What is the Lanham Act?

The Lanham Act created a national trademark registration system. Enacted in 1946, this act also protects a trademark owner against others using similar marks.

The Lanham Act also provided a way for companies to watch for modifications to their trademarks. This section of the law, called trademark dilution, gives the owner of a famous trademark a way to protect it from changes. No other person or company can use the mark in a way that reduces how unique it is. The Lanham Act allows legal entities to consider the implications of issuing a trademark under the trademark laws.

Also called the Trademark Act of 1946, this legal statute oversees unfair competition laws and violations. President Harry Truman signed it into law on July 5, 1947.

The Lanham Act protects trademarks, which include graphics, symbols, phrases, words, and logos. A trademark helps to identify from where a product or service comes. For example, the current Ford logo has trademark protection. It includes the word "Ford" in a specific font, set on a blue backdrop and surrounded with an oval.

The trademark doesn't restrict other companies from ever using the word "Ford" in a name, logo, or graphic. But this specific design and layout cannot be duplicated without legal consequences.

The name comes from a Texas Congress Representative, Fritz G. Lanham. He focused much of his time and energy during his political career to secure federal laws that recognized trademarks.

The Lanham Act and Advertising

In addition to changing the trademark protection laws, the Lanham Act also restricts false advertising. If a competitor is making false claims or giving misleading information about your business or product, you have legal rights.

There are several recent cases that have been in the news which fall under the false advertising section of the Lanham Act. One example was when a Little League coach sued Paramount Pictures Corp. for a misrepresentation of him in the movie, "Hardball." He believed that the film portrayed him in a negative way, so his lawsuit included claims of invasion of privacy and defamation, along with false advertising.

The result of this case went in Paramount's favor, since the court could not find enough similarities between the coach and the character in the film. The final verdict stated that the movie included "innocent construction," and because Paramount included the statement "inspired by a true story," this helped the case. Those involved also couldn't find a large number of viewers who believed the film directly portrayed the coach's life.

Another example took place between two telephone directory publishers. One sued the other for using deceptive trade practices, which violated the Lanham Act.

Invasion of privacy is another level of the Lanham Act when it relates to advertising practices. In another high-profile case, a group of people sued a bank and subpoenaed records from American Express Travel Related Services Company, Inc. They stated that this company violated their privacy rights by disclosing financial information to third-party companies.

This case became more complex as state-level courts turned it over to a federal court, but a judge determined that federal courts did not have jurisdiction. The end result was a loss for the plaintiffs, since the court found that they did not have enough proof to back up their claims of deception or deceptive advertising.

Why is the Lanham Act Important?

Prior to the Lanham Act, there was no formal system in the United States to protect the unique marks of businesses or individuals. Companies could copy aspects of their competitors legally. This created a lot of confusion for consumers. Brand loyalty couldn't really exist because customers couldn't tell which items came from their favorite companies.

However, a person wanting to mark his/her products and services is not a new concept. In Medieval Times, swordsmiths and blacksmiths used unique marks on their crafts to show ownership. But it took hundreds of years before any type of legal action occurred around trademarks.

If someone violates the Lanham Act against you or your business, you have several legal recourses. The most common result is injunctive relief, which requires the company to discontinue its actions. You may also have the option to recover damages for lost profits or other financial struggles due to the violation.

When you can prove that the other person or company violated the Lanham Act knowingly and/or maliciously, you have even more legal rights to recover attorney fees and other costs associated with the case.

The Trademark Act of 1881

In an attempt to improve the federal tracking and recognition of trademarks, leaders drafted the Trademark Act of 1881. It included information about protection and rights available to trademark holders. This act also brought up a second option for registering marks that weren't eligible for protection. The second registration would help keep track of marks that might be trademark-eligible in the future, such as when a company goes out of business or changes its logo.

The third section of the act overviews the restrictions and protections for trademarks. It also talked about possible scenarios that a company or person might infringe on a trademark and how to react. The final portion looked at international trademark laws and how they correspond to U.S. trademark laws.

The Trademark Act of 1881 was rejected by the Supreme Court that year, but amendments to the act helped it go through later. It underwent further amendments in 1905 and 1906.

Reasons to Consider Using the Lanham Act

The Lanham Act helps to protect trademark holders. You may consider using it if another person or business tries to copy your mark. When taking legal action against a violator of this act, the trademark holder has to prove two important points:

  • That the other person or company's use of the trademarked symbol will likely cause confusion among consumers, and
  • That he/she holds ownership in the mark

If you can provide both of these points, you have a valid case. The first point goes back to why the act became law in the first place. Trademark holders needed to protect their brands by limiting who could use their intellectual property. Without a trademark, anyone could use a similar or even identical mark, which creates confusion among consumers.

In order to satisfy the first requirement, a trademark holder must follow the requirement of "use in commerce." This requirement means that the person or company must actually use the mark in standard business practices. You can't just trademark logos, symbols, phrases, words, and designs if you don't plan to use them.

The "use in commerce" requirement further dictates that the mark must identify its source. While this doesn't necessarily mean that a company can only trademark its name, it does mean that it must clearly relate to the business or product.

The second point focuses on who actually owns the trademark. It's nearly impossible to prove who started using a specific mark first, unless one holds the trademark. The United States Patent and Trademark Office (USPTO) usually gives ownership to the first party who files an application.

When considering whether a case violates the Lanham Act, those involved use a "totality of the circumstances" test. Jurors or a judge will first look at the adoption of the trademark, then review how it's used in a public setting. The case will also focus on other factors that don't relate to profits or sales. These may include:

  • How well the trademark owner uses the mark publicly
  • Whether the mark is identifiable
  • How much business activity the owner conducts using the mark
  • The extent of marketing of the product or service with the mark

Another factor in cases that may violate the Lanham Act is the "likelihood of confusion" test. This test looks at how likely it is for a consumer to feel confusion when looking at a similar logo, symbol, phrase, word, or design. The "likelihood of confusion" test also focuses on specific areas, such as:

  • Marketing channels
  • The mark's strength on its own
  • How similar the two marks are
  • Clear evidence of confusion from consumers
  • How likely it is that the trademark owner will expand products
  • Why the defendant used a similar mark
  • How close the products or services are to one another
  • Focus of the business and how carefully consumers would select a product in the related category

False Advertising

The Lanham Act also protects companies against false advertising and misleading claims. Your business might use the Lanham Act in bringing a case against a violator. One recent high-profile case was POM Wonderful LLC v. Coca-Cola, which went to the Supreme Court. In this example, POM Wonderful LLC, a company that grows and distributes pomegranates and juice, filed a suit against soft drink giant Coca-Cola. The case focused on the false advertising protection under the Lanham Act.

POM Wonderful LLC said that Coca-Cola was marketing a pomegranate-blueberry juice drink that contained apple and grape juices. This resulted in loss of sales due to false advertising on Coca-Cola's juice drink. The Supreme Court reversed the original decision given in the state court, but POM Wonderful LLC lost the case.

Although the plaintiff lost, this example helped reaffirm the need to improve clarity in food labels. The case took eight years to resolve, causing both companies to lose money and time. It also put Coca-Cola in the public eye for its involvement and possible violation of the act.

You might have a case if a competitor gives false claims or information about your product or service. In order to qualify for protection under the Lanham Act, the information must:

  • Be given in commercial promotion or advertising, and
  • Likely cause confusion or mistake, or deceive the connection, affiliation, or association with your brand.

Claims might actually be false, but even those that are true but cause confusion or deception are illegal under the Lanham Act.

When fighting against someone who brought false claims in marketing or advertising, you must also prove the commercial injury caused by this situation.

Common Mistakes

The most common mistake under the Lanham Act is a company or person using a mark that is similar to one that's trademarked. Without performing a search of active trademarks, it's hard to know what already exists. You might think you're creating an original logo, symbol, phrase, word, or design, only to find that another person came up with the idea already.

If this happens, the trademark owner may ask you to stop using the mark. He or she could also take legal action against you or your business.

Another mistake is making false or misleading claims against another entity in your marketing campaigns. It's best to focus on your own strengths instead of making claims about others to avoid violating the false advertising section of the act completely.

Frequently Asked Questions

  • What does the Lanham Act cover?

The Lanham Act protects trademarks and service marks, and protects against false advertising. It helps prevent other companies or individuals from using the logo, design, symbol, word, phrase, or other mark used by another entity. The purpose of the Lanham Act is to avoid confusion for consumers who can't identify the source or a product or service.

  • Does buying a domain name that's similar or identical to wording in a trademark violate the Lanham Act?

While this action doesn't necessarily violate the Lanham Act, it may go against the Anticybersquatting Consumer Protection Act. This act went into place to prevent businesses or individuals from registering or using a domain name that dilutes a registered trademark or causes confusion for consumers trying to visit the site of the trademark holder.

If you need help understanding the Lanham Act, you can post your question or concern on UpCounsel's marketplace. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.