Money Damages and Corrective Advertising: An Economic Analysis

Abstract

In unfair competition cases, injunctive relief is the norm' for three reasons. First, it is difficult to prove and then calculate actual damages. Second, an injunction alone usually provides substantial relief.2 Third, the substantive law of damages in the field of unfair competition$ is uncertain and unstable. One commentator on the Lanham Act4 notes that, when courts grant money damages, the confluence of evidentiary complexity and legal confusion has resulted in some plaintiffs receiving windfall recoveries while others find injuries uncompensated; meanwhile, defendants face uncertain liability and capricious penalties.5 This instability in the law has led to diverse attempts to address the damage issue. Perhaps the most troubling development in the search for an accurate, consistent rationale for awarding money damages in unfair competition cases has been the federal courts' adaptation of the Federal Trade Commission's (FTC) injunctive remedy of corrective advertising. Federal courts have applied this rationale-usually used to justify corrective advertising injunctions-to