Normative Economic Analysis of Trademark Law

Abstract

Aside from the benefits that trademarks provide society, nothing inherently special about them warrants granting an exclusive in them interest to users. Trademarks benefit society by providing information about and identification of the products that consumers wish to buy. This informational and identificatory role of trademarks is the source of their value and the policy basis for according the first user protection against others’ concurrent use of the same or similar mark. The law should protect the source of a trademark’s value, not other attributes that merely reflect that a trademark has value. The informational and identificatory roles of trademarks can cost-effectively facilitate interbrand competition. Interbrand competition, in turn, maximizes value for consumers. Protection of trademark interests beyond their informational and identificatory roles protects more than their value to consumers. Such broadened protection creates property interests in trademarks that benefit only the first user of the mark at the expense of consumers’ interest in competitive markets. Protecting consumers’ interest in competitive markets creates more value than protecting the naked property interests of trademark users. This Article examines basic assumptions about competitive markets and the positive roles that recognition of exclusive trademark interests plays in promoting interbrand competition in such markets. The Article also examines various existing trademark doctrines and recent amendments to the Lanham Act against these standards.