Monday, October 02, 2006

A shot across the bow for notice pleading

Evco Technology & Development Co., LLC v. Buck Knives, Inc., 2006 WL 2773421 (E.D.Pa.)

A patent owner who doesn’t manufacture or sell the patented product itself still has Lanham Act standing to challenge a defendant’s false claims about its version of the patented product. In this case involving bows for archery, the court refused to dismiss the plaintiff-patentee’s claims that defendant made false or misleading statements about “the nature, characteristics, qualities, or geographic origin of the Infringing Bows”; the identity of the company selling and providing the lifetime warranty on the bows; and “[defendant’s] authorization to manufacture and sell Infringing Bows in the United States.” As with many such cases of false statements about IP rights, materiality seems to me a serious issue, though not one that can be decided on a motion to dismiss.

The court found that the patentee had standing even without allegations that it sold or made the patented product, because defendant’s activity “directly affects [plaintiff’s] reputation and goodwill arising out of its ownership of the [patent].” The ultimate result makes sense to me, but courts ought to be careful not to take this rationale too far, or the result will be an easy evasion of Dastar by claims that a defendant’s copying affects a plaintiff’s goodwill.

The court also ruled that Lanham Act false advertising claims need not meet the heightened pleading requirements of FRCP 9(b), but needed to offer more particularity than traditional notice pleading under Rule 8. The 9(b)/8 question has divided courts considering Lanham Act claims. I understand the appeal of a sort of “Rule 8.5” solution in giving defendants a little more notice of the claim without requiring plaintiffs to plead all that 9(b) requires – since many elements required by 9(b) aren’t really suited to claims dealing with a traditional advertising campaign. But calling it a “Rule 8.5” solution highlights the problem: Notice pleading is the federal rule in the absence of special circumstances. If those circumstances aren’t present, as they aren’t with Lanham Act claims – which don’t require fraud – then a median solution isn’t justified, because for the purposes of the federal rules there is no problem in need of a solution.

Here, the court found that the complaint’s allegations were sufficient to satisfy this “notice-plus” standard, because it referenced and incorporated defendants’ promotional brochure containing the allegedly false/misleading statements. Obviously, plaintiffs are well advised to incorporate the advertising they’re attacking into their complaints. But since no one knows what the “notice-plus” standard really requires, it just introduces more complexity and uncertainty into the process.

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