Safeguarding Fair Play in Commerce: The Role of International Treaties

Every time a business copies a competitor’s trade dress, spreads false information about a rival, or locks licensees into coercive deals, it chips away at the foundation of honest commerce. These aren’t just ethical lapses – they are legally actionable wrongs under a framework built across decades of international treaty-making. Two instruments sit at the heart of this framework: the Paris Convention for the Protection of Industrial Property and the TRIPS Agreement. Together, they set minimum global standards for protecting businesses and consumers from unfair competition and anti-competitive abuse – standards that India, as a signatory to both, is bound to uphold.

The Paris Convention and the idea of “honest practices” 🔗

The Paris Convention, originally signed in 1883, is one of the oldest international IP treaties still in force. While it primarily addresses patents, trademarks, and industrial designs, it also contains a crucial provision that extends its reach into the domain of commercial ethics: Article 10bis.

Added to the Convention in 1900 at the Brussels Diplomatic Conference, Article 10bis requires all member countries to provide “effective protection against unfair competition.” Its core definition is deliberately broad: any act of competition contrary to honest practices in industrial or commercial matters constitutes unfair competition. This open-ended standard gives national legislatures and courts room to adapt the rule to evolving commercial realities – from traditional passing off to influencer marketing and algorithmic advertising – without needing to enumerate every possible wrong.

Three minimum categories of prohibited acts 🔗

While the standard is open-ended, Article 10bis(3) identifies three specific categories of conduct that must be prohibited as a minimum. These are not exhaustive – they were always intended as illustrative examples – but they capture the core of what the drafters considered unacceptable commercial behaviour.

Causing confusion: Any act that creates, or is likely to create, confusion with respect to a competitor’s establishment, goods, or activities is prohibited. This covers situations where a business mimics a rival’s branding, packaging, or trade dress to mislead consumers into believing they are dealing with the original. Even the likelihood of confusion suffices – actual harm need not be proven.

Discrediting a competitor: Spreading false or misleading statements that damage the reputation or goodwill of a competitor’s enterprise, products, or services is prohibited. This goes beyond defamation – it targets commercially motivated falsehoods designed to give an unfair edge in the marketplace.

Misleading the public: Making false or deceptive claims about the nature, characteristics, manufacturing process, or suitability of one’s own goods is prohibited. A company falsely advertising that its product is “organic” or “made in India” when it is not would squarely fall within this category.

Alongside Article 10bis sits Article 10ter, which requires member states to ensure appropriate legal remedies are in place to effectively suppress unfair competition. Protection on paper is meaningless without enforcement mechanisms – Article 10ter closes that gap.

TRIPS Agreement: extending the reach and adding teeth 🔗

The TRIPS Agreement, concluded in 1994 as part of the WTO framework, significantly strengthened the international IP system by doing something the Paris Convention could not: linking substantive IP obligations to the WTO’s dispute settlement mechanism. Under Article 2(1) of TRIPS, WTO members are required to comply with Articles 1 through 12 and Article 19 of the Paris Convention. This incorporation means that Article 10bis obligations are now enforceable through WTO dispute proceedings – a meaningful shift from the relatively toothless Paris Convention regime.

But TRIPS did not stop at simply incorporating Paris Convention obligations. It added its own layer of protection against unfair commercial practices, particularly in the context of undisclosed information and anti-competitive licensing.

Protection of trade secrets and undisclosed information 🔗

Article 39 of TRIPS requires members to protect undisclosed information – what most people call trade secrets – against acquisition, disclosure, or use in a manner contrary to honest commercial practices. The Agreement specifies that “honest commercial practices” excludes at minimum: breach of contract, breach of confidence, inducement to breach, and acquisition of information by third parties who knew or should have known that dishonest means were used.

This matters enormously in a commercial world where proprietary formulas, customer databases, and manufacturing processes are often more valuable than registered IP. Without international protection for trade secrets, competitors could freely use industrial espionage or bribe insiders to gain unfair advantages – practices that Article 39 is squarely designed to prevent.

Article 40: controlling anti-competitive licensing practices 🔗

One of the most practically significant – and often overlooked – provisions of TRIPS is Article 40, which deals with anti-competitive practices in contractual licensing. The Article opens by acknowledging a real tension: IP rights are monopoly rights by design, and their exercise through licensing agreements can sometimes tip from legitimate protection into market abuse.

Article 40(1) recognises that certain licensing practices may restrain competition, adversely affect trade, and impede the transfer and dissemination of technology. Article 40(2) then permits – but does not compel – WTO members to take appropriate measures in their national laws to prevent or control such practices. Three types of conduct are listed as illustrative examples of what may be treated as abuses:

Exclusive grantback conditions: These are clauses that require a licensee to assign or exclusively license back to the licensor any improvements the licensee develops. This can effectively prevent the licensee from benefiting from its own innovations and entrench the licensor’s dominance.

Conditions preventing challenges to validity: These are clauses that prohibit a licensee from challenging the validity of the IP being licensed. Such clauses are problematic because they can lock invalid or overbroad IP rights in place, insulating them from legitimate legal challenge.

Coercive package licensing: This refers to situations where a licensor forces a licensee to take a bundle of licences – including for IP the licensee does not want or need – as a condition of accessing the IP they actually require. This leverages market power in one product to force acceptance of others.

An important nuance: Article 40’s provisions are permissive rather than mandatory. The Agreement does not define an exhaustive list of anti-competitive licensing practices, nor does it specify what remedies must be applied. It leaves these determinations to domestic law, while providing a framework for international cooperation. Article 40(3) and (4) allow WTO members to request consultations from each other when IP right holders are believed to be engaging in anti-competitive licensing practices – creating a soft diplomatic mechanism for cross-border enforcement.

The WIPO Model Provisions: bridging the gap 🔗

Recognising that Article 10bis leaves significant interpretive latitude to member states, WIPO published Model Provisions on Protection Against Unfair Competition in 1996. These provisions expand on the three categories in Article 10bis and introduce additional acts warranting protection – including damage to goodwill or reputation, secret information misappropriation, and a general clause designed to catch acts not specifically enumerated. The Model Provisions do not have binding force but serve as a reference point for countries drafting or updating their unfair competition frameworks.

India’s domestic framework: aligning with international obligations 🔗

India is a signatory to the Paris Convention and a WTO member bound by TRIPS. Article 2 of TRIPS directly incorporates Article 10bis obligations into India’s WTO commitments. However, as scholars have noted, Indian law does not have a standalone “general clause” equivalent to Article 10bis(2). Protection against unfair competition in India is instead dispersed across several statutes and common law doctrines – passing off under trademark law, the Trade Marks Act 1999, the Designs Act 2000, and the law of breach of confidence.

On the competition side, India enacted the Competition Act, 2002, which replaced the older Monopolies and Restrictive Trade Practices Act, 1969. The Competition Act established the Competition Commission of India (CCI) as the primary enforcement authority. The Act targets three broad categories of harm: anti-competitive agreements (Section 3), abuse of dominant position (Section 4), and combinations – mergers, acquisitions, and amalgamations – that cause an appreciable adverse effect on competition (Section 6).

Section 3 of the Competition Act prohibits agreements between enterprises that cause or are likely to cause an “appreciable adverse effect on competition” in India. Section 4 forbids any enterprise from abusing its dominant market position – including through unfair or discriminatory pricing, restricting production or technical development, or using dominance in one market to enter or protect another. These provisions reflect the spirit of TRIPS Article 40, even if they operate primarily under domestic competition law rather than IP law directly.

The CCI has investigative powers, can impose significant financial penalties, and plays an advisory role on government policies affecting market competition. The Competition (Amendment) Act, 2023 further strengthened this framework by expanding investigation powers, introducing settlements and commitments mechanisms, and enabling penalties calculated on global turnover – a recognition that modern anti-competitive conduct is often transnational.

Why this framework matters beyond the classroom 🔗

Understanding these international norms is not merely an academic exercise. For law students and practitioners in India, the Paris Convention-TRIPS framework defines the baseline below which Indian law cannot fall. When a start-up is targeted by a larger player using a confusingly similar trademark, when a pharmaceutical company is forced into coercive package licensing, or when a multinational uses grantback clauses to stifle a domestic innovator’s growth, the remedies – domestic and international – trace their origins to these treaty provisions.

The framework also signals an important policy balance. IP rights are exclusive rights, and exclusivity, by definition, limits competition. The challenge for legislators and courts is to permit legitimate exercise of IP while preventing its weaponisation against consumers and rival businesses. Articles 10bis and 40 acknowledge this tension openly and give states the tools – if not always the mandate – to manage it.

As commerce increasingly happens across borders, through digital platforms, and via complex licensing ecosystems, the pressure on these frameworks to evolve is constant. The question of whether Article 10bis adequately addresses modern challenges – from algorithmic pricing to data exclusivity – remains open and is a live area of scholarly debate.

What do you think? Given that Article 40 of TRIPS permits but does not require countries to control anti-competitive licensing practices, does India’s Competition Act, 2002 go far enough in addressing IP-related market abuse – or does the lack of a dedicated statutory unfair competition clause leave a meaningful gap in the legal framework? And as AI-driven commercial practices become widespread, should international treaties like the Paris Convention be updated to expressly address algorithmic manipulation and data-driven unfair competition?

References

1. https://www.wipo.int/wipolex/en/text/288514
2. https://www.wto.org/english/docs_e/legal_e/trips_e.htm
3. https://www.esa.int/About_Us/Law_at_ESA/Intellectual_Property_Rights/Protection_against_unfair_competition
4. https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm
5. http://www.cptech.org/ip/texts/trips/40.html
6. https://www.wto.org/english/tratop_e/trips_e/ta_docs_e/modules7_e.pdf
7. https://www.ippt.eu/legal-texts/paris-convention/article-10bis
8. https://academic.oup.com/jiplp/article/19/2/119/7470754
9. https://www.cci.gov.in/legal-framwork/act
10. https://www.nortonrosefulbright.com/en/knowledge/publications/ba1b31d2/competition-law-fact-sheet-india
11. https://academic.oup.com/jiplp/article/19/2/81/7577520