Chapter 5: Advertising: Injurious Falsehood and Lanham Act Misrepresentation

What is injurious falsehood?

A legal claim protecting a person’s ability to sell goods, property, or services by addressing false statements that harm economic interests. Also called disparagement of property, slander of title, slander of goods, trade libel, or commercial disparagement.

How does injurious falsehood differ from libel?

Libel protects reputation, while injurious falsehood protects economic interests, such as the ability to sell property, goods, or services.

What are the two broad types of injurious falsehood?

1. Slander of title — attacks property rights in land, chattels, or intangible property.
2. Trade libel/disparagement — attacks the quality of goods or services.

Under the Restatement (2nd) of Torts, what must a plaintiff prove in an injurious falsehood case?

1. Publication of the statement.
2. Falsity of the statement.
3. Intent to harm or reckless disregard for truth.
4. Pecuniary harm caused by the statement.

What makes a statement disparaging under the Restatement of Torts?

If it casts doubt on the quality of another’s property, goods, or services and:

• The publisher intended to cast doubt, or

• A reasonable recipient would interpret it as casting doubt.

How can a plaintiff prove damages without identifying specific customers?

By showing:

1. Stable business before publication.

2. Wide dissemination of the statement.

3. Business decline afterward.

4. Elimination of other reasons for the decline.
   This creates a presumption that the statement caused the loss.

What is the “actual malice” standard and how does it relate to injurious falsehood?

Actual malice means knowledge of falsity or reckless disregard for truth. Many injurious falsehood cases require this higher fault standard, similar to New York Times v. Sullivan, though the Supreme Court has not decided if it’s always required.

What was the key issue in Bose Corp. v. Consumers Union?

Whether the disparaging statement about Bose speakers was made with actual malice. The Supreme Court agreed there was no clear proof of actual malice and left open whether it is always required in injurious falsehood cases.

What is the Lanham Act’s relevance to injurious falsehood?

It protects against misleading advertising that injures a competitor. In some cases, proof of actual malice is not required for commercial speech disputes under the Lanham Act (US Healthcare v. Blue Cross).

Why is slander of title historically significant?

When wealth was tied to physical property, statements casting doubt on property rights could prevent sale or profit, making slander of title a serious matter.

What is a primary defense in injurious falsehood cases?

Truth — if the defendant proves the statement is true (or provides enough evidence for a jury/judge to agree), the case fails.

What are the two privileges that apply in injurious falsehood cases, similar to personal libel cases?

Absolute privilege and conditional privilege.

What is absolute privilege?

Complete protection for certain statements, such as those made in judicial proceedings, that cannot lead to liability.

What is conditional privilege?

Protection for statements made under certain conditions, like fair and accurate reporting, even if the statement is disparaging.

How does republishing from a privileged source work in injurious falsehood cases?

Republishing is protected if the original statement came from a privileged source (e.g., a government report) and is reproduced fully, fairly, and accurately.

What is the competitor’s privilege?

A legal protection allowing businesses to make unduly favorable comparisons about their products or services, even without believing them fully, as long as they avoid false facts or misleading disparagement.

Why is competitor’s privilege allowed?

Because consumers expect exaggeration or “sales talk” and naturally discount promotional statements.

What key restriction applies to competitor’s privilege?

Statements cannot state false facts or directly disparage competitors in a misleading way.

How is competitor’s privilege similar to a personal libel defense?

It is similar to the “fair-comment” privilege, which protects opinions made about matters of public interest if they are not provably false.

What was the main issue in Pizza Hut v. Papa John’s?

Whether Papa John’s slogan and comparative advertising were false and misleading under the Lanham Act, constituting injurious falsehood.

What did the trial court rule in Pizza Hut v. Papa John’s?

That Papa John’s had made false claims and ordered damages and corrective advertising.

What did the appellate court rule in Pizza Hut v. Papa John’s?

That the slogan was puffery, not a verifiable fact, and that Pizza Hut had not proven the factual claims materially influenced consumers — thus reversing the verdict.

What is the key takeaway from the Pizza Hut v. Papa John’s case?

Comparative advertising and slogans are often protected as puffery under the competitor’s privilege unless they contain provably false claims that influence purchasing decisions.

What are “veggie-libel” laws?

State laws, beginning in the early 1990s, designed to protect agricultural producers from false claims about perishable food products.

Why are they called “veggie-libel” laws?

The term originated because early cases involved produce, especially vegetables and fruit, such as the A is for Alar case involving apples.

What sparked the creation of veggie-libel laws?

A 1989 CBS “60 Minutes” segment titled “A is for Alar” reporting that the chemical daminozide (Alar) used on apples was a carcinogen, especially risky for children.

What happened after the A is for Alar broadcast?

Apple sales dropped sharply, growers lost billions, and many went out of business. Eleven apple growers sued for product disparagement.

What was the outcome of the A is for Alar lawsuit?

The trial court dismissed the case for lack of proof of falsity; the appeals court upheld dismissal, finding NRDC and EPA studies supported the claim, and animal testing was valid scientific evidence.

What is the main purpose of veggie-libel laws?

To make it easier for agricultural producers to sue when false claims harm their business.

How many states have adopted veggie-libel laws?

Thirteen states.

What features vary by state in veggie-libel laws?

• Some shift the burden of proof to the defendant.

• Some require criticism to be based on “reliable scientific evidence.”

• Some impose liability for negligent falsehoods.

• Some allow triple damages.

What happened in the Oprah Winfrey & Howard Lyman case (1996)?

Lyman said there was a risk of mad cow disease; Winfrey agreed on-air → beef sales declined. Texas cattle producers sued under the Texas veggie-libel law → veggie-libel claim dismissed; jury ruled for Winfrey/Lyman.

What was the Beef Products Inc. (“Pink Slime”) case about?

BPI produced lean finely textured beef (LFTB) using ammonium hydroxide; ABC News reported on it, calling it “pink slime,” leading to lost customers and revenue. BPI sued for $1.9 billion under South Dakota veggie-libel law; the case settled before verdict.

What legal protections do veggie-libel laws provide to producers?

They protect producers of perishable products from disparagement, sometimes shifting burden of proof, requiring scientific backing for criticism, and allowing triple damages.

What tension exists in veggie-libel laws?

Protecting producers vs. protecting freedom of speech and public health reporting.

Why did the appeals court reject the apple growers’ claim in the A is for Alar case?

NRDC and EPA studies supported the claim that daminozide could be carcinogenic, and animal testing is a standard scientific method.

What is the Lanham Act?

A federal law passed in 1946 that governs trademarks and false advertising, protecting consumers and businesses from marketing that could mislead or confuse.

What kinds of communications does the Lanham Act apply to?

Communications in connection with goods or services in commerce, including advertising, promotions, and point-of-sale statements.

What are the two main provisions of the Lanham Act?

1. Confusion provision — prevents misleading statements causing confusion about sponsorship, affiliation, connection, origin, or approval of goods/services.
2. Misrepresentation provision — prevents false claims about the nature, characteristics, qualities, or geographic origin of products/services.

How does the misrepresentation provision differ from injurious falsehood law?

It applies even if no competitor is disparaged, allowing claims about one’s own product and giving the law broader reach.

Why do celebrities often sue under the Lanham Act?

To claim that advertisements falsely imply they endorse a product or service, causing confusion about sponsorship or approval (right of publicity).

What is required to prove a violation under Section 1125(a) of the Lanham Act?

1. Defendant made a false or misleading statement about goods/services.
2. Statement actually deceived or tended to deceive the audience.
3. Statement was disseminated to the public.
4. Statement was commercial speech.
5. The deception was material.
6. Goods/services were in interstate commerce.
7. Plaintiff had a likelihood of suffering injury.

Does dissemination have to be through mass media for the Lanham Act to apply?

No — it can include point-of-sale advertising or statements by salespeople.

Does the Lanham Act apply to news reports?

No — only to commercial speech.

What does “material deception” mean under the Lanham Act?

A deception that is likely to influence a consumer’s decision about whether to purchase a product or service.

Why does the Lanham Act apply broadly to interstate commerce?

Because “interstate commerce” is defined broadly, covering most commercial activity.

Why is the Lanham Act useful for advertisers?

It allows companies to police competitors’ advertising without needing to go through government regulators.

Give an example of a case involving the Lanham Act.

A dental floss manufacturer claimed Listerine mouthwash advertisements were misleading, showing how competitors can use the law to challenge advertising.

Can false claims about a company’s own product be actionable under the Lanham Act?

Yes — it is sufficient for liability even if no competitor is mentioned.

What is injurious falsehood?

Publishing a false and disparaging statement that harms another’s interests, causing pecuniary loss, if the publisher intended or should have recognized the harm and knew or recklessly disregarded its falsity.

What are the two historical forms of injurious falsehood?

1. Slander of title 2. Trade libel.

How did trade libel become more common?

Wealth shifted from land ownership to production of goods and services.

What does trade libel involve?

Publications that ridicule, denigrate, or “knock” a product or service.

Why is comparative advertising often avoided?

It can lead to trade libel claims.

What fault standard applies to injurious falsehood?

Knowledge of falsity or reckless disregard (similar to “actual malice”).

When is a statement considered disparaging?

When it casts doubt on the quality of another’s goods, services, or land and that interpretation is intended or reasonable.

What are examples of disparagement?

Claiming inferior workmanship, unfitness for purpose, or lacking desirable qualities.

Can conduct be disparaging?

Yes, such as refusing or shunning a product.

What counts as pecuniary loss?

Direct loss from customer conduct or expenses to counteract the disparagement.

How can pecuniary loss be proven?

1. By identifying specific lost customers, or

2. By showing aggregate loss through:

   • Widespread dissemination

   • Stable/increasing business before publication

   • Sudden decline afterward

   • Eliminating other possible causes

What damages can be recovered in pecuniary loss?

Lost business, costs of counter-advertising, and attorney’s fees.

What does defamation protect?

Personal reputation.

What does disparagement protect?

Economic interests (property, products, or services).

Can a statement be both defamatory and disparaging?

Yes, if it attacks both reputation and business interests.

Example of disparagement only?

“The hotel is dirty.”

Example of defamation only?

“The owner hires prostitutes.”

Example of both disparagement and defamation?

“The hotel operates as a brothel.”

What must plaintiffs prove in trade libel cases?

Special damages, knowledge of falsity or reckless disregard, and intent to harm.

Can trade libel be enjoined?

Yes.

What did common law require? (proof and fault in trade libel)

Negligence plus ill will or intent to interfere with another’s interests.

What is competitors’ privilege?

One may make favorable comparisons to a competitor’s goods even without believing them, as long as no false facts are stated.

Example: Pizza Hut v. Papa John’s outcome?

The slogan “Better Ingredients. Better Pizza.” was ruled puffery, not false advertising.

What is puffery?

Boastful or exaggerated claims no reasonable consumer would take literally.

What did Commonwealth v. Golden Gate National Senior Care decide?

Claims like “fresh water every day” were factual, not puffery.

What are the main defenses to trade libel?

Truth, fair-report privilege, and fair comment privilege.

Why were veggie libel laws created?

After a failed 1989 “60 Minutes” disparagement suit about apples.

How many states have veggie libel laws?

Thirteen.

What do veggie libel laws generally cover?

Perishable food products and allow producers to sue for false disparagement.

What can some veggie libel laws require?

• Defendants to prove truth

• Scientific evidence

• Actual malice

• Triple damages

What happened in Oprah’s cattle case?

She won—cattle are not “perishable,” and there was no actual malice.

What was the “Pink Slime” lawsuit about?

Beef Products Inc. sued ABC News for trade libel; Disney settled for $177 million in costs.

What does §43(a)(2) prohibit?

False or misleading representations about one’s own or another’s goods or services.

What must be proven under the Lanham Act?

1. False or misleading statement

2. Actual or likely deception

3. Dissemination to the public

4. Commercial speech

5. Materiality

6. Interstate commerce

7. Likelihood of injury

What does “commercial speech” mean here? (Lanham Act §43(a)(2))

Statements made to promote goods/services, not just for news or entertainment.

Example of false advertising under the Lanham Act?

McNeil v. Pfizer – Listerine ads falsely claimed to be “as effective as floss.”

What type of falsehoods did Pfizer’s ads create?

Literal and implicit falsehoods.

What was the dispute about in Molson Coors vs. Anheuser-Busch?

Ads saying Miller Lite and Coors Light are brewed with corn syrup.

How did the court rule in Molson Coors vs. Anheuser-Busch?

The ads were not false or misleading because the labels themselves listed corn syrup.