US SC lays framework on party’s standing to sue for false advertisement under Lanham Act

The United States Supreme Court clarified that the appropriate analytical framework for determining a party’s standing to maintain an action for false advertising under the Lanham Act extends to those who fall with­in the ‘zone of interests’ protected by that statute.

“The §1125(a) cause of action extends to plaintiffs who fall with­in the zone of interests protected by that statute and whose injury was proximately caused by a violation of that statute”, the Court said.

“Thus, a plaintiff suing under §1125(a) ordinarily must show that its economic or reputational inju­ry flows directly from the deception wrought by the defendant’s ad­vertising; and that occurs when deception of consumers causes them to withhold trade from the plaintiff”, the Court added.

Direct application of the zone-of-interests test and the proxi­mate-cause requirement supplies the relevant limits on who may sue under §1125(a). These principles provide better guidance than the multifactor balancing test as observed by the Third, Fifth, Eighth, and Eleventh Circuits, the direct-competitor test as observed by the Seventh, Ninth, and Tenth Circuits, or the reasonable-interest test applied by the Second and Sixth Circuits.

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