Reminder: Lanham Act is THE Most Powerful Weapon Against Unfair Competition
Let’s jump right in: Most practitioners know absolutely nothing about the Lanham Act. If they know anything about the Lanham Act at all, they know it solely as the federal trademark act. I hear it all the time: How does the Lanham Act apply here? There’s no trademark at issue. That’s rookie nonsense. The Lanham Act does far more than protect trademarks.
- Any false advertising: The Lanham Act has incredibly powerful provisions that prohibit companies from engaging in (1) false advertising or (2) advertising that although factually true is nonetheless deceptive.
- Standing is very broad. If you’re a competitor, a quasi-competitor, somehow in the market and impacted by the false advertising, you have standing to sue. Standing in a Lanham Act case is much easier to satisfy than standing in, say, an antitrust case (very limited).
- Damages are incredible. If you can prove a Lanham Act false advertising claim, you don’t even need to prove actual lost sales or lost profits. You can get disgorgement of profits from the defendant. That’s amazing and much different than antitrust or other business torts where you’ll struggle to prove actual damages/lost sales and no doubt get into an expert fight over your damages model. Simply put: The Lanham Act is the real weapon out there. And it’s mostly untapped.
I’ll give you an example: Last year, we were involved in some ugly non-compete/tortious interference litigation up in Palm Beach County Circuit Court. The lawyers on the other side were highly touted labor and employment attorneys from Proskauer Rose’s Boca Raton, Florida office. You know the type. Thirty years of experience. Listed in Best Lawyers in America and everywhere else. They were suing my client primarily for hiring away some of their employees. We counted by filing a federal Lanham Act lawsuit for false advertising.
Proskauer Rose had to bring in a separate team of attorneys to litigate the Lanham Act case. Why? Apparently because the thirty year veteran big form labor & employment lawyer didn’t have the skill-set to defend the Lanham Act case. Our case in a nutshell:
A nurse staffing and recruiting company called Nightingale – the one suing us for non-competes and tortious interference – was certified by an entity called the Joint Commission. The Joint Commission certifies thousands of healthcare organizations including medical staffing companies. Although Nightingale was certified by the joint commission, we alleged that this advertisement in and of itself was misleading because Nightingale was not in compliance with the actual Joint Commission requirements, and, in fact, was blatantly violating those requirements. We alleged that the company had forged paperwork – including various health screenings and lab tests – in order to reduce its operating costs and get its nurses staffed at hospitals more quickly.
Naturally, Nightingale pushed back arguing that we couldn’t possibly state a Lanham Act claim because they were – in fact – duly certified by the Joint Commission. The United States District Court for the Southern District of Florida disagreed, denied their motion to dismiss and sustained literally EVERY single claim in the lawsuit, including a FDUTPA claim.
The moral of the story: The Lanham Act is the real deal. It does far more than protect trademarks. It protects competitors against false advertising by industry rivals. It has serious teeth. If an industry rival is engaging in false and deceptive business practices and it’s harming your company, the Lanham Act should be number one on your list. Even if you can’t exactly quantify the damages caused by the rival’s false advertising, if you know it’s damaging you based on your actual knowledge of the relevant market, you must consider this strategy. You can get damages, disgorgement, injunctions and even attorney’s fees.
Jonathan Pollard is a competition lawyer based in Fort Lauderdale, Florida and has extensive experience litigating unfair competition, trademark and false advertising cases. For more information, call 954-332-2380.