Bern Unlimited, Inc. v. Burton Corp., 25 F. Supp. 3d 170 (D.
Mass. 2014)
Bern, which sells sports helmets, sued six competing helmet
makers. It initially sued for design
patent infringement, but dropped that claim and switched to trade dress infringement. In their answers to the third amended
complaint, defendants brought counterclaims, which Bern moved to strike as too
late and futile. The motion was granted
in part and denied in part.
The complaint claimed the design elements the “rounded
profile of the helmet, which is designed to follow the shape of the wearer’s
head”; and “the distinctive visor.” Bern
allegedly began selling the initial version in December 2005, followed in
January 2007 by a design patent application, which became a registration in
2008. If you see an on-sale bar issue
there, you’re not alone. Bern ultimately filed a statutory disclaimer of the
patent.
In its marketing materials, Bern touted its patent
protection, allegedly to discourage retailers from buying competitors’ helmets.
The patent itself appears in many of
Bern’s advertising catalogs. Ads also
claim that Bern was the first to invent a helmet with a visor, and that its
helmets were the “first visor helmet offering a protective visor cover in the
front,” the “world’s first functional
visor lid” (emphasis added because Bern probably now wishes it hadn’t said
that), “the original,” and the “INDUSTRY’S FIRST VISOR.”
These statements were allegedly knowingly false and harmed
competitors’ sales. [I wonder if there’s
not a different theory of falsity: the reference to “functional” implies a
utility patent; consumers might’ve thought there were functional benefits
unique to Bern’s product.]
As to the alleged “first” and “original” claims, these were
nonactionable puffery, rather than being specific and measurable. As to the allegedly false claims of patent
coverage, however, defendants stated a counterclaim. Bern argued that its statements weren’t false
or misleading because patent was in fact issued and patents are presumed to be
valid, and it didn’t accuse defendants of infringing. But the presumption of validity can be
overcome in a Lanham Act claim when the claimant shows objective and subjective
bad faith. If the allegations in the
counterclaims were true, Bern couldn’t have reasonably believed the patent was
valid due to the on-sale bar, which would show objective bad faith.
Nor did statements have to refer directly to competitors to
be actionable. The counterclaims alleged
that Bern characterized competing helmets as imitations in the same marketing
materials that included references to the patent. Defendants alleged that the combination of
showing the first page of the patent with the statement, “Every single brand in
the market now has a brim, but your customer wants the original!” would
reasonably cause consumers to believe that competing helmets infringed.
The court characterized these allegations as “thin, at
best.” (I think it depends on how
savvy/patent-aware the relevant consumers—here, the retailers—are.) But they
were sufficient to survive a motion to dismiss.
Bern also alleged that the counterclaims failed to allege
injury/proximate cause under Lexmark. The court disagreed. Defendants alleged that Bern’s false
advertising deceived customers, which resulted in increased sales for plaintiff
and decreased sales for defendants. That’s harm directly caused by plaintiff’s
false advertising.
Nor was there undue delay and unfair prejudice. Some
additional discovery might be necessary. Even if literal falsity justifies a
presumption of confusion, a claimant seeking damages needs to show actual
harm. Plus, even with literal falsity,
defendants would have to prove materiality with evidence. Thus, allowing the counterclaims would cause
some prejudice, but much of the necessary discovery had already been done, and
it would waste resources to require defendants to file a new action.
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