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 this theory, trademark law aims to increase consumer welfare by reducing the cost of shopping for goods or services, and it accomplishes this goal by preventing uses of a trademark that might confuse consumers about the source of the goods with which the mark is used. This conceptual frame is wrong, and it is complicit in most of trademark law’s extraordinary expansion. “Search costs” is not sufficiently precise; many types of search costs are irrelevant to consumer behavior, and even when search costs are relevant, it is not clear that consumers always want them reduced. Yet precisely because the category of search costs is so broad, and because courts’ traditional focus on consumer confusion seemed so compatible with search cost language, courts overwhelmingly have equated confusion and search costs. As a result, they have felt compelled to respond whenever a mark owner can describe the defendant’s use in confusion-based terms. But trademark law is not, and never has been, an all-purpose tool for reducing search costs or eliminating confusion. It is instead a limited intervention in the market that prevents certain kinds of deceptive acts that have certain kinds of effects. If it is to have meaningful limits, courts need to recover this sense of modesty and limit trademark law to circumstances in which the defendant’s use of a mark is likely to deceive consumers in ways that will interfere with purchasing decisions. Reframing trademark law’s purpose in this way has significant ramifications for almost every part of trademark doctrine, 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.