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Module V

The document discusses unfair competition laws, which aim to ensure fairness in business practices and combat acts like confusion, misleading advertising, and discrediting competitors. It outlines the sources of these laws at international, regional, and national levels, highlighting the lack of harmonization and various legal frameworks. Additionally, it describes remedies available for unfair competition, including cease and desist letters, injunctions, and potential criminal actions.

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Jacky Kang
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2 views12 pages

Module V

The document discusses unfair competition laws, which aim to ensure fairness in business practices and combat acts like confusion, misleading advertising, and discrediting competitors. It outlines the sources of these laws at international, regional, and national levels, highlighting the lack of harmonization and various legal frameworks. Additionally, it describes remedies available for unfair competition, including cease and desist letters, injunctions, and potential criminal actions.

Uploaded by

Jacky Kang
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

MODULE V Unfair Competition

INTRODUCTION
Most countries allow free competition between companies within limits.

Where there is competition, acts of unfair competition are likely to occur.

A system of legal enforcement has gradually developed worldwide over time but
there is a lack of international harmonization.

Unfair Competition laws need to be studied more particularly at regional and


national levels.

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UNFAIR COMPETITION AND ANTITRUST LAW
Anti-trust law is concerned with the preservation of the freedom of competition by
combating restraints on trade (i.e. cartels) and abuses of economic power
Unfair competition law is concerned with ensuring fairness in competition by forcing
all participants to play according to the same rules.
Unfair competition considers that certain competitive behaviors have to be banned
and prevented
Sometimes the exercise of an intellectual property right may violate antitrust law
and/or unfair competition law. This may happen when an intellectual property right is
“misused”.

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SOURCES OF LAW – INTERNATIONAL LAW
The Paris Convention defines unfair competition as any act contrary to honest
practices. “Commercial honesty” is to be defined by national authorities. PC
establishes 3 prohibited acts: 1-Confusion 2-Discrediting and 3-Misleading. Member
States must grant a minimum standard of protection and ensure “appropriate legal
remedies”.
TRIPS contains provisions related to unfair competition, specifically for geographical
indications, trade secrets (data protection) and practices in IP licenses. It extends the
obligations from the PC to WTO Members, which have to (or are invited to) provide
effective legal protection against all acts of unfair competition.
WIPO model provisions have greatly helped adapting and approximating national
laws. Expand the protection against unfair competition to “any act or practice in the
course of industrial or commercial activities”.

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SOURCES OF LAW – REGIONAL LAWS
The European Union is not a completely standardized system as per differences of
handling and approach among Members.
However, it has community directives and regulations for unfair business-to-consumer
commercial practices; misleading and comparative advertising and enforcement and
modernization consumer protection rules.
 The Andean Community’s Industrial Property regulation contains a general clause
of unfair competition protection and a list of prohibited acts, that “among others”
constitute intellectual property-linked unfair trade practices: Confusion; and
Misleading claims.

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SOURCES OF LAW – NATIONAL LAWS
All countries with market economy systems have devised unfair competition
regulations. There are different approaches:
Special statutes or specific provisions within broader statutes, combined with general
statutes.
In some civil law tradition countries protection is found in the general tort law.
In common law traditions, the actions for passing-off and violation of trade secrets
were developed in court.
For consumer protection some countries have separate sets of laws.

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ACTS OF UNFAIR COMPETITION
Confusion. To exploit someone else’s goodwill. The “intent” to confuse is immaterial
Both companies must operate on the same market, as confusion may arise only if
actual or potential consumers are the same.
Misleading. Creating a false impression of a competitor’s own products or services.
Commonly found in advertising, so most countries with special legislation for
misleading advertising.
The claims are likely to have a misleading effect. Statements that are literally correct
can be deceptive.
The concept of misleading is restricted to those indications that might cause
misconceptions on the part of the consumer.

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ACTS OF UNFAIR COMPETITION
Discrediting competitors. Any false allegation concerning a competitor that is likely
to harm his commercial goodwill.
Discrediting tries to entice customers with incorrect information. This is not done by
false statements about one’s own product, but by casting untruthful aspersions on a
competitor.
Violation of trade secrets. These are protected against unauthorized use by various
statutory means.
Some countries have special provisions for their protection, many countries protect
them also by way of criminal, administrative or commercial provisions.

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ACTS OF UNFAIR COMPETITION – FREE RIDING
General lawfulness of imitation in absence of IPRs. The broadest form of
competition by imitation.
Any act that a competitor undertakes with the intention of exploiting another’s
achievement for his own purposes without substantially departing from the original
achievement.
Dilution is understood as the lessening of the ability of a mark to be associated
with a source.
Some dilution can be regarded as result of use of similar marks for totally different
goods or services.

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ACTS OF UNFAIR COMPETITION – FREE RIDING
Exploitation of another’s reputation. When a product leads consumers to associate
the mark with a certain origin or quality, its unauthorized use will not cause confusion
as to their source but will be unfair appropriation of the reputation. This may equally
apply to product appearances. This relates to protection of well-known trademarks.
Slavish imitation. Absence of likelihood of confusion but the copied products still
have a particular distinctiveness, that concerns aesthetic features that leave room for
alternative features.
Unfair exploitation of traditional knowledge. It is not fully protected by the IP
systems. Infringers may reproduce and register unprotected traditional knowledge.
One possible reaction could be starting a case of unfair misappropriation.

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ACTS OF UNFAIR COMPETITION – FREE RIDING
Comparative advertising. It may take two forms: a positive or a negative
reference. It varies greatly from country to country.
It must respect the restrictions to all advertisement and must not be misleading.
It is beneficial for a competitive market, as it provides useful information to consumers.
It should be considered from the point of view of:
Unfair competition, (a competitor to advertise one’s own products);
Trademark law, (someone else’s trademarks to advertise a product)
Consumer law (it damages the interests of the public if is misleading).

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REMEDIES
Cease and Desist Letters attempt to settle the dispute directly by informing the
competitor that an action is to be undertaken if the action does not stop. It is posible
to request damages.
Injunctions take place when there is need for an urgent and swift stop of the unfair
act. One may request an authority to oblige the counterparty to stop the actions
immediately.
Damages may be requested for the losses that the unfair act caused.
Criminal Actions are also available in certain jurisdictions in which certain unfair
competition actions constitute a crime and can lead to seizing, fines and jail time.
Consumer Protection regulations aim to protect the consumers that have been
affected by the unlawful actions of a company.

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