Innovation, Competition and Consumer Welfare in Intellectual Property Law
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Innovation, Competition and Consumer Welfare in Intellectual Property Law

Gustavo Ghidini

This authoritative book provides a comprehensive critical overview of the basic IP paradigms, such as patents, trademarks and copyrights. Their intersection with competition law and their impacts on the exercise of social welfare are analysed from an evolutionary perspective.
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Chapter 4: The Distinguishing Function and Advertising Value of the Trademark: Aspects and Critique of the European Reform

Gustavo Ghidini


There are other factors, emotive as much as rational, which still today divide attitudes towards the legal protection of trade-marks. Pro-branders argue for generous extensive support, branding-sceptics for limited and controlled assistance. I shall label the former green-lighters and the latter red-lighters. I declare at once that my own inclination has long been to see red, rather than green. (W. Cornish, Intellectual Property: Omnipresent, Distracting, Irrelevant?, Oxford, 2004) PART I THE CLASSIC SYSTEM (BEFORE THE REFORM)1 1. The Fundamental Distinguishing Function of Trademarks Distinctive signs fulfil an essential function in the market economy. They enhance firms’ own market identity by emphasising their difference from competing firms and businesses. The importance of that function (which was also associated with a quality guarantee before the introduction of free-market principles, especially in the age of guilds) was exalted in the trading system ushered in by the industrial revolution because of three main factors: (a) first and foremost, with the advent of freedom of competition, institutional pluralism became a hallmark of economic action; (b) second, with the expansion of markets – following on from better means of transportation, new product conservation techniques, development of distribution networks and faster 1 The term ‘reform’ essentially refers to Council Directive 89/104/EEC of 21 December 1988 to harmonise the laws of the Member States relating to trademarks (now in codified version as Directive 2008/95 EC) and Council Regulation (EC) No. 40/94 on the Community trademark (now in codified version as Regulation 207/2009). 156 Distinguishing function/advertising value of the...

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