Justifying Trade Mark Rightful Place

The purpose of this essay is to discuss whether the right to a trade mark is a property right that ensures protection to the consumer and its relationship with passing off and unfair competition.
Despite the passing of the trademark act 1994, the thesis of this essay is that the right to trademark was and still a qualified property right, and though in close proximity to the torts of unfair competition and passing off, that it may be said to constitute part of them, yet it is governed by common law and statutory rules of its own.
Before going further, however, it is suggested to give a brief account of the background of the Trade Marks Act 1994, which implemented, to some extent, the Trade Mark Directive No. 89/104/EEC of December 21, 1988, of the European Council, to approximate the laws of the Member States relating to trade marks. It is to be noted here, that the aim, since the Treaty of Rome of March 25, 1957[1] was to eliminate the barriers which divide Europe and remove obstacles to trade in order to “guarantee steady expansion, balanced trade and fair competition ". It has become, therefore, necessary to harmonize the trade mark law throughout Europe in order to create a common market. This was considered a necessary step towards the ultimate goal of promulgating a unitary Trademarks system[2]. The Trade Mark Directive required that each member state should “bring into force the laws, regulations and administrative provisions necessary to comply with the Directive not later than December 28, 1991. Nevertheless, the Trade Mark Act 1994 of the United Kingdom did not come into force until October31, 1994.

Definition of a trade mark

The definition which is now introduced into English Trade mark law by the force of the Trade Mark Directive is provided for in section (1) of the Trade Mark Act 1994 as:
“Any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of another undertaking. It may in particular consists of wards (including personal names), designs, letters, numerals or shapes of goods or their purchasing packaging”[3]
This is presumed to be the definition adopted by all member states of the European Union which implemented the Trade marks directive. Nevertheless, it raises some difficulties because as said by Robert Burrel and Haw Beverley Smith:
“Prior to the implementation of the Trademark Directive, there was a long line of authority in the United Kingdom to the effect that shapes of products and containers or coverings should not be registerable as trade marks.”[4]
This was based on reasonable justifications, which are still valid and may be summerised in that shapes of goods and packagings can neither act as trade marks, nor perform their functions and their protection ultimately create perpetual monopolies over goods and containers, in addition to overlapping with patents and designs which enables them to be used to prevent an invention or design form falling into public domain after expiration.
Although section 3 (2) of the Trade Mark Act 1994 introduced limitations on the protection of shapes and packaging , yet these limitations are ambiguous and the exact scope of the trade mark protection for shapes and packaging is difficult to define as shown by the case of Phillips electrics NV V. Remington Consumers Products ltd[5].
However, there is no urgent necessity to protect shapes and containers as trade Marks in the United Kingdom, because they were already protected in the previous law, as an imitation of a shape or packaging might give rise to an action of passing off in the United Kingdom or an action for unfair competition in the United States[6].
By contrast, imitations of shapes and coverings may give rise to an action for commercial fraud in Saudi Arabia, but they are not registerable as trade marks since section (1) of the Saudi Trademark Law define a trade mark in the following terms:
“In implementing the provisions of this law trade marks shall be names of distinct shapes, signatures, words, letters, drawings, symbols , stamps and protruding inscriptions or any other sign or combination thereof which can be recognized by sight and suitable to distinguish industrial, commercial vacationed or agricultural products or a project to exploit forests or natural resources or to indicate that the thing upon which the trademark is put belongs to the owner of the trademark on grounds of manufacture , selection , invention thereof or trading therewith or to indicate the rendering of a certain service"[7].

The property concept & Trademark

From the above definition, it is clear that a trade mark is a distinctive name, symbol or device that indicates or authenticates the origin of products. Once this right is acquired and legally recognized, the owner becomes entitled to the exclusive use of the mark to the exclusion of all others. In other words, any unauthorized use by another person even if the use is innocent and without fraud, gives the owner the right of action for infringement against the user. As a consequence of this the right in the technical trade mark was classified at common law many years ago as a property right[8]. This was first recognized in the case of Millington V. Fox in which the infringement of a trademark was restrained[9], although it was committed innocently and without knowledge .This was reaffirmed in subsequent cases[10], and adopted by the Trade Mark Act 1938, according to which a trade mark validly registered becomes a species of incorporeal property.
However, prior to statutory provisions, the question whether the right to trade mark is a right of property was not firmly established. It was held in the case of Collins Co. V. Brown that there was no property whatever in a trade mark[11], and in Reddaway V. Banham the validity of the statement that there was a property in the common law trade mark was questioned[12].
By contrast, the old judicial authorities in the United States were like United Kingdom, somewhat conflicting. According to Rudolf Callmann in his discussion of the property concept in the law of Trade mark[13], the famous trade mark cases maintained that the right to adopt and use a trade mark is a property right, but this was not followed in subsequent cases, which recognized the property concept but in a qualified sense. However, the trade mark law revision
Act 1994 and the federal Dilution Act 1995 have broadened trade mark rights and suggest a return to the old concept of trade marks as property rights[14].
As far as the United Kingdom is concerned, the uncertainty was finally settled by the Trade Mark Act 1994 which provides in section 2(1) that:
“A registered trade mark is property right obtained by registration of the trade mark under this act and the proprietor of a registered trade mark has the right and remedies provided for in this Act,”
This is confirmed in section 22 which provided that:
"A registered trade mark is a personal property (in Scotland) incorporeal movable property"
Despite these statutory provisions, it submitted that the right of trade mark is a property right in a qualified sense for the following reasons:
In the first place, it is a movable not real property and the rights and duties of the owner are confined to the rights and duties provided for in the Trade mark Act 1994, as expressly stated in section 2 (1).
This implies a difference between property right relating to trade marks and ordinary property rights; otherwise the Trade mark owner would have been left to seek protection in the ordinary rights and duties of an intangible property.
Secondly, the property right in a trade mark is limited by the territorial scope of the United Kingdom. Section 9 (1) of the trademark Act 1994 which provides that:
“The proprietor of a registered trademark has exclusive rights in the trade mark which are infringed by the use of the trade mark in the United Kingdom without his consent”
There are, therefore, territorial limits to the protection.
Thirdly, a trade mark is only a symbol of the ' good will ' of the business of the trade mark owner who acquires the right to prevent his goods from being confused with goods of others and to prevent other to steal his business through the use of misleading marks. These are practically all the rights enjoyed by the owner of the trade mark[15].
Fourthly, the protection is not for the trade mark as such, but it is rather against injury to the business[16]. If there is any property right, then this is derived from the good will or the product not from the mark or symbol as such.
Fifthly, the purpose of protection is not the trade mark itself but is to prevent consumer’s deception and preserve the owner’s interests in his business. A trade mark is, therefore, not protected for its own self.
Sixth, it is difficultly to understand how a trade mark can have a value independent of the fact that it is a symbol of the good will of business or product.
Seventh, there are limitations on all property rights and a trade mark is not an exception. This supports the view that a trade mark is a property in a qualified sense. This is because if there are limitations on real personal property, it goes without saying that there should be limitation on property right to trade marks.
Finally, although the property right in the a trade mark is now supported by the Trade Mark Act 1994, which put an end to a long and old controversy, nevertheless the statement that it is a property in a qualified sense is still true.

Consumer Protection

The question arises here is not whether a trade mark is a property, but is whether it provides the necessary protection for both the trader and the purchasing public from fraud, confusion and deception. In cases of infringement it is clear that the infringer " works fraud upon dealer and customer alike; his palming off is a piracy pure and simple " as has been put by an American judge[17].
In the case of General Electric Company v. The General Electric Co. ltd, Lord Diplock considered the interests that deserve protection by registration of a trade mark in following words:
" A right of property of this character calls for an accommodation between the conflicting interests of the owner of the monopoly, of general public as purchasers , of goods to which the trade mark is affixed and the general traders ……. the interest of the general public requires that they should not be deceived by the trade mark ……… …….. it ought not to tell a lie about the goods."[18]
In fact as has been expressed by Daniel M. Mcclure:
“The history of trade mark was seen as play out the tension between protecting entitlements on the one hand and encouraging competition by allowing free access to protected trade mark on the other."[19].
From the above definition of a trade mark, it follows that the main function of a trade mark is to distinguish goods and services of one undertaking from those of other undertakings, and to identify them with a particular manufacture or trader. One of the goals of this is the protection of the consumer from deception and confusion but this cannot be realised unless the rights of the owner to use the trade mark are restricted. Unfortunately, this is not the case due to the fact that the owners of marks are now free even after the Trade Mark Act 1994 to establish subsidiaries to manufacture products under their trade marks or even give license to independent undertakings to do so. This makes the trade mark unable to offer the Consumer an effective means of identifying the origin of products and gives him no guarantee of the quality or characteristics of the product. Since the owner is not required by law to guarantee the quality or characteristics of the products manufactured by a subsidiary or a licensee[20]. This constitutes serious limitations to the extent of protection provided to the consumer by the trade mark. Moreover, in the context of the European community application of national law introduces a further limitation on consumer protection, because a trade mark owner is able to exclude imports from other member states bearing his mark, even if the use of the trademark was with his consent and thereby deprives the consumers of increased choice and domestic producers will continue to enjoy a protected market without improving quality or reducing the prices. Consequently a trade mark owner and his subsidiaries or licensees will be able to divide the common market among themselves to the detriment of consumers. To remedy this situation and eliminate all trade barriers the Trade Mark Directive and other Regulations were issued by the European council to harmonies the laws of states members as step towards unification of these laws.
The consumers are further victimized by the allegation that trade mark rights are in danger of coming to be used as an instrument for the support of monopolies and restrictive practices rather than an indication of origin of the goods and a guarantee of their quality[21].
The argument in support of this view may be summerised as follows[22]:
1. Trade marks have monopolistic features that affect public interests due to the legal privileges attached to them.
2. As a result of trade mark monopoly a cartel can be able though use or abuse of trade marks to divide the world among its members because a trade mark exists only where it is used and two or more businesses may use the same trade mark on the same products in different territories.
It has been pointed out that these arguments are not convincing as the proponents failed to show what are the legal privileges flowing ownership of a trade mark, and how these legal privileges affect the public. Moreover, the attack on trade marks by calling them monopolies is an attack on property in general, and all property is essentially monopolistic as its owner may use it to the exclusion of all other. In this sense a monopoly exists, but this is not monopoly in the ordinary sense. This has been expressed more forcefully by L.D. Taggart [23] as follows:
“Upon analysis of the facts underlying the use and protection of trade- marks, trade- marks are not monopolies in any objectionable sense, nor are they restraint of competition. They are the essence of competition. Their purpose and effect is to distinguish competitive goods. If there is no competitive product the basic need for a trade-mark disappear because there is no reason to distinguish one product from another. When only one product exists, these is no “customer”, there is only “consumer”. The consumer takes or dose without. He has no choice”.
In fact trade marks protection tends to enhance competition among providers of goods. As stated by Gideon Parchomvsley and Peter Seigedman:
“By identifying the source of the goods and services, trademarks promote competition in two related ways. First trademarks enable business to convey information to consumers about the quality of products and services, reducing consumers' search costs. This informational function of trademarks is specially valuable in the context of “experience goods " – Products whose attributes consumers can not discern before purchasing them – where consumers rely on prior experience in deciding among competing brands. Second ,trade mark allow consumers to associate product and service attributes with certain firm and base their consumption decision on this association . For this reason, on the supply side, trade mark, protection spurs firms to maintain and improve the quality of their products and services. The availability of trade mark protection protects firms against free- riding by competitors enabling them to reap the fruits of their investment in superior products and services." [24]
In the light of the above, it clear that the law of trade mark does not guarantee to the consumer complete freedom from deception even if the trade marks have no monopolistic features.
This is further complicated by the fact that the scope of its application is too narrow to provide complete protection for the consumer. Apparently for this reason, Trade Mark Act 1994 has expressly saved the common law action of passing off in accordance with S.2 (2) which provides that:
“No proceeding shall lie to prevent or recover damages for the infringement of an unregistered mark as such but nothing in this Act affects the law relating to passing off.”
Passing off is ,therefore, the safety value in cases of unregistered marks and cases when the deception is by such things like weigh or size which do not constitute trademarks.

Passing off

It is defined as carrying on" business or to sell merchandise under such a name , mark, description or otherwise in such a manner as to mislead the public into believing that the merchandise or business is that of another person is a wrong actionable at the suit of that other person .. This form of injury is commonly …… termed …. passing off one's goods or business as the goods or business of another."[25]
The action of passing off gives sufficient protection in all cases in which the use of the name does not constitute an infringement of the trademark but nevertheless it is in some degree deceptive. The action for infringement of a trade mark is based upon the plaintiff's title to the exclusive use of the mark and the use of this mark by the defendant .The action for passing off is based on the fact that the defendant has been using some means such as imitation of the plaintiff goods which are calculated to pass the defendant’s goods off as those of the plaintiff and that the plaintiff thereby sustained injury. In an action for infringement the plaintiff needs to prove only the registration of the mark under his name and the use of mark by the defendant. In the action of passing off it must be proved that the defendant has been using means which are calculated to deceive as well as injury to the plaintiff[26]. The law of passing off, therefore, supplements the law of trade mark and is the equivalent of unfair competition in the United States. It can, thus, to be said that the law of trade marks is a part of the law of unfair competition since the principle of unfair competition is the principle of passing off. In other words, the rule of passing off is the rule of unfair competition itself[27]. However, the common law does not recognize a general law of unfair competition. Hence, it is impossible to describe English law beyond the well defined principle of passing off and other economic torts[28]. In case of passing off the goods or services must be offered for sale in an area where the defendant and plaintiff are competitors. As stated by Lord Kingsdown in Leather Cloth Co v. American leather Cloth Co.[29]:
“The fundamental rule is that one man has no right to put off his goods for sale as the goods of arrival trader"

Passing ऑफ़य्ेक्ommitted in several ways such as:
(1) Marketing a product as that of the plaintiff.
(2) Using plaintiff's name.
(3) Using plaintiff trade name.
(4) Using the plaintiff trademark.
(5) Imitating appearance of the plaintiff's goods.
(6) Selling inferior goods thereby misleading purchasers.
The defendant is liable even if his conduct was honest and innocent but his representation must be calculated to deceive.
The relation of the law of Trade marks to the common law of passing off is that trade marks are now governed by the Trade mark Act 1994 in accordance with which a trade mark is property giving the proprietor an exclusive right to the use of it in respect of the classes of goods in relation to which it is registered. This kind of monopoly or right of property is not firmly established in the common law. The cause of action in a common law action for passing off is not the infringement of any statutory monopoly or right of property but damage done to the plaintiff in his business by the deceptive acts of the defendant. In other words at Common Law the use of the plaintiff's trade mark is never in itself any cause of action but is merely one of several means by which the wrong of deceiving the public to the plaintiff's prejudice may be committed . Moreover, passing off may arise in cases which have nothing to do with trade marks such as using the plaintiff name[30].
However, as pointed out above it is not possible to give a complete picture of British law without reference to economic Torts and cases such as Donoghue v. Stevenson[31]. In this case Mrs. Donoghue drank a bottle of ginger beer manufactured by the defendant. The bottle allegedly contained the decomposed remains of a snail which were not, and could not be detected until the greater part of the content of the bottle was consumed. It was alleged that she was ill as a result and sued the defendant. The House of Lords gave a judgment for the plaintiff on the grounds that:
" … a manufacturer of products which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him, with no reasonable possibility of intermediate examination and with the knowledge that the absence of reasonable care in the preparation or putting up of the product will result in an injury to the consumers life or property, owes a duty to the consumer to take that reasonable care".
This case is an example of protection to the consumer which the tort of passing off cannot provide. The Principle of Donoghue V. Stevenson has been extended to provide more protection to the consumer, but this is outside the scope of this essay. It is sufficient to state that, although the protection provided by the law of passing off is wider than the protection provided by trade marks, nevertheless the action of passing off alone is not sufficient to provide a complete protection, especially in cases of personal injuries as happened in the case of Donoghue V.Stevenson referred to above .The rule of this case is so elastic that the courts were able to extend it to make manufacturers of products liable in certain circumstances to the end consumer, however far the distance between the place of manufacture and the place where the ultimate consumer resides.

Conclusion

It may be concluded from the above that the 1994Trade marks Act has added a new element to the definition of a trade mark by allowing shapes and packagings to be registered as trademarks.
It is true that, the 1994 Act has recognized the right to trademark as a property right, but as far as British law is concerned this is not new. As we mentioned above, it was recognized by the Common law in some cases which were reaffirmed by the Trade mark Act, 1938. Consequently the question whether a trademark right is a property right is now settled by legislation in the United Kingdom and is no longer subject of dispute except as to whether it is a qualified property right or not. The arguments in support of its qualified nature are enumerated above, and it is seems, to me, be an academic rather than practical.
The another issue that we have concluded is that trade marks are unable to provide their full expected protection, because trade marks proprietors are free to create subsidiaries and give licenses and authorize them to use their trade marks without keeping control over the products of those subsidiaries and licensees. The suggested remedy is to restrict in some way the freedom of those trade marks proprietors; otherwise they will also be able to divide the world among themselves and their subsidiaries and licencees.
As to the wrongs of infringement of a trade mark, passing off and unfair competition they are so interrelated that it is nearly impossible to a discuss them separately. Trade marks law is a part of the law of passing off, and this law in the United Kingdom is the equivalent of Unfair Competition in the United State and is governed by the same rules. For this reason we have concentrated to some extent on Passing Off as the essay is concerned mainly with British Law.
Although much has been written in the United States on the tort of unfair competition, nevertheless it seems that the expression" unfair competition" is a descriptive expression and not well defined as the tort of " passing off". This is at least the impression left behind after reading many American Articles[32]. The confusion may be because the expression is frequently used in economics and each of "Infringement of a trade mark"; "Passing Off" and "Monopoly" can be described as unfair competition. In any case the expression is the name given to the tort of Passing Off in the United States of America.
The action for Passing Off, therefore, gives sufficient protection where the use of the name, though deceptive, does not constitutes an infringement of the Trade mark, but the consumer is still in need of protection in cases where there is neither infringement nor a deceptive use, but the injury to the plaintiff is caused by the defective nature of the product itself। To bridge this gab, the British law recognizes liability for defective products and holds that, a manufacturer of products is liable to the ultimate consumer for injuries caused by any defective product.

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[1] See recitals of the Treaty of Rome of 25 March 1957.
[2] Timothy W. Blankely, “Beyond the International Harmonization of Trademark Law: The Community Trade Mark as a Model of Unitary Transnational Trademark Protection” University of Pennsylvania Law Review Vol. 149 No. 1 (Nov. 2000) PP 309-354.
[3] Trade Mark Act 1994.
[4] Robert Burrell; Huw Beverley Smith, “Shaving the Trade Marks Directive down to Size?” M.L.R Vol. 63 No. 4 ( July 2000) p. 570
[5] Philips Electronics NV v. Remington Consumer Products Ltd [1999] R.P.C. 809 CA.
[6] See W.L.P.A. Molengraaff, “The Nature of the Trade-Mark” Yale Law Journal Vol. 29 No.3 (Jan. 1920) PP.303-311.
[7] The Law of Trade Marks, Royal Decree No. M/21, 2002.
[8] See W.L.P.A. Molengraaff, "The Nature of the Trademark", Yale Law Journal vol. 29 No.3 (Jan. 1920) pp.303-311, and “The Nature and Extent of the Right in Trade-Marks" Columbia Law Review, Vol.16 No.5 (May 1916) p.416.
[9] Millington V. Fox 3 Myl. X c. 338 [1838].
[10] See Edelsten V. Edelsten I De G. J.&S 188,199. Leather Cloth Co.v. American Leather Cloth Co. 4 De G. J&S 137.142 1863. Singer Manufacture Co.v. LOOG 8 App.cas 15.33 (1882) and Hall v. Barraws 4 De G.J. 150.
[11] Collins Co. v. Brown [1857] 3 Kay & J. 423, 426.
[12] Reddaway V. Banham A.C. [1896],199,209
[13] Rudolf Callmann, “Unfair Competition without Competition? The Importance of the Property Concept in the Law of Trade-Marks”, The University of Pennsylvania Law Review Vol.95 No. 4 (March 1947) pp. 443- 467.
[14] Daniel M.Mcclure, “Trademarks and Competition: The Recent History” law & Contemp Probs vol. 59 No.2 (1996) p.14.
[15] See Rudolf Callmann op. cit. p.458
[16] See Op. Cit p.13. See also “Nature and Extent of the Right in Trade-Marks”, Colum. L. Rev., Vol. 16, No. 5 (May, 1916), pp. 416-417. See Leslie Davison Taggant, “Trade-Marks: Monopoly or Competition?” Mich. L. Rev., Vol. 43, No. 4. (Feb., 1945), pp. 659-674.


[17] Op. Cit. p. 668
[18] General Electric Co Ltd (USA) v General Electric Co Ltd [1972] 1 W.L.R. 729. See also R. K. Gardiner, “Consumer Interest in Trade Mark Protection” Vol. 36, No. 3 (May, 1973), p. 300.
[19] Daniel M. Mcclure , Op. Cit. p.14.
[20] See A.C Evans, “Trade Marks and Consumer Interests in EEC Law”, ICLQ No1 (1983), pp. 241-249.
[21] Op. Cit. pp.300-303.
[22] See Kurt Berchard " Are Trademark an anti Trust Problem?" 31 Georgetown L.J. 245 (1943), Bartholomew Diggin “Trademark and restraint of Trade” 32 Georgetown L.J. 113 (1944). Also James Fay Hall Jr. “Possible monopoly implications in the Trademark Bill" 32 Georgetown L.J. 171(1944).
[23] See Taggart, op. Cit. p.668.
[24]G. Parchomvsley and P. Seigedman "Towards an integrated theory of intellectual Property" Virginia Law Review vol. 88 No.7 (Nov. 2002) p.1468, 1469.

[25] See Salmond on Torts section 149.
[26] W.L.P.A. Molengraaff, “The Nature of the Trade-Mark”, Yale law Journal Vol. 29 No.3 (Jan. 1920) pp. 303- 311.
[27] See Rudoff Callmann op. Cit. p.445.
[28] See Anselm Kamperman Sanders, " unfair competition: The protection of intellectual and industrial creativity" (Oxford University Press, 1997).
[29] Leather Cloth Co v. American leather Cloth Co, (1865), 11 H.L. Cas. 523, p.538.
[30] Salmond on Torts section 151.
[31] Donoghue v. Stevenson [1932] A.C. 562.
[32] See for example” Trade Mark: Monopoly or Competition " Leslie Davidson Taggart Supra. " Trademarks and Competition: The Recent History “Danied M.McClure Supra.” Unfair Competition without Competition . Rudolf Callmann, “Unfair Competition without Competition? The Importance of the Property Concept in the Law of Trade-Marks” Supra.