On March 25, 2014, a unanimous U.S. Supreme Court established a uniform test to determine whether a plaintiff has standing to bring a false advertising claim under section 43(a) of the Lanham Act, 15 U.S.C. §1125(a). Lexmark International, Inc. v. Static Control Components, Inc., No. 12-873 (U.S. March 25, 2014). Now, to bring a claim under section 43(a), the plaintiff must demonstrate (1) that its injury falls within the “zone of interests” protected by the Lanham Act, and (2) that its injury was proximately caused by the defendant’s misrepresentations.
Before the Supreme Court’s decision, there was a three-way split among the U.S. Circuit Courts of Appeals as to the appropriate test for standing under section 43(a). The 7th, 9th and 10th Circuits had limited section 43(a) standing to actual competitors of the defendant; the 3rd, 5th, 8th and 11th Circuits had relied on antitrust standing principles or the factors outlined in Associated General Contractors v. Carpenters, 459 U.S. 519 (1983); and the 2nd Circuit had applied a “’reasonable interest’ approach.” The Court rejected all three of these tests.
Instead, the Court focused on two background principles for whether a plaintiff has standing to bring a statutory cause of action. First, “a statutory cause of action extends only to plaintiffs whose interests ‘fall within the zone of interest protected by the law involved.’” The Court held that to come within the zone of interests protected by section 43(a), “a plaintiff must allege an injury to a commercial interest in reputation or sales.” Second, “a statutory cause of action is limited to plaintiffs whose injuries are proximately caused by the violation of the statute.” The Court held that the plaintiff “ordinarily must show economic or reputation injury flowing directly from the deception wrought by the defendant’s advertising; and that occurs when deception of consumers causes them to withhold trade from the plaintiff.” The Court also confirmed that consumers do not have standing to bring claims under section 43(a).
Lexmark alleged that Static Control infringed its copyrights relating to its Prebate program for ink cartridges by developing a microchip that mimicked Lexmark’s microchip used in the ink cartridges. Static Control counterclaimed, asserting that Lexmark engaged in false or misleading advertising in violation of section 43(a) by misleading end users into believing they were required to return Prebate-labeled cartridges to Lexmark, and by, among other things, telling companies it was illegal to use Static Control’s products to refurbish those cartridges. The Court applied its new test for section 43(a) standing and concluded that Static Control had adequately pleaded a claim.
The Court’s decision is available here.