Lexmark's effect on "commercial advertising or promotion"

Syngenta Seeds, Inc. v. Bunge North America, Inc., 2014 WL 3882886, No. 13-1391 (8^th Cir. Aug. 8, 2014)

District court opinion discussed here.  This opinion is more Lexmark fallout.  Syngenta, a biotech company that makes genetically modified corn seed (Viptera), sued Bunge, a grain storage and transport company, for, among other things, violating the Lanham Act.  Syngenta had regulatory approval to sell Viptera in the US and numerous foreign countries, but not China. China barred corn grown from GMO seed, and could bar an entire shipment of corn from the Chinese market if it contained traces of GMO corn.  Bunge had purchase contracts with farmers who bought Viptera seed from Syngenta; the contracts authorized Bunge to refuse to accept products containing genetic modifications for which import approval has not been obtained in foreign export markets.

When China significantly increased corn imports, Bunge started treating China as a major export market for domestically-grown corn, and therefore began refusing to accept corn grown from Viptera seed. Bunge placed signs in its regional facilities and on its website stating that it was unable to accept delivery of Viptera (and another product) because “[t]hese seed products have not received necessary international approval from major export destinations for the U.S.”  It continued, “Bunge facilities are integrated into the export market, which is why the terms of Bunge’s purchase contract states that Bunge will not accept grains and oil seeds containing transgenic events not approved for U.S. export markets. Bunge will accept a listed product once the seeds receive approval from major export markets.”

Syngenta alleged that Bunge’s refusal caused additional expenses to farmers who had purchase contracts with Bunge and had planted Viptera. Many of those farmers allegedly  expressed dissatisfaction with Syngenta and, as a result, Syngenta allegedly lost profits, market share, and goodwill.  The district court granted summary judgment on Syngenta’s Lanham Act claim, concluding Syngenta lacked standing/had failed to show that Bunge’s signs were commercial speech.  (Discussion of other claims omitted.)

Pre-Lexmark, the district court had reasoned that Syngenta didn’t have standing because it wasn’t a Bunge competitor and that Bunge’s signs weren’t commercial speech.  Lexmark established “the zone-of-interests test and proximate causality requirement as the proper analysis for analyzing standing.”  (Sorry, Justice Scalia. No one is listening to you when you say this isn’t about standing.  And they’re really serious about it, as you’ll see below.)  The Court expressly rejected the requirement that the challenged commercial speech has to come from a competitor.

The court of appeals declined to affirm the district court on the alternate ground that Bunge’s statements didn’t qualify as commercial speech, because “[l]ooking past the threshold standing determination to affirm on the basis of the merits of a contested point of law …would be assuming ‘hypothetical jurisdiction.’”  Thus, the district court needed to apply the zone of interests/proximate cause test in the first instance.  (And the district court will also have to grapple with the fact that Lexmark, though it doesn’t address the issue expressly, casts into doubt the standard “commercial advertising or promotion” test that requires the targeted speech to be speech by a competitor; it seems very unlikely that Congress did with those words what the Court said it did not do otherwise.  However, if the speech was still not "commercial speech" in a First Amendment sense, that might not matter.)