Trademark infringement is seen as a form of unfair competition. In an unfair competition claim, an individual or business must be able to show, at a minimum, that another individual or business is using a trademark under circumstances where the public is likely to become confused or deceived. While unfair competition is not codified in a statutory sense, it has been recognized as a cause of action by the courts. Additionally, some states have passed deceptive business practices acts to protect against unfair business practices. There is not a strict definition of “unfair competition,” but it contains a wide variety of unfair or deceptive business practices. The North Carolina Supreme Court said that the test lies in the answer to the following: “Has plaintiff’s legitimate business been damaged through acts of the defendant’s which a court of equity would consider unfair?” This question can be posed a different way: “Is the defendant’s trademark likely to cause confusion or mistake, or to deceive purchasers as to the source of the product?” However, courts frequently do not distinguish between the two questions if there is solely an unfair competition claim or a trademark infringement claim.
Many policy concepts have helped form guidelines to unfair competition. Some of these policies include: