“California recognizes claims for both common law unfair competition and statutory unfair competition.” K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 961.

Common Law

The common law tort of unfair competition is generally thought to be synonymous with the act of “passing off” one’s goods as those of another.

The tort developed as an equitable remedy against the wrongful exploitation of trade names and the common law trademarks that were not otherwise entitled to legal protection. Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1263; Los Defensores, Inc. v. Gomez (2014) 223 Cal.App.4th 377, 394 (the common law tort of unfair competition has long been recognized in California).

The purpose of the equitable doctrine is to prevent unfair competition through misleading or deceptive use of a term exclusively identified with the claimant’s product and business, affording judicial protection whenever the name and the business become synonymous in the public mind. Id.

Statutory Law

“The Unfair Competition Law (UCL) does not proscribe specific activities, but broadly prohibits ‘any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.’” Puentes v. Wells Fargo Home Mortg., Inc.(2008) 72 Cal. Rptr. 3d 903, 908, citing Business and Professions Code § 17200, et seq. The UCL “governs ‘anti-competitive business practices’ as well as injuries to consumers, and has as a major purpose ‘the preservation of fair business competition.’” Id.

To state a cause of action under the “UCL”, a plaintiff must show:

1. a business practice;
2. that is unfair, unlawful, or fraudulent; and
3. authorized remedy.

Bus. & Prof. Code § 17200; Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 676.

Because the UCL is written in the disjunctive, it establishes three varieties of unfair competition-acts or practices which are unlawful, or unfair, or fraudulent. In other words, a practice is prohibited as “unfair” or “deceptive” even if not “unlawful” and vice versa.” Puentes v. Wells Fargo Home Mortgage, Inc. (2008) 160 Cal.App.4th 638, 643-644.

The five general categories for causes of action under the UCL:

1. unlawful business act or practice,
2. unfair business act or practice,
3. fraudulent business act or practice,
4. unfair, deceptive, untrue or misleading advertising, and
5. any act prohibited by Business and Professions Code sections 17500 to 17595.

Unfair business practices

“A plaintiff alleging unfair business practices under these statutes [(Bus. & Prof. Code § 17000 et seq.)] must state with reasonable particularity the facts supporting the statutory elements of the violation.” Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.

“The statutory language referring to ‘any unlawful, unfair or fraudulent’ practice makes clear that a practice may be deemed unfair even if not specifically proscribed by some other law.” Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co. (1999) 20 Cal.4th 163, 180.

Unlawful practices

Unlawful practices are practices “forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made.” Saunders v. Super. Ct. (1994) 27 Cal.App.4th 832, 838–839.

By proscribing any “unlawful” business practice, the UCL “borrows” violations of other laws and treats them as unlawful practices. Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co. (1999) 20 Cal.4th 163, 180.

“Its coverage is sweeping, embracing anything that can properly be called a business practice and that at the same time is forbidden by law. Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143; Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co. (1999) 20 Cal.4th 163, 180. It governs anti-competitive business practices as well as injuries to consumers, and has as a major purpose the preservation of fair business competition.” Cel-Tech Commc’ns, 20 Cal.4th at 180.

Fraudulent practices

A claim based on the fraudulent prong can be based on representations that deceive because they are untrue, but also those which may be accurate on some level, but will nonetheless tend to mislead or deceive. Morgan v. AT&T Wireless Services, Inc. (2009) 177 Cal. App. 4th 1235, 1255.

The “fraud” prong of unfair competition law is unlike common law fraud or deception because a violation can be shown even if no one was actually deceived, no one relied upon the fraudulent practice, or no one sustained any damage. Buller v. Sutter Health (2008) 160 Cal. App. 4th 981, 986.

It is not necessary to plead that the fraudulent deception was actually false, known to be false by the perpetrator, and reasonably relied upon by a victim who incurs damages. In re Tobacco II Cases (2009) 46 Cal. 4th 298, 312. This distinction reflects the focus of the Unfair Competition Law on the defendant’s conduct, rather than the plaintiff’s damages, in service of the statute’s larger purpose of protecting the general public against unscrupulous business practices. Id. Since this is a statutory claim, the pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation. Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619.

Standing

Actions for relief pursuant to the UCL may be prosecuted “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” Bus. & Prof. Code § 17204; Pfizer Inc. v. Super. Ct. (2010) 182 Cal.App.4th 622, 630.

Safe Harbor Rule

“Although the unfair competition law’s scope is sweeping, it is not unlimited. Courts may not simply impose their own notions of the day as to what is fair or unfair. Specific legislation may limit the judiciary’s power to declare conduct unfair. If the Legislature has permitted certain conduct or considered a situation and concluded no action should lie, courts may not override that determination. When specific legislation provides a ‘safe harbor,’ plaintiffs may not use the general unfair competition law to assault that harbor.” Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 182.

“A plaintiff may thus not ‘plead around’ an ‘absolute bar to relief’ simply ‘by recasting the cause of action as one for unfair competition.’ The rule does not, however, prohibit an action under the unfair competition law merely because some other statute on the subject does not, itself, provide for the action or prohibit the challenged conduct. To forestall an action under the unfair competition law, another provision must actually ‘bar’ the action or clearly permit the conduct.” Id. at 182-183 (citation omitted).

Remedies

A distinguishing feature of the UCL is that it does not provide a private action for damages or other legal remedies. Instead, the UCL provides an equitable means to prevent unfair practices in the future and restore money or property to victims of those practices. Cel–Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 179.

“Plaintiffs are generally limited to injunctive relief and restitution.” Cel-Tech Commc’ns, Inc. v. L.A. Cellular Tel. Co. (1999) 20 Cal. 4th 163, 180.

The California Supreme Court has defined an order under section 17203 for restitution as one “‘compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken, that is to persons who had an ownership interest in the property or those claiming through that person.’” Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144–1145;see also Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 68.

“Under the UCL, an individual may recover profits unfairly obtained to the extent that these profits represent monies given to the defendant or benefits in which the plaintiff has an ownership interest.” Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1148