UNFAIR COMPETITION

 

The distinction between unfair competition and deceptive trade practices is that unfair competition covers only situations which target consumers, while deceptive trade practices also injure businesses.  Unfair competition laws are almost always applied against small businesses, while the corporate behemoths are subject to antitrust litigation. Despite the fact that federal law does have some application in this area, unfair competition is almost always dealt with at the state level.  The Federal Trade Commission (FTC), the federal agency responsible for consumer complaints, investigates unfair or deceptive trade practices.

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Because so many business practices are currently recognized as unfair trade practices, few legislatures attempt to list every single action that could constitute unfair competition. Instead, most courts which have addressed the issue have concluded that each act of unfair competition must be judged individually on a case-by-case basis.  However, despite the general lack of clear legislative delineations, unfair competition usually encompasses the following categories:

  • Insurance rigging.
  • Deceiving creditors.
  • Slandering a competitor’s products or services.
  • Presenting a competitor’s products or services as your own, or otherwise violating trademarks or copyright law.
  • Predatory pricing or dividing up territory.

If your company has been accused of engaging in unfair competition, you need assistance from a knowledgeable business defense attorney who can safeguard your legal rights and aggressively protect your entity’s best legal and financial interests.  To arrange for a private legal consultation with the experienced attorneys of Bellatrix PC, call our law offices at (800) 889-8376 today.

Predatory Pricing and Misappropriation of Assets

Many people are surprised to learn that predatory pricing doesn’t only apply to usury or gouging (in which, as business owners should be advised, the Federal Trade Commission takes a particular interest).  Counter-intuitively, predatory pricing or “undercutting” also results where consumer goods and services are priced too low.  A deep-pocketed company can always disrupt a market by drastically undercutting the prevailing market rate with the intention of inflating its prices as soon as all the other competitors have been starved into bankruptcy.

Contrary to popular belief, misappropriation in this context does not refer to misappropriation of funds. Misappropriation, when stated mononymically, usually refers to the misuse or unauthorized use ofintangible assets, where those intangibles are not otherwise covered by copyright or trademark law.  Theft of trade secrets falls under this umbrella.

Commercial Disparagement and Tortious Interference

In plain terms, commercial disparagement is the business version of slander and libel, which are separate forms of defamation.  Traditionally, slander refers to oral defamation, while libel indicates injurious statements made in writing.  All forms of defamation involve intentionally false statements made with the intent to damage reputation.

If a competitor makes libelous or slanderous statements targeting your business, you may have a cause of action under commercial disparagement.  First Amendment protections aside, no one has the right to make false statements concerning your business.  Commercial disparagement laws are designed to protect you and provide you with legal recourse if such disparagement causes a financial loss.

Tortious interference occurs when a business, or a group of businesses, convinces a supplier to commit a breach of contract.  It goes without saying that if your competitor is legally able to interlope between you and your supplier, and persuades your supplier to sell you his services for a greater price than he provides to your competitors, you would soon be out of business.  If you suspect that you are in this situation, our business defense lawyers can provide aggressive representation.

The California Unfair Competition Law

Up until 2004, the Unfair Competition Law was very controversial, as the person filing the claim did not need to have been deceived or harmed by the business in question.  Additionally, if the individual won the claim, it would be in his or her name, leaving the business vulnerable to being sued again for the same conduct, since it was not a true class action lawsuit.  As a result, many attorneys were using Section 17200 as an “add on” claim in traditional product liability or torts lawsuits to raise the prospect of a larger payout.  Section 17200 also required attorney’s fees to be paid to the winning attorneys, which motivated lawyers to add on the claim to their current lawsuit.

In November of 2004, the law was updated to more clearly define Section 17200 and Section 17500 with the passing of Proposition 64.  The Unfair Competition Law now requires that a representative claim seeking relief on behalf of others may be brought only by a “person who has suffered injury in fact and has lost money or property as a result of the unfair competition.”  Proposition 64 also added language that cross-references California’s class action statute, meaning all representative actions under Section 17200 or Section 17500 must meet regular class action requirements.

The ability to defend a typical California Unfair Competition Law action requires an in-depth knowledge of this unique statute, a command of the rules and procedures governing class-action litigation and, in many cases, an understanding of substantive areas of law that are used to trigger the Unfair Competition Law violation.  Examples of actions that violate Section 17200 and Section 17500 include:

  • False Advertising and Promotion:
    A business makes a statement in advertising that is either untrue, or is likely to deceive the customer.
  • Misleading or Deceptive Trade Practices:
    A business deceives the consumer as to the quality, source, origin, or endorsement of the product.  Not to be confused with false advertising.
  • “Palming Off” Goods:
    A business portrays its goods to the public as being the goods of another, or originating from another source.
  • Trade Dress Violations:
    A business very closely copies the appearance of a competitor’s product and/or packaging so much that the consumer has trouble telling the difference between the two products.  This issue affects goods ranging from makeup to computers to cigarettes.

While healthy competition in the business world leads to innovation and efficiency, it also increases your risk of being accused of violating California’s Unfair Competition Law.  If your business is concerned about or has been served with a Section 17200 or Section 17500 violation claim, Bellatrix PC’s aggressive Unfair Competition Law attorneys are here to help.  We will carefully and thoroughly investigate the claim, and then work with your team to strategically develop a defense plan.

Call our law offices today at (800) 889-8376 or contact us online to schedule your confidential legal consultation.

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