USAA moved to dismiss Mitek’s false advertising counterclaim
and strike its claims of bad faith; the magistrate judge recommended denying
these motions. USAA provides various
financial services, and alleged that in 2005 it invented a method for consumers
to remotely deposit financial documents. It filed patent applications for this
invention, and chose Mitek as the software vendor for software to read the
numbers on checks. USAA allegedly
disclosed the invention to Mitek subject to a confidentiality agreement. In 2008, allegedly unbeknownst to USAA, Mitek
filed a provisional patent application, reciting a claim to a similar
invention. In 2012, Mitek began telling
USAA that it was infringing on Mitek’s patents.
USAA sued for a declaratory judgment of nonfringement/invalidity/etc.
Mitek alleged that USAA violated the Lanham Act by accusing
Mitek of conducting its commercial activities in an unethical manner. USAA’s press release, “USAA files Suit
Against Mitek Systems, Inc.,” states:
USAA has filed suit against Mitek
Systems, Inc. for misappropriation of USAA's proprietary information, breach of
contract, and fraud, among other claims.
USAA spokesman Paul Berry says,
"USAA invented remote deposit capture technology to meet the needs of our
highly mobile military membership, enabling them to deposit checks with a
scanner or smartphone wherever they may be stationed. USAA has invested
substantial time and money in the development and implementation of an
invention which has revolutionized the banking industry."
"Mitek misappropriated USAA's
proprietary and confidential information while working under contract for USAA,
and then took numerous steps to claim it as its own,” says Berry. “USAA filed
this lawsuit to protect USAA members and our Association."
The magistrate judge concluded that this was commercial
advertising or promotion. It was widely
disseminated and promoted USAA by claiming that USAA developed an invention
that has “revolutionized the banking industry,” and that USAA is looking out
for its members and filed the suit to “protect” them. Such statements “go well beyond describing the
allegations in a lawsuit and arguably involve an attempt to influence customers
to buy USAA's goods and services.” USAA
argued that it was simply identifying its allegations, but the press release
didn’t specify its allegations or say that USAA was giving its “beliefs,
opinions or views." Instead, the press release presented its contents as factual statements "and, by
suggesting that it was protecting its customers in filing suit, USAA intimates
that Mitek's products and/or services are somehow unsafe or untrustworthy.” (At a minimum, this conclusion seems in tension with the law surrounding Lanham Act claims based on statements made about
pending patent lawsuits, though that’s not a “commercial advertising or
promotion” problem.)
USAA then argued that it wasn’t in competition with Mitek. The magistrate judge found sufficient
competition: “both companies have apparently sought to develop and implement a
product to designed to enable mobile banking.”
USAA targets individual customers while Mitek targets banks as potential
users/licensees, but that “hardly [made] a difference; the parties clearly are
both vying for use of the same technology with the intent of selling this
product and/or service to its
customers” (emphasis added).
USAA also argued that it wasn’t trying to influence
customers with the press release. (Whose
customers? This might bear on the “competition”
question, though I also think that the fact that one company has integrated
production and one supplies just one component of the overall experience is
relevant and might be enough to justify a finding of competition under some
circumstances.) Mitek, though, argued
that USAA’s claims jeopardized its well-earned reputation (with whom? Mitek’s
customers or USAA’s customers?). The
magistrate judge concluded that the press release could be understood “to
influence customers to continue or commence business with USAA.”
The magistrate judge also concluded that the statements alleging
misappropriation of confidential information concerned the
nature/characteristics/qualities of Mitek’s services or commercial activities.
USAA then argued that it accurately described its
allegations. But the press release
suggested that Mitek’s actions were unethical and that customers needed “protection.” “These statements go well beyond merely
describing the allegations in the complaint and arguably convey a false
impression of Mitek's goods and/or services, providing USAA with an unfair advantage
in the marketplace.” (The marketplace
for what?)
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