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Unfair Competition

Pennsylvania has a strong statutory regime protecting consumers from a business’s unfair trade practices.  Businesses, on the other hand, are typically protected by the state’s common law from unfair methods of competition in the marketplace.  In Pennsylvania, as in most states, an unfair competition claim brought by one company against another is a business tort – that is, a wrong done by one business to another that causes economic injury.

What is unfair competition under Pennsylva

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Generally, unfair competition law addresses economic damages done by one business to another through deceptive or otherwise wrongful conduct.  Unfair competition claims can be broken down broadly into two categories.  The first category covers actions intended to confuse consumers as to the source of products or services.  The other includes all other forms of unfair trade practices.

Pennsylvania’s courts have largely followed the unfair competition definition from the Restatement of Torts (Third).   Restatements are secondary sources in which legal scholars set out basic principles of law as applied in most jurisdictions.  Under the Restatement’s definition of unfair competition, one business that causes harm to another’s commercial relations is not liable for that harm unless it results from acts or practices such as:

  • deceptive marketing;
  • trademark infringement;
  • appropriation of other trade values such as trade secrets and the right of publicity; or
  • any other acts or practices determined to be an unfair method of competition, “taking into account the nature of the conduct and its likely effect on the person seeking relief and the public.”

This final provision is also known as a “catch-all,” intended to sweep up other methods of unfair competition that are otherwise tortious or wrong under the law, including violation of state or federal statutes, or international agreements.

Other forms of unfair competition

Other types of unfair trade practices might include:

  • Tortious (or intentional) interference with contractual or prospective contractual relations.  In this kind of case, a person or company may be liable to a business for damages caused  by intentionally interfering with the performance of a contract between that business and a third party.
  • Misappropriation of trade secrets.  In such a case, one party wrongfully acquires trade secrets from another party (for example, by industrial espionage or inducing another to breach a duty), thereby causing economic harm.
  • Fraud.  In this case, one party makes a misrepresentation or fails to disclose material information resulting in damage to another.
  • Breach of fiduciary duty.  Here, where one party owes a fiduciary duty to another, that party may be liable for damages caused by a breach of that duty.
  • Trade disparagement or defamation.  This case involves false or misleading statements made in commerce about a party’s goods or services.
  • Unjust enrichment.  In this case, one party is improperly enriched, to another’s detriment.

Consult a Philadelphia business lawyer

If you believe that your business has been the victim of unfair competition, contact the skilled Philadelphia commercial litigation attorneys at The Kim Law Firm, LLC, for a consultation.  The Kim Law Firm is experienced at representing clients in commercial disputes in Pennsylvania and throughout the country.