Irrelevant Confusion

Trademark law centers its analysis on consumer confusion. With somesignificant exceptions, the basic rule of trademark law is that adefendant’s use of a mark is illegal if it confuses a substantial number ofconsumers and not otherwise.As a general matter, this is the right rule. Trademark law is designed tofacilitate the workings of modern markets by permitting producers toaccurately communicate information about the quality of their products tobuyers, and therefore to encourage them to invest in making qualityproducts in circumstances in which that quality wouldn’t otherwise beapparent. If competitors can falsely mimic that information, they willconfuse consumers, who won’t know whether they are in fact getting a highquality product and therefore won’t be willing to pay as much for thatquality. I won’t pay as much for an iPod if I think there is a chance it isa cheap knock-off masquerading as an iPod.The law of false advertising operates as an adjunct to trademark law. Whiletrademark law prevents competitors from misrepresenting the source of theirproducts by mimicking another’s brand name, the law of false advertisingprevents false or misleading statements about the quality of one’s own or acompetitor’s products. Like trademark law, false advertising law isdesigned to protect the integrity of markets by allowing consumers to relyon statements made by sellers.Unfortunately, trademark law has taken the concept of confusion too far.Between 1930 and 1980, courts expanded the concept of confusion beyondconfusion as to the source of a product to include the possibility thatconsumers are confused as to whether the trademark owner sponsors or isaffiliated with the defendant’s goods. This expansion began for plausiblereasons: consumers might be confused to their detriment in a variety ofcircumstances in which the plaintiff and the defendant do not actuallycompete directly. But sponsorship and affiliation confusion has taken on alife of its own, resulting in a large number of cases in which companies orindividuals are prevented from doing things that might conceivably confuseconsumers, but do not confuse consumers in any way that harms theirdecision-making process or that the law should care about. In Part I, weoffer a number of examples of “confusion” that courts have found actionableeven in circumstances in which that confusion was unlikely to matter to theoperation of the market. Part II explains how we arrived at thisunfortunate pass.We suggest in Part III that trademark law should focus its attention onconfusion that is actually relevant to purchasing decisions. We would makethe source of the goods the central element of confusion analysis. It isconfusion as to source that is most obviously relevant to the purposesbehind trademark law. That does not mean, however, that confusion as to therelationship between plaintiff and defendant can never be actionable.Confusion as to affiliation should be actionable when consumers are likelyto believe that the trademark owner stands behind or guarantees the qualityof the goods the defendant sells. Even if consumers understand thatindividual franchisees, rather than the McDonald’s Corporation, actuallymake their hamburgers, they are likely to expect that McDonald’s standsbehind whatever quality that brand represents.Finally, the fact that confusion as to sponsorship or affiliation shouldnot generally be trademark infringement does not mean that it will never beactionable. Some statements that create confusion as to sponsorship oraffiliation will be actionable as a form of false advertising. We addressthe scope of false advertising in Part IV. Notably, proof of a falseadvertising claim requires the plaintiff to demonstrate that themisrepresentation is material – that it is likely to affect a productpurchasing decision. Indeed, the statute specifies the sorts ofmisrepresentations that are forbidden. We continue the discussion in PartV, which explores some of the implications of shunting some cases into thefalse advertising framework, and discusses how to handle some close cases.