Unfair Competition

With regards to unfair competition, sometimes there are hidden risks associated with using an unregistered mark if the use of such a mark has the possibility of infringing on another mark with respect to trademark rights and unfair competition.

Unfair Competition Prevention Act – important provisions

Article 2 (1) The term “unfair competition” as used in this Act means any of the following:

(i) the act of creating confusion with another person’s goods or business by using an indication of goods or business(meaning a name, trade name, trademark, mark, container or packaging for goods which is connected with a person’s operations, or any other indication of a person’s goods or business; the same shall apply hereinafter) that is identical or similar to an indication of goods or business that is well-known among consumers as that of another person, or by assigning, delivering, displaying for the purpose of assignment or delivery, exporting, importing or providing through a telecommunications line goods that uses such an indication;

(ii) the act of using an indication of goods or business that is identical or similar to another person’s famous indication of goods or business as one’s own, or of assigning, delivering, displaying for the purpose of assignment or delivery, exporting, importing, or providing through a telecommunications line goods that use such an indication;

(iii) the act of assigning, leasing, displaying for the purpose of assignment or leasing, exporting or importing goods that imitate the configuration of another person’s goods (excluding configuration that is indispensable for ensuring the function of said goods);

For software, it is usually important to pay attention to 2(1)(i) and (ii). However, unless the other mark is well-known, it might still be possible to use it.

It is also important to note Article 8 of companies act:

No person may use, with a wrongful purpose, any name or trade name which makes it likely that the person may be mistaken for the other Company.

(2) Any Company the enterprise interests of which have been, or are likely to be, infringed by the use of any name or trade name in violation of the provisions of the preceding paragraph may seek an injunction suspending or preventing the infringement against the person who infringes, or is likely to infringe, those enterprise interests.

The risky part is that you might need to immediately stop using the mark (which might already cause financial loss), pay damages and also be subject to a penalty.

As such it is at your own risk as to whether you use an unregistered mark or not. As always, ventures need to assess hidden risks and consider whether benefits outweigh the costs and the likelihood of those costs being incurred.

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