IANAL: I am not a lawyer
and this is not legal advice. If you want legal advice,
consult an attorney, not my web pages!The Latham Act
was designed to protect business from competitors who play "dirty
tricks", those who misrepresent the quality of the products of their
business competitors:
"Any advertising or
promotion that misrepresents the nature, characteristics, qualities
or geographic origin of goods, services or commercial activities"
(Lanham Act, 15 U.S.C.A. § 1125(a)).
False Advertizing and the Latham Act
This page gives the proof requirement for false advertizing.
To prove that an advertisement is false, a plaintiff must prove five
things:
(1) a false statement of fact has been made about
the advertiser's own or another person's goods, services, or
commercial activity;
(2) the statement either deceives or has
the potential to deceive a substantial portion of its targeted
audience;
(3) the deception is also likely to affect the
purchasing decisions of its audience;
(4) the advertising
involves goods or services in interstate commerce; and
(5) the
deception has either resulted in or is likely to result in injury to
the plaintiff.
The most heavily weighed factor is the
advertisement's potential to injure a customer.
Failure to Disclose
Failure to disclose happens when a business competitor fails to
disclose a material fact about a business competitor, a form of
"tortuous interference
This
page discusses the failure to disclose. It is considered
false advertising under the Lanham Act if a representation is
"untrue as a result of the failure to disclose a material fact."
Therefore, false advertising can come from both misstatements
and partially correct statements that are misleading because they do
not disclose something the consumer should know. The Trademark Law
Revision Act of 1988 (15 U.S.C.A. § 1051 et seq.), which added
several amendments to the Lanham Act, left the creation of the line
between sufficient and insufficient disclosure to the discretion of
the courts.
Product Disparagement and the Latham Act
Product disparagement involves discrediting a competitor's
product. The 1988 amendment to the Lanham Act extends claims for
false advertising to misrepresentations about another's products.
Unfair Competition (dirty tricks) and the Latham Act
Section 43(a) of the Lanham Act attempts to define “unfair
competition” as occurring when:
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 . . .
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.
Tortuous Interference
Tortuous
interference is the unlawful interference into one’s contractual or
business affairs. For example, someone who uses the web to
defame an individual’s business and contacts their customers (or
prospective customers) may be violating this law. A special
case of tortuous interference called “Tortuous Interference with
Prospective Advantage” is available in some states to punish those
who seek to damage one’s ability to find and retain new customers.
The elements of the tort of interference with contract are:
-
A valid contract between the plaintiff and a third person that
confers upon plaintiff a contractual right against a third
person.
- The defendant knows of the contract.
- The defendant intentionally induces the third person not to
perform the contract.
- The defendant acts without justification.
- The defendant’s conduct causes actual pecuniary harm to the
plaintiff.
In the USA, you can
be sued for “tortuous
interference” if your blog comments defame, encourage harassment
or interfere with someone’s normal course of business.
The North Carolina Supreme Court
has held that tortious interference with prospective economic
advantage occurs when a party interferes with the freedom of
contract and “not in the legitimate exercise of defendant's own
right, but with design to injure the plaintiff . . ." (see
Owens v. Pepsi Cola Bottling Co. of Hickory, N.C., Inc., 330 N.C.
666, 680, 412 S.E.2d 636, 644 (1992)).
For a simple example of "unjustified", a business competitor
would be unjustified in conducting a "smear" campaign against a
business competitor, which results in advertisers withdrawing from
existing contracts for fear of bad publicity.
On the web, it
suggests that statements below, while not libelous per se, may be
actionable as tortuous interference, especially if the publisher
induces the public to interfere with the business relationship:
- "I cannot believe that people actually pays Waldo's Widgets
money"
- "I feel sorry for anyone unfortunate enough to use Waldo's
Widgets services"
- "Waldo's Widgets products are shoddy and poorly made"
- "I wonder if their clients know what serial offenders
Waldo's Widgets are?"
- "Amy Author's article is wrong, it's a fact, not my opinion"
- "The owner of Waldo's Widgets is a fraud"
Also see:
Employer responsibility for employee misconduct
