Parasitism is a form of conflict between companies. It consists of one company following in the footsteps of another to take advantage of its know-how and research and development (R&D) efforts, both human and material. It then benefits from the reputation established by the other company.
This is an unfair way of doing business. Parasitism is an act of unfair competition for which the perpetrator is liable in tort.
The expertise of an unfair competition lawyer is invaluable in cases of parasitism. While healthy competition is normal, certain practices can render a company liable. And it is important to act quickly when faced with parasitic or reprehensible behaviour. An expert competition lawyer will advise you on the exact nature of the facts, their materiality and the legal action to be taken to put an end to the disturbance and obtain compensation for the damage caused.
In a tense competitive market, not every means is a good one for capturing market share. Gaining a competitive advantage over another company can be done in compliance with the principle of fair competition. Otherwise, the company is abusing its entrepreneurial rights and incurring liability.
What is parasitism?
Parasitism consists of following in the footsteps of another company, taking undue advantage of the efforts made by the latter. The company committing the act of parasitism thus saves effort in order to achieve the same result.
Parasitism is very often invoked alongside an infringement action when an intellectual property title is claimed by the victim. There is no obligation to do so, and parasitism can be punished on its own, on the basis of an act of unfair competition. This is known as parasitic competition or unfair competition and parasitism.
Article 1240 of the Civil Code (formerly article 1382 of the Civil Code) defines civil liability as “Any act of man, which causes damage to another, obliges the person through whose fault it occurred to repair it“.
The concept of parasitismis a creation of case law and evolves with the economic market and competitive practices. Moreover, the courts no longer require that a position of real competition exist between the two companies. Parasitism is therefore distinct from unfair competition.
Historically, as early as 1959, the Court of Cassation found the creators of the “serious cow” guilty of parasitism, given the obvious reference to the Laughing Cow.
In all cases, the elements required to hold the author liable must be present: a fault, a loss and a causal link between the two.
There are different forms of parasitism:
- taking advantage of a company’s or brand’s reputation,
- taking advantage of a company’s material and human investments.
The existence of a risk of confusion is not a condition for parasitic competition.
What to do in the event of parasitism
As soon as you notice any parasitic act or behaviour, consult a lawyer. Time is a precious ally. Your lawyer specialising in competition law knows how to send a formal notice showing your determination and surprise.
If the formal notice has no effect, an action for unfair competition must be brought before the Commercial Court. This action can be brought for 5 years. If necessary, your lawyer can consider pre-trial investigation measures. Attempts at amicable resolution and negotiation are still possible.
Summary proceedings may be considered in urgent or obvious cases. Interim prohibition measures can be taken to put an end to the disturbance.
Proceedings on the merits take time, but make it possible to put together a solid case to obtain compensation for the damage suffered as a result of parasitic acts.
Why use a lawyer in cases of parasitism?
Alawyer specialising in parasitism is a competition law strategist. He knows the limits of fair and healthy competition between companies. Your lawyer will advise you on what action to take in the event of parasitism. The courts do not require competition between the two companies.
Your lawyer will establish the existence of the 3 elements that make it possible to hold the perpetrator of parasitism liable:
- Fault: this is constituted by the usurpation of someone else’s economic value, by the reduction of their investment, by the time saved, by the absence of risk-taking. Following in the footsteps of another company undoubtedly requires an element of intent. Parasitism is difficult to achieve through carelessness. Not every imitation of another is punishable. For example, copying a competitor’s offer, which is common in the profession, is not parasitic behaviour.
- Damage: the reality of damage can be seen in the loss of sales, damage to the company’s reputation, consumer testimonials showing that they have confused the two companies, and so on. Non-material damage is important because it is difficult to show that a reduction in sales is linked to parasitic behaviour.
- The causal link: trial judges have sovereign power to assess the evidence of causality, subject to review by the Cour de cassation.
A competition lawyer gathers all the evidence of parasitic behaviour. He will have bailiffs’ reports drawn up in due and proper form to establish the materiality of parasitic behaviour.
Your lawyer will assist you when you lodge a complaint about parasitic behaviour. He will assist you throughout the legal proceedings and adopt the best strategy.
What are the penalties for parasitism?
Your lawyer will require you to put an immediate stop to acts of parasitism, possibly subject to a fine. You can also demand preventive measures to prevent such acts from being repeated.
Your lawyer will also seek damages depending on the seriousness of the harm established. If you are unable to establish material loss, you will at the very least seek compensation for non-material loss. The investments made by your company are the same as the investments not made by the parasite.
Finally, you can ask for the judgment to be published. This is a blow to the company that committed the parasitic acts, as well as to any companies that might have the idea of engaging in acts of unfair competition. It is always a good idea to show that the company is equipping itself with adequate means of defence.
Good to know:if the action is related to an infringement action, the main action is brought before the judicial court, rather than the commercial court. The court’s jurisdiction is part of the defence strategy.
The courts build up examples of parasitic behaviour as they go along. Here again, the rise of new technologies and e-commerce is unsettling judges. We will look at some of the cases in which parasitism has been recognised.
Examples of parasitic behaviour
For example, does the choice of a domain name similar to that of another company constitute an act of parasitism? The principle of speciality in trademark law means that a domain name must be used to refer to a website containing goods or services similar to those protected by a trademark. Where this is not possible under trademark law, parasitism is likely to come into play.
For example, registering a domain name that includes the non-distinctive trade name of a competitor constitutes a punishable parasitic act (c2euros case, 17 March 2015).
In other cases, parasitism has been recognised for a reproduction of photographs of a bouquet of flowers on a competitor’s website (Cour de cassation, 9 December 2016). According to the judges, “such a presentation to market similar products through the same distribution channel, making it possible to economise on the efforts made, is not in itself unfair. Only a capture of investments made in unfair circumstances are likely to characterise a fault of parasitism“.
Recently, the Court of Cassation specified that economic parasitism, which consists in interfering in the wake of others, necessarily involves a prejudice, even moral, even limited in time (Commercial Chamber, 17 March 2021). In this case, the abri-jardin.eu website had copied the technical descriptions and specialist advice produced by its competitor, sauna-bien-être.com. It was found guilty of parasitism. The company tried to optimise its natural referencing (on search engines such as Google) by saving the cost of creating content for its website. Parasitism therefore avoids the risk of copyright infringement and the need to investigate the originality of the technical data sheets created in this way. The company was condemned without even being able to prove a drop in sales.
Parasitism and the protection of ideas
Parasitism is very often invoked at the frontier of the protection of private rights (trademark law, design law, copyright). Very recently, Konbini took action on the grounds of parasitism in relation to its “fast and curious” audiovisual format. A candidate in a local election had used this format to broadcast a campaign video. He raised an objection of parody, which was rejected by the court. He was ordered to pay €15,000 in damages for moral prejudice. In the absence of direct competition, Konbini was unable to prove any material loss.
This can also be the case when an e-commerce site reproduces the general terms and conditions of sale of another site. Can copyright be invoked to enforce general terms and conditions of sale? The requirement of originality can be an obstacle. However, the cost of having a lawyer or your in-house legal department draw up your GTCs is considerable.
Similarly, software cannot always be protected under intellectual property law. An action for parasitism may be brought in support of a copy of parts of the software. The colossal investments in this sector and the time saved by copying sometimes lead to anti-competitive practices.
In other cases, acts of commercial parasitism may be involved:
- imitation of a website,
- the reproduction of commercial documents, general terms and conditions, sales literature, etc.
- the use of a branded product as a prize in a competition,
- the use of visual elements that are too close to a company, giving the impression that there are links with it.
No business sector is spared from parasitism. Disputes are multiplying in a context of tense economic competition.
Commercial parasitism and unfair competition
Parasitism is a legal construct that forms part of unfair competition. There are other forms of unfair competition, such as :
Any behaviour that takes advantage of a company’s efforts is punishable. The Goldwin law firm defends the interests of companies disrupted by parasitic behaviour. It will do everything in its power to restore your reputation and the conditions for normal competition.
Our lawyers will support and advise you in taking the necessary steps to put an end to this situation. They put their expertise and experience in competition law to work for the long-term survival of your business. Our lawyers develop creative and innovative strategies to protect your efforts and investments. An unfair competition lawyer is invaluable to the survival of your business.
Every day, the Goldwin law firm works with businesses to get to know them better. In this way, we can provide a better defence, give better advice and define the right strategy when faced with an act of unfair competition. Contact us for expert advice on unfair competition. If you are a victim of unfair competition, contact our law firm to discuss the facts, the context and the damage. We will then draw up a winning strategy for your reputation.
