Protected unfair trade practices

IN this 53rd instalment we wind up on the most common species of unfair competition.

 By Richard Pasipanodya

Recapping
In the previous two instalments we presented synoptic treatments of the of the most prominent elements of unfair competition with respect to acts that; cause confusion as to source of goods or services; mislead or deceive the consuming public as to the nature or quality of a competitor’s products; discredit or disparage the competitor’s repute and goodwill either as regards his personality, products, employees or pricing, and those that violate the trade secrets of others. We hereunder wind-up the remainder.

 
Free-riding acts
Free-riding on another’s market achievement basically entails the imitation and exploitation of a competitor’s indications, commercial success of the product or technical achievements for the offender’s own business success. Such imitation is undertaken without substantially departing from the essential technical features of that particular achievement to the detriment of the proprietor thereof.
In this sense it is imitation motivated by greed to take undue advantage of another’s achievements as recognised by the consuming public and other competitors alike.
This type of unfair competition therefore goes beyond mere confusing similarity and is more than misleading. It targets notoriously distinctive achievements on the marketplace. It is the broadest form of competition by imitation insofar as it takes the creative ingenuity of another lock, stock and barrel. Hence the term free-riding on the coattails of others or reaping where one has not sown. This is mostly rife with well-known marks.
As a direct consequence thereof, the distinctiveness or advertising value of the owner’s mark is diluted through this misappropriation or slavish imitation which is totally parasitic in nature and scope.
Briefly, therefore, this type of unfair competition waters down or whittles away the uniqueness, hence advertising value potency and prowess of the competitor’s mark. It gradually lessens the ability of the mark to be uniquely associated with its consumers as signifying a particular source of goods or services — so-called dilution by blurring. In this context its association with particular products wanes.
Comparative advertising
Comparative advertising is by and large the communication of somewhat true assertions but nevertheless bearing undertones of disparagement. It assumes two forms, namely:
(i) a positive reference of one’s own products as being at par with those of their competitors, and
(ii) a negative reference as in claiming that one’s products are of a far better quality than those of the competitors.
The positive reference clearly has connotations and implications of misappropriating the repute or goodwill of the competitor.
Meanwhile, the negative reference is essentially disparagement as it criticises or tarnishes the repute or goodwill of the competitor.
In either case, whether the reference was explicitly or implicitly expressed, the key is that comparative advertising must, like all forms of advertisement, adhere to norms and ethics of advertising. That having been said and done however, the notions of what disparaging or misappropriating is differs from jurisdiction to jurisdiction.
Comparative advertisement is generally tolerated in jurisdictions with a permissive or liberal attitude on the principle of freedom of expression.
On the other hand, in jurisdictions where honest business ethics are strictly upheld, both versions of comparative advertising are either forbidden or severely restricted as impinging on another’s freedoms and repute.
However, it cannot be substantially denied though that comparative advertisement is prone to inflict irreparable damage to the reputation and goodwill of the targeted competitor than any other form of the misleading or disparaging advertisement. For that reason it is emphatically stressed here that there should be effective and adequate safeguards against abuse of such trade practices.
Harassment and undue influence
Under this heading are covered various species and aspects of unfair trade practices whose commission is not so rampantly common and occurrence not so prevalent. The practices are also viewed variedly from jurisdiction to jurisdiction.
In a nutshell they are borderline cases wherein an entity exerts psychological pressure on existing and prospective clients with the ill intention of discouraging them from maintaining and establishing trade relations with their rival — that is mental and emotional hijack.
Though in our modern day society these instances are rare, we have in this category acts of picketing, whether verbally or through written media such as placards.
Acts of imposing undue psychological pressure may be in the form of nuisance advertising in a bid to exploit fear of the unknown aroused in the targeted audience. This may take the form of adverts directed at the elderly purporting that should these senior citizens not consume certain products they may end up in a nursing home. They may also go to extremes by instilling fears of imminent death or serious health problems.
In all such cases the predatory instincts of the perpetrator target the vulnerability of the clientele to arouse fear of the unknown either to attract custom away from their rival or chase away their rival’s custom through unscrupulous and malicious methods. In all respects it is an illicit method of soliciting custom through mentally and emotionally haranguing vulnerable customers.
Trade boycott and impediment
Essentially, this is the refusal or instigation of others to refuse to engage in business relations with the perpetrator’s rival. There are two cases of boycott, namely:
(i) primary boycott which is the outright refusal by one business concern from doing business with another for whatever reason, and (ii) secondary boycott, where third parties are systematically dissuaded from doing business with a particular concern. In essence, these are aspects of unfair trade practices driven by the ill motive to impede a rival’s functional activities or business operations.
With primary boycott, however, it is difficult yet to say this is legally a wrongful act. Yes, it may be morally wrong, but no more than that since every person has the unfettered right and inalienable freedom to do business with anyone they so wish to the exclusion of others without incurring the wrath of the law.
Contrariwise, secondary boycott is an intrusion into another’s privacy. For it enables the perpetrator to make inroads and harm another’s painstakingly-created goodwill. And by so doing, unfairly benefit from custom not ascribed to their own merits. To that extent, it thus carries aspects of both free-riding and harassment, and as such it is legally wrongful conduct.
Aspects of hindering or obstruction of a rival’s functional activities include acts such as inducing a rival’s clientele, agents and personnel alike to flee through offering bribes or peddling falsehoods in order to deceive.
More often than not this is accompanied by a ruthless violation of the rival’s trade secrets. We need not state more than that this is not only a wrongful, but an uncouth way of unfair trade practices.
Enticement of custom
This species of unfair trade practices comprises a broad category of aspects of soliciting clientele or custom through enticement and luring. These are forms of marketing techniques which seek to influence the consuming public to buy products whose prices are otherwise not commensurate with their quality or not really needed, save for the bait that has been dangled such as bonuses, gifts and lottery prizes.
Under these circumstances customer choice is clearly not exercised by discretionary means, wisdom and volition, but through undue influence.

 

 

  • Pasipanodya is an IP consultant who writes in his own capacity. Feedback on: mobile +263 775053007, or e-mail: henripasi@gmail.com

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