This article argues that trademark infringement and dilution are best understood as commercial behavior that manipulates the cognitive biases of consumers, and as such threatens to render their heuristic judgments persistently inaccurate. In this view, trademark liability—whether imposed under the label of infringement or dilution—serves neither to protect property rights of trademark owners, nor to protect them against the unfair trade practices of competitors, but to shape consumer markets in such a way as to conform to the innate cognitive processes of boundedly rational consumers. The trademark regime can thus be understood as a legal apparatus designed (albeit perhaps unconsciously) to accommodate and even harness non-rational human thought processes, rather than suppress or eradicate them. The judicial outcomes of such a regime may be essentially indistinguishable from those of a system of property rights, but it will become clear that this resemblance is more a function of the mechanics of systemic market regulation than of any proprietary interest created under the law.
Part II of this article outlines the theoretical and doctrinal antagonism between the doctrines of trademark dilution and traditional trademark infringement, with an eye to the features of each that have historically kept them distinct from one another. Part III dissects the various species of trademark liability that have developed under this bifurcated trademark regime. Part IV applies the theoretical and empirical insights of cognitive psychology to the elements of trademark doctrine outlined in Part III. Part V collects these insights into a cohesive theoretical framework for all species of trademark liability. The article closes with some practical concerns surrounding the adoption of this framework, anticipating objections, and suggesting future roles for Congress, the courts, and the trademark bar.
Sheff, Jeremy N., "The (Boundedly) Rational Basis of Trademark Liability" (2007). Faculty Publications. 43.