The Comparative Law and Economics of Counterfeits and Post-Sale Confusion
RESEARCH HANDBOOK ON THE LAW AND ECONOMICS OF TRADEMARKS, Glynn S. Lunney, Jr., ed., Edward Elgar Publishing, 2022, Forthcoming
19 Pages Posted: 16 Dec 2021 Last revised: 4 Jan 2022
Date Written: December 16, 2021
Post-sale confusion is a concept used to protect trademark holders even when no consumer confusion exists at the point of sale. Instead, protection is granted based on the fact that future purchasers or other consumers will be confused after the sale and such confusion will harm trademark holders. Despite the widespread criticisms of this doctrine, with many commentators calling for either its abolition or substantial reform, courts continue to grant such protection.
This chapter interrogates the economic justifications for the doctrine of post-sale confusion. It begins by exploring those justifications in the trademark holder's domestic market. For analytical purposes, the discussion focuses on U.S. trademark law, including the different rationales advanced by the U.S. Court of Appeals for the Sixth Circuit in General Motors Corp. v. Keystone Automotive Industries, Inc. The analysis demonstrates that very limited economic justifications exist to support the doctrine of post-sale confusion, except in cases where the counterfeits will harm the exclusivity or other quality-unrelated attributes of status goods.
This chapter then turns to the trademark holder’s foreign markets. Using a comparative approach, the analysis shows that the doctrine’s economic justifications are even weaker in developing countries where most counterfeits are made. Because many foreign jurisdictions do not have the doctrine of post-sale confusion, the analysis relies on the analogical category of nondeceptive counterfeits. Based on the economic analysis of the doctrine in both developed and developing country markets, this chapter concludes by offering five recommendations for courts, legislators, and policymakers to reform trademark law in the area of post-sale confusion.
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