Friday, June 19, 2009

free rider infringement

One of the basic principles of American Trademark law is that you can't make something that looks or sounds like someone else's product or service. The problem that would cause is someone might want to buy product A, get confused by the look-alike, and buy product B by mistake. B then unfairly benefited at the expense of A on A's brand recognition.
Thus one question immediately asked in a trademark case is "is there a likelihood of confusion" among consumers.

Well not so in Europe it seems.
The European Court of Justice has just ruled that likelihood of confusion is not necessary to find trademark infringement.
It seems "unfair advantage" is the key in European trademarks.
news source

The "free rider" problem is one economists tackle all the time. It's when one party benefits from the actions of another or others, but doesn't participate in that action. One example is the person who doesn't pay taxes. That person still uses the roads, is still protected by the military, but doesn't pay for any of those services and gets a free ride off others paying. Another example would be the anti-vaccination person. If 90% of the kids are vaccinated, the odds of your kid getting sick though not vaccinated are slim. He benefits from the herd immunity resulting from everyone else getting vaccinated (the problem there is if vaccination rates drop to say, 80-85%, herd immunity is lost and you get epidemics).

So in Europe, if you intend to ride someone else's coat tails, but you aren't fooling anybody, you are still guilty of infringement.

What really bugs me is the judgment specifically said this is infringement even when there is no harm to the trade mark owner! In other words, it's a victimless crime. Consumers have access to a product they might not otherwise have. A different market segment is served. Everyone wins, but for some reason it's a bad thing. Now they are saying you can't indicate that your product is an imitation of another product, even if that's exactly what you are doing.

I'd hate to see this reasoning come across the pond.

Out of their minds

How does this happen?

Insanely large judgment

I understand willful infringement of copyright is a bad thing. Illegally downloading songs knowing you are doing so should be penalized.
But $80,000 per song? How is that in any way justified?
What happened to the principle of proportionality where the punishment matches the crime? There is no way one copy of one song can cause $80,000 in harm to the record label.
Perhaps it's the old Lincoln addage: "the best way to get rid of a bad law is to enforce it."

I love her reaction though. Reminds me of a quote from the Who. Pete Townshend I think.
Remember, this was the early 1960s so money meant a lot more then. The Who had a bit of shtick where they would smash their instruments at the end of the show, along with much stage equipment. One day they were called into their manager's office to be informed they were 100,000 pounds in debt. Their reaction was to roll on the floor laughing. Pete (I think) said something along the lines of "when you're 10,000 pounds in debt you worry because somehow you've got to pay that off. But you know you're never going to pay off 100,000 pounds so it's just laughable."
Of course their story ended better, with them becoming world-wide blockbuster stars and easily paying off everything.

And now they stand on the side of the creditor, demanding payment from mom for her downloads. (though I doubt she downloaded the Who)
That brings up another thing though: I bet dollars to donuts not a penny of that judgment will go to the artists. Do the artists get the nickel on the dollar off the judgment that they would have gotten off a paid-for download? Probably not, though I would be interested to find out.