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The Velvet Elvis and Other Trademark Absurdities

From the Mises blog; archived comments below.

Your Intrepid IP Abolitionist Outside the Velvet Melvin pub, nee The Velvet Elvis Pub, in Houston

Yeah, patent and copyright are the big IP baddies–but trademark isn’t that hot, either. (See my posts Trademark versus Copyright and Patent, or: Is All IP Evil?; Trademarks Ain’t so hot, either…; The Patent, Copyright, Trademark, and Trade Secret Horror Files; and Trademark and Goats-on-the-Roof Bans; see also various posts on trademark collected at C4SIF.)

A good example of trademark absurdity can be found here in Houston. Every now and then I pass by the Velvet Melvin Pub. See, it used to be called The Velvet Elvis, after the famous print showing a velvet version of Elvis Presley. So Elvis Presley’s estate sues the pub, forcing it to close. According to the Houston Chronicle, it reopened as Woody’s Place, then changed to the Velvet Melvin. One might object that the Framers of the Constitution would not have contemplated federal power being used to shut down a pub like this, but then, the federal trademark law is unconstitutional anyway, since it is not authorized in the Constitution (only patent and copyright are).

Another infamous trademark dispute related to Houston involves the competing taco chains Two Pesos and Taco Cabana. As Wikipedia explains, Two Pesos “was similar to Taco Cabana but Two Pesos never opened in Taco Cabana’s home market of San Antonio. The Two Pesos chain was sold to Taco Cabana in 1993 after losing a drawn-out trademark suit that appeared before the United States Supreme Court. …

Mises Academy: Stephan Kinsella teaches Rethinking Intellectual Property: History, Theory, and Economics“Two Pesos was started in 1985 by Houston restaurateur Marno McDermot, who had been in negotiations with Taco Cabana’s management to take the patio-restaurant chain nationwide. When Taco Cabana’s founding Stehling brothers rejected his advances, McDermot decided to open up his own chain of similarly-themed patio-dining Tex-Mex restaurants under the Two Pesos name. When Taco Cabana entered the Houston market, they sued Two Pesos for stealing their business concepts and “trade dress.”” I.e., they had similar layouts and colors. I.e., this suit penalized market competition.

For those interested in this topic, see my article Rethinking IP, which discussed my upcoming Mises Academy Course Rethinking Intellectual Property, a six-week course starting this Tuesday, March 22.

archived comments:

{ 34 comments… read them below or add one }

The Fresh Prince of Darkness March 20, 2011 at 9:53 pm

Interesting; I didn’t know anyone wore jean shorts anymore.

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Lucas, Prince of Darkness March 21, 2011 at 1:06 am

Many people wear jean shorts; I’m surprised they’re scarce enough wherever you live that you didn’t know. Where do you live?

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Daniel, Prince of Darkness March 21, 2011 at 2:06 am

Some place were jean shorts never became ubiquitous enough to gain the moniker of “jorts”

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Ozzy, Prince of Darkness March 21, 2011 at 10:13 am

Never heard of them referred to as “jorts,” but they’re far more common here than any other kind of shorts.

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DixieFlatline March 20, 2011 at 11:53 pm

Without a belt no less.

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Jack March 21, 2011 at 4:18 am

Stephan,
About trademark absurdities, the recent case of Ford F-150 vs Ferrari F150
http://www.autoweek.com/article/20110304/F1/110309941 )
is really good example.

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J. Murray March 21, 2011 at 5:53 am

Right, because people will be confused between a full-size truck and a completely impractical racing vehicle.

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Sione March 21, 2011 at 11:36 am

J Murray

An aside:
It is the truck that is impractical. Whenever I am in the US I am amazed at how many of those inept things there are trundling about. They are almost always one-up with an empty tray- no cargo whatsoever. The few I saw with stuff in the tray were driven by Mexicans or had some company’s livery on the doors. The rest were driven by people who looked like they never even had a use for a truck, let alone knew how to drive one properly.

That Ferrari is not a racing vehicle. It is a fast road car with a limited race track ability. As a road car it is far superior to a crashy, bouncy truck in terms of the intended application of getting one (or even two) people along a road. It looks better, it goes faster, it sounds better, it rides better (much better primary and secondary ride than any truck or SUV), it is much safer, it handles better, it has superior controlability, its tactile feedback is way better, it is more precise, it has more roadholding (lots and lots more), it has much more pleasant NVH, it never corners like a galleon carrying too much sail (or as Shelby would say, like twelve pounds of shit in a six pound shit bag), it has a better sound system, the cabin materials are more comfortable and look better, it has better braking performance, it is safer, etc. etc. etc. My preference is for Lamborghinis as the Ferraris tend not to be as dedicated (hence I find them a little soft and compromised), but even so the Ferrari is a sound road car and practical as a day to day commuter should you want.

Leave trucks for when there really is a large cargo to carry. The ineptness of truck road manners and general crudity of the things makes them a poor choice for a personal road vehicle. And if people muct drive a US brand try a Corvette.

Sione

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nate-m March 21, 2011 at 11:51 am

I used to own a F150. A old one.. 89 or so.

It’s a fantastic vehicle. That was about the peak of Ford quality or so for the late 80′s through the 90′s. They regularly see well over 200 thousand miles. Inline six, 5 speed transmission with granny low, and 4 wheel drive. Bench seats. There was nothing it couldn’t do. A fantastic vehicle and one of the best I’ve ever owned.

Newer ones suck. But all new cars suck. Over priced and over regulated.

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David March 21, 2011 at 1:04 pm

I hate that unibody crap everybody is using nowadays. Makes repairs way more expensive… there’s a reason the Ford Crown Victoria had a near monopoly on police interceptors and taxi cabs…

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Sione March 21, 2011 at 2:51 pm

David

“there’s a reason the Ford Crown Victoria had a near monopoly on police interceptors and taxi cabs”

Several reasons.

Cheap.
RWD.
Cheap.
Largish.
Cheap.
Four doors.
Cheap.
Available customised right from the factory.
Cheap.

The Panther platform dates back to 1978, long enough for the tooling to have well and truely paid for itself. A very good effort by Ford and it could have gone on even longer yet, but for certain regulations and laws…

I’m a bit of a fan of the old rwd body-on-frame cars. They were easy to refine. NVH could be readily dealt with if that was wanted. They can’t survive the new CAFE and collision regs though. Anyway, the best rwd Ford and GM mass market sedans are made in Australia these days. Check out the Ford Falcon and the Holden Commodore. The US is missing out.

Sione

nate-m March 21, 2011 at 9:41 pm

I hate that unibody crap everybody is using nowadays. Makes repairs way more expensive… there’s a reason the Ford Crown Victoria had a near monopoly on police interceptors and taxi cabs…

Unibodies kick ass. It’s a fantastic thing.

With a framed vehicle and you get into a accident it will tweak the frame. If it was practical to run a X-member from corner to corner in the frame then it would be a different issue, but that is not practical. So despite the big beams the strength of a frame in lies in the joints of it. That is a frame that is very strong and can hold lots of weight vertically, gets damaged very easily when hit from the corner. Once the frame is tweaked then you can yank it back out… but it’s like a spring. Eventually, slowly, with the aid of vibration from the road, then it will go all out of shape again. The symptoms you will experience involve engine mounts breaking, body panels screwed up, doors jamming, and alignment issues. Eventually you will have to take it in and have the frame yanked again.

With a _PROPERLY_ designed unibody car with a space frame will suffer from mostly localized failures in the body. That is you will not experience buckling around the doors and such unless your in a very severe accident. (and in that case you just have to get a different car). You can just cut out the damaged portion and weld + glue new body panels into place.

Technically, yeah, that is more expensive then just pulling a frame back into shape, drilling out the fender spot welds, and putting new fenders in place. But with a proper unibody car permanent fixes are quite possible. Were as with a framed vehicle you have to do a frame swap as it’s never going to be the same again.

Both have their places. I wouldn’t want a unibody truck, for example.

Modern cars are fantastic in reliability and engineering. But they are just too expensive. Modern technically CAN make things simpler and cheaper.

Like fuel injection. Fuel injection is fantastic and is extremely simple and rugged. It should make motors dramatically more reliable and cheaper then with carbureted.

But they manage to screw it up and make everything fantastically expensive. The electronics necessary to properly run a fuel injection system is on par with something like a scientific computer. FE can be extremely simple and rugged. Easy to troubleshoot and the electronics should be dead simple and cheap as dirt. Efficient, cheap, nearly unbreakable. The only moving part you need for FE (besides the motor + accessories) is the throttle body and fuel pump. That’s it.

It’s sad that we have declined so far.

Sione March 21, 2011 at 3:18 pm

nate-m

Re Ford F150

They suffered from deficient roll damping of the rear suspension. Next time you drive an early example along a bumpy road notice how the rear end skips sideways across the larger road irregularities. Apart from wrecking the primary ride that also has bad effect when it occurs mid-corner. It can generate snap oversteer and sometimes that is not easy to catch, even by a driver who is ready for a departure.

There were quite a few unintended off-road excursions with 150s when they first were introduced into Australia. Ford withdrew them for a time until (finally listening to its Aussie-based chassis engineers) implementing a fix accross the entire production. At the time I wondered how any manufacturer could have allowed such an obviously dangerous characteristic to go unresolved for so long, especially when it was so simple to fix (just move the damper mounts outboard some). I guess it’s one of those things people don’t care about until it bites. Surprising Ford never seemed to get into litigation difficulties over that one. Lucky!

Sione

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J. Murray March 21, 2011 at 12:29 pm

I’m not sure you read that article linked. How is an open top vehicle weighing 640 kg, stiff racing suspension, only one seat, zero trunk space, and a six figure price tag practical or safe? There’s no way I’ll take that thing the length of Florida, especially on I-95. Wearing a helmet and not being able to bring along luggage for the trip isn’t exactly a vehicle worth bragging about. A Ferarri is a vehicle for people who are fabulously wealthy, live near a track, and enjoy racing. It’s a garage queen and a status symbol, not something to get groceries in.

Also, I take it you haven’t been in a newer model truck. They’re incredibly comfortable to drive, 2011 models handle like a mid-size sedan (the Toyota Tundra has a turning radius similar to economy cars and the F150 isn’t far behind). Of course, I use mine to haul a small boat around. Let’s see a Ferarri do that. But, it’s just a well equipped luxury wise as any BMW or Mercedes on the market (in a few features, better), and being a vehicle designed to tow 4500kg it’ll last forever. The main reason the full size trucks are known to get 300k miles on them is because they’re built above and beyond what’s needed by a wide margin.

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Sione March 21, 2011 at 2:24 pm

J Murray

Yes. I read the article.

Re F150.
I’m sorry. I was thinking about the wrong Ferrari. I have not driven an F150. The F150 is a dedicated Formula One race car and not a road car at all. It is a very specialised track car and I suspect it could not be driven on road. In my comments to you I was thinking about the 458 and a certain prototype that preceded it. Both are excellent road cars. Both are superior to any truck I’ve ever driven, other than in potential payload. In real applications total payload to be carried is generally no more than one person (possibly two) and perhaps 20kg of stuff (unlikely to be even that). The 458 has sufficient capacity to deal with that.

Re getting groceries
I’ve not used a Ferrari for grocery getting (although I’ve used one as a commuter). On the other hand I have used the Lamborghini for grocery missions. It’s good fun. On the basis of that I’d say the 458 would be OK for the task.

Re trucks
The compromises of design necessary to give the truck its potential payload capability result in severe chassis deficencies, among other issues. These manifest themselves in all sorts of ways including safety (or lack of it). For instance, tucks are dynamically inferior to the point of being unsafe. One should NEVER drive a truck as if it were a car, even if it seems to be almost car-like in its initial behaviour (response and feedback in the linear zone). The trouble is that trucks are set up by manufacturers to mimic car type behaviour. This encourages people to believe they can drive a truck as if it were like a road car. It isn’t. People end up assuming that they are competant to drive a truck in similar fashion to a good car. They are not and should not.

A reasonably competant chassis development engineer can hide the woeful chassis deficiencies of a truck to the extent that a naive driver may not detect the issues (at first). But the ride remains not well resolved, the steering remains hopeless and the head toss problems give the game away. As for the flexing of the chassis and body, along with the lack of refinement that delivers, no thanks- too crude to put up with. Ten minutes of driving one of these and I remember why I gave up on the horrid things for all tasks except moving large loads.

I consider the design direction that is being taken with trucks (trying to make them car-like) disturbing in that it encourages a false sense of security and an unwarranted confidence. The first time an excursion is made into the non-linear handling zone the driver discovers the chassis has flattered only to deceive. Basically the truck is a dynamic mess and its handling and roadholding problems are encountered at modest demands. For most the realisation that they only have tenuous, indirect control (with even that only available so long as low demands are being made on the vehicle) comes as a real shock. Dangerous indeed.

As far as “new” trucks are concerned, yes I have driven them (most of them). They are every bit as bad as always. As soon as you lean on them some they reveal their woeful shortcomings. They don’t beat physics. A truck is and remains a dynamic mess with poorly resolved ride, handling, NVH, roadholding, refinement, tactile feedback and all the rest- unsafe and a complete waste of time with the exception of when a large payload needs to be moved at low to very modest velocities.

Re luxury.
A truck is never going to appoach the luxury of a BMW or Mercedes super sedan. In the end it comes down to this; you can dress up the interior of a truck cabin to simulated German luxury sedan appearance, but such fakery does not even approach the levels of refined quality inherent inside a German luxury sedan. The refinement just won’t ever be there (too much chassis flex, NVH issues, ride and handling problems), the absolute specification and quality of materials won’t be there, the standard of construction won’t be there…

Luxury is not about how many electronic gee gaws and gadgets are scattered around the cabin. There is a lot more to it than that.

Regarding miles
So what? Most Americans flip their vehicles every few years or so anyhow. Most trucks are parted out, or fall off the road, well before they make the third of a million miles you are referring to. Worse is that in the effort to make trucks more car like the manufacturers are compromising what trucks are supposed to do, carry large loads for a long time at lowish costs.

Re towing.
How often do you do that? Not daily. Anyway, unless the boat is really, really large you definately do not need a truck for the task. Use a decent sedan.

Sione

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nate-m March 21, 2011 at 10:34 pm

On the basis of that I’d say the 458 would be OK for the task.

How does the 458 handle ice and snow drifts? If it is not able to get up the hill to my house in the winter then it’s going to be a issue.

One should NEVER drive a truck as if it were a car, even if it seems to be almost car-like in its initial behaviour (response and feedback in the linear zone).

If a person confuses a truck with a sports car then they deserve what they get.

Ten minutes of driving one of these and I remember why I gave up on the horrid things for all tasks except moving large loads.

I couldn’t give two shits about road handling capabilities or ride quality. As long as it goes straight when going 50 and can safely navigate a turn going 15 then I am sold.

A vehicle is just a seat strapped to a motor that gets me from point a to point b. A seat with a big box in the back is inherently superior for every day tasks then one that has a small box.

A truck is never going to appoach the luxury of a BMW or Mercedes super sedan.

And a BMW and Mercedes is not something that is ever going to reach a price point that I care to pay for them. It doesn’t have anything to do with how much money I make. I just don’t see the point in spending money on something like that for just driving around.

I paid $1500 dollars for my truck, cash. Talked the owner down from 1900. It lasted about 3 years and 40,000 miles before I got tired of it and had the recyclers haul it away for me. A sofa and a big screen is comfort and luxury. A car is a tool to get me from point a to point b. It’s really just a over-glorified wagon with a engine.

I like sports cars a lot. But unless I am racing them I don’t see the point to owning them. Certainly don’t see the point to driving them around. I am certainly not going to buy one that is so expensive that I have to worry about crashing them. If I have to race and worry about smashing in a fender or two, then what is the point? It ruins the fun.

Although, to be honest, I do prefer small cars over big ones. I liked my big truck, but it was not the only vehicle I owned at the time.

I just wish it was legal to drive those UTVs around on the road. Just put some fabric sides on those things with a decent heater and that would be my ideal going-to-town car. Fantastic things. Everybody should be driving them.

J. Murray March 22, 2011 at 5:22 am

In regards to towing – sure, I’ll use a sedan…if I want to burn out the transmission and damage the drive train. Sedans aren’t designed to handle much more than its own weight and passengers. If I was towing a 10′ aluminum skiff, maybe, but not a 7,000 lb boat. And this is being charitable as sedans don’t have the necessary tow hook, brake cables, and brake light wires to handle a trailer. Not to mention the lack of safety features like trailer sway control and electronic braking.

David March 21, 2011 at 12:58 pm

Just because you don’t use the cargo bay every single time you use the truck doesn’t mean it doesn’t see any use at all. Do you expect people to buy two vehicles if they sometimes need a truck?

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Sione March 21, 2011 at 2:41 pm

David

“Do you expect people to buy two vehicles if they sometimes need a truck?”

Yes. Definately. Either do that or just hire the truck when you need.

Sione

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David March 21, 2011 at 2:46 pm

And why should they listen to you?

Armand March 21, 2011 at 7:00 am

Can we trademark that outfit and get you to never wear it again? Thanks.

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Wildberry March 21, 2011 at 11:01 am

Stephan,

You describe trademark and trade dress as if there is no rational basis for it. I think it finds its roots in the common law under “passing off”, isn’t’ that correct? Doesn’t it have dual purpose in principle of both protecting a trade dress owner’s investment in brand identity, as well as protect the consumer and the trade dress holder from the results of making an incorrect association with origin of good or service? In principle, isn’t that rational?

You seem to be making the general case on the basis of a highly specific aberration. Based on your facts, I don’t think the Elvis estate was risking much and I don’t understand the cost/benefit of going after a pub in Houston, especially one that looks like this. (Unlike some others, I’ll refrain from making a fashion comment here. It’s not easy.) In any case, the remedy wouldn’t be to close them down, as you say. If they served decent burgers and cold beer, I don’t think business is going to fall off much if they changed their sign, do you? If Elvis’s name had been more common, like “Bubba”, they might not have had this problem.

As for the famous Two Pesos case, the guy cut his own franchise without paying up. Do you think it would be cool to throw up a couple of golden arches and call myself MeDonald’s? Why not create In ‘n Out instead? Rather than promoting REAL competition, you want to protect the rights of a low-level emulator? Why?

As we have discussed elsewhere, the party with the most to lose is first the proprietor, and then the consumer. The trade dress owner is in the best position to take action, not the individual consumer, as you have proposed. The consumer, assuming he is just dissatisfied and not injured, will simply take his business elsewhere. A brand is something that takes investment and time, just like writing a book. It belongs to the creator, not the “emulator”.

As a side note, something not being specifically enumerated in the Constitution does not render it automatically unconstitutional. What Constitutional rights or limitation does trademark or trade dress violate? What is your basis to claim unconstitionality? I don’t see it. Murder is not mentioned in the Constitution either, right?

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Stephan Kinsella March 21, 2011 at 11:35 am

Wildberry:

You describe trademark and trade dress as if there is no rational basis for it.

“ratioanl basis”? That is positivist terminology–a law is constitutional in some cases so long as there is a “ratioanl basis” for it–that is not how libertarians think about things. The question is whether it is justified, not whether there is a “rational basis” for it.

I think it finds its roots in the common law under “passing off”, isn’t’ that correct? Doesn’t it have dual purpose in principle of both protecting a trade dress owner’s investment in brand identity, as well as protect the consumer and the trade dress holder from the results of making an incorrect association with origin of good or service? In principle, isn’t that rational?

? Rational? For who? Sure, the owner of a trademark right benefits from it. So what? The question is, is it justified. Protects his investment? But this means giving him a right to tell others what to do with their own property, on the basis that he has a property right to the *value* of his property. But he does not.

the only basis for trademark law is fraud. But in this case the victim is the defrauded consumer–not the trademark holder. Yet TM law gives him standing to sue. WHy? It should be the customer.

Further, TM law allows the TM holder to prevail even when there is not fraud. For example if A sells B a fake Rolex watch for $20 then B is NOT defrauded, yet Rolex can sue A anyway.

This is the problem.

You seem to be making the general case on the basis of a highly specific aberration. Based on your facts, I don’t think the Elvis estate was risking much and I don’t understand the cost/benefit of going after a pub in Houston, especially one that looks like this. (Unlike some others, I’ll refrain from making a fashion comment here. It’s not easy.) In any case, the remedy wouldn’t be to close them down, as you say. If they served decent burgers and cold beer, I don’t think business is going to fall off much if they changed their sign, do you? If Elvis’s name had been more common, like “Bubba”, they might not have had this problem.

The question is why does Elvis’s estate/heirs have the right to tell VMPub what to do with their own property? Who was VMPub “defrauding”? Their customers? How? The pub never said it was “authorized” by the Elvis estate. It had a Velvet Elvis print up. So it named itself after this. so what?

As for the famous Two Pesos case, the guy cut his own franchise without paying up. Do you think it would be cool to throw up a couple of golden arches and call myself MeDonald’s?

First, this is NOT what Two Pesos did. They did not call themselves Taco Cabana. THey were just a competing taco chain, with a different name. Just like Burger King competes with McDonald’s. THey are both burger chains with different names. TP and TC were competing taco chains. So what if they had a similar layout and even color scheme? Does TC own lime green and pink, for God’s sake? THis is absurd.

Why not create In ‘n Out instead? Rather than promoting REAL competition, you want to protect the rights of a low-level emulator? Why?

TP was not low-level, what are you talking about? And even if it was–so what? do you want to outlaw Walmart and Discount Tire, and permit only “high- level” stores? What?

As we have discussed elsewhere, the party with the most to lose is first the proprietor, and then the consumer. The trade dress owner is in the best position to take action, not the individual consumer, as you have proposed.

But even in this theory, they shoudl e able to sue TP only if it was defrauding its customers. But there was no allegation that they were defrauded, and in fact they clearly were not. If I see a Two Pesos joint and buy a taco from them, how am I defrauded?

As a side note, something not being specifically enumerated in the Constitution does not render it automatically unconstitutional. What Constitutional rights or limitation does trademark or trade dress violate? What is your basis to claim unconstitionality? I don’t see it. Murder is not mentioned in the Constitution either, right?

The perils of talking without knowing what you are talking about. A federal law against murder would in fact be unconstitutional. That is why the states are the ones who regulate such crimes. They have general or plenary police or legislative power. The feds do not. The states are free to outlaw murder, drugs, and to regulate trademarks (not that all these are good ideas; and assuming the state’s own constitution does not prohibit these laws). But the feds are not–there is no enumerated power for the feds to censor speech, regulate drugs, regulate trademarks, or outlaw murder.

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Wildberry March 21, 2011 at 2:08 pm

@Stephan Kinsella March 21, 2011 at 11:35 am

“ratioanl basis”? That is positivist terminology

Well, sorry I didn’t know that word was outlawed here. Was Mises a positivist? I thought he said something like humans act on a rational basis?

that is not how libertarians think about things. The question is whether it is justified, not whether there is a “rational basis” for it.

How do you determine if something is “justified”. Do you have to have a rational basis for that determination? Cheeez! Why make a distinction without a difference?

But this means giving him a right to tell others what to do with their own property, on the basis that he has a property right to the *value* of his property. But he does not.

Property rights are not to the “value”, but the exclusive use, as you know and have said elsewhere. Why are you introducing value? I didn’t raise that. No one has property rights to the value of something. They have a right to exclusive use and possession. A setting of value may occur in the context of remedies only after some injury has been inflicted on the victim. It is a consequence of some wrongdoing, not the basis or meaning of property rights.

the only basis for trademark law is fraud. But in this case the victim is the defrauded consumer–not the trademark holder. Yet TM law gives him standing to sue. WHy? It should be the customer.

I am familiar with your thoughts on this subject, and I anticipated your position in my initial comments. There are several reasons why you are wrong in your interpretation of who should have (ahem, in whom the cause of action is justified) the cause of action. While you are correct that an injured consumer WOULD have a cause of action for fraud with regard to a misrepresented transaction, the trademark action is a different cause based on the theory that I outlined. A business spends time and effort in order to create a positive association with a given origin of a product or service. This is efficient for the consumer and the business owner because consumer choices are made more efficient for the consumer if they can rely on the trade mark/product/service association when making a buying decision. It is a right in the business owner because, like copyrights, no one has better title to the brand image, which included trade dress, than the creator of it.

Consistent with our earlier exchange regarding the equivocation of “emulation” and competition, “emulating” another’s brand, for which the emulator made none of the investment, can offer deceiving signals to the consumer, AND deprive the trademark holder of the good will he has developed. That makes the “emulator” not a legitimate competitor, but a free-rider, who can put up a recognized symbol of quality, undercut that quality and take a profit, defraud consumers, and injure the good name of the trade mark owner. Preventing all of that by creating a cause of action called TM/TD seems justified.

Further, TM law allows the TM holder to prevail even when there is not fraud. For example if A sells B a fake Rolex watch for $20 then B is NOT defrauded, yet Rolex can sue A anyway.

This is the problem.

Like I said, we’ve had this discussion before. If the consumer knows it is a fake, the consumer is not defrauded, I agree. Therefore HE would not have a cause of action. However, on what “justified” basis is someone entitled to bank on the prestige of a product that is none of his doing? Like I said before, why doesn’t the “pirate” just sell crappy watches that appear to be a Sieko? Because he is taking something that is not his and using it to sell crappy watches. Is that justified in any system of ethics?

What if it is a good copy, one that is not obviously a fraud? What if the consumer takes it back to Rolex because it doesn’t keep time? Now what? Tough luck, buyer beware? That is the problem. Protecting the validity of associating the obvious trade dress of a product or service is useful to everyone but the fraudster, yet you take up his cause over the other parties. Why? Is this a First Amendment/Nazi kind of thing, where as distasteful as it may be, the fraudster has RIGHTS?

The question is why does Elvis’s estate/heirs have the right to tell VMPub what to do with their own property? Who was VMPub “defrauding”? Their customers? How? The pub never said it was “authorized” by the Elvis estate. It had a Velvet Elvis print up. So it named itself after this. so what?

Like I said, it is a marginal case. I don’t see the injury to the Elvis estate here. They should have licensed it to them for $1. For some reason they wanted to be putzes. Pedestrians have the right of way, but no reason to be an ass about it. Let’s be courteous and give each other a chance, right? However, the uptightness of the Elvis heirs is not reason to oppose the very concepts and principles of trademark laws.

First, this is NOT what Two Pesos did. They did not call themselves Taco Cabana.

Sorry, I read this case, counselor. True, they did not take the name, but they did copy nearly every other element of trade dress (which was my point about the golden arches). There was some evidence that it was a plan to be bought out, he located in regions that Taco had not entered yet, so perhaps he was trying to make it an easy decision for them, who knows. Doesn’t matter. It was clear however that it wasn’t an “accident” or “simultaneous invention”. Taco was a targeted competitor, and he “emulated” everything but the name.

THey were just a competing taco chain, with a different name.

In the words of the great Ronald Reagan, “There you go again!” See above about trade dress, and deny it if you must.

Just like Burger King competes with McDonald’s. They are both burger chains with different names.

Yes, but oddly they are very hard to confuse, even though they both are fast-food restaurants that have very similar menus and they each have a goofy mascot. But if you lined their trade dress up side by side, I think you would have to admit there are some striking differences.

TP and TC were competing taco chains. So what if they had a similar layout and even color scheme? Does TC own lime green and pink, for God’s sake? THis is absurd.

Your apologetic defense of unfair business practices is absurd. They weren’t similar, they were downright identical. Same music, same furniture, same layout, same menu, etc. If they were bought out, all that would have to be changed is a little signage. It was a devious plan that failed. I think the failure of that particular kind of business plan is a good thing. I would rather see a real alternative business, not some looky-loo imitator.

TP was not low-level, what are you talking about? And even if it was–so what? do you want to outlaw Walmart and Discount Tire, and permit only “high- level” stores? What?

Sometimes, Stephan, I get the impression you are not trying very hard to understand me. No, I’m not proposing outlawing Walmart. I’m proposing that if an entrepreneur wants to compete with Walmart, then don’t open a store that an average consumer mistakes for THE Walmart. Compete, man! Give me, the King Consumer, a real choice! Bring something NEW TO THE PARTY!!

But even in this theory, they shoudl e able to sue TP only if it was defrauding its customers. But there was no allegation that they were defrauded, and in fact they clearly were not. If I see a Two Pesos joint and buy a taco from them, how am I defrauded?

Ah, like I already said; maybe so and maybe not. If you got food poisoning and you thought, based on the similarity of the trade dress, that TP and TC were associated, TC would be harmed. But TC may not know about this particular case. Maybe you just got the trots. You vowed to stay away from anything that looks like TP. TC would be injured through no fault of their own. Doesn’t TC have anything to say about that, or you say TS for TC?

The perils of talking without knowing what you are talking about. A federal law against murder would in fact be unconstitutional. That is why the states are the ones who regulate such crimes. They have general or plenary police or legislative power. The feds do not.

Gee, and all this time I wanted to be a G-man because they are the biggest and baddest police!

See here: http://writ.news.findlaw.com/hilden/20031015.html

“The Line Between State And Federal Criminal Jurisdiction
Two Recent Murder-for-Hire Decisions Illustrate How Blurry It Can Be
By JULIE HILDEN
julhil@aol.com
—-
Wednesday, Oct. 15, 2003
Can a murder-for-hire transaction conducted within a single state, and involving only residents of that state, ever be a federal crime? One might think not – but a federal criminal statute makes clear the answer is yes.
The states are free to outlaw murder, drugs, and to regulate trademarks (not that all these are good ideas; and assuming the state’s own constitution does not prohibit these laws). But the feds are not–there is no enumerated power for the feds to censor speech, regulate drugs, regulate trademarks, or outlaw murder.”

None the less, what I said was:

“As a side note, something not being specifically enumerated in the Constitution does not render it AUTOMATICALLY unconstitutional. What Constitutional RIGHTS or limitation does trademark or trade dress violate? What is your basis to claim unconstitionality? I don’t see it. Murder is not mentioned in the Constitution either, right?

You said trademarks were unconstitutional:

One might object that the Framers of the Constitution would not have contemplated federal power being used to shut down a pub like this, but then, the federal trademark law is unconstitutional anyway, since it is not authorized in the Constitution (only patent and copyright are).

This means that the state trademark laws violate something that IS ENUMERATED in the Constitution. I am asking you what that is. I am not asking you if a federal law against murder is unconstitutional. I am agreeing with you, murder ain’t in the constitution, but neither is trademark. OK, then, what makes them BOTH unconstitutional?

REPLY

Stephan Kinsella March 21, 2011 at 2:34 pm

“Wildberry”:

@Stephan Kinsella March 21, 2011 at 11:35 am

“ratioanl basis”? That is positivist terminology

Well, sorry I didn’t know that word was outlawed here. Was Mises a positivist? I thought he said something like humans act on a rational basis?

The problem with TM law (and IP law) is not that it lacks “a ratioanl basis.” Where do you get this?

” that is not how libertarians think about things. The question is whether it is justified, not whether there is a “rational basis” for it. ”

How do you determine if something is “justified”.

Whether it violates property rights as understood as those in accordance with Lockean homesteading. hellooo

Property rights are not to the “value”, but the exclusive use, as you know and have said elsewhere. Why are you introducing value?

You said “Doesn’t it have dual purpose in principle of both protecting a trade dress owner’s investment in brand identity”

that means a property right in value not in the physical integrity of a scarce resource.

I didn’t raise that.

But you did.

” No one has property rights to the value of something.”

I konw. You don’t. It’s implicit in your idea of value in “a business investment.”

A business spends time and effort in order to create a positive association with a given origin of a product or service.

ah, but positive association is what others think about you; it’s the value of the thing.

This is efficient for the consumer and the business owner because consumer choices are made more efficient for the consumer if they can rely on the trade mark/product/service association when making a buying decision.

hahaa, you think state TM law is “efficient” hahahaha

If the consumer knows it is a fake, the consumer is not defrauded, I agree. Therefore HE would not have a cause of action. However, on what “justified” basis is someone entitled to bank on the prestige of a product that is none of his doing?

the “prestige” is its reputation or value, which is in others’ minds. you now have a property in value, or what others think? weird.

Sorry, I read this case, counselor. True, they did not take the name, but they did copy nearly every other element of trade dress (which was my point about the golden arches).

And you said “they would call thesmevles McDonald’s”

Yes, but oddly they are very hard to confuse

Do you think someone would confuse Two Pesos with Taco Cabana?!

They weren’t similar, they were downright identical. Same music, same furniture, same layout, same menu, etc. If they were bought out, all that would have to be changed is a little signage.

It was not “the same” but even if it was–so what? this is called COMPETITION.

It was a devious plan that failed.

statists often think of competition as “devious”–”cutthroat” or “stealing my customers.” hOrrible!

I’m not proposing outlawing Walmart. I’m proposing that if an entrepreneur wants to compete with Walmart, then don’t open a store that an average consumer mistakes for THE Walmart.

Are you saying customers of Two Pesos were mistaking it for Taco CAbana?

You said trademarks were unconstitutional:

” One might object that the Framers of the Constitution would not have contemplated federal power being used to shut down a pub like this, but then, the federal trademark law is unconstitutional anyway, since it is not authorized in the Constitution (only patent and copyright are). ”

This means that the state trademark laws violate something that IS ENUMERATED in the Constitution”

No, it does NOT mean that state TM laws are unconstituitona, only the Lanham Act is.

I am asking you what that is. I am not asking you if a federal law against murder is unconstitutional. I am agreeing with you, murder ain’t in the constitution, but neither is trademark. OK, then, what makes them BOTH unconstitutional?

The feds are a gov’t of enumerated powers. Neither power is enumerated . You must not understand the American federalist union.
See The Unique American Federal Government http://www.stephankinsella.com/2009/10/the-unique-american-federal-government/

REPLY

Wildberry March 21, 2011 at 7:26 pm

@Stephan Kinsella March 21, 2011 at 2:34 pm

The problem with TM law (and IP law) is not that it lacks “a ratioanl basis.” Where do you get this?

Well, I’m trying to use the English language. “Rational” as in “reason, sanity, “etc.” To describe something as irrational is certainly not the same as saying you believe something to be unjustified. Rational people can disagree about what is justified. I know you are an extremist, but are you an irrational extremist? I would like to hope not; otherwise this truly IS as waste of time. It is the rational justification of IP laws that we are discussing, no?

Whether it violates property rights as understood as those in accordance with Lockean homesteading. hellooo

I understand your rationale, but your justification is irrational. See?

I konw. You don’t. It’s implicit in your idea of value in “a business investment.”

No, it is the relationship between a symbol and its interpreted meaning. When someone produces a product or service, its source and origin is determined by way of a trade mark. The value of this trademark increase with investment of time and effort by the producer behind the mark. The first day he used it, it had little value, but it was still his. Overtime it has higher value in goodwill if consumers interpret that symbol with a desirable level of quality, etc. So it is not the value that determines his exclusive right to his use of it, but when someone else uses this good will value to direct business to himself (goodwill) at the expense of the legitimate producer, he is attempting to get something (goodwill of consumers) for which he has exchanged nothing. When you get something for nothing, some call that stealing or extraordinary good luck. Most often it is the former.

ah, but positive association is what others think about you; it’s the value of the thing.

Yes. It is the goodwill that has been earned in the market place. It is worth something. Who, pray tell, has better title to it? Someone who has spent a lifetime building up a positive reputation in the market, or some fly by night dude who counterfeits the symbol to dupe some poor unsuspecting consumer into believing something that is false? Justice, my good man, justice (from which the word “justified” is derived).

hahaa, you think state TM law is “efficient” hahahaha

By this I assume you mean that a system of laws that gave the consumer no reasonable way to verify if he is actually getting what he is paying for is more efficient? I would like to see your proof of that one.

the “prestige” is its reputation or value, which is in others’ minds. you now have a property in value, or what others think? weird.

Yes, your use of language is weird. You can’t possibly know what is in other’s minds, nor can I, unless they tell you. And people will tell you that there is some “prestige” in owning certain things, say a Rolex, while wearing a knock-off Rolex is lame. The use of trademarks to discourage “passing off” is not equivalent to demanding a property value in “what others think”. Rather, I am saying that I have a right to my own symbols of goodwill to my own products. To advertise that I am selling Rolexes for ½ price under conditions that make in difficult or impossible to tell if they are authentic is an offense against both the legitimate producer and the consumer. As I recently read in a post today that you directed me to, to claim that the only cause of action is with the consumer for fraud is operationally equivalent to a class-action suit orchestrated by the producer against the infringer. It all comes out the same, which is probably why it arose as a right under common law. At least, it is rational to surmise as much.

And you said “they would call thesmevles McDonald’s”

Yes, with golden arches. Why do you quibble so?

Do you think someone would confuse Two Pesos with Taco Cabana?!

I don’t know, but apparently the finders of fact thought so. If everything about the two stores were identical except the name, could a reasonable person believe there is an association? I don’t see why not, whereas Burger King and McDonald’s would not give that impression. Don’t you think that is a relevant distinction here?

It was not “the same” but even if it was–so what? this is called COMPETITION.

Competition doesn’t mean “anything goes”. You can’t rig up an electric shock on the sidewalk in front of your competitor’s store. You can’t spread false rumors about rat infestations. You can’t send shills in to “get” food poisoning. You can’t set up a hot dog stand in the lobby of my hotel. And you can’t make yourself look like Stephan Kinsella and run around preaching the benefits of IP. There are limits to everything, mister “live free or die”. The trick is to adopt reasonable limits (there’s that word again…)

statists often think of competition as “devious”–”cutthroat” or “stealing my customers.” hOrrible!

Good use of rhetoric, but completely off point. You have a nasty habit of conflating the meaning of words and then trying to beat up your opponents with the confusion you create. I think it is called the fallacy of equivocation.

Competition is based on the concept of consumer choices. Real competition is an offer of something for something compared to something else for something else. It is not based on an offer for something that is made to deceive you into believing it is something else so I can get something for it that you would only be willing to pay for that something else. At its core, that is fraud in the inducement.

Are you saying customers of Two Pesos were mistaking it for Taco CAbana?

Like I said, I don’t know what was in the minds of the people who visited. I think it is possible. If TP wanted to avoid any possible confusion with TC, that could have been easily accomplished. Why didn’t he? I presume it must have been because he thought TC had something that was worth copying, so he did. It appears he knew exactly what he was doing and why. But what was in his mind is also hard to determine. So we just go with the tangible evidence that the similarity between the two was not likely an accident, and that TP was following TC in the establishment of the trade dress for these competing restaurants. If TP wanted to compete with TC on something that is meaningful to consumers (menu, quality, price, selection, experience, etc.) then he would have tried to DISTINGUISH himself from his competitor. Yet you think that competition is just replicating whatever came before you. What a grey and unfeatured world that would be.

You said trademarks were unconstitutional:

No, it does NOT mean that state TM laws are unconstituitona, only the Lanham Act is.

I got your point earlier, but you don’t seem to believe me. Please complete this sentence:

The constitutional authority for the Lanham Act arises under the __________ clause.

Hint: channels and instrumentalities of interstate commerce.

Apparently you have a weak case on unconstitutionality because I don’t believe it’s ever been challenged on that basis, has it? Is that your argument, TM is unconstitutional, because….?

You must not understand the American federalist union.
See The Unique American Federal Government http://www.stephankinsella.com/2009/10/the-unique-american-federal-government/</blockquote

More pictures?

No, Stephan, I just don’t understand a thing about it. I would love to discuss the niceties of constitutional government with you sometime, but do you really want to make a “federal case” out of this? LOL! You tend to say things sometimes that you don’t really mean, I think.

REPLY

Stephan Kinsella March 21, 2011 at 8:26 pm

“Wildberry”:

When someone produces a product or service, its source and origin is determined by way of a trade mark. The value of this trademark increase with investment of time and effort by the producer behind the mark.

rihgt, and you think you have a property right in that value. See? this is nonsense, of cousre.

The first day he used it, it had little value, but it was still his.

Nothing “has” value. It’s not intrinsic.

Overtime it has higher value in goodwill if consumers interpret that symbol with a desirable level of quality, etc. So it is not the value that determines his exclusive right to his use of it, but when someone else uses this good will value to direct business to himself (goodwill) at the expense of the legitimate producer, he is attempting to get something (goodwill of consumers) for which he has exchanged nothing.

This is not an argument. it’s a substitute for argumet. where is the argument showing you have a right to stop the “someone else” from selling to the customer? Does he violate the custome’rs rights? If so how? and if he does, it’s their rights violated. If he does not, how does someone else have a right to complain?

When you get something for nothing, some call that stealing or extraordinary good luck. Most often it is the former.

Nothing is wrong with luck. if it’s stealing, what property of the trademark owner was “taken” from him–stolen? Only thing you can point to is the value. But there are no property rights in value.

ah, but positive association is what others think about you; it’s the value of the thing.

Funny, earlier you denied you believe in property rights in value.

Yes. It is the goodwill that has been earned in the market place. It is worth something. Who, pray tell, has better title to it?

hahahha now you admit it plainly, that there is title to value, to goodwill, to what soething is “worth.” nonsense.

Someone who has spent a lifetime building up a positive reputation in the market,

Reputation is just what others think about you. how can you have a property right in that? do you own their brains? have you never read Rothbard on reputation rihgts? it’s in his knowledge chapter in Ethics of Liberty. free online.

” Do you think someone would confuse Two Pesos with Taco Cabana?! ”

I don’t know, but apparently the finders of fact thought so.

Not so. The Taco Cabana case did not rest on a showing of consumer confusion. And only a moron would think any consumer would think Two Pesos = Taco Cabana. Helloooo.

If everything about the two stores were identical except the name, could a reasonable person believe there is an association?

ahhaa, everything except the name? hahahahah

The constitutional authority for the Lanham Act arises under the __________ clause.

there is no clause.

Hint: channels and instrumentalities of interstate commerce.

Apparently you have a weak case on unconstitutionality because I don’t believe it’s ever been challenged on that basis, has it? Is that your argument, TM is unconstitutional, because….?

The IC clause argument is nonsense. By that argument the copyright clause is superflous–they could enact patent and copyright by virtue of the IC clause; why would they need the patent and copryight clause.

Wildberry March 21, 2011 at 10:01 pm

@Stephan Kinsella March 21, 2011 at 8:26 pm

rihgt, and you think you have a property right in that value. See? this is nonsense, of cousre.

Nothing “has” value. It’s not intrinsic.

If “nothing” has value, why would anyone want to copy “it”?

where is the argument showing you have a right to stop the “someone else” from selling to the customer?

Why would I want to make that argument? I’m in favor of competition. Sell away, just don’t do it in the disguise of another’s trade dress or under another’s mark. Don’t sign check’s with my name, either. Same same.

Does he violate the custome’rs rights? If so how? and if he does, it’s their rights violated. If he does not, how does someone else have a right to complain?

We’ve been around this track. The customer has a right to the expectation that a given mark denotes the authentic origin of a given product. One way to explain the TM is that it is a product of his means of production. It is a pro-IP argument. I don’t expect you will give much ground on this.

Nothing is wrong with luck. if it’s stealing, what property of the trademark owner was “taken” from him–stolen? Only thing you can point to is the value. But there are no property rights in value.

Luck is good. Property entails exclusive rights of USE and possession. It is a violation of exclusive use. Using someone’s property without consent is stealing. So no, I’m pointing to property rights in exclusive use. Most property has value or it would be abandoned. Not only is it not being abandoned, but is being employed without permission and in the fraud; it is misrepresentation of the proper relationship between a particular mark and the source of a particular product or service. I have never claimed that there are “property rights in value”. Property has value, but the realization of that value is a matter of market operation, and the offer is controlled by the TM owner. Just like the offer is controlled by the producer.

ah, but positive association is what others think about you; it’s the value of the thing.

Funny, earlier you denied you believe in property rights in value.

Sorry, quickdraw, you are quoting yourself here. These aren’t my words.

hahahha now you admit it plainly, that there is title to value, to goodwill, to what soething is “worth.” nonsense.

I do not claim there is title to value. No, not me. I don’t say that. Nope. Really. OK?

Goodwill is the likelihood that a customer will return to your business. It has tangible value, and is often assigned a numerical dollar value in a merger/acquisition valuation.

So, property may have value, but it is a monopoly in the right to use and/or possess. Nice try.

Reputation is just what others think about you. how can you have a property right in that? do you own their brains? have you never read Rothbard on reputation rihgts? it’s in his knowledge chapter in Ethics of Liberty. free online.

I guess there might be something he or you have written that I haven’t read, yet. You are both prolific and I’m not that young. So little time…

I don’t agree with the Rothbard/Hoppe/Kinsella view on reputation rights. In that view, one is free to say untrue, damaging things about anyone with impunity. Blackmail is fair game. In this view, as I said earlier, you can spread rumors of a rat infestation as part of your competitive strategy. In your view that is fine. In mine it is not.

To hold my view, it is not necessary that I claim to own anyone’s brain. I merely have to hold that liable and slander is aggression, and as such I have a right to retaliation. This right is encoded in tort laws.

In the context of truth, one earns one’s reputation. To attack it is aggression against the person. Aggression begets retaliation. Your views is that this right to retaliation is that of slander or liable in kind. I disagree, and I think my view contributes to a more civilized society. To each their own.

Not so. The Taco Cabana case did not rest on a showing of consumer confusion. And only a moron would think any consumer would think Two Pesos = Taco Cabana. Helloooo.

You are right, it did not. But the theory of trademarks does. It is a theory of passing off goods from one source with another. Only a moron would think that “consumer confusion” was a material fact in the case. It turned on a finding of infringement of protected trade dress, which it found. Hellooo.

If everything about the two stores were identical except the name, could a reasonable person believe there is an association?

ahhaa, everything except the name? hahahahah

???? I get you are laughing. Well? Could they, or is it that you can’t speak for a reasonable person?

there is no clause.

You’re kidding, right?

The IC clause argument is nonsense. By that argument the copyright clause is superflous–they could enact patent and copyright by virtue of the IC clause; why would they need the patent and copryight clause.

Well, I guess it would be because at the time the constitution was written, patents and copyrights were enumerated along with the commerce clause and the rest. At that time trademarks were the jurisdiction of the states in common law.

Apparently congress thought that the variations from state to state in the implementation of trade mark laws and the growing need to have a consistent and uniform method for establishing and interpreting trademarks across state lines was a matter of interstate commerce that needed regulating. They drew their authority to enact legislation from the commerce clause.

Now I will be the first to admit that the application of the commerce clause has not always been to my liking, i.e. most recently Obamacare. I think they will ultimately lose that one. The supremacy of the Latham Act may not be justified, but it is certainly rational. I find it justifiable as well.

Brian Drake March 21, 2011 at 2:51 pm

@Wildberry

“As a side note, something not being specifically enumerated in the Constitution does not render it automatically unconstitutional. What Constitutional rights or limitation does trademark or trade dress violate? What is your basis to claim unconstitionality?”

The 10th Amendment:
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

REPLY

Wildberry March 21, 2011 at 7:32 pm

See the Commerce clause of of Article I Section 8.

Regulation of comerce is an enumerated power of congress. I may alway agree with the interpretation of that power, but that is where it comes from. So the 10th Amendment does not negate this federal power.

REPLY

J. Murray March 22, 2011 at 5:25 am

Commerce Clause applies only to States as political entities. The US Constitution’s wording is very clear. When discussion the people, us, it uses “The People” (found only once in the entirety of Article 1, which only discusses how Representatives are elected). When discussion State governments, it uses the word State (See Amendment 10). At no point does the US Constitution refer to a state as a geographical location. The Constitution does not give Congress authority to regulate commerce between the people.

REPLY

Adam March 22, 2011 at 6:14 am

“As a side note, something not being specifically enumerated in the Constitution does not render it automatically unconstitutional. What Constitutional rights or limitation does trademark or trade dress violate? What is your basis to claim unconstitionality?”

When you have to start proving something to the negative, the argument becomes impossible. There was a time when legal jargon didn’t prevent people from pointing out the obvious, but seeing how ridiculous Wildberry is, I see we’ve passed that point.

REPLY

Peter Surda March 25, 2011 at 7:11 am

Wildberry,

However, on what “justified” basis is someone entitled to bank on the prestige of a product that is none of his doing?

You are assuming your conclusion, Wildberry. I don’t remember whether you said you consider causality to be a sufficient criterion for a property right violation, but quite likely you did not answer that question, because avoiding clarity is your modus operandi.

REPLY

Ryan Vann March 22, 2011 at 1:07 pm

Funny how this turned into a car talk episode; I thought NPR was defunded into non-existence?

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