When is Licensing a Trade Mark Deceptive?

Abstract

Orthodoxy suggests that the primary raison d’etre of a trade mark is to guarantee origin and, more subtly, quality. Economic reasons to do with the interests of consumers justify this function. Because licensing means the person who produces trade marked goods is not the registered owner, the law has for long been disinclined to allow the practice for fear the public would be deceived. But trade marks have always involved more than the public interest. A strong argument — based upon the reap/sow theory — favours the economic rights of trade mark owners. Recognition of licensing and transferring marks under the trade marks legislation, therefore, has over the years been gradually extended. The New Zealand Trade Marks Act 2002 made radical changes. In the new regime restrictions on dealing in trade marks have now given way to laissez-faire. But to what extent? In particular, when will a registered trade mark be rendered invalid when used by someone else with the owner’s consent? The answer will impact upon a wider issue of the possible erosion of public confidence in the registration system.