The Trademark Paradox
Trademarks and Their Conflicting Legal and Commercial Boundaries
Table Of Contents
- About the author
- About the book
- This eBook can be cited
- 0. Introduction
- 0.1 The Trademark Paradox
- (a) The Problem: Where are we?
- (b) The Reasons: How did we get here?
- (c) The Consequences: Where are we headed?
- (d) The Future: What alternatives do we have?
- 0.2 Scope & Overview
- (a) Trademarks & Society
- (b) Trademarks & Competition
- (c) Conflicting Commercial & Legal Boundaries
- (d) Striking a Balance
- 0.3 Sources, Citations & Legal Framework
- (a) Sources & Citations
- (b) U.S. Federal Laws, Courts & Precedence
- (c) EU Treaties, Courts & Legislation
- 1. Trademarks & Business: The Protection of Brand Assets
- 1.1 Overview: Trademarks in Transition
- 1.2 Trademarks Today
- (a) Competitive Business Assets
- (b) Brand: n. A living business asset.
- (c) The iPad Trademark Saga in China
- 1.3 Historical Overview
- (a) Practical Beginnings: Ownership, Origin & Quality
- (b) The Trademark (R)Evolution: Goodwill & Advertising
- (c) Modern Significance and Function
- 1.4 Chapter Observations
- 2. U.S. Trademark Protection: Common Law Roots & Commerce
- 2.1 Overview
- 2.2 Early Protection
- (a) 1772–1825: Early Beginnings
- (b) 1845–1860: New York State Trademark Statute
- (c) 1870–1880: Federal Trademark Laws, Registration & Unconstitutionality
- (d) United States Trademark Association (INTA)
- (e) 1881–1920: New Federal Trademark Laws
- (f) Concurrent International Developments: Paris Convention & Madrid Agreement
- 2.3 The Lanham Act and the Beginning of the Modern Phase
- (a) The Lanham Trademark Act
- (b) Trademark Trial and Appeal Board
- (c) Modern Amendments: Enhanced Protection
- (d) Further International Developments: TRIPs
- 2.4 Modern U.S. Trademark Law
- (a) Scope & Duration of Protection
- (b) Jurisdiction & Responsibilities
- (c) Registration Application & Process
- (d) Requirements for Protection
- (e) Loss of Rights: Genericness
- (f) Causes of Action
- (g) Defenses
- (h) Remedies
- 2.5 Chapter Observations
- 3. EU Trademark Protection: Tension Between Competing Interests
- 3.1 Early Beginnings
- (a) France
- (b) United Kingdom
- (c) Austria
- (d) Germany
- (e) International Protection
- 3.2 National Rights v. EU Common Market Principles
- (a) Territorial Protection
- (b) Free Movement: The Problem with Trademarks
- (c) TFEU: Protection of Intellectual Property Rights
- (d) Case Law: Priority of Intellectual Property Rights
- (e) Differing National Rights within the EU
- (f) Balancing Act: Exhaustion of IP Rights
- 3.3 Modern EU Trademark Law
- (a) Goals & Challenges
- (b) Trademark Harmonization
- (c) The Trademark Directive
- (d) The Community Trade Mark Regulation
- (e) Interaction with National Trademark Laws
- (f) Scope of Protection
- (g) Jurisdiction: National Courts, OHIM & EU Courts
- (h) Categories of Protectable Subject Matter
- (i) Infringement & Causes of Action
- 3.4 Chapter Observations
- (a) From Sirena to HAG II
- (b) The EU Perspective
- (c) Differences between U.S. & EU Laws
- 4. Trademarks & Competition: Competition’s Role in Resolving the Tension between Proprietary Rights & Market Competition
- 4.1 Chapter Overview
- (a) Interim Summary
- (b) Basic Considerations
- 4.2 Areas of Conflict Between Trademark Laws and Competition Principles
- (a) Competition Law: Key Objectives
- (b) Intellectual Property Rights: Key Objectives
- (c) Legal Collision
- (d) Anti-Competitive Behaviors
- (e) Ongoing Efforts
- (f) The Trouble with Trademarks
- 4.3 Chapter Observations
- (a) Comparison of U.S. and EU Approaches
- (b) Reconciliation Challenges
- (c) Chapters 5 and
- 5. Application of U.S. Antitrust Laws to Intellectual Property Rights: Deference to Proprietary Rights
- 5.1 Legal Framework
- (a) The Sherman Antitrust Act
- (b) The Clayton & FTC Acts
- (c) The Per se Rule vs. the Rule of Reason
- 5.2 Historical Overview
- (a) Early Decisions: IP Rights Paramount
- (b) The Nine No-No’s: Stringent Scrutiny – IP Rights Narrowly Construed
- (c) Modern Economic Focus: Encourage Innovation and Competition
- (d) 1995 Guidelines: Three Principles
- (e) 2000 Guidelines: Collaboration
- (f) Modern Application of the Guiding Principles
- (g) The Trademark Analysis
- 5.3 Chapter Observations
- (a) Goal of Antitrust: Enhancing Consumer Welfare
- (b) Application of U.S. Antitrust Laws to Intellectual Property Licenses
- (c) Conclusion: IP Rights Dominate
- 6. Application of EU Principles to Intellectual Property Rights: Deference to Competition & The Internal Market
- 6.1 Historical Perspectives & Overview
- (a) A Two-Dimensional Challenge
- (b) EU Principles & Intellectual Property Rights
- 6.2 Articles 34-36 TFEU
- (a) Quantitative Restrictions
- (b) Principle 1: Existence v. Exercise of Intellectual Property Rights
- (c) Principle 2: Specific Subject Matter
- (d) Principle 3: Principle of Exhaustion
- (e) Application of Free Movement of Goods Rules to Trademarks
- 6.3 Articles 101 and 102 TFEU
- (a) Competition Law Framework & Enforcement
- (b) Authority to Enforce Competition Rules: Regulation No 1/
- (c) Legislative Tools: Block Exemptions & Guidelines
- (d) Article 101 TFEU
- (e) Article 102 TFEU
- 6.4 EU Competition Rules Applicable to Trademarks
- (a) Application of Article 101 to Trademark Licensing
- (b) Application of Technology Transfer Block Exemption to Trademark Licensing
- (c) Application of Vertical Restraints Block Exemption to Trademark Licensing
- (d) Application of Article 102 to Trademark Ownership & Licensing
- 6.5 Chapter Observations
- (a) EU Principles & Goals: Competitive Market
- (b) Intellectual Property Rights: Additional Challenges
- 7. Commercial Boundaries: Significance & Strategies
- 7.1 Interim Summary
- (a) Trademarks – Competition – Collision
- (b) Trademarks’ Commercial and Legal Boundaries
- 7.2 Intellectual Property Rights: Creativity v. Commerce
- (a) The Intellectual Property Umbrella
- (b) Foundations of Legal Protection & Historical Perspectives
- (c) Rationales for Protection
- (d) Scope of Rights & Protectable Subject Matter
- (e) Existence versus Use
- 7.3 Commercial Power: Predatory Practices (and the Rise of the Trademark Bully)
- (a) Aggressive Policing and Over-Enforcement of Rights
- (b) Non-Meritorious Litigation
- (c) Aggressive Bullying Tactics Outside of the Courtroom
- (d) Trademark Turf Wars
- (e) Dilution Claims Run Amok
- 7.4 Chapter Observations
- 8. Trademark’s Legal Boundaries: Conflict Between Private Rights & Public Interests
- 8.1 Interim Summary
- (a) Commercial Significance
- (b) Legal Failures
- 8.2 Expanding Legal Rights
- (a) Overview
- (b) Rationales for Protection
- (c) Protected Categories
- (d) Infringement Standards & Causes of Action
- (e) Priority of Rights
- 8.3 The Legal System’s Failure to Establish Limits
- (a) Basic Observations
- (b) Protection of Trademarks as Property
- (c) Protection of Trademarks’ “Commercial Magnetism”
- (d) Availability of Overlapping (and Supplementary) Protection
- (e) Lack of Guidance Under Competition Laws
- (f) No Measurable Tools to Gauge Market Power or Abuse
- (g) Lack of Applicable Remedies
- 8.4 Chapter Observations
- (a) Trademarks & Commerce
- (b) Trademarks & Competition
- (c) Chapter Summary
- 9. Solutions: Striking a Balance
- 9.1 Interim Summary
- (a) Trademarks: “You’ve Come a Long Way, Baby”
- (b) The Competitive and Non-Competitive Effects of Trademarks
- (c) Private Rights v. Public Interests
- (d) The Trademark Paradox
- (e) Establishing a Balanced Trade-Off
- 9.2 Prune the Trademark Tree
- (a) Stop Analogizing: Let Trademarks be Trademarks
- (b) Prioritize Trademarks’ “Information Role”
- (c) Reapply Unfair Competition Principles
- (d) Reign in Dilution: Apply Carefully (if at all)
- (e) Implement a Meaningful Use Requirement
- (f) Balance Injury v. Harms
- 9.3 Practice Statutory & Regulatory Humility
- (a) Implementation of “sui generis” Laws: Be prudent
- (b) Reconsider Competition’s Role
- (c) Proceedings: Act Timely
- (d) Articulate Confusion
- (e) Deter Meritless Litigation
- (f) Be Governed by Sic Utere Tuo
- 9.4 Chapter Observations
- (a) Intellectual Property Protection
- (b) Trademarks & the Global Economy
- (c) Fundamental Changes to Trademark Protection
- (d) Achieving Reasonable (and Effective) Competition
- 10. Summary in the Form of 10 Theses
- Schedule 1 – 2014 Ranking of the Top 100 Brands
- Schedule 2 – U.S. Circuit Court Map
- Schedule 3 – Generic Trademarks
- Schedule 4 – Treaty of Lisbon: New Terminology & Numbering
- German Summary (Deutsche Zusammenfassung)
- 1. Einführung in das Thema
- 1.1 Das Markenparodoxon
- 1.2 Das Problem: Wo stehen wir?
- 1.3 Die Gründe: Wie sind wir an diesem Punkt angelangt?
- 1.4 Die Folgen: Wohin bewegen wir uns?
- 2. Die Kapitel im Überblick
- 2.1 Kapitel 1–3: Marken und die Gesellschaft
- 2.2 Kapitel 4–6: Marken und Wettbewerb
- 2.3 Kapitel 7–8: Wirtschaftliche und rechtliche Grenzen von Marken und ihre Konflikte
- 2.4 Kapitel 9: Der richtige Mittelweg
- 3. Ergebnisse
← 12 | 13 → Acknowledgements
This paper was accepted for submission in June 2014 by the Faculty of Law at Phillips-Universität Marburg and forms part of the requirements necessary to fulfill the degree of Doctor of Jurisprudence (Dr. iur.).
Without the assistance and support of Professor Dr. Georgios Gounalakis, this paper would not have been possible. His passionate interest in and deep knowledge of intellectual property law, coupled with his engaging and pragmatic approach, make working with him both intellectually rewarding and professionally enjoyable. I am further grateful for his efforts to help me navigate the administrative requirements for submitting this paper in such a timely fashion.
I further owe sincere thanks to Professor Dr. Florian Möslein, for so promptly reviewing, preparing, and submitting his evaluation.
I am deeply indebted to Dr. Nadine Herrmann, for encouraging me to follow this course of study in the first place, for giving me the time and space to write this paper, and for convincing me that I could complete it long before it otherwise would have been finished. I am grateful for her support and, more important, her friendship.
Very special thanks go to Dr. Klaus Winker. His balanced insights as to how this paper needed to change helped make it good, and his impressive talent as a journalist and an editor helped make it better. Alongside his professional advice, I am fortunate to have had his company and support.
I could not have completed this without the extraordinary friendship of my sister, Audrey Mina Manley. Without her unending support, patience, humor, and conviction in me, I could not have done this, or much else, in the past few years.
Finally, I dedicate this work to my parents, Maya and Edward Manley, whose never-ending support and love have guided me through this as well as every chapter of my life, and who continue to inspire me with their unwavering dedication to “do good work”.
Frankfurt am Main, November 2014
← 14 | 15 → “…the creation or recognition by courts of a new private
right may work serious injury to the general public, unless
the boundaries of the right are definitely established and
It would be almost impossible to imagine a world without trademarks. From the moment we wake up (turning off the Sony alarm clock, showering under the Hansgrohe shower head, getting into our BMW to drive to work, stopping for a Starbucks coffee, turning on our Dell computer, opening up our Microsoft office programs, searching for something on Google, making a call on our Samsung smartphone, checking emails on our Blackberry, quenching our thirst with a Coca-Cola, or buying a book on Amazon) until the end of the day (when we can finally enjoy a glass of Veuve Cliquot with friends), we interact – whether consciously or unconsciously – with a constant parade of trademarks, each vying for our attention and selection.
Trademarks play a fundamental role in our everyday lives as consumers as well as in the market in general. They help us distinguish the products we like and avoid those that we don’t, acting as a short-hand signal to give us certainty of what product we have chosen. They give us information about the source, manufacturer, or quality of the products we are purchasing, allowing us to make such choices quickly and efficiently. They allow companies to differentiate their products from those of their competitors, and to invest in and build brand (i.e., customer) loyalty, without fear of free-riding by competitors.
This paper examines the legal and commercial paradox we face with respect to trademarks. Trademarks are the essence of competition – in fact, they signal competition – since without competition there would be no need to distinguish ← 15 | 16 → between the goods of one company from those of another. Robust trademark laws prevent unfairness between (or free riding by) competitors, ensuring protection of the business goodwill represented by a mark. They diminish customer confusion and deception. They make “communication” between seller and buyer simple. Trademarks are “an essential element in the system of undistorted competition”,3 acting as “aids to the exchange of commodities … considered … vitally important to the protection of commerce”.4
However, the significant legal expansions in trademark protection coupled with the aggressive commercial strategies used by trademark owners – although made within the framework of promoting competition by combating free rider problems – have served to restrict competition by erecting overly-protectionist and often insurmountable barriers to market entry. The paradox lies in how we have dealt with this conflict: in our insatiable quest to promote competition, we have granted, and continue to grant, trademark owners new private rights and expanded claims without ensuring adequate boundaries of such rights, which has resulted, paradoxically, in a stifling of competition. We have failed to balance the private interests (increased protection of the investments made in the business goodwill of a trademark) with the public interests (ensuring robust market competition without restraints or barriers to trade).
In this regard, Justice Brandeis’ admonition, made almost a century ago in International News Service v. Associated Press, is well worth remembering:
“… with the increasing complexity of society, the public interest tends to become omnipresent; and the problems presented by new demands for justice cease to be simple. Then the creation or recognition by courts of a new private right may work serious injury to the general public, unless the boundaries of the right are definitely established and wisely guarded.”5
← 16 | 17 → (a)The Problem: Where Are we?
Long before they were defined or protected as trademarks, trade names, service marks, logos, or brands, identifying marks were put on a variety of items – including pottery, bricks, tiles, swords, cloth, books, wine, bread, medicines, gold, silver, and pewter – in order to signal ownership, source, or quality.6
In today’s modern and global marketplace, however, trademarks no longer function as mere ownership marks, source identifiers, or assurances of quality. Trademarks today are classified among the most important competitive business assets a company may own.7 They are big business, high value, aggressively protected, commercial assets. They are used to communicate the persona of a business to consumers worldwide and deemed an essential part of a comprehensive global business strategy.8 In essence, they are bearers of information, signals of investment, and tools of influence, identity, and trust. Where rhetoric has been called the “art of persuasion”, trademarks could be called the “symbols of persuasion” to gain customer loyalty and thus secure market share.
← 17 | 18 → As the commercial significance and financial value of trademarks have increased, so too the instances for abuse. There is the traditional abuse by competitors wanting to “free ride” on the success of a well-known trademark – i.e., to ride on the coat-tails of a well-known trademark in order to benefit from the power of attraction, the reputation, and the prestige of such mark, without paying the requisite financial compensation – by passing off their goods as those of the famous mark. There is also related “copycat confusion” or “ambush marketing”.9 Solving the “free rider”, passing-off, and ambushing problem has prompted much of the expansion in modern trademark law.
As trademarks’ power to persuade has grown (to increase product sales and gain market share), so too have the efforts by trademark owners to aggressively seek and claim expanded legal protection to keep such market value, whether in the courts or through effective bullying tactics outside of the courtroom. This too can be a form of abuse, resulting in expansive, and arguably excessive, rights. Dominant trademark owners today have broad rights that ensure their trademarks – along with an expansive swath of goodwill associated with those trademarks and the business enterprise – are not sullied (tarnished), imitated, or even tangentially referenced.
This expansive increase in legal rights and commercial power has occurred without corresponding limitations – or defined boundaries – either within the trademark laws themselves or through consistently applied competition or unfair trade practice principles. As a result, instead of functioning as origin, source, or quality identifiers intended to protect consumers and thereby ensure a fair and efficient market, trademarks are strategically used by owners to erect barriers to trade – against competitors, against foreign market participants, and against other intellectual property owners. Trademark laws have not effectively dealt ← 18 | 19 → with the consequences of having granted expanded rights – they have allowed trademark rights to become “untethered” from their “traditional moorings”.10 Although competition laws are suitable to address specific practices or prohibit illegal, unfair, or deceptive business practices, they have side-stepped the problems of powerful trademarks stifling competition. In the end, competition laws may not be the most suitable mechanism to align or “fix” the trademark paradox.
This configuration – of new but improvidently granted rights – is similar to the issues the justices faced in International News Service.11 There, the majority held the position that courts can treat “any civil right of a pecuniary nature as a property right” and that “the right to acquire property by honest labor or the conduct of a lawful business is as much entitled to protection as the right to guard property already acquired.”12
In his separate opinion,13 Justice Holmes14 began by observing that property rights are creations of law: they do not arise automatically from value, even if that value is exchangeable. Instead, they depend on a legal judgment that recognizing a right to exclude is needed to protect against unwarranted interferences. Justice Holmes suggested that the majority was wrong in creating a new right to protect interests. Where protection can be afforded without granting a right to exclude – in particular when unfair competition principles can be applied to resolve the dispute – Holmes felt it unnecessary to create new property rights to resolve the problem.15
The same can be said of trademarks. In allowing trademark protection to expand – including the introduction of “new” rights to resolve free rider and ambush marketing concerns – we have developed quasi-property rights in the “business persona” imbued in the trademark. We have done so without adequately considering the rationales for such expansion, whether principles already ← 19 | 20 → exist to resolve these problems, or the effects of such expansion on competition and the market.
From a legal rationale perspective, trademark protection was never intended to reward owners for an invention or artistic work,16 which is traditionally the reason justifying the exclusive rights granted to patent and copyright owners. Instead, trademark law was – and still fundamentally is – based on principles of unfair competition17 – i.e., it was developed in order to protect consumers from confusion. Patents and copyrights protect inventions and writings, allowing owners to prevent others from making, selling, using, or exploiting that invention or writing. A trademark merely allows to owner to bar others from use of that mark, but does not allow an owner to bar others from making a similar product. The relevant analysis in any trademark infringement (or unfair competition) action is whether the defendant’s mark is likely to cause consumer confusion, mistake, or deception.18 Initially, the scope of such consumer confusion was narrow: the laws and the courts only permitted trademark infringement between direct competitors in an industry.19 Today, the standards for infringement are far broader, covering not only “actual” confusion, but a likelihood of confusion, whether in a competing market or even markets not yet entered into.
Furthermore, since trademarks can, in theory, be protected indefinitely, the traditional trade-off underlying patent and copyright protection – the short-term grant of exclusive rights in exchange for the long-term contributions to the public domain – does not apply to trademarks. The expanded rights granted to trademarks thus have a far more appreciable, and lasting, effect.
← 20 | 21 → Finally, trademark rights – similar to other intellectual property rights – are inherently territorial and national by nature.20 Given the expanding uses of trademarks worldwide, crossing territorial boundaries where the laws may be different has added yet another layer to the complexity. Today, the top global brands are just that: global. They are known worldwide by name or by logo. They act as international “ambassadors” across languages, cultures and laws. Divergent national legal rights are coming more and more into conflict, testing both national laws’ and businesses’ ability to deal with conflicting laws, policies and trends. Particularly in the EU, trademarks’ inherently exclusive and territorial nature have been seen as impediments to the creation of a single market.
Because of these fundamental differences in rationale, scope, and duration, as well as the tension between territorial protection and international use and reputation, it has been difficult to apply general intellectual property rationales (which were developed primarily with patents and copyrights in mind) or competition law principles and restrictions to trademark use.21 These differences highlight the different interests (from the perspective of trademark owners) and challenges (from the perspective of law makers) that we face with respect to trademarks.
Although courts today understand and recognize the value of trademarks,22 there is no systematic or consistent application of legal restrictions dealing with them. ← 21 | 22 → To date, neither intellectual property laws nor competition rules have developed a mature or coherent legal regime to manage the ways in which trademarks are used in our modern, global market place. Depending on the current political situation, the economic marketplace, and even the country registering the trademarks, the laws and policies applied to trademark use and protection have experienced pendulum swings of either unabated rights or micro-managing.
Currently, the competition rules and legal guidance either ignore trademarks from discussions of intellectual property (e.g., they are specifically excluded from both the U.S. and the EU competition guidelines on the licensing intellectual property) or approach them from an irrelevant or impractical point of view (e.g., the EU guidelines refer to their “ancillary” relationship to other intellectual property rights). Trademark owners – and in particular dominant trademark owners – have taken advantage of this imbalance and have, through aggressive litigation and bullying business tactics, incrementally pushed out the contours of trademark protection, in some cases created new rights, to expand the scope of trademark rights. What we have failed to do with such increased private right, in Justice Brandeis’ words, is “prescribe limitations and rules for its enjoyment; and also to provide administrative machinery for enforcing the rules.”23
This paper will first highlight some of the legal and commercial conflicts we face with respect to trademarks and their modern system of protection. It will then conclude by suggesting principles and guidelines to resolve the imbalance.
Trademarks are a vital part of our lives – for businesses, for consumers, and for competitors. The fundamental principles underlying trademark protection still apply today, adapted and augmented as needed in our modern society. Although courts and policy makers have allowed imprudent expansion of private trademark rights, there are sufficient public interest principles and guidelines available to rebalance such imprudent expansion. The principles underlying trademark laws are good; they simply need some good “gardening” – i.e., pruning of the ← 22 | 23 → excess and establishment of well-defined borders – when being applied by courts and national authorities. Furthermore, in the spirit of Justice Holmes’ suggestion, there are existing unfair competition laws in place which can be applied to resolve the dispute. By pruning the trademark expansion and re-applying unfair competition principles, we could abate the pendulum swings of over- and under-exuberance, resulting in a more measured and consistent approach to trademark use, protection, and exploitation, benefiting businesses, consumers, and the market.
Chapter 1 begins with a review of the historical functions and foundations of trademarks, and examines the contours of trademark law which continue to be revised in response to business and social demands. Chapters 2 and 3 look at the legal frameworks in which trademark rights were developed in the U.S. (Chapter 2) and the EU (Chapter 3), reviewing the fundamentals which govern their rights today.
These three chapters demonstrate that the function of trademarks in our society today has evolved significantly from an original means of source identification intended to prevent consumer confusion and minimize consumer search costs to a profitable and commercially powerful means by which companies communicate a wealth of information regarding their business as an enterprise (and not just the product they are selling). Trademarks today are big money, big business, competitive assets.
With any exercise (and certainly with any expansion) of rights, concerns regarding the anti-competitive effects of such rights are raised. Even if additional rights are granted under the rationale of promoting competition, such expanded rights can serve to restrict competition. As a result, although trademarks act as important aids to competition (by prohibiting free-riding) and benefit consumers (by decreasing confusion and preventing fraudulent trade practices), their commercial dominance in the global market today, coupled with the expanding legal protections afforded under current laws, can have the effect of restraining free and fair trade.
Competition laws seek to minimize or prohibit anti-competitive effects which arise from the acquisition, exploitation, or enforcement of power in the market. ← 23 | 24 → The exercise of intellectual property rights – including trademarks – are certainly not immune from the scrutiny of competition laws. Chapters 4 – 6 thus explore the collision of intellectual property and competition laws in order to review how the granting of exclusive rights under intellectual property laws directly or indirectly conflicts with the restrictions on monopoly and monopolistic behaviour underlying competition rules.
Chapter 4 sets out the overall issues and challenges of the collision. Chapter 5 (for the U.S.) and Chapter 6 (for the EU) analyze how competition laws have been applied to the obtainment, grant, acquisition, and exercise of intellectual property rights – in particular with respect to trademarks – to determine whether the application of competition laws to the exercise of trademark rights has been successful to combat the anti-competitive effects of trademark use and protection. Chapters 5 and 6 also acknowledge the political and social frameworks which shaped the development of antitrust and competition laws, and looked at how such laws have been and are applied to promote and maintain “fair” market competition by regulating anti-competitive conduct.
With this background of trademarks, competition, and the collision of intellectual property rights and competition restrictions, Chapters 7 and 8 highlight the commercial and legal challenges courts, legislatures, and regulatory authorities are faced with when analyzing the competitive and anti-competitive effects of trademark use, protection, and exploitation. Trademarks are pro-competitive, essential to fair and efficient competition. Chapters 7 and 8 make the observation, however, that the expanding legal protection afforded trademarks coupled with the aggressive commercial strategies used by trademark owners – made under the guise of promoting competition – has served to restrict competition.
Chapter 8 takes the position that neither the trademark rules nor the competition rules adequately address these issues. Although developments and changes in law are vital to adapt our laws to a mature and modern society, what is problematic is our failure to establish (and “wisely” guard, in Justice Brandeis’ words) the boundaries of such developments or to address the anti-competitive effects of such changes. Chapter 8 posits that both intellectual property law and competition laws need to recognize the position of trademarks and address these issues accordingly, but that neither can do the work intended of the other. In fact, there are other well-established mechanisms available which might be better suited than competition rules to regulate the anti-competitive effects of trademark. This observation will lay the groundwork for Chapter 9 – “Striking a Balance”.
← 24 | 25 → (d)Striking a Balance
Recognizing the growing anti-competitive effects of trademarks (through the strong brand personalities they exude) and trademark law (through the expanded legal protection trademarks have been afforded) is one thing; determining what, if anything, can be done about such effects is quite another. Any solution needs to balance the pro-competitive functions of trademarks with the anti-competitive effects of their protection in order to achieve some reasonable measure of “workable competition”.24
A balanced approach – in the words of Samuelson – “is not a decision between … extremes”. Instead, solutions can be found in “the degree to which public policy should do less or more to modify the operation of particular private economic activities.” Chapter 9 identifies two pragmatic principles which can be applied to “do less or more”. These relate to (i) the nature and functions of trademark and trademark laws, and (ii) the legislative and judicial framework which informs and protects the same. These principles are based on well-developed (but now somewhat marginalized) doctrines and balance competing private and public interests (from the perspectives of trademarks owners, competitors, competition authorities, legislatures) to ensure efficient working of our modern, competitive economy.
The Conclusion summarizes the issues and the key lessons learned in 10 theses.
Primary source material comes from U.S., German, and EU founding documents (e.g., the U.S. Constitution, the German Basic Law – the Grundgesetz, and the EU treaties), along with material from U.S., English, German, and EU courts, legislative authorities, and other regulatory bodies. Secondary literature comes primarily from sources in the U.S., England, and Germany.
As has been sagely observed: “There are two golden rules for the citation of legal authorities. One is consistency. The other is consideration for the reader.”25 I have adopted somewhat of a hybrid style of legal citation to enable both a U.S. ← 25 | 26 → and an EU-trained professional to understand the references and thereby locate the materials as easily as possible. I have tried to be consistent yet considerate.
For U.S. materials, I have both followed and deviated from the standard conventions as set out in the BlueBook and the ALWD Manual,26 with a generous nod to Richard Posner.27 For EU materials (including individual Member State materials), I have adopted key aspects of the citation method suggested by Oxford University and Oxford University Press.28
← 26 | 27 → (b)U.S. Federal Laws, Courts & Precedence
For a reader not knowledgeable about the U.S. legal system, understanding the U.S. legal framework and court system – and in particular its division between state and federal laws, and state and federal court systems – can be perplexing. The following is a high-level overview of some key aspects to keep in mind.
(i)Constitution: Federal Government
The U.S. Constitution – written in 1787, ratified in 1788, and in operation since 178929 – is the ← 27 | 28 → supreme law of the land in the United States. It creates the federal system of government in which power is shared between the U.S. federal government and the individual state governments.30 The federal government is supreme with regard to those powers expressly or implicitly delegated to it,31 but states remain supreme in matters reserved to them.32
Article I of the U.S. Constitution establishes the legislative branch of the federal government, consisting of a Senate and a House of Representatives.33 Article I, Section 8, lists the enumerated powers delegated to Congress.34 These powers ← 28 | 29 → include Congress’ authority (i) to regulate commerce – the so-called “Commerce Clause”,35 which forms the basis for both trademark36 and antitrust laws,37 and (ii) to protect writings and discoveries – the so-called “Patent and Copyright Clause”,38 which provides the basis for patent and copyright protection.39
(ii)Federal Courts & Jurisdiction
Article III of the U.S. Constitution establishes the judicial branch of the federal government.40 Section 1 establishes the Supreme Court but leaves to Congress ← 29 | 30 → the authority to create lower federal courts as needed: “The judicial Power of the United States shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.” These Article III courts – which hear most of the federal cases – include the U.S. District Courts, the U.S. Circuit Courts of Appeal, and the U.S. Supreme Court.41
Article III, Section 2, of the U.S. Constitution holds that federal courts have jurisdiction to hear cases “arising under” the Constitution.42 Already by 1824, the Supreme Court interpreted this clause broadly, finding that it allows federal courts to hear any case in which there is a federal ingredient.43 Alongside the constitutional basis, federal courts have the right to hear certain cases as set out in the statutory requirements of 28 U.S.C. § 133144 (which gives district courts original jurisdiction to cases “arising under” federal law)45 and § 1338 (which gives district courts original exclusive jurisdiction over patent, copyright, and trademark claims).46
← 30 | 31 → During Congress’ first Session in 1789,47 the Judiciary Act was passed by the Senate and thereafter by the House of Representatives.48 It was signed into law by President George Washington on 24 September 1789.49
(A)U.S. District Courts
The district courts are the trial courts (or courts of first instance) of the U.S. federal court system. Most federal cases begin here. Within limits set by Congress and the Constitution, the district courts have jurisdiction to hear nearly all categories of federal cases, including both civil and criminal matters.50 In many cases, the judge determines issues of law, while the jury (or judge sitting without a jury) determines findings of fact.51
← 31 | 32 → The Judiciary Act of 1789 originally created 13 judicial districts within the 11 states that had at that point ratified the Constitution.52 In each judicial district, the Act established a district (trial) court to serve as the federal trial court for admiralty and maritime cases as well as for some minor civil and criminal cases, as well as circuit (appeals) courts.53 As new states entered the union, Congress created additional district courts that in their geographical outline remained within state boundaries.54
Today, there are 94 federal judicial districts. Every state, the District of Columbia, and Puerto Rico have at least one district court.55 Some large states, such as California, have as many as four.56 Each district court has between two and 28 judges.57
(B)U.S. Circuit Courts of Appeal
- ISBN (PDF)
- ISBN (ePUB)
- ISBN (MOBI)
- ISBN (Hardcover)
- Publication date
- 2015 (February)
- Schutzmarke Rechtsschutz Markenzeichen
- Frankfurt am Main, Berlin, Bern, Bruxelles, New York, Oxford, Wien, 2015. 466 pp., 7 coloured fig., 1 b/w fig.