On October 27, 2011, a federal court in Virginia dismissed a Lanham Act claim seeking to hold a government contractor liable for statements contained in an environmental assessment report. US Demil v. ARA Group. Arnold & Porter LLP represented the Defendant.
Background: Lanham Act applies to GoCo statements. The scope of “advertising” under the Lanham Act is broad and applies to non-traditional promotional statements such as those in emails and slide decks provided to government or business purchasers. In the government contracting sector, courts already have held that bid proposals even to government agencies can constitute Lanham Act false advertising.
Plaintiff’s case. The plaintiff attempted to expand the reach of the Lanham Act to cover technical data, included in an environmental assessment report, prepared after the contractor was already working for the agency. The information in question was allegedly provided to the U.S. Army regarding a project to demilitarize munitions, and was provided pursuant environmental regulations.
The court’s analysis. The court cited three reasons supporting the dismissal:
- Context. The court observed that “it is not just what is said but the context in which it is said, and given this context, I don't see how the Lanham Act can go forward as a matter of law.” Here, the “purpose” of the statements was to provide data for an environmental assessment, which is distinguishable from a bid proposal, where the purpose is promotion / to induce a sale.
- Customer sophistication. The court considered the sophistication of the Army personnel requesting the data and the highly technical nature of the data. The court noted that the audience here was “not just your ordinary GSA person, but these are highly technical people, so you have also an audience much less likely to be duped.”
- Policy considerations. The court commented on the need to limit the scope of the Lanham Act in the government contracting sector to prevent cases from being filed based on every communication sent to every government agency. The court sought to avoid a decision that would “open the floodgates,” noting that “the vigor with which competitors fight with each other in government contracting is well known.”
Significance. Although the defendant was able to dismiss the Lanham Act claim on the facts of the case, the case confirms that Lanham Act false advertising is a potential tool to police unfair competition in the government contracting sector. Before bringing a claim, however, plaintiffs should make sure that the Complaint contains detailed allegations to prove that the primary purpose of the communication is for promotion in a competitive context (and not for some other purpose such as to provide technical data for inclusion in an environmental assessment), and that the statements have the potential to mislead the target audience.
NOTICE: ADVERTISING MATERIAL. Results depend upon a variety of factors unique to each matter. Prior results do not guarantee or predict a similar result in any future matter undertaken by the lawyer.