The subject of this Article is the legal regime that regulates the struggle for control of a luxury brand across various cross-cutting cleavages in American society—global competition over wealth and status. Rights under federal trademark law, whether asserted under statutory provisions relating to simple trademark infringement or the more specialized provisions relating to trademark counterfeiting, are grounded in the doctrine of post-sale confusion.
Post-sale confusion as a doctrine unto itself has received surprisingly little critical attention. What literature does exist either characterizes post-sale confusion as merely one example of broader trends in intellectual property, or else discusses the economic or philosophical implications of luxury consumption without critically examining the underlying legal doctrine that facilitates that consumption. This Article makes a new contribution, first by critiquing the actual doctrine of post-sale confusion, and second by examining the relationship between that doctrine and what I claim is its unique purpose: the regulation of socially expressive consumption.
The first step in this project is to try to provide a coherent doctrinal account of the post-sale confusion cases. As it turns out, this is an impossible task. There is no single coherent theory of injury in post-sale confusion cases; rather, there are three. The first theory, "bystander confusion," refers to the following factual scenario: a defendant sells its product to a non-confused purchaser; observers who see the non-confused purchaser using the defendant's product mistake it for the plaintiff's product; and those observers draw conclusions from their observations that influence their future purchasing decisions. The next theory of injury, "downstream confusion," is implicated where there is a risk that a non-confused purchaser of a knockoff or altered trademarked good might give or resell the good to a confused recipient. The third theory of injury, "status confusion," is the legal theory that most often serves to justify liability against the manufacturers of knockoff luxury branded goods, even though the purchasers of those goods know full well what they are buying. I refer to the luxury trademarks that serve this socially expressive function (by virtue of the artificial scarcity that trademark law permits their owners to maintain) as "Veblen brands."
This Article ultimately asks whether the trademark system has any legitimate interest in creating, maintaining, and regulating the market for Veblen brands, and if so, whether the First Amendment permits the law of trademarks to be used in that way. Part I analyzes the case law in the area of post-sale confusion, sets out the three categories into which such cases fall, and critiques each category. Part II compares status-confusion theories to the dominant information economics account of trademark law. This comparison reveals the fundamental theoretical disconnect between status confusion and the rest of trademark infringement law: whereas the economic theory of trademarks is directed at the flow of information about products, status confusion doctrine is directed at the flow of information about people. Part III turns to the policy implications of this theoretical gap. Specifically, it argues that status-confusion doctrine places an unjustified burden on First Amendment rights of social expression. Accordingly, the Article concludes by arguing that post-sale confusion doctrine should be discarded entirely, and replaced with a more limited doctrine focused on preventing confusion of actual or potential consumers.
Sheff, Jeremy N., "Veblen Brands" (2012). Faculty Publications. 39.