The Litigator's Guide to Unfair Competition in Colorado
| Publication year | 1992 |
| Pages | 42 |
1992, January, Pg. 42. The Litigator's Guide to Unfair Competition in Colorado
The law of unfair competition in Colorado includes many types of conduct. This article examines Colorado cases and statutes regarding unfair competition.
The original purpose of the law of unfair competition was to prevent a person from passing off his or her business as that of another.(fn1) Early cases involving unfair competition were limited to those situations. For example, in International News Service v. The Associated Press,(fn2) Associated Press ("AP") gathered news material through its own expenditure of labor, skill and money. International News Service ("INS") took the AP material and sold it for a profit. The U.S. Supreme Court held that the INS practice was unfair. The Court noted that
[s]tripped of all disguises, the process amounts to an unauthorized interference with the normal operation of [AP's] legitimate business precisely at the point where the profit is to be reaped ... with special advantage to [INS]... because of the fact that it is not burdened with any part of the expense of gathering the news.(fn3)
In contrast to the earlier cases involving unfair competition, the Colorado Supreme Court in more recent decades has adopted the position that "unfair competition is a question of fact, and no inflexible rule can be stated as to what conduct will constitute unfair competition."(fn4) The universal test is whether the public is likely to be deceived.(fn5) Thus, practices which generally may be described as the misappropriation of a competitor's business values have been held to constitute an unfair competitive practice.(fn6) In addition, practices of a business competitor that depart from the "good faith and honest, fair dealing" which is essential to encourage invention in the commercial world are unfairly competitive.(fn7) In other jurisdictions, it has been held that the concept of unfair competition is designed to cover confidential matters and fiduciary relations that do not fit within the formal categories of either trade secret or patent protection, yet nevertheless constitute an advantage wrongfully appropriated.(fn8)
Two elements must be present for a business practice to constitute unfair competition with regard to a trade name. First, the trade name must have acquired a secondary meaning or significance that identifies the plaintiff. Second, the defendant must have used the name or an assimilation of it unfairly against the plaintiff.(fn9)
A trade name has acquired secondary meaning if it is shown that by prior and continuous use of the trade name for a long period of time, the public mind (1) identifies the user of the name with a particular service or goods furnished by the holder of the trade name and (2) thereby identifies the product or service by name.(fn10) Factors to be considered in ascertaining whether a trade name has acquired a secondary meaning include the length of time the trade name has been in use, the amount of advertising expended on promotion of the name and the growth of the business to which the trade name refers.(fn11) A single word in a trade name should not be isolated to determine whether, by itself, the word has acquired a secondary meaning in connection with the plaintiff's business. Further, the use of more than one trade name by a business will not have an effect on whether one of the trade names has acquired a secondary meaning.(fn12)
For example, in Swart v. Mid-Continent Refrigerator Co.,(fn13) former employees of Mid-Continent Refrigeration Company started their own company, called Mid-Commercial Refrigeration Company. Noting confusion by consumers, the Colorado Supreme Court enjoined the defendants from misappropriating the plaintiff's trade name. The court held that the defendants obviously adopted the trade name Mid-Commercial Refrigeration Company to benefit from the goodwill established by Mid-Continent. It also held that the defendants' use of the name Mid-Commercial was likely to deceive the public.(fn14)
In Adolph Coors Co. v. A. Genderson and Sons, Inc.,(fn15) the defendant had purchased large quantities of beer from licensed retailers in Colorado and other
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