Supreme Court Rules That A Non-Competitor Has Standing To Assert False Advertising Claims


On March 25, the U.S. Supreme Court held that a company has standing to assert a false advertising claim against a non-competitor under Section 43(a) of the Lanham Act if it can "show economic or reputational injury flowing directly from the deception wrought by the defendant's advertising." In determining whether an injury is within a "zone of interest," a plaintiff "must allege an injury to a commercial interest in reputation or sales." The court noted that such occurs when "deception of consumers causes them to withhold trade from the plaintiff" (Lexmark Int'l, Inc. v. Static Control Components, Inc., U.S., No. 12-873, 3/25/14). In doing so, the court closed a significant split among various circuit courts by declining to adopt any of the following existing alternate approaches:

  • the "reasonable interest" test used by the Second and Sixth Circuits
  • the "direct competitor" test used by the Seventh, Ninth, and Tenth Circuits
  • a five-part balancing test used by the Third, Fifth, Eighth and Eleventh Circuits

The District Court initially dismissed that claim, agreeing that Static Control lacked standing to assert its claim. The Sixth Circuit used the "reasonable interest" test to conclude that Static Control had sufficiently asserted a claim based on Lexmark's statements, and thus revived the claim. Employing its own "economic reputational injury flowing directly from deception" test, the U.S. Supreme Court agreed that Static Control had standing to assert its claim under the Lanham Act.

This new ruling means that organizations must be mindful of a widening circle of those who could bring claim under the newly-expanded application of the Lanham Act.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Polsinelli | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.