Driving Business Advantage Business Driving

Liability for Commercial Speech Julia Huston,FoleyoagLLP Disparagement, andRelatedClaims Commercial A GuidetoFalsedvertising, Commercial Speech: Liability for Presented atthe2010 Associationof CorporateCounsel Annual Meeting

LL 2010 LL FA This volume summarizes related bodies of – false advertising, commercial disparagement, and – that govern the conduct of business communications. It sets forth elements, , and related defenses for each of these causes of action and suggests ways to reduce the risk of liability in business communications, advertising, and marketing. Related claims, such as trademark infringement, , and interference with contractual relations, are also addressed. Risk management procedures, a checklist for compliance training, and a sample complaint, answer and jury instructions are provided. Table of Contents

I. Introduction to Claims Based on Commercial Speech...... 1 II. False Advertising...... 2 A. Elements of False Advertising...... 3 1. False or misleading statements...... 3 2. Proof of consumer reaction...... 6 3. Commercial advertising or promotion...... 8 4. Establishment claims...... 8 b. Damages and Remedies for False Advertising...... 9 C. Defenses to False Advertising...... 10 1. Opinion...... 11 2. Puffery...... 11 III. Defamation and Commercial Disparagement...... 13 a. Elements of a Defamation Claim...... 13 b. Defamation Defined...... 14 C. Examples of Defamatory Statements...... 15 1. Dishonesty or ...... 15 2. Mental disorder...... 15 3. Crime or immorality...... 15 4. Injurious to business reputation...... 16 5. Potential for bad behavior...... 16 6. Careless omission of a significant fact or name in a publication...... 16 D. Proving Fault Within a Free Speech Framework...... 16 e. Elements of a Commercial Disparagement Claim...... 19 1. Privileged statements...... 21 2. Corporations as public figures...... 22 f. Damages and Remedies for Defamation and Commercial Disparagement...... 22 1. Damages...... 22 2. Special damages...... 23 3. Presumed damages...... 24 4. Retraction...... 24 5. Punitive damages...... 25 6. Prior restraint...... 25

Attorney advertising. Prior results do not guarantee a similar outcome. G. Defenses to Defamation and Commercial Disparagement...... 27 1. Truth...... 27 2. Opinion...... 29 3. The libel-proof plaintiff...... 32 4. Absolute Privileges...... 33 a. Litigation privilege...... 33 b. Legislative privilege...... 35 5. Conditional Privileges...... 35 a. Employer privilege...... 36 b. Fair reporting privilege...... 38 c. Common interest privilege...... 39 d. Public interest privilege...... 39 e. Credit report privilege...... 40 f. Law enforcement privilege...... 40 g. Competitive privilege...... 40 IV. Other Claims...... 41 a. Trademark Infringement or Dilution...... 41 b. Copyright Infringement ...... 44 C. Interference with Contractual Rights...... 45 D. Intentional Infliction ofE motional Distress...... 45 e. Breach of ...... 45 f. Unfair or Deceptive Practices in Violation of State Law...... 46 G. Violation of Federal Trade Commission Statutes and Regulations...... 46 h. Violation of Industry Statutes and Regulations...... 46 V. Forums for the Enforcement of False Advertising Claims...... 47 a. Civil Lawsuit in Federal or State Court...... 47 b. Enforcement Action by Federal Trade Commission or State Attorney General...... 47 C. Enforcement Through the National Advertising Division of the Council of Better Business Bureaus...... 47 VI. Minimizing the Risk of Liability...... 48 VII. Treatises and Other Sources of Information...... 48 exhibit 1: Checklist for Risk Management Procedures...... 50 exhibit 2: Checklist for Compliance Training...... 51 exhibit 3: Checklist for False Advertising...... 52 exhibit 4: Checklist for Defamation...... 53 exhibit 5: Checklist for Commercial Disparagement...... 54 exhibit 6: Sample Complaint...... 55 exhibit 7: Sample Answer...... 60 exhibit 8: Sample Jury Instructions...... 64 About the Author...... 69 “The very first law in advertising is to avoid the concrete promise and cultivate the delightfully vague.” - Stuart Chase (1888-1985)

“Never write an advertisement which you wouldn’t want your family to read. You wouldn’t tell lies to your own wife. Don’t tell them to mine.” - David Ogilvy (1911-1999)

“False words are not only evil in themselves, but they infect the soul with evil.” - Socrates Liability for Commercial Speech 1 .3d .3d 144, 153 .3d 264, 272-73 .2d 1293, 1297 n.5 (Colo. 1994). business disparagement claim is similar in many ex. 2003) (“A business disparagement claim is F Inc., 497 DIRECTV, Inc. v. Cable, Time Warner 2007). (2d Cir. , 315 F United Indus. Corp. Scotts Co. v. 2002). (4th Cir. Avenue, 284 F Saks Fifth Inst. v. & Camel Hair Mfg. Cashmere 2002), cert. denied, 537 U.S. 1001 (2002). 302, 311 (1st Cir. Stewart, 882 P Keohane v. , 626 N.E.2d 862, 866 n.4 (Mass. 1994). Chmielewski Draghetti v. 167, 170 Biosciences, Inc., 124 S.W.3d Granada Forbes Inc. v. (T to a defamation claim. The two differrespects in that reputation the personal actions chiefly serve to protect defamation business disparagement claim protects while a party, of an injured economic interests.”). Bork, 531 N.E.2d 1033, 1037 (Ill. App. Ct. 1988) Inc. v. Allcare, two distinct causes disparagement are (“Defamation and commercial integrity in his business or of action. Defamation lies when a person’s disparagement lies when is attacked while commercial profession the quality of his goods or services is attacked.”). • • • • • • •

I. Introduction to Claims Based on Commercial Speech on Commercial Based to Claims I. Introduction false advertising, of action of causes commercial defamation, and related The loosely communications. impact on business a significant together have disparagement False advertisingadvertising is or is likely to mislead and that is either literally false confuse consumers. Defamation encompasses the torts of libel (written defamation) and slander (spoken defamation). Commercial disparagement, which is closely related to defamation, concerns false to defamation, disparagement, which is closely related Commercial goods call into question the quality of a competitor’s statements made with the intent to harm. or services and to inflict pecuniary as attached A sample complaint and sample answer for these causes of action are attached as Exhibit 8. Other causes Exhibit 6 and Exhibit 7. Sample jury instructions are speech, false or misleading statements in commercial of action that may arise from set forth in Section IV. such as trademark infringement and copyright infringement, are 2 A Guide to False Advertising, CommercialDisparagement, and Related Claims defendant kneworshouldhaveknownthatitsstatementwasfalsemisleading. mayalsohavetoprove underLanhamAct§43(a),aplaintiff thatthe advertising state statutesforunfaircompetition,inadditiontoproving theelementsoffalse claimundersome right ofactionfordamages.Inorder afalseadvertising toassert whichareadvertising, enforced bytheAttorneyGeneralanddonotprovide aprivate states havestatutesandregulations prohibiting untrue,deceptiveormisleading a specificstatestatuteoramountstofraudunfaircompetition.Notethatsome mayalsobeactionableunderstatelawtotheextentthatitviolates False advertising case lawforguidanceregarding theinterpretation ofLanhamAct§43(a). casesare generallylooktofederal advertising brought statecourts infederalcourt, 28U.S.C.§1338(a).Becausethevastmajorityoffalse federal orstatecourt. undertheLanhamAct§43(a)maybebroughtClaims forfalseadvertising ineither 15 U.S.C.§1125(a)(emphasisadded). in 1989,provides: isprohibitedFalse advertising byfederalstatute.TheLanhamAct§43(a),asamended II. FalseAdvertising “ for guidance…”for courts generally look to federal case law cases are brought in federal court, state …the vast majority of false advertising she isorlikelytobedamagedbysuchact. activities,… shallbeliableinacivilactionbyanypersonwhobelievesthatheor geographic originofhisorheranotherperson’s goods,services,orcommercial orpromotion,advertising misrepresents thenature, characteristics,qualities,or of fact,orfalsemisleadingrepresentation offact,which.(B)incommercial combination thereof, oranyfalsedesignationoforigin,misleadingdescription for goods,usesincommerce anyword, term,name,symbol,ordevice,any (1) Anypersonwho,onorinconnectionwithanygoodsservices,container

• Code 17500). deceptive marketingtechniquesunderCaliforniaBus.and Prof. 2d 463,467-68(Cal.Ct.App.2002)(addressing claimsfor People ex.rel. BillLockyerv. Freemont LifeIns.Co.,128Cal.Rptr. Liability for Commercial Speech 3 . Supp. 115, . Supp. 115, .3d 1134, 1139 .3d 489, 495 .3d 264, 272 .3d 1175, 1180 .3d 125, 129 (3rd Cir. 1994). Cir. .3d 125, 129 (3rd 302, 310- 11 (1st Cir. 2002), cert. 2002), denied , 537 U.S. 1001 302, 310- 11 (1st Cir. .3d ass. 1996) (addressing claims for false advertising claims for false (addressing (D. Mass. 1996) 120 n. 3 A). c. 93 under Mass. Gen. Indus. Corp., 315 F United Scotts Co. v. F Co., 946 Consumer Prods. Norelco v. Gillette Co. 2002). (4th Cir. Saks Fifth Avenue, 284 & Camel Hair Mfg. Inst. v. Cashmere Int’l, Inc., 227 F Papa John’s Pizza Hut, Inc. v. 1997). (9th Cir. Rhone- Consumer Pharm. Co. v. Johnson & Johnson-Merck Pharm., Inc., 19 F Poulenc Rorer (5th Cir. 2000) (5th Cir. Co., 140 F Clorox United Indus. Corp. v. 1998). (8th Cir. Stover Seed Co., 108 F Southland Sod Farms v. advertisement its own or the plaintiff’s about product; segment of its audience; or by a lessening of goodwill diversion of sales to the defendant either by direct associated with the plaintiff’s products. • • • • • • •

f (2002).

he defendant made a false or misleading statement in a commercial in a commercial a false or misleading statement he defendant made 1. T decision); the purchasing (i.e., it is likely to influence 2. The deception is material to deceive a substantial deceives or has the tendency he statement actually 3. T and into interstate commerce; 4. The defendant placed the statement of the statement, as a result he plaintiff or is likely to be injured has been 5. T A. Elements of False AdvertisingA. Elements on a false advertising under the Lanham Act, a plaintiff claim to prevail In order must prove: n some circuits, the order of the second and third elements are reversed, but the reversed, elements are of the second and third the order In some circuits, test is otherwise identical. 1. False or misleading statements of the false advertising test, a plaintiff on the first prong must to prevail In order statement was either literally false, literally true demonstrate that the defendant’s or ambiguous but likely to mislead or confuse consumers. 4 A Guide to False Advertising, CommercialDisparagement, and Related Claims confuse consumers as“impliedlyfalse” or“implicitlyfalse.”Despite thecloseness referSome courts tostatements thatare literallytruebutlikely tomisleadand been explicitlystated. it impliesafalsemessagewhichwouldberecognized bytheaudienceasreadily asifithad is falsebynecessaryimplicationif,whenconsidered inthecontextwhichitispresented, A statementcanbeliterallyfalseeitheronitsfaceorbynecessaryimplication. (citing TimeWarner Cable,Inc.v. DIRECTV, Inc.,497F 2007)). • • • • • • • • • • • • • (9th Cir. 1997). Southland SodFarmsv. StoverSeedCo.,108F 315 (1stCir. denied,537U.S.1001(2002). 2002),cert. Cashmere &CamelHairMfg.Inst.v. SaksFifthAvenue , 284F Scotts Co.v. UnitedIndus.Corp.,315F 158 (2dCir. 2007)). (NJ)Inc.v.Tiffany eBay, Inc.,600F Rorer Pharm.,Inc.,19F Johnson &Johnson-Merck ConsumerPharm.Co.v. Rhone-Poulenc (7th Cir. 1994). BASF Corp.v. OldWorld Trading Co.,41F (9th Cir. 1997). Southland SodFarmsv. StoverSeedCo.,108 F (8th Cir. 1998). United Indus.Corp.v. Clorox Co.,140F (6th Cir. 1999). v. AmericanBoard ofPodiatricSurgery, Inc.,185 F PodiatricPhysiciansandSurgeonsAmerican CouncilofCertified (5th Cir. 2000) Pizza Hut,Inc.v. PapaJohn’s Int’l,Inc.,227F 311 (1stCir. denied,537U.S.1001(2002). 2002),cert. Cashmere &CamelHairMfg.Inst.v. SaksFifthAvenue,284F (4th Cir. 2002). Scotts Co.v. UnitedIndus.Corp.,315F Time Warner Cable,Inc.v. DIRECTV, Inc.,497F (NJ)Inc.v.Tiffany eBay, Inc.,600F .3d 125,129(3rd Cir. 1994). .3d 93,112n.19(2dCir. 2010) .3d 93,112(2dCir. 2010)(citing .3d 1175,1180 .3d 264,274(4thCir. 2002). .3d 264,272-73 .3d 1081,1088-89 .3d 489,495 .3d 144,153(2dCir. .3d 1134,1139 .3d 1134,1139 .3d 606,614 .3d 144,153, .3d 302, .3d 302, Liability for Commercial Speech 5 .3d .3d 144, 158 .3d 144, 159 .3d 264, 274 (4th Cir. Cir. .3d 264, 274 (4th .3d 264, 275-76 .3d 264, 274 .3d 1175, 1181 .3d 1175, 1180-81 .3d 24, 35 (1st Cir. 2000). .3d 24, 35 (1st Cir. 2000). .3d 24, 35 (1st Cir. , 284 F Saks Fifth Avenue Mfg. Inst. v. & Camel Hair Cashmere cert. 2002), 1001 (2002) , 537 U.S. denied (1st Cir. 302, 315 (explaining distinction). , 315 F United Indus. Corp. Scotts Co. v. F Inc., 497 DIRECTV, Inc. v. Cable, Time Warner 2007). (2d Cir. Indus. Corp., 315 F United Scotts Co. v. 2002). (4th Cir. Co., 228 & Gamble Commercial Procter Co. Puerto Rico v. Clorox Indus. Corp., 315 F United Scotts Co. v. 2002). (4th Cir. Co., 228 & Gamble Commercial Procter Co. Puerto Rico v. Clorox Co., 140 F Clorox United Indus. Corp. v. 2007). (2d Cir. Co., 140 F Clorox United Indus. Corp. v. (8th Cir. 1998). (8th Cir. Inc., 497 F DIRECTV, Cable, Inc. v. Time Warner 1998). (8th Cir. • • • • • • • • • • 2002). f f

of the terminology, such statements must be distinguished from statements that are that are statements from be distinguished statements must such of the terminology, implication. by necessary literally false and one of those than one way, in more be interpreted reasonably If the statement can be literally false. false, then the statement cannot ways is not literally false or misleading by implication, the greater Although a statement may be found of the to integrate the components to which the consumer is required the degree will to draw the false conclusion, the less likely it is that falsity advertisement in order be found. Visual images as well as words can be false or misleading under Lanham Act § 43(a). can be false or misleading under Visual images as well as words 6 A Guide to False Advertising, CommercialDisparagement, and Related Claims “ consumer reaction. willgrantreliefIf thestatementisliterallyfalse,courts withoutrequiring evidenceof 2. Proof ofconsumerreaction or confused. mustpresentconsumers, theplaintiff evidencethatconsumerswere actuallymisled If thestatementisliterallytrueorambiguousbutlikelytomisleadandconfuse consumers were actually misled or confused.” the plaintiff must presentevidence that but likely to mislead and confuse consumers, If the statement literally is true or ambiguous

(citing TimeWarner Cable,Inc.v. DIRECTV, Inc.,497F • • • • • • • • United Indus.Corp.v. Clorox Co.,140F (6th Cir. 1999). v. AmericanBoard ofPodiatricSurgery, Inc.,185 F PodiatricPhysiciansandSurgeonsAmerican CouncilofCertified (5th Cir. 2000) Pizza Hut,Inc.v. PapaJohn’s Int’l,Inc. , 227F (4th Cir. 2002). Scotts Co.v. UnitedIndus.Corp.,315F (summarizing casesandapplyingruleindamagescontext). 302, 314-15(1stCir. denied,537U.S.1001(2002) 2002),cert. Cashmere &CamelHairMfg.Inst.v. SaksFifthAvenue,284F 500, 512(7thCir. 2009). Schering-Plough Healthcare Prods. v. Schwarz Pharma,Inc.,586F (NJ)Inc.v.Tiffany eBay, Inc.,600F (2d Cir. 2007)). (NJ)Inc.v.Tiffany eBay, Inc.,600F (8th Cir. 1998). .3d 93,112(2dCir. 2010). .3d 93,112-13(2dCir. 2010) .3d 1175,1180 .3d 264,273 .3d 489,497 .3d 606,614 .3d 144,153 .3d .3d Liability for Commercial Speech 7 .3d .3d .3d 606, 614 .3d 606, 616 .3d 489, 497 .3d 489, .3d 264, 276 .3d 264, 281 .3d 1175, 1183 .3d 1175, 1183 .3d 125, 129-30 (3rd Cir. 1994). Cir. .3d 125, 129-30 (3rd .3d 24, 33, 36 (1st Cir. 2000). .3d 24, 33, 36 (1st Cir. , 284 F Saks Fifth Avenue Mfg. Inst. v. & Camel Hair Cashmere cert. 2002), 1001 (2002). , 537 U.S. denied (1st Cir. 302, 311 , 227 F Int’l, Inc. Papa John’s Inc. v. Pizza Hut, 2002). (4th Cir. Co., 140 F Clorox United Indus. Corp. v. (5th Cir. 2000) (5th Cir. of CertifiedAmerican Council Surgeons Podiatric Physicians and Inc., 185 F of Podiatric Surgery, American Board v. 1998). (8th Cir. United Indus. Corp., 315 F Scotts Co. v. 1998). (8th Cir. (6th Cir. 1999). (6th Cir. Co., 228 & Gamble Commercial Procter Co. Puerto Rico v. Clorox American Council of Certified Podiatric Physicians and Surgeons Inc., 185 F Surgery, of Podiatric American Board v. 1999). (6th Cir. Rhone-Poulenc Consumer Pharm. Co. v. Johnson & Johnson-Merck Pharm., Inc., 19 F Rorer Saks Fifth Avenue, 284 F & Camel Hair Mfg. Inst. v. Cashmere 2002), cert. denied, 537 U.S. 1001 (2002). 302, 316 (1st Cir. Indus. Corp., 315 F United Scotts Co. v. 2002). (4th Cir. Co., 140 F Clorox United Indus. Corp. v. • • • • • • • • • • •

f Courts often do not require survey at the preliminary injunction stage, if there is stage, if there injunction survey evidence at the preliminary Courts often do not require other evidence that consumers have been misled. s a general rule, the plaintiff must show how consumers actually reacted, as opposed to as opposed the plaintiffAs a general rule, how consumers actually reacted, must show is most reaction to the statement. Evidence of consumer reacted, how they could have consumer surveys. through often presented statements in bad faith or with intent to harm the If the defendant made the accused and will instead apply evidence of consumer reaction plaintiff, many courts will not require that consumers have been misled. a presumption 8 A Guide to False Advertising, CommercialDisparagement, and Related Claims statement constitutescommercial orpromotion. advertising Thestatementmustbe: testtodeterminewhethera haveappliedafour-part somecourts advertisements, promotion.” Whenconfronted withstatementsthatappearinformsotherthantraditional By itsexpress terms,LanhamAct§43(a)(1)(B)appliesonlyto“commercial or advertising 3. Commercial orpromotion advertising may showthat either(1)thedefendant’s testswere not sufficiently reliable toconclude fact. Inorder to prove thatanestablishmentclaimis falseorlikelytomislead,theplaintiff An “establishment”claimis astatementclaimingthattestsorstudiesprove acertain 4. Establishmentclaims orpromotion”constitute “advertising within themeaningofstatute. If thestatementisnotconveyedtopurchaser priortotheactualpurchase, itwillnot 4.  services; and 3. Forthepurposeofinfluencingconsumerstobuydefendant’s goodsor 2. Byadefendantwhoisincommercial competitionwithplaintiff; 1. Commercial speech; promotion). • • • • • • made in a “classic advertising campaign”ormoremade ina“classicadvertising informaltypesof“promotion.” or “promotion” withintheindustry, regardless of whethertherepresentations are tothe Disseminated sufficiently relevant purchasing publictoconstitute“advertising” (user manualdidnotconstituteadvertising). Marcyan v. NissenCorp.,578F were orpromotion). notadvertising 35 (D.Mass.1996)(statementscontainedinproduct packageinserts Gillette Co.v. Norelco Consumer Prods., Co.,946F videotape products were orpromotion). notadvertising 129 F aff’d, Brown v. Armstrong, 957F 800, 803(7thCir. 2001)(expressing doubtsastotest). But seeFirstHealthGroup Corp.v. BCEEmergis Corp.,269F (finding salespresentations toconstitutecommercial or advertising Seven-Up Co.v. Coca-ColaCo.,86F several respected circuits”). 6, 19(1stCir. 2003)(notingthat“thistestbearstheimprimaturof Podiatrist Assoc.,Inc.v. Rico,Inc.,332F LaCruzAzuldePuerto .3d 1252(1stCir. 1997)(statements containedin . Supp.1293,1302(D.Mass.1997), . Supp.485,506-07(N.D.Ind.1982) .3d 1379,1384(5thCir. 1996) . Supp.115,134- .3d .3d Liability for Commercial Speech 9 .3d .3d 606, 618 .3d 1134, 1139 .3d 1134, 1145-46 .3d 489, 497 .3d 1081, 1090 .3d 1175, 1181-82 .3d 1175, F Co., 140 Clorox Corp. v. United Indus. 1997). (9th Cir. Co., 41 F Trading Old World BASF Corp. v. (8th Cir. 1998). (8th Cir. Seed Co., 108 F Stover v. Southland Sod Farms 1994). (7th Cir. Saks Fifth Avenue, 284 F & Camel Hair Mfg. Inst. v. Cashmere 2000) (5th Cir. American Council of Certified Podiatric Physicians and Surgeons Inc., 185 F Surgery, of Podiatric American Board v. 302, 311 (1st Cir. 2002), cert. denied, 537 U.S. 1001 (2002). 302, 311 (1st Cir. Int’l, Inc., 227 F Papa John’s Pizza Hut, Inc. v. 1999). (6th Cir. Stover Seed Co., 108 F Southland Sod Farms v. 1997). (9th Cir. • • • • • • •

…the plaintiff must demonstrate that he that demonstrate must plaintiff …the be to is likely she or he that “believes she or Thus, [advertising].”… such by damaged to necessary not is harm specific of evidence obtain an injunction.” “ with reasonable certainty that they support the claim; or (2) the defendant’s tests, even if tests, even certainty that they supportwith reasonable (2) the defendant’s the claim; or asserted did not support the defendant. by the proposition reliable, B. Damages and Remedies for False AdvertisingB. Damages and against false advertising to obtain an injunction of Lanham Act § 43(a), in violation In order the plaintiff that he or she “believes that he or she is likely to be must demonstrate damaged by such [advertising].” 15 U.S.C. § 1125(a)(1). Thus, evidence of specific harm is not necessary to obtain an injunction. 10 A Guide to False Advertising, CommercialDisparagement, and Related Claims Act §43(a). defenses are case under Lanham availabletoadefendantinfalseadvertising In additiontoanygeneraldefensesthatmaybeapplicable, thefollowingspecific C. DefensestoFalseAdvertising false statementsinthemarketplace. reputation, andcompensationforanycorrective necessarytocounter the advertising disgorgement ofthedefendant’s wrongful profits, compensationforinjurytotheplaintiff’s includerecoveryThe typesofdamagesavailableforfalseadvertising oflostprofits, intent toharmtheplaintiff. orstatementsmadeinbadfaithwithan statements, falsecomparativeadvertising, harmed asaresult. presume Somecourts harmwhere liabilityisbasedonliterallyfalse was customers were andthattheplaintiff actuallydeceivedbythefalseadvertising In order torecover damages,unlessapresumption mustshowthat applies,aplaintiff expenses).

• • • • • • • was intentionalandwillful). permissible remedy whendefendant’s forfalseadvertising conduct 343 (D.N.J.2001)(findingthatdisgorgement ofprofits wouldbea Castrol, Inc.v. PennzoilQuaker StateCo.,169F (upholding districtcourt’s award corrective forplaintiff’s advertising U-Haul Int’lInc.v. Inc.,793F Jartran, profits basedonmarketshare analysis). (7th Cir. districtcourt’s 1994)(affirming award of$2.5millioninlost BASF Corp.v. OldWorld Trading Co.Inc.,41F (9th Cir. 1997). Southland SodFarmsv. StoverSeedCo.,108 F (6th Cir. 1999). v. AmericanBoard ofPodiatricSurgery, Inc.,185 F PodiatricPhysiciansandSurgeonsAmerican CouncilofCertified (5th Cir. 2000) Pizza Hut,Inc.v. PapaJohn’s Int’l,Inc.,227F 302, 314-17(1stCir. denied,537U.S.1001(2002). 2002),cert. Cashmere &CamelHairMfg.Inst.v. SaksFifthAvenue,284F .2d 1034,1041(9thCir. 1986) .3d 489,497 .3d 1081,1092-95 .3d 1134,1146 . Supp.2d332, .3d 606,618 .3d Liability for Commercial Speech 11 . Supp. 115, 136- .3d 1045, 1051-52 (2d Cir. .3d 919, 931-32 (9th Cir. 2010) (9th Cir. .3d 919, 931-32 (finding statement “guilty of misleading the American public” to (finding statement “guilty of misleading

Photomedex, Inc. v. Irwin, 601 F v. Photomedex, Inc. would be date on which product predicting (finding statement actually was not product where to be actionable available for purchase date, and sale available until over a year after projected have known evidence suggested speaker knew or should where timeline was impossible). that the predicted Inc., 61 F Random House, v. Groden 1995) as interpreted not be reasonably be non-actionable opinion that could facts). stating provable Co., 946 F Prods., Consumer Norelco Gillette Co. v. ass. 1996) (finding statement by razor blade manufacturer razor blade manufacturer 37 (D. Mass. 1996) (finding statement by close for comfort”that “anything closer could be too constitutes opinion rather than statement of fact). • • •

Generally speaking, a claim that is not is not that a claim speaking, Generally be to likely is verified being of capable protected as a non-actionable opinion.” 1. Opinion in an advertisementA statement Act in violation of Lanham or misleading cannot be false between a fact. In distinguishing rather than an opinion B) if it expresses § 43(a)(1)( fact, courtsopinion and false advertising in See jurisprudence. turn to defamation cases capable of being verified is speaking, a claim that is not Section III(G)(3), above. Generally event is a future opinion. A statement predicting as a non-actionable likely to be protected if the speaker has knowledge opinion, but it may be actionable generally a non-actionable time the statement was made the opinion, i.e., that it knew at the of facts not warranting in the truth of what was said. did not have a good faith belief that it was false or 2. Puffery advertisingA statement will not constitute false “puffery.” if a court finds that it is mere two kinds of puffery:Courts about a product’s (1) a general statement have recognized and (2) of opinion; expression as a mere perceived superiority that is so vague as to be “ 12 A Guide to False Advertising, CommercialDisparagement, and Related Claims specific andmeasurableisnotpuffery. reasonable buyerwouldrely. Note,however, thataclaimofproduct superioritywhichis an exaggeratedstatement,oftenmadeinablusteringorboastingmanner, uponwhichno would rely upontheexaggeratedclaims. of acompetitor. isnotactionablewhere Suchnegativepuffery noreasonable consumer hasbeenappliedtonegativecomments madeabouttheproductsThe conceptofpuffery f puffery). • • • • • • • United Indus.Corp.v. Clorox Co.,140F standing alone,tobepuffery). Cir. 2000)(findingstatement“BetterIngredients. BetterPizza.”, Pizza Hut,Inc.v. PapaJohn’s Int’l,Inc.,227F therefore notpuffery). detergent .Whiterisnotpossible”capableofmeasurement, and Clorox Ricov. Co.Puerto Procter &GambleCommercial Co.,228 into sharp-toothedanimals, tobepuffery). bees stingingafaceandanimatedrazorsthatspit out flamesandturn danger ofshavingwitharegular razorblade,includingaswarmof (D. Mass.1996)(findingvisualimagesexaggeratingthe painand Gillette Co.v. Norelco Consumer Prods., Co.,946F service as“unwatchablyblurry, andpixelated”tobe distorted, 2007) (findinggrossly exaggeratedimagesofcompetitor’s television Time Warner Cable,Inc.v. DIRECTV, Inc.,497F well-known examplesofpuffery) 586 F See alsoSchering-PloughHealthcare Prods. v. Schwarz Pharma,Inc., measurable toconstitutepuffery). product tobepuffery, but“50%LessMowing”tobetoospecificand (9th Cir. 1997)(finding“LessisMore” inrelation tocrabgrasscontrol Southland SodFarmsv. StoverSeedCo.,108 F explicitorunambiguoustobeactionable). be insufficiently 1998) (findingstatementsaboutoperationof roach killerproduct to .3d 24,38-39(1stCir. 2000)(findingstatement“Compare withyour .3d 500,512(7thCir. 2009)(collectingcasesandexplaining .3d 1175,1180(8thCir. .3d 489,498-99(5th .3d 144,160(2dCir. .3d 1134,1145 . Supp.115,131 Liability for Commercial Speech 13 pp. Div. 1999) . App. Div. .S. 2d 1, 5 (N.Y .3d 93, 104-105 (Ariz. Ct. App. 2007) (two 402 (Cal. Ct. App. 1999) 2d 397, Maldonado, 85 Cal. Rptr. Smith v. The in reputation. invasion of the interest (“Defamation is an fact that is publication of a statement of involves the intentional or which and has a natural tendency to injure false, unprivileged, causes special damage.”). , 704 N.Y City of New York Dillon v. letters sent internally from university president only to post-graduate university president letters sent internally from “published” for defamation purposes). advisor were student’s Levin, 613 N.E.2d 585, 587 (Ohio 1993) (“It is sufficient Hecht v. even that the defamatory matter is communicated to one person only, though that person is enjoined to secrecy.”). he elements [of defamation] are a false statement, published a false statement, (“The elements [of defamation] are constituting fault party, a third without privilege or authorization to must and, it at a minimum, a standard, as judged by, defamation per se.”). either cause special harm or constitute Steel USA Inc., 929 N.E.2d 184, 187 (Ind. 2010) Mittal Dugan v. supervisor that employee was (statement made by plaintiff employee’s with her boss…allegedly an “stealing time” and working on a “scheme constituted defamation per se). attempt to defraud the Company” Inc., 917 N.E.2d 650, 657-58 (Ind. 2009) (statement Tremco Baker v. sales practices” in “inappropriate that former employee had engaged because it was too vague to did not constitute defamation per se of conclude that it was so obviously and naturally harmful that proof its injurious character was unnecessary). Likins, 167 P Dube v. • • • • • •

III. Defamation and Commercial Disparagement Commercial and III. Defamation Claim of a Defamation A. Elements A party that the or she can demonstrate defamation if he have a claim for may concerning of fact, of or statement has made a defamatory defendant prospective and causes economic harm. that is false the complaining party, n most states, certain statements are considered defamatory on their face. Such considered In most states, certain statements are (2) a per se if they impute: (1) criminal conduct; statements constitute defamation office, or occupation; trade, profession, in a person’s loathsome disease; (3) misconduct per se, harm will be presumed. or (4) sexual misconduct. If a statement is defamatory publication. Showing a defamatory statement to just one person is sufficient to prove 14 A Guide to False Advertising, CommercialDisparagement, and Related Claims reputation inthecommunityandexposesthatpersontohatred, ridicule,orcontempt. It iswellestablishedthatastatement“defamatory”ifittendstoinjure aperson’s B. DefamationDefined decisionsandstatutes. well asstatecourt decisionsas mayincludefederalcourt law foradefamationclaimfiledinstatecourt The FirstAmendmentdefinestheboundariesofdefamationlaw. Therefore, theapplicable ifitcouldreasonablythe plaintiff beunderstoodtorefer tohimorher. Even where isnotmentionedbyname,astatementdeemedtobeabout theplaintiff mustalsoproveNote thattheplaintiff “fault,”asdescribedinSectionIII(D),below. any considerable,respectable classofthecommunity. notethatthestatementmustdiscredit inthemindsof Some courts theplaintiff

app.2000)(“T 1926)). • • • • • Manfredonia v. Weiss, 829N.Y with him.”). the communityortodeterthird personsfrom associatingordealing to harmthereputation ofanotherastolowerhimintheestimation (“A defamatorystatementisdefinedasacommunicationthattends Mercer v. Cosley,955A.2d550,561(Conn.pp.Ct.2008) cocaine operationcouldreasonably beunderstoodtorefer tohim). statement expressly newsreports, becausethe namedintheoffending statedaclaimfordefamation,eventhoughhewasnot (plaintiff Eyal v. HelenBroad. Corp.,583N.E.2d228,230-31(Mass.1991) of thecommunity.”) intheeyesofa substantial andrespectablethe plaintiff minority Tonnessen v. DenverPublishingCo.,5P a ‘substantialandrespectable minorityofthecommunity.’”) communication isdefamatoryifitprejudices intheeyesof theplaintiff Jews forJesus,Inc.v. Rapp,997So.2d1098,1114(Fla.2008)(“[A] Sydney v. MacFaddenNewspaperPubl.Corp.,151N.E.209(N.Y and todeprivehimoftheirfriendlyintercourse insociety.’”) (quoting induce anevilopinionofhiminthemindsright-thinkingpersons, topubliccontempt,ridicule,aversionordisgrace, or the plaintiff (“Defamation isthemakingofafalsestatementthat‘tendstoexpose that aBrookline deliownerwasinvolvedinan“Israelimafia” o bedefamatory, astatementneedonlyprejudice .S.2d 508,509(N.Y .3d 959,963(Colo. . App.Div. 2007) . Liability for Commercial Speech 15 o be .2d 1063, . 1993) (prominent businessman brought suit against radio businessman brought . 1993) (prominent .2d 619, 621 (N.H. 1998) (“T .2d 619, Bank, 712 A St. Mary’s v. Touma the plaintiff must tend to lower language esteem in the defamatory, it may be quite even though group, and respectable of any substantial a small minority.”) , 993 F Div. Prod. ITT Corp. Electro-Optical Swengler v. law) (statements by 1993) (applying Virginia 1070- 71 (4th Cir. defrauding that government contractor was terminated employee government funds constituted the government and mismanaging Mass. 1975) (letters sent Latif, 323 N.E.2d 913, 914 ( v. Ricciardi by defendants to plaintiff’s customers falsely stating that plaintiff had found defamatory). were product to pay for defendant’s refused Inc., 626 A.2d 595, 601 (Pa. Super. Glass Tech., Schott Kryeski v. was “crazy” did not rise to the Ct. 1993) (statements that employee such as words other cases where level of defamation, consistent with to and “nuts” did not rise “crazy,” “paranoid,” “schizophrenic,” the level of defamation). Mach. Corp., 392 Mass. 508, 517, 467 N.E.2d Int’l Bus. Bratt v. by employer that plaintiff126, 133 (1984) (statements made has a may be defamatory). specified mental disorder Hepps, 475 U.S. 767, 769 (1986) Philadelphia Newspapers, Inc. v. (plaintiff for publishing businessman sued newspaper for defamation crime). article alleging links to organized Capital Cities Communications, Inc., 626 N.E. 2d 34, v. Prozeralik 36-37 (N.Y and beaten that he had been abducted station for falsely reporting crime boss). due to unpaid debts to organized • • • • • • • defamation). C. Examples of Defamatory Statements C. Examples of them: alleged defamed have that plaintiffs examples of statements are The following fraud 1. Dishonesty or 2. Mental disorder 3. Crime or immorality 16 A Guide to False Advertising, CommercialDisparagement, and Related Claims “actual .” orpublicfigure,a publicofficial heorshemust prove thatthedefendantactedwith above. Theburden of proof is Iftheplaintiff variesdependingonthestatus oftheplaintiff. ofthedefendant inadditiontoproving“fault” onthepart eachof the elementsdescribed recover must prove damagesfordefamation,theSupreme hasheldthataplaintiff Court protections oftheFirstAmendment.T U.S. Supreme jurisprudencedefinesthecontoursofdefamationlawwithin Court D. Proving aFree FaultWithin Speech Framework 6. Careless omissionofasignificantfactornameinpublication 5. Potentialforbadbehavior 4. Injurioustobusinessreputation

• • • • • lawsuits againstsurgeon hadbeenvoluntarilydismissed). regarding medicalmalpractice claimsandomittedthefactthatearlier judgment ondefamationclaimwhennewspaperpublished stories 837 (Ct.App.T Scripps Texas Newspapers,L.P. v. Belalcazar,99S.W.3d 829,835- be arrested). that shopkeeperhadcausedamentallyhandicappedcustomerto have changedtheoverallimpression from televisionreport refusing tofinddefamationwhere inclusionofmaterialfactswouldnot that omissionofmaterialfactscanrisetotheleveldefamation,but Mohr v. Grant,108P couldbeinferred ofplaintiff frombehavior onthepart theletter). defendant’s restaurant wasdefamatorybecausethepotentialforbad thatshewasnolongerpermittedto enter advising plaintiff (letter sentbydefendant’s – andalsotothepolice lawyertoplaintiff Smith v. SuburbanRests.,Inc.,373N.E.2d215,217( Mass. 1978) patents were defamatory). competitor’s customersthatcompetitor’s products infringedits 270 (Cal.App.Ct.2002)(findingthatcompany’s statementsto Atlantic MutualIns.Co.v. J.Lamb.Inc.,123Cal.Rptr. 2d256, legal ). filed defamationclaimagainstclient’s motherforaccusinghimof Costello v. Hardy, 864So.2d129,142(La.2004)(attorney ex. 2003)(denyingdefendant’s motionforsummary .3d 768,773-77(Wash. 2005)(recognizing o balancetherightoffree speechwiththerightto Liability for Commercial Speech 17 .2d 775 . Supp. 358, 365 (D. Mass. 1985), aff’d,. Supp. 358, 365 814 F The Court Sullivan, 376 U.S. 254, 267 (1964). Times Co. v. New York in a “actual malice” to prevail held that a plaintiff must prove defamation action against a public official figure. or public Butts, 388 U.S. 130, 133-34 (1967). The CourtCurtis Publ’g Co. v. by for defamation actions brought affirmed the actual malice standard against news organizations. public figures Robert Inc., 418 U.S. 323, 345 (1974). The CourtGertz Welch, v. Times malice held that private plaintiffs need not make the New York showing in actions involving media defendants; states may not impose some showing of fault; and a private plaintiff liability without requiring or punitive damages. malice to obtain presumed must prove • • •

A statement is published with ‘actual ‘actual with is published A statement that knowledge with is published it if malice’ as to disregard’ ‘reckless with or is false it is false.” it whether “ Milkovich v. Lorain Journal Co. Lorain, evidence. Milkovich v. by clear and convincing Malice must be proved , 418 U.S. 323, 342 (1974)). Robert Inc. 497 U.S. 1, 15 (1990) (citing Gertz Welch, v. be acquainted with the clients in a defamation action should Practitioners representing Court cases: following Supreme (1st Cir. 1987) (collecting cases). 1987) (1st Cir. with knowledge that it is with “actual malice” if it is published A statement is published Sullivan, v. Times Co. false. New York as to whether it is disregard” false or with “reckless if it is disregard” with “reckless (1964). A statement is made 376 U.S. 254, 280 , 390 U.S. 727, Thompson doubts as to its truth. St. Amant v. published with serious 731 (1968). “public official” is generally a government employee who has substantial responsibility A “public official” substantial employee who has a government is generally 75, 85 , 383 U.S. Baer affairs. of government over the conduct v. Rosenblatt or control in the role of prominence assumed a individual who has is an “public figure” (1966). A 323, 345 (1974). , 418 U.S. Robert Inc. Gertz Welch, v. affairssociety. of E.I. Flotech, Inc. v. under certain circumstances. also be a public figure A corporation can Co., 627 F Du Pont de Nemours 18 A Guide to False Advertising, CommercialDisparagement, and Related Claims burden ofproof applies: negligence standard, whichisamajorityofstates,thefollowingtableshowshow In jurisdictionswhere privatefigures ormattersofprivateconcernare subjecttoa Builders, Inc.,472U.S.749,761(1985). need toprove malicetoobtainpresumed damages.Dun&Bradstreet, Inc.v. Greenmoss Similarly, ifthestatementrelates may toamatterofpublicconcern,privateplaintiff N.E.2d 161,164(Mass.1974). 437 N.E.2d205,208(Mass.1982);Stonev. EssexCountyNewspapers,Inc. 330 Unfair Competition§27:108at27-249(4thed.2010);see,e.g.,Schrottman v. Barnicle , onTrademarks McCarthy defendant actedwithnegligence.J.ThomasMcCarthy; and a privatefigure Inamajorityofstates,privatefigure plaintiff. needprove onlythatthe public figures undertheFirstAmendment.Statelawestablishesburden ofproof for The Supreme hasheldthatprivate figures Court are afforded greater protection than heldthatastatementonmatterofpublicconcernmustbe theCourt • • • Touring, Inc.v. Publ’n,953F Affiliated of fact.AnexcellentdiscussionMilkovichappearsinPhantom held thatan“opinion”maybeactionableifitimpliesafalseassertion Milkovich v. LorainJournalCo.,497U.S.1,19-20(1990). The Court law, atleastwhere amediadefendantisinvolved. provable asfalsebefore there canbeliabilityunderstatedefamation Philadelphia Newspapers,Inc.v. Hepps,475U.S.767,774(1986). respect tosuchstatementsobtainpresumed andpunitivedamages. doesnothavetoproveapply; thus,aprivateplaintiff malicewith doesnot heldthatGertz is notamatterofpublicconcern.TheCourt withrespect appliedtoaprivateplaintiff toastatementthat Gertz 761 (1985).Theissuebefore waswhethertheholdingof theCourt Dun &Bradstreet, Inc.v. Greenmoss Builders,Inc.,472U.S.749, .2d 724,727-28(1stCir. 1992). Liability for Commercial Speech 19 to Negligence evidence of actual malice Clear and convincing concerning the plaintiff,for almost all statements or her personal to his relating including statements etc.) life (sex life, drug use, as when the such In very limited circumstances, the plaintiff’sdefendant falsely fictionalizes life and may apply it as the truth, negligence presents evidence of actual malice for Clear and convincing statements concerning the plaintiff’s public activities For other defamatory statements, negligence for Clear and convincing evidence of actual malice to plaintiff’s status as a public statements relating official, including plaintiff’s for public fitness office For other defamatory statements, negligence BURDEN OF PROOF BURDEN orts § 623(A) (1977)). Pro Golf Mfg. Inc. v. Tribune Review Newspaper Co., 809 A.2d 243, Tribune Golf Mfg. Inc. v. Pro “(1) the disparagement is shown where 246 (Pa. 2002) (commercial statement is false; (2) the publisher either intends the publication that publication should recognize cause pecuniary loss or reasonably and in pecuniary loss; (3) pecuniary loss does in fact result; will result (4) the publisher either knows that the statement is false or acts in of its truth or falsity”) (quoting Restatement disregard reckless (Second) of T •

ervasive public figure (such as a nationally known (such as a Pervasive public figure celebrity) who has thrust (one figure Limited purpose public of a public himself or herself into the forefront to influence the outcome of the issues controversy involved) Public official (but note that not all government “public officials” for the considered employees are purpose of defamation law) STATUS OF PLAINTIFF OF STATUS Private figure E. Elements of a Commercial Disparagement Claim E. Elements of a Commercial to defamation. It disparagement is a tort closely related Commercial intended to call into question the quality of a has been defined as a false statement inflict pecuniary harm. The states have to in order goods or services competitor’s the same tort:several designations for what is essentially disparagement” “Commercial 20 A Guide to False Advertising, CommercialDisparagement, and Related Claims cause ofaction. Illinois, inparticular, whethercommercial raiseuncertainty disparagement isaviable in Not everyjurisdictionrecognizes whatevernameitmaytake.Thecourts thistort, “T “Product disparagement” “Business disparagement” rade libel”

• • • • • Second DistrictofIllinois). that commercial disparagementisnotaviable causeofactioninthe Becker v. Zellner,684N. E.2d 1378,1388(Ill.App.Ct.1997)(finding the publishedfalsehood.”). and(5)specialdamagesareplaintiff; proximately causedasaresult of ininducingothersnotto dealwiththe a materialandsubstantialpart (4)infact,thefalsehooddoesplay others nottodealwiththeplaintiff; knows orreasonably shouldknowthatitwilllikelyresult ininducing communicated toathird person;(3)whenthedefendant-publisher mustallege:(1)afalsehood;(2)hasbeen published,or libel, plaintiffs (M.D. Fla.2006)(applyingloridalaw)(“T Border CollieRescue,Inc.v., 418F Ryan likely todoso;(5)withmalice;(6)thus,causingspecialdamages.”) interest, oreitherrecognized orshouldhaverecognized thatitwas pecuniary which thedefendantintendedtocauseharmplaintiff’s (3)derogatory businessingeneral;(4)throughparty; totheplaintiff’s of the following elements: (1) a false statement; (2) published to a third ofproduct(Colo. App.1989)(“Thetort disparagementrequires proof Teilhaber Manu.Co.v. Unarco MaterialsStorage , 791P resulted inspecialdamagestotheplaintiff.”). information aboutit,(2)withmalice,(3)withoutprivilege,(4)that must establishthat(1)thedefendantpublishedfalseanddisparaging (T Forbes Inc.v. GranadaBiosciences,Inc.,124S.W.2d 167,170 inflict pecuniaryharm”). bring intoquestionthequalityofarival’s goodsorservicesinorder to (defining commercial disparagementas“afalsestatementintended to Picker Int’l,Inc.v. Leavitt,865F ex. 2003)(“T o prevail onabusinessdisparagementclaim,plaintiff . Supp.951,964(D.Mass1994) . Supp.2d1330,1348 o stateavalidclaimoftrade .2d 1164

Liability for Commercial Speech 21 ex. . Supp. 2d ennessee as a separate ennessee as a separate . Supp. 369, 374 (E.D. Pa. o date, disparagement of quality o date, disparagement enn. 1999) (“T business disparagement claim is similar in many respects similar in many respects 2003) (“A business disparagement claim is to a defamation action. The two torts differ in that defamation actions party, reputation of an injured the personal chiefly serve to protect economic interests.”). protects while a business disparagement claim E.2d 1033, 1037-38 (Ill. App. Ct. 1988) Bork, 531 N. Inc. v. Allcare, was president supply company’s statements that medical (defendant’s company was under paying bribes and that medical supply corporate defamation but investigation for fraud might constitute quality of disparagement because the did not constitute commercial was not attacked). goods and services the company’s Ceridian Corp., 966 F KBT Corp., Inc. v. or trade libel has not been recognized in T not been recognized or trade libel has cause of action.”). 167, 170 (T Biosciences, Inc., 124 S.W.2d Granada Forbes Inc. v. 1997) (applying Pennsylvania law) (“A conditional privilege attaches to statement when the statement involves disparaging a commercially pp. Ct. 2002) ll. App. Ct. 2002) 702-703 (I Inc., 776 N.E.2d 693, CBS, v. Schivarelli cause of action for as to whether a “it is disputed (noting that holding that in Illinois,” and viable remains disparagement commercial of action, plaintiff is a viable cause disparagement even if commercial television program failed to show that defendant’s hot dog stand owner the quality of statements regarding made false and demeaning plaintiff’s hot dogs). Inc., 69 F Bahr Consultants, Co. v. Kansas Bankers Surety E.D. T 1004, 1014-15 ( • • • • •

ennessee is another state that casts doubt on the availability of this count. state that casts doubt on the ennessee is another his tort shares the elements of defamation, with the notable exception that, as reflected the notable exception that, as reflected the elements of defamation, with This tort shares disparagement plaintiff must also prove in the cases described above, the commercial special damages (economic loss). See Section III (F)(2), below. 1. Privileged statements often disparagement are Statements that would otherwise constitute commercial as conditionally privileged. protected t is useful to distinguish corporate defamation from commercial (or product) product) (or commercial defamation from It is useful to distinguish corporate of the corporation the reputation injures disparagement. Defamation of a corporation of the corporation’s the reputation disparagement injures itself, while commercial or services. products T 22 A Guide to False Advertising, CommercialDisparagement, and Related Claims reduced to $22.7millionandwasneverpaidduetosubsequent casedevelopments). against DowJonesin1997 basedonaWall Street (theverdict Journalarticle waslater towards high juryverdicts indefamationcases,” includingarecord $222.7millionverdict According to onelegalresource, inrecent years there hasbeen“analarmingtrend to actualorcompensatorydamages. prevailingA plaintiff attrialinadefamationorcommercial disparagementcaseisentitled 1. Damages F. DamagesandRemediesforDefamationCommercial Disparagement commercial disparagementcase. ofthedefendanttoprevailthe corporationmustestablishactualmaliceonpart ina A corporationmaybedeemedapublicfigure circumstances. undercertain Inthatevent, 2. Corporationsaspublicfigures compensatorydamagesforbusinessdefamation app.1991)(affirming t • • • • was goingoutofbusiness). when competitorcirculated falselystatingthatplaintiff advertisements GN Danavox,Inc.v. StarkeyLabs.,Inc.,476N.W.2d 172(Minn.Ct. suggested thatantiquesdealerhadknowinglysold stolenproperty). business andtoantiquedealer’s reputation whentelevisionbroadcast 659 (Cal.Ct.App.1991)(upholdingjurydamagesforactualinjury to Weller v. AmericanBroadcasting Cos.,Inc.,283Cal.Rptr. 644,658- distinguish amongthecorporations). subsidiaries thatcontainedmultiplemisstatementsandfailedto discussingfinancialproblemsmagazine article atseveralcorporate (Granada failedtoestablishactualmalicearisingfrom aForbes Forbes Inc.v. GranadaBiosciences,Inc.,124S.W.2d 167(T at 281(Little,Brown 1978));seealsoRestatement(Second)of biased”) (quoting3PhilipAreeda &DonaldF recognize disparagement[ofarival]asnon-objectiveandhighly (as apublicpolicymatter, acknowledgethat“[m]anybuyers… courts Picker Int’l,Inc.v. Leavitt,865F recognized interest ofthepublic.”). of thepersontowhomitispublishedorsomeotherthird person,ora some interest ofthepersonwhopublishesit,someinterest orts §§623A,626(1979)). orts . Supp.951,964(D.Mass.1994) . T ntitrust Law § 738c, urner, AntitrustLaw§738c, ex. 2003)

Liability for Commercial Speech 23 ex. ischer, Perle & Williams on Publishing aylor Williamsischer, & Mark A. F o prove special damages, the plaintiff must prove that special damages, the plaintiff must prove o prove

ptr. 644, 658- , 283 Cal. Rptr. Cos., Inc. American Broadcasting v. Weller 659 (Cal. Ct. App. 1991) (affirming damages for injury $2.3 million in when and emotional distress lost potential business, to reputation, that antiques dealer had suggesting report broadcast television station property). knowingly sold stolen 172 (Minn. Ct. Inc., 476 N.W.2d Starkey Labs., v. GN Danavox, Inc. and business). opportunity, sales, reputation, T 616, 628 ( Inc., 223 S.W.3d SNF, Astoria Indus. of Iowa, Inc. v. a substantial partthe disparaging communications played in inducing pecuniary parties in a direct to deal with the plaintiff, not third resulting as specific lost sales, or liquidated, such loss that has been realized loss of trade, or loss of other dealings.”).

• • • damages of $517,752 for loss in app. 1991) (upholding compensatory app. 2007) (“T erle, John Perle, JohnT E. Gabriel damages). 2010) (discussing at 5-75–76 (3d ed. Law § 5.13, lost business (2) the plaintiff’s (1) the value of may include Actual damages reputation; emotional to remedying opportunities; other costs related expenses and and (3) medical humiliation. anguish, embarrassment, and injuries such as mental 2. Special damages of general damages is sufficient proof In cases involving libel (written defamation), or in cases of slander (spoken defamation) However, presumed. because damages are special damages (economic loss) to disparagement, the plaintiff must prove commercial a monetary award. recover … in cases of slander (spoken defamation) defamation) (spoken slander of cases … in plaintiff the disparagement, commercial or loss) (economic damages special prove must award.” a monetary recover to “ 24 A Guide to False Advertising, CommercialDisparagement, and Related Claims to retract, butdonotspecifytiming. Generally, retraction statutesrequire thatthedefendant begivenanopportunity 4. Retraction the amountofthosedamages,however. a naturalandprobable mustprove consequenceofthepersedefamation.Theplaintiff isentitledtopresumedIn casesinvolvingdefamationperse,theplaintiff damagesas 3. Presumed damages

• • • • • • equal degree ofpublicityuponwrittenrequest ofthecomplainant.”). complained of.waspromptly retracted by the defendantwithan it shallbeanabsolutedefense ifthedefendantshowsthatmatter Wash. Rev. Code§9.58.040 (“Inanyprosecution oractionforlibel defendant mayprove suchnon-acceptanceinmitigationofdamage.”). ofretraction, doesnotaccepttheoffer and, iftheplaintiff the and theretraction ispublished,hemayprove suchpublication, publish, the libel, accompanied by a copy of the retraction which he intends to ortohisattorneyofintentionpublisharetractionthe plaintiff of answer is required tobefiledtherein giveswrittennoticeto referred to,eitherbefore oraftersuchactionisbrought, butbefore the for libel,atanytimeafterthepublicationoflibel hereinafter Mass. Gen.Lawsc.231,§93(“Where thedefendantinanaction be corrected.”). the statementsclaimedtobelibelousanddemandingthatsame at theplaceofpublicationorbroadcast, awrittennoticespecifying Cal. Civ. shallserveuponthepublisher, Code§48a(1)(“Plaintiff libelous anddemandthatthesamebecorrected.”). broadcast, awrittennoticespecifyingthestatementsclaimedtobe publisher attheplaceofpublication,orbroadcaster attheplace Ariz. Rev. shallserveuponthe Stat.Ann.§12-653.02(“Theplaintiff Baker v. Tremco Inc.,917N.E.2d650,657(Ind.2009). loss ofprospective customers.”). contractswiththeplaintiff’s special damages...Usually, thedamages claimedhaveconsistedof others nottodealwithhim,andthatasaresult hehassuffered inducing publication hasplayedamaterialandsubstantialpart mustprove270 (Cal.Ct.App.2002)(“Theplaintiff inallcasesthatthe Atlantic MutualInsuranceCo.v. J.Lamb,Inc.,123Cal.Rptr. 2d256, of

Liability for Commercial Speech 25 .2d 1063, 1072 .2d 1063, . 1072, 1074 (Wash. 1891) . 1072, 1074 (Wash. .3d 189, 205 (1st Cir. 2007) (applying 2007) .3d 189, 205 (1st Cir. 1979) (holding that .2d 777, 788-89 (Or. , 993 F Div. Prod. ITT Corp. Electro-Optical v. Swengler law note that Virginia (“We law) (applying Virginia 1993) (4th Cir. but a claim for defamation per se, actual damages under presumes that a plaintiff defendant made the statements must establish that the damages can be recovered.”). punitive before with ‘actual malice’ 172, Inc., 476 N.W.2d Starkey Labs., v. GN Danavox, Inc. punitive damages of award App. 1991) (upholding 176-177 (Minn. Ct. suggesting that false statements in flyers when defendant knew a high probability that plaintiff “created was going out of business of injury to [plaintiff’s] business, and yet [defendant] acted with and noting the standard injury,” for [plaintiff’s] probable disregard evidence for punitive damages in Minnesota as “clear and convincing the rights for deliberate disregard that the acts of the defendant show or safety of others”). , 504 F Lynch Merrill Galarneau v. more “Maine requires terminated employee, statements would injure knowledge concerned: [Defendant’s] punitive damages are where or its actions must have been so must have motivated its statement, outrageous as to imply malice.”). , 593 P Green Wheeler v. constitution). violate the Oregon punitive damages in defamation cases Hoefer, 25 P & Dray Co. v. Spokane Truck (abolishing punitive damages in Washington State civil cases). (abolishing punitive damages in Washington Mass. Gen. Laws c. 231, § 93 (“In no action of slander or libel shall… punitive damages be allowed.”). • • • • • • knew that defamatory maine law) (even if defendant employer

5. Punitive damages punitive damages. to recover high threshold a Plaintiffs cross must damages. Several states do not allow punitive 6. Prior restraint disparagement cases, the available in defamation and commercial While injunctions are willingness of courts depends on the type of speech at issue. It is to enter injunctions statements than against political and easier to obtain an injunction against commercial other types of speech. 26 A Guide to False Advertising, CommercialDisparagement, and Related Claims are allegedlyfalse. it more toobtainpreliminary difficult injunctive relief againstcommercial statementsthat issued againststatementsfoundlibelousaftertrial.Thepriorrestraint doctrinecanmake Bans oncommercial statementsusuallytaketheformofpermanent injunctiverelief accordingly subjecttogreater restriction, thannon-commercial speech. As arule,commercial speechgarnersalowerlevelofconstitutional protection, andis “ statements that are allegedly false.” injunctive relief against commercial it more difficult to obtain preliminary The prior restraint doctrine can make

• • • • Castrol v. PennzoilCo.,987F 458, 465(2dCir. 1999)). Ass’n,New Latino Officers York, Inc. v. CityofNew York, 196F found permissible is hazardous and may chill protected speech”) (citing predictions exanteastowhatrestrictions onspeechwillultimatelybe this motionforpreliminary injunctiverelief,” because“making 2003) (“thequestionoftheactualtruthorfalsityisnotappropriate on New.Net, Inc.v. Lavasoft,356F inform it”). ban formsofcommunicationmore likelytodeceivethepublicthan accurately informthepublicaboutlawfulactivity. Thegovernmentmay objection tothesuppression ofcommercial messagesthatdonot New York, 447U.S.557(1980)(“there canbenoconstitutional Central HudsonGas&Elec.Corp.v. PublicServiceCommissionof the free speechclause oftheFirstAmendment”). doesnotarouseof falseandmisleadingadvertising concernsunder evidentiary hearingtobe false, because“theLanhamAct’s prohibition (preliminary injunctionisavailableagainststatementsshown at Cornwell v. Sachs,99 F unprotected bytheFirstAmendment). only statementsthatwere found“literallyfalse”attrialandtherefore context ofpermanentinjunction,defendantisbarred from publishing .Supp.2d 695,708-709( E.D. Va. 2000) .2d 939,949(3dCir. 1993)(evenin . Supp.2d1071,1084(C.D.Cal. .3d

Liability for Commercial Speech 27 pp. Div. 1999) . App. Div. .S.2d 1, 6 (N.Y , 403 U.S. 713, 714 (1971) (“Any 713, 714 (1971) States, 403 U.S. United Co. v. Times New York this Court comes to bearing of expression prior restraints system of (quoting its constitutional validity.”) against a heavy presumption (1963)). Sullivan, 372 U.S. 58, 70 v. Bantam Books, Inc. Stuart (holding that , 427 U.S. 539 (1976) Ass’n v. Nebraska Press a fair to guarantee a criminal defendant was not justified prior restraint case). sensationalized and publicized trial, even in a highly (1931) (recognizing State of Minnesota, 283 U.S. 697, 716 Near v. national security is at stake). where be appropriate that injunction may County Newspapers, Inc., 311 N.E.2d 52, 63 Essex Stone v. only in extraordinary (Mass. 1974) (a court will grant prior restraint publication will implicate national such as where circumstances, security or the right to a fair trial.) not actionable, The statement is an opinion and therefore or The plaintiff proof,” is “libel absolute privilege. The defendant has a conditional or of La. Sys., 5 So.3d 862, 867 Bd. of Sup’rs for the Univ. Cyprien v. (La. 2009) (plaintiff employee failed to establish defamation statement that employee misrepresented defendant employer’s where resume was true). his qualifications in his , 704 N.Y City of New York Dillon v. (plaintiffs failed to establish defamation when employer stated that they they that stated employer when defamation establish to (plaintiffsfailed had been “terminated,” because the statement was true). ruth • • • • • • • • •

n the non-commercial sphere, by contrast, it is more difficultan injunction to obtain it is more by contrast, sphere, In the non-commercial defamatory statements. of potentially the publication preventing Disparagement Commercial G. Defenses to Defamation and With certain defense to a defamation or statutory limitations, truth is an absolute following: disparagement action. Other common defenses include the commercial 1. T that the If the plaintiff a claim for defamation, the defendant will likely argue states statement at issue is true. 28 A Guide to False Advertising, CommercialDisparagement, and Related Claims published with“goodmotives”and“withoutmalice.” In otherstates,truthisabartorecovery fordefamationonlyifthecommunicationis In moststates,truthisanabsolutebartorecovery. figure, orthedefamatorystatementinvolvesamatterofpublicconcern. hastheburdenThe plaintiff ofproving orpublic falsityifheorsheisapublicofficial impression. Even ifastatementistrue,itmaybedefamatorybyimplicationgivesfalse

• • • • • • • • • evidence, ifit isfoundthatthesamewas writtenorpublishedproperly or publishing ofalibel,where thetruthispleaded andgivenin Del. CodeAnn.Tit.10,§3919(“ In actionsfordamages thewriting Gen. Lawsc.231,§92). to showdefamation)(applying Massachusettslawandcitingass. employee wasfired couldhavebeenmadewithactualmalicesufficient executive’s emailsentto1500employees truthfully statingplaintiff Noonan v. Staples,Inc.,556F libel action.”). (Cal. App.Ct.1996)(“T Campanelli v. RegentsoftheUniv. ofCal. , 51Cal.Rptr. 2d891,897 true statements,howeverdisparaging,are notactionable.”). 1980) (“T Stuempges v. Parke,Davis,&Co.,297N.W.2d 252,255(Minn. defense toacivildefamationaction.”). 138, 141(N.Y Ltd.v.Commonwealth MotorParts BankofNovaScotia,355N.Y broadcast reporting thathehadbeenkidnappedwasfalse). (N.Y Prozeralik v. CapitalCitiesCommunications,Inc.,626N.E.2d34,38 matter ofpublicconcern). hasburden(plaintiff ofproving falsityifdefamatoryspeechatissueisa Philadelphia Newspapers,Inc.v. Hepps,475U.S.767,777(1986) (recognizing acauseofactionfordefamationbyimplication). Jews forJesus,Inc.v. Rapp,997So.2d1098,1106(Fla.2008) ownadmissions). true, basedonplaintiff’s failedtoprove(plaintiff defamationwhendefendant’s statementswere Mercer v. Cosley,955A.2d550,562-563(Conn.pp.Ct.2008) . 1993)(well-knownbusinessmanhadburden ofproving thatradio ruth, however, isacompletedefense[todefamation],and . App.Div. 1974)(“T ruth, ofcourse,isanabsolutedefensetoany .3d 20(1stCir. 2009)(holdingthat ruth isanabsolute,unqualified .S.2d Liability for Commercial Speech 29 .2d 1164, , 760 So.2d 170, 183 (Fla. Dist. Ct. App. Ramlawi, 760 So.2d 170, Lipsig v. afforded 1167 (Colo. 1989) (“The constitutional protections to a defendant in a applicable are a defendant in a defamation action disparagement action ... In general, a statement of opinion, as product under the expression opposed to a statement of fact, will be protected 2d 891, 894 of Cal., 51 Cal. Rptr. Regents of the Univ. Campanelli v. objectively unjustified or made (Cal. App. Ct. 1996) (“Even if they are statements of opinion rather than in bad faith, publications which are fact cannot form the basis for a libel action.”). for public information, and with no malicious or mischievous motives, or mischievous with no malicious information, and for public the courtdefendant.”). find for the may 2d 881, 886-87 , 842 So. Joint Venture Horizon Assoc. v. LRX, Inc. a defense truth ‘is only (“Under Florida law, App. 2003) (Fla. Dist. Ct. a good motive.’”) the truth has been coupled with to defamation when 256 (Neb. 1994) , 516 N.W.2d First United Bank of Bellevue v. Young [to libel] alone shall be a complete defense (“The truth in itself and plaintiff by the publication was made that the proved unless it shall be or presumed not be inferred Actual malice shall with actual malice. publication.”). from Cohn, 420 U.S. 469, 489-490 (1974) (“The Corp. v. Cox Broadcasting the subject of the where required defense of truth is constitutionally publication is a public official or public figure.”). Hepps, 475 U.S. 767, 776 (1986) Philadelphia Newspapers, Inc. v. plaintiff falsity when is a private figure of proving (plaintiff bears burden but publication is of public concern). Materials Storage, 791 P Unarco Co. v. Mfg. Teilhaber • • • • • • first Amendment.”). (quoting 2000)). ruth is always an absolute defense to defamation if the plaintiff is a public figure or the to defamation if the plaintiffruth is always an absolute defense is a public figure T matter is an issue of public concern. 2. Opinion not actionable and therefore speech An opinion is constitutionally protected as defamation. 30 A Guide to False Advertising, CommercialDisparagement, and Related Claims “ it wouldreasonably beunderstoodtodeclare orimplyprovable offact. assertions The relevant questionisnotwhetherthestatementanopinion,butrather a statementcouchedasanopinionmaybedefamatoryifitconveysfactsthatare untrue. Simply couchingsuchstatementsintermsofopiniondoesnotdispeltheseimplications; the statement, ‘Jones aliar.’” is can cause asmuch damage to reputation as “the statement, ‘In my opinion Jones aliar,’ is opinion does not dispel these implications”. . Simply couching such statements in terms of of app.2004)(“Statementsofopinionthatimplyfalseassertion • • • existence offactsare actionableasdefamation.”). (4th Cir. 1993)(applyingVirginia law)(“Statementsclearlyimplyingthe Swengler v. ITTCorp.Electro-Optical Prod. Div., 993F declares orimpliesaprovably offact.”). falseassertion a reasonable factfindercouldconcludethepublishedstatement statement isfactoropinion.Rather, thedispositivequestioniswhether fact are actionable ... Thequestion isnot strictly whether the published Franklin v. DynamicDetails,Inc.,10Cal.Rptr. 3d429,441(Cal.Ct. as thestatement,‘Jonesisaliar.’”). ‘In myopinionJonesisaliar,’ cancauseasmuchdamagetoreputation terms ofopiniondoesnotdispeltheseimplications;andthestatement, offact.Simplycouchingsuchstatementsin imply afalseassertion or ifhisassessmentofthemiserroneous, thestatementmaystill he baseshisopinion,ifthosefactsare eitherincorrect orincomplete, told anuntruth.Evenifthespeakerstatesfactsuponwhich a knowledgeoffactswhichleadtotheconclusionthatJones speaker says,‘InmyopinionJohnJonesisaliar,’ heimplies Milkovich v. LorainJournalCo.,497U.S.1,18-19(1990)(“Ifa .2d 1063,1071 Liability for Commercial Speech 31 .3d 864, 868 .2d 350, 357 (Wash. Ct. .2d 350, 357 (Wash. Ct. .2d 350, 357 (Wash. .2d 746, 751-52 E.2d 746, 751-52 Servs. Co., 670 S. Raytheon Tech. Hyland v. just analyzing factual portions not analysis requires (2009) (defamation but also considering allegedly defamatory statement, of defendant’s that one could a whole, including any implications the statement as the statement). draw from reasonably News, Inc., 943 P Tacoma v. Schmalenberg false. A statement meets this test to the extent that is provably of whether facts, regardless or implies provable it falsely expresses of fact or a statement of the statement is, in form, a statement to the extent it does opinion. A statement does not meet this test such a statement facts; necessarily, or imply provable not express communicates only ideas or opinions.”). , 416 F Group Aviation Research Inc. v. Aviation Charter, 2005) (applying Minnesota law) (“Statements about matters (8th Cir. or false true proven not capable of being of public concern that are stating facts as interpreted and statements that cannot be reasonably defamation actions by the First Amendment.”). from protected are Journal Co., 497 U.S. 1, 21 (1990) (“loose, Lorain Milkovich v. figurative or hyperbolic language” weighs against concluding that a defamatory assertion of fact was made). News, Inc., 943 P Tacoma v. Schmalenberg false. A statement meets this test to the extent that is provably of whether facts, regardless or implies provable it falsely expresses the statement is, in form, a statement of fact or a statement of opinion. A statement does not meet this test to the extent it such a facts; necessarily, or imply provable does not express statement communicates only ideas or opinions.”). • • • • • on a statement app. 1997) (“A defamation claim must be based app. 1997) (“A defamation claim must be based on a statement n determining whether a statement is one of fact or opinion, the statement must be the statement must of fact or opinion, is one whether a statement In determining Factual portions as a whole. be may not defamatory statement of an allegedly considered in the context of considered they must be falsity in isolation; for their truth or evaluated facts. and other stated opinion any accompanying types of statements as opinion: the following The Constitution protects false. be proven Statements that cannot actual facts about as stating interpreted Statements that cannot be reasonably an individual. 32 A Guide to False Advertising, CommercialDisparagement, and Related Claims Statements that,from theircontext,negatetheimpression thattheyare factual. “libel-proof” andtherefore unabletoprevail. Defendants frequently thisdefense assert Even where maybe deemed thechallenged statementisfoundtobe false,aplaintiff 3. Thelibel-proof plaintiff whether astatementisanopinion. maystatepragmaticallythatallcircumstancesCourts are considered indetermining Amendment.”).

• • • • • • Jewell v. NYPHoldings,23F understand thecritictobeaccusingproducer ofanactualcrime). be immunefrom liabilitybecausenoreasonable reader would charge admissionforthatshowiscommittinghighwayrobbery” would Cir. 1992)(theatercriticwhowrote that“theproducer whodecidedto Phantom Touring, Inc.v. Publ’n,953F Affiliated as statingfactsare protected from defamationactionsbytheFirst or falseandstatementsthatcannotbereasonably interpreted matters ofpublicconcernthatare notcapableofbeingproven true 868 (8thCir. 2005)(applyingMinnesotalaw)(“Statementsabout Aviation Charter, Inc.v. AviationResearch Group, 416F intrusion onthefieldoffree expression”). all constitutionallyrequired factorstoguard against“aforbidden (1st Cir. anindependent examinationof undertakes 1992)(court Phantom Touring, Inc.v. Publ’n,953F Affiliated audience towhomthepublicationwasdirected.”). communication andtotheknowledgeunderstanding ofthe mustlookatthenaturestatement .Thecourt andfullcontentofthe of anaveragereader anddecidethenaturalprobable ofthe effect the circumstances mustputitselfintheplace test.Thecourt havedevelopedatotality of (Cal. Ct.App.1996)(“Californiacourts Campanelli v. RegentsoftheUniv. ofCal.,51Rptr. 2d891,895 actual factsaboutplaintiff”). means thateditorial“cannotreasonably beinterpreted asstating (context ofsatiricaleditorialcolumnaboutlocalschoolsuperintendent Garvelink v. Detroit News,522N.W.2d 883,886-87(Mich.App.1994) statement ofpure opinionnotbasedonundisclosedfacts”). the inherent nature areasonable ofacartoon, reader wouldviewitasa asastatementoffact;rather,would notviewsuchacartoon given notactionableasdefamationbecause“areasonable(cartoon reader . Supp.2d348,385(S.D.N.Y .2d 724,727(1st .2d 724,727 .3d 864, . 1998) Liability for Commercial Speech 33

. 1981) (electric-car maker has no libel . 1981) (electric-car . Supp. 2d 1032, 1037-38 (D.Kan. 2003) . Supp. 2d 1032, 1037-38 (D.Kan. . Supp. 742, 750-5 1 (S.D.N.Y . Supp. 742, 750-5 Simmons Ford, Inc. v. Consumers Union of the United States, Inc., 516 Consumers Union of Inc. v. Simmons Ford, person who is not a party only when to the dispute about a third claim against Consumer Reportsclaim against Consumer for an article that truthfully reported but performance abysmal record ratings and poor safety the car’s safety that the car failed to meet federal mistakenly claimed poor because the car’s the plaintiff was libel-proof regulations; reputation). dented its had already performance record and safety F Rizzo, 242 Lamb v. consecutive life terms for three (applying Kansas law) (prisoner serving activity had because his criminal was libel-proof kidnapping and murder his reputation). destroyed 233, 239 (Mich. Medical Ass’n, 602 N.W.2d American Kevorkian v. to implications of being a murderer). with respect libel-proof , 884 A.2d 63, 79 (D.C. 2005) (“This jurisdiction, Watts Oparaugo v. an absolute like the majority of other jurisdictions, has long recognized to, or in the course of, a privilege for statements made preliminary so long as the statements bear some relationship judicial proceeding, (quoting Finkelstein, Thompson & Loughran v. to the proceeding.”) Hemispherx.2d 332, 338 (D.C. 2001)). Biopharma, Inc., 774 A 2002) Red Roof Inns, Inc., 566 S.E.2d 595, 603 (W.Va. Collins v. a party to judicial proceeding, (“Prior to the filing of a prospective a dispute is absolutely privileged to publish defamatory matter • • • • • f suicide was of physician-assisted app. 1999) (well-known proponent against plaintiffs whose reputations are already so tarnished that they cannot be be that they cannot so tarnished already are against plaintiffs whose reputations described by being falsely be defamed cannot a mass murderer For example, defamed. assert can also Defendants contexts where in noncriminal this defense evader. as a tax the harm already beyond plaintiff’s cannot harm the statement the defamatory reputation of the truth. caused by disclosure 4. Absolute privileges the an absolute privilege may operate as a defense and protect In certain circumstances, Absolute privileges apply to liability. statement from maker of an otherwise defamatory certain process. statements made in connection with litigation or the legislative a. Litigation privilege Attorneys, parties, have an absolute and witnesses participating in a judicial proceeding – to publish statements that to as the litigation privilege privilege – sometimes referred faith. is contemplated in good so long as the proceeding to the proceeding, related are 34 A Guide to False Advertising, CommercialDisparagement, and Related Claims particularly withregardparticularly toactivitiespreceding litigationoroutsidethescopeoflitigation. The litigationprivilege–although“absolute”andbroad inscope–isnotwithoutlimits, Statements madeinaquasi-judicialproceeding are alsoprivileged. p • • • • • • • threatened litigation). inresponsedefamatory statementmade bypotentialparty to But seeClarkCo.Sch.Dist. v.Educ.Software, Inc.,213 Virtual was notpending). privilege doesnotapplywhenlitigationwasmerely contemplatedbut Lindeman v. Lesnick,604S.E.2d55,58-59(Va. 2004) (absolute to third outsidethelitigation). parties (absolute privilegedoesnotapplytostatementsmade byattorney Thompson v. Frank,730N.E.2d143,146(Ill.App.2000) judicial proceeding.”). the privilegetocommunicationsmadepreliminary toaproposed made inthecourseofjudicialproceedings, theyhavenotextended recognizeCourts thelitigationprivilege inregards tocommunications 2d 716,728(N.D.Ind.2006)(applyingndianalaw)(“Although Medical InformaticsEng’g,Inc.v. Ne,P.C. Orthopaedics , 458F made maliciously). of anagencyexercising quasi-judicialandregulatory authorityandwas (statement notabsolutelyprivilegedwhere itwasnotmadebythehead DG, 2008-SC-000380-DG,2010WL1636870,at*10-11(Ky. 2010) But seeHillv. Ky. LotteryCorp.,---S.W.3d ----,Nos.2006-SC-000748- made inlettertoBoard ofPardons absolutelyprivileged). Kocontes v. McQuaid,778N.W.2d 410,424(Neb.2010)(statement of ajudicialproceeding). werecourt absolutely privilegedbecause theywere madeinthe course by crimevictimtoserviceprovider forsubmissionto Abromats v. Wood, 213P judicial proceeding.”). matter ispublishedonlytopersonswithaninterest intheprospective related totheprospective judicialproceeding; and(3)thedefamatory is underseriousconsideration;(2)thedefamatorystatement (1) theprospective judicialactioniscontemplatedingoodfaithand .3d 496,503(Nev. 2009)(extendingabsoluteprivilegetoallegedly .3d 966, 971 (Wyo. 2009)(statementsmade .3d 966,971(Wyo. . Supp. ndiana ndiana

Liability for Commercial Speech 35

.3d 980, 985 (7th o overcome a defense involving such a o overcome ont. 2010) (statement (Mont. 2010) (statement .3d 443, 444-45 the purpose for which the publication is privileged; or (5) the the purpose for which the publication publication includes unprivileged matter.”). Cir. 1994) (applying Wisconsin law) (“A conditional privilege is Cir. the disregards or recklessly abused if: (1) the defendant knows published for a purpose other than truth; (2) the defamatory matter is (3) the publication is made to that for which the privilege is given; for believed to be necessary some person not reasonably of the privilege; (4) the defamatory the accomplishment of the purpose accomplish to necessary be to believed reasonably not are statements during session of state House of made by state legislator 2008) (statement made 530, 533 (N.D. State, 759 N.W.2d v. Voigt a legislative worker’s attorney general before by special assistant it was absolutely privileged because committee compensation review a legislative proceeding). was made during Cooper v. Glaser, 228 P Cooper v. Soc. of Wisc. Service , 17 F Children’s Kennedy v. …the defendant is generally found not not found is generally defendant …the otherwise would that statements for liable defendant as the so long defamatory, be statements the that believed reasonably faith.” good in acted and true were • • •

absolutely privileged). representatives “ 5. Conditional privileges If one of a number of conditional privileges, as described below. Courts have recognized is generally found not liable for statements that these privileges applies, the defendant believed that the defendant reasonably so long as the would otherwise be defamatory, T true and acted in good faith. statements were b. Legislative privilege b. Legislative that would to statements absolute immunity that grant have provisions Most states proceeding. made during a legislative be defamatory otherwise privilege, the plaintiff must show an abuse of the privilege or that the statements were made with malice. 36 A Guide to False Advertising, CommercialDisparagement, and Related Claims perform theirduties. perform recognize thelegitimateneedofemployerstodeterminetheiremployees’capacity Conditional privilegeoftenarisesintheemploymentcontext,becausecourts a. Employerprivilege believing thetruthofdefamatorystatementinorder tomaintaintheprivilege. However, somestatesrequire thatthespeakerhaveatleastareasonable basisfor privilege inthesecircumstances. Simple negligence,lackofsoundjudgment,orhastyactionwillnotcausetheloss

• • • • • • why sixemployeeswere terminatedwere privileged). (finding thatstatements by managementto1500employeesexplaining Schrader v. EliLilly and Co.,639N.E.2d258,262-63(Ind.1994) another uponasubjectinwhichtheyhavecommon interest.”). they are qualifiedlyprivilegedashavingbeenmadebyonepersonto or statements are made about an employee in an employment context, connection withanemployeereview, orare placedinapersonnel file, 1999) (“T Dillon v. CityofNewYork, 704N.Y its falsity). made knowingittobefalse,oractinginreckless disregard asto canonlyshowabuseofconditionalprivilege whereplaintiff statement (abandoning lack-of-reasonable grounds threshold andstatingthat But seeFerguson v. &Hunt,Inc.,221P Williams believe thatitisacorrect statement.”). reasonable grounds forbelievingthatitistrueandhemusthonestly malice, meaningthat“thepersonmakingthestatementmusthave Louisiana law)(qualifiedprivilege requires goodfaithandlackof Stockstill v. ShellOilCo.,3F to defeataconditionalprivilege,butnotmere negligence). (holding thatactualmaliceorreckless disregard ofthetruthisenough Jacron SalesCo.,Inc.v., 350A.3d688,699-700(Md.1976) Sindorf statement wasfalseorwithareckless disregard astoitstruth.”). or (2)outsidethescopeofprivilege,(3)withknowledgethat privilege byproving thatdefendantacted(1)withcommonlawmalice, (applying NewY Weldy v. PiedmontAirlines,Inc.,985F o theextentthatmemorandaare prepared forinternaluse in plaintiff maydemonstrateabuseofthe ork law)(“Aplaintiff .3d 868,872(5thCir. 1993)(applying .S.2d 1,6-7(N.Y .2d 57,62(2ndCir. 1993) .3d 205(Utah2009) . App.Div.

Liability for Commercial Speech 37

.2d 168, 171-72 (7th Cir. 1993) 1993) .2d 168, 171-72 (7th Cir. inn. 2009) 910 (Minn. 2009) Corp., 766 N.W.2d Boise Cascade Bahr v. complaint in course of investigating harassment (statement made of an because it concerned investigation conditionally privileged misconduct). employee’s 809-810 (Fla. 1984) , 462 So.2d 803, Galbreath Nodar v. meeting regarding father at school board (statements by student’s law privileged, as “[u]nder the common performance were teacher’s his employee’s to an employer regarding of Florida, a communication performance privileged”). is conditionally Coal Co., 996 F Consol. Delloma v. a former employer who gives (applying Illinois law) (“Generally, employer holds some qualified to a prospective a negative reference ... An employer may invoke privilege against defamation suits by prospective inquires to direct a conditional privilege to respond Boys and Girls Clubs of Northwest Indiana, 845 N.E. 2d v. Trail a qualified privilege 130, 136-37 (Ind. 2006) (“Indiana recognizes employers. Like and prospective for communications between former communications, that privilege intracompany privilege afforded needs by permitting former employers human resource protects for an appraisal of to requests yet critical responses ‘to give sincere qualifications without fear of a defamation employee’s a prospective • • • • employers.”). action.”). or coworkers supervisor to an employee’s by an employer statements made Similarly, the necessary to serve reasonably were if the statements conditionally privileged are to perform fitness of an employee in the his or her job. legitimate interest employer’s performance to statements about an employee’s A conditional privilege may also apply for example, in an employment employers, made by former employers to prospective reference. only basic factual information to employers often provide however, As a practical matter, the risk of litigation. and termination dates) to reduce employers (such as hire prospective on whether intra-corporate split to the publication element, courts are With regard communications can constitute publication. In some states, it is a defense to since it is publication if the statement is made between employees of a corporation, number of states hold “talking to itself.” A growing a corporation merely considered otherwise, however. 38 A Guide to False Advertising, CommercialDisparagement, and Related Claims as thereport isafull,fair, and accurateaccountofthecontentscomplaint. isthatsuchreports areamong courts absolutelyprivileged,regardless ofmalice,solong regardWith themoderntrend toreporting onthecontentsofcomplaintsfiledincourt, substantially trueare privileged. to afairreporting privilege.Statements that containminorinaccuraciesbutare mustbefull,fair,A report orarticle andaccurate,madewithoutmalicetobesubject b. Fairreporting privilege produced.”). minorinaccuraciesdonotamounttofalsitysolongasthesubstance, 2001), issubstantiallytrue, michiganlaw)(“Ifthegist,sting,ofarticle app.2001)(“Communicationinsidecorporation,betweenitsofficers, • • • • • • and discussingtrend amongcourts). full, fair, andaccurate accountofafiledcomplaint)(collectingcases containing (newspaper publishernotliablefordefamationarticle Salzano v. N.JerseyMediaGroup Inc.,993A.2d778(N.J.2010) mind ofthereader from thatwhichthepleadedtruthwouldhave is notconsidered falseunlessitwouldhaveadifferent onthe effect the gist,sting,oflibelouscharge bejustified.Astatement overlooks minorinaccuraciesandconcentratesuponsubstantialtruth. Pritt v. RepublicanNat.Committee,557S.E.2d853,861-62(W.Va. the defendantisnotliable...”). Nichols v. Moore, 477F amounting tomore thannegligenceonthenewspaper’s part). fair report privilege,buttheprivilegemay bevitiatedbymisconduct (newspaper reports mustbefull,fair, andaccuratetoenjoythe Howell v. EnterprisePubl’gCo.,LLC,920N.E .2d 1,13(Mass.2010) corporation canconstitutepublication). (recognizing thatacommunicationbetweenemployeesof Popko v. Cont’lCas.Co.,823N.E.2d184,189(Ill.App.Ct.2005) actions fordefamation.”). employees, andagents,isneverapublicationforthepurposesof Thornton v. HoldenvilleGen.Hosp.,36P denied,537U.S.812(2002)(“Thelawoflibel… cert. .3d 396,399(6thCir. 2007)(applying .3d 456,460(Okla.Civ. Liability for Commercial Speech 39 .3d 904, 927-28 (10th Cir. 2007) (applying Utah 2007) .3d 904, 927-28 (10th Cir. E.2d 184, 189 (Ind. 2010) Mittal Steel USA Inc., 929 N. Dugan v. security to company’s supervisor plaintiff employee’s (statement from faith and without because it was made in good chief was privileged a subject on the theft of company property, abuse, as it concerned duty). and interest a common which they shared 809-810 (Fla. 1984) (statements , 462 So.2d 803, Galbreath Nodar v. teacher’s meeting regarding at school board father by student’s of the defendant, privileged, as “[t]he remarks performance were meeting at a school board in person to a school board addressed in an English class at a concerning the curriculum and instruction and his son’s was enrolled public high school in which his son difficulties class clearly came within the scope of the privilege with the listener”). of speaker and based on mutuality of interest , 494 F Kroll Becker v. law) (statements by members of state investigatory body were investigatory body were law) (statements by members of state required the making of reports privileged under Utah law concerning immunity have provided would and therefore by state or federal law, sufficient except that plaintiffs provided suits for libel or slander, from privilege). evidence of malice to overcome , 871 So.2d 1, 23-24 (Ala. 2003) (statements of Argo Town Butler v. made by city council member during city council meeting the public welfare, were to promote privileged, stating, “In order certain stemming from causes of action an absolute privilege from performance of their legislative functions.”). • • • •

upon members of legislative bodies alabama law has conferred c. Common interest privilege interest c. Common interest the so-called common here, privileges described some of the other Overlapping and interest, have a common and the recipient the publisher may apply where privilege it. to promote intended is reasonably the communication privilege d. Public interest of a particular it class of persons carries with A legal duty imposed for the protection reasonably to make statements of a kind that are an absolute or conditional privilege necessary to the performance of the legal duty. 40 A Guide to False Advertising, CommercialDisparagement, and Related Claims g. Competitiveprivilege f. Lawenforcement privilege e. Credit report privilege

• • • • • • • as to the corporation, unless by fair construction and without the aid of corporate vendorormanufacturer, itwillnotbeheld libelousperse publication onitsfaceisdirected againstthegoodsorproduct ofa 914, 924(3rd Cir. 1990)(applyingPennsylvanialaw)(“Where the U.S. Healthcare, Inc.v. BlueCross ofGreater Phila.,898F presumptively qualifiedlyprivileged”). or thestate’s attorneypriortotheinstitution ofcriminalcharges are statements voluntarilymadebyprivateindividualsto thepolice majority oftheotherstateshaveheldinthiscontext, thatdefamatory Fridovich v. Fridovich,598So.2d65,69(Fla.1992)(holding“asa communication betweencitizensandpublicofficials.”). therefor aninvestigationtobeeffective, mustbeanopenchannelof for communicationsbetweencitizensandlawenforcement. Inorder recognizing publicpolicysupports aqualifiedprivilege (“Important Richmond v. Nodland,552N.W.2d 586,589(N.D.1996) was protected byqualifiedprivilege). enforcement thatacustomerhad“pulledgun”insidestore officer v.Williams Tharp,914N.E.2d756(Ind.2009)(statementmadetolaw ill will’s equivalent.’”). or suchawantonandreckless disregard oftherightsanotherasis defamation unlessthedefamatorymatterwasuttered withmalice reporting agenciesenjoythisqualified privilege andare ‘notliablefor 383 (S.D.N.Y County Vanlines, Inc.v. ExperianInfo.Solutions,Inc.,317F interest intheinformation,are privileged.”). reporting agencies,furnishedingoodfaith toonehavingalegitimate 2006) (applyingT Morris v. EquivaxInfo.Services,LLC,457F found tobeconditionallyprivileged). Commission, itserroneous report regarding oneofitscustomerswas duty toreport delinquentaccountstotheAlcoholicBeveragesControl 117 (Mass.App.Ct.1987)(where thedefendantwasunderalegal Dexter’s Rest.,Inc.v. Hearthside Whitehall Co.,508N.E.2d113, . 2004)(applyingNewY eports ofmercantileexas law)(“Reports orothercredit- ork law)(“Credit investigationand .3d 460,471(5thCir. .2d . Supp.2d

Liability for Commercial Speech 41

rademark Office in urner, Antitrust Law urner, . T ass. 1994) 964 (D. Mass. 1994) . Supp. 951, rademark claims may be asserted under both federal and state laws. It

orts §§ 623A, 626 (1979)).

were of poor quality were not defamatory because the statements not defamatory because the statements of poor quality were were or lack of integrity of “dishonesty, did not accuse the producer personal reprehensible incompetence nor even imply any ptr. 252 (Cal. 252 (Cal.App. Ct. Rptr. Sup. Ct., 216 Cal. Inc. v. Polygram Records, goodsindicating that wine producers statements 1985) (comedian’s estatement (Second) 1978)); see also Restatement (Second) Brown § 738c, at 281 (Little, of T extrinsic evidence it imputes to the corporation fraud, deceit, fraud, deceit, to the corporation evidence it imputes extrinsic to in relation conduct in its business or reprehensible dishonesty, or product.”) said goods , 865 F Leavit Inc. v. Picker Int’l, services or product, a rival’s the discussion involves where (“Generally, it ‘imputes to the corporation libelous unless it is not considered . . many buyers conduct.’ . or reprehensible fraud, deceit, dishonesty, [of a rival] as non-objective and highly disparagement . . . recognize & Donald F 3 Philip Areeda biased.”) (quoting

• • characteristic”).

A. Trademark Infringement or Dilution Infringement A. Trademark name or logo) in an advertisementThe use of a trademark (such as a brand or other infringement or dilution by the speech may give rise to a claim for trademark commercial T trademark owner. atent and T by the P be registered is not necessary for a trademark to to be infringed or diluted. order IV. Other Claims IV.

or diluted.” and Trademark Office in order to be infringed infringed be to order in Office Trademark and for a trademark to be registered by the Patent Patent the by registered be to a trademark for both federal and state laws. It is not necessary necessary is not It laws. state and federal both “Trademark claims may be asserted under under asserted be may claims “Trademark 42 A Guide to False Advertising, CommercialDisparagement, and Related Claims also fairuse,provided thatthenameisnotbeingusedasatrademark. of thegoodsandservices.Useaparty’s individual nameinhisorherownbusinessis provided thatthedesignationisbeingusedtofairlyandaccuratelydescribesomeaspect actually atrademarkuseassuch,butisinstead ofadescriptiveword orphrase, The useofanotherparty’s trademarkconstitutes fairuseifthechallengedisnot adopting themark,andotherfactors. actual confusion,thestrength trademark,theintentofdefendantin oftheplaintiff’s and services,overlapinconsumers,channelsoftrade,theexistenceany factor balancingtestwhichconsidersthesimilarityofmarks,goods In evaluatingwhetherthere employamulti- isatrademarkinfringement,mostcourts sponsored bythetrademarkowner. and servicesare comingfrom thetrademarkowner, orare with,endorsedby, affiliated or goods andservices.Thatis,consumersmustbelikelytobelievethattheaccused ortheirrespectivelikely tobeconfusion,mistakeordeceptionasbetweentheparties In order toprove trademarkinfringement,aownermustprove thatthere is

• • • • • • • • products beingsold). designer, forpurposesofidentifyingdesigner inadvertising (applying fairusedefense touseofHENSLEY Hensley Mfg.,Inc.v. ProPride, Inc.,579F 15 U.S.C.§1115(b)(4). 1026 (9thCir. 2004)(applyingeight-factor test). Playboy Enters.,Inc.v. NetscapeCommc’nsCorp.,354F (1st Cir. 2008)(applyingeight-factortest). Boston DuckTours, LPv. SuperDuckTours, LLC,531F Cir. 2009)(applyingeight-factortest). Starbucks Corp.v. Wolfe’s Borough Inc.,588F Coffee, unfair competitionforuseoftrademarkinadvertisement). cleaner salesandrepair shopfortrademarkinfringement,dilution,and 2004) (vacuumcleanermanufacturer suedindependentvacuum Scott FetzerCo.v. HouseofVacuums Inc.,381F sell goods). dilution foruseofmanufacturer’s trademarkandlogoonwebsiteto manufacturer suedwebsiteoperatorfortrademarkinfringementand Audi AGv. D’Amato,469F 15 U.S.C.§1125(a). .3d 534(6thCir. 2006)(automobile .3d 603,612(6thCir. 2009) , lastnameoftrailerhitch .3d 477(5thCir. .3d 97,115(2d .3d 1,10n.6 .3d 1020, Liability for Commercial Speech 43

.3d 211 (3rd .3d 211 (3rd .3d 97 .3d 97 .2d 302 (9th Cir. .2d 302 (9th Cir. .3d 465, 489 (5th Cir. 2008) (finding no nominative 2008) .3d 465, 489 (5th Cir. UCKS name not protected as parody as parody 2009) (finding CHARBUCKS name not protected (2d Cir. it was used as a brand for the defendant’s under federal statute where own coffee). fair use where sportswear manufacturer sold t-shirts sportswear using universities’ manufacturer fair use where suggested affiliation, that improperly color schemes and logos in a way sponsorship, or endorsement). New Kids on the Block v. News Am. Publ’g, Inc., 971 F News Block v. New Kids on the 1992) (articulating test for nominative fair use). oft-cited three-part Inc., 425 F Lendingtree, Corp. v. Century 21 Real fair use variation of New Kids test for nominative 2005) (employing Cir. in the context of an affirmative defense to trademark infringement). Smack Agric. & Mech. Coll. v. Bd. of Supervisors for La. State Univ. Co., 550 F Apparel 15 U.S.C. § 1125(c)(3)(A). Coffee, Inc., 588 F Borough Wolfe’s Starbucks Corp. v. • • • • •

rademark dilution, in contrast to trademark infringement, requires the unauthorized infringement, requires rademark dilution, in contrast to trademark he use of another’s trademark for purposes of parody may be protected, even if the may be protected, trademark for purposes of parody The use of another’s not met (because, for example, the are for the statutory defense of parody requirements own goods or services and accused mark is being used as a designation for the party’s not just to identify the famous trademark owner). T that is likely to blur or tarnish the famous mark in the use of a famous mark in a manner of any likely confusion. The federal dilution eyes of consumers even in the absence be a defense to a claim that it shall provides statute, as amended in 2006, expressly n addition, the doctrine of nominative fair use provides that a partyuse a trademark may provides nominative fair use the doctrine of In addition, own goods trademark owner’s owner itself or the the trademark mark to identify owner’s applies, many courts fair use whether nominative In determining and services. consider some more (as opposed to use the trademark need to is a legitimate there whether than was of the trademark whether the party or phrase), used more descriptive word as a logo), and whether (such the trademark owner of its products necessary to identify or falsely suggest sponsorship engaged in any other acts that would the defendant has the trademark owner. endorsement by use is “fair use . . . , including use in connection of trademark dilution if the accused goods or services; that permits consumers to compare with advertising or promotion upon the famous mark owner or criticizing, or commenting or identifying, parodying, 15 U.S.C. § 1125(c)(3)(A). In order mark owner.” the goods or services of the famous the accused use of the mark must not be used as to qualify for the statutory defense, own goods or services. a designation for the party’s 44 A Guide to False Advertising, CommercialDisparagement, and Related Claims monetary losses. salesorother including whetherthecopyrightownerislikelytoexperience anydiverted oftheuseonmarketvaluecopyrightedwork, as awhole;and(4)theeffect usedin relation(3) theamountandsubstantialityofportion tothecopyrightedwork for commercial or nonprofit educationalpurposes; (2) thenature ofthecopyrightedwork; however, takingintoaccount(1)thepurposeandcharacterofuse,includingwhether itself islikelytoconstitutefairuse.Eachcasemustbedecidedonitsownfacts, copyrighted workforpurposesofcriticizing,commentingupon,orparodying thework Fair useisadefensetocopyrightinfringement.Generallyspeaking,theof are filtered out. substantially similarintheeyesofanordinary observeroncetheprotectable elements on accesstothecopyrightedworkplusprobative similarity)andthetwoworksare infringement occurswhenacopyrightedworkiscopied(whichmaybeinferred based but onlytotheoriginalandcreative expressions ofsuchideasormethods.Copyright well astextandimages.Copyrightdoesnotextendtoanyideaormethodofoperation, protects original,creative works,andmayextendtocorporatelogoscharactersas communication maygiverisetoaclaimforcopyrightinfringement.Copyright The useofanother’s copyrightedmaterialinone’s orcommercial ownadvertisement B. CopyrightInfringement VUITTON fordesignergoodsdespiteinapplicabilityofstatutoryparody defense). findingthatCHEWYVUITONasabrandfordogtoysdidnotdiluteLOUIS (affirming Louis VuittonMalletierS.A.v. HauteDiggityDog,LLC,507F

protection). • • • • • a fairuse). campaign constitutedcopyright infringementthatwasnotprotected as photo showingindividualwearing copyrightedeyewearinadvertising On Davisv. Gap,Inc. , 246F 17 U.S.C.§107. (2007) (discussingextensionofcopyrightprotection tocharacters). Melville B.Nimmer&DavidNimmer, NimmeronCopyright§2.12 in phonebookdidnotmeetstandard forobtainingcopyright constitute copyrightinfringementbecausecompilationoffactualdata 64 (1991)(publicationofinformationcopiedfrom phonebookdidnot Feist Publ’ns,Inc.v. RuralTel. Serv. Co.,Inc.,499U.S.340,361- 17 U.S.C.§§101,etseq. .3d 152,173-76(2dCir. 2001)(useof .3d 252(4thCir. 2009) Liability for Commercial Speech 45 .S.2d 668 .3d 1022, 1030 .3d 1022, .3d 956 (Utah 2008) (terminated pp. 2007) (graduate Ariz. Ct. App. 2007) (graduate .3d 93, 97-103 ( pp. Div. 2008) (anesthesiology resident sued medical school 2008) (anesthesiology resident . App. Div. student filed defamation and tortiousstudent filed defamation with business interference information incorrect against advisor for reporting expectancy claims to the INS). 441 (Cal. Ct. 3d 429, , 10 Cal. Rptr. Dynamic Details, Inc. Franklin v. defendant when economic relationships contractual and prospective plaintiffsuggested in a series of emails that had stolen copyrighted School District, 194 P Davis Oman v. Sony Computer Entm’t Am., Inc. v. Bleem, LLC, 214 F Bleem, Inc. v. Entm’t Am., Sony Computer video game in comparative a from shots of screen 2000) (use (9th Cir. advertising use). constituted fair Likins, 167 P Dube v. and intentional infliction worker sued school district for defamation his surrounding actions for school district’s of emotional distress 3d 1 (Cal. Ct. App. 2008) Rptr. Inc., 84 Cal. Church, Mariners Gunn v. filed defamation and member and worship director (former church he when against church suit distress intentional infliction of emotional for being homosexual). was fired Health and Hospitals Corp., 863 N.Y New York Pandian v. (N.Y of contract and defamation when medical school submitted for breach of to American Board negative evaluation of resident • • • • • • app. 2004) (plaintiff with alleged trade libel and interference materials). termination). Anesthesiologists). D. Intentional Infliction of Emotional Distress D. Intentional Infliction of Emotional a party believed to be harmed by false or misleading statements In some circumstances, under state law. of emotional distress may bring a claim for intentional infliction C. Interference with Contractual Rights with Contractual C. Interference for speech may give rise to claims statements in commercial False or misleading pursuant to state law. relations contractual with existing or prospective interference of Contract E. Breach between the parties, false or misleading statements may Depending upon the relationship of contract. give rise to claims for breach 46 A Guide to False Advertising, CommercialDisparagement, and Related Claims Healthcare Prods. v. Schwarz Pharma, Inc.,586F §§ 337(a);Photomedex,Inc.v. Irwin,601F Lanham Actisbeingusedmerely asavehicleforenforcing theFDCA.See21U.S.C. willoftendismiss LanhamActclaimswhereFDCA, andcourts theyperceive thatthe other products. 21U.S.C.§§301,etseq.There isno private rightofactionunderthe medicaldevicesand false ormisleadingstatementsonlabelsforfood, drugs, andcertain industry regulations. Forexample,theood,Drug,andCosmeticAct(DC)prohibits mayalsobesubjecttoliabilityforfalseormisleading statementsthatviolate Parties ofIndustryStatutesandRegulations H. Violation “ right ofactionunderthestatute. initiative orattherequest ofacompetitororanotheraggrievedparty, there isnoprivate §§ 1.1,etseq.Whileenforcement actionsmaybebrought bytheFTC,eitheratitsown foods, drugs,devices,services,orcosmetics.”15U.S.C.§§45(a)(1)&52(a);16C.F purpose ofinducing,orwhichislikelytoinduce,directly orindirectly thepurchase of commerce”or affecting andspecificallyprohibits forthe “anyfalseadvertisement… The Federal ofFederalTradeG. Violation CommissionStatutesandRegulations misappropriation, andsimilartorts. practices. Manystatesalsorecognize commonlawclaimsforunfaircompetition, Claims mayoftenbebrought understatestatutesprohibiting unfairanddeceptivetrade F. ofStateLaw UnfairorDeceptivePracticesinViolation industry regulations.”industry false or misleading statements that violate Parties may also be subject to liability for

• • libel, andmisappropriation oftradesecrets inviolationofFloridalaw). counterclaim againstformeremployeefor, interalia,defamation,trade (M.D. Fla.2006)(defendantdogtrainerandmilitarycontractorbrought Border CollieRescue,Inc.v., 418F Ryan to pregnancy andchildbirth). defamation whenshewasfired afterbeingonaleaveofabsencedue (terminated attorneysuedformerlawfirmforbreach ofcontractand Kamaka v. GoodsillAndersonQuinn&Stifel,176P rade Commission(FTC)prohibits “unfairordeceptiveactspracticesin .3d 919,924(9thCir. 2010);Schering-Plough . Supp.2d1330,1338-39 .3d 500,508-10 (7thCir. 2009). . 3d91(Haw. 2008) .R Liability for Commercial Speech 47

rade Commission rade Commission .R. §§ 1.1, et seq.) and at www.ftc.gov. .R. §§ 1.1, et seq. Better Business Bureaus V. Forums for the Enforcement of False Advertising of Claims for the Enforcement Forums V. advertisement false or misleading by the allegedly that is aggrieved A company of a widely known. not which are to it, some of of options available has a number competitor or State CourtLawsuit in Federal A. Civil or in either federal advertisingA lawsuit for false under the Lanham Act may be brought an injunction is a right to a jury trial, and state court. §§ 1331, 1338. There 28 U.S.C. available. are and monetary damages Attorney General Commission or State Action by Federal Trade B. Enforcement the Federal T a civil lawsuit, a company may inform As an alternative to false advertisement.ttorney General (AG) of an allegedly (FTC) or a state A The FTC or be will in which case a formal proceeding against the advertiser, AG may take action against more to commence proceedings commenced. The FTC or AG has the discretion engaged in similar such as all companies within an industry that are than one advertiser, advertising practices. the FTC determines whether the advertisement proceeding, In an FTC enforcement or is “any acts or practices in or affectingconstitutes an “unfair or deceptive commerce” false advertisement to induce, directly . . . for the purpose of inducing, or which is likely 15 U.S.C. of foods, drugs, devices, services, or cosmetics.” the purchase or indirectly §§ 45(a)(1) & 52(a); 16 C.F that consumers, as opposed to The FTC or AG is likely to take action if it appears being harmed by the advertisement in question. The FTC is principally competitors, are or otherwise widespread. national in nature concerned with advertisements that are to the attention of the FTC or AG is not normally A competitor who brings a matter any party receive or against a third proceeding entitled to participate in any resulting monetary damages. by the FTC is set forth in the proceedings Detailed information about enforcement (16 C.F applicable regulations the National Advertising Division of the Council of Through C. Enforcement relating programs operates several self-regulating The Council of Better Business Bureaus the National Advertisingto nationwide advertisements, Division (NAD). through principally established by the National AdvertisingReview for NAD are The policies and procedures Advertising Review Unit (CARU), which Council (NARC). NARC also governs the Children’s Retailing Self- and the Electronic children, towards advertisements directed addresses marketing. response direct (ERSP), which addresses Regulation Program Any partyNAD, alleging that a national advertisement may file a complaint with is not that the complaint meets truthful or accurate. NAD will investigate the claim and, provided 48 A Guide to False Advertising, CommercialDisparagement, and Related Claims Detailed informationaboutNADisavailableatwww.nadreview.org. reported totheappropriate federalorstateauthorities. failstocomplywithadecisionofNADorARB,thisfactwillordinarilyadvertiser be public member, agencymember, oneadvertising andthree members.Ifan advertiser ReviewBoardthe NationalAdvertising (NARB).ThereviewingARB panelconsistsofone N areand astatementbytheadvertiser made public.NADdecisionsmaybeappealedto At theconclusionofcase,challenger’s andadvertiser’s positions,NAD’s decision, still running. procedure oftenallowsforacasetoberesolved whiletheaccusedadcampaignis decision within60businessdaysofthefilingdatecomplaint.Thisaccelerated NAD adheres todetailedprocedures withstrictdeadlines,andordinarily deliversawritten Commission), andpublicizethefactthatithasdoneso. refer themattertoappropriate federalorstateauthorities(suchastheFederalT intheNADprocess, declinestoparticipate NADwill confidential material.Iftheadvertiser tomakeuptwosubmissions,whichmayinclude challenger eachhaveanopportunity basiccriteria,commenceacaseagainsttheadvertiser.certain and Theadvertiser for providing information andresources further case. thatmay beusefulinaparticular treatises may beusefulforproviding amore in-depthanalysisintheseareas oflaw, and defamation, andcommercialclaims offalseadvertising, disparagement.Thefollowing This publicationisintended toprovide onlyabriefsummaryof thelawrelating tothe VI. Treatises and OtherSources ofInformation Exhibit 1,andchecklistsforcompliancetrainingare provided inExhibits2through 5. groups thatengageinsuchactivities.Riskmanagementprocedures are suggestedin provide basicprocedures andcompliancetrainingforrepresentatives from thebusiness and hostingawebsite.Therefore, youmaywant toadvisetheseclientsthattheyshould pressmarketing, publiccommunications(suchasadvertising, releases ornewsletters), expose theircompanytoliability. Suchactivitiesincludehumanresources, salesand However, even“lowrisk”clientshavebusinessgroups thatengageinactivitiescould activities. extensive advertising orpublicrelationsclients, advertising firms, orInternetserviceproviders), orengagesin susceptible toliabilityfordefamation(e.g.,publishers,newsorganizations orothermedia risk managementprocess ifyourclientisofatypethat maybeespeciallyimportant action andimplementingprocedures tominimizetheriskofunanticipatedclaims.This andpublicrelationsadvertising, involves understandingtheelementsofeachcause Advising clientsonhowtominimizerisksassociatedwithbusinesscommunications, VI. MinimizingtheRiskofLiability rade

Liability for Commercial Speech 49 orts,. (concerning §§ 558 et seq ischer, Perle & Williams aylor Williamsischer, & Mark A. F and Unfair Competition McCarthyon Trademarks McCarthy, J. Thomas false advertisement). 2010) (concerning et seq. (4th ed. § 27:24 erle, JohnT Gabriel P commercial §§ 623A, 626 (concerning defamation), and (3rd ed. 2010). et seq. (3rd Law § 5.01 on Publishing and Related Robert Libel, Slander, D. Sack, Sack on Defamation: .H. Johnson, Advertising and Bruce E and Commercial Steven G. Brody Guide (2nd ed. 2010). Speech: A First Amendment of T Restatement (Second) • • • • • disparagement). (4th ed. 2010). Problems 50 A Guide to False Advertising, CommercialDisparagement, and Related Claims procedures thattakeintoaccountitsbusinessphilosophy, budgetandtoleranceforrisk. minimizing riskare suggestedbelow. Obviously, eachclientshoulddevelopitsown describedinthischapter. torts communications andadvertising Otherprocedures for Basic trainingshouldincludeteachingyourclientstheelementsofbusiness T Exhibit 1:ChecklistforRiskManagementProcedures raining high-risk clients is the single most important procedureraining high-riskclientsisthesinglemostimportant forminimizingrisk. liability. Promptly report anyclaims totheinsurer. 9. Obtainappropriate insurancecoverageforbusinesscommunicationsandadvertising information couldreduce theriskofadefamationsuit. prohibits employeesfrom improperly disclosingpersonnel andothersensitive proprietary informationgenerally. Inaddition,anondisclosure agreement thatexpressly disclosure ofconfidentialinformation.Anondisclosure agreement safeguards aclient’s 8. Require allemployeestosignanondisclosure agreement prohibiting theimproper threatened orfiled,considerpublishinga retraction ofthestatementatissue. defamation,orcommercial7. Ifanactionforfalseadvertising, disparagement is competitors thatmaybeactionable(orresult inlegalaction). 6. Maintaincorroborating informationforstatementsmadeaboutthird or parties disclaim allliabilityforposting. right toremove anycontentforreason atitssolediscretion. Thepolicyshouldalso company doesnotreview contentpostedonthesitebythird andreserves parties the policy shouldincluderequirements forpostingcontent,andprovide noticethatthe employees, customers,orthepublicare abletopostmessagesonthewebsite.Such 5. Developapolicyregarding communicationsonthecompany’s if website,particularly 4. Includeacorporatecommunicationspolicyintheemployeehandbook. 3. Sendquestionablematerialtooutsidecounselforreview before release. for theclient.Makesure thattheyare allwell-trained. about competitors.Limitthenumberofpeoplewhoare authorizedasspokespersons 2. Assignonepersontoreview allpubliccommunicationsthatcontainstatements disclosure ofpotentiallydefamatorystatements. through toidentifyandprevent 5,totrainmanagementandhigh-riskdepartments the 1. Developandimplementatrainingprogram foryourclient,asdescribedinExhibits1

Liability for Commercial Speech 51 ou may want to suggest an audit if you ou may want to suggest our client’s website administrator should be trained to identify suspect statements to identify suspect statements administrator should be trained website our client’s suspect that a client’s website contains false advertising website contains defamatory or or potentially suspect that a client’s disparaging content. departments that even internal their human resources 4. Clients should remind in information about an employee may result dissemination of potentially defamatory Confidentiality is crucial to minimizing risk. liability. they plan to make about competitors that could 5. Clients should scrutinize statements customers, or cause financial with existing their competitors’ contractual relations injure in particular should be trained to identify such loss. Sales and marketing groups question about whether the is any if there a legal evaluation statements, and to request or false advertising. disparagement commercial statement could constitute defamation, parties about statements made by third actionable to recognizing 6. With respect “free the U.S. Constitution protects your clients that your clients, you should remind opinions, hyperbole, and name-calling (e.g., your client is a Therefore, expression.” generally not such statements are stupid, senile bum”) may be upsetting, but “silly, or services will products statements about your client’s unflattering actionable. Further, likely to mislead or literally false, are statements are likely not be actionable unless the conduct” on or reprehensible confuse consumers, or allege “fraud, deceit, dishonesty, loss. economic likely to cause direct the part of your client, and are 1. Clients should be informed that false or misleading communications may result in communications may result be informed that false or misleading 1. Clients should the Internet, or published posted on printed in correspondence, liability whether spoken, in advertising content. or editorial even truthful be informed that, under certain2. Clients should circumstances, of injuring if made with the malicious intent in liability statements can result another party. 3. Y Y published on the Internet. they are before Exhibit 2: Checklist for Compliance Training Checklist for Exhibit 2: the the elements of your clients include teaching training should Basic compliance also concepts should The following torts communications business described herein. be part a training program: of 52 A Guide to False Advertising, CommercialDisparagement, and Related Claims knowledge offactsnotwarrantingtheopinion? 9. Isthestatementoneofopinionratherthanfact?fopinion,didspeakerhave consumer wouldtakeitseriously)? products oftheclient’s competitor, whichissounrealistic orplayfulthatnoreasonable 8. Isthestatement“reverse (i.e.,anexaggerationofthequalities puffery” product superiority)? upon whichnoreasonable consumerwouldrely, ratherthanameasurableclaimof (i.e.,anexaggerationorboastabouttheclient’s7. Isthestatement“puffery” products incommercial6. Couldaparty competitionwiththeclientbeinjured bythestatement? in aproduct thatwouldonlybediscovered insert afterthepurchase wascomplete)? purpose ofinfluencingpurchasing decisions(asopposedto,forexample,astatement disseminatedtothepurchasing thestatementbesufficiently 5. Will publicforthe thestatementbeplacedininterstatecommerce?4. Will 3. Isthestatementmaterial,inthatitislikelytoinfluencepurchasing decisions? misled orconfused?Whatwouldaconsumersurveybelikelytoshow? substantial numberofconsumers?Ifso,isthere evidencethatconsumerswere actually 2. Ifthestatementisliterallytrue,itnonethelesslikelytomisleadandconfusea 1. Isthestatementliterallyfalse? Exhibit 3:ChecklistforFalseAdvertising Liability for Commercial Speech 53 1. Does the statement imply or contain any fact concerning a living individual or an a living individual fact concerning or contain any the statement imply 1. Does Will false? that is substantially existing company to one or be “published” the statement orally or in writing? people, either more opinion of the individual of the community form a lower member a reasonable 2. Would Will of the statement? cause the public to the statement result direct or company as a his or her the statement injure or company? If an individual, will avoid the individual status? professional of dishonesty or fraud, mental accuse an individual or company 3. Does the statement delete potential for bad behavior? Or does a statement or immorality, disease, crime or them? important a way as to injure an individual or company in such facts about for reason is the client’s true but potentially damaging, what 4. If the statement is publishing the statement? Is it about a matter of public official5. Does the statement concern a or figure? public concern? an opinion and a between 6. Is the statement an opinion? One way to tell the difference false. fact is that an opinion cannot be proven and fairly portray7. Does the statement accurately Are the facts of the matter? available? sources corroborating proceeding? the statement made in connection with a judicial or legislative 8. Was with an employment matter or a matter of 9. If the statement was made in connection believed to be faith and reasonably was the statement made in good public interest, true? Exhibit 4: Checklist for Defamation Checklist for Exhibit 4: 54 A Guide to False Advertising, CommercialDisparagement, and Related Claims Exhibit 5:ChecklistforCommercial Disparagement dishonesty, orreprehensible conduct? 3. Doesthestatementimputeanyoffollowingtoarivalcompany:fraud,deceit, 2. Couldthestatementdirectly causefinancialdamagestoacompetitor? a contractualrelationship withanexistingcustomer? the publicationofastatementregarding acompetitor’s product orserviceinterfere with onthechecklistfordefamation,Exhibit4,could 1. Inadditiontothequestionssetforth Liability for Commercial Speech 55

SUPERIOR COURT SUPERIOR OF THE DEPARTMENT COURT TRIAL Action No. 10-0000 Civil PARTIES ) ) ) ) ) ) ) ) ) JURISDICTION AND VENUE COMPLAINT AND JURY DEMAND COMPLAINT AND JURY Plaintiffs, Defendants. COMMONWEALTH OF MASSACHUSETTS COMMONWEALTH

The Massachusetts Superior Court has jurisdiction over this action pursuant to M.G.L. c. The Massachusetts Superior Court has jurisdiction over this action pursuant to The United States District Court for the District of Massachusetts [If filed in federal court: Plaintiff Zephyr Security Software, Inc. (“Zephyr”) is a Delaware corporation with a principal with a principal is a Delaware corporation Inc. (“Zephyr”) Zephyr Security Software, Plaintiff Way, residing at 17 Reindeer of Zephyr, Anderson is the founder and president John Plaintiff residing at 89 Hedgehog Lane, Providence, Defendant Douglas Balmy is an individual corporation owned by Balmy is a Delaware Inc. (“Secur-Space”), Defendant Secur-Space, 5. 6. 1. 2. 3. 4. The amount in controversy exceeds twenty-five thousand dollars 223A, § 3 and G.L. c. 214, § 1. in this forum is proper pursuant to G.L. c. 223, § 1. Venue ($25,000), exclusive of interest and costs. and has jurisdiction has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331, 1332 and 1338, Massachusetts. place of business at 123 Dove Street, Boston, Brookline, Massachusetts. Balmy has also uses the alias “Code __Kid” when publishing Road Island. On information and belief, Anderson. information concerning Zephyr and Birds Nest Street, Boston, Massachusetts. with a principal place of business at 2000 [If diversity: over state law and common law claims pursuant to the doctrine of pendant jurisdiction. exclusive of interest The amount in controversy exceeds seventy-five thousand dollars ($75,000), States District Court for the District of Massachusetts is proper under in the United Venue and costs. 28 U.S.C. § 1391.]] Exhibit 6: Sample Complaint Exhibit 6: ss. SUFFOLK, INC., SOFTWARE, ZEPHYR SECURITY and JOHN ANDERSON, v. INC., SECUR-SPACE, and DOUGLAS BALMY 56 A Guide to False Advertising, CommercialDisparagement, and Related Claims your company.” advisor that,“ZephyrSofthas secretfilesembeddedinitthatmakepossibleforZephyr tospyon Zephyr’s long-termclients,Gizmo,Inc.(“Gizmo”),andinformed MeganCharles,Gizmo’s security Zephyr’s softwareinpreventingsecuritybreachesisalso whollyuntrue. products orservicesiswhollyuntrue. provides?” security breaches.Doesn’t yourbusinessdeserve thesecurityandpeaceofmindthatonlySecur-Space tests showthatSecur-Space’s softwareisthreetimesmoreeffective thanZephyrSoftinpreventing advertisement wentontocomparetheSecur-Space softwareproductwithZephyr’s: “Independent “Zephyr’s presidenthasacriminalpast.Nowonderheconsidershimselfanexperton security.” The that read:“Can You Entrust Your Building’s Securityto This Man?” The textbelowtheheadlineread: in theBostonBusinessBee. The advertisementfeaturedaphotographof Anderson andaheadline message onthe Yippee! messageboard. Security Software,hasacriminalpast.” message onthe Technology messageboard:“IknowthatJohn Anderson, thepresidentofZephyr topics. UserscanpostmessagesforthepublictoviewonInternet. clients. Accordingly, Secur-Space competesforthesameclientsasZephyr. visibly angry. employment onJuly31,2007. Boston. and otherpublicproperties.Zephyrhasestablisheditselfasawell-respectedcorporatecitizenof sector. Zephyr hasalsoadvisedthecityofBostononmattersrelatingtosecuritygovernmentoffices blue chipclienteleovertheyears,andhaswonindustryawardsforinnovationinsecurityservices applications forover15years.ItspremiersoftwareapplicationisZephyrSoft.Zephyrhasdevelopeda 20. 19. 18. 17. 16. 15. 14. 13. 12. 11. 10. 9. 8. 7. On oraboutNovember20,2008, Balmy, asarepresentativeofSecur-Space, calledoneof The statementthatSecur-Space’s securitysoftwareisthreetimesmoreeffective than The statementthat Anderson, and byaffiliationZephyr, cannotbetrustedtoprovidesecurity On oraboutOctober20,2008,BalmyandSecur-Space publishedafull-pageadvertisement The statementthat Anderson hasacriminalpastiswhollyuntrue. On informationandbelief,BalmyisthepersonwhousedaliasCode_Kidtopublishsaid On oraboutSeptember20,2008,apersonusingthealiasCode_Kidpublishedfollowing One Yippee! messageboardconcerns Technology. An Internetsitecalled Yippee! operatesandmaintains“messageboards”concerningvarious On informationandbelief,Secur-Space developscustomsecuritysoftwareforcorporate Balmy foundedhisowncompany, Secur-Space, onorabout August 1,2001. When Anderson advisedBalmythathisemploymentwasbeingterminated, Balmy washiredbyZephyrasacomputerengineerinJune2006.terminatedBalmy’s Zephyr isalocalcompanythathasbeendevelopingsoftwareforcorporatesecurity FACTS Liability for Commercial Speech 57 . COUNT I COUNT II (Defamation of Zephyr by Balmy and Secur-Space) (Defamation of Zephyr by Balmy and (Defamation of John Anderson by Balmy and Secur-Space) (Defamation of John By telling the statement to the security advisor at Gizmo, Megan Charles, Defendants By telling the statement to the security advisor at Gizmo, Megan Charles, Defendants causing Defendants negligently published the false and defamatory statements about Zephyr, that the Defendants published the false and defamatory statements with the knowledge defamatory statements injured the reputation of Zephyr. Defendants’ Defendants’ statements that the president of Zephyr, John Anderson, has a criminal past and Anderson, has a criminal John of Zephyr, statements that the president Defendants’ and in the Boston Business Yippee! board of By publishing the statements on the message software has secret files embedded in it, and that statements that Zephyr’s Defendants’ Zephyr incorporates by reference the allegations set forth in paragraphs 1 through 29, above. Zephyr incorporates by reference the allegations The statement that Zephyr spies on Gizmo, or on any company, is also wholly untrue. is also wholly any company, on Gizmo, or on that Zephyr spies The statement its that it was terminating informing Zephyr sent a registered letter Gizmo later, Three days paragraphs 1 through 23, above. by reference the allegations set forth in Zephyr incorporates Anderson, has a criminal past and John that the president of Zephyr, statements Defendants’ and in the Yippee! message board of Technology on the By publishing the statements Anderson, and defamatory statements about Defendants negligently published the false statements with the knowledge that the Defendants published the false and defamatory Anderson. the reputation of defamatory statements injured Defendants’ The statement that ZephyrSoft has secret files embedded in it is wholly untrue. in it is wholly has secret files embedded that ZephyrSoft The statement 34. 35. 36. 37. 31. 32 33. 30. 22. 23. 24. 25. 26. 27. 28. 29. 21. published the defamatory statement to at least one other person. damages, including the monetary loss of an important and valuable client, Gizmo, and Zephyr to suffer reputation. injury to Zephyr’s statements were false, or with reckless disregard as to the falsity of the statements. and defamed Zephyr. cannot be trusted, are false and untrue, statements to a wide range of persons in the public via the Bee, Defendants published defamatory Internet. Zephyr uses the files to spy on its clients, are false and untrue and defamed Zephyr

the use of Zephyr’s contract was for The software. destroying Zephyr’s contract and security services in excess of $100,000 annually. services, for which Gizmo paid Zephyr software and support Anderson. false and untrue, and defamed cannot be trusted, are Bee, Defendants published defamatory statements to a advertisement placed in the Boston Business wide range of persons in the public. emotional distress and injury to his reputation. damages, including causing him to suffer disregard as to the falsity of the statements. statements were false, or with reckless

58 A Guide to False Advertising, CommercialDisparagement, and Related Claims statement wasfalse,orwithrecklessdisregardastothefalsityofstatements. Gizmo, andinjurytothereputationofZephyrSoftZephyr. to suffer specialandgeneraldamages,includingthemonetarylossofanimportantvaluableclient, published thedisparagingstatementstoawiderangeofpersonsinpublic. disparaged Zephyr’s softwareproduct,ZephyrSoft. reprehensible conducttoZephyr. causing acustomertoregardZephyrSoftasdangerous,andimputingdeceit,dishonesty published thedisparagingstatementtooneormorepeople. untrue, anddisparagedZephyr’s softwareproduct,ZephyrSoft. commerce. newspaper distributedinMassachusetts andotherstates,wastherebyplacedintointerstate to purchasesecurityproductsandservices. influence, thepurchasingdecisionsofpotentialcustomers ofZephyr continue todeceive,asubstantialsegmentofitsintendedaudience. Secur¬Space’s andZephyr’s products. security breaches,”isfalseandmisleading,misrepresented thecharacteristicsandqualitiesofboth Space’s softwareisthreetimesmoreeffective thanZephyr’s software,ZephyrSoft,inpreventing 45. 44. 43. 42. 41. 40. 39. 38. 51. 50. 49. 48. 47. 46. Defendants publishedthefalseanddisparagingstatementwithknowledgethat Defendants publishedthefalseanddisparagingstatementsaboutZephyrSoft,causingZephyr By publishingthefalseanddisparagingstatementinBostonBusinessBee,Defendants Defendants’ statementthatZephyr’s presidenthasacriminalpastisfalse anduntrue, Defendants negligentlypublishedthefalseanddisparagingstatementconcerningZephyrSoft, By tellingthestatementtosecurityadvisoratGizmo,MeganCharles,Defendants Defendants’ statementthatZephyr’s softwarehassecretfilesimbeddedinitisfalseand Zephyr incorporatesbyreferencetheallegationssetforthinparagraphs1through37,above. The deceptiveadvertisement injured, andislikelytocontinueinjure,Zephyr. The deceptiveadvertisementwaspublishedintheBoston Business Bee,abusiness The deceptionoftheadvertisementismaterial,andhasinfluenced, andwillcontinueto The falseandmisleadingstatementintheadvertisementdeceived, andhasatendencyto The statementsinDefendants’ advertisementthat,“Independenttestsshowthat Secur- Zephyr incorporatesbyreferencetheallegationssetforthinparagraphs1through45,above. (False Advertising —Section43(a)oftheLanhamAct) (False Advertising (Commercial Disparagement) COUNT IV COUNT III , specificallycompaniesthatplan Liability for Commercial Speech 59

ZEPHYR SECURITY SOFTWARE, INC. SOFTWARE, ZEPHYR SECURITY ANDERSON JOHN attorney, their By #000001 BBO Kermit, LLP Josephina KIBBLESTONE & KERMIT 1 Winter Street Winter 1 02110 MA 111-2222 Boston, (617) Tel. COUNT V JURY DEMAND JURY

Preliminarily and permanently enjoin Defendants from publishing further defamatory enjoin Defendants from publishing Preliminarily and permanently Anderson, and ZephyrSoft; statements about Zephyr, Defendants on all counts of the Complaint; Enter judgment against at trial; damages in an amount to be determined Plaintiffs Award fees plus its reasonable attorneys’ enhanced damages as permitted by law, Plaintiffs Award and the costs of this action; and just and proper. Grant such other relief as the Court deems [Other counts may include unfair competition, violation of statutes, intentional interference unfair competition, violation of [Other counts may include The deceptive advertisement violates Section 43(a) of the Lanham Act, codified at 15 U.S.C. codified at 15 U.S.C. Act, Lanham Section 43(a) of the violates The deceptive advertisement at law. no adequate remedy Zephyr has A. B. C. D. E. 52. 53. Zephyr demands a jury trial on all triable issues. Zephyr demands a jury trial on all triable 54. respectfully request that this Court: THEREFORE, Plaintiffs Dated: ______

etc.] breach of non-compete agreement, with contractual relations, of representations misleading, or disparaging from using false, prohibits Defendants which § 1125(a), products. or Zephyr’s or qualities of its own characteristics, the nature, fact that misrepresent

60 A Guide to False Advertising, CommercialDisparagement, and Related Claims and DOUGLASBALMY SECUR-SPACE, INC., v. Plaintiffs, JOHN ANDERSON, and ZEPHYR SECURITY SOFTWARE, INC., SUFFOLK, ss. Exhibit 7:SampleAnswer engineer inJune1989.Otherwise denied. allegations containedinparagraph7oftheComplaintand thereforedeniesthesame. Complaint.] uses an“alias.”Otherwise,admitted. allegations containedinparagraph2oftheComplaint. allegations containedinparagraph1oftheComplaint. 10. 9. 8. 7. 6. 5. 4. 3. 2. 1. Defendant DouglasBalmy(“Balmy”)intheabove-captionedactionanswersComplaintasfollows: Balmy admits the allegationscontainedinparagraph 10oftheComplaint. Balmy deniestheallegations contained inparagraph9oftheComplaint. Balmy admitsthathewashired byZephyrSecuritySoftware,Inc.(“Zephyr”)asacomputer Balmy iswithoutknowledgeorinformationsufficienttoform abeliefastothetruthof [If filedinfederalcourt:Balmyadmitstheallegationscontained inparagraph6ofthe Balmy admitstheallegationscontainedinparagraph5of Complaint. Balmy admitstheallegationscontainedinparagraph4ofComplaint. Denied totheextentthatallegationinparagraph3ofComplaintallegesBalmy Balmy iswithoutknowledgeorinformationsufficienttoformabeliefasthetruthof Balmy iswithoutknowledgeorinformationsufficienttoformabeliefasthetruthof Defendants.

COMMONWEALTH OFMASSACHUSETTS ANSWER OFDOUGLASBALMY JURISDICTION ANDVENUE

) ) ) ) ) ) ) ) ) PARTIES FACTS Civil Action No.10-0000 TRIAL COURT DEPARTMENTOF THE SUPERIOR COURT

Liability for Commercial Speech 61 COUNT I COUNT II Balmy denies the allegations contained in paragraph 31 of the Complaint. Balmy denies the allegations contained in paragraph 32 of the Complaint. Balmy denies the allegations contained in paragraph 33 of the Complaint. Balmy denies the allegations contained in paragraph 34 of the Complaint. Balmy incorporates by reference the answers set forth in paragraphs 1 through 29 of this Answer. this Balmy incorporates by reference the answers set forth in paragraphs 1 through 29 of Balmy denies the allegations contained in paragraph 25 of the Complaint. Balmy denies the allegations contained in paragraph 26 of the Complaint. Balmy denies the allegations contained in paragraph 27 of the Complaint. Balmy denies the allegations contained Balmy denies the allegations contained in paragraph 28 of the Complaint. Balmy denies the allegations contained in paragraph 29 of the Complaint. Balmy incorporates by reference the answers set forth in paragraphs 1 through 23 of this Answer. set forth in paragraphs 1 through 23 of this Balmy incorporates by reference the answers Balmy admits the allegations contained in paragraph 13 of the Complaint. contained in paragraph the allegations Balmy admits admit or deny the allegations or knowledge sufficient to Balmy is without information the Complaint. contained in paragraph 15 of Balmy denies the allegations admit or deny the allegations or knowledge sufficient to Balmy is without information the Complaint. contained in paragraph 17 of Balmy admits the allegations the Complaint. contained in paragraph 18 of Balmy denies the allegations in paragraph 19 of the Complaint. Balmy denies the allegations contained in paragraph 20 of the Complaint. Balmy denies the allegations contained sufficient to admit or deny the allegations Balmy is without information or knowledge sufficient to admit or deny the allegations Balmy is without information or knowledge sufficient to admit or deny the allegations Balmy is without information or knowledge Balmy admits that he develops custom security software for clients. Balmy denies that he Balmy denies that for clients. custom security software that he develops Balmy admits 12 of the Complaint. contained in paragraph the allegations Balmy admits

31. 32. 33. 34. 30. 25. 26. 27. 28. 29. 24. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 11. 12.

denies the same. 14 of the Complaint and therefore contained in paragraph denies the same. 16 of the Complaint and therefore contained in paragraph and therefore denies the same. contained in paragraph 21 of the Complaint and therefore denies the same. contained in paragraph 22 of the Complaint and therefore denies the same. contained in paragraph 23 of the Complaint as Zephyr. for the same clients competes 62 A Guide to False Advertising, CommercialDisparagement, and Related Claims

response isdeemedrequired,Balmydeniestheallegations containedinparagraph53oftheComplaint. response isdeemedrequired,Balmydeniestheallegations containedinparagraph52oftheComplaint. statements setforthintheComplaint arestatementsofopinion. 37. 36. 35. 53. 52. 51. 50. 49. 48. 47. 46. 45. 44. 43. 42. 41. 40. 39. 38. Plaintiff’s claimsare barredbecausetheallegedlydefamatoryordisparagingstatement or The Complaintfailstostatea claimuponwhichreliefcanbegranted. 54.

Balmy deniestheallegationscontainedinparagraph37ofComplaint. Balmy deniestheallegationscontainedinparagraph36ofComplaint. Balmydeniestheallegationscontainedinparagraph35ofComplaint. Paragraph 53containsalegalconclusiontowhichnoresponse isrequired. To theextenta Paragraph52containsalegalconclusiontowhichnoresponse isrequired. To theextenta Balmy deniestheallegationscontainedinparagraph51ofComplaint. Balmydeniestheallegationscontainedinparagraph50ofComplaint. Balmy deniestheallegationscontainedinparagraph49ofComplaint. Balmy deniestheallegationscontainedinparagraph48ofComplaint. Balmy deniestheallegationscontainedinparagraph47ofComplaint. Balmy incorporatesbyreferencetheanswerssetforthinparagraphs1through45ofthis Answer. Balmy deniestheallegationscontainedinparagraph45ofComplaint. Balmy deniestheallegationscontainedinparagraph44ofComplaint. Balmy deniestheallegationscontainedinparagraph43ofComplaint. Balmydeniestheallegationscontainedinparagraph42ofComplaint. Balmy deniestheallegationscontainedinparagraph41ofComplaint. Balmy deniestheallegationscontainedinparagraph40ofComplaint. Balmy deniestheallegationscontainedinparagraph39ofComplaint. Balmy incorporatesbyreferencetheanswerssetforthinparagraphs1through37ofthis Answer. [Responses toothercounts,aslistedinComplaint.] SECOND AFFIRMATIVE DEFENSE FIRST AFFIRMATIVE DEFENSE COUNT IV COUNT III COUNT V Liability for Commercial Speech 63

Francis X. Wigglesworth, BB0#000002 Wigglesworth, X. WIGGLESWORTH Francis & Street WIGGLESWORTH Winter 02110 2 MA Boston, 555-5555 (617) DOUGLAS BALMY attorney, his By

DEMAND FOR JURY TRIAL DEMAND FOR JURY FIFTH AFFIRMATIVE DEFENSE FIFTH AFFIRMATIVE SIXTH AFFIRMATIVE DEFENSE SIXTH AFFIRMATIVE THIRD AFFIRMATIVE DEFENSE THIRD AFFIRMATIVE EIGHTH AFFIRMATIVE DEFENSE EIGHTH AFFIRMATIVE FOURTH AFFIRMATIVE DEFENSE FOURTH AFFIRMATIVE SEVENTH AFFIRMATIVE DEFENSE SEVENTH AFFIRMATIVE Enter an Order dismissing the Complaint; each count of the Complaint; Enter judgment on behalf of Balmy on fees and costs; and Grant Balmy his reasonable attorneys’ just and proper. Grant such other relief as the Court deems A. B. C. D. Balmy demands a jury trial on all triable issues. [Other defenses may be based on laches, estoppel, acquiescence, , [Other defenses may be based on laches, Plaintiff’s claims are barred because Plaintiff has suffered no harm, to its reputation, its business or has suffered Plaintiff claims are barred because Plaintiff’s Balmy respectfully requests that this Court: WHEREFORE, with respect to the Complaint, Some or all of Plaintiff’s claims are barred by the First Amendment and the state and federal Amendment and the state and claims are barred by the First Some or all of Plaintiff’s Plaintiff’s claims are barred because the allegedly defamatory or disparaging statement or are barred because the allegedly defamatory claims Plaintiff’s or disparaging statement or are barred because the allegedly defamatory claims Plaintiff’s Plaintiff’s claims are barred because the allegedly defamatory or disparaging statement or disparaging statement defamatory or because the allegedly claims are barred Plaintiff’s

Dated: ______

or disparaging statement or statements set forth in the otherwise, as a result of the alleged defamatory set forth in the Complaint. Complaint or as a result of any other conduct jurisdiction, etc.] free speech. constitutional protections afforded to be true. opinion, as a matter of Balmy’s of opinion, which Balmy believed, statements are statements or puffery. in the Complaint are rhetorical hyperbole statements set forth are true. statements

64 A Guide to False Advertising, CommercialDisparagement, and Related Claims circumstances. knowledge thatitwasfalseorwith“reckless disregard” astowhetheritwasfalse. malice.” Astatementwaspublishedwith“actualmalice”ifit orapublicfigure,official must theplaintiff prove thatthedefendantacted with“actual isapublic Ifyoufindthattheplaintiff varies dependingonthestatusofplaintiff. orpublicfigure: isapublicofficial [If theplaintiff Theburden ofproof forproving fault prove publication. damaged theplaintiff. statement mustbeonethatwasfalseandmadepublicly. Itmustalsobeastatementthat The that thedefendanthasmadeadefamatorystatementoforconcerningplaintiff. mustproveIn aclaimfordefamation,theplaintiff byapreponderance oftheevidence A. ElementsofClaim I. Defamation Exhibit 8:SampleJuryInstructions 9 8 7 6 5 4 3 2 1 making thedefamatorystatement. who isaprivatefigure needonlyprove thatthedefendantactedwithnegligencein protection thanpublicfigures undertheFirstAmendment.InMassachusetts,aplaintiff are Privateindividuals,suchastheplaintiff, [If aprivateplaintiff: afforded greater of thedefendantbyapreponderance oftheevidence. damages fordefamation.Forthatreason, mustalsoprove theplaintiff “fault”onthepart Our judicialsystemworkstobalancetherightoffree speechwiththerighttorecover community andexposeshimorhertohatred, ridicule,orcontempt. A statementisconsidered defamatoryifittendstoinjure reputation theplaintiff’s inthe substantial responsibility orcontrol overtheconductofgovernmentaffairs; generallyappliestogovernmentemployeeswhohave 1. Thestatusof“publicofficial” [Choose theapplicableinstruction]: community. made, discredit inthemindsofanyconsiderable,respectable theplaintiff classofthe if thestatementsallegedinthiscase,andcircumstances underwhichtheywere prominence ofsociety. intheaffairs 2. Thestatusof“publicfigure” appliestoindividualswhohaveassumed roles of Flotech, Inc., 627F. Supp. at365. v. Welch,Gertz Robert Inc.,418U.S.323,345(1974). Rosenblatt v. Baer, 383U.S.75, 85(1996). New York TimesCo.v. Sullivan,375U.S.254,280 (1964).7Rosenblattv. Baer, 383U.S.75,85(1996). 849, 851,330N.E.2d161,164(1974). Schrottman v. Barnicle,386Mass.627, 630,437N.E.2d205,208(1982);Stonev. EssexCountyNewspapers,Inc.,367Mass. Flotech, Inc.,627F. Supp.at367. Flotech, Inc.v. E.I.DuPontdeNemoursCo.,627F. 814F.2d Supp.358,367(D.Mass.1985),aff’d, 775(1stCir. 1987). Shafir v. Steele,431Mass.365,372,727N.E.2d1140,1145(2000). Cignetti v. Healy, 89F. Supp.2d106(D.Mass.2000). 4 9 ] 2 1 aking a defamatory statement to even one person is sufficient to Makingadefamatorystatementtoevenonepersonissufficient 5 ] 8 Acorporationmaybeapublicfigure undercertain 3 Y ou mustdetermine 7 or 6 ] Liability for Commercial Speech 65 12 ou should consider all ou should also consider any cautionary ou should also consider any cautionary ruth is an absolute defense to a defamation [or commercial [or commercial to a defamation absolute defense ruth is an 14 13 he relevant question for you to determine is not whether the question for you to determine is not The relevant 11 defendant, however, cannot escape potential liability just by using the potential liability just by using cannot escape A defendant, however, 10 Flotech, Inc., 627 F. Supp at 368 (D. Mass. 1985); Cole v. Westinghouse Broad. Co., 386 Mass. 303, 306-09, 435 N.E.2d 1021, Broad. Westinghouse Supp at 368 (D. Mass. 1985); Cole v. Flotech, Inc., 627 F. 1023- 25 (1982). Lorain Journal Co., 497 U.S. 1, 18-19 (1990). Milkovich v. if the statement could Note that whether a statement is a fact or an opinion is a question of law to be decided by the court. However, Myers v. the issue of whether it is a fact or an opinion must be decided by the jury. to be either, be understood by the average reader Boston Magazine Co., 380 Mass. 336, 339-40 (1980). F.2d 724, Affiliated Publ’n., 953 Inc. v. 1997); Phantom Touring, 122, 127 (1st Cir. Inc., 127 F.3d Wal-Mart Stores, Inc. v. Levinsky’s, 733-34 (1986). Globe Newspaper Co., 398 Mass. 731, 1992); Aldoupolis v. 727 (1st Cir. 2000). 243, 248 (1st Cir. Inc., 221 F.3d Press, St. Martin’s Gray v. the statement is an opinion, the statement is or the plaintiff is “libel-proof,” a privilege. the defendant has ou may find that the defendant has one or more defenses to the claim of defamation [or of defamation [or to the claim defenses more has one or that the defendant ou may find statement is couched as an opinion, but rather whether the statement presents or implies but rather whether the statement presents statement is couched as an opinion, or false. true proven capable of being the existence of facts that are 10 11 12 13 14 ven where the challenged statement is found to be false and not an opinion, a plaintiff Even where is If the plaintiff’s reputation unable to prevail. and therefore may be deemed “libel-proof” or so tarnished by prior acts, it is possible that he or she cannot be defamed already f the statement presents or implies actual facts, the defense of opinion does not apply. the defense of opinion does not apply. or implies actual facts, If the statement presents of the statement that the defendant is the context On the other hand, if it is plain from or surmise, conjecture, a theory, interpretation, an a subjective view, expressing merely of objectively verifiable facts, or that the rather than claiming to be in possession you must find the statement to be a hyperbole or fiery rhetoric, statement is merely non-actionable opinion. n making this determination, you must consider whether the context in which the In making this determination, you must that it is factual. Y impression statement is published negates the a particular phrase. Y used, not merely the words publication in which the statement was published, and terms used by the defendant, the the intended readers. B. Defenses Y T disparagement]. commercial f you find, by a preponderance of the evidence, that the evidence, that the of the by a preponderance action. If you find, disparagement] you must find for the defendant. statement is true, including: other defenses that may apply, I will now explain some 1. 2. 3. not actionable as speech, and therefore protected An opinion is constitutionally defamation. word “opinion” while asserting as an a factual untruth. For example, a statement couched word is a liar” – may be defamatory if it implies false and opinion – ”in my opinion, John Jones defamatory facts. 66 A Guide to False Advertising, CommercialDisparagement, and Related Claims such asmentalanguish,embarrassmentandhumiliation. by you,andcosts,suchasmedicalexpenses,related toremedying emotionalinjuries reputationdamages mayincludethedamagetovalueofplaintiff’s asdetermined isentitledtodamagesifheorsheprevailsA plaintiff attrialinadefamationcase.Actual C. Damages the privilegewasabused. mustinturnprove,the defendant,plaintiff byapreponderance oftheevidence,that evidence, anyclaimeddefensesandprivileges.Ifaqualifiedprivilegeisestablishedby The defendanthastheburden ofproof ofestablishing,byapreponderance ofthe abuse thisprivilege,youmustfindforthedefendant. If youfindthatthedefendanthadaprivilegeinmaking[hisorher]statementanddidnot that thedefendantabusedprivilegeormadestatementwithmaliciousintent. However, proves thedefendantisnotentitledtobenefitofprivilegeifplaintiff or competitiveprivilege.] privilege, publicinterest privilege,credit report privilege,lawenforcement privilege, the litigationprivilege,employerfairreporting privilege,commoninterest [Describe anyprivilegesthatare applicabletothespecificfactsofcase,suchas as thedefendantreasonably believedthestatementwastrueandactedingoodfaith. generally permittedtomakestatementsthatwouldotherwisebedefamatorysolong circumstances,Under certain aprivilegemayapply. Insuchcases,thedefendantis being falselydescribedasataxevader. disparaged. Forexample,inacriminalcontext,massmurderer cannotbedefamedby 17 16 15 the defamation.However, punitivedamagesare prohibited. mayalsorecover Theplaintiff anguish andsuffering. specific economic harmcausedby impairment ofreputation andstandinginthecommunity, personalhumiliation,andmental of proving theactualharminflictedbydefamatorystatement,whichincludes actual injuryresulting from thewrong hastheburden donebythedefendant. Theplaintiff recoveryIn acaseofdefamation,theplaintiff’s islimitedtocompensatorydamagesfor damages require economic loss. damages,” ratherthanmere damagetoreputation, torecover amonetaryaward. Special In casesinvolvingslander, mustprove whichisspokendefamation,theplaintiff “special future conduct. award damagesbasedonanintenttopunishdefendant’s conductorattempt to deter Mass. Gen.Lawsc. 231, §93. Alba v. Sampson,44Mass. App.Ct.311,312,690N.E.2d1240, 1242(1998). Dexter’s Rest.,Inc.v. Hearthside WhitehallCo.,24Mass.App.Ct.217,220,508N.E.2d 113,116(1987) 16 15 17 Thatmeansyoumustnot Liability for Commercial Speech 67 Actual damages may include 20 19 21

22 18 Picker Int’I., Inc. v. Leavitt, 865 F. Supp. 951 (D. Mass. 1994). Supp. 951 (D. Leavitt, 865 F. Picker Int’I., Inc. v. Supp. at 365 (D. Mass. 1985). Flotech, Inc., 627 F. 1987). 775 (1st Cir. Supp. 358, 365 (D. Mass. 1985), aff’d, 814 F.2d E.I. Du Pont de Nemours Co., 627 F. Flotech, Inc. v. Hearthside Rest., Inc., 24 Mass. App. Ct. at 220. Dexter’s 2002). 302, 310-311 (1st Cir. Saks Fifth Ave., 284 F.3d & Camel Hair Mfg., Inst. v. Cashmere the defendant made a false or misleading statement in a commercial advertisement statement in a commercial the defendant made a false or misleading decision); the deception is material (i.e., it is likely to influence the purchasing segment the statement actually deceives or has the tendency to deceive a substantial and the defendant placed the statement into interstate commerce; by of the statement, either as a result the plaintiff has been or is likely to be injured the value of lost business opportunities. 18 19 20 21 22 III. False Advertising A. Elements of Claim the defendant with false advertising under Lanham Act § 43(a). The plaintiff has charged on a false advertising claim under the Lanham Act, the plaintiff to prevail must In order of the evidence: by a preponderance prove, 1. about its own or the plaintiff’s product; 2. 3. of its audience; 4. 5. the diversion of sales to defendant or by a lessening of goodwill associated with direct plaintiff’s products. C. Damages The plaintiff to actual or compensatory damages if you find that the defendant is entitled caused economic loss. made a disparaging statement that B. Defenses [Same defenses as for defamation.] he elements the plaintiff must prove in a commercial disparagement action are the the action are disparagement in a commercial [The elements the plaintiff must prove by a preponderance of defamation.] The plaintiffsame as the elements must also prove, Thus, the economic loss. require damages.” Special damages of the evidence, “special to plaintiff loss in order statement caused economic must establish that the disparaging disparagement. damages for commercial recover II. Commercial Disparagement II. Commercial of Claim A. Elements Commercial disparagement. with commercial the defendant The plaintiff has charged question intent to call into made with the a false statement consists of disparagement economic harm on to inflict order goods or services in the quality of a competitor’s that competitor. 68 A Guide to False Advertising, CommercialDisparagement, and Related Claims Act ifyoufindthatitexpresses anopinionratherthanafact. cannotbefalseormisleadinginviolationoftheLanham A statementinanadvertisement B. Defenses defendant toprove thatconsumerswere notactuallydeceived. willpresumeconsumers, thecourt actualdeceptionandtheburden shiftstothe If thestatementisliterallyfalseordefendantactedinbadfaithtointentionallymislead 30 29 28 27 26 25 24 23 the defendanttoprove thatconsumerswere notactuallydeceived. If youpresume deceptionforoneofthereasons describedabove,theburden shiftsto actually deceived. may presume isnotrequired deceptionandtheplaintiff toprove thatcustomerswere the defendantactedwillfullyorinbadfaithintentionallydeceivedpublic,you If youfindthatthestatementwasliterallytruebutmisleading,andalso washarmedasaresult. andthattheplaintiff deceived bythefalseadvertising In order torecover mustshowthatcustomerswere damages,theplaintiff actually C. Damages exaggerated claims. considered puffery, butonlyifyoufindthatno reasonable consumerwould rely onthe Exaggerated negativecommentsmadeabouttheproducts ofacompetitormayalsobe actually deceived. has occurred, isnotrequired andtheplaintiff toprove thatcustomerswere If youfindthestatementwasliterallyfalse,maypresume thatdeception isentitledtocompensationforthe harmthatitsuffered.event, theplaintiff product superioritythatyoudeterminetobespecificandmeasurableisnotpuffery. product superioritywhichistoovaguetobemeasured canalsobepuffery, aclaimof boasting manner, onwhichnoreasonable buyerwouldrely. Whileageneralclaimof oftenmadeinablusteringor exaggerated statementcontainedinanadvertisement, ifyoufindthatitismerewill notconstitutefalseadvertising “puffery.” isan Puffery Cashmere, 284 F.3d 318. Cashmere, 284 F.3d 316-18. Cashmere &CamelHairMfg.,Inst.v. Saks FifthAve.,284F.3d 302,310-311(1stCir. 2002). Intl., Inc.,999F.2d 1,5(1stCir. 1993)). Brown v. Armstrong, 957F. 129F.3d Supp.1293,1302n.8(D.Mass.1997),aff’d, 1252(citingAktiebolagetElectrolux v. Armatron Gillette Co.,946F. Supp.at131. Clorox Co.P. R.v. Procter &GambleCommercial Co.,228F.3d 24,38-39(1stCir. 2000). Gillette Co.v. Norelco ConsumerProds. Co.,946F. Supp.115,136-37(D.Mass.1996). Cashmere, 284F.3d at311-318. 29 28 26 24 Additionally, astatement 23 30

27

Inthat 25 Liability for Commercial Speech 69 rademark Office, oard of the U.S. Patent and T rial and Appeal Board

rademark T rademark, Copyright and Unfair Competition practice group, is well known for is group, and Unfair Competition practice rademark, Copyright Julia Huston The author gratefully acknowledges the assistance of Eric J. Huang, who provided who provided The author gratefully acknowledges the assistance of Eric J. Huang, support, and Joel R. Leeman, Sarah C. Peck, and Kelly A. Hoffman, invaluable research who contributed substantially to an earlier version of this work. roperty DepartmentProperty Intellectual and Chair of Julia Huston, PartnerFoley Hoag LLP’s in T the firm’s and false advertising victories in trademark, copyright cases. her high-profile of trademarks, counseling and strategy in the areas practice includes litigation, Julia’s false advertising, domain name piracy, Internet commerce, copyrights, trade secrets, has handled major trademark matters for the unfair competition, and patents. Julia variety of industries. Julia has obtained several owners of famous trademarks in a in a a $20.7 million verdict multimillion-dollar IP judgments and settlements, including state advocates on behalf of clients in federal and false advertising case. She regularly courts, the T About the Author About proceedings. name dispute resolution and in national and international domain clients on developing long-term strategies counsels In addition to litigation, Julia regularly extensive experience in litigation and dispute resolution for their IP portfolios. Julia’s enforcement portfoliosenables her to build her clients’ IP strategically with an eye toward in the marketplace. and defense for maximum advantage Julia leads due diligence teams that thoroughly In the context of corporate transactions, being the value of, intellectual property investigate, and assist clients in assessing of intellectual advice concerning protection comprehensive Julia also provides acquired. rights in licensing and assignment transactions. property Boston University (J.D., magna cum laude; B.A., magna from Ms. Huston holds degrees Harvard cum laude with distinction, Phi Beta Kappa; B.S., magna cum laude) and University (Ed.M.). 70 A Guide to False Advertising, CommercialDisparagement, and Related Claims download orvisitfoleyhoag.comforourlibrary. Y industry-specific alerts andupdatesfromindustry-specific alerts FoleyHoag,orvisitourWeb site. Sample otherfree titlesfrom theFoleyHoageBooklibrary, sign-upfor Foley HoageBookLibrary ou mayalsobeinterested inoureBookseries.Simplyclickonanimageto Visit ourWebVisit site Sign up for industry-specific alerts andupdates Sign upforindustry-specificalerts Driving Business Advantage Business Driving

by Vickie L.HenryandNathanC.enderson by Vickie to PatentInfringement Standing asaDefense

ook B e oag H oley F Driving Business Advantage BOSTON | WASHINGTON | EMERGING ENTERPRISE CENTER | FOLEYHOAG.COM

Attorney advertising. Prior results do not guarantee a similar outcome.