Trademarks and unfair competition: law and policy

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Trademarks are legally backed and can be used to gain an advantage in the competitive market. However, competition among businesses needs to be fair and healthy. The law provides a wide framework for both start-ups and already established businesses to compete for customers’ patronage in the market. Knowing exactly how the law protects your business as it relates to trademarks and unfair competition is essential. We have highlighted some main points you need to know about using trademarks to your competitive advantage.

The first take-home lesson is that the definitions of both “trademark” and “unfair competition” change with time and place. For instance, the requirements for granting a trademark to a business in a state in the US (e.g., Ohio) can vary slightly from the requirements of another state (e.g., California). So, what qualifies as “unfair competition” from businesses may vary depending on the interpretation and adjudication of trade laws in a particular locality.

For example, a state may consider a client’s misinformation as an act of “unfair competition.” Especially when the marketer explicitly claims that if the client does not purchase a product, the marketer’s job is at risk. Manipulations of this sort are not acceptable since they can cow the customer into going against their natural decision, for which they might derive little or no real value.

Trademark disputes often arise from companies operating within the same niche. For instance, a startup may use part of the name of an already established brand to attract customers to its new but similar product. A case of such was filled before a court in 2019. Company A claimed to have launched its product, ‘Premier Paint’ in February 2003. In 2017, a startup, Company B tags its product, ‘Premium Paint’. Company A insists Company B’s product should take a different name. Company A claims that the names of the products are similar and may mislead customers to believe the products originate from the same company. Company B insists that ‘Premium’ is different from ‘Premier’. Hence, customers are less likely to see the products from the different companies as the same.

The above scenario also occurs with company logos and symbols. How this matter is adjudicated depends majorly on the position of the trademark law in the state. Some state laws would allow the startup to keep the name but insist that the logos and packaging for the products be made visibly different from that of the competition. In other states, Company B may be issued a cease and desist order. Where the suit is between two dominant companies, the case could be trickier than it appears and possibly leads to payment for damages. It is important to have a seasoned trademark attorney to assist with all matters relating to trademarks.

Consumer sovereignty has become a modern standpoint for competitive effectiveness in markets. It makes sense to factor consumer sovereignty when considering trademark protection and preventing unfair competition. Consumer choice is a dynamic factor since various factors can influence it. Consumer choice can be rational sometimes and irrational at other times. This provides a dynamic front for what is considered the “right” of a company and acceptable “conduct” in the marketplace.

It is worth mentioning that initial policies on trademarks and unfair competition were made to protect businesses alone. Modern policies in this sphere now consider narratives from the standpoint of protection for the consumer. Regulations are necessary to ensure that no competitor or individual citizen can disrupt the market dynamics to his or her sole advantage.

Hence, trademarks are considered business rights that help customers identify a particular business to satisfy a specific need. To guide customers in decision-making and protect company rights, trademarks are enforced after their approval. When a company infringes on another company’s trademark, the law assumes it is the most disadvantaged consumer. Therefore, in adjudicating copyright discrepancies, customer sovereignty remains the dominant point of argument.

Geographical location also has a role to play in protecting trademarks and preventing unfair competition. It is essential to designate the origin of a trademark to achieve international recognition in the effective competition. Geographical indications can also be used to extend locations for which a business can claim and protect its trademarks. For instance, the EU and some other international trade organizations have measures in place that designate origins and geographical indications for many agricultural products.

Despite the various discrepancies in trade laws worldwide, international trade organizations often agree with the designation of origins for specific products. For instance, member countries protect popular geographic designations so their unique reputation would not be misappropriated or tarnished. This is probably why a local business may complain that its intended trademark was rejected during initial efforts to register it for the business.

It is possible for international brands to enforce trademarks in their country of origin and lose out in trademark battles with foreign rivals. Due to discrepancies between trademark laws across countries, many countries require international businesses to also register their trademarks in the host country. It is only after the host country affirms the trademark that such an international company can enforce the trademark within that locality.

Protecting international companies from foreign infringement on their trademarks still depends on national policies. For instance, China’s trade laws seem to be too lenient on businesses as touching trademark, patent, and copyright. This is partly responsible for why lots of “cloned” products are associated with Chinese manufacturers. It is advisable for international businesses that get patronage in China also to register their trademark in China.

To put your business on the good side of the trade law, you need to keep your business updated on current policies and regulations regarding trademarks and market fair-play guidelines. Seek advice from your New York trademark attorney before making major business decisions that can affect your brand massively.

What is the single biggest challenge you faced when attempting to secure a trademark for your business? Feel free to share your experience in the comments section.

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