Unfair Competition Under the Lanham Act and Texas Law

By Hank FasthoffJuly 21, 2026

Unfair competition describes several different claims, and each protects a different commercial interest. Section 43(a) of the Lanham Act provides federal causes of action for false association and false advertising. Texas law supplements those claims through common law trademark infringement, unfair competition, business disparagement, contract claims, and other causes of action supported by the conduct at issue.

Selecting the correct claim affects what you must prove, whose perceptions count, which damages you can recover, and whether federal law or the Texas Uniform Trade Secrets Act displaces a state law theory. A competitor's use of your name presents a different claim from a false product comparison, and copying confidential technical information presents another. Treating them all as unfair competition obscures the elements that determine the case.

Section 43(a) Has Two Different Causes of Action

Section 43(a)(1)(A) prohibits uses in commerce that are likely to cause confusion about affiliation, connection, association, origin, sponsorship, or approval. It protects unregistered trademarks, trade dress, and other source identifiers and also covers passing off and false endorsement. Our articles on trademark infringement and likelihood of confusion and trade dress protection address the proof required for those claims.

Section 43(a)(1)(B) governs false or misleading factual representations in commercial advertising or promotion that misrepresent the nature, characteristics, qualities, or geographic origin of goods, services, or commercial activities. A false advertising plaintiff doesn't need a trademark. It must prove a commercial injury within the statute and connect that injury to an actionable advertising representation.

These provisions overlap when an advertisement uses a competitor's mark while making false statements about the competitor's product. They remain separate causes of action, however, because one turns on confusion about source or affiliation and the other turns on false or misleading commercial claims.

False Association and Unregistered Marks

A business can enforce an unregistered word mark, logo, slogan, or trade dress under Section 43(a)(1)(A) if the designation qualifies for protection and the accused use creates a likelihood of confusion. Registration supplies statutory presumptions, while an unregistered claimant must prove the underlying facts without that evidentiary benefit. Priority also depends on use, territory, and the particular goods or services.

Federal circuits use different names and formulations for their likelihood of confusion factors. They examine substantially similar subjects, including the strength of the designation, similarity of the parties' uses, relatedness of the goods or services, trade channels, purchaser care, intent, and actual confusion. Your evidence should reproduce how consumers encounter the parties in the marketplace instead of reducing the dispute to two marks displayed beside each other in a lawsuit.

Passing Off and Reverse Passing Off

Passing off occurs when a seller presents its goods or services as those of another source. Reverse passing off occurs when a seller removes or obscures the source of another producer's goods and offers them as its own. Both theories concern marketplace source identification rather than a free standing right to credit for ideas or authorship.

Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), enforced that boundary. Dastar copied and edited footage from a television series whose copyright expired, then sold the resulting videos under its name. The Supreme Court held that origin of goods under Section 43(a) refers to the producer of the tangible goods offered for sale, not the author of the ideas, concepts, or communications embodied in those goods.

Dastar prevents a plaintiff from using the Lanham Act to obtain a perpetual attribution right that copyright law doesn't provide. A conventional reverse passing off claim can proceed when the accused party misidentifies the producer of tangible goods, but the pleading must concern the source of the goods sold rather than authorship of their creative content.

False Endorsement

Section 43(a)(1)(A) also applies when a defendant's use of a person's name, image, likeness, voice, or persona is likely to create a false impression of sponsorship, approval, or affiliation. The identity must function in the challenged use as a source or endorsement signal. Unauthorized use alone doesn't establish a Lanham Act claim.

False endorsement can overlap with state right of publicity, privacy, contract, and advertising claims. Choice of law has practical force because states define publicity rights, postmortem rights, defenses, and remedies differently. You should identify where the use occurred, where the claimant's commercial identity is centered, and which audiences received the message before selecting claims.

False Advertising

Section 43(a)(1)(B) applies to a false or misleading representation of fact made in commercial advertising or promotion about the nature, characteristics, qualities, or geographic origin of goods, services, or commercial activities. The representation can concern the advertiser's product, a competitor's product, or a comparison between them. A private statement in an isolated negotiation doesn't become commercial advertising merely because the speaker hopes to make a sale.

Courts require dissemination to the relevant purchasing public, although circuits differ on how broadly a communication must circulate and how they treat messages directed to a small or concentrated market. Sales presentations, dealer communications, websites, social media, product labels, trade show materials, and comparative advertisements can qualify when their commercial purpose and distribution satisfy the governing circuit's test. Pleading a false sentence without identifying its audience, medium, and distribution leaves the statutory advertising requirement exposed.

Literal Falsity and Misleading Messages

A factual representation can be literally false or literally true but misleading in context. A court can find literal falsity from the words themselves or from the necessary message conveyed by the advertisement as a whole. When an advertisement makes an implied claim and supports more than one reasonable interpretation, the plaintiff ordinarily needs reliable evidence showing that consumers received the misleading message.

Consumer surveys often supply that proof, but the survey must test the relevant audience, advertisement, and alleged message with a sound control. Internal advertiser documents, customer testimony, complaints, sales scripts, and market research can also show the message received. A survey that asks whether consumers dislike an advertisement proves little about whether the advertisement conveyed the specific false claim alleged.

Courts distinguish factual claims from nonactionable opinion or puffery by asking whether the representation is specific and capable of verification in context. A measurable claim about price, ingredients, test results, performance, certification, origin, or comparative rank presents a factual proposition. Broad praise can qualify as puffery when consumers would understand it as subjective sales language, but adding numbers, testing references, or an objective comparison can convert a slogan into a provable claim.

Materiality and Causation

Falsity alone doesn't establish liability. The challenged representation must be material to the purchasing decision, and a plaintiff seeking relief must prove the injury or likely injury required by the statute. Evidence that buyers considered the represented feature, asked about it, relied on it, or treated it as a condition of purchase supports materiality.

Causation requires more than comparing companywide revenue before and after an advertisement appeared. Market conditions, price changes, lost distribution, product quality, supply limits, and other competitors can affect sales during the same period. Your damages proof should connect the challenged message to diverted sales, price erosion, lost opportunities, corrective advertising costs, or reputational injury through customer evidence, sales data, and a defensible economic analysis.

Who Can Sue Under Lexmark

Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014), rejected prudential standing as the framework for determining who can sue under Section 43(a). The Court treated the issue as one of statutory interpretation. A plaintiff must fall within the Lanham Act's zone of interests and plead injuries proximately caused by the statutory violation.

For a false advertising claim, the plaintiff must allege injury to a commercial interest in reputation or sales. A consumer who bought a disappointing product doesn't acquire a Lanham Act cause of action from that purchase, while a business can qualify without competing directly against the advertiser if the alleged commercial injury satisfies the statutory test. Direct competition can strengthen the causal showing, but Lexmark doesn't impose it as a universal prerequisite.

Regulated Products and Competing Statutes

Regulatory compliance and Lanham Act liability present separate questions. In POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102 (2014), the Supreme Court held that the Federal Food, Drug, and Cosmetic Act didn't preclude a competitor's Lanham Act claim challenging a juice label. The Court concluded that the two statutes complement each other because they protect different interests through different enforcement mechanisms.

The analysis depends on the statutes, regulations, and agency action governing the product and claim. Preclusion, preemption, primary jurisdiction, and evidentiary effect present distinct issues. A regulatory filing or agency approval can supply important evidence, but you should read the governing scheme before treating compliance as either a complete defense or proof of falsity.

Domestic Use After Abitron

Abitron Austria GmbH v. Hetronic International, Inc., 600 U.S. 412 (2023), held that Sections 1114(1)(a) and 1125(a)(1) apply only to domestic use in commerce. Domestic consumer confusion doesn't substitute for the required domestic use. A worldwide advertising campaign, foreign sale, or imported product therefore requires a transaction specific analysis of where the accused use occurred.

You should separate domestic sales, imports, online offers, foreign advertising, and foreign transactions when developing the record. Choice of remedy also affects territorial analysis because an injunction must conform to the statute's domestic scope and the conduct proved.

Texas Common Law Unfair Competition

Texas treats unfair competition as an umbrella for causes of action arising from improper competitive conduct. Taylor Publishing Co. v. Jostens, Inc., 216 F.3d 465, 486 (5th Cir. 2000), explained that the claimant must identify an illegal act, which can consist of an independent tort or another actionable wrong. The label unfair competition doesn't replace the elements of the underlying claim.

Texas common law trademark infringement protects rights acquired through use and centers on likely confusion. Federal and Texas claims frequently proceed together, but territorial priority, available remedies, and the facts supporting common law rights require separate attention. A claimant should prove when and where it used the designation and how customers understood it.

TUTSA Displacement

Section 134A.007 of the Texas Uniform Trade Secrets Act displaces conflicting tort, restitutionary, and other Texas law that provides civil remedies for trade secret misappropriation. It preserves contractual remedies, criminal remedies, and other civil remedies that aren't based on trade secret misappropriation. TUTSA displacement follows the substance of the allegations when a plaintiff renames the same trade secret theory as unfair competition, conversion, breach of fiduciary duty, or misappropriation of confidential information.

In Trinseo Europe GmbH v. Kellogg Brown & Root, L.L.C., No. 24-20460 (5th Cir. Jan. 21, 2026), the Fifth Circuit affirmed summary judgment against alternative claims for misappropriation of confidential information. Applying Texas intermediate appellate decisions, the court examined the substance of the allegations and concluded that TUTSA displaced claims based on the same information and facts as the trade secret claims. A plaintiff needs an independent duty or injury to support a separate Texas cause of action.

Contract claims can survive because Section 134A.007 preserves contractual remedies. Other tort claims can also survive when they depend on conduct and duties independent of trade secret misappropriation. You should compare the facts required for each claim rather than assume that pleading in the alternative preserves every label.

Business Disparagement

Texas business disparagement protects economic interests against false and disparaging statements. The claimant must prove publication of disparaging words, falsity, malice, lack of privilege, and special damages. Unlike a Lanham Act false advertising claim, business disparagement doesn't require commercial advertising or promotion, but it demands proof of a direct pecuniary loss.

Innovative Block of South Texas, Ltd. v. Valley Builders Supply, Inc., 603 S.W.3d 409 (Tex. 2020), distinguished business disparagement from defamation and confirmed that special damages mean pecuniary losses that flow directly from the disparaging publication. Lost customers, canceled orders, and measurable price or sales effects can supply that proof when the evidence connects them to the statement. General injury to reputation without a proven economic loss won't satisfy the special damages element.

Remedies

Section 1116(a) authorizes injunctions under equitable principles and provides a rebuttable presumption of irreparable harm after the required merits showing. The presumption applies to violations under Section 1125(a), including false association and false advertising. A permanent injunction requires a finding of violation, while preliminary relief requires the claimant to show likely success on the merits.

Section 1117(a) authorizes recovery of the defendant's profits, the plaintiff's damages, and costs, subject to equitable principles. The plaintiff proves the defendant's sales, and the defendant proves costs and deductions. A court can increase actual damages up to three times and adjust a profits award to a just sum, but a profits adjustment must compensate rather than punish. Courts can award attorney fees in exceptional cases.

Section 1118 authorizes destruction of specified labels, signs, prints, packages, wrappers, receptacles, advertisements, and tools used to make them when the statute's conditions are met. It doesn't create a general forfeiture remedy for every product associated with a Section 43(a) violation. Counterfeiting remedies and statutory damages also require the statutory predicates for counterfeiting and don't apply to an ordinary false advertising claim.

Texas remedies depend on the underlying cause of action. Business disparagement requires special damages, contract remedies follow the agreement and contract law, and TUTSA supplies its own injunction, damages, exemplary damages, and attorney fee provisions. Pleading several labels doesn't permit duplicate recovery for the same injury.

Building the Record

If you're challenging false advertising, you should preserve the advertisement in the form consumers received it, including the date, audience, placement, surrounding text, linked material, video, audio, and platform data. You should also obtain claim substantiation, test protocols, raw data, product specifications, internal approvals, sales training, customer communications, and records showing how broadly the message circulated.

If the claim concerns false association, you should document priority, distinctiveness, marketplace use, confusion, sales channels, and consumer conditions. If confidential information is involved, you should identify the information with precision, document the measures used to protect it, and separate contract breaches from trade secret misappropriation before pleading Texas common law claims.

Defending the case requires the same discipline. You should preserve the development and support for every challenged claim, identify the intended and actual audience, test materiality and causation, and examine whether the plaintiff seeks to convert copyright, patent, regulatory, or trade secret law into a broader Lanham Act claim. The cause of action should fit the commercial wrong and the evidence needed to prove it.