The conventional wisdom provides two traditional justifications for trademark law. The first is the “consumer protection” rationale. If there were no trademark law, an unknown soft drink manufacturer could freely use Coca-Cola’s COKE trademark on its goods. If it did so, consumers would be defrauded; they would buy the unknown’s products thinking that they were Coca-Cola’s. Trademark law prevents this sort of fraud from occurring and thereby protects consumers from fraud.

The second justification is the “producer incentive” rationale. In the preceding COKE example, it is not just the consumer who is happy that fraud has been prevented. Coca-Cola is equally happy, if not more so, because every time a consumer is fooled into buying someone else’s product, thinking that it’s COKE, Coca-Cola loses a sale (and may suffer a hit to its reputation as well). So by prohibiting fraud on consumers, trademark law gives Coca-Cola confidence that others cannot free-ride on its mark, which in turn gives the company the confidence it needs to invest in making COKE the best product it can be. [...]

Document Type


Publication Date