IN this 51st instalment, we explore the various species and aspects of unfair competition in the context of intellectual property (IP) matters.
Report by Richard Pasipanodya
Since the initial attempts at international harmonisation of intellectual property rights (IPRs) protection, it was recognised as highly imperative that protection mechanisms against various species and aspects of unfair competition must supplement the inherent inadequacies in existing IPRs protection mechanisms.
Article 10bis of the revised Paris Convention for the Protection of Industrial Property (Paris Convention) (1967), which states in part that unfair competition is “any act of competition contrary to honest practices in industrial or commercial matters”, identified three categories of unfair competition as those acts that; cause confusion, are false about an enterprise, or misleading in nature. Noteworthy, however, is that this categorisation was not in any way meant to be exhaustive as what constitutes dishonest trade practices was as varied and fluid as per given national or sectoral ethical standards. This is why the provision deliberately leaves the determination of “commercial dishonesty” to national courts and administrative authorities.
Rationale basis of protection
The rationale basis of protection is rooted in the need to create a sanitised trade environment through which competition would best meet and satisfy human needs and wants. Meanwhile, the ideal situation of free play of market forces would not be met by leaving this to market players as there would always be unscrupulous entrepreneurs who would disregard same. As such, self-regulation of rules was considered to be insufficient without statutory mechanisms in place to be observed and enforced with full force and effect by all parties.
Legal basis for protection
There is a three-tier basis for the legal protection of unfair competition and these are: The need to protect competitors themselves from undeserved attacks; the need to protect consumers from being short-changed; and protection of public interest at large. In practice, therefore, the concept of unfair competition is underpinned by the desire to balance the conflicting, yet equally important interests of these three categories of stakeholders. However, the efficacy or otherwise of the legislative mechanisms are wholly dependent on individual national laws.
Acts of unfair competition
In view of the fact that there are no universally accepted standard trade practices, it follows that the term “honest trade practices” as postulated in Article 10bis is neither conclusive nor exclusive as to what constitutes unfair competition according to country to country experiences. Inasmuch, the standards constantly evolve with time, such that there are always emergent species of unfair competition phenomena at each given epoch. As such, the acts of unfair competition have no prescribed limits in their inventiveness.
However, the most prevalent species of dishonest trade practices or concepts of unfair competition broadly include, among others; causing confusion, misleading, discrediting or disparaging competitors, misappropriation or violation of others’ trade secrets; taking undue advantage and prejudicing other competitors’ achievements (free riding), comparative advertising, harassment or picketing such as instilling fear and psychological pressure, touting such as offering bonuses, gifts and lotteries in sales promotion.
The acts of unfair competition as extrapolated from Article 10bis are in three forms. These comprise acts likely to cause confusion as to the identity, products and operational activities of the competitor; acts likely to discredit the personality and integrity of the competitor and those acts that are likely to mislead the consuming public about the source and quality of the products on the market. Hereunder and in subsequent instalments, we present a synoptic treatment of these.
The concept of likelihood to cause confusion is very broad as to encompass any trade malpractice. This is typically so with trademarks, which by virtue of their definition are open-ended to embrace any type of sign with the capacity to distinguish and capable of graphical representation such as names, logos, labels, slogans, colour, smell, sounds and three-dimensional marks or any combination thereof. In which case not only are signs used to distinguish goods, services or enterprises but also to clothe these with a particular distinctive appearance on the basis of which they lure custom and patronage, hence create goodwill.
In the aftermath, the two main areas in which likelihood of confusion frequently occurs are with regards to origin or source of the goods or services, and the appearance portrayed of the goods. Whatever the nature of the confusion, however, it is immaterial whether the imitator was motivated by bad faith. Thus “intent” on the part of the imitator is not as relevant a fact in the determination of the ensuing confusion. Neither is it necessary for the confusion to have actually occurred. Suffice it that there exists a likelihood thereof.
This type of protection against unfair competition is based on the common law principle of passing off, so called the “principle of speciality” in the sense that it is related to the traditional primary function of distinguishing goods and services of different entities. The test is on whether the offending mark so resembles the protected mark as to confuse a substantial number of potential customers of the class of the goods or services as to the source of goods or services.
In this determination the factors frequently considered as relevant include: The degree of the distinctiveness of the mark, the size and reputation of the proprietary entrepreneur, sophistication of the class of consumers, the similarity of the mark, the goods or the services. In which pursuit the criteria to so determine entail considering elements of pronunciation or verbal translation of the mark and more importantly, the impression that the relevant consumer would have planted in their mind therefrom.
There can also be likelihood of confusion with respect to non-competing goods or services – so called confusion by affiliation. This occurs where the mark as used gives the impression that there is a strong business connection between the products of the imitator and those of the proprietary owner of the mark.
The manner in which the offending mark is used can lead to a third species of confusion – so called confusion by sponsorship — within the American jurisprudence. This occurs where the appearance of the mark, the types of goods or services over which the mark is used and the manner in which they are used influences the consuming public to deduct that such use by the offender is authorised or sanctioned by the proprietary owner of the mark.
- The more distinctive the mark the more prone it is to imitation, hence detrimental to the consuming public who would be shortchanged through counterfeit products. For, it is the goodwill that resides in the mark as created by the proprietor in the investment in time, money, labour and creative effort that no doubt the predatory imitator would always seek to misappropriate.
It is with this very motive that the World Intellectual Property Organisation (Wipo) administered Joint Recommendation Concerning Provisions on the Protection of Well-known Marks was crafted.
- Pasipanodya is an IP consultant who writes in his own capacity. Feedback on: mobile +263 775053007, or e-mail:firstname.lastname@example.org.