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When does competition rise to the level of 'unfair competition'?

Most business people in California who work hard and see success want to protect their product or service in order to grow their customer or client base. So, when competitors come their way, it can be a real dog-eat-dog environment. However, when does mere lawful competition rise to the level of illegal unfair competition?

Unfair competition involves deception, fraudulent acts or acting in bad faith. Essentially, unfair competition occurs when a business deceives the public by substituting its goods or services for that of its competitor. Unfair competition is illegal.

There are numerous examples of unfair competition. One is trademark infringement. Another is false advertising. A third is the unapproved substitution of one brand of product for a second brand of product. Misappropriation of trade secrets is also a type of unfair competition. If a business falsely represents its goods or services, this is also unfair competition. Trade defamation is another type of unfair competition.

In general, unfair competition is litigated at the state level. A successful unfair competition claim can result in financial compensation and an order to cease the unfair actions. However, claims involving copyrights and trademarks are litigated in federal court, as they fall under the realm of federal law.

The U.S. Federal Trade Commission can also play a role in an unfair competition case if the defendant's actions harmed consumers, for example, through false advertising. In addition, Congress can address the issue of unfair competition through the Commerce Clause of the United States Constitution.

In the end, however, unfair competition claims can be quite complex. A business litigation attorney can provide further information about unfair competition and can assess their client's situation to determine if a lawsuit can be pursued.

Source: The Balance, "The Definition of Unfair Competition," Sally Kane, May 20, 2017

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