Whether times are bad or good, competitors are competitors. Oft times, a competitor will go beyond what is generally accepted as “fair game” when comparing its products to your competitive products. Federal law protects against “product disparagement” through “false advertising.”
1
Prove False Statement & Deception
To prove false advertising under federal law, a plaintiff-business must first demonstrate that the defendant-competitor made a false statement of fact about its product, and that these advertisements actually deceive or have the tendency to deceive a substantial segment of its audience.
2
Prove Materiality & Interstate Commerce
A plaintiff-business must then prove that the deception is material in that it is likely to influence the purchasing decision and that the defendant-competitor caused it’s falsely advertised goods to enter interstate commerce.
3
Proof Of Injury
Finally, the plaintiff-business must prove that it has been or is likely to be injured as a result, either by direct diversion of sales or by a lessening of its good will.
4
Explore State Law Rights In Addition To Protection Under Federal Law
The common law of the State of New Jersey similarly protects against such product disparagement as well. State law and federal law may be asserted in the same action. So, it is important to assert every cause of action potentially applicable whether it is based on state or federal law.
5
Litigation As A Business Tool
When your business is the victim of product disparagement by an unscrupulous competitor, the judicial process can serve as a “business tool” to at least halt such unfair competition as well as potentially recover the monetary damage suffered. Typically, no business or individual wants to engage in litigation. But, litigation should be viewed as a "business tool" to protect your enterprise investments when unavoidably necessary. Your attorney should handle the matter cost effectively as well as thoroughly and competently.
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