The Extended Protection of Strong Trademarks

Economic investment in trademarks is not necessarily indicative of product quality, as trademark protection does not provide incentive for continuous product quality improvement. The authors begin their analysis by exploring the function of trademarks from the perspectives of traditional law and economics. Such an analysis points to a conflict between the legal and economic interpretation of the function of trademarks. Particularly, the authors suggest that the traditional economic perspective of trademarks fails to justify the legal existence of strong brands and their extensions. This argument is tested through the review of advertising, brand extension, and product quality literature. The authors conclude that a desire to protect high product quality does not explain an extended protection of strong trademarks, but extended protection can prevent welfare losses when product variety is considered important to consumers\u27 utility function