Chapter 1: the competitive market system and the right to compete
A. unfair trade practices law and the competitive market system
B. the right to enter markets and to compete freely
I. Fair and Unfair Means of Competition
A. Schoolmaster’s Case (pg. 5, 1410): New school undercut the prices of the old school. It did intentionally cause harm but the manner was not improper. This is an example of fair competition.
B. Tuttle v. Buck, pg. 7 (1909): ∆ entered into the barbershop business only to drive π out. π said false, libelous things about ∆’s barbershop.
1. §786 Rst. 2nd of Torts, Competition as proper or improper interference: causing injury is presumed bad unless you have an excuse from (a)-(d).
a) W/o the slander: Part (d) supports π’s position
2. Rst. 3rd of Unfair Competition, §1 General Principles: If you cause injury, you are not subject to liability, unless you do (1)-(3).
a) Case thrown out of court: public benefits by the reduced cost of haircuts.
3. Maggs: Rst. of Unfair Competition is right nd T v. B was decided wrong.
C. Natural Monopolies: If the town is isolated and the town can only support one barber, this creates a natural monopoly. There might be brief fights over the monopoly and this benefits the public by giving brief respites from monopolistic pricing.
D. Prima Facie Tort Theory: Every intentional infliction of harm is a prima facie tort and it’s up to ∆ to prove an excuse.
1. Opposite to the Rst. of Unfair Competition.
2. Slander: deceptive marketing, easy case
3. Harm to Public Test
a) School: not harmful to public
b) T v. B: lies about sanitary conditions takes choices away from consumers
c) Shooting at another ship is harmful.
C. interference with contractual relationships
Intentional inducement of breach of contract
I. Price v. Sorrell: C1 and C2 are bound by a contract. BG (Bad Guy) does something wrt the contract. Hospital is C1 and Collection Agent is C2 Alleged debtor’s lawyer is BG. BG wrote a letter to C1 saying that C2 is undesirable. C2 sues BG for punitive damages.
A. If Hospital fired the collection agent because of BG. Apply Rst. of Torts §766, “induced or caused a 3rd party not to perform.”
B. Hospital didn’t sign a contract w/ Collection Agent and now decides not to hire him. Apply §766B, Intereferes with prospective contract.
1. Not liable if you kidnap the Collection Agent and hold him so he misses the interview. The lawyer is not a competitor
C. Trucking company contracts with lumber mill to bring logs out of forest. BG blocks the raod causing increased expense for the trucker because he has to go 50 mi out of his way. Applying §766A. One = Roadblocker. Another = Trucker. 3rd Person = lumber mill expecting the shipment. (One = lawyer, Another = CA, 3rd Party = Hospital).
1. Court rejected §766A.
a) CA’s job wasn’t made more difficult by the Lawyer’s disp
sale: displayed to prospective purchasers in the ordinary course of business.
E. End result is bad: BB invested a lot of money in a mark and through no fault of its own, loses.
II. Substantial Sales:
A. Zazu Designs v. L’oreal: L’oreal wanted to expand into salon products and went ahead w/ marketing and selling, knowing that Zazu was planning on going into same business. Later, Zazu had sold some small quanities. Need substantial sales to get CL protection.
1. Corporation stomps on small business.
B. Zone of natural expansion: Aunt Jemima made pancake mix but not syrup. Another company, using that name, started making syrup. Aunt Jemima sued on grounds that customers will be confused because syrup was in their natural zone of expansion.
C. Hypo: Company A and Company B start selling if different states, neither registers trademarks. Both sold the same amount in own states. Which law applies?
1. State CL: not very different.
2. Federal, §43(a): no problem because federal law covers all states.
a) Court will have to decide if the possibility of confusion exists.
Hypo: Zazu had an ITU. Different result. It’s Federal and protected.