An Overview of Unfair Competition Law And Trademarks

Understanding Trademark Unfair Competition for Business Owners

What is trademark unfair competition? It is a commercial tort that defies easy definition, encompassing various forms of deceptive business practices. As emphasized in People ex rel. Mosk v. National Research Co. of Cal., the domain of unfair competition is wide, stretching across numerous deceptive and unethical business actions. This broad umbrella includes acts like trademark infringement and trade secret theft, each affecting businesses in unique ways.

The landscape of unfair competition law has evolved significantly over time. Initially, legal remedies were available mainly for trademark infringement and false advertising between direct competitors. Modern legal interpretations, however, recognize that trademark infringement can occur even between non-competitors, especially if consumers might be confused about the affiliation or origin of goods and services. Some states require additional elements, such as “bad faith,” adding a layer of complexity to legal proceedings. This evolution reflects a growing understanding of the diverse ways in which trademarks can be used and misused in the marketplace.

The principle of free market competition underpins our economy, encouraging the replication of business ideas once they enter the public domain. This concept is fundamental to fostering innovation and competition. The transition from idea to intellectual property marks a crucial threshold. At this point, as demonstrated in cases like Streetwise Maps, Inc. v. Van Dam, Inc., the burden shifts to the intellectual property holder to prove infringement. This legal structure ensures that while innovation is protected, the essence of competitive capitalism is maintained.

Diverse Forms of Trademark Unfair Competition

Trademark unfair competition manifests in varied forms. Apart from trademark infringement, other forms include dilution, false advertising, and trade dress infringement. Each form has specific legal criteria and implications. The legal system, as noted in cases like Philadelphia Dairy Products v. Quaker City Ice Cream Co., draws a line between unethical behavior and legally actionable unfair competition. Understanding this distinction is crucial for business owners to navigate the competitive landscape effectively without overstepping legal boundaries.

Unfair competition law is not static; it evolves with changes in technology, societal norms, and political landscapes. Courts have the authority to define and interpret what constitutes unfair competition, a power that comes with responsibilities and limits. Legal precedents and legislative policies, as observed in SK & F, Co. v. Premo Pharmaceutical Laboratories, Inc., guide these judicial decisions, ensuring that they align with broader legal and societal principles.

The Lanham Act’s Influence The Federal Lanham Act, particularly Section 43(a), plays a pivotal role in shaping unfair competition laws. It provides a unified federal approach to addressing issues of trademark infringement and has become the foundation for many legal battles and decisions. This act offers a more standardized method for handling such cases across different states, ensuring a degree of consistency in the application of the law.

Antitrust Law vs. Unfair Competition

Antitrust law and unfair competition law, while seemingly contradictory, serve complementary roles in regulating the market. Antitrust law aims to prevent monopolistic practices and maintain healthy market competition, whereas unfair competition law focuses on preventing deceptive practices that distort market competition. As elucidated in L.A. Draper & Son v. Whellabrator-Frye, Inc., the core of antitrust law is the protection of the competitive process, not individual competitors, which sets it apart from unfair competition law.

State Laws on Unfair Competition

States like South Carolina have their own laws to combat unfair competition, such as the South Carolina Deceptive Trade Practices Act. These laws address a wide array of deceptive practices, from false advertising to the misrepresentation of goods. They provide businesses and consumers with legal avenues to address unfair practices, illustrating the varied approaches states take to protect their economic environments.

In South Carolina, the legal framework for addressing unfair competition and deceptive business practices is encapsulated in the South Carolina Uniform Deceptive Trade Practices Act (39-5-10 et seq.). This comprehensive statute serves as a critical tool for businesses and consumers alike in combating unethical business practices and maintaining the integrity of the marketplace.

Central to this Act is the prohibition of false and fraudulent advertisements. This provision plays a significant role in ensuring that the information provided to consumers is accurate and reliable, thereby fostering trust and fairness in commercial transactions. The scope of this prohibition is broad, covering a wide range of deceptive practices that can potentially harm both consumers and competitors.

One of the notable features of this Act is the empowerment of private individuals to seek legal redress. Victims of deceptive trade practices have the right to initiate a lawsuit for damages resulting from such practices. This aspect of the Act not only serves as a deterrent against unethical business behavior but also provides a means of recourse for those affected.

The Act outlines several specific actions that constitute deceptive trade practices. These include:

  • Passing off goods or services as those of another, which undermines the value of authentic goods and deceives consumers regarding the true source of a product.
  • Causing confusion about the source or certification of goods or services, which can damage the reputation of legitimate businesses and mislead consumers.
  • Creating a misunderstanding regarding affiliation or certification, potentially damaging the credibility and trustworthiness of businesses.
  • Employing deceptive representations of the geographic origins of goods or services, which can affect consumer choices and harm local producers.
  • Falsely representing used or secondhand goods as new or original, a practice that directly deceives consumers about the quality and value of a purchase.
  • Misrepresenting the quality of goods or services, which can lead to unfair competition and consumer dissatisfaction.
  • Disparaging the goods, services, or business of another with false or misleading statements, which can harm business reputations and market competition.
  • Advertising goods or services with no intention to sell as advertised, or not having enough supply to meet demand without disclosing quantity limitations.
  • Making false or misleading statements concerning price reductions, which can manipulate consumer perception and choices.

These provisions underscore the Act’s comprehensive approach to addressing a wide range of deceptive practices in the marketplace. The South Carolina Uniform Deceptive Trade Practices Act thus plays a pivotal role in safeguarding fair business practices, protecting consumer interests, and ensuring a level playing field in the state’s commercial landscape. By addressing these diverse aspects of deceptive practices, the Act contributes significantly to the maintenance of integrity and trust in South Carolina’s economic environment.


In conclusion, understanding and navigating trademark unfair competition is essential for business owners. While imitation and inspiration are integral to a competitive economy, they must be balanced against the rights provided by intellectual property laws. This balance is critical to fostering a business environment that is both innovative and fair. By recognizing the nuances of unfair competition laws, business owners can better strategize their practices, ensuring they compete effectively yet ethically in the marketplace.