Introduction

In order for the legal concept of reputation parasitism to truly function, its enforcement should be made easier and clearer.

Reputation parasitism is a legal concept originating from the Nordic countries. It refers to the exploitation of a competitor's goodwill in marketing, where consumers are not misled regarding a product's commercial origin. Reputation parasitism may, for example, occur through the imitation of a well-known trademark or business concept or through marketing and selling lookalike products without misleading the consumer.

Acts of reputation parasitism may not be enforced based on the Finnish Trademarks Act or the Trademarks Directive, as they do not infringe any IP rights. Consequently, possible protection against reputation parasitism functions as a welcome supplement to traditional trademark legislation. Reputation parasitism is not explicitly prohibited in Finnish legislation; the legal concept regulating reputation parasitism is merely based on case law.

Stricter adoption

Traditionally, the Market Court has required that consumers be misled as to the origin of the product in order for the action to be enforceable. As a result, reputation parasitism has generally not been enforceable in Finland. In contrast, since 1998 the Swedish Market Court has clearly established reputation parasitism as an autonomous ground for action in its legal praxis.

The Finnish Market Court first changed its view and adopted the Swedish reputation parasitism concept in Granströms Båtvarv in 2012. In this case, the court expanded the interpretation of Section 1(1) of the Unfair Business Practices Act and confirmed that reputation parasitism can violate good business practices and is therefore enforceable in Finland.

The case could have been groundbreaking for the enforcement of acts of reputation parasitism. However, even though the court confirmed that reputation parasitism can be enforceable, the court has not actively adopted the concept following the decision. Reputation parasitism has therefore not been established as a reliable autonomous ground for action.

What happened?

The court's most recent ruling concerning unfair business practices, Erätukku v Kartanokuva, clearly contradicted the view adopted in Granströms Båtvarv. The Erätukku decision had two particularly interesting features. First, the court did not use the term 'parasitism' at any time. 'Parasitism' as a term has generally been used in Finnish and Swedish legal literature, and the avoidance of using the terminology in legal praxis could be interpreted as the court's unwillingness to fully adopt the legal concept of reputation parasitism.

Second, the court did not refer to its own legal praxis concerning exploitation of goodwill, and thus ignored its previous decision in Granstöms Båtvarv where the Swedish legal concept was so clearly adopted. The fact that the court ignored this decision could indicate that it remains uncertain of its interpretation of Section 1(1) of the Unfair Business Practices Act and is dubious about adopting the Swedish concept. However, it is interesting to question why and how the court came to this apparently contradictory decision.

Comment

As a result of the positive outcome of Granströms Båtvarv, reputation parasitism is often used at least as secondary grounds for action in Market Court litigation. Regardless, it remains difficult to convince the court that goodwill has been exploited when consumers have not been misled about a product's commercial origin.

It may be interpreted from the discussed legal praxis that the court is having difficulty in deciding on its approach to the legal concept of reputation parasitism. It remains to be seen whether the enforceability of reputation parasitism will be a functioning legal concept or if it turns out to be a failed attempt. It is desirable for the court to clearly establish reputation parasitism as a functioning legal concept once the court's interpretation of its enforceability is fully settled.

For further information on this topic please contact Henrik af Ursin by telephone (+358 9 681700) or email (henrik.afursin@dittmar.fi). The Dittmar & Indrenius website can be accessed at www.dittmar.fi.

Jessica Samelin, trainee, also assisted in the preparation of this update.

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