Trademark enforcement bad now – incentivizes over-policing and crushes smaller businesses

[Sonia K, Leah Chan, 2018, Scholarly Commons @ UNLV Boyd Law, “Platform Law and the Brand Enterprise”, https://scholars.law.unlv.edu/cgi/viewcontent.cgi?params=/context/facpub/article/2394/&path_info=Platform_Law_and_the_Brand_Enterprise.pdf, accessed 7/10/2024, LR]

In the platform enterprise, trademarks function just like other trademarks in the sense that they serve informational and economic functions.4 4 By enabling consumers to trust that their experience of a certain product can be consistently associated with a particular trademark, trademarks lower consumer search costs. 4 5 Yet trademarks play an even more central role in platform entrepreneurship because they enable consumers to identify clusters of marks with a particular platform, thereby facilitating the reduction of transaction costs that are essential to a platform's success. For example, with the Parking Panda platform, both sets of marks, the Parking Panda's and the parking companies', inform consumers that their parking experience will be similar to their previous experiences, thereby enabling purchasers to rely on their previous decisions.

Branding, too, is an essential aspect of this enterprise. 4 6 Brands, on one hand, incorporate a business's trademark, but instead of being primarily informational in nature, they also convey an experience to the consumer. Particularly in a platform ecosystem, brands tell the consumer about the other individuals who buy the product, thereby creating a community of likeminded purchasers.4 7 For example, although Parking Panda aims to help users "find and reserve parking," the company describes its mission as much more than just parking assistance:

"[t]hrough Parking Panda, drivers plan and commute smarter by booking guaranteed parking in advance. Parking Panda customers are empowered with the ability to search and compare thousands of parking options and prices in more than 40 cities throughout North America."48

Through this statement, Parking Panda attempts to create a community of "smart commuters,"4 a consumer identity and experience, which is their "brand," while also having their related trademark, "Parking Panda."

As this Article has suggested, the "macrobrand" in this example is "Parking Panda," and the "microbrands" comprise the individual parking companies that operate within the Parking Panda ecosystem. Yet the legal protection of trademarks, and by extension, brands, introduces tension into the relationship between macro- and micro-brands. Trademark law encourages owners to provide a consistent level of quality in their products, to ensure consumer confidence and repeat purchases. This is done through granting trademark owners limited exclusivity in their trademarks; for example, only one company can be known as "Parking Panda" for online parking services. In addition, trademark law rewards those owners that are active in policing their marks by granting them "strong" or even "famous" status.' Therefore, trademark owners are incentivized to police their marks against not just competitive infringement by others who might "pass off' their goods as those of another producer, but also against related or associative uses. 52 This has led, in some cases, to trademark over-enforcement, particularly in situations where macrobrands receive takedown requests to remove allegedly infringing material that microbrands host on the platform.5 3

Unfortunately, the doctrines governing trademarks and intermediary liability are both confusing and outdated, particularly as applied to platforms. This next subsection shows how this standard has played out in both the real space and online context to demonstrate the particular complexities platforms face. Special attention, too, is placed on alternative standards of contributory liability, specifically emerging from Europe and Canada, which have taken different approaches. Finally, we compare the existing approach in trademark law with that taken in the copyright context, which will lay the foundation for suggestions to reform existing law.