Determining the Scope of Trademark Rights by Recourse to Value Judgements Related to the Effectiveness of Competition - The Demise of the Trademark-Use Requirement and the Functional Analysis of Trademark Law

Apostolos Chronopoulos

Abstract

This paper examines the doctrinal implications of the principle of complementarity between intellectual property rights and competition law in the field of trademarks. The systematic adherence of trademark rights to the wider set of norms regulating the competitive process implies that their teleology should take into consideration value judgements related to the effectiveness of competition. Neither the limiting concept of trademark use nor the legal recognition of some “economic trademark functions” is apt to fulfil this legal task. It is therefore submitted that the normative valuations flowing out of competition law should be implemented through a purposive interpretation of the legal terms contained in trademark provisions. The relevant legal issues are examined comparatively taking into consideration EU, German and US approaches.

The article focuses on the legitimacy of third-party uses of another's trademark and examines the advisability of their integration into the exclusive legal position of the right holder in the light of values appertaining to a system of effective competition, namely a competitive process that delivers socially desirable outcomes.

Case law and commentary often attempt to address this legal issue by constructing broad categories of infringing acts based on the way the trademark in suit has been used by the alleged infringer. One theory categorically dismisses the use of another's trademark as a source designator for one's own products or services as potentially infringing. To be successful in a trademark suit, the claimant should firstly establish that the colliding sign is being used as a trademark (trademark-use requirement). Under a more expansive approach, the prohibitive authority of the right holder should be able to extend to every use likely to impair the so-called economic trademark functions of investment and advertising (multifunctional analysis of the trademark-use concept). The first notion builds upon the leitmotiv of free – but not necessarily effective – competition and therefore seeks to confine the legal exclusivity to the protection of the origin function so as to minimize its exclusionary effect to the greatest extent possible, while the second is concerned with the legitimate business interests of the right holder vested in the trademark as a property right.

The paper continues by presenting the legal fundaments and the normative content of both doctrines (Part II). It expresses scepticism whether the teleology of both theories is adequate to balance the conflicting competitive interests incidental to trademark disputes. For that reason it proposes to link the decisions regarding the optimal scope of trademark rights to valuations flowing out of the norms regulating the competitive process. This proposition is then exemplified in cases related to merchandising (Part III), scale model toys (Part IV), trademark uses in the internet (Part V) and to conflicts between trademarks and trade names (Part VI). The paper concludes (Part VII) that neither the trademark-use theory nor the functional analysis of trademark law could effectively implement the principle of complementarity between IP rights and competition law in the field of trademarks.