New York’s unfair competition law is a mix of two General Business Law statutes and a body of common law developed over decades by the state’s courts. Together they cover deceptive advertising, passing off one company’s goods as another’s, misappropriation of proprietary information, and trade secret theft. Businesses and consumers harmed by these practices can sue to stop the conduct and recover money, and in the most serious cases the state can bring criminal charges.
What Counts as Unfair Competition
The term covers several distinct types of conduct rather than a single offense. Deceptive acts and false advertising fall under GBL 349 and 350. Passing off, where one seller uses another’s brand or trade dress to confuse buyers, is a common law claim often paired with federal trademark claims. Misappropriation reaches conduct that harvests value someone else built, from hot-news scraping to trade secret theft. Each category has its own elements, its own remedies, and its own defenses.
Deceptive Practices and False Advertising
Two statutes carry most of the weight against deceptive business conduct. GBL 349 outlaws unfair or deceptive acts in any business, trade, or service conducted in the state.1New York State Senate. New York General Business Law 349 – Unfair, Deceptive, or Abusive Acts and Practices Unlawful GBL 350 targets false advertising specifically. Both allow private lawsuits, but the damages differ enough to matter.
Under GBL 349, someone harmed by a deceptive practice can sue to stop the conduct and recover actual damages or $50, whichever is greater. If the violation was willful or knowing, the court can increase the award up to three times actual damages, but the increase is capped at $1,000.1New York State Senate. New York General Business Law 349 – Unfair, Deceptive, or Abusive Acts and Practices Unlawful That cap keeps individual 349 claims small, which is why many plaintiffs bring them as class actions.
GBL 350 is more generous. A person harmed by false advertising can recover actual damages or $500, whichever is greater. For willful or knowing violations, the court can award up to three times actual damages, capped at $10,000, and may grant attorney fees to the winning plaintiff.2New York State Senate. New York General Business Law 350-E – Construction The fee-shifting piece is what draws plaintiffs’ lawyers to modest-value cases when the deception was obvious.
A business falsely claiming its product is “FDA-approved” when it is not could face lawsuits from affected consumers under either statute. The New York Attorney General can also bring enforcement actions under GBL 349, with power to seek injunctions and restitution.1New York State Senate. New York General Business Law 349 – Unfair, Deceptive, or Abusive Acts and Practices Unlawful
Passing Off and Brand Confusion
Passing off happens when a company sells its goods or services as if they belong to another business, usually by copying trade names, packaging, or branding closely enough to confuse buyers. New York courts treat this as one of the oldest and still most commonly litigated forms of unfair competition.
The 2013 lawsuit Tiffany & Co. v. Costco Wholesale Corp. shows how these claims play out. Tiffany sued Costco for selling diamond engagement rings under point-of-sale signs reading “Tiffany” when the rings had no affiliation with the jeweler. Costco argued it was using “Tiffany” to describe a pronged setting style, not to claim a connection with the brand.3Justia. Tiffany and Co v Costco Wholesale Corp The district court initially awarded Tiffany $21 million, but the Second Circuit vacated that judgment in 2020 and sent the case back for trial, finding that whether consumers were actually confused needed a fuller hearing. Even strong passing-off claims can hinge on how a factfinder reads consumer perception.
Businesses harmed by passing off can pursue New York common law claims and federal claims under the Lanham Act. Remedies typically include an injunction against the infringing conduct and compensatory damages for lost sales or reputational harm.
Misappropriation and Trade Secrets
Misappropriation is a separate branch of unfair competition in New York, covering situations where one business exploits another’s proprietary information, investment, or customer relationships. The issue is not consumer confusion but the unfair harvesting of value someone else created.
In NBA v. Motorola, Inc. (1997), the NBA sued Motorola for transmitting real-time game scores through a handheld pager without authorization. The NBA won an injunction at trial but lost on appeal. The Second Circuit ruled that Motorola’s score updates were not unlawful misappropriation, and it laid out a narrow five-part test for “hot news” claims that has kept this theory difficult to prove.4Justia. NBA v Motorola Inc, 105 F3d 841 (2d Cir 1997) Benefiting from publicly available facts is not enough. A plaintiff generally needs to show that a competitor free-rode on expensive, time-sensitive information gathering in a way that would destroy the incentive to produce that information at all.
Trade Secret Protection
Unlike most states, New York has not adopted the Uniform Trade Secrets Act. Trade secret claims are governed entirely by common law. To prevail, a plaintiff must show that the information qualifies as a trade secret, considering factors like its secrecy, the effort spent developing it, and the measures taken to keep it confidential, and that the defendant acquired or used it through improper means.
Remedies include injunctions against further use or disclosure, compensatory damages, and in some cases disgorgement of the defendant’s profits. Employers often use non-disclosure agreements to strengthen these claims by establishing that the employee knew the information was confidential. Non-compete agreements are also used to protect trade secrets after an employee leaves, though New York courts will enforce them only if their scope and duration are reasonable.
Federal Lanham Act Claims
Many unfair competition disputes in New York involve both state and federal claims. Section 43(a) of the Lanham Act creates two federal causes of action that overlap with New York common law: false association and false advertising.5Office of the Law Revision Counsel. 15 USC 1125 – False Designations of Origin and False Descriptions
A false association claim requires proof that the plaintiff has protectable rights in a mark and that the defendant’s use of a similar mark is likely to confuse consumers about who made or sponsored the product. A false advertising claim targets misleading statements in commercial promotion about a product’s nature, quality, or origin. The Lanham Act has no statute of limitations of its own, so courts in New York borrow the state’s period for analogous claims, generally three to six years depending on the injury alleged.
The Lanham Act’s fee-shifting provision matters. In “exceptional cases,” the court must award reasonable attorney fees to the winning party, judging by the totality of circumstances, including whether the losing side’s position was objectively unreasonable or brought in bad faith. For trademark counterfeiting and dilution claims specifically, fee awards are mandatory rather than discretionary.
Defenses Businesses Can Raise
Not every accusation sticks. Defendants in unfair competition cases have several established defenses.
Puffery
Marketing statements that are vague, subjective, or clearly exaggerated are puffery and not actionable as false advertising. “The best pizza in New York” is puffery because no one can prove or disprove it. “Made with 100% organic ingredients” is a specific, verifiable factual claim. The line between the two is where most advertising disputes are actually fought. Courts ask whether a reasonable consumer would treat the statement as a factual assertion they could rely on when buying.
Nominative Fair Use
A business can use another company’s trademark when it needs to identify or refer to that company’s products. A phone repair shop can advertise “We fix iPhones” without Apple’s permission. The defense requires that the product cannot be easily identified without using the trademark, that the defendant used only as much of the mark as necessary, and that the use did not suggest endorsement by the trademark owner. Costco’s defense in the Tiffany case turned partly on this argument.
Laches and Unclean Hands
If a trademark owner knew about the alleged infringement and waited an unreasonable time before suing, the defendant can raise laches, arguing the delay caused prejudice. Unclean hands can bar a plaintiff from relief if the plaintiff itself engaged in fraud, bad faith, or deceptive conduct connected to the dispute. Courts apply unclean hands cautiously and require the misconduct to relate directly to the matter being litigated.
Civil and Criminal Penalties
Civil Liability
Private plaintiffs can bring civil claims under GBL 349, GBL 350, the Lanham Act, or common law. Remedies vary but generally include compensatory damages, injunctions, and enhanced damages for willful violations. The Attorney General has additional tools, most notably the Martin Act, which covers fraudulent practices involving securities and financial products. New York courts have consistently held that the Attorney General does not need to prove fraudulent intent to bring a civil Martin Act action.6New York State Senate. New York General Business Law 352-C – Prohibited Acts Constituting Misdemeanor and Felony The statute’s broad language focuses on the acts themselves rather than state of mind, giving the AG unusual leverage.
Criminal Liability
When unfair competition crosses into outright fraud, New York’s Penal Law takes over. Scheme to defraud in the first degree covers systematic, ongoing fraud targeting multiple victims or causing losses exceeding $1,000. It is a class E felony.7New York State Senate. New York Penal Law 190.65 – Scheme to Defraud in the First Degree Falsifying business records in the first degree, which involves fabricating records with intent to commit or conceal another crime, is also a class E felony.8New York State Senate. New York Penal Law 175.10 – Falsifying Business Records in the First Degree
Trademark counterfeiting has a graduated penalty structure. At the low end, manufacturing or selling goods bearing a counterfeit trademark is a class A misdemeanor.9New York State Senate. New York Penal Law 165.71 – Trademark Counterfeiting in the Third Degree When the retail value of counterfeit goods exceeds $100,000, the charge rises to trademark counterfeiting in the first degree, a class C felony carrying up to 15 years in prison.10New York State Senate. New York Penal Law 165.73 – Trademark Counterfeiting in the First Degree Prosecutors have used these statutes aggressively against large-scale counterfeit operations, particularly in New York City.
Who Enforces the Law
The Attorney General’s Office is the most significant enforcement authority. Through its Bureau of Consumer Frauds and Protection, the AG’s office has broad authority under the General Business Law to issue subpoenas, compel document production, and seek injunctions and restitution.11New York State Attorney General. Consumer Issues High-profile actions have produced multimillion-dollar settlements, and the ability to act under the Martin Act without proving fraudulent intent gives the office significant leverage in negotiations.
The Department of State’s Division of Consumer Protection handles individual consumer complaints, offering mediation and referring patterns of misconduct to the Attorney General or law enforcement. It has no prosecutorial authority of its own, but the complaints it collects often feed larger investigations. When conduct crosses state lines or involves federal law violations, the Federal Trade Commission may act alongside state authorities under Section 5 of the FTC Act.
Filing a Lawsuit and Time Limits
Unfair competition lawsuits can be filed in state or federal court. Federal jurisdiction applies when the claim involves trademark infringement under the Lanham Act, when the parties are from different states and the amount in controversy exceeds $75,000, or when a federal question is otherwise present. State court handles the rest, including pure GBL 349 and 350 claims and common law actions.
Once the complaint is filed and served, the defendant has 20 days to respond if served personally in New York. If the summons and complaint arrived through an alternative method, such as substituted service or service on an authorized state official, the deadline extends to 30 days after service is complete.12New York State Senate. New York Civil Practice Law and Rules 3012 – Service of Pleadings and Demand for Complaint Discovery follows, and in unfair competition cases it usually focuses on the defendant’s marketing materials, internal communications about competitive strategy, and evidence of consumer confusion.
Preliminary injunctions matter more here than in many other civil cases. A court can grant one early if the plaintiff shows a likelihood of success on the merits and that ongoing unfair competition would cause irreparable harm that money cannot fix. A competitor’s deceptive conduct can erode market position faster than any lawsuit can produce a final judgment, so the injunction is often the real prize.
Claims under GBL 349 and 350 generally must be brought within three years of the deceptive act. Common law unfair competition and misappropriation claims typically fall under the same three-year window, though the clock may start later if the plaintiff did not discover the wrongful conduct immediately. Federal Lanham Act claims borrow from the most analogous state law, which in New York usually means three to six years depending on whether the court treats the claim as more like fraud or like injury to property. And even inside the limitations window, an unreasonable delay can support a laches defense that reduces or eliminates the available remedies.