Unfair Competition Under the Lanham Act and Texas Common Law: When the Claim Goes Beyond Trademark Infringement

By Hank FasthoffJuly 7, 2026

Trademark infringement protects registered marks. But competitive misconduct doesn't always involve a registered trademark. A competitor may copy your unregistered brand identity, misrepresent its own products in advertising, sell repackaged versions of your goods under its own name, or make false claims about your products to divert your customers. Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) provides a federal cause of action for these practices, and Texas common law covers additional conduct the Lanham Act doesn't reach.

Section 43(a) is the federal unfair competition statute. It protects unregistered marks, trade dress, and commercial interests against false designation of origin and false advertising without requiring a federal trademark registration. For businesses that haven't registered their marks, or whose competitive injury doesn't fit within traditional trademark infringement, § 43(a) is often the most effective litigation tool available.

False Designation of Origin: § 43(a)(1)(A)

Section 43(a)(1)(A) prohibits the use of "any word, term, name, symbol, or device" or "any false designation of origin, false or misleading description of fact, or false or misleading representation of fact" that is "likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association" of one person with another, or "as to the origin, sponsorship, or approval" of goods, services, or commercial activities.

In practice, § 43(a)(1)(A) covers several categories of competitive misconduct.

Passing off (also called palming off) occurs when a defendant sells its goods under the plaintiff's name, mark, or trade dress, causing consumers to believe they're buying the plaintiff's product when they're buying the defendant's. A manufacturer who packages its product to look like a competitor's product (same colors, same layout, same trade dress) so consumers buy it by mistake has engaged in passing off.

Reverse passing off occurs when a defendant takes the plaintiff's product and sells it as the defendant's own. In Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), the Supreme Court limited reverse passing off to tangible goods. Dastar purchased videotapes of a World War II documentary series (whose copyright lapsed), repackaged them under its own name, and sold them without crediting Fox as the original producer. The Court held that "origin" under § 43(a) refers to the producer of the tangible product sold in the marketplace, not the creator of the underlying content. Reverse passing off can't be used to enforce attribution rights for creative works whose copyright has expired. But it remains viable when the defendant removes the plaintiff's branding from a physical product and sells it as the defendant's own.

False endorsement occurs when the defendant uses someone's identity (name, image, likeness, voice) in a way that falsely implies that person endorses, sponsors, or is affiliated with the defendant's goods or services. False endorsement claims often intersect with state-law right of publicity claims (covered in a separate article on this site).

Protection of unregistered marks and trade dress is one of § 43(a)(1)(A)'s most important functions. A business that hasn't registered its mark with the USPTO can still bring a federal unfair competition claim if it can prove that its unregistered mark or trade dress is distinctive (inherently or through secondary meaning), that the defendant is using a confusingly similar mark or dress in commerce, and that the use is likely to cause confusion. The likelihood of confusion analysis is the same multi-factor test used for registered trademark infringement.

False Advertising: § 43(a)(1)(B)

Section 43(a)(1)(B) prohibits "any false or misleading description of fact, or false or misleading representation of fact" in "commercial advertising or promotion" that "misrepresents the nature, characteristics, qualities, or geographic origin" of goods, services, or commercial activities.

False advertising under the Lanham Act is distinct from trademark infringement. It doesn't require a trademark at all. It covers any false or misleading factual claim about a product or service made in commercial advertising, whether the claim is about the defendant's own product or about a competitor's product.

To prevail on a false advertising claim, the plaintiff must prove the defendant made a false or misleading statement of fact in commercial advertising or promotion, the statement was material (likely to influence a purchasing decision), the statement was made in interstate commerce, and the plaintiff has been or is likely to be injured by the false statement (typically through lost sales, diverted customers, or damage to commercial reputation).

A statement can be "false on its face" (the statement is literally untrue) or "misleading by implication" (the statement is literally true but conveys a false impression to consumers). Literally false statements can support relief without consumer survey evidence. Misleading-by-implication claims typically require survey evidence showing that consumers in fact drew the misleading inference.

Puffery (general, vague claims of superiority like "the best" or "world-class") isn't actionable. Puffery is understood by consumers as opinion rather than fact. Only specific, verifiable factual claims are actionable under § 43(a)(1)(B).

Standing Under Lexmark

In Lexmark International, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014), the Supreme Court established the standing requirements for § 43(a) claims. A plaintiff must satisfy two conditions. First, the plaintiff's injury must fall within the "zone of interests" protected by the Lanham Act, which means the injury must be to a commercial interest in reputation or sales. Second, the injury must be "proximately caused" by the defendant's false advertising or misrepresentation.

Under Lexmark, competitors who lose sales or suffer reputational harm from the defendant's false advertising have standing. Ordinary consumers generally don't have standing to sue under the Lanham Act (consumer protection claims are brought under state consumer protection statutes or through FTC enforcement, not under § 43(a)).

Texas Common Law Unfair Competition

Texas common law provides additional unfair competition theories that supplement the Lanham Act.

Common law trademark infringement protects unregistered marks under Texas law, using a likelihood of confusion analysis similar to the federal standard. A business with common law trademark rights established through use in Texas can bring a state-law claim even if it hasn't registered the mark federally.

Misappropriation covers the taking of another's commercially valuable property (trade secrets, confidential information, customer lists, business plans) through improper means. Texas misappropriation claims often overlap with trade secret claims under TUTSA (Texas Uniform Trade Secrets Act, Chapter 134A) but can reach conduct that doesn't satisfy the TUTSA's definition of trade secret.

Trade disparagement (also called business disparagement or injurious falsehood) under Texas common law requires proof that the defendant published a false statement of fact about the plaintiff's goods, services, or business, the defendant knew the statement was false or acted with reckless disregard for its truth, the defendant intended to injure the plaintiff or reasonably should have recognized the likelihood of injury, and the plaintiff suffered special damages (specific, quantifiable pecuniary loss) as a result. Trade disparagement differs from defamation in that it targets the plaintiff's business or products rather than the plaintiff's personal reputation, and it requires proof of special damages (which defamation per se doesn't).

Remedies

Section 43(a) claims share the same remedies as registered trademark infringement under the Lanham Act. Injunctive relief under § 1116 (temporary and permanent injunctions). Monetary relief under § 1117(a) (defendant's profits, plaintiff's damages, costs, enhanced damages up to three times in appropriate cases). Attorney's fees in exceptional cases under § 1117(a). Destruction or forfeiture of infringing goods under § 1118.

For false advertising, the Trademark Modernization Act of 2020 created a rebuttable presumption of irreparable harm for purposes of injunctive relief in Lanham Act cases, which applies to § 43(a) false association claims as well as registered trademark infringement claims.

In April 2026, a New York jury awarded $420 million in a Lanham Act false advertising case (Skillz Platform Inc. v. Papaya Gaming), the largest false advertising verdict in U.S. history, demonstrating that § 43(a)(1)(B) claims can produce substantial recoveries when the false advertising causes significant commercial harm.

Practical Recommendations

If a competitor is misrepresenting its products, disparaging yours, or copying your unregistered brand identity, evaluate whether § 43(a) provides a federal claim before defaulting to state-law theories. Federal court jurisdiction, the Lanham Act's remedies framework, and the ability to obtain nationwide injunctive relief make § 43(a) a more powerful tool than most state-law alternatives for competitive misconduct that crosses state lines.

Preserve evidence of the false advertising. Screenshots of the competitor's advertisements, social media posts, website claims, marketing materials, and trade show presentations are the evidence that proves the false statement was made, that it was made in commercial advertising, and that it was material. If the advertising is online, capture it before the competitor changes or removes it.

For false advertising claims, determine whether the statement is literally false or misleading by implication. Literally false statements can be challenged without consumer survey evidence. Misleading-by-implication claims usually require survey evidence, which adds cost and complexity. Identifying the category early shapes the litigation budget and the evidentiary strategy.

If your business uses unregistered marks or trade dress, consider federal registration to strengthen future enforcement. Section 43(a) protects unregistered marks, but the plaintiff must prove distinctiveness and protectability without the presumptions that registration provides. Registration costs far less than the additional litigation expense of proving protectability from scratch.