Also known as: deceptively advertise · deceptively advertised · deceptively advertising · deceptive advertisement · false advertising · misleading advertising
Written by attorneys — see sources below.
A tortious and sometimes criminal act of distributing an advertisement that is untrue, deceptive, or misleading. The wrong consists of a public representation about a product, service, or professional qualification that induces justifiable reliance and causes harm, whether physical injury, economic loss, or regulatory discipline.
Attorney Demetrius Douglas runs a television spot that opens with him standing before a jury box delivering a closing argument. In reality Douglas has never completed a jury trial. A client who retained Douglas after seeing the ad later learns of the fabrication and files a grievance with the state bar. The bar imposes discipline because the visual created a false impression of trial experience.
Delta Dynamics advertises its printers as costing far less than competitors while omitting that buyers must also purchase a mandatory service contract. Deanna Davenport sees the ad, buys a printer, and later discovers the hidden cost. She sues under the Lanham Act alleging the advertisement was false or misleading.
Lexmark tells customers that only its own remanufactured cartridges work with its printers. Static Control Components, which sells compatible chips, sues alleging the statement is false and diverts sales. The court must decide whether Static Control has standing to pursue the false-advertising claim.
Lexmark International, Inc. manufactures and sells laser printers along with the toner cartridges designed exclusively for those printers. It introduced a Prebate program that offered customers a 20-percent discount on new cartridges if they agreed to return the empty cartridges to Lexmark once used. The program terms were communicated to consumers through notices printed on the toner-cartridge boxes. Static Control Components, Inc. manufactures and sells components necessary for remanufacturers to refurbish used Lexmark toner cartridges. Static Control developed a microchip that could mimic the microchip in Lexmark Prebate cartridges, enabling remanufacturers to refurbish and resell those cartridges after replacing the original chip. In 2002 Lexmark sued Static Control alleging violations of the Copyright Act and the Digital Millennium Copyright Act. Static Control counterclaimed under section 43(a) of the Lanham Act, alleging that Lexmark misled end-users into believing they are legally bound by the Prebate terms. Static Control further alleged that Lexmark sent letters to remanufacturers falsely advising that it was illegal to sell refurbished Prebate cartridges and to use Static Control products. Static Control alleged that these statements caused it lost sales and damage to its business reputation. The district court granted Lexmark’s motion to dismiss the Lanham Act counterclaim on prudential standing grounds. The Sixth Circuit reversed after applying the reasonable-interest test. The Supreme Court granted certiorari to decide the appropriate analytical framework.
View caseTwo Pesos opens a chain of Mexican restaurants using a distinctive colorful decor and layout that Taco Cabana claims is confusingly similar to its own. Taco Cabana sues for trade-dress infringement, asserting that the copied appearance functions as deceptive advertising about the source of the dining experience.
Taco Cabana, Inc., operates a chain of fast-food restaurants serving Mexican food. The first Taco Cabana restaurant opened in San Antonio in September 1978. By 1985 five more had opened in that city. Taco Cabana's Mexican trade dress features a festive eating atmosphere with interior dining and patio areas decorated with artifacts, bright colors, paintings and murals. It also includes a stepped exterior in a vivid color scheme using top border paint and neon stripes, bright awnings and umbrellas. In December 1985, Two Pesos, Inc., opened a restaurant in Houston that adopted a motif very similar to Taco Cabana's trade dress. Two Pesos expanded rapidly in Houston and other markets but did not enter San Antonio. In 1986, Taco Cabana entered the Houston and Austin markets. It expanded into other Texas cities including Dallas and El Paso where Two Pesos was also operating. In 1987, Taco Cabana sued Two Pesos in the United States District Court for the Southern District of Texas. The suit alleged trade dress infringement under § 43(a) of the Lanham Act and theft of trade secrets under Texas common law. The case was tried to a jury. The jury answered five questions. Taco Cabana has a trade dress. Taken as a whole, the trade dress is nonfunctional. The trade dress is inherently distinctive. The trade dress has not acquired a secondary meaning in the Texas market. The alleged infringement creates a likelihood of confusion on the part of ordinary customers as to the source or association of the restaurant's goods or services. The district court entered judgment awarding damages to Taco Cabana. It found that Two Pesos had intentionally and deliberately infringed the trade dress. The Court of Appeals for the Fifth Circuit affirmed the judgment. The Supreme Court granted certiorari to resolve a conflict among the courts of appeals.
View caseVirginia prohibits pharmacists from advertising prescription-drug prices. A consumer group sues, arguing the ban keeps consumers from learning truthful price information and thereby protects higher prices. The Court must determine whether the prohibition on commercial speech is constitutional.
Virginia law made it unprofessional conduct for a licensed pharmacist to publish, advertise, or promote any price for prescription drugs under Va. Code Ann. § 54-524.35(3). The Virginia State Board of Pharmacy regulated the profession to protect public health, safety, and welfare. It licensed pharmacists only after they showed good moral character, graduated from an approved school, completed up to twelve months of experience, and passed a Board examination. Licensed pharmacists remained subject to penalties or license revocation for negligence, fraud, or unprofessional conduct. Prescription drug prices varied sharply even within the same locality. In Richmond the cost of forty Achromycin tablets ranged from $2.59 to $6.00. In the Newport News-Hampton area the price of tetracycline ranged from $1.20 to $9.00. About ninety-five percent of prescriptions were filled with dosage forms prepared by manufacturers. Some pharmacies refused to quote prices over the telephone. An individual Virginia resident who suffered from diseases requiring daily prescription drugs, together with two nonprofit organizations whose members included many users of such drugs, brought suit against the Board and its members. The plaintiffs claimed the ban prevented them from learning where their limited resources could be spent most effectively. A prior challenge to the same statute brought by a drug retailer and one of its pharmacists had been rejected on due-process and equal-protection grounds. The three-judge District Court for the Eastern District of Virginia declared the quoted portion of the statute void and enjoined its enforcement. The Supreme Court noted probable jurisdiction of the Board's appeal.
View caseRhode Island bans all advertising of liquor prices by retailers. A liquor store challenges the ban as an unconstitutional restriction on truthful commercial speech. The Court evaluates whether the total prohibition advances a substantial state interest without being more extensive than necessary.
In 1956, the Rhode Island Legislature enacted two separate prohibitions against advertising in any manner the price of alcoholic beverages offered for sale in the state. The first prohibition applied to vendors licensed in Rhode Island and to out-of-state manufacturers, wholesalers, and shippers. The second applied to the Rhode Island news media. In 1985 the Rhode Island Supreme Court reviewed and upheld the constitutionality of the first ban in two separate cases. Petitioners 44 Liquormart, Inc. and Peoples Super Liquor Stores, Inc. are licensed retailers of alcoholic beverages. 44 Liquormart operates a store in Rhode Island. Peoples operates stores in Massachusetts that Rhode Island residents frequent. In 1991, 44 Liquormart placed an advertisement in a Rhode Island newspaper. The ad stated that state law prohibited advertising liquor prices. It displayed the word WOW next to pictures of vodka and rum bottles along with low prices for peanuts, potato chips, and Schweppes mixers. The Rhode Island Liquor Control Administrator assessed a four-hundred-dollar fine against 44 Liquormart. After paying the fine, 44 Liquormart and Peoples filed suit in the United States District Court for the District of Rhode Island. The complaint sought a declaratory judgment that the two statutes and the administrator's implementing Regulation 34 violated the First Amendment. It also asserted a claim under 42 U.S.C. § 1983. The parties stipulated that the price advertising ban was vigorously enforced. Rhode Island permitted all advertising of alcoholic beverages except price references outside licensed premises. The proposed advertisements concerned lawful activity and would not be false or misleading. The district court heard conflicting expert testimony and reviewed multiple studies. It found as a fact that the ban had no significant impact on levels of alcohol consumption in Rhode Island. The district court held the statutes unconstitutional in 1993. A panel of the Court of Appeals for the First Circuit reversed the district court judgment. The full court sitting en banc later affirmed the result after rehearing in 1995. The Supreme Court granted certiorari in 1995 because of the importance of the questions presented.
View caseA commercial seller that makes a public material misrepresentation about a product’s character or quality can be strictly liable for physical harm to a consumer who justifiably relies on the statement. Liability does not require proof of negligence or intent. The plaintiff must show the representation was made to the public, was false, and caused the injury through justifiable reliance.
False or misleading commercial speech receives no protection when it falls within historically recognized categories of unprotected speech such as fraud. Content-based restrictions on such speech are permissible without satisfying strict scrutiny.
A plaintiff may recover pecuniary loss caused by third parties’ refusal to deal and the reasonable costs of measures taken to counteract the disparagement, such as testing and corrective advertising. Emotional distress and general reputational harm to owners are not compensable.
…but only as concerned partisan political matters. We have long recognized the power of the Federal Trade Commission to regulate misleading advertising and labeling, see, e. g. , Jacob Siegel Co. v. FTC , 327 U. S. 608 (1946), and the National Labor Relations Board's power to regulate an employer's election-related speech on the basis…