On Opening Day of Term, High Court Denies Review of Three Trade Regulation Cases

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter, and John W. Arden.

The U.S. Supreme Court opened its 2009-2010 term yesterday by denying review of three trade regulation decisions—concerning resale price fixing, Lanham Act false advertising, and arbitration of an in-term restrictive covenant in a trademark license.

Resale Price Maintenance

Left standing by the Court was a decision by the U.S. Court of Appeals in Richmond, Virginia (2009-1 Trade Cases ¶76,547), holding that two pesticide manufacturers did not conspire with their distributors to set minimum resale prices of certain termiticide products.

In their petition for review, complaining providers of pest control services asked: (1) whether resale price agreements, through which retailer agents raised consumer prices, is controlled by Leegin Creative Leather Products, Inc. v. PSKS, Inc. (2007-1 Trade Cases ¶75,753), 551 U.S. 877 (2007) or United States v. General Electric Co., 272 U.S. 476 (1926); and (2) whether it was established that the manufacturer's resale price agreements with retailers violated §1 of the Sherman Act under Leegin.

The petition is Valuepest.com of Charlotte, Inc. v. Bayer Corp., Docket 08-1584, cert. filed June 22, 2009.

Lanham Act False Advertising

The Supreme Court declined to review a decision by the U.S. Court of Appeals for the Federal Circuit (2009-1 Trade Cases ¶76,553, CCH Advertising Law Guide ¶63,320), reversing a jury award of more than $8 million against a Japanese basketball manufacturer for falsely advertising its product design as “innovative.”

On appeal, the manufacturer contended that Lanham Act claims based on advertisements that falsely claim authorship of an idea were barred by the U.S. Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003).

In its petition, the manufacturer had asked whether Dastar established an authorship limitation on false advertising claims brought under Section 43(a)(1)(B) of the Lanham Act. The petition is Baden Sports, Inc. v. Molten USA, Inc., Docket 08-1477, cert. filed May 28, 2009.

Restrictive Covenant

The Court denied a petition for review of a decision of the U.S. Court of Appeals in San Francisco (2009-1 Trade Cases ¶76,482, CCH Business Franchise Guide ¶14,055), which held on remand from the U.S. Supreme Court that an arbitrator manifestly disregarded California law by enforcing an in-term restrictive covenant in a trademark license.

On October 6, 2008, the Supreme Court vacated an earlier decision of the appeals court (2008-1 Trade Cases ¶76,129, CCH Business Franchise Guide ¶13,703) in light of the Court’s decision in Hall Street Associates, LLC. v. Mattel, Inc., 128 S.Ct. 1396 (2008).

In a petition for review, a party to the trademark license asked whether a decision vacating an arbitration award on the non-statutory ground of "manifest disregard" was inconsistent with U.S. Supreme Court precedent and whether an arbitrator's good faith but erroneous interpretation of state law constituted a basis for vacating an arbitration award under the Federal Arbitration Act.

The petition for review is Improv West Associates v. Comedy Club, Inc., Docket 08-1525, cert filed June 8, 2009.