Unfair competition

In contemporary conditions competition is essential attribute of market economic system. Such competition contributes to improvement of goods quality, development of new technology and methods, constantly improvement of own business activity.

Market competition regulates market relations. But such relations can be dishonest and therefore there are Laws for protection against different infringements.

In Ukraine there are Laws of Ukraine “On protection against unfair competition” and “On economic competition protection” based on the Paris Convention.

Unfair competition is accompanied by all acts contrary to honest trade practice. As usual the acts connect with misleading advertising and violating trade secrets.

All laws on protection against unfair competition are concerned with restrains on trade and abuses of economic power and at the same time are concerned with a forcing of all participants to play according to the same rules. Unfair competition laws have been designed for protection of the honest businessmen and of the consumers.

In trade market there are widely used identified elements for distinguish goods, services and business such as mark, sign, label, slogan, shape, color, packaging. Unfair using any of these elements can mislead consumers.
For example, Ukrainian company “Konti” wanted to register trademark ”BAILES” in Cyrillic letters that had the same pronunciation of already registered trademark ”BAILES” of Irish company. According to Laws of Ukraine “On protection against unfair competition” these trademarks can confuse the consumers with the using of these trademarks by different companies in the same branch. Therefore Ukrainian company was refusing to register the trademark.

For protection of appearance for identical or similar goods there is applied a special laws on industrial designs. In Ukraine such law can protect product shape for a definite goods and services, exactly for goods and services the design is registered. The protection against coping shape of products for other goods and services may be obtained under unfair competition law if using of copied design confuses the consumers.

It is generally situation when business rivals make exaggerated statements about their goods and services for selling them. Such assumed and laudatory information about owner’s property can mislead consumers. But there are countries where such incorrect information is not considered as such that can be misleading, only advertising statements and especially those that claim uniqueness (“the best”, “the first”) are considered as unfair competition actions.

Discrediting competitors is usually defined as any false allegation concerning a competitor that can harm his commercial goodwill. Like misleading, discrediting tries to entice customers with incorrect information. But such information connects with untruthful aspersions a competitor, his product or services. The consequences after such actions are more considerable.

The next category of acts of unfair competition is disclosure of secret information.
For instance, enterprise has developed new technology of product that gives better quality of product and is less expensive. If this information will be given to a competitor without the permission of the owner of the information it results in unfair competition.

Also it is existed other category of acts of unfair competition called comparative advertising.
The comparative advertising may take two forms, one of them is positive reference to another’s product and another one is a negative reference. In the first case it is claiming that one’s own product is as good as other well-known product with a good consumer’s opinion, in the second case competitor criticizes the product claiming that own product is better than the other and in that way he disparages other’s goodwill.