Thursday, October 04, 2007

The basketball damages

Baden Sports, Inc. v. Kabushiki Kaisha Molten, 2007 WL 2790777 (W.D.Wash.)

The Seattle Trademark Lawyer covered this case, so I will try to be brief. (Previous entries here and here.) Baden sued Molten for infringing its patent on a cushioned game-quality basketball, and for falsely advertising that Molten’s own dual-cushion technology was “innovative.” The jury, finding willfullness on both counts, awarded Baden roughly $38,000 in patent damages and $8 million in Lanham Act damages.

I’m surprised that a false claim that products were “innovative” could produce such a large award. The term is at least close to puffing, unless there are more specific associated claims. I wonder if the jury wasn’t including compensation for patent infringement in there as well, despite the fact that logically the claims are independent; one could falsely advertise one’s basketballs as “innovative” merely by producing standard old basketballs.

The court applied eBay v. MercExchange to both the patent and false advertising aspects of the permanent injunction request, citing a 9th Circuit case holding that eBay applies to trademark cases brought under the Lanham Act. See Reno Air Racing Ass'n v. McCord, 452 F.3d 1126, 1137-38 (9th Cir. 2006). Molten was enjoined from selling the infringing balls in the US and from advertising its dual-cushion basketball as innovative, but not from using the model numbers identified in Baden’s complaint or using the name “Giugiaro” for the design; the model numbers and names refer not to the infringing internal components but the ball type, size and cover material. Comment: This means Molten may retain some of the goodwill it acquired during the time it used the infringing design and false advertising.

Possibly of interest: Molten argued that irreparable injury was less likely because Baden was willing to license the patents at issue. But even so, the court held, Baden risked a loss of goodwill because Molten’s infringement and advertising “erode[d] consumers’ and retailers’ perception of Baden as an innovator” – which seems like a problem of false advertising, not patent infringement.

Despite the findings of willfullness, the court declined to award attorneys’ fees on either claim. This was not an exceptional case; Molten “reasonably disputed” the Lanham Act claim by arguing that “innovative” was puffing and that Dastar barred the claim.

No comments: