Unfair Competition Law: Legal Standards, Case Studies, and Assistance
What constitutes unfair competition? Can ceompetitors trash your business without consequence? Is it legal for adversaries to buy domains that include your company's name? What about contract shenanigans? Do they also fall under the umbrella of unfair competition?
The answers await below.
Unfair Competition: What Is It?
What is unfair competition? Legally speaking, it's a set of torts dealing with unacceptable marketing techniques that companies use to gain advantage over competitors.
- Purposefully spreading negative gossip about your competitor to gain an advantage;
- Posting fake and negative reviews of competitors on Internet review websites;
- Using a competitor's logo in a way that tricks consumers;
- Stealing unauthorized data from an employer or competitor;
- Profiting off of another person's or company's likeness; or
- Sending misleading emails that negatively and unfairly affect a competitors business.
The above list is a sampling. Basically, shady business acts that involve customer deception fall under the "unfair competition" umbrella. Generally, though, anti-trust issues don't constitute unfair competition.
What Laws Deal With Unfair Competition?The following U.S. laws address issues related to unfair competition:
- Lanham Act
- Federal Trade Commission Act
- Various State Laws (Dependent on Jurisdiction)
What Civil Torts Are Considered Unfair Competition Torts?
Torts that fall under the unfair competition banner:
- Trademark and Copyright Infringement
- Rights of Publicity
- False Advertising
- "Bait and Switch" Selling Techniques
- Unauthorized Product Substitution
- Misappropriation of Trade Secrets and Client Data
- Breach of Restricted Covenant
- Trade Libel
- False Representation (of Products or Services)
- Tortious Interference
Unfair Competition Law In The United States
Where is Unfair Competition Codified Under U.S. Law?
Title 15 of the United States Code
"[U]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are...unlawful."
Unfair Competition: A Simple Legal Definition
Unfair competition is an umbrella term for several torts that address business legalities. In the simplest terms, unfair competition laws are used when one party inappropriately manipulates a market advantage over another party -- usually a business competitor.
Intellectual Property Infringement
Intellectual property torts - copyright, trademark and trade dress - are arguably the most litigated unfair competition cases in the United States. Every state has a set of intellectual property laws. Additionally, the Lanham Act covers infringement-related actions on the federal level.
Two main things to remember about U.S. intellectual property law:
- Intellectual property plaintiffs bear the burden of proving how the defendants profited from the alleged infringement; and
- Parody and satire are legal.
Misappropriation of Trade Secrets
Stealing trade secrets is an actionable offense that falls under the unfair competition banner. An important aspect in trade secret cases are temporary restraining orders. Trade secret laws are state laws, and most states adhere to standards outlined in the Uniform Trade Secrets Act (USTA). Legalities regarding trade secrets are also addressed in the Economic Espionage Act of 1996.
Free speech is a top priority in the U.S., but publicly lying about a business, with the intent of causing harm, is libelous and against the law. Bottom line: you can't lie about the competition - or a company you don't like -- in an attempt to damage its bottom line or gain a market advantage. Doing so is called trade libel - and it's another type of unfair competition law.
Monopolies stifle competition and are against the law. To test the limits of antitrust law, companies may accuse a market leader of monopolistic behavior (i.e., think Google). These types of cases fall under the banner of unfair competition law.
Another unfair competition tort: tortious interference, which is lawyer-speak for, "meddling with other businesses' contracts with their customers."