Unfair competition laws prohibit a company from engaging in deceptive or otherwise wrongful business practices that injure consumers and other businesses. Unfair competition can therefore cover a wide range of prohibited conduct, including:
- Trademark infringement, in which a company uses a competitor’s trademark on its own goods or services;
- Misappropriation of trade secrets, in which a person or company acquires a trade secret through improper means, such as stealing a competitor’s formula or recipe;
- False advertising, in which a company uses confusing, misleading, or blatantly untrue statements to promote its product(s), such as falsely claiming its drug promotes weight loss;
- “Bait and switch” selling tactics, in which a company advertises products or services at a low price, but the advertised goods are either unavailable or not as good as advertised;
- Unauthorized substitution of one brand of goods for another, in which a company substitutes another brand or product in lieu of the one ordered, such as selling a counterfeit designer handbag;
- False representation of products or services, in which a company makes false representations when supplying, offering to supply, or promoting its goods or services, such as making a misleading product warranty or guarantee; and
- Trade defamation, in which a company publishes false statements intentionally disparaging the quality of the goods or services of its competitor(s).
While unfair competition laws are intended to protect consumers and businesses and help prevent illegal merchandising, a violation of unfair competition laws may also give rise to a claim for violations of the securities laws. For example, a company engaged in unfair competition may simply violate the securities laws by falsely reassuring investors that it is in compliance with all unfair competition laws. Alternatively, a company that ceases to engage in unfair competition, either by choice or as a result of a regulatory enforcement action, may no longer be able to meet its revenue or income guidance for the quarter or year, as the guidance was based on the continuation of the illegal practices. In such a case, the company’s prior guidance may be considered misleading. In either instance, if the market learns of a company’s violations of unfair competition laws, and the company’s share price declines, causing harm to investors, it may give rise to a securities claim.
If you believe that you have suffered a loss on your investments due to a company’s violation of unfair competition laws, please contact the class action attorneys at Glancy Prongay & Murray.