The Competition Commission recently conducted an enquiry following a complaint filed by Pakistan Services Limited against Pearl Continental Hotel (Abbottabad), Omni Comm (Private) Limited, Pearl Hotel (Faisalabad) and Lucky Gold (Private) Limited for fraudulently using the complainant's registered trademark PEARL CONTINENTAL and 'PC' logo in a similar or identical style and design for the branding of their hotels. It was further alleged that the respondents' conduct could harm the complainant's business interests and goodwill, which amounted to deceptive marketing practices.

The complainant owns extensive rights to the PEARL CONTINENTAL trademark and the PC logo in relation to hotel and hospitality services in Pakistan and 33 countries across the world. Both trademarks:

  • are registered with the Trademarks Registry; and
  • have been extensively used by the complainants since 1958.

The complainant had granted a franchise to the respondents for operation of a four star hotel in Abbottabad and Faisalabad under the trademark/trade name PEARL CONTINENTAL and its logo PC. The respondents failed to honour their contractual obligations, which resulted in the termination of the franchise arrangement with respondents one and two in 2003, and with respondents three and four in 2013, whereby the complainant withdrew the authority to use the its trademark, trade name and logo with immediate effect.

Subsequently, the respondents had resorted to deceptive marketing practices through the unauthorised use of said marks on their main signage, menu cards, letterheads, invoices, billing receipts, banquet contracts and decorations and order books.

The enquiry committee found as follows:

  • The complainant had a strong standing in the market and had invested significantly in its goodwill and reputation. Moreover, the respondents' conduct had aimed to capitalise on the complainant's reputation and goodwill in respect of its trademark and logo and consumers were bound to develop an association between the complainant's and the respondents' services. Therefore, the conduct of respondents two and four amounted to violation of Section 10(2)(d) of the Competition Act, which prohibits the 'fraudulent use of another party's trademark'.
  • By fraudulently using the complainant's trademark, the respondents implied that they could provide the same quality of services as the complainant, which amounted to a violation of Section 10(2)(b) of the Competition Act which forbids the:

distribution of false and misleading information to consumers, including the distribution of information lacking a reasonable basis, related to the character, place of production, properties, and quality of services.

  • The respondents' conduct was judged to be potentially harmful to the business interests of other undertakings in the same line of business and the complainant's business interests. Even if there was no proof of actual harm incurred upon the business interests of the complainant, the unauthorised capitalisation on the complainant's registered trademark and the potential to harm its goodwill amounted to a violation of Section 10(2)(a) of the Competition Act (ie, the distribution of false or misleading information that is capable of harming the business interests of another undertaking).
  • The respondents had resorted to deceptive marketing practices by adopting marks that were identical or deceptively similar to the complainant's registered marks.

The enquiry report accordingly recommended issuance of a show cause notice against the respondents.

For further information on this topic please contact Sanaya F Vachha at Vellani & Vellani by telephone (+92 21 3580 1000) or email ([email protected]). The Vellani & Vellani website can be accessed at www.vellani.com.

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