• False Advertising Suit Brought for News Article Fails
  • October 11, 2006
  • Law Firm: Reed Smith LLP - Pittsburgh Office
  • A watch company, which claimed that a news article describing a trademark infringement settlement was in fact a thinly disguised advertisement for its competitor, failed in its attempt to bring a false advertising suit over the article.

    “‘[A] journalist’s article is not commercial advertising, commercial promotion or commercial speech,’” the U.S. District Court for the Southern District of New York stated, citing precedent. See Croton Watch Co., Inc. v. National Jeweler Magazine, Inc. and Teslar Inside Corporation, 2006 WL 2254818 (S.D.N.Y.)

    The suit by Croton Watch Co. follows an earlier trademark infringement action brought by competitor watch designer and manufacturer, Teslar. Teslar had sued Croton and ShopNBC.com, claiming the parties were selling a watch that violated Teslar’s trade dress.

    The parties settled the suit, with Croton denying the accusation that it violated Teslar’s trade dress. Nonetheless, Croton agreed to cease its sales of the watch. A Florida court adopted the parties’ proposed Consent Judgment verbatim, enjoining Croton from “marketing, advertising, promoting, selling or offering to sell…” the watch.

    Following the settlement, the trade publication, National Jeweler, ran a six-sentence article with the headline, “Philip Stein Teslar wins trademark case.” The article stated that Teslar announced it had “won a trademark infringement case” against Croton, and further reported that the “judge ruled” that Croton’s watch violated Teslar’s trade dress protection.

    Croton then sued Teslar for defamation and tortious interference with prospective economic advantage, and for false advertising under the Lanham Act. The New York federal court dismissed the suit on all grounds.

    Croton had argued that National Jeweler ran the article in question after receiving a news release from Teslar, and that the publication was giving Teslar “free press” in the hopes of obtaining advertising from the latter.

    “The article itself was extremely commercial in nature,” Croton argued. “The article was in fact an advertisement masquerading as a news story, promoting Teslar’s reputation while disparaging that of Croton’s.” Further, Croton alleged, “Teslar was the motivating force behind the article.”

    However, the court rejected the argument that the article constituted “commercial speech” under the Lanham Act.

    “Plaintiff cannot adequate[ly] plead a violation of the Lanham Act by simply alleging that defendant caused a journalist to write the article, the content of which plaintiff finds objectionable,” the court determined. “The noncommercial nature of a journalist’s article cannot be overcome by plaintiff claiming an improper purpose motivated the publisher to run the article.”

    Further, the court rejected Croton’s defamation claim. Although the article described resolution of the trademark case as a victory rather than as a settlement, it was substantively accurate, since Croton was legally barred from selling or manufacturing more copies of the disputed watch, the court determined.

    Why This Matters:  Advertisers frequently use media placements to reinforce their commercial message. However, publications—not advertisers—control the content of editorial space, and news stories are granted “full protection” under the First Amendment as the court in Croton noted. Advertisements, on the other hand, are commercial speech, which is protected by the First Amendment, but with limitations such as those delineated by the Lanham Act’s false advertising standards.