Big False Advertising Law News: SCOTUS Changes The Rules

false advertising lawBluntly speaking, the U.S. Supreme Court usually picks lawsuits that dwell at the intersection of “American Morals Avenue” and “Dispassionate Law Lane,” leaving the quasi-wonkish definitional deliberations to the appellate circuit.

But not this time.

Lexmark v. Static Control: Why It Matters In The World Of False Advertising Law

Recently, the highest court in the land accepted and subsequently released an opinion on the uncharacteristically “wonky” Lexmark vs. Static Control. A case Justice Scalia described as “sprawling,” Lexmark is dense, nuanced and in its most recent ruling, the Supreme Court only addressed one aspect of the claim – the issue of “standing” in Lanham Act false advertising suits.

So, why is Lexmark such a big deal? In plain English, via the ruling, the Court created a national “test” for determining who can and cannot sue for false advertising under the Lanham Act.

False Advertising Standards Before Lexmark = Different Strokes For Different Folks

Before now, false advertising rules essentially came down to location, because different courts used different standards to determine who could and could not sue for false advertising under the Lanham Act. The Lexmark ruling, however, nullifies the appellate and district court tests, replacing them with a unified two-prong “prudential standing” test.

Zones of Interest

The court determined that legal standing must include a direct “zone of interest” relationship between litigants. Huh? In the parlance of our time (TM “the Dude”), what SCOTUS is saying is that any company or entity has the right to sue for false advertising under the Lanham Act, even if the defendant and plaintiff are not direct competitors. Additionally, the second prong of the new false advertising determining test will require a verifiable “proximately caused” commercial injury. In other words, moving forward, in Lanham false advertising cases, plaintiffs will have to prove that defendants’ actions in some way caused financial harm.

Injury To Business Reputation

In addition to false advertising, the Lanham Act allows claims for injury to reputation and commercial interests “flowing directly from the deception wrought by the defendant’s advertising.” According to the false advertising law, this condition exists when the deception causes the consumer to reject a product. The new test makes no distinction for reputation without proof of actual malice, but only addresses commercial claims by the plaintiff.

Ultimate Impact of Lexmark v. Static Control On False Advertising Law

The final impact of the ruling on the number of future lawsuits is unclear. District and appellate courts now have standard instructions when determining false advertising Lanham Act cases, but the burden of proof may be impacted at the preponderance level. Preponderance allows a case determination by one single controlling factor if the fact carries enough legal weight. There may also be several other overlapping statutes allowing established plaintiffs standing in claims that are crafted in an acceptable manner.

Contact False Advertising Attorney

Kelly / Warner handles all manners of false advertising and commercial libel cases. If you need to speak with an attorney about a trade libel or false advertising issue, please get in touch today. We’re a top-rated firm with the experience you’re looking for in terms of false advertising and commercial defamation law. We look forward to speaking with you soon.

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