Examples of Unfair Competition against Small Businesses

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Unfair competition against smaller businesses causes severe devastation to the owner and company when facing a larger corporation or a non-profit organization. The behavior and activities that these other entities engage in may cripple the small business and take away entire revenues streams to the point that the company breaks.

Unfair competition usually occurs through false information about a company, advertising that draws attention away from a business or attracting the customers of a specific entity to the other. The economic harm to the company is often irritating for larger corporations. However, smaller businesses affected in similar manners have face closing the store from these actions.

There are federal and state laws that protect such entities from these practices, but the company may need to file a lawsuit against the other entity to find a remedy to the situation. While individuals may cause similar harm, it is usually another company that starts and continues unfair competition activity to significantly damage the small business.

Examples of Unfair Competition Explained

There are several types of unfair activities through competition that a company may engage in against a small business. One of the complicated ways is through trademark infringement. A business may have a trademark symbol, word or phrase that represents the company in the eyes of the public. If another company uses a similar trademark, it could confuse the consumers. Additionally, this could then water down the brand and lead to complications in product or service sales. Small businesses thrive on customers, and harm to the trademark may lead to severe consequences when not dealt with through legal channels.

The substitution of goods may constitute unfair competition. This could also include instances of a name brand item proposed for sale to the consumers with the generic sold instead. Using the same trademarked images, the company may save money by switching out the products. However, this is still unfair competition and could harm small businesses that are unable to compete in the same manner. A false representation of products or services is similar to this and may mislead the public about products. If a warranty or guarantee does not exist even if explained to clients and customers as part of the package, there are means to sue the company.

Misappropriation of Trade Secrets

The trade secret through a recipe, process or method is part of the standard competition between companies. Some have these trade secrets, and others do not possess any. If the secret is stolen by someone or misappropriated, it could ruin the business. When products or services run through the secret, when the details are no longer private or disclosed to the public, the competitive edge is lost. If the business is unable to maintain customers after the misappropriation, it is possible that the company may close its doors. A lawsuit for compensation for this matter is critical to regain revenue for lost sales.

False Representation and False Advertising

When a company or corporation targets a product line or another entity, the owner or management may seek to use various unfair competitive practices. These may include a type of false representation about products and services offered. The items sold to consumers may have claims that are either entirely untrue or partially false. This could involve a misleading warranty attached to the object or a guarantee about what the product or service may provide to consumers. False representation is illegal, and the company could face severe consequences if a customer or company has enough evidence to back the claim.

False advertisements are similar to misrepresentation in how the advertising details may build up a product or service only for these claims to prove false. This may include details about nutritional benefits of the consumable or how a pair of shoes make the owner feel like he or she is walking on clouds. Both false advertising and misrepresentation may attract attention away from a small business in competition with the entity. This usually leads to economic and financial impact. However, the small business may have recourse through the courts in litigation against the corporation or big company.

Legal Help in Unfair Competition against Small Businesses

A lawyer may need to help in gathering as much evidence as possible to strengthen the case for a small business. This is made easier when the other company engages in illegal or unethical practices. By proving such issues in the courtroom, the small business may seek compensation or another remedy if necessary.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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