Deceptive (misleading) statements

Deceptive (misleading) statements
Whoever makes misleading statements about his (own) business circumstances in the course of business for competition purposes is in breach of competition law (Section 2 Unfair Competition Act). This includes also statements of the origin of goods or services or misleading statements regarding the (own) enterprise. Since the pages referred to do not belong to the services offered by one or the other undertaking it could be a relevant misleading statement only if the referring enterprise creates the impression that it has collected and organised the relevant information itself and thus made a added service to the potential customer. That the reference creates the impression that the referred pages are his own services is however not the case. That is why it cannot be subsumed under Section 2 Unfair Competition Act. It is more likely that it will fall under Section1 Unfair Competition Act (exploitation of a competitor’s work).
Breach of law
It constitutes also a breach of Section 1 Unfair Competition Act if someone breaches another legal provision - if this breach is objectively in the position to hinder the fair competition - to get an advantage over a competitor. The breached provision must not necessarily be a provision regulating fair competition (OGH 13.7.1993 - Tageszeitungsimpressum - ÖBl. 1993, 226). It could also be a breach of a provision of the Copyright Law protecting the moral rights of an author. It has to be noted however that the resulting breach of competition law and the protection granted by the Unfair Competition Act is only a subsidiary remedy to the copyright protection. Third persons may not base their claim on this breach (Baumbach Hefermehl Wettbewerbsrecht § 3 N°121). This legal ground may thus not serve as a basis against the link (Ernst op.cit.,225).
Exploitation of a competitor’s work
Generally it is legal to use the work of a competitor if the work is not protected by the Patent Act, Copyright Act, Trademark Act, model Protection Act, etc. However, in specific circumstances, it constitutes unlawful exploitation of the (unprotected) work of a competitor within the meaning of Section 1 Unfair Competition Act if someone exploits the results of the efforts of another person and uses it to compete with this other person (cf. OGH 27.7.1993 - Loctite - ÖBl 1993, 156). The same is true if the competitor’s work is protected. The Unfair Competition Act applies in parallel to the law protecting the specific work except when the application of the protection right has been explicitly excluded (OLG Wien, 19.12.1995 - Happy Birthday I MR 1996, 109 ff.). The exploitation must take place in a substantial way and without any significant efforts of one's own. This applies also to marketing measures. For the setting of a link to be unlawful, the exploitation of the competitor’s work must lead to the obstruction of the competitor.
The more recent court decisions stress however that the exploitation of a competitor’s work is always against public policy. The defendant would have to prove that there was no other technical and reasonable economic possibility other than to copy the services of the plaintiff (OGH ÖBl. 1994, 223).
The mere copying / imitation of an otherwise (e.g. by copyright law) unprotected product remains lawful in those cases where there is no danger of a deception regarding its origin (OGH 13.7.1993 - Makramee Spitzen - ÖBl. 1994, 58). It might however constitute an unlawful exploitation of a competitor’s work if the exploited work possesses a specific competitive quality worthy of protection in addition to other elements which make the exploitation an unfair practice. A competitive quality exists where a product has specific qualities or a specific form which enables the customers and other competitors to differentiate this product from similar ones (OGH ÖBl. 1993,212 - Ringe).
It is decisive whether the imitator uses the product not only as an inspiration for a product of his own but without sufficient reasons gives the product the form of another product and thus creates the possibility for confusion (OGH ÖBl. 1975, 110 - Bilder-Bonbonnieren ). Real copying "Glatte Übernahme" exists where the imitated product is copied with any technical means wahrsoever (OGH ÖBl. 1995, 116 - Schuldrucksorten).
The use of frames constitutes an identical copying of the efforts of another. This is why no further elements of unfairness are needed to make the action unlawful. Whoever uses the efforts of another person regularly wants to hinder the other person since he strengthens his own position without any remuneration worthy of mentioning. The copying saves money and the original provider of the service does not collect the rewards of his efforts. A simple indication would suffice that the page shown has not been made available by the frame provider. If such an indication is lacking then the site (that had been put into the web for marketing purposes under possibly quite considerable expense) would be unlawfully shown as the frame provider's own site and his own marketing effort. This would be a breach of Section1 Unfair Competition Act. If this web site possesses an individual competitive quality then the behaviour of the frame provider would be considered as unlawful unfair practice (Kucsko Schmarotzen im Netz, ÖBl. 1999 1; Ernst, op. cit., 226).
After having requested the linking competitor unsuccessfully to erase such links one could also think of technical solutions (described by Laga, Neue Techniken im World Wide Web - Eine Spielwiese für Juristen? JurPC Web-Dok. 25/98, Abs 20 -22).
3. Limitations for online marketing of specific products
Several states have problems with online marketing insofar as specific products are concerned. Special regulations might prohibit the marketing for instance of tobacco in mass media. Therefore, it is of great interest to know how product-related marketing restrictions influence the online dissemination of commercial information.
In Austria there are no specific provisions yet applying to online marketing. Such obligations will be established with the implementation of the distance selling directive of the EU (Directive dated 4 June 1997, 97/7/EC, OJ L 144, 19) in Austria, i.e. at the latest by 4 June 2000. In the meantime, the application of existing provisions to online publications must be examined.
In a controversial State Court decision the world wide web (www) was seen as a "Medium" (a publication) within the meaning of Section 1 (1) N° 1 of the Austrian Media Law 1981.(OLG Wien, 26/11/1997, 24 Bs 291/97, MR 2/98, 44). The State Court thus likened a publication on the internet with a journal published in a printed edition and applied the Media Law (privacy and protection of identity) provisions accordingly. Another court decision concerning the obligation to mark TV advertising confirmed the application of the Media Law to electronic media (OLG Wien 28/1/1999, 15 R 50/98b MR 2/99, 108). The Supreme Court (29/9/92, 4 Ob 79/92 – Product Placement, MR 5/92, 207) had already clarified that printed media and electronic media are competitors with respect to paid advertising.
Online services consisting of regular communication of data similar to newsletters from one author to a bigger group of receivers could be regarded as media services that should be treated similar to a newspaper or journal (Jaburek/Wölfl Cyberrecht, 1997, 47 f.). However, since the State Court decision defining the www as a “Medium” within the meaning of the Media Law concerned only the provisions concerning privacy and non-disclosure of identity of persons in the reporting of crimes, it is quite doubtful whether all other provisions of the Media Law should be applied to the edition of home pages in the Internet.
It is to be noted that the obligations contained in the Austrian Media Law do not apply to foreign media (Section 50 Media Law).
The following indications refer therefore only to the most important marketing restrictions applicable to printed journals (newspapers and magazines). Insofar an internet service is considered broadcasting, the relevant restrictions apply (for the Austrian Broadcasting Organisation – ORF, the restrictions contained in the “Rundfunkgesetz”, BGBl. 379/1984 as last amended by BGBl. 1/1999, in particular Section 5h “Anwendung auf Teletext und Online-Dienste”; for other broadcasters the restrictions are contained in the “Kabel-und Satelliten-Rundfunkgesetz”, BGBl. 42/1997 as last amended by BGBl. 100/1997).
Further useful information is contained in the Voluntary Restrictions of the Austrian Advertising Sector (“Selbstbeschränkungen der österreichischen Werbewirtschaft – Informationsbriefe für Werbetreibende (Werbebriefe) drafted by the Federal Ministry of Ecomoic Affairs in co-operation with the Representatives of the Section Advertising of the Austrian Chamber of Commerce) contained in the Pressehandbuch edited by the VÖZ, Schreyvogelgasse 3, 1010 Wien). These apply to advertising in any media, including electronic media. The Austrian advertising industry also follows the ICC Code of Advertising (Handbook of the European Association of Advertising Agencies, Brussels 1993).
a) Are there any restrictions for the online marketing of tobacco products?
See restrictions contained in Sec 11 (2) to (5) Tabakgesetz (BGBl. 1995/431). Advertising is restricted to one page per tobacco manufacturer per issue.
See also the Directive 98/43/EC for tobacco advertising and sponsoring to be implemented until 30/7/2001 (Leidenmüller, Tabak, Werbung und das Europarecht, ecolex 1999, 138).
b) Are there any restrictions for the online marketing of alcohol?
The restrictions are voluntary.
c) Are there any restrictions for the online marketing of medical products?
Sections 50 ff. Arzneimittelgesetz and the Voluntary Restrictions of the Austrian Advertising Sector. Restrictions on references to the medical professions and to people portrayed as doctors. Testimonials are banned for medicinal products.
d) Are there any specific restrictions for the online marketing of other products?
These include among others
Law on Foodstuffs 1975, BGBl. 86/1975 last amended by BGBl. 63/I/1998 and 372/II/1998, applying to also to advertising for cosmetics, consumer goods and additives which may affect health: Advertising for food must not make health claims; must not refer to members of the medical profession, to body organs, or to the effect of the product on them. In advertising for dietary food, nutritional information must be given
Sec. 28 Chemicals Act 1996, BGBl. 53/1997: advertising must make reference to dangerous ingredients in all (e.g. cleaning and household) products and give a clear security advice.
- Sec. 27 and Sec. 30 Suchtmittelgesetz BGBl. 112/1997 (drugs and addictive substances)
- Restrictions for publicity of financial services (Sec. 4 Capital Market Act BGBl. 625/1991, Sec. 43 Investment Fund Act, BGBl. 532/1993 last amended by BGBl. 41/1998)
Sec. 24 Wine Act BGBl. 444/1985 last amended by BGBl. 10/1992 (denomination of origin)
4. Limitations for online marketing to specific persons
Other competition law restrictions relate to specific groups of users. For instance, the marketing of products to minors is sometimes restricted. Similarly, specific restrictions exist in the area of lawyers, doctors or dentists. It is therefore important to get some information as to the extent of person-related restrictions and their effect on online marketing.
Are there any restrictions for the online marketing as to minors?
See in particular the Voluntary Restrictions of the Austrian Advertising Sector (“Kind und Werbung”).
b) Are there specific restrictions for lawyers, doctors or dentists which are interested in using the internet for the dissemination of commercial information on their services?
The members of liberal profession (lawyers, doctors, public notaries, architects, etc.) are bound by their general internal rules. For lawyers see Sections 45 to 49 of the Richtlinien für die Ausübung des Rechtsanwaltsberufes /Directives for the Exercise of the Lawyer’s Profession) (RL-BA 1977) applicable to advertising in any means of communication.
c) Are there other regulations which are aimed at or have the effect of restricting the online marketing for specific persons? No.
5. To which extent are there any information duties with regard to commercial websites?
Several national laws contain obligations for internet providers with regard to the disclosure of information on their homepage. Therefore, it is necessary to get some ideas as to the extent of information duties for providers a) as to prices, b) as to taxation, c) as to the identity of the content provider and d) as to other relevant commercial data.
In Austria there are no specific provisions yet for internet providers with regard to the disclosure of information on their homepage. Such obligations will be established with the implementation of the distance selling directive of the EU in Austria (Directive dated 4 June 1997, 97/7/EC, OJ L 144, 19) in Austria, i.e. at the latest by 4 June 2000. In Austria the implementation of these information duties will be made through an amendment of the Consumer Protection Law. The Federal Ministry of Justice has drafted a proposal for an amendment which follows now the examination procedure. It will oblige undertakings selling products over the internet to inform their potential customers in a clear and detailed manner on all the significant details mentioned under a) to d). The proposal also includes a right to resign from the contract within two weeks in case the goods do not correspond to the expectation of the consumer. The amendment is supposed to come into force in summer 2000. (Der Standard 2 April 1999 Besserer Schutz für Konsumenten im Internet-Versandhandel; Mohr Aktuelles zur Umsetzung der Fernabsatzrichtlinie, ecolex 1999, 82).
6. Netiquette and self-regulation
The discussion on internet regulation is highly influenced by the idea that netiquette and self-regulation has to be stressed and supported in the light of the trans-national nature of the internet. Netiquette is a short-term for a variety of codes of conduct which are used with the internet community. The question still remains to be solved if and how the netiquette can be integrated within the legal framework.
a) Do you know of specific codes of conduct for online marketing in your country?
b) How do these codes of conduct influence competition law?
c) s there a chance to enforce these codes?
e) How do you estimate the value and importance of these codes?
These codes are under discussion but have not yet been adopted (Information provided by G. Wagner, General Secretary VIW – Verband für Informationswirtschaft in Österreich, http: //www.viw.or.at/; see also the web site of the Internet Service Providers Austria – ISPA, http://www.ispa.at/).
III. Procedural rules (Private International Law/International Civil Procedure Law)
1. Which principles are applied to solve problems of private international law?
Due to the international, even global nature of the internet, the issue of international private law creates a multitude of problems. International private law (or law of conflict of laws) determines the substantial law, applicable to a case that has connections to more than one state. Since content on the internet is typically available world-wide, the number of potentially applicable laws to actions of (allegedly) unfair competition increases significantly. Does someone who advertises on the internet therefore have to obey every unfair competition law in the world, meaning his behaviour would be governed by the strictest possible standards?
International private law is regulated in Austria by the Act on Private International Law – IPRG (Federal Law Gazette 1978/304 last amended by Federal Law Gazette 1998/119 . The latest amendment in force since 1 December 1998 is due to Austria’s adherence to the Convention on the Applicable Law to Contractual Obligations „Rome Convention“ (Rome 19 June 1980). It has led to the derogation of Section 36 to 45 IPRG and a special conflict of laws rule in implementation of Art 6 (2) of the Council Directive for abusive clauses in consumer contracts 93/13/ EEC, OJ N° L 95/29 (Derogation of Section 41 IPRG by Art. 5 Rome Convention). This special rule has not been incorporated into the IPRG but in the relevant specific Act (Section 13a Consumer Protection Act, Section 11 TNG). The Rome Convention is directly applicable in Austria and – since a special transformation was not necessary - has not been incorporated into the IPRG.
For breaches of competition law there are several connecting points in the Act: Section 13 (2) IPRG for infringements of the right to one’s name; Section 34 (1) IPRG determining the applicable law for industrial property rights and Section 48 (2) IPRG determining the law for other breaches of competition law
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