HomeBusiness DigestIntellectual Property Perspectives: Unfair competition ruins creativity

Intellectual Property Perspectives: Unfair competition ruins creativity

Contextualising competition

 

Undeniably we live in a world in which people perceive their needs and wants as unlimited in context of a world of limited resources. As a result thereof people find themselves in forms of perennial competitive struggles for survival as they engage in economic activities in order to improve their standards and quality of life in a perceived hostile environment. As these struggles pervade the entire spectrum of endeavour and creativity, they correspondingly evolve with each technological epoch

Benefits of perfect competition

Theoretically, perfect competition, which thrives best in a free market economy, yields the following benefits, driven by the market forces of demand and supply;

Ease of entry of many, market participants astride efficient use of the scarce resources;

Obviating economic exploitation of weaker players by the stronger competitors who would otherwise ruthlessly abuse their economic power to prevail;

Guaranteeing consumers greater freedom of choice over a wider range of increasingly better quality and types of products and

Spurring economic growth prosperities of nations through ever-improved business operational efficiency, lowering of production costs and selling prices, innovation in modes of production and distribution, and developments of new products.

Effects of unfair competition

The above perceived socio-economic benefits have always been elusive. For our perfect competition model has always remained a mirage as there has always been prowling predators who by their scheme of genius are bent upon reaping where one has not sown and have ruined or crippled many a thriving enterprise’s  viability since the Roman Empire.

 

As a result, we are thus graced with a scenario in which a few business entities unscrupulously benefit at the detriment of society, other business entities and consumers alike.

 

For, invariably, all forms of unfair competition are characterised by the infringement of their rivals’ right to attract custom, coupled with ripping the consumers off by offering inferior products. That is to say, in essence, unfair competition represents unbridled malicious and brutal attack on the goodwill of other enterprises.

What  is goodwill?

To date no precise conceptual definition of goodwill has been unanimously captioned except the global consensus it is an imaginative magnetic force of the composite force comprising  a variety of independent elements arising from organisational cohesion of the enterprise built upon unique attractive forces that include business location, trade name, reputation, connections, class of established customers, absence of competition, operational methods and concepts.

In this sense, goodwill is a dependent composite  which, unlike its independent constituent components, cannot possess a more or less permanent existence outside the context of the enterprise. Further, it differs from trade to trade as it equally dopes from enterprise to enterprise. Accordingly. the greater the value of the goodwill the greater the enterprise’s market viability. It is for the above reasons too that distinctive marks do not in themselves constitute goodwill, but merely symbolise it.

For the avoidance of doubt goodwill is therefore a tradable intellectual property asset arising from the entrepreneur’s organisational ingenuity, investment in time and money, labour and effort , thus worthy of legal protection against or forms of predatory forays. Hereunder are some common instances in which goodwill is interfered with by various species of unfair competition.

Passing off

By far the oldest, most common and importanpassing off occurs when a trader deceptively represents to the public that their  enterprise, goods or services are the same or have a same connection with those of their competitor. It entails imitation and use of distinctive mark over their own similar merchandise. The resultant effect of which is confusion as to source or origin of the products by the consumer, hence dispersion or loss of custom to the proprietor of the trademark.

Deception of enterprise or performance

This form of unfair competition occurs when a trader by false description, prevents  the public from making a clear distinction between their performance and that of competitors or the exact nature of the products.

In such  circumstances deception does not arise from confusion as envisaged under passing off, but from trying to lure customers from what appears to be a semblance of other’s  performances or nature of products

Characteristically, in virtually all circumstances involving deception of the enterprise or performance, the ultimate products on sale would be of inferior quality or altogether different  to the customer’s imagination as would have been portrayed  by the description thereof. Envisaged here are instances where a trader advertises that they sell gold rings when in fact they are selling certain wares at wholesale price whereas these are retail equivalent.

Misappropriation of advertising value

To the uninitiated, misappropriation of advertising value and passing off bear no difference. This is true to some degree, especially where there is a competitive relationship between the perpetrator and the proprietor of the distinctive work. The difference lies in the motive of use of the mark.

Whereas in the passing off form of unfair competition the offender’s motive is to deceive the consuming public as to the source or origin of the goods or the services, with misappropriation  of advertising value the perpetrator uses the reputation of another’s famous trademarks to create a reputation of their own enterprise,  goods or services without necessarily creating the impression that these are in a way the same as or connected  with those of the proprietor of the distinctive trademark.

Misappropriation  of the advertising value of distinctive trademarks occurs both in competitive and non-competitive situations . These assume two basic forms, namely unconcealed or directly with respect to competing goods  or services and concealed whether in competition or outside competition. Whatever the form, this results in dilution of the distinctive mark as commercial magnetism (advertising value) is eroded, leading to the dispersion or loss of custom. As  we stated in an earlier article dilution can either by blurring (impairment) of the distinctiveness of the mark owing to common place  use by various players and tarnishment arising from derogatory third party player uses.

 

e-mailhenripasi@gmail.com, legacyipchambers@gmail.com.

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