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Lanham Act: False Advertising

Plaintiff brought an action against a competitor for false advertising under §43(a) of the Lanham Act, 15 U.S.C. §1125(a). Plaintiff, a manufacturer of industrial wheel balancing machinery which uses Halon 1202, a high density fluid that is a type of Freon, complained that certain publications by its competitor, whose industrial wheel balancing machinery were completely mechanical, had committed false advertising in violation of the Lanham Act. The three incidents included a cartoon distributed by defendant at a trade show indicating certain type of wheel balancers, including a "Freon Balancer," were junk. Second, defendant sent a letter to approximately 3,200 of its customers setting forth certain information regarding the "elimination of ozone depleting substances (ODS) found in some grinding wheel balancers." The letter included a reference to the fact that concern over ODS substances among its customers may have arisen because "one manufacturer of automatic grinding wheel balances uses Halon." Finally, defendant also issued a letter to its customers that further inquired about the use of Halon setting forth a one-page report by an environmental consultant entitled, "Halon 1202 And The Environment." This report indicated that "halon 1202 is an environmentally unfriendly substance, having relatively high ODP . . . and is likely to come under severe use restrictions in the near future."

The Court found that in order to prevail on a false advertising claim under the Lanham Act the plaintiff must prove, inter alia, that the challenged advertisements are either literally false or that the advertisements, though literally true, are likely to mislead and confuse customers. In this respect, plaintiff must prove that the claim is false or misleading not merely that it is unsubstantiated. Subjective claims about products which cannot be proven either true or false are not actionable under the Lanham Act. In reviewing the subject publications, the Court found that there was "nothing literally false about the depiction of 'Freon Balance' on the junk pile, particularly since Plaintiff testified that its machinery was no longer marketed under the name 'Freon Balancer.'" Neither was the March 16 letter literally false; at most, the statements were incomplete or misleading. Finally, plaintiff failed to present any evidence showing that the report distributed by defendant was literally false.

As the plaintiff fails to demonstrate that the challenged advertisements are literally false, it must prove that it is deceptive or misleading, which depends on the message that is conveyed to consumers. In this respect, the plaintiff failed to present any evidence of customer confusion in the marketplace which is a prerequisite for recovery under this theory. Plaintiffs failed to present any customer who testified to being misled or deceived about plaintiff's products (or defendant's products) after having read one or more of the three publications. Without such evidence of customer reaction, the false advertising claim based upon implied falsehood must be dismissed.

Balance Dynamics Corporation vs. Schmitt Industries, Case No. 94-CV-75356, E.D. Mich, 9/17/97, DeMascio, R.E. (dkt #278). This article was written by William F. Frey, a partner in our Litigation Department, and previously appeared in the January 1998 edition of the Michigan Bar Journal.

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