Unfair competition in the corporate world involves dishonest rivalry in commercial trade practices, such as false advertising or misrepresenting revenue. Unfair competition in California differs in each situation based on the type of business. In any case, companies that use deceptive techniques can be held accountable under tort law.
Basics of unfair competition
Unfair competition prevents a party from being successful in the trade because of the bad faith, fraud or oppression of another party. The parties may be viewed as trying to interfere with public policy because they tend to stall competition, which impacts the greater public.
State courts typically handle unfair competition cases. If a lawsuit succeeds, it could result in injunctions against the business, monetary damages for the plaintiff or both. Sometimes, copyright and trademark practices go to court. However, state laws may be overridden by federal laws when laws conflict.
Small businesses can be impacted by deceptive practices, and they could bring litigation. The Federal Trade Commission has stepped in for cases involving consumers who suffered injury or monetary loss from false advertising.
Kinds of unfair competition
One type of unfair competition practice is trademark infringement, which is copying another business’s registered trademark. For example, if a chain restaurant used McDonald’s logo to advertise without permission, it’d be a trademark violation.
False advertising occurs when a company makes claims about a product that haven’t been validated by research. Examples include diet pills making outlandish claims of fast weight loss or software not having the advertised capabilities.
Sometimes, false advertising may involve unauthorized substitution of a lower-cost product or bait-and-switch tactics. Bait-and-switch means the business advertises one product, but the consumer finds that the store has sold out is pushing a different product. A dishonest business could also try to rumor monger, which means they try to malign a competitor.
Unfair competition can create risky circumstances. If a consumer or business experiences harm from this practice, a business litigation lawyer may be able to assist them.