The Antitrust Commission has issued a landmark judgement in a trade dress case (ie, display/lay out of a product), marking the first time the commission has found that look-alike products may constitute unfair competition. On January 21 the commission ruled that a Chinese manufacturer and importer of yarn acted against principles of fair competition when it imitated distinctive features of the lay out of 'Cadena' yarn.

Coats Cadena (Chile) SA is the market leader in the production of yarn in Chile. A Chinese company, Soga, imitated the shape of Cadena's yarn containers. Although the trademarks were different, Soga displayed its products in a way that imitated the lay out by Cadena.

Cadena did not have any industrial design or registered trademark protecting its lay out. The commission stated that despite the lack of intellectual property rights granted to Cadena, the imitation of the general lay out amounted to an act of unfair competition. The commission reasoned that (i) consumers could be led to believe that both products have the same origin, and (ii) that this would allow Soga to benefit from Cadena's reputation. In this regard the commission stated that competitors who increase their sales by imitating well-established brands obtain an unfair advantage over those who compete by investing in research and development.

The commission did not fine Soga because the Chinese company had changed its trade dress practices shortly after the claim was filed. Nevertheless, this case will have far-reaching effects, most notably for producers of household appliances which in many cases have closely followed the general lay out of the leading producer.

For further information on this topic please contact Gerardo Varela at Cariola Diez Perez-Cotapos & Cia by telephone (+56 2 360 4000) or by fax (+56 2 360 4030) or by e-mail ([email protected]).

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