Competitive Torts

1. In free enterprise economy, a businessperson or firm is not liable for economic harm to competitors caused by legitimate price and product competition. Thus, manufacturers and other sellers can lawfully compete by improving their products, pro­moting their sale, and building customer satisfaction and brand loyalty. The law of competitive torts provides a remedy only when the business methods or practices are «unfair» or «improp­er». It happens when a business engages in fraudulent market­ing as by adopting a product name so similar to one already used by a competitor that a purchaser can not easily distinguish between the products of the two companies. Thus, the manu­facturer of «M&M» candies has a legal remedy if a competitor markets a similarly packaged candy under the name «M&N». Such deceptive marketing of goods harms not only the manu­facturer, but also consumers who are misled as to the maker of the candy. Society has a substantial interest in preventing such harmful practices and thereby maintaining free and fair compe­tition in the marketplace.

2. A person may engage in any business he or she chooses and may compete with other businesses for customers. Unless a new enterprise stoops to improper business practices, it is not required to account for the losses it inflicts on a competitor because of the new enterprise's products. However, laws restrict the right to engage in a particular business, trade, or profession. Thus, when a person enters a particular trade or business not for economic reasons, but rather to inflict harm on another, this constitutes a tort – i.e., the wrongful entry into business for which the plaintiff can recover damages. Laws may also restrict entry a business or a profession by requiring appli­cants to meet specific qualifications or be approved by an examining board. For example, proof of qualification is required before someone can practice medicine or law, or become a real estate broker.

3. People use contracts to establish their understandings when they make a business deal. Under the law of contracts and sales, if either of the parties fails to perform the contract (breaches it) the other has a right to sue for the resulting damages. However the contractual relationship between the parties to the contract can become a subject of interference by outsiders either during the process of making the contract or during the process of performing it after it is made. The right to make a contract and to have it performed is necessary to the orderly conduct of business affairs, so the law provides tort protection against outsiders who improperly interfere with other people's contracts.

4. Any business is entitled to compete with other firms free from attacks on its reputation and the products it sells. When derogatory statement harms the reputation of a businessperson or firm, such as a corporation or a partnership, a suit can be brought for a tort of defamation. Defamation of a business occurs when an unprivileged statement affects the credit rating of a businessperson or firm or otherwise attacks the honesty or character of the business. For example, if a credit bureau, in response to a request from one of its members, sends a report erroneously indicating that a company is in bankruptcy, this constitutes defamation.

5. A distinct tort which is related to defamation is disparagement (умаление, недооценка конкурирующих товаров). Whereas defamation damages a firm's interest in its reputation, disparagement damages a business's interest in the economic value of its products and property. The tort of disparagement includes the torts of slander of title (заведомо необоснованное порочение правового титула) and slander of quality.

Slander of title involves publication of untrue matter which casts doubt upon, or denies, the validity of another's title or interest in any kind of property and the publication causes financial loss.

Slander of quality is publication of false matter which indicates that another's property lacks the characteristics its vendor claims for it or which indicates that the property is unfit for the purposes for which it is being sold or leased. Thus the quality of the property will probably be diminished.

6. Unfair trade practices encompass all interferences with the right of a business to enjoy its goodwill and other trade advantages it possesses. Unfair trade practices take many forms. Among them are fraudulent marketing and wrongfully imitating a company's product design or packaging. The term palming off (сбывать товар или вести дела, выдавая себя за другое лицо) refers primarily to falsifying the source or maker of a product or service. By misrepresenting the maker of a product, a business can «pass off» inferior goods to a purchaser. Another method of «palming off» is for a competitor to imitate the name, physical appearance, or packaging of a product. By imitating the form or style of another's product or its distinc­tive wrapping, a competitor may be able to pass off its goods to unsuspecting consumers. To protect consumers and competi­tors from unfair trade practices competition laws have been adopted which prohibit unfair and deceptive marketing, pro­motional and sales practices, including false or deceptive advertising.