free speech protects allegations of patent infringement that aren't objectively baseless

Lite-Netics, LLC v. Nu Tsai Capital LLC, 2023-1146, 2023 WL 2054370, --- F.4th ---- (Fed. Cir. Feb. 17, 2023)

Reversing the district court’s preliminary injunction, the Federal Circuit held that notices to stores that sold Nu Tsai’s holiday string lights alleging patent infringement were not objectively baseless and thus could not be made in bad faith for purposes of avoiding patent-law conflict preemption. Lite-Netics therefore could not be enjoined, using the tortious interference/defamation torts, from suggesting that HBL is a patent infringer, that HBL has copied Lite-Netics’s lights, or that HBL customers might be sued.

Note the framing that might be coming soon to a case near you: “Lite-Netics appeals the district court’s preliminary injunction against its patent-related speech. We hold that the district court abused its discretion in issuing the preliminary injunction because the applicable speech-protective legal standards are not met.” When I started this gig, the framing was about protecting the patent system from collateral challenge with state-law claims. But we are in new days now.

“This requirement of a showing of bad faith as prerequisite to applying state tort law to speech about infringement rests partly on First Amendment principles.” I will just note that bad faith is usually not required when commercial speech is false, and the chilling effect is usually not a big deal for commercial speech. It’s really patent preemption doing the work, but it’s interesting to see the First Amendment getting recruited to help out.

Substantively: “Because there was an objectively reasonable basis for many of Lite-Netics’s infringement allegations, the district court abused its discretion in finding that Lite-Netics could not have ‘realistically expect[ed] success on the merits’ and, therefore, acted in bad faith.”