Supreme Court Sets New Test In Lexmark For Whether A Party Has Standing To Bring A False Advertising Claim Under The Lanham Act

On March 25, 2014, the Supreme Court in Lexmark International, Inc. v. Static Control Components, Inc., No. 12-873 (Mar. 25, 2014), ruled that a two-part inquiry pairing the zone-of-interests test and a proximate-cause requirement applies when determining standing for false advertising claims under the Lanham Act, 15 U.S.C. § 1152(a). In so holding, the Court rejected the three tests that had been developed and applied by the circuit courts in favor of an inquiry grounded in principles that, according to the Court, are traditionally applied to statutorily created causes of action.

Lexmark manufactures and sells laser printers, as well as toner cartridges for those printers. Sonic Control makes and sells to third party "remanufacturers" components that are necessary to "remanufacture" or refurbish Lexmark toner cartridges. The dispute in this case arose because Static Control developed a microchip that could mimic a microchip used in Lexmark "Prebate" cartridges, which disabled a toner cartridge when the cartridge ran out of toner. In 2002, Lexmark sued Static Control for various copyright violations. Static Control counterclaimed, alleging, inter alia, violations of the Lanham Act's false advertising provision. Static Control alleges that Lexmark (a) "purposefully misleads end-users" to believe that they are legally required to return Prebate cartridges to Lexmark after a single use; and (b) sent letters to remanufacturers that falsely advised that it was illegal both to sell refurbished Prebate cartridges and to use Static Control's products in so doing. Lexmark moved to dismiss this claim based on Static Control's lack of standing.

In the opinion below, the Sixth Circuit had set forth the split in the circuit courts over which test applies when determining standing for false advertising claims under the Lanham Act:

The Second and Sixth Circuits used a "reasonable interest" approach, finding that the claimant has standing if the claimant can demonstrate: (1) a reasonable interest to be protected against the alleged false advertising, and (2) a reasonable basis for believing that the interest is likely to be damaged by the alleged false advertising; The Seventh, Ninth, and Tenth Circuits used a categorical test, permitting Lanham Act suits only by an actual competitor making an unfair-competition claim; and The Third, Fifth, Eighth, and Eleventh Circuits used the "AGC" factors, which are used for determining standing for antitrust claims...