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Wednesday, 30 November 2011


As stated above trademarks possess in itself the power to appeal consumer’s behaviour, influencing them to purchase the marked products. This marketing power of the trademarks has been criticised for a really long time. The question “whether the marketing power of the trademark which gives “benefit that are illusory” or creates an economic benefit which serves some useful purpose in marketing the product. The two major schools debating on this topic are, the Harvard school criticising the marketing power of the trademark and the Chicago school favouring it.


Trademark as a means of providing information through advertising gains recognition in the minds of the consumers. The marketing power of the trademark acquired by this recognition gives some advantages to the brand owner including some which are not in favour of the consumer. For example, as recognized trademark appeal to the consumer at emotional and psychological level, which makes the consumer to re-purchase the product and finally makes addicted to that product. “Addicted” here mean “brand insistence” where the consumer refuse to switch to any other brand. This process of inducing the consumer to buy a particular product is highly criticised but “Harvard school”. According to Harvard school, the firms induce consumers to buy product by “persuasive advertising”, as ‘most advertising, however, is designed not to inform, but to persuade and influence’.[1]

It goes further than this; Firms could use trade marks to achieve a form of monopoly power or at least to engage in price discrimination.[2] The tendency of marked products to demand high prices on the market compared to alternatives or to enjoy a relatively large market share appears to favour Harvard school. Similarly, ECJ has ruled in many cases that, “the image or the aura of the recognised trademark does add value to the price of the product as well as plays an important in conferring intangible characteristics upon the product, as it appeals to the mind of the consumers[3]”. According to Harvard school, it is also arguable that this is merely a form of price discrimination and does not add genuine value to the marked products[4].

In conclusion, economists supporting Harvard school of thought insists on the statement that “Firms may differentiate their product from competitor’s products and achieve consumers brand insistence through persuasive advertising, and insulate his market share from price competition and create high barriers to entry”. Edward Chamberlain go further that this when stating that “the public interest would be best served by permitting unlimited confusion through imitation, so that it would be almost impossible to accomplish advertising differentiation” [5] ,supporting no trademark at all which in my view he suggested “the world of confusion” where there is no way to distinguish between the products.



Chicago school’s theory on trademark aimed to disprove the Harvard School’s theory on trademarks and argued that, trademarks facilitate competitiveness, by reducing the search and communication costs that may result from there being significant differences in the quality of products and provides mechanism for combating the problem that consumers may lack the information and expertise they need to compare the products available to them on the market[6]. Further, Chicago Schools theory has been elaborated to take account of the cognitive impact of such trade marks on the basis that this capacity reduces consumers’ mental or internal search costs. Even ECJ’s has stated that trademarks are consistent with the economic theory of trademarks, which is associated in particular with the ‘Chicago School’ of economics.[7]
Furthermore, it can be said that the recognised brand do offer premium price, but that brand premium cannot, over time, exceed the informational and economic value of the brand itself. So for example, if a consumer is paying more prise for a product it is because of the highly quality and low search cost which is inferred on the product, so it not correct to say “just because consumer have paid more for some products did not mean there had been any actual increase in the quality of the product rather, they themselves have talked into paying premium price for the same product”
Favouring the Chicago school, in United Kingdom, the system of certification marks signifies that a firm or its products have been certified as complying with specific standards on such matters as safety, performance or geographical origin.[8] This practice gives consumers an assurance that the products they are buying have a certain level of quality standard and other attributes, which it has passed to claim that mark.
Under Chicago School of thought, trademarks promote the product rather than distort competition, they facilitate communication and reduce search, they increase the flow of information to consumers, and they enable consumers to rely on prior experience.

[1] Kenner Parker Toys, Inc. v. Rose Art Industries, Inc. - Confusing Play on Words Costs Dough for Rose Art accessed on 21/7/2011
[2] Price discrimination occurs when a seller of products that are identical or closely similar to each other is able to charge different purchasers a different price according to their individual willingness to pay rather than having to sell at a uniform market price.
[3] L’Oréal v. Bellure [2009] ETMR 987] and Copad v Christian Dior [2009] ETMR 683.
[4] Van den Bergh and Camasasca, 2006
[6] An Economic Perspective on Trade Mark Law (Edward Elgar Publishing, 2011)
[7] McClure, 1996
[8] The 1994 Act, s. 50. (as amended).

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