Law

A trade mark implies any sign that can be represented graphically and is capable of distinguishing goods or services of one undertaking from those of other undertakings. In particular, it comprises of words, designs, letters, numerals or the shape of goods including their packaging. In this regard, Malwanski (2003) state that Intellectual Property Law gives general protection to patents rights, trademark rights and copyrights, in the sense that patent rights, trademark rights and copyrights constitute intellectual property.

It is a point of worth to clearly affirm that Trademark confers rights that prevent third parties from interfering with such rights. However, there have been controversies regarding the same. Holding onto this line of thought, this study shall critically evaluate the Trade Marks Act particularly section 10(4) (c) and section 12. Additionally, the study will evaluate several statute and case-laws in the light of the two sections. Several themes will be explored, such as, the validity of intellectual property law rights of trademark holder and limitations of such rights as well as exemptions.

Trade Mark Act
Trade mark Act spells out the rights of a trade mark holder, how to safeguard them and how to claim them in the event they are infringed. This section will critically evaluate section 10 (4) (c) and 12. Article 10 indicates the infringement of registered trade mark. Infringement occurs if a trader uses a sign or symbol on his goods or services and yet the same trade mark is identical to other goods or services for which it is registered. For example, automobile a manufacture making saloon cars is not supposed to brand hisher cars with the symbol for Ford, Toyota or Chrysler, because trade mark Act deems that as illegal. Moreover, this infringement occurs if the trade mark used on goods and services is similar to those, for which the trade mark is registered, especially usage within similar products. In addition to that, it is also worth noting that infringement of a registered trademark occurs when goods and services used are not similar to those which the trade mark is registered. Additionally, a person uses a sign by affixing it to goods or their packaging or whenever he launches them in the market. More importantly a person uses a sign if he imports or exports goods under the sign.

On the other hand, Article 12 indicates the exhaustion of rights conferred by registered trade mark. Infringement of a trade mark does not suffice by using the trade mark in relation to goods that have been put in the market and within the parameters of European Economic Area under that trade mark by the proprietor or with his consent. On the contrary, this does not apply if there are legitimate reasons for the proprietor to contest further dealings in the goods. This occurs if the conditions of the goods has been altered or impaired in the event they have been put on the market.

In general, Section 10(4) (c) of the Trade Marks Act (TMA) grants the rights to a trademark owner to prevent the importation of goods under his mark. Section 12 of the TMA however provides a defense to such infringement under the exhaustion of rights principle.

Once the trade mark has been registered it becomes a property right to the trade mark holder so long as its registration process adheres to the requirements of the Trade mark act. Moreover, the trade mark holder has all the rights in the trade mark and can sue any party that violates such rights without his consent. These rights take effect from the date of registration or better still the date of filing of the trade mark application.  So, there can be no accusations of infringement if this occurs before the actual date of registration.

As can be seen, the proprietor gets all the exclusive rights as regards the trade mark and any case of infringement can be settled in a court of law. Looking at section 10 (4) (c), it has been stated that the proprietor can prevent trading of goods or services with his trademark. Section 12 counters this position by stating that the rights holder can allow the importation of goods or services through consent and, if the goods or services trade within the European Economic Area. It goes ahead to purport that the rights holder can prevent further dealings of the goods if he feels that such dealings are not fair to the product.  

Clearly, section 12 conditions the rights of the trade mark owner although it does not purely deny him such rights. It is important to clarify several issues in section 12 what does it mean to trade goods in European Economic Area To what extent does consent of the trademark owner entail What leads to the mishandling of goods upon their being put in the market What exactly are the rights of a trade mark owner These are the fundamental issues that one needs to look into.

Exhaustion of Trade mark Rights
In a pedestrian language, rights cannot be conditioned to external factors since by virtue of themselves they are not to be violated or overruled. Again, rights take different forms in that they can be classified as natural, congenial, positive, alienable or inalienable rights. In this regard, it seems a contradiction in terms to say that one has a right to this and at the same say that the same right may not apply in this or that condition. This is where the borne of contention arises whenever considering the rights granted to a trade mark owner. The trade mark act states very clearly that the proprietor acquires those rights on the date of filing of the trade mark. Seemingly, these rights incline more to the prevention of other parties from interfering with the trade mark. For instance, trading with such a trade mark or selling goods that do not relate to goods under which the trade mark was registered. Illustrative examples can be better placed to argue this case out clearly and precisely. For instance, consider the following example trader A registers a trade mark namely Safaricom trader B designs other products but puts the trade mark, safaricom on them. In this case, trader A can sue trader B for violating his trade marks rights. Consider this other example trader X registers a trade mark toto on school bags that he releases in the market during back to school shopping trader Y seeks trader Xs consent to use his trade mark and comes up with school sweaters but puts the trade mark toto. In this case trader X can sue trader Y for violating his rights because of use of trade mark for the wrong reasons.

A trademarked product lawfully enters the market if the trademark proprietor manufactured the good and sold it voluntarily by either placing it in a store or through other channels. In most cases, the buyer may decide to resell it at higher value with a view to make some profit. This reselling can take place in the buyers country, region or in a different country. Now, such products will be resold together with their trademark. This implies selling a trademarked product which in commerce implies use of the trade mark. In this event, the trade mark owner can block the reselling of such product and accuse the buyer of trademark infringement. Various countries have resorted to exhaustion of such rights in order to bar the trade mark holder from manipulating the reselling of his product.  

In this sense, a trademark holder cannot claim any infringements if his product entered legally in the market. Now, turning back to section 12, it derives validity whenever one thinks of the universality principle. This principle legalizes grey markets and parallel imports. But, it fails to recognize that countries have diverse legal systems. By virtue of the territoriality principle, trademarks are regarded as national matters. This means that legality of trademark applies in the country where it is registered. In this context, grey markets can be prevented moreover, the trade mark owner can control the rights of its distribution in that market.

Therefore, it would be of no relevance for one to have an identical trade mark while in another country that is the originator of the grey market product. In support of this opinion, it is because trade mark requirements would be as per that countrys national affair. As a result of this contradiction, this principle can undermine fair situations as well as feasibility in developing common markets, especially in the European Union.

It is important to note that the exhaustion principle has two variations namely exhaustion in local good will and exhaustion in commerce. In the latter case, once the product has been sold for the first time the trademark proprietor loses his rights. The argument is that since the trademarked product is legally in the market, then its parallel import is also legally justified. In the former case, local goodwill applies to a domestic holder who manages to develop a substantial goodwill in the market for a foreign trademark. In most cases, this local goodwill surpasses the goodwill linked to the trade marked goods themselves. It can be argued and justifiably so that the trademark as found locally does not identify with the manufacturer either in law or in fact.

Exhaustion in European Community
According to Attilio (2000) reports that European Community advocates for free flow of goods between the Member States. Therefore, from a simplified understanding of implied perspective, Trade mark, patents and copyright can be a hindrance to this end. In this regard, there are various restrictions that have been advanced to regulate such rights. The main restriction was geared towards harmonization of the laws of the Member States of the European Community with respect to trademarks. In addition, this was later modified by Annex 17 of the European Economic Area Agreement which had the following provisions

The trademark holders rights shall not prohibit usage of the goods which have been put on the market especially if there exists a contract under that trademark moreover, if this contract involves the proprietors consent.

Looking at the above assertion, it can rightly be argued that whenever trademarked products get launched in the market within the confines of European Economic Area and with the trademark owners consent, he will therefore have no rights to oppose the import or re-import of the said product into another country in the European Economic Area. In the same respect, the European Court of Justice interprets this clause as follows

The exhaustion of trademark rights only apply in situations when there trademark owner gives consent furthermore, this provision applies across all Member States including their domestic law as pertains to trademark rights. It is important though to note that, for there to be consent, it must relate to each individual item of the products in respect of which exhaustion is pledged.

In this regard, the exhaustion policy only applies to products that are legally put in the European market. Despite focal on European Market, the member states cannot reinstate more liberal exhaustion laws like in the case of allowing worldwide exhaustion. For instance, if a trademark holder put the product on the market in Asia without any restrictions, he will have the rights to block parallel import of the product at European boarders. On the contrary, if the trademark holder put the product on the market in countries like Scotland or Belgium, he will have no rights to block parallel import to a country like Netherlands and the same applies to re-importion from the Netherlands back to Belgium or Scotland.  

Critical Evaluation of the Trademark Act
Section 12 of the Trademarks Act is somewhat self-contradictory. In other words, it is not consistent with the spirit of the intended rights of the trademark holder. On one hand, it states that the trademark holder has no rights to block parallel import or re-import of the trademarked product if this takes place within the Member States. On the other hand, it states that the same trademark holder has rights to block import or re-import of the product if this takes place outside the Member States. The former case is utilitarianism because it is geared towards an economic interest within the Member States. Critically, this statement clearly shows that European countries do not have the interest of the trademark holder but their interest mainly how much the Member States can benefit. This in itself is good because it seeks to promote the good of the European Community. In other words, it operates within the principles of economic solidarity so to speak. Thus, body becomes useful in meeting objective aimed indicating unity and common purpose. The challenge is that this unity suppresses the rights of the trademark holder.  In fact, universality principle does not take into account the consent of the trademark holder. Section 12 clearly, undermines or disregards the consent of trademark holder, and to this extent it suppresses his rights.

If it is the case that a trademark holder cannot block the trading of his trademarked product if it takes place within European Economic Area, then he has no trademark rights to the product, which is all. Again, if it is the case that a trademark holder can block the trading of his trademarked product if it takes place outside the European Economic Area, then he has rights to the trademarked product. This is the contention as regards the rights of the trademark holder. So, in the former case, what rights does the trademark holder have It was mentioned earlier that once the person registers the trademark, the rights to it start from the date of application, period So, what are those rights if the product cannot be blocked within Member States The Trade Mark Act should be clear on this. It should substantiate the kind of rights conferred on that event of registration. At least, it should state that the rights conferred to a trademark proprietor at inception only apply to situations not within the Member States. This should be stated from the beginning and not provided in the later sub-clauses to avoid possible misinterpretation.

It can be argued and justifiably so that trademark rights should apply in all instances both domestically and internationally. It should safeguard the holder upon any malicious misappropriation of the trademarked product in the local settings. Further to that, the trademark holder should be compensated any time his trademarked product is of benefit to the Member States. The Trademark Act does not elevate the trademark proprietor neither does it spell out the compensation procedure for the use of his trademarked product. One of the ways to penalize attempts to benefit from the intellectual property rights of another person is by making up for losses incurred by the owner. Section 12, therefore, does not consider that Member States potentially could misappropriate the product or they could be a barrier to the financial gains intended by the trademark owner.

Every entrepreneur has a vision. In this context, the Trade Mark Act must respect the wishes, objectives and scope of the entrepreneur. He is the inventor and has sole rights to direct how his product sails in the market. However, this does not mean that he is exempted from certain legal regulations like product safety and custom duty. The main point here is that, the spirit of entrepreneurship surmounts the spirit of Member States.

In general, section 10 (4) (c) and section 12 refute each other by limitation. They can be considered as two statements that serve as counter arguments and refutations to each other. Principles of Logic demand that an instance which refutes A, makes A invalid and no-entity. Assuming that this instance is B, then upon refutation of A, B gains validity and it becomes an entity. In so doing, it replaces A, not unless A provides a refutation which again makes B invalid and no-entity. This analogy can be applied in the two sections contended in this study.

So, if it is the case that a trademark holder can prevent the import or export of goods bearing his sign and it is also the case that he cannot block import or export of goods bearing his sign, if this is done within the Member States, then section 10 is null and void. There should be an amendment to it. So long as section 10 applies and remains authentic then section 12 literally denies the rights conferred to the trademark holder in section 10.

Case Analysis
Perry v Truefitt
This case prohibits another person to sell his own products and at the same time insinuate that the goods are of another trader. This is well entrenched in the passing off policy which actually led to the modern Trademark Law. It essentially safeguards the goodwill and reputation of a business.

Additionally, it safeguards the public from accessing low quality products advanced through deceitful procedures.

Section 12 does not take into consideration the goodwill of the trademark holder. In deed, it cannot be assumed that there are not deceitful motives within the European Economic Area. To what extent does section 12 safeguard the goodwill and reputation of the trademark holder Clearly, this does not come out very well. There is a very big possibility that some Member States may take advantage of the situation and trade the trademarked product under the pretence that they are the goods of another trader. To reiterate, how does the Trademark Act (section 12) intend to control such an occurrence
Nice and Safe Attitude v Piers Flook

This case illustrates the extent in which goodwill can go. It is laudable that a trademarked product enjoys rights that prohibit misappropriation of the product in the Diaspora. Nice and Safe traded with a logo similar to NASA logo without the consent of NASA. Eventually, NASA allowed Piers Flook to use this logo, a move that was challenged by Nice and Safe. This is an indication that goodwill need not be acquired rightfully to be protected even against the originator of the trademark. Passing off actions safeguard goodwill arising from well known international companies. Moreover, it does not matter if they trade in the European Economic Area. It is up to the claimant to defend that their goodwill is well established in the UK.

Section 10 is in line with this claim since it protects the trademark holder from importation or exportation of products with his sign if without his consent.  

Law Society of England and Wales v Griffiths
It is believed that for there to arise goodwill claims there must be an element of trade in two similar activities or two similar customers. In other words, there has to be a common ground in terms of activity. This case involves two claimants where one of them (X) had phone line P1 as 0500192939 whereas the other claimant (Y) acquired phone line 0800192939 which was X line. The two claimants were involved in common trade and so the move by claimant Y was actionable. However, it is important to note that passing off action do not apply to professional trading, for instance, Law Society.

This understanding can be applied to section 12 so that it does not suppress the rights of the trademark holder in less essential matters. It should only extend to those matters involving trade between two beneficiaries or customers.  Then, it should safeguard the goodwill of the trademark holder on matters outside this context. Moreover, the spirit of Member State should not dominate in all inventions or trademarked products. This may kill the efforts of future entrepreneurs who may feel that they creativity will not benefit like in the case of communism.

Conclusion
In conclusion, the paper has discussed in a detail the account of Trademark Act accompanied by various cases. The paper has identified a Trademark as any sign that can be represented graphically and is capable of distinguishing goods or services of one undertaking from those of other undertakings. According to the Trade mark Act, the Act spells out the rights of a trade mark holder, how to safeguard them and how to claim them in the event they are infringed. Importantly, article 10 of the Act indicates the infringement of registered Trademark occurs if a trader uses a sign or symbol on his goods or services and yet the same trade mark is identical to other goods or services for which it is legally registered.

Although Section 10(4) (c) of the Trade Marks Act (TMA) grants the rights to a trademark owner to prevent the importation of goods under his mark, Section 12 of the Trademark Act however contracts right of trademark holder, because it provides a defense to such infringement under the exhaustion of rights principle.

Therefore, this infringement is propagated by the contradictory clause and the profit driven motif of the European Area is the bore of contention regarding the Trademark Act.  Indeed, the Trademark laws should protect the rights of the trademark holder from arbitrary infringement. For instance, a third party trades goods as if they were his own without the consent of the trademark owner. This indirectly legally permitted by the Trademark Act as since some sections violet clauses of the same Act.  On the other hand, infringement occurs if a third party trades goods registered under a Trademark for the wrong reasons. Section 10 and Section 12 come out as counter arguments and due to this, it violates the rights conferred to the trademark proprietor as stated in section10. However, section gains credibility whenever one thinks of monopoly.

It is a point of worth to note that Trademark rights should not lead to excessive monopolistic attitudes. Exhaustion of rights is one way to achieve this. Moreover, it liberalizes economy so that other there is mutual benefit.  In general, section 12 is a good law, but it needs to be reviewed to strike the balance. The situation is made worse by the fact that the states within European market are interested in their own gains rather than genuine concerns of the trademark holders.  Moreover, sections 12 of the Act do not take into consideration the goodwill of the trademark holder, thus, making it possible for illegal use of the trademark. Therefore, in my opinion, the Act needs strong amendment to protect trademark owners as well as emphasizing the role of the states especially within European Union in encouraging them to uphold the rule of law regarding Trademark.