The Case for a 'Limited' Protection of Trademark Merchandising

Abstract:     
Since its “judicial creation” in the 1970s, much controversy has surrounded the practice of trademark merchandising. Because of the departure from the traditional interpretation of trademark law - protecting consumers and the market - in favor of a direct protection of trademark “value,” trademark scholars have generally opposed the recognition of merchandising rights. Despite this opposition, courts and the legislature have nonetheless favored the acceptance of this practice by steadily increasing the scope of trademark protection in the past decades, notably by introducing the concept of confusion as to the products’ “sponsorship” or “affiliation” as part of the standard for trademark infringement. Not surprisingly, trademark scholars have criticized these developments and to date no solution has been found in this area of the law. This Article argues against this situation and offers an alternative position to the opposition to merchandising so far expressed by the majority of scholars. Specifically, this Article accepts that, in the modern economy, the concept of commercial “source” could also include products’ “sponsorship” and “affiliation.” Accordingly, this Article recognizes that the use of trademarks on promotional products that are offered for sale could legitimately serve the traditional distinctive function of trademarks, and indicate to the public the origin of the marked products, at least in terms of trademark owners’ “sponsorship” and “affiliation”. Contrary to common criticism, this recognition of merchandising marks as legitimate “source indicators” would not negatively affect the market or consumers. Instead, it would finally provide a clear guideline in this important area of the law, and subject this practice to the general rules for the acquisition and enforcement of trademark rights as well as to existing trademark defenses and fair uses.

Number of Pages in PDF File: 51

Keywords: trademark, trademark merchandising, trademark infringement, trademark licensing

JEL Classification: K00, K11

Accepted Paper Series