In this alert, we will comment on how to recognise and defend yourself against acts that the Unfair Competition Act (the Act) does not clearly define as unfair competition, but that obviously hurt your business.

The Unfair Competition Act contains a rather lengthy list of acts that are explicitly named unfair competition torts. They fall in several groups. The typical examples are using false or misleading markings, soliciting employees or clients, and unfair advertising. If your rival commits one of these, you may very likely have an evident claim based on the explicit language of the Act.

Although the list is rather long, it is by no means exhaustive. As often happens in practice, your competitor’s behaviour, though seemingly harmful, does not clearly fit into this long list. Many market practices evade strict legal definitions.

By way of example, launching a product that is misleadingly similar to a rival product, while not copying it verbatim, may definitely harm you, though it would not entirely meet the statutory definition. Such situation may involve launching a hobby magazine for seniors, whose title and features only slightly differ from yours, but they may nevertheless easily mislead the distracted consumers. Another example is your former distributor offering motor oil in packaging and with markings resembling yours, suggesting that it’s the same product, only cheaper – while the barrels contain something completely different. Unfortunately, such conduct – albeit harmful and dishonest – may not easily fall within the statutory definitions.

Does it mean that you are deprived of any effective defence and your rival is to get off scot-free?

This is not really the case, and you may still challenge your rival under the general catch-all clause of the Act. Under this provision, unfair competition is any act contradicting the law and/or good custom, if it threatens or breaches another entrepreneur’s or a customer’s interest.

Any behaviour meeting said criteria qualifies as unfair competition. It means that you will be able to rely on the Act offering you certain defence and indemnities to the same extent as in a case of clearly defined torts.

It will very often be conduct that is contradictory not as much to particular statutory provisions, but to good custom in general. The term “good custom” can be defined as any generally observed market rules, boiling down to fair play on the “live and let live” basis. All sorts of industry codes of ethics and best practices will come in handy. A breach of such code will very likely be a breach of “good custom”. In any case, you need to gather a good set of arguments and evidence confirming such a breach.

Summing up, even if a rival’s objectionable behaviour threatening your business evades statutory definition on numerous acts of unfair competition, you are not left defenceless. It is possible to pursue a line of argumentation to convince the Court that certain actions are unlawful and disadvantageous to your operations.