The Economic Foundations of European Dilution Law

Publication details

Ilanah Fhima, 'The Economic Foundations of European Dilution Law' in Glynn S Lunney Jr. (ed), Research Handbook on the Law and Economics of Trademark Law (Edward Elgar, 2023).

Abstract

This chapter examines three economic justifications offered for protection against dilution – reduction in consumer search costs; protection of reputation-based aspects of trade marks; and misappropriation – before considering the extent to which they are each reflected in the EU dilution jurisprudence. It argues that the EU courts have, perversely, withheld dilution protection in blurring cases – where consumer search costs are said to increase as the distinctive character of a mark is weakened – even though search cost reduction serves the interests of mark owners and consumers alike. Likewise, the courts’ approach has severely limited protection against detriment to distinctive character (tarnishment), thereby ignoring arguments that such protection aids efficient consumer decision-making and enhances consumer choice based on reputational/emotional aspects of branded products. Simultaneously, courts have expanded the role of misappropriation-based unfair advantage taking without properly developing the provision’s built-in limitations. This skews protection in the mark owners’ favour since it fails to consider countervailing competition-based interests properly. Also, because unfair advantage is easily proved, the courts’ approach has suppressed the further development of blurring and tarnishment under EU trade mark law. The chapter concludes with suggestions for restoring balance, so that protection not only is more consumer-centric but also better accommodates competitors’ needs.

More information

Find out how to access the book chapter here and the book here.