COMPETITION • FRENCH LAW • UNFAIR COMPETITION
Economic parasitism (free-riding) consists in placing oneself in the wake of others, relying on the efforts and initiatives of an economic operator, whether a competitor or not, to gain customers. The parasite is a follower in terms of behavior which generally adopts the same or almost identical elements as those that have contributed to the success of an undertaking in order to benefit from them without any cost to itself, i.e. without any intellectual, promotional or financial investment.
Parasitism can either occur through parasitic behavior or parasitic competition with the interested parties in a relatively close competitive situation and having a common end customer base, or through acts of parasitism, in which the parties are not in a situation of competition because they have no customers or have a totally different set of customers. The concept of parasitic behavior was first developed by legal theorists in connection with trade mark infringement and has since been applied more generally by the courts. According to the traditional concept of parasitic behavior, an unfair practice had to involve an attempt at taking over the customers of another undertaking. However, it became progressively evident that this definition was too narrow and that an act could be unfair in spite of the fact that it was not aimed at the appropriation of clients. Thus, one can act unfairly towards an undertaking that does not actually have any clientele of its own or that does not come within the definition of a business. In some cases there does not even have to be a shared customer base. As unfair conduct can be equated to an abuse of the freedom to trade, if the act in question violates that principle it is unlawful: any person “who free-rides on the coat tails of another by taking advantage of the efforts he has made and his name and reputation” acts unlawfully. This theoretical definition was later enshrined by the commercial chamber of the Court of Cassation: “economic parasitism is defined as any behavior by which an economic operator rides on the coat-tails of a competitor in order to take advantage, at no expense, of its efforts and know-how”.
Free-riding manifests itself by the usurpation of the work or reputation of others. In the first hypothesis, even if the attempt to induce confusion is not a condition for the offense, in practice, a distinction must be made between usurpation of another’s work by misappropriation of knowledge or know-how and imitation of a product or work. In the first case, the courts sanction the unfairness of obtaining the information, regardless of the confusion involved. In the second case, they punish the free-riding on a pre-existing reputation, which is achieved either by copying elements characteristic of another’s work, leading to the acquisition of customers, or by the slavish reproduction thereof, which leads to a risk of confusion or association. The misappropriation of another person’s reputation may consist in taking over the corporate name, trade name or domain name of another undertaking, imitating the characteristic elements of its trademark or making undue reference to it. Undertakings sometimes resort to an advertising strategy known as “ambush marketing”, which consists in associating their commercial image with that of a sporting or cultural event in order to benefit from its media impact, without paying the related fees and without having obtained prior authorization from the event organizer.