Advertising Law

As a small business owner, advertising can be a useful tool to inform customers and potential customers of your products and services. United States laws protecting businesses against false advertising, trade libel and trademark infringement primarily fall under The Trademark Act of 1946 (Lanham Act, 15 USC§1051). These laws place limits on how a business promotes its products and name through traditional common law restrictions, through state laws and regulations, and through federal law and regulations.

In federal law, the most important source of business advertising restrictions is the Federal Trade Commission (FTC) Act, 15 U.S.C. § 45. The FTC has power to issue regulations governing advertising and interpreting federal law; the State Attorneys General have the power to enforce state advertising restrictions laws. The ability of states and the FTC to restrict advertisements is itself limited by the First Amendment to the U.S. Constitution, which provides for the right to free speech.

FTC pronouncements establish three ways an advertisement may be unfair:
• An advertisement may be deceptive.
• An advertisement may be unfair.
• An advertiser may be making unsubstantiated claims.

If your small business has been compromised by inappropriate advertising of a competitor, you should seek the advice of Washington, DC small business attorney Michael Trevelline. He can evaluate the gravity of the offense and work with you to determine appropriate legal action.

A company advertising needs also to know that under Section 5 of the FTC Act, the FTC has power to prohibit "unfair methods of competition." FTC pronouncements establish three ways an advertisement may be unfair. First, an advertisement may be deceptive. Deception includes material omissions, express misrepresentations, implied misrepresentations. Second, an advertisement may be unfair. Unfairness centers around causing injury that is reasonably avoidable. Third, an advertiser must be able to substantiate specific claims, i.e., documentation of tests performed before issuing the advertisement. Those potentially liable include not only the manufacturer or service provider, but also the advertising agency, the distributor of the advertisement, anyone who helped in its preparation, a website provider, catalog marketers. Such facilitators of an advertisement are normally only liable when they knew or should have known of the unfairness of the advertisement. Specific guidance governs many specific types of advertising including:

o TV Demonstrations
o Testimonials
o Sweepstakes & Contests
o Puffery
o Guarantees
o Comparative Claims
o Use of the Word "New"
o Use of Flags, money and cents
o Use of the words "Free" and "Cents Off"
o Unsolicited consumer ideas

The FTC web site contains much information: http://www.ftc.gov. Of particular help is a document entitled "Frequently Asked Advertising Questions: A Guide for Small Business" found at http://www.ftc.gov/bcp/edu/pubs/business/adv/bus35.shtm.