Do I Have a Lanham Claim Against My Competitor for False Advertising?
The elements that a party must prove to prevail on a Lanham Act Claim for False Advertising.
If your competitor’s advertising is false or misleading, you are not helpless. You might have a federal claim under Section 43(a) of the Lanham Act. Although the Lanham Act is often known as a trademark statute, it also protects businesses against the unfair competition of misleading advertising or labeling.
A plaintiff that prevails on a Lanham Act claim can obtain an injunction against the false or misleading advertising, as well as damages and, in certain cases, attorneys’ fees. Importantly, consumers do not have standing under the Lanham Act, only competitors.
The Supreme Court in POM Wonderful LLC v. Coca Cola, recently explained why the Lanham Act utilizes competitors as its enforcement mechanism: “Competitors who manufacturer or distribute products have detailed knowledge regarding how consumers rely upon certain sales and marketing strategies. Their awareness of unfair competition practices may be far more immediate and accurate than that of agency rulemakers and regulators.” Thus, the “Lanham Act draws upon this market expertise by empowering private parties to sue competitors to protect their interests on a case-by-case basis.” (You can read more about POM Wonderful LLC v. Coca Cola at The Antitrust Attorney Blog).
THE LANHAM ACT LANGUAGE
The false-advertising section of the Lanham Act (commonly known as Section 43(a)) provides as follows:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—
is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
41 U.S.C. § 1125(a)(1).
THE LANHAM ACT ELEMENTS
To prevail on a false-advertising claim under the Lanham Act, a plaintiff must satisfy the following elements: (1) a false or misleading statement of fact; that is (2) used in a commercial advertisement or promotion; that (3) deceives or is likely to deceive in a material way; (4) in interstate commerce; and (5) has caused or is likely to cause competitive or commercial injury to the plaintiff.
FALSE OR MISLEADING STATEMENT OF FACT
Two types of advertising claims are actionable under the Lanham Act: (1) statements that are literally false; and (2) statements that are literally true, but likely to mislead, confuse, or deceive.
Specific claims of false objective facts are, of course, the easiest to prove. Statements of opinion or general claims of superiority—often called puffery—are not typically actionable under the Lanham Act. But a plaintiff might recover on a superiority claim if, for example, the challenged advertisement makes a direct comparison to a competitor’s product.
A plaintiff can recover under the Lanham Act for misleading statements that are literally true, but must show that the advertisement has deceived or has a tendency to deceive.
COMMERCIAL ADVERTISING OR PROMOTION
The definition of commercial advertising or promotion under the Lanham Act is relatively broad and, in addition to obvious advertisements, can include internet advertising, labels, and even some sales presentations to groups of customers or potential customers. This element is typically a factually specific inquiry.
DECEIVES OR IS LIKELY TO DECEIVE IN A MATERIAL WAY
A court will presume that a literally false advertisement deceives in a material way. Plaintiffs asserting a Lanham Act claim for misleading but true statements face a higher burden: They must typically show extrinsic evidence—like a survey, for example—that demonstrates the misleading effect of the advertisement. Finally, some courts have held that a plaintiff need not show extrinsic evidence of materiality where defendant’s Lanham Act violation is willful or in bad faith.
As is true for federal antitrust claims, a plaintiff doing business in the United States will usually satisfy the Lanham Act’s interstate commerce element quite easily.
COMPETITIVE OR COMMERCIAL INJURY
To obtain injunctive relief, a plaintiff need only show threatened injury; actual injury isn’t required. But to recover damages under the Lanham Act, a plaintiff must show actual injury from the challenged advertisement.
ABOUT THE AUTHOR: Jarod Bona
Jarod Bona is an antitrust and complex litigation attorney. After graduating from Harvard Law School and clerking on the Federal Court of Appeals for the Eighth Circuit, Mr. Bona spent a dozen years at DLA Piper and Gibson, Dunn & Crutcher before starting his own boutique firm, Bona Law PC, in March 2014.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.