Sunday, March 11, 2007

Do you care where your basketball came from?

Baden Sports, Inc. v. Molten, 2007 WL 703394 (W.D. Wash.)

Baden developed and patented a new game-quality, cushioned basketball. Baden alleged that Molten introduced several basketball models into the U.S. market that copy Baden's patented technology.

Molten advertises its technology as its own innovation, using terms such as “new design,” references to a prominent Italian design company, “innovative proprietary Dual-Cushion technology,” and “[t]echnology that only Molten can create,” which Baden alleged are false claims. Moreover, Baden alleged that Molten imports its balls into the United States without marking the country of origin, constituting a misrepresentation of geographic origin.

Molten moved to dismiss Baden’s Lanham Act claims. Molten argued that it did not copy Baden's technology; rather, its dual cushion technology is an outgrowth of designs Molten developed in the 1960s and 70s. Molten also argued that Baden's patent is invalid because of prior art. The court recognized these as factual issues for further development. Molten then argued that “innovative” and “proprietary” are mere puffery, but the court refused to decide the issue on a motion to dismiss. Given that the main issue in the case is whether Molten infringes Baden’s patent, the subsidiary Lanham Act claim that Molten’s technology is really Baden’s innovation could not be resolved at this stage.

Molten balls ordered through a prominent online store with which Molten has a relationship – the FIBA online store – are concededly not marked with a country of origin. Molten argued that Fan Avenue, a French basketball vendor which rents website space from FIBA, purchases and imports Molten basketballs to Europe, where there are no country of origin marking requirements, and then, in turn, offers those unmarked basketballs for sale over the internet to purchasers throughout the world. Molten argued that the duty to mark falls on the importer, who is the consumer in the case of the FIBA store.

The Tariff Act requires every imported foreign product to be marked to indicate country of origin. But Baden’s claim is under the Lanham Act: failure to mark balls that end up in the US is misleading. Although there’s no affirmatively misleading claim, only an omission, a number of courts have concluded that the omission of a geographically descriptive term is actionable under the Lanham Act in these circumstances. Given the Tariff Act, a failure to mark acts like an affirmative representation of US origin. (Can this be presumed material? My answer is yes because of the Tariff Act and the motivations for it, and the intriguing question is whether the presumption can be rebutted, even though it's illegal to fail to mark foreign origin.) Thus, the court refused to dismiss the claim, but noted that Molten’s responsibility for the misrepresentation remained to be litigated as it neither distributed nor imported the balls directly to the US.

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