Advertising and the public interest: legal protection of trade symbols.

Author:Brown, Ralph S., Jr.
Position:Reprint of article in Yale Law Journal, v. 57, p. 1165, 1948 - Ralph Sharp Brown, Intellectual Property, and the Public Interest - Reprint
 
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"The protection of trade-marks is the law's recognition of the psychological function of symbols. If it is true that we live by symbols, it is no less true that we purchase goods by them. A trademark is a merchandising short-cut which induces a purchaser to select what he wants, or what he had been led to believe he wants. The owner of a mark exploits this human propensity by making every effort to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means employed, the end is the same--to convey through the mark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this is attained, the trademark owner has something of value. If another poaches upon the commercial magnetism of the symbol he has created, the owner can obtain legal redress." Frankfurter, J., in Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co.(1)

The law of trade symbols is of modern development, largely judge-made and only partly codified.(2) Its impetus comes from the demands of modern advertising, a black art(3) whose practitioners are part of [1166] the larger

army which employs threats, cajolery, emotions, personality, persistence and facts in what is termed aggressive selling. Much aggressive selling involves direct personal relationships; advertising depends on the remote manipulation of symbols, most importantly of symbols directed at a mass audience through mass media, or imprinted on mass-produced goods. The essence of these symbols is distilled in the devices variously called trade-marks, trade names, brand names, or trade symbols. To the courts come frequent claims for protection, made by those who say they have fashioned a valuable symbol, and that no one else should use it. Very recently, for example, the vendors of Sun-Kist oranges lost a court battle to prevent an Illinois baker from selling Sun-Kist bread.(4) The highest court, in its most recent encounter with a like case, upheld the power of a manufacturer of robber footwear to prevent the use of a red circle mark by a seller of rubber heels, which the plaintiff did not manufacture.(5)

In these cases, a choice of premises and techniques is still open. One set of premises, which seems to subsume Justice Frankfurter's felicitous dictum, recognizes a primary public interest in protecting the seller who asks the court to enjoin "another [who] poaches upon the commercial magnetism of a symbol he has created." This expansive conception merits critical attention. Are all forms of poaching forbidden? Should they be, consistent with another premise? This one asserts, in the words of Judge Frank, "the basic common law policy of encouraging competition, and the fact that the protection of monopolies in names is but a secondary and limiting policy."(6) The legal ties which bind together some apparently inconsistent decisions may be found, but not simply in an indiscriminate prohibition of poaching, nor yet in a presumption in favor of competition, no matter how compelling. Rather, courts move from these and other premises to refinements of doctrine.

It is proposed here to seek, in the milieu in which trade symbols are created and used, for data underlying both premises and dogma. This will require an independent evaluation of the institution of advertising. What do we get for the three billions of current annual outlay?(7) Do [1167] we want it? Unfortunately, there is little consensus as to what values advertising serves. Its votaries have poured their most skillful symbols back in the soil from which they sprang.(8) Its detractors, maddened by the success of this propaganda, would purge Radio City with fire and sword.(9) One thing the examination will reveal is that what appear to be private disputes among hucksters almost invariably touch the public welfare. We shall therefore be concerned to ask, when courts protect trade symbols, whether their decisions further public as well as private goals.

  1. TRADE SYMBOLS AND THE ECONOMICS OF ADVERTISING

    The principal reason for advertising is an economic one(10)--to sell goods and services. We can describe this process, and its economic effects, with relative confidence,(11) compared to the obscurity which [1168] surrounds the psychological, cultural, or other social consequences of modern advertising. These may turn out to be more portentous than the affairs of the market-place. But the materials are uncollected or unrefined. In this survey we can only drop a handful of problems into a footnote.(12) The reader must make his own judgments from his own observations, remembering, as we turn almost exclusively to economic discussion, that man does not live by bread alone.

    Informative and Persuasive Advertising

    The buying public submits to a vast outpouring of words and pictures from the advertisers, in which, mingled with exhortations to buy, is a modicum of information about the goods offered. From the point of view of the economic purist, imparting information is the only useful function of advertising.(13) A perfect market demands a perfect enlightenment of those who buy and sell. One of the many imperfections of the real world is that, absent advertising, most buyers would have to go to a great deal of trouble to discover that is offered for sale.(14) To the extent that the blandishments of sellers inform buyers what is to be bought, and at what price, advertising undoubtedly helps to quicken the stream of commerce.(15)

    [1169] Most advertising, however, is designed not to inform, but to persuade and influence,(16) What is the occasion for such tremendous outlays on persuasion and influence in a well-ordered economic system? If we consider first the total stream of production and consumption, persuasive advertising seems only to consume resources that might be put to better use producing more goods and services. It does not increase total demand, it only increases wants. Effective demand arises, not from what we would like to have, but from the purchasing power of the community created by its productive power. We consume what we produce, and no more. Considering the economic welfare of the community as a whole, to use up part of the national product persuading people to buy product A rather than product B appears to be a waste of resources.

    Perhaps advertising helps to produce more, if it goads people to work longer and harder.(17) At first blush, this seems a moral and salutary prescription. On second thought, one realizes that more work and more goods means less leisure. Are we interested only in greater possessions? In its own right, and as a time to consume the fruits of labor, leisure is highly prized. Somehow a balance has to be struck between work and play, but the degree of discontent which the advertisers can create is not the way to do it.(18)

    [1170] In any case, there is a system for multiplying both goods and leisure which has been in operation for some time with some success. It consists of putting savings to work in the form of machines, and is called capitalism, or the Industrial Revolution, or whatever label is politically pleasing. If the process of capital investment is at all affected by advertising, that relationship is far more important to explore than the unsatisfactory proposition that advertising increases production by making people work more.

    Any possible connection between advertising and capital investment is especially worth pursuing, because the new economics has taught us that if the rate of additions to or replacements of capital equipment declines, total production and income will also decline, and to a much greater extent. The level of production is a function of the level of investment, and the level of investment is a function of the expectations of enterprisers.(19) People do not start new businesses or expand old ones unless they think they see a profit in it, and that is where advertising comes in. To pursue the relation between persuasive advertising and profits, we shall have to make our way through the thickets of monopolistic competition and the slough of mass-production cost economies. Whatever profit advantages advertising offers spring chiefly from these two sources. Only after exploring them can we consider whether profits, so derived, facilitate the total flow of investment.

    Market Control and Differentiation

    How does the privilege of an entrepreneur to spend money on advertising increase the likelihood of profit at all, in a system described by its proponents as one of free competition? The competitive system, after all, postulates many sellers offering uniform products to many buyers. For any good, at a given time, there is a single market price, at which any seller can sell all he chooses to produce, i.e., all that it is profitable for him to produce. In a pure economy, advertising outlays (except for information to make the market more nearly perfect) would only add to the costs, and decrease the profit, of any firm.(20)

    It is easy to escape from this dilemma by reminding ourselves that pure competition is descriptive only of an ideal, not of the real world.(21) [1171] We have long since settled for such compromise goals as "workable" competition,(22) which take account of the fact that actual markets are a blend of competitive and monopolistic elements, reflecting the unwillingness of men of business to sell at prices impersonally determined. The term "monopolistic" means only the acquisition of any degree of control over a market, either as regards price or entry.(23) Most entrepreneurs strive to achieve some degree of control, for it enables them to have a price policy directed at maximizing profits, instead of leaving all to the chances of a competitive market.(24) They seek to escape from competition in two principal ways: (1) By dominating the market, either through a loose or close-knit combination of firms, or by the growth of a single firm. Examples are steel,(25) shoe...

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