The need for protection

Introduction

This module is concerned with the concept of unfair competition. The module will explain what sorts of acts could be considered as unfair competition and explain the remedies that can be used, together with the obligations

countries must fulfill, to ensure fairness in competition. The idea of unfair competition has been around for some time and was mentioned as part of intellectual property protection as early as 1900 in the Brussels revision of the

Paris Convention.

What is Unfair Competition?

Article 10bis (2) of the Paris Convention defines an act of unfair competition as “any act of competition contrary to honest practices in industrial or commercial matters”. Article 10bis (3) continues specifying which acts, in particular, shall be prohibited:

1. “all acts of such a nature as to create confusion, by any means, with the establishment, the goods, or the industrial or commercial activities, of a competitor;

2. false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor;

3. indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods."

Later on in the module you will get some more detailed examples of the types of things that constitute unfair competition but for now try this SAQ

SAQ 1: Which of the following would you consider to be an act of unfair competition?

1. An advertisement that a competitor’s dairy Yogurt was not made with cows milk

An untrue statement that a competitor was about to become bankrupt

Choosing a logo that was just marginally different from that of a competitor

4. Stealing the secret design of a competitor’s product

5. Stealing the whole of an initial consignment of a competitor’s new product

Answer

All of the examples given in the question are dishonest but answers 1-4 are types of unfair competition and would be dealt with using any laws designed to combat unfair competition. The final example (5) is straightforward theft and could be dealt with in the normal way for such a crime.

Therefore unfair competition is at its simplest dishonest practice. Of course the concept of dishonest practice is a little difficult to precisely define and has to be defined in a country’s national law. These national laws set the

commercial and legal environment, ensure fairness in competition, and, as a result, complement the protection of intellectual property rights.

The need for protection

Experience has shown that there is little hope of fairness in competition being achieved solely by the free play of market forces. In theory, consumers, in their role as referees of economic play could deter dishonest entrepreneurs by disregarding their goods or services and favoring those of honest competitors. Reality, however, is different. As an economic situation becomes more complex, consumers become less able to act as referees. Often they are not even in a position to detect by themselves acts of unfair competition, let alone react accordingly. Indeed it is the consumer who—along with the honest competitor— has to be protected against unfair competition. Fair play in the marketplace cannot be ensured only by the protection of industrial property rights. A wide range of unfair acts, such as misleading advertising and the violation of trade secrets are usually not dealt with by the specific laws on industrial property. Unfair competition law is therefore necessary either to supplement the laws on industrial property or to grant a type of protection that no such law can provide.

Audio segment 1: How do the laws of unfair competition relate to those designed to combat the abuse of a dominant market position?

The rules on the prevention of unfair competition and those on the prevention of restrictive business practices (anti-trust law) are interrelated: both aim at ensuring the efficient operation of a market economy. They do so, however, in different ways. Anti-trust law is concerned with the preservation of the freedom of competition by combating restraints on trade and abuses of economic power. Unfair competition law, on the other hand, is concerned with ensuring fairness in competition by forcing all participants to play according to the same rules. Yet both laws are equally important, although in different respects, and supplement each other.

SAQ 2: Which of the following are valid reasons for the need for laws concerning unfair competition?

1. To provide a “level playing field” for all existing and potential competitors.

Date: 2015-12-17; view: 881