Competitive or Commercial Injury - The Lanham Act
The Lanham Act is a federal law that prohibits a number of deceptive and unfair business practices. The Act covers unfair and deceptive competition such as trademark infringement, trademark dilution and false advertising. The Act clearly states that:
The intent…is to regulate commerce within the control…by making actionable the deceptive and misleading use of marks in…commerce; to protect registered marks used in such commerce from interference by State, or territorial legislation; to protect persons engaged in such commerce against unfair competition; to prevent fraud and deception in such commerce.
The false advertising component of the Lanham Act, §43(a),requires the following are established:
- the existence of a defendant's false statement of fact about its own or another product in a commercial advertisement;
- that the statement actually deceived or had the tendency to deceive a substantial segment of the audience;
- materiality - the likelihood that a purchasing decision was influenced by the deception;
- that the statement entered interstate commerce due to the defendant; and
- injury or likelihood of injury to the plaintiff, whether by loss of sales to defendant or loss of goodwill associated with plaintiff's products, as a result of the defendant's false statement.
Unless the advertising is purely local, the interstate commerce component is almost always met with a false advertising or false representation claim (the interstate commerce provision has been broadly interpreted).The economic or reputational injury may be met if the false advertising comes in the context of marketplace competition.
The protections of the Lanham Act are available to competitors – not to private consumers. The remedies available for a violation of the Act include injunctive relief to prohibit the activity, money damages and in “exceptional” cases attorney’s fees.