Overview

What is a trade mark?

• TMA s1(1): “any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings”

• Trademarks communication 3 possible types of information

  • Trade origin (essential function in European terms)

    • Martin y Paz Diffusion v David Depuydt (2013): Trade marks tell customers who is “the owner of the trade mark and not (necessarily) the real manufacturer)

  • Quality (customers expect consistently quality from the same product)

    • This is a by-product of indicating trade origin

    • SA-CNL SUCAL v HAG (1990): Trade marks guarantee that the goods “have been produced under the control of a single undertaking which is accountable for their quality”

  • Other values (“atmospherics”)

    • Used to target specific consumer groups in advertising

    • Dior v Evora: Trade marks can have “communication, investment, or advertising functions”

Parallel systems

• Community Trade Marks

  • Governed by the Community Trade Mark Regulation 207/2009

• National Trade Marks

  • Governed by the Trade Marks Act 1994

    • Harmonised by the Trade Mark Directive 2008/95/EC

    • Courts often apply the Directive since the Act has to be interpreted in accordance with the Directive anyway

  • Granted by the UK IPO

Justifications

Different justifications from other IP rights

• Doesn’t protect creations (unlike patents and copyrights which require originality)

  • So it cannot rely on natural rights (Lockean) or be to incentivise creation

• Distinct from the goods themselves

  • So it doesn’t prevent competition in the actual product, only the marks

• Function indefinitely, receive perpetual protection

  • Stricter time limits on copyright and patents

Problems with trade mark protection

• Impedes competition

  • Competitors are forced to use other names and branding, since trade mark registration gives a monopoly to the owner

    • The trade mark could cover a broad category of goods and services

  • This could result in increased costs

    • Applicant need not be doing anything (e.g. selling products) when registering for the trade mark

    • If someone uses a trade mark in ignorance and subsequently has to rebrand, that creates significant cost

• Impedes free speech

  • E.g. in parodies of branded goods

Arsenal Football Club v Reed [2003] CMLR 481

• CJEU considered the function and purposes of trade marks

• The “essential function … is to guarantee the identity of origin”

  • By enabling consumers “without any possibility of confusion, to distinguish the goods or services from others which have another origin”

  • To fulfil its role, trade marks must “offer a guarantee that all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality”

Landes and Posner, Trademark Law: An Economic Perspective (1987)

• Trade marks help to identify goods

• Reduces search costs

  • In the market for trademarked goods

    • This requires that producers “maintain a consistent quality across time and across consumers” and that searching for the trade mark is cheaper than searching for desired attributes

    • Allows customers to avoid investigating attributes of the brand by relying on the trade mark

• Trade marks are “self-enforcing”, incentivising producers to maintain consistent quality

  • “They are valuable because they denote consistent quality, and a firm has an incentive to develop a trade mark only if it is able to maintain consistent quality”

  • If there is no consistent quality, customers will learn that the trade mark doesn’t connect their past and future purchases and will be unwilling to pay for it

• There are limited costs of trade marks

  • Possibility that owners are induced to spend money on creating a “spurious image of high quality that enables monopoly rents”

    • Diverting consumers from lower-priced substitutes of equal or higher quality

    • E.g. branded goods which are produced according to the same formula as generic goods but cost more

  • Landes and Posner: This has not happened in trade mark law

    • Trade marks ensure the quality of the product, not just the formula by which it was produced

    • Trade marks don’t create social waste and consumer deception

Schechter (1926): Trade marks perform advertising functions as well as indicating origin

• The “trademark is not merely the symbol of goodwill but often the most effective agent for the creation of goodwill, imprinting upon the public mind an anonymous and impersonal guarantee of satisfaction, creating a desire for further satisfactions”

• Trade marks should be protected even if there is no confusion as to origin

• Key principles

  • “value of the modern trademark lies in its selling power”

  • The selling power depends on not only the “merit of the goods” but also “its own uniqueness and singularity” to create a “psychological hold” on the public

  • Uniqueness or singularity is “vitiated or impaired” by use on other goods

  • Degree of protection should depend on how unique it is due to owner’s efforts

Klein: Consumers often purchase brands rather than the underlying product

Litman (1999): There is no social purpose in protecting atmospherics, despite their value

• Just because consumers “attach real value to atmospherics” doesn’t mean that these atmospherics should be protected

  • Valuable things might deserve protection or might need to remain available for public use

• “Protecting consumers from deception is the justification most familiar to trademark law”

  • But this doesn’t justify preventing dilution where there is no confusion

• The justification of incentivising investment is not applicable either

• Justification of desert is not very applicable, although owners invest in the trade mark

  • The value of trade marks “derives from consumers’ investing those symbols with value for which they are willing to pay real money”

  • So this value should be left in the public sphere, not owned by the proprietors

Summary: Main Justifications

• Consumer protection

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