Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: FCC standards did not require dismissal of suit over marketing of wireless routers, (Dec 13, 2013)

By Jeffrey May, J.D.

False advertising claims brought by Netgear, Inc., a manufacturer of computer networking equipment and other hardware, including wireless internet routers, against a competing seller of wireless routers were not barred by or preempted by the Federal Communications Commission’s exclusive authority to enforce its radio frequency emissions standards, the federal district court in San Francisco has ruled. Netgear can proceed with claims that ASUSTeK Computer, Inc. and its U.S. subsidiary ASUS Computer International falsely stated in advertisements and promotional materials that certain of its wireless routers complied with FCC regulations (Netgear, Inc. v. ASUSTeK Computer, Inc., December 12, 2013, Illston, S.).

The defendants unsuccessfully argued that only the FCC has the authority and expertise to determine whether its radio frequency emissions standards and related regulations had been violated, and thus that Netgear’s Lanham Act false advertising claim was barred and the state claims were preempted.

Netgear could prove its claims by showing that the defendants falsely advertised that their products met FCC standards, either by submitting falsified test results or by altering their wireless routers after testing, the court reasoned. Proving these allegations did not risk undercutting the agency’s expert judgments and authority, because Netgear’s allegations did not implicate the FCC’s determinations or require the court to interpret ambiguous FCC regulations.

The court also rejected the defendants’ contention that Netgear’s state law claims were preempted under the doctrine of field preemption. Netgear’s claims that the defendants misrepresented that their wireless routers met FCC standards did not implicate the FCC’s regulation of radio frequency interference. Moreover, Netgear was not attempting to impose any requirements on the defendants that were in addition to or in any way inconsistent with FCC regulations regarding wireless routers.

Primary jurisdiction. The court also declined to apply the doctrine of primary jurisdiction to stay or dismiss the claims. Netgear’s claims would not require the court to interpret complex regulations, resolve technical issues, or engage in policy judgments that required the expertise of the FCC.

The case is No. C 13-3405 SI.

Attorneys: Fletcher C. Alford (Dentons US LLP) for Netgear, Inc. Natalie L Arbaugh (Fish and Richardson, PC) for ASUSTeK Computer, Inc.

Companies: Netgear, Inc.; ASUSTeK Computer, Inc.; ASUS Computer International, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews