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FALSE AND DECEPTIVE ADVERTISING
by James A. Calderwood

Recent reports indicate that the number of lawsuits relating to false and misleading advertising and trade disparagement are increasing at a rapid rate. Some pending suits involve ceramic products and a number of companies who deal in ceramic items have been threatened with this type of legal action.

The trend towards an increasing number of these suits is not confined to advertising directed at the average consumer but also relates to promotional material and statements directed to sophisticated commercial purchasers such as industrial producers and retailers.

Those who produce and market ceramic products should be aware of the possibility of such actions and the potential scope of exposure a company may have. It is not a problem confined to the advertising and marketing departments or a company that produces products only through brokers or distributors.

If a ceramic plate manufacturer is requested to produce a plate featuring the likeness of a famous person the plate producer should have written proof that the company for whom it is producing the plate has the legal right to use the likeness. A suit by the individual whose likeness is on the plate could well name the ceramic decorator along with others as defendants if there was no legal right to use the likeness.

If there are remarks in advertising and promotional material, even if only implied, that could put a competitor’s product in a bad public light then there should be valid testing or data to support the claim. For instance, if a ceramic tile producer says that its floor tile "is easier to clean than any other leading brand" it should have data to back up the claim. Even though the statement does not mention any other brand the effect is a negative statement about other brands of ceramic tile. To avoid adverse legal action the company should have the results of systematic tests that compared the ability to clean its tile with other major tile brands.

At the federal level most false advertising suits are brought under a statute known as the Lanham Act. That Act prohibits any false or misleading description or representation of fact which is likely to misrepresent the nature, qualities, characteristics, origin or source of a company’s goods or services or, those of a competitor. Under the Lanham Act private parties may bring suits.

Most states also have statutes which prohibit false and misleading advertising. These state statutes most commonly permit private suits as well as actions by a unit of the state government. At the federal level the Federal Trade Commission Act prohibits false and deceptive advertising. It is administered by the Federal Trade Commission, no private rights of action are allowed under it.

For an action under the Lanham act a competitor instituting a suit has to show either infringement of a trademark or false advertising. There is no requirement that the plaintiff show that the defendant intended to deceive. The mere fact that a substantial number of people are left with a false impression or a misrepresentation relates to an inherent quality or characteristic of the product that may induce people to buy it is enough to establish a violation.

Deceptive advertising is a particular problem because it may be literally true (and therefore not false) but, it may be misleading. For instance, a pharmaceutical company would be engaging in deceptive advertising if it advertised that consumers should buy a particular drug it manufactures because the drug has been approved by the U.S. Food and Drug Administration (FDA). No drug can be sold in the U.S. unless it has been approved by FDA. Therefore the claim, while literally true, is deceptive because it creates the false impression that drugs produced by others may not have been approved by FDA. In deception cases the plaintiff normally has to show that some significant segment of the population has been misled.

Comparative advertising can be a particular problem. If one company compares its product with another by name or trademark and says its product is superior, it should be prepared to prove its claim with tests and data. Comparative statements that cannot be supported may well lead to trade disparagement suits.

Some claims are considered "puffing" and are generally held not to be legally actionable. A statement that "Tony’s pizza is the best tasting in town" is too subjective to be actionable.

Accusations of misuse of trademarks is resulting in a growing number of lawsuits. A trademark is a word, symbol or devise used by a seller of a product or service to identify and distinguish its products and services from those of others. A trademark infringement suit may involve accusations that someone has diluted the mark without permission by using it in an improper manner, has unlawfully appropriated it by using it in an unauthorized manner, or used a mark that is confusingly similar. Even creating a package with a similar shape, design and color to that of another product may raise problems.

Due to the growth of legal actions relating to false and deceptive advertising and product defamation it is increasingly important that all claims related to ceramic products be carefully reviewed and be capable of support.

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