Bern Unlimited, Inc. v. Burton Corp., No. 11-12278, 2014 WL
2649006 (D. Mass. June 12, 2014)
Bern sued six of its competitors in the market for sports
helmets, alleging trade dress infringement.
Answering Bern’s third amended complaint, defendants asserted false
advertising counterclaims, which the court struck in part.
First, defendants alleged that Bern falsely advertised that its
helmets were the “first visor helmet offering a protective visor cover in the
front.” The court found this, and claims that the helmets were the “original”
and the “first functional visor lid” to be puffery. They were not specific and
measurable, and thus not actionable. (No
Dastar analysis required, then.)
Second, defendants alleged that Bern falsely advertised that
its helmets were covered by a patent, implying that its competitors’ helmets
were imitations. Bern argued that there
could be no falsity because the patent in fact issued and was presumed valid. But the presumption can be overcome by
showing objective and subjective bad faith.
What counts as bad faith is determined on a case by case basis; if the
patentee knows of invalidity but represents that a competitor is infringing,
that’s clearly bad faith.
The counterclaims alleged that Bern advertised and sold the
helmet more than a year before the applicant applied for the patent, triggering
the old on sale bar. If the
counterclaims were true, Bern’s statements that the patent covered the helmet
were made in bad faith because it couldn’t reasonably have believed that the
patent was valid.
Bern argued that statements could only be actionable if they
directly referred to a competitor or its products, and that it didn’t
explicitly claim that the defendants were infringing its patent. But the counterclaims alleged that Bern
characterized competing helmets as imitations, and did so in the same marketing
materials that included references to the patent. One ad included, on the same page, both a
reproduction of the first page of the patent and the statement, “Every single
brand in the market now has a brim, but your customer wants the original!” While the argument that these statements in
combination would reasonably cause consumers to believe that competing helmets
were infringing was “thin, at best,” the allegations were sufficient to state a
claim.
Bern also argued that defendants didn’t allege proximate
cause, as required by Lexmark. But Lexmark’s
requirement of injury flowing directly from advertising is satisfied when “deception
of consumers causes them to withhold trade from the [claimant].” The
counterclaims properly alleged that scenario.
The court also rejected Bern’s argument that the
counterclaims were added too late. Defendants
argued that they didn’t know until they received Bern’s document disclosure
that Bern knew the patent was invalid from its inception, thus completing their
counterclaim with the requisite bad faith.
The court had “doubts” about the timing and purpose of the
counterclaims, but still declined to strike them on grounds of undue
delay. There would be some prejudice to
Bern, because Bern would be entitled to discovery on deception and materiality
(even though literal falsity creates a presumption of deception, that can be
rebutted, and materiality has to be shown independently; thus discovery would
be appropriate). But that prejudice was not
enough to overcome the interest in adjudicating related claims together; much
relevant discovery was already completed, and it would be a waste to separate
the claims.
No comments:
Post a Comment