Rationales for the Protection of Trademarks with a Reputation TRADEMARK LAW INSTITUTE ‘The Protection of Trademarks with a Reputation’ 15 October 2010.

Rationales for the Protection of Trademarks with a

Reputation

TRADEMARK LAW INSTITUTE

‘The Protection of Trademarks with a Reputation’ 15 October 2010

W. SakulinInstitute for Information Law (IViR)

Universiteit van Amsterdam

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Need for and (minimum) requirements of a rationale

The need for a rationale Trademark rights exclude third parties from

certain uses of trademarks Interdependency in communication Distributive justice – equal opportunities

The (minimum) requirements of a rationale A convincing reason for protection Ability to determine the appropriate scope and

limitations of the rights

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The Functional Approach

1. Source identification and product distinction founction

2. Quality and guarantee function3. Advertising function

ECJ: The essential function (1 and 2) The other functions: communication, advertsing,

investment (3)

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The Essential Function

ECJ 12 November 2002 Arsenal Football Club, para 48: “to guarantee the identity of origin of the marked goods or services to the consumer or end user by enabling him, without any possibility of confusion, to distinguish the goods or services from others which have another origin. For the trade mark to be able to fulfil its essential role in the system of undistorted competition which the Treaty seeks to establish and maintain, it 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.“

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Economic Rationales

TM right to achieve an economic optimum Existence & scope of TM rights only as far as

benefits outweigh costs

Remedying a market failure 1. High search costs

-> search cost rationale1. Insufficient revenues to TM right holder

-> dynamic efficiency rationale

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Economic Rationales

Consumers / Society Right holders

Source identification & product distinction function

SC rationale

Quality and guarantee function

Dynamic efficiency rationale

Advertising function

?

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Economic Rationales – The advertising function

Search cost rationale Blurring

Depends on the definition of distinctive character and harm Tarnishment

Truthful information should be permitted Free-riding

Not about search cost reduction – ECJ L’Oréal v. Bellure

Dynamic efficiency rationale Does TM law have the aim to stimulate the ‘production’

of trademarks with a reputation? “No economic harm in pure free-riding” Landes and

Posner

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Negative effects of protecting the advertising function

Negative economic consequences Adverse selection by consumers – (tab water) Inertia of consumers Monopoly power & barriers to market entry (antitrust)

The ‘freedom’ argument “Consumers are free to chose the products they like –

advertising does not force products or services on them.” -> Consumers need adequate knowledge of alternatives

Possible negative social consequences Directed against advertising Promotion of consumerism Promotion of stereotypes

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Ethical Rationales

TM right as moral entitlement or reward

BUT always grounded in a framework of justice or fairness

This implies mutual duties and rights of all people vis-à-vis each other

1. Unjust enrichment2. Lockeian Labour Theory

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Unjust Enrichment

Basic principle of civil lawAction of last resort

Impoverishment Enrichment Causal link Unjust No other means of recuperation

Does not fulfill the (minimum) requirements of a rationale What is ‘unjust’? Misappropriation/own efforts?

Not possible to deduce an indication for defining the scope of trademark rights

If ‘unjust’ is defined in the negative i.e. “free competition must remain possible”, then the application of economic theories seems more appropriate.

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Lockeian Labour Theory

Based on a mutual “no-harm principle” A labourer owns his body and his labour He mixes his labour with objects from the commons The objects embody the labour Taking of the objects by others harms the labourer -> others have a duty to refrain from causing harm

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Lockeian Labour Theory

Application to trademark rights? physical labour / investment the commons / signs state of nature / monetary economy corn, apples / repute, distinctive character (in the

mind of consumers)

Need to modify the original theory Investments Signs

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Lockeain Labour Theory

The object of protection must be the result of the labour or investment Trademarks with a ‘reputation’ Exclusion of alternative causes of reputation –

Schechter(!) What about reputation (ECJ Chevy), repute & distinctive

character (ECJ l’Óreal and Intel)?

‘Enough and as good’ must be left to third parties Results from the no-harm principle

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Labour & ‘Enough and as good’

No appropriation of descriptive or cultural connotations, e.g. Lief! (Sweet!) – Goldhase – Raffael’s Putti (A. Ohly)

Room for descriptive, generic and referential uses 3rd party uses need to remain ‘as good’(!) – ECJ Gilette Generic uses –use as product standard should be possible L’Oréal v. Bellure – enough and as good?

Freedom of Expression Parody, criticism, artistic uses, educational use…

Other social values

Thank You!

W. SakulinInstitute for Information Law (IViR)

Universiteit van Amsterdam

[email protected]