ABSTRACT
This chapter takes a competition law insight into the economic rationale and risks of granting legal exclusivity to functional signs. The first part discusses the goals of EU competition law, the relationship between IP and competition law, and the pro-competitive role played by trade marks as badges of origin. The next part explores how trade marks may negatively affect competition. The discussion comprises the issues of increasing consumer search costs, the costs for competitors of putting substitutable products on the market, or costs of intimidating litigation and co-existence agreements. Part 4.2.2. deals with strategic use of trade marks – as barrier to entry – to maintain market dominance and supra-competitive prices, such as the synergy between patents and trade marks, with a focus on pharmaceuticals, or the use of product features as indispensable asset for follow-on new products. Part 4.3. maps the concepts of branding and value of reputation against goodwill and brand components (such as brand image), with an insight into consumer co-branding and economic, marketing, and accounting standards. Part 4.4. explores how a competition perspective on market definition and products’ substitutability may be integrated within the functionality assessment, one which sufficiently reflects sufficient market competition and satisfies consumer needs.
