TOWARDS A EUROPEAN UNFAIR COMPETITION LAW A Clash Between Legal Families Intellectual Property Law Library R.W de Vrey, Towards a European Unfair Competition Law A Clash Between Legal Families (2006) M Ogawa, Protection of Broadcasters’ Rights (2006) Towards a European Unfair Competition Law A Clash Between Legal Families A comparative study of English, German and Dutch law in light of existing European and international legal instruments by Rogier W de Vrey MARTINUS NIJHOFF PUBLISHERS LEIDEN / BOSTON A C.I.P record for this book is available from the Library of Congress CRC prepared by: G.J Wiarda Institute (Utrecht Institute of Legal Studies), Boothstraat 6, 3512 BW Utrecht, the Netherlands This book is the published version of the PhD thesis defended on 13 December 2005 Printed on acid-free paper ISSN 1871-6725 ISBN 90-04-15040-4 © 2006 Koninklijke Brill NV, Leiden, The Netherlands Koninklijke Brill NV incorporates the imprints Brill Academic Publishers, Martinus Nijhoff Publishers and VSP http:/ /www.brill.nl All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording or otherwise, without written permission from the Publisher Authorization to photocopy items for internal or personal use is granted by Brill Academic Publishers provided that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910, Danvers MA 01923, USA Fees are subject to change Printed and bound in The Netherlands PREFACE From the moment I got in contact with the law as a student, I have been trying to find the crosslinks between the various areas of law as well as relationships between certain areas of law and matters of public policy and economics Unfair competition law, as a separate area of law, has proved to be a particularly attractive area of law in light of the above Not only is it situated on the borderline of intellectual property law, competition law and consumer protection law, but it is clearly connected to areas situated outside of the legal landscape like competition policy, state interference and ethical standards of behaviour Should we provide for unfettered competition between traders by relinquishing any call for arranging the behaviour of players on the market, or we need to provide for a set of rules to counter unfair behaviour? And if so, what constitutes unfair behaviour? Do we want to create more monopolies by introducing new quasi-intellectual property rights? Shouldn’t companies be able to develop one single marketing strategy when introducing their products on the European market instead of being hindered by differences in unfair competition laws of the Member States And what set of rules should be provided to consumers who enter into a cross-border transaction? These considerations have motivated me to start and finish my research on the harmonisation of unfair competition law Because of the wide scope of my research topic, I am particularly grateful to my promoter prof.mr F.W Grosheide for helping me keep my track by supporting me and placing his confidence in me In addition, I am very grateful to the Max-Planck-Institut für Geistiges Eigentum, Wettbewerbs- und Steuerrecht in Munich, in particular prof dr dres h.c J Straus and Dr F Henning-Bodewig for their hospitality and the possibility to conduct research as a Stipendiat, as well as the Queen Mary Intellectual Property Research Institute in London in particular in the person of prof.dr M Blakeney and finally, the European Commission, DG Health and Consumer protection for their hospitality Special words of thanks should be extended to mr P.A Morris LL.B., who has edited the text of the manuscript and to mrs W.J Vreekamp and mrs T Kloos of the Wiarda Institute of the University of Utrecht for making the manuscript ‘camera ready’ Last but not least, I want to offer my warm thanks to my wife, Robijn, my parents and my sister, Evelyn, for providing me with unfailing support in my work The research was completed in July 2005 Any case law or literature published after this date has – with some minor exceptions – not been incorporated Utrecht, September 2005 Table of Contents Preface List of Abbreviations v xiii Chapter 1: Introduction 1.1 1.2 1.3 1.4 1.5 1.6 The Europeanization of Unfair Competition Law Thesis Delimitation of the research Methodology Terminology Plan of Action Chapter 2: International and European Law 11 2.1 2.2 11 12 12 13 14 15 16 17 2.3 Introduction International Rules on Unfair Competition 2.2.1 The Paris Convention for the Protection of Industrial Property a General clause b Specific cases of unfair competition c Legal redress 2.2.2 Special agreements following the Paris Convention 2.2.3 TRIPs 2.2.4 WIPO Model Provisions on protection against unfair competition 2.2.5 The International League of Competition Law 2.2.6 Conclusions Unfair Competition within the European Community 2.3.1 Introduction 2.3.2 The need for harmonisation 2.3.3 Community harmonisation so far 2.3.4 Primary European Union Law 2.3.5 Secondary European Union Law 2.3.5.1 The Ulmer comparative study 2.3.5.2 Harmonisation in specific areas a Misleading Advertising Directive b Cases of very specific EU regulation relating to unfair competition 18 22 23 24 24 27 29 30 33 33 35 35 37 vii Contents 2.4 2.5 2.6 2.7 c Unfair competition law accommodated in other areas of law d Comparative Advertising Directive e E-commerce Directive f Conclusions 2.3.6 The European Convention of Human Rights The introduction of consumer protection in unfair competition law Common principles suggested in legal doctrine as alternative approaches to harmonisation 2.5.1 Unjust enrichment 2.5.2 The doctrine of misappropriation New European legislative initiatives 2.6.1 Draft Regulation on Sales Promotions 2.6.2 The Unfair Commercial Practices Directive 2.6.2.1 The Green Paper and its Follow-up 2.6.2.2 An analysis of the Unfair Commercial Practices Directive a Introduction b Total harmonisation c Confined to B2C relations d The country-of-origin rule e General Clause f Specific clauses; Misleading commercial practices g Specific clauses; Aggressive commercial practices h Blacklist of unfair commercial practices i Remedies Conclusion 37 39 40 42 43 45 48 48 50 52 53 55 55 57 57 58 59 64 65 68 69 70 72 75 Chapter 3: Dutch Law 79 3.1 3.2 3.3 79 79 80 80 84 85 86 viii Introduction Freedom of trade Legislative development of unfair competition 3.3.1 The 19th century 3.3.2 Bills before Parliament 3.3.3 Criminal Law regulation of 1915 3.3.4 The Lindenbaum/Cohen case of the Hoge Raad 3.3.5 The 1941 and 1963 Preliminary Reports and the draft NBW legislation a The 1941 Preliminary Reports b The 1963 Preliminary Reports 3.3.6 The 1967 Report by the Committee of Orderly Commerce 3.3.7 The 1971 SER Proposal 3.3.8 Developments following the 1971 SER proposal 87 87 89 90 91 93 Contents 3.4 3.5 3.6 3.3.9 Voices in literature 1971-1992 3.3.10 New Civil Code 1992 3.3.11 Voices in literature 1992-present 3.3.12 Conclusions Scope of Protection Acts prohibited under unfair competition law 3.5.1 Introduction 3.5.2 Classification of acts prohibited under unfair competition law 3.5.3 Misleading the public: Misleading advertising 3.5.3.1 Provisions in the Civil Code 3.5.3.2 Art 6:194-196 BW a Misleading b Burden of proof c Sanctions 3.5.3.3 Self regulation 3.5.4 Discrediting competitors 3.5.5 Imitation and misappropriation 3.5.5.1 Slavish imitation a Distinctiveness b Confusion c Similarity regarding features that are not important for the reliability and usefulness of the product d Needless confusion 3.5.5.2 Slavish imitation; controversies in literature a The requirement of confusion b The ‘Reflex-Effect’ c Term of protection 3.5.5.3 The imitation of badges of trade 3.5.5.4 Misappropriation of (valuable) intangibles a Introduction b Equivalent performance c Statutory regulation d Survey of topics of discussion concerning sweat of the brow protection e Conclusion 3.5.5.5 Protecting Know-how Conclusion 94 96 97 97 100 101 101 102 104 104 105 105 108 108 110 111 112 113 116 117 119 120 120 121 126 127 129 135 135 135 138 140 142 142 145 Chapter 4: German Law 147 4.1 4.2 147 148 Introduction Legislative development of unfair competition ix 366 367 368 369 370 371 372 373 374 375 376 WIPO MODEL PROVISIONS ON PROTECTION AGAINST UNFAIR COMPETITION (1996) Article General Principles (1) [General Provision] (a) In addition to the acts and practices referred to in Articles to 6, any act or practice, in the course of industrial or commercial activities, that is contrary to honest practices shall constitute an act of unfair competition (b) Any natural person or legal entity damaged or likely to be damaged by an act of unfair competition shall be entitled to the remedies referred to in (2) [Relationship Between Articles to and Provisions Protecting Inventions, Industrial Designs, Trademarks, Literacy and Artistic Works, and Other Intellectual Property Subject Matter] Articles to shall apply independently of, and in addition to, any legislative provisions protecting inventions, industrial designs, trademarks, literary and artistic works, and other intellectual property subject-matter Article Causing Confusion with Respect to Another's Enterprise or Its Activities (1) [General Principle] Any 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 enterprise, shall constitute an act of unfair competition (2) [Examples of Confusion] Confusion may, in particular, be caused with respect to (i) a trademark, whether registered or not; (ii) a trade name; (iii) a business identifier other than a trademark or trade name; (iv) the appearance of a product; (v) the presentation of products or services; (vi) a celebrity or a well-known fictional character Article Damaging Another's Goodwill or Reputation (1) [General Principle] Any act or practice, in the course of industrial or commercial activities, that damages, or is likely to damage, the goodwill or For the purposes of these Model Provisions, the term 'trademark' covers marks relating to goods, marks relating to services, and marks relating to both goods and services 377 reputation of another's enterprise shall constitute an act of unfair competition, regardless of whether such act or practice causes confusion (2) [Examples of Damaging Goodwill or Reputation] (a) Damaging another's goodwill or reputation may, in particular, result from the dilution of the goodwill or reputation attached to (i) a trademark, whether registered or not; (ii) a trade name; (iii) a business identifier other than a trademark or a trade name; (iv) the appearance of a product; (v) the presentation of products or services; (vi) a celebrity or a well-known fictional character (b) [Definition of ADilution@] For the purposes of these Model Provisions, "dilution of goodwill or reputation" means the lessening of the distinctive character or advertising value of a trademark, trade name or other business identifier, the appearance of a product or the presentation of products or services, or of a celebrity or well-known fictional character Article Misleading the Public (1) [General Principle] Any act or practice, in the course of industrial or commercial activities, that misleads, or is likely to mislead, the public with respect to an enterprise or its activities, in particular, the products or services offered by such enterprise, shall constitute an act of unfair competition (2) [Examples of Misleading] Misleading may arise out of advertising or promotion and may, in particular, occur with respect to (i) the manufacturing process of a product; (ii) the suitability of a product or service for a particular purpose; (iii) the quality or quantity or other characteristics of products or services; (iv) the geographical origin of products or services; (v) the conditions on which products or services are offered or provided; (vi) the price of products or services or the manner in which it is calculated Article Discrediting Another's Enterprise or Its Activities (1) [General Principle] Any false or unjustifiable allegation, in the course of industrial or commercial activities, that discredits, or is likely to discredit, another's enterprise or its activities, in particular, the products or services offered by such enterprise, shall constitute an act of unfair competition (2) [Examples of Discrediting] Discrediting may arise out of, advertising or 378 promotion and may, in particular, occur with respect to (i) the manufacturing process of a product; (ii) the suitability of a product or service for a particular purpose; (iii) the quality or quantity or other characteristics of products or services; (iv) the conditions on which products or services are offered or provided; (v) the price of products or services or the manner in which it is calculated Article Unfair Competition in Respect of Secret Information (1) [General Principle] Any act or practice, in the course of industrial or commercial activities, that results in the disclosure, acquisition or use by others of secret information without the consent of the person lawfully in control of that information (hereinafter referred to as "the rightful holder") and in a manner contrary to honest commercial practices shall constitute an act of unfair competition (2) [Examples of Unfair Competition in Respect of Secret Information] Disclosure, acquisition or use of secret information by others without the consent of the rightful holder may, in particular, result from (i) industrial or commercial espionage; (ii) breach of contract; (iii) breach of confidence; (iv) inducement to commit any of the acts referred to in items (i) to (iii); (v) acquisition of secret information by a third party who knew, or was grossly negligent in failing to know, that an act referred to in items (i) to (iv) was involved in the acquisition (3) [Definition of Secret Information] For the purposes of this Article, information shall be considered "secret information" if (i) it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (ii) it has commercial value because it is secret; and (iii) it has been subject to reasonable steps under the circumstances by the rightful holder to keep it secret (4) [Use or Disclosure of Secret Information Submitted for Procedure of Approval of Marketing] Any act or practice, in the course of industrial or commercial activities, shall be considered an act of unfair competition if it consists or results in (i) an unfair commercial use of secret test or other data, the origination of which involves considerable effort and which have been submitted to a competent authority for the purposes of obtaining approval of the marketing of pharmaceutical or agricultural chemical products which 379 utilize new chemical entities, or (ii) the disclosure of such data, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use 380 .. .TOWARDS A EUROPEAN UNFAIR COMPETITION LAW A Clash Between Legal Families Intellectual Property Law Library R.W de Vrey, Towards a European Unfair Competition Law A Clash Between Legal Families. .. crosslinks between the various areas of law as well as relationships between certain areas of law and matters of public policy and economics Unfair competition law, as a separate area of law, has proved... (2006) M Ogawa, Protection of Broadcasters’ Rights (2006) Towards a European Unfair Competition Law A Clash Between Legal Families A comparative study of English, German and Dutch law in light