A Critical Assessment of the Impact of Trademarks and the Newly Recognised ‘Modern Functions’ on Competition

This paper looks into the status of trademarks in competition. Trademarks are misconstrued to give their owners too much power, one akin to a monopoly. Instead, this paper aims to argue that this power is justified and that it even enhances competition. This argument is grounded in the study of the aims of both competition and trademark systems, the explanation of the word monopoly, and the study of the new modern functions. The paper starts by an exploration of the evolution and current status of competition and trademark law; the two systems have complementing aims. Nevertheless, trademarks continue to be misunderstood because of the misuse of the word monopoly. There is a difference between a legal and an economic monopoly, and trademarks only grant the latter. This type of monopoly is not harmful, but is only a cost of the property system that is trademark law. This “cost” is in fact beneficial to competition: it upholds the economy by creating different markets, benefits consumers by acting as tokens in their hands, and encourages producers to innovate. This argument extends beyond the ability of trademarks to identify origin and onto the modern functions of advertisement, communication, and investment. These new attributes of trademark have become the commercial reality, and so they must be adopted by the law in order to ensure that the competition system is both up to date and healthy. This paper hence concludes that trademarks help and not hinder competition, even with the expansion of their functions. Courts and academics should continue to consider this view, which could perhaps be aided by empirical studies on the effects of trademarks on competition after the adoption of the modern functions.