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Brands, ‘weightless’ firms and global value chains: the organisational impact of trade mark law

Published online by Cambridge University Press:  01 April 2019

Andrew Griffiths
Andrew Griffiths*
Affiliation:
Newcastle Law School, Newcastle University, UK
*
*Author email: [email protected]
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Abstract

The Rana Plaza disaster of April 2013 was the most prominent of several incidents that have highlighted poor standards of business behaviour in the supply chains of well-known brands. Analysis of these incidents has attributed these poor standards to an institutional structure in which lead firms with strategic power outsource production into global value chains and pursue business models that involve rapid product upgrading and require low costs and fast turnarounds in production such as the garment industry's ‘fast fashion’ business model. This paper aims to complement that analysis by showing how trade marks, as the main legal anchors of brands, have reinforced the strategic power of lead firms, enabled them to outsource production and encouraged them to adopt business models of this kind. The paper will also evaluate the claim that brands mitigate their harmful effects by transmitting countervailing pressure back onto their owners because they provide salient targets for bad publicity and blame, as coverage of the Rana Plaza disaster showed, which can threaten their owners with reputational damage. It will be argued that this countervailing pressure has a limited effect and cannot be relied on without more to address the issues that the Rana Plaza disaster revealed.

Keywords

trade marksbrandsbusiness organisation
Type
Research Article
Information
Legal Studies , Volume 39 , Issue 2 , June 2019 , pp. 284 - 301
Copyright
Copyright © The Society of Legal Scholars 2019 

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Footnotes

†

I would like to thank Professor Simon Baughen of Swansea University and the anonymous referees for their helpful comments and feedback.

References

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2 Ibid.

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26 ‘Bangladesh: British firms did not follow New Safety Regime for Clothing Production’ (The Daily Telegraph, 2 May 2013), available at http://www.telegraph.co.uk/news/worldnews/asia/bangladesh/10034090/Bangladesh-British-firms-did-not-follow-new-safety-regime-for-clothing-production.html (accessed 4 February 2019); ‘Bangladesh: Rana Plaza architect says building never meant for factories’ (The Daily Telegraph, 3 May 2013), available at http://www.telegraph.co.uk/news/worldnews/asia/bangladesh/10036546/Bangladesh-Rana-Plaza-architect-says-building-was-never-meant-for-factories.html (accessed 4 February 2019). See further Das v George Weston Ltd, above n 1, paras [81]–[98].

27 APPG Report, above n 1, at 18.

28 See above n 1.

29 See above n 1.

30 APPG Report, above n 1, at 14, citing McKinsey & Company ‘Bangladesh's ready-made garment landscape: the challenge of growth’ (2011).

31 APPB Report, above n 1, at 26–27.

32 APPB Report, above n 1, at 26–27.

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35 Bair and Palpacuer, above n 9.

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38 Ibid.

39 On how a ‘buyer-driven dynamic’ seems to have emerged in global value chains in most industries see Gibbon, Bair and Ponte, above n 9, at 320–322.

40 Klein, above n 4.

41 Streeck, W ‘Citizens as consumers: considerations on the new politics of consumption’ (2012) 76 New Left Review 27Google Scholar.

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47 Ponte and Sturgeon, above n 9, at 201–202.

48 Azmeh and Nadvi, above n 33.

49 APPG Report, above n 1, at 7; Taplin, above n 14, at 73.

50 This can be seen in the division of the retail price for a T shirt among parties in the value chain: ‘What does that $14 Shirt really cost?’ ( Maclean's, 1 May 2013), available at http://www.macleans.ca/economy/business/what-does-that-14-shirt-really-cost/ (accessed 4 February 2019).

51 Anner, Bair and Blasi, above n 1; Drebes, above n 46.

52 G Gereffi, J Humphrey and T Sturgeon ‘The governance of global supply chains’ (2005) 12 Review of International Political Economy 78 at 81–88; Gibbon, Bair and Ponte, above n 9, at 319–326; Gereffi and Lee, above n 8, at 25–26; Ponte and Sturgeon, above n 9, at 200–210; Lee and Gereffi, above n 5, at 320–322.

53 This analysis builds on the market and firm dichotomy associated with Ronald Coase: Coase, RH ‘The nature of the firm’ (1937) 4 Economic NS 386CrossRefGoogle Scholar. See Macneil, I ‘Contracts: adjustments of long-term economic relations under classical, neoclassical and relational contract law’ (1978) 72 Northwestern University Law Review 854Google Scholar; Williamson, OE ‘Transaction-cost economics: the governance of contractual relations’ (1979) 22 Journal of Law and Economics 233CrossRefGoogle Scholar.

54 Gereffi, Humphrey and Sturgeon, above n 52, at 83–84 and 86–87.

55 Langlois, above n 44.

56 Gereffi, Humphrey and Sturgeon, above n 52, at 84–87.

57 Langlois, above n 7, at 370–376; Gereffi, Humphrey and Sturgeon, above n 52, at 85.

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59 Gereffi, Humphrey and Sturgeon, above n 52, at 85.

60 Richardson, above n 10, at 888; Langlois, RN and Foss, NJ ‘Capabilities and governance: the rebirth of production in the theory of economic organization’ (1999) 52 Kyklos 201CrossRefGoogle Scholar.

61 Gereffi, Humphrey and Sturgeon, above n 52, at 86.

62 Williamson, above n 53, at 239 and 246–247.

63 Gereffi, Humphrey and Sturgeon, above n 52, at 80.

64 Bair and Palpacuer, above n 9, at S2.

65 Chon, above n 23. See further Kysar, DA ‘Preferences for processes: the process/product distinction and the regulation of consumer choice’ (2004) 118 Harvard Law Review 525CrossRefGoogle Scholar.

66 Bair and Palpacuer, above n 9, at S2.

67 Talbot, L ‘Trying to save the world with company law? Some problems’ (2016) 36 LS 513Google Scholar at 518.

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74 Recast Directive, Art 10(2)(b) and 10(2)(c); TMA 1994, ss 10(2) and 10(3). On Art 10(2)(b) see Case C-251/95 Sabel v Puma [1997] ECR I-6013; Case C-39/97 Canon v MGM [1998] ECR I-5507; Case C-342/97 Lloyd Schuhfabrik v Klijsen Handel [1999] ECR I-3819; on Art 10(2)(c), see Case C-252/07 Intel v CPM [2008] ECR I-8823; Case C-487/07 L'Oréal v Bellure [2009] ECR I-5185; Case C-252/12 Specsavers v Asda [2013] Bus LR 1277.

75 Havana Cigar v Oddenino [1923] 1 Ch 179 (CA); Sales Affiliates v Le Jean [1947] Ch 295 (HC); Premier Luggage & Bags v Premier Company [2002] EWCA Civ 387. This has been extended to include third parties’ use of a trade mark as a keyword to trigger ‘pop-up’ advertising, sponsored links or other pre-arranged responses when consumers use the sign in question as a search term online: Case C-236/08-238/08 Google France v Louis Vuitton [2010] ECR I-2417; Case C-323/09 Interflora v Marks & Spencer [2012] Bus LR 1440.

76 Ibid.

77 See Campbell, above n 13.

78 Hilton, B, Choi, CJ and Chen, S ‘The ethics of counterfeiting in the fashion industry: quality, credence and profits issues’ (2004) 55 Journal of Business Ethics 345CrossRefGoogle Scholar; Pouillard, V and Kuldova, T ‘Interrogating intellectual property rights in post-war fashion and design’ (2017) 30 Journal of Design History 343CrossRefGoogle Scholar.

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81 Raustiala and Sprigman, above n 79, at 1718–1728.

82 Case C-59/08 Copad v Christian Dior Couture [2009] ECR I-3421 at [24]–[26].

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84 I Lianos ‘Brands, product differentiation and EU competition law’ in Desai, Lianos and Weber Waller, above n 70, p 146 at pp 148–152.

85 Major Bros v Franklin [1908] 1 KB 712 (HC); Primark v Lollypop Clothing [2001] FSR 637 (HC); IHT v Ideal-Standard, above n 21, at [38]–[39].

86 Primark v Lollypop Clothing, above n 85.

87 A trade mark guarantees that ‘all the goods or services bearing it have been manufactured or supplied under the control of a single undertaking which is responsible for their quality’: Case C-206/02 Arsenal FC v Matthew Reed [2002] ECR I-10273 at [48] and [58].

88 The ‘decisive factor is the possibility of control over the quality of goods, not the actual exercise of that control’: IHT v Ideal-Standard, above n 21, at [38].

89 Bostitch TM, above n 21, at 197; IHT v Ideal-Standard, above n 21, at [37]–[38].

90 Scandecor Development v Scandecor Marketing [2001] ETMR 800 (HL) at [19].

91 Recast Directive, Art 15; TMA 1994, s 12.

92 Case C-355/96 Silhouette v Hartlauer [1998] ECR I-4799; Case C-173/98 Sebago v GB-Unic [1999] ECR I-4103; Joined Cases C-414/99-C-416/99 Zino Davidoff v A & G Imports [2001] ECR I-8691.

93 On this ‘territorial price discrimination’ see Maskus, KE ‘Economic perspectives on exhaustion and parallel imports’ in Calboli, I and Lee, E (eds) Research Handbook on Intellectual Property Exhaustion and Parallel Imports (Edward Elgar, 2016) p 106CrossRefGoogle Scholar at pp 112–113.

94 Recast Directive, Art 15(2); TMA 1994, s 12(2).

95 Case C-427/93 Bristol-Myers Squibb v Paranova [1996] ECR I-3457; Case C-348/04 Boehringer Ingelheim v Swingward (No 2) [2007] ECR-3391; Case C-276/05 Wellcome v Paranova [2008] ECR I-10479. Much of the case law on these rights relates to pharmaceutical products.

96 Case C-337/95 Parfums Christian Dior v Evora [1997] ECR I-6013; Case C-59/08 Copad v Christian Dior Couture [2009] ECR I-3421.

97 Ibid.

98 Cosmetic Warriors v Amazon [2014] EWHC 181 (Ch).

99 Vandenbergh, MP ‘The new Wal-Mart effect: the role of private contracting in global governance’ (2007) 54 UCLA Law Review 913Google Scholar. See further Rühmkorf, above n 1, pp 73–92.

100 On product and process characteristics, see above n 65.

101 Adams v Cape Industries [1990] Ch 433 (CA); VTB Capital v Nutritek [2013] UKSC 5.

102 Adams v Cape Industries, ibid; Lungowe v Vedanta Resources [2017] EWCA Civ 1528, paras [67]–[90].

103 Chandler v Cape Industries [2012] EWCA Civ 525.

104 Lungowe v Vedanta Resources, above n 102, at [83].

105 Lucky Alame v Royal Dutch Shell [2018] EWCA Civ 191 at [89] and [140].

106 Such concerns influenced the response of some brand owners to the Rana Plaza disaster: ‘US retailers see big risk in safety plan for factories in Bangladesh’ (The New York Times, 22 May 2013), available at http://www.nytimes.com/2013/05/23/business/legal-experts-debate-us-retailers-risks-of-signing-bangladesh-accord.html (accessed 4 February 2019).

107 Baughen, SJ Human Rights and Corporate Wrongs: Closing the Governance Gap (Edward Elgar, 2015) pp 212–250CrossRefGoogle Scholar.

108 See for example the Modern Slavery Act 2015, s 54(4).

109 Office of the United Nations High Commissioner for Human Rights ‘Guiding principles on business and human rights: implementing the United Nations “protect, respect and remedy” framework’ (2011).

110 Guiding Principles 17–21.

111 Cassel, D ‘Outlining the case for a common law duty of care of business to exercise human rights due diligence’ (2016) 1 Business and Human Rights Journal 179CrossRefGoogle Scholar.

112 cf Lucky Alame v Royal Dutch Shell, above n 105, at [89] and [140]. On the scope for action by or on behalf of consumers see Rühmkorf, above n 1, pp 93–111.

113 See above n 23.

114 On the categorisation of value chains, see above n 54.

115 On complexity in transactions, see above n 56.

116 Hemphill, TA and White, GO III ‘The world economic forum and Nike: emerging “shared responsibility” and institutional control models for achieving a socially responsible global supply chain?’ (2016) 1 Business and Human Rights Journal 307CrossRefGoogle Scholar.

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118 APPB Report, above n 1, at 12.

119 This dilution is illustrated in the slogan of the Clean Clothes Campaign in response to the Rana Plaza disaster of ‘Brands pay up now!!’: see https://cleanclothes.org/news/2013/05/24/activists-protest-fashion-brands-failure-to-pay-bangladesh-disaster-victims-compensation (accessed 4 February 2019).

120 Chon, above n 23, at 297.

121 Chon, M ‘More and more(s): certification in global value chains’ in Calboli, I and Lee, E (eds) Trademark Protection and Territoriality Challenges in a Global Economy (Edward Elgar, 2014) p 79Google Scholar at p 85.

122 On Fairtrade, see http://www.fairtrade.org.uk/What-is-Fairtrade/Using-the-FAIRTRADE-Mark (accessed 4 February 2019).

123 See for example the ‘Cocoa life’ certification scheme set up by Mondolez International: https://www.cocoalife.org/ (accessed 4 February 2019).

124 Chon, above n 58, at 2316.

125 Palpacuer, above n 8, at 411.

126 Ibid.

127 See above nn 37–38.

128 See above n 36.

129 As with the ‘Lush’ brand: see above at n 98.

130 See above at n 65.

131 Anner, Bair and Blasi, above n 1.

132 Drebes, above n 46.

133 Palpacuer, above n 8, at 411–443; Sinkovics, Hoque and Sinkovics, above n 36.