Use of another company (business name) in Internet advertising – ruling of the Court of Appeal in Bialystok (Poland)

In a ruling on 3 February 2017, the Court of Appeal in Białystok (Poland) considered an appeal by a defendant in a case concerning the right to combat unfair competition (case file I ACa 740/16). The dispute arose over the use by the defendant of the business name of the plaintiff when marketing services on the Internet.

The plaintiff’s business is debt recovery. Its activities involve acquiring debts from third parties or acting on behalf of creditors. The plaintiff became aware that the effectiveness of its activities was declining and believed the cause of this lay in the unlawful, in its opinion, activities of the defendant. The defendant conducts business involving consultancy services for debtors of banks and other institutions.

On its website, the defendant used the business name of the plaintiff in three forms. First, an abbreviation of its name in letters was used as one of the metatags referring to the content of webpages. The effect of this is that, when the word is entered in a Web browser, the browser shows Internet users sites containing those metatags. These metatags, invisible to users, greatly increase the chance of certain content being read by persons looking for information on the Internet.

Second, the defendant used the plaintiff’s business name as a keyword in an advertising service offered through Google, namely, Google AdWords. This meant that, when an Internet user entered the name of the plaintiff in a browser, Google gave the user sponsored links leading to the defendant’s website. In this way, the defendant gained customers.

Third, the plaintiff was named on the webpages run by the defendant. In this case, though, the expert engaged by the Court was unable to determine whether the references to the claimant derived from the defendant itself or from users using a forum made available by the defendant. Nor was it possible to establish who made a given entry on the forum.

All of the above activities were considered by the plaintiff to be unlawful, as contrary to the principles of fair competition. Specifically, the claimant accused the defendant of unfair advertising and an infringement of the general clause of Article 3 of the Act on Combating Unfair Competition. In principle, the Courts of both instances shared the position of the claimant. In the rulings they handed down, interesting legal arguments were put forward that deserve some attention.

First, the Courts of both instances confirmed that the Act on Combating Unfair Competition does not only apply in the case of a dispute between direct competitors. The Court emphasised that the Act protects not only direct competition, but also the freedom to conduct economic activity in conditions of market rivalry in the broad sense. This means that the defendant could show the legal title on the basis that it uses designations identifying other businesses in its own activities. In the case at hand, the defendant did not present such a legal basis.

The Court of Appeal additionally discussed European Court of Justice case law, noting that even though rulings in cases such as Google France and Interflora were issued against the background use of other trademarks, and not other business names, those rulings can be applied to this case as well.

Ultimately, the Court of Appeal found that, even though the unlawful activities of the defendant ceased during the course of the proceeding as a direct result of that proceeding, and even though some of the claims of the plaintiff were dismissed as no longer relevant, the defendant cannot be deemed as having won in respect of settling the costs of the proceedings.

On the contrary, if the unlawful activity was stopped during the proceeding, the defendant should return the costs of the proceeding to the claimant (despite the claim being dismissed formally). The courts of both instances found that the withdrawal of the claim during the proceedings did not necessarily predetermine whether the actions of the defendant can be deemed as an incitement not to perform agreements and to disclose business secrets in the form of making information on the claimant’s clientele publicly available.

Sources: http://orzeczenia.bialystok.sa.gov.pl and http://www.rp.pl

By: Oskar Tulodziecki

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