Legal Definitions - Unfair competition

Unfair competition is a type of business practice that causes harm to a company through deceptive or wrongful actions. There are two main categories of unfair competition:

• Deceptive trade practices, which are meant to confuse consumers about the source of a product
• All other forms of unfair competition, which are known as unfair trade practices

Examples of unfair competition include:

• Trademark infringement, which is when someone uses a company's logo or name without permission
• Misappropriation, which is when someone uses a person's name or likeness without permission
• False advertising, which is when a company makes false or misleading claims about their product
• "Bait and switch" selling tactics, which is when a company advertises a product at a low price but then tries to sell a more expensive product instead
• Unauthorizedsubstitution of one brand of goods for another, which is when a company replaces a product with a different one without the customer's knowledge
• Use of confidentialinformation by former employees to solicit customers, which is when a former employee uses their knowledge of a company's customers to start their own business
• Theft of trade secrets, which is when someone steals a company's confidential information
• Breach of a restrictive covenant, which is when someone violates a contract that restricts their ability to compete with a company
• Trade libel, which is when someone makes false statements about a company's product or service

The law of unfair competition is mainly governed by state common law, but federal law may apply in certain situations. The Federal Trade Commission (FTC) was established to protect consumers from deceptive trade practices, which indirectly protects competitors as well. Some states have enacted legislation dealing with specific types of unfair competition.

These examples illustrate how unfair competition can harm a company's reputation, sales, and customer base. It is important for businesses to protect themselves from unfair competition and for consumers to be aware of deceptive practices.