The false advertising provision in the Lanham Act may be asserted to protect anyone who falls within the “zone of interest” protected by the statute and who suffers damages proximately caused by false advertising. Lexmark International, Inc. v. Static Control Components, Inc., ___ S.Ct. ___ (March 25, 2014). The Supreme Court was unanimous in affirming the ruling that a person can assert false advertising against a person that is not a direct competitor.
Static Control produces and sells microchips used in refurbished Lexmark toner cartridges. Static Control’s customers sell the refurbished toner cartridges. Static Control alleged Lexmark falsely denigrated the refurbished toner cartridges. Each lost sale of a refurbished cartridge represented a lost sale of a Static Control microchip. Static Control had standing to pursue the false advertising claim even though it was not a direct competitor of Lexmark.
The Lanham Act protects against unfair competition.
“Any person who, on or in connection with any goods or services, . . . uses in commerce any . . . false or misleading description of fact, or false or misleading representation of fact, which . . . in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services or commercial activities, shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.
15 U.S.C. § 1125(a)(1)(B). The statutory “zone of interest” encompasses a commercial interest in reputation or sales. A cause of action exists for any person suffering an injury to a commercial interest in reputation or sales proximately caused by a violation of the statute. Consequently, any person can sue for an injury to an economic or reputational interest flowing directly from the defendant's deceptive advertising, including advertising that deceives customers into not doing business with the plaintiff.
The test adopted by the Supreme Court incorporates the proximate cause element of traditional tort liability and differs from the three alternative tests that have been used by different Circuit Courts in the past: the antitrust standing test; the competitor test and the reasonable interest test.
This ruling expands the class of injured parties that can pursue a false advertising claim, but continues to exclude claims by consumers, because they do not suffer injury to a commercial interest in sales or business reputation.