Unfair competition law is a broad legal concept that is used both by laypersons and courts often without clear definition. It generally is thought to encompass two separate concepts. One concept is the wrong of confusing customers about the source of origin of goods or services. That is “palming or passing off,” making a customer think that ones goods or services are those of someone else. The other concept is a catch-all “unfair trade practices.” Both categories of unfair competition law are generally matters of state common law, law developed by court decisions over time. Some states, including Virginia, proscribe by statute certain conduct in particular industries as unfair trade practices. A few states have adopted the Revised Uniform Deceptive Trade Practices Act which has general application to all industries and prohibits passing off goods or services as those of another and also prohibits certain specified types of deceptive advertising.
The term “unfair competition” is also used to describe certain conduct prohibited by federal statute. The federal trademark law, the Lanham Act, not only proscribes trademark infringement, it also addresses other related wrongs. Section 43(a) of the Lanham Act, codified as 15 U.S.C. §1125(a), provides for a civil cause of action against persons who cause confusion about the source of origin of goods or services, or in advertising misrepresent and nature, characteristics, qualities, or geographic origin of his or another person’s goods or services.
Unfair competition law is distinct from but similar to other common law wrongs relating to the manner of conducting business; for example, interference with business advantage, and trade disparagement. Certain conduct may give rise to a cause of action under several different theories of recovery.
Although the Federal Trade Commission has authority under Section 5 of the FTC Act to bring an action against those who engage in “unfair or deceptive acts or practices in or affecting commerce,” the group of wrongs often referred to as “unfair competition” is distinct from antitrust laws.
The above comments are intended to illustrate general principles only. There are often exceptions to general rules which apply in certain circumstances. Laws change over time by subsequent enactment of legislation and by court decision. Legal principles can differ from one jurisdiction to another. Particular factual circumstances may result in a different legal conclusion. If you have a question about a particular factual situation you should consult with an attorney.
David Harrison is experienced in unfair competition law under the Lanham Act and under Virginia state law.