Unfair Competition

Evolution of Unfair Competition

Unfair competition originally comprised a fairly narrow set of deceptive business practices pertaining to trademarks.

Over the years, courts gradually expanded unfair competition’s meaning and application.

Today, unfair competition is an umbrella term comprising a wide range of misconduct that unethically injures competitors and the marketplace. In Michigan specifically, the courts define unfair competition as “any conduct that is fraudulent or deceptive and tends to mislead the public.”

Unfair competition can include any of the follow scenarios:

  • Tortious interference with contracts and business relationships.
  • “Palming off” trademarks, service marks, and trade names as one’s own. Palming off occurs when a business deceives consumers into believing that the business’s goods are those of another business.
  • Counterfeit goods.
  • Stealing confidential information or trade secrets to gain a competitive advantage.
  • Inducing employees to breach their contracts to help a competitor.
  • Infringing on another business’s intellectual property rights to more easily compete.

The Aspects of Unfair Competition

Perhaps the two most notable aspects of unfair competition are the following:

  1. Its sheer breadth as a cause of action. As the above illustrations show, parties can rely on the broad definition of unfair competition to address a host of competitive behaviors that may not run afoul of narrower causes of action. Thus, wise businesses suffering from unfair possess an elastic alternative path to recovery.
  2. Access to exemplary damages, as opposed to mere financial/compensatory losses. Specifically, a business injured by unfair competition may obtain both lost profits as well as lost customer or business goodwill. The availability of exemplary damages may exponentially increase an injured business’s total recovery amount.

You bet that the other side will pound the table and insist that every portion of the contract is enforceable in every context across the board.  Oftentimes, that is not the case.  For instance, it is incredibly important to assess who the new employer is (or will be) and the employee’s specific role within the new organization.

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