Unfair competition

Competition must comply with a certain business morality, and any unfairness departing from it engages the tortious liability of its author underArticle 1240 of the French Civil Code. That provision, at the heart of the general law of civil liability, is the basis for the unfair competition action, which — unlike infringement — does not presuppose the existence of an exclusive right.

The point is not to penalise competition as such, but the abuse of it. Unfair competition law does not prohibit competing; it condemns conduct contrary to fair commercial practice and professional honesty. It is therefore a corrective mechanism, intended to prevent competitive activity from degenerating into practices that are destructive of, or harmful to, a business.

Conditions de mise en œuvre de l’action en concurrence déloyale

In any event, an unfair act is actionable only where the three conditions of tortious liability are met: fault, damage and a causal link.

1. La faute : This means any conduct contrary to fair commercial practice, whether an act, a statement or even an omission. There is no need to establish an intention to harm. The assessment is objective, in the light of professional practice.
2. Le préjudice : This is generally commercial disturbance: loss of customers, a fall in turnover, damage to the business’s image, or disorganisation of the market. The damage may be material or non-material. The loss of a key employee, wrongfully poached, may for instance cause organisational harm.
3. Le lien de causalité : The court will often presume it from the fault and the damage, which makes the claim for compensation easier to bring.

These conditions protect not only rights holders, but also those who hold no exclusive right in the elements complained of. The unfair competition action is therefore particularly useful in disputes concerning unregistered distinctive signs or elements incapable of intellectual property protection.

Types of unfair competition

Unfair competition may take several forms, identified by commentators and case law. There is no exhaustive list, but four main categories stand out.

1. Le dénigrement : This consists in spreading disparaging information about a competitor or its products. The allegations may be direct or implicit, true or false — it matters little, provided their effect is to bring discredit. The aim is to divert customers or to damage the reputation of an economic operator.
2. La confusion : This seeks to create confusion in the public mind between two businesses, two products or two services. It may result from imitating the corporate name, the logo, the packaging or the advertising. The court will consider, in particular, the originality of the sign, visual or phonetic similarity, and the defendant’s conduct
3. La désorganisation : This may affect a business internally (for example, large-scale poaching of employees, or misappropriation of customer files) or harm the very structure of the market (resale at a loss, misleading advertising, unauthorised parallel distribution). It often corresponds to conduct designed to destabilise an economic operator in order to take its place. Enticing away a strategic employee in disregard of the contractual clauses binding that employee to the employer may amount to unfair disorganisation.
4. Le parasitisme économique : Parasitism arises where an operator places itself in the economic slipstream of another so as to derive undue benefit from that other’s investment or reputation, without comparable effort of its own. That may be the case, for example, where a company copies a competitor’s presentation, aesthetic codes or concept without copying it formally. Parasitism is actionable even in the absence of any likelihood of confusion.

Interaction with other actions

An unfair competition action may be brought either as a principal claim or in addition to an infringement action. In the latter case, it allows compensation for related facts that are nonetheless distinct from those relied on in the infringement claim. For example, copying a product protected by a patent or a trade mark may found an infringement action; but if the competitor has in addition sought to mislead consumers by trading on confusion, an unfair competition claim may be added to it.

This combination of actions allows cumulative awards of damages : for the infringement of exclusive rights on the one hand, and for the commercial or non-material harm suffered as a result of unfair acts on the other.

Sanctions et mesures réparatrices

The court may order a range of measures: an award of damages (loss of turnover, damage to image), cessation of the unfair acts subject to a periodic penalty payment, publication of the judgment, and even pre-trial investigative measures (Article 145 of the French Code of Civil Procedure).

Damages are assessed on the basis of the losses suffered and the profits foregone; in cases of parasitism, however, account may be taken of the advantage unfairly obtained by the defendant. On that basis, a competing company that profits from another’s development efforts without bearing the cost may be ordered to disgorge the benefits unfairly received.

Some decisions of the Paris Court of Appeal have further emphasised that the commercial disturbance resulting from unfair practices may justify an order for immediate cessation, notamment en cas de confusion manifeste entre deux activités concurrentes.

Frequently asked questions

Quelle est la différence entre concurrence déloyale et contrefaçon ?

La contrefaçon sanctionne l’atteinte à un droit de propriété intellectuelle. La concurrence déloyale sanctionne, sur le fondement de la responsabilité civile, un comportement fautif contraire aux usages loyaux du commerce, comme la confusion, le dénigrement, la désorganisation ou le parasitisme. Les deux actions peuvent être cumulées si elles reposent sur des faits distincts.

Quel est le délai pour agir en concurrence déloyale ?

L’action se prescrit par cinq ans à compter du jour où la victime a connu ou aurait dû connaître les faits lui permettant d’agir, conformément au droit commun de la responsabilité civile.

Quel tribunal est compétent ?

Le tribunal de commerce entre commerçants et le tribunal judiciaire dans les autres cas. Lorsque la demande en concurrence déloyale est connexe à une action en contrefaçon, le tribunal judiciaire spécialisé en propriété intellectuelle connaît de l’ensemble.