Lanham Act: brand owners’ current weapon of choice
Since the outbreak of COVID-19, US federal courts have seen an uptick in Lanham Act cases. Unlike a typical Lanham Act case dealing solely with some form of trademark infringement or dilution, these cases have largely attacked third-party price-gouging of key medical supplies needed to combat the disease.
In its purest form, the Lanham Act was designed to protect brand goodwill and recognition. In a typical case, a company may seek to enforce its federal trademark against another company that is using a mark that may be confusingly similar. The COVID-19 pandemic, however, has underscored the need for companies to be equipped with other mechanisms to swiftly forestall price-gouging and protect brand reputation within the public forum.
In this situation, the Lanham Act has allowed medical supply companies to quickly leverage its protections to block unauthorised third-party redistribution and consequent price-gouging of essential medical goods.
3M respirators
3M has been the flag-bearer on this issue so far. Since the pandemic outbreak, the company has filed several complaints seeking Lanham Act relief to enjoin price-gougers from profiting on 3M products that are vital to those fighting COVID-19, with one of the most visible products being N95 respirators. 3M’s complaints paint a stark picture of gougers taking advantage of governments and healthcare providers in a time of crisis.
In 3M v Puznak, 3M alleges a price-gouging scheme in which the defendants tried to deceive government officials in Indiana into thinking that they were connected with 3M, and offered respirators at a price more than double the list price.
3M’s complaint details the significant confusion that arose from this conduct as Indiana officials, already overwhelmed with responding to the pandemic and the need for N95 respirators, tried to determine whether the offer was reliable. When questioned by Indiana officials on their connection to 3M, the defendants allegedly spun a false narrative, stating that: “nobody from 3M has time or interest … in satisfying … paranoid irrationality” and that the diligence was “really quite sad … for the people of Indiana”.
The defendants also informed the state that they were receiving “counsel of executives from 3M to ‘just forget it and move on’”. Ultimately, this ruse was revealed as the state learned that the defendants had no 3M connection, and were merely trying to profiteer from the pandemic.
3M’s other complaints offer similar stories of fraudulent schemes to deceive government agencies and healthcare providers with price-gouging allegations ranging anywhere from two to six times 3M’s own list prices.
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