Wednesday, March 19, 2008

Diebold wins one voting machine battle

Avante International Technology Corp. v. Premier Election Solutions, Inc., 2008 WL 686324 (E.D. Mo.) (Magistrate’s report)

Plaintiff alleged that Diebold Election Systems, now known as Premier, and Sequoia Voting Systems, violated the Lanham Act and the Illinois Deceptive Trade Practices Act by making claims about the capabilities of their voting machines, specifically about whether their machines complied with Illinois state requirements. This occurred, plaintiff alleged, because it owns a patent that is the only way to comply with Illinois state requirements. With respect to Sequoia, plaintiff alleged in the alternative: either Sequoia infringed its patent, or its machines don’t comply with Illinois law and thus it made false and misleading representations.

The report found plaintiff’s allegations against Sequoia too conclusory to survive a motion to dismiss. Its allegations against Diebold/Premier were more specific: Premier represented to Illinois customers that its equipment complies with state requirements, but that’s false, and Avante therefore lost sales and royalties.

Premier argued that Avante lacked standing, regardless of whether the court adopted a requirement of direct competition or the Conte Bros. test. The report agreed. Avante didn’t allege that it had tried and failed to sell its election equipment in Illinois. Indeed, Avante alleged that it isn’t certified by the Illinois Board of Elections, and thus can’t sell in Illinois. Thus, it’s not the “commercial competitor” required by the Lanham Act.

Likewise, the state-law claims failed. State deceptive practices law doesn’t apply to conduct that complies with “conduct in compliance with the orders or rules of or a statute administered by a Federal, state or local governmental agency.” To be sold in Illinois, any party’s equipment would have to be certified by the Board of Elections. If defendants were certified, there could be no claim under state law. If defendants were not certified, there could be no damages because the uncertified party could not sell its products.

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