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
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”
 Article
10
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