Artificial intelligence (AI) has the potential to impact all aspects of our lives and is currently the subject of much debate. However, despite much press coverage of AI and its revolutionary impact, its impact on our lives in the short term is likely to be relatively limited.

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As noted by American researcher and futurist Roy Amara, “We tend to overestimate the impact of a technology in the short term and underestimate the effect in the long run.”

The long-term impact of AI on how consumers purchase products and services, as well as its direct impact on trademark law, is often overlooked. Most commentators tend to focus on the impact of AI on patent, copyright and industrial design law.

How we buy products: changes over time

In the Victorian era, when the basic tenets of trademark law were established, store assistants would advise consumers on which products to buy, providing a “filter” between the consumer and the product, Most are unbranded. (Image: benoitb/Getty Images)

You might think that the way we buy products and services hasn’t changed over time, but that’s not the case; The way we buy products and services has changed continuously over the years.

Consider how people bought products in the 19th century when the basic tenets of trademark law were formed. This, without a doubt, conjures up images of a traditional Victorian store, with a shop assistant selecting products in a glass case. At the time, the store assistant provided a “filter” between the consumer and the product, largely unbranded. The assistant is the only person in the process who has knowledge of the products for sale and often gives advice to the consumer on which products to buy.

The long-term impact of AI on how consumers purchase products and services, as well as its direct impact on trademark law, is often overlooked.

With the advent of the modern supermarket, the consumer makes the decision alone and no longer benefits from a filter (store assistant) between the consumer and the product as all products are available. are all displayed. (Image: George Marks / Getty Images)

The Victorian way of buying products has changed dramatically with the advent of the modern supermarket, where consumers make decisions alone and no longer benefit from the (store assistant) filter between consumers. use and products. Furthermore, in this context, the consumer already knows or can be aware of all the products on sale in the supermarket, because all the products available are visible to the consumer in the store. .

Then, with the increasing popularity of product marks, consumers gained more information from the direct signs of the mark, either in the form of the brand’s phonetics or its visual or conceptual impact. of them. In the modern supermarket, brands have effectively replaced Victorian store assistants and essentially assumed the role of direct consumer communication.

Internet continues to change buying habits

The social media revolution has introduced new forms of influence on consumers with the “likes” of family and friends becoming a factor in purchasing decisions. (Image: Elena Brovko / Getty Images)

The buying process changed again with the advent of shopping on the Internet. The products available to consumers increase exponentially, and with that comes consumer product information and knowledge. Again, there was no filter between the consumer and the product; Consumers have complete control over their purchasing decisions.

The social media revolution has introduced new forms of influence on consumers with the “likes” of family and friends becoming an important factor in purchasing decisions. “Likes” add importance when “outside” influencers like celebrities and sports stars join in.

The buying process is influenced by the information available to the consumer and who, or really what, makes the purchasing decision. AI has an impact on the information available to consumers and their purchasing decisions.

The structure of the buying process is changing again, arguably, with the advent of AI apps like Amazon Alexa, Google Home, consumer chatbots, AI personal shopping assistants. like Mona, Amazon Dash, and AI robot assistants like Pepper. In many ways, the advent of AI applications means that the purchasing process has returned to the old Victorian model, with some important differences.

The buying process changed again with the advent of shopping on the Internet. The products available to consumers increase exponentially, and with that comes consumer product information and knowledge. (Image: AndreyPopov / Getty Images)

The influence of AI on purchasing decisions

While consumer use of AI applications is still relatively limited, most consumers will use some form of AI application such as product recommendation systems that appear on Amazon.com and other platforms. other online retail platforms. In this context, the application of AI effectively acts as a filter between consumers, products and brands, providing unique recommendations to consumers on the basis of past purchase decisions. .

AI applications also have important implications for the so-called “ordinary consumers” in trademark infringement and liability issues.

Many consumers don’t delegate purchasing decisions to an AI app like Amazon Alexa. However, as long as the AI ​​application (not the consumer) has access to all available information about the products for sale, the AI ​​application is like a personal shopper. In this respect, it is possible that the consumer can completely delegate the purchasing decision to the AI ​​application, where the AI ​​application will make that decision mainly based on the previous purchases of this consumer. .

In a May 2019 Harvard Business Review article, Nicolaj Siggelkow and Christian Terwiesch refer to product offering as an “automated execution” model. In an earlier paper, in October 2017, in the same publication, the automated fulfillment model mentioned by authors Ajay Agrawal, Joshua Gans and Avi Goldfarb, is moving the traditional purchasing process. from the “shop then ship” model to the “ship then shop” model. Retail is no longer simply “meeting” the needs of consumers; In the age of AI, it has become “predictive retail”.

In the age of AI, retail is no longer simply “meeting” the needs of consumers; it has become “predictive”, with the application of AI forming the filter between the consumer and the brand. This raises interesting questions regarding trademark law concepts such as “post-sale confusion” and the like. (Image: AndreyPopov / Getty Images)

Predictive retailing is still a stub. To have real traction, such retail models must be precise enough to avoid the economies of scale of profitability that plague the fast fashion sector. However, this retail model raises interesting questions regarding trademark law concepts such as “post-sale confusion” and the like. If a person is not involved in the purchase of a branded product, that person can, by definition, be confused only at the point of receipt of the product, not at the point of sale. The usual form of post-sale confusion involves third parties, not the buyer, but predictive retail may herald a new form of consumer confusion.

Even if consumers do not authorize purchasing decisions for an AI application, AI has an impact on how consumers perceive markets, products, and brands because on average an AI application, for example like Amazon Alexa, recommends three products to consumers when prompted to search for a product to buy. Consumers are not aware of the full range of products available in the market and thus they are faced with a relatively limited set of products to purchase, even if in the end, they make a purchasing decision. The AI ​​application once again forms a filter between the consumer and the brand.

So, what does that have to do with trademark law?

The above scenario has important implications for trademark law and its application. In general, trademark law deals with the purchasing process, how the product is purchased, and the interaction between the consumer and the brand.

The buying process is influenced by the information available to the consumer and who, or really what, makes the purchasing decision. AI has an impact on the information available to consumers and their purchasing decisions.

AI in the retail landscape also raises important questions regarding comparative advertising and regulations regarding influencers.

Furthermore, trademark law is fundamentally based on concepts of human frailty. When you remove “people” and “weaknesses” from the trademark law, what do you have left?

Some of the basic tenets of trademark law relate to human frailties such as “imperfect recollection”, “mistake”, “misleading trademark” and the impact of sounds and concepts. and look and compare brands. These aspects of trademark law have advanced with the rise of supermarket shopping, but are likely to become less important with the rise of AI due to reduced product selection, or at least reduce the choice of products and brands to which individual consumers are presented.

AI applications also have important implications for the so-called “ordinary consumers” in trademark infringement cases and liability issues. If an AI application purchases a product, with little or no human interaction, who or more importantly, who is the average consumer and who or what should be responsible for the resulting purchase? to trademark infringement?

Case law related to AI and trademark infringement

Although to the best of our knowledge, there have been no cases dealing directly with AI and liability for trademark infringement, several cases in the last decade before the US Court of Justice. The European Union (CJEU) can be applied because of this new technology to shed light on that question.

The French court’s decision in the case of Louis Vuitton against Google, regarding the issue of keyword advertising and the automatic selection of such keywords in Google’s AdWords system, held that Google would not be liable for trademark infringement unless they actively participate in the keyword advertising system. Furthermore, L’Oréal’s lawsuit against eBay, the company involved in the sale of counterfeit goods on eBay’s online marketplace, also states that eBay will not be liable for trademark infringement unless they own aware of this trespassing activity. Then there was a similar argument in Coty v Amazon. Therefore, it would appear that if an AI application vendor had fully implemented takedown procedures similar to those described in the Google and eBay cases and was not notified of the infringement, then they will not be held legally responsible for the infringement.

However, if the AI ​​vendor becomes more involved in potential infringing activity, these two lawsuits argue that the AI ​​vendor could be held liable. In the case of cosmetics companies Warriors Ltd and Lush Ltd against Amazon.co.uk Ltd and Amazon EU Sarl before the UK Supreme Court, Amazon was found liable for infringement in the use of the products. activated trademark links to their website do not include the product with the referenced mark, so that consumers cannot tell whether the products sold are from the trademark owner. Furthermore, a series of lawsuits before the German Federal Court involving Ortlieb Sportartikel GmbH hold Amazon liable when ads on Amazon.de are triggered using the search term “Ortlieb”, on basis of using this phrase in product descriptions as well as on the basis of past consumer behavior, a key aspect of AI applications. The courts argued that consumers would be “conditioned” with the expectation that Ortlieb and only Ortlieb products would be sold. There has been the most notable speculation by Markus Rouvinen on the IP Kat blog that such logic could be applied to so-called online product catalog advertising (PLA) where an active search provider ad activation is based on past search behavior, which, like past consumer buying behavior, is one of the key drivers of AI-based recommendations and purchase decisions.

AI and comparative advertising: considerations

AI in the retail landscape also raises important questions regarding comparative advertising and regulations regarding influencers. By definition, an AI application, like Amazon Alexa, is an “influential company.” On average, Alexa recommends three potential products for consumers to buy, typically a top-branded product, Amazon’s own brand, and a product influenced by a consumer’s previous purchase decision. use. Even if an AI app itself is not authorized to make a purchasing decision, by definition it “influences” that decision. If so, should AI applications be covered by the regulatory framework regarding influencer marketing?

AI in the retail context also raises important questions regarding comparative advertising and regulations regarding influencers. (Photo: Kinwun / Getty Images)

In such a case, the product recommendations of an AI application would need to be clearly identified as some form of advertising. This problem will become even more important if the AI ​​application makes product recommendations based on criteria that are favorable to the AI ​​provider such as profit margin on products, as opposed to relevant criteria. directly to the consumer’s past preferences.

Furthermore, there is potential for AI applications to engage in comparative advertising. If a consumer requests an AI application for a product, the application has the ability to recommend an “alternative” product to the consumer for a fee paid by a competing product supplier. This increases comparability with online keyword advertising if comparative advertising issues have arisen during the bidding process for keyword search terms.

Voice search gaining traction: implications for brands

The potential of voice search, which the proliferation of AI applications heralds, has not been overlooked by the advertising industry. Some predict that 30 to 50 percent of product searches will be done by voice instead of text within 5 years. While these predictions may be overblown, it is likely that certain areas of the retail market, such as the consumer goods market, will be significantly impacted by voice search. speak.

Some predict that 30 to 50 percent of product searches will be done by voice instead of text within 5 years. This can cause problems similar to those encountered with regards to text search. It also heralded a decline in importance of the visual aspects of the mark and a greater emphasis on phonetic and conceptual comparisons. (Image: kyonntra / Getty Images)

The advent and increase in bids on voice search terms will raise the same problems as they have with text search. Additionally, as voice search overtakes text search, the balance between phonetic, visual, and conceptual comparisons of brands shifts. The visual aspects of the mark will be less important as more emphasis is placed on phonetic and conceptual comparisons. Such a change is no different from what happened when the Victorian shopping model gave way to supermarket shopping.

Furthermore, although ultimately undecided on the issue of comparative advertising, Justice Arnold, in the keyword advertising case Interflora v Google in the United Kingdom, expressed surprise that the EU Directive on Comparative and misleading advertising (Directive 2006.114/EC) was not raised in that lawsuit. It is possible that a lawsuit involving an AI application engaged in comparative advertising will resolve this issue.

So where are we now?

AI may not have the short-to-medium-term impact on the world that the press recently feared or hoped for, but it will. One area where the impact of AI is clearly visible is how products are purchased, which by definition has important implications for trademark law. As Humphrey Bogart may have said to Ingrid Bergman in an updated version of Casablanca: AI is changing trademark laws, maybe not today, maybe not tomorrow, but soon and for the rest of your life. friend.

As policymakers globally begin to become aware of the widespread economic and social impact of artificial intelligence, WIPO and its member states have begun to engage in specific aspects of AI. may be intellectual property (IP), both IP and AI in terms of their impact on IP management and on IP policy. Following WIPO’s First Discussion on IP and AI, in September 2019 and Public Consultation on AI and IP Policy, from December 2019 to February 2020, WIPO developed relevant documents to the revision of IP and AI issues, including trademark law, discussed at the Second Session of the WIPO Dialogue on IP and AI from 7 to 9 July 2020.