In today’s competitive business environment, every business owner wants a competitive edge. But when they attempt to achieve this goal with dishonest practices, it’s considered unfair competition. These deceptive practices can cripple and even destroy businesses and are a common cause of commercial litigation lawsuits. Each year, the FTC brings hundreds of cases to federal court for violation of competition laws.
If your business is a victim of unfair competition or you’ve been falsely accused of unfair practices, we can help. Here’s what you should know about unfair competition and commercial litigation.
Examples of Unfair Competition
Unfair competition is an umbrella term and encompasses many types of economic torts. Unfair competition examples include:
- Trademark infringement
- Bait-and-switch selling technique
- False advertising or false claims about a product
- Trade dress violation
- Breach of restrictive covenant
- Misappropriation or use of confidential information
- A false representation of products or services
- Unauthorized substitution of goods or products
- Misrepresenting the source of a product
- Trade libel, slander, or rumormongering
- Counterfeiting or imitation
- Below-cost selling
To qualify as libel or slander, the false information must decrease the confidence, respect, or regard for your business or product. Typically, trade defamation is a civil matter. In serious cases, it may be considered a criminal matter.
Unfair Competition and State Laws
State laws govern unfair competition. However, trademark issues, copyright infringement, and false advertisement involve federal laws. Federal laws generally pre-empt state laws if the issues pose a conflict.
The Federal Trade Commission (FTC) protects business owners and consumers from unfair competition risks.
How Businesses Distinguish Themselves
There are four devices a business uses to distinguish its company from others. These include:
Trade Names
This is used to distinguish a sole proprietorship, partnership, corporation, or other business entity. A business can register and operate under a trade name or have an assumed name known to the public.
An example might be a restaurant known by one name to the locals but registered under a different name. Under unfair competition laws, both names are considered trade names.
Trademarks
A trademark is a word, phrase, slogan, symbol, emblem, or other device used to signify authenticity or source to the public. Customers recognize registered trademarks which help them easily identify a company’s products and maintain brand loyalty.
Service Marks
These are similar to trademarks but represent services rather than goods. For example, Havard Pest Control provides pest control services so the company has a registered service mark.
Trade Dress
This represents the physical appearance of products or the manner in which they’re presented. How a product is wrapped, packaged, displayed, or promoted all fall under trade dress.
Trade dress may include the design, shape, or texture of a product or its packaging. Colors may also be part of a company’s trade dress. Distinct color schemes or markings are considered trade dress as well.
Qualifying for Protection
The above devices qualify as intangible assets, along with inventions, creative works, and artistic efforts. These assets are considered to be trade secrets.
Trade secrets can include formulas, patterns, processes, techniques, and other tools that allow a company an advantage over its competitors. The trade secret owner is the only one who can exclusively use or benefit from the information.
The laws of unfair competition provide a way to protect trade secrets. The theft of trade secrets can result in the one releasing the information being held liable for any damages or economic injury.
Employees and former employees can be held liable for sharing a company’s trade secrets.
Facets to Unfair Competition Laws
There are additional facets to the laws of unfair competition. These include:
The Exhaustion Doctrine
This allows distributors to market branded items in their original or unchanged state. A distributor can advertise a product associated with a well-known trademark or service mark.
The distributor must state their true connection with the owner of the trademark or service mark. A lack of proper branding or clarification can result in legal action.
Implied Reverse Passing Off
This occurs when an individual or company removes a mark when selling a product or attempts to pass it off as something else. This creates confusion among consumers and can result in legal action.
Express Reverse Passing Off
This occurs when an individual or company removes a mark and tries to rebrand an item, passing it off as their own. Taking legal action for this violation can be challenging.
If you are dealing with any of these situations of unfair practices, you should begin by contacting a reputable commercial litigation lawyer to discuss your situation.
Remedies for Unfair Competition
There are a number of tools at the court’s discretion to prevent unfair competition practices and restore damages to victims of unfair competition. Many states allow awards of monetary damages as well as injunctive relief.
A business can sue for injunctive relief and restrain competitors from continuing these unlawful practices. Money damages may be awarded to compensate for a business’s losses due to unfair competition.
Depending on the circumstances, remedies may be available in state and federal court.
Damages for Unfair Competition in Commercial Litigation
The court takes unfair competition seriously and considers a number of factors into account when awarding damages. These include:
- The number of violations
- Length of misconduct
- The nature and seriousness of the offense
- The willfulness of the misconduct
- A defendant’s net worth, assets, and liabilities
Hire a Commercial Litigation Attorney
Unfair competition is any wrongful practice that causes harm to businesses or consumers. Unfair competition laws are in place to help business owners protect their trade secrets.
If you’re a small business owner who has been accused of unfair competition or feels another business is violating your rights, commercial litigation attorneys can help.
The business lawyers of Boyer Law Firm have extensive experience dealing with the complexities of unfair competition laws for Florida business owners. We’d love to talk with you about your case.
Contact the Boyer Law Firm today to schedule a consultation.
