Penalty for Lahore restaurant in trademark dispute upheld

The Supreme Court has upheld the Competition Appellate Tribunal's (CAT) order imposing a penalty of Rs6 million on a local restaurant chain for using the name and logo of the international coffee chain, Starbucks, to allegedly deceive customers.

Starbucks, a globally recognised chain of coffeehouses registered in the US state of Washington, had lodged a formal complaint before the Competition Commission of Pakistan (CCP) that the Lahore-based restaurant, Options International, was selling "Starbucks Coffee" while fraudulently using its name in their branding, deceiving consumers and harming its business interests.

The SC ruled that the appellant, Options International, put itself forward by selling its products under the international brand name Starbucks and using its logo.

This, it noted, must have had the effect of distorting competition within Pakistan because a local vendor selling similar products, as those being sold by the appellant, would be at a serious disadvantage and not be able to compete in addition to that since the understanding public would believe, understand, or perceive the same to be the genuine products of Starbucks.

The CCP's enquiry concluded that Options International had prima facie deceived its consumers and harmed the business interests of its competitors by disseminating false and misleading information.

During the enquiry, Options International admitted to the violation.

In its order, CCP's bench noted that although Options International had stopped using the name of the international coffee chain and committed to complying with the commission's directions, the unauthorised use of Starbucks' trademark spanned a substantial period.

The CCP bench, besides barring Options International from using the name and logo of Starbucks, imposed a penalty of Rs5 million on Options International. Additionally, the bench directed Options International to inform the general public through newspaper advertisements for three consecutive days about its fraudulent use of the international coffee chain. Options International filed an appeal against the CCP's order before CAT, which dismissed the appeal and increased the penalty amount from Rs5 million to Rs6 million and modified the daily penalty.

Subsequently, Options International appealed to the apex court against the CAT's order, which the court dismissed.