Building Brand Assets: The Role of Trademark Rights

Abstract

Trademarks play an important role in protecting intangible brand assets. However, the impact of trademark rights on brand assets has received little attention in the literature. The authors examine the impact of trademark rights on brand assets from the perspective of appropriability—that is, the firm’s ability to benefit from innovation and creativity. To ensure causal identification, they use a natural experimental context in which U.S. Supreme Court decisions on trademark rights provide an exogenous variation in strength of trademark rights. Using a database of trademarks registered in the United States and a difference-in-difference estimation approach, the authors show that, overall, trademark applications and applications to register in other categories increase when trademark rights are strengthened and decrease when trademark rights are weakened. However, trademarking responses of brands to a change in property rights are muted for design trademarks and amplified when a firm has multiple brands. The authors discuss the theoretical, substantive, and managerial implications of the findings and provide guidance for further research.