Trademarks are rights granted under the commerce clause of the United States Constitution, and are based on the notion that competition should be fair under both state and federal law. This is fundamentally different from copyright and patent law, which are designed to promote progress in science and the useful arts. It is important to understand this difference, as it informs the different ways in which trademarks are viewed, and the distinct analysis for finding trademark infringement.

Trademark law exists to prevent consumer confusion. This is based on economic theories that view confusion in the marketplace as a mechanism that decreases market efficiency. In practice, it means when a consumer walks into a McDonalds expecting the usual quality and price of a quarter-pounder with cheese, but instead gets something of much worse quality that is much more expensive, that is a waste of resources. The consumer wasted his time walking into the fake McDonalds, and his money on the fake McDonald’s burger, and he did it because the imposter was using the golden arches. Trademark law seeks to prevent unauthorized users from using marks such as the golden arches, thereby allowing companies to use their marks as reliable indicators of source, and allowing consumers to associate a certain level of quality, price, and ultimately trust in those companies and their brands.

Trademarks exist on the state and federal level. On the state level, trademarks exist as part and parcel of the state law of unfair competition. At common law, once a business began using their mark in commerce, i.e. in advertising, to market their products, and to generate sales, they immediately obtained rights in such marks, rights that could be infringed by imposters using their marks, and which could be enforced under state law. Federal rights on the other hand derive from acts of Congress passed pursuant to the Commerce Clause of the Constitution. The Supreme Court of the United States has found that the Constitution requires that there be a “use in commerce” for trademark rights to attach, and consequently, for the United States Patent and Trademark Office (USPTO) to grant a federal trademark registration. Such a registration confers a number of rights, including nationwide priority over later registered marks, while putting would-be infringers on notice, attains prima facie validity (a presumption that the mark is valid), and allows for customs to halt infringing goods at the border.

Trademarks are also enforceable under a different theory known as dilution, once again under both state and federal law. Dilution is fundamentally different from confusion. Unlike confusion, dilution basically holds that famous marks should not be copied because they tarnish, blur or in some way diminish the famous mark. Some are in disagreement with the very premise behind dilution, but the reality is that dilution law has become a very useful way for the most powerful of companies to protect and enforce their brands on a national scale.