United States of America : Chapter 2

• Pages: 5-16
• Date: 01 January 2002
• DOI: 10.10520/EJC74010
• Published date: 01 January 2002

CHAPTER 2

UNITED STATES OF AMERICA

1. Introduction

2. Common law

3. Trade Commissions

3.1 Federal Trade Commission

3.2 The USA International Trade Commission

4. Statutory law

4.1 Lanham Act

1. Introduction

In 1910 the first case1of many to come concerning comparative advertis-

ing, served before court. From that time on it became a hotly debated sub-

ject and the USA was at the head of all the developments in this area of

the law.2

This country is very lenient toward advertisers, but even here advertisers

must ensure that their advertisements are honest and will not mislead the

consumers. In the past plaintiffs could litigate on the ground of the com-

mon law of unfair competition whenever an advertisement defamed a

business or compared the goods and in the process disparaged the busi-

nesse’s goods. The general attitude towards comparative advertising was

that it was unethical and not practised by a self-respecting businessman.3

But, as time went by the common law actions became inadequate and the

legislation was amended to accommodate comparative advertising as the

attitudes changed.4In the words of Judge Browning in Smith v Chanel

Inc.:5

“The courts, however, have generally confined legal protection to

the trademark’s source identification function for reasons grounded

in the public policy favouring a free, competitive economy.”

And he continued with a quote from American Safety Table Co. Inc. v

Schreiber:6

5

1Saxlehner v Wagner 216 US 375, 30 S CT 298, 54 L Ed 525 (1910).

2 Mills 1996: 193.

3 Beller 1995: 920. But the courts had to distinguish between conduct that was

only ‘unethical’ and conduct that was ‘illegal’, because it is so far below the

standards of the marketplace. The court in Goodwin v Agassiz, 283 Mass.

358, 363, 186 N.E. 659, 661 (1933) put it in the following words: “Law in its

sanctions is not coextensive with morality. It cannot undertake to put all parties

to every contract on an equality as to knowledge, experience, skill and shrewd-

ness”. Shell 1988: 1198.

4 In 1987 35% to 40% of all advertising was comparative and 25% to 30% of

these advertisements identified the competition. Neiman 1987: 4 col 1.

5 402 F2d 562, 159 USPQ 388 (CA 9 1968).

6Id. at 567, 159 USPQ at 392, quoting the American Safety Tablecase, 269 F2d

255, 272, 122 USPQ 29, 43 (CA 2 1959).