Schechter's Ideas in Historical Context and Dilution's Rocky Road

Abstract

Dilution is one of the great mysteries of trademark law. Ever since Frank Schechter first proposed the theory in his famous 1927 Harvard Law Review article, The Rational Basis of Trademark Protection, judges have had trouble understanding it and scholars have had difficulty justifying it. Still, dilution manages to hang on. Just when it seems that the theory might wither away, it gains new life and cycles through another period of ascendancy and then decline. The adoption of the Trademark Dilution Revision Act in October 2006 completes the latest cycle, reinvigorating Section 43(c) just when restrictive judicial interpretations threatened its viability. This Article traces the history of dilution law back to its origins in Schechter's 1927 article. It focuses on two stages: (1) Schechter's original 1927 proposal and its reception, and (2) the adoption of state anti-dilution statutes starting in the late 1940s. The Article challenges the generally accepted account of these events and situates Schechter's ideas in a richer economic, jurisprudential, and doctrinal context. Schechter was not a formalist, nor did he advocate for broad property rights in marks or rely principally on Lockean labor-desert or anti-free-riding arguments, as some have argued. Schechter was a legal realist. He believed that dilution was the real reason to protect marks because it was the reason that fit the way marks actually functioned in the marketplace, and he urged judges to acknowledge this fact openly because doing so would produce better decisions. Dilution never made any serious headway between 1927 and the early 1940s not because Schechter's contemporaries rejected the idea in theory, as some have assumed, but rather because they saw a strategic advantage to using broad confusion theories to expand trademark protection. When states began adopting anti-dilution statutes in the late 1940s, two developments played an important role. First, dilution found a strong and aggressive advocate in the person of Rudolf Callmann, and second, political factors favored action on the state level.

Keywords: dilution, trademark law, legal realism, Frank Schechter

JEL Classification: K11, K39