Courts are key to trademark reform; they understand more than Congress

The courts have understood what the Congress-and, evidently, many of the theorists-have not: If, as seems likely, MIM rather than IM correctly describes the universe of available and appropriate trademarks, then the economic argument that trademarks ought to be protected because they are information-economizing devices justifies only the common law system of rights that flow from, and are coextensive with, use of the mark. But the economic argument cannot easily justify nationwide exclusive rights upon registration, and cannot justify at all the shift from a use-first system to one that permits application upon a showing of intent-to-use. I do not say that these provisions cannot be justified on any ground; I say only that if MIM rather than IM is true, they cannot be justified on the ground that trademarks lower consumer search costs. Thus, the courts were right to do what they did in curbing the excesses of the Lanham Act. Not until the would-be proprietor of a mark enters a market should it ever be permitted to exclude others from using the mark in that market. Until that time, the mark should remain a part of that market's language, free for others to use as they wish. The concern about building national markets is hardly frustrated by this rule: As a firm prepares to take its mark national, as through an expanded advertising campaign, it can then gain its nationwide rights. But as long as its use is purely local in character, its protection should be local too. And if the firm has never used the mark at all, then its protection should not exist. IV. PROPOSALS FOR REFORM The trouble with trademark is clear. The question for those who are troubled is what can be done about it in the wonderful world of the TMRA. After all, the Revision Act was passed just over a year ago, and the pressures to conform to the practices of the rest of the world are of course quite substantial. So it would be foolish to suggest what seems the obvious solution, that the intent-to-use system be repealed. More practical advice is needed to harmonize the certainty of the TMRA with the plausibility of the notion that MIM rather than IM is true. The practical advice that I offer is of two kinds-advice for the courts, and advice for the Commissioner. To understand the advice, it is first necessary to go back over some ground. The economic model of trademark law as lowering search costs is consistent only with a regime in which negative uses are not permitted. The Lanham Act by its terms did permit purely negative uses-the registrant could restrain junior users in separate markets-but the courts properly put a stop to that. The principal theoretical variation between the TMRA and the previous law is that the new Act permits what are in effect purely negative uses of a mark upon application for registration. Finding a judicial solution to the problems of the Revision Act will not be easy, partly because the new statute is so slippery (no injunctions, just an admonition, a word to the wise) and partly because it is so clear (a bona fide intent to use is enough). Indeed, the TMRA's unfortunate combination of clear assurances and vague restrictions creates a dangerous instability. The instability is reflected in the examples that I have already discussed, the seeming erosion of the doctrine of abandonment and the potential eradication of the prohibition of assignments of marks in gross-two cornerstones of the trademark law under the ancien regime, when rights flowed from use. Also endangered is the rule that injunctive relief is available only in markets that the proprietor of the mark has actually entered. Only the courts-and perhaps the good sense of the Patent and Trademark Office-can prevent trademark law from tumbling further down the slippery slope from economizing on information toward warehousing trademarks. Along that line, I have three somewhat modest proposals, which I here sketch lightly, recognizing that they deserve more detailed consideration than I offer.