Description of the Lanham Trademark Act Regulatory Scheme – The Lanham Act (Part 2), by Khalid Farwana

[Khalid Farwana]

The Lanham Act is a system based on the American federal law that oversees the proceedings between or among competitors regarding comparative advertising misuses. As a federal law, the Lanham Act provides individuals and companies with an opportunity to launch a claim against competitors for false or misleading advertising. Section 43(a) of the Lanham Act was passed into law in 1946 with aim to protect both consumers and individuals engaged in commerce against the deceptive and distorted use of trademarks and other forms of unfair competition present in the market. However, the existence of the Lanham Act during its first decade focused on being used mildly to protect against advertising abuses. In recent times, the use and application of the Lanham Act has extensively been used in commercial markets about false claims under the concept of comparative advertising. An example of the forementioned application is shown in Bernard Food Industries, Inc. v. Dietene Co.65, whereby the court of appeal overturned an earlier ruling against Dietene. The court stated that in a case where the defendant only makes false representations as regarding to the plaintiffs products or services in its comparison, no cause of action is required. Under section 43(a) of the Lanham Act federal law, a plaintiff must prove the following:  a) false or misleading advertisements of facts regarding a product must be present b) such advertising and marketing deceives or had the ability to deceive customers through forms of lying c) deception expected to impact customers buying decision  d) the product or service is in a national market and finally e) the plaintiff is injured or harmed due to the advertisement. The product discussed in Bernard Food Industries, Inc. v. Dietene Co.65 was custard pudding. A sentence was used in the advertisement stating that Dietene’s product was superior to Bernard’s in all major aspects (7th Cir. 2018)[1]. The misleading claims were towards the plaintiff and not about the defendant’s product. Even though the effectiveness of the Lanham Act has continued to increase, the law has one major challenge, that certain advertising claims are not unlawful under its authority. For instance, “Puffing” or “Puffery” is not a claim under the Lanham Act since it represents a statement of pure opinion and not a fact. Puffing is considered under law to be inflated advertising or arrogant, with the customer or buyer having no reason to rely on such kind of advertising. However, the main problem with a claim of that caliber is that there lies a thin line between the definitions of puffing and false or misleading advertising.

According to (Pompeo 569), the United States Congress passed the Lanham Act section 43(a) with the target of answering to the necessity for a new implementation by the federal government as a solution for multiple unfair competition practices and events that were present in the marketplace. Pompeo entails that the endorsed section 43(a) of the Lanham Act was due to three key factors: lack of federal general common law, other countries having competing laws for false advertising, and the restrictive nature of past cases that rarely allowed a cause of action; unless falsely claiming that another business’s goods or services are one’s own (Pompeo 569). For instance, in the Erie Railroad Co. v. Tompkins Co. case, the Supreme Court gave a ruling that there was no federal general common law targeting the issue of false advertising. Erie filed a minor injury claim in the US District Court in southern New York. This case dated back to 1938, prior to the implementation of The Lanham act. The ruling meant that much of the existing federal laws pertaining to this matter lost much of its meaning, importance and respect. Federal laws and regulations governing unfair competition under comparative advertising practices were also impacted similarly. Due to negligence, a railroad company caused injury to a pedestrian. State laws had to be enforced instead of common law. Harry Tomkins was walking along one of the tracks owned by Eire Railroad Company. While a train was approaching, an object flew from nearby and hit Tomkins knocking him to the ground, causing him to crush his right arm underneath the nearby moving train (7^th Cir, 2018). Tomkins won through the jury and decision was granted through federal court.[2] This case is mentioned merely to reflect the impact it made on the disregard for Federal Common Law and the dire need for the Lanham Act (Misrepresentation 199). The implementation of the Lanham Act was also necessitated by the fact that other countries, particularly developed nations, had operating unfair competition laws targeting false advertising. Therefore, the U.S. Congress focused on coming up with a federal law that would make it possible to deal with challenges faced by the FTC in regulating advertisements (Ochoa 911). The outcome of the American Washboard Co. v. Saginaw Manufacturing Co. once again reflected the flaws of comparative advertising. The case also necessitated Congress to come up with the Lanham Act to avoid cases of restrictive property. The American Washboard Company had a monopoly over washboards in the market. Their products were created mainly out of aluminum. Saginaw Manufacturing Company on the other hand, wanted to compete in that same market so they sold a similar product advertising that they were produced out of aluminum when in fact, zinc was their secret element. It deceived customers into thinking that aluminum was being used to produce their product, however, they did not entice or seduce customers into thinking that their product was that of the plaintiff (Misrepresentation 199). The case allowed a cause of action only in the rare instance of “palming off”, in which a defendant represents his goods and services as being those of the plaintiff. The requirements of the Inter-American Trademark Convention of 1929 focused on necessitating proof beyond the claims of “palming off” in instances of unfair competition or false advertising (Pompeo 570). The United States Congress focused on coming up with a federal regulation which was broader than “palming off”.

In another case, L’Aiglon Apparel, Inc. sued Lana Lobell in 1954 in the U.S. Court of Appeals Third Circuit. The case was claimed on April 8^th of that year and decided by July 2^nd (7^th Cir 2018)[3]. The Lanham Act received serious revision in its first 20 years, particularly due to this case. In this case, false advertising claims were questioned. L’Aiglon’s advertising displayed an image of their dress that was valued at $17.95. Two million copies of this marketing strategy were distributed among many retailers. Lobell, on the other hand, had a similar dress that was noticeably different, but identically advertised in a magazine for $6.95. Lobell used L’Aiglon’s duplicate image to falsely represent its own merchandise. The United States District Court dismissed the case initially for the failure to state a cause of action. Thanks to the Lanham Act, Section 43, the decision was reconsidered, and the decision was reversed and granted in the plaintiff’s favor. Due to this case, advertisers could now file civil law suits for false representation based on the Lanham Act. According to Justia Law directory, due to this major accomplishment, all US citizens and advertisers were included under the act.

According to Pompeo (571), section 43(a) litigation of the Lanham Act began to strengthen in the 1970s. This happened in accordance with FTC’s campaign to encourage the application of comparative advertising. The United States District Court extended the application and jurisdiction of section 43(a) of the Lanham Act for the Northern District of Illinois in the Skil Corp. v. Rockwell International Corporation case. Whereby the court defined the essential factors that were needed in establishing a prima facie case of false advertising. Prior to establishing these factors, the Lanham Act was slow in its implementation as courts did not have a recognized foundation that could be used to determine outcomes. As a way of enhancing section 43(a) of the Lanham Act, the court focused on coming up with five key factors that would help litigators develop a prima facie case of false advertising. For instance, the court defined the statutory language of “false representations” to mean that a business advertises a product by making misleading claims intentionally by means of displaying partially correct statements or omitting information. Additionally, the court claimed that the use of false statements in comparative advertisements would lead to deception and consumer confusion (Ochoa 915). The Skil Corporation vs Rockwell International Corporation was claimed on March 29^th of 1976 and decided on Aug. 26^th of that same year(7^th Cir 2018)[4] This case increased the influence behind the Lanham Act being enforceable. Rockwell’s advertising consisted generally of television commercials. In their television commercials they used comparative advertising by comparing the weakness of Skil’s power tools against their own. Due to this campaign Skil claimed they lost numerous current and potential customers. Skil corporation also claimed that the commercials were misleading and somewhat far from the truth. This means that Rockwell International Corporation was merely using Skil Corporation as a scapegoat to boost interest in their own products. The courts reviewed the case and the commercials and determined that the false advertising used created confusion and deception to the customers. Furthermore, in Skil Corporation v. Rockwell International Corporation, the district court also established that for a business to recover damages as outlined in section 43(a), the plaintiff must be able to establish that the customers and the targeted audience were deceived. When it came to obtain equitable relief for affected businesses, only a likelihood of deception was needed to establish a case. The plaintiff was successful and the defendant’s motion to dismiss was rightfully denied as The Skil Corporation v. Rockwell International Corporation case paved the way for the strengthening of section 43(a) of the Lanham Act while also leading to an influx of comparative advertising cases (Pompeo 572). The comparisons made in the TV commercial was much more specific than any other case seen before. It was directly concentrating on deterring customers away from the competitor. After the decision, it became clear that comparative advertising cases needed to be present in federal courts and thus businesses had to be more cautious by avoiding pitfalls that could be interpreted as violating the provisions of the law.

[1] Case found on http://www.justia.law. False advertising made by a defendant about a plaintiff’s product is not protected by section 43(a) of The Lanham Act. This case occurred in August of 1969.

[2] General Law could not be applied as the state law was not present at the time. “Bernard Food Industries, Inc., Plaintiff-Appellee, v. the Dietene Company, Defendant-Appellant, 415 F.2d 1279 (7th Cir. 1969).” Justia Law, law.justia.com/cases/federal/appellate-courts/F2/415/1279/280361/.

[3] “L’aiglon Apparel, Inc. v. Lana Lobell, Inc, 214 F.2d 649 (3d Cir. 1954).” Justia Law, law.justia.com/cases/federal/appellate-courts/F2/214/649/314445/.

[4] “Skil Corporation v. Rockwell International Corp., 375 F. Supp. 777 (N.D. Ill. 1974).” Justia Law, law.justia.com/cases/federal/district-courts/FSupp/375/777/1669380/.

Sources:

Anten, Todd. “Self-disparaging trademarks and social change: Factoring the reappropriation of slurs into Section 2 (a) of the Lanham Act.” Colum. L. Rev. 106 (2006): 388.

“Bernard Food Industries, Inc., Plaintiff-Appellee, v. the Dietene Company, Defendant-Appellant, 415 F.2d 1279 (7th Cir. 1969).” Justia Law, law.justia.com/cases/federal/appellate-courts/F2/415/1279/280361/.

“Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938).” Justia Law, supreme.justia.com/cases/federal/us/304/64/.

“Misrepresentation of One’s Own Goods as an Unfair Method of Competition in the Absence of Any Element of ‘Passing off.’” Columbia Law Review, vol. 26, no. 2, 1926, pp. 199–204

“L’aiglon Apparel, Inc. v. Lana Lobell, Inc, 214 F.2d 649 (3d Cir. 1954).” Justia Law, law.justia.com/cases/federal/appellate-courts/F2/214/649/314445/.

“Skil Corporation v. Rockwell International Corp., 375 F. Supp. 777 (N.D. Ill. 1974).” Justia Law, law.justia.com/cases/federal/district-courts/FSupp/375/777/1669380/.

Beard, Fred. “Comparative Advertising Wars: An Historical Analysis of Their Causes and Consequences.” Journal of Macromarketing, vol. 30, no. 3, 2010, pp. 270-286.

—. “Negative Comparative Advertising: When Marketers Attack.” Marketing Metaphors and Metamorphosis, 2008, pp. 146-161.

Keller, Bruce P. “”It Keeps Going and Going and Going”: The Expansion of False Advertising Litigation under the Lanham Act.” Law and Contemporary Problems, vol. 59, no. 2, 1996, p. 131.

Ochoa, Tyler T. “Introduction: Rights of attribution, section 43 (A) of the Lanham Act, and the copyright public domain.” Whittier L. Rev. 24 (2002): 911.

Petty, Ross D. “The Evolution of Comparative Advertising Law: Has the Lanham Act Gone Too Far?.” Journal of Public Policy & Marketing (1991): 161-181.

Pompeo, Paul E. “To tell the truth: comparative advertising and Lanham Act Section 43 (a).” Cath. UL Rev. 36 (1986): 565-586

Radis, Jennifer Thurswell. “The Lanham Act’s Wonderful Complement to the FDCA: POM Wonderful v. Coca-Cola Enhances Protection Against Misleading Labeling Through Integrated Regulation.” Loy. U. Chi. LJ 47 (2015): 369.

Romano, Charlotte J. “Comparative advertising in the United States and in France.” Nw. J. Int’l L. & Bus. 25 (2004): 371-413.

Singdahlsen, J. P. “The Risk of Chill: A Cost of the Standards Governing the Regulation of False Advertising under Section 43(a) of the Lanham Act.” Virginia Law Review, vol. 77, no. 2, 1991, p. 339

 

[Author]

Posts