The (Negative) Impact of Non-Traditional Trademarks on Market Competition and Product Innovation*

*Please note that this seminar will be on Monday Week 5

 

In this presentation, Professor Calboli criticizes the protection of non-traditional trademarks (NTTMs) by focusing on one specific aspect of the debate in this area--the negative impact of NTTM on product innovation. In particular, she argues that granting exclusive rights to NTTMs may foreclose competitors and third parties from using identical and similar product designs and products feature, with a negative impact on market competition. Furthermore by recognizing and protecting elements of product designs or aesthetic product features as NTTMs, this may support a system of intellectual property protection that promotes standardization in product development, rather than creativity and innovation. This can have a twofold negative impact. First, it may induce businesses to standardize the aesthetic features of their products and repeatedly use them on their products to acquire the level of necessary market recognition (distinctiveness) to be protected as trademarks. Second, protecting NTTMs may lead to less investment, not only in product and design innovation but also in product quality. Notably, securing and enforcing NTTMs allows businesses to capitalize on, and extract value from the attractive power of the marks, which can in the short-term be a more viable means to attract consumers, as opposed to longer-term investment in product quality. Professor Calboli argues that this situation could be avoided by effectively curtailing the protection of these marks, which also remain product designs. Although the underlying subject matter may be appealing, valuable, and frequently distinctive, it is not appropriate to protect such subject matter for a virtually unlimited period of time as trademarks.

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