Supreme Court Docket Report - June 3, 2013

Keywords: Lanham Act, false-advertising claim, unfair competition

Lanham Act - Standing To Bring False-Advertising Claim

Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) creates a federal private cause of action for false advertising and unfair competition. This cause of action encompasses, among other things, false statements made by competitors about each other's products. Section 43(a) grants standing to bring a claim to "any person who believes that he or she is or is likely to be damaged" by the allegedly false advertising or unfair competition. 15 U.S.C. § 1125(a)(1)(B). Although the grant of standing appears quite broad on first reading, it has been circumscribed to varying degrees by courts applying prudential limitations on its scope. Today, the Supreme Court granted certiorari in Lexmark International, Inc. v. Static Control Components, Inc., No. 12-873, to resolve a circuit split concerning the proper test for determining whether a plaintiff has standing to bring a claim under Section 43(a).

The case arises from a lawsuit that Lexmark filed against Static Control alleging that Static Control was infringing on Lexmark's patents covering microchips in toner cartridges for laser printers. Static Control counterclaimed under Section 43(a), alleging that Lexmark falsely told Static Control's customers that Static Control's microchip was infringing on Lexmark's patents. Lexmark moved to dismiss Static Control's claim, arguing that Static Control lacked standing under Section 43(a).

The district court granted Lexmark's motion to dismiss Static Control's Section 43(a) claim, following the Third, Fifth, Eighth, and Eleventh Circuits in holding that the test for standing to bring a false-advertising claim is the same rigorous five-factor test used in analyzing standing to sue for antitrust violations under the Sherman and Clayton Acts as set forth by the Supreme Court in Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519 (1983).

The Sixth Circuit vacated and remanded. See Static Control Components, Inc. v. Lexmark Int'l., Inc., 697 F.3d 387 (6th Cir. 2012). The court rejected the five-factor test, as well as the so-called "categorical approach," used by the Seventh, Ninth, and Tenth circuits, which requires that the plaintiff be in competition with the alleged false advertiser. The Sixth Circuit instructed the district court on remand to apply the less rigorous "reasonable...