Supreme Court Clarifies False Advertising Law

A Lexmark competitor can proceed in suing the printer company after the U.S. Supreme Court's ruling Tuesday in a false advertising appeal.

Static Control Components Inc. sued Lexmark in federal court, alleging that Lexmark told customers that Static Controls' products infringed on Lexmark's intellectual property and that using Static Control's products was illegal, reports Reuters. Static Control had been refilling and reselling Lexmark toner cartridges to those with Lexmark printers for more than a decade.

Lexmark, however, asserted that Static Control had no right to sue under the law. How did the High Court respond?

The Lexmark Case and the Lanham Act

Static Control made its claims in federal court under the Lanham Act, which covers trademark infringement claims as well as false advertising. Lexmark argued that Static Control couldn't sue under the Lanham Act because its business losses were not closely related enough to Lexmark's call to consumers not to use refilled toner cartridges.

The U.S. Supreme Court disagreed, finding that Static Control was within the "zone of interest" of the Lanham Act, and that their alleged business losses were a foreseeable result of Lexmark's advertising. Static Control was not a direct competitor of Lexmark, but it made its business by refilling and reselling toner cartridges originally sold by Lexmark.

In order for a business to make a claim for false advertising under the Lanham Act, it must show that:

• There was an injury to a commercial interest in reputation or sales,
• The injury was directly caused by the false or deceptive advertising; and
• Consumers were deceived by ads which cause them not to do business with that company.

This is a less stringent test than requiring that companies like Static Control to show that they directly compete with Lexmark, and allows more plaintiffs to successfully make Lanham Act claims.

What Does This Mean for Your Business?

The U.S. Supreme Court's ruling means Static Control can continue its lawsuit against Lexmark. But what does it mean for your small business?

While each state has its own false advertising or deceptive business practice laws, the protections under the Lanham Act apply nationwide. With the Court clarifying that businesses need not be direct competitors to sue for false advertising under the Act, injured businesses may now consider suing in both federal and state court.

If you feel your business has suffered losses because of false advertising, you may want to consult an experienced advertising law attorney to discuss your options for recovery.

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Related Resources:

• Supreme Court Changes False Advertising Law Across the Country (Forbes)
• LEXMARK INTERNATIONAL, INC. v. STATIC CONTROL COMPONENTS, INC. (FindLaw)
• Think Twice Before Advertising on Your Car (FindLaw's Free Enterprise)
• Stay Legal, Don't Make Ad Fine Print Too Small (FindLaw's Free Enterprise)