Friday, December 12, 2014

Dastar bars false advertising claim based on patent filing

Akzo Nobel Surface Chemistry LLC v. Stern, 2014 WL 6910212, No. 2:13–CV–00826 (S.D. Ohio Dec. 8, 2014)

Akzo makes specialty chemicals, including adjuvants, which are additives that modify the properties of the main ingredient in formulations.  Stern was formerly employed by Akzo as a research chemist with access to confidential information and is now emplyed by defendant Huntsman, a direct competitor of Akzo.  His agreement with Akzo provided that any “inventions, ideas or improvements” he made were the sole property of Akzo and that he agreed to not divulge confidential information.  Six years after he left Akzo, Huntsman filed a patent application whose subject matter, Akzo claims, infringes on (uses?) the specific adjuvants formulations that Stern developed and/or learned of while employed with Azko.  Azko sued.

One of Akzo’s claims was that defendants’ filing of the pending patent was a misappropriation and misrepresentation of Akzo’s trade secrets, in violation of 43(a)(1)(B) and the Ohio Deceptive Trade Practices Act.  Defendants argued that filing a patent application didn’t constitute making statements in commercial advertising or promotion.  Akzo alleged, however, that after seeing the pending patent, a potential customer inquired about Akzo’s ownership of the adjuvants. Thus, Akzo argued, it was reasonable to infer that the patent application constituted a statement of ownership to the relevant (sophisticated) purchasing public.  But Semco, Inc. v. Amcast, Inc., 52 F.3d 108 (6th Cir. 1995), held that a “detailed description and explanation of a new process” without advertising, is not commercial speech.  Akzo didn’t claim that “advertising language” was included in the application.

Moreover, defendants successfully contended that claims “related solely to the creation and ownership of intellectual property” weren’t actionable under the Lanham Act because they didn’t go to the “nature, characteristics, or qualities” of the adjuvants, even though Dastar (which was about the meaning of “origin”) didn’t really hold that. Cf. Romero v. Buhimschi, 396 Fed. Appx. 224 (6th Cir. 2010) (§ 43(a)(1)(B) does not refer to failure to provide “authorship designation”).  (Just to be clear, the real problem in most failure to credit false advertising claims is materiality, but they shouldn’t be entirely off the table, when the advertiser is trying to sell itself because it was the creative force behind something.)  Here, the court rejected the argument that filing a patent application was a misrepresentation about whether Akzo had the legal right to use its own IP.  (Is this even true given prior user rights under the AIA?)  The court was unpersuaded.  “To claim that information contained in a patent application equates to misrepresentation of the details underlying the goods or service is, at best, a stretch.”  Such claims are better the province of copyright or patent law; to hold otherwise would be to create a perpetual patent/copyright, which Congress can’t do.

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