Competition between commercial and industrial organizations is permitted and encouraged in a market economy. Since rivals want to succeed, they occasionally could feel pressured to employ dishonest tactics to obtain an unfair edge, including attacking a rival directly or deceiving the public to harm a rival.
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Although self-regulation through associations of organizations might be beneficial in establishing a code of conduct or managing activities, it is frequently disregarded by members and not upheld by the courts.
In an effort to combat unfair competition, Article 10 bis was added to the Paris Convention in 1900 during the Brussels Diplomatic Conference for the Revision of the Paris Convention.
Unfair competition: What is it?
Generally speaking, any action taken in the course of business or industrial operations that isn’t in line with ethical standards is considered unfair competition; the key phrase here is “contrary to honest practices.” Honest trade methods are frequently referred to as “professional correctness” in Italy, “the principle of good faith” in Switzerland and Spain, and “honest trade practices” in Belgium and Luxembourg.
It is difficult to come up with a universally accepted description of what behavior is against moral principles. Standards of “honesty” and “fairness” might vary from nation to nation in order to represent the moral, social, and economic ideals of a particular community. Therefore, the legal authorities of the relevant nation must interpret the concept of “honesty.” Concepts of ethical behavior developed via international trade should also be taken into account, particularly when competing organizations are located in different nations.
“An act or practice contrary to honest practices” might be interpreted broadly. For instance, failing to take action may potentially be regarded as unfair competition. “Failure to correct or supplement information concerning a product test published in a consumer magazine, thereby giving a wrong impression of the quality of the product offered on the market, or failure to give sufficient information concerning the correct operation of a product or concerning possible side-effects of a product” are examples of unfair competition, according to the WIPO Model Provisions on Protection Against Unfair Competition.
Additionally, according to WIPO, dishonest behavior must occur “in the course of industrial or commercial activities.” This can be widely interpreted as include the operations of businesses that offer goods or services, especially the purchasing or selling of such commodities or services, as well as the operations of specialists in certain fields, like law or medicine.
The idea of protection against unfair competition is a dynamic one that must change to reflect changes in trade as well as the creation of new guidelines and responsibilities for players in the business market. The safeguard against unfair competition that was first intended to shield “honest businessmen” has now expanded to encompass consumer protection. These days, the goal of legislation against unfair competition is to guarantee fair competition in the best interests of all parties.
Actions deemed to be unfair competition
Certain activities are legally restricted in order to stop unfair practices. Unfair business practices are categorized into three main groups under Article 10 bis of the Paris Convention:
actions that are confusing
Unfair competition is defined as any act or practice carried out in the course of industrial or commercial activities that confuses or is likely to confuse consumers about the business or operations of another party, particularly the goods or services that business provides.
The extent of protection is further expanded by the fact that even the possibility of confusion having a negative impact equivalent to actual confusion is considered an act of unfair competition. For example, misunderstanding may result from a trademark, whether registered or not, or from the way a thing looks. A product’s appearance include its form, packaging, and other non-functional characteristics.
Behavior that is deceptive
A deceptive behavior may give the wrong impression of a rival’s goods or services, causing the customer to act on incorrect information and incur losses. A statement making false claims or hints about a company, its goods, or services can be considered misleading behavior. For instance, making inaccurate claims about a product’s production process may have an impact on its safety and convey an incorrect image.
actions that harm reputation or goodwill
A person’s goodwill or reputation may suffer if a product loses its unique character, look, value, or reputation. Any action that lessens the impact of a trademark, for example, is deemed unfair as it may impair the uniqueness and distinctiveness of the brand.
Discrediting another party’s business or its operations, industrial or commercial espionage, and improperly employing proprietary information—such as through violation of contract or breach of confidence—are further actions that may be considered unfair competition.
