Legal and economic arguments for the protection of advertising value through trade mark law

Abstract

Traditionally, trade mark theory has been reluctant to protect advertising value from appropriation by third parties. Various justifications for this proposition have been put forward, most notably the free-riding theory associated with overbroad trade mark monopolies, the ethical condemnation of the ‘branding personality’, and the waste of economic resources spent on persuasive advertising. As a result, the system of protection established by the Trade Marks Directive has relied predominantly on theories of liability that require some kind of consumer confusion or dilutive harm. Thus, protection against the appropriation of advertising value has been confined to marks with a reputation. However, both marketing and economics literature suggest that there are sufficient grounds militating in favour of a general protection against the commercial appropriation of advertising value and that, rather than constituting an insurmountable persuasive force, the brand image simply constitutes a good that is demanded by consumers as a complement to some basic product. This article argues that far from being bound by the notion of parasitic competition, the free-riding theory finds its actual justification in the promotion of a dynamic competition with differentiated products. In addition, it is the best analytical instrument we have at the moment for the legal evaluation of the complex phenomenon of brands and the balance of the various interests involved in the respective disputes.