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To what extent are companies allowed to imitate products? A new general ruling from the Dutch Supreme Court

To what extent are companies allowed to imitate products? A new general ruling from the Dutch Supreme Court

In the Netherlands, all products and their packaging, in some circumstances, are in principle protected against ‘slavish’ imitation. Now, the Dutch Supreme Court has explained – in a case involving jewellery – which conditions the claimant must meet if he wants claim this type of protection successfully.

Criteria for slavish imitation

The Supreme Court has formulated the following criteria (all quotes below are office translation):

‘In the matter of imitation of a material product that is not (or no longer) protected by an absolute right of intellectual property, imitation of that product is, in principle, free, although this principle is subject to exception if that imitation is feared to cause confusion among the public and the imitating competitor fails to fulfil his obligation to do all that is reasonably possible and necessary to prevent the risk of causing confusion between the two products without impairing the soundness or usability of his product (Supreme Court, 20 November 2009, ECLI:NL:HR:2009:BJ6999, Dutch Law Reports 2011/302 (Lego)). Imitation that causes unnecessary confusion is a kind of unfair competition, against which a defence can be conducted in proceedings claiming an unlawful act. This is consistent with the obligation included in Article 10 to paragraph 1 and paragraph 3, under 1, of the Paris Convention for the Protection of Industrial Property (Treaty Series 1980, 31, hereinafter: Paris Convention) that the countries party to the Convention must offer protection against unfair competition, and for that reason, must prohibit “all acts of such a nature as to create confusion by any means whatsoever with the establishment, the goods, or the industrial or commercial activities, of a competitor”.’

To put it briefly: the claimant can claim protection against the slavish imitation of a product pursuant to Article 6:162 of the Dutch Civil Code, which is the article that provides for unlawful acts. Slavish imitation creates a claim against the imitating party. In this case the claimant demanded, among other matters, an injunction on the marketing of the products in question (a jewellery line).

The obligations of the imitating competitor

According to this ruling, the imitating competitor has an obligation ‘to do all that is reasonably possible and necessary to prevent the risk of causing confusion between the two products without impairing the soundness or usability of his product’. If that competitor violates that obligation and consequently causes ‘unnecessary confusion’, the claim will be successful on the grounds of Article 6:162 of the Dutch Civil Code.

Conditions for the claimant’s product

The Supreme Court sets a number of conditions for the product for which protection is claimed. The most important of these is that the claimant can prove he has an ‘own look’:

‘There can be confusion regarding an imitated product only if that product has its “own look” on the relevant market, by which we mean: its outward appearance is distinctive from other, similar products on that market (also known as the Umfeld). The degree to which that product must be distinctive from those similar products if the appearance of its imitations is to be deemed to potentially create confusion depends, among other things, on the nature and quantity of similar products that are on the market in question at that time.’

This means that a product can have less or more of its own ‘look’ or distinctiveness on the relevant market, which is determined by the other products on the market. Considering that the claimant often knows his own market (well), he will be quite capable of determining the distinctiveness of his product on the grounds of that criterion.

The Supreme Court does not explain here which market(s) is/are relevant. It might be easy to define the market for jewellery, but there are cases conceivable in which products are complementary or substitutable and that might not be (or could not be), at first glance, considered as belonging to the same market. The lower courts will need to define such markets.

The Supreme Court also rules ‘that popularity, familiarity or a large market share do not necessarily mean that a product has its own look on the market, in the sense that, as far as outward appearance goes, it is distinctive from other, similar products on that market’. Therefore, if I read the ruling correctly, those circumstances alone do not mean that the product itself is familiar too.

The claimant must protect its product

The Supreme Court stresses that a product’s distinctiveness is not a constant value: ‘A product’s own look can diminish and even disappear (“dissolve”) as more similar products appear on the market and maintain their position on that market.’ This mainly means that the Supreme Court forces – to a certain extent – the claimant to actively act against slavish imitations on the market, and seeks protection:

‘Insofar as slavish imitations of the product are involved, the party who puts that product on the market may be required, in some circumstances, to make the necessary efforts to deter those imitations from the market for the purpose of preserving the look of his product on the market. The degree of effort required from the party concerned will depend on the circumstances of the case. Nonetheless, in general that party cannot be required to deal with all competitors who put imitations on the market at the same time indiscriminately, regardless of their market share, for instance (compare Supreme Court 13 November 2015, ECLI:NL:HR:2015:3307 (The Pirate Bay)).’

Accordingly, the claimant must uphold his own position in relation to others and protect its product. As the Supreme Court rules, it cannot be defined, in a general sense, when the claimant has taken sufficient action. In all events, the claimant does not need to act against all products that are slavish imitations. It is worth pointing out as well that the Supreme Court, in this respect, speaks of ‘dealing’ with third parties. It is not clear what exactly can be required of the claimant at which point; that is to say, whether sending a cease and desist letter will be enough or whether the claimant should actually take (a) rival(s) to court by demanding an injunction. We could perhaps deduce, from the fact that the Court of Appeal’s ruling – on which the Supreme Court was to judge – was upheld and in which the Court of Appeal seems to be quite critical of the claimant, that the standards are high. It is of great importance, therefore, to be vigorous about taking action.

The main criterion: the risk of confusing the public

In essence, the claimant can take action, claiming the unlawful act, if there is a risk that the public will be confused because the defendant has put a product on the market that is similar to a product of the claimant (that already exists). Although the Supreme Court has only used the word confusion a few times, it has emerged, from legal precedents, that the risk of confusion, in principle, will suffice. How should one assess ‘confusion’? When is there a risk of confusing the public?

The main criterion is that, due to the similarity between the products, the public might confuse the products, or, as the case may be, that similarity may influence the public’s purchasing decision. The decisive factor in this matter is the overall impression. According to the Supreme Court, the public is ‘not very observant’ and ‘will not often see the two products together’. I wonder whether the same applies to cases in which the products are higher priced and in which the public, in principle, gives (more) thought to the decision concerning the purchase. Only time will tell.

Overall impression

The lower courts must also pay attention to ‘the overall impression of similar products’ and whether there is (a risk of) unnecessary confusion among the relevant public; to do this, the courts may also examine all the relevant circumstances of the case. The question is whether the courts should primarily (or solely) concentrate on the overall impressions of the claimant’s and the defendant’s products or whether the courts may also – taking a wider view – include the overall impressions of products in the Umfeld when examining the issue of unnecessary confusion. If the latter is correct, it is possible that less confusion is caused if the distinctiveness of a product is smaller (and the Umfeld is therefore ‘busier’), which will also depend on the degree of similarity between the products concerned. And in that case, the opposite might also possibly be true. That is to say, if the claimant’s product is the only one on the market, there will be a (much) greater risk of confusion as soon as the imitator launches his product on the market – which could also be the case if there is less similarity between the products.

A practical assessment of confusion

Because whether the case involves unnecessary confusion or not depends on ‘all circumstances’, the lower courts will (or should) consider a number of practical aspects in the examination of each case:

‘For the examination, the courts do not need to assume that, regarding the issue of confusion, the features that are similar must be given more weight than the features that differ. It will also depend on the circumstances of the case as to whether, and to what extent, the public will allow itself to be led, within the context of a purchasing decision, by the way the products are or have been experienced after the purchase (“post sale”), whether the public will (also) pay attention to features that are not visible during use and to the packaging of the various products.’

And ‘moreover, there will also be no cause to make a distinction the more confusion, if any, relates to the products themselves (“direct confusion”) or to their origin (“indirect confusion”).’ After all, both if the public confuses the imitation for the original and if the public thinks that the products concerned – even if they are not identical but have a similar overall appearance – are from the same company or from companies that are economically related, confusion arises that could affect the public’s purchasing decision. The unfair competition against which the countries party to the treaty pursuant to Articles 10 to paragraph 3, under 1, of the Paris Convention (and Article 2, paragraph 1, of the TRIPS Agreement) should offer protection covers both the confusion concerning the wares and confusion pertaining to the ‘establishment (…) or the industrial or commercial activities of a competitor’.

This all might mean that sticking another brand name to the imitated product (and/or its packaging) cannot remove its illegality. In addition, the actual usage of the product after its purchase might be considered for the examination of the issue of confusion. The products do not need to be identical for a claim against slavish imitation to be successful.

Conclusions

In this ruling, the Dutch Supreme Court clearly explains the parameters for obtaining an injunction on slavish imitation in the Netherlands, which is important, as this injunction can be claimed if the claimant cannot claim any other intellectual property rights such as copyrights, trademark rights or design rights. We can draw the following conclusions from the ruling:

  • if the claimant has put his product with its own look on the market, he will be able to take action successfully against identical or matching products that are unnecessarily confusing.
  • the claimant must actively protect the own look of its product(s) on the market (at law) by sending demand letters and/or by instituting legal proceedings. If the claimant does not do this, the claimant could lose the own look.
  • the defendant has an obligation to do all that is reasonably possible and necessary to prevent the risk of causing confusion between the two products without impairing the soundness or usability of his product.
  • the overall impression of the products is decisive, because that impression may cause the public to confuse the products and could affect the public’s purchasing decision.
    there are two kinds of confusion: direct and indirect confusion. Both kinds of confusion can be prohibited.
  • all circumstances of the case should be considered, including, but not limited to, the usage of the products following their purchase and how the packaging looks.

Joost Becker, intellectual property lawyer

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