Since its judicial creation in the 1970s, strong controversy has surrounded the practice of trademark merchandising. Trademark scholars have generally opposed merchandising rights because of the departure from the traditional interpretation of trademark law—protecting consumers and market competition—in favor of a direct protection of trademark value. Despite this opposition, courts and Congress have favored the acceptance of this practice by broadening the scope of trademark protection and by introducing the concept of confusion as to the products’ “sponsorship” or “affiliation” as part of the standard for trademark infringement. Not surprisingly, trademark scholars have criticized these developments but have not offered, so far, a solution that is responsive to the changes that have affected the role of marks in the past decades. This Article fills this gap and, contrary to the position of the majority of scholars, advocates in favor of providing legal protection to trademark merchandising under the current rule of trademark law. Specifically, this Article accepts that in the modern economy the concept of commercial source can also include products’ sponsorship and affiliation as indicated by the courts and accepted by the legislature. Based upon this premise, this Article recognizes that the use of trademarks on promotional products that are offered for sale can legitimately serve the traditional distinctive function of trademarks and indicate to the public the origin of the marked products, at least in terms of trademark owners’ sponsorship or affiliation. Contrary to common criticism, this recognition of merchandising marks as legitimate source indicators would not negatively affect competition in the market or consumers. Instead, it would finally provide a clear guideline in this important area of the law and subject trademark merchandising to the general rules for the acquisition and enforcement of trademark rights as well as to existing trademark defenses and fair uses.
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