By: Leonard E. Rubin - Querrey & Harrow, Chicago
March 2, 2015
Long-time, trusted employees often leave a company to start their own competing business. One way for them to impress prospective clients and customers is by advertising the important matters they were involved in while at their former company. How far can they stretch the truth while bragging about their work on important projects handled at their former company? And why is it important (if the answer to that question is not readily apparent)? A recent lawsuit decided in the federal court of appeals in Chicago gives us at least some answers to these questions.
Dealing first with the importance of finding those answers, the former partner or employee wants to grow his or her business as fast as possible. By detailing his or her expert involvement in high-profile work at the former company, he or she is not only extolling his or her importance, but also using that hopefully impressive credential to lure new business that might otherwise have gone to the former company.
What if the former partner or employee is stretching his or her descriptions of his or her work beyond what he or she really performed? The former company, while there may be nothing it can do about truthful representations of work done by the departer, the former employer does not want the former partner or employee to exaggerate his or her value at the company and thus potentially lure present and prospective clients away.
If the former partner or employee advertises that he or she designed the new city bus terminal, acclaimed for its forward-looking aspects, but in truth all he or she did was look over drawings for practical flaws, he or she has made it seem that it has lost a key designer, might have trouble fulfilling a new commission, and that he or she now heads a new creative, accomplished company that can easily handle new work form its clients in the same forward-looking fashion. He or she has gained possible business and it may lose possible business, all because of a serious misrepresentation.
Can the former employer stop this misrepresentation? Yes, the former employer can sue, and the basis for the lawsuit may be found in, of all unlikely places, trademark law. The Lanham Act, as federal trademark law is called, contains the following provision:
Any person who, on or in connection with any goods or services, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which—(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person [shall be liable in a civil action.]
Use of this section of trademark law carries with it a number of conditions, among which are (1) the representation must be in commerce, (2) false or misleading, (3) likely to cause confusion or mistake, and (4) there must be a potential for or actual damages. So it must be used carefully, but it is available.
In the lawsuit referred to above (Gensler v. Strabala, 7th Cir., No. 12-2256, decided August 21, 2014), the architectural firm Gensler contended that Strabala, a former architect with Gensler’s firm and now heading his own firm, falsely claimed to have designed a famous building while with Gensler. Gensler’s original complaint was dismissed because the lower court said there were insufficient allegations that Strabala’s claims were false, but on appeal, the court decided that Gensler had enough in its pleading to allow it to stay in court.
The point here is that under typical circumstances, it might be a stretch of the imagination to think of trademark law when trying to figure out what may have been violated by misleading advertising or promotion indulged in by a former key employee. But, a little imagination can sometimes go a long way.
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