Trade Practices and Intellectual Property

    In 1938 Congress expanded the FTC Act so as to prohibit "unfair or deceptive acts or practices, " in addition to "unfair methods of competition. "An "unfair" practice can clearly hurt competitors. The FTC has attempted to develop a standard for     identifying commercial practices that are unfair to consumers, as well. In 1980, the FTC declared that "unjustified consumer injury" was the most important such standard, but the Supreme Court has not yet upheld it.

      An act or practice was traditionally regarded as deceptive if it tended to mislead substantial numbers of consumers. Under President Reagan, the FTC has suggested that for deception, the misrepresentation must be LikeLy to mislead reasonabLe consumers.

      Another important basis for prosecuting false advertisements is Section 43(a) of the Lanham Act, which outlaws "any false description or representation" of goods or services in interstate commerce. Only competitors of the firm that made the false description have the right to sue under this section. A high proportion of Section 43(a) cases deal with comparative advertisements, which contrast the advertised product and its competitors. These contrasts do not violate the Lanham Act unless the advertised product is itself set forth in a misleading way.

      To promote creativity, the government has created intellectual property: limited monopolies in the form of patent, copyright, and trademark protection. Both patent and copyright protection are extended to the tangible expression of ideas, not to the idea itself.