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Devaluing your competitor's brand

By J. DeVoy

Trademark law provides brand holders protection from competitors or third parties infringing upon, diluting or tarnishing their business marks, but what happens when the damage comes from the actual market for the brand and the people who consume it?  Every brand has negative connotations; Chevrolet is associated with poor quality and a dysfunctional company that couldn’t exist but for massive government bailouts, Brooks Brothers is perceived to be for old, boring white people, and Ed Hardy is accused to cater to obnoxious douchebags.

Using market forces, these associations can be used to attack and devalue a competitor’s brand without necessarily running afoul of trademark law.  Legally, there is a concept of “tarnishment” within trademark law, which makes it unlawful for a party to cast a trademark in an unflattering light – normally by associating the trademark with unflattering, inferior or unseemly products or services. One example of this is Toys “R” Us v. Akkaoui, 40 U.S.P.Q.2d (BNA) 1836 (N.D. Cal. Oct. 29, 1996), where the Northern District of California held that the defendant’s use of “Adults ‘R’ Us” as an adult website tarnished Toys “R” Us’ trademark by associating it with adult materials inconsistent with the Toys “R” Us brand.  But plenty of harm can be done without direct use of a competitor’s trademark.  Imagine the fallout if Charles Manson were spotted in a Nike tracksuit, or if the Unabomber talked about how cool and refreshing bottled Perrier was when he was living in a woodland shanty.  That kind of damage does not seem to be considered within the ambit of title 15 of the U.S. Code, which governs trademarks.

One recent example involves Snooki, the Jersey Shore cast member who has been arrested, punched in the face, fought with her housemates, and has cried on television more times than I can bother to count.  About a year ago, she stopped toting Coach handbags, largely in favor of Gucci and other purses – because Coach allegedly started sending Snooki the handbags of competitors. (Source.)  Following the adage that your enemy’s enemy is your friend, someone with such a toxic media persona is the enemy of everyone, and can be used to inflict harm upon competitors by associating them – even unwittingly – with competing brands.

The legal academy has also noted and commented on this trend.  Professor Jeremy N. Sheff’s forthcoming article in the Fordham Intellectual Property, Media & Entertainment Law Journal, “The Ethics of Unbranding,” addresses this very issue.  In addition to weighing which ethical system is most appropriate for assessing the ethics of using sabotage to disassociate one’s brand with a controversial figure (e.g., Snooki, Lindsay Lohan) and associate another’s brand with that individual, Sheff offers analysis of this conduct under several ethical systems.  The conclusion: While the practice may be questionable depending on one’s perspective, it is not clearly unethical.

Beyond the scope of federal trademark law, there is the specter of state-promulgated unfair competition statutes.  Even then, though, this kind of conduct should not be problematic.  After all, the brands are not deceiving the public through false claims or unsupportable promises: Brand owners are simply providing a prominent individual with products – though not necessarily their own – that the target can use, or choose not to use, in public.  While there is a calculated effect in this tactic, namely making the competitor’s brand look trashy or too widely accessible to truly be a luxury good, it is ultimately the individual who does the damage by incident of his or her status as a trend-setter, rather than the brand owner engaging in this action and feeding a prominent person a competitor’s goods.

This conduct has some historical precedent.  Substantively, it is no different from Ed Bernays paying attractive young women to walk the streets of Manhattan while smoking in order to implant the idea of women smoking into people’s heads – something unthinkable when Bernays did this in the 1920’s and 1930’s. (Source.)  This worked, in part, to break people’s prior conceptions about women and smoking, and worked to open the tobacco market to women, doubling the potential universe of customers.

Similarly, if I’m a black hat public relations manager for Land Rover, two of my main objectives will be to 1) maintain Land Rover as a luxury brand, and 2) make the competition appear non-elite.  Thus, if someone who will diminish my product’s cachet is using it – and especially if they are using it in a particularly derogatory way, such as driving a 15-year-old Range Rover simply to claim they have one  – it’s my job to shift the blame to someone else.  For example, if Amber from MTV’s Teen Mom, who is awaiting trial for beating her ex-fiance in front of their daughter and on national television, started driving a Land Rover, I’d give her a free Escalade to defuse the potential negative connotations.  Or even if she wasn’t driving a Land Rover, the attention surrounding her and her trial in various magazines and tabloids would justify giving her an Escalade just to take Cadillac down a notch. (A Porsche Cayenne would be too obvious.)  As it’s her choice to drive the Cadillac, the damage done to GM’s luxury brand would be at her hands – even if facilitated by a competitor.

State-by-state analysis of unfair competition laws would be important before running into such a plan at full sprint, but there’s nothing intrinsically unfair or dishonest about giving someone the opportunity to devalue a brand – even if unwittingly.  Moreover, there are no readily apparent problems within the realm of trademark law so long as its the controversial spokesperson’s agency – as opposed to the competitor’s manipulation – that causes the damaging brand association to be made.

H/T: The Last Psychiatrist.

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