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Understanding what constitutes ‘unfair competition’

On behalf of Cohn Lifland Pearlman Herrmann & Knopf LLP | Feb 12, 2019 |

While it is common for businesses engage in competition, it is important that their actions remain lawful. However, some businesses can become too competitive and begin engaging in unlawful business practices. These actions fall under the business tort known as “unfair competition.”

In the United States, business torts occur when a business engages in unlawful actions that cause another business to suffer financially. Federal and state laws are in place to protect businesses and customers from unfair competition.

There are several different types of business torts that can constitute unfair competition. Some of the most common types of unfair competition include:

  • False advertising and false representation: These involve untrue or deceptive information that misrepresent a business’s products and services. False advertising and false representation can also include fabricated evidence and information that is not from a valid source.
  • Misappropriation of trade secrets: Generally, this occurs when an employee leaves a business and begins working for a competitor. It involves the obtaining and sharing of confidential trade information without the consent of the business.
  • Violation of the antitrust laws: This comes about when businesses conspire to fix prices, divide markets, engage in group boycotts or use their monopoly power to harm competition.
  • Unauthorized substitution: This can happen when a business advertises an item that does not exist in order to attract customers. Once a customer is intrigued, the business encourages the sale of another item.
  • Trade libel or slander: This includes false statements about a business that cause it to suffer economic harm. These statements can be written or spoken.
  • Trademark infringement: Occurs when a business uses another business’s trademark without prior authorization, which can cause customers to confuse one business for the other. This can also include the selling of counterfeit goods. 

Unfair competition can severely damage a business. If your business is involved in an unfair competition dispute, contact an experienced business litigation attorney to discuss your next steps.