Lesser Law Group

Unfair competition is a business tort

Unfair competition is essentially a business tort. This makes it a civil wrong, not a criminal violation. However, unfair competition standards are established under both federal law and California state law, both of which allow an aggrieved business to sue the offending business for monetary damages and injunctive relief to halt the illegal behavior. The relevant federal laws are found under copyright laws, trademark laws and the Lanham Act (15 U.S.C. Section 1125.) Unfair competition does not refer to monopolies or antitrust violations.

In general, what constitutes unfair competition varies with the type of business involved, the specific action being considered and the individual facts of the case. Legal commentators cite the following types of unfair competition most commonly reported -- trademark infringement, misappropriation, unauthorized substitution of one brand of goods for another, false representation of products or services, false advertising, use of confidential information by a former employee to solicit customers, trade libel, theft of trade secrets and breach of a restrictive covenant.

In essence, unfair competition restricts or curtails a business' revenue stream. Therefore, the remedy is to monetarily compensate the victim for the loss. In determining the measure of damages, the court will look to such factors as the number of violations, length of the conduct, seriousness of the conduct and the assets and net worth of the defendant. Injunctive relief, or an immediate order to stop the offending behavior, is typically reserved for serious, ongoing issues that would likely cause irreparable harm to the plaintiff business.

A business does not need to be a major player in the market to have a basis of action for unfair competition. A business litigation lawyer could provide legal advice to a company owner who is considering their options.

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