New Jersey would not recognize a common law tort of false advertising, says fed ct

Pim Brands, Inc. v. New Cibo Vita LLC, No. 25-cv-01418(MEF)(AME), 2025 WL 2938602 (D.N.J. Oct. 16, 2025)

The parties compete in the market for yogurt-covered fruit snacks, and the plaintiff alleged false advertising, including unfair competition claim under New Jersey common law. Here, the court rules that New Jersey does not recognize an unfair competition claim that is based, as here, only on an allegation of false advertising that is not comparative and does not involve passing off, and thus doesn’t assert interference with some property-type interest. (Also, in a footnote, unfair competition can include “antitrust-type claims” or “what amount to claims for tortious interference with contract”; query how an antitrust claim is an interference with the plaintiff’s property.)

The court characterized the tort as relatively new (late 19^th century) in origin, but quickly assumed a definite shape: “The essence of the wrong in unfair competition consists in the sale of the goods of one manufacturer or vendor for those of another; and if defendant so conduct its business as not to palm off its goods as those of complainant, the action fails.” Howe Scale Co. of 1886 v. Wyckoff, Seamans & Benedict, 198 U.S. 118 (1905). Thus, the tort was about “palming off.” It protected consumers, but only indirectly and only by protecting a company’s “brand equity.” [Not a particularly contemporaneous term.] It differed from trademark by covering, e.g., “palming off of what we would today call service marks” and “palming off based on brand symbols that for one reason or another could not be formally registered as trademarks.”

But the tort stretched “a bit” to encompass INS v. AP misappropriation. They still shared the “core DNA” of being property-like. But “[i]f a company engages in false advertising—if it says something untrue about its own product—how is it potentially taking property from another company? … [L]osing out on possible future business is a long way from being deprived of here-and-now property (or quasi-property).”

Thus, a false advertising claim is not an unfair competition claim. American Washboard Co. v. Saginaw Manufacturing Co., 103 F. 281 (6th Cir. 1900), was the key case involving false advertising that a washboard was made with aluminum, rejecting a false advertising claim on the ground that “the private right of action in [unfair competition] cases is not based upon fraud or imposition upon the public, but is maintained solely for the protection of the property rights of a complainant.” Courts around the country “routinely stick to the line [American Washboard] drew.”

Thus, the court predicted that the New Jersey Supreme Court would hold that there can be no unfair competition claim based only on a false advertising theory, as the one relevant NJ appellate case had held. Tris Pharma, Inc. v. UCB Manufacturing, Inc., 2016 WL 4506129 (N.J. Super. Ct. App. Div. Aug. 29, 2016).

True, the Third Circuit stated in an infringement case, pre-Tris Pharma, that “the federal law of unfair competition under § 43 (a) [of the Lanham Act] is not significantly different from the New Jersey [common] law of unfair competition[.]” But that was only true with respect to passing off (and other things like the relevance of common-law agency principles).

Finally, the court noted, the Third Circuit has indicated that “where two competing yet sensible interpretations of state law exist, we should opt for the interpretation that restricts liability, rather than expands it, until the Supreme Court of [New Jersey] decides differently.” Travelers Indem. Co. v. Dammann & Co., Inc., 594 F.3d 238 (3d Cir. 2010) (cleaned up). [I’m not sure Chief Judge Becker of blessed memory would endorse this view—he thought of judging as the process of doing justice, and he was willing to evolve the common law towards that end.]