French Competition Law provides a comprehensive review of the French rules relating to competition: restrictive agreements, commercial negotiation, abuses of a dominant position, procedure and merger control.

French Competition Law

Undertakings that take advantage of another's business reputation, be it a competitor or not, by imitating its business initiatives in hopes of acquiring customers are guilty of parasitism (free-riding). The parasitic undertaking copies all or virtually all the elements that contributed to the success of another's business in order to enjoy similar profit without making the equivalent financial, i …

Types of behavior and parasitic acts 

Undertakings that take advantage of another's business reputation, be it a competitor or not, by imitating its business initiatives in hopes of acquiring customers are guilty of parasitism (free-riding). The parasitic undertaking copies all or virtually all the elements that contributed to the success of another's business in order to enjoy similar profit without making the equivalent financial, intellectual or promotional input. Parasitic behavior is considered to be an act of unfair trading.

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 the reputation of 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”.

CA Toulouse, 19 October 1988; Cass. com., 9 May 1991; CA Versailles, 16 January 1997, LawLex200200001305JBJ; T. com. Paris, 5 January 1998, LawLex200200001197JBJ; T. com. Paris, 27 January 1998, LawLex200200001187JBJ.

Yves SAINT-GAL "Concurrence parasitaire ou agissements parasitaires" [Parasitic competition or parasitic acts], RIPIA, 1956, 37.

See for first citation CA Paris, 24 November 1959, The Ritz Hotel Ltd. See also CA Paris, 24 June 2011, LawLex201100001920JBJ and 4 November 2011, LawLex201100001921JBJ, refusing to review the unfair acts from the parasitism perspective where the parties are in a situation of competition.

Cass. com., 8 November 1994, LawLex200200001523JBJ, concerning a non-profit making association.  

CA Paris, 6 November 1989, LawLex200200001849JBJ, regarding an action for disparagement, on the fact that it was of no importance that mutual funds did not come within the definition of a business once they were involved in a commercial activity. 

CA Versailles, 12 February 1990, LawLex200200001887JBJ; CA Paris, 20 February 1992, LawLex200200001752JBJ; 24 September 1996, LawLex200200001332JBJ. 

Cass. com., 26 January 1999, LawLex200200001014JBJ; 7 April 2009, LawLex200900001613JBJ, enshrining the admissibility for a parent company established under the laws of another country to sue for parasitic acts committed in France, where there is no relationship of competition with the parasite undertaking.

Because parasitism includes unfair behavior between non-competitors, it has developed fairly autonomously compared to unfair competition which presupposes the existence of a relationship of rivalry between the parties. Although it is unanimously accepted that the sanctioning of parasitic acts is assured by an action in unfair competition, some commentators still refuse to consider parasitic acts as relevant to unfair competition actions. A trend in the case law has developed which distinguishes unfair competition - as concerning operators in a situation of competition - and parasitic behavior - only concerning non-competitors . The Court of Cassation has declared that it does not support this stating that “bringing an action for parasitism is not dependent on the absence of a situation of competition between the parties” .

Parasitic acts involve no risk of confusion on the part of clients because the parties are not in a competitive relationship . Parasitic competition supposes a certain amount of copying and similarity in the activities of the undertakings concerned, but the risk of confusion is still not a necessary factor . The boundary between the two is not always easy to draw especially as they are based on the underlying idea of an opposition between parasitism and unfair competition. In practice, the courts are faced with various unfair acts committed in diverse circumstances and do not refer to any previously-established distinction by category . Thus a situation of competition is mainly required in the event where confusion is sought . The requirement of a risk of confusion is not however a decisive factor of distinction between parasitic behavior and unfair competition insofar as the confusion may be the consequence of the parasitism. Thus, if we accept that unfair trading practices involve a failure to respect the duty of fairness, an obligation incumbent on all economic operators under the concept of freedom of trade, parasitic acts merely represent a particular illustration of unfair competition, along with the more traditional acts coming under the theory of unfair practices, such as disparagement .  Parasitic competition can be regarded as merely an aggravated form of unfair competition within the traditional meaning of the term (confusion and customer poaching) .

It is now commonly agreed that the distinction between parasitic competition and parasitic acts comes within the scope of unfair competition actions since, in a number of cases  the case law no longer makes the action in unfair competition subject to the existence of a situation of competition between the parties. Ultimately, an act of confusion can now be challenged either in respect of its characteristics or its effects. In the latter case, it takes the form of parasitic behavior leading to a commercial disturbance which must be sanctioned . One difference does remain however; the Court of Cassation  has held that parasitic behavior is the result of a number of factors assessed as a whole whereas this is not the case of unfair competition where a tort must be characterized. Where an undertaking complains that its former employees having resigned in order to start a new company have poached its customers and used concepts of which it claims ownership, the court will rightly examine the misappropriation of ideas only in respect of parasitic behavior and then assess whether the poaching of customers or any eventual hiring away of staff characterize acts of unfair competition .

For examples of the rejection of actions for parasitic competition due to the existence of a situation of competition between the parties, see CA Paris, 5 November 2010, LawLex201100001933JBJ; 10 December 2010, LawLex201100000196JBJ; 4 February 2011, LawLex201100000303JBJ; 25 February 2011, LawLex201100001927JBJ; 29 April 2011, LawLex201100001513JBJ; 17 June 2011, LawLex201100001928JBJ; 24 June 2011, LawLex201100001920JBJ; 28 October 2011, LawLex201100001934JBJ; 4 November 2011, LawLex201100001921JBJ. 

Cass. com., 15 November 2011, LawLex201100001829JBJ.

Cass. soc., 12 June 2012, LawLex201200000912JBJ.

See especially CA Paris, 18 May 1989, LawLex200200001907JBJ, sanctioning the plagiarism of the packaging of a perfume outside of any risk of confusion.

CA Paris, 18 May 1989, LawLex200200001907JBJ; Cass. com., 27 June 1995, LawLex200200001443JBJ.

But see CA Paris, 3 June 2011, LawLex201100001088JBJ, which attempts to establish a categorization by holding that the wrongful behavior comes within the principles of unfair competition depending on the risk of confusion it creates in the minds of the public where the parties to the dispute are in a situation of competition, even if they do not have exactly the same customers.

E.g. CA Orléans, 19 September 2014, LawLex201400001009JBJ, holding that the use of a corporate name quasi-identical to that of a competing company characterizes  parasitic behavior, and the fact that one of the companies concerned works with public authorities while the other works with private companies does not rule out all likelihood of confusion.

For which a situation of competition is no longer required.

Cass. com., 3 March 2015, LawLex201500000292JBJ, holding that a company is not riding on the coat tails of Ferrari, by selling in hypermarkets and markets "bargain" toys intended for a different clientele than the market targeted by Ferrari products, which, even if they refer to Formula 1 and have similarities with a racing car of the brand, constitute only a coarse imitation unable to give rise to confusion and therefore, any risk of diversion of customers.

For disparagement see Cass. com., 20 November 2007, LawLex200700001920JBJ; CA Versailles, 12 February 1990, LawLex200200001887JBJ; CA Paris, 28 October 1996, LawLex200200001319JBJ, on the disparagement relative to the wearing of fur coats. 

See in particular CA Paris, 30 June 2009, LawLex201000000581JBJ, stressing that the marketing of an item of clothing at a lower price than a competing model is an act of parasitism not of unfair competition insofar as, because it was a model from the previous season, the items are not present on the same market.

Parasitism and unfair competition

An action for damages or for an injunction to cease the parasitic behavior is distinct from an action for passing off insofar as it is only available to the victim who has no other legal recourse and no intellectual property rights. Recourse to the concept of parasitic behavior thus allows for protection of a design for which the IP rights covering it have expired . The reproduction or imitation of an aspect of a product excluded from the scope of intellectual property can be unfair by virtue of the circumstances surrounding it, namely the risk of creating confusion with a competitor's products in the minds of customers. However, by virtue of the principle of free trade, any interested party may reproduce a creation which is unprotected by intellectual property rights. Consequently it is not unfair to sell a product using the technical characteristics of a patent which has passed into the public domain . A copy of a good which is not trademark-protected is lawful in itself and it is irrelevant that the copier, having benefitted from another's investment, is able to make savings . 

Insofar as parasitic behavior consists in undermining the economic value of others' work, there must necessarily be a creative effort on the part of the victim independently of any financial outlay . Thus, although the victim of parasitic behavior is not required to bring concrete evidence of a risk of confusion, he must show the parasitic intent of the defendant in the action .  

As parasitic behavior constitutes an unlawful act distinct from IP infringement , for an action for parasitic competition to be admissible, it must be based on separate facts from those relied on for an infringement action .This is the case where counterfeit goods are sold very cheaply and carry a label stating that they have been verified by the company owning the trade mark, which creates confusion with the genuine products , of the exploitation of a website with an address which is virtually identical to and easily mistaken for the trade name and company name of a competitor operating in the same field of activities having the same potential clientele ,  the use by an undertaking, in an advertisement of a well-known brand to sell its own products and to develop its business to the detriment of the official distributor of the brand  or the sale, in the form of a series, of identical t-shirts but of a different color than those of the victim, thus creating a range effect at a lower cost .

Cass. com., 22 October 2002, LawLex200200006231JBJ.

Paris, 18 October 2000, LawLex200200000727JBJ.

CA Aix-en-Provence, 5 July 2018, LawLex201800001034JBJ; see, in a previous case, CA Paris, 18 December 2015, LawLex201500001812JBJ: the use of the names of the flavors of a competitor's e-liquids, without any technical reason, for identical products that the latter has been marketing for several years, shows the respondent company's desire to position itself at a lower cost in its wake, this desire for similarity being reinforced by the adoption of the name "American Beauty" for the product range, which evokes the complainant undertaking's American origin.

CA Paris, 4 September 2009, LawLex201100001932JBJ.

Cass. com., 14 February 2012, LawLex201200000282JBJ: a liability claim for acts of parasitism may be brought by a person having no proprietary claim and does not require the existence of a risk of confusion; CA Versailles, 13 October 2011, LawLex201200000612JBJ : the victim who is not required to provide concrete evidence of a likelihood of confusion for a finding of parasitic behavior must on the other hand establish that its models came first, that its products were slavishly copied, investments it has made and the parasitic intention of the defendant to the action; CA Paris, 18 May 1989, LawLex200200001907JBJ: a company which plagiarizes the packaging of a competing perfume, even where there is no risk of confusion, is guilty of economic parasitism. See however Cass. com. 25 April 2006, LawLex200600001183JBJ, which stresses that the action for parasitic competition must be rejected where the facts at issue have already been sanctioned on the basis of patent infringement and where a comparison of the commercial documents of two companies shows that there is no risk of confusion for the consumer and no specific occurrence of parasitism likely to provide an undue benefit to the defendant, either in respect of reputation or of industrial and commercial techniques.

CA Versailles, 13 October 2011, LawLex201200000612JBJ.

CA Colmar, 13 May 1994, LawLex200200001572JBJ. A infringing work, with a similar name (Jack The Dog) to the infringed work (Bob the dog) with contents and illustrations inspired by pop art characterizes an act of parasitic competition separate from the infringement, when it free-rides on the back of the complainant's creations, known to have been a part of that artisitic movement for more than twenty years: Cass. 1re civ., 9 April 2015, LawLex201500000475JBJ.

Cass. com., 2 December 2008, LawLex200800002167JBJ; 19 January 2010, LawLex201000000566JBJ: the same facts as formed the basis of a claim for infringement cannot be relied upon for an action in parasitic competition, even if the infringer has taken advantage of the very large advertising investments incurred by the creator of the disputed models. But see Cass. com., 3 June 2008, LawLex200800000972JBJ, finding  that an action for parasitic acts may be brought by an association, which cannot avail itself of any intellectual property right even if the claim based on parasitism relies on the same facts as those alleged in support of the infringement action, if it results in a fault; Cass. soc. 12 June 2012, LawLex201200000911JBJ, holding that the action for liability for parasitism may be based on the same facts as those alleged in support of an action for trade mark infringement of trade mark which was dismissed for lack of intellectual property, where unlawful behavior is established.

Cass. com., 22 November 2002, LawLex200200006134JBJ.

Cass. com., 31 May 2005, LawLex200500006070JBJ.

CA Toulouse, 29 November 2009, LawLex201000000897JBJ.

French Competition Law

93. Types of behavior and parasitic acts

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93. Types of behavior and parasitic acts

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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