Friday, June 19, 2009

free rider infringement

One of the basic principles of American Trademark law is that you can't make something that looks or sounds like someone else's product or service. The problem that would cause is someone might want to buy product A, get confused by the look-alike, and buy product B by mistake. B then unfairly benefited at the expense of A on A's brand recognition.
Thus one question immediately asked in a trademark case is "is there a likelihood of confusion" among consumers.

Well not so in Europe it seems.
The European Court of Justice has just ruled that likelihood of confusion is not necessary to find trademark infringement.
It seems "unfair advantage" is the key in European trademarks.
news source

The "free rider" problem is one economists tackle all the time. It's when one party benefits from the actions of another or others, but doesn't participate in that action. One example is the person who doesn't pay taxes. That person still uses the roads, is still protected by the military, but doesn't pay for any of those services and gets a free ride off others paying. Another example would be the anti-vaccination person. If 90% of the kids are vaccinated, the odds of your kid getting sick though not vaccinated are slim. He benefits from the herd immunity resulting from everyone else getting vaccinated (the problem there is if vaccination rates drop to say, 80-85%, herd immunity is lost and you get epidemics).

So in Europe, if you intend to ride someone else's coat tails, but you aren't fooling anybody, you are still guilty of infringement.

What really bugs me is the judgment specifically said this is infringement even when there is no harm to the trade mark owner! In other words, it's a victimless crime. Consumers have access to a product they might not otherwise have. A different market segment is served. Everyone wins, but for some reason it's a bad thing. Now they are saying you can't indicate that your product is an imitation of another product, even if that's exactly what you are doing.

I'd hate to see this reasoning come across the pond.

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