1. UNFAIR COMPETITION
Sanjeev Kumar Chaswal
LL.M. (IPR & ARB)
M.S. Cyber Security & Cyber law

2. • A market economy allows and encourages competition
between industrial and commercial organisations. As
competitors are out to win, they may sometimes be
tempted to use malicious means to gain an unfair
advantage such as making a direct attack against a
competitor or misleading the public to the detriment of
a competitor.
• Self-regulation, via associations of organisations, can
play an important role by setting up a code of conduct
or controlling practices, however, it often fails to be
respected by participants or followed by judicial
authorities.
• In 1900, at the Brussels Diplomatic Conference for the
Revision of the Paris Convention, Article 10 bis was
added to the Convention to try and prevent unfair
competition.

3. What is Unfair competition
• As a general rule, any act or practice carried out in the
course of industrial or commercial activities contrary
to honest practices constitutes an act of unfair
competition; the decisive criterion being “contrary to
honest practices”. In Belgium and Luxembourg honest
practices are sometimes referred to as “honest trade
practices”, in Switzerland and Spain as “the principle
of good faith” and in Italy as “professional
correctness”.
• It is not easy to find a clear-cut and worldwide
definition of what constitutes an act contrary to honest
practices. Standards of ‘honesty’ and ‘fairness’ may
differ from country to country to reflect the economic,
sociological and moral concepts of a given society

4. Behaviour classified as unfair
competition
• To prevent unfair practice certain actions are
limited by law. Article 10 bis of the Paris
Convention classifies unfair business practices
into three broad categories:
• Acts causing confusion.
• Acts that are misleading.
• Acts damaging goodwill or reputation.
• t.

5. Acts causing confusion.
• An act or practice, in the course of industrial or
commercial activities, that causes, or is likely to cause,
confusion with respect to another’s enterprise or its
activities, in particular, the products or services offered
by such an enterprise constitutes an act of unfair
competition.
• Even the likelihood of confusion having a detrimental
effect comparable to actual confusion constitutes an
act of unfair competition and this widely enlarges the
scope of protection. For instance, a trademark, whether
registered or not, or a product’s appearance may lead
to confusion. Appearance of a product includes
packaging, shape or other non-functional
characteristic features of the products.

6. Acts that are misleading
• A misleading act can create a false impression of a
competitor’s product or services leading to the
consumer, acting on false information, suffering
financial damage.
• Misleading acts can take the form of a statement giving
incorrect indications or allegations about an enterprise
or its products or services.
• For example, misleading statements concerning the
manufacturing process of a product may relate to a
product’s safety and create a false impression.

7. Acts damaging goodwill or reputation
• Reducing the distinctive character, appearance, value or
the reputation attached to a product could damage
another’s goodwill or reputation. For instance, any act
that dilutes the effect of a trademark is considered
unfair as it could destroy the originality and distinctive
character of a trademark.
• Other acts that could be classified as causing unfair
competition include discrediting another’s enterprise or
its activities, industrial or commercial espionage, and
acting unfairly with respect to confidential information
such as breach of contract or breach of confidence.

8. Protection against unfair competition
• Protection against unfair competition is an ever-evolving
notion that has to adapt to the evolution of trade, and the
development of new principles and obligations for
participants in the business market. Originally designed to
protect the ‘honest businessman’, the scope of protection
against unfair competition has now been enlarged to
include protection of the customer. Nowadays laws
against unfair competition aim to ensure fair competition
in the interests of all concerned.
• Under the Paris Convention, Member States are obliged to
provide protection against unfair competition. This
obligation is reinforced by Article 2 of the Trade-Related
Trade-
Aspects of Intellectual Property Rights (TRIPS) that
obliges members of the WTO to comply with the Paris
Convention.
Convention.

9. What is Unfair Competition Law
• Two potential meanings of the term „competition law“
competition law
• Set of provisions ensuring that competition continues to
exist in anti-trust law
• Rules of fair practice in an existing market - unfair
competition law. Both areas are generally distinct.
• What is acts of competition:
• The 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.

10. 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

11. The Unfair competition and IP legal
framework
• 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.

12. The Unfair competition and IP legal
framework
Geographical indications
• Trade secret protection
IP UC • Unregistered TMs
• Misappropriation of
reputation
• Product imitation

13. The international legal framework
• Article 10bis Paris Convention:
10bis 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.

14. The international legal framework
• Provisions on unfair competition in the TRIPS
agreement?
• No consensus on the question of a general tort of unfair
competition.
• (Art. 22) Protection of geographical indications.
• (Art. 39) undisclosed information,
• borderline areas between intellectual property and unfair
competition

15. 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

16. The international 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

17. U.K. Law
• Some history on UK Law: Law:
• 1888 - 90:
• Mogul Steamship v. McGregor and related decisions –
rejection of general tort of unfair competition.
• Early 19th century: origins of passing off action
• 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

18. The Legislation
• There is no statute in the UK relating to unfair competition
as such. There is, however, protection for a trader whose
competitor seeks to mislead customers as to whose goods
the customer is buying. In the UK, this concept is called
"passing off", and in the context of trade marks, the law and
principles of Equity have evolved over time by (primarily)
the High Court of England & Wales (although the Scottish
and Northern Ireland Courts, follow to a large degree, the
approach of the English Court. They are not, it should be
noted, precisely the same, and do constitute a different
jurisdiction). In essence, therefore, the law is "judge made"
and hence why it is referred to as "the common law tort of
passing off”.

19. U.K. 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
• 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

20. U.K. 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)

21. U.K. 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.

22. U.K. Law
• Torts protecting competitors against acts of
„unfair competition“.
• passing off.
• injurious falsehood:
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.

23. • Example discussed in this course: U.K.
• • 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.

24. UNFAIR COMPETITION LAWS IN US
• In 2008, the total cost of tort liability in the United States
was more than $255 billion, which is equivalent to an $838
yearly tort tax on every American or $3,340 for a family of
four. Another study puts the cost at $9,827 for a family of
four if all the indirect costs are included.
• Since 1990, commercial torts against business have
increased more than personal torts against individuals, and
Small Business bears a disproportionate amount of liability
costs. It is the small business — perhaps a family-run
business or a tech startup or a local business employing a
handful of people — that bears the biggest burden.
• A single tort suit can cripple a small business, especially a
self-insured business. It is no wonder that more than three-
quarters of small business owners say they are concerned
about the threat of unfair lawsuits

25. • Increasingly, the plaintiffs in tort suits against small
business are other businesses (often, big businesses)
making tort claims to recover economic, business
damages. These business-versus-business tort claims are
often called economic or business torts and are
increasingly based on state law, not federal law.
• Typically, these business lawsuits are intentional
torts because the defendant intentionally caused some
harm to the plaintiff. These cases do not necessarily
involve injury directly committed against a person or
property, but rather involve losses related to intangible
business assets, including economic interests, business
relationships, and assets of good will and business
reputation. Business torts include an ever lengthening list
of civil wrongs, such as:

26. • Civil Conspiracy-Copyright infringement.
• Fraud and fraud in the inducement-Injurious falsehood
• Interference with contract- Interference with
prospective economic advantage
• Misappropriation of trade secrets-Negligence and
negligent misrepresentation
• Product disparagement- Slander and slander of title
• Trade libel or disparagement- Trademark infringement
• Trade name infringement-Unfair competition and
trade practices

27. Federal Unfair Competition Law
Under LANHAM Act.
• The trademark infringement and trademark dilution, which
are two areas of the law falling within the broader scope of
unfair competition law.
• The false designations of origin and false descriptions as
covered by Section 43(a) of the Lanham Act.
• While the Lanham Act, in general, focuses primarily on
obtaining, maintaining, and enforcing trademark and
service mark rights, Section 43(a) has frequently been
referred to as a federal unfair competition provision.
• The section 43(a) available to challenge certain unfair
competition practices under this portion of the Lanham Act

28. • Section 43(a), in part, states
• "Any person who, on or in connection with any goods or
services, or any container for goods, uses in commerce any
word, term, name, symbol, or device, or any combination
thereof, or any false designation of origin, false or misleading
description of fact, or false or misleading representation of fact,
which:
• (A) is likely to cause confusion, or to cause mistake, or to
deceive as to the affiliation, connection, or association of such
person with another person, or as to the origin, sponsorship, or
approval of his or her goods, services, or commercial activities
by another person, or
• (B) in commercial advertising or promotion, misrepresents the
nature, characteristics, qualities or geographic origin of his or
her or another person's goods, services or commercial
activities, shall be liable in a civil action by any person who
believes that he or she is or is likely to be damaged by such
act."

29. Examples under Lanham Act
• Paragraph A, the conduct must be likely to cause
confusion or mistake or deceive regarding affiliation with
another person or origin, sponsorship, or approval of the
goods, services, or commercial activities by another
person. For example, conduct must give the impression
that there was such an affiliation or that the origin,
sponsorship, or approval emanated from another person
when, in fact, it did not.
• Paragraph B focuses specifically on commercial advertising
or promotion and has two prohibitions. The nature,
characteristics, qualities, or geographic origin of goods,
services, or commercial activities cannot be
misrepresented. Such misrepresentations also cannot be
made with respect to another's goods, services, or
commercial activities

30. • A further area of protection under Section 43(a) involves
the trade dress of a product. For example, the unique
shape of the Coca-Cola bottle is readily recognizable by a
high percentage of people as identifying the Coca-Cola
product. The trade dress, in order to be protectable under
Section 43(a), must either be inherently distinctive or have
acquired secondary meaning through usage.
• It is not necessary to have a trademark registration in
order to enforce rights under Section 43(a). One must,
however, have "standing to sue" in order to seek relief
under the law. Among the factors considered in evaluating
this issue are the nature of the conduct alleged to be in
violation of Section 43(a), the manner in which the person
seeking relief has been or is likely to be damaged by such
conduct, and whether the damage is of the type sought to
be protected by the act

31. OTHER UNFAIR
COMPETITION LAWS IN US
AN OVERVIEW
• Business Torts - Commercial Disparagement
• Since 1990, commercial torts against business have
increased more than personal torts against individuals,
and small business bears a disproportionate amount of
• liability costs. It is the small business — perhaps a
family-run business, a tech startup, or a local business
employing a handful of people — that bears the biggest
• burden.

32. Federal Trade Commission Act - Unfair or
Deceptive Acts or Practices
• The Federal Trade Commission ("FTC ") is an
independent agency established by Congress in
1914 to enforce the Federal Trade Commission
Act ("FTC Act").
• (1)Section 5 of the FTC Act prohibits "unfair
methods of competition," and was amended in
1938 also to prohibit "unfair or deceptive acts or
practices.“
• (2) TheCommission enforces a variety of other
antitrust and consumer protection laws as well.

33. Federal Trade Commission - Bureau of
Competition
• The Federal Trade Commission's Bureau of Competition
champions the rights of American consumers by promoting
and protecting free and vigorous competition. The
• Bureau: reviews mergers and acquisitions, and challenges
those that would likely lead to higher prices, fewer choices,
or less innovation; seeks out and challenges
anticompetitive conduct in the marketplace, including
monopolization and agreements between competitors;
promotes competition in industries where consumer impact
is high, such as health care, real estate, oil & gas,
technology, and consumer goods; * provides information,
and holds conferences and workshops, for consumers,
businesses, and policy makers on competition issues and
market analysis

34. Federal Trade C ommission's
Investigative and Law Enforcement
Authority
• The Commission's specific investigative powers are defined
in Sections 6, 9, and 20 of the FTC Act, 15 U.S.C . Sec’s.
46, 49, and 57b-1, which authorize investigations and
various forms of compulsory process. In addition,
• the premerger notification provisions in Section 7A of the
Clayton Act, 15 U.S.C . Sec. 18a, prohibit consummation of
covered acquisitions until the requested information is
provided, thus effectively enabling the Commission to obtain
information regarding such acquisitions.

35. Unfair Competition - FTC Act -
Sherman Act - Clayton Act
• Federal antitrust laws apply to virtually all
industries and to every level of business,
including manufacturing, transportation,
distribution, and marketing. They prohibit a
variety of practices that restrain trade, such as
price-fixing conspiracies, corporate mergers
likely to reduce the competitive vigor of particular
markets, and predatory acts designed to achieve
or maintain monopoly power.
•

36. Federal Trade Commission ("FTC“)
• The Federal Trade Commission ("FTC") is an independent
agency established by Congress in 1914 to enforce the
Federal Trade Commission Act ("FTC Act").
• The Section 5 of the FTC Act prohibits "unfair methods of
competition," and was amended in 1938 also to prohibit
"unfair or deceptive acts or practices.”
• The Commission enforces a variety of other antitrust and
consumer protection laws as well. The FTC Act provides a
comprehensive framework for carrying out the
Commission's law enforcement initiatives.
• Under Section 5, the Commission has determined that a
representation, omission, or practice is deceptive if:
• (1) it is likely to mislead consumers acting reasonably
under the circumstances; and
• (2) it is material, that is, likely to affect consumers' conduct
or decisions with respect to the product at issue.

37. • In executing its antitrust law enforcement responsibilities, the
Commission relies upon both Section 5 of the FTC Act -- which
prohibits unfair methods of competition -- and a number of other
antitrust statutes
• As a general proposition, practices that constitute unfair
methods of competition include at least practices that violate
the Sherman Act and the Clayton Act.
• Thus, for example, although the Commission cannot directly
enforce the Sherman Act, it can prohibit -- as unfair methods of
competition -- practices that (1) violate Section 1 of the
Sherman Act because they constitute a "contract, combination .
• . . , or conspiracy, in restraint of trade or commerce;" or (2)
violate Section 2 of the Sherman Act because they constitute
monopolization of, an attempt to monopolize, or a conspiracy to
monopolize a particular market.

38. Sherman Act
• 15 U.S.C. § 1. Trusts, etc., in restraint of trade illegal;
etc. illegal;
penalty.
penalty.
• Every contract, combination in the form of trust or otherwise,
or conspiracy, in restraint of trade or commerce among the
several States, or with foreign nations, is declared to be
illegal.
• Every person who shall make any contract or engage in any
combination or conspiracy hereby declared to be illegal shall
be deemed guilty of a felony, and, on conviction thereof,
shall be punished by fine not exceeding $10,000,000 if a
corporation, or, if any other person, $350,000, or by
imprisonment not exceeding three years, or by both said
punishments, in the discretion of the court.

39. 15 U.S.C. § 2. Monopolization; penalty
• Every person who shall monopolize, or attempt to
monopolize, or combine or conspire with any other
person or persons, to monopolize any part of the trade or
commerce among the several States, or with foreign
nations, shall be deemed guilty of a felony, and, on
conviction thereof, shall be punished by fine not
exceeding $10,000,000.
• if a corporation, or, if any other person, $350,000, or by
imprisonment not exceeding three years, or by both said
punishments, in the discretion of the court.

40. Clayton Act
• 15 U.S.C. § 18. Acquisition by one corporation of stock
of another
• No person engaged in commerce or in any activity affecting
commerce shall acquire, directly or indirectly, the whole or
any part of the stock or other share capital and no person
subject to the jurisdiction of the Federal Trade Commission
shall acquire the whole or any part of the assets of another
person engaged also in commerce or in any activity
affecting commerce,
• where in any line of commerce or in any activity affecting
commerce in any section of the country, the effect of such
acquisition may be substantially to lessen competition, or to
tend to create a monopoly.
•

41. NEW UNFAIR COMPETITION LAWS IN US
• The States of Washington & Louisiana already have
full‐fledged Unfair Competition Laws and on 4th November
2011, 36 States & 3 U.S. Territories came together to write
a strong memorandum to the Federal Trade Commission
(FTC) and Bureau of Competition, seeking a federal law on
federal Unfair Competition law.
• Further, 24th January 2012, U.S. President, Mr. Barack
Obama, in his State of the Union Address, announced the
creation of the Trade Enforcement unit which would
investigate cases of unfair competition in manufacturing by
way of IP infringement

42. • One of the first states to introduce such specific legislation
was the state of Louisiana in 2010. 0ther states have
followed closely behind and introduced their own measures
that take aim at IT and fair competition.
• That Washington is one of the more trade-dependent states
in the United States and its volume of manufactured imports
in 2011 was more than 30% higher than that of other states
• The State of Washington’s Unfair Competition Act, a similar
piece of legislation that took effect in July 2011.
• The laws’ requirements are very clear and simple. They
obligate and mandate the manufacturers, who export to
U.S., to show by way of poof of licenses or necessary
certifications provided by the software publishers or
industry, that they are only using genuine and licensed
software for their entire business operations.

43. • The laws also provide for injunction against sales,
seizure of products and monetary damages, if a
manufacturer does not follow the law and remains
non‐compliant.
• The exporter doing exports its products to U.S., directly
or indirectly, then it must ensure that their usages of IT
(software products) in their business operations are
genuine, legal and licensed. They should preferably get
a compliance certificate from the software publishers by
undertaking a Software Asset Management (SAM)
Review led by a third party consultant or obtain an
Industry level ISO aligned SAM certification such as
provided by BSA | The Software Alliance (BSA)

44. THANKS