Oral arguments in the appeals process of the Arizona Cartridge Remanufacturers Association (ACRA) v. Lexmark case began on March 17, in Northern California's U.S. Court of Appeals for the Ninth District. The case, first filed in September 2001, alleges that Lexmark engages in "deceptive, false, and misleading dvertising," based on its Lexmark Return Program (Prebate) packaging notation of special pricing.
The case is now under submission, meaning it will be decided at a later time. A decision is expected to be rendered by the appellate panel within the next three to six months. According to ACRA's attorney Ron Katz, "If the decision is favorable, it could be the end of the Prebate program."
According to Katz, the panel, comprised of three judges, had "one primary question for me and one for Lexmark." They asked Katz, "What was the untrue statement?" They asked Lexmark, "How can you say it is a special price?"
Katz argued the false advertising claim is based on privity, or the close and direct business relationship between two parties. He charged that the claim of a "special price" on the outside packaging of a Use and Return (Prebate) cartridge is false because while Lexmark has bearing on the price given to its distributors, the distributors have no obligation to pass on any discount given by Lexmark, and Lexmark does not control the price given to the end user. He stated that because Lexmark does not set the prices end users pay for their products, the company's claim of "special pricing" is false. Therefore, Lexmark cannot legally demand, impose or create a perception of additional post-sale restrictions or requirements because of that special pricing, such as returning an empty cartridge, because the "special pricing" condition is not guaranteed.
Lexmark stated that the special pricing is ensured because of "market forces" and "that's how it turns out" because of the tight product competition, according to Katz.
To listen to the opening arguments of the case visit: http://supportacra.org
For further discussion of privity visit: http://www.rechargermag.com/article.asp?id=200401076
