Saturday, February 18, 2006

False advertising doesn't violate the Sherman Act

Briggs & Stratton Corp. v. Kohler Co., 405 F.Supp.2d 986 (W.D. Wis. 2005)

Plaintiff sued defendant for patent infringement relating to an internal combustion engine (are there external combustion engines?). Defendant counterclaimed for violations of the Sherman Act, state antitrust law, and common law unfair competition. Plaintiff moved to strike the portion of defendant’s antitrust counterclaims that alleged false advertising of plaintiff’s engines’ horsepower. The court agreed that false advertising, in the absence of monopoly power, does not violate the antitrust laws. In the Microsoft case, false advertising about Java compatibility was part of Microsoft’s strategy to exclude other operating systems from the market, and thus violated the Sherman Act. The false advertising here, however, didn’t exclude the defendant from the market.

Question: Why not assert false advertising counterclaims? Possible answer, depending on the parties’ market positions (also, of course, relevant to the antitrust issues): Lanham Act standing for false advertising requires a showing of likely harm, which means that the counterclaimant would have to provide reasons to think that sales were diverted from it in particular rather than from other competitors. Perhaps that would have been difficult to prove.

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