Antitrust Law Daily Wrap Up, ADVERTISING NEWS: High Court Asked to Consider “Three-Way Circuit Split” on Lanham Act False Advertising Standing Requirements, (Jan 18, 2013)

By Jeffrey May, J.D.

Lexmark International, Inc., a major producer of laser printers and toner cartridges for its printers, has asked the U.S. Supreme Court to review a decision of the U.S. Court of Appeals in Cincinnati holding that Static Control Components, Inc., a company that made components for toner cartridges, had standing to pursue Lanham Act false advertising claims. Lexmark’s petition for a writ of certiorari was filed on January 14, 2013 (Lexmark International, Inc. v. Static Control Components, Inc., Dkt. No. 12-873).

Lexmark developed toner cartridges containing microchips that communicate with printers to ensure that Lexmark printers only work with its cartridges. Lexmark asserted various copyright and patent infringement claims against Static Control, related to, among other things, Static Control's manufacture and sale of microchips used by remanufacturers of toner cartridges for Lexmark's laser printers.

Static Control brought a Lanham Act claim against Lexmark for engaging in false advertising. Static Control alleged that Lexmark falsely informed customers that Static Control's products infringed Lexmark's purported intellectual property and misled Static Control customers into believing that Static Control was engaging in illegal conduct because license agreements prohibited remanufacturing Lexmark toner cartridges. A federal district court dismissed the Lanham Act claim for lack of standing. Static Controls” antitrust claims were also dismissed on standing grounds.

In an August 2012 decision (697 F. 3d 387, 2012-2 Trade Cases ¶78,027), the appellate court reversed dismissal of the Lanham Act claim, but upheld dismissal of the antitrust claims. Static Control was found to have standing to pursue the Lanham Act false advertising claim, even though it was not a competitor of Lexmark. The appellate court refused to follow standing requirements imposed by other federal circuits, that a Lanham Act false advertising plaintiff be a competitor of the defendant or that the plaintiff satisfy standing analysis utilized in federal antitrust cases. Static Control alleged a cognizable interest in its business reputation and sales to remanufacturers and sufficiently alleged that these interests were harmed by Lexmark's statements to the remanufacturers that it infringed Lexmark's intellectual property, the appellate court decided.

In its petition for review, Lexmark contends that there is a three-way split on standing requirements for Lanham Act false advertising claims. According to Lexmark, “the Sixth Circuit panel felt constrained by a prior Sixth Circuit case on the ‘reasonable interest’ test and practically invited intervention by this Court.”

Lexmark presents the following question: “Whether the appropriate analytic framework for determining a party's standing to maintain an action for false advertising under the Lanham Act is (1) the factors set forth in the Supreme Court's 1983 decision in Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 1983-1 Trade Cases ¶65,226, as adopted by the Third, Fifth, Eighth, and Eleventh Circuits; (2) the categorical test, permitting suits only by an actual competitor, as employed by the Seventh, Ninth, and Tenth Circuits, or (3) a version of the more expansive “reasonable interest” test, either as applied by the Sixth Circuit in the case or as applied by the Second Circuit in prior cases.”

Attorneys: Steven B. Loy (Stoll, Keenon, Ogden, PLLC) for petitioner.

Companies: Lexmark International, Inc.; Static Control Components, Inc.

News: Advertising