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What is unfair competition?

What happens when consumers or other business owners feel you have wronged them in some way? They may claim you caused them economic injury by misrepresenting your product, advertising falsely or deceiving them otherwise. It is important for you, a California executive, to understand that these accusations comprise unfair competition.

For a better understanding of unfair competition laws, you may refer to The Legal Information Institute at Cornell Law School. It outlines the basics of unfair competition and provides the two main categories deceptive business practices fall into:

  • "Unfair competition" - wrongful actions that intend "to confuse customers as to the source of the product"
  • "Unfair trade practices" - all other competition deemed unfair

The LII says individual states sometimes enact their own legislation in this area, but federal law trumps state law when the two conflict. The Federal Trade Commission serves to uphold that law, protecting you as a consumer as well as you, the Chief Executive Officer. Sometimes businesses get indirectly caught up in incidents involving deceptive practices, so the FTC strives to protect both individuals and companies. 

As mentioned above, false advertisements are just one accusation you may hear from the public. Other unfair practices you want to avoid include stealing trade secrets, substituting unauthorized brands of products, breaking confidentiality agreements and selling goods using "bait and switch" tactics. You should also be careful to sidestep misappropriation and trademark infringement.

The LII notes that "what constitutes an 'unfair' act varies within the context of [your] business, the action being examined, and the facts of the individual case."

This information intends to educate regarding unfair competition laws but does not aim to offer legal advice.

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