Peter Yu, ‘The Comparative Law and Economics of Counterfeits and Post-Sale Confusion’

Post-sale confusion is a concept used to protect trademark holders even when no consumer confusion exists at the point of sale. Instead, the protection is granted based on the fact that consumers, future purchasers, or other members of the public will be confused after the sale and that such confusion will harm trademark holders by affecting future purchases. Despite the widespread criticisms and skepticisms among legal commentators, with many calling for either abolition or substantial reform, courts continue to grant such protection. While some US courts took the positivist approach by emphasizing Congress’s legislative change through the 1962 amendment to the Lanham Act, others justify such protection by highlighting its benefits to trademark holders and the public.

This chapter interrogates the economic justifications for the doctrine of post-sale confusion. It begins by exploring those justifications in the domestic context, using the different rationales the US Court of Appeals for the Sixth Circuit offered in General Motors Corp v Keystone Automotive Industries, Inc. The analysis demonstrates that very limited economic justifications exist to support such protection, except in cases of reduced distinctiveness or exclusivity.

This chapter then utilizes a comparative approach to explain why the case for such protection is even weaker at the international level, in particular in developing countries that often manufacture both the trademarked goods and the unlicensed counterfeits. There are good reasons to combat trademark counterfeiting, such as to prevent consumer confusion or deception, but the economic case for prohibiting counterfeits that do not cause point-of-sale confusion is rather weak. Based on these findings, this chapter offers five recommendations for courts, legislators, and policymakers to reform trademark law in the area of post-sale confusion.

Yu, Peter K, The Comparative Law and Economics of Counterfeits and Post-Sale Confusion (December 16, 2021). Research Handbook on the Law and Economics of Trademarks, Glynn S Lunney, Jr, ed, Edward Elgar Publishing, 2022, forthcoming, Texas A&M University School of Law Legal Studies Research Paper No 21-60.

First posted 2021-12-20 12:00:28

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