MapQuest sued CIVIX for breach of contract and breach of the covenant of good faith and fair dealing. CIVIX counterclaimed for false advertising, tortious interference with prospective economic advantage, and breach of contract/breach of the covenant of good faith and fair dealing. The court refused to dismiss the last two claims, but I’m only going to talk about the first two.
CIVIX has patents related to geographic search technology; its business is licensing those patents. In 1999, it settled an infringement suit with MapQuest, giving MapQuest a license to use, sell, license, sublicense, transfer, assign, etc. MapQuest technology covered by any claim of the CIVIX patents. The license also granted MapQuest end users a right of use that extended to MapQuest customers’ customers and end users. It was confined to “proprietary” products “created and developed” by MapQuest. CIVIX covenanted not to sue MapQuest, MapQuest customers, or MapQuest customers’ customers or end users, with respect to MapQuest technology. Despite that, MapQuest alleged that CIVIX has filed multiple suits against MapQuest customers based on their use of MapQuest products and services.
CIVIX counterclaimed that MapQuest interfered with CIVIX’s efforts to license its patents by falsely representing to infringers that, by buying MapQuest products, they’re licensed under CIVIX patents, even as to products that MapQuest did not “create and develop,” that are not proprietary, and/or that are merely pass-through products created and developed by third parties. For example, MapQuest resells geocodes, purchased through other vendors. A geocode is a precise latitude/longitude measure corresponding to the location of something, such as a hotel. Though sale/use of a geocode by itself doesn’t infringe any claim of the CIVIX patents, they are allegedly used in systems that infringe. These geocodes are not “created and developed” by MapQuest, nor are they “proprietary.” Allegedly, MapQuest represented that using geocodes supplied by MapQuest conferred a license of the CIVIX patents, encouraging infringers to resist taking a license.
On the Lanham Act claim, CIVIX argued that MapQuests statements were material and likely to mislead consumers. (Note here that the patent-related ad claim—we can give you a license—is clearly unrelated to Dastar’s concerns. I doubt not, however, that some courts would still think that Dastar was relevant.) First, MapQuest argued that it isn’t a CIVIX competitor. The court reasoned that CIVIX had adequately pled that they were competitors in the business of licensing CIVIX patents.
However, the court agreed that CIVIX failed to satisfy the heightened pleading requirements of Rule 9(b). (Not all courts agree that Lanham Act claims are subject to 9(b), and I think the better rule is that they aren’t. False advertising is a business tort, not a fraud claim, just like trademark infringement is. Courts don’t make trademark plaintiffs under §43(a)(1)(A) satisfy 9(b), and I haven’t seen a good reason to treat §43(a)(1)(B) differently.) Here, CIVIX’s factual allegations were thin, alleging only that MapQuest “improperly represented to infringers that by buying products sold by MapQuest they are licensed under the CIVIX patents .... MapQuest has represented that the use of geocodes supplied by MapQuest confers a license of the CIVIX patents, and has encouraged infringers to make such a claim and not pay for a license under the CIVIX patents.” CIVIX and MapQuest have been litigating based on the same patents and licensing agreement for at least five years, and yet it pled no more specifics. That isn’t the “who, what, when” etc. that 9(b) requires. Moreover, these minimal allegations don’t provide the court any basis to conclude that the statements at issue were made in “advertising or promotion,” as required. A person-to-person pitch wouldn’t count as advertising, while widely distributed print ads would. The court declined to speculate.
On the other hand, essentially the same allegations survived a motion to dismiss when pled as tortious interference with prospective economic advantage—which is, by the way, one reason why 9(b) isn’t appropriate here. CIVIX needed only to plead (1) a reasonable expectancy of entering into a valid business relationship, (2) MapQuest’s knowledge of the expectancy, (3) an intentional and unjustified interference by MapQuest that induced or caused a breach or termination of the expectancy, and (4) damage.
MapQuest argued that CIVIX failed to allege any reasonable expectation of entering into a licensing agreement with MapQuest customers. However, the Seventh Circuit has held that the Federal Rules don’t require that a complaint allege the specific third party or class of third parties with whom a claimant had a valid business expectancy. If CIVIX is right that the settlement agreement doesn’t allow sublicensing rights for systems using geocodes (note: whoa! If MapQuest is licensing systems that happen to include geocodes, that seems a far different animal than the raw geocodes, and I see why MapQuest is suing in the first place), then MapQuest’s statements to customers that they were already sublicensed for CIVIX patents meant lost licensing opportunities. This was a reasonable expectancy because two MapQuest customers, Orbitz and Travelocity have—following litigation—bought licenses from CIVIX. Other MapQuest customers might as well.
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