Contributory False Advertising

This year’s supplement features the Eleventh Circuit’s decision in Duty Free Americas, Inc. v. Estee Lauder Cos. (DFA)[1], another in a growing body of cases to extend contributory liability doctrine beyond the traditional trademark infringement context. In the years since the Supreme Court decided Inwood Labs.[2], courts have generally been predisposed to consider, if not formally recognize, contributory claims across the spectrum of Lanham Act violations.[3] Their basic reasoning has been that all trademark-based claims lend themselves to contributory causes of action because they derive from common-law torts of unfair competition.[4] In DFA, the court expanded on that reasoning when it recognized a claim for contributory false advertising,[5] concluding that the rationale supporting contributory liability in the trademark infringement context applies with even more force to false advertising.[6]

The statutory relationship between trademark infringement and its Lanham Act §43(a) companion prohibition, false advertising, informed the court’s decision in DFA.[7] The fact that “both causes of action were motivated by a unitary purpose” [8]  — to prohibit unfair competition — lent further support for allowing a cause of action for contributory false advertising. They “should be interpreted to have the same scope,”[9] the court reasoned.  By extension, the same principles that led the Supreme Court to recognize contributory liability for trademark infringement in Inwood Labs. supported a cause of action for contributory false advertising.[10]

What is more, the prohibition against false advertising has been deemed by the Supreme Court to afford broader protection than the trademark infringement provisions.[11]  Consequently, the court concluded:

It would be odd indeed for us to narrow the scope of the false advertising provision — a cause of action plainly intended to encompass a broader spectrum of protection — and hold that it could be enforced only against a smaller class of defendants. Absent congressional direction, we are reluctant to limit the statute’s scope in this way.[12]

The Eleventh Circuit thus makes clear that the traditional rationale for extending contributory liability doctrine to other “trademark-based claims” indeed applies – a fortiori – to false advertising.

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[1] 797 F.3d 1248 (11th Cir. 2015).

[2] 456 U.S. 844, 214 USPQ2d 1 (1982). In Inwood Labs., the Supreme Court set the standard for contributory trademark infringement. It held that

if a manufacturer or distributor [1] intentionally induces another to infringe a trademark, or if it [2] continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorially responsible for any harm done as a result of the deceit.

Id. at 854.

[3] See Chapter 4 of the main volume of Secondary Trademark Infringement.

[4] See, e.g., Microsoft Corp. v. Shah, No. C10-0653, 2011 WL 108954, at *4, 98 USPQ2d 1404 (W.D. Wash. Jan. 12, 2011), where the court makes this observation with respect to contributory cybersquatting and contributory trademark dilution.

[5] 797 F.3d at 1277. Thought the court ultimately dismissed the claim, 797 F.3d at 1277, it nonetheless upheld its validity.

[6]Id.  at 1276 -77.

[7] See id. at 1276. (“The placement of the two prohibitions in the same statutory section –and correspondingly, the fact that the introductory language banning both practices is identical –suggests the causes of action should be interpreted to have the same scope.”).

[8] Id. at 1274.

[9] Id. at 1276.

[10] Id. at 1275-6 (citing cases).

[11] Id. at 1276.

[12] Id. at 1276-7.

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