In Lexmark International, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377 (2014), the Supreme Court unanimously held that “to invoke the Lanham Act’s cause of action for false advertising, a plaintiff must plead (and ultimately prove) an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.” The Supreme Court’s holding resolved a circuit split, and broadened the ability to bring a claim for false advertising under the Lanham Act.
The conflict in this case arose out of Lexmark’s attempt to ensure that its customers refurbish used printer cartridges with Lexmark. The company introduced a “prebate” program under which Lexmark sold discount toner cartridges to its customers. The customers would in turn return the empty cartridges to Lexmark, and agreed to these terms through a shrinkwrap license. Lexmark enforced the shrinkwrap license through a microchip that disabled the cartridge once empty, leaving the cartridge refurshishable only by Lexmark. Static Control created microchips that mimicked the chip in Lexmark’s prebate cartridges. Consequently, Lexmark sued Static Control for copyright infringement. Static Control counterclaimed, alleging that Lexmark violated the Lanham Act by falsely advertising to companies that it was illegal to sell refurbished prebate cartridges and by purposefully misleading users to believe that they were legally bound by the prebate terms. The issue before the Supreme Court was whether Static Control had standing to sue under the Lanham Act for false advertising.
The Supreme Court, resolving a circuit split, held that Static Control had standing under the Lanham Act. The court created a two-part test. Now, to have standing to sue for false advertising, a plaintiff must plead an injury to commercial interest in sales or business reputation proximately caused by defendant’s false advertisements.