Reconciling Individualism and Collectiveness in Trademark Merchandising in the United States

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Trademark merchandising - the use of trademarks on promotional products for profits or simply as advertising - constitutes a ubiquitous phenomenon in today’s society. Despite this popularity, however, this booming business technique also constitutes a highly controversial topic and its acceptance under the rule of law still remains unclear in the United States. Not surprisingly, the disagreements surrounding the debate on trademark merchandising reflect the historically opposing views of trademark scholars and practitioners over the scope of trademark protection. Arguing that the justification for trademark protection has traditionally been based on the premise that trademarks do not exist “in gross” but rather only as indicators of commercial origin, and that trademark rights should be enforced solely to protect consumers against confusion, numerous scholars have opposed the recognition of merchandising because of the “unnatural” expansion of trademark protection and the resulting dangers for market competition. Hence, the business world has commonly traded marks as vital assets and properties per se to be defended against any unauthorized use, also on promotional products. Trademark owners and practitioners have thus traditionally advocated in favor of the legal recognition of trademark merchandising.

Ultimately, the economic changes of the past decades and the unprecedented increase in mass production and distribution of consumer goods have strengthened the position of the business world and reasserted the relevance of trademarks as profitable business assets. As a result, the importance of trademarks has also reached the judiciary and the legislature. During the past decades, multiple judicial rulings and statutory revisions have invariably led to increased trademark protection. In some cases, courts have also granted relief to plaintiffs based merely upon the impairment of the marks per se rather than because of existing confusion among consumers. Not surprisingly, this judicial and legislative favor for strong trademark protection has also translated into favor towards trademark merchandising. Still, while they have favored a de facto legal recognition of trademark merchandising, neither the judiciary nor the legislature has expressly accepted, so far, the validity of this practice in the legal context. Instead, courts have simply adopted a broader interpretation of the traditional standard for trademark infringement - “consumer confusion” - to include confusion “as to the sponsorship” of the marked products to justify trademark enforcement against unauthorized promotional products. Ultimately open-ended and based on a case-by-case approach by the courts, this approach has left ample room for doctrinal opposition and much uncertainty for trademark owners and competitors about the legitimacy of their actions while using trademarks on promotional products.

This chapter argues against this uncertainty and advocates for a solution to reconcile the current uncertainty surrounding the legal treatment of trademark merchandising with business reality and existing trademark rules in the United States. The first section of this chapter summarizes the history and developments of trademark merchandising, and reconstructs the confusing and disconnected debate that characterizes the positions of academics and practitioners on the issue. Highlighting the unsustainable uncertainty of the status quo in this area, the second section of this chapter proposes a solution that carefully balances the increasingly unavoidable recognition of individual merchandising rights in today’s society with the need to limit these rights in the interest of market competition and collectiveness in general.

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ATRIP Intellectual Property

Series Title

Individualism and Collectiveness in Intellectual Property Law


Edward Elgar Publishing


Jan Rosén

Series Editor

Annette Kur & Jan Rosén