Unfair competition - what is it and how to defend against it?

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Compliance with the principles of fair competition in the market should be a priority for every entrepreneur. The problem, however, is that some companies do not follow such a recommendation at all. In such a situation, the law allows the use of certain tools and transfers the relevant claims to the aggrieved party. The article will explain what unfair competition is and how you can defend yourself against it.

What is unfair competition?

Before we move on to discussing the catalog of claims due to an entrepreneur against whom unfair competition is applied, it is first necessary to explain exactly what this concept is.

Pursuant to Art. 3 of the Act on Combating Unfair Competition, an act of unfair competition is an act that is against the law or morality, if it threatens or violates the interest of another entrepreneur or client.

The acts of unfair competition are in particular:

  • misleading designation of the company;

  • false or fraudulent indication of the geographical origin of goods or services;

  • misleading designation of goods or services;

  • breach of trade secrets;

  • inducing the termination or non-performance of the contract;

  • imitation of products;

  • slander or dishonest praise;

  • obstruction of market access;

  • bribery of a person holding a public office;

  • unfair or prohibited advertising;

  • organizing an avalanche sales system;

  • running or organizing activities in a consortium system;

  • unjustified extension of payment terms for delivered goods or services rendered.

In fact, the number of acts of unfair competition is huge, a lot in this regard depends on the ingenuity of a given enterprise. The basic determinant, however, is the conflict with the law or good business practices.

The Supreme Court's judgment of October 9, 2019 (file reference number I NSK 61/18):
All acts defined in the Act on Combating Unfair Competition are contrary to good practices. Moreover, Art. 3 sec. 1 u.z.n.k. allows for the recognition of acts of unfair competition also other behaviors of the entrepreneur, not covered by the provisions of this Act, which are prohibited under other acts or contrary to morality, while infringing the entrepreneur's interest. Establishing good manners within the meaning of the Act on Combating Unfair Competition takes place taking into account the purpose of the Act, which is to ensure equal and undistorted conditions of competition. In the context of relations with consumers, actions that are aimed at misinformation, disorientation, misconception in the customer, taking advantage of his ignorance or naivety, i.e. actions that are commonly referred to as unfair, unreliable, deviating in minus from accepted standards of conduct.Whether a given action is contrary to morality is determined by the entirety of the circumstances, especially the goal, means used and consequences of the actions taken.

Unfair competition - claims

If an act of unfair competition takes place, the aggrieved entrepreneur has the right to defend his position on the market. In such a situation, the regulations grant him a number of different claims against an entity that violates the law or decency in the market.

In the event of an act of unfair competition, an entrepreneur whose interest has been threatened or infringed upon may request:

  • cessation of unlawful activities;

  • removing the effects of prohibited activities;

  • submitting a single or multiple declaration with appropriate content and in an appropriate form;

  • compensation for the damage caused, on general terms;

  • issuing unjustified benefits, on general terms;

  • adjudication of an appropriate amount of money for a specific social purpose related to supporting Polish culture or protection of national heritage - if the act of unfair competition was culpable.

Interestingly, a claim can be made regardless of whether a given entrepreneur has suffered a loss as a result of unfair actions of its competitor. It is sufficient for the behavior of the other entrepreneur to be contrary to the law or morality and to the interests of another company.

Which claim offered by the legislator will, however, be appropriate for a given entrepreneur? In order to answer this question, it is necessary to examine the circumstances of a specific case and adjust the aggrieved entrepreneur's demands accordingly.

The Supreme Court's judgment of 22 March 2017 (file reference number III CSK 86/16):
On the scope of application of sanctions under Art. 18 u.z.n.k. decides the type of act of unfair competition committed by the defendant and the consequences of unlawful behavior. The claim for abandonment is a measure of civil law protection of the entrepreneur's interests, violated or threatened as a result of the act of unfair competition, and is of fundamental importance for ensuring the effectiveness of the system of protection of broadly understood intangible property rights and interests protected by the provisions of the Act. Its purpose and essential function is to put an end to unlawful activity as quickly as possible and to prevent unacceptable action in the future. This claim serves the aggrieved entrepreneur primarily in a situation where the act of unfair competition has already been committed and the unlawful condition continues, or when, due to the nature of the unlawful action or the cessation of the infringement, the illegal condition does not exist at the time the action is brought, but there is real danger of repetition of the violation.

Unfair competition - how to take advantage of claims?

The first step that every aggrieved entrepreneur should take is to send an appropriate summons to the infringer - necessarily in writing. Such a declaration should first of all indicate the demand for immediate cessation of acts of unfair competition. It is equally important to indicate exactly what acts are involved and when they were committed. Depending on the circumstances of a given case, the aggrieved party may take advantage of statutory claims - especially when the violations have already caused negative market consequences for a given entrepreneur. The summons should also specify the consequences of failure to comply with the demand - they will be primarily the possibility of bringing the case to court and bringing a claim for damages from the infringing party. It is also worth noting that the letter is the final call to stop violating the principles of fair competition and will not be repeated if it is ignored (in this case, the aggrieved party has the right to directly initiate a court case against the dishonest entrepreneur without the need to inform him in advance about the filed lawsuit).

A call for an end to infringement is not a mandatory step when unfair competition arises. The aggrieved party may immediately initiate a court case against a given entity. In practice, however, drafting a summons is a good solution, because in the event of a possible court case, it shows that the aggrieved party tried to resolve the problem in an amicable way - it strengthens his position in the court from the very beginning.

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Unfair competition - limitation of the claim

Regardless of the type of claim the entrepreneur is entitled to for breach of the principles of fair competition, it must be remembered that each of them is statute-barred. If too much time elapses from committing a prohibited act or breach of good commercial practice, the infringer shall not bear any responsibility.

Claims for acts of unfair competition expire after 3 years, with the limitation period starting separately for each infringement.

Judgment of SA in Wrocław of 5 July 2013 (file reference number I ACa 613/13):
Limitation of claims begins when the aggrieved party learns about the act of unfair competition and about the person responsible for its commission. Undoubtedly, both of these conditions must be met jointly, which means that the entitled person is aware of the existence of all constitutive elements of his claims. On the other hand, the concept of "becoming aware of this deed" should be understood as meaning that the injured party is aware of the constitutive features of a tort of unfair competition. This means that the limitation period begins when the aggrieved entrepreneur becomes aware of the fact that an act of unfair competition has been committed against him, the person of the perpetrator and the relationship between the perpetrator's action and the act, or - in the case of compensation claims - a causal relationship between such action and the damage.

Unfair competition - summary

Violation of fair competition is associated with unlawful activity of the other entrepreneur, which sometimes may also take the form of a conflict with good commercial practice. In such a situation, the aggrieved entrepreneur has the right to use the claims guaranteed by the Act on Combating Unfair Competition. The basic right here is the demand to stop the infringement and repair the damage. The aggrieved entrepreneur may exercise his rights both in pre-litigation (by drawing up a summons to stop infringement) and in the course of court proceedings (by filing an appropriate lawsuit against the infringer).