Borrowing Goodwill

The elusive intangible property right known as “goodwill” serves as the central organizing concept for trademark and unfair competition laws in the United States. It also plays an important, but very different, role in the common law tort of passing off in the United Kingdom and Commonwealth countries. Yet the full history of goodwill—and its divergent incorporation into trademark doctrine—has not been adequately explored. Many historical accounts of American trademark law have incorrectly identified commercial goodwill as a nineteenth-century legal creation. The term goodwill, however, can be traced as far back as the sixteenth century, where it was used to describe an intangible property right. Commercial goodwill existed as a valuable cultural and market reality—eventually finding its way into the common law by the eighteenth century. During the nineteenth century, American courts often relied on the various strands of doctrine developed by British law and equity courts. But in 1916, in Hanover Star Milling Co. v. Metcalf, the U.S. Supreme Court took American law in a new direction by placing goodwill at the center of its trademark regime. In doing so, the Court committed the United States to resolutely use-based trademark protection, in contrast to the formal trademark registration models favored by most jurisdictions around the world.

     This Article explores the earliest origins of commercial goodwill to show that it was already a well-established property right before the advent of modern trademark law. It goes on to demonstrate how the U.S. law came to identify goodwill protection as the primary aim of its trademark system. By reframing the historical narrative of American trademark law to contextualize the relationship between goodwill and trademark law doctrines, and contrasting that relationship with the U.K. law, it sheds light on some of the challenges and tensions seen in U.S. trademark law today.