Parasitic Exploitation: Unfair Practice Among Non-Competitors

Violations against the assets that comprise the tangible property of a legal entity are easily perceptible. They are condemned and prohibited by several laws of different nature.

The most known violations against intangible assets include crimes against trademarks, patents and industrial designs, provided for in the Brazilian Industrial Property Law (Law 9279/96), as well as copyright violations, provided for in the Copyright Law (Law 9610/98).

In this regard, the theory of parasitism, under the widely known Competition Law, has been growing in importance and power in the intellectual property protection scenario.

The whole society strives for free competition since it mitigates and equalizes prices, improves service provision and, therefore, benefits consumers most of the time.

In fact, free competition is one of the General Principles of the Economic Activity, as established by art. 170, item IV, of the Federal Constitution.

On the other hand, deceptive competition is condemned by the entire legal system in Brazil and, in some cases, is considered a crime by lawmakers.

Any act that may illegally and unreasonably be detrimental to a competitor, going beyond the limits of the Law, is generically called unfair competition and is regulated by the Industrial Property Law and by article 10 bis of the Paris Convention for the Protection of Industrial Property, of 1883 (enacted in Brazil under Decree 75572/75 -, which reprehends "unfair uses" in commercial practices).

Unfair competition usually takes place in two forms: either one openly attacks a competitor to affect its credibility before consumers and, therefore, gain indirect advantage − a more aggressive way of competing in the marketplace, as usually observed in comparative advertising − or one dishonestly takes advantage of its adversary's success, "getting a free ride" in the prestige earned after a long journey and big investments.

Two simultaneous effects in case of unfair competition can be easily noted: on the one hand, it inflicts harm on competitors, which have their concept discredited in the marketplace and lose customers or have them lured away; on the other, a company takes undue advantage at the expenses of a competitor, that is, unjust enrichment. The Brazilian legislation and precedents have made considerable progress in this area: decisions are increasingly more homogeneous, strongly banning this practice.

However, what to expect when a non-competing company takes advantage...