Business and Real Estate Litigation Reporter

October 2007

False Advertising Claims under the Lanham Act

By Eric Cheung and Barry MacNaughton

Companies often include comparisons to their competitors in their advertising. Comparative advertising leads to allegations under Section 43(a) of the Lanham Act and state law, both of which prohibit using false or misleading representations in advertising. To prove a prima facie case for false advertising, a plaintiff must show that: 1) the defendant made a false statement either about the plaintiff's or its own product; 2) the statement was made in a commercial advertisement or promotion; 3) the statement actually deceived or has a tendency to deceive a substantial segment of the audience; 4) the statement was likely to influence purchasing decisions; 5) the defendant caused its false statement to enter interstate commerce; and 6) the plaintiff has been or is likely to be injured by a false statement. The most litigated part of the standard is factual falsity. This article will give you some of the "dos and don'ts" on this prong of false advertising analysis.

Comparative claims generally fall into two categories: "establishment claims" and "non-establishment claims." Gillette Co. v. Norelco Consumer Prods. Co., 946 F. Supp. 115, 121 (D. Mass. 1996). An establishment claim is an advertisement that expressly or impliedly claims to be established by a particular level of scientific evidence. For example, a claim that "tests or studies prove" a certain fact is an establishment claim. A non-establishment claim is a claim of general superiority in the market.

The nature of a plaintiff 's burden varies significantly depending on whether the advertisement is an establishment or non-establishment claim. Id.; Castrol, Inc. v. Quaker State Corp., 977 F. 2d 57, 63 (2d Cir. 1992). Where a defendant's advertisement claims that a test proves that its product is superior, the plaintiff must show that the test did not establish the proposition for which it was cited. Gillette Co., 946 F. Supp. at 121; Castrol, Inc., 977 F. 2d at 63. The plaintiff can meet this burden by demonstrating that the claim was unsubstantiated or that the tests were not sufficiently reliable to permit a conclusion that the product was superior. McNeil-P.C.C., Inc. v. Bristol-Myers Squibb Co., 938 F. 2d 1544, 1549 (2d Cir. 1991) (challenging a plaintiff is not required to conduct its own studies to establish falsity; rather, it is sufficient to demonstrate that the defendant's studies did not establish its advertising claim). Courts tend to give defendants certain deference in establishment claims to ensure vigorous competition and to protect legitimate commercial speech, absent the clear intent to deceive or substantially confuse consumers. See Gillette Co., 946 F. Supp. at 127 (although an independent testing of the organization's study was flawed in several respects, the flaws were not so severe as demonstrating that the study as a whole was unreliable). See also United Indus. Corp. v. Clorox Co., 140 F. 3d 1175, 1182 (8th Cir. 1998); Rhone-Poulenc Rorer Pharm., Inc. v. Marion Merrell Dow, Inc., 93 F. 3d 511, 515 (8th Cir. 1996).

In claims where the defendant advertises that its product is generally superior, the plaintiff must affirmatively prove that the defendant's product is equal or inferior. Proof that the advertiser had no support for its statement does not necessarily prove its falsity. BASF Corp. v. Old World Trading Co., Inc., 41 F. 3d 1081, 1091 (7th Cir. 1994); Proctor & Gamble Co. v. Chesebrough-Ponds, Inc., 747 F. 2d 114, 119 (2d Cir. 1984). Since the plaintiff must affirmatively prove the literal falsity of the challenged claim, not merely that it was unsubstantiated or supported by inadequate or unreliable tests, the plaintiff 's burden in a non-establishment claim is greater than in an establishment claim. Gillette Co., 946 F. Supp. at 121; United Indus. Corp., 140 F. 3d at 1182; Castrol, Inc., 977 F. 2d at 63; Proctor & Gamble Co., 747 F. 2d at 119.

Not all misrepresentations in advertisements, however, violate the Lanham Act. "Puffing" is an exaggerated advertising, blustering and boasting upon which no reasonable buyer would rely and is not actionable under false advertising. Southland Sod Farms v. Stover Seed Co., 108 F. 3d 1134, 1145 (9th Cir. 1997); see also Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F. 2d 242, 246 (9th Cir. 1990). Puffing is "generalized statements, not making specific claims, that are so exaggerated as to preclude reliance by consumers." Product superiority claims are puffery when they are vague or highly subjective. Southland Sod Farms, 108 F. 3d at 1145 ("Less is More" is non-actionable puffery); In re Century 21-RE/MAX Real Estate Advertising Claims Litigation, 882 F. Supp. 915, 926 (C.D. Cal. 1994) (statement that defendant was "Out in Front," was mere puffery); Cook, Perkiss and Liehe, Inc., 911 F. 2d at 246 (the statement, "we're the low cost commercial collection experts" fails to contain the kind of detailed or specific factual assertions that are necessary to state a claim for false advertising).

In summary, a company making specific comparative advertising claims will not be liable if such claims are true. However, the standard varies depending on whether the claim references a test or study. If the challenged advertisement is an establishment claim, the test or study must support the position and be reliable. A showing that the test does not prove the proposition or is not sufficiently reliable is sufficient to satisfy the challenging plaintiff's burden. For non-establishment cases, the plaintiff must offer affirmative proof that the advertisement is false. Comparative advertising can be a highly effective business tool but one that can lead to costly litigation. Following these simple rules can help prevent litigation. Moreover, monitoring competitor's advertising claims and taking decisive action when necessary will help ensure a fair competitive environment.

If you have any questions regarding this newsletter, please contact the Editor of this publication, ECJ Partner Barry MacNaughton at (310) 281-6342 or by e-mail at bmacnaughton@ecjlaw.com; or contact Eric Cheung at (310) 281-6392 or by e-mail at echeung@ecjlaw.com. If you or one of your colleagues would like to receive the firm's Business and Real Estate Litigation Reporter, contact Marlena Chumo at (310) 281-6328 or by e-mail at mchumo@ecjlaw.com.