§ 4.01 Introduction

• Jurisdiction: United States
• Publication year: 2020

§ 4.01 Introduction

Trademarks¹ and service marks play a prominent role in modern society.² A trademark distinguishes one producer's goods or services from another's. Guarding a trademark against use by others, as the Supreme Court has explained, "' secure[s] to the owner of the mark the goodwill' of her business and 'protect[s] the ability of consumers to distinguish among competing producers.'"³ Trademark protection has roots in common law and equity.⁴ The Lanham Act, enacted in 1946, provides federal statutory protection for trademarks.⁵ The Supreme Court has also recognized that federal trademark protection, supplementing state law, "supports the free flow of commerce" and "foster[s] competition."⁶

Companies spend billions of dollars in advertising to assure that corporate logos are visibly displayed at athletic and other public events: celebrities sign lucrative contracts to wear a particular kind of clothing item, while athletes are paid to affix a trademark symbol to a sporting uniform.⁷

That companies are willing to make these investments demonstrates how well trademarks continue to serve their important traditional functions for both consumers and manufacturers. Indeed, apart from serving to identify and distinguish a seller's goods or products, trademarks can provide a uniquely reliable source of information about potential purchases.⁸ Trademarks also serve the function of quality control since it is impossible for consumers to investigate the merits of every product they buy or service they use. For manufacturers, trademarks crystallize the good will sometimes called "brand equity," they have built up over time and ensure that customers will continue to purchase their products. Finally, trademarks also serve as an instrument of buying and selling by providing the same functions for commercial entities that a signature does for individuals.

Counterfeiting can destroy the important benefits of trademarks. Selling items bearing counterfeit marks defrauds customers who pay for brand-name merchandise but bring home low quality fakes. It cheats trademark owners out of legitimate sales and tarnishes their reputation when they are blamed for the poor quality of the counterfeit merchandise. It also injures legitimate retailers who must provide refunds to customers who discover that their brand-name goods are in fact counterfeit. Trademark counterfeiting is tantamount to commercial forgery.

Counterfeit products cost American businesses billions of dollars a year in losses.⁹ Moreover, counterfeit products that do not meet minimum health and safety standards may also threaten public welfare.¹⁰ For example, there is least one reported instance that the failure of counterfeit helicopter parts caused crashes that resulted in a number of injuries and deaths.¹¹

Finally, according to Congress, "ties have been established between counterfeiting and terrorist organizations that use the sale of counterfeit goods to raise and launder money."¹²

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Notes:

^[1] The Lanham Act defines the term "trademark" to include any word used by a person "to identify and distinguish his or her goods . . . from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown." 15 U.S.C. § 1127. A proposed mark cannot acquire trademark protection unless the mark is distinctive, that is, unless it serves the traditional trademark functions of "distinguishing the applicant's goods from those of others" and identifying the source of the goods. Two pesos, inc. v. Taco Cabana, Inc., 505 U.S. 763, 768, 112 S. Ct....