Article

A Consumer Decision-Making Theory of Trademark Law

The consumer search costs theory has dominated discussion of trademark law for the last several decades. According to that theory, trademark law aims to increase consumer welfare by reducing the cost of shopping for goods or services. It accomplishes this by preventing uses of a trademark that might confuse consumers about the source of the goods with which they are used. This conceptual frame is wrong, and it is complicit in most of trademark law’s extraordinary expansion. Search costs are often irrelevant to consumer behavior, and even when they are relevant, it is not clear that consumers always want their search costs reduced. Moreover, courts focusing on search costs overwhelmingly have equated confusion and search costs and have therefore felt compelled to respond whenever a mark owner can describe the defendant’s use in confusion-based terms. 

But trademark law is not an all-purpose remedy against thinking, and courts should be concerned about confusion only when it is likely to interfere with consumer decisions. More specifically, courts should respond in trademark cases only when the defendant’s use is likely to deceive consumers and thereby prevent them from effectuating their choices. Reframing the issue in this way has significant ramifications for almost all of trademark law, from a variety of theories of infringement to the likelihood of confusion analysis, defenses, and even the scope of injunctive relief. It is, to put it simply, a better view of trademark law, and one that can identify reasonable limits in an area sorely lacking limits of any kind.

The End of Campaign Finance Law as We Knew It

The Article argues that Citizens United v. FEC ended campaign finance law as we long knew it, but for reasons that have little to do with corporate electioneering. Although the public outcry and legal scholarship have focused on the decision’s narrow effect on corporations, the Article demonstrates how the decision’s broader logic transformed campaign finance law beyond corporate electioneering and led within months to the nearly complete de-regulation of independent expenditures in time for the 2010 elections. Last year’s elections provided only a glimpse of what the Article calls the reverse hydraulics of de-regulation, and as the Article argues, this new de-regulated world of campaign finance is not a better one.

Citizens United therefore is a clear turning point for not just campaign finance law, but for all regulation of the relationship between campaign money and the political process. However, the Article surprisingly concludes in the end that the Supreme Court actually may be sympathetic to alternate forms of regulation of political corruption, notwithstanding Citizens United’s broad skepticism about corruption. Namely, the Court may be much more sanguine toward government regulation of campaign money’s influence when it is structured as ex post regulation of the legislative process on the back end, as opposed to the ex ante structure of campaign finance regulation. Citizens United, when considered in light of other recent Court decisions, point this way forward for campaign finance reform without campaign finance regulation.

The Myth of Efficient Breach: New Defenses of the Expectation Interest

We defend contract law’s preference to protect the expectation with a liability rule against prominent doctrinal and moral critics who argue that a promisee should have a right to specific performance or to a restitutionary remedy. These critics argue that liability rule protection limited to contractual expectations unjustifiably favors promisors, by allowing a promisor to capture the entire gain from unilaterally exiting a contract as long as she compensates her promisee for the profit he would have realized had he received the goods or services the contract described. The critics prefer to vindicate contractual expectations with a property rule or restitution.

We show that a promisee’s gross payoff under the typical contract is invariant to the remedy the law accords him. Current defenders and critics focus on gross payoffs. In this analytic universe, no remedy can be shown to be superior to any other remedy. We argue below that the promisee’s net payoff, for transaction cost reasons, is higher under a contract that protects his expectation with a liability rule. This claim supports the dual performance hypothesis, which holds that promisees typically give their promisors discretion either to trade the goods or services at issue or to make a transfer to the promisee in lieu of trade. A promisor who transfers rather than trades therefore does not breach; rather, she breaches only when she rejects both trade and transfer. On this view of the law, a promisee’s suit to recover his expectation is a specific performance action to enforce the contract’s transfer term. We further explain that this approach renders contract law coherent; it is consistent with the law’s immanent normativity; and it is consistent also with the morality of promising.

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