The Supreme Court agreed to hear Lexmark International Inc.’s appeal of Lexmark International, Inc. v. Static Control Components, Inc., the August 29, 2012 decision of the U.S. Court of Appeals for the Sixth Circuit that re-instated three of Static Control’s unfair competition counterclaims against Lexmark.
Although the legal disputes between Lexmark and Static Control have centered primarily on allegations by Lexmark of patent infringement, copyright infringement, and violations of the Digital Millennium Copyright Act, none of those issues is involved in the case before the Supreme Court.All of the jury verdicts in favor of Static Control and against Lexmark on those claims remain final. The Court’s action also does not affect the district court’s determination that Lexmark’s “Prebate” program is not enforceable as a patent license under patent law, a decision that the Sixth Circuit let stand.
The question that will be heard by the Supreme Court is limited to the legal issue of when a company has the legal right, known as “standing,” to assert a claim for false advertising under the federal law known as the Lanham Act. Different courts of appeals historically have applied different tests. Several courts (the Seventh, Ninth, and Tenth Circuits) apply a “categorical” test giving standing only to competitors. Three other courts (the Third, Fifth, and Eleventh Circuits) apply by analogy the same test courts use to evaluate antitrust claims.
The Sixth Circuit and the Second Circuit look to whether the plaintiff can demonstrate a “reasonable interest” that is protected under the Lanham Act. William London, Static Control’s general counsel, reacted to the Court’s decision today: “Static Control’s counterclaims allege that Lexmark targeted Static Control’s products with false advertising statements, and as a result Static Control incurred harm to its business and goodwill. This is precisely the type of conduct that is prohibited by the Lanham Act, and past case law affirms Congress’s intention in such circumstances to protect companies like Static Control.
While Static Control regrets that the Court chose this case as the vehicle to clarify the differences among the tests applied by the different courts of appeal, we are confident that at the end of the day Static Control will continue to have standing to pursue its claims and obtain redress for the harms caused by Lexmark’s unfair competition and anticompetitive practices.” The Sixth Circuit’s August 29, 2012 opinion also found that Static Control was entitled to pursue its counterclaims against Lexmark for antitrust violations and false advertising under North Carolina state law. Those claims are not affected by the grant of certiorari by the Supreme Court. The Sixth Circuit case is Static Control Components, Inc. v. Lexmark International, Inc., 697 F.3d 387 (6th Cir. 2012).