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Lexmark Int'l, Inc. v. Static Control Components, Inc. - 572 U.S. 118, 134 S. Ct. 1377 (2014)

Rule:

Whether a plaintiff comes within the zone of interests is an issue that requires the court to determine, using traditional tools of statutory interpretation, whether a legislatively conferred cause of action encompasses a particular plaintiff’s claim. Prudential standing is a misnomer as applied to the zone-of-interests analysis, which asks whether this particular class of persons has a right to sue under a substantive statute.

Facts:

Petitioner Lexmark International, Inc. was selling the only style of toner cartridges that work with the company's laser printers. However, remanufacturers acquired and refurbished used Lexmark cartridges to sell in competition with Lexmark's own new and refurbished ones. As a response to the problem created by the remanufacturers, Lexmark introduced a “Prebate” program. The said program gave customers a discount on new cartridges if they agreed to return empty cartridges to the company. Each Prebate cartridge has a microchip that disables the empty cartridge unless Lexmark replaces the chip. Respondent Static Control, a maker and seller of components for the remanufacture of Lexmark cartridges, developed a microchip that mimicked Lexmark's. Lexmark sued for copyright infringement, but Static Control counterclaimed, alleging that Lexmark engaged in false or misleading advertising in violation of §43(a) of the Lanham Act,, and that its misrepresentations had caused Static Control lost sales and damage to its business reputation. The District Court held that Static Control lacked prudential standing to bring the Lanham Act claim, applying a multifactor balancing test the court attributed to Associated Gen. Contractors of Cal., Inc. v. Carpenters. In reversing, the Sixth Circuit relied on the Second Circuit's “reasonable interest” test.

Issue:

Was Static Control - a maker and seller of components for the remanufacture of Lexmark cartridges - authorized to sue under the Lanham Act pursuant to the reasonable interest test?

Answer:

Yes.

Conclusion:

In answering the question, the Court noted that in order to come within the zone of interests in a suit for false advertising under the Lanham Act, a plaintiff had to allege an injury to a commercial interest in reputation or sales. A plaintiff also had to show economic or reputational injury flowing directly from the deception wrought by the defendant's advertising. In the case at bar, to determine the relevant limits on who could sue, the Court directly applied the zone-of-interests test and the proximate-cause requirement. Under those tests, the Court held that Static Control came within the class of plaintiffs whom Congress authorized to sue under § 1125(a). Its alleged injuries included lost sales and damage to its business reputation due to the toner manufacturer's statements that the maker's business was illegal. Moreover, it adequately alleged proximate causation by alleging that it designed, manufactured, and sold microchips that both were necessary for, and had no other use than, refurbishing the manufacturer's toner cartridges.

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