Imitation within the meaning of Protection of Competition Act

The prohibition of unfair competition, set out in Chapter Seven of Protection of Competition Act, is one of the most common reasons for appealing to the Commission for Protection of Competition (CPC). One of the most typical forms of unfair competition is namely the imitation, the norms of which are regulated in the provisions of Art. 35. The legal act provides protection against imitation by prohibiting the goods and/or services supply, having the appearance, packaging, marking, name or other signs that are to mislead or may mislead the origin, the manufacturer, the seller, the way and place of manufacture, the source and the manner of acquisition or use, the quantity, quality, nature, consumer properties and other essential characteristics of the exact good or service. The legal protection also covers the protected intellectual property sites such as the company’s name use, a brand or a geographical designation, identical or similar to such, having been others’ possession, in a way that may harm the interests of competitors. Last, but not least, it is forbidden to a domain or a website appearance to be used, when it is identical or similar to such, having been others’ possession, in a way that may lead to misleading and/or may damage the interests of competitors.

The purpose of such an unfair behavior is the consumer to be misled, thereby the interests of competitors to be harmed. Through their unfair conduct, the trader aims to take advantage of the image of its rival, so as to derive benefits from their reputable reputation and imposed name. The potential peril of damaging the interests of competitors rather than the real ones that occur is a sufficient ground for a violation under the Protection of Competition Act.


1. Imitation of goods and services:

In order an imitation to be indictable, there to be a criminal imitation within the meaning of the PCA, several elements must be present:

  • An economic activity existence as well as a competition attitude between the parties;
  • Real supply of goods or services;
  • A real or potential misleading;
  • The misleading is to be related to the described or other essential characteristics of the good/service;
  • The current misconduct is to damage or may harm the interests of competitors.

The requirement of an economic activity existence as well as a competition attitude between the parties is a sine qua non for establishing a breach of the unfair competition prohibition in general, not only for imitation. For the existence of a competitive attitude, the practice of the CPC and the Supreme Administrative Court (SAC) shows that it is not enough for the parties to operate on one and the same geographic market,  but to operate on the same product market. It is necessary for the parties to be undertakings, within the meaning of the legal act as well as to offer goods or services that can be accepted by consumers as interchangeable in terms of their characteristics, purpose and prices. In this respect, an “undertaking” means any natural person, a legal entity or unincorporated entity that carries on business, irrespective of its legal or organizational form. In determining the competition attitude between the parties in a pending proceeding before the CPC, what is of a high importance is not the trader’s activity subject when establishing the company, but the activity actually carried out by the parties, i.e. the actual supply of goods and services by the parties to the relevant market.

Analyzing the concept of imitation within the meaning of the legal act, it should be taken into account that the protection of the industrial property rights is different as well as the same does not compete with the protection of the bona fide commercial practices within the meaning of the Protection of Competition Act. The ownership of a protected industrial property site (a.k.a. the presence of a protected design) does not have any relevance to the alleged imitation under Art. 35, para. 1 of the legal act.

According to the Commission for Protection of Competition: ”imitation” is  when the appearance of a product is reproduced in a way that resembles another one, which has already been known or imposed on the mind of the consumer, and when such a case is one of causing confusion among consumers or at least creating a likelihood of such. The comparison should be made on the overall effect produced by products as well as their perception by consumers.

In the first place, in order a violation to occur, it is necessary the consumers to be misled. In this respect, by interpreting the imitation concept as a breach of the competition legislation, the competent authorities conclude that when assessing the possibility of misleading to implement the imitation composition under Art. 35 of the legal act, the interpretation should be based on the perceptions of the average intelligent as well as informed contemporary consumer. The immaterial allegations shall be viewed from the point of the consumers’ view, since it is through their behavior that the competitor’s interests may be adversely affected. The CPC and the SAC accept that the presence of proximity in those elements, which are characteristic and memorable and via which the product or the producer is associated in the mind of the consumer. That is why, when assessing whether there is an imitation within the meaning of Art. 35, para. 1 of the legal act, no special knowledge is required, but an entire view of the overall visual effect created by the average consumer shall be conducted. The main element of the factual composition, implemented in Art. 35, para. 1 of the legal act, is related to the possibility that the offered product or the service may lead to misleading. The provision aims to protect the interests of competitors that may be harmed only if there is an objective possibility for deception on the part of the offeror or other characteristics of the relevant good or service. At the same time, in addition to competitors, the provisions of Art. Article 35 of the statutory act also aims to protect consumers’ interests due to the fact that such a possible misconception would shift their attention to an imitative product rather than to the proper demanded one.

Among the most important conditions, so as the ban on imitation of goods and products to be violated under the terms of Art. 35, is the existence of a certain reputation of the imitated commodity, which could bring undue benefits to the unscrupulous (imitating) trader. When proving the nuisance, it is not enough for the imitated product to have been known on the market before the imitation itself,  but it is extremely important to be proved that the products offered by the bona fide merchant have some degree of reputation among consumers or in other words, the consumers may have the impression that they shall buy a specific product on the market while at the same time they are actually offered something different and choose it instead because of similarities in its appearance. In a case, filed to the CPC, the reputation  is a subject to proof, so in such cases a marketing expertise, market surveys, surveys, rankings etc. may be required. The probative burden of proving in terms of reputation existence lays within the party, claiming that its product or service is a subject to imitation by a competing undertaking. For this purpose, of course, there needs to be a factual supply of goods or services (the imitation product being marketed as well), insofar the ideas and the concepts are not a subject to protection and due to the fact the same ones cannot be imitated until realized.

The existence of an established and imposed name on the respective market is also a necessary condition for the presence of undue imitation in the meaning of Art. 35 in terms of the competitor’s interests. Only in this way the imitating trader would be interested in imitation in order to make a better product, resulting in higher profits and undue benefits. In this sense, the fact of the existence or the lack of rights under the Trade Marks and Geographical Designations Act is not relevant, so the registration of which has been affected earlier and the fact that the product produced by one of the competitors has already been placed on the market as well as acquired a reputation.

For the existence of imitation within the meaning pursuant to the Protection of Competition Act, the price of the imitated and the imitation product could also be of significance. For example, if the unscrupulous trader offers their product at a price lower than that of the bona fide, provided that the two products are similar in nature, the CPC may assume that one’s pricing behavior follows the one of the other one as well as prevents the competitor from selling a similar product at a lower price. In such regard as well as in case there is a similarity in the appearance of the products, it is possible the imitation trader to claim that the same perceives its products as similar to the imitation and acts on the principle of direct competition in respect of a product. The price would be crucial and if it were shown that in terms of a given price class, it would be essential for a consumer choice, rather than the appearance of the product, thus not linking the product’s vision to its producer. The dimensions, proportions, materials from which the goods are made and their colors are also relevant for the detection of a violation of the ban imposition. However, even in the absence of a precise equivalence in two products, it could in fact cause confusion in the perception of the end user.

According to the practice of the CPC and the SAC, when assessing whether there is an imitation within the meaning of Art. 35, para. 1 of the legal act in terms of the product appearance, the overall product visual effect and how it is perceived by the consumer shall be taken into account as well as the design as a whole and its main distinctive elements are important, which can play a significant role in the customer’s orientation on the market of competitive products offered and when shaping their choice.

On the other hand, there is a likelihood of similarity between two products is the result of the characteristics of the product itself, which shape, size and designations have been determined either by regulatory requirements or by the purpose of the product. Thus, if the process product is a mattress frame, for example, because it serves as a mattress base, although there is an opportunity to the mattress frame to be offered as a stand-alone product, its purpose is to belong to another type of product, namely a bed. In this sense, the choice of the individual consumer is not so much the type and the way the commodity looks, but above all is its price and the extent to which it is compatible as characteristics (dimensions, way of installation, etc.) with the main commodity purchased (Check Court Act No. 144/10.02.2011, Commission for Protection of Competition).

Considering what the main elements of a product are, I reckon as important to bear in mind that they are those which claim uniqueness and individual justification, prerequisites for the presence or absence of an infringement.

Imitation within the meaning of Art. 35, para. (1) of the legal act occurs not only when the appearance of a product literally copies the product of a competitor, but also when its particular elements imitate elements of the appearance of the competing goods and which, in their totality, lead to such a similarity which objectively is capable of deceiving consumers. When the overall visual effect produced by the process products is highly similar, it follows that the overall nature of the products distributed is an objective precondition for misleading consumers. Such confusion between two competing products may lead to a company’s interests being damaged by diverting demand to the imitation product, not because of its own qualities, but as a result of misconduct. The violations under Art. 35 of the legal act are not effective and the likelihood of deception is sufficient to determine the complexity of the act. In this case, the possibility for the CPC in any case to consider that there was a factual imitation of a product would be greater. However, in order to assess this imitation as a breach, there should be evidence of the existence of a reputation and a product placed on the market.

It should be noted that in terms of a case filed in the CPC, the Commission may also require opinions from third parties. Against this background, as an aggravating situation of the unscrupulous trader would be the existence of a contract between them and the supplier/producer of the imitation product under which the contract confers the second to the manufacture of specific goods with precisely defined characteristics similar to those of the imitation product. In this way, the unscrupulous conduct, namely the aim of producing a specific product resembling a product of a competitor, would be revealed. In the event that the manufacturer denies that the object of the purchase is a specific product, then it would be in favor of the infringer-trader. Thus, the initiator of the file may direct its claim directly to the producer, but, first of all, as mentioned above, it is necessary for the two companies to be competitive. In the event that a contract between the alleged contractor and the manufacturer is missing, such a lack would raise some problems in any proceedings before the CPC, as it implies a free, unwritten negotiation between the two companies, which is a prerequisite for assigning the production of a specific product, which product is imitating another one, offered by a competing company. In any case, a third-party opinion will necessarily be required.

Grounded on all mentioned-above, even assuming that the products distributed by the infringer are similar in design to the products produced and distributed by the initiator of the file, it does not mean that such a product similarity leads to an independent plea violation of the special composition of Art. 35, para. 1 of the legal act.


2. Imitation of a company, a brand or geographical designation:

Art. 35, para. 2 of Protection of Competition Act prohibits the use of a company name, a trademark or a geographical designation, identical or similar to those of other entities, in a way that may harm the competitors’ interests.

The ban is an imperative one. The prerequisites for the act composition are as it follows:

  • Identifying the usage of a mark or distinctive sign, identical or similar to those of others, which may lead to the risk of harming the competitors’ interests;
  • The competitor whose interests are affected has an established and imposed name on the relevant market.

The European practice has taken the view that when assessing whether there is a likelihood of confusion, the competent authority should focus on the overall impression created by the relevant signs, images and forms. The isolation of a single element of the aggregate as well as limitation of the confusion likelihood to this element is not allowed. Regarding the mark limitation, the practice of the competent authorities in that regard is clear – the consumers perceive the brand as a whole, without analyzing it in its details, remembering its dominant sign or as a general impression.

To the composition of the violation under Art. 35, para. 2 of the legal act, trademark and design rights are already relevant, as opposed to the breach of Art. 35, para. 1 of the same act, which were mentioned in the first item above. The brand plays a huge role in the economic activity of the economic entities and therefore its protection in the sense of the PCA is particularly enhanced. In addition to individualizing a product, the brand influences the market share and hence the revenue of the trader concerned, which is, in fact, the main reason why it is a common object of imitation.

The market recognition of a brand or a company’s name and their use in a similar way by a competing company brings undue benefits to the latter, while at the same time the bona fide trader suffers or could suffer losses as a result of misleading consumer demand. The practice of the CPC and the SAC in such cases shows that the existence of even a mere misconception about the service provider, resulting from the similar names of two competing undertakings, is an unlawful conduct. In order an anti-market behavior to be present, the company’s name/brand shall be used in a form and/or in a way that does not show a striving for distinctiveness and individualization, but rather the opposite – to seek similarities with a competing competitor with the purpose of an unlawful gain. In this respect, the second prerequisite for the complexity of the act (regarding the existence of a reputation) largely overlaps with what has been written in relation to it in the first item above.

Deviating  from the current topic, I consider as important to take into account that, in addition to the PCA, the misuse of a company’s name and/or a trademark may also be a violation of the Commercial Code, Trade Marks and Geographical Designations Act ) and the Consumer Protection Act (CPA). Furthermore, the protection under the PCA and the protection under the meaning of the Commercial Code, as well as the one, promulgated in both statutory acts mentioned above, is not mutually exclusive; penalties and costs for each individual production can be cumulated. Thus, in practice, if a company imitates a foreign trade mark or a business name, it can be attacked in several different ways, including via regulatory and judicial proceedings, with penalties being both pecuniary as well as the cessation of the infringement.


3. Domain and Website Imitation:

In addition to the aforesaid, the Protection of Competition Act also prohibits the use of a domain or an appearance of a website, identical or similar to others’ possession in a way that may guide to misleading and/or damaging the competitors’ interests. The current provision is entirely focused on online trading and positioning.

As stated in items 1 and 2, in order to be a constitutive within the meaning of Art. 35, para. 3 of the legal act, the use of a domain or an appearance on a competitor’s website should be in a way that damages or at least creates a risk of damaging the competitor’s interests. The potential risk of harming a competitor, directly or indirectly by redirecting consumer’s demand, as a result from the use of the domain imitation, is a sufficient circumstance, it is not necessary an actual deception or an actual harm to be suffered. The existence of similarity between domains should be sought in their names. Domain is just the address of the site, it does not serve to identify its content. Therefore, in the presence of identical domains, leading to pages, offering similar and interchangeable goods or services, in order for an infringement to occur, it is sufficient only to be a possibility of diverting the user from the desired result. This artificially distorts the consumer’s demand and, in fact, the user falls on a page of a competitor, whom once they can become a client. In this way, the impersonated merchant loses visitors, who are actually to become potential customers. This is the reason why the registration of a domain similar to a previously registered one in order to redirect visitors from the latter is misleading as well as contrary to good commercial practice and fair competition. The same applies to registering a foreign company or brand as a domain name. Such a registration is a sign that the owner is aiming for a bad profit and profit as well as the same is in violation of the fair competition rules.

Under the internet site appearance imitation, pursuant to the Protection of Competition Act I meant the design of the website itself, incl. the published images and other basic elements. Similarity, resulting from the unified interface of the website, such as a social network and similar fan-groups, is not reprehensible by the statutory act. This are the cases when the difference in the so-called “Fan pages” is in their content, and the similarity is in the appearance and the interface, which is entirely followed by the basis proposed by the social group itself. In such a case, it cannot be assumed that the similarities are due to the deliberate behavior of an imitation company of a foreign “fan-group” (for example, Court Act No. 1137/18.09.2013, Commission for Protection of Competition).

In any case, the imitation of a domain or a website and the imitation of goods and services should be possible without the help of specialized knowledge and skills as long as the visitors are an unlimited range of people and cannot be expected to have such ones.


4. The total prohibition under Art. 29 of the Protection of Competition Act:

However, it should be borne in mind that in case a complaint is filed, the Commission assesses not only the legal ground referred to by the applicant but also all other relevant articles that may be affected by the infringement.

Therefore, the general prohibitions on unfair competition within the meaning of Art. 29, according to which “any act or omission in the conduct of an economic activity is prohibited, which is contrary to the commercial practice and damages or may harm the competitors’ interests”.

According to CPC’s practice, the imitation is never done for itself. It is always aimed at misleading the consumer about a particular product, which in turn adversely affects the competition. The fact that an imitation in the sense of the legal act cannot be proven in any case, it does not always mean that there is a fair commercial conduct and a lack of infringement.

In order to the composition of Art. 29 of the statutory act to be fulfilled, CPC and SAC practice requires, in addition to establishing a competitive attitude between the parties, also an act or omission of the competitor, which is in conflict with the commercial practices and/or potentially damaging the interests of its competitors to be existent as well. According to the CPC, “good-faith commercial practice” is the rules, governing the market behavior that derive from laws and customary commercial relations and not violate good morals. In this respect, even if the Commission does not find a violation under Art. 35, it may be considered that the defendant, in view of their conduct on the market, violates the general prohibition under Art. 29. This would be the case if it is established that by its conduct the defendant artificially distorts the consumer’s demand, which predisposes or leads to distortion of the competitive environment, increases the incomes of the unscrupulous trader and reduces them to the bona fide. For the latter, there is no need to prove the reputation of the commodity imitated, but only the fact of similarity that one party takes advantage of, even in the mind of the consumer, that the latter does not buy a reputable product. If a non-imitation, but a misleading look, is found to be misleading, the offender acts in a bad faith in the conduct of their business and damages their competitors. The misleading appearance of distributed products has a negative impact on the market as it creates the risk of demand shifting, which is detrimental to the interests of the bona fide trader. In order to violate Art. 29 of the statutory act, not only a result is needed, but a possibility of harm as well.


5. Proceedings before the Comission. Sanctions:

A litigation before the CPC in terms of unfair competition may only be filed by a competitor of the offender. The petitioner and the defendant must have companies, engaged in a similar commercial activity, related to the sale of interchangeable products in terms of their characteristics, purpose and prices on the same product and geographic market. If this prerequisite exists, the CPC shall consider a complaint if deposited.

If a violation is found, all or part of the costs incurred by the claimant are attributable to the infringer (of course, only if they are claimed in the course of proceedings, and the CPC does not award them ex officio). The Commission cannot award a compensation to the claimant, but could only a fine and rules a cessation of the infringement. Compensation for damages can be claimed by the injured entity in accordance with the Civil Procedure Code.

In the course of a possible case, the parties have the opportunity to present evidence in defense of their case. As I have pointed out, one of the most crucial issues to prove is the presence or lack of reputation. For this reason, it is advisable to order any prospect to prove such a reputation (it may be possible to design a marketing team, but then the burden would be less), surveys on consumer confidence in terms of brands and products on the relevant market. This could be a market analysis, a questionnaire for consumers and others, and the positive conclusion to the applicant would be that it was marketed as a quality brand.

Infringements in the area of ​​unfair competition are generally characterized by a lower degree of public danger than other types of competition infringements. For violations of the Protection of Competition Act, the CPC imposes a pecuniary sanction of up to 10 per cent of the total turnover for the previous financial year of an undertaking or association of undertakings for a violation of the unfair competition prohibition. In the case of unfair competition, the CPC methodology provides a sanction of up to 8% of the net sales revenue for the previous financial year, and for imitation, the practice is the sanction to be about 2% of the net sales revenue for the previous financial year. The CPC’s ruling is not a final one and may be appealed to a three-member panel of the Supreme Administrative Court.