Following a complaint filed by Al-Rehman Oil Mills, Bahawalpur, the Competition Commission initiated proceedings against nine animal and livestock feed manufacturers for engaging in deceptive marketing practices under the Competition Act 2010.

Facts

The complainant is engaged in the production and distribution of animal and livestock feed under the brand name Taizgaam. The respondents are also engaged in the manufacture and sale of animal and livestock feed while using trademarks and trade dress (ie, layouts, fonts and colour schemes) on their respective labels and packaging which are deceptively similar to the complainant's registered trademark TAIZGAAM.

The Competition Commission considered whether:

  • the respondents had resorted to the unauthorised and fraudulent use of the complainant's distinctive logo, packaging and registered trademark TAIZGAAM on their products to mislead consumers regarding the origin of the products; and
  • such conduct was capable of causing harm to the business interests and goodwill of the complainant in violation of Section 10 of the Competition Act.

Observations

The commission observed as follows:

  • 'Taizgaam' is a common term in the Urdu language meaning 'fast speed' and, as such, is not specifically associated with the nature of the product on which it was used (ie, animal feed). Therefore, the respondents could not claim that they had adopted the trademark as a generic term widely used in the industry in relation to animal feed.
  • While relying on the concepts of parasitic copying and copycat packaging, the trademark and trade dress that the respondents had adopted was materially deceptive. This had a direct bearing on the transactional decision of ordinary consumers and caused undeniable confusion in their minds regarding the source of the product in question. As such, the respondents' conduct amounted to the unauthorised and fraudulent use of the complainant's trademark and packaging.
  • The trademark registration numbers mentioned on the respondents' disputed packaging gave the impression that their brand name was registered as a trademark and therefore genuine.
  • Copycat packaging amounts to the dissemination and distribution of misleading and deceptive information to the public which is capable of harming the business interests of the party whose trademark, product labelling and packaging have been copied.
  • No evidence of actual harm caused to an undertaking is required for the determination of an infringement 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) as long as it can be proved that such potential harm could be caused or is foreseeable. Similarly, a violation of Section 10(2)(b) of the Competition Act (ie, the distribution of deceptive information that lacks a reasonable basis) could harm the business interests of competitors.
  • The respondents' parasitic copying of the complainant's packaging and labelling and their unsubstantiated claims regarding trademark registration were misleading and deceptive by their nature and therefore capable of harming the complainant's business interests.
  • The respondents' behaviour was likely to cause the eventual dilution of the complainant's brand identity and goodwill – in particular, the product's visual recognition, distinctiveness and trade dress – which it had built over many years.
  • The respondents' conduct aimed to take advantage of the goodwill attached to the complainant's trademark and trade dress by misleading consumers through the use of confusingly similar logos, colour schemes, designs, language and an unauthenticated trademark registration number which appeared on their packaging.

Decision

The Competition Commission found that the respondents had violated Section 10 of the Competition Act by resorting to deceptive marking practices through:

  • the distribution to consumers of misleading information that lacked a reasonable basis by claiming to have registered trademarks for their product without substantiating this claim (Section 10(2)(d) of the Competition Act);
  • the distribution of false or misleading information that was capable of harming the business interests of another undertaking (Section 10(2)(a) of the Competition Act); and
  • the distribution of false or misleading information to consumers, including the distribution of information lacking a reasonable basis concerning the goods':
    • price;
    • character;
    • method or place of production;
    • properties; or
    • suitability for use or quality (Section 10(2)(b) of the Competition Act).

Penalties

Having considered that the some of the respondents were willing to change their trademarks and trade dress, the Competition Commission imposed a penalty of PRs2.7 million (PRs300,000 per respondent) and ordered them to:

  • cease their unauthorised use of the complainant's registered trademark TAIZGAAM and copycat packaging within one month; and
  • file individual compliance reports.

Failure to comply with the commission's directions could result in the imposition of additional penalties at the rate of PRs100,000 per day from the date of the order until compliance.

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

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