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Common questions about laws protecting small business owners

Are you concerned that a competitor is utilizing false advertising methods? As a small business owner, you are protected against unfair competition, which includes misleading labels and false advertising. All business owners are protected under a federal law known as the Lanham Act, and California has its own Unfair Competition Law. Learn what constitutes false advertising and some important components of Lanham Act claims. 

What qualifies as false advertising?

The Lanham Act describes false advertising as using a false or deceitful statement for commercial purposes that causes or is likely to cause competitive injury to another business. False advertising is different from puffery-a term used to describe claims of superiority or opinions.

While these statements may be exaggerations, they are generally not considered false advertising. For example, a business may claim it is the "greatest" in an advertisement, but unless there is a false claim that the endorsement comes from an authority, it is likely an instance of exaggeration.

What qualifies as a false or misleading statement?

The types of unfair advertising claims are:

1. Statements that are completely false.

2. Statements that are true but are misleading, deceitful or confusing.

Instances in which there are clearly false claims of objective facts are easiest to prove. True but misleading statements must be proven that they are deceitful.

What injuries and damages must be involved?

False advertising causes commercial or competitive injury to the competitor. If you have proof of a threatened or likely injury, injunctive relief may be obtained. Recovering damages requires proof of an actual injury caused by the advertisement in question.

What happens when the Lanham Act does not apply?

False advertising is not the only example of deceptive business tactics that may warrant business litigation. Businesses may take part in other deceitful actions, such as selling products or services that are deceptively similar, breaching warranties and tortious interference. If the Lanham Act does not apply in these cases, the California Business and Profession Code and the Federal Trade Commission protect small business owners.

Any type of unfair competition or deceptive practice is harmful to competitors and consumers. If you believe your small business has been injured by false advertising or deceptive actions, you should consult a business litigation attorney and find out if you have a basis for a private claim. While competition can be healthy and motivating for businesses, sometimes it is taken too far. Be rest assured that federal and state laws are in place to protect small business owners like you from unfair competition.

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