Antitrust Law Daily Wrap Up, ADVERTISING—8th Cir.: Lanham Act false ad claims revived in transgenic corn case, (Aug 8, 2014)

By Linda O’Brien, J.D., LL.M.

The U.S. Court of Appeals in St. Louis has reversed and remanded a district court’s dismissal of biotechnology company Syngenta Seed’s Lanham Act false advertising and/or promotion claims against an agricultural storage company over signs stating the company’s policy of refusing to accept Syngenta’s transgenic corn at its facilities. The federal district court in Sioux City, Iowa—which had rejected the claims because the parties were not in commercial competition—was directed to reevaluate them in light of the U.S. Supreme Court’s recent Lexmark decision (Syngenta Seeds, Inc. v. Bunge North America, Inc., August 8, 2014, Bye, K.).

Syngenta Seeds is a biotechnology company and producer of a strain of transgenic corn marketed under the name Agrisure Viptera. Syngenta obtained regulatory approval for selling Viptera in the United States and allowing corn grown from Viptera seed to be imported in numerous foreign countries. However, Syngenta did not obtain such approval from China, which had a strict policy regarding imports of corn grown with seed with certain genetically modified traits. Bunge North America is an agricultural product storage and transport company which purchases products from domestic farmers, stores them in local elevators, and transfers the products to purchasers in domestic and foreign markets. Under its purchase contracts, Bunge can refuse to accept products containing genetic modifications for which import approval has not been obtained in foreign export markets.

In 2011, Bunge began to treat China as a major export market for domestically grown corn due to significant increases in the amount of corn imported into China. Because of China’s policy regarding unapproved genetically modified traits, such as Viptera, Bunge began refusing to accept corn grown from Viptera seed and placed signs at its facilities notifying producers of its refusal. Syngenta filed suit against Bunge, alleging that Bunge engaged in false advertising under the Lanham Act. The district court granted Bunge’s motion for summary judgment and Syngenta appealed.

The appeals court determined that, until recently, there was a split among circuits regarding the approach to analyzing standing to bring a claim under the Lanham Act. Precedent held that, for a false statement to be actionable under the Lanham Act, it must be commercial speech and made by a competitor. The district court reviewed Syngenta’s claim under the then-controlling standard and reasoned that Syngenta did not have standing to bring the claim because Bunge was not a competitor and Bunge’s signs did not constitute commercial speech.

According to the court, in March 2014, the U.S. Supreme Court decision, Lexmark International, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, resolved the circuit split and, in rejecting the requirement that challenged commercial speech be made by a competitor, established the zone-of-interests test and proximate causality requirement as the proper analysis for determining standing to allege a Lanham Act claim. Since Syngenta’s standing was analyzed under the circuit’s now-abrogated standard, the district court did not yet determine whether Syngenta had standing under the zone-of-interests test and proximate causality requirement.

In rejecting Bunge’s argument that the grant of summary judgment could be affirmed on the district court’s alternate ruling that Bunge’s signs did not qualify as commercial speech, the court noted that to look past the threshold standing determination to decide contested question of law would be assuming “hypothetical jurisdiction.” Thus, it was necessary to remand Syngenta’s claim to determine in the first instance whether Syngenta had standing to bring the claim under the zone-of-interests test and proximate causality requirement.

The case is No. 13-1391.

Attorneys: Daniel J. Brown (Dorsey & Whitney, LLP) for Syngenta Seeds, Inc. Christopher M. Hohn (Thompson Coburn, LLP) for Bunge North America, Inc.

Companies: Syngenta Seeds, Inc.; Bunge North America, Inc.

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