Tuesday, September 03, 2013

Patentee lacks Lanham Act standing against manufacturer's disparagement

Almblad v. Scotsman Industries, Inc., No. 13–cv–1297, 2013 WL 4600209 (N.D. Ill. Aug. 28, 2013)

Scotsman makes ice machines.  Almblad allegedly “determined that ice made from commercial machines, like Scotsman’s machines, was contaminated ‘because the design of such machines allowed for the intake of sewer gas’ during the ice manufacturing process,” told Scotsman and other ice machine manufacturers about this, and invesnted a device that would eliminate this contamination, offering it ot Scotsman for licensing.  In response, Scotsman allegedly defamed him and falsely asserted that its products didn’t have that design defect and that Almblad made false claims about his own inventions. 

A standards organization held a phone conference among representatives of ice machine makers and the general public that allegedly disseminated Scotsman’s defamatory written statement.  The statement indicated Scotsman “appreciate[d] the opportunity to address Mr. Almblad’s erroneous claims and mischaracterizations that are meant to serve his commercial purpose.” It went on: “[O]ur testing refutes Mr. Almblad’s claims. In particular, his claim that gases are being sucked from floor drains into the equipment is just flat wrong. None of our machines do this .... Mr. Almblad has no scientific or medical evidence, and our experts cannot find anything in any medical or scientific study, describing a single occurrence in which airborne contamination infected an ice machine and caused an illness” and stated that “Mr. Almblad misinterprets the FDA Food Code to suit his commercial purposes.”

Almblad alleged that these statements discouraged potential licensees from transacting with him.

Defendants moved to dismiss Almblad’s defmation claim, arguing that Scotsman’s statements were pure opinion.  This was premature.  He pled falsity and damage; he was not required to provided detailed factual allegations as long as defendants had fair notice of the claim.  (I’m not sure this is responsive to the argument that what was said was opinion, though by this logic a renewed motion for summary judgment on fact/opinion might work.)

As for the Lanham Act claim, defendants argued that Almblad lacked standing because he wasn’t a direct competitor—an issue the Supreme Court will (it is to be hoped) soon decide, but for the moment the Seventh Circuit requires direct competition or at least a “discernible competitive injury,” though those things aren’t actually the same.  The complaint didn’t allege direct competition. Instead, Almblad alleged that he made his device available for licensing.  Almblad argued that his device, an air filter, would directly compete with Scotsman’s products, which are designed to treat slime, mold, and airborne microorganisms in its ice machines.   But he never alleged the nature of his business: the court discerned that he was a patentholder who licensed into the industry.  Thus, he didn’t plead facts plausibly establishing competition.

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