Tuesday, July 24, 2007

Globetrotting: foreign b-ball manufacturer not liable for failure to mark origin

Baden Sports, Inc. v. Molten, 2007 WL 2058673 (W.D. Wash.) – previous discussion here. Baden patented a game-quality cushioned basketball, padded with a sponge underlayer. Baden alleged that Molten’s new models infringed its patent. Molten has a sponsorship agreement with FIBA, the Federation Internationale de Basketball, a French body which sells Molten balls directly to consumers through its online store. Balls sold through the store arrive in the U.S. without any country of origin marking.

Molten advertised its “Dual Cushion Technology” as its own innovation, and it was featured as a proprietary design created by Molten in FIBA Assist Magazine, “[t]echnology that only Molten can create.” Amazon.com labels Molten balls as featuring “Innovative Molten Dual Cushion Technology” Baden objected to this advertising, as well as to the absence of country of origin marking; since the balls are not US-made, this allegedly deceives consumers as to source.

Molten argued that Dastar barred Baden’s claim. Dastar precludes 43(a)(1)(A) claims about the origin of the ideas behind products, but not 43(a)(1)(B) false advertising claims. Several courts have nonetheless used Dastar to dismiss false advertising claims based on inventorship of a product: “the Lanham Act does not protect inventions or ideas.” But was Baden’s false advertising claim merely a repackaged reverse passing off claim? In other words, are the words “innovative, exclusive, and proprietary” about inventorship? “Exclusive” and “proprietary” mean no one else offers the same technology for sale, and “innovative” means new in comparison to other products, regardless of who invented it. The court concluded that the Lanham Act claim partially survived Dastar – the claims based on “exclusive” and “proprietary” were just reverse passing off claims, but “innovative” could be false advertising.

This seems wrong – “exclusive” is not about inventorship, but about whether competitors can or do offer the same technology. “Exclusive” and “proprietary” may indicate a claim of right to preclude others from offering the same technology, but it doesn’t matter who invented that technology. For example, Molten might have exclusive technology transferred from the true inventor, and its advertising would still be true and would have nothing to do with the origin of the ideas behind the technology. And claims of exclusivity might well be material to consumers, who could conclude that they couldn’t get the promised characteristics elsewhere. Again, Dastar has been extended beyond its strictly logical limits, perhaps because of a judicial intuition that plaintiffs in these kinds of cases can rarely show actual materiality and deceptiveness.

Baden’s geographic false advertising claim based on failure to label country of origin was separate. Here, its claim foundered on the problem that Molten was not the distributor or US importer of the unmarked balls, but only a supplier to FIBA. Its only participation in the transactions was wholly outside the US. Baden argued that Molten was contributorily liable if it sold the balls with knowledge that they’d be resold in the US without proper country of origin markings, following Inwood v. Ives on contributory trademark infringement and Steele v. Bulova Watch Co. on the extraterritorial scope of the Lanham Act.

Nonetheless, the court found that Molten’s conduct was outside the jurisdictional scope of the Lanham Act. Molten has no control over the eventual sales of the balls, though it anticipated that some would be sold in the US. Rather than selling to a US importer, Molten sells to a French distributor who then sells balls around the world.

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