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17 September 2020
The Competition Commission has examined two cases concerning generic trademarks and deceptive marketing practices.
Pursuant to a complaint filed by Nimco Corner, the Competition Commission initiated an inquiry into, and thereafter issued show cause notices to, Mr Nimko Corner (Respondent 1) and Karachi Nimco (Respondent 2) for engaging in deceptive marketing practices under the Competition Act 2010.
The complainant processes, markets and sells local snack food under the trademark NIMCO. The trademark has been registered since 1947 and, since then, the complainant has developed and designed distinctive logos and packaging to be used in connection with its snack foods, which it has used throughout Pakistan and internationally for many years. Over time, the Nimco packaging and brand have become well known throughout Pakistan.
The complainant alleged that the respondents fraudulently used its registered trademark, logo and packaging design, including using similar trade names and taglines.
Issues considered by the Competition Commission
Was the complaint time barred and filed with mala fide intent?
While relying on the acquiescence principle under the Trademarks Ordinance 2001, Respondent 2 argued that the complaint was time barred as the complainant had not objected to the use of "Karachi Nimco" when Respondent 2 commercialised its business activities.
The Competition Commission observed that the complaint was maintainable as it had been filed with bona fide intent to protect the complainant's rights in accordance with the law. Further, the Competition Commission held that the complaint was not time barred as the matter had been filed under the Competition Act which does not prescribe a time limit for filing a complaint.
Was the defence of genericism for the word 'Nimco' available to the respondents?
Respondent 2 relied on the ground that the word 'Nimco' is generic and common to trade and, therefore, no one could claim any right over such word.
The Competition Commission observed that its jurisdiction is limited to the extent of deceptive marketing practices in violation of Section 10 of the Competition Act and held that until any direction is issued by another authority, it is not inclined to consider 'Nimco' to be a general descriptive word. Therefore, the complainant has the right to take appropriate actions to safeguard its goodwill, reputation and investment in its brand Nimco under and pursuant to the Competition Act.
Did the respondents engage in deceptive marketing practices?
The Competition Commission observed that the respondents had resorted to free riding and parasitic copying by creating lookalikes of popular products with similar packaging in order to attract consumers' attention and generate demand for their own products in the market. Moreover, the Competition Commission highlighted that consumers were at serious risk of falling prey to deceptive confusion pertaining to the origin and quality of the products due to the striking similarity with the complainant's name, product packaging, logo and get up.
The Competition Commission further observed that the respondents had not provided any evidence to prove the authenticity of their trademark and trade dress and substantiate the fact that their trademark and trade dress would not cause a misleading impression that the respondents' products originated from the complainant and, therefore, matched the quality of the complainant's products. This deceptive similarity may directly or indirectly affect consumers' transactional decisions and cause confusion regarding the origin, source and quality of the products.
The Competition Commission observed that Respondent 1 was using identical packaging with the registered trademark sign without having obtained any trademark registration from the Trademarks Registry, which resulted in the dissemination of false and misleading information.
The Competition Commission found that by using a trademark similar to that of the complainant, copying the packaging material and graphical representations and imitating the entire trade dress of the complainant, the respondents had violated Section 10 of the Competition Act by resorting to deceptive marketing practices through:
The Competition Commission:
Failure to comply with the Competition Commission's directions could result in additional penalties of PRs1 million per day from the date of the violation of the order.
The respondents may appeal the Competition Commission's order before the Competition Appellate Tribunal.
An inquiry was initiated against New Yorker Pizza for alleged deceptive marketing practices under the Competition Act based on a complaint filed by The New York Pizza.
The complainant alleged that the respondent had adopted the trademark NEW YORKER PIZZA, which was deceptively similar to the former's name and registered trademark NEW YORK PIZZA. Moreover, the complainant alleged that the addition of the suffix 'er' to its registered trademark would mislead the general public into believing that the respondent was a partner or an extension of the complainant's business.
The report issued by the inquiry committee dismissed the complaint filed by New York Pizza on the following grounds, among others:
The Competition Commission disagreed with the inquiry committee's conclusion for the following reasons:
Based on the above reasons, the Competition Commission remanded the matter back to the inquiry committee.
For further information on this topic please contact Sanaya F Vachha at Vellani & Vellani by telephone (+92 21 3580 1000) or email (firstname.lastname@example.org). The Vellani & Vellani website can be accessed at www.vellani.com.
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Sanaya F Vachha