Part II - Local and Global Dimensions

4 Academic Brands and Online Education

Paul Schiff Berman

Online education both does and does not radically transform higher education and higher education brands. On the one hand, providing courses online potentially allows universities to reach a worldwide audience, helps them globalize their brand, changes the cost structure for both students and institutions, and could reshape the competitive branding landscape among universities. On the other hand, university brands are surprisingly regional, low student–faculty ratios are still necessary for truly high-quality education, and the online competitive landscape might ultimately simply replicate reputational hierarchies forged over decades in the world of on-campus education.

Thus, although it is probably an exaggeration to say that online learning will completely “disrupt” the higher education model and existing university branding hierarchies, online education will inevitably become more and more integral to universities and over time the distinction between on-campus and online education is likely to become increasingly blurred. As a result, online education brings both promise and peril for universities as they manage their brands while increasingly adopting online education modalities.

This chapter first provides an overview of the online education landscape in higher education. Then, it outlines some of the core issues that universities must address as they consider and implement online education strategies while managing their brand.

I. The Online Education Landscape

Online education, long relegated to the fringes of the American higher education system, has become mainstream. For example, between 2012 and 2016, although overall enrollment at four-year institutions increased by only 2 percent, exclusively online enrollment grew by approximately 16 percent.¹ Similarly, the number of students enrolling in at least some online courses and programs grew by 39 percent.² Indeed, by 2018, one-third of all undergraduates at US institutions were enrolled in some online classes, and 13 percent were learning entirely online.³ These data suggest that not only are more students learning exclusively online, but even students in traditional on-campus programs are becoming more exposed to online and hybrid learning. This in turn reflects a shift in student preferences for increasingly flexible learning opportunities and also demonstrates the spread of technology-facilitated courses. With many secondary schools and universities moving instruction online as part of the response to the 2020 coronavirus pandemic,⁴ these trends have accelerated.

The movement to online is even more obvious if one focuses specifically on graduate education, particularly Master’s programs oriented toward professional credentials. From 2012 to 2016, graduate enrollment in exclusively online programs at US-based institutions increased by approximately 28 percent.⁵ During this same period, overall graduate enrollment increased by only 2 percent, while undergraduate enrollment actually decreased by 5 percent.⁶ In the post-recession, post-pandemic economy, students may well be less willing to leave their jobs to gain a post-baccalaureate credential and instead may prefer working and studying simultaneously.

Even at the undergraduate level, university administrators in the United States are increasingly recognizing that the prototypical eighteen- to twenty-two-year-old resident college student actually constitutes less than half of today’s undergraduate population.⁷ Instead, we see an increase in the number of so-called “non-traditional” undergraduates. These students have competing priorities and may prefer degree programs that allow for more flexible schedules.

Of course, education pursued away from campus is not a new phenomenon. The idea of correspondence degrees by mail extends at least as far back as the nineteenth century.⁸ However, until recently, most universities relegated such programs to the fringes of their educational missions. Correspondence courses were run out of continuing education or extension divisions and were generally operated on a cost-recovery basis as part of the school’s community outreach mission.⁹ Certainly, no one thought that courses completed solely by mail could in any way replace or compete with traditional on-campus learning.

The rise of the commercial Internet in the 1990s, however, transformed the possibilities of so-called distance education. For the first time, off-campus students could engage in truly interactive sessions with faculty and other students, and the variety of teaching materials could be radically expanded to include prerecorded lectures, real-time adaptive assessments, interviews with experts, videos from the field, debates among leading scholars, interactive projects, virtual reality, and so on.

Still, traditional not-for-profit universities were slow to grab hold of this new opportunity. While some universities experimented with online programs – Duke launched a global MBA online, for example¹⁰ – most stayed on the sidelines, or they experimented with online only for non-degree continuing education. As a result, various for-profit universities – most notably the University of Phoenix – leapt in to fill the void. By 2010, there were 3 million students enrolled in online degree programs nationwide, 70 percent of whom were at for-profit institutions.¹¹ However, the result of this trend was that online education acquired the taint of a low-end, for-profit brand, and many people came to associate online education with diploma mills or fake universities.

The aftermath of the Great Recession of 2008 was a wake-up call for not-for-profit universities. Although initially many of those who were out of work sought graduate degrees, as the slow-down persisted, the popular press began focusing on higher education tuition prices and increasingly questioned whether the return on investment from education was worth the cost.¹² Over the following decade, student loan debt became a major topic in national political debates. On campus, graduate enrollments fell, and universities also began to focus on long-term demographic shifts in the United States that are decreasing the number of eighteen- to twenty-two-year-old college students.¹³

These twin trends created a financial squeeze, and universities began to see online education as a source of increased tuition revenue, both for graduate and undergraduate programs. Flagship public universities, such as Arizona State and Penn State, sought to become national (and international) magnets for students, and even private universities long resistant to change began to see online education as a viable degree path, particularly for professional Master’s students.

Meanwhile, the technology industry set its sights on the education sector as primed for “disruption” through the use of online modalities. New start-up ventures such as Coursera and edX partnered with elite universities to create MOOCs – Massive Open Online Courses – with superstar professors providing free education to potentially tens of thousands of students. The idea was that these MOOCs could bend the cost curve of higher education, providing a cheaper alternative by offering high-quality courses to the world at mass scale. This alternative education modality, Harvard Business School professor Clayton Christensen famously predicted, would put half of American universities out of business altogether.¹⁴

Inevitably, the hype about disruption turned out to be at least somewhat overstated. MOOCs still exist, but their leading purveyors have now moved into providing degree or certificate programs in collaboration with universities and are no longer offering them completely for free (though these certificates are sometimes significantly less expensive than full on-campus degrees).¹⁵ Thus, it does not appear that MOOCs are truly displacing the higher education model. However, their brief boom did succeed in making online education more attractive to higher-prestige universities that had been worried about online initiatives damaging their brands. With institutions such as Stanford, MIT, and Harvard embracing at least the idea of online education, the door was now open for other hesitant universities to explore online offerings in an effort to wrest students away from the for-profits. As a result, though the past decade began with a MOOC frenzy, the more lasting impact of their rise has been the massive growth in for-credit online graduate and undergraduate programs offered by both public and private not-for-profit universities: over a 20 percent increase in graduate programs and over a 15 percent increase in undergraduate programs.¹⁶

Although these programs are often launched with the hope of attracting new tuition revenue, it is important to recognize that creating them requires a major upfront expenditure of resources, resources that universities often cannot provide prior to realizing any incoming tuition revenue from such programs. Accordingly, many universities launching online programs have partnered with for-profit online program management companies, or OPMs, which stay in the background but offer the student recruitment, instructional design, and technical and student services necessary to successfully operate an online program. In return, these OPMs either collect a set fee from the university or share a percentage of online tuition revenue. And while the use of OPMs has drawn criticism,¹⁷ it is difficult to see how universities can effectively invest the resources necessary to launch high-quality online programs without substantial upfront funding from somewhere. Nevertheless, these for-profit partnerships threaten to tarnish the overall branding of universities as not-for-profit institutions providing public goods, as opposed to neoliberal institutions scooping up as much tuition revenue as they can.

In addition to the cost of running online programs, universities also face increased competition in the online degree market. In theory at least, a student can take an online course from any university anywhere in the world (though, as discussed below, most students take online courses from universities located near them). So, how do universities differentiate themselves in this new space? This question leads to many others that implicate core issues of university branding. Is a university’s brand helped or hindered by the creation of online programs? Can universities create a distinctive online brand that is separate from their pre-existing reputation? Does the partnership with a for-profit OPM affect the university brand? Does the rise of online education cause students (and employers) to de-emphasize the social role of the on-campus university experience, and can online programs recreate that social experience? Should online and on-campus versions of a degree both yield the same credential? If a non-university creates an online course, is that credential as valuable as a university credential, and does the answer depend on the university’s brand reputation? If one university creates a best-in-class online degree program, why should other universities create their own, instead of licensing the best in class? But if they do that, then is the distinctive brand of each university diluted? And perhaps most important, over the long-term, how will even on-campus education ultimately be transformed by the rise of online educational possibilities, as students increasingly expect faculty to use class time for more than just lectures that could have been prerecorded, and most courses therefore become hybrid? Especially in light of the coronavirus pandemic of 2020, more and more universities will see online education as a significant complementary modality to their on-campus instruction. Ultimately, those universities that can forge the best combination of on-campus and online programming for all students – resident and non-resident alike – will be the universities that thrive. The following sections explore these various issues of online education and academic brands.

II. Online Education and the University as a Brand

A. Branding Online Education as Quality Education

Online education creates something of a branding conundrum for universities. Universities seeking to protect their brands are sometimes worried about online education because they fear that the actual quality of the educational experience will be lower, or because they fear others will perceive their institutions to be second-rate as a result of embracing online education. To some degree, these concerns reflect the taint that online education acquired from its past association with rapacious for-profit educational companies. On the other hand, if online programs generate new revenue – bringing in students who might not otherwise have enrolled at that university – the increased tuition revenue could be used to expand student financial aid and fund new faculty lines or research facilities or anything else a university might spend money on to improve quality and strengthen its reputation.

Universities therefore must work to ensure that their online programs are offered at the highest quality possible and that they are not perceived as “lesser” or “dumbed-down” versions of the equivalent on-campus degrees. This effort requires, first of all, that the online degree be in fact the same as its on-campus counterpart. There cannot be an asterisk or any other indication that it is somehow less than a full degree from that university. Second, the online degree must have the same number of credits and be equally rigorous. Third, it must have equivalent admissions requirements. If a school lowers its admissions standards for online programs in order to generate more tuition revenue, this could dilute the brand. Yet, while the admissions standards must be equivalent, they need not always be precisely the same. For example, because online graduate programs usually attract more mid-career professionals, a department might waive the GRE exam requirement in favor of some minimum number of years of relevant work experience. The important point is that the graduates of the online program cannot be seen as being substantially inferior to the students graduating from the equivalent on-campus program. Indeed, ideally if degrees were not designated as online or on-campus, employers would not know or care what modality the student used.

Of course, some might balk at the notion that the online academic experience could ever be equivalent to the on-campus experience. But there is nothing about the online modality per se that necessarily equates to lower-quality education. To the contrary, online education provides opportunities for student activities, interaction, and engagement that can sometimes even surpass on-campus learning. As with all teaching, it can be done poorly, or it can be done well.

Part of the problem is that when faculty members and others imagine online education, they often envision a grainy C-Span video with a single, stationary long shot from the back of a room and people simply talking for an hour. Or they imagine that online education must be like a MOOC, with one professor lecturing to 10,000 people online. And they rightly reject both of these as educationally lacking.

But online education can be much more than this.

First, both the technology and the instructional design thinking that power online education are now far more sophisticated than they once were. High-end video production can create engaging, short, and memorable presentations as well as other asynchronous materials that students can consume on their own time and that go far beyond just a video lecture. For example, a course on not-for-profit management can show footage of an actual Board of Directors meeting, an archeology course can take students to a field research site using virtual reality, a law course can provide excerpts from courtroom or appellate proceedings, and so on. Professors can also collaborate with other faculty members across the globe, provide students with video interviews and debates involving experts who might never find the time to come to an on-campus class, and show vivid video-based examples of classroom ideas in action. The days of C-Span videos are long gone.

Second, online education need not be offered at large scale, with massive student–faculty ratios. For example, a small group of students could take an intensive writing tutorial online, and there might only be a 5 to 1 student–faculty ratio. A US student taking a weekly one-on-one musical instrument lesson with a world-renowned musician located in India via Zoom is online education, and it certainly has lots of personalized attention and interactivity. There is no reason that the branding of online education need be synonymous with large scale. Instead, the online brand can imply more personalized instructional opportunities.

Third, online education can be branded as truly interactive education: it need not all be asynchronous. As bandwidth problems have decreased, it has become easier and easier for universities to provide synchronous discussion sessions, where all participants log in at the same time, everyone can see everyone else, and a real-time seminar discussion is easy to facilitate.¹⁸ Indeed, even many large online courses now divide the students in the class into smaller weekly discussion sections, with the student–faculty ratio capped at no more than 20 to 1. In addition, online programs can have on-campus elements, such as intensive weekends when all students gather for special programming. Some universities even use intensives to gather students for in-person programming at selected spots around the globe. These intensives allow for student bonding, more intense connections with faculty, and customized educational experiences. As a result, calling online education “distance education” is in some ways simply a failure of branding. Universities would be well advised to emphasize close collaborative work, high interactivity, and low student–faculty ratios online, rather than physical distance and psychic remove.

Online programs also provide opportunities to create experiences tailored to individual students or discrete student groups. For example, imagine a statistics course in a Master’s of Business Administration program. Typically, such a course would include some strong math students as well as some who have not taken undergraduate math at all. Likewise, there might be a group of students particularly interested in going into the health care industry, while others want to be entrepreneurs, and still others plan on going into government, and so on. A professor teaching such a class on campus would pitch the class in a neutral way to try to accommodate all backgrounds, with the result that the course would never fully speak to anyone. In contrast, if the course were taught online, the professor could easily feed more challenging material to some and more remedial material to others. The students interested in health care could receive problems tailored to the health care sector, while the entrepreneurs could receive their own specific applications of statistical concepts. The synchronous online discussion sections could also be divided by interest or background to facilitate in-depth discussion of statistics in particular fields. And while all this could of course be done on campus as well, it is actually easier to accomplish online because professors can more easily feed different assignments or materials to different students. In addition, as adaptive learning algorithms progress in sophistication, students working through materials can automatically receive customized responses and follow-up assignments based on their prior answers. This personalization is difficult to do in an on-campus class, even if it has a fairly low student–faculty ratio, because online adaptive learning literally provides different content or exercises to every single student in real time, based on their responses. An on-campus classroom rarely offers such opportunities.

Even when lectures are delivered in a non-interactive, asynchronous format, the online modality can make them better than on-campus lectures. For example, each student can view an asynchronous lecture at a time when that student is most alert and prepared to listen, not when they are tired or multitasking. Students can rewind the material and listen to the content again; those for whom English is a second language can slow down the speed of the lecture or pause it to look up words, and so on.

Finally, although students lose the socialization of the on-campus experience, online Facebook groups, Slack and Discord servers, and homegrown social media platforms make interaction among students surprisingly robust, and the on-campus intensives add to those connections. Especially for professional Master’s programs, students capitalize on the fact that they and most of their colleagues are older and already working and can therefore use the program to build worldwide professional networks that continue long after graduation. Thus, while many may feel nostalgia for their on-campus experience, meaningful social networks can in fact be formed online. This is particularly true for the new generations of students who have grown up interacting with friends through electronic media.

In short, while online education is clearly different from on-campus education, it need not be inferior. Indeed, though there are ways in which the on-campus experience is distinctive, there are also both pedagogical and social advantages to its online counterpart that we should not ignore. And, of course, when considering the quality and value of an online degree program, we must always ask ourselves: “As compared to what?” For example, if we are comparing an online class to a fifteen-person seminar taught on campus by a master teacher and discussion leader, the online class may not be able to compete (although that same fifteen-person synchronous session with that same master teacher could probably also occur online). But significantly, most students at most universities don’t take many fifteen-person seminars from master discussion leaders. Instead, they sit in large lecture halls with medium-level lecturers teaching at a time of day when the students’ biorhythms make them less alert and when many of them are multitasking. They are either bored or confused, they can’t ask questions or engage in discussion, they can’t ask for clarifications or rewind or look up materials that would help them understand, and so on. So, if that’s the comparison, it is not at all clear that an online modality provides an educational experience that a university needs to apologize for or that should hurt its brand. To the contrary, most professors, even those reluctant at first, find that teaching online forces them to be more thoughtful and intentional about what they are teaching and what their learning outcomes and methodologies are, and they emerge as better teachers, both online and on campus.

B. Prestige, Branding, and the Price of Online Programs

As mentioned previously, one of the reasons online education was supposedly going to disrupt traditional on-campus universities was that it would radically decrease tuition costs. But that has not turned out to be the case, and it is instructive to see why. First, quality online education actually requires significant expenditures. As discussed above, the asynchronous materials need to be well produced and edited, requiring sophisticated video production, virtual reality, and an instructional design team to work with faculty helping them transform an on-campus course into an online course that will be pedagogically excellent and – perhaps just as important – seem pedagogically excellent to prospective and current students or university accrediting bodies or funders. Second, in order to maintain a high degree of interactivity and a low student–faculty ratio, there must be many synchronous sessions, which requires a large number of permanent or adjunct faculty, as well as technical support to make sure it all runs smoothly. Third, the online student needs dedicated student support because university administrative logistics, tutorial help, disability services, technical support, course guidance, career counseling, and so on must all be offered online and outside of normal business hours to accommodate the online student body. And finally, student recruitment in the competitive online environment requires sophisticated use of search engine optimization to try to ensure that one’s program appears in the top five results of a Google search. Likewise, it is costly to ensure that if a student is interested in a program and makes an inquiry, that prospective student receives a call within hours if not minutes. Because most university admissions offices are not staffed to handle such inquiries, particularly outside of usual business hours, those tasks must be contracted to private companies. For all of these reasons, launching an online program requires a significant investment of capital up front, and so universities are hesitant to reduce the tuition price, particularly if part of the reason for launching the online program was to generate new revenue.

In addition to the purely economic reason for keeping tuition high, there is a branding justification as well. Universities are often hesitant to price their online programs lower than their on-campus equivalents because it might signal to students (and employers) that online programs are somehow cheaper or lesser than on-campus ones. Instead, universities hope to signal that the online degree is just as rigorous, just as pedagogically sophisticated, and just as selective, and therefore often insist on pricing it equivalently.

For all these reasons, online education has failed to bend the cost curve of university higher education. Of course, in theory a university that significantly increased overall tuition revenue through online programming would be in a position to decrease tuition across the board, for both the online and on-campus versions of the degree. But it is also possible that university administrators would be tempted to use that additional revenue either to cover shortfalls elsewhere in the budget or to pay for programmatic or faculty priorities or new initiatives. Thus, it is unclear whether there will ever be a large-scale correlation between online programs and decreased tuition, and at least part of the reason online tuition cost remains high stems from concern about maintaining the university’s brand.

C. The Difficulty of Creating a Worldwide Online Education Brand

One of the great problems of the global higher educational system is that although there are approximately 25,000 universities in the world – with many of them providing an outstanding education to students – the reality is that they serve only a very small percentage of the global population. In theory at least, online education could help address that problem, and one can only imagine how transformative it would be if more people all over the world had access to a high-quality education.

Less idealistically, university administrators see the global population as an untapped revenue source, as well as a way of expanding a university’s scope, scale, and influence. A university could try to develop a global brand as a purveyor of distinctive high-quality online education and build that brand among populations that do not, or cannot afford to, attend programs at the university’s campus.

However, these dreams of global online education run into several difficult realities. To begin with, there are strong headwinds against online education in much of the world. Foreign corporations may only pay employees to obtain an on-campus degree, foreign governments may only sponsor on-campus students, foreign employers may have biases against online education, and so on. And many prospective students from foreign countries who seek a US degree also want (or their sponsors want them to have) the acculturation that comes from physically spending time on a US campus.

Of course, even if some foreign students demand the on-campus experience, there are undoubtedly others who seek the educational credential but do not need or cannot afford to come to the United States, leaving their jobs or families in the process. For them, online education with a US educational institution might be attractive, but these students then face a second problem: the price of tuition. For many foreign students the cost of US tuition is high, and so the question is whether online degree programs can be offered at a substantial discount. However, for the economic and reputational reasons discussed above, it is not clear that universities can afford to reduce tuition. Thus, the dream of a global brand has so far not been realized. Indeed, fewer than 3 percent of online students in the United States are from abroad, and even online ventures with explicitly global aspirations, such as Penn State World Campus, Touro University Worldwide, University of Arkansas Global Campus, Northern Michigan University Global Campus, and Kansas State University Global Campus, all struggle to draw even 5 percent of their student body from outside the United States.¹⁹

D. Academic Brands Are Local

Perhaps even more surprising than the difficulty universities have had attracting international online students is the fact that most of any given university’s online student body actually lives in the immediate geographic vicinity of its physical campus. Indeed, it turns out that university brands are more local and regional than we often realize. This is true even for traditional on-campus admissions at supposedly elite or national universities. For example, although Yale receives applications from all over the country – indeed the world – the students most likely to accept offers of admission and actually matriculate are those who live in the eastern US.²⁰ And paradoxically, that same localized branding extends to online education. Although in theory students could attend an online program at a university based anywhere in the country (or the world), the reality is that students tend to gravitate toward university brands with which they are familiar. Recent data show that 66 percent of online students live within 50 miles of their institution, and another 12 percent within 100 miles.²¹ In addition, the proportion of students taking exclusively online courses who are located in the same state as the institution at which they are enrolled has increased over time, from 50.3 percent in 2012 to 56.1 percent in 2016.²²

Perhaps this should not be wholly surprising. Universities have often spent decades or even centuries building local knowledge and loyalty through sports teams, apparel, alumni networks, faculty appearances on local news, and so on. All of this contributes to a university having a much stronger brand locally, and that branding seems to carry over to online education. Thus, even though a student searching for an online degree program could choose one offered by a university located across the country, the local school is likely to seem more familiar, more legitimate, and more advantageous from a career networking point of view. Therefore, it may well be more attractive than the one that is distant. In addition, student data suggests that 75 percent of online students travel to campus at least once a year, and 56 percent travel to campus between one and five times a year.²³ More often than not these students come to campus to meet with an instructor, make a payment, meet with a study group, or make use of the library.²⁴ Thus, enrolling locally clearly has advantages for students. The bottom line is that online education does not wholly displace physical geography.

E. The Promise and Peril of For-Profit Partnerships

As discussed previously, because of the costs associated with launching online education programs, many universities have sought partnerships with for-profit online program management companies, or OPMs. Building the infrastructure to support both the necessary level of programmatic quality and an effective student recruitment operation requires a significant investment of resources, all without a guarantee in advance that any students will even show up. Not surprisingly, universities have been reluctant to do that. Commercial partners provide expertise, staffing, and financial resources that can help a university launch programs at the requisite quality level.

Many contracts with OPMs are structured as a revenue-sharing partnership. Under this model, the university does not need to invest much money up front to build or market the programs or create the infrastructure for student recruitment or technical or student support. Instead, nearly all upfront, out-of-pocket expenses are borne by the commercial partner. The only costs the university incurs are those associated with internal administrative staffing and faculty costs. Accordingly, any downside risk that the program will be unsuccessful is almost entirely incurred by the OPM.

The commercial partner, however, in return for its large upfront investment and willingness to shoulder all the risk, demands a long-term revenue-share arrangement; these contracts generally last from seven to ten years, and OPMs can demand up to 70 percent of revenue. These types of contracts sometimes generate concern because, particularly in the second half of the contract period when the online programs have potentially scaled sufficiently to be profitable, the university could be paying millions of dollars a year to an outside partner. Such an arrangement may prompt a visceral sense that the university is overpaying for functions that it could more cost-effectively fund itself from the gross revenue of the programs. This is certainly true, but of course it does not consider the fact that the partner had to front all the money and take all the ex ante risk, saving the university from having to make a substantial investment before any revenue was ever realized.

A second concern with regard to these revenue-share arrangements is that the commercial partner has a financial incentive to scale the programs as large as possible in order to maximize revenue. However, under most revenue-share agreements the university retains complete control over all of the actual admissions decisions. Therefore, the university ultimately determines the scale and sets any admissions criteria, not the partner. On the other hand, if the university consistently thwarts the partner’s efforts to scale the programs without sufficient justification, the university may jeopardize the viability of the partnership.

This leads to a third concern, which is that if the university is sharing half or more of its revenue from online programs with a partner, the university might feel financial pressure to scale the programs larger than is appropriate, solely because it needs to derive sufficient revenue. Such pressure could lead to unduly loosening admissions criteria or developing online programs so big that they strain the faculty or university infrastructure. In any event, the OPM partnership makes it less likely that universities will reduce tuition prices for online instruction. Therefore, some contend that partnerships with online OPMs effectively drive up the cost of online education.²⁵

On the other hand, in the revenue-share model at least the interests of the university and the commercial partner are aligned in that the partner has a strong incentive to build a successful program in order to recoup its upfront investment. And even aside from the creation of the online program, the student recruitment effort for these programs requires both expenditures and marketing sophistication that are far in excess of typical university capacity. In addition, universities usually find that the increased marketing muscle associated with online recruitment has spillover effects into all areas of university recruitment, thus benefiting the school’s overall brand awareness. As a result, it may be that launching online with an OPM ultimately benefits a university’s brand, so long as the university does not suffer reputational harms from the mere fact of the commercial partnership itself.

Finally, as mentioned previously, some might think it is inherently antithetical to the whole idea of a not-for-profit institution of higher learning for the university to undertake a large educational initiative in collaboration with a for-profit commercial partner that is taking half or more of the tuition revenue. Interestingly, this idea derives from a particular sense of the university as somehow immune from the logics of the neoliberal market, and ironically, that sense of the pure university operating separate from the market is actually a core component of its historic brand identity. Thus, even if there are very good reasons to form commercial partnerships with OPMs, universities may find that doing so harms their branding as an institution that supposedly operates at a remove from market capitalism.

F. Academic Credentialing and the Power of Brands

To the extent that universities resist launching online education programs, other entities might fill the niche, just as the University of Phoenix once did, and offer credentials at a much lower price. For example, online coding boot camps promise to teach students the basics of programming or cybersecurity and at least in theory provide a credential that employers will value. Likewise, online companies such as Khan Academy have built a strong academic brand for free educational videos, though these videos have little if any interactivity and do not purport to provide a credential in the marketplace.

These sorts of initiatives raise fundamental questions about the power of university academic brands as a kind of quality control gatekeeper and the academic degree as a signaling mechanism to employers in the market. To the extent that the knowledge and skills gained in at least some educational programs are fungible, does it matter whether or not one goes to a high-prestige university? For example, the Bachelor of Science in Nursing (BSN) degree is treated by many employers simply as a credential one either has or does not. These employers do not care where the BSN is awarded. As a result, many students will simply choose the least expensive online BSN degree program they can find, and there is little competition on quality. Thus, if a non-university such as Khan Academy ultimately offered a BSN degree program, perhaps it would be sufficiently valued on the job market that it could be successful.

Nevertheless, for many other degrees, the prestige and academic brand of the credentialing institution still matters. The reputation of the school, its ranking, and its history all are important indicia of quality, and it therefore benefits schools to signal the quality of their online programs through many of the program features described above: on-campus intensives, state-of-the-art technology, white-glove customer service, low student-faculty ratios, and so on.

In the end, however, the actual quality of the online program may not play any significant role in the brand value of the program. This is because it may be that a university’s reputation in online education programs is entirely derivative of its pre-existing reputation for on-campus education. Thus, a degree through an online program offered by a top-twenty-five university could be inherently more valuable than one offered by a lower-ranked institution, even if the lower-ranked school’s online program is better from the point of view of its instructional design or technological sophistication. If that turns out to be true, it would suggest that academic brands are “sticky” and persist even in this new modality. In contrast, it is conceivable that a university that is considered lower tier in traditional on-campus education might invest sufficient resources in online education, through branding, recruitment, and programmatic quality, that it would develop a distinct reputation for online education that is stronger than its more general reputation. Time will tell whether any university is successful in building a distinct online brand in this way. But in any event, the credentialing and signaling power of a university brand remains, and it is not at all clear that pop-up online educational credential purveyors will truly be able to compete effectively at scale.

H. A Hybrid Online/On-Campus Future

There is no reason that an educational program or even a particular course needs to be conducted either entirely online or entirely on campus. To the contrary, many on-campus students would prefer to take some courses online, or they would prefer that some materials within a particular course be presented online rather than in a classroom. Imagine a student conducting field research abroad who still wants to take classes back at their home institution and graduate on time; that student will want to take some courses online. Or imagine the on-campus student involved in an externship who would prefer not to have to leave work at 3 p.m. two or three times per week to attend a course lecture in person; or the commuting student who would simply prefer not to have to come to campus every day. Each of these students might want some online elements within their on-campus curriculum.

For professors, creating a hybrid course presents many pedagogical advantages as well. After all, some didactic material is best presented in a prerecorded asynchronous format. As a result, rather than wasting valuable class time on such material, it can be provided to the students asynchronously, and class time can then be used for exploring applications of those core concepts through project-based learning or group discussion. In short, a hybrid format might actually improve the classroom experience for everyone by reserving class time for only those types of educational experiences that are best accomplished through in-class group interaction.

Thus, it is highly likely that students will increasingly demand hybrid approaches to education and that the distinction between online and on campus will blur over the coming years, as on-campus courses and programs increasingly incorporate online elements. Particularly because universities were forced to become more familiar with online modalities as a result of the coronavirus pandemic of 2020, there may now be an increased willingness on the part of both students and faculty to embrace a hybrid approach. Indeed, most students and faculty have realized that there are aspects of online education that are actually better than their on-campus equivalents, and they are likely to prefer to continue with those elements in the future, even in their on-campus education.

This sort of new hybrid reality may raise one final branding issue. Over time, applicants to a university may well begin to demand a school that offers hybrid online/on-campus education, not only because they want the flexibility, but also because it will signal to them that this is a forward-looking university that cares about its students. After all, applicants to a university five or ten years ago might well have looked to ubiquitous Wi-Fi on campus as a selling point, not only because they wanted wireless access, but also because it signaled that the university was technologically savvy enough and cared about its students enough to have invested in it. Thus, the existence of Wi-Fi was incorporated into applicants’ brand perception of the university as a whole. In the 2020s, students may well begin to judge a campus experience in part based on their ability to take at least some courses (or some components of courses) online. As a result, a university stuck in an exclusively on-campus modality may actually suffer from the lack of online options and may be branded as an institution unable or unwilling to innovate.

Conclusion

Online education is here to stay. Indeed, in the wake of the coronavirus pandemic of 2020 more universities may find that online education is a pedagogically sound and attractive option for students, especially if universal broadband access becomes a reality and eliminates the economic digital divide that currently exists. New online programs are likely to be launched or expanded, and even universities that do not offer fully online programs are likely to increase hybrid online/on-campus programs or courses in order to accommodate student preferences and organizational imperatives. Thus, online education, though once considered a fringe activity relegated to specific programs serving niche audiences, will become increasingly integrated into the normal activities of universities. And this will be true, I suspect, for universities at all levels of prestige.

On the other hand, online education seems unlikely to completely upend the higher education model altogether. It is unlikely to put large numbers of universities out of business. It is unlikely to significantly alter tuition prices, at least in the near term. It is unlikely to create global mega-universities. And it is unlikely to move large segments of the educational system outside of universities altogether. Thus, though there will be innovations and adjustments, there are unlikely to be large-scale disruptions.

Ultimately, the reason that the university model is sticky and unlikely to be completely changed by online education is precisely the power of academic brands. It turns out that students want to go to known universities and that employers rely on known universities as credentialing and signaling institutions. Universities have been building up local knowledge of their brands and local connections through their alumni and faculty networks for many decades or even longer, and such brand recognition is difficult to dislodge.

For this reason, universities are rightly protective of their brands. And because of their desire to protect those brands, universities have been slow to adopt online education for fear that it will be perceived as less rigorous, thereby diluting the perceived quality of what their brand symbolizes. Yet, as online educational pedagogy and the technology that enables it keep increasing in quality, more and more universities are making forays into this once disparaged form of education, either on their own or with commercial partners. As this transformation occurs, the danger for branding might indeed reverse. Over time, a university that does not offer online or hybrid options may suffer damage to its brand, either because it does not have sufficient tuition revenue to invest in new initiatives, or because it has no way to serve student needs, or even because students will come to perceive a university with no online options as insufficiently innovative. In addition, it is possible that universities might be able to develop a distinctive brand identity by offering particularly high (or low) quality online education. As a result, building pedagogically strong online education opportunities is likely to become an increasingly important educational and reputational priority for universities seeking to survive and thrive as viable brands in the twenty-first century.

5 University Brands as Geographical Indications

Jeremy N. Sheff

I. Introduction

When lawyers and managers come together to discuss brands, very often discussion can slip between two distinguishable meanings of the term. The first meaning – the one managers typically use – is a marketing concept. In this view a brand is some set of meanings, beliefs, and associations formed around a particular symbol or set of symbols associated with a company, an institution, or a person. This is the sense in which university administrators and consultants typically use the word; it is also the primary sense of the word as used in Mario Biagioli’s chapter and those by Celia Lury and Deven Desai. The second meaning of the term “brand” – the one lawyers typically use – is, unsurprisingly, a legal concept. In this sense, a brand is a legally protectable sign that serves as a symbol and repository of the meanings and associations implied by the marketing concept of a “brand,” typically enforced through intellectual property law (and more specifically, trademark and unfair competition law). This is the sense in which Jamie Boyle and Jennifer Jenkins seem to use the term.¹ In point of fact, a lot of slippage exists between these two senses of the term, and many have noted this ambiguity in the past.²

In this chapter, I will focus on the second meaning, that is to say, on the intellectual property right in the sign itself, and particularly on the justifications for conferring such a right and delimiting its boundaries. Careful consideration of the legal context of university brand enforcement reveals that we have been miscategorizing academic brands in the legal framework of intellectual property. I will argue that academic brands ought to be thought of less as trademarks – the species of intellectual property rights under whose rubric they are typically enforced – and more as geographical indications (GIs). As I hope to show, understanding university brands in this way both makes better sense of the legal doctrine around university trademark enforcement and also has implications for how we view university licensing and enforcement programs as a matter of normative justification.

II. Trademarks and the University

The other contributions to this volume demonstrate some of the difficulties that attend upon evaluating university brands through a trademark lens – at least under the American theory and doctrine of trademarks. The dominant theoretical account of trademarks in American law today is grounded in an economic model of markets in which buyers and sellers have asymmetric information.³ Sellers, it is said, stake their reputations and their going-concern values on the association of their products with particular marketing messages tied to a brand, which gives consumers a mechanism to punish dishonest sellers (the withholding of future business) and reward honest or high-quality ones with their repeat business. This association supposedly gives sellers an incentive to produce goods of high and consistent quality and to disseminate honest marketing messages. Conversely, if this incentive bears out, consumers will be able to shift the cost of discovering information about their purchase options – their “search costs” – to sellers (who are uniquely in possession of such information and thus face far lower information costs than prospective buyers), thereby facilitating welfare-increasing transactions by lowering the aggregate costs of entering into them.

Of course, such a shift of search costs depends on sellers being able to control who may use the symbol – the trademark – that serves as the vehicle for the information transfer and the mechanism for consumer discipline.⁴ Thus, the standard of liability for trademark infringement gives producers the right to enjoin conduct that jeopardizes the reliability of a mark as an indicator of information and a mechanism of consumer discipline. Defendants will be liable for infringement where their conduct is “likely to cause confusion, or to cause mistake, or to deceive” “as to the affiliation, connection, or association” between the defendant and the mark owner, “or as to the origin, sponsorship, or approval of [the defendant’s] goods, services, or commercial activities by another person.”⁵

This economic account has been subject to harsh and sustained criticism since it crystallized in the writings of Chicago School scholars in the 1980s. Some scholars point out that information transfer is only a small part of what branding does – that it also gives sellers opportunities to engage in spurious differentiation, exercise problematic persuasive influence, and leverage potential cognitive biases of consumers.⁶ Others point out that not all consumer efforts to identify their preferred purchase options need be considered “costs” in a negative sense.⁷ Still, this economic theory has gained authoritative approval, both from the leading trademark law treatise and from the US Supreme Court.⁸ But regardless of whether the Chicago School theory of trademarks is descriptively or normatively adequate to mainstream trademark doctrine, it clearly has very little (if anything) to do with the role of academic brands today.

As Professors Boyle and Jenkins illustrate, when universities try to enforce their trademark rights, they do so primarily in areas far removed from any aspect of their reputation as institutions of higher education or research.⁹ While occasionally a dispute may arise in which one university claims another university is using a trademark that might lead consumers to confuse the two institutions themselves,¹⁰ for the most part university trademark disputes involve secondary and tertiary lines of business – branded apparel and gifts, often connected to athletics programs – or the use of a university name in expressive works. And as Mark Bartholomew points out in Chapter 7 of this volume, universities’ trademark enforcement activities in these areas may actually be in deep tension with their academic missions.

Many of these types of enforcement actions involve what we’ve come to call “merchandising rights” – the right of a mark owner to control the use of their mark on promotional merchandise such as branded apparel and gifts, notwithstanding that the mark is primarily associated with other goods or services. These merchandising rights are of relatively recent vintage: prior to the late 1970s or early 1980s, apparel and merchandise bearing university names and logos were often produced and sold by independent businesses local to the university in question, and this practice was widely tolerated.¹¹ A similar commercial ecosystem arose around sports franchises and third-party-manufactured merchandise bearing their logos. But in a series of court victories starting in 1975, professional sports franchises in the United States began arrogating this trade in team-branded merchandise to themselves.¹² Over the ensuing years, universities followed suit, attempting (not always successfully) to put the manufacturers that supply university-branded merchandise under tribute, and steering the trade to their preferred vendors.¹³

In the earliest of these merchandising rights cases, courts held that where consumers demand university-branded or sports-franchise-branded apparel and merchandise in order to manifest their identification with the team or school, the team or school has an exclusive right to satisfy that demand, even if there is no plausible argument that such consumers are confused as to the affiliation of the merchandise manufacturer with the university or the team – and indeed even where it seems likely that consumers do not care about that commercial affiliation. The classic explanation was given by the Fifth Circuit in the early merchandising case, Boston Hockey:

The confusion or deceit requirement is met by the fact that the defendant duplicated the protected trademarks and sold them to the public knowing that the public would identify them as being the teams’ trademarks. The certain knowledge of the buyer that the source and origin of the trademark symbols were in plaintiffs satisfies the requirement of the act. The argument that confusion must be as to the source of the manufacture of the emblem itself is unpersuasive, where the trademark, originated by the team, is the triggering mechanism for the sale of the emblem.¹⁴

As I and others have argued elsewhere, it is extraordinarily difficult to square this argument with the likelihood-of-confusion standard for trademark liability, or with the conventional “search costs” justification for that standard – indeed, it is difficult to square the argument with any theoretical justification for trademark law other than a fairly crude anti-misappropriation impulse.¹⁵ Indeed, in Europe courts freely admit to the anti-misappropriation impulse as a basis for trademark liability,¹⁶ and the leading EU merchandising case – Arsenal Football Club plc v. Reed – rests in no small part on the assertion that “the proprietor [of a trademark] must be protected against competitors wishing to take unfair advantage of the status and reputation of the trade mark by selling products illegally bearing it.”¹⁷ The question-begging circularity of the word “illegally” in this passage gives the game away.

But because anti-misappropriation theory is not explicitly countenanced by American trademark law, with its historical antipathy to “rights in gross,”¹⁸ some American courts have sought means of indulging the anti-misappropriation impulse sub rosa. The most successful means of doing so has followed the “rights accretion” feedback pattern identified by Jim Gibson: because trademark liability turns on consumer psychology, and because “consumer perception reflects an acquired familiarity with licensing practices,” the successful assertion of a merchandising right in some areas of commerce – even if grounded in a mistaken legal theory – can over time give rise to real, measurable confusion as to whether any new use of a trademark is in fact licensed, and thereby justify a finding of infringement that would not have been justified but for the assertion of the merchandising right in the first place.¹⁹ Today, courts upholding the merchandising right tend to justify trademark liability by reference to supposed consumer confusion as to whether unauthorized manufacturers of merchandise were “sponsored by” or “affiliated with” the university or sports franchise plaintiffs.

This reasoning leads to the same result as the reasoning of Boston Hockey, but aligns more closely with the Lanham Act’s text regarding confusion as to affiliation, sponsorship, or approval. The Fifth Circuit has explicitly endorsed this move. In the course of affirming a district court opinion denying relief in a merchandising case regarding fraternal organization emblems used in jewelry, the Fifth Circuit quoted with approval the district court’s assertion that “It is not unreasonable to conclude, given the degree to which sports emblems [as contrasted with fraternal order symbols] are used to advertise teams and endorse products, that a consumer seeing the emblem or name of a team on or associated with a good or service would assume some sort of sponsorship or association between the product’s seller and the team.”²⁰ And in Board of Supervisors for Louisiana State University Agricultural and Mechanical College v. Smack Apparel Co., the Fifth Circuit invoked this argument to rest the merchandising right explicitly on confusion as to sponsorship:

We hold that given the … overwhelming similarity between the defendant’s t-shirts and the Universities’ licensed products, and the defendant’s admitted intent to create an association with the plaintiffs and to influence consumers in calling the plaintiffs to mind – that the inescapable conclusion is that many consumers would likely be confused and believe that Smack’s t-shirts were sponsored or endorsed by the Universities … We further recognize the public’s indisputable desire to associate with college sports teams by wearing team-related apparel. We are not persuaded that simply because some consumers might not care whether Smack’s shirts are officially licensed the likelihood of confusion is negated. Whether or not a consumer cares about official sponsorship is a different question from whether that consumer would likely believe the product is officially sponsored.²¹

Many commentators have criticized this species of sponsorship confusion liability as bad policy. Stacey Dogan and Mark Lemley have argued that such confusion, even if proved, should only give rise to liability where it is shown that consumers “are likely to believe that [the defendant] makes or stands behind the t-shirt, cap, or other merchandise at issue in the case,” or where they suffer confusion “that could affect the trademark holder’s reputation and cannot be dispelled with a disclaimer.”²² Mark Lemley and Mark McKenna have argued that sponsorship approval cases should be thought of through a false advertising lens – requiring trademark plaintiffs to establish that any alleged confusion as to sponsorship is material to consumer purchasing decisions.²³ These commentators seek to prevent rent-seeking or otherwise anti-competitive behavior by trademark owners that raises prices without providing corresponding consumer benefits, and which may also pose a threat to freedom of expression. But they are ultimately dismissive of the anti-misappropriation impulse that clearly guides these cases, and they do not closely examine why sponsorship might matter to some consumers and indeed motivate their purchasing decisions.²⁴

I may share the view of such critics on the normative desirability of anti-misappropriation rationales for trademark protection generally. But there is something at work in university merchandising programs that goes beyond simple misappropriation, and even these critics seem to recognize it as an issue. As Dogan and Lemley explain:

there may be merchandising cases in which the trademark serves as both source-identifier and as a critical feature of the product, so that it confers both reputation-related and nonreputation-related advantage to those who use it. In these cases, the ultimate competitive effect of allowing trademark rights may be difficult to gauge. On the one hand, reputational concerns may drive some purchasers to mistakenly assume an affiliation between the parties and thereby increase search costs; on the other hand, the absence of competition may force consumers to pay a premium for the good, even when many of them do not particularly care whether the product was officially licensed.²⁵

As this analysis suggests, markets for branded products used by consumers to signal affiliation with the source of the brand create what Michael Grynberg has referred to as “consumer conflict”:

While trademark litigation is literally a battle between competing sellers, it is also a struggle between consumer classes. The conflict arises because each class attaches a different value to the defendant’s conduct. The “plaintiff” consumer class seeks to avoid confusion of its members by depriving the “defendant” consumer class of access to a particular product or service.²⁶

In disputes over merchandising, this conflict is particularly acute. As Dogan and Lemley point out, some consumers actually care whether merchandise is licensed, and others do not. Consumers who do not care about sponsorship or approval are simply seeking a means of signaling their affiliation, and are happy to do so at the lowest cost. Those who do care expect branded merchandise to be licensed and have reasons for wanting that expectation to be honored – and, if need be, enforced. But in the case of university merchandise, I think it is a mistake to call these reasons “reputation-related,” as Dogan and Lemley do. A university supporter who wishes to signal their support by wearing licensed, branded apparel is unlikely to demand the university’s sponsorship because they trust in the university’s reputation regarding any quality of apparel. But such a person might still want to be assured that the apparel is licensed, because they want their purchase to provide some material support to the university, in the form of licensing revenues. Thus, if trademark enforcement – even under affiliation, sponsorship, or approval confusion theories – is about reputation, I think it provides scant justification for university merchandising programs.

But that is not to say that no such justification is possible, or even that intellectual property law is incapable of providing such justification. Even though the consumer class that aligns with universities in their licensing enforcement activities are not motivated by reputation-related concerns, they still diverge from consumers seeking the lowest-cost token of affiliation signaling in ways that reproduce precisely the consumer conflict described above. So long as we conceive of intellectual property rights in university-branded merchandise as trademark-based and thus reputation-based, we will lack the tools to describe and analyze this conflict. But I think we can find another and potentially less problematic justification for these types of university practices in a different branch of intellectual property law – the law of geographical indications.

III. Geographical Indications and Their Evolution

The World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) defines a Geographical Indication (GI) as a sign that identifies “a good as originating in the territory of a [WTO] Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.”²⁷ The paradigm example is denominations of origin for wine,²⁸ but other agricultural products such as Parma ham and Roquefort cheese have long been subject to GI protection. The classic theoretical defense of GIs is that they prevent fraud regarding certain objective characteristics of products – especially agricultural products – that are uniquely and causally connected to that combination of physical geographic, agronomic, and climatic features that are collectively referred to as “terroir.”

I have always been deeply skeptical of terroir arguments for GI protection, because I am dubious about the relationship between geographic origin and any objective quality or characteristic of a product. Perhaps the most famous example I could cite is the 1976 blind wine tasting dubbed the “Judgment of Paris,” in which a panel of illustrious French wine experts collectively gave top honors to upstart California vintners over their venerable French counterparts. The aspect of this episode that is most damning to the terroir theory of GIs is not that the California wines were deemed better, but that the blind tasters confused which wines came from which region – they couldn’t tell the difference.²⁹

But if examples such as the Judgment of Paris put the lie to terroir-based justifications for GI protection, more recent developments in the law of GIs offer an alternative. The Lisbon Agreement, and particularly the Geneva Act of the Lisbon Agreement, provides a new argument about what it means for the quality, reputation, or characteristics of a good to be “essentially attributable” to its geographical origin. Specifically, it contemplates that such a connection between goods and place may be attributable to a combination of both natural and human factors.³⁰ The European Commission, in a recent Green Paper, has put its authority behind this position, going so far as to say that for some GIs, human factors may be entirely responsible for the connection between the reputation of a good and its geographical origin.³¹ And increasingly, cultural products outside of agriculture (often labeled as forms of “intangible cultural heritage”) have been seeking and obtaining such protection in some jurisdictions.³²

This trend is consistent with the arguments of scholars like Delphine Marie-Vivien who have advocated for recognition of such human factors as craft, culture, and tradition as a sufficient basis for GI protection, particularly for goods such as textiles, pottery, and other non-agricultural traditional products.³³ Dev Gangjee generalizes this view of GIs into a historical theory of justification, where GIs exist to recognize the historical continuity of a particular productive community, defined by human factors that have persisted in a particular location as to a particular product.³⁴ This reasoning recognizes that a particular geographically defined community may find value in, and seek to protect and preserve, its shared history, shared culture, shared forms of life, and shared experience in particular modes of production, and may find a GI a useful means of doing so.

The availability of this historical, human-factors-based account of GI protection gives my inner GI-skeptic some pause. The historical account suggests that the reason for protecting GIs is not that they indicate some physical quality or characteristic of the products to which they are affixed, but that they indicate a cultural tradition of the people who make those products – a tradition that others might deem worthy of support and protection – and provide a means for that community to identify itself to others in commerce. By identifying the products of particular productive communities in the marketplace, GI protection gives people who wish to provide material support to those communities a tool to direct their resources with confidence that they will reach their targets.

This cultivation of geographically and historically defined productive communities shares clear affinities with the logic of the university: a geographically defined community convened and perpetuated over time for the purpose of producing and disseminating knowledge. Such a conception of the university is best expressed in Michael Oakeshott’s classic description:

What distinguishes a university is a special manner of engaging in the pursuit of learning. It is a corporate body of scholars, each devoted to a particular branch of learning: what is characteristic is the pursuit of learning as a co-operative enterprise. The members of this corporation are not spread about the world, meeting occasionally or not at all; they live in permanent proximity to one another. And consequently we should neglect part of the character of a university if we omitted to think of it as a place.³⁵

Of course, today’s university branding identifies not just the community of scholars and learners, but also the athletics programs that coexist with them in uneasy symbiosis. Even so, just as with professional athletics franchises, such programs are inextricably tied to a particular historically continuous community convened in a particular place.

If we think of the university’s right to control uses of its name and logo on merchandise (such as apparel) as serving this interest of a geographically defined productive community in preserving and advancing its particular way of life, I think we run into far fewer analytical problems than when we try to justify that right by reference to protecting the university’s reputation. As an illustration, imagine a person who respects and values particular European (or Californian) traditions of craft and culture in winemaking, for example, and wishes to preserve those traditions against the encroaching pressures of global competition in an environment where goods, labor, and capital are increasingly mobile. Such a person might well seek to give their custom to producers who presently embody and promise to carry on the traditions that person holds dear – and those producers may well be identifiable most readily by their particular geographical and historical affiliations. The reasons why such a person might seek out goods bearing a particular GI strike me as essentially the same as the reasons why consumers might seek out merchandise sold (or licensed) by a particular university. That is: they wish to offer both expressive solidarity with, and pecuniary support for, a particular productive community. This is not a purchase motivated by reputation, but by a kind of charity: a desire to provide material support to communities that cannot extract sufficient resources to sustain themselves through the competitive market as currently constituted (and, perhaps, to signal to the purchaser’s social audience that they harbor this desire).

Now, while this justification for enforcement of academic brands in university merchandise strikes me as more descriptively plausible than a reputation-based account, and while the concept of charity has positive connotations, it also has a dark side. In the GI context, at worst, the desire to cultivate patronage by customers of particular geographic communities simply by reference to place and history may smack of chauvinism or jingoism – it can devolve into a desire to shield one’s tribe from competitive pressures even at the cost of pouring valuable resources into wasteful endeavors. This is a tendency that the European Union, for example, has worked hard to resist in reconciling GI protection with the principle of the common market.³⁶ And in the university context as in political economy more broadly, discrete communities that come to rely on a flow of resources from a small number of well-resourced supporters open themselves up to the dangers of complacency, corruption, and even ruin, as they become increasingly beholden to the idiosyncratic preferences of those who command such resources at particular moments.

IV. The Dark Side of the Academic GI

In the case of GIs, a cautionary tale for universities can be found, again, in the wine industry. The 1982 vintage of Bordeaux wines is famous for cementing the reputation of the leading wine critic of the past half-century, Robert Parker. Parker famously raved about the high-alcohol, jammy, concentrated quality of that year’s vintages, contradicting the judgment of some more established critics who preferred the more restrained and balanced style typical of the region’s history.³⁷ Wine merchants capitalized on Parker’s 100-point rating system to launch a media marketing campaign that triggered a speculative frenzy, bringing the ordinary affluent American consumer, for the first time, into the world of intensive interest in buying and drinking world-class wines. The new entry of American money, guided by Parker’s tastes and judgments, irreversibly upended the world of wine. If high-priced wine could be a marker of taste, status, and wealth, Parker’s 100-point system gave Americans a perfectly calibrated tool to buy in, and they bought in big. By the mid-1990s, Parker’s nod could make or break a winemaker: “the difference between a score of 85 and 95 was 6 to 7 million Euros. If a château received a score of 100, it could multiply its price by four.”³⁸ This money brought new levels of prosperity to Bordeaux – a region Parker has always championed – but it also changed the region’s wines. The “American” style – fruit-forward, high-alcohol, young-drinking, and concentrated – took over these most venerable of appellations d’origines contrôlées, the geographically and historically defined communities whose traditions of austere, balanced, and restrained wines of great longevity had supposedly justified the protection of their coveted indicia of origin in the first place. Parker’s biographer quotes one importer who neatly encapsulated the dilemma: “The French can see Parker is magic for their wine, but they resent having to do things the American way.”³⁹

If university brands are best thought of as GIs, the Parkerization of Bordeaux illustrates the dilemma they present. A university that seeks to resist broad competitive pressures by relying on supporters of its GI-like brand puts itself – its community identity – at the mercy of the interests of its wealthiest supporters. At worst, it surrenders to wealthy patrons’ control over those characteristics, traditions, and ways of life that defined the university community in the first place. And it is entirely possible that those patrons’ views about the proper way of life for the university community may systematically differ from that community’s historical traditions. The university analogue of Parkerization, then, can be seen in the cultivation of donor funding, and the efforts of university managers to organize their institutions in pursuit of that goal.

This problem is not a new one, and is reflected in two long-standing and competing visions of the university as an institution. In one vision, most famously expressed by Wilhelm von Humboldt, the university is and should be an enclave dedicated to the pursuit of knowledge for its own sake, insulated from the pressures and demands of both the market and politics. While the fruits of academic study will surely advance both the material and moral welfare of the state that is presumed to be the university’s natural sponsor (and ultimate beneficiary), Humboldt warned that those fruits could only materialize if the university is provided ample public resources and allowed to deploy them as it sees fit with minimal public oversight.⁴⁰

Contrast this idealist vision with the jaundiced assessment of Thorstein Veblen, who at the turn of the last century diagnosed the market’s infiltration into the university and identified it with the professionalization of university administration along the lines of business enterprises – the metrics-based management of his day.⁴¹ The tension between the Taylorist university of Veblen’s polemic and the ivory tower of Humboldt’s imagination turns in no small part on the type of community affiliation that we can now identify with the GI-like university brand – its promises and its threats. And nowhere is the tension between the risks and rewards of GI-like branding more evident than in the role of athletics programs in university management.

This was true even in Veblen’s day, as he wrote:

Unquestionably, an unreflecting imitation of methods that have been found good in retail merchandising counts for something [in university promotional activities] … There is also the lower motive of unreflecting clannishness on the part of the several university establishments. This counts for something, perhaps for more than one could gracefully admit. It stands out perhaps most baldly in the sentimental rivalry – somewhat factitious, it is true – shown at intercollegiate games and similar occasions of invidious comparison between the different schools. It is, of course, gratifying to the clannish conceit of any college man to be able to hold up convincing statistical exhibits showing the greater glory of “his own” university, whether in athletics, enrolment, alumni, material equipment, or schedules of instruction; whether he be an official, student, alumnus, or member of the academic staff; and all this array and circumstance will appeal to him the more unreservedly in proportion as he is gifted with a more vulgar sportsmanlike bent and is unmoved by any dispassionate interest in matters of science or scholarship; and in proportion, also, as his habitual outlook is that of the commonplace man of affairs.⁴²

Veblen claims that the types of people who could be won over by “clannish” chauvinism are precisely the types of people who lack the disposition to the pursuit of knowledge that Humboldt (and implicitly Veblen) associate with the true purpose of the university and the highest calling of its members. Nearly a century later, Derek Bok put it more bluntly: “Another reason some have given for operating big-time athletic programs is that the publicity and excitement of a winning team can attract more applicants and better students. Those who make this claim rarely pause to explain why a college would want to attract students who chose it because of its football team.”⁴³

Veblen and Bok may be indulging in some chauvinism of their own, but they may also have a point. What little research there is on the motivation of consumers to purchase officially licensed university merchandise suggests that the most powerful contributor to such motivation is a desire to support the university’s athletics programs – more than the desire to support academic programs, more than the desire to support a university’s religious mission, more even than the quality of the goods bearing the university brand.⁴⁴ And combined with the observations of critics of market-based university management like Veblen and Bok, this suggests a distributive dilemma in the university branding context that mirrors the distributive dilemma of the university as a whole. In pursuing GI-like recognition as productive communities, universities may believe they are securing the means to protect their tradition of knowledge production, but they may in fact be surrendering that tradition to the control of others who do not value it. Whenever the occasion arises for a community to define its values, it will be required to prioritize certain values over others – and as we saw in Bordeaux, control over those priorities may ultimately devolve on those who give support rather than those who receive it.

In Chapter 2 of this volume, Celia Lury argues that market relations tend over time toward hierarchy, while solidarity on the basis of identity is an essentially horizontal relation. Obviously, the GI-based conception of the university brand I am developing has the potential for both. The horizontal solidarity that I have identified as a justification for the historical, human-factor-based theory of GI protection has a long history in university communities. It is implicit in Humboldt’s valorization of the collaborative community of scholars set apart from ordinary life. Indeed, the first university, in Bologna (Italy), originated in a sort of medieval solidarity movement among students organizing against their grasping landlords and idling professors.⁴⁵ But a hierarchical dynamic of market relations is obviously present as well, particularly when the university looks to its identity as a community as a potential tool to attract material resources. Inevitably, with boosters as with customers, material support tends to come with demands for a measure of control – charity, even motivated by solidarity, can ultimately start to look like a purchase.

V. Conclusion

The linking of social identification to market behaviors is a move that we might associate with the currently unfashionable and vaguely defined school of political economy that passes under the name “neoliberalism.” If neoliberalism stands for anything, it stands for a preference for markets as a tool of social organization.⁴⁶ It is thus directly opposed to the Humboldtian model of the university as a social institution insulated from the market and protected (but not dominated) by the state. As critics of neoliberalism note, particularly in the context of intellectual property, driving social interactions into markets can have the effect of elevating the interests of particular constituencies over others: markets are biased in favor of those who already have disproportionate control over material resources.⁴⁷

The dark side of the GI-based view of academic brands is thus, at bottom, really just one manifestation of the neoliberal approach to university management that has been criticized at least since Veblen. Its implications for the university are analogous to the implications for the polity of increased economic inequality and decreased public social spending that critics of neoliberalism consistently warn us against. Rather than a collective obligation of either a particular university community or (following Humboldt) of society as a whole, higher education and knowledge production may come to be seen as (perhaps eccentric or arbitrary) charitable causes, and thereby threaten to become subject to the (again, perhaps eccentric or arbitrary) preferences and priorities of individuals with surplus resources and a chauvinist affinity for a particular university community. And if there is no such thing as pure charity in the marketplace, university brand development makes it difficult to distinguish boosterism from outright corruption. Recent revelations about donor influence at George Mason and the University of Oregon (both, notably, public institutions) are illustrative of this danger.⁴⁸ In such episodes, some will see universities making managerial decisions that happen to attract donors’ material support. Others will see donors corrupting the university’s mission with their quid pro quos and starving academic pursuits for the benefit of ideological or commercial ones. But the very fact that different constituencies view these episodes in such starkly different terms is exactly the point. When a university uses its geographic and historical identity as a productive community distinct from the market as a tool to try to marshal material resources, it inevitably subjects that identity to market forces, and may ultimately end up destroying it.

This is the paradox of the GI-based view of academic brands. Where donors’ and boosters’ preferences and priorities systematically diverge from those that would emerge from either democratic processes or expert stewardship (or both), the productive work of the university that justified its protected status in the first place – preparation of students for civic life and knowledge production through free inquiry – may lose priority to other concerns precisely because the university seeks to solicit material support for that productive work. Thus, while a view of academic brands as justified by the logic of geographical indications seems doctrinally and theoretically more plausible to me than a view based on trademark law, examining academic brands through a GI lens also focuses our attention on the particular dangers such brands pose to the idealized forms of life of universities.

6 Elite Universities as Luxury Brands

Haochen Sun

Introduction

In characterizing a recent college admissions fraud case brought by the US Attorney for the District of Massachusetts, Judge Douglas Woodlock bluntly labeled the fraud “a sneaky crime of conspicuous consumption.”¹ In this chapter, I explore the legal implications of consuming elite higher education as a luxury good. Like luxury goods companies, elite universities are regarded as owners of luxury brands under trademark law. Companies such as Louis Vuitton, Ferrari, and Hermès own brands that enjoy a high level of exclusivity and attract conspicuous consumption. So do elite universities. I propose that Harvard, Stanford, and Yale can be viewed as analogous to Louis Vuitton, Ferrari, and Hermès.

This “luxurification” of higher education, however, perpetuates class division and violates the right to education by favoring students from families who can pay the tuition. In this chapter, I consider how luxury brands prosper through exclusivity and conspicuous consumption. I then explore the extent to which elite universities can be compared to luxury brands and why their institutional names and logos should, primarily from a trademark protection perspective, be regarded as hyper luxury brands. Finally, I consider the legal and social implications of the luxurification of higher education.

I. The Making of a Luxury Brand

Ranging in price from $40,000 to $500,000 and with a waiting list of up to six years, the Hermès Birkin is the most coveted of handbags.² Why are luxury items such as the Hermès Birkin so appealing? Consumers are drawn to luxury goods like Birkin bags due to their exclusivity.³ This aura of exclusivity entails superior quality, enhanced creativity, and the steep price of goods or services marketed by these luxury brands.

Quality. Luxury brands are synonymous with exceptional materials, craftsmanship, and service. High-quality leather, fabrics, and rare stones are sourced by luxury companies from carefully selected supply chains,⁴ and rigorous screening processes are used to maintain premium product craftsmanship.⁵ Luxury companies are also recognized for offering high-quality in-store and post-sale services dedicated to their customers’ needs.⁶

Creativity. Luxury brands also signify the high level of creativity that is embedded in their goods and services. Luxury fashion companies vigorously support innovation in product design, constantly redefining fashion trends and luxury lifestyles.⁷ Legendary designers, such as Giorgio Armani, Coco Chanel, Valentino Garavani, Gianni Versace, and Yves Saint-Laurent, created and branded their own luxury business empires with highly creative designs.⁸ Luxury conglomerates such as Compagnie Financière Richemont SA, Kering SA, and LVMH Moët Hennessy Louis Vuitton rely on gifted designers and artists.

Price. Luxury companies maintain the exclusivity of their brands through pricing strategies, with high prices normally commensurate with the quality and creativity invested in their products or services.⁹ Harry Winston and Van Cleef & Arpels sell their jewelry at a much higher price than other brands because of the high quality of their diamonds and creative designs, craftsmanship, and services.¹⁰ The same applies to other luxury brands. Normally, the better the materials, craftsmanship, and services a luxury company provides and the more it invests in creativity, the more it charges for its products.

As price is an important indicator of the level of exclusivity, luxury brands apply marketing strategies like offering limited editions and controlling sales channels.¹¹ To safeguard these exclusivity-oriented marketing strategies, luxury companies have taken legal action against retailers who sell their products too cheaply or without a license.¹²

A. Conspicuous Consumption

Apart from quality and creativity, what else does the high price of a Birkin bag signal? And why are consumers willing to buy this extremely expensive item? The high price is a public statement of the Birkin bag as a status symbol,¹³ and many consumers purchase these bags for this reason. The exclusivity of luxury brands like the Hermès Birkin is inextricably linked with their signifying function vis-à-vis the conspicuous consumption of luxury goods or services.¹⁴

Conspicuous consumption refers to people’s willingness to pay a much higher price for a functionally equivalent good for the purpose of the public display of that good as a status symbol. A person’s acquisition of wealth does not necessarily level up his or her social status. Instead, this wealth must be used to publicly display certain indicators. According to Veblen, “In order to gain and to hold the esteem of men, wealth must be put in evidence, for esteem is awarded only on evidence.”¹⁵ One’s consumption of the bare necessaries of life does not produce such evidence, but lavish spending on luxury goods and services does. Luxury goods in Veblen’s time, such as precious metals and gems,¹⁶ expensive “food, drink, narcotics,”¹⁷ hand-made silver spoons,¹⁸ and fashionable dress,¹⁹ were costly and sold to a relatively small number of people because they were naturally scarce and crafted in a sophisticated manner. “Since the consumption of these more excellent goods is an evidence of wealth,” Veblen observes, “it becomes honorific; and conversely, the failure to consume in due quantity and quality becomes a mark of inferiority and demerit.”²⁰

Conspicuous consumption leads to the so-called Veblen effect, through which the demand for luxury goods increases as their price increases.²¹ Subject to this effect, a luxury good or service has a two-segment pricing scheme: the real price and conspicuous price. The former stands for the normal market price that ordinary consumers pay for the good.²² It covers the costs for design, production, and circulation. The conspicuous price refers to the extra costs the seller charges for the status-signifying function of its luxury goods. People who consume conspicuously are willing to buy luxury goods at higher conspicuous prices. This is because they care much more about the status-signifying function of conspicuous prices than other consumers, who are only willing to pay real prices.²³ The higher the conspicuous prices of luxury goods, the more elite consumers are willing to buy these goods as signifiers of status.²⁴

For a long time, the conspicuous consumption phenomenon applied to luxury goods without brand names attached. However, since the 1980s, the luxury goods sector has radically transformed its elites-oriented business model through branding. First, as more people are able to afford luxury goods, sales volume increases. Marketing luxury goods through brand names is cost-effective and impactful.²⁵ This trend has intensified since the formation of luxury brand conglomerates, making each luxury company more profit-driven.²⁶

Second, extensive advertising of luxury goods through television and social media increasingly relies upon brand names. Many luxury good advertisements contain a trademark or a combination of trademarks that represents the brand names of the good. These trademarks indicate the identity of product manufacturers and service providers and signify the quality, creativity, and price of their products or services. Luxury companies also routinely incorporate celebrities into their advertisements to show that their products or services are so distinctive and elegant that they ought to be enjoyed only by people with elite lifestyles.²⁷

As Jean Baudrillard famously observed, “[in order to] become an object of consumption, the object must become a sign.”²⁸ Mikimoto sells jewelry made of cultured pearls, each of which is worth a mere 10 percent of a natural pearl.²⁹ The value resides in the Mikimoto trademark; the sign, represented by its conspicuous price. With increased prevalence of trademarks, consumers increasingly associate these symbols not only with luxury goods and services but also with prestige and social status.³⁰

Trademark law has also come to recognize trademarks as symbols of prestige and social status. Courts have held that the Christian Dior mark stands for “the allure and prestigious image [with] an aura of luxury,”³¹ the Ferrari mark “reputation for rarity and quality,”³² Hermès for “scarcity” and “status,”³³ the Lexus mark for “exclusive luxury experience,”³⁴ Gucci for “luxury status,”³⁵ and the Rolex and Vacheron & Constantin-Le Coultre marks for “prestige.”³⁶ Given that luxury brands signify their users’ social positions, courts have further recognized their function in relation to conspicuous consumption. For instance, based upon the judicial recognition of Louis Vuitton’s “luxury status” and “image of exclusivity and refinery,”³⁷ a Louis Vuitton product is “something wealthy women may handle with reverent care and display to communicate a certain status.”³⁸

In a similar vein, attorneys who have argued cases for luxury brands have emphasized in their court filings that these brands function as high status signifiers. For example, attorneys asserted that Lexus “is a very prestigious luxury brand and it is an indication of an exclusive luxury experience,”³⁹ and is also well known for its “power, attraction, reputation and prestige.”⁴⁰

II. Elite Universities as Luxury Brands

In the acclaimed The Great Gatsby, protagonist Jay Gatsby pretends to be an Oxford University graduate in order to increase his reputation and his chances of winning over the woman he loves.⁴¹ How can a university’s name carry so much allure and prestige? What is the relevance of this amid the recent college admissions scandals?

In this section, I argue that elite university names also represent exclusivity and serve conspicuous consumption and, thus, such names should be regarded as luxury brands. Moreover, mainly from the trademark protection perspective, I further contend that elite universities should be regarded as owners of hyper luxury brands.

Elite universities achieve exclusivity through bolstering their quality of education, creativity of research, competitiveness of the admissions process, and rates of tuition.

Quality. With large endowment funds plus high tuition fees,⁴² elite universities are financially capable of offering excellent software for teaching and learning. These universities top the relevant educational rankings and have the largest endowments. Thirteen have individual endowments valued at $10 billion or more.⁴³ Elite universities endeavor to recruit talented scholars through rigorous hiring processes and further provide training programs to improve the quality of teaching. They also dedicate resources to innovating curricula that will equip students with cutting-edge knowledge for postgraduate and professional pursuits. Moreover, elite universities generously capitalize on their endowments, creating an excellent peer learning atmosphere by enrolling high-caliber students. Meanwhile, elite universities are well known for their excellent hardware, such as libraries, classrooms, and dormitories. For example, Harvard University has the largest university library in the US and the largest private library in the world.⁴⁴

Creativity. With vibrant academic traditions, culture, and capabilities, elite universities excel in research performance, producing impactful findings. The top positions in ranking lists are mostly occupied by elite universities. These universities have a vital role to play in fostering innovation and inventing new technologies.⁴⁵ Stanford, the Massachusetts Institute of Technology (MIT), and Harvard have been ranked as the top three most innovative universities in the world for five straight years since 2015,⁴⁶ and all ten universities with the highest number of Nobel Prize winners between 2000 and 2017 are elite universities.⁴⁷

Competitiveness. The highly competitive admissions process is another factor contributing to the exclusivity of elite universities. Every year, the number of applications to elite universities far exceeds the number of students they can admit. It is estimated that only 6.4 percent of 368,806 applicants were admitted by the top ten US universities as ranked by the U.S. News & World Report for the fall 2019 entering class.⁴⁸ There has been a tendency for elite universities to raise admissions standards, making enrollment even more competitive.

The acceptance rates of Ivy League universities and other top colleges have dropped to record lows in recent years. Harvard’s acceptance rate fell from 4.6 percent in 2018 to 4.5 percent in 2019, resulting in only 1,950 students accepted out of 43,330 applicants.⁴⁹ Duke University cut its acceptance rate from 8.6 percent in 2018 to 7.4 percent in 2019, the biggest drop among the top ten US universities.⁵⁰ Other elite colleges also operate with extremely low acceptance rates, including Columbia (5.1 percent), Yale (5.9 percent), the University of Chicago (5.9 percent), MIT (6.6 percent), and the University of Pennsylvania (7.4 percent).⁵¹

Price. Exceptionally high tuition is another force driving the exclusivity of elite university education. Price reinforces the luxury aura of such educational services as it creates a financial barrier to entry, separating those who can afford education as a luxury good from those who cannot. In fact, if elite universities charged lower tuition, their quality and status could be questioned.⁵²

Current tuition and fees for full-time undergraduate students at all of the top ten US universities exceed $50,000 per year, while the average cost for in-state students at public universities is $10,440.⁵³ Columbia University charges the highest tuition among the top ten at $64,380.⁵⁴ Over the last forty years, the tuition and fees of US elite universities have risen faster than US inflation rates and household income, deterring middle- and low-income students from applying.⁵⁵

The high costs of elite university education are justified not only by the quality of education, creative output, and competitive admissions process, but also by access to highly compensated jobs upon graduation. Most Wall Street bankers are recruited from the Ivy League and other elite universities such as MIT and Stanford.⁵⁶ Four-fifths of US law firm partners earning $5 million in profits per partner are graduates of the top five law schools.⁵⁷ A recent survey of Harvard, Princeton, and Yale alumni shows that three-quarters of them live in zip codes ranking in the top 20 percent on an index of income, half in zip codes in the top 5 percent, and a quarter live in zip codes in the top 1 percent.⁵⁸

Duke is an elite university located in Durham, North Carolina, charging undergraduate students approximately $60,000 in tuition and fees.⁵⁹ Located only about ten miles away, the University of North Carolina at Chapel Hill (UNC) is a public university, charging in-state undergraduate students approximately $9,000 in tuition and fees.⁶⁰ However, many students and their parents may still choose Duke over UNC. This is because they may attach more importance to Duke’s exclusivity accrued from its quality of education, creativity, and admissions process. The acquisition of prestige and social status through conspicuous consumption of education is another reason why families might make such a decision.⁶¹ Elite universities facilitate conspicuous consumption of education in the following two ways.

First, elite universities’ efforts to boost their exclusivity produce an inevitable corollary to the Veblen effect. As discussed in Section I, above, the Veblen effect reverses the classic relationship between price and demand by increasing the demand for luxury goods despite (or as a result of) their rise in price. This effect is observable in elite higher education.⁶² Each year, more students apply to increasingly expensive elite colleges. Research shows that after adjusting for inflation, tuition and fees charged by private colleges rose by 140 percent between 1985 and 2016.⁶³ The Ivy League and other top colleges like Duke, MIT, and Stanford increased tuition and fees roughly 3–4 percent every year from 2013 to 2018.⁶⁴ Nonetheless, every year these elite universities have received more applications, driving acceptance rates lower.⁶⁵ In fact, rising tuition and fees in elite universities boost applications.⁶⁶ For instance, it was found that for elite colleges, an additional $1,000 increase in tuition and fees contributed to a 3.6-point increase in SAT scores, a 1.2 percent reduction in acceptance rates, and a 0.5 percent increase in the number of admitted students who enrolled.⁶⁷

Elite universities treat low acceptance rates as a means of enhancing prestige.⁶⁸ They have an incentive to reject more applicants because lowering acceptance rates could improve their university ranking performance, which in turn encourages more students to apply.⁶⁹ Students and their parents become more anxious when they realize that gaining admission to an elite college is becoming more difficult, and this pushes them to apply to more schools to maximize their chances of acceptance.⁷⁰ The globalization of higher education is another factor driving down acceptance rates. The past two decades have witnessed a rapidly increasing number of international applicants who can easily afford the high tuition and fees at elite universities.⁷¹

Second, the Veblen effect shows that the impetus for conspicuous consumption of elite education is the prestige and social status conferred by these elite universities. Given their exclusivity, elite universities confer prestige on their students and graduates through their admissions and educational programs.⁷² Limited numbers and restrictive entrance requirements mean that only a very small portion of students can be admitted and complete their studies at these universities. The amount of status elite universities can confer on students and graduates depends on the status they themselves enjoy, measured to a certain extent by rankings. The higher a university ranks, the more prestige its students and graduates enjoy. The status of an alumnus also has an impact on the status of his or her alma mater. Elite universities tout their networks of distinguished alumni, such as leading government officials and accomplished entrepreneurs, to raise their national and international profiles.

The Veblen effect explains why some parents are keen to foot the bill for their children’s expensive, elite education. While they care about the academic benefits of elite universities,⁷³ they also value the prestige and social status that they impart. Parents may treat the payment of high tuition and fees as an opportunity to show off their wealth and enjoy the prestige and social status that are associated with these universities.⁷⁴ From this perspective, the high tuition and fees become the conspicuous price of the status-signifying function of elite higher education.⁷⁵ Moreover, many parents see their children’s achievements as a reflection and extension of their own.⁷⁶

As revealed earlier, conspicuous consumption of luxury goods has evolved into a focus on brands that signify exclusivity and prestige. So has conspicuous consumption of elite education. Elite universities have increasingly relied upon their institutional names and logos as brands, and parents and students increasingly care about these brands.

Elite universities adopt luxury branding strategies to strengthen the exclusivity and prestige of their educational services. Given their long history, incumbent universities such as those in the Ivy League have already gained the status of luxury educational brands.⁷⁷ Their management teams endeavour to maintain and improve their top rankings by strengthening their exclusivity and soliciting donations for further institutional development.⁷⁸

On the other hand, some universities adopt luxury branding strategies in order to rebrand themselves as elite. For example, several universities have implemented the so-called Absolut Rolex Plan to boost the quality and reputation of their educational services.⁷⁹ Quoting from George Washington University’s former president Stephen Trachtenberg, who initiated the plan:

“College is like vodka. Vodka is by definition a flavorless beverage. It all tastes the same. But people will spend $30 for a bottle of Absolut vodka because of the brand. A Timex watch costs $20, a Rolex $10,000. They both tell the same time.”⁸⁰

This Absolut Rolex Plan paid off⁸¹ for George Washington University, which has since significantly increased the exclusivity and reputation of its educational services, as have other universities that implemented this luxury branding strategy.⁸²

Wealthy parents are often consumers of luxury educational brands.⁸³ For example, affluent families in China are increasingly sending their children to US universities. Soon after they become wealthy, they regard university degrees, especially those conferred by elite universities, as status symbols for themselves and their children.⁸⁴ These status symbols are built around the high cost, scarcity of seats, high proportion of the best and brightest students, first-class campuses and facilities, high-quality education, and better graduate career prospects. Increasingly, affluent families in China are sending their children to US universities.⁸⁵ In 2014–15 alone, more than 300,000 Chinese students attended university in the United States.⁸⁶ These families sometimes spend heavily on admissions counselling, private tutoring, and extracurricular activities for their children, and even make donations to universities in order to increase the chances of their childrens’ admission.⁸⁷

The tremendous popularity of university rankings evinces the effectiveness of elite universities’ luxury branding strategies. Oftentimes, university rankings simply highlight elite universities’ institutional names and/or logos encapsulating many university achievements. Therefore, these names and logos are perceived as brands symbolizing exclusivity, prestige, and social status. The higher a university is ranked, the more exclusive and prestigious its name and logo are in the minds of students and parents.⁸⁸

Guided by the symbolic ramifications of ranked names and logos, students and parents rely increasingly upon university rankings to make their selections.⁸⁹ For instance, Monks and Ehrenberg’s research found that a university’s drop in rankings led to a greater acceptance rate, a smaller percentage of admitted students, and an entering class of lower academic quality.⁹⁰ Among prospective international students, 32 percent have been found to consider ranking an important factor when choosing their university.⁹¹ Chinese students cited the U.S. News & World Report rankings as the most influential factor.⁹²

III. Elite Universities as Hyper Luxury Brands

I have demonstrated that, like a luxury good, the exclusivity of elite higher education makes it a target for conspicuous consumption. It follows, then, that elite university names and logos can be regarded as luxury brands in the educational services marketplace. While elite universities and luxury companies both apply luxury branding strategies, the names and logos of universities are more exclusive and prestigious. In this section, I consider from a trademark protection perspective why elite university names and logos should be regarded as hyper luxury brands.

Luxury companies rely heavily on trademark law to protect the exclusivity and prestige of their brands, which in turn drive conspicuous consumption. Trademark law confers upon business owners, such as luxury companies, an exclusive right to a trademark that is capable of indicating the source of a product or service in the marketplace.⁹³ If trademark protection were to be suspended or eliminated in a country or across the globe, the pervasiveness of counterfeit goods or services would cause a crisis of survival for the entire luxury industry.

On the one hand, the absence of trademark protection would embolden counterfeiters to flood the market with fake goods without any legal liability, which would significantly impair the exclusiveness and prestige of luxury brands.⁹⁴ On the other hand, other forms of intellectual property such as copyright and design patents have proven to be ineffective in protecting luxury companies in warding off free-riding activities.⁹⁵ Therefore, courts have attached great importance to trademark law’s function in weeding out counterfeits by holding that it is legal to sell knockoffs only if they do not bear a counterfeit trademark.⁹⁶

Trademark law protects luxury brands as status symbols in four primary ways. First, it guards against the use of marks that are confusingly similar, which helps luxury companies preserve the exclusivity of their trademarks. Normally, courts apply a multi-factor test⁹⁷ to decide whether the party sued by the luxury company has used its mark in such a way as to mislead consumers into believing that the goods in question were manufactured by the luxury company. By prohibiting the use of confusingly similar marks, the test’s “competitive proximity” and “bridging the gap” factors also entitle luxury companies to control not only their existing market channels⁹⁸ but also the potential market sectors they legitimately intend to expand into.⁹⁹ The more famous and distinctive a luxury mark is, the stronger the legal protection the anti-confusion test would afford.¹⁰⁰

Second, the post-sale confusion doctrine prevents knockoffs from causing harm to luxury brands’ quality reputation and prestige.¹⁰¹ In Rolex Watch U.S.A., Inc. v. Canner¹⁰² and Ferrari S.P.A. v. Roberts,¹⁰³ the courts ruled that the public circulation of knockoff watches that bore the “Rolex” trademark and cars that looked very similar to Ferrari’s had led consumers to question the quality, reputation and prestige of Rolex and Ferrari.¹⁰⁴

Third, the anti-dilution doctrine guards against blurring the distinctiveness of a famous trademark and tarnishing its reputation. The anti-blurring doctrine¹⁰⁵ “functions to prevent the prestigious images of luxury brands from being diluted into brands accessible to the mass public, an effect that would gradually whittle away the prestige of luxury brands.”¹⁰⁶ Tarnishment may occur when a trademark is linked to “products of shoddy quality, or is portrayed in an unwholesome or unsavory context.”¹⁰⁷ In this context, the harm caused by dilutive use is “that the public will associate the lack of quality or lack of prestige in the defendant’s goods with the plaintiff’s unrelated goods.”¹⁰⁸

Fourth, trademark law has widened the scope of the registrability of marks, enabling non-traditional luxury marks to receive legal protection against confusing and dilutive uses. These trademarks differ from those that are traditionally registered as word or logo marks. Famous examples are single-color marks such as the Tiffany blue¹⁰⁹ and Christian Louboutin red-sole marks,¹¹⁰ and motion marks such as the vertical opening mechanism of a Lamborghini door.¹¹¹

There is a key difference between brands owned by elite universities and those of luxury companies. Elite universities can be elevated to the status of hyper luxury brands,¹¹² due to their extremely low admission rates, enrolling just 5 percent of applicants every year.¹¹³ Luxury companies generally open their stores and services to the general public, selling goods or services to anyone who can afford them. Elite education goes beyond the purchase of luxury goods because money is not generally enough to gain admission to an elite university.

Another major factor determining the hyper luxury brand status of elite universities is their very limited recourse to trademark protection. For a number of reasons, elite universities do not need to rely on strong trademark protection in the same way that luxury companies do.

First, elite university brands rely very little on anti-confusion protection.¹¹⁴ For instance, Hotel Stanford is a three-star hotel located near Pennsylvania Station in New York City.¹¹⁵ It is highly unlikely that anyone would believe Stanford University has any affiliation with it because, according to the test set out in Polaroid Corp. v. Polaroid Elecs. Corp.¹¹⁶ for assessing the likelihood of confusion, there is no “competitive proximity” between a hotel and a university, nor would Stanford extend its business activities to hotel services. However, if a secondary school were to name itself Stanford High School, its position in the educational domain suggests an affiliation with the university that might cause confusion among the target consumers.¹¹⁷ Yet any journalist or curious parent could quickly and easily defeat the validity of this suggestion by fact-checking with Stanford University. Therefore, few schools would attempt such a false affiliation.

Second, elite university brands are impervious to post-sale confusion. Trademark law prevents circulation of counterfeit goods that damage the reputation and prestige of luxury brands.¹¹⁸ However, wearing a poor-quality counterfeit Harvard-branded hat, for example, does not necessarily harm Harvard’s brand reputation or prestige because they are related to the quality of educational services, not hats.¹¹⁹

Third, elite university brands can defeat dilutive uses largely because there is moral backlash against such uses. Suppose a company registered the “Princeton” mark for its toilet plungers. This mark, however, would blur the distinctiveness of the Princeton mark, because it would now be associated with products other than educational services.¹²⁰ Moreover, the reputation of the mark might be tarnished as it is “portrayed in an unwholesome or unsavory context.”¹²¹ However, universities are highly regarded by the public. Therefore, the public would treat such dilutive uses of educational marks as an offense to the moral mission of a university and it would be unlikely to be attracted to any toilet plungers bearing the Princeton mark.¹²² For these reasons, it is unlikely that a manufacturer would make such dilutive use of an educational mark.

Fourth, due to the importance they attach to history and tradition, elite university brands tend to use only conventional words and logos as trademarks. Unlike luxury goods companies, they have not (yet) used or sought to protect non-traditional marks such as color, smell, and motion marks.

IV. Social Justice and the Right to Higher Education

The luxurification and conspicuous consumption of elite education are phenomena that do not only involve elite universities and wealthy families. In this section, I examine their implications for the protection of every human being’s right to higher education as a means of promoting social justice.

Since its inception within the framework of the United Nations, the right to higher education has paved the way for the enjoyment of higher-education equality: The 1948 Universal Declaration of Human Rights¹²³ states that “Everyone has the right to education” and “higher education shall be equally accessible to all on the basis of merit.”¹²⁴ And the ICESCR¹²⁵ states that to protect the right to education, states should ensure “higher education shall be made equally accessible to all, on the basis of capacity.”¹²⁶ The shift from “merit” to “capacity” broadens the coverage of the right to education to benefit students from disadvantaged backgrounds,¹²⁷ who may not have benefited from a strong primary and secondary education but nonetheless have the capacity for further study. The scope of the right to education is not clearly defined in the ICESCR because the cost of education is very high; states are only required to have higher education that is “equally accessible.”¹²⁸

Although the right to education is not a fundamental right provided for under the US Constitution,¹²⁹ US courts have attached importance to its protection as a civil right. In Brown v. Board of Education,¹³⁰ the Supreme Court relied upon “the importance of education to our democratic society” and the right to education to resoundingly invalidate racial segregation in the public school system.¹³¹ In Grutter v. Bollinger,¹³² the Supreme Court recognized the value of equality in higher education, ruling that the Equal Protection Clause of the US Constitution did not prohibit the University of Michigan Law School’s narrowly tailored use of race in its admissions decision to “further a compelling interest in obtaining the educational benefits that flow from a diverse student body.”¹³³ This ruling was made because access to legal education “must be inclusive of talented and qualified individuals of every race and ethnicity, so that all members of our heterogeneous society may participate in the educational institutions that provide the training and education necessary to succeed in America.”¹³⁴ Moreover, the Court stressed the importance of equal access in public school to all segments of American society, and that “Nowhere is the importance of such openness more acute than in the context of higher education.”¹³⁵ Although Grutter deals with the Fourteenth Amendment as it applies to a public school, as a state actor, Congress has established the importance of equality in private educational institutions receiving federal financial assistance in Title VI of the Civil Rights Act of 1964.¹³⁶

What does the luxurification of higher education mean for access to it? In modern societies, higher status is as important as seeking more political and economic power because people care about how they are perceived by others.¹³⁷ Against this backdrop, the luxurification of higher education reinforces how the receipt of education confers social status.¹³⁸

People attain higher status with increasing, highly differentiated levels of educational attainment. A functionalist theory of education argues that the bestowal of different statuses by reason of educational attainment is beneficial to society, as people need to occupy a variety of social positions in order for society to function well. Education can help sort people into appropriate social positions by equipping them with the job skills needed for specialized occupations. The educational system reinforces social stratification and preserves social class inequalities from one generation to the next by sorting students according to social class and transmitting class-oriented norms, values, beliefs, and behaviors.

The luxurification of higher education drives social class division and inequality in education. This is because universities are stratified, just like people in society, and differentiated by students’ social class background and academic accomplishments. Highly ranked universities tend to draw students with higher socioeconomic status, and students from more privileged backgrounds are more likely to attend high-quality, prestigious universities.¹³⁹ Receiving education at an elite university is a means of accruing, maintaining, and signaling economic power and prestige.

Such luxurification is completely at odds with equal access as the ethical basis for the right to higher education recognized by international human rights treaties, Congress, and the Supreme Court. US elite universities date back to colonial times when religious groups sponsored the college education of their clergy.¹⁴⁰ Later, upper-class men established colleges to nurture children of their own class.¹⁴¹ Until the 1950s, elite universities and colleges reserved admission for students “fortunate enough to have been born into the right family or to have attended a particular … high school.”¹⁴²

According to the 1947 Truman Commission on Higher Education, “the social role of education in a democratic society is at once to insure equal liberty and equal opportunity to differing individuals and groups, and to enable the citizens to understand, appraise, and redirect forces, men, and events as these tend to strengthen or weaken their liberties.”¹⁴³ From an individual standpoint, higher education is linked to an important array of benefits ranging from better personal and spousal outcomes, children’s educational gains, greater longevity, and even lifelong happiness.¹⁴⁴ From a societal standpoint, higher education is the key to social mobility and creativity and a catalyst for free speech and democracy.¹⁴⁵

Elite universities have been utilizing diversity programs to admit students from different races through affirmative action and from low-income families through financial aid awards. In Fisher v. University of Texas,¹⁴⁶ the Supreme Court upheld the legality of race-based diversity programs provided that they can pass the strict scrutiny test.¹⁴⁷ Similarly, in Students for Fair Admissions v. Harvard,¹⁴⁸ the District Court for the District of Massachusetts upheld the legality of race-based diversity programs on the same grounds.¹⁴⁹

While elite universities promote equal access to higher education through affirmative action and financial aid, these schemes have had little effect on the luxurification of higher education. It is estimated that only 9 percent of freshmen attending elite universities are from families in the bottom half of the socioeconomic distribution,¹⁵⁰ and just 5 percent of American students at prestigious law schools come from families in the bottom half.¹⁵¹ Financial aid schemes also have limited impact. A study has shown that most elite universities, including five in the Ivy League, have more students from the top 1 percent of the US national income scale than from the entire bottom 60 percent.¹⁵² Scholars have pointed out that Americans have become accustomed to the reality that higher education comes at a phenomenal cost, requiring most middle-class families to save throughout a lifetime for their children’s education at elite universities.¹⁵³

A recent proposal to shift the responsibility solely to the public educational sector has proven too politically controversial and is thus very unlikely to be accepted nationally. In his failed bid for the 2020 presidency, Senator Bernie Sanders argued that “It is time to build on the progressive movement of the past and make public colleges and universities tuition-free in the United States – a development that will be the driver of a new era of American prosperity.”¹⁵⁴

Given the deep-seated problems caused by the luxurification of higher education and the ineffectiveness of federal government intervention, I propose that elite US universities should devote more of their resources to promoting equal access to higher education. One means of doing so is promoting equal access to knowledge. Intellectual properties include original expression of ideas in the form of textbooks, research papers, and literary books, and inventions with novel solutions to existing technological problems. Therefore, intellectual properties embody a rich repertoire of knowledge.¹⁵⁵ Moreover, the enjoyment of intellectual properties is non-rivalrous,¹⁵⁶ meaning that a person’s use of a work or an invention does not hamper others’ simultaneous use of the expression or technical features embodied in the work or invention. Therefore, the responsible exercise of rights over intellectual properties by IP owners has an enormous impact on the public’s access to knowledge.¹⁵⁷

Elite universities’ socially responsible use of intellectual properties can help promote the right to higher education through providing equal access to knowledge. First, they should take advantage of their copyrights over staff publications to participate actively in open access knowledge sharing and dissemination. Second, they should prudently exercise the fair use doctrine, a user right under copyright law, to make available the tens of millions of books housed in their libraries through an e-lending program.

Through fulfilling such responsibilities, elite universities will help bring protection of the right to higher education into a new era of social justice, so that students from all walks of life can benefit from the democratization of knowledge. The beauty of this democratization is that while at present only some students are able to physically receive their education on elite university campuses, all students (whether nationally or globally, financially well placed or challenged, and of all ethnicities and genders) might benefit from the knowledge these universities and others commit to disseminating as widely and openly as possible.

Conclusion

The conspicuous consumption of elite higher education, as this chapter has revealed, is a phenomenon that treats elite universities as owners of luxury brands. The more surprising reality is that elite universities have actually become hyper luxury brands. Due to their extremely low admission rates, elite university brands are more exclusive than most luxury brands. This luxurification of higher education, however, runs counter to the ethos of education in general and the right to education in particular. As both international human rights treaties and the US Supreme Court have emphasized, the right to education entitles everyone to equal access to higher education. The luxurification of higher education stands in the way of this equality.