A Law-and-Economics perspective on trade marks

Abstract

The aims and scope of this chapter The school of analysis that has come to be known as ‘Law-and-Economics’ involves the use of economic concepts and reasoning in the analysis of legal rules and institutions. It includes both normative analysis, in which the law is evaluated in terms of its contribution to economic efficiency, and positive analysis of the development of the law and of proposals for reform. Some scholars of Law-and-Economics have argued that common law rules have an underlying economic logic and achieve greater economic efficiency than rules imposed through legislation. This chapter will suggest that trade mark law provides some vindication of this view when the traditional limits on the property rights of trade mark owners, which reflected the common law of passing-off, are compared to the trend towards giving them much broader protection against misappropriation and free-riding. Trade marks play an important role in the organization of economic activity. They are the means through which undertakings compete with each other. Thus, after registering a sign as a trade mark for designated goods or services (or ‘products’), an undertaking can use it to confer a distinctive identity on its products when they are ready for marketing and presentation to consumers. Such a distinctive identity enables consumers to recognize the undertaking's products and distinguish them from others and to make choices on this basis. For many products, such an identity provides the main reference point for consumers and defines the subject matter of their transactions.