Section 12. Placing handbills, circulars, etc., in newspapers and magazines without the consent of the publisher.

The placing of advertisements in the nature of handbills, circulars, cards, etc., in a newspaper or magazine, without the consent of the publisher, has been made a criminal offense in New York, New Jersey, and Pennsylvania.1 Such advertisements are frequently inserted between the leaves. The New York statute provides as follows:

Any person who, with intent to profit, directly or indirectly thereby, places or causes or produces an advertisement to be placed in or affixes or causes the same to be affixed to a newspaper without the consent of the publisher of said newspaper, or who directly or indirectly places or causes or procures an advertisement to be placed in, or affixes or causes the same to be affixed to a magazine or periodical without the consent of the publisher of such magazine or periodical, and in a way calculated to lead the readers thereof to believe that such advertisement was circulated by such publisher, is guilty of a misdemeanor. The placing of an advertisement, notice, circular, pamphlet, card, handbill, printed notice of any kind in, or the affixing thereof to, a newspaper, magazine, or periodical is presumptive evidence that the person or persons or corporation or corporations whose name or names appear therein as proprietor, advertiser, vender, or exhibitor, or whose goods, wares, and merchandise are advertised therein, caused or procured the same to be so placed or affixed with the intent to profit thereby.

1 New York Laws (1914), ch. 113; New Jersey Laws (1913), ch. 322; Pennsylvania Laws (1913), Act No. 312. See Collins v. American News Co. et al., p. 458.

CHAPTER X.

UNFAIR COMPETITION IN FOREIGN COUNTRIES.

Section 1. Introductory.

The term "unfair competition" as known in the laws and jurisprudence of the United States finds its counterpart in most European countries and has also been the subject matter of treaty among various nations, including the United States.

The terms used for unfair competition are found in the judicial decisions rather than in the statutes. They are generally similar, and in many countries are described by phrases having the same Latin derivation, represented by the French term "concurrence déloyale," or disloyal competition. Countries which do not use this term, but one substantially similar to it (e. g., "unlauterer Wettbewerb" in Germany and "oneerlijke concurrentie" in the Netherlands), recognize in the French phrase, nevertheless, an equivalent meaning. This fact has facilitated international agreements on this subject. In some countries a distinction is made between disloyal competition and illegal competition (concurrence illicite), though both would, apparently, be covered by the phrase "unfair competition."

The primary idea of unfair competition as developed in judicial decisions in European countries is "passing off" or "confusion," but several other distinct kinds of acts are included therein, such as disparagement of competitors, etc. While the fundamental principles of the law of unfair competition in European countries have been developed without special reference to practices to suppress competition generally or to maintain monopoly, the latter idea is found in certain English colonies.

The present discussion aims to set forth as clearly as practicable in brief space not only the meaning and legal application of the term "unfair competition" in foreign countries, but also any legislation or judicial decisions to prevent that which under any other name has apparently been treated as unfair competition. It should be clearly understood, however, that no conclusion is drawn therefrom as to the meaning of this term in the laws of the United States.

CHARACTER OF THE LAW.-The law regarding unfair competition in most European countries is to be found both in the civil and penal codes and in particular statutes. The civil-code provisions on this subject contain brief statements of legal principles without use of the term unfair competition, from which the courts, in several countries

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at least, have developed an elaborate jurisprudence under this title. The particular statutes have been enacted regarding specific forms of unfair competition, also without designating them as such, but in some countries the effort has been made to combine in a single statute the chief provisions of this sort, either with or without this specific title.

The present tendency of the law seems to be to combine these two methods of preventing unfair competition, i. e., to have a broad general provision of the civil law applicable to the ever-varying forms of unfair competitive practices, and to supplement this by special provisions making unlawful the more easily defined or more obnoxious unfair practices and sometimes imposing penalties. Especially where international treaties are concerned, or where reciprocity provisions regarding the protection granted to foreigners are incorporated in the statutes, the prohibition by statute of specific acts of unfair competition seems to have certain advantages.

FORMS OF UNFAIR COMPETITION.-The European civil-code provisions, some of which are of recent and some of comparatively early date, generally establish civil liability for unjustifiable injury or for injury by an act which is against good morals (contra bonos mores). These have been given a broad application with reference to unfair practices by competitors, such as misappropriation of firm names, false designation of provenance or quality of goods, disparagement of competitors, enticing employees to leave, etc. Almost all recognized methods of unfair competition have been attacked under such general code provisions.

European penal-code provisions on this subject sometimes specifically prohibit similar practices.

The provisions of earlier special statutes, furthermore, generally relate particularly to the misappropriation of firm names, false designation of provenance of goods, unauthorized use of trade-marks, or of awards at expositions, etc. Violation of such statutory provisions is often made a criminal offense as well as a ground for civil damages. It should be noted that these laws relate particularly to commercial good will or, according to the usual descriptive phrase of this special subject, they relate to "industrial property."

More recent legislation relating to unfair or unlawful methods of competition embraces prohibitions regarding other matters, and especially with respect to false advertisements, bogus clearance sales, espionage, corruption of employees, betrayal of business secrets, rebating, trading stamps, and, in certain British colonies, to practices of a recognized monopolistic tendency, such as combinations of competitors, exclusive dealing, tying contracts, dumping, etc. BASIC LEGAL IDEAS. From an historical point of view, and, broadly speaking, unfair competition in European countries relates to unfair

practices to injure a competitor. The effect on the consumer is not generally considered except as it concerns a competitor. Thus, deception practiced on a consumer in regard to the identity of a company or of the origin or provenance of the goods it sells is not an offense because the consumer may be injured, but because an unfair advantage has been taken of a competitor or his special property rights have been invaded.

Various other laws are found which aim to protect the purchaser by prohibiting the sale of deleterious articles or cheating with regard to weights, measures, etc. Especially in recent years laws against such cheating have sometimes been incorporated with laws dealing with unfair competition in the original sense so that it is now more difficult to draw the line between them. It indicates perhaps a broadening tendency with respect to the proof of an unfair act of competition or with respect to the parties who are protected against unfair acts. One explanation or the other is necessary, apparently, if unity of principle is to exist. Thus, injury to the consumer by certain unfair methods of commercial dealing might be regarded as conclusive evidence of the existence of unfair competition without inquiry as to its actual effect on competitors. On the other hand, certain commercial practices which are injurious to the consumer might be defined as unfair competition in every case whether used by all competitors or by a monopoly and without respect to actual or presumed effects on competitors. This, of course, would involve a change in the original principle.

This point of view seems especially important in connection with certain monopolistic practices. Such practices might obviously injure competitors, but where all competitors combine the persons injured would not be actual competitors, but consumers, employees, persons who sell to the combination or the traders who buy from it. So far as competitors are concerned only potential competitors apparently would be injured. Recent laws in certain British colonies apparently are based on the principle that certain monopolistic practices injurious to consumers, employees, noncompeting traders, and potential competitors are unfair methods of competition. It is noteworthy that precisely in these countries both the legal institutions and the political and social conceptions are most nearly like those in the United States.

METHOD OF PRESENTATION.-The law regarding unfair competition has been developed chiefly during the last hundred years, and is of considerable extent and complexity. In some countries the judicial decisions are very numerous. It was not practicable for the Bureau to make an exhaustive investigation into this subject, as not all of the sources of legal information were available. It is thought, however, that a fairly comprehensive view is given of the most pertinent parts

of the codes and statutes. Many judicial decisions have been used for illustration. On some topics, at least, for some countries, many similar cases might be cited, especially with relation to questions of confusion. On other topics, which are perhaps of more peculiar interest in this connection, only a few cases have been found, and sometimes none at all. There is doubtless a considerable number of practices which the courts have declared to be unfair competition, particularly under code provisions, that it would be desirable to notice in this connection, but which the necessarily limited research of the Bureau has not discovered. The laws and judicial decisions are described for each country separately, generally on the basis of an examination of the original texts. The works of legal writers have been largely used as guides, however, and sometimes even the texts of laws and judicial decisions have been derived from them. By following as closely as possible the original material, and treating different countries separately, it is thought that the risk of inaccurate statement is very much less than it would be if the material were rearranged in a comparative form. Such treatment would also involve to a much greater extent conclusions as to the similarity or dissimilarity of laws, for which no conclusive legal authority could be cited and with respect to which the Bureau does not deem it desirable to give its own opinion. The comparative form of treatment, moreover, would give an impression of completeness of statement with regard to the existence or absence of particular rules of law in each country greater than is furnished by the present discussion.

COUNTRIES CONSIDERED.-The countries which are considered in this chapter are as follows: England and its principal colonies and dependencies (including Canada, Australia, New Zealand, South Africa, India, and Egypt), France, Belgium, Italy, Spain, Portugal, the Netherlands, Germany, Austria, Switzerland, Denmark, Norway, Sweden, Russia, Greece, Bulgaria, Roumania, Turkey, Brazil, Argentina, Chile, Peru, and Japan. France and Germany are treated in more detail than any of the others, because they are the best representatives of the two principal methods of legislating against unfair competition and each has an especially well-developed jurisprudence on this subject. The most recent legislation of special interest is that of Greece, Denmark, and certain Swiss Cantons.

GENERAL COMPARISON OF EUROPEAN SYSTEMS OF LAW.-Two distinct systems, the French and the German, have been followed more or less closely by the other countries of continental Europe. The German, or casuistic system, is the more rigid. It provides a special law against specific kinds of unfair competition which contains also a provision of general application. In a general way it has served as a type for the legislation of Austria, Denmark, Greece, Spain, Portugal, and certain Swiss Cantons. The French method is more flexible.