Document Type

Article

Publication Date

2023

Abstract

Trademarks are increasingly valuable assets, and some companies aggressively enforce and protect these assets. Such aggressive tactics can harm small businesses and chill creativity and speech, but trademark owners are routinely told that the law requires them to stop all similar third-party trademark usage or risk abandonment of their rights. While prior scholarship has discussed how the risk of trademark abandonment is quite low, incentives built into trademark law still push companies to court. This Article presents the results of an event study utilizing an established database of trademark infringement cases to provide insight to decisionmakers on whether the stock market supports such enforcement actions when taken by publicly traded companies. Unlike in prior litigation event studies, this study finds that the market responds negatively to the plaintiff's filing of the trademark suit but does not respond negatively toward the defendant. This result suggests that, unlike in patent litigation, the market may prefer that trademarks be protected outside of court. Given that corporate law protects officers and directors from liability in most circumstances, these decisionmakers have the freedom to choose more creative, strategic enforcement measures. Public companies would be wise to consider this additional source of data when balancing trademark law's push toward aggressive enforcement.

Publication Citation

75 S. C. L. Rev. 1 (2023).

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