Competition is always present in business industry or in any other venture. Hence, business owners are compelled and challenged to be more competitive and to make much better products and services to equal others and to provide what people would desire most. But, competition is not always healthy especially if it is an unfair competition.

Unfair competition is basically, a fraud in the conduct of business to the loss or detriment of other businesses within the industry. This is a practice of deceiving, confusing, or using means and methods to overpower other business competitors or take advantage of them.

Unfair competition practices may be the unauthorized use of another's name or trademarks to mislead consumers about the identity of the unauthorized user. It can also be a wrongful use of trademarks or packaging to deceive consumers about the origin of the product, or the source of merchandise.

Additionally, unfair competition can also be in the form of unauthorized disclosure or revelation of trade secrets or through usage of false information in advertisements to negatively influence consumers' choice.

It may also be in the form of acts like falsifying information or spreading incorrect information about business competitors and usage of threats or bribes to lose their advantage in the marketplace.

Law of Unfair Competition

The law of unfair competition is governed by state common law. This law is basically comprised of torts that cause an economic injury to a business, through a deceptive and wrongful practice. It has two categories:

1. The term "unfair competition"- Sometimes refers only to those torts that are meant to confuse consumers as the origin or source of the product.

2. "Unfair trade practices"- Comprises all other forms of unfair competition.

Examples of Unfair Competition

· Trademark Infringement- This is the most common example of unfair competition. It is a violation of exclusive rights, where, a person, called "infringer" uses a trademark which is identical or confusingly the same to a trademark owned by another party, or using a trademark without the authorization of the owner.

  • Misappropriation- Unauthorized use of intangible assets that are not protected by trademark or copyright laws.

  • False advertising

  • Bait and switch selling tactics

  • Usage of confidential information by former employee to solicit customers

  • Breach of restrictive covenant

  • Trade libel

California on Unfair Competition

There are few states that enacted legislation dealing with specific types of unfair competition.

In California State, they have business and professions code dealing with unfair competition. According to this code, specific or preventive relief may be given to enforce penalty, forfeiture or penal law, in case of unfair competition.

The code also states that any person who engages, has engaged, or intends to involve in unfair competition may be joined in any court of competent jurisdiction.

That person shall be liable for civil penalty not to exceed $2,500 for every violation brought in the name of the people of the state of California by the Attorney General, by any district attorney or by any county counsel authorized by agreement.

The court may also impose a civil penalty for every violation of the California business and professions code. The amount will be assessed based on the nature and seriousness of the misconduct, number of violations, persistence of the misconduct, length of time over which the misconduct happened, the willfulness of the defendant's misconduct, and the defendant's assets, liabilities and net worth.