119
Unfair Competition I Prof. Dr. Ansgar Ohly University of Bayreuth [email protected] www.geistiges-eigentum.info
2
Part 1: General Principles
I. The
concept
of unfair competition –
an approach
3
1.1
What
is
Unfair Competition
Law?
What
is
unfair competition
law
about?
Unfair Competition
4
1.1
What
is
Unfair Competition
Law?
Two potential meanings of the term „competition law“
• Set of provisions ensuring that competition continues to exist antitrust law
• Rules of fair practice in an existing market unfair competition law
• Both areas are generally distinct but may overlap, examples: boycott, tying arrangements.
5
1.1
What
is
Unfair Competition
Law?
Acts of competition• = acts done for the purpose of selling goods
or providing services.• Unfair competition law addresses traders …
- In proceedings concerning unfair competition the defendant is generally a trader.
• It may, however, protect consumers.- Some legal systems give locus standi to consumer
organisations in unfair competition proceedings.- Other legal systems distinguish between unfair
competition law and consumer protection law.
6
1.1
What
is
Unfair Competition
Law?
The
concept
of „fairness“
(„honest practices“, „boni
mores“)
• Methodological problem of these terms: extremely general and abstract, impossible to define „general clause“
• No precisely identifiable meaning• How to apply this concept?
- Statutory list of examples- Guidelines- Balance of interests
7
1.1
What
is
Unfair Competition
Law?
Areas
of unfair competition
law• Focus: consumer protection
- Misleading advertising- Aggressive advertising = Undue influence on
consumers- Cold calling, e-mail spamming, ect. (some
jurisdictions only)• Focus: protection of trade values
- Damaging goodwill- Exploiting goodwill- Interference with contractual relations- Misappropriation of trade secrets- Product imitation?
8
1.2
The
international legal framework
The
(Continental) European perspective• “Unfair commercial practices are prohibited, if
they are likely to significantly affect the interests of competitors, consumers or other market participants.” (§ 3 (1) German Act against UC)
• “Unfair commercial practices shall be prohibited.” (Art. 5 (1) EC Unfair Commercial Practices Directive)
9
1.2
The
international legal framework
The
common
law
perspective• The rejected complaint shows just how anti-competitive
a law of unfair competition would or might be. What one man calls "unfair" another calls "fair". (…) I think there are real difficulties in formulating a clear and rational line between that which is fair and that which is not, once one goes outside the requirement of no deception. (L‘Oréal v Bellure, [2007] EWCA Civ 968 at paras 139, 140 per Jacob LJ)
• „This alleged tort really amounts to saying that there has been competition, and adding the old nusery cry: ‚It‘s unfair!‘ To that I would only cite my nanny‘s great nursery proposition: ‚The world is a very unfair place, and the sooner you get to know it, the better.‘ In my view, unfair competition is not a wrong known to the law.“ (Swedac v. Magnet & Southerns [1989] F.S.R. 243 at 249 per Harman J )
10
1.2
The
international legal framework
Article 10bis
Paris Convention(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 shall 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.
11
1.2
The
international legal framework
Examples
of unfair competition according
to WIPO Model
Provisions:• Causing confusion• Damaging another‘s goodwill or
reputation• Misleading the public• Discrediting another‘s business• Disclosing or misappropriating trade
secrets
12
1.2
The
international legal framework
Provisions
on unfair competition
in the
TRIPS agreement?
• No consensus on the question of a general tort of unfair competition.
• Protection of geographical indications (Art. 22) and undisclosed information (Art. 39) borderline areas betweenintellectual property and unfair competition
13
1.2
The
international legal framework
Unfair competition
law
and IP
IP UC
• Geographical indications
• Trade secret protection
• Unregistered TMs
• Misappropriation of reputation
• Product imitation
14
1.2
The
European legal framework
European Community
law
(overview)• No consensus on …
- what unfair competition means- level of regulation- Administrative v. private law model
• Harmonised areas- Misleading and aggressive practices- Comparative advertising- TV advertising- E-mail spamming
• Not yet harmonised- Protection of goodwill- Protection against imitation- Trade secrets- Interference with business / with contracts
15
1.2
The
international legal framework
Directive
2005/29/EC – "Unfair Commercial
Practices Directive”
→
consumer protection (B2C) against unfair commercial practices, in particular misleading and aggressive practices
Directive
2006/114/EC concerning
misleading
and comparative advertising
→
protection of traders (B2B) against misleading and unlawful comparative advertising
EC law: the
two
main
directives
16
1.3
Unfair competition
and IP
Unfair competition and intellectual property • Theory: Unfair competition law is a specific branch of
tort law. It prohibits certain acts without granting rights.
- Example: Art. 10bis of the Paris Convention aims at the prevention of prevent misleading advertising without protecting a competitor‘s or consumer‘s subjective right.
• Practice: Some areas of unfair competition law do protect rights. There is no clear dividing line between unfair competition and intellectual property law.
- Examples: protection of trade secrets, protection of goodwill against acts causing confusion
• Open (and debated) question: Should unfair competition law be allowed to fill gaps in the intellectual property system?
17
1.2
International Law
Unfair competition
law
and IP
IP UC
• Geographical indications
• Trade secret protection
• Unregistered TMs
• Misappropriation of reputation
• Product imitation
18
II.
The
Concept
of Unfair Compe- tition
in Selected
European
Jurisdictions: three
paradigms1. Germany2. France3. England
19
1. Germany
20
2.1
German Law
History of the Act against Unfair Competition (UWG)• Pre-1896: notion of „unfair competition“ rejected by the
courts• 1896: first Act Against Unfair Competition• 1909: Act against Unfair Competition acquires its
present structure, introduction of general clause• 1932 / 33: Specific legislation against discounts and
free gifts• 1965: right of action for consumer organisations• 1998 - 2001: partial liberalisation • 2004: reform of unfair competition law, revised general
clause supplemented by list of examples, further liberalisation
• 2008: implementation of Unfair Commercial Practices Directive
21
2.1
German Law
§
3: general tort of unfair competition
§ 4: examples of unfair competition
§§ 5, 5a: misleading practices / omissions
§ 6: comparative advertising
§ 7: harassing advertising
Structure of the UWG 2004/2008
22
2.1
German Law
§ 3 (1): Unfair commercial practices are prohibited, if they are likely to significantly affect the interests of competitors, consumers or other market participants.
• „general clause“: vague, highly abstract wording without a clearly definded scope
• Integral model: protection of competitors, consumers and the general public
• broad frame filled in by non-exhaustive list of examples (§ 4 )
• high relevance of case-law
23
2.1
German Law
Categories of unfair competition (§§
4 -
7)• exertion of undue influence over consumers (§ 4 No. 1)• exploitation of inexperience, distress or fear (§ 4 No. 2)• concealed advertising (§ 4 No. 3)• „intransparent“ sales promotion activities (§ 4 No. 4-6)• trade libel (§ 4 No. 7, 8)• unfair product imitation (§ 4 No. 9)• unfair interference with a competitor’s business (§ 4 No.
10)• violation of statutory provisions which are designed to
regulate market behaviour (§ 4 No. 11)• misleading practices / omissions (§§ 5 / 5a)• unfair comparative advertising (§ 6)• harrassing practices (e.g. cold calling, spamming) (§ 7)
24
2.2
German Law
Right of action
against
acts
of unfair competition
(§
8 UWG):
• individual competitors• trade organisations• consumer organisations• chamber of commerce• not: individual consumers (who may
have claims under contract or general tort law)
25
2.1
Three
Models
Model 1 • Example discussed in this course: Germany.• Other examples: Austria, Switzerland, Belgium,
Greece, Nordic countries • Specific legislation against unfair competition.• General tort of unfair competition, supplemented by
specific torts.• Ideal: Fair competition.• „Integral concept“: unfair competition protects
competitors, consumers and the general public.• Private law actions against unfair competition
- D: no administrative authority- Many other EU countries: private law control
supplemented by administrative authority
26
2. France
27
2.2
French Law
Some
history• 1791: freedom of trade guaranteed by statute• 1804: Code civil• Mid 19th century: origins of the notion of concurrence
déloyale on the basis of articles 1382, 1383 Code civil.• 1986 / 93: liberalisation of rules on comparative
advertising• 1991 / 93: ban on tobacco advertising• 1992: Code de la propriété intellectuelle• 1993: Code de la consommation• 2008: implementation of Unfair Commercial Practices
directive into Code de la consommation
28
2.2
French Law
Categories of unfair competition under article 1382, 1383 Code civil
• confusion• dénigrement / critique excessive• désorganisation interne d’une
enterprise rivale• désorganisation generale du
marché• parasitisme
29
2.2
French Law
Consumer protection: criminal and administrative law
• Example: misleading practices• Art. L-121-1 Code de la consommation:
prohibition of misleading practices (= implementation of EC directive)
• Art. L121-2: powers of administrative authorities to take action against misleading advertising
• Art. L 121-6: criminal sanctions
30
2.2
Three
Models
Model 2• Example discussed in this course: France.• Other examples: Italy, (to some extent) Netherlands.• Unfair competition law as part of general tort law.• Tort of unfair competition and specific torts as
applications of general clause of tort law.• Ideal: fair competition.• Distinction between protection of competitors (tort law)
and consumer protection (criminal and administrative law).
31
3. England
32
2.3
English Law
Some
history• Early 19th century: origins of passing off action• 1888 - 90: Mogul Steamship v. McGregor and related
decisions – rejection of general tort of unfair competition
• 1966: first Code of Advertising Practice• 1980: Erven Warnink v. Townend (Advocaat case)• 1981: Cadbury-Schweppes v. Pub Squash• 1988: Control of Misleading Advertisements
Regulations• 2008: Consumer Protection from Unfair Trading
Regulations / Business Protection from Misleading Marketing Regulations 2008
33
2.3
English Law
Three
meanings
attributed
to the term
„unfair competition“
(see
Moorgate Tobacco v. Philip Morris)• synonym of passing off• generic term for all causes of action
available against unlawful acts done by a competitor
• general tort of misappropriation of trade values
34
2.3
English Law
Arguments advanced
against
the introduction
of a general
„tort
of
unfair competition“• Difficulties in forming clear line
between fair and unfair• lack of legal certainty• judicial law-making• interference with freedom of trade
35
2.3
English Law
Three layers of protection against (what a continental lawyer would call) unfair competition:
• Tort law: specific economic torts protect traders against some types of unfair behaviour of competitors
• Consumer protection: criminal and administrative sanctions against misleading advertising
• Self-regulation: British Code of Advertising, Sales Promotion and Advertising Practice (and other codes of practice)
36
2.3
English Law
The
tort
of passing
off• protection of goodwill against
misrepresentations misleading the public as to the origin or the quality of goods or services
• „Misappropriation by misrepresentation“• Elements
- Claimant = owner of goodwill- Misrepresentation
= defendant misleads public as to
trade origin or quality …- … thereby causing damage
to claimant.
37
2.3
English Law
Torts protecting competitors against acts of „unfair competition“
• passing off• injurious falsehood: protection against
malicious false statements about a competitor• breach of confidence
(doctrinal basis
disputed): protection of confidential information against disclosure by person who is under a duty of confidence
• conspiracy• intimidation• interference with contractual relations
38
2.3
Three
Models
Model 3• Example discussed in this course: England.• Other examples: Scotland, Ireland, to some extent US• No general prohibition of unfair competition.• Ideal: free competition.• Some areas of unfair competition law covered by
specific torts (examples: passing off, injurious falsehood, intimidation, interference with contractual relations).
• Distinction between protection of competitors (tort law) and consumer protection (criminal and administrative law).
• Strong role of self-regulation.
39
2.4
Open Questions
No European consensus
on ...• what „unfair competition“ means,• how fairness in the market place
should be enforced,• whether there should be a general tort
of unfair competition,• whether the law of unfair competition
should protect (a) only competitors, (b) only consumers or (c) both at the same time.
40
3.
EU Law
III.
European Community
law1.
Overview
2. Harmonisation3. Coexistence
41
3 EU Law
Starting
point:Case study: BGH GRUR 1985, 876 –
Tchibo/Rolex I
Rolex Oyster Rolex Lookalike
42
3.
EU Law
Choice of law: Reg. 864/2007 (“Rome II”)• Art. 4 [General rule]
- (1) Unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.
• Art. 6 [Unfair competition and acts restricting free competition]
- (1) The law applicable to a non-contractual obligation arising out of an act of unfair competition shall be the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected.
- (2) Where an act of unfair competition affects exclusively the interests of a specific competitor, Article 4 shall apply.
43
3 EU Law
Lookalike = legal unless IP infringe- ment or passing off
Lookalike may constitute misappropri- ation of reputation
(§ 4 No. 9b UWG)
44
3.1
Overview
Primary and secondary legislation• Primary legislation: treaties
constituting EU, EC and EAC, particularly EC Treaty
• Secondary legislation (article 249 EC):- Regulation: directly applicable, binding in
its entirety- Directive: binding as to result, form and
method of implementation left to national authorities
45
3.1
Overview
Aim: creation
of internal
market
(Art. 2 EC)
Obstacle: different unfair competition
law systems
Strategy
2:
coexistence
of different systems, combined with
• control
of excessive regulation
under
primary
law
(Art. 28, 49 EC)
• country
of origin principle
(Broadcasting
Directive, E-Commerce Directive)
Strategy
1:
harmonisation by secondary law
• directive
imposing minimum
standard
(Misleading Advertisements Directive 1984)
• directive
imposing minimum
and maximum
standard
(Comparative Advertising Directive 1997)
• regulation
46
III.
European Community
law1. Overview2.
Harmonisation
3. Coexistence
= more details next week
47
3.2
Harmonisation
Directive on Misleading Advertising (1984 / 2006)
• Who is protected?- 1984 version: Triad of purposes: protection of
consumers, of competitors and of the general public
- 2006 version: B2B only• (fragmentary) definition of advertising and
misleading advertising (art. 2)• Member states can choose between private law
remedy and supervision by administrative authority (art. 4)
• Directive only imposes minimum standard (art. 7)• Limited harmonising effect
48
3.2
Harmonisation
Directive
on Comparative
Advertising (1997 / 2006)
• Formally amendment of 1984 Directive on Misleading Advertising
• Problem: lack of agreement about concepts of denigration and exploitation of goodwill
• Imposes both minimum and maximum standard
- Problem: How about misleading comparative advertising?
• Effect:- Liberalisation in some countries (such as
Germany)- But no increased protection in the UK
49
3.2
Harmonisation
Audiovisual Media Services Directive (1989 / 2007)• Combination of both strategies• Substantive provisions on TV advertising
(“coordinated area”), currently under revision- separation between programmes and advertising,
prohibition of concealed advertising- advertising and ordre public- advertising for tobacco, alcohol, medicinal products- advertising and children- Programme sponsoring
• Country of origin principle:- Member states are to ensure that broadcasters under
its jurisdiction comply with the law of that member state
- Member states must not restrict the freedom of transmission of programmes from other member states for reasons coordinated by the directive
50
3.2
Harmonisation
European directive on privacy and electronic communications (2002)
• Mainly concerns data protection• Article 13 prohibits certain methods of direct
marketing:- Unsolicited commercial communication by automatic
calling machines, telefax or e-mail (opt in model)- No ban on telephone advertising (cold calling) = opt out
model permitted, but not mandatory- exception: e-mail address obtained from customer in the
context of the sale of a product or a service may be used for direct marketing of its own similar products or services provided that customers clearly and distinctly are given the opportunity to object, free of charge and in an easy manner
51
3.2
Harmonisation
Unfair Commercial Practices
Directive
(2005)• Concept:
- general prohibition of unfair competition (= no restriction to specific media or particular unfair practices)
- But application limited to B2C-relations• Prohibition of unfair business practices (article 5)
- „general clause“, comparable to article 10bis Paris Convention or § 3 of the German UWG
- two criteria: (a) professional diligence, (b) impact on consumer choice
- fleshed out by provisions on misleading and aggressive practices (articles 6 – 9)
- supplemented by list of unfair practices in appendix I• We will look at articles 6 – 9 in more detail next week!
52
3.2
Harmonisation
Product-
and media-related
rules• Directive on tobacco advertising
- Initial directive (1998) declared void by ECJ- Passed in restricted form in 2003
• Directive on electronic commerce (2000)- Country of origin principle- Substanrive provisions on liability of ISPs and on
duties of information
• Many regulations on safety and labelling of medical products and foodstuffs
53
3.2
Harmonisation
No harmonisation
of unfair practices
in B2B-relations, examples:
• Trade libel• Protection of goodwill• Imitation of products and services• Interference with a competitor‘s business• Interference with contractual relations• Infringement of a statutory provision• Protection of trade secrets
54
3.2
Harmonisation
… back to our
case
studyCase study: BGH GRUR 1985, 876 –
Tchibo/Rolex
Rolex Oyster Rolex Lookalike
55
III.
European Community
law1. Overview2. Harmonisation3.
Coexistence
56
3.3
Coexistence
Control
of national unfair competition legislation
under
art. 28, 49 EC
• Idea: difference of unfair competition law systems = obstacle for free movement of goods (art. 28 EC) and services (art. 49 EC).
• However: in the absence of harmonisation national measures may be justified.
• Result: - National law (as determined by choice of law
rules) remains applicable- Control of excessive regulation by member
states under articles 28 and 49 EC
57
3.3
Coexistence
Art. 28 EC: scope• Measures having an equivalent effect to
quantitative restrictions• ECJ, Dassonville: all trading rules enacted
by member states which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade
• But restriction in Keck: Provisions on selling arrangements do not come under article 28 EC, provided they affect domestic and foreign products in the same manner
58
3.3
Coexistence
Art. 28: justification• Art. 30: IP rights• Cassis de Dijon: grounds of
justification not restricted to those set forth in article 30 EC. Justification if:
- mandatory requirement (e.g. consumer protection, protection of traders from unfair competition)
- Proportionality (= measure is (i) capable, (ii) necessary and (iii) reasonable)
59
3.3
Coexistence
The country of origin principle • Two elements:
- Each member state is to ensure that unfair competition law is respected by traders acting within their territory.
- No restriction of activities of traders acting from territory of other member state.
• Application restricted to- TV broadcasting- E-Commerce
• Has been widely criticized- “race to the bottom”- May undermine consumer protection
60
3.3
Coexistence
… back to our
case
study
againCase study: BGH GRUR 1985, 876 –
Tchibo/Rolex
Rolex Oyster Rolex Lookalike
61
Part 2: Specific
Areas1.
Misleading
and
aggressive advertising2. Comparative advertising3. Protection of goodwill4. Product imitation
62
1. Misleading
Practices
Starting points (I):• Model of rational consumer choice: Consumer makes
his / her choice on the basis of information.• Unfair competition law protects …
- the basis of rational consumer choice: truthful product information = one of the most important conditions of the functioning of a free market whereas misleading advertising distorts rational consumer choice
- the process of rational consumer choice: the consumer should make his decision free from pressure and undue influence
• Consequence: paramount importance of provisions against misleading and aggressive business practices.
63
1. Misleading
Practices
Starting points (II)• Relevance of consumer model• Former German approach
- Which percentage of consumers has been misled?- If > 10-15 %, then misleading advertising (+)- Consequence: protection of minorities and “consumer in
a hurry”• European approach
- Established in ECJ case-law, now adopted in Unfair Commercial Practices Directive, also accepted by German courts
- Average consumer who is reasonably well-informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors
64
1. Misleading
Practices
Starting points (III):• Provisions against misleading and aggressive
advertising certainly protect consumers.• Do they also protect competitors?
- French model: consumer protection mainly dealt with by criminal law, however: distinction between protection of consumers and competitors, competitor can bring action civile.
- English model: competitor has right of action only if his / her goodwill is interfered with. Criminal sanctions against misleading advertising. Great importance of self-regulation.
- German model: A trader who enhances his sales by means of misleading advertising benefits from an unfair “head-start”misleading advertising distorts “par conditio concurrentium”competitors have right of action
• Article 1 of the Directive of 1984: purpose = protection of (a) consumers, (b) rival traders, (c) the public in general.
• Article 1 of the Unfair Commercial Practices Directive = directive (only) protects consumers
65
1. Misleading
Practices
Starting points (IV): • The WIPO model provisions distinguish between
“misleading the public” and “causing confusion” – why?• No difference from consumer’s point of view.• Difference from competitors’ point of view: Confusion
as to the source of products interferes with a competitor’s goodwill whereas misleading advertising does not.
• Consequence: different remedies in some jurisdictions- Germany: consumer organisations only have right of action in
cases of misleading advertising, causing confusion only gives rise to an action for TM infringement.
- England: no general tort of misleading advertising, passing off action only lies when goodwill is damaged.
• Borderline area: geographical indications of origin.
66
1. Misleading
Practices
The Unfair Commercial Practices Directive (2005/29/EC): key features
• Only applies to B2C-relations• General prohibition of unfair commercial practices• Fleshed out by
- List of 31 case examples in annex I (“black list”)- More detailed provisions on misleading and aggressive
commercial practices• Method of enforcement (private law or administrative)
left to member states• Should have been implemented until 12 June 2007• But most states were late (F: early 2008, UK: spring
2008, D: 30 December 2008)
67
1. Misleading
Practices
Unfair commercial
practices: a „three-step-test“
68
1. Misleading
Practices
Misleading
actions
(article
6)• Commercial practice
- examples: advertising, marketing• Misleading = either false or, while not strictly false,
likely to deceive the average consumer- Consumer model: average consumer- Advertising directed at specific group (exapmle: children):
average member of that group- Examples:
– false claims – truthful or unclear claims that are likely to be misunderstood– incomplete claims that are likely to be taken to be complete– hyperbolic claims that are likely to be taken at face value– further examples in annex I
• Practice likely to cause consumer to take a transactional decision that he would not have taken.
69
1. Misleading
Practices
Misleading omissions (article 7)• How much information does a trader have to give?• Article 7 (1): omission of material information that the
average consumer needs, according to the context, to take an informed transactional decision
• Article 7 (4): in case of an “invitation to purchase”, the following information shall be regarded as material, if not already apparent from the context:
- main characteristics of product- address and identity of trader- price- arrangements for payment, delivery and performance- rights of withdrawal or cancellation (where such rights
exist)
70
1. Aggressive Practices
Aggressive practices• = practices which are likely to impair the average
consumer’s freedom of choice• and which are likely to cause him to take a
transactional decision that he would not have taken otherwise
• examples:- Threat- Coercion- Undue influence- See also the examples given in annex I
• The directive does not concern mere harassment without any impact on consumer choice (example: e- mail spamming)
71
1. Misleading
Advertising
Case study:
Heidi Klum and the fat-free fruitgum (OLG Düsseldorf, GRUR-RR 2006, 235)
72
Part 2: Specific
Areas1. Misleading advertising2.
Comparative
advertising
3. Protection of goodwill4. Product imitation
73
2. Comparative
Advertising
Relevant interests:• Advertiser:
- Effective means of showing advantages of own product
- Means of challenging leading competitors- Danger: Competitor may strike back.
• Competitor:- Critical advertising („A is better than B“) may
damage goodwill.- Claim of equivalence („A is as good as B“) may
exploit goodwill• Consumer:
- Truthful and relevant comparison may provide useful information
74
2. Comparative
Advertising
The
law
before
the
EC directive
(I):• Germany:
- Rule: comparative advertising = unfair competition, narrow exceptions
- Reason: Nobody can be a judge in his own cause, no trader needs to put up with being used as an advertising tool.
• France: - Rule: comparative advertising = unfair competition- Liberalisation as regards price comparisons in
1986- Requirements for lawful comparative advertising in
1993 Code de la consommation (model for 1997 directive)
75
2. Comparative
Advertising
The
law
before
the
EC directive
(II):• England:
- No common law protection, unless established torts apply, particularly injurious falsehood and passing off.
- Restrictions in pre-1994 trade mark law, liberalised by Trade Marks Act 1994.
- Self-regulation• EC: first draft directive tabled in 1991,
long, controversial discussions
76
2. Comparative
Advertising
Definition of comparative
advertising
(art. 2 (c))
• „any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor“
• Covers both critical claims (A is better than B) and claims of equivalence (A is as good as B).
• Is an actual comparison required? See ECJ, case C-112/99, Toshiba
• Implied identification: depends on market structure (ECJ, C-381/05, De Landtsheer)
77
3.
Comparative
advertising
Comparative
advertising? ECJ, C-381/05 – De Landtsheer v CIVC and Veuve Clicquot
78
2. Comparative
Advertising
Comparative
advertising?
79
2. Comparative
Advertising
Criteria of fairness (article 4)(a) Comparative advertising must not be misleading.
- Problem: Does the directive set a minimum or an exact standard? See C-44/01, Pippig v Hartlauer
(b) Goods or services intended for the same purpose- Test: Can the products be substituted one against the
other?- Problem: Comparison of product selections, see C-
356/04, LIDL/Colruyt(c) Objective comparison of material, relevant,
verifiable and representative features- Consequence: exclusion of image comparisons- Problem: verifiable by whom? C-356/04, LIDL/Colruyt:
consumers must be given reasonable opportunity
80
2. Comparative
Advertising
Criteria of fairness (cont’d)(d) Comparative advertising must not discredit
another competitor‘s business- Problem: every critical comparison tends to
discredit the identified competitor.- Solution: principle of proportionality
(e) For products with designation of origin, only products with the same designation must be compared.
(f) Comparative advertising must not take unfair advantage of a competitor‘s goodwill.
- Problem: Every claim of equivalence tends to take advantage of a competitor‘s reputation.
- Solution: principle of proportionality
81
2. Comparative
Advertising
Criteria
of fairness
(cont‘d)(g) Comparative advertising must not
present goods or services as product imitations
- Problem: What if the imitation itself is permitted?
(h) Comparative advertising must not create confusion.
- Problem: relationship between unfair competition law and trademark law.
82
2. Comparative
Advertising
Case
study
1: C-59/05 –
Siemens v VIPA
83
3.
Comparative
advertising
Case
study
2:
ECJ, C- 381/05 – De Landtsheer v CIVC and Veuve Clicquot
84
2. Comparative
Advertising
Relationship
to TM law• Can the use of a TM in comparative advertising
infringe the mark?• If the advertisement satisfies the criteria of
article 4 (easy case): no TM infringement- Recital (15): “Such use of another's trade mark, trade
name or other distinguishing marks does not breach this exclusive right in cases where it complies with the conditions laid down by this Directive, the intended target being solely to distinguish between them and thus to highlight differences objectively.”
• But what if the advertisement does not satisfy the criteria?
85
2. Comparative
Advertising
Why
is
this
question
relevant?• Remedies for TM infringement are more extensive EC
Enforcement Directive only applies to IP infringement• Some jurisdictions do not provide for private law
remedies against acts of unfair competition- Example: UK, implementation of Directives of 2005
and 2006 only allows administrative action and refers to self-regulation
• Question not yet decided by ECJ: - C-533/06, O 2 Holdings v Hutchison 3 G- C-487/07, L’Oréal v. Bellure, Opinion of AG Mengozzi
delivered on 10 Feb 2009
86
2.
Comparative advertising
Case study: English Court of Appeal, [2007] EWCA Civ
968, L’Oréal v. Bellure, case
pending before ECJ, case C-487/07
L’Oréal: Trésor Creation Lamis: La Valeur
87
2. Comparative
Advertising
Arguments against: • Essential function of TM = indication of
commercial origin not interfered with (Jacob LJ in O 2)
• Comparative Advertising Directive = lex specialis (Advocate General Mengozzi in O 2)
• Comparative Advertising Directive does not oblige member states to create private law remedy
88
2. Comparative
Advertising
Arguments for: • Unfair comparative advertising may interfere
with goodwill attached to TM
• TM law not only protects „guarantee of origin“ function, it also grants protection against dilution and misappropriation
• Art. 5 (1)(a) TM Dir does not explicitly require confusion might protect TMs against everyunauthorised use in commercial communication
• Art. 5 (2) TM Dir protects well-known TMs beyond confusion as to origin
89
2. Comparative
Advertising
Issue
1: trade
mark
use• Idea: TM law does not grant monopoly in word
or device, but only protects certain functions
• ECJ cases: C-206/01 – Arsenal; C-48/05 – Opel/Autec, C-17/06 – Céline
• Step 1: use for the purpose of distinguishing the goods or services in question
• Step 2: use must affect the functions of the trade mark, in particular its essential function of guaranteeing to consumers the origin of the goods or services
90
2. Comparative
Advertising
Issue
1: trade
mark
use
(cont‘d)• Which functions of a TM does the law protect?
• Art. 5 (1)(b): protection against confusion guarantee of commercial origin only affected if comparison causesconfusion (ECJ, C-533/06, O2, paras 47, 48
• Art. 5 (1)(a): broad protection of „use in commercial communication“ or specific case of confusion?
- AG Mengozzi in C-487/07 – L‘Oréal, paras 60, 61: „taking unfair advantage“ does not interfere with TM function
• Art. 5 (2): protection of goodwill as such link with well-known mark sufficient
91
2. Comparative
Advertising
Issue
2: conditions
of infringement• Use of TM in the course of trade
• Without authorisation
• For the purpose of distinguishing goods or services
• TM function affected? - Art. 5 (1) (-)- Art. 5 (2) (+)
• Art. 5 (2)- Mark must be well-known- Causing damage to or taking unfair advantage of
distinctiveness or repute- Without due cause
92
Part 2: Specific
Areas1. Misleading advertising2. Comparative advertising3.
Protection
of goodwill
4. Product imitation
93
3. Protection
of Goodwill
Introduction• Goodwill = valuable business reputation• Regularly attached to distinctive signs
- registered trade marks- unregistered trade marks- trade names- geographical indications of origin
• Protection against:- confusion / deception- dilution- denigration- exploitation
94
3. Protection
of Goodwill
European harmonisation?• Law of registered trade marks harmonised by Trade
Marks Directive, national systems supplemented by CTM regime
- Article 5 (2) allows the member states to protect well- known trade marks against the use of a similar sign for different goods if the sign takes unfair advantage of, or is detrimental to the distinctive character or the repute of the trade mark
• European register of indications of origin established under Regulation 510/2006
• No harmonisation of- law of unregistered trade marks- law of trade names- Protection of goodwill against dilution or exploitation
outside the scope of TM law
95
3. Protection
of Goodwill
German law
I• Trade marks: same statutory regime applies
to both registered and unregistered marks• Trade names:
- §§ 5, 15 Trade Marks Act of 1995 protect business designations
- §§ 17 et seq., 37 Commercial Code protect the firm
• Personality rights- § 12 Civil Code 1900: right to one‘s name- § 22 Act on Copyright in Artistic Works (1907):
right to one‘s image - general personality right
96
3. Protection
of Goodwill
German Law
II: the
role
of unfair competition
law:• Under the pre-1995 Trade Marks Act, trade marks
were only protected against the use of a similar sign which caused confusion
• On the basis of unfair competition law, the courts protected well-known marks against forms of use which did not cause confusion:
- exploitation of goodwill (example: Rolls Royce, Dimple)- damage to goodwill (example: Mars)
• Most cases are now covered by § 14 II No. 3 Trade Marks Act
• § 3 UWG may remain applicable in cases where trade mark use is absent.
97
3. Protection
of Goodwill
English Law
(overview):• Trade Marks Act 1994: protection of
registered trade marks• passing off: protection of the goodwill
attached to signs (in the widest sense), elements:
- Misrepresentation
made by one trader- affecting the goodwill
of another trader
- thereby causing damage.
• No additional protection against unfair competition (see Pub Squash)
98
3. Protection
of Goodwill
Elements of passing
off -
the
„classical trinity“: (1) Goodwill
• Goodwill = personal property consisting of the business value attached to a distinctive sign
• Goodwill must be owned by a trader = any person deriving an income from the provision of goods or services …
- Examples: artists, pop groups, celebrities, clubs… but has been held to cover professional organisations and charities
• Goodwill must exist in England. - This condition has been given up in other common
law jurisdictions such as Ireland or Australia
99
3. Protection
of Goodwill
Elements of passing
off -
the
„classical trinity“: (1) Goodwill
• Goodwill is normally attached to a distinctive sign
- According to Continental terminology, passing off could be referred to as the „law of signs“ (Wadlow, para. 8-7)
• Examples:- Registered trade marks- Unregistered trade marks- Trade names / personal names- Characteristic get-up- Descriptive terms with secondary meaning
100
3. Protection
of Goodwill
Elements of passing off -
the „classical trinity“: (2) Misrepresentation
• The essence of passing off is a false representation made by the defendant.
• Examples: - deception as to trade source of goods- sale of goods of inferior quality originating from the
claimant- pretension of licence agreement / of endorsement
• Extended form of passing off:- Protection of collective goodwill in geographical
indicaions of origin („Champagne“) or indications of quality („Advocaat“)
- A trader pretends that his goods belon to a class of goods to which they do not belong.
101
3. Protection
of Goodwill
Elements of passing
off -
the
„classical trinity“: (3) Damage
• The misrepresentation must deceive or be likely to deceive. The actual or potential deception must damage the claimant‘s goodwill.
• Heads of damage:- Loss of sales- Loss of licensing opportunity- Erosion of distinctiveness- Damage to reputation due to distribution of inferior
goods or due to injurious association with the claimant
102
3. Protection
of Goodwill
In addition to trade mark law and established torts such as passing off –
should there be additional
protection against „dilution“
or „unfair exploitation“?• English approach: In the absence of
misrepresentation there is no protection against dilution or the exploitation of goodwill (Pub Squash).
• German approach: Protection may be granted, if the verdict of „unfair competition“ can be based on additional factors such as damage to goodwill (Mars) or exploitation (Rolls Royce).
• The difference between both approaches has been diminished by Article 5 (2) or the Trade Marks Directive.
103
Part 2: Specific
Areas1. Misleading advertising2. Comparative advertising3. Protection of goodwill4.
Product
imitation
104
4. Product
Imitation
IP protection
against
product
imitation:• technical subject-matter: patents, utility
models
• artistic works: copyright
• product design: registered design right, unregistered Community design right
• risk of confusion: trademark law, particularly protection of 3D marks
105
4. Product
Imitation
The
European perspective• Harmonised IP law• Unfair Commercial Practices Directive (art. 6)
- Product marketing which creates confusion = unfair- But directive does not intend to reduce consumer
choice by prohibiting the promotion of products which look similar to other products (recital 14)
• Misleading and Comparative Advertising Dir.- Reference to original product may be comparative
adv.- Unfair if it (a) causes confusion, (b) takes unfair
advantage of reputation of TM, (c) presents goods as imitations or replicas
106
4. Product
Imitation
German law
I• Rule: freedom of imitation unless product protected
by IP rights.
• Exception (see § 4 No. 9 UWG): copying can be unfair if …
• (a) the product is of competitive individuality („wettbewerbliche Eigenart“)
• and if (b) additional factors are present, in particular:- confusion as to source- exploitation of competitor‘s goodwill- breach of confidence
107
4. Product
Imitation
German law
II• Flexible system:
- The closer the copying, the more likely it will be considered as unfair.
- The higher the level of individuality the more likely the product is to protected.
- The more potential alternatives, the more likely the product is to be protected.
- Where IP protection is available, the courts are hesitant to grant protection against copying, where no IP protection is available the courts may be ready to fill in gaps in the IP system.
108
4. Product
Imitation
German law
III: case
example: BGH GRUR 1985, 876 – Tchibo/Rolex I
Rolex Oyster Rolex Lookalike
109
4. Product
Imitation
French law• Relevant categories under art. 1382 code civil:
confusion, parasitisme• Parasitisme = misappropriation of another
trader’s labour and investments without reasonable efforts of one’s own
• Example: CA Paris, 14/6/2006, Cartier v. Raymond Weil
- Dispute between two producers of kuxury watches- Court stresses world-wide reputation of „Tank“- „By offering a slavish copy, the defendant sought
to exploit this reputation without own creativity or investment.“
110
4. Product
Imitation
English law I: statutory and common law protection of product shapes
• Unregistered design right (s. 213 et seq. Copyright, Designs and Patents Act 1988)
• Low threshold for copyright protection.• Protection of product shapes and designs by
tort of passing off if offer of product imitation amounts to misrepresentation (example: Reckitt & Colman v. Borden [1990] RPC 341 – Jif).
• No additional common law protection against „lookalikes“.
111
4. Product
Imitation
English Law II: Arguments advanced against additional protection (see Moorgate Tobacco and L’Oréal cases):
• Imitation = mainspring of economy• By protecting IP rights legislation has drawn
the line between lawful and unlawful imitation. The courts should not interfere.
• Legal certainty: line between fair and unfair is difficult to draw
• A remedy against unfair copying would serve to stifle competition.
112
4. Product
Imitation
no tort or „unfair copying“
Imitation permitted, but marketing may be unfair
Parasitic competition = unfair
113
4 Case studies
Case study 1: imitation of luxury products (BGH GRUR 2007, 795 – handbags)
Hermès: les Birkins The imitation
114
4. Product
Imitation
Case study 2: Lego cases• BGH GRUR 2005, 349 and • Supreme Court of Canada, Kirkbi AG v. Ritvik Holdings
Inc., 2005 SCC 65, 16. 3. 2005
115
4. Product
imitation
Should there be additional protection against imitation on the basis of unfair competition law?• In Europe, this question is less relevant
than it used to be:- Many cases in which German courts have
granted protection would satisfy the passing off requirements in England.
- introduction of unregistered Community design right
- protection of 3D marks under TM Directive and Regulation
116
4. Product
imitation
Should there be additional protection against imitation on the basis of unfair competition law?
• Position 1: „numerus
clausus“
(= closed number) of intellectual property rights
- “Imitation is the life blood of competition.”- IP rights are the result of a legislative balance
between protection of creative achievements and freedom of trade.
- IP system would be undermined if protection against copying was granted without the safeguards of the IP system.
- Lack of legal certainty• Favoured by English courts.
117
4. Product
imitation
Position 2: copying
is
by
itself
unfair • „Don‘t imitate, innovate!“• The closer the copy the more it tends to be
unfair. • Distinction between 1 : 1 copying and less
close imitations- Article 5 lit. c Swiss Act against Unfair
Competition: „An act of unfair competition is in particular committed by (…) c) anyone who takes the marketable results of the work of another person and exploits them by means of technical reproduction procedures without an appropriate effort of his own.
118
4. Product
Imitation
Position 3: Copying of subject-matter not protected by IP rights can be unfair if additional factors are present.
• Distinction between “if” and “how”• Copying may be in particular be unfair, if it
misleads consumers (“misrepresentation”) or if it exploits or damages another trader’s reputation (“misappropriation”)
- See § 4 No. 9 UWG (Germany).• Most jurisdictions …
- agree that copying is unfair if it causes confusion (see art. 6 (2) Unfair Business Practices Directive)
- But less agreement about misappropriation
119
4. Product
Imitation
Position 4: subsidiary nature of unfair competition protection
• Where IP rights are infringed, there is no need for an action for unfair competition.
• Where IP rights are not infringed, additional unfair competition protection must not be granted where the IP system deliberately grants a freedom
- Example 1: no uc protection of technical inventions after patent protection has elapsed.
- Example 2: no uc protection where statutory exceptions apply.• Unfair competition law can protect against imitation where
the particular conflict of interest has not (yet) been considered by IP legislation.
- Example 1: IP law does not protect consumers consumer protection against deceptive copying
- But how about intellectual creations not taken into account by IP law, example: sports broadcasting rights
- Arguably Legislation is too slow to react to all new developments.
- Evolutionary function of case-law.
