Does Trademark Law Protect “Bad Will”?

Last Friday, I participated in a spirited panel at the annual IP symposium hosted by the Penn Intellectual Property Group (PIPG) at the University of Pennsylvania Carey Law School. Titled “How Far Should Trademark Protection Extend, and Should Stronger Marks Get Greater Protection,” our panel included Amy Landers, Professor of Law at Drexel School of Law; Willajeanne McLean, Distinguished Professor of Law at University of Connecticut School of Law; myself; Saurabh Vishnubhakat, Professor of Law at Cardozo Law; and moderator Camilla Hrdy, Associate Professor at Rutgers Law (from left to right in the photo).

Our topic was inspired by a 2017 NYU Law Review article by Barton Beebe & Scott Hemphill, titled “The Scope of Strong Marks: Should Trademark Law Protect the Strong More than the Weak?” The article challenged the conventional jurisprudence that strong marks — coined and arbitrary marks, or marks that have become famous through extensive use in commerce — are entitled to greater protection in the likelihood of confusion analysis. Beebe and Hemphill argued that because consumers are more familiar with famous marks, they are more likely not to be confused by an identical or similar third-party mark. This position has evidently been taken by some foreign courts, but is not the case in the U.S. (and, speaking for myself, this pivot would not be well-received by those of us tasked with protecting our clients’ well-known brands).

One interesting angle the panel considered in this context was the role of “bad will” in analyzing trademark scope. The traditional analyses for likelihood of confusion and its cousin, dilution, grant strong and famous brands greater protection than those that are conceptually or economically weak. This position makes sense in the current marketplace, where it is not uncommon to see unusual pairings of famous brands—such as LL BEAN and SUBARU collaborations, or brands such as CATERPILLAR / CAT licensing into the apparel space.

But an interesting angle relates to the scope of protection accorded brands that may suffer from a decrease in cache or reputation. In other words, does “goodwill” relate to fame alone, or is it more of a value judgment? Is “bad will” protected in the same way as good? Is there, as P.T. Barnum put it, “no such thing as bad publicity”?

Recent history is rife with examples of famous brands who have taken a PR hit – such as the rebrand of AUNT JEMIMA to address perceived racial stereotypes, and the more recent turn in consumer perception regarding TESLA. Our panel discussed whether a brand that has suffered in the court of public opinion should be entitled to a narrower scope of protection. One theory is that while “bad will” may not impact the likelihood of confusion analysis, it may impact at least a dilution by tarnishment claim. While it remains to be seen whether future courts or the USPTO consider “bad will” in their evaluation of the relevant likelihood of confusion or dilution analysis, it is always enjoyable to debate trademark policy with creative thinkers in the space.

And, as always, the prudent brand owner should act on infringements of their trademarks in the here and now, while U.S. law is still clear on the strength element, lest an unexpected event change the way the public, and perhaps a court, would interpret the scope of the brand’s rights.