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In the matter of show cause notice issued to Mis shainal al-syed foods for deceptive marketing practices - (30 Mar 2018)

Distribution of false or misleading information that is capable of harming the business interests of another undertaking' shall be deemed to constitute a deceptive marketing practice

MRTP/ Competition Laws

The Complainant is a company incorporated under the Companies Ordinance, 1984 in Pakistan since 19 February 1970. It is engaged in the business of production, marketing and sale of a large variety (more than a hundred types) of food products at affordable prices, including but not limited to, dessert preparation mixtures, custards, jams, jellies, marmalades, pickles, ketchups, vinegars, sauces, recipe masalas, salts, snacks, spices and other ingredients ('Complainant's Products').

The Complainant submitted that it has been using the word 'National' as a trademark, house mark and company name since 1970. Additionally, it was stated that it has been using this registered trademark as a logo (copyright protected) which appears on all the Complainant's Products and related items in its modernized form. The Complainant alleged that, the Respondent started preparing, packing, marketing and imitated food products ("Respondent's Products") using a singly similar logo "Shainal" and packaging in terms of colour scheme, design and 11 get up, to that of the Complainant's Products.

There is no doubt from the visual observation of pictorial illustrations placed on the record in present matter, that any ordinary consumer, would at first instance be deceived as to the origin of the products at the time of exercising a choice of purchase. With evolving consumer preferences and laws, presentation; trade dress have become just as essential for making products and services distinctive and for building brand recall. The cultural diversity of the Pakistan market makes a compelling case for the importance of product identification by packaging and visual impression. This has resulted in third parties creating lookalikes of popular products with similar packaging in order to grab consumers' attention and generate demand for their own products in the market.

In the considered view of the Commission, the consumers are clearly susceptible and at a serious risk of falling prey to deceptive confusion pertaining to the origin and quality of the products, due to the striking similarity in the Complainant's Trade Dress and the Respondent's Trade Dress. In view of legal and factual analysis, the Commission is fortified in its decision as to the existence of a contravention by the Respondent of Section 10(1) in terms of clause (d) of subsection (2) of Section 10 of the Competition Act, 2010 to the extent of the fraudulent use of the Complainant's Trade Dress.

The concept of having a reasonable basis is an established doctrine in USA which was first recognised in the case of Pfizer, Inc.,. In its seminal Pfizer decision, the Federal Trade Commission held that, even if an advertiser does not specify a level of support for its claims, i.e., it does not make an "establishment claim," it nevertheless must have a "reasonable basis" for making objective claims about product. The Commission further ruled that, when an advertisement does not make a specific level of substantiation of its claims, it is assumed that consumers expect that the advertiser had a 'reasonable basis' for making the claims.

As established by the Commission, the Respondents' Trade Dress and overall impression of the product labelling and packaging is deceptively similar to that of the Complainant's Trade Dress. An ordinary consumer who purchases the Respondent's Product off the shelf is highly likely to be deceived by the product packaging, logo and the get up of the product. The misleading information on the Respondent's Products is, the form of a deceptive impression disseminated by the Respondent's Trade Dress is likely to mislead the consumer as to the origin and quality of the same being linked to that of the Complainant.

The Respondent has failed to discharge the burden of providing any level of substantiation for the authenticity of its Trade Dress to the effect that it would not cause a misleading impression that Respondent's Products originate from the Complainant and hence match the quality of the Complainant's Products. This deceptive similarity in the Respondent's Trade Dress and the Complainant's Trade Dress has the potential to directly or indirectly affect the transactional decision of the consumers to buy the Respondent's Product on the misleading pretence as to origin/ place of production and quality of the product and hence is materially deceptive.

The conduct of the Respondent has resulted in a violation of Section 10(1) read with Section 10(2) (b) of the Act, as the Respondent is disseminating misleading information to consumers lacking a reasonable basis, in the form of the confusing similarities of Respondent's Trade Dress to that of the Complainant's Trade Dress, thereby misleading the consumers as to the origin and place of production of the product.

Clause (a) of Section 10 of the Act provides that 'the distribution of false or misleading information that it is capable of harming the business interests of another undertaking' shall be deemed to constitute a deceptive marketing practice. The Commission is of the considered opinion that, Respondent's practice of parasitic copying of the Complainant's Trade Dress, which appreciably impairs the consumer's ability to make an informed decision due to confusing similarities between the Respondent's Products and the Complainant's Products, being inherently deceptive, is in fact capable of harming the business interest of the Complainant in contravention of clause (a) of sub-section (2) of Section 10 of the Act.

The Respondent is reprimanded to ensure responsible behaviour in future with respect to the marketing of their business and are directed to cease and desist from the use of its Trade Dress which is subject matter of present Order and similar to the Complainant's Trade Dress and Trade Mark, with immediate effect and not to use it in future. The Respondent is directed to ensure that the products are repackaged in a manner that is distinct in its overall layout, design, shape, size, language and colour scheme so as to be easily distinguishable from the Complainant's Trade Dress. The Respondent is also directed to file within sixty days from the date of present Order.

Tags : PRODUCT   SIMILARITY   CONTRAVENTION  

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