Monday, 8 April 2013

Copying an assortment of unprotected products

Author: Simon Vander Putten (Altius, Brussels)

Cousins & Co v Melan (docket no 2011/RG/313), Court of Appeals, Mons (Belgium), 29 October 2012, not yet published

Journal of Intellectual Property Law & Practice (2013), doi: 10.1093/jiplp/jpt050, first published online: April 3, 2013

Despite finding that an assortment of luminous ball decorations was not protected by intellectual property rights and could be freely copied, the Mons Court of Appeal held that consumers could be misled by confusing similarities between the website and trade dress of an original business and a competitor selling an almost identical assortment of products, and ordered the competitor to modify these aspects of its business in order to prevent confusion.

Legal context

Figure 1. Illustration of the type
of luminous garlands in dispute
(courtesy of Mélanie Grégoire,
 used with permission.)
The Belgian Market Practices and Consumer Protection Act of 6 April 2010 transposes Directive 2005/29 concerning unfair business-to-consumer commercial practices in the internal market (the ‘Unfair Commercial Practices Directive’), including the prohibition against misleading product marketing (Article 6(2)(a) of the Directive).

Article 95 of the Belgian Act also contains a catch-all provision, according to which ‘all acts contrary to honest market practices by which an undertaking harms or may harm the professional interests of one or more other undertakings are forbidden’. This provision does not arise from EU harmonization.

An injunction to stop any of the acts described above can be claimed in court through accelerated proceedings on the merits.

Facts

French company Cousins sold garlands of lights made of fabric balls, available in different colours. The garlands could be hung from the ceiling or on a stand and could serve as lighting or for mere decorative purposes. Cousins sold the lights through regular shops and its website, where consumers could choose colours to create a custom-made garland.

Considering itself harmed by actions of Melan, a Belgian company that sold almost identical luminous garlands under the trade name ‘Happy Lights’, Cousins sought an injunction to stop these practices, alleging that Happy Lights created confusion by assuming its business concept and by presenting its website and shops in too similar a way and, in doing so, took unfair advantage of Cousins' investment (parasitic competition).

The first instance court held that there were no exclusive rights on the assortment of products sold by Cousins and found no possible confusion between the two businesses' websites and shops. The claimant then filed an appeal.

Analysis

The appeal court first noted that a concept or idea could only be protected under copyright where it was embodied in a concrete form. It then found that the franchise agreement, know-how manual and pre-contractual information documents put forward by Cousins were not embodiments of original creative efforts but only signs of efficient commercial development of and intense marketing efforts surrounding a product with no originality. When analysing the similar assortment of products sold by Happy Lights, the court, like the trial judge, pointed out that Cousins did not invent the items and that copying such an assortment could not be legally criticized in the absence of intellectual property rights, such as a design protection.

The court then analysed the claims under unfair competition law. In line with the first instance court's reasoning, the appeal court stated that, where the alleged acts fall within the scope of the Unfair Commercial Practice Directive and are allowed under it, they cannot be otherwise prohibited under the general clause of Article 95 of the Market Practices and Consumer Protection Act, since the Directive achieves a full harmonization. Thus, if acts likely to harm the commercial interests of an undertaking (Article 95 of the Act) are also likely to affect the economic interests of the consumers, the criteria in the Unfair Commercial Practice Directive will be relied upon to assess whether to prohibit or allow those business activities.

After finding that the alleged acts affected consumers and were thus within the scope of the Directive, the appeal court analysed the alleged misleading character of Happy Lights' product marketing.

The court compared the parties’ websites and noted that Happy Lights used a similar website structure and a substantial amount of Cousins's content, including the online garland creator (in relation to its general aspects, colours, text, fonts and the layout and display of sections). The court also found similarity in the websites’ source codes and noted that there was infringement of the database rights protecting the website, namely the maker's rights that had been transferred to Cousins by the designer.

With reference to the shops, the court found that the decoration, furniture and fittings of Happy Lights’s shops seemed largely inspired by those chosen by Cousins. In particular, the court observed that Happy Lights also used Plexiglas tubes to display the garland balls, a counter with boxes to display the larger luminous balls and orange and chocolate brown colours on the shops' walls. Finally, the court underlined the identical graphic style used to display the product prices.

The appeal court concluded that, by its numerous ‘borrowings’ from Cousins's marketing and its extraction and reusing of the database from the garland creator, Happy Lights created confusion for consumers with an average level of attention, who could have the global impression that the parties' respective activities originated from a single undertaking. The appeal court noted that similarities between the two businesses clearly superseded the differences, including the difference between the parties’ respective trade names (namely ‘La Case de Cousin Paul’ versus ‘Happy Lights’). The court further qualified these unfair practices as parasitic competition because of their accumulation and persistence.

The appeal was upheld and the court ordered Happy Lights to modify its website structure—in particular the online garland creator—and the trade dress of its shops so as to desist from the parasitic copying practices.

Practical significance

This decision confirmed a 2009 Supreme Court judgment that established that, where no intellectual property right protects a product or service, unfair competition law may not be used to fill the gap (Cour de cassation, Belgium, 29 May 2009, Marquet & Cie v Orac, docket no C.06.0139.N, available at www.juridat.be). By this judgment, the Supreme Court stated that, given the principle of freedom of copy, a seller that has made no creative effort and who benefits from the efforts or investment in any economic creation of another seller does not act contrary to fair trade practices. However, the Supreme Court specified that a judge could still consider such an advantage to be illicit in cases where intellectual property rights are infringed, where advertising creates confusion, and in the case of other related illicit acts.

This principle that a product not protected by any intellectual property right cannot, as a rule, have any protection under rules of unfair competition law—rules that apply, in turn, to the accompanying circumstances—has been criticised by some authors for potentially contradicting Article 10bis of the Paris Convention for the Protection of Industrial Property as revised, which requires signatory states to ensure that their nationals enjoy effective protection against unfair competition.

The appeal court of Mons quoted the 2009 Supreme Court decision, adding that a restrictive approach against parasitism had to prevail, given the freedom of competition principle.

The appeal court applied this principle to a whole assortment of products by deciding that it could be freely copied. Thus, the decision highlighted here rightfully considered that the freedom of competition implies the right to take advantage of an entire business model, including the same collection of products and method of sales.

However, the decision reflected that there are also limits to free competition where the accompanying circumstances are either contrary to a legal provision, such as those designed to prevent misleading commercial practices (here, the website and the shops created confusion), or infringe intellectual property rights covering something else than the products themselves (here, the database rights on the website were infringed).

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