Convergences and Development
European Intellectual Property Institutes Network series
Edited by Nari Lee, Guido Westkamp, Annette Kur and Ansgar Ohly
Chapter 2: Interfaces between trade mark protection and unfair competition law: Confusion about confusion and misconceptions about misappropriation?
According to legal and economic orthodoxy, the function of a trade mark is best explained by reference to information economics. Consumers rely on information about the source and the quality of products in order to make a reasonable choice, but markets can be rather non-transparent places. A trade mark creates a "channel of communication" which allows the trade mark owner to "broadcast" information about the quality and the image of his products. This enables consumers to recognize products that they have already tried before or that they have heard about. Thus trade marks reduce consumer search costs. At the same time they create an incentive for the trade mark owner to invest in quality and image. Without trade marks, consumers could not distinguish reliably between goods of different suppliers, in particular they would not be in a position to assess the quality of "experience goods". Hence the market would neither reward good offers nor punish bad quality. It would not be worthwhile for producers to make efforts, and the result would be what Akerlof famously termed a "market for lemons". This economic argument can be backed up by a moral consideration: it is wrong to tell lies, and nobody should be allowed to benefit from deceptive behaviour.
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