http://www.independent.org/newsroom/article.asp?id=3531
...Pending in the U.S. District Court for the Central District of California is a lawsuit targeting producers of corn syrup for their “Sweet Surprise” advertising campaign...
...The sugar industry’s lawsuit is primarily based on Section 43 of the 1946 Lanham Act. The Lanham Act is typically associated with intellectual property rights, such as copyright or trademark protection. It also contains provisions prohibiting false or misleading advertising...
...The sugar companies dispute the claims made in the “Sweet Surprise” campaign and assert that corn producers are misleading the public. The sugar industry states that this has led to “actual damages in the form of price erosion and lost profits stemming from the artificially reduced demand [for sugar] caused by Defendants’ false and misleading advertising.” If it weren’t for the alleged misrepresentations being made in the Sweet Surprise campaign, they say, more Americans would avoid corn syrup products...
...Regardless of one’s views on the relative merits of corn syrup vs. cane sugar, Americans should be concerned about the effort to use the Lanham Act to silence commercial speech.
Under the First Amendment, commercial speech enjoys constitutional protection. Unfortunately, however, Section 43 of the Lanham Act creates a perverse incentive for a commercial rival to attempt to stifle speech—and to use litigation as an anti-competitive weapon.
By alleging that advertising claims are false and misleading, a plaintiff can impose huge legal costs on a rival for no other purpose than to seek economic advantage...
So long as there is free entry into the advertising realm, any company, organization or group of companies that finds a rival’s advertising claims to be questionable is free to disseminate information challenging those claims. They can present their views in a news conference. They can create ads of their own. They can mobilize allies in a grassroots effort.
Television, magazine, and internet advertisements are just a few of the vehicles available to educate consumers on the benefits or detriments of a particular product.
In a free society, this is how consumers gather information and make informed decisions about what products to purchase.
To the extent that consumers need additional protection, this should be left to neutral government agencies, such as the Federal Trade Commission, which is tasked with protecting the public from false advertising.
The FTC is fairly successful in its efforts. For example, just a few months ago the FTC successfully settled an action against Skechers USA, which it had accused of making false claims about the body toning effects of its shoes. Under the settlement, Skechers had to pay $40 million in consumer refunds and cease its misleading advertising. An FTC action is a much better vehicle than a lawsuit brought by a competitor that stands to benefit financially by harming a rival.
Speech, whether commercial or political, is important to our society. The sugar industry’s claims about the superiority of cane sugar over corn syrup are better brought in the court of public opinion than in federal court.
 William Watkins, Jr.Send email William J. Watkins, Jr. is a Research Fellow at The Independent Institute in Oakland, Calif. and author of the Independent Institute book, Reclaiming the American Revolution |
. He received his J.D. cum laude from the University of South Carolina School of Law and is a former law clerk to Judge William B. Traxler, Jr. of the U. S. Court of Appeals for the Fourth Circuit.
William J. Watkins, Jr. is a Research Fellow at The Independent Institute in Oakland, Calif. and author of the Independent Institute book, Reclaiming the American Revolution
. He received his J.D. cum laude from the University of South Carolina School of Law and is a former law clerk to Judge William B. Traxler, Jr. of the U. S. Court of Appeals for the Fourth Circuit.
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