Author: Gergana Kirova
Introduction:
Free competition is a fundamental principle of the market economy and guarantees the possibility of freely offering goods and services on the market. This right to market “competition” does not imply the possibility for a legal entity to unlawfully benefit from another’s commercial identity and market presence. It is for this reason that the legislator has provided for the offence of “Imitation” under Article 35 of the Competition Protection Act (CPA), which prohibits imitation as a form of unfair competition when it may mislead consumers regarding the origin of goods or services.
Imitation essentially constitutes a form of unfair competition in which external features or other distinctive elements are used, similar or identical to those of a competitor, in a manner capable of creating a likelihood of confusion among consumers regarding the origin, manufacturer, as well as other essential characteristics of the goods or services. The provision of Art. 35 CPA aims to provide protection against such acts, as well as to provide protection not only to competitors but also to consumers. The law sanctions such wrongful conduct when it is aimed at deriving an unlawful market advantage from the already established reputation of a competitor.
This article will examine the hypotheses of imitation as a form of unfair competition under Article 35, paragraphs 1–3 of the CPA.
Imitation under Article 35(1) CPA:
First of all, the first of the forms of unfair conduct provided for in the provision should be analyzed, namely: “the offering of goods or services with appearance, packaging, labeling, name or other features which mislead or may mislead regarding the origin, manufacturer, seller, method and place of production, source and method of acquisition or use, quantity, quality, nature, consumer properties and other essential characteristics of the goods or services.”
In order for a violation under Article 35(1) CPA to be established, the following elements of the factual composition must be cumulatively established:
Firstly, unlawful conduct consisting of active and factual offering of goods or services on the market to consumers.
Secondly, this unfair conduct must be of such a nature as to create a reasonable and objective likelihood of confusion among consumers or lead to actual deception in consumer perception regarding the commercial origin of the goods or services. It should be noted that, in assessing the likelihood of consumer confusion, no specialized knowledge is required. The assessment of the presence of confusion is formed with regard to the perspective of the average consumer, taking into account the nature of the goods or services, the manner of offering, and the fact of which competitor first established the product or service on the relevant market. Furthermore, for the second element of the composition to be present, the conduct should relate to goods or services that are well-known and have an established reputation on the competitive market, with the aim of unfairly taking advantage of their recognition and damaging the reputation and market share of the competitor concerned.
Thirdly, the last element of the factual composition under paragraph 1 refers to a real possibility of creating a mistaken impression in the consumer regarding the person offering the goods or services, as well as their origin. The assessment of the existence of this real possibility is based on external features and other characteristics of the goods or services, as these are the first elements perceived by consumers and may influence their perception of the goods or services and their origin.
Imitation under Article 35(2) CPA:
After examining the factual composition under paragraph 1, the offence under para. 2 should also be analyzed, namely: “The use of a trade name, trademark or geographical indication identical or similar to those of other persons in a manner that may harm the interests of competitors is prohibited.”
The prohibition referred to in paragraph 2 concerns unlawful imitation of a company name, as well as the infringement of rights relating to intellectual property such as trademarks or geographical indications that are identical or similar to those of competitors. It is significant to note that the provision does not expressly include copyright and industrial designs, although in practice examples of imitation affecting competitive positions are often observed.
When assessing similarity and/or identity in the case of imitation of trademarks, already established criteria are applied, consisting of visual, phonetic and conceptual elements, in accordance with the practice of the Court of Justice of the European Union and the Patent Office. The assessment of similarity is based on the overall impression left on the consumer, with particular emphasis on the distinctive, especially dominant, elements of the sign.
It should be noted that Article 35(2) CPA implies liability of manufacturers of goods and providers of services who have designated goods or services with another’s trade name or with an already protected trademark or geographical indication. No liability is assumed for persons who are subsequent distributors of the goods or services subject to imitation, as their unlawful conduct falls within the scope of Article 35(1) CPA.
Imitation under Article 35(3) CPA:
With the development of e-commerce and the digital world, the protection against unfair competition in the online space has become increasingly important. For this reason, the legislator has expressly provided in Article 35(3) a prohibition on the use of a domain or the appearance of a website identical or similar to those of a competitor, namely: “The use of a domain or the appearance of a website identical or similar to those of other persons in a manner that may mislead and/or harm the interests of competitors is prohibited.”
Here, unfair competition constitutes dishonest conduct by an entity in the online environment aimed at misleading consumers and harming a competitor. But what is meant by the term “website appearance”? In its predominant meaning, the legislator refers to the visual design of a website, in particular its graphic design, structure, images, and color combinations. These elements form the initial perception of users and are essential for the distinctiveness of the website in the online environment. Therefore, imitation of an identical or similar visual appearance of a competitor’s website may create a false impression among consumers regarding the commercial origin and a connection between the two entities. Moreover, there is a high risk that consumers may mistakenly believe they are visiting the official website of a trader.
Of particular importance is also the similarity between domain names. The concept of “identical or similar” domains should be interpreted in light of the likelihood that the average consumer may be misled. Complete identity exists when there is absolute identity of the word elements of the domain, regardless of the extension used. Similarity, on the other hand, may be expressed through semantic or phonetic resemblance of the domains capable of creating the impression of a connection between websites, thereby misleading the average consumer.
Conclusion:
To conclude, the regulation of Article 35 CPA represents an essential instrument for counteracting various forms of imitation as a manifestation of unfair competition, while simultaneously protecting the interests of both competitors and consumers. Through the established prohibitions, the preservation of a fair market environment is ensured, and the unfair exploitation of another’s commercial reputation and established market presence is prevented.
This material prepared by Gergana Kirova aims to provide more information about imitation under Article 35 of the Competition Protection Act . It does not constitute a legal opinion and cannot be interpreted as individual consultation on any concrete facts or circumstances. The advice of a specialist should be obtained for specific questions and situations. For more information on the above-mentioned issues and individual consultations, please contact the team of the law firm of Krasimira Kadieva at 00359 882 308 670 or make an inquiry using the contact form on the website. Since 2021 Gergana Kirova is a student at Sofia University “St. Kliment Ohridski“, having previously graduated from the High School “St. Kliment Ohridski“ in Sofia.