Competition in the modern business environment is normal and often considered healthy. A highly competitive business environment embraces innovation as a way of meeting needs of customers in the best way possible. Companies that embrace creativity often emerge successful in such markets. They can understand emerging trends, new tastes and preferences, and what can be done to align products with new demands. It is common to find companies that use unethical practices in such highly competitive business environments. The need for business entities to operate in an environment where there is mutual respect among firms. It is unethical for a company to engage in acts that may harm other firms or customers because of the desire to make quick gains.
The need to ensure that business entities and customers are protected from unscrupulous practices led to the enactment of laws and regulations that define how firms should operate. In an environment where companies are keen on making impressive profits at all costs, the temptation to eliminate major market rivals may exist. The legal structures ensure that such temptations are subdued to create a healthy competitive environment for all players. Trademark laws are specifically meant to ensure that intellectual rights and trademarks are not infringed upon by their rivals in the market. The United States has strict trademark laws meant to create a perfect environment for the business community to operate.
Concepts of Trademark and Trademark Laws
The concept of a trademark has gained massive popularity in the modern business environment. Trademark is defined as a word, phrase, or logo that identifies the source of goods or services. As the name suggests, it is a mark that identifies a company and distinguishes it from its rivals in the market. The concept of defining the identity of business emerged because of the existence of companies offering similar products in the same environment. Coca-Cola Company and PepsiCo offer cola products in the global market. The two fierce market rivals are keen on ensuring that they offer the best value to their customers. They constantly add value to their products and try to improve the experience for their customers as a way of gaining a competitive edge over the competitor. However, such efforts would go to waste if customers are not able to distinguish the two companies’ products. Coming up with a unique product name, logo, and colors makes it easy to differentiate products from one company from another. Every time customers realize that there is uniqueness in a given product, they will know the company that is committed to meeting emerging needs. As such, it makes it possible for a firm to develop a pool of loyal customers.
Product and brand promotion has become one of the crucial areas of marketing because of the competitive business environment. Firms are finding it necessary to use mass and social media to popularize their brands and products in the market. Such promotional campaigns would be impossible to conduct without a clear trademark. A firm needs to inform its customers about the name of the product, its unique characteristics, and how it can be distinguished from other existing products in the market. Apple Inc. is one of the most successful companies in the market for electronic products. Its phones, laptops, and other products are considered superior to most of the rival products in the market. When promoting its brand and product both in the local and international market, this company uses its brand name and logo to remind its customers what to look for when they are planning to make a purchase. Its brand logo stands out above the rest as a mark of quality.
The competitive business environment makes it necessary to have a trademark that identifies and distinguishes products of one company from another. When purchasing a mobile phone, a customer may have a preference, such as Samsung, because of a specific characteristic that it has. When a given brand becomes popular in the market, some less popular companies may be tempted to use names and logo of the popular brands. The practice has become common in China. Some companies operating with obscure names brand their phones as Samsung or Nokia because they know these brands are popular. Customers end up purchasing these products believing that they have their preferred brand only to realize that they have been duped. Trademark laws are meant to fight such unfair business practices.
Trademark theft may have devastating consequences both to customers and the affected companies. To customers, this form of theft denies them the experience they expected from products they purchased. A customer often has a specific need to be met, and the choice of a given brand is often made for a specific reason. When they are duped into purchasing a product that is not what they expected, the post-purchase dissonance may not be avoided. It may be worse when the product purchased is significantly inferior to what they expected. Such cases are common in counterfeit products. These unscrupulous business entities do not care about the issue of quality because they are riding on the wave of a strong brand of their targeted company. They make substandard products, earn quick profits within a fairly short period, and shift their focus to another company. Customers’ interest is often the last of their concern.
The trademark laws are also meant to protect business entity. It takes years and a significant amount of resources for a company to develop a strong brand that is largely acceptable in the market. Top global brands such as Apple Inc., Coca-Cola, and Samsung are worth billions of dollars because of the heavy investment the relevant companies have placed in their promotion. One of the biggest problems of counterfeiting that trademark laws seeks to fight is the possible loss of value of a given strong brand. Most of the counterfeited products are of poor quality. When a customer chooses to purchase a specific brand over others, one of the defining factors is quality. They feel cheated. The main problem that emerges from such a scenario is that such customers will not only avoid the company’s products but will also influence others against the brand.
It is unfair for a company that has embraced business ethics and has spent millions of dollars to promote its brands and produces quality products to be subjected to such practices. It may take a long time and heavy investment in promotion to win back customer’s trust. The existence of trademark laws ensures that such practices are avoided in the modern business environment. Companies or individuals found to be engaging in such unfair practices are often subjected to stiff penalties to discourage others from the same and to compensate the aggrieved party. The ability of the aggrieved company to take the aggressor to court and prove that its trademark name was used in selling substandard products may help restore the faith of customers. The company will be able to explain its position, the unfortunate occurrence, and measures put in place to avoid similar situations in the future. It becomes easy to repair the damaged image of the brand in the market.
Concept of Unfair Competition
After analyzing the concept of trademark, it is necessary to understand the concept of unfair competition. One must understand what it means to be unfair in the business realm. Unfair competition is defined as any act or practice carried out in the course of industrial or commercial activities contrary to honest practices constitutes an act of unfair competition. Unfair competition is also defined as professional correctness, there is a standard code of conduct that is expected of business entity. A business entity, just like a person, has rights and freedoms that must be respected. As such business entity enjoys its rights and freedom it has a responsibility to ensure that it does not infringe upon the rights and freedoms of other companies. There must be a clear line beyond which companies and businessperson should not cross because of the possibility of harming other firms. It is in the interest of a company to operate without being unfairly disrupted by other entities. The following acts are often classified as unfair competition.
- Misleading Activities – In a highly competitive business environment, misleading acts are highly undesirable because of their consequences to the affected firms. Companies spend a lot of resources to promote their products and brand. Their primary goal is to have a pool of loyal customers. Such goals are always defeated if a different firm embraces practices that may mislead customers. When customers are misled, they can make decisions that may harm a given company. In an effort to discredit a competitor’s product and to reduce its market share, a firm may be tempted to misrepresent its products to influence decisions of customers. The affected company can seek legal redress against the entity that has provided the misleading information.
- Confusing Activities – Any commercial or industrial activity that has a potential of confusing customers may be considered an unfair business practice. In a highly competitive business environment, companies struggle to remain unique. They achieve that uniqueness in products that they deliver to their customers. Some of the successful brands in the market invest a lot of time and resources to come up with unique products in the market. They benefit from such initiatives by having a pool of loyal customers who trust their products. They use unique trademarks as a constant guide to their customers whenever they want to purchase their product. Any act that causes confusion among customers in a way that makes it difficult to identify their desired product is an unfair business practice.
- Activities That Damage Reputation or Goodwill – An act that reduces the appearance or distinctive character of another company’s brand or products is an unfair business practice. In a highly competitive business environment, any news that is harmful to the image and products of a rival company may be beneficial to a given company in the same industry if it will influence customers to avoid the rival’s product. However, if it is established that the attempt to discredit the reputation of a rival firm is planned and executed with malice, the perpetrator may be subjected legal action to compensate the affected company and to act as a warning to others who may be tempted to engage in similar acts. A perfect case is Johnson & Johnson Merck Pharmaceuticals, Co. v. SmithKline Beecham Corp of 1992. Smithkline Beecham Corp ran an advert that discredited the quality of products of Johnson & Johnson. Although Johnson & Johnson lost the case, it was a strong indication that marketing strategies that unfairly focuses on tainting the image of a rival firm may be subject to a legal suit.