Enforcement Costs and Trademark Puzzles

Abstract:     
The standard account holds that trademark law, at its core, aims to protect consumers from deceptive and confusing uses of source-identifying marks. However, there is a problem with the standard account. It cannot explain a number of important trademark doctrines, many of which, like the protection accorded trade dress, have expanded the scope of trademark rights in recent years. Some critics argue that these puzzling doctrines reflect a radical shift away from the standard account and toward a new property theory of trademark law that focuses not so much on the quality of information available to consumers as on the seller's ability to appropriate the full commercial value of its mark.

This Article offers a different, and less alarming, explanation for many of the puzzling doctrines, one that does not require a radical departure from the standard account. This alternative explanation focuses on the enforcement costs of implementing law based on the standard account. Enforcement costs include the administrative costs of adjudicating trademark lawsuits and the error costs of over- and under-enforcing trademark rights. For a number of reasons, trademark law generates high enforcement costs, and many of the puzzling features of trademark doctrine can be understood as legal tools to manage these high costs. In particular, courts adopt general rules or standards that protect trademarks more broadly than the standard account's substantive policies support, but those rules and standards can be justified by the administrative and error costs they save. In the end, the Article uses the enforcement cost approach to suggest two reforms to trademark law - the broader acceptance of disclaimers especially in merchandising rights cases, and the abolition of trade dress protection.

Keywords: Intellectual Property, Trademark, Enforcement Costs, Trade Dress

JEL Classifications: K11, K42

Accepted Paper Series