Kajko, Weisman & Colasanti, LLP

How do you know if a business is engaging in unfair competition?

Technology has created many wonderful opportunities for business owners. With a few hundred dollars, you can create an online store and start running your business from your laptop. You can also respond to customer inquiries wherever you are and fulfill orders while you sit on your couch.

However, the ease of setting up shop also means your competition has increased. With the vast online marketplace, suddenly standing out in the crowd has gotten much harder. Some businesses simply do not play fair. You may be wondering whether one of your competitors has engaged in unfair competition. Here is what you should know about unfair business practices.

What is unfair competition?

Unfair competition is when a company engages in deceptive or unethical business practices which harm another company or consumers. There is not specific law that governs unfair competition, rather it is an umbrella term that encompasses several types of bad business practices. Below are some unfair competition practices.

Trademark infringement

Trademark infringement occurs when a business uses another company’s trademark on their goods or services in such a way that it causes confusion or deception.

Falsely representing goods or services offered

This occurs if a company makes misleading statements about what a product does or makes a guarantee that they cannot back up. Any misleading warranties are also considered unfair competitive practices.

False advertising

This is like above, but it specific applies to advertisements, whether in a magazine, online, on TV or over the radio. Ads are supposed to be truthful and when possible, backed by scientific evidence. The Federal Trade Commission enforces and monitors advertisements and pays close attention to claims that affect consumers’ health.

Bait and switch deception

A business may advertise a low price on an attractive product or service. Then when the consumer tries to buy the product, the seller says it is unavailable and offers the consumer another product at a higher price. Another company may also advertise your product as the “bait,” and then switch it out with their inferior product when the consumer goes to buy. That could also constitute false advertising.

Misuse of trade secrets

A trade secret is information that could be a formula, program, technique, pattern, process or even a recipe that gives a business an economic advantage. Someone accused of misappropriating trade secrets has taken that information and used it to benefit another business.

Massachusetts recently adopted the Uniform Trade Secrets Act (UTSA), which went into effect on Oct. 1, 2018. The UTSA expands protections for businesses by including trade secret protection for secrets even if the information is not currently in use. The law also allows companies to sue for misappropriation if it has occurred or if it is “threatened misappropriation.” Threatened misappropriation means before the trade secret misuse has happened. However, if someone is found to have brought a trade secret misappropriation case in bad faith, the defendant can recover their attorney fees from the plaintiff. This is to prevent frivolous trade secret lawsuits.

If your competition engaged in any of these behaviors, you may have a strong case for unfair competition.

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