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Competition Appellate Tribunal Enhanced Penalty for unauthorized use of the “Starbucks” Trademark to Protect Well-Known Trademarks under Pakistani Law --- ATCCP

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Competition Appellate Tribunal Enhanced Penalty for unauthorized use of the “Starbucks” Trademark to Protect Well-Known Trademarks under Pakistani Law --- ATCCP

Islamabad 02-08-2024: In a significant ruling, the Competition Appellate Tribunal, chaired by Mr. Justice Mazhar Alam Khan Miankhel, has upheld the penalty imposed by the Competition Commission of Pakistan (CCP) against M/s Options International (SMC-Pvt Limited) for unauthorized use of the Starbucks trademark. The Tribunal dismissed the appeal filed by the company, modifying the penalty and reinforcing the protection of well-known trademarks under Pakistani law.

The case originated from a complaint filed on August 31, 2017, by Sana Sheikh Fikree, representing Starbucks Corporation. The complaint alleged that Options International was unlawfully using Starbucks' trademark. The CCP referred the complaint to its Enquiry Committee under Section 37(2) of the Competition Act, 2010, which found sufficient evidence of trademark contravention.

Despite the appellant's commitment to cease using the Starbucks trademark, the CCP proceeded under Section 30 of the Act, ultimately imposing a penalty of PKR 5,000,000 and an additional daily penalty of PKR 100,000 for non-compliance.

M/s Options International argued that Starbucks had no business operations in Pakistan and thus lacked the standing to file the complaint. The appellant also contended that the CCP's decision was based solely on the Enquiry report, which they claimed violated their right to a fair trial under the Constitution of Pakistan. Additionally, the appellant deemed the imposed penalty excessive.

The Tribunal reaffirmed the CCP's jurisdiction to handle such complaints, emphasizing that trademark registration in Pakistan grants proprietary rights regardless of the trademark owner's business presence in the country. Citing Section 86 of the Trade Mark Ordinance, 2001, and Section 10 of the Competition Act, 2010, the Tribunal underscored the broad protections available for well-known trademarks.

The Tribunal found that the appellant had admitted to unauthorized use of the Starbucks trademark and failed to comply with the undertaking to cease such use. This non-compliance, coupled with ongoing use of the trademark, justified the CCP's actions and penalties.

In its decision, the Tribunal dismissed the appeal, enhancing the penalty from PKR 5,000,000 to PKR 6,000,000 under Rule 25 of the Competition Appellate Tribunal Rules, 2015. Additionally, a further daily penalty of PKR 5,000 was imposed from December 3, 2021, until full compliance is achieved.

This ruling reinforces the legal protections for well-known trademarks in Pakistan and affirms the CCP's authority to penalize deceptive marketing practices. It also highlights the importance of adhering to commitments made during legal proceedings and the potential for enhanced penalties in cases of non-compliance.

The Competition Appellate Tribunal's decision in favor of Starbucks underscores the robust legal framework supporting intellectual property rights in Pakistan. The enhanced penalties signal a strong stance against trademark violations and deceptive marketing practices, serving as a precedent for future cases.