Friday, November 30, 2012

Contract language isn't commercial speech?

Syngenta Seeds, Inc. v. Bunge North America, Inc., 2012 WL 5879271 (N.D. Iowa)

Previously, the court denied a preliminary injunction on Syngenta’s claims that Bunge, which operates grain milling facilities and warehouses, wrongfully refused to accept Syngenta’s Viptera corn from growers and wrongfully posted signs stating this policy, allegedy because Viptera (which has been genetically modified) hadn’t received approval from “major” export destinations.

The court found that Syngenta wasn’t likely to succeed on the merits of its Lanham Act claim because it wasn’t in commercial competition with Bunge and because the sign stating the policy of refusing Viptera corn wasn’t commercial speech.  Though American Association of Orthodontists v. Yellow Book USA, Inc., 434 F.3d 1100 (8th Cir. 2006), didn’t require direct commercial competition between the parties, Aviation Charter, Inc. v. Aviation Research Group/US, 416 F.3d 864 (8th Cir. 2005), held that “commercial advertising or promotion” requires a statement by a defendant in commercial competition with the plaintiff, and the earlier case controlled.

Syngenta argued that it was in commercial competition with Bunge: “Bunge provides economic incentives to growers to grow and deliver certain specialty crops, with seeds produced by companies other than Syngenta, and thereafter sells those crops to certain customers at a premium.”  Thus, every acre planted because of such an incentive program was a non-Viptera acre.  Bunge responded that this program was only for soybeans, at facilities that didn’t accept corn, and that Syngenta wasn’t in the soybean market.  In addition, Bunge argued, recognizing this as competition would mean that “every grain handling company competes with every seed developer simply by paying more money for delivery of one crop over another.”

The court agreed that “commercial competition” required a less attenuated competitive relationship.  The Eighth Circuit’s categorical approach looks for the same or similar goods or services in the same market—competition for the same dollars from the same consumers.  Soybeans weren’t corn, and Bunge didn’t compete in seed production anyway.  Even defining the relevant area as “promoting seed products,” Syngenta and Bunge didn’t compete—Syngenta promoted Viptera corn seed, and Bunge promoted certain soybean seeds.  And they’re at the opposite ends of the supply process—Syngenta promoting to growers at the supply end, while Bunge seeks to get growers to grow products it will buy at the demand end.  A household consumer doesn’t compete with Sony by being willing to pay more for a Mitsubishi TV.

In addition, Bunge’s sign wasn’t commercial speech.  The relevant factors: (i) whether the communication is an advertisement, (ii) whether it refers to a specific product or service, and (iii) whether the speaker has an economic motivation for the speech.  Though Syngenta argued that not all three were necessary, and that the second and third factors were present, Bunge claimed that it wasn’t proposing a commercial transaction, because a sign declining to enter into a Viptera transaction didn’t implicitly propose another transaction.  (I’m dubious about this—surely at a facility dedicated to buying corn, the implication has to be “please bring us non-Viptera corn.”)

The court agreed: the absence of a proposed commercial transaction weighed dispositively against deeming the speech commercial.  Syngenta argued that Bunge was trying to dictate the terms of its proposed transaction for the purchase of corn.  The court reaffirmed its conclusion that the sign related to commercial transactions, but didn’t propose any, and was therefore not commercial speech. 

(The mystery deepens.  Regulation of contract terms is ordinarily thought not to involve any speech at all; it’s not even subject to Central Hudson scrutiny, as Fred Schauer among others has pointed out.  For these purposes, I don’t see why speech “relating to” a contract wouldn’t be commercial speech.  That is, it’s “not commercial speech” only in the sense that it’s not protected “speech” at all in the current constitutional scheme; the only purpose of the “commercial speech” requirement is to prevent the Lanham Act from regulating “noncommercial speech”—political, artistic, etc. speech—and so contract terms should easily qualify as “words that can constitutionally be governed by the Lanham Act.”  Now, there may be other parts of the Lanham Act that are actually part of its text that disqualify this claim—the aforementioned “commercial advertising or promotion” is a good candidate—but “commercial speech” does no sensible independent work here.)

But anyway: Bunge’s contracts barred growers from delivering, and Bunge had the right to refuse, corn containing transgenic traits that were not approved for all United States export markets. So the sign was just reiterating the terms of the contracts, which were all in effect at the time the sign went up. Thus, the sign didn’t propose any contract terms, only reiterated existing terms.  “[A]s a matter of law, a statement of refusal to enter into a certain transaction, standing alone, is not a proposal of any transaction, and, hence, is not ‘commercial speech.’”  It might be different if the statement “promoted or urged selection of another product” instead.

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