Outside the trademark arena, the idea of unfair competition exists in common law and statutes to compensate businesses that have suffered an injury through deceptive or wrongful business practices. In a trademark situation an injured party can bring an unfair competition claim under § 43(a) of the Lanham Act. Section 43(a) provides that:
“Passing off” encompasses a lot of activity and is the oldest theory of unfair competition. Passing off happens when the defendant makes a statement or representation that the goods or services are affiliated or come from the plaintiff. There can be direct or indirect false representation in this regard. An example of a direct representation is when the seller/defendant claims the products are actually from plaintiff. It can happen indirectly when a customer places an order for plaintiff’s products, but the order is actually filled with defendant’s products.
To be liable for “passing off” a defendant must simulate the plaintiff’s mark, trade dress or trade name and plaintiff is able to show evidence that this caused a likelihood of confusion. No showing of intent is required.
Some plaintiffs have also tried to bring “reverse passing off” claims. In theory, a “reverse passing off claim” happens when a defendant/seller re-sells plaintiff’s product only after plaintiff’s label or trademark has been removed. This causes purchasers to believe that defendant’s product is actually coming from plaintiff. But, this cause of action was rejected by the United States Supreme Court in DastarCorp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 66 (2003). In that case, the defendant resold films with expired copyrights. The original film makers sued. The Court rejected plaintiff’s argument and said that copyright laws do not work this way—either it is copyright infringement or its not and if the copyright had expired then the defendant was free to do whatever it pleased with the films.