Look around your home and you are sure to find no shortage of cheap promotional items carrying the logo of one business or another.  In fact, I happen to have in front of me right now three pens emblazoned with the names of three different national hotel chains.  None of the hotel chains are especially trendy, so it is hard to imagine that anyone would actually pay a premium to use the pens because of the presence of the trademarks.  But some trademarks do have real cache — think Harley, Starbucks, or BMW — and there might be real money-making opportunities in selling pens, shirts, mugs, and so forth linked to those famous names.  So, you might wonder, would it be legal to start producing  and selling merchandise bearing famous names without first obtaining a license from the trademark owners?

As Irene Calboli explains in a new paper on SSRN, the answer has not been as clearly and satisfactorily worked out by the courts as you might think.  

It is commonly thought that trademark rights are recognized in order to prevent consumer confusion.  But the consumer confusion concerns seem much less compelling when an unlicensed producer is selling a T-shirt with the Starbucks name than a bag of coffee — consumers likely do not have the same quality expectations from a Starbucks T-shirt  that they have from a Starbucks cup of joe.  Still, as Irene describes, the trend is towards greater protection of trademark owners’ merchandising rights.

Irene’s paper thoroughly reviews the development of the law in this area, as well as the arguments for and against the protection of trademark merchandising.  She argues in favor of a clearer legal standard that would provide more explicit protection for merchandising, but that would also recognize standard defenses to enforcement actions by trademark owners.

Entitled “The Case for a ‘Limited’ Protection of Trademark Merchandising,” Irene’s paper is forthcoming in the Illinois Law Review.  Here is the abstract:

This Article provides an in-depth analysis of trademark merchandising – the use of trademarks on promotional products – and of the inconsistencies that have affected this practice since its “judicial creation” in the 1970s. Because of the departure from the traditional account of trademark protection – protecting consumers and the market – in favor of a direct protection of “trademark value,” trademark scholars have generally argued against accepting this practice stressing its dangers for consumers and the market. Still, recent judicial decisions and developments in trademark legislation have increasingly indicated a de facto acceptance of trademark merchandising. Hence, neither the courts nor the legislature have formally “legalized” this practice, but have simply stretched the interpretation of the traditional infringement standard to justify protecting trademark merchandising, thus leaving room for doctrinal opposition. As a result, the terms of protection of this practice remain unclear, and trademark owners and competitors are left wondering about the legitimacy of their actions while using trademarks in the course of trade. This Article argues against this uncertainty and advocates for a solution that would reconcile trademark theory and practice while favoring a limited protection of trademark merchandising under the general principles of trademark law. Specifically, this Article suggests recognizing trademark merchandising within the limits of trademark licensing, subject to the requirement of “use in commerce,” and the existing rules for trademark enforcement, defenses, and fair use. Contrary to common criticism, this limited protection of merchandising would not negatively affect the market or consumers. Instead, this protection would guarantee fairness in competition, prevent frivolous legal actions, and finally provide a clear guideline in this important area of the law.