Court’s Decision Favours Static Control

A latest ruling from the United States Supreme Court holds that Static Control has the right to sue Lexmark on grounds of false advertising arising out of Lexmark’s Prebate program.

Lexmark first sued Static Control in 2002. It was initially successful in having the trial court throw out Static Control’s counterclaims against Lexmark. The case went to trial in 2007 with a jury verdict in Static Control’s favor. After trial, Static Control successfully convinced the Sixth Circuit Court of Appeals to reinstate Static Control’s claims for Unfair and Deceptive Trade Practices and false advertising. Lexmark petitioned the Supreme Court to reconsider. The Supreme Court rejected Lexmark’s request.

Static Control’s claims against Lexmark are based, in part, on Lexmark falsely telling remanufacturers that remanufacturing “Prebate” cartridges was illegal. The Lanham Act, a federal statute, prohibits false advertising. The trial court initially rejected Static Control’s Lanham Act claim, but the Sixth Circuit reinstated it. Lexmark asked the Supreme Court to overrule the Sixth Circuit.

The latest decision was approved by all nine justices in the Supreme Court. According to Justice Antonin Scalia, “…Static Control adequately alleged proximate causation by alleging that it designed, manufactured, and sold microchips that both (1) were necessary for, and (2) had no other use than, refurbishing Lexmark toner cartridges. It follows from that allegation that any false advertising that reduced the remanufacturers business necessarily injured Static Control as well.”

“We are extremely pleased the Supreme Court agrees Lexmark should be held accountable for its actions,” said President Bill Swartz. “I only wish Ed, our founder, my father, were here to enjoy this victory with us.”

William London, Static Control’s General Counsel added, “The Supreme Court’s unanimous decision should send a strong message to Lexmark. We plan to move forward with our false advertising suit against Lexmark and prove we were damaged by Lexmark’s false advertising.”

The above image was taken on the footsteps of the Supreme Court in December 2013 when oral arguments were heard. From left to right): Dale Lewis, Static Control’s vice president of manufacturing and engineering; Joseph Smith, attorney with Bartlit Beck; William London, Static Control’s general counsel; Bill Swartz and Michael Swartz, co-presidents of Static Control.