Hands off my Brand! The Financial Consequences of Protecting Brands through Trademark Infringement Lawsuits

Abstract

Well-known brands are frequently imitated, misused, or tampered with. Firms facing these threats routinely turn to the legal system and file trademark infringement lawsuits in an attempt to prevent revenue losses and brand equity dilution. In this article, the authors address the largely unexplored issue of brand protection. First, they categorize all major types of trademark infringement. Second, using signaling and prospect theories, they present a conceptual model that outlines the financial consequences of defending a brand in court. The authors test the predictions of this framework using a large sample of trademark infringement lawsuits and find that although investors react negatively in the short term to firms’ filing and even to firms’ winning such cases, the long-term performance of firms that successfully leverage the legal system to protect their brands is positive.

Estrategias de imitación en productos de limpieza

“…Jiang & Cova (2012) definieron la falsificación como la producción de copias que están empaquetadas de manera idéntica, incluidas las marcas comerciales y el etiquetado, para hacer parecer a un consumidor que el artículo es el producto genuino. (Khandeparkar & Motiani, 2018) De acuerdo a Ertekin, Sorescu, & Houston (2018) se identifica que la falsificación ocurre cuando se utiliza una marca comercial idéntica o confusamente similar en los productos que compiten directamente con la marca original o en productos no relacionados. También citan a Cohen (1991) y Conway-Jones (2002) quienes definen la falsificación de una marca como el uso no autorizado de una marca comercial (por ejemplo, nombre de marca, logotipo, eslogan) de una manera que pueda causar daño a la reputación de esta marca comercial o crear confusión entre los consumidores sobre el origen de los bienes o servicios que llevan la marca comercial.…”

Case study – trade dress and brand protection in Thailand’s copier paper business

“…Filing a trademark infringement lawsuit negatively affects a company’s stock price because it signals a market problem. Winning such lawsuits, however, enhances the company’s performance over the long term (Ertekin et al , 2018). Injudicious filing of trademark lawsuits can result in consumer backlash, especially if they are seen as attacking creative activities of consumers or brand communities (Robson et al , 2020).…”

Submarine trademarks

“…They are, by far, the most widely used form of intellectual property (IP) with 11.5 million trademark filings worldwide in 2019 as opposed to 3.2 million patent filings. 1 Growing evidence illustrates the benefits that firms derive from protecting their brands through trademarks: stocks of trademark registrations are positively correlated with financial performance (Krasnikov et al, 2009) and firm value (Edeling & Fisher, 2016); trademark filings and their enforcement elicit positive stock market reactions (Ertekin et al, 2018;Fosfuri & Giarratana, 2009); trademark holdings help startups secure funding from venture capitalists (Block et al, 2014) and are positively correlated with firm growth (Dinlersoz et al, 2018) and success (Fazio et al, 2016).…”