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Posted: December 7, 2014

Plaintiff Likely to Succeed on Common Law Claim for Unfair Competition

On November 20, 2014, Justice Whelan of the Suffolk County Commercial Division issued a decision in Cold Spring Harbor Construction, Inc. v. Cold Spring Builders, Inc., 2014 NY Slip Op. 51688(U), preliminarily enjoining a defendant’s use of a tradename.

In Cold Spring Harbor Construction, the plaintiff, Cold Spring Harbor Construction, Inc., brought an action for unfair competition against the defendant, Cold Spring Builders, Inc., and sought an order preliminarily enjoining the defendants’ use of the name Cold Spring Builders. The court granted the motion for preliminary injunction, finding, among other things, that the plaintiff was likely to succeed on its claim for unfair competition, explaining:

[T]he plaintiff further established a likelihood of success on its common-law cause of action sounding in unfair competition by reason of the defendant’s conduct. The essence of an unfair competition claim under New York’s common law is that the defendant assembled a product or provides a service which bears a striking resemblance to the plaintiff’s product or service that the public will be confused as to the identity of the products. It is rooted in the bad faith misappropriation of the labors and expenditures of another, likely to cause confusion or to deceive purchasers as to the origin of the goods or services. To prevail in an unfair competition case, the plaintiff may prove either: (1) that the defendant’s activities have caused confusion with, or have been mistaken for, the plaintiff’s activities in the mind of the public, or are likely to cause such confusion or mistake; or (2) that the defendant has acted unfairly in some manner. The bad faith misappropriation of a commercial advantage belonging to the plaintiff by the infringement or dilution of a trademark or trade name or by the exploitation of proprietary information and/or trade secrets are both actionable.

Claims of unfair competition under New York’s common law may thus be premised upon claims that the defendant misappropriated a commercial advantage belonging exclusively to the plaintiff by the exploitation of proprietary information and/or trade secrets, or upon claims of trademark infringement or dilution. Where the unfair competition claim is grounded upon the defendant’s injurious use of the plaintiff’s trade mark or name, the defendant’s conduct must be found to have constituted an unfair appropriation or exploitation of a special quality attached to plaintiff’s name, thereby resulting in a misappropriation of a commercial advantage belonging exclusively to the plaintiff. Irrespective of the base predicate, the key to stating a non-statutory, common law claim of unfair competition is that the defendant charged with actionable conduct displayed some element of bad faith in misappropriating the plaintiff’s labor, skill, expenditures, proprietary information or trade secrets.

(Internal quotations and citations omitted) (emphasis added).

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