Monday, February 13, 2017

Challenging materiality when literal falsity is conceded

Smart Vent, Inc. v. USA Floodair Vents, Ltd., 193 F.Supp.3d 395 (D.N.J. 2016)

Smart Vent alleged patent infringement and false advertising related to competitor Floodair’s flood vents, which it allegedly falsely claimed to be certified by various bodies.  The regulations at issue, however, requried only certification, not certification by specific parties; the real question was whether Floodair falsely or misleadingly described its product as certified in accordance with a standard known as TB-1. 

As a matter of law, the court determined that TB-1 called for an individual certification different from that provided by Floodair. Thus, the court granted partial summary judgment on falsity, but refused to find materiality or harm to Smart Vent without further evidence.  “While there is a reasonable inference that USA Floodair’s misrepresentation that its product complies with TB-1 led to increasing its sales and decreasing Smart Vent’s sales, that inference is unavailable to Smart Vent as the movant in its summary judgment motion.”  The parties also agreed that appropriate certification decreases flood insurance premiums, which “creates at least the impression that certification-related statements would influence purchasing decisions,” but that still left a triable issue.  Floodair provided some evidence that other aspects of its product, such as cost effectiveness and ease of maintenance, could also drive sales. 

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