Although at first glance, in view of the facts of the case, one might question the Court’s decision (as happened with the Oreo/Morenazos case), the truth is that it is only by delving deeper into the reasoning behind the judgement that one (at least this writer) comes to appreciate the highly specialised nature of a case involving unfair competition and just how meticulous one must be in preparing for it.
The judgment begins as follows: the Spanish legislature chose to “consciously and deliberately adopt a liberal approach with regard to the imitation of the services and business or professional initiatives of others, by establishing, as a general rule, the freedom to imitate” (citing comparative advertising and the imitation of services as examples). With this statement, serving as a sort of ‘disclaimer’, the Supreme Court proceeds to examine the case by analysing the various provisions invoked by Mr. Wonderful, acting as the claimant, against Ale- Hop. The claim alleges unfair competition through the imitation of another’s services, acts of confusion, unfair exploitation and conduct contrary to good faith.
Following an analysis of the facts and grounds, the Court focuses its examination of the case on the application of the provision governing acts of imitation (Article 11.2), before going on to hold that the claim based on the imitation of features cannot be upheld.
Firstly, because, as Mr. Wonderful has registered designs to protect its products, it cannot seek to invoke the Unfair Competition Act, which could give rise to a new exclusive right and run counter to the freedom to imitate products enshrined in our Unfair Competition Act. I wonder: why did Mr. Wonderful not rely on its designs? Perhaps they were not so similar in the eyes of an informed user? When can one seek protection under this provision whilst holding registered IP rights, reconciling both approaches as required by the principle of relative complementarity? …
Delving deeper into the analysis of the provision as it applies to the case, the Chamber considers that the risk of association (whether conceived in its broad or strict sense) was not proven; rather, the consumer perfectly distinguished between the two business ventures. The Court emphasises that what gives rise to the risk of association is the imitation of the service itself, insofar as it possesses competitive distinctiveness, not the use of the forms. Only those that are distinctive and above average deserve protection, the Supreme Court tells us. But it also points out that the potential to create an association may be counteracted by forms that are so different as to eliminate it. And here, it cites a tweet from an influencer who said, “And now I’m off to Ale-hop, which is the Mr Wonderful for the poor.”
In this case, the conclusion reached by the Provincial Court of Valencia is upheld, namely that there is no risk of association because Ale-Hop’s products are distinguished in the minds of consumers by the distinctive image of the cow with a cowbell at the entrance to its premises and by the use of its trademark. Consequently, Ale-Hop’s conduct is not appropriate. The Court rules out the possibility that Mr. Wonderful’s strategy of entering into collaborations with third- party owners of well-known trade marks (which, according to the claimant, would lead consumers to believe that Ale-Hop’s products were also the result of a collaboration between Ale-Hop and Mr. Wonderful) could give rise to an association in the minds of consumers, referring in particular to the aforementioned tweet by the influencer (to whom Ale-Hop may, incidentally, already be grateful).
Nor did the Supreme Court find grounds to overturn the findings of the Magistrates’ Court and the courts of first and second instance, insofar as they did not find that the requirements enabling a finding of exploitation of another’s efforts had been met. This form of protection safeguards the investment (time and money, that is, effort) made by the creator of the original work and penalises the appropriation of that investment by the creator of the imitative work, who benefits from that imitation at the expense of the other party (by taking advantage). The Supreme Court did not consider that Ale-Hop had engaged in this practice, as it has its own designers, such as Mr. Wonderful. Nor did it consider that Mr. Wonderful’s investment had been proven.
Finally, regarding Mr. Wonderful’s allegation of predatory imitation or obstruction through systematic imitation, the Court considered that it had not been established what percentage of the 110 products classified as imitations represented the total number of products in that company’s catalogue. Nor was it established that Ale-Hop had implemented a market strategy with the aim of preventing Mr. Wonderful from establishing itself, as its approach was in line with that of other companies offering similar products on the market and reflecting common styles and trends: the (Japanese) ‘kawaii’ style, the ‘hipster’ style or ‘vintage lettering’, which share a common source of inspiration and which, moreover, Ale-Hop had already employed prior to Mr. Wonderful, albeit opting for different colour finishes. In other words, Ale-Hop’s strategy was justified on competitive grounds and precludes any predatory or obstructive intent.
Of course, what must be acknowledged about the judgement is its effort to summarise and compile the case law established in recent years by the Supreme Court on the subject of unfair competition, which is well worth bearing in mind whenever any operator has to deal with the application of the law on unfair competition.
Fernando Ortega
Lawyer
