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Intellectual Property Specialization Course
Protection from Unfair Competition
17 November 2011
Luca Ghedina
Free Competition
The basic tenets of free competition: Is beneficial Is highly efficient Stimulates innovation Lower prices for consumers Free copying: the rule – exclusive rights: the exception
Unfair vs. Free Unfair
Unfair as the limit of free competition Article 10 bis of Paris Convention signatories agree to assure “protection from unfair competition” Definition: “any act of competition contrary to honest practices in industrial or commercial matters”
Unfair Competition - Definition
Impossible to define: no limit to human inventiveness! Attempted definitions:
Contraire à la morale des affaires Contrario alla correttezza professionale Gegen die guten Sitten (no longer!) Contrary to good conscience
Unfair Competition - Definition
Definitions are always too vague No inflexible rule can or should be laid down Traditionally, unfair competition is the result of court decisions also in civil law countries The best definition is a list of concrete cases
Unfair Competition - Cases
Article 10 bis Paris Convention: Acts that create confusion with the company, goods or activities of a competitor; False allegations that discredit a competitor Indications liable to mislead the public;
List not exhaustive
Unfair Competition - Cases Below cost selling – predatory pricing Boycotting – turning key employees away Sending cease and desist letters accusing of infringement with no valid IP rights Theft of trade secrets – know how misappropriation Use of confusingly similar containers, product configurations, packaging Advertising
Need for Protection
Free competition does not mean one can compete “too hard” Grey area between free copying / competition and exclusive rights Unfair competition has a residual character: it is actionable where no IP rights are available
The Legal Basis for Protection
No exhaustive definition – referral to vague principles subject to change No exhaustive list The law of unfair competition is dynamic Lack of specific statute or precedent need not be a bar to a claim of unfair competition
The Legal Basis for Protection
International convention National statutes Court precedents
The Paris Convention of 1883
Article 10 bis and ter (amendments of 1925, 1934 and 1958) Directly actionable (10 bis) Binding for the Member States (10 ter), not directly actionable
National Statutes
Some countries do not have specific provisions (i.e. France) Some countries have a specific unfair competition act (i.e. Germany: Gesetz gegen den unlauteren Wettbewerb - UWG) Others have provisions contained in other broader statutes (i.e. Italy: Articles 2598 – 2601 Civil Code)
National Statutes
The common features of most statutes are (only):
Broad, vague definitions of unfair competition Non exhaustive list of concrete cases Protection of competitors only or also of the public
National Statutes- The Italian example: art. 2598, Civil code
-“Without prejudice to the provisions on distinctive signs and patent rights, acts of unfair competition are performed by whoever:
1) Uses names or distinctive signs which are likely to create confusion with the names or distinctive signs legitimately used by others, or slavishly imitates the products of a competitor, or performs by any other means acts which are likely to create confusion with the products and activities of a competitor;
…..
National Statutes- The Italian example: art. 2598, Civil code
-
…2) spreads news and comments on the
products and activities of a competitor, which are likely to discredit them, or treats as his own the good qualities of the products or of the enterprise of a competitor;
3) avails himself, directly or indirectly, of any other means which do not conform with the principles of correct behaviour in the trade and are likely to injure another’s business.”
Court precedents
Court precedents are the backbone of the law of unfair competition, however
“There is no part of the law which is more plastic than unfair competition, and what was not recognized as an actionable wrong 25 years ago may well have become one today” (Ely-Norris Safe Co. v. Mosler Safe Co.) …but no unbridled discretion either!
Court precedents - Trends
Impose an higher legal standard of fair competition
Consequence of judicial activism The law reflects the mores and conventions of the society
From the protection of the competitor to that of the public
Concrete Case
Trade dress / Product shape
Must be distinctive, i.e. capable of identifying source of origin Not merely functional Not merely decorative or aesthetic
Trade Dress - Product Shape
A trade dress/product configuration is protected against copying if it is distinctive AND If the outcome of the imitation is a likelihood of confusion on the part of the public In order to assess likelihood of confusion the trademark may also be taken into consideration
Unfair Competition vs. IP Rights
Traditional principle: avoid overlapping of protection
A decorative feature must be protected by way of design
A technical feature by way of a patent
A creative feature by way of copyright
A two-dimensional distinctive feature – ideally – by way of TM
Unfair Competition vs. IP Rights
Trend: Gradual disappearance of any significant difference between the law of trademark and the law of “trade dress” (unfair competition) Reduced relevance of unfair competition in traditional areas Expansion of unfair competition to new form of acts contrary to commercial morality