Lanham Act Ruling Shifts the BurdenThe federal unfair competition law - the Lanham Act - lets competitors sue each other in federal court for trademark infringement or false advertising. The burdens on a competitor to demonstrate a claim can be significant and expensive, particularly if the challenger is required to show that a competitor's advertising is false.
A recent appellate court decision, however, lessens a challenger's burden of proof and strengthens a challenger's ability to attack a competitor's false or unsubstantiated advertising.
What is the Lanham Act? Analogous to a government regulatory challenge, section 43(a) of the Lanham Act gives a competitor the right to file suit against another for false advertising in federal court.
Generally speaking, a challenger must establish that the competitor's advertising contains either an express or implied false or misleading statement about a product sold in interstate commerce, that the statement deceived or had the capacity to deceive a substantial segment of potential consumers, that the deception is material and that the challenger is likely to be injured as a result of the statement. If a claim is literally false, evidence of deception is usually not required.
Challengers who meet this burden can obtain an injunction stopping the marketer from engaging in the challenged behavior, possibly require corrective advertising and obtain monetary damages, including a potential tripling of damages for intentional misconduct, along with attorneys' fees.
Mylanta "Night Time Strength" case. A recent Lanham Act decision provides insight into these types of suits. A case was brought by Novaritis, the marketer of Maalox, against Johnson & Johnson, the marketer of Mylanta. Both companies marketed competing over-the-counter liquid antacid medicine.
Novaritis sued J&J under the Lanham Act and under the New Jersey consumer protection law in federal court in New Jersey, claiming that the name and packaging of J&J's product "Mylanta Night Time Strength" were deceptive. Novaritis claimed the Mylanta nighttime product was actionable because it was not formulated specifically for nighttime use and was not objectively superior to other products in the marketplace.
According to Novaritis, the nighttime product was essentially a slightly stronger version than the "maximum strength" product offered by both competitors, not a unique product otherwise providing nighttime relief.
The district court agreed with Novaritis, finding that Mylanta's "Night Time Strength" product name falsely implied that the product was formulated to provide relief throughout the night. The court found that the claim was literally false because the nighttime product was not superior to others in terms of nighttime relief and was not specifically formulated for nighttime relief.
Because the claim was literally false, the court held that evidence of consumer deception was not required. The court entered a preliminary injunction barring Johnson & Johnson from distributing the product under the name "Night Time Strength."
Unsubstantiated claim is per se false. Johnson & Johnson appealed the trial court's decision to the U.S. Court of Appeals for the Third Circuit, which affirmed the trial court's barring J&J advertising.
Most notable, however, is that the appellate court found that the reason the product name and advertising were false was not that Novaritis showed that it was falsely advertised, but because J&J lacked substantiation for the product's performance claims. Accordingly, the court affirmed the trial court's injunction barring the use of the name "Night Time Strength" and associated advertising.
The decision is significant for marketers because the court severely lessened the burden of proof for challengers. Challengers normally have the burden of demonstrating that the challenged ad is false. Here, however, the court did not require Novaritis to show that the advertising was false and shifted the burden to J&J to show it had substantiation for the product's performance claims.
Marketers should keep this decision in mind when creating an ad campaign and ensure that all express and implied product performance claims are substantiated. Marketers must remember that claims required to be substantiated are not limited to express advertising claims, but include product name and packaging, and any reasonably implied claims. If challenged, the burden of showing substantiation may not be on the challenger, but rather the advertiser who should ensure that it has adequate substantiation.