13 February 2007

Trademark Perversion

The same Register article I just referred to contains another interesting quote, this time from the Gowers Review:

"Trading Standards have powers and the duty to prevent the sale of trade mark protected goods. However, where the infringement of rights relates to copyright alone Trading Standards do not have the power to act, and cannot perform searches and seizures. This means, for example, that where there are sales of counterfeit CDs and DVDs, Trading Standards have only a limited response. This creates an inconsistency in the way that the law treats piracy and counterfeiting."

The "inconsistency" between "piracy" and counterfeiting is hardly random or arbitrary. Copyright law exists to favour producers. If I sell you a copy I have made of Pirates of the Caribbean, you are not the victim, Disney is. On the other hand, trademark law exists in theory to protect consumers. If I sell you a Rolex watch that was not really made by Rolex, you are being cheated. The job of trading standards is to protect consumers, and therefore it has been concerned with enforcing trademarks, and not with enforcing copyrights. No inconsistency.

The Gowers Review recommends that this non-existent inconsistency be eliminated by having Trading Standards officers enforce copyrights also. How has this come about? It is because in reality they are already working for producers, not consumers. Trademark law is now being used as another form of copyright. If I buy a pair of Ray-Ban sunglasses for £2 from a street vendor, I know full well that they have not come from the Luxottica Group. By prosecuting the street vendor, the Trading Standards Officer is not protecting me, he is protecting the producer. It is indeed an inconsistency that the officer can act to protect the monopoly privileges of LVMH or Chelsea Football Club, but not those of Disney or Microsoft. However, he should not be doing either.

There is an efficiency argument for combining the functions of consumer protection and monopoly protection, but that needs to be set against the danger that one will overwhelm the other.

Update: By coincidence, John Kay makes a very similar point in today's Financial Times about the proper purpose of trademarks.

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