Unfair Competition: How does it relate to trademark infringement?

 

By: Tyler Hampy

To begin, what is unfair competition? Although the courts have had little success in defining unfair competition in the abstract, Black’s Law Dictionary defines unfair competition as dishonest or fraudulent rivalry in trade and commerce, specifically, the practice of endeavoring to pass off one’s own goods or products in the market for those of another by means of imitating or counterfeiting the name, brand, size, shape, or other distinctive characteristics of the article or its packaging.

However, it is necessary for the courts to have flexibility in defining unfair competition. When Congress passed the Federal Trade Commission Act of 1914, it stated that, “[i]t is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field. Even if all known unfair practices were specifically defined and prohibited, it would be at once necessary to begin all over again. If Congress were to adopt the method of definition, it would undertake an endless task.”

Many years ago, unfair competition laws were established to protect consumers and businesses. The idea of unfair competition goes against public policy because it excessively burdens competition. Therefore, the law sets a minimum level of “fairness” to be practiced in marketplace competition. In other words, it is illegal to compete “too much” or “too hard.”

So, where does trademark infringement fit in the picture? Trademark infringement is a form of unfair competition. The law of trademarks is a subcategory of the broader arena of unfair competition; therefore, trademark infringement actions fall within the umbrella of unfair competition.

The Senate Committee reporting on the Federal Trademark Act of 1946 succinctly stated that, “unfair competition is the genus of which trademark infringement is one of the species…All trademark cases are cases of unfair competition…”

With respect to unfair competition, trademark law’s general purpose is to prevent one person from passing off his goods or business as the goods or business of another. This is particularly applied to the practice of attempting to substitute one’s goods or products in the market for those of another for the purpose of deceiving the public.

In trademark law, unfair trade practices are commonly found when one imitates or counterfeits the name, size, color scheme, pattern or other distinctive particularities of another’s good or service or when one imitates the shape, color, label, wrapper or general appearance of another product’s package in order to mislead the general public or deceive an innocent purchaser.