Tuesday, February 04, 2020

false claims of patent invalidity may be false advertising

Willis Electric Co. v. Polygroup Macau Limited (BVI), 2020 WL 522441, No. 15-cv-3443 (WMW/KMM) (D. Minn. Feb. 3, 2020)

The parties compete in the market for artificial Christmas trees. (The parties apparently say “holiday,” but come on.) Willis allegedly innovated in the pre-lit tree category, introducing a “One Plug Tree that was unlike anything the holiday tree market had ever seen before.” Willis filed a patent application, and Polygroup allegedly subsequently began selling a “knockoff design” and applied for its own patent.  (Here's a video of the Willis product.)

Willis sued for patent infringement and other claims, including antitrust violations (based on alleged bid-rigging and predatory pricing) and false advertising. The court refused to dismiss the Lanham Act and state law false advertising claims.

False statement of fact: allegedly false statements  “about the validity of Willis Electric’s patents and the functionality of Willis Electric’s products” were actionable. Willis alleged that Polygroup “told at least one major retailer that its patents in this area invalidated Willis Electric’s patents,” which is “impossible, because Willis Electric’s [patents] predate Polygroup’s [patents].” Willis Electric also alleges that, although its patented design “always has had 360-degree movement,” Polygroup falsely or misleadingly told a manufacturer that Willis Electric’s product “is not 360 degrees,” and told a retailer that Polygroup’s design has 360-degree movement in contrast to Willis Electric’s “original design” that did not have 360-degree movement. This was sufficient. [Note that lawyers’ statements about patent validity are often held to be non-actionable opinion; query what “invalidated” might mean in this context.]

Also, on commercial advertising or promotion: Polygroup allegedly made false or misleading statements on at least five separate occasions to at least one manufacturer and three retailers. “Significantly, Willis Electric does not sell to the public directly, and its market generally is confined to a limited group of retailers.” This was enough at the pleading stage—though it’s not clear from the court’s discussion that the same false statements were made to each of the targets.

Defamation: Polygroup argued that the statements about Willis’s patents and products were subjective assertions of quality.  But “[s]tatements as to whether a patent is valid, or whether a product includes a certain feature, are not subjective statements of opinion or general assertions of quality.” And questions about whether the statements would harm Willis’s reputation in the “sophisticated buying community” couldn’t be resolved on a motion to dismiss.

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