نقض قوانین علامت تجاری و سیاست نظارت بهینه

The paper addresses a trademark infringer who seeks to capitalize on the reputation of a trademark owner, sells an identical product under a trademark which is confusingly similar to that of the owner, charges the same price and competes with him in the same market. We show that the welfare-maximizing monitoring intensity is zero, hence the government is not likely to engage in monitoring infringement. Recognizing this, the trademark owner may consider monitoring the market himself, discovering, however, that this is worth his while only if the penalty for infringement, which he fully collects, is sufficiently high. Given the entry condition, an increase in the penalty may either raise or lower the optimal monitoring intensity. In the former case it will counter-intuitively increase the infringer's expected profit, apparently because a higher penalty will also lead to a raise in price. While monitoring enables the trademark owner to maintain a positive profit level, it reduces social welfare. The government may intervene to eliminate the private incentive for monitoring through taxing the collected penalty.

A trademark is a word, symbol or phrase, used by a seller to identify his products and distinguish them from those sold by another (Radack, 1996). By being the first to use the trademark in commerce or by being the first to register the trademark with an official agency, one acquires rights as a trademark owner. Trademark infringement occurs when another party uses a confusingly similar trademark in relation to products which are identical or similar to those sold by the trademark owner. It is prohibited by unfair competition laws because it confuses consumers as to the origin of the product and it unfairly curtails the trademark owner's profits. Nevertheless, trademark infringement is a widespread phenomenon throughout the world.1 While trademark infringement is an illegal act in its own right, it is also an essential feature of counterfeiting and piracy, which have been extensively modeled in the theoretical literature (e.g., Higgins and Rubin, 1986, Grossman and Shapiro, 1988, Bae and Choi, 2006 and Belleflamme and Picard, 2007). Piracy refers to the unauthorized copying of goods (e.g., software, music disks, DVD movies, books) which is usually distinguishable from the original, known to be of lower quality and therefore sells for a lower price in a separate market. Counterfeiting involves an imitation that, at the time of purchase, is indistinguishable from the authentic product. It may be of the same quality as the original so that consumers never notice the difference, but it is often of lower quality which is likely to be revealed after using the product. It is not necessarily aimed at deceiving consumers if selling at a lower price in a separate market (e.g., fake Gucci handbags). Consumers may still be willing to buy a counterfeit because they value the prestige associated with the brand-name product. In contrast, trademark infringement which is not connected to counterfeiting and piracy aims at confusing consumers to believe that they are buying the original product. Unlike counterfeiting and piracy, it need not involve the unauthorized utilization of a patented invention or the reproduction of copyrighted material, nor is it necessarily associated with lower quality (it may even be of a higher quality). Its sole purpose is to capitalize on the trademark owner's success in building reputation for the trademark.2 The present paper addresses an infringer who attempts to confuse consumers that she is the trademark owner, therefore charging the same price as the latter and competes with him in the same market. The infringer's product is assumed to be a perfect substitute to the imitated product, hence consumers, while confusing between the two, are not harmed in any way by the infringement. While focusing on pure trademark infringement, the model developed in the paper is also applicable to the case of perfect counterfeiting or piracy, which is indistinguishable from the original, has the same quality and sells at the same price. 3 This constitutes a major departure from the existing literature which assumes that the counterfeit product is of distinguishably lower quality than the original, therefore selling at a lower price in a separate market. We begin with setting the stage for the analysis (Section 2), proceed to examine the infringer's output decision (Section 3), show that the government is not likely to enforce the law by monitoring the marketplace (Section 4), and consequently let the trademark owner choose his optimal monitoring intensity (Section 5). A summary of the main results concludes (Section 6).

We have addressed a trademark infringer who seeks to capitalize on the reputation of a trademark owner, sells an identical product under a trademark which is confusingly similar to that of the owner, charges the same price and competes with him in the same market. We show that the welfare-maximizing monitoring intensity is zero, hence the government is not likely to engage in monitoring infringement. Recognizing this, the trademark owner may consider monitoring the market himself, discovering, however, that this is worth his while only if the penalty for infringement, which he fully collects, is sufficiently high. Given the entry condition, an increase in the penalty may either raise or lower the optimal monitoring intensity. In the former case it will counter-intuitively increase the infringer's expected profit, apparently because a higher penalty will also lead to a raise in price. While monitoring enables the trademark owner to maintain a positive profit level, it reduces social welfare. The government may intervene to eliminate the private incentive for monitoring through taxing the collected penalty although it is not likely to do so.