Finding the right way to scare off a copycat competitor depends on the nature of the copying involved – options include using consumer protection laws, passing off, copyright and registered designs.
Management decides that your business' marketing materials are outdated and have lost their zing. As a result, the CEO instructs your marketing department to refresh the look and feel of your marketing materials, including your websites, brochures and pamphlets.
The refresh is a success and sales increase. Having lost market share, one of your competitors releases new marketing materials, including a brand new website, which very closely mimic the look and feel of yours. The CEO is furious and wants blood.
Rest assured: there are things you can do to try to stop this kind of conduct. In this article, we consider a range of legal avenues that may assist in stopping copycat competitors in their tracks.
Consumer protection laws and passing off
Wherever copycat competitors are concerned, your first port of call will very often be the Australian Consumer Law and the tort of passing off.
The Australian Consumer Law prohibits a range of conduct in this context. This includes:
- engaging in conduct which is misleading or deceptive, or likely to mislead or deceive;
- making false representations that goods or services have a sponsorship or approval that they do not have; and
- making false representations that a business has a sponsorship, approval or affiliation that the business does not have.
In addition, the tort of passing off is designed to protect a business' goodwill or reputation. It does so by prohibiting a business from falsely representing that they are somehow connected with another business, or that their goods are services are connected with the goods or services of that other business.
Where a competitor creates marketing materials which mimic yours, it may be possible to rely on these prohibitions to stop them from doing so. That is because, by using marketing materials which are very similar to your business' materials, consumers may be misled or deceived. For instance, consumers who have purchased products through your website may see your competitor's very similar website and think they are affiliated with your business, or that your business' products are being sold through your competitor's website.
One limitation, however, is that unless your business has developed a reputation in its marketing materials such that consumers are familiar with them, consumers may not experience any confusion when confronted with your competitors' materials, despite the similarity. Similarly, the competitor might argue (successfully or otherwise) that because the materials are clearly branded with their brands, consumers may see the similarity but will not be confused and will know that the competitor is a different business. In those circumstances, other avenues can be considered.
Even if your business has not generated a reputation in its marketing materials, it may still be the owner of copyright in various aspects of those materials. Where that is the case, your business may be able to pursue the competitor for infringing your business' copyright, regardless of whether consumers are aware of your marketing materials.
Where a competitor has, for example, slyly taken a photograph owned by your business and put it on its website, or reproduced a page of text from one of your business' brochures, copyright infringement is likely to be easily established. However, even where that is not the case, and the competitor has copied the look and feel of your materials in a less direct way, it may still be possible to hold them to account.
Among other things, copyright protects literary works and artistic works. Literary works protect books, and the like (including text on a website or in a promotional brochure), whereas artistic works protect things like photographs, logos and paintings.
Some suggest that a literary work could only protect the elements of your marketing materials which convey information and are understood by a human through the process of reading, such as words. As a result, there is some doubt about whether the look and feel (ie. non-textual elements) of marketing materials can be protected as a literary work.
However, if that is the case, those other elements may be capable of protection as an artistic work, which include drawings. This does not mean that the marketing materials in question must have been created by an artiste in a beret on a Parisian sidewalk. It could also include, for example, the selection and arrangement of elements of your marketing materials created by your employees using Adobe InDesign.
In this regard, the courts recognise that valuable work goes into creating these kinds of materials. Decisions need to be made about the layout, colour, font and dimensions of the various elements – just one of which might be text. Accordingly, the courts have prohibited competitors from copying the "layout, positioning of elements, aspects of the font, overall pattern, and the "look and feel"" of certain materials.
But as always, it is very important to make sure that your business owns copyright in the relevant materials in the first place. If the materials are not created by your employees in the course of their employment, it is generally necessary to get an assignment of copyright from the creator to your business that is signed and in writing.
An alternative way in which the overall appearance of certain marketing materials could be protected is through Australia's registered designs regime. Unlike copyright, protection is not automatic – an application needs to be filed with the Designs Office and certified before it can be infringed. In addition, registered designs do not protect everything you might think of as a "design". What is protected is the overall appearance of a product resulting from one or more visual features of the product. A visual feature, in relation to a product, includes the shape, configuration, pattern, and ornamentation of the product, but does not include the feel of the product or the materials used in the product.
While websites may not fall within this definition, there is no reason why, for example, a distinctive point-of-sale display stand or brochures with a particularly novel shape could not be protected as a registered design, which competitors would then be prohibited from copying.
Choosing one of many ways to skin the copycat
Not all copycat competitors will be worth time, effort and legal fees to restrain their conduct. However, where a copycat competitor is costing your business sales or harming your business' reputation, things can be done to try to stop them.
When the time comes, the appropriate strategy to adopt will depend on your business' circumstances, the marketing materials which have been copied and any associated conduct on the part of your competitor. For example, a competitor which has copied your website may well have engaged in other unlawful conduct (such as making misleading statements to your customers) so deciding on the best way to skin the copycat is crucial.
Often, an appropriately worded letter of demand from your in-house legal department or an external law firm will be sufficient to convince a copycat competitor to alter their marketing materials. Where that is not the case, court proceedings can be considered and may be a useful way to teach your competitor (and other potential infringers of your rights) a lesson where they have engaged in repeated unlawful conduct which harms the interests of your business.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.