Unfair competition for the protection of a concept

In the absence of a private right on the concept, an indirect means of defensive protection would be through unfair competition. This is a notion from competition law, which seeks to regulate relations between economic actors. It does not protect the concept as such, but rather provides a means of dealing with usurpation.

Indeed, free competition is valid as long as professionals do not engage in unfair practices, i.e., practices that are contrary to professional customs and that aim to harm their competitors. This is known as unfair competition.

Although this behaviour is not defined by any Code, the acts which constitute unfair competition are reprehensible on the basis of extra-contractual civil liability under articles 1240 and 1241 of the French Civil Code. The conditions and acts have been defined by case law. It should be noted that it is possible to bring an action for an infringement at the same time as an action for unfair competition in a subsidiary manner, depending on the rights held by the victim company, thus enabling action to be taken on a criminal level.

This abusive commercial practice can be proven by the cumulation of three conditions:

  • A fault: an intentional or unintentional act that harms a competing company.
  • A prejudice: it must be certain (i.e., not presumed or alleged), such as an excessive loss of customers or turnover, or abnormal poaching of employees, and only the company targeted by the act of unfair competition can claim it (no prejudice by ricochet).
  • A causal link: there must be a causal link between the fault and the damage.

Proof can be provided by a bailiff’s report. Sanctions are of civil nature and mainly consist of damages, the cessation of unfair acts and some accessory measures (destruction of equipment used for unfair acts, publication of the court decision, etc.).

The unfair competition practices are mainly the following:

  • Imitation: the use of the same distinctive signs as a competing company, creating confusion.
  • Free riding (parasitism): taking advantage of a competitor’s efforts and know-how without contributing to those efforts (not necessarily necessitating a competitive relationship).
  • Smear campaign (denigration): openly and publicly criticising a competitor’s work, methods, or products, while clearly identifying the company.
  • Disruption (disorganisation): this can be of many forms, but mostly involves the mass and abusive hiring of employees or the disclosure of company secrets (such as manufacturing secrets).

In the context of the defence of a concept, the three notions that will attract attention are imitation, disruption, and free riding.

A direct competitor who imitates the advertisement, distinctive signs, or products and services of a company, thus creating a real risk of confusion, could be sanctioned (Cass. Com., 9 July 2013, n° 12-22.166).

Also, disruption could be punished if, for example, a former employee, manager, or partner discloses a concept that was still a secret (Paris, 22 May 1990, D. 1990, IR p.175).
Above all, the behaviour of a competitor who follows in the footsteps of another to take advantage of his/her reputation, efforts, and investments, without expenditure (C. Cass., Ch. Com., 26 January 1999, appeal no. 96-22.457), could be sanctioned. Thus, the Paris Commercial Court was able to judge that a protectable concept “constitutes an economic value, individualised and providing a competitive advantage, the result of know-how, intellectual work and investments” (T. Com. Paris, 28 September 2015, n°2014-027464, Sound Strategy v. Concepson; confirmed on appeal: CA Paris, 7 March 2017, n°15/22802). It is the result of an investment, which may be promotional, economic, intellectual, or even the result of notoriety.

It has been recognised by judges that an idea, endowed with uniqueness acquired through investment and which the wrongdoer has misappropriated, is protectable by an action for parasitism (free riding) as an original concept (CA Paris, Pôle 5, ch. 4, 7 Oct. 2015, n° 10/11257). This has also been recognised in the case of undue appropriation of a work, research, or know-how (Cass. com., 24 Nov. 2015, n° 14-16.806, Civ. 1re, 22 June 2017, n° 14-20.310, CA Paris, Pôle 5, ch. 2, 15 Apr. 2016, n° 12/072530).