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Advocate & Intellectual Property Attorney
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Manish M. Bhagnari

B.Com. & LL.B.

Unfair Competition

Unfair competition is a commercial tort. It can not be defined in the abstract. The word 'unfair' is no more precise then many other legal terms like 'reasonable' or 'adequate'.

Unfair competition is an intellectual concept. The meaning of the term is fluid and varies from case to case. Unfair competition is mainly a common law tort. It is largely found in case law. Originally, it was equated to passing off. But today passing off is considered as only one form of unfair competition. The legal concept of unfair competition is broad and flexible. There is no complete list of activities which constitute unfair competition.

The law of unfair competition serves five purposes, viz:

  1. i.   to protect the economic, intellectual, and creative investments made by businesses      in distinguishing themselves and their products.

  2. ii.   to preserve the good will that businesses have established with consumers.

  3. iii.  to deter businesses from appropriating the good will of their competitors.

  4. iv.  to promote clarity and stability by encouraging consumers to rely on a                    merchant's good will and reputation when evaluating the quality of rival products.

  5. v.   to increase competition by providing businesses with incentives to offer better          goods and services than others in the same field.

Article 10bis of the international convention for protection of Industrial property (Paris Convention) gives some guidance to what constitutes unfair competition.

Article 10bis

  1. (a)  The countries of union are bound to assure to nationals of such countries                 effective protection against unfair competition.

  2. (b)  Any act of competition contrary to honest practices in industrial or commercial         matters constitutes an ac of unfair competition.

  3. (c)  The following in particular shall be prohibited:

All acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities of a competitor.

False allegations in the course of trade of such nature as to discredit the establishment, the goods, or the industrial or commercial activities of a competitor.

Indications or allegations the use of which in the course of trade is liable to mislead the public as to name, as to nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity of the goods.

It is well established that any act or conduct which confuses or tends to confuse the public mind in relation to the identity of the plaintiff' or his products is a violation of the plaintiff's right.

Unfair competition law enforces increasingly high standard of fairness or commercial morality in trade. Commercial morality is a touchstone for unfair competition law. Unfair competition is contrary to good conscience.