Tuesday, June 12, 2007

False inventorship claim isn't false advertising

Carter v. ALK Holdings, Inc., 2007 WL 1655857 (N.D. Ga.)

Plaintiff Carter is defendant ALK’s former vice president and general manager. He alleged that ALK, which does business as ACME Security, took his idea for improving the security of safe-deposit boxes, applied for a patent that falsely listed ALK’s owner as an inventor, and coerced him to assign his rights therein. The court determined that none of Carter’s multiple claims stated a federal claim, though it agreed that his allegations were troubling.

Carter’s false designation of origin claims, based on ALK’s sales pitch to Wachovia, were precluded by Dastar. This is familiar territory: if ALK ultimately sells the invention to Wachovia, it will be the physical source of the relevant goods.

False advertising was not successful either, in part because Carter alleged that it occurred through the false patent application. The court had no problem deciding that this wasn’t “commercial advertising or promotion.” Moreover, this was the unusual case where the misrepresentations at issue didn’t involve any product or service, only the pending patent application. There is precedent holding that a patent isn’t a “good or service” under the Lanham Act. digiGAN, Inc. v. iValidate, Inc., 71 U.S.P.Q.2d 1455, 1459-60 (S.D.N.Y. 2004). (Note: a patent might be part of a defendant’s “commercial activities,” however, as that term has been broadly defined in false advertising cases. The court didn’t address the line of cases holding that misrepresentation that goods are patented or that a patent is pending can be false advertising in appropriate circumstances.)

Finally, invoking a sort of implied exhaustion requirement, the court pointed out that a falsity determination would require the court to determine who the real inventor/s was/were, and this is for the PTO in the first instance. The statutory scheme governing patents is pretty clear that courts should only determine inventorship disputes once (if) a patent issues. This isn’t akin to a garden-variety claim that the patent statute preempts the Lanham Act. There will be no patent unless the PTO approves it; it’s more like a false advertising claim based on statements about a drug the FDA has yet to approve.

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