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The best way to envision the relationship between trademarks and unfair competition is to imagine an umbrella. The umbrella is unfair competition and trademark infringement is one spoke in the umbrella. This is because trademark infringement is a form of unfair competition, that is, fraud or dishonest business dealings in trade and commerce. It is when competition becomes unfair because one of the parties has obtained an advantage through fraud or dishonesty.
Unfair competition laws abound in all of the states and cover the gamut of bad business behavior, both towards other competitors and towards consumers. Thus, unfair competition laws address trademark infringement, stealing of trade secrets, patent infringement, etc. while simultaneously also addressing consumer-based practices such as price gouging, false statements, and anti-trust violations (i.e. monopolies).
For our purposes, we will discuss the specific unfair competitive practice of trademark infringement, or passing off of products under the mark of another so as to benefit from the other’s trademark goodwill and profit. The main purpose of intentional trademark infringement is to deceive the public, which is why it is considered anti-competitive. It gives the consumer a fraudulent choice of goods, punishing the consumer with a lower quality facsimile of the original and cheating the rightful owner of the mark out of profits.
The practice of trademark infringement is so contrary to public policy that U.S. trademark law grants owners of trademarks without registration the right to bring actions for infringement of unregistered marks in federal court. It does this through Section 43(a) of the Lanham Act which expressly forbids the “false designation of origin.” Additionally, Section 43(a) further draws the line in the sand of unfair competition by outlawing false descriptions used in advertising or promotions that misrepresent the nature of the goods of the owner or even of a competitor.
Another shade of trademark-related unfair competition laws are dilution laws. Dilution occurs when the use of a mark dilutes or otherwise taints a famous mark. Perhaps one of the more famous cases involved Victoria’s Secret’s suit against Victor’s Little Secret. VS alleged that Victor’s Little Secret, which operated as a lingerie and adult entertainment store in Kentucky, tarnished the Victoria’s Secret brand by association.
Only famous marks can be diluted, and the onus of proving that a mark is famous rests solely on the shoulders of the party claiming dilution.
In the business world, trademark infringement is considered the more focused species of the genus of unfair competition. However, this does not mean that unfair competition claims do not get their day in court. On the contrary, unfair competition claims are routinely included along with trademark infringement claims to make sure that the entire umbrella is hanging over the case.
If you have questions about trademark infringement, unfair competition, or other intellectual property-related matters, contact Chris Clark today. He can help you protect your intellectual property rights and if need be, help defend them as well.
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