Trademarks Ain't so hot, either...
David (on the Against Monopoly blog)--sure, it is understandable why you are "much more favorably inclined towards trademarks than other forms of intellectual property." As you say, "It seems to me a good thing that it is possible to tell who you are doing business with, and no downside monopoly". As I noted here, the primary justification for trademark rights is based on the notion of fraud--that the "infringer" is defrauding his customers by misrepresenting his identity and the source of the goods being sold (see pp. 43-44 of my Against Intellectual Property, pp. 59-63 of Reply to Van Dun: Non-Aggression and Title Transfer, p. 34 of A Theory of Contracts: Binding Promises, Title Transfer, and Inalienability).
But this analysis would give a cause of action to customers, however, not to the holder of the mark, who is not defrauded. Moreover, it would protect the customer only when there is fraud. For example, neither the customer (nor Rolex) should be able to sue Rolex knock-off companies, because people who buy fake Rolexes for $10 are not being defrauded. They know they are buying a cheap knock-off. But trademark law does give trademark holders--not customers--the right to sue infringers, regardless of whether there is really fraud to the consumer.
So while we can condemn fraudulent sales to customers, this is not what modern trademark law prevents. Modern state-run trademark law is almost as bad as cpoyright and patent, even if it has a less-objectionable core or origin. The fundamental problem with trademark law is that it is state law--it is created and administed by the state, which is a criminal organization. To expect justice from the state is like expecting a cat to bark.
Thus we have trademark rights granted to trademark holders, instead of to customers, the real victims of fraud. Thus we have a statutory scheme establishing an arbitrary, artificial legal system and an inept bureaucracy to construe and enforce it. Thus we have ridiculous extensions of trademark to cover "anti-dilution" rights, much as the term and scope of copyright and patent are gradually increased over time. And thus we have the government's courts used like trademark's more infamous cousins, copyright and patent, to stifle competition and squelch free speech. See, e.g., A Bully-Boy Beer Brewer, Straight Talk; 9th Circuit Appeals Court Says Its Ok To Criticize Trademarks After All; Trademarks and Free Speech; Beemer must be next... (BMW, Trademarks, and the letter "M"); Hypocritical Apple (Trademark); ECJ: "Parmesian" Infringes PDO for "Parmigiano Reggiano"; Engadget Mobile Threatened For Using T-Mobile's Trademarked Magenta.
Clearly, this is just another example highlighting why the state is worse than useless; it is a harmful criminal organization.
And in fact, US trademark law is unconstitutional. While the US Constitution, to the extent it is legitimate and not just the de facto result of a successful coup d'etat, unwisely authorizes Congress to enact copyright and patent law, no provision is made for trademark law. Instead, trademark law is based on an unconstitutionally expanded reading of the Interstate Commerce clause. As James J. Kilpatrick noted in The Sovereign States: Notes of a Citizen of Virginia, in describing the Supreme Court's illegitimate expansion of power under the guise of the Constitution's interstate commerce clause:
It was an insidious process, conducted with the care of the cat that stalks her prey - now creeping forward, now pausing to sniff the air; now advancing, now lying still as the bird takes alarm; then edging forward again, and so, step by inexorable step, moving to the ultimate seizure.
But it started at the very beginning of the United States. Tom Dilorenzo, in The Founding Father of Constitutional Subversion, explains:
"Hamilton was also likely to be the first to twist the meaning of the Commerce Clause of the Constitution, which gave the central government the ability to regulate interstate commerce, supposedly to promote free trade between the states. Hamilton argued that the Clause was really a license for the government to regulate all commerce, intrastate as well as interstate. For "What regulation of [interstate] commerce does not extend to the internal commerce of every State?" he asked. His political compatriots were all too happy to carry this argument forward in order to give themselves the ability to regulate all commerce in America."
So don't stop with copyright and patent: abolish the unconstitutional Lanham Act, and its unjustifiable grant of trademark rights to trademark holders instead of defrauded customers, and maintain the link to fraud (knockoffs are fine; no anti-dilution law).
Comments (39)
Once again the question remains - what constitutes fraud? If (as this article implies) someone who buy a $10 'Rolex' watch and complains he was 'defrauded' then it would pointed out "at what point did you think you could get a Rolex for $10?". Fraud doesn't seem to have a great history of enforcement as most people would say the 'victim' didn't engage in any due diligence or wanted 'something for nothing (or at least on the cheap)'. Hence Homer's "it takes two to lie - one to lie and one to listen" seems to paraphrase W. C. Field's "you can't cheat an honest man".
Published: July 25, 2008 1:36 AM
The objection to property rights as "created by the state" strikes me as ill-considered, because it applies more broadly than its proponents seem to think. Intellectual property is created by state action? Well, what about property in land? A farmer can't physically occupy all of his farm at once, or physically defend it against every intrusion. Squatters who have built houses tend to stay home as much as possible, for fear that someone else will move in and dispossess them. Hernan de Soto's recommended cure for this has been to set up a title registry for each area, with a single clear record of who owns what land. But resolving such questions seems to be a characteristic activity of the state; the oldest historical records from the Near East already show legal decisions being made about land title, whereas tribal societies have no such procedures. So there seems to be just as good ground for doing away with ownership of land as for doing away with ownership of content. But I don't see many libertarians advocating this.
As to the enforcement of trademark by the trademark holder rather than the customer, that seems to be mainly a matter of administrative convenience. A parallel case would be broadcasting rights. If you broadcast on a frequency I've been using, the actual physical property that's being interfered with is the radio receivers of people who listen to my broadcasts and are now prevented from doing so; it's their property rights, and not mine, that are being directly violated. But the enforcement costs are vastly lower if your interference can be shut down by one big legal action from me, rather than nibbled away by a long series of legal actions from my listeners, any one of whom may well decide that the costs of suing you are worse than just putting up with the interference. Surely a sound legal regime will structure rights to make them convenient to enforce?
Published: July 25, 2008 9:26 AM
The objection to property rights as "created by the state" strikes me as ill-considered, because it applies more broadly than its proponents seem to think. Intellectual property is created by state action? Well, what about property in land? A farmer can't physically occupy all of his farm at once, or physically defend it against every intrusion. Squatters who have built houses tend to stay home as much as possible, for fear that someone else will move in and dispossess them. Hernan de Soto's recommended cure for this has been to set up a title registry for each area, with a single clear record of who owns what land. But resolving such questions seems to be a characteristic activity of the state; the oldest historical records from the Near East already show legal decisions being made about land title, whereas tribal societies have no such procedures. So there seems to be just as good ground for doing away with ownership of land as for doing away with ownership of content. But I don't see many libertarians advocating this.
As to the enforcement of trademark by the trademark holder rather than the customer, that seems to be mainly a matter of administrative convenience. A parallel case would be broadcasting rights. If you broadcast on a frequency I've been using, the actual physical property that's being interfered with is the radio receivers of people who listen to my broadcasts and are now prevented from doing so; it's their property rights, and not mine, that are being directly violated. But the enforcement costs are vastly lower if your interference can be shut down by one big legal action from me, rather than nibbled away by a long series of legal actions from my listeners, any one of whom may well decide that the costs of suing you are worse than just putting up with the interference. Surely a sound legal regime will structure rights to make them convenient to enforce?
Published: July 25, 2008 9:27 AM
THANK YOU, William H. Stoddard. I couldn't have said it better myself. Maybe since you said it instead of me, Stephan will be more likely to listen.
***
Actually, I will add one thing: how far do you take the concept of fraud? Can't it go well beyond the sale of the fake Rolex? To give a humorous example:
Let's say I buy a Rolex knock-off. And then let's say a woman decides to sleep with me, based in large part on believing I was wealthy enough to afford a real Rolex.
Stephan claims that fraud is a rights violation under libertarianism because (basically) it involves the taking of something that wasn't actually consented to. In his example here: If I buy a fake Rolex, thinking it's real, then what I have consented to is "give $X for real Rolex". By giving me a fake one, he has taken money from me that I didn't actually consent to giving him.
Simple enough.
But let's go back to my example. What the woman REALLY consented to was "sexual use of my body by gentleman wealthy enough to afford a real Rolex". But wait! I *wasn't* such a gentleman, so the woman didn't REALLY consent to sex with me. oops!
Did that count as a aggression, Stephan?
Published: July 25, 2008 10:09 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:27 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:28 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:28 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:28 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:28 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:28 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:28 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:28 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:30 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:30 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:30 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:30 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:30 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:30 AM
No, that is not an exchange.
There is no implicit contract to violate.
Published: July 25, 2008 10:30 AM
Oh, shit.
Published: July 25, 2008 10:31 AM
Stoddard, how about you independently, of the state's claims, justify IP, eh, and stop regurgitating Person's harebrained nonsense? Kinsella argues IP cannot be justified by argument in the way property otherwise can be. So deal with that, and not a strawman.
Published: July 25, 2008 10:33 AM
Well, scineram, despite saying it 15 times, you're wrong. There WAS a contract: the woman was giving "access to body for sexual activities" to "man wealth enough to buy real Rolex". And despite accessing her body, I was NOT such a man, and so she never granted me permission for use of her property. Ergo, it was aggression.
Looks open and shut to me.
Published: July 25, 2008 11:47 AM
_If_ she said that she 'only' wanted to have seks, because he is "man wealth enough to buy real Rolex", then I would say there is a contractbreach. (It could be that he, in fact, is rich enough. That doesn't mean that that rolex _has_ to be fake, though. But let's ignore that fact.) If she, however, didn't say such a thing - i.e. she didn't stipulate any 'conditions' - then I say 'haha' to her. She has, imo, no legal claim for what so ever.
Published: July 25, 2008 11:56 AM
Person: So pay her the penny your promise to be a rich man is worth.
Published: July 25, 2008 12:07 PM
Silas:
The reason fraud is a rights violation is it is a means of committing a type of theft or maybe "conversion"--using someone's property without their consent. It primarily refers to exchanges of title. So the title to my gold coin transfers to the apple seller ONLY if the seller is not knowingly defrauding me as to their quality. This is a condition to the coin title transferring. IF the condition isn't filled, the title doesn't trasnfer, so the seller is now in possession of my coin. If he doesn't return it, he's trespassing.
I am not sure if this could apply as well in the case of personal interaction or services. The woman does not give title to anything; she just consents to teh man having sex with her body. Is the consent genuine? Hard to say. In a sense yes, even though she relied on a lie. In the case of an exchange based on fraud, I think the key is that the title transfer is contractually impeded by a fraudulent act. This is why the seller is holding property he has no title to and must return it. NOt sure if there is a direct analogue here.
Published: July 25, 2008 12:15 PM
Lode: Okay then, go back to the store example:
"Hey, *I* didn't ever explicitly say that the Rolexes here were real. I just happen to have a bunch of signs around the store that say these are genuine Rolexes. Hell, I don't even know who put them there. If you fell under the impression that I was giving you a real Rolex, that's not my fault."
How is that different?
***
@Inquisitor: Stephan *tried* to show how IP cannot be justified. He failed to do so for numerous reasons I have cited on this blog and elsewhere, the clearest of which is this argument:
If you accept property rights in radio waves, you accept a kind of property rights in the formation of a specific pattern, which is all that transmission of a radio wave is. Yes, radio waves are "different" in that they "interfere" with others who transmit the same frequency, but your characterization of it as "interference" only exists because of a value judgment you made (i.e. that you LIKE the situation resulting from non-interfering transmissions, that situation being the possibility of EM spectrum use for data transfer) -- and the VERY SAME value judgment can be made for IP. Specifically, another use of an idea "interferes" with one kind of use, which people may consider beneficial in the same way that frequency rights are.
Game. Set. Match.
***
@Stephan: If your theory of contracts can't handle cases of granting temporary usage rights to property, that is a deficiency in your theory, not in my argument.
Consent to use of one's body must be genuine, or the use is aggression. Just as consent to the transfer of an apple can be false (since the actual apple was not the one the buyer had in mind) consent to use of one's body can be false (since the person granted permission was no the one the consenter had in mind).
Published: July 25, 2008 12:20 PM
"Hey, *I* didn't ever explicitly say that the Rolexes here were real. I just happen to have a bunch of signs around the store that say these are genuine Rolexes. Hell, I don't even know who put them there. If you fell under the impression that I was giving you a real Rolex, that's not my fault."
How is that different?
Store vs. personal home, Sale (transfer of money for value) vs. intimate relations. Really, it's an entirely different situation.
Published: July 25, 2008 12:55 PM
Okay Michael, so you can apply different labels to the different situations. GREAT!
But what I was looking for was a substantive, relevant distinction, not whether you can generate labels. Give it another go, k?
Published: July 25, 2008 12:59 PM
The differences aren't self-evident? Okay, "Consent to use of one's body must be genuine, or the use is aggression. " Guess what? I agree with that statement. However, since an exchange of value was not made (she wasn't a prostitute, he wasn't selling her the fake Rolex), the fraud involved isn't a crime punishable by law, but merely by social sanctions (she blabs about his fake Rolex and never dates him again, for example), whereas, the store selling fake Rolex's with signs saying they are genuine has committed a fraud that is punishable by law and the person thinking he was getting a real Rolex deserves to get his money back (restitution).
Published: July 25, 2008 1:08 PM
Michael: The lack of an exchange of value implies no-punishment-via-law because ______?
If I say, "Hey, anyone can dump non-radioactive material on my Plot #5", I have granted a kind of permission. If then someone dumps radioactive material on Plot #5, *he has aggressed*, even though there was no "exchange of value". It is aggression because he did not have permission for the act he performed -- the permission was only for non-radioactive material.
Similarly, in the rape case, if the woman consented to, "sexual use of my body, but only the gentleman I just met who is wealth enough to afford real Rolexes", and I proceed, I have done the same thing: made use of property for which I wasn't granted permission.
Published: July 25, 2008 1:32 PM
The Mises position on the validity and enforcement of trademarks is something on which I am still not perfectly clear, so allow me to inquire about a real-life example that varies a bit from the scenario in which someone is paying $10 for a "Rolex" they know beforehand is a blatant fake. Note that I am trying to -learn- by posing this scenario, not be difficult.
Unopened (Mint In Sealed Box or Mint On Sealed Card) vintage toys demand very high prices (hundreds or thousands of dollars) among collectors in the secondary market as they are fairly rare. After all, how many kids in the 70's and 80's never opened their toys? I know I did.
Some Chinese companies have tried to cash in on that fact by producing extremely convincing replicas (i.e., forgeries) of those vintage toys and fraudulently marketing them as official, vintage items with the associated high prices. Quite a number of collectors have ended up being burned by these schemes, paying hundreds of dollars for something it is ultimately worth far less once its true nature has become known.
The only way that some have even recognized these as forgeries is by comparing them in detail to the original items and finding minute discrepancies; just seeing a photo of the item in-box on eBay is not sufficient. To reiterate, the real thing is worth a lot of money while a forgery is not as would be the case with old paintings.
As a result, eBay and Hasbro have started cracking down via trademark infringement on the sellers in China of these unlicensed, vintage toy forgeries that are spreading throughout the secondary market. If nothing else, Hasbro does not want products floating around bearing their company logo and brand names which have not been subjected to their safety tests (lead paint hazard, inferior plastic quality, etc.), possibly opening them up to legal liability.
So, is Hasbro pursuing the correct course of action in this situation, possibly on the part of duped purchasers of the forgeries? Does the company have a rightful claim against the toy forgers for using their brand name and trademarks without permission? If so or if not, why?
Published: July 25, 2008 2:33 PM
Michael: The lack of an exchange of value implies no-punishment-via-law because ______?
Because we're talking about fraud, not trespass or an initiation of force. So tell me, in your example, what is the "appropriate" punishment for having sex because a guy wore a fake Rolex? She takes him to court and expects a judge and/or jury to award her ____?
Published: July 25, 2008 2:35 PM
"Intellectual property is created by state action? Well, what about property in land?"
Yes, historically the state has granted property titles in land as a legal privilege to a small few who do not actively labor upon that land. I think the problem is that you're conflating property rights with property titles. Property rights are a particular standard, but the current allocation of property titles does not necessarily reflect property rights. In fact, it blatantly violates them.
Published: July 26, 2008 12:11 AM
"As a result, eBay and Hasbro have started cracking down via trademark infringement on the sellers in China of these unlicensed, vintage toy forgeries that are spreading throughout the secondary market. If nothing else, Hasbro does not want products floating around bearing their company logo and brand names which have not been subjected to their safety tests (lead paint hazard, inferior plastic quality, etc.), possibly opening them up to legal liability." - Chad
The bigger question is - does a company have a right to its name and logo and others idenitifers? Is it perfectly valid for another toy company to call itself 'Hasbro' and use the same logo and colour and so forth that Hasbro uses to identify itself? Or can 'Hasbro 2' argue that 'Hasbro 1' has not right to own 'words', 'colours', 'patterns', 'symbols', etc., and it's up to the comsumer to guess which company is which by buying the produce?
Published: July 26, 2008 12:37 AM
"Yes, historically the state has granted property titles in land as a legal privilege to a small few who do not actively labor upon that land. I think the problem is that you're conflating property rights with property titles. Property rights are a particular standard, but the current allocation of property titles does not necessarily reflect property rights. In fact, it blatantly violates them."
I don't think that's a sufficient answer. It's not evident to me that there is any system of property rights in land that is not created by a state. State-created property titles cannot be called a distortion of property rights if the property rights have no independent existence apart from the property titles.
Published: July 26, 2008 2:28 AM
"The bigger question is - does a company have a right to its name and logo and others idenitifers? Is it perfectly valid for another toy company to call itself 'Hasbro' and use the same logo and colour and so forth that Hasbro uses to identify itself?"
Personally, I would answer in the negative to that second question even if doing so was not considered illegal. It almost seems like a deliberate act of corporate "identity theft," especially since companies pour so much money into establishing their unique identities in the market.
"Or can 'Hasbro 2' argue that 'Hasbro 1' has not right to own 'words', 'colours', 'patterns', 'symbols', etc., and it's up to the comsumer to guess which company is which by buying the produce?"
I might be wrong, but it seems to me that some would argue that Hasbro #2's argument is correct. However, that would leave discriminating consumers open to fraud. How could they ever know if what they were purchasing was an official product from Hasbro #1 or just a clever forgery by a competing company such as Hasbro #2?
I am not saying that a company should be able to exclusively trademark a common color (ex. purple) or a common pattern (ex. stripes), but they have to have -some- way of uniquely identifying their products visually from those of copycat competitors. Trademarking an uncommon word as a company name (ex. "Hasbro") or an uncommon word as a product name (ex. "Stratego") seems reasonable enough to me; it does get a bit less clearcut, though, once you start talking about trademarking common words like (Nike) "Air" or (Ford) "Focus."
Perhaps, I just perceive trademarking as a form of helpful consumer fraud prevention while others just perceive it as the arbitrary, exclusive ownership of words, shapes, patterns, or colors. I am not sure exactly how to balance the two properly.
Published: July 26, 2008 4:21 AM
My wife bought me an "Ipod" off of ebay for what seemed like a decent price, yeah I know what was she thinking. When it arrived it even looked legit (identical packaging, apple logos, etc). As soon as i turned it on, it was obviously a fake. However, she also used PayPal to pay for the item. She disputed with PayPal and within a week had all of her money back. Why do some people act as if the market can't solve the problem of two companies using the the same name and logo? The argument is no better than the one that we would all just sit around stranded and helpless if the government didn't build roads.
Published: July 26, 2008 10:12 AM
"I don't think that's a sufficient answer. It's not evident to me that there is any system of property rights in land that is not created by a state. State-created property titles cannot be called a distortion of property rights if the property rights have no independent existence apart from the property titles."
I don't consider property rights to be a system, it's an ethical standard. If you follow your own logic here, it is you who's claiming that property rights are a product of the state. I disagree, but I'm sure you'll find plenty of Marxists who agree with you (albiet from a different angle). From my perspective, state-created property titles are not property rights and are irreconcilable with a free market.
Published: July 26, 2008 1:50 PM
Mike, the PayPal refund procedure you described is likely abused by unscrupulous buyers nearly as often as it is used legitimately, potentially freezing an honest seller's entire account rather than just the amount of money involved in the original transaction, so it is still does not solve the problem.
Personal identity theft is someone fraudulently pretending to be you. Business/corporate identity theft is a competitor fraudulently pretending to be your company and/or fraudulently marketing its products as yours. The bottom line is that I do not see how the former can be roundly condemned but the latter be considered acceptable.
Published: July 26, 2008 4:24 PM