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Flashcards in DL Unfair Competition Deck (17)
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1

What is the Unfair Competition?

Article 10bis (2) of the Paris Convention defines an act of unfair competition as “any act of competition contrary to honest practices in industrial or commercial matters”.

2

Which acts should be prohibited?

1. “all acts of such a nature as to create confusion, by any means, with the establishment, the goods, or the industrial or commercial activities, of a competitor;
2. false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor;
3. indications or allegations the use of which in the course of trade is liable to mislead the public as to nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods."

3

in nutshell what is UC?

is at its simplest dishonest practice.

4

How do the laws of unfair competition relate to those designed to combat the abuse of a dominant market
position?

Anti-trust law is concerned with the preservation of the freedom of competition by combating restraints on trade and abuses of economic power. Unfair competition law, on the other hand, is concerned with ensuring fairness in competition by forcing all participants to play according to the same rules.

5

What is the threefold purpose of UC?

- the protection of competitors
- the protection of consumers - - and the safeguarding of competition in the interest of the public at large.

6

What is the categories of acts of UC?

- Causing confusion
- Misleading
- Disclosure of secret information
- Taking advantages of another's achievements (free riding)
- Comparative advertising

7

What is causing confusion?


The Paris Convention (Art. 10bis (3)) obliges the Member States to prohibit all acts that are “of such a nature as to create confusion by any means whatever with the establishment, the goods or the industrial or commercial activities of a competitor”. E.g: the scope of this article is very broad, as it covers any act in the course of the trade involving a mark, sign, label, slogan, packaging, shape or color of goods, or any other distinctive indication used by a businessman. Thus not only indications used to distinguish goods, services or businesses but also the appearance of goods and the presentation of services are considered relevant for the prohibition of confusion. However, there are two main areas in which confusion frequently occurs.

8

Briefly, how does industrial design protection work?

Such legislation usually prohibits the use of identical or similar product appearances for identical or similar goods.

However, as with trademark legislation, protection under special laws on industrial designs is also limited in several ways, which vary significantly from country to country. In a manner similar to the specific protection under trademark laws, such limitations may concern the general applicability of the designs law to certain product appearances and also the exact scope of the protection granted by the specific legislation. For example, if the design protection of a surface decoration is limited to the use of the decoration on products for which the design is registered, protection against copying of the design for the decoration of other products may be obtained under unfair competition law, if the copied design is misleading or causes confusion as to the commercial source.

9

What is Misleading?

Misleading can roughly be defined as creating a false impression of a competitor's own products or services.

10

Does the concept of misleading vary from country to country?


Generally the concept of misleading does vary from country to country and this can best be seen in the various national treatments of exaggerations. Although in all countries obvious exaggerations (even if literally inaccurate) are not considered deceptive because they can easily be recognized as "sales talk," the question of what is mere "hot air" or "puffing" and what is to be taken seriously is answered differently in different countries. In some countries (such as Germany), it is assumed that the public basically believes all advertising statements, and especially those that claim uniqueness ("the best, the first," etc.); consequently an especially strict standard is applied. Other countries (such as Italy and the United States of America) take the exact opposite position and tolerate generally formulated indications, in particular those in the form of claims of uniqueness. Thus in the United States of America the courts have generally only intervened if the product advertised as the best is in reality inferior.

11

What it is discrediting Competitors?


Discrediting (or disparagement) is usually defined as any false allegation concerning a competitor that is likely to harm his commercial goodwill. ike misleading, discrediting tries to entice customers with incorrect information. Unlike misleading, however, this is not done by false or deceptive statements about one's own product, but rather by casting untruthful aspersions on a competitor, his products or his services. Discrediting, therefore, always involves a direct attack on a particular businessman or a particular category of businessmen, but its consequences go beyond that aim: since the information on the competitor or his products is incorrect, the consumer is liable to suffer also.

12

Is the concept of discrediting different in different countries?

In some countries a literally truthful remark about a competitor may be considered unfair competition if the "attack" is blown up out of proportion, or if the words used are needlessly injurious. On the other hand, some countries expressly restrict the notion of discrediting to inaccurate or at least misleading statements.
An explanation of this difference in attitudes can be found in the diverging assessment of "commercial honor." Where unfair competition law has its roots in the protection of the commercial reputation of the individual businessman—as it does in the continental European countries—a "special tort of business disparagement" has emerged, to which, in principle, much stricter rules apply than to defamatory statements outside the bounds of competition, where constitutional considerations such as freedom of speech have to be taken into account. In other countries, especially those that have not developed a comprehensive system of protection against unfair competition, the attitude is exactly the opposite: it is assumed that, in the interest of competition, attacks on individual competitors are unavoidable, that they must be widely tolerated and that a line should only be drawn where the attack is based on false facts. In those countries, the plaintiff usually also bears the burden of proof as to the falseness of the statement—which can sometimes make an action impossible.

13

What is disclosure of secret information?

A considerable amount of commercial competitiveness of an enterprise can be due to information developed and accumulated by that enterprise or individuals in it. For example, the customer and potential customer lists could give that company an edge over its’ competitors who do not have such good quality lists. Another example could be that an enterprise has developed a secret industrial process, which enables it to sell a better quality or cheaper product. I hope you agree with me that if either of these pieces of information were given to a competitor without the permission of the owner of the information this would result in unfair competition. Indeed, the disclosure of secret information is defined as unfair competition by the TRIPS Agreement of 1994, which obliges World Trade Organization members to provide protection for “undisclosed information”.
The TRIPS Agreement specifically describes the protection of undisclosed information as necessary to protect against unfair competition (Article 39 (2)).

14

Why can’t patent protection be used to protect such secret information?


Competitive strength usually depends on innovative techniques and accompanying know-how in the industrial and/or commercial field. However, such techniques and know-how are not always protectable by patent law. Firstly, patents are available only for inventions in the field of technology and not for innovative achievements concerning the conduct of business, etc. Moreover, some technical discoveries or information, while providing a valuable commercial advantage for a particular trader, may lack the novelty or inventive step required to make them patentable. Furthermore, while a patent application is pending, as long as the information has not been disclosed to the public, the owner of the information to be patented ought to be protected against any wrongful disclosure of the information by others, regardless of whether or not the application eventually leads to the grant of a patent.

15

What does it mean "Taking undue advantage of another’s achievements"?

The notion of “free riding” has a number of common features with the notions of causing confusion and misleading. It could be defined as the broadest form of competition by imitation. Under the principles of a free market, however, the exploitation or "appropriation" of another person's achievements is unfair only under specific circumstances. On the other hand, acts that cause confusion or mislead normally imply free riding on another person's achievements, but are generally recognised, as forms of free riding that are always unfair.
There are various types of free riding including the dilution of the distinctive value and quality of a competitor’s mark. This could happen if a similar mark is used for dissimilar goods or services.

16

What is comparative advertising?


Comparative advertising may take two forms: a positive reference to another's product (claiming that one's own product is as good as the other) or a negative reference (claiming that one's own product is better than the other).

In the first instance, where the competitor's product is usually well known, the crucial question relates to the possibility of misappropriation of another's goodwill. In the second case, where the competitor's product is criticized, it is the question of disparagement that arises. However, both forms of comparison involve an (unauthorized) reference to a competitor, who is either mentioned by name or implicitly identifiable as such by the public.

17

Other acts of unfair competition

As you should appreciate now the field of unfair competition is large and the treatment by different countries quite varied. So, in order to complete the list of unfair acts as much as possible, it is worthwhile giving a few more examples, briefly. These are:
• Nuisance advertising. For example, advertising which unduly exploits fear to make a sale.
• The use of sales promotion techniques such as, lotteries, gifts and bonuses. These are usually regulated to avoid undue inducement to buy.
• Impeding of market activities such as, the destruction of a competitor's returnable soft drink bottles.