Friday, April 29, 2022

Sending infringement notice to Amazon isn't commercial advertising/promotion but could be tortious interference

Studio 010 Inc. v. Digital Cashflow LLC, No. C20-1018-DGE, 2022 WL 1215529 (W.D. Wash. Apr. 4, 2022) (R&R)

Equadose sued for declaratory and injunctive relief and damages based on defendants’ allegedly intentionally inaccurate representations to that accused Equadose of selling an earwax cleaning device that infringed a patent, which resulted in Equadose’s inability to sell the product on for a period of time. The judge recommended rejecting Lanham Act claims because statements made to Amazon only aren’t “commercial advertising or promotion” (the judge at one point wrongly shorthands this as “not commercial speech,” but finishes by correctly focusing on “not commercial advertising or promotion”), but rejecting the rest of the motion to dismiss.

Accepting the allegations of the complaint, it was plausible that defendants “patented a device without disclosing that Equadose’s product might invalidate that patent, improperly sought to block plaintiff from selling the product on by wielding an invalid patent, then attempted to evade legal liability for harm that had already been incurred by transferring the patent and promising not to sue.”

One point of possible further note: individual defendant Ackerman was in as an officer of a (defaulting) corporate defendant. He was personally involved in the relevant conduct, including patenting and reporting to Amazon, so he could be liable for “tortious misuse” of patent and trademark rights. And the Patent Act dosen’t preempt “fraud/misrepresentation-based state or federal unfair competition laws, nor state contract and tortious interference laws, as they address conduct beyond mere infringement or noninfringement.” Thus, though claims may not solely be based on obtaining a patent through fraud,  “Equadose may proceed with its claims that involve the wielding of an invalid patent to interfere with its contractual relations with and to unfairly compete by improperly blocking Equadose access to the sole marketplace for its products.” This also sustained Equadose’s claim for a violation of the Washington Consumer Protection Act, since Equadose properly alleged (1) an unfair or deceptive act or practice, (2) occurring in trade or commerce, (3) affecting the public interest, (4) injury to a person’s business or property, and (5) causation.

No comments: