What is unfair competition?

Unfair competition claims allow businesses and business owners to recover losses resulting from another’s unfair, fraudulent, or deceptive business practices.  Because unfair competition claims arise under state law, the precise contours of the claim can vary by state. 

A wide variety of misconduct can qualify as unfair competition.  Deceptive business practices, such as false advertising, bait-and-switch selling tactics, or false claims concerning the origin or characteristics of a company’s goods and services, can qualify.  Trade libel – where a company falsely disparages another company’s products or services – can also qualify as unfair competition.

Unfair competition can also arise when a company misappropriates trade secrets or other proprietary information from a competitor.  For example, if a company’s former employee uses knowledge and information that he gained during his employment to compete with his former employer, that can qualify as unfair competition. 

Significantly, as the name suggests, an unfair competition claim can generally be brought only by a competing business.  Generally, a consumer who is wronged by a company’s unfair or deceptive business practices cannot assert an unfair competition claim (although the consumer may have other causes of action).  Additionally, an unfair competition claim generally requires that the business actually be harmed by the unfair, fraudulent, or deceptive business practice. 

A plaintiff that brings a successful unfair competition claim can often recover both damages – monetary compensation for the harm suffered – and an order requiring the defendant to stop engaging in the unfair, fraudulent, or deceptive activity.

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