False advertising occurs when advertisers materially mislead and deceive consumers. A business that makes misleading advertising statements about its products or another company’s products can be sued in federal court under section 43(a) of the federal Lanham Act. (15 United States Code, Section 1125(a).) It is not necessary to have a federally registered trademark to make a claim under section 43(a). All that is required is that a business has made false or misleading statements as to its own product or another’s, that there is actual deception or at least a tendency to deceive a substantial portion of the intended audience, and that the advertised goods traveled in interstate commerce. The deception must be material, that is, likely to influence purchasing decisions, and there must be likelihood of injury to another company in terms of declining sales or loss of goodwill. In other words, if the false advertising has no impact on purchasers, goodwill, or sales, then the claim will be dismissed.
For purposes of section 43(a), advertising is more than traditional print and television advertisements; it is any commercial speech intended to influence consumers and disseminated to the relevant purchasing public. “Commercial speech” refers to statements generally made for the purposes of promoting a business or trade, not editorial or informational speech protected under free speech principles. For example, it is not commercial speech to make statements about a product in a newspaper article.
Deceptive advertising is generally categorized as either statements that are simply untrue (or “false on their face”) or statements that are accurate but deceptive. An example of a statement that is false on its face would be falsely claiming that a motor oil additive will increase mileage. An example of a statement that is accurate but deceptive would be that a motor oil additive protects against engine corrosion, but failing to mention that the protection is for boat engines and not automobile engines. In cases of accurate but deceptive claims, a court must examine evidence, for example, to determine if a company’s test results have been distorted or exaggerated.