False Advertising and Trade Infringement

Although many of us may want to claim false advertising every time we are not completely satisfied with our purchase, our Chicago false advertising lawyers recognize that the law sets the bar quite high for a plaintiff to prove that false advertising actually occurred. False advertising is defined by the federal Lanham Act.

To win a claim for false advertising, plaintiffs bear the burden of proving that:

1. A false statement of fact has been made about the advertiser’s own or another’s goods or services;
2. The statement either deceives or has the potential to deceive a substantial portion of its targeted audience;
3. The deception is likely to affect the purchasing decision of its audience;
4. The advertising involves goods or services in interstate commerce; and
5. The deception has resulted in injury to the plaintiff or is likely to result in injury to the plaintiff. The injury is calculated as the amount of money the plaintiff paid for the falsely advertised goods or services.

False advertising may take one of three forms:

1. Failure to disclose. Companies can be held liable for misrepresenting a product by withholding crucial information that could influence the purchase decision.
2. Flawed and insignificant research. Advertisements that fall under this category include a company’s unfounded and unsupported claims that various studies prove the superiority of its product. Our false advertising attorneys can advise Chicago clients on whether this type of claim may apply to their situation.
3. Product disparagement. This happens when a company goes too far in discrediting a competitor’s product. Although bashing another product to prove the superiority of one’s own product is common in advertising, a company can do so legally only so long as it remains within the bounds of the truth.

A trademark is a symbol, slogan, or other device with which the public identifies a product or company. Trademark infringement, or misappropriation of a company’s trademark by a competitor, can harm both the owner of the registered trademark and the consumer.

Trademark infringement is defined as the “use in commerce [of] any reproduction, counterfeit, copy or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution or advertising of any goods or services or in connection with which such use is likely to cause confusion, or cause mistake, or cause to deceive.”

When a trademark is misappropriated, the consumer is misled into believing that the product is either produced or approved by the company that owns the trademark. The owner of the trademark suffers a loss of sales and possible harm to its reputation if the consumer is dissatisfied with the product and blames the trademark owner. Our Chicago false advertising attorneys can help our clients seek to protect their reputation.

Both consumers and competitor companies have remedies when they are injured by false advertising. Some states have adopted the federal Uniform Deceptive Trade Practices Act, which addresses misleading advertising practices. However, this act only provides injunctive relief, which means that plaintiffs are unable to collect damages. For this reason, most states have enacted their own statutes to combat false advertising.

Most states provide three different forms of remedy for false advertising depending on the circumstances: injunctive relief, corrective advertising, and damages. A false advertising lawyer at our Chicago firm can determine which of these remedies may be applicable.

Injunctive relief requires the defendant to discontinue taking a certain action. Corrective advertising can be granted in one of two ways. The court can order the defendant to run advertisements that correct the misleading information, or award the plaintiff monetary damages so the plaintiff can run its own advertisements to counter the false advertising.

A court might also award a plaintiff damages if the plaintiff proves either that some consumers were actually deceived by the false advertising, or that the defendant used the false advertising in bad faith. There are four types of damages which are awarded for false advertising:

1. Profits the plaintiff lost when sales were diverted to the false advertiser;
2. Profits the plaintiff lost on sales made at prices which were reduced as a demonstrated result of the false advertising;
3. The cost of any advertising that reasonably responds to the defendant’s false advertisements; and
4. Any quantifiable harm to the plaintiff which cannot be undone through corrective advertising.