Comment by Veronica J. Cherniak
When browsing for holiday gifts at the nearest shopping mall, today's consumer will be hard pressed to find a store that does not sell promotional goods—that is, merchandise adorned with the famous trade names and symbols of educational institutions, sports teams, musical groups, popular manufacturers, and the like. There is no doubt that the purchasing public is fascinated with products bearing the logos, insignias, and slogans of their favorite institutions. The names and symbols of universities, soft drinks, professional sports teams, fraternal organizations, movie characters, beers, and musical groups decorate a wide variety of commonplace merchandise: coffee mugs, bumper stickers, buttons, towels, glassware, wearing apparel, playing cards, jewelry, lamps, and so on. These items often cost more than similar products without such ornamentation, and they sell.
Manufacturers, merchants, and other enterprises are equally fascinated with promotional goods. Most commentators agree that the licensing of “merchandising properties” has become a lucrative business. The attraction of institutions to the merchandising business is obvious. Whether due to a company's marketing efforts through use of its trademark, its reputation for selling quality products, or its overall image, average consumers prefer trademark-ornamented goods and are typically willing to pay more for them than they would normally pay for less-decorated, substitute goods. Because sales of promotional goods offer an appealing opportunity for financial gain, it is not surprising that enterprises other than the institutional owners of often-used trade symbols have entered the market. In response to this competition, those entities responsible for the popularity of these symbols have attempted to prevent unauthorized, ornamental and promotional use of their trademarks.
Ornamental and promotional goods displaying famous trade symbols represent unconventional trademark uses. The traditional and most common function of a trademark is that of identification. When placed directly on a product, a trademark identifies the product's origin. Furthermore, the mark serves to convey certain information regarding product quality to the consumer. The growing popularity of ornamental and promotional goods and the increased success of the merchandising market suggest that trademarks may also serve other functions.
Promotional goods are those goods that consumers purchase to express allegiance to the owners of the trademarks that adorn the goods. Ornamental goods are products that bear trademarks as designs, rather than as identifiers. Consumers purchase ornamental goods because the trade symbols are aesthetically pleasing or fashionable, not because they represent quality products. Whereas conventional trademark use serves an identification function, promotional and ornamental trademark uses, respectively, serve expressive and aesthetic functions.
Embedded in the controversy between trademark owners and unassociated retailers and manufacturers is the unanswered question: Should trademark law recognize a monopoly in the ornamental merchandising value of trade names and symbols? This question is a complex one that has not been adequately addressed by the current body of trademark law. The results of the cases involving promotional and ornamental trademark use have been disparate. In several cases, the courts have supported protection against unauthorized promotional uses, leaving trademark owners with an exclusive right to market their goods. Conversely, other courts have been reluctant to expand the scope of trademark protection to cover instances of ornamental use, holding steadfast to the idea of a limited role of trademark law and allowing alleged infringers to capitalize on the popularity of the trade names and symbols of others. Typically, the courts apply an analysis to ornamental use cases that is similar, if not identical, to that employed in other trademark infringement cases; however, the vagueness of trademark law allows the courts to manipulate key definitions, such as “likelihood of confusion” and “functional features,” to produce outcomes consistent with their views on the expansion of trademark rights. This judicial policy-making has created confusion and inconsistency in the adjudication of ornamentaland promotional use issues and frustrated the interests of both trademark owners and unlicensed business enterprises.
One difficulty in answering the exclusive merchandising right question is that state and federal trademark principles are premised upon conflicting interests. Federal law, codified in the Lanham Act, prohibits the unauthorized exploitation of another's trade symbol only if it is likely that consumers might be confused as to the relationship between the organization represented by the trademark and the product itself. This confusion rationale is the crux of the Lanham Act, and its main purpose is to protect the interests of the consuming public. State common law recognizes exclusive rights in certain types of intangible property, affording trademark owners relief based on theories related to unjust enrichment and misuse of another's good will. These remedies are designed mainly to protect the restitutionary interests of the trademark owner. Thus far, these interests have not been judicially reconciled.
Economic analysis of trademark law can offer insight into resolution of the ornamental use issue and reconciliation of the interests of consumers and trademark owners. Although ways to limit the negative economic impact of an exclusive merchandising right may exist, an investigation of the economic realities of unauthorized trademark use in the promotional goods context reveals a striking argument against the creation of a merchandising monopoly for trademark owners. Part II of this Comment provides a background of the fundamental principles of trademark law and the ornamental use issues, as well as the history of the judicial struggle with promotional goods cases and the development of an exclusive merchandising right. Part III presents the economic arguments for and against the creation of a trademark monopoly and the circumstances under which trademark owners should have exclusive control over the exploitation of their marks.
About the Author
Veronica J. Cherniak.
Citation
69 Tul. L. Rev. 1311 (1995)