EU Report on Parasitic Copying Highlights the Need for More Robust Legislation on Lookalike Products

LONDON, 13 January 2011 - Today the European Commission (EC) has released the results of a European Union (EU) wide study on parasitic copying. Parasitic or look-a-like products are used by manufacturers to boost sales by confusing and misleading consumers by drawing a link between their white label products and the market leader's branded goods.

Hogan Lovells has spent over six months compiling the report for the EC, which analyses to what extent different legal systems in the EU address the problem of look-a-like products.  The Report makes a number of observations on best practice and highlights how parasitic copying can be discouraged.

The report highlights the fact that there is a concern amongst manufacturers that parasitic copies not only offer competitors an advantage that amounts to unfair competition but also cause consumer confusion.
The disparities in EU law, with regards to what can be protected, make efficient and cost-effective protection against parasitic copying increasingly difficult.

Some key considerations for businesses to protect their branded products across the EU are:

• National laws on unfair competition currently provide more effective protection than EU law.
• To avoid serious loss of revenue it is important for businesses to be aware of what action can be taken in different EU Member States and identify where protection or enforcement may not be effective.
• Whilst the enactment of the EC Unfair Commercial Practices Directive has improved the protection available to rights holders against parasitic copies in a few Member States, this appears to be the exception rather than the rule. 

Sahira Khwaja, of Counsel at Hogan Lovells and co-author of the Parasitic Copying Report with partner David Latham, said:

"The key message to come out of this study is that, as the law stands, the approach to parasitic copying across the EU is inconsistent.  Member States do not regard the primary purpose of the Unfair Commercial Practices Directive to be the prevention of parasitic copies.

"Although it is open to Member States to prevent parasitic copying under the Directive, many choose not to do so because it focuses only on consumer protection, ignoring or downplaying the effects of business-to-business unfair competition As a result, any protection provided is, at best, incidental."

David Latham, partner in the London office said:

"Consideration should be given to extending relevant provisions in the Enforcement Directive to parasitic copying cases so that they are uniformly and clearly available across the European Union, as this does not currently appear to be the case.

"Specialist courts should be the only judicial arena in which claims relating to parasitic copying are heard. At the moment, some claims are not heard by judges with experience of IP rights or with experience in the area of parasitic copying.  In the majority of cases, it would be sufficient if they were heard in the same courts as trade mark infringement and unfair completion claims. This would not only be cost effective but it would save a great deal of time."


About the reports

There are two separate reports - one focuses on trade secrets and the other on parasitic copying. The reports were compiled using a series of questionnaires and literature reviews using Hogan Lovells' European network of specialist intellectual property lawyers as well as other specialist contacts of the firm. The reports focus on the civil law but given that the criminal law is an important means of protection of trade secrets in some Member States we have included some commentary on the criminal law in that report.

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