Supreme Court Resolves Standing Issues Under the Lanham Act

Posted on April 4th, 2014 by J. Britt PhillipsJ. Britt Phillips

The Sixth Circuit has been the subject of national attention over the past few years due to the increasing number of reversals it has seen handed down from the Supreme Court. Last week however, the Supreme Court unanimously affirmed the Sixth Circuit in what will become a seminal decision on the issue of standing under the Lanham Act.

In Lexmark International, Inc. v. Static Control Components, Inc., Petitioner Lexmark sued Respondent Static Control for copyright infringement. Lexmark is known widely throughout the country as a manufacturer and seller of laser printers and toner cartridges; Static Control makes and sells the components necessary to re-manufacture Lexmark cartridges. In response to Lexmark’s Complaint, Static Control counterclaimed under §43(a) of the Lanham Act, 15 U.S.C. §1125(a), alleging that Lexmark engaged in false or misleading advertising for disparaging comments made to Static Control’s customers about the company’s products.

The significance of this decision is that it resolves a Circuit split. Previously, the question of whether a plaintiff had standing to sue under the Lanham Act could have been resolved one of three ways. The Third, Fifth, Eighth, and Eleventh Circuits applied a multi-factor balancing test referred to as “antitrust standing or the [Associated General Contractors] factors”. The Seventh, Ninth and Tenth Circuits permitted a suit only by an actual competitor. And the Second Circuit applied a ”reasonable interest” test, which was the test the Sixth Circuit used here. The Sixth Circuit concluded Static Control had standing because it “alleged a cognizable interest in its business reputation and sales to remanufacturers and sufficiently alleged that [those] interests were harmed by Lexmark’s statements to the remanufacturers that Static Control was engaging in illegal conduct”.

Taking a different approach, the Supreme Court determined Static Control had standing under the Act to sue for unfair competition by adopting a “zone of interests” test. In Justice Scalia’s opinion, and the other Justices agreed, whether a plaintiff has standing to sue under a federal statute requires the Court to determine, using “traditional statutory-interpretation tools”, whether a “legislatively conferred cause of action encompasses a particular plaintiff’s claim”. A cause of action extends to a plaintiff who falls within the “zone of interest” protected by that statute and whose injury was proximately caused by a violation of that statute.

This decision should, at least for the immediate future, bring more uniformity and predictability to pleading requirements under the Lanham Act. The full text of the decision can be found here.