To be sure, in the noncompete and non-solicit context, the vast majority of claims that invoke unfair competition as one of its primary causes of action (i.e., legal bases for recovery) do so on the grounds that the defendants misappropriated confidential and proprietary information that was then used (unfairly) to gain a business advantage and divert customers to a competing entity. Such claims fall under the umbrella of common law, meaning non-statutory, unfair competition.
But there are other forms of unfair competition in this context that do occasionally arise that implicate both state and federal statutory law, and that is where the defendants attempted to mislead consumers into believing that they were in fact the plaintiff's business, using deceptively similar brand names.
Statutory Liability for Unfair Competition Under New York Law
To that end, New York General Business Law § 133 provides as follows:
§ 133. Use of name or address with intent to deceive.
No person, firm or corporation shall, with intent to deceive or mislead the public, assume, adopt or use as, or as part of, a corporate, assumed or trade name, for advertising purposes or for the purposes of trade, or for any other purpose, any name, designation or style, or any symbol or simulation thereof, ... which may deceive or mislead the public as to the identity of such person, firm or corporation or as to the connection of such person, firm or corporation with any other person, firm or corporation ...
Whenever there shall be an actual or threatened violation of this section, an application may be made to a court or justice having jurisdiction to issue an injunction, upon notice to the defendant of not less than five days, to enjoin and restrain such actual or threatened violation; and if it shall appear to the satisfaction of the court or justice that the defendant is in fact assuming, adopting or using such name, or is about to assume, adopt or use such name, and that the assumption, adoption or use of such name may deceive or mislead the public, an injunction may be issued by said court or justice, enjoining and restraining such actual or threatened violation without requiring proof that any person has in fact been deceived or misled thereby.
The important piece to keep in mind here is the last sentence - whereby the statute expressly provides for injunctive relief where the section has been - or is likely to be - violated.
Statutory Liability for Unfair Competition in the Non-Compete Context Under Federal Law
The Lanham Act, codified at 15 U.S.C.A. § 1125, and entitled "False designations of origin, false descriptions, and dilution forbidden," is the companion federal statute to GBL § 133, and provides, inter alia, as follows:
(a) Civil action
(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which--
(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
The important piece to keep in mind here is that the statute allows for not only recovery of damages and disgorgement of ill-gotten gains, but in certain rare "exceptional" cases, for the recovery of attorneys' fees as well. See 15 U.S.C. § 1117(a).
