distinctiveness. For instance, the red sole on the bottom of a shoe associates the product and the producer with glamour and sexiness.[274] The label “Safari shoe” captures not only the general style of the product, but also the mystery and adventure of African safaris. If trademarks are to convey messages like this, then trademark law will have to protect marks lacking inherent distinctiveness. This protection of course requires exposing consumers to confusion.[275]

At first blush, one might think that this confusion impairs the trademark system by causing error and delay in the identification of producers. In truth, however, the confusion actually increases the value of the system by helping consumers develop cognitive skills that support the transmission of subtle messages through trademarks. Granted, consumers may experience occasional confusion when confronted with new trademarks that lack inherent distinctiveness, but working through that confusion is precisely how consumers learn that descriptive terms and product features are sometimes used as source identifiers.[276] More importantly, confusion teaches consumers to use context and other social cues to identify and comprehend various messages encoded in trademarks. Once consumers learn these skills, they become more fluent at them through repetition. Eventually, responding to trademarks in a sophisticated manner becomes second nature and routine, allowing our trademark system to carry more information than it would in the absence of exposure to confusion.

B. Private-Label Goods

The case of private-label goods offers a slightly different illustration of how confusion improves the functioning of our trademark system. Again, if trademarks exist only to distinguish one producer from the other, it would make sense to force private-label sellers not to use packaging that resembles name-brand packaging. This would make the packaging of the two producers very easy to tell apart and greatly reduce, if not eliminate, the likelihood of mistaken purchases. Of course, trademark law generally allows the use of private-label packaging that resembles name-brand packaging, exposing consumers to confusion.[277] However, there is a payoff for this confusion, for it helps consumers develop the cognitive skills to receive more information efficiently through the trademark system.

As courts have recognized, the point of private-label packaging is to inform consumers that the private-label good is effectively identical to the name-brand good.[278] The use of packaging that resembles name-brand packaging clearly reminds consumers of the name brand, but differences in packaging, such as a different product name and label, inform the consumer that the producer of the good is not the same. If trademark law forced private-label producers to use packaging that did not resemble name-brand packaging, initial consumer confusion would clearly be reduced. However, consumers would also lose an efficient way of being informed about private-label goods and their basic qualities. Consumers could, in theory, be asked to read labels directly comparing private-label goods to name-brand goods. However, reading these labels would be more cumbersome and slower than looking for private-label packaging.

This is why it makes sense for trademark law to expose consumers to confusion over private-label goods. Without question, allowing the use of private-label packaging risks consumer error, particularly when consumers hastily buy goods while on “autopilot.” Over time, however, consumers have discovered their errors, and they have consciously learned how to avoid mistakes when confronting private-label goods. Indeed, as Kahneman and others predicted, consumers have adopted new cognitive strategies that are now routine because of repetition and practice.[279] This has greatly reduced the likelihood of consumer error, and, more importantly, it has given consumers the ability to receive information about the source and qualities of private-label merchandise more efficiently than they could if private-label packaging could not resemble name-brand packaging. In other words, it is again important to expose consumers to confusion in order to develop the consumer skills that allow our trademark system—and, by extension, markets—to function efficiently.

C. Fair Use

Fair use offers one more example of how confusion improves our trademark system. The conflict addressed by this doctrine arises because people sometimes give trademarks more than one meaning. For example, in KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc.,[280] the plaintiff and defendant used “micro color” in two different ways.[281] The plaintiff used the term as a trademark identifying its cosmetics, while the defendant used the term to describe its cosmetics.[282] Trademark holders understandably object to the creation of unauthorized meanings for their trademarks. If successful, their claims of infringement would not only deprive consumers of the information conveyed by the defendants, but also would eliminate the possibility of consumer confusion over the proper meaning to attribute to terms like “micro color.”

Trademark convention would generally regard the confusion created by fair use as a social cost that permanently offsets the social benefits of trademark law. Society benefits from allowing others to use trademarks to fairly describe goods, but those gains must be weighed against a permanent barrage of confusion that consumers face when they encounter terms like “micro color” in varying contexts. Closer reflection reveals, however, that trademark convention is wrong and that confusion itself creates social benefits.

Once again, the key to seeing this conclusion comes from consumer adaptation to confusion. Consumers may indeed be unsure about the meaning of terms like “micro color,” but this lack of certainty will not lead to permanent confusion. Consumers who sense uncertainty will devote conscious thought to figuring out exactly what “micro color” means, and this effort will improve consumer resistance to confusion in two ways. First, consumers will understand the different ways in which “micro color” gets used, reducing the likelihood of confusion over the use of this and similar terms in the future. Second, consumers will become aware of and more attuned to the contextual cues that signal when a term is being used as a source identifier or a descriptor. This process is similar to the one that enables consumers to recognize things that lack inherent distinctiveness as trademarks, and it makes consumers resistant to future confusion when they encounter trademarks used as plain descriptors. In short, consumer adaptation to confusion increases the value of our trademark system because it actually lowers consumer susceptibility to confusion in the long run. This adaptation allows our trademark law to permit descriptive uses of marks as fair use, and this usage increases the amount of information consumers receive.

IV. Persistent Confusion, Trademark Convention, and Opportunities for Reform

The persistence of confusion in our trademark system and its beneficial effects challenge modern trademark’s embrace of the eradicate confusion norm. If, as modern trademark convention holds, the eradicate confusion norm truly governs trademark, then the law would diligently eliminate almost all confusion as pernicious to the proper operation of markets. However, the persistent and ubiquitous existence of confusion shows that trademark law conforms to modern trademark theory sporadically at best. Instead of consistently shielding consumers from confusion, trademark law frequently accepts and even encourages behavior that exposes consumers to confusion of the very sort that supposedly harms markets. This exposes a meaningful gap between significant portions of trademark law and modern trademark theory.

If modern trademark convention is correct in its assertion that even modest amounts of confusion damage markets enough to warrant a legal remedy,[283] the gap between trademark law and trademark theory should signal fairly considerable and observable market harm. After all, consumers regularly confront multiple meanings for marks, and trademark theory predicts that this confusion should delay the satisfaction of consumer preferences. However, this delay does not generally happen. Markets may not be perfect, but consumers usually find what they want and learn to use trademarks quite effectively, despite frequently encountering confusion. This outcome implies that modern trademark theory’s claim about the danger of confusion is overstated, and that the value of the eradicate confusion norm is much lower than trademark convention would have us believe. Indeed, the relatively smooth operation of modern marketplaces suggests that, as noted earlier, modest amounts of confusion are not only relatively harmless but also beneficial because they help consumers learn to avoid confusion in the first place.[284] Trademark theory should therefore abandon the eradicate confusion norm and replace it with a more nuanced understanding of trademark law that improves the operation of the trademark system by appropriately exposing consumers to modest, manageable amounts of confusion.

Implementing this change requires the conscious balancing of market disruption caused by confusion against market improvements that arise because exposure to confusion makes consumers better at avoiding confusion and at understanding subtle messages conveyed through the trademark system. In some cases, this balance will clearly favor the use of trademark law to prevent confusion. Consider a typical dispute in which the defendant and plaintiff use identical or nearly identical marks on similar, directly competing goods.[285] In this situation, the harm to markets is clear and substantial. Consumers surely will not know whether the defendant or plaintiff makes the goods in question, and it is therefore likely that many mistaken purchases will be made. More importantly, the hypothesized facts indicate that the benefits associated with exposing consumers to confusion are unlikely to materialize. Because the two marks are identical and used on directly competing merchandise, consumers will find it difficult to come up with an effective strategy for accurately identifying the manufacturer. Without such a strategy, System 2 cannot help System 1 learn to quickly and reliably identify producers, making the benefits of increased consumer skill elusive. In short, the harm of exposing consumers to confusion surely outweighs the benefits of doing so.

In other cases, particularly when consumers are likely to resolve confusion on their own, the balance comes out very differently. For example, when the defendant and plaintiff use similar but distinguishable marks,[286] the harm to markets becomes far more speculative because consumers will probably distinguish between the two producers successfully. Consumers may experience momentary confusion and incur search costs to overcome it, but that confusion does not disrupt markets as badly as mistaken purchases from the wrong manufacturer would. More importantly, in cases where consumers figure things out for themselves, exposure to minor confusion will probably improve consumer abilities, leading to less confusion and a better-functioning trademark system over the long run. Whenever a consumer encounters confusion and successfully overcomes it, her System 2 has come to the aid of System 1 by creating a strategy for getting the information the consumer needs. Over time, System 1 learns to execute the strategies created by System 2 automatically, making the consumer more astute when encountering similar marks. Accordingly, it seems likely that the benefits of exposing consumers to low levels of confusion outweigh the modest and speculative harm that this confusion may cause.

The confusion that persists in our trademark system and the associated benefits suggest that trademark law already implements the balance proposed here in many important areas.[287] In other areas, however, trademark law seems to have paid insufficient attention to the relationship between this balance and the proper functioning of our trademark system. These areas offer meaningful opportunities for reform.

Consider the cases in which courts base infringement on a plausible but somewhat speculative possibility of confusion.[288] Trademark convention states that these decisions improve our trademark system by making it even easier for consumers to avoid confusion.[289] Perhaps most consumers can tell the difference between Beer Nuts and Brew Nuts,[290] but a few consumers will have difficulty doing so, and it makes conventional sense to follow the eradicate confusion norm because that norm will reduce the overall number of confused consumers.

The benefits of exposing consumers to modest confusion suggest that cases like Brew Nuts were wrongly decided. Over the long run, there is reason to doubt whether preventing modest confusion of the sort created by the simultaneous use of “Beer Nuts” and “Brew Nuts” really helps markets function more effectively. In situations where two marks can be distinguished with a modest amount of attention, consumers are quite adaptable. They can easily learn that Beer Nuts and Brew Nuts are similar products made by different producers, or they can learn that there is only one maker of nuts whose name refers to beer. The specific lesson learned greatly affects how consumers behave, especially when reinforced by other cases with similar results.

If consumers learn that the difference between “Beer Nuts” and “Brew Nuts” has no commercial significance, they will learn to ignore that difference and others like it. This eventually will make consumers relatively insensitive to easily perceptible differences between marks, and this insensitivity will render consumers susceptible to becoming confused whenever they see marks that evoke similar associations. By contrast, if consumers learn that Beer Nuts and Brew Nuts are different, they will learn that modest differences between marks matter. If trademark law consistently reinforces this lesson in similar cases, consumers will become sensitive to this degree of difference and will become less susceptible to confusion in the future. This sensitivity will improve the operation of markets in two ways.

First, more information will flow through the trademark system. If consumers learn that “Beer Nuts” and “Brew Nuts” are effectively identical, then trademark law will prevent competitors of Beer Nuts from calling their products “Brew Nuts” or any other similar name. This protection makes it hard for more than one nut producer to quickly inform consumers that its nuts go well with beer. It increases the risk that consumers will not know valuable information about the products they buy, hampering the prompt satisfaction of consumer preferences. Conversely, if consumers learn to differentiate between marks like “Beer Nuts” and those like “Brew Nuts,” then trademark law has no reason to intervene because consumer confusion will not exist. This allows many rival producers to use “Beer Nuts,” “Brew Nuts,” “Lager Nuts,” or any other reference that informs consumers that their nuts go well with beer. This association provides valuable information to consumers and improves the operation of markets because consumers can more easily understand the nature of products they encounter.

Second, markets will avoid the confusion and disruption that accompany trademark judgments. As noted earlier, any finding of trademark infringement both reduces and creates consumer confusion.[291] Some consumers will have no trouble distinguishing “Beer Nuts” from “Brew Nuts,” and some of those consumers will look for “Brew Nuts” as their preferred brand of nuts. If a court finds the use of “Brew Nuts” infringing, the losing defendant must stop using the mark and rebrand its products. Those consumers who preferred “Brew Nuts” will be frustrated because they cannot use “Brew Nuts” to find the product they want to buy. Indeed, they will remain confused until they discover and learn whatever new mark the maker of “Brew Nuts” decides to use on its product. However, if trademark law teaches consumers to distinguish between marks like “Beer Nuts” and “Brew Nuts,” the incidence of trademark infringement will fall. This reduction will lower the amount of forced rebranding, allowing consumers who prefer “Brew Nuts” to continue buying their desired product without disruption. The market will therefore operate more smoothly because consumers can immediately satisfy their preferences.

Similar observations can be made about cases where aggressive interpretations of confusion have been used to prevent satirical depictions of trademarks. For example, in Anheuser-Busch, Inc. v. Balducci Publications,[292] the plaintiff, Anheuser-Busch, sued the defendant, Balducci, over a fake advertisement that appeared on the back cover of Balducci’s humor magazine, Snicker.[293] The fake advertisement purported to promote a beer called “Michelob Oily,” and it was intended to make a sly reference to an oil spill in the Gasconade River—a source for the water used in Anheuser-Busch’s beer.[294] To support its claim, the plaintiff introduced the results of a survey indicating that consumers did not recognize that Balducci’s work was a humorous fake.[295] Slightly over half of the survey respondents thought that Balducci needed Anheuser-Busch’s permission to use its logos and trademarks.[296] Six percent thought the advertisement was authentic.[297] Nevertheless, the district court rejected Anheuser-Busch’s claim and found that no infringement existed.[298] However, the Eighth Circuit reversed.[299]

Leaving aside the significant problems about reliability and objectivity that plague surveys prepared for litigation, the Eighth Circuit’s decision makes sense only under a very expansive view of confusion. It may be appropriate for trademark law to shield consumers from indistinguishable fakes, but here consumers did not generally accept the defendant’s advertisement as authentic because only six percent of the survey responses reflected this kind of confusion. Granted, the finding of infringement against Balducci protected a small number of consumers from confusion, but it is not at all clear that doing so benefitted our trademark system.

The very premise of parodies and satires like Balducci’s is the point driven home by the viewer’s recognition of the fake as resembling the original. The viewer of the advertisement briefly entertains the possibility that he is looking at an original, but then figures out that it is a fake conveying a humorous message about the original. This process means that every parody operates on a form of confusion that trademark law arguably should remedy. However, if trademark law remedies this confusion, it will become very difficult to create effective parodies and satires because the necessary moment of confusion will become evidence of trademark infringement. Once the trademark system makes this change, fewer and fewer parodies and satires will be published, and consumers will have fewer and fewer reasons to develop, use, or maintain the cognitive skills that enable their identification and appreciation of parodies. This will make consumers even more prone to confusion, and over time the art form will wither because the law prohibits producing it. Instead, if courts permit the publication of fake advertisements like Balducci’s, a few consumers will surely face immediate confusion. However, consumers will also eventually develop the ability to recognize parodies and satires, making them less prone to confusion in the future. This will improve the operation of our trademark system by increasing the amount of information available to consumers.

Of course, like all challenges to convention, the proposal made here will meet objections. In particular, defenders of the eradicate confusion norm will likely make two claims. First, they may argue that consumers will not meaningfully adapt to confusion because they are permanently susceptible to confusion. Time pressure, boredom, and low involvement are permanent features of marketplaces that distract consumers from the potentially meaningful features of trademarks. Second, they may claim that the costs of any present confusion and concomitant consumer adaptation outweigh any benefits that may be gained. I think that both of these arguments are plausible but insufficiently persuasive to truly support the eradicate confusion norm.

I agree that consumers frequently do not pay full attention when shopping, but this lack of attention does not mean that consumers cannot improve the skills they use when they are not paying full attention. Consumer shopping behavior develops because it generates results that consumers deem acceptable given their level of interest and other constraints. If we allow consumers to occasionally face a surprise, they will learn and adopt strategies that produce better results. More important, the adaptations become automatic over time, eventually becoming skills that can be executed routinely while distracted. Indeed, this adaption is precisely what has happened in the cases of marks that lack inherent distinctiveness and private-label goods.[300]

Furthermore, although there are costs associated with exposing consumers to confusion, those costs have modest effects on the operation of markets and are very much worth incurring. Remember, a great deal of consumer learning happens during day-to-day activities.[301] As long as the confusion encountered is reasonable, consumers may buy the wrong products or have mistaken impressions for a short while, but they will not make these errors for long. One could take the position that the entire point of trademarks are to relieve consumers of this very burden and that eliminating confusion makes our trademark system work better. However, this argument is shortsighted because it forgets that our trademark system’s ability to convey information is determined by the skills of the consumers who participate in markets, and it is a good idea to have skilled, perceptive consumers.

Conclusion

In this Article, I have identified the conventional wisdom that trademark law exists to eradicate consumer confusion. I have further argued that this goal rests on an incorrect understanding of the relationship between consumer confusion and the effective functioning of our trademark system.

Trademark convention embraces the elimination of confusion because it wrongly believes that confusion has no constructive role to play in our trademark system. It may be tempting to shield consumers from all confusion in order to make their lives as easy as possible but doing so is surely a mistake. Consumers cannot learn to identify and distinguish between trademarks without occasional exposure to confusion. Shielding consumers from all confusion deprives consumers of the very skills needed to function in modern markets. A trademark system that truly eliminated all confusion would therefore make consumers’ lives harder, not easier. This insight enabled the identification of many instances in which trademark law has pursued the elimination of confusion too aggressively, at least in part because trademark convention blinds courts to the constructive benefits of modest confusion. All of this leads to the conclusion that confusion has an important and constructive role to play in our trademark system.

It is my hope that this insight will affect the future of trademark in two ways. First, a new understanding about the effects of confusion opens up opportunities for future scholarship. Perhaps psychologists and educators can help us determine whether consumers are particularly likely or unlikely to learn from certain forms of confusion. Empirical work may also be possible to determine the extent to which consumers exposed to confusion acquire stronger cognitive skills.

Second, and more importantly, courts will hopefully recognize the importance of confusion and change the way they understand and interpret trademark law. Doing so may initially confuse consumers who are presently inattentive and harm the commercial interests of those who own trademarks. Over the long run, however, all of society will benefit because consumers with improved cognitive skills can better navigate modern markets in ways that support the sophisticated and constructive use of trademarks.

           *   © 2014 Alfred C. Yen.

         **   Professor of Law, Law School Fund Scholar, and Director, Emerging Enterprises and Business Law Program, Boston College Law School. Many thanks to Mark McKenna and Notre Dame Law School for allowing me to discuss this work at the 2013 Trademark and Marketing Roundtable. The faculties of Boston College Law School, the University of Florida Law School, the University of California at Davis Law School, and the University of Arizona Law School have also generously shared their thoughts with me during faculty colloquia. My colleague Joe Liu patiently read and commented on a number of earlier drafts, and I have benefited from discussions with Mark Janis and Deven Desai. Thanks are also owed to David Rouse, Aliesje Chapman, Christopher Plescia, and Andrew Smith for their research assistance, as well as to the Boston College Law School Fund. Of course, all errors remain my responsibility.

 

 

DOWNLOAD PDF | 93 N.C. L. Rev.77 (2014)

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