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California’s Unfair Competition Act

June 21, 2013

Posted in Business Litigation

Unfair competitionUnfair competition may seem like an obvious issue but in reality there are only five types of conduct that actually constitute ‘unfair competition’ according to California law and none of them are cut-and-dry. If you have a business dispute that potentially involves unfair competition, it’s pertinent to understand how the law works.

California’s Unfair Competition law is nearly 80-years old but still remains relevant today. Filed under the California Business and Professions Code Sections 17200 and 17201, the code officially reads:

“Unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice or unfair, deceptive, untrue or misleading advertising…”

“… persons, corporations, firms, partnerships, joint stock companies, associations and other organizations of persons.”

The five types of wrongful conduct are:

  • An ‘unlawful’ business act or practice
  • An ‘unfair’ business act or practice
  • A ‘fraudulent’ business act or practice
  • ‘Unfair, deceptive, untrue or misleading’ advertising
  • Any act specifically prohibited by Sections 17500-17577.5

Under California law, each wrongful act is autonomous of the others. For example, your competitors conduct can be unfair and deceptive without being unlawful. On the other hand, it can be unlawful without being untrue or misleading. When you file an unfair competition lawsuit, you and your attorney must carefully determine the type of conduct you are accusing the defendant of as your argument must demonstrate that specific form of behavior. And each type of conduct requires its own elements and standards of proof. So, just because you’re distressed about your competitors’ actions, doesn’t automatically mean they were ‘unfair’ according to the law.

In addition to California statutes, federal law may be applied, depending on your specific circumstance. If your case involves trademarks, copyrights or any unfair advertising, for example, it may partially be governed by federal laws, particularly certain sections of the Lanham Act.

It’s also important to understand that unfair competition laws are broadly defined and interpreted. ‘Unfair’ is a very general term, sometimes making it difficult to prove, so your argument will likely involve extensive references to case law, as well. That said the vagueness of unfair competition laws can occasionally work in your favor. Unfair competition claims are often tacked onto other accusations during business litigation matters because the broad nature of the statutes can be manipulated to fit many different arguments. Either way, you’ll want an experienced business litigation attorney who knows the benefits and drawbacks of an unfair competition complaint and how to make it work for your situation.

If you believe your company is the victim of unfair competition, it can be daunting and complicated to prove, at best. Before you launch your own investigation or argument, contact The Law Offices of Tony T. Liu immediately so as not to jeopardize your case. We’ll walk you through the elements required to prove your claim, how to preserve evidence, preparing your argument and more.