False advertising under the

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False Advertising Under the Lanham Act

COURTLANDL. REICHMAN ANDM. MELISSACANNADY

F

alse advertising under the Lanham Act is an increasingly popular cause of action because of its broad applicability and ability to remedy competitive harm. Section 43(a) of the Lan- ham Act¹ proscribes false statements or representations that are made in commercial advertising or promotion, are likely to deceive consumers, and are likely to cause injury to the plaintiff. The remedies available to a plaintiff under the Lanham Act include injunctive relief, damages, corrective advertising, and attorneys’ fees, although the statute affords the court broad discretion to fashion an equitable remedy that fairly compensates the plaintiff.

Section 43(a) of the Lanham Act prohibits a wide range of false or misleading statements or representations. Classic false advertising claims involve a defendant’s false or misleading statement

either about its own or a competitor’s product. A variety of claims fall into these categories—statements based on testing, unsubstantiated assertions, national advertising campaigns, and verbal sales pitches to a limited number of consumers.

In franchising, false advertising claims are apparently being brought with increasing frequency. Conventional franchise systems rely heavily on advertising, using it to differen- tiate themselves in a crowded market. The ability to redress false advertising claims is an important weapon that, unlike other intellectual property claims such as trademark infringe- ment, both franchisees and franchisors can use. Recent cases have involved large franchisors seeking to enjoin competitors’ false comparative advertising, and franchisees seeking to enjoin competitors from poaching business with false claims. Further, developing case law supports false advertising claims by franchisees against unscrupulous franchisors.

This article discusses false advertising claims under the Lanham Act. It examines the elements of a false advertising claim, including an analysis of what constitutes an actionable statement, who has standing to sue under the Lanham Act, and the remedies available to a successful plaintiff. It also high- lights the considerable inconsistency in interpretations of false

advertising law among the federal circuit courts. The U.S.

Supreme Court has yet to address false advertising law under the Lanham Act, and, as a result, the circuits have developed inconsistent and often contradictory approaches to several core issues. This article discusses the predominant approaches and evaluates possible ways to harmonize the case law.

Statutory Bases for Claims

The Lanham Act establishes a federal cause of action for, among other things, false advertising:²

(a)(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—

. . . .

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.³

The plain language of the statute permits any person likely to be damaged to assert a claim based on a false or misleading statement of fact about a product, service, or commercial activity. This deceptively simple language has given rise to a significant body of law that is relatively unset- tled and inconsistent in many respects.

Most courts recite the elements of a Lanham Act false advertising claim as follows:

(1) the defendant made a false or misleading statement of fact in a commercial advertisement about a product;

(2) the statement either deceived or had the capacity to deceive a substantial segment of potential consumers;

(3) the deception is material, in that it is likely to influence the consumer’s purchasing decision;

(4) the product is in interstate commerce; and

(5) the plaintiff has been or is likely to be injured as a result of the statement.⁴

This list of elements appears to be an historical accident.

It originated in a 1974 district court decision, which did not analyze the elements and cited as its only authority a 1956 law review article that had formulated the elements based solely on pre-Lanham Act case law.⁵ Courts have widely repeated these elements without analysis, but have rarely (if ever) applied them as stated.

These five elements do not reflect the actual, substantive elements required by courts to prove a Lanham Act false advertising claim. Claimants rarely must show “materiality”

in the sense of proving that the advertisement had a likely effect on consumers’ purchasing decisions. Instead, in appli- cation, the second and third elements merge so that the Courtland L. Reichman ([email protected]) and M. Melissa Can-

nady ([email protected]) are attorneys with the firm of King &

Spalding in Atlanta, Georgia.

Courtland L. Reichman

M. Melissa Cannady

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“materiality” element simply requires a showing of deception, or the capacity to deceive.⁶Further, although courts require some showing of “likely effect on consumer decisions,” this is in connection with the fifth element, proving the fact or the likely threat of actionable injury to the claimant.⁷

This interpretation hews more closely to the language of section 43(a), which does not speak of “materiality,” but requires a false or misleading statement of fact used in commercial advertising or promotion that injures, or creates a likelihood of injury to, a plaintiff. Thus, this article discusses the following elements: (1) a false or misleading statement of fact; (2) that is used in a commercial advertisement or promotion; (3) that is material, in that it deceives or is likely to deceive; (4) that is used in interstate commerce; and (5) that causes, or is likely to cause, the claimant competitive or commercial injury.

False or Misleading Statement of Fact

To establish a false advertising claim under the Lanham Act, a claimant first must prove a false or misleading statement of fact. To demonstrate falsity, a claimant generally must show either: (1) that the statement is literally false, or (2) that although literally true, the

statement is likely to mislead, confuse, or deceive consumers.⁸If a statement is literally false, courts typically grant injunctive relief without requiring proof of materiality (i.e., that the advertisement deceived). If, however, a statement is literally true but misleading, courts usually require proof that

the statement has deceived, or has a tendency to deceive.

Literally False Statements

Courts typically consider whether an advertisement is literally false to be an issue of fact.⁹Some courts split the issue into two inquiries: (1) identification of the claim conveyed by the advertisement; and (2) determination of whether the claim is false.¹⁰ Courts allow the claimant to prove literal falsity based on express claims in advertisements and also on claims that the advertisement conveys by “necessary implication.”¹¹ “A claim is conveyed by necessary implication when, considering the advertisement in its entirety, the audience would recognize the claim as readily as if it had been explicitly stated.”¹²If, however, the message is merely suggestive or requires viewers to make inferential leaps, it is less likely to form an appropriate basis for a literal falsity challenge.¹³

The plaintiff’s burden in proving that a challenged advertisement is literally false depends on the nature of the claim involved and the context in which the claim is made.¹⁴ For example, a visual image, or a visual image combined with an audio component, may make an advertisement literally false.

In Rhone-Poulenc Rorer Pharmaceuticals, Inc. v. Marion Merrell Dow, Inc.,¹⁵the court held that a drug manufacturer’s advertisements, which featured images such as two gasoline pumps and airline tickets with dramatically different prices, accompanied by the slogan “Which one would you choose?”

was a literally false message, because it conveyed the inaccu- rate idea that the manufacturer’s drug and its competitor’s drug could be indiscriminately substituted. In Coca-Cola Co.

v. Tropicana Products, Inc.,¹⁶ the court held that the images of the defendant’s television commercial advertising orange juice, that depicted an orange being squeezed and poured directly into the carton made the advertisement literally false, because it represented that the defendant’s orange juice was produced by squeezing oranges and pouring the juice directly into the carton, when in fact the juice was heated and sometimes frozen before packaging.

Similarly, in S.C. Johnson & Son, Inc. v. Clorox Co.,¹⁷the the Second Circuit considered the falsity of advertising that focused on an image. There, the defendant’s television commercial and print advertisements depicted two plastic storage bags filled with water, each containing a goldfish and hang- ing upside down.¹⁸ The plaintiff’s plastic bag was shown to be leaking continuously and at a fairly rapid rate.

Based on evidence presented at trial, the court found that the defendant’s advertisements were literally false because they falsely depicted both the risk and the rate of leakage of the plaintiff’s storage bags.¹⁹

Claims of superiority can fall on either side of the line between actionable falsity and nonactionable

“puffery.” To be actionable, the challenged claim need not make a direct comparison to a competitor’s product or service.²⁰If the advertisement asserts that a product is superior, but does not refer to scientific tests as support, the plaintiff must affirmatively prove that the claim is false, i.e., that the defendant’s product is equal or inferior.²¹Such claims of superiority are distinct from expressions of opinion or exag- geration, often called “puffery” (discussed below), which typically do not constitute false advertising. Actionable claims of superiority usually refer to specific aspects of a product or service (e.g., “our widget lasts longer”), whereas puffery is more general (e.g., “our widget is the best”).²²

Where the challenged advertisement explicitly or implicitly represents that tests or studies prove that its product is superior, the plaintiff can meet its burden in two ways.²³ First, the plaintiff can prove that the superiority claims are literally false because the tests used are not sufficiently reliable to permit a conclusion that the product is superior.²⁴Sec- ond, the plaintiff can meet its burden by showing that the tests used, even if reliable, did not establish the proposition for which they were cited.²⁵

The challenged claim need not make a direct comparison to a competitor’s

product or service.

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For example, in Castrol, Inc. v. Quaker State Corp., the defendant’s television commercial, which asserted that “tests prove” that its motor oil provides better protection against engine wear at start-up, was literally false. The district court heard five days of expert testimony at trial in determining whether the tests upon which the defendant relied supported the superiority claims in the defendant’s commercial. In the end, the court found that it did not need to consider the tests’

reliability because they did not establish the proposition for which the defendant cited them.²⁶

Misleading Statements

A statement may be actionable false advertising even if it is literally true. “Statements that are literally true or ambigu- ous but which nevertheless have a tendency to mislead or deceive the consumer are actionable under the Lanham Act.”²⁷ Such claims may implicitly convey a false impres- sion, may be misleading in context, or may simply be deceptive when viewed by consumers.²⁸

Courts universally hold that if an advertisement is literally true but allegedly mis-

leading, the claimant has an additional burden of proving that the advertisement has deceived or has a tendency to deceive.²⁹ As discussed in greater detail below, a claimant must prove materiality by extrinsic evidence, such as a consumer survey or market

research, demonstrating how consumers actually reacted to the advertising.³⁰

Opinion and Puffery

A third category of statements includes opinion and puffery, which are not actionable. For a statement to be actionable under section 43(a), it must be a statement of fact, as opposed to mere opinion or bald assertions of superiority.³¹ A statement of fact is one that “(1) admits of being adjudged true or false in a way that (2) admits of empirical verification.”³²

“Puffery,” in contrast,

comes in at least two possible forms: (1) an exaggerated, blustering, and boasting statement upon which no reasonable buyer would be justified in relying; or (2) a general claim of superiority over com- parable products that is so vague that it can be understood as noth- ing more than a mere expression of opinion.³³

Thus, a claim that “Less Is More” in advertising for turf grass was held to be nonactionable puffery because it was the type of generalized boasting upon which no reasonable buyer would rely.³⁴But a related claim describing the product with the phrase “50% Less Mowing” was held to be actionable false advertising because it was a specific and measurable claim of superiority, apparently based on product testing.³⁵ Statements in a collection agency’s advertisement implying that the agency offered the same collection services as

lawyers but at a lower price were held to be mere “puffery”

and not actionable as false advertising.³⁶ Similarly, a claim that “You’re in good hands with” an insurer was held to be nonactionable puffery because it was general, subjective, and could not be proven true or false.³⁷

Again, the context of the claim is important when determining whether an advertisement claim is mere puffery. For example, a clothing manufacturer’s claims that its product was the “best waterproof golf suit available” or the “best way to keep dry” were more than puffery when juxtaposed with a comparison to the competitor’s product, and the manufacturer had no evidence of comparison testing.³⁸

The line between actionable statements of fact and mere puffery can be difficult to find. For example, in Pizza Hut, Inc. v. Papa John’s International, Inc.,³⁹Pizza Hut based its false advertising action on Papa John’s slogan, “Better Ingredients. Better Pizza.” Pizza Hut challenged the slogan standing alone and in conjunction with comparative representations regarding the quality of the competitor’s dough and sauce. Papa John’s had asserted that its tomato sauce was made with “fresh, vine-ripened tomatoes”

and its dough with “clear filtered water,” while Pizza Hut’s sauce came from “remanufactured tomato paste,” and its dough used “whatever comes out of the tap.”⁴⁰ The jury found that the statements in Papa John’s ads were literally true but misleading, and the trial court concluded that the misleading ads had so “tainted” the slogan that it enjoined further use altogether.⁴¹

On appeal, the Fifth Circuit held that the slogan “Better Ingredients. Better Pizzas,” standing alone, was nonactionable puffery because it was not a quantifiable or verifiable fact, and thus not a claim upon which consumers would jus- tifiably rely.⁴² But the court upheld the jury’s finding that, when viewed in combination with Papa John’s sauce and dough ads, the slogan was misleading. The court reasoned that when used in conjunction with those ads, the slogan became a verifiable statement regarding the quality of the ingredients, and that there was sufficient evidence in the record to support the conclusion that the advertisements were misleading.⁴³As discussed more fully below, however, the Fifth Circuit nonetheless reversed and directed entry of judgment for Papa John’s because Pizza Hut had failed to prove materiality.

Commercial Advertising or Promotion

The second element of a false advertising claim is that the false or misleading statement of fact must appear in “commercial advertising or promotion.”⁴⁴Recent decisions generally rely on the following definition of “commercial advertising or promotion”:

The context of the claim is important when determining

whether an advertisement

claim is mere puffery.

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(1) commercial speech;

(2) by a defendant who is in commercial competition with the plaintiff;

(3) for the purpose of influencing consumers to buy the defendant’s goods or services; and

(4) that is disseminated sufficiently to the relevant purchasing public to constitute “advertising” or “promotion” within that industry, even if not made in a “classical advertising campaign.”⁴⁵

The first three parts of the definition are intended to ensure that advertising or promotion excludes noncommercial speech that is entitled to a higher degree of protection under the First Amendment.⁴⁶ In addition to the general commercial speech element, the definition adds the standing requirement that the defendant must be in “commercial competition” with the plaintiff. This arises out of First Amendment concerns that the Lanham Act not be used to impinge free speech.⁴⁷The “commercial speech” element, however, should be read to mean only that advertising and promotions that are fair game under the First Amendment are actionable. There seems to be little justification for adding a “competition” requirement that does not appear in the text of the Lanham Act.⁴⁸

This definition also requires the statement to have been made in “advertising or

promotion.” Courts have struggled to define “advertising and promotion.” On one end of the spectrum, conventional mass advertising campaigns—such as where a company runs newspaper advertisements, television commercials, or other promotions to influence large numbers of

anonymous consumers to buy its products or services—clear- ly are actionable advertising or promotion. At the other end, a private negotiation between two businesspeople, absent other circumstances, would not be actionable.⁴⁹Between these two poles fall a wide array of statements that may or may not qual- ify as “advertising or promotion,” depending on a variety of factors, including the context in which the statement was made, the relevant audience, the specific industry involved, and the extent of dissemination or publication.

The definition of “advertising or promotion” should start with the plain meaning of these words.⁵⁰The U.S. Supreme Court has instructed that when construing a statute, the first step “is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case.”⁵¹Webster’s Dictionary defines “advertis- ing” as, among other things, “the act of calling something to the attention of the public especially by paid announce- ments,” and “promotion” as, among other things, “the fur- therance of the acceptance and sale of merchandise through advertising, publicity, or discounting.”⁵²These capacious def- initions seem to include more limited communication used to promote or sell products or services, so long as the communication is aimed at the relevant consuming “public.”

Thus, in cases that do not involve conventional, anonymous mass advertising, courts generally examine evidence on the nature of the industry to determine whether the statement was disseminated to enough of the relevant “public”

to constitute advertising or promotion. “[B]oth the required level of circulation and relevant ‘consuming’ or ‘purchasing’ public addressed by the dissemination of false infor- mation will vary according to the specifics of the industry.”⁵³ Where there are a relatively limited number of potential purchasers in a particular market, for example, even a single promotional presentation to an individual purchaser may be actionable as “commercial advertising and promotion.”⁵⁴ In Seven-Up Co. v. Coca-Cola Co., the Fifth Circuit held that a soft drink manufacturer’s sales presenta- tions to representatives of eleven independent bottlers were sufficiently disseminated to the relevant purchasing public to be “commercial advertising or promotion” within the soft drink industry because the presentation materials were specifically developed and designed to target independent bottlers—the manufacturer’s purchasers—and convince them to change brands.⁵⁵ Furthermore, oral statements also may constitute “advertising or promotion,” particularly if that is the customary method of advertising in a particular industry.⁵⁶

As these decisions illustrate, whether a particular communication constitutes “advertising or promotion” is a highly fact-specific inquiry, which often turns on the nature of the industry. Other examples of actionable “advertising or promotion” include:

• In Avon Products, Inc. v. S.C. Johnson & Son, Inc.,⁵⁷ the court held that Avon’s dissemination of lists of alternative uses of its “Skin-So-Soft” bath oil and other materials touting the bath oil as an insect repellent was advertising and promotion under the Lanham Act because Avon’s business relies exclusively upon promotion by its sales representatives.

• In Gordon & Breach Science Publishers S.A. v. American Institute of Physics,⁵⁸the court held that nonprofit scientific societies’ distribution at a librarians’ conference of allegedly misleading comparative survey results, which favored the societies’ publications, and e-mails to librarians (prospective purchasers of the publications) were commercial advertising under the Lanham Act because the survey was explicitly promotional in nature.

• In National Artists Management Co. v. Weaving,⁵⁹the court concluded that the defendant’s telephone calls to roughly ten people about reasons for terminating their relationship with plaintiff were “advertising or promotion” because, in the theater-booking industry, services are promoted by word of mouth and a network of telephone

The definition of

“advertising or promotion”

should start with the plain

meaning of these words.

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contacts, and the industry is “indisputably small and closely interconnected.”

By contrast, the following examples were held not to be

“advertising or promotion”:

• In First Health Group Corp. v. BCE Emergis Corp.,⁶⁰the Seventh Circuit concluded that representations by the defendant’s executives and lawyers during private contract negotiations were not advertising within the meaning of the Lanham Act.

• In Sports Unlimited, Inc. v. Lankford Enterprises, Inc.,⁶¹ the Tenth Circuit held that the defendant’s distribution of a reference sheet describing unfavorable customer comments about the plaintiff’s work did not constitute commercial advertising or promotion because the defendant distributed the sheet to only two people for whom the plaintiff was already working.

• In Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc.,⁶² the court held that store employees’ allegedly dis- paraging comments about another store to twelve customers and nine undercover investigators were not

“advertising or promotion” under the Lanham Act, where thousands of customers comprised the relevant purchasing public.

• In Gillette Co. v. Norelco Consumer Products Co.,⁶³ the court determined that claims in a package insert accompa- nying an electric razor that the razor provided a “closer, more comfortable shave” were not commercial advertising or promotion because the statements were inside the package and therefore did not affect the purchaser’s decision to buy the product.

Materiality

A plaintiff must demonstrate that the false or misleading advertising or promotion at issue is “material.”⁶⁴ Materiality centers on whether the false or misleading advertisement deceives or is likely to deceive.⁶⁵ Such materiality generally is established when the advertisement deceives, or has the capacity to deceive, a substantial segment of potential consumers about a relevant quality or characteristic of the product or service.

Some older cases discuss materiality in terms of whether the representation involved an “inherent” quality, characteristic, or nature of the product.⁶⁶ However, this requirement is not rooted in the language of the statute, which on its face includes no materiality or “inherency” requirement, and courts typically do not impose it.⁶⁷ Whether the representation is likely to influence consumers’ decisions is more appropriately addressed as part of the injury requirement.

The plaintiff’s burden of establishing materiality differs depending on the type of statement involved and the defendant’s intent, as discussed below.

Literally False Statements

Where the statement at issue is literally false, courts presume that the advertisement was material: “With respect to materiality, when the statements of fact at issue are shown to be literally false, the plaintiff need not introduce evidence on the

issue of the impact the statements had on consumers.”⁶⁸This principle is tied directly to section 43(a), which on its face does not require an additional showing of deception, and thus reflects that a literally false statement by its very nature has the capacity to deceive consumers. Nonetheless, defendants should be permitted to present evidence rebutting the presumption of materiality by showing that consumers were not, in fact, deceived by the advertisement.

Misleading Statements

When a claim is literally true but misleading, the claimant must show the nature of the message actually conveyed to consumers, which turns on the public’s reaction to the advertisement.⁶⁹ “The plaintiff may not rely on the judge or the jury to determine, based solely upon his or her own intuitive reaction, whether the advertisement is deceptive.”⁷⁰ Instead, the evidence must demonstrate that the advertising or promotion deceived a substantial portion of its audience.⁷¹The requirement of actual deception is grounded in practicality: it is difficult to determine that a literally true advertisement was unlawfully “misleading” without reference to whether actual consumers were misled. “[W]here the advertisement is literally true, [public perception] is often the only measure by which a court can determine whether a commercial’s net communicative effect is misleading.”⁷²

The type of evidence necessary to prove materiality varies depending on the nature of the case and the relief requested.⁷³ In general, surveys are the preferred vehicle.⁷⁴However, evidence showing how consumers actually reacted, such as let- ters, calls, and affidavits, can also show consumer deception.⁷⁵

Surveys

Surveys are the predominant and most widely accepted method of proving materiality.⁷⁶Even where the claimant believes that it can rely on a literal falsity claim or seeks only an injunction (that requires less evidence of materiality), counsel is wise to develop credible survey evidence. Courts place great weight on properly conducted surveys, which often determine appellate results. In JTH Tax, Inc. v. H&R Block Eastern Tax Services, Inc.,⁷⁷ for example, the Fourth Circuit considered whether H&R Block’s false characteriza- tion of certain loans as tax “refunds” constituted false advertising under section 43(a). The court relied heavily on a survey showing that 21.7 percent of consumers regarded the phrase “refund amount” as more effective than the term

“loan.” In addition, the survey evidence showed that consumers associate loans with numerous unfavorable condi- tions and obligations, as opposed to a “refund.” Thus, without addressing whether the challenged statements were literally false or merely misleading, the Fourth Circuit upheld the district court’s finding that use of the term “refund” to advertise a noninterest-bearing loan was likely to deceive a reasonable consumer.⁷⁸

In Pizza Hut, Inc. v. Papa John’s International, Inc.,⁷⁹the Fifth Circuit considered materiality based on Pizza Hut’s survey results. As discussed above, Pizza Hut sued Papa John’s for false advertising based on Papa John’s $300 million

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advertising campaign, which included the slogan, “Better Ingredients. Better Pizzas.” Although the court concluded that the slogan was misleading when viewed in combination with other misrepresentations, it determined that Pizza Hut had presented insufficient evidence of materiality because Pizza Hut failed to prove that the Papa John’s ads had the tendency to deceive consumers. The court rejected Pizza Hut’s attempted use of Papa John’s tracking surveys, which showed that 48 percent of respondents believed that Papa John’s used better ingredients than other pizza chains, reasoning that this was not sufficiently probative of materiality, because the surveys did not indicate whether the participants’

conclusions resulted from the advertisements at issue, from their own eating experiences, or both.⁸⁰

The percentage of consumers who must be deceived by an advertisement varies depending on the context and nature of the survey, but courts generally will find materiality if 20 percent or more of survey respondents were deceived. For example, in JTH Tax,⁸¹the court held that a consumer survey showing that 20 percent of respondents were deceived by the defendant’s advertisement was sufficient to establish materi- ality. The court in Johnson & Johnson-Merck Consumer Pharmaceutical Co. v. Rhone-Poulenc Rorer Pharmaceuti- cals⁸² held that a survey finding that only 7.5 percent of respondents were deceived

by the defendant’s advertisement was not sufficient, but noted that 20 percent would have been sufficient. Also, in Novar- tis Consumer Health, Inc.

v. Johnson & Johnson- Merck Consumer Pharma- ceutical Co.,⁸³ the court ruled that survey evidence showing that only 15.5

percent of the respondents were misled was sufficient to show that, under the Lanham Act, a substantial portion of the intended audience was deceived.

Willful or Bad Faith Conduct

Although not all circuits have spoken on the issue, several have held that if the defendant violated the Lanham Act will- fully or in bad faith, a plaintiff is not required to provide consumer survey or other extrinsic evidence in order to prove materiality:

In some circuits, if the defendant “intentionally set out to deceive the public,” using “deliberate conduct” of an “egregious nature” in light of the advertising culture of the marketplace in which the defendant competes, a presumption arises that consumers were, in fact, deceived, dispensing with the need for the plaintiff to commis- sion a consumer survey.⁸⁴

This presumption is justified by the rationale that actual confusion is difficult to prove, and where a defendant intentionally seeks to deceive consumers, it is fair to infer that consumers were, in fact, deceived.⁸⁵Of course, the defendant is free to rebut this by demonstrating an absence of consumer confusion.

Standing and Injury

The Lanham Act provides that a false advertiser “shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.”⁸⁶This element encompasses both a standing and an injury requirement.

Standing

The plain meaning of “any person” in section 43(a) encompasses both competitors and consumers that can show harm from the false advertising. However, courts have consistently rejected consumer standing to sue for false advertising under the Lanham Act.⁸⁷ Courts generally root this conclusion in section 45 of the Lanham Act, which provides that the statute was enacted “to protect persons engaged in . . . commerce against unfair competition.”⁸⁸Based on section 45, courts almost universally hold that the Lanham Act requires some showing of a potential for commercial or competitive injury.

The U.S. Supreme Court has never considered standing under section 43(a)(1)(B), and the federal circuits have been sharply criticized for their inconsistent decisions on this issue.⁸⁹

Although courts have consistently held that there must be some commercial injury, approaches differ on whether the plaintiff must be a competitor of the defendant. For example, the Second Circuit has held that “a section 43 plaintiff need not be a direct competitor”

of the defendant, but instead must merely allege the potential for commercial or competitive injury.⁹⁰ The Third Circuit has also recognized that a noncom- petitor is not necessarily precluded from bringing a false advertising claim under the Lanham Act.⁹¹

In the Ninth Circuit, on the other hand, to have standing to sue for false advertising under the Lanham Act, the plaintiff must “allege commercial injury based upon a misrepresentation about a product, and also that the injury was ‘competitive,’ i.e., harmful to the plaintiff’s ability to compete with the defendant.”⁹²The Sev- enth and Tenth Circuits have followed the Ninth Circuit’s lead in holding that to have standing for a Lanham Act false advertising claim, the plaintiff must be a competitor of the defendant and allege a discernible competitive injury.⁹³ Moreover, as discussed above, most circuits include (without analysis) in the definition of “commercial advertising or promotion” a requirement that the defendant is in commercial competition with the plaintiff.⁹⁴

In Conte Bros. Auto, Inc. v. Quaker State-Slick 50, Inc.,⁹⁵ the Third Circuit articulated a standing test, noting that

“there exists no single overarching test for determining the standing to sue” under the Lanham Act. Under the Conte Bros. standard, a court should consider:

(1) The nature of the plaintiff’s alleged injury: Is the injury “of a type that Congress sought to redress in providing a private remedy for violations of the [Lanham Act]”?

Courts have consistently rejected consumer standing

to sue for false advertising

under the Lanham Act.

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(2) The directness or indirectness of the asserted injury.

(3) The proximity or remoteness of the party to the alleged injuri- ous conduct.

(4) The speculativeness of the damages claim.

(5) The risk of duplicative damages or complexity in apportioning damages.⁹⁶

Under the Conte Bros. test and other Lanham Act jurisprudence, it is highly unlikely that a plaintiff who is merely a consumer would have standing to bring a claim for false advertising under the Lanham Act, because a consumer cannot show commercial injury. However, it does not necessarily follow that a plaintiff who is a consumer of the product or service, but who also has a commercial or competitive interest, would not have standing to bring a false advertising claim.

Of particular relevance to franchising, the Second Circuit recently held that a trademark licensee is not precluded from suing its licensor for false advertising if the licensor makes false claims to promote a competing product or falsely dis- parages the licensee’s product.⁹⁷ The court determined that

“[t]he licensor’s sole enjoyment of the goodwill in the licensed mark does not entitle it to make false claims to promote its own product, allegedly to the detriment of its licensee.”⁹⁸“Trademark licensees have been able to sue competitors under section 43(a), . . . and we see no reason why a false advertising claim may not be brought by a licensee just because the alleged violator is the licensor.”⁹⁹

This case fits comfortably within precedent requiring some competitive injury, but it also could have far-reaching implications. A franchisee,

who is a trademark licensee of the franchisor, should have standing to assert false advertising claims against the franchisor if the franchisor is competing against the franchisee at some level. This could occur, for example, if the franchisor is using false advertising to sell

national accounts, or to convince new franchisees to join a separate system operated by the franchisor. If the franchisor operates through a dual distribution system, owning some stores and franchising others, the franchisor’s risk increases.

Injury

The Lanham Act affords a claim to a plaintiff who “believes”

that it is, or is likely to be, damaged by the challenged violation.¹⁰⁰ However, both case law and common sense dictate that “despite the use of the word ‘believes,’ something more than a plaintiff’s mere subjective belief that he is injured or likely to be damaged is required. . . .”¹⁰¹On the other hand, only threatened, not actual, injury need be established to obtain injunctive relief.¹⁰²

Generally, the case law requires a claimant to show that he

or she is likely to be injured by the false advertising.¹⁰³“The statute demands only proof providing a reasonable basis for the belief that the plaintiff is likely to be damaged as a result of the advertising.”¹⁰⁴Thus, a likelihood of injury will not be presumed.¹⁰⁵ “The type and quantity of proof required to show injury and causation has varied from one case to another depending on the particular circumstances.”¹⁰⁶ As discussed above, survey evidence need not be submitted in every case to prove a likelihood of injury; injury sometimes will be a fair inference based on the nature of the false statement and of the competition between the parties.

Remedies

The Lanham Act provides for broad injunctive and monetary relief.¹⁰⁷The type of evidence necessary to prove substantive elements of the offense differs depending on the relief sought. A plaintiff requesting only injunctive relief need make no greater showing than is necessary to satisfy the materiality element of the cause of action. Thus, for literally false claims, no additional evidence is necessary, and for misleading claims, a tendency to deceive consumers must be established.¹⁰⁸By contrast, when the plaintiff seeks damages, it generally must prove actual confusion or deception arising from the violation.¹⁰⁹Finally, other forms of monetary relief can be available in some jurisdictions without demonstrating actual deception.

Injunctive Relief

False advertising claims usually include prayers for injunctive relief, at least in part because the plaintiff’s burden of proof is lower than that necessary to receive damages. Injunctive relief requires a showing only that the defendant’s representations about its product have a tendency to deceive consumers, which is presumed where the statement is literally false.¹¹⁰

Courts have broad discretion in fashioning injunctive relief in false advertising cases.¹¹¹The most common form is an injunction prohibiting the defendant from further distribution of the false advertising. In some cases, the court may also enter an injunction ordering the defendant to correct the problems that its false advertising created. For instance, in Rhone-Poulenc Rorer Pharmaceuticals, Inc. v. Marion Merrell Dow, Inc.,¹¹² the defendant was required to undertake corrective advertising to remedy its false advertising, which said that its pharmaceutical product could be freely substituted for its competitor’s product. The court ordered the defendant to take steps necessary to explain to its sales representatives, physicians, phar- macists, and patients the differences between its product and its competitor’s product, including that the defendant’s product was not approved to treat angina.¹¹³

Courts have broad discretion in fashioning injunctive relief

in false advertising cases.

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Monetary Damages

Once a violation of section 43(a) has been established, the plaintiff is entitled

subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. . . . In assessing profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party.¹¹⁴

This provision confers broad discretion upon the district court.¹¹⁵

Several forms of monetary relief are possible, including the amount of profits lost as a result of the defendant’s false advertising (marketplace damages), the defendant’s profits gained as a result of its false advertising (unjust enrichment), amounts necessary for corrective advertising, and attorneys’

fees. Importantly, although the Lanham Act permits courts to increase damages, punitive damages are not available for violation of section 43(a).¹¹⁶

Marketplace Damages

Most courts require proof of actual consumer deception to award the plaintiff its

“marketplace damages,”

which are defined as lost profits and loss of goodwill. Actual deception is required because it shows that the defendant’s misconduct caused actual harm in the marketplace.¹¹⁷ Conceptually, actual confusion is part of causation, because false

advertising can only cause monetary damage if consumers were deceived into buying the defendant’s product in lieu of the plaintiff’s product.

There is, however, disagreement among the circuits on this issue. The Ninth Circuit has held that actual confusion is not necessary and that “the preferred approach allows the district court in its discretion to fashion relief, including monetary relief, based on the totality of the circumstances.”¹¹⁸ The Eleventh Circuit has suggested the same result, stating that “all monetary awards under Section 1117 are ‘subject to the principles of equity,’ and contrary to the assertions of both parties, no hard and fast rules dictate the form or quantum of relief.”¹¹⁹Often, however, courts do not distinguish between “marketplace damages” and other forms of monetary relief, for which proof of actual confusion is less important.¹²⁰ To the extent that these decisions

do not require actual confusion for marketplace damages, they appear to be mistaken: It is difficult to see how a plaintiff can prove that false advertising directly and proximately led to a decline in its profits if it cannot show that consumers stopped purchasing the plaintiff’s goods because of the defendant’s deception. Attributing a decline in profits to the defendant’s misconduct would appear speculative without such evidence.

Where the challenged advertisement is deliberately false, some courts have dispensed with the need for actual consumer confusion.¹²¹For example, the Ninth Circuit has held that the “[p]ublication of deliberately false comparative claims gives rise to a presumption of actual deception and reliance,” reasoning that:

The expenditure by a competitor of substantial funds in an effort to deceive consumers and influence their purchasing decisions justi- fies the existence of a presumption that consumers are, in fact, being deceived. He who has attempted to deceive should not com- plain when required to bear the burden of rebutting a presumption that he succeeded.¹²²

Defendant’s Profits

Another form of potential monetary relief is recovery of the defendant’s profits resulting from the false advertising. The circuits are split on whether such damages are available without proof of deliberate misconduct.

The Second, Third, Sixth, and D.C. Circuits have concluded that a plaintiff must prove that the defendant acted willful- ly before it can recover the defendant’s profits.¹²³The Eighth and Ninth Circuits have suggested that willful conduct is required.¹²⁴ The dominant rationale for requiring willful misconduct is “to limit what may be an undue windfall to the plaintiff, and prevent the potentially inequitable treatment of an ‘innocent’

or ‘good faith’ infringer.”¹²⁵ However, the Fifth, Seventh, Tenth, and Eleventh Circuits do not generally require intentional misconduct.¹²⁶For example, the Eleventh Circuit has held that a plaintiff need not demonstrate intentional misconduct to obtain an award of the defendant’s profits.¹²⁷ Similarly, the Seventh Circuit has held that actual confusion is not necessary to recover on an unjust enrichment theory.¹²⁸Instead, these circuits have adopted a flexible approach. The Eleventh Circuit has made clear that “all monetary awards under Section 1117 are ‘subject to the principles of equity,’ . . . and no hard and fast rules dictate the form or quantum of relief.”¹²⁹

The flexible approach seems most appropriate. The award of defendant’s profits should be left to the trial court’s discretion, taking into account the overall equities of the case and the parties’ respective conduct. In most instances, an award of the defendant’s profits will, indeed, be predicated on

Most courts require proof of actual consumer deception

to award the plaintiff its

“marketplace damages.”

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intentional misconduct. However, there are cases where the defendant’s conduct may not rise to the level of “willful- ness,” but nonetheless it would be inequitable for the defendant to keep profits derived from unlawful conduct. The concern of limiting windfall judgments and preventing inequitable treatment can be handled on a case-by-case basis under traditional principles of equity, without the need to establish an inflexible rule requiring intentional misconduct.

Corrective Advertising and Damage Control

Courts also may award the plaintiff compensation for its own corrective advertising efforts undertaken before final adjudi- cation of the dispute.¹³⁰ In these cases, the court often requires the plaintiff to prove that its advertising strategy was actually corrective and undertaken in response to the defendant’s false advertising.¹³¹

In addition, courts have awarded damages for prospective corrective advertising expenditures. To recover these, the plaintiff often must prove that:

(1) the expenditures are corrective, i.e., responsive to the defendant’s false advertising;¹³²

(2) the expenditures are a surrogate for measuring the plaintiff’s actual damages;¹³³and

(3) the plaintiff is unable to undertake a corrective advertising campaign concurrently with the wrong that it seeks to redress in court.¹³⁴

Attorneys’ Fees

The Lanham Act empowers a court to award the prevailing party reasonable attorneys’ fees in “exceptional cases.”¹³⁵ The prevailing party has the burden of demonstrating the exceptional nature of the case by “clear and convincing evidence.”¹³⁶ While many courts have held that an exceptional case is one where the defendant’s acts can be characterized as malicious, fraudulent, deliberate, bad faith, or willful, some courts have simply characterized the misconduct as

“very egregious.”¹³⁷As a practical matter, attorneys’ fees are difficult to recover unless the defendant intended to deceive or refused to withdraw the advertising or promotion once it became aware of the deception.

Conclusion

False advertising under the Lanham Act is an increasingly popular cause of action because it applies to such a broad variety of statements in diverse factual settings. False advertising claims may be particularly useful in franchising, given the importance of advertising in promoting franchise brands and the ability of franchisees to bring actions, especially where the competitive paths—and swords—of franchisor and franchisee cross.

Endnotes

1. 15 U.S.C. § 1125.

2. 15 U.S.C. § 1125(a).

3. Id.

4. See, e.g., Clorox Co. Puerto Rico v. Procter & Gamble Commer- cial Co., 228 F.3d 24, 33 n.6 (1st Cir. 2000); Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 495 (5th Cir. 2000); Balance Dynamics

Corp. v. Schmitt Indus., 204 F.3d 683, 689 (6th Cir. 2000); Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 244 (9th Cir. 2000); United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998); Johnson & Johnson-Merck Consumer Pharm. Co.

v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125, 129 (3d Cir. 1994);

Skil Corp. v. Rockwell Int’l Corp., 375 F. Supp. 777 (N.D. Ill. 1974).

5. Skil Corp.., 375 F. Supp. at 783 (citing Weil, Protectability of Trademark Values Against False Competitive Advertising, 44 CAL. L.

REV. 527, 537 (1956)).

6. See, e.g., Pizza Hut, 227 F.3d at 497; see also discussion of materiality below.

7. See, e.g., Warner-Lambert Co. v. Breathasure, Inc., 204 F.3d 87 (3d Cir. 2000).

8. S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir. 2001); United Indus. Corp., 140 F.3d at 1179; Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139–40 (9th Cir. 1997).

9. See, e.g., Clorox Co. Puerto Rico, 228 F.3d at 34.

10. Id.

11. Id. at 34-35.

12. Id. at 35.

13. See, e.g., id.; United Indus. Corp., 140 F.3d at 1175.

14. See Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 495 (5th Cir. 2000) (“When construing the allegedly false or misleading statement to determine if it is actionable under section 43(a), the statement must be viewed in the light of the overall context in which it appears.”); United Indus. Corp., 140 F.3d at 1180.

15. 93 F.3d 511, 516 (8th Cir. 1996).

16. 690 F.2d 312, 318 (2d Cir. 1982).

17. 241 F.3d 232 (2d Cir. 2001).

18. Id. at 235-37.

19. Id. at 239.

20. Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997).

21. See Castrol, Inc. v. Quaker State Corp., 977 F.2d 57, 63 (2d Cir.

1992); Avon Prod., Inc. v. S.C. Johnson & Son, Inc., 984 F. Supp. 768, 797 (S.D.N.Y. 1997). In addition, courts have held that a claim that is unsupported but that is not literally false or deceptive does not violate the Lanham Act. See Am. Home Prod. Corp. v. Procter & Gamble Co., 871 F. Supp. 739, 758 (D.N.J. 1994) (“[T]he absence of acceptable tests or other proof substantiating an advertising claim does not allevi- ate a Lanham Act plaintiff’s burden of showing that a challenged advertisement is false or misleading. Thus, a plaintiff must affirmatively prove that the claim in question is false or misleading, not merely that it is unsubstantiated.”) (quotations and citations omitted); see also Johnson & Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125, 129 (3d Cir. 1994); Sandoz Pharm.

Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 228 (3d Cir. 1990).

22. See Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246 (9th Cir. 2000) (“The common theme that seems to run through cases considering puffery in a variety of contexts is that consumer reliance will be induced by specific rather than general assertions. Advertising which merely states in general terms that one product is superior is not actionable.”) (citations and quotations omitted).

23. Castrol, Inc., 977 F.2d at 63.

24. Id.

25. Id. Of course, the plaintiff could also prove that the defendant’s claim of “tests prove X,” for example, is literally false if in fact the defendant never conducted any tests.

26. Id. at 63-64.

27. United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1182 (8th Cir.

1998).

28. Id. at 1180.

29. See, e.g., Clorox Co. Puerto Rico v. Procter & Gamble Commer- cial Co., 228 F.3d 24, 33 (1st Cir. 2000).

30. Id.; Gordon & Breach Science Publishers S.A. v. Am. Inst. of Physics, 859 F. Supp. 1521, 1532 (S.D.N.Y. 1994).

31. See, e.g., Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 496 (5th Cir. 2000) (collecting cases); Groden v. Random House, 61

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F.3d 1045, 1051 (2d Cir. 1995) (stating that when a statement is “obvi- ously a statement of opinion,” it cannot “reasonably be seen as stating or implying provable facts”).

32. Presidio Enter., Inc. v. Warner Bros. Distrib. Corp., 784 F.2d 674, 679 (5th Cir. 1986); see also Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1145 (9th Cir. 1997).

33. Pizza Hut, 227 F.3d at 496-97.

34. Southland Sod, 108 F.3d at 1134.

35. Id.

36. Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246 (9th Cir. 2000) (finding that reasonable consumers would not interpret the plaintiff’s claim as a factual claim upon which they could rely).

37. See Bologna v. Allstate Ins. Co., 138 F. Supp.2d 310, 323 (E.D.N.Y. 2001).

38. W.L. Gore & Associates, Inc. v. Totes, Inc., 788 F. Supp. 800 (D. Del. 1992).

39. 227 F.3d 489, 491 (5th Cir. 2000).

40. Id. at 492.

41. Id. at 493-94.

42. Id. at 498-99.

43. Id. at 501-02.

44. See 17 U.S.C. § 1125(a); Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1383 (5th Cir. 1996).

45. Gordon & Breach Science Publishers S.A. v. American Inst. of Physics, 859 F. Supp. 1521, 1532 (S.D.N.Y. 1994); see also Sports Unlimited, Inc. v. Lankford Enter., Inc., 275 F.3d 996, 1004-05 (10th Cir. 2002) (using these four factors to determine whether challenged conduct constitutes “commercial advertising or promotion”); Coastal Abstract Serv., Inc. v. First Am. Tit. Ins. Co., 173 F.3d 725, 734 (9th Cir. 1999); Seven-Up Co., 86 F.3d at 1384.

46. Gordon & Breach, 859 F. Supp. at 1536. Although several courts have adopted the Gordon & Breach four-part test, including incorporation of the First Amendment “free speech” doctrine, courts have expressed appropriate skepticism about whether such require- ments should be added to the plain language of the statute. See, e.g., First Health Group v. BCE Emergis Corp., 269 F.3d 800, 803 (7th Cir.

2001) (“We have serious doubts about the wisdom of displacing the statutory text in favor of a judicial rewrite with no roots in the language Congress enacted.”).

47. Gordon & Breach, 859 F. Supp. at 1532.

48. See First Health Group, 269 F.3d at 803.

49. Id. at 804.

50. See, e.g., Barnhart v. Sigmon Coal Co., Inc., 122 S. Ct. 941, 950 (2002) (“As in all statutory construction cases, we begin with the lan- guage of the statute.”); First Health Group, 269 F.3d at 803; Seven-Up Co., 86 F.3d at 1384 (“Courts have noted that we should give the terms

‘advertising’ and ‘promotion’ their plain and ordinary meanings.”).

51. Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997) (citing United States v. Ron Pair Enter., Inc., 489 U.S. 235, 240 (1989)).

52. WEBSTER’SNINTHNEWCOLLEGIATEDICTIONARY59,941 (1984).

53. Seven-Up Co. v Coca Cola, 86 F.3d 1379, 1385 (5th. Cir. 1996).

54. Id. at 1386; Mobius Mgmt. Sys., Inc. v. Fourth Dimension Soft- ware, Inc., 880 F. Supp. 1005 (S.D.N.Y. 1994) (holding that a single letter from a computer software manufacturer to a potential customer could constitute “advertising or promotion”).

55. Seven-Up Co., 86 F.3d at 1386.

56. See, e.g., Nat’l Artists Mgmt. Co., Inc. v. Weaving, 769 F. Supp.

1224, 1234-35 (S.D.N.Y. 1991).

57. 984 F. Supp. 768, 795 (S.D.N.Y. 1997).

58. 905 F. Supp. 169 (S.D.N.Y. 1995).

59. 769 F. Supp. 1224, 1234-35 (S.D.N.Y. 1991).

60. 269 F.3d 800, 804 (7th Cir. 2001); but see Mobius Mgmt. Sys., Inc. v. Fourth Dimension Software, Inc., 880 F. Supp. 1005 (S.D.N.Y.

1994) (holding that a single letter from a computer software manufacturer to a potential customer could constitute “advertising or promotion”).

61. 275 F.3d 996, 1004-05 (10th Cir. 2002).

62. 942 F. Supp. 209 (S.D.N.Y. 1996).

63. 946 F. Supp. 115 (D. Mass. 1996).

64. JTH Tax, Inc. v. H&R Block East Tax Serv., Inc., 28 Fed. App.

207 (4th Cir. 2002).

65. Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 502 (5th Cir. 2000); Sandoz Pharm. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222, 228-29 (3d Cir. 1990).

66. See, e.g., Coca-Cola Co. v. Tropicana Prod., Inc., 690 F.2d 312 (2d Cir. 1982).

67. See Jean Wegman Burns, Confused Jurisprudence: False Adver- tising Under the Lanham Act, 79 B.U. L. REV. 807, 871 (Oct. 1999) (noting that Congress never included a materiality or “inherent”

requirement in § 43(a)). Nonetheless, courts in the Second Circuit con- tinue to recite and apply the “inherent quality or characteristic” lan- guage. See, e.g., S.C. Johnson & Son, Inc. v. Clorox Co., 241 F.3d 232, 238 (2d Cir. 2001).

68. Pizza Hut, 227 F.3d at 497; see also S.C. Johnson & Son, 241 F.3d at 232; Clorox Co. Puerto Rico v. Procter & Gamble Commercial Co., 228 F.3d 24 (1st Cir. 2000).

69. See Pizza Hut, 227 F.3d at 497; Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1140 (9th Cir. 1997); Johnson & Johnson- Merck Consumer Pharm. Inc. Co. v. Rhone-Poulenc Rorer Pharm., 19 F.3d 125 (3d Cir. 1994).

70. Pizza Hut, 227 F.3d at 497 (quotation omitted); see also Clorox Co. Puerto Rico, 228 F.3d at 37; Johnson & Johnson v. Smithkline Beecham Corp., 960 F.2d 294, 297 (2d Cir. 1992).

71. See United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1182 (8th Cir. 1998).

72. Pizza Hut, 227 F.3d at 503 n.13.

73. Id. at 497.

74. See Clorox Co. Puerto Rico, 228 F.3d at 36; Pizza Hut, 227 F.3d at 497.

75. Pizza Hut, 227 F.3d at 497.

76. See, e.g., id. at 503 n.3 (“[T]he success of a plaintiff’s implied fal- sity claim usually turns on the persuasiveness of a consumer survey.”).

77. JTH Tax, Inc. v. H&R Block East Tax Serv., Inc., 28 Fed. App.

207 (4th Cir. 2002).

78. Id.

79. 227 F.3d 489 (5th Cir. 2000).

80. Id. at 503.

81. 128 F. Supp. 2d 926 (E.D. Va. 2001), aff’d, 28 Fed. App. 207 (4th Cir. 2002).

82. 19 F.3d 125, 135-36 n.14 (3d Cir. 1994).

83. 129 F. Supp. 2d 351, 367 (D.N.J. 2000) (citing Coca-Cola Co. v.

Tropicana Prod., Inc., 690 F.2d 312, 317 (2d Cir. 1982)).

84. Clorox Co. Puerto Rico v. Procter & Gamble Commercial Co., 228 F.3d 24 36 n.9 (1st Cir. 1998); see also United Indus. Corp., 140 F.3d at 1183; Johnson & Johnson-Merck Consumer Pharm. Co. v.

Rhone-Poulenc Rorer Pharm., Inc., 19 F.3d 125 (3d Cir. 1994);

Resource Dev., Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134 (2d Cir. 1991); U-Haul Int’l, Inc. v. Jartran, Inc., 793 F.2d 1034 (9th Cir. 1986).

85. See Resource Dev., 926 F.2d at 140.

86. 15 U.S.C. § 1125(a) (emphasis added).

87. See, e.g., Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1383 n.5 (5th Cir. 1996) (“[W]e have found no case which suggests that ‘consumers’ have standing under § 43(a).”); Stanfield v. Osborne Indus., Inc., 52 F.3d 867, 873 (10th Cir. 1995) (“[T]hus, to have standing for a false advertising claim, the plaintiff must be a competitor of the defendant and allege competitive injury.”); Serbin v. Ziebart Int’l Corp., 11 F.3d 1163, 1177 (3d Cir. 1993) (holding that the consumers, as noncommercial plaintiffs, do not have standing under the Lanham Act); Colli- gan v. Activities Club of New York, Ltd., 442 F.2d 686 (2d Cir. 1971) (analyzing the legislative history and purpose behind § 43(a) and con- cluding that consumers lacked standing to bring action under the Lan- ham Act); Bacon v. Southwest Airlines Co., 997 F. Supp. 775, 780 (N.D. Tex. 1998) (holding that there is no private cause of action for consumers under the false advertising prong of the Lanham Act); see also James S. Wrona, False Advertising and Consumer Standing Under Section 43(a) of the Lanham Act: Broad Consumer Protection Legisla- tion or a Narrow Pro-Competitive Measure?, 47 RUTGERSL. REV. 1085