Legal Definitions - sole-source rule

The sole-source rule is a legal principle that applies in certain types of false advertising lawsuits. It states that for a company to successfully sue another company for false advertising, the suing company must demonstrate that it is the only provider of goods or services possessing the specific characteristic or trait that was falsely advertised. The rationale behind this rule is that if multiple companies offer products with that particular characteristic, it becomes difficult for the suing company to prove that the false advertisement directly harmed theirbusiness specifically, rather than the market as a whole.

Here are some examples to illustrate the sole-source rule:

• Example 1: Unique Patented Technology
  "TechGenius Inc." holds the exclusive patent for a revolutionary smartphone battery that can fully charge in under five minutes, a capability no other company possesses. A competitor, "Mobile Innovations," launches a new phone model, falsely advertising that its battery also charges in under five minutes. Under the sole-source rule, TechGenius Inc. would likely be able to sue Mobile Innovations for false advertising.

  Explanation: TechGenius Inc. is the sole source of the specific, patented technology allowing for a five-minute charge. Mobile Innovations' false claim directly misleads consumers about a unique feature exclusive to TechGenius, making the harm to TechGenius's market position clear and direct.

• Example 2: Exclusive Ingredient or Component
  "NutriLife Supplements" developed and exclusively licenses a rare botanical extract, "ZenithBloom," known for its unique calming properties, which it uses in its flagship anti-stress product. No other supplement company has access to or uses ZenithBloom. A new brand, "CalmEase," enters the market, falsely claiming its product also contains ZenithBloom to achieve similar calming effects.

  Explanation: NutriLife Supplements is the sole source of the ZenithBloom extract in the market. CalmEase's false advertisement directly capitalizes on and undermines NutriLife's exclusive offering, making it evident that NutriLife is specifically harmed by the misleading claim.

• Example 3: Unique Service Certification
  "EcoClean Services" is the only cleaning company in its metropolitan area to have achieved a highly specialized "Platinum Green Certification" from a prestigious national environmental agency, signifying their use of proprietary, zero-impact cleaning methods. A rival company, "Sparkle & Shine," begins advertising its services as also holding the "Platinum Green Certification," even though they have not undergone the rigorous process to obtain it.

  Explanation: EcoClean Services is the sole holder of the "Platinum Green Certification" in their operating region. Sparkle & Shine's false claim directly misrepresents their service quality by appropriating a unique and exclusive credential belonging only to EcoClean, thereby causing direct harm to EcoClean's unique market advantage.