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Friday, 12 February 2016

Why it may not be possible to provide a comprehensive explanation of trademarks

Fellow Kat Eleonora asked in her post of yesterday-- “Is trademark law difficult?”, focusing on the complexity of the trademark
registration process. A similar question recently occurred to this Kat, but from a different direction. True, the trademark registration process can be complex, but with enough persistence, one can usually navigate through it. What is more intractable is trying to put together the building blocks of trademark law that have developed over the years. For this Kat, therefore, here is the central question— “Is it possible to talk about in an analytically coherent fashion?” He is not sure that he can give a thumbs-up response.

Let me suggest that there are three principle lines of inquiry that have been brought to bear on trademarks. The first is determining exactly what and whom are being protected—the trademark owner against a trader using a confusingly similar mark or the consumer from being deceived? Are trademarks a property right or a deception right? Let’s assume the answer is that it depends—the EU approach tends towards the former while the US approach tilts towards the latter. If so, considerations of consumer protection are more likely to find their way into US trademark law as compared with its EU counterpart. But these are tendencies rather than black and white distinctions, and the resolution to the question can play out differently, depending upon the jurisdiction.

The second is to ask to what extent trademarks are economically beneficial. The 20th century witnessed two principal approaches to the question. The earlier approach took a relatively negative view of trademarks, arguing that they have the effect of creating artificial distinctions between roughly similar products. If you, as a trademark owner, hit the trademark jackpot and succeed in nurturing a trademark that can command a premium price, you become better off, even if there is no enhancement of consumer welfare in the form of obtaining a premium product in exchange for paying a premium price. Advertising is held to play a key role in creating these artificial distinctions and generating the requisite demand. For Kat readers with an historical bent, it is fascinating to see how this approach folded into the debates within the US Department of Justice in the 1930’s and 1940’s during the process of enacting the Lanham Act of 1946.

Towards the latter part of the 20th century, a the neoliberal economic approach (think Adam Smith) gained ascendancy, emphasizing the role that trademarks play in providing useful information about the goods or services to the consumer. Trademarks are perceived as an efficient means for providing useful commercial information. A so-called strong mark is viewed as more successful in providing this information, rather than as an instrument for consumer exploitation. What is common to both these approaches is that they are driven by economic analysis. As such, they are not directly part of trademark law, although since they are often part of a law school education, at least in the U.S., as well as providing the foundation for many a scholarly article, they serve as the basis for arguments about whether there is too much or too little trademark protection.

The third centers on identifying the function(s) of a trademark. Everyone agrees that a trademark is first and foremost an indication of source, which serves a fundamental component of trademark law. But additional functions can be to be recognized, most notably the quality function of a mark, which was seen to derive from the origin function and, in the US at least, provided the basis for giving legal recognition to licensing. Various jurisdictions have gone further, affording recognitioninter alia to the advertising function (positive and negative) and to an information function. The extent to which these additional functions are merely variants or the origin function, or are sui generis (as Eleonora wrote that some claim it is "...because of the Court of Justice of the European Union that has added all those trade mark functions"), or are not really functions at all from the legal perspective, is not settled. And then there is that category of marks that are so strong that do not merely serve as an indication of source, but become their own asset. Do such marks constitute an exception from the source indication function, or do they amount to another function for trademarks for a select number of well-positioned marks?

And so the question—how are we meant to interweave these various analytical moving parts? Are they meant to be interwoven as components of an overarching whole, or is each of them a separate and distinct inquiry about how to
understand trademarks and trademark law? If the former, as a profession, both in practice and in academia, we are far from explaining these interconnections and for good reason, because any attempt to join together so many elements into a single coherent legal framework seems especially daunting. If the latter, there is the relief of not having to show these interconnections, but at the price of dooming any analysis of trademark law to a series of partial explanations. Perhaps that is why it is so challenging to talk about trademarks.


THE US anon said...

Mr. Wilkof,

One can always find a way of "trying too hard" and confusing oneself. That does not make the subject itself intractable. It just means that you have confused yourself.

For example, your second question here: "The second is to ask to what extent trademarks are economically beneficial" can only lead to an answer of "It depends." This is the only answer because the end result extends beyond the law itself and is determined in part by individual (and corporate) actions beyond the law. You also at this point interject the various subjective views of those who simply disagree with the concept itself. You are the one making a muddle here - the law is not a muddle. Complicated? Sure. But as Einstein is famously quoted (and the second part is critical):

"Everything should be made as simple as possible, but not simpler." (emphasis added)

Anonymous said...

Wilkof provides here a succinct overview of the still unsuccessful quest for a comprehensive theory of trademarks. I wonder whether this problem has parallels in the world of science. A friend of mine from planet Physics has referred me to the following on Wikipedia:

"Wave–particle duality is the fact that every elementary particle or quantic entity exhibits the properties of not only particles, but also waves. It addresses the inability of the classical concepts "particle" or "wave" to fully describe the behavior of quantum-scale objects. As Einstein wrote: "It seems as though we must use sometimes the one theory and sometimes the other, while at times we may use either. We are faced with a new kind of difficulty. We have two contradictory pictures of reality; separately neither of them fully explains the phenomena of light, but together they do".

Perhaps we on planet Law have something to learn from planet Science....

Ashley Roughton said...


My experience in teaching the economics of trade marks is to ask "why a trade mark system?", to which there are many answers, but the by far most important one is "to reduce search costs". That would be your first question. Your second question (if the first is answered in the sense that we have an economic basis for the existence of a trade marks system) is then "why a state sponsored system?"; the answer to that question might be more tricky since non state sponsored trade mark systems do exist, and work quite well. The third question is "how do we ensure the system works", to which the most efficient answer - if you believe that efficiency equates with the economisation of state resources - is by allocating rights to private enterprise and leaving it to them to pursue trespassers. This last answer is why we have a private enforcement system. People complain about their "rights" being infringed but they forget that they are only given them to save the state from enforcing the operation of a system it created.

To that extent I disagree with your questions but I agree with your conclusion ("... so challenging to talk about trademarks."). I feel a symposium coming on. "The IPKat symposium on the economic function of trade marks: does our current system create the right economic advantages?" anybody up for it? Actually, while we are at it could we also have a symposium or perhaps a short debate on whether it is "trade marks" or "trademarks" (Google search seems to think it is the latter).


Sally Cooper said...

Really like "property right" v "deception right". The former is so 1800 and something and the latter is so 2000 and something. Let's say 1900 and something saw the shift from (fogive me) Victorian mill-owners here in the UK wanting to make sure THEIR goods were not confused with goods of other Victorian mill-owners to (forgive me again) an "I thought of it first so it's mine" mentality (where the battleground is either (here in the UK - unregistered) copyright or (here in the UK - more publically) the wonderful world of trade mark registration. Just wait 'til Joe Public gets the hang of design rights !

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