14-Sep-2021
written by: Andrew Abou Khater
Globally, free market principles are founded in market-based economies in order to establish rules to avoid the free market being prejudiced or abused. Fair competition in principle is important to let corporate entities and firms enjoy a fair fight while protecting their assets and their position in the market.
Correlatively, intellectual property rights are amongst the several guarantees of fair competition without infringement of any of the rights of the corporate entity for example trademarks’ rights.
Therefore, intellectual property rights granted to protect trademarks or any other rights are pro-competitive. Any infringement of trademarks will certainly affect the competition between the market’s operators. However, we will tackle in this article how especially trademark’s infringement are the product and leading reason of unfair competition.
Many commentators would qualify trademark infringement as a “form of unfair competition”. In different MENA region states and other states, unfair competition provisions are a subcategory of intellectual property laws or interconnected with them.
We will address in this article trademark infringement and its connection with unfair competition.
- The key functional role of trademarks in the market
A trademark is a consisting type of intellectual property rights. It carries similar definition in almost all legal systems, where it derives from the Paris Convention; and it is defined as “any sign that individualizes the goods of a given enterprise and distinguishes them from the goods of its competitors.”
Generally, trademark provisions protect names, signatures, words, symbols, signs, and combination of colors, combination of word and logo, stylized word mark, services or goods offered in the course of trade.
It encompasses different roles and functions which are interdependent and practically looked at together.
According to trademarks’ law, trademark protection is drastically necessary for every owner to guarantee him the exclusive right granted by law to use the Trademark, and stop any other person from using similar or identical marks for similar or identical goods.
Hence, the trademark’s protection prevent other competitors or third parties from using identical or similar marks impacting the owner’s business, goods or services.
To this end, a trademark is an acknowledgment of the entity’s brand. Consequently, the trademark must be necessarily protected for the three following main reasons:
1-A Trademark will help providing the entity with an identity (it identifies the product and its origin);
2-A Trademark will help establish the product or services’ liability, and quality (it guarantees the product’s unchanged quality); and
3-A Trademark helps improve the brand’s equity (it advertises the product).
- Trademark’s infringement
The infringement of a trademark is considered as a violation, breach of any of the three functional capacities of a trademark as an identifying, guaranteeing or advertising device. The trademark’s infringement encompasses the constitution of an infringement to the main distinguishing feature of a trademark whether its size, shape, overall appearance originally distinct from any other trademark.
Whereas, trademarks can be infringed in different circumstances that vary with their intensity and consequences.
There are cases that constitute strong examples of the law claims of unfair competition due to trademark’s infringement:
1-The most recurrent form of trademark infringement related to free market principals are the use of an identical logo, brand of another competitor and use it without permission, assignment or contract entitling for such use.
2- In situations of sale, distribution of a product or service, some distributors will act as the owners of the trademark. Hence, this behavior is considered as a violation of trademark rights.
3- Yet another familiar case occurs when counterfeiting exists or when confusion about the trademark elements occurs because other have used it to identify their own products or services, thereby diminishing the trademark’s original statue. This would be implemented when using the mark of the owner on purchased goods which originally did not have these elements affixed on them.
On another hand, free market principal have a general purpose of preventing any violation of the reputation, brand, activity of a corporate entity and its place in the market whether to protect the entity before other competitors or consumers.
- Inter-correlation between Trademark infringement and unfair competition
In trademark law, unfair trade practices are commonly found when a breach of any of the distinctive particularities of other operators’ goods or services takes place.
In fact, trademark infringement is connected to unfair competition because:
- They share the same liabilities where the infringer is violating the protection of goods and services registered and protected under the trademark,
- Correlatively restrict the fairness of the competition by prejudicing the competitor’s trade dress in the market and intentionally confusing the consumers.
- As used in the same context, the trademark infringement and unfair competition are interconnected because either way the infringer is unrightfully trying to benefit from the competitor’s business and market notoriety.
In response to this, trademark’s law constantly seeks to encourage trademarks’ registration in order to implement a protection against unfair competition and the imposition of sanctions against infringements of legitimate intellectual property rights.
In response to several infringement cases and deceptive practices, a level of fairness was set to be adopted by every trademark owner and every business owner in order to conduct the corporate activity with honesty before the public and to avoid unfair competition.