Trademarks facilitate consumer capitalism.

3 How Trade Marks Facilitate Consumerism Ownership of a trade mark gives a firm exclusive rights covering two matters.46 One is the exclusive right to use the sign to brand and differentiate products of a kind for which it has been registered as a trade mark and turn them into specific objects of demand. The second is the exclusive right to determine which products can be marketed under the trade mark and thus with the benefit of its power to attract demand.47 The owner’s exclusive right to use a trade mark to attract demand is reinforced by various ancillary rights over the use of the relevant sign and similar signs both for branding products and as reference points in advertising and in other communication. The owner’s exclusive control over the supply of branded products is also reinforced by various ancillary rights. These include the absolute right to authorise the first marketing of products under the trade mark in the European Economic Area (“EEA”);48 and certain rights over the further marketing of branded goods after their first marketing in the EEA, which protect the trade mark’s reputation and power to attract demand.49 Moreover, along its exclusive control over supply, the owner has discretion as to how it arranges for the production or procurement of that supply and to vary these arrangements.50 The owner’s extensive control over the use of its trade mark for demand-attraction and over supply-provision, together with its discretion over the organisation of supply have made crucial contributions to the ability of some firms to exploit the opportunities of consumerism. It has meant that the marketing of products can be separated from their production so that each activity can develop according to its own economic logic in terms of scale and scope. The ability to do this has enabled firms that are well-placed to attract demand from consumers to focus their efforts and resources on marketing and other higher value activities and to compete at this level. Leading firms in many industries no longer engage in the “Fordist” mass production of products,51 but focus on high value “weightless” activities such as design, product development, marketing whilst orchestrating production from fluid and flexible supply chains.52 Innovation in technology and communication has increased the scope for outsourcing production into supply chains, enabling much greater flexibility in production arrangements and facilitating more rapid product development.53 Consumerism has increased the advantage of outsourcing production in a way that combines low costs with a high degree of flexibility.54 The transformation of Clarks Shoes in the 1990s from a large-scale manufacturer of shoes in the United Kingdom to a global marketing firm that orchestrates the manufacture of shoes through a fluctuating global supply network of manufacturers is an example of this.55 It can also be seen in the fast fashion industry with its globally-recognised brands and global supply chains.56 Whilst the control and discretion that trade mark owners have over supply is important to their capacity to seize and exploit the opportunities of consumerism, their demand-side control makes a much more obvious contribution to this capacity. The foundation of this contribution is the owner’s ability to use a trade mark to give products an identity that is distinctive and exclusive. This kind of identity roughly corresponds to the marketing concept of a brand, though a “brand” is not defined in trade mark law and its relationship with a trade mark can be nebulous.57 Trade marks are both the signifiers and the legal anchors of brands. A firm may use more than one trade mark to signify and anchor a specific brand and may vary the combination or change them,58 though consumers must be likely to recognise each signifier on its own as signifying an exclusive connection to one firm for it to be registered as a trade mark.59 The legal definition of a trade mark as a sign that identifies and distinguishes products as those “of one undertaking” understates the full potential of brands and their trade mark signifiers as marketing resources.60 Firms can use trade marks to differentiate products in other ways as well. Firms can, for example, use trade marks to customise products in terms of their quality and other characteristics and to market different versions of the same kind of product.61 Moreover, a brand owner has control over the customisation that its brand reflects, with discretion to vary quality and other characteristics as long as the brand does not become misleading.62 Firms can also use trade marks to establish different layers of brands under their control to signify different layers of information about the products they supply. These may range from broader corporate or umbrella brands to narrower product or niche brands.63 Their owners have discretion as to how far (if at all) they make the connections between different brands under their control apparent to consumers. The ability to use branding to customise products and to establish different product brands means that firms can profit from satisfying consumers with differing preferences.64 This enables firms to compete more effectively in the dimension of product differentiation, especially with the growth of the tendency associated with consumerism for consumers to attach greater value to differentiation, even superficial differentiation, for its own sake.65 The growth of consumerism has also increased the scope for attracting demand to specific brands of products because of their particular intangible content, which may be their only significant difference from other brands.66 Trade mark law has done much to facilitate the capacity of brands to add intangible content to products through protecting the kind of image and other associations that can give them this capacity. The Court of Justice of the European Union (“CJEU”) has gone so far as to recognise that an image of prestige and luxury can form part of the “actual quality” of marked products.67 The foundation of a brand’s capacity to add intangible content is its exclusivity since this gives it an institutional character and establishes commercial accountability for branded products. It enables the brand to acquire a reputation concerning the branded products, which can be a source of reassurance to consumers and attract demand accordingly.68 Moreover, as a cohesive entity with some of the attributes of a humanistic personality, a brand can go further and acquire its own unique history and biography along with an image and other associations.69 This can appeal to consumers at the emotional level and help to offset the impersonal nature of artificial legal structures.70 The continuity of this personality can turn what would otherwise be an isolated act of consumption into something that can be repeated or a continuing relationship.71 A brand’s personality can also help to increase the emotional impact of consumption through transforming branded products into sources of self-expression or self-realisation or into symbols of status or of adherence to particular values reflecting the brand’s reputation, image and associations.72 Trade marks can help to develop the personalities of the brands they signify through their ancillary role as reference points. Their owners can use them in advertising and other promotional activity to cultivate or reinforce images and other associations for their brands. Brands with the capacity to add intangible content to products can become something much more than a means of product differentiation and sources of guidance and reassurance about product quality and characteristics. Trade mark law has boosted the potential of brands to attract demand in this way through its calibration of the ancillary rights of their owners. The owner of a trade mark that has acquired a reputation in the minds of consumers is entitled to prohibit third parties who are marketing or supplying products of any kind from using the same or a similar sign in a way that creates a mental “link” with the trade mark (that is bringing the trade mark to the minds of consumers encountering the third party’s sign) and as a consequence of this link has one or more of three designated effects on the trade mark.73 The designated effects are to damage the trade mark’s “distinctive character”, to damage its “repute” and to take “unfair advantage” of these without “due cause”. The CJEU has confirmed that this additional protection for certain trade marks goes beyond the traditional boundary of protection, which requires an infringing sign to be likely to confuse consumers about the commercial origin of the third party’s products or to create a false impression that there is an economic link of some kind with the trade mark or its owner.74 Instead, this additional protection increases the control that the owner has over its trade mark’s presence in the minds of consumers and thereby increases its value as a resource for attracting attention and demand. It protects the prominence that the trade mark may enjoy in the minds of consumers and the factors that enable it to attract demand, which can include an appealing image as well as a good reputation concerning product quality.75 It also enables the owner to prevent unfair exploitation of these features of its trade mark’s presence. In a controversial judgment, the CJEU ruled that a third party can take unfair advantage of such a presence even where it causes no damage to that presence and there is no likelihood of consumers being misled about commercial origin.76 In a similar line of development, the CJEU has ensured that the owner’s control over third parties’ use of its trade mark as a reference point in their own advertising and promotional activity is sufficient to protect its image and associations as well as its meaning as a trade mark.77 As well as facilitating the cultivation of images and associations for the brands they signify through their use as reference points, trade marks can contribute directly to their emotional impact and power to attract demand. A trade mark’s distinctiveness and nature as a sign can boost its potential to gain salience in the minds of consumers.78 Some signs such as logos or shapes may contribute to the aesthetic impact of a brand. However, trade mark law imposes restrictions on the ability of firms to appropriate such signs for their exclusive use as trade marks. The main overriding condition of registration is that a sign must have distinctive character in the sense that relevant consumers must be likely to perceive it as signifying an exclusive connection to one firm and thus as a trade mark.79 This can be a difficult condition for signs not traditionally or typically used as trade marks (such as shapes or colours) to satisfy.80 There are further restrictions on the ability to register shapes as trade marks even if consumers may have come to perceive them as trade marks through their use as such.81 These include a restriction on shapes that add substantial value for reasons that are not brand-related such as their aesthetic appeal,82 though in practice it can be hard to disentangle the inherent allure of a sign from other factors that may give it emotional impact.83 These further restrictions are due to be extended to cover product characteristics in general.84 However, apart from these restrictions, trade mark law does not preclude firms from registering aesthetically-appealing signs as trade marks once consumers have come to perceive them as such even though their owners may thereby gain an extensive zone of exclusivity.85 Trade marks that signify verbally may bring attractive connotations and associations to brands through any alternative meanings or significance they may have and a firm may select a brand name or other trade mark for this reason. Trade mark law places some restrictions on the ability of firms to appropriate words and word-combinations of this kind as trade marks, but these are limited.86 There are restrictions on the registration of signs that are entirely descriptive or have some other entirely non-origin significance for the relevant kind of products, at least not until they have acquired sufficient familiarity through use as trade marks in practice to displace their alternative significance.87 However, these restrictions do not preclude trade marks from having descriptive elements or being suggestive or allusive to the quality or characteristics of the branded products. Cases involving everyday words such as “sky” and “apple” show how firms can gain zones of exclusive control over words with pre-existing meanings through registering them as trade marks.88 Trade mark law does provide for applications to register signs as trade marks to be refused for bad faith and this provision can apply where a firm seeks to register a sign that is likely to have significant emotional impact or attract significant demand for some other reason and where the applicant has no good reason to appropriate this appeal for its exclusive use.89 A further point relevant to consumerism is that a trade mark can be positioned where consumers would not notice them prior to purchase.90 Such trade marks function as a means of subsequent brand authentication, but their invisibility may also add to the allure of products sold under a niche brand to consumers who are seeking the emotional satisfaction of feeling part of a select community.91 Nevertheless, for trade marks used in this way, as with all trade marks that are ancillary contributors to a brand, it is still necessary that relevant consumers should be likely to perceive them on their own as signifying an exclusive connection to one firm even though they are not used on their own in practice.92