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Do trade marks stifle innovation. A close up image of a web URL

Do trade marks stifle innovation?

IP rights designed to motivate the creation of new innovative products by awarding a monopoly, are increasingly criticized for having the opposite effect of that intended. This article argues that trade marks are still highly valuable in the post-Internet age.

Dominance through registration?

Critics of the trade mark system say that large corporates can have an over bearing effect on the market by filing for wide ranging portfolios of marks. In doing so, they obtain monopolies in words in the English language which should be free for all to use; that this anti-competitive practice impedes innovation. However, trade marks are subject to rigorous examination by the Intellectual Property Office concerned, and are only granted if they are sufficiently distinctive, and lacking in descriptiveness.

There are strict rules as to what can be registered, and the Office will reject for registration those trade marks which are lacking in originality. It continues to be possible for companies to find original names to describe their offerings, although a more imaginative approach is called for if the proprietor wishes to obtain a mark which works globally.

Further, although it is possible to renew a trade mark so that it stays in force in perpetuity, this is tempered as once use ceases for a period of five years, the registration is vulnerable to cancellation on this basis. This check on the monopoly means that the rights cease to be an impediment and return to the market, where innovation may continue.

A strong brand

Trade marks can also save the day where the other anticipated forms of IP are not applicable. For example, if a company wishes to develop new products but patents are not appropriate due to lack of novelty or insufficient funds, the creation of a strong brand can be essential in allowing that product to thrive in the market. With regard to the technology industry, being first to the market may make all the difference in attracting consumers, especially if that brand makes an aspirational statement. Innovators may find that trade mark protection is more of a suitable vehicle, given the comparatively low costs and ease of registration.

Freedom of speech

Others argue that the trade mark system has a deleterious effect on free speech. The Electronic Frontier Foundation say that when trade mark conflicts are considered in an online context, there is more likelihood of abuse by dominant established players than there would be offline. Cease and desist letters are sent via an intermediary such as Facebook, and on receipt of same it is easier for them to capitulate and shut down the offending account, rather than have a lawyer consider the merits of the case. The policy decisions of major networking platforms can have a marked effect on what material the end user will see. Taking down pages of allegedly infringing content through overly aggressive tactics means that the large corporations can dictate the material served to consumers; this reflects authority beyond that which should be granted.

In answer, we would say that it is not trade mark law which is lacking and therefore requires change, but a nuanced system that can deal with how such infringements are responded to. It is suggested that what would be of assistance is the major industry players giving attention to adopting universal best practices for dealing with such trade mark conflicts.

Domain names

The trade mark system is similarly criticised with accusations of over-reaching in the field of domain name disputes. Domain names are now nothing short of essential, with websites acting as a shop window for businesses to reflect their online presence. Domain names are granted on a “first come first served” basis without examination for prior rights, and as a result can infringe registered trade marks. While the identical trade mark can exist in different ownership in a particular territory, as the goods or services may differ sufficiently for no likelihood of confusion to exist, the same is not possible for domain names. As domains are simply addresses, only one variant is possible. Critics allege that this leads to conflict where those corporations with sophisticated mechanisms for fighting disputes may unfairly prevail.

This does not, however, mean that the trade mark system is not fit for purpose. In order to improve the situation, it is suggested that ongoing modification of ICANN’s Uniform Dispute Name Dispute Resolution Policy is required, to ensure that it keeps pace with changing circumstances. There is room for further refinement, in order to address concerns of inter alia forum shopping between complainant-friendly adjudicators and case load allocation, the type of panellists employed; and whether three-person panels should be mandatory, which is considered to be of advantage in ensuring fairness and increasing confidence in the system. Irrespective of any perceived shortcomings of the UDRP, the system is in many ways more efficient and cost-effective than litigation.

Conclusion

Trade marks are still fit for purpose, especially compared to their more obviously innovative cousins, patents. They represent a fast, efficient and cost effective way to gain a monopoly right proportionate to the effort made by the proprietor in contributing to the economy.

While there are issues with regard to trade mark disputes in the online environment, these could be mitigated by improvements to intermediaries’ policies, and to those of bodies involved in arbitration of domain name disputes.

IP law is not perfect but in reality some imperfection is only to be expected, given the unique disruption caused by the advent of the Internet, and the technological – but also social – changes it has brought about.

We maintain that trade marks, in common with the majority of intellectual property rights, facilitate a return on investment necessary for entities to fund further innovation in the Internet age and allow it to continue; this can only be good for creators, rights holders, and consumers alike.

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February 11, 2016 Rachael share this article