Unfair competition proceedings

In France, the unfair competition action is a so-called “common law” action, which is not based on intellectual property rights.

This action in tort is in fact based on article 1240 of the french Civil Code, which states that “any act of man, which causes damage to another, obliges the person by whose fault it occurred to repair it”.

The acts sanctioned on the basis of unfair competition are thus considered to be contrary to fair trade practices, thus limiting the principle of freedom of trade and industry as well as the principle of free competition in order to maintain healthy competition on the market.

The action for unfair competition thus concerns a multitude of competitive acts which, in a certain context, are likely to be considered as wrongful.

This may include actions based on the identifying elements or codes of a competing company, without these codes being protected and/or protectable under intellectual property rights.

It is therefore possible, among other things, to oppose an unregistered logo, a corporate name, a domain name, a layout, a graphic charter, a sign, even one or more clothing models, one or more communication codes specific to the company, etc.

Notions of unfair competition and parasitism

The concepts of unfair competition and parasitism are based on article 1240 of the french Civil Code, and have subsequently been developed by case law.

Generally speaking, since this is the basis of common law (tort liability), the plaintiff in the action will have to demonstrate the existence of a fault, an injury and a causal link between the two.

Unfair competition is constituted by acts of unfair use of identification elements not protected by a private right if there is a risk of confusion.

Unfair competition must thus result from a positive fault of the author of the reprehensible acts, who will have the will to create confusion in the mind of the public with another competing company in the sector (decision of the “cour d’appel” of Paris, September 26, 2012, n°11-06.404).

It is not necessary for the parties to be in direct competition with each other in order to invoke this ground.

Thus, it is constant that “the copy, whether slavish or not, and assuming it is established, is not sufficient to characterize a wrongful conduct in a framework of freedom of trade” (decision of the “cour d’appel” of Paris, September 6, 2013, n°12-12.391): the existence of a risk of confusion must be established.

In addition to the risk of confusion, which concerns actions based on elements that identify the company, denigration, poaching leading to the disorganization of the company or the misappropriation of customers and many other actions are likely to constitute unfair practices in business life.

Parasitism, on the other handis defined by the jurisprudence as “the set of behaviors by which an economic agent interferes in the wake of another in order to take advantage of his efforts and know-how and thus appropriates an individualized economic value that provides a competitive advantage, the result of specific research and design work (“cour d’appel” of Paris, September 26, 2012, No. 11-06.404).

It follows from the foregoing that the plaintiff in the free-riding action must, among other things, justify, in the context of the litigation that he would initiate :

• An individualized economic value on the elements he claims;
• A competitive advantage created by the elements it claims;
• A specific design work on the elements it claims;
• Specific investments on the elements it claims.

In the same way as for unfair competition, the “Cour de cassation” has had occasion to recall that the fact of marketing identical or similar products does not, in itself, constitute parasitic behavior (Cass. com., March 15, 2017, n°15-21.268).

Articulation of unfair competition and parasitic claims and the course of the proceedings

Claims based on unfair and/or parasitic competition may be brought:

• As a principal :
  • In a completely autonomous way, as a main basis before the Commercial Court;
  • As a complement to an infringement action before the judicial court, when there are facts distinct from the infringement facts (e.g.: trademark infringement and acts of unfair and parasitic competition due to the wrongful use of a design and/or a sign, for example).

• In the alternative, in the context of a main infringement action before the Court, in order to prevent the risk of the action being dismissed on the basis of infringement.

When actions are brought on the basis of unfair competition, the action is held before the Commercial Court and therefore before non-professional consular judges, who are used to disputes between traders.

It is recommended to be accompanied by a lawyer specialized in defending your interests against your competitors or more generally, to deal with the use of your identification elements by third parties without your authorization (identification of the type of infringement, letter of prior notice, requesting a bailiff to carry out operations of finding, arguing a motion and obtaining an order for the purpose of report 145, evaluation of the commercial and/or moral damage, drafting of the summons etc.).

The Bouchara firm accompanies you in :

• Analysis of the chances of success of the action you plan to take;
• Strategic choices to be made according to the type of infringement before initiating any action before a Court;
• Obtaining bailiff’s reports (Internet report, purchase report, report 145 etc…);
• The drafting of a summons and/or conclusions before the Commercial Court and before the Judicial Court;
• Infringement actions;
• Preparation of the file documents.