Monday, February 11, 2013

Reverse passing off and Dastar's limits

Genometrica Research Inc. v. Gorbovitski, 2013 WL 394892 (E.D.N.Y.)

Genometrica is developing a medical device, a DNA analyzer/sequencer.  It was formed by one of the two individual defendants, Gorfinkel, and Gorbovitski was its sole director and executive officer for a time, but after they sold their stakes, they allegedly created a new company, Advanced BioMedical Machines, in order to compete directly with Genometrica to develop ABMM’s own sequencer.  This sequencer is allegedly substantially similar or identical to Genometrica’s, and ABMM allegedly “states in its marketing materials that its device employs and exploits inventions, technology patents, know-how, trade secrets and related intellectual property and other information that belongs to Genometrica.”  In addition, its website allegedly offers to sell ABMM’s sequencer, a “version” of Genometrica’s device, without authorization.

Without discussing Dastar, the court refused to dismiss the false designation of origin/false advertising claims, even though the allegations were that ABMM was “holding out and representing to the public in interstate commerce that it is the owner of all rights, title and interest to the website and the intellectual property contained therein, including the Medical Device” and that this was false because the image of the sequencer on the website clearly showed the Genometrica’s former corporate name and was taken from a brochure prepared by Gorbovitski as Genometrica’s officer. 

The picture might well ground a reverse passing off claim, but the broader “misrepresentation of IP ownership” allegations seem clearly Dastar-barred.  Still, the court accepted the general allegations that defendants’ conduct created a likelihood of confusion etc. as to “the affiliation, connection, and association between Defendants' ABMM Sequencer and Genometrica's Medical Device.”  That is, the complaint set out all the elements of false designation of origin (oddly, the court repeatedly referred to the device as a “work,” which suggests that it should have encountered Dastar)—but see below.

In addition, Genometrica stated a claim for false advertising because defendants allegedly made a false or misleading representation about the sequencer (which appears to be simply that it was defendants’) and otherwise alleged the elements.

Defendants apparently didn’t argue Dastar directly, even though it would’ve given them some purchase on the false advertising claims as well, given the case law.  Instead, they argued that Genometrica didn’t properly plead that it owned a trademark.  If the §43(a) claim was for infringement of an unregistered mark, Geometrica would need to allege the existence of a protectable mark.  But a false advertising §43(a)(1)(B) claim doesn’t require that, so that claim survived.
What about §43(a)(1)(A)?  The court determined that false designation of origin requires a protectable mark. Genometrica didn’t allege that it had a protectable mark for its former corporate name or for any other mark in connection with the sequencer.  Thus, allegations of false association and trading on Genometrica’s goodwill was insufficient to state a claim.  Alleging reverse passing off, in the absence of a mark, wasn’t sufficient to satisfy the statute.

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