Identifying the Five Main Types of Unfair Competition

by / ⠀Startup Advice / February 5, 2021

With hundreds of businesses trying to get the same market demographic, keeping your company or brand top of mind among the competition is important. Identifying the main types of unfair competition can help your business in many ways. 

While competition in the business world is common and expected, certain types of competition cross the line into illegal territory. The Federal Trade Commission recognizes unfair competition practices as unauthorized and prosecutable when they occur. 

According to the Federal Trade Commission Act, any unfair or deceptive acts or practices affecting commerce are “prohibited” under Section 5. Companies that violate this act are subject to legal action taken by the FTC. These laws protect companies from unfair competition in the marketplace.They also protect consumers from unfair dealings. 

If you are in the process of building a business, pay close attention to whether or not competitors break FTC’s rules about unfair competition. Take legal action if you discover types of unfair competition in the marketplace. 

Most Common Types of Unfair Competition

Trademark Infringement

It is always recommended that you register your company’s trademark so you seek legal action if someone infringes on your intellectual property. For example, a competitor that uses your logo or copies a trademarked business practice. They can be held liable for unfair competition and trademark infringement.  

False Advertising

Competitors will often make unfair or untrue statements about their product or services. This practice is becoming more common in today’s hyper-digitized, fast-paced information cycle. 

When you see a competitor making a false or misleading statement about their goods or services, seek the advice of an experienced unfair competition lawyer.It can be related to their pricing or their capabilities. 

Unauthorized Substitution

This unfair competition tactic involves advertising a product or service as something it’s not. Once they earn the sale from the customer, they supply them with a lesser or counterfeit good of lower quality.  Many trademark infringement claims come about because of these unauthorized substitution practices. These frequently happen in the luxury goods sector.

Misappropriation of Trade Secrets

If a competitor obtains critical information related to your formulas, strategies, recipes, or other intellectual property that crucial to your company’s success and uses that information to gain a competitive edge and monetary gain.If this happens, you can bring an unfair competition lawsuit against them.

False Representation

Similar to false advertising, anytime a competitor falsely represents its product or services, you will face an unfair competition claim.  These include, product warranties, satisfaction guarantees, and other commercial policies. Businesses that have promised a false outcome or result will be considered false representation.

Any business or enterprise can find themselves at the center of an unfair competition lawsuit. Seeking legal counsel may be your best course of action when facing any type of unfair competition.

About The Author

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David M. Pitcher, a partner at Staas & Halsey LLP, has practiced intellectual property law for over thirty years. Pitcher is a Washington DC IP lawyer, assisting clients with patents, trademarks, copyrights, licensing and more.

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