Lanham Act Also Applies to False Advertising Claims
July 9, 2002
This article was reprinted with permission from the May 13, 2002 issue of The National Law Journal
© 2002 NLJ IP Company
Ask lawyers about the federal Lanham Act, and most would recognize it as the statute that protects trademarks. But businesses that advertise - and especially lawyers who represent those businesses - are also familiar with Section 43(a) of that Act, which is the short but broadly phrased provision permitting business competitors to sue one another for false advertising, among other things. Although the jurisprudence of § 43(a) developed in a haphazard way, litigants in recent years have benefited from attempts some courts have made to bring order to the caselaw chaos.
Congress originally enacted the Lanham Act, including § 43(a) (which is codified at 15 U.S.C. § 1125(a)), in 1946 and amended it in 1988, but in both instances provided scant guidance on how courts should construe § 43(a). This provision prohibits any use of a false or misleading description or representation in commercial advertising or promotion that "misrepresents the nature, characteristics, qualities, or geographic origin of. . . goods, services, or commercial activities." Courts have formulated the following elements for a claim under § 43(a):
- The defendant must have made a false or misleading statement of fact in advertising.
- That statement must have actually deceived or had the capacity to deceive a substantial segment of the audience.
- The deception must have been material, in that it was likely to influence the purchasing decision.
- The defendant must have caused its goods to enter interstate commerce.
- The plaintiff must have been or is likely to be injured as a result.
United Industries Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998).
To obtain monetary damages - as opposed to simply injunctive relief - a Lanham Act plaintiff must also demonstrate actual consumer reliance on the false advertisement and a resulting economic impact on its own business. Finally, although § 43(a) appears to be aimed at protecting consumers, the Lanham Act provides no cause of action to consumers, only to business competitors. Barrus v. Sylvania, 55 F.3d 468, 470 (9th Cir. 1995); Serbin v. Ziebart Int'l Corp., 11 F.3d 1163, 1169-70 (3d Cir. 1993).
Categories of Falsity
Categorization of the challenged advertising claims is the critical pivot in any § 43(a) action and is frequently result determinative. Courts place false or misleading advertisements into three categories: implied falsity, literal falsity and "mere puffery." Liability under the Lanham Act arises out of only the first two categories, as mere puffery is not actionable. United Industries, 140 F.3d at 1180 (defining puffery as "exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely and is not actionable under § 43(a)."). On the other extreme, if plaintiffs can prove an advertising claim was literally false, their burden is lightened considerably because courts will presume the element of deception.
Implied false advertising claims are those that are literally true, but that imply another message which is false. For example, in a Lanham Act suit between two shaving products companies, the defendant advertised that the moisturizing strip on its shaving razor was "six times smoother" than its competitors' strips, while showing a man rubbing his hand down his face. Gillette Co. v. Wilkinson Sword, Inc., 89-CV-3586, 1991 U.S. Dist. Lexis 21006, *6 (S.D.N.Y. Jan. 9, 1991). The court rejected the defendant's argument that "six times smoother" implied that only the moisturizing strip on the razor's head was smoother, which may have been literally true. Instead, the court found the "six times smoother" advertising claim implied the consumer would receive a smoother shave from the defendant's razor as a whole, a claim that was false.
For these types of impliedly false advertising claims, plaintiffs must affirmatively prove the false implication of the challenged advertisement and that the message has a tendency to mislead, confuse or deceive the public. In most cases, that can be done only through a time-consuming and expensive consumer survey, whose results are often inconclusive. Am. Council of Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 616 (6th Cir. 1999); Johnson & Johnson-Merck Consumer Pharms. Co. v. Rhone-Poulenc Rorer Pharms., Inc.,19 F.3d 125, 129-30 (3d Cir. 1994); Coca-Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 317 (2d Cir. 1982). Proving implied falsity is therefore a tall order for plaintiffs in most cases.
As a result, most plaintiffs prefer the court to categorize the challenged advertisements as literally false because the element of deception is presumed and no costly consumer survey is required. A characterization of an advertising claim as literally false does not, however, sound the death knell for Lanham Act defendants. Courts have further divided literally false advertising claims into two categories: "tests prove" or establishment claims because the advertisement cites a study or test that "establishes" the claim, and "bald" assertion or non-establishment claims.
A good example of a tests prove claim is found in Castrol, Inc. v. Quaker State Corp., 977 F.2d 57, 59 (2d Cir. 1992), in which the court examined the advertisement that "tests prove Quaker State 10W-30 [motor oil] protects better than any other leading 10W motor oil." In contrast, the advertising claim describing the defendant's product as "the strongest antacid there is" was treated as a bald claim in Johnson & Johnson-Merck, 19 F.3d at 129.
In the early analysis of literally false advertising under the Lanham Act, courts did not explicitly distinguish between tests-prove and bald claims. It was not until the mid-1990s that courts, like the 7th U.S. Circuit Court of Appeals in BASF Corp. v. Old World Trading Co., 41 F.3d 1081 (7th Cir. 1994), began reconciling the seemingly conflicting decisions on the proof necessary to show that an advertising claim is false.
The reconciliation rests on the type of advertising claim made. If the claim is an express tests-prove claim, then the plaintiff must show the tests or surveys relied on are unreliable or do not in fact support the advertising claim. But where there is a bald or non-establishment claim, which does not expressly rest on a test or study, then the Lanham Act plaintiff must show the claim is actually false and cannot merely attack any tests or peer-reviewed studies that support the claim. In essence, the plaintiff must generate affirmative proof that the statement is literally false, rather than simply take potshots at the defendant's tests or studies on which the advertisement does not expressly rely.
Reflecting on these differing standards, one court recognized "that proving the falsity of a fact asserted in an advertising claim may well be more difficult than merely proving that a test asserted to validate the claim is not sufficiently reliable to do so." C.B. Fleet Co. v. SmithKline Beecham Consumer Healthcare, L.P., 131 F.3d 430, 439 (4th Cir. 1997). The difference in standards reflects the concern courts have that consumers will place greater trust in advertising claims that assert they are supported by scientific studies. Accordingly, plaintiffs will typically want the challenged advertisements to be characterized as tests-prove, while defendants will want their advertising claims characterized as bald claims.
As is true with much of the muddled jurisprudence of § 43(a) of the Lanham Act, courts have not provided clear guidelines to determine whether an advertising claim is a tests-prove or bald claim. Some cases have construed the definition of tests-prove claims broadly to include advertisements that "explicitly or implicitly" represent that tests or studies prove the claim made. BASF, 41 F.3d at 1081; Castrol, 977 F.2d at 63. Some courts find a test- prove claim is made where the advertising contains a graph or diagram, in addition to express claims of "tests prove" or "studies show." See Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1144 (9th Cir. 1997); Glaxo Warner Lambert OTC G.P. v. Johnson & Johnson Merck Consumer Pharms. Co., 935 F. Supp. 327, 329 (S.D.N.Y. 1996). In another twist, one court required the plaintiff to demonstrate the advertising claims conveyed the implied message that tests or studies support the claims before challenging the advertisements as a tests prove claims. See L&F Products, Inc. v. Procter & Gamble Co., 845 F. Supp. 984, 1000 (S.D.N.Y. 1994).
But not all courts have defined tests-prove claims so broadly as to include implicit, as well as explicit, claims that the advertisement is supported by tests or studies. Tacit in some earlier decisions was the requirement that the tests-prove claim be express. See Sandoz Pharm. v. Richardson-Vicks, Inc., 902 F.2d 222, 223 (3d Cir. 1990) (evaluating claim that cough syrup starts to work the instant it is swallowed as bald claim); Johnson & Johnson-Merck, 19 F.3d at 129 (analyzing claim that defendant's product is "the strongest antacid there is" as bald claim).
Later decisions have made an express reference to testing a prerequisite: "When challenging a claim of superiority that does not make express reference to testing, a plaintiff must prove that the defendant's claim of superiority is actually false, not simply unproven or unsubstantiated." United Industries, 140 F. 3d at 1182 (evaluating as a tests-prove claim an advertisement regarding efficacy of roach trap that was advertised as "based on lab tests"); see also EFCO Corp. v. Symons Corp., 219 F.3d 734, 740 (8th Cir. 2000).
The lengthiest discussion of this issue comes from the 4th Circuit in C.B. Fleet Co. v. SmithKline Beecham Consumer Healthcare, L.P., 131 F.3d at 439. There, the court was considering the defendant's claim that its product was "Now Designed for Better Cleansing" and that it cleaned better than the plaintiff's product. In affirming the judgment dismissing the action, the court decided that the task of determining whether an advertising claim implicitly asserts it is test-validated is a question of fact. The advertising in front of the court "contained no express assertion of test validation nor [was] there any language in the text that implie[d] it" and the 4th Circuit found the trial court need not look further than the advertisement itself in making the determination.
The appellate court affirmed the lower court's finding that the defendant's advertising made no tests-prove claim: "The fact that it was later revealed in litigation that the claim was test-based does not alter this. The relevant question for determining the required proof is whether the advertisement made an assertion of test-validation to the consumer public. If it was not asserted in the advertised claim, it was not made part of the claim being challenged as false.
If it is later revealed, through discovery or otherwise, that the claim was test-based, the claimant obviously may challenge the test's reliability in attempting to prove false the advertised fact, but falsity remains the required object of proof." Id. The plaintiff in C.B. Fleet was therefore required to affirmatively prove the actual falsity of the defendant's advertising claims.
In sum, while liability under § 43(a) was expanding for many years, the recent trend is to constrict the provision's scope, typically by categorizing the advertisements. First, characterizing advertising claims as impliedly false requires the plaintiff to demonstrate, through a survey, that consumers received the implied message in the advertisement and that they were deceived. Second, in cases concerning literally false advertising claims, courts have shown increased willingness to classify claims as bald assertions, thereby raising the plaintiff's burden of proof. Therefore, the key for any § 43(a) party is to convince the court to place the challenged advertisements in the right category.