Zest sued Implant for patent infringement in an ongoing case
whose Markman hearing had already
occurred. Implant sued Zest for false
advertising and related claims, alleging that Zest’s ads: (1) misrepresented
the nature of its patent infringement lawsuit against Implant Direct; (2)
misrepresented the capabilities of Implant Direct's product; and (3) contained
unauthorized depictions of Implant Direct's product. Zest moved to dismiss.
Implant argued that it was false for Zest to accuse it of
patent infringement while also advertising that Zest’s product had unique
patented features not possessed by Implant’s product. (The court didn’t like that Implant only
attached ads to the complaint and didn’t identify the specific deceptive
statements, but figured that Implant meant “Beware of other ‘look-alike’
products--they do NOT have the unique innovations provided by the Zest patented
product. The ‘look-alike’ products do not have the Zest pivoting technology
….”) The court had two problems with
this argument. First, the ad itself
didn’t say anything about the patent infringement lawsuit, so wasn’t itself
false or misleading. Second, patent
infringement turns on the claims of a patent, not structure or function, so it
wasn’t inherently inconsistent to claim both that Implant infringed and that
its product didn’t contain all of Zest’s innovations.
There was another statement in the ad of relevance: “IMPORTANT
NOTICE: Dear valued customers of the ZEST LOCATOR Attachment System who
currently purchase from Attachments International and Sybron Dental Specialties
affiliated businesses. Please note that due to pending legal action, we are
terminating our distribution agreement with Attachments International and
Sybron Dental Specialties affiliated businesses effective May 4, 2011.” Implant said this was false because Impant
didn’t cause Zest to end its distribution agreement. The court didn’t get the argument. The ad didn’t say anything about the
particulars of the pending legal action, including who sued whom or what the
nature of the lawsuit was; it didn’t mention Implant, much less blame it.
To the extent the complaint could be read to allege that
Zest falsely advertised the scope of its patent, creating the false impression
that it couldn’t be designed around, its allegations were too conclusory. Thus the Lanham Act claim was dismissed, as
was the state law false advertising claim.
Implant also brought unfair competition claims based on
Zest’s use of Implant’s marks/products in comparative ads that used
side-by-side images of the parties’ products; Implant alleged that the use of
its marks traded on its goodwill and misled the public. The court found these allegations “plainly
incongruent” with the ads. The ads used
Implant’s trademark, but only to identify and distinguish its product from
Zest’s, and always with a TM and an attribution to Implant at the bottom. “It can't possibly be said that, in light of
this, Zest is trading on ‘the good will associated with the Implant Direct
products’ or that there is a likelihood of the products being confused.”
The court turned to Implant’s claims for trade libel and
product disparagement, starting with the “due to pending legal action”
statement above, which the court had already found not to adequately allege
falsity. The other statements were
comparative ones saying that Zest’s product had specific superior features, but
Implant didn’t explain why the statements were false. The court dismissed with leave to amend
(except for the TM infringement claims, as to which amendment would be futile),
and told Implant to do a “much better job” of specifically identifying what was
false or misleading.
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