The Dark Side of Trademark Protection

75 Pages Posted: 21 Jun 2016 Last revised: 25 Sep 2018

See all articles by Davidson Heath

Davidson Heath

University of Utah David Eccles School of Business

Chris Mace

University of Utah, David Eccles School of Business

Date Written: August 14, 2018

Abstract

We study the effects of trademark protection on firm profits and strategy using the 1996 Federal Trademark Dilution Act, which granted additional legal protection to selected trademarks. We find that the FTDA raised treated firms' operating profits and was followed by a spike in trademark lawsuits and lower entry and exit in affected product markets. Treated firms reduced R&D spending, produced fewer patents and new products, and had more recalls of unsafe products. These results suggest that stronger trademark protection had negative effects on innovation and product quality.

Suggested Citation

Heath, Davidson and Mace, Chris, The Dark Side of Trademark Protection (August 14, 2018). Available at SSRN: https://ssrn.com/abstract=2798473 or http://dx.doi.org/10.2139/ssrn.2798473

Davidson Heath (Contact Author)

University of Utah David Eccles School of Business ( email )

Salt Lake City, UT 84112
United States

Chris Mace

University of Utah, David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

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