Tenth Circuit: No Presumed Lanham Act Injury Without Proof of a “Two Significant Participants” Market; Actual Injury Requires Evidence of Ad Exposure and Causation

Introduction

In Kesters Merchandising Display International, Inc. v. SurfaceQuest, Inc. (10th Cir. Jan. 6, 2026), two competitors in lightweight architectural materials disputed the use of product photographs in advertising. Kesters sold “MicroLite,” and SurfaceQuest sold architectural film and later marketed its own lightweight beam wrapped in its film. Kesters alleged SurfaceQuest promoted its products using photographs and depictions of MicroLite, along with other allegedly deceptive representations, and sued for false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B).

The appeal turned on a single gating element: whether Kesters produced evidence from which a reasonable factfinder could infer a cognizable Lanham Act injury—either by a permissible presumption of injury or by proof of actual injury causally linked to the challenged advertising.

Summary of the Opinion

The Tenth Circuit affirmed summary judgment for SurfaceQuest. The court held that (1) injury could not be presumed because Kesters failed to show a “limited” market in which only Kesters and SurfaceQuest were the only two significant participants, and (2) Kesters failed to produce evidence of actual injury because it offered no proof that SurfaceQuest’s allegedly false advertising reached the customer (Hy-Vee) or caused the lost bid. The court also rejected Kesters’ effort to rely on an affidavit surfaced too late (in a reply brief) and not properly submitted in opposition to SurfaceQuest’s summary judgment motion.

Analysis

Precedents Cited

Cypert v. Indep. Sch. Dist. No. 1-050 of Osage Cnty., 661 F.3d 477 (10th Cir. 2011) and Est. of Harmon v. Salt Lake City, 134 F.4th 1119 (10th Cir. 2025): These cases supplied the appellate framework—de novo review of summary judgment and the requirement that summary judgment be granted when no genuine dispute of material fact exists and the movant is entitled to judgment as a matter of law.
United States v. Sup. Ct. of N.M., 839 F.3d 888 (10th Cir. 2016): Used for the rule that when both sides move for summary judgment, each motion is evaluated separately with all inferences drawn in favor of the nonmovant on that motion.
Lexmark Int'l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014): The cornerstone for the injury and causation requirements. The court relied on Lexmark for two propositions: (1) Lanham Act false advertising requires a showing of injury (including lost sales/profits), and (2) the injury must “flow[] directly from the deception,” i.e., the plaintiff ordinarily must show a causal connection between the advertising deception and harm.
Bimbo Bakeries USA, Inc. v. Sycamore, 29 F.4th 630 (10th Cir. 2022): Cited to define cognizable injury types in this circuit—direct diversion of sales or loss of goodwill.
Vitamins Online, Inc. v. Heartwise, Inc., 71 F.4th 1222 (10th Cir. 2023): The opinion’s key substantive authority on when injury may be presumed in Lanham Act false advertising: a presumption arises only where the defendant has materially inflated its product’s value (or deflated the plaintiff’s) and the parties are the only two significant participants in a market or submarket. The panel used Vitamins Online both to deny the presumption here and to emphasize that additional competitors defeat the presumption unless they are “insignificant.”
Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 762 F.3d 114, 1120 (10th Cir. 2014): Quoted via Vitamins Online for the “cross-elasticity of demand” market-definition tool—substitutability, not mere similarity, determines whether firms compete in the same market.
Telecor Commc'ns, Inc. v. Sw Bell Tel. Co., 305 F.3d 1124 (10th Cir. 2002): Reinforced that “reasonable interchangeability does not depend upon product similarity,” undercutting Kesters’ attempt to show a narrow market by pointing to product similarities rather than substitutability.
United States v. Davison, 768 F. Supp. 3d 1324 (D. Kan. 2025), Banner Bank v. First Am. Title Ins. Co., 1916 F.3d 1323 (10th Cir. 2019), and EEOC v. UPS Ground Freight, 443 F. Supp. 3d 1270 (D. Kan. 2020): These authorities framed the procedural holding that cross-motions are treated as separate motions; evidence must be properly presented in response to the motion it is meant to defeat, even if the court resolves both motions in one order.
Lowther v. Child. Youth & Fam. Dep't, 101 F.4th 742 (10th Cir. 2024) and Geddes v. United Staffing All. Emp. Med. Plan, 469 F.3d 919 (10th Cir. 2006), plus Modaine v. Am. Drug Stores, Inc., 408 F. Supp. 2d 1169 (D. Kan. 2006): These cases supported the court’s refusal to credit new evidence/arguments first raised in a reply brief without giving the opponent a fair chance to respond—an additional, independent reason Kesters’ late affidavit could not save it.
Murray ex rel. Murray v. Montrose Cnty. Sch. Dis. RE-1J, 51 F.3d 921 (10th Cir. 1995): Used for mootness: once SurfaceQuest was entitled to summary judgment, Kesters’ appeal of the denial of its own summary judgment motion became moot.

Legal Reasoning

Injury is an essential element, not a formality. Following Lexmark Int'l, Inc. v. Static Control Components, Inc., the court treated injury and proximate causation as mandatory components of Lanham Act standing/merits in a false advertising claim.
The “presumed injury” shortcut is narrow and requires market proof. Kesters sought to avoid proof of concrete harm by invoking the Vitamins Online, Inc. v. Heartwise, Inc. presumption (often associated with literally false advertising in a duopoly-like market). The panel assumed, without deciding, that literal falsity could satisfy the “material inflation/deflation” requirement, but held Kesters failed the second requirement: evidence that only Kesters and SurfaceQuest were the only two significant market participants.
- SurfaceQuest showed multiple competitors existed.
- Kesters did not timely argue or present evidence that those competitors were “insignificant.”
- The court stressed that market limitation depends on substitutability (“cross-elasticity of demand”), not mere product similarity (citing Lenox MacLaren Surgical Corp. v. Medtronic, Inc. via Vitamins Online, and Telecor Commc'ns, Inc. v. Sw Bell Tel. Co.).
Cross-motions do not merge the evidentiary record. Kesters tried to rely on an affidavit that appeared with its reply in support of its own motion and was not included in its response exhibits opposing SurfaceQuest’s motion. Citing Banner Bank v. First Am. Title Ins. Co. and United States v. Davison, the court held the district court properly evaluated SurfaceQuest’s motion on the evidence submitted in connection with that motion. The late affidavit also ran into the reply-brief bar (citing Lowther v. Child. Youth & Fam. Dep't and Geddes).
Without a presumption, actual injury requires evidence of ad exposure and causation. Kesters’ concrete-harm theory was that it lost a Hy-Vee bid (health markets project) because of SurfaceQuest’s deception. The court rejected this as speculative because Kesters produced no evidence that: (a) SurfaceQuest won the work Kesters allegedly lost, (b) SurfaceQuest showed its marketing materials to Hy-Vee, or (c) Hy-Vee ever saw the challenged marketing materials. Under Lexmark and Vitamins Online, the absence of evidence linking the deception to the lost bid defeated causation and thus injury.

Impact

Raises the practical bar for presumed injury in false advertising cases. Plaintiffs seeking a presumption must be prepared to prove market structure, not just falsity—especially evidence that other competitors are not significant and that the relevant “market or submarket” is defined by substitutability (cross-elasticity of demand).
Encourages early, record-based market definition. The decision signals that conclusory assertions about “limited markets” will not survive summary judgment without competent evidence bearing on substitutability and competitive constraints.
Reinforces disciplined summary-judgment practice. Evidence must be timely submitted in opposition to the particular motion it is meant to defeat; parties cannot assume cross-motions allow a court to “import” evidence from one briefing track to another, nor can they cure gaps with reply evidence.
Clarifies causation proof expectations for lost-bid theories. When the alleged injury is a lost contract/bid, plaintiffs should expect to need evidence that the decisionmaker was exposed to (and influenced by) the challenged advertising—such as testimony from the customer, proof of sales presentations, or documentary trails of marketing materials.

Complex Concepts Simplified

Lanham Act false advertising (15 U.S.C. § 1125(a)(1)(B)): A federal claim targeting commercial advertising that misrepresents the nature, characteristics, qualities, or origin of goods/services.
“Injury” (diversion of sales / loss of goodwill): Harm such as customers choosing the defendant instead of the plaintiff (lost sales) or harm to reputation and customer relationships (goodwill).
Presumed injury: A limited shortcut that allows a court to infer harm without direct proof, but only under narrow conditions—here, the critical one being a market with only two significant competitors (or others so minor they do not matter).
Cross-elasticity of demand: A way to ask whether products are substitutes: if buyers would switch from Product A to Product B when A’s price/availability changes, the products compete in the same market—even if they look different.
Summary judgment and “genuine dispute”: The court ends a claim before trial if the evidence would not allow a reasonable jury to find for the nonmoving party on a material fact.
Cross-motions for summary judgment: Even if both sides move for summary judgment, each motion is judged independently, on the evidence submitted for that motion, with inferences drawn against the movant.
Mootness (in this posture): If the defendant is entitled to judgment as a matter of law, the plaintiff’s argument that it should have won summary judgment becomes irrelevant.

Conclusion

The decision’s central takeaway is that Lanham Act false advertising plaintiffs must prove injury with rigor. A presumption of injury is unavailable without a supported showing that the parties are the only two significant competitors in a properly defined market, grounded in substitutability evidence (cross-elasticity of demand). Absent that presumption, the plaintiff must produce evidence that the challenged advertising reached relevant buyers and caused the claimed harm. Procedurally, the opinion also underscores that cross-motions are separate and reply-brief evidence generally cannot rescue an underdeveloped summary judgment record.