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.