What Counts as Unfair Competition in Business Law?
Running a business comes with its share of challenges, but few issues are as frustrating or legally complicated as unfair competition. Unfair competition is an umbrella term under business law that covers dishonest or fraudulent trade practices that harm another business.
Whether you're a small business owner or a corporation, understanding what constitutes unfair competition can help protect your business interests. At William B. Hanley, Attorney at Law, I will strive to guide you through your case.
If you’re facing issues related to unfair competition in California, including Irvine, Newport Beach, Orange County, Los Angeles County, or San Diego County, reach out to me to schedule a consultation.
What Is Unfair Competition?
Unfair competition involves business practices that are deemed unethical, deceptive, or illegal and that are intended to gain an unfair advantage in the market. While competition is a natural and healthy part of business, unfair competition crosses the line by deliberately harming another company’s market position. Some common examples of unfair competition include:
Trademark infringement: Using a competitor’s brand name, logo, or design to confuse customers.
Trade libel or slander: Publishing false statements to damage a competitor’s reputation.
Passing off: Selling goods or services under the pretense that they are associated with another business.
False advertising: Misleading claims about your products or services to misdirect customers.
Misappropriation of trade secrets: Stealing proprietary information such as formulas, client lists, or business strategies.
Unfair competition laws aim to create a level playing field so businesses can innovate and compete without being victimized by sabotage or fraud.
California Laws Governing Unfair Competition
California business owners benefit from some of the nation’s strongest statutes against unfair competition. The California Unfair Competition Law (UCL), outlined in Section 17200 of the California Business and Professions Code, broadly prohibits:
Unlawful practices – Any action violating federal, state, or local laws.
Fraudulent practices – Deceptive practices that mislead consumers or businesses.
Unfair practices – Acts harming competition or exploiting others, even if technically legal.
The UCL allows private individuals or businesses to bring lawsuits and seek remedies for unfair competition. Some common remedies include monetary damages, injunctions to stop unfair practices, and restitution of any gains made through unfair competition.
This law makes it easier for businesses to take legal action without the stringent requirements of other legal claims. For example, a company claiming fraud under California's UCL doesn't need to prove monetary damages occurred; it only needs to prove that deception occurred.
Other key laws in California for combating unfair competition include:
Uniform Trade Secrets Act (UTSA)—This law protects businesses from the misappropriation of trade secrets and provides remedies for companies whose proprietary information is wrongfully obtained or disclosed.
Lanham Act (Federal) – While federally implemented, the Lanham Act is frequently invoked in California to address trademark infringement and false advertising. The Act grants businesses the right to sue for damages when their brand or products are misrepresented.
Filing a claim under these laws often involves gathering evidence demonstrating how the unfair competition directly impacted your business, such as financial losses, loss of customer trust, or harm to your reputation.
How to Identify and Handle Unfair Competition
If you suspect your business has been targeted, early detection is key. It's important to know what to watch for and the steps you can take.
Signs of Unfair Competition
Sudden customer loss: Unexplained shifts in your client base, particularly if customers seem to have been misled.
Unauthorized use of branding: Discovering another business uses your trademarks, slogans, or product designs.
Negative PR campaigns: Receiving reports or reviews based on false claims propagated by competitors.
Suspicious pricing strategies: Competitors offering unsustainably low prices to drive you out of the market.
Misleading advertising: Competitors disseminating false or deceptive information about their products or services to gain an unfair advantage.
Intellectual property infringement: Discovering that a competitor has copied or imitated your copyrighted material, patented inventions, or trade secrets.
Actions You Can Take to Protect Your Business
File a cease-and-desist letter to stop illegal practices harming your business immediately.
Seek compensatory damages to recover financial losses caused by the unfair competition.
Request injunctive relief—a court order that prevents the accused business from continuing harmful practices.
Collaborate with an experienced business attorney to build a robust case.
Consider alternative dispute resolution methods like mediation or arbitration to avoid costly and lengthy court proceedings.
Implement preventative measures to protect your business from future unfair competition, such as monitoring your trademarks and patents regularly.
Business Litigation Attorney Serving Irvine and Newport Beach, California
At William B. Hanley, Attorney at Law, I have four decades of experience defending businesses throughout California, including Irvine, Newport Beach, Orange County, Los Angeles County, and San Diego County. If your business needs a proven litigator, reach out to me today to schedule an initial consultation and see how I can help.