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How trade marks can restrict competition

Intellectual property rights (IPR) are created to foster innovationto give incentive for a company or a creator to invest in business, create new products, brands, innovate on the existing technology. The existence of IPRs may make a market more attractive for innovators, leading to country-specific investments in marketing and distribution. Such investments may result in quicker launch of new products, increased marketing of older products, and greater availability of treatments.

A trade mark is a strong intellectual property right that helps consumer to differentiate competing goods on the market. Trade mark right is the only one intellectual property right that can be perpetual. Each 10 years paying its renewal fees, a trade mark can be protected forever. Longines Watch Company registered its trade mark in 1889 and it is still valid today. It is the oldest, still registered international mark. As this example shows, trade mark can give a very long and strong protection for its owner.

The mark can convey quality (like Swatch watches), luxury (like Louis Vuitton) or affordability (like H&M). A trade mark is a sign capable of distinguishing the goods or services of one enterprise from those of another. We see trade marks all around us: they appear widely on the Internet, in Facebook ads, grocery stores, outlets, reaches us from TV screens and radio channels.

The very main purpose of a mark is to exclusively identify the commercial source or origin of products or services. A mark, properly called, indicates source or serves as a badge of origin. In other words, it serves to identify a particular business or enterprise standing behind that mark.

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Because of its very reason – to separate the goods of one manufacturer from the same goods of another – trademark must be DISTINCTIVE. If one farmer will sell the apples using a trade mark “applesand another farmer will sell its apples using the mark “Apples”, people will never separate between the two.

Therefore, to be protected and to be registered by intellectual property office, a trade mark must be distinctive. A consumer must be able to distinguish one mark from others, separate it from a mere description of the product. No enterprise should be able to monopolize a word, symbol, picture of an object that is a product itself. For example, a word “meat” cannot be a trade mark for meat products, or a picture of almond cannot be a mark of a company providing almonds. Such trade marks would not fulfill its main purpose because all meat products would have a word “meat” on their labels, like all the almond packages would have a picture of an almond.

This rational, that no company should have the exclusive rights to use generic expressions of goods, it is also confirmed in legislation. Not getting into an analysis of juridical detailsnational or regional trade mark laws, in general, prohibit registering generic words as marks.

Sadly, curiosities do happen and clearly descriptive terms are registered as trade marks. Our very short investigation in the biggest trademark database showed registered trademarks for the following goods:

  • isign – for digital signatures, electronic signatures, and handwriting recognition;
  • scratch map – for scratchable maps;
  • AdDigital – for computer software for use in connection with providing advertising services;
  • ADVANCED DIGITAL CABLE – for different wires and cables.

It is just a few examples. Can be much more! Such trade marks can now be used against other competing firms to restrict their sales. Especially in the Internet market, it is very easy to ban or block other company’s account and stop the competition claiming the alleged infringement of a trade mark. Amazon or eBay, or another Internet store, protecting their own interest, automatically removes goods or blocks sellers reportedly infringing intellectual property rights. A lawful use of a generic term on company’s packaging or description of a product may lead to a cancellation of the listings, or the suspension or removal of the selling privileges.

The user of a generic term, because of the notification about the trademark infringement, can no longer legally offer its goods online. The only possible way to get back to the trade is to attack the validity of descriptive mark in the intellectual property office or court. But new and small businesses usually cannot handle the burden to pay the legal fees for advocating, filing an opposition or invalidity claim. They can be simply destroyed by bigger players, monopolizing generic terms as their trade marks.

European Union Intellectual Property Office (EU IPO) has prepared the guidelines related to the threshold of descriptiveness of the trade marks. Guidelines provide an in-depth explanation with examples when trade marks should be treated as descriptive and so should not be registered. The EU IPO has also prepared the Common practice document, converging the different interpretations of the examination of absolute grounds for refusal as regards figurative trade marks with purely descriptive words / expressions. In the preparatory work of these guidelines representatives of all EU Member States were involved.

The examiners of EU IPO, as well as the examiners in central trade mark offices in the EU Member States, should follow these guidelines in their daily work. Despite these soft law instruments, quite often the threshold of descriptiveness understood by one examiner differs from that of another. And as a final excuse, we all are humans making mistakes and either because of lack of knowledge, lack of time, or even lack of enthusiasm, descriptive trade marks are registered over and over again.