Impact damage may reduce the strength and stiffness of laminated composite structures due to matrix cracking, delaminations and fiber failure. This study is focused on the effect of a local softer region caused by fiber fracture. This region is modeled as a notch - a hole, a soft inclusion or cut fibers. Several tests were performed in tension and compression with different notch sizes and the strain distributions on the surface were measured optically. The predicted strain and stress distributions for an inclusion in an infinite anisotropic plate were compared with the strain distribution. The point stress and the average stress criteria were used as failure criteria and compensated for finite width. This study showed that the average stress criterion gave a slightly better fit than the point stress criterion. Two methods for evaluating failure criteria were used - by the failure stress and by the optically measured strain distribution. The conclusion that can be drawn from this study is that the characteristic lengths for these criteria not are material constants; they depend on the load case and on the notch ". One indication of different fracture mechanisms is the difference in the characteristic lengths.