“Yes! that’s it! that’s it!” Those were my words when I first saw the title of Jeanne Fromer & Mark McKenna’s paper, Amazon’s Quiet Overhaul of the Trademark System. I was sure that they had identified the culprit behind the seismic shifts in trademark law that I had sensed were taking place over the past several years. I was thrilled that they were going to put together the pieces, some of which I had personally encountered, of a bizarre and important puzzle. They did not disappoint.
Trademarks ostensibly exist to reduce consumer search costs and protect the goodwill brand owners generate in their source-identifying marks (as associated with particular goods or services). They do this by being distinctive, with fanciful (made-up words like “Exxon”) and arbitrary marks (e.g., “apple” for computers) receiving the strongest protection, and, along with suggestive marks (e.g., “Coppertone” for sunscreen), being deemed inherently distinctive, while descriptive marks (e.g., “Honey-baked Ham” for ham with a sweet glaze) may acquire distinctiveness. Generic terms, the common name for a product (e.g., “apple” for apples) are not protectible as trademarks, because other product sellers need to be able to use the common names of goods for their own products. This last restriction reflects trademark law’s concern with the preservation of competition in the marketplace.
Trademark rights in the U.S. are acquired by use, which can be quite helpful for small business owners who may not be able to afford federal registration when launching. However, federal registration with the United States Patent and Trademark Office (PTO) does provide a number of helpful benefits, including nationwide constructive use even in unentered markets.
As compellingly described by Fromer and McKenna, Amazon, through its “Brand Registry Program”, has singlehandedly turned many of these long-held understandings and goals on their head, transforming trademark law in profoundly disturbing ways. The Brand Registry Program rewards owners of federally registered trademarks with a cheap and efficient dispute resolution process, which both allows them to object to uses of their mark on the website and also gain a higher priority in search results than if their mark was unregistered.
Fromer and McKenna identify at least ten impacts of Amazon’s program on the trademark system: Amazon 1) created a shadow trademark system that incentivized applicants to file for federal trademark registrations which 2) swamped, the PTO resulting in 3) significant delays for all applicants (plus a cluttered register) and opportunities for bad actors to 4) fraudulently register “in use” but unregistered marks and then 5) extort the legitimate owners (often small entities relying on traditional trademark priority rules) who would now risk losing the ability to sell goods on Amazon.
In addition, the authors detail how Amazon’s policies led to a change not just in the magnitude of registrations but also 6) in the kinds of marks being registered, nullifying the effect of historical limitations on the registration of 7) descriptive and generic terms (bad actors can register them with the USPTO as stylized marks/use disclaimers, but Amazon’s Registry only matches text so those legal limitations are ignored) while also giving rise to a wide variety of 8) “nonsense marks” (if you’ve shopped on Amazon, you’ve seen them), strings of unpronounceable letters that have no meaning to consumers but qualify for Amazon’s registry which then favors them in search results. As the authors explain, “when search and purchase are not necessarily done by people who need to remember a brand name, businesses just need something to make the algorithm prefer them. Nonsense will do.”
And if these externalities to Amazon’s Brand Registry Program were not bad enough, the company has simultaneously 9) elevated its own brands on its site so that one is more likely to see Amazon brands first in searches, even in searches specifically for other brands. This gives Amazon more power vs. third-party brands and 10) “decenters” branding by blunting the traditional source identification and search cost reduction benefits branding is designed to provide.
So, what to do? Because Amazon’s program (intentionally or not) is influencing the behavior of parties within the legal system, seemingly to the detriment of public policy goals for trademark law, the authors wisely propose actions for the PTO, Amazon, and the trademark system itself.
For the PTO, some self-reflection on its approach to dealing with these shifts in behavior is in order. This should include, inter alia, a reevaluation of its process of allowing registration of descriptive or generic terms with stylization or disclaimers, as well as the possibility of higher fees for such registrations in light of the higher costs imposed on the trademark system. Also advocated is a reconsideration of the registrability of nonsense marks which, as the authors note, are not like normal coined terms (as they are only able to be compared with other marks for sight, not sound nor meaning) and do not actually fit anywhere on the Abercrombie spectrum of distinctiveness.
For Amazon, while it has already begun cooperating with the PTO on identifying fraudulent filings, it can and should do more. Fromer and McKenna’s suggestions that Amazon curtail its acceptance into the Brand Registry of marks based on a pending application (which may never register and which arguably further incentivizes fraudulent filings that rely on the PTO backlog) and only allow a mark in the registry when it is registered in standard text, seem both sensible and eminently doable.
Finally, for the trademark system, the success of Amazon’s search algorithm as a replacement for much of the search-cost-reducing, information conveying function of trademarks suggests we may not need to accept the trademark baggage of artificial product differentiation and independent brand value generation (apart from product quality) to meet consumer search efficiency goals. This may call for a reevaluation of the role of trademarks in the competitive marketplace, but also an assessment of whether the dominance of Amazon’s search algorithm effectuates for its own branded products is consistent with the public good or should be addressed, if not within the trademark system, then within another legal framework. There is no single solution, but Fromer and McKenna’s completion of this trademark puzzle is a wonderfully valuable, albeit troubling, gift to us all.
