Trademark Transactions in Common Law Countries

Historically, common law countries took a restrictive approach to transactions involving trademarks. This restrictive approach was said to flow from the reasons for granting protection for trademarks in the first place. If a trademark communicates information to consumers as to the origin and quality of a particular trader’s goods or services, it was thought that any dealing with a trademark, such as an assignment of the mark or the grant of a licence to a third party to use the mark, would disrupt the source and quality guarantee functions of the mark and potentially cause confusion among consumers. In other words, the very reasons that a trademark receives legal protection were thought to justify constraining an owner’s ability to deal with the mark. Initially, these sorts of concerns were highly influential, and the law either proscribed or imposed strict limitations on the exploitation of trademarks. However, over the course of the last century there was a gradual liberalisation of these rules. Consequently, in most common law countries we have now reached a position where the law recognises registered trademarks to be personal property, which can be exploited with fewer restrictions than in the past. This liberalisation has to a large extent reflected changes in business practices, as brands have come to be recognised as valuable commodities in their own right and as trademark licensing, merchandising and franchising have become large and lucrative industries. Notwithstanding this, the tension between the idea of the mark as “property” and the mark as a badge of origin remains. This chapter, published in an edited collection on international and comparative trade mark law, explores how this tension is reflected in common law countries in the retention of restrictions on trademark transactions in cases where marks have been or might be used in such a way as to deceive consumers. Working out when a badge of origin can be transferred to an unrelated third party whilst not falling into the category of a “deceptive transaction” remains more difficult than is often appreciated, as our analysis of key doctrines in Australian, UK and US trademark law reveals.