Argument analysis: Argument in standing case presages rare win for Sixth Circuit
on Dec 5, 2013 at 12:58 pm
An uncharacteristically amenable Court heard argument on Tuesday in Lexmark International, Inc. v. Static Control Components, Inc. Although the case is from the Sixth Circuit, it is not a state-on-top criminal matter. Rather, it is an intellectual property/standing case. Specifically, the Court is asked to define the limits of standing in false advertisements under the Lanham Act.
The case involves advertisements by Lexmark, sent to manufacturers of after-market print cartridges for Lexmark printers, advising them that it would be unlawful to sell cartridges containing the chips manufactured by Static Control. Predictably enough, when Lexmark sued Static Control for patent infringement, Static Control counterclaimed, challenging the allegedly false claims under the Lanham Act. The Sixth Circuit held that Static Control had standing because it had a “reasonable interest” at stake.
Lexmark’s basic argument is that the Court should import the narrow test for antitrust standing, the AGC test, so-called from the Supreme Court case announcing it. But Steven Loy, appearing for Lexmark, could barely summarize his position before he faced a barrage of criticism. Justice Scalia almost immediately interrupted him to emphasize the relatively specific breadth of the Lanham Act, as compared to the antitrust laws.
Matters only went downhill from there, as Loy spent most of his time fending off the repetitive insistence of Justices Sotomayor, Ginsburg, and Breyer that the statute as written plainly seems to apply to the conduct alleged by Static Control. So, Justice Sotomayor commented: “You’re saying that it’s illegal to use that person’s products. It seems to me that’s the essence of the Lanham Act as it’s now written.” Similarly, Justice Ginsburg emphasized that “the words of the Lanham Act . . . see[m] to envision a very broad standing, certainly enough to encompass the person . . . whose product is being disparaged.”
Justice Kagan varied the inquiry only slightly, by asking Loy what the Court should be examining in cases like this one, assessing statutory standing. When Loy suggested the intent of the statute, Justice Kagan immediately challenged him as to how he could find the multi-factor AGC test in the language of the Lanham Act: “[I]f that’s the question the [antitrust doctrine] strikes me as not the answer to that question. I mean, we don’t usually say what was Congress’s intent, . . . and then sort of devise a five-part test with a lot of things that aren’t mentioned in the statute.”
Joined by Justice Scalia at this point, Justice Kagan emphasized the oddity of statutory interpretation depending on “a kind of free-form inquiry about what kind of prudential standing rule should apply to that particular right of action.” Justice Scalia repeatedly emphasized that he was “uncomfortable” with “the notion that . . . in my prudence I give standing here and I deny standing there, it’s up to me.”
Matters were much calmer for Jameson Jones, appearing for Static Control. Generally, just as in the first argument of the day (analyzed here), the Justices spent Jones’s argument time trying out a series of verbal formulations of a standard on which all the Justices might agree. Thus, Justice Breyer suggested that the problem was whether you are “the kind of plaintiff that Congress intended in this statute to protect against the kind of injury that you say you suffered.” Justice Kagan phrased it similarly, as deciding “what kinds of actors did the Lanham Act provide a right of action to, as sensibly construed.”
The only substantial disagreement among the Justices involved whether this “just read the statute” test should be characterized as adopting the “reasonable interest” test of the Sixth Circuit, or instead the “zone of interest” test from the Administrative Procedure Act. Although a few of the Justices seemed to favor the flexibility of the “reasonable interest” standard, Justice Scalia felt strongly that this is a “zone of interest” analysis: “It isn’t whether the interest is reasonable. It’s . . . whether it was the type of interest that the statute sought to protect. And the term ‘zone of interest’ is a better expression of that concept, it seems to me, than ‘reasonable interest.’”
In sum, a decision affirming the decision of the Sixth Circuit seems quite likely. At worst, the Court might send the case back to have the Sixth Circuit apply the Court’s standard to the facts of this case. But given the apparent lack of support for Lexmark’s position, and the likelihood that Static Control would have standing under any test except for the AGC test, a straight-up affirmance seems the best bet.