The appeal from Lexmark in June 2013 is to begin in the Supreme Court, with oral arguments to be heard from both sides.
Forbes has previewed the case in the Supreme Court ahead of its restart in the USA, coming after the announcement in June that Lexmark had won the right to appeal against the false advertising ruling in Static Control’s favour.
Forbes notes that the case “addresses who can sue for violations of the federal false advertising statute, a question that has baffled courts around the country”, and adds that the case has “potentially […] important implications for the quantity of future false advertising litigation and the robustness of market place competition, making it a case worth watching”.
The site notes that “this case easily could go sideways” due to the court potentially offering a “fractured set of opinions without a clear consensus” as well as going in a number of different directions with any particular ruling. In terms of implications, the Forbes writer stated that he is “troubled by Lexmark’s efforts to restrict competition”, and notes that whilst Prebate “seemingly benefits consumers” with a price cut, it “also prevents the development of a used cartridge market”.
The article also asks “if Static Control lacks the legal tools to keep Lexmark honest, will anyone else challenge Lexmark’s marketing statements?”, as Static has been able to “invest a decade’s worth of litigations costs” in the case, a “heavier investment than many remanufacturers would be willing to make”. Adding to this, Forbes states that the ruling “could have substantial implications for competition” in the cartridge market, as well as “affect how new entrants can use false advertising litigation”.
Lexmark had sought a review in January this year, and was granted certiorari by the Supreme Court in June to appeal against the ruling deeming that Static Control had standing to make false advertising claims against the OEM, which the components manufacturer claimed had falsely told its customers that Static Control infringed its patents.
The false advertising claims were raised during the patent infringement case between the two companies regarding the sale of microchips for laser printers and toner cartridges, which began in 2002 when Lexmark sued Static Control for selling replicate microchips to competitors of Lexmark after the OEM developed a microchip that prevented printers from using non-Lexmark toner cartridges.
Courthouse News had reported that “by 2004, a federal judge in Lexington, Ky., consolidated Lexmark’s suit with a declaratory judgment action that Static Control had filed” and that a federal judge had “barred Static Control from asserting counterclaims under federal and state antitrust and false advertising laws”.
However, Static Control were found to have not infringed Lexmark patents, with the court advising that Lexmark had “misused its patents”. It was later concluded on appeal by both parties that “Static Control should have been allowed to pursue its claims for violation of the Lanham Act and various state laws”, and in August 2012 it was ruled that Static Control’s antitrust claims were dismissed.