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Unfair Competition





March 3, 1998

Sponsoring Committee: Unfair Competition and Look-Alikes Subcommittees of the Issues and Policy Committee


Resolution

WHEREAS, countries which are parties to the Paris Convention and the WTO TRIPS Agreement have obligated themselves to prohibit unfair competition pursuant to Article 10 bis of the Paris Convention and Article 2 of the WTO TRIPS Agreement;

WHEREAS, many countries which are parties to the Paris Convention and the WTO TRIPS Agreement have no unfair competition law, or provide inadequate protection only under other laws;

BE IT RESOLVED, that it is the position of the International Trademark Association that all countries, and particularly those which are parties to the Paris Convention and WTO TRIPS Agreement, which currently have no unfair competition law or have inadequate protection under other laws, adopt specific legislation implementing Article 10 bis of the Paris Convention, or equivalent legislation


Background

Although there is growing global concern about acts of unfair competition, many countries have no general protection against such acts, or have inadequate protection in the form of, for example, the common law action for “passing off”. This deficiency should be remedied. INTA, which has previously supported protection against unfair competition in the United States by its position on Section 43(a) of the Lanham Act, needs to expand its position globally.

The proposed resolution is timely since various governments are now considering expanding protection against unfair competition, or in several cases, enacting an unfair competition law where none has previously existed, due to TRIPS implementation mandates.

The heart of international protection against unfair competition is found in Article 10 bis of the Paris Convention, which is now mandated in all WTO countries under Article 2 of the WTO TRIPS Agreement. Paris Convention, Article 10bis states:

(1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition.

(2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition.

(3) The following in particular should be prohibited

  1. all acts of such a nature as to create confusion by any means whatever 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.
Accordingly, it is clear that the enumerated acts as well as other acts not listed but found in local legislation (e.g., in Germany) are prohibited. However, since implementing legislation has not been enacted in various countries, such protection is in fact not globally available to trademark owners.

Apart from countries which do not have unfair competition laws as such, other countries, such as the United Kingdom and some other so-called “common law” countries, claim compliance with Article 10 bis by pointing in particular to the existence of the “passing off” action and certain consumer protection laws. Others, such as Australia and New Zealand, do have broader unfair competition provisions in their statutes. It is clear that a passing off action provides protection against just one form of unfair competition and should not be thought of as equivalent to a general protection against acts of unfair competition. To highlight this problem, the laws of the United Kingdom and Germany should be reviewed as examples of two different approaches.

Under the English common law (which for practical purposes is the same in other parts of the United Kingdom), the action for passing off has been developed by the courts for the protection of the goodwill in a business. Such protection is available, in particular, for goodwill generated by the use in the business of a trade mark or the trade dress of a product. Successive decisions have identified, as basic requirements of the law of passing off, a misrepresentation made by a trader to protective customers of his, or ultimate consumers of his goods or services, which is likely to injure the business or goodwill of another trader. It has been emphasized recently that the essence of passing off is deception or likelihood of deception. The mere existence, or likelihood, of confusion is not enough.

In Germany, what would be passing off in the United Kingdom is treated as just one aspect of unfair competition. For many years the German case law, applying Article 1 of the Act of Unfair Competition, has provided protection for trademarks and product configurations or packaging which enjoy a reputation, against exploitation of reputation and dilution, even irrespective of danger of confusion as to origin. Such protection is given irrespective of any protection by an industrial property right. In a decision in 1985, in the case of “DIMPLE” (GRUR 1985, 550), the Federal Supreme Court granted protection for this whiskey mark, which enjoyed a reputation among German consumers of about 35%, against use for cosmetics, on the ground of exploitation of reputation without any danger of confusion. Similarly, where the goods are of the same kind, in the leading case of “Tchibo/Rolex” (GRUR 1985, 876), the Federal Supreme Court granted protection against the look-alike product, even though there was no danger of confusion because the counterfeit product was too inexpensive to be thought to be an original. The new German Trademark Act now incorporates a comprehensive approach to both trademark infringement as well as unfair competition

This disparity is of particular concern when trade dress (getup) is involved in a dispute. In the United Kingdom, for example, even if clear unfair competition violations such as free-riding or misappropriation are inherent in the creation of so-called “look-alike” product packaging, no action can be taken if the conflict does not fall within the rather specifically defined passing off criteria. The overall effect is to deny brand owners their “day in court” where the relative merits of the dispute could be decided.

To resolve this problem, the Unfair Competition and Look-Alikes Subcommittees of the Issues and Policy Committee propose adoption of specific national implementing legislation against unfair competition. Mere acknowledgments of Paris Convention or TRIPS compliance by national governments are not sufficient. Accordingly, INTA should go on record as a vocal supporter of unfair competition legislation worldwide. The Unfair Competition and Look-Alikes Subcommittees of the Issues and Policy Committee request that the Board of Directors adopt this resolution to exemplify this support and allow INTA representatives to authoritatively advocate this position.