So you have put in all the hard work and resources to get your new product or innovative idea to market. What do you do if, soon after launching, a competitor starts selling a product or service that is nearly identical to yours? Suppose you haven’t got a registered patent or design. Do you just cop it on the chin? Competition is, after all, inevitable, and you believe your product speaks for itself. Or can you do something about it?
Well, firstly, you’re right that competition is inevitable. And in most circumstances, you can’t prevent someone from copying a good business idea. What you can do, though, is stop a competitor from exploiting the reputation you have built up in the distinctive look and feel or features of your product or packaging in such a way that consumers are likely to be confused between your product and the copycat’s. This can amount to misleading and deceptive conduct in terms of the Australian Consumer Law and passing off.
The copycat may have also infringed your copyright, for example, if they have copied your website content or the artwork on your packaging, but this article looks at your rights under the Australian Consumer Law. Still, it’s essential to get legal advice when a competitor oversteps the mark between fair competition and unlawful copying to see what rights you have and how you can enforce them.
Australian Consumer Law
Section 18 of the Australian Consumer Law in Schedule 2 of the Competition and Consumer Act 2010 (Cth) (Australian Consumer Law) prohibits a business from engaging in misleading or deceptive conduct or conduct that is likely to mislead or deceive consumers.
In addition, section 29 of the Australian Consumer Law prohibits a person from making false or misleading representations about goods or services, including representations that goods or services have an association with another trader’s products or business where no such association exists.
For example, let’s say your product comes in a rainbow coloured heart-shaped box and has become well known for this distinctive packaging. Suppose your competitor starts selling their products in similar packaging. In that case, consumers may be confused between the two products or may be misled into believing your competitor’s products are made by you.
Many people will advise you to focus on what you do best, selling a great product, and ignore the copycats. But copycats can be detrimental to your business in several ways. You can lose valuable sales if customers are confused between your products and those of the copycat’s, and you can also risk damage to your brand’s reputation if the copycat is selling an inferior product to yours. The Australian Consumer Law can stop a competitor from trying to exploit your hard-earned reputation in the market in this manner.
What can you do?
As a first step, you can send a cease and desist letter from your lawyer explaining how your rights have been infringed and demanding that the copycat remove the infringing product from the market. If they have deliberately copied your product or packaging, a strongly worded legal letter often does the trick. However, if it doesn’t, you may have to consider other options for example, court action.
If you do take court action against a copycat, you may get an order, sometimes on an urgent basis, preventing them from manufacturing or supplying the infringing goods, as well as orders as to the award of damages and the payment of your legal costs. Of course, court action is costly and time-consuming, so it really is a last resort when you’re left with no other choice to protect your brand from significant lost sales or further reputational harm.
If you’re having problems with copycats, get in touch with us to discuss your options.