In the United States, generally speaking, businesses have the legal privilege to compete against each other in the marketplace. Businesses are legally allowed to use any lawful means in that competition to sell their goods and services and to “woo” customers. However, the privilege to compete involves only LAWFUL means and methods. That said, some businesses compete in the marketplace with unlawful means and methods. Some of these are criminal in nature, such as, at one extreme, the use of criminal elements to literally destroy a competing business through something like arson. More modern forms of criminal unfair competition include hacking, denial of service attacks, and other cybercrime. Law enforcement and the criminal justice system handle unfair competition that is criminal in nature.
There are, however, several other forms of unfair competition that are still unlawful (even if they do not generally rise to the level of criminal behavior). A few examples include:
- False advertising – a large category of unfair competition including false labeling, false claims of effectiveness, slack filling of packaging, false origin and source claims, misleading sales tactics, and offerings like “bait-and-switch” sales where a high-quality product is advertised but not available leading consumers to buy the substitute lower-quality product, etc.
- Trade defamation — like spreading false rumors about a competitor
- Theft of trade secrets
- Trademark infringement — using a competitor’s trademark on your goods/services without permission
- Theft of the right of publicity — use of a person’s likeness without permission
- Patent infringement — using a competitor’s invention without permission
- Copyright infringement — using a competitor’s original works of art without permission
- Trade dress infringement — offering a “look-alike” product meant to confuse consumers
- Luring and poaching of a competitor’s employees
- Breaching agreements related to noncompetition and restrictive covenants
- Spying and corporate surveillance
Traditionally, unfair competition was handled through the common law, which is a form of “judge-made” law that builds up slowly over the years. Often, the rules established through the court decisions are summarized by legal academics in various reference books. For unfair competition, one of the leading reference books is called Restatement (Third) of Unfair Competition § 3. For a topic outline, see here.
Most often, however, the rules established through the common law become converted into statutory law. And this has generally happened with respect to the laws of unfair competition. So, for trademark infringement, that form of unfair competition is now banned by the federal trademark statute, the Lanham Act. Likewise, there are now trade secret protection laws in every State and at the federal level. False advertising is banned by the Federal Trade Commission Act. Many States have similar laws, like the California Unfair Competition Law. But, other forms of unfair competition — like trade defamation — remain defined by the common law.
Contact The Unfair Competition Attorneys at Revision Legal