Territorial Trademark Rights and the Antitrust Laws

Trademarks are devises used by business men to distinguish their goods from those of others. The utility of trademarks to purchasers lies in the identification of different lines of merchandise by different trademarks. On the other hand, perhaps the greatest advantage of trademarks to business derives from the connotations associated with marks by skillful advertising. Legal protection of trademark rights thus has a dual aspect: preventing others from copying marks both guards the identification function of trademarks and maintains exclusive rights in the commercial value of trademarks created by advertising. A Senate committee described the hybrid nature of trademark protection as follows: The purpose underlying any trade-mark statute is two-fold. One is to protect the public so it may be confident that, in purchasing a product bearing a particular trade-mark which it favorably knows, it will get the product which it asks for and wants to get. Secondly, where the owner of a trade-mark has spent energy, time, and money in presenting to the public the product, he is protected in his investment from its misappropriation by pirates and cheats. This is the well-established rule of law protecting both the public and the trade-mark owner. The development of the law of trademark protection has been characterized by tension between the public and private reasons for protection. Proponents of liberal protection have stressed the importance of the identification function of trademarks in urging extensive protection for private interests, whereas opponents of strong protection have characterized trademarks as monopolies, immunities from competition and minimized their social value. Controversy has raged over both the goods and the geographical area for which protection should be accorded. A dramatic confrontation of the opposing viewpoints was initiated in 1938 when advocates of liberal protection prevailed upon Congressman Lanham to introduce a bill to revise the federal trademark laws. The Antitrust Division of the Department of Justice, motivated by evidence that international cartels were utilizing trademarks to implement their schemes, and by exaggerated fears that trademarks could equal patents as major instruments of anticompetitive abuse, became the protagonist of the opposition. The passage of the Lanham Act in 1946, replete with amendments intended to assuage the Justice Department, transferred the controversy over the act\u27s protectionist features to the courts, where the opposing viewpoints have continued to clash. Though the Justice Department contended that the Lanham Bill bristled with objectionable features,the principal documentation related to division of territorial markets among competitors through use of common trademarks. This evidence was drawn on to illustrate how provisions of the Lanham Bill dealing with concurrent registration, assignment, and licensing could be used to cloak conspiratorial division of trade territory by competitors. Although these are selected aspects of the Antitrust Division\u27s position, the subject of territorial trademark rights with respect to competing goods affords a manageable microcosm in which to analyze competitive and noncompetitive aspects of trademark protection. Despite the fulminations of the Antitrust Division, it is the contention of the author that the Lanham Act provisions dealing with territorial trademark rights on balance permit a more procompetitive. demarcation of territorial trademark rights with respect to competing goods than common-law principles. This contention will be developed by survey of the territorial scope of trademark rights with respect to competing goods before and after the passage of the Lanham Act, analysis of the arguments for and against strong protection of these rights, and consideration of the relationship of these territorial trademark rights to the antitrust laws.https://repository.law.umich.edu/michigan_legal_studies/1036/thumbnail.jp