By Olga Slobodyanyuk
Microsoft announced its new policy in a press release on March 28: “Effective immediately, if we receive information indicating that someone is using our services to traffic in stolen intellectual or physical property from Microsoft, we will not inspect a customer’s private content ourselves. Instead, we will refer the matter to law enforcement if further action is required.” The policy change followed criticism of Microsoft’s 2012 trade secret theft investigation in which Microsoft accessed a user’s private Hotmail email without a warrant.
Supreme Court affirms Static Control’s standing in its false advertising suit against Lexmark
A unanimous Supreme Court affirmed the United States Court of Appeals for the Sixth Circuit’s holding that Static Control Components, Inc. (“Static Control”) has standing to sue Lexmark International, Inc. (“Lexmark”) for false advertising under the Lanham Act. Lexmark Int’l, Inc. v. Static Control Components, Inc., No. 12-873 (U.S. March 25, 2014), slip op. hosted by Legal Information Institute.
Lexmark sold toner cartridges with a microchip that prevented re-use of the cartridges by non-Lexmark manufacturers. Lexmark, slip op. at 2. Static Control developed a different microchip which circumvented Lexmark’s chip and allowed re-manufacturers to refill the cartridges. Id. “In 2002, [Lexmark] sued Static Control, alleging that Static Control’s microchips violated both the Copyright Act of 1976 . . . and the Digital Millennium Copyright Act.” Id. Additionally, Lexmark sent letters to all of Static Control’s customers, stating that Static Control was violating copyright law and that the customers had to return the cartridges. Id. at 3. Static Control responded with counterclaims, which included false advertising allegations under § 43(a) of the Lanham Act. Id. at 2. Lexmark challenged Static Control’s standing to pursue the false advertising claims. Id. at 4–5. The Supreme Court ruled for Static Control by applying the “zone of interests” test combined with a proximate cause analysis, rejecting Lexmark’s proposed “direct-competitor” test for whether a party has standing to bring a false advertising suit under the Lanham Act. Id. at 10.
SCOTUSblog describes this ruling as “reject[ing] out of hand everything that either the parties or the courts of appeals have said with regard to the topic at hand, and most of what the Court itself previously has said.” Ars Technica commented that this decision is “a somewhat unusual ruling considering that the conservative-leaning court isn’t often inclined to open the door to more lawsuits.”
Consumers receive e-book conspiracy settlement payout while Apple’s litigation continues
On March 25, consumers received Amazon account credits for Kindle e-book purchases made between April 1, 2010 and May 21, 2012. Ars Technica reports that e-book buyers from Barnes and Noble, Kobo, and Apple will also receive account credits, and Sony e-book consumers will receive checks. The settlement is the result of a civil antitrust lawsuit alleging that five book publishers and Apple colluded to raise the prices of e-books. The publishers, which include Simon & Schuster and HarperCollins, settled for $166 million, reports The Wall Street Journal.
Apple did not to settle and was found to be “facilitating and executing [a] conspiracy.” United States v. Apple, No. 1:12-cv-2826 (DLC) (S.D.N.Y. July 10, 2013). According to Ars Technica, Apple is appealing the decision at the United States Court of Appeals for the Second Circuit. In addition, Apple may face a class-action lawsuit from a group of consumers not included in the original suit, reports Reuters. The consumers allege that Apple violated antitrust law by conspiring with publishers to raise e-book prices, and the class seeks more than $800 million in damages. Plaintiffs’ Consolidated Opposition to Defendants’ Motions to Dismiss, In Re: Electronic Books Antitrust Litigation, No. 11-md-02293 (DLC) (S.D.N.Y. March 30, 2012) hosted by Hagens Berman. The plaintiffs’ class was certified on March 28.