The Lanham Act establishes several grounds for businesses to pursue litigation against competitors and other parties that are misusing their trademarks and engaging in other forms of false and misleading advertising. When a Lanham Act lawsuit is warranted, taking legal action promptly can be critical for both protecting a business’s exclusive rights and mitigating the losses it needs to recover.
Crucially, while many business owners and executives assume that evidence of actual confusion or deceit is necessary to pursue litigation under the Lanham Act, this is not the case. The Lanham Act provides opportunities for businesses to take action to prevent anticipated harm in many circumstances. With this in mind, business owners and executives who have questions about whether civil action is warranted should not hesitate to engage outside counsel—particularly if they are concerned about losing current or potential customers.
“Along with providing trademark protection, the Lanham Act also provides grounds to pursue false advertising claims based on false or misleading representations. If a company’s false advertising results in (or is likely to result in) consumer confusion leading to business losses, this can provide clear grounds to take legal action under the Lanham Act’s prohibition on unfair competition.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.
While the Lanham Act provides clear grounds to pursue legal action in appropriate cases, business owners and executives must make informed and strategic decisions about when litigation is warranted. This article provides an introduction to when businesses can pursue litigation under the False Claims Act, including litigation based on false or misleading descriptions in commercial advertisements and litigation based on unauthorized use of another’s trademark (or a confusingly similar trademark).
What Business Owners Need to Know About Filing a Lanham Act Lawsuit
The Lanham Act protects trademarks and trade dress (when they qualify for protection), and it provides grounds for businesses to pursue litigation when competitors’ and other parties’ actions are likely to confuse consumers and lead to actual injury. Pursuing litigation under the Lanham Act typically means filing a lawsuit in federal district court, and plaintiffs in Lanham Act cases can seek emergency relief in federal court when necessary.
Here are five important facts about Lanham Act lawsuits:
1. The Lanham Act Establishes Several Potential Causes of Action
The Lanham Act establishes several potential causes of action. Along with causes of action involving federal trademark rights (including, but not limited to, rights afforded by federal registration), this includes causes of action based on false advertising and unfair competition.
Trademark Infringement
Trademark infringement claims are at the heart of the Lanham Act. Trademark owners can pursue infringement claims under the Lanham Act when competitors and other parties use their marks without authorization and in a way that creates a likelihood of confusion in the marketplace.
The term “likelihood of confusion” is key. Evidence of actual confusion is not required to file a trademark or service mark infringement claim under the Lanham Act. If a defendant’s conduct is likely to cause confusion, this is enough. Similarly, evidence that the defendant used an identical mark also is not required. If a defendant uses a confusingly similar mark on its own products or services in a way that creates a likelihood of confusion, this is enough for a trademark owner to seek to recover damages and secure injunctive relief.
Trademark Dilution
Trademark dilution claims involve the unauthorized use of a famous mark in commerce. When a commercial party seeks to profit off of a famous trademark in bad faith, this also provides clear grounds for the famous mark’s owner to seek to recover damages and secure injunctive relief.
False or Misleading Advertising (Unfair Competition)
Along with trademark-based claims, the Lanham Act also establishes causes of action for false or misleading advertising and unfair competition. While false advertising claims often involve elements of trademark misuse, as discussed below, this is not a requirement for pursuing legal action.
Fundamentally, the Lanham Act’s false advertising and unfair competition provisions are intended to protect consumers by ensuring that consumers know the source of products and services and are paying fair prices. However, these provisions provide businesses with grounds to take legal action as well—and, in the vast majority of cases, it is up to businesses to take legal action to protect themselves and their customers.
2. There Are a Handful of Key Elements to a Successful Lanham Act Case
While there are several potential grounds for filing a Lanham Act lawsuit, all Lanham Act claims require proof of the elements of the relevant cause of action. For example, establishing a claim for false advertising under the Lanham Act requires evidence of the following elements:
False or Misleading Statement of Fact in Commercial Advertising
Filing a false advertising lawsuit under the Lanham Act requires evidence of a false or misleading statement of fact published in commercial advertising. Opinions generally are not actionable; and, while there is a line that companies can (and do) cross, the use of “puffery” in promoting a company’s own products or services generally is not enough to warrant legal action.
Effect on Interstate Commerce
To establish a federal cause of action, a company’s false advertising must affect interstate commerce. Given the nature of today’s economy, this element will be easily satisfied in most cases.
Deceit or Capacity to Deceive
To be actionable as false advertising, a company’s false or misleading statement of fact must either deceive consumers or have the capacity to deceive consumers. If a reasonable consumer would be likely to be deceived by a company’s misleading commercial activities, then a federal lawsuit under the Lanham Act may be warranted.
Material Impact (or Potential Material Impact) on Consumers’ Purchasing Decisions
Along with causing (or being capable of causing) deceit, a company’s false advertising must also have a material impact (or potential material impact) on consumers’ purchasing decisions. From focus groups to expert testimony, there are a variety of ways to prove the “material impact” element of a false advertising claim under the Lanham Act.
Actual or Anticipated Competitive or Commercial Injury
Finally, businesses that pursue false advertising claims under the Lanham Act must also be able to prove an actual or anticipated competitive or commercial injury. Generally, if there is no competitive or commercial injury to be recouped or prevented, then no remedies are warranted.
Again, these are the elements of a false advertising case under the Lanham Act. The elements of trademark infringement and trademark dilution cases differ. When evaluating the viability of pursuing a lawsuit under the Lanham Act, business owners and executives should work with experienced legal counsel to ensure that they are giving due consideration to all potential causes of action.
3. Time May Be of the Essence
In Lanham Act cases involving trademark infringement, trademark dilution, false advertising, and other causes of action, time will often be of the essence. Waiting to seek relief in the courts can jeopardize companies’ exclusive rights in some cases, and it can also lead to losses that could—and arguably should—have been avoided.
Whether a case involves an infringing product, a false designation of origin, a misleading claim about a plaintiff’s products or services, or any other cause of action under federal law, taking action promptly is nearly always the best approach. At the very least, business owners and executives should consult with outside counsel to ensure that they are making informed decisions about what legal action, if any, is warranted.
4. Businesses Can Seek Damages and Injunctive Relief Under the Lanham Act
The Lanham Act generally entitles businesses to seek damages (including disgorgement of a defendant’s profits), injunctive relief, or a combination thereof in trademark-related cases and false advertising cases. To seek damages, however, a plaintiff must generally be able to prove actual losses resulting from the defendant’s unauthorized or otherwise unlawful conduct.
If a plaintiff can only establish that it is likely to suffer losses without lower court intervention, then injunctive relief may be the sole available remedy under the circumstances at hand. But, even with this being the case, pursuing a claim under the Lanham Act can still be well worth it if the claim results in protecting the business’s reputation, customer relationships, and profits going forward.
5. Businesses that Have False Advertising or Trademark Claims Under the Lanham Act May Have Other Claims As Well
Finally, while the Lanham Act provides clear grounds to pursue legal action in a wide range of circumstances, filing a lawsuit under the Lanham Act may not be the only option that businesses have available. Frequently, businesses that have infringement, dilution, false advertising, and unfair competition claims under the Lanham Act will have claims under other federal and state laws as well.
In these cases, asserting multiple viable causes of action can not only help to maximize businesses’ chances of success in court, but it can also provide additional leverage in pre-litigation or pre-trial settlement negotiations. If you need to know more about your business’s legal options, you should consult with experienced legal counsel promptly.
