alleged use of competitor's corporate "persona" didn't cause actionable confusion

SME Steel Contractors, Inc. v. Seismic Bracing Co., LLC, No. 2023-2426, 2025 WL 2057365 (Fed. Cir. Jul. 23, 2025)

Discussion of previous district court opinion here. Because a patent is involved, the appeal on all issues goes to the Federal Circuit, but the Federal Circuit is supposed to apply home circuit precedent to the non-patent claims. Once again we see the powerful discontinuity between TM and false advertising claims produced by the normal absence of any damage requirement in TM.

The parties compete in the design of buckling-restrained braces (BRB), which are structural devices that help buildings withstand seismic activity. SME sued Seismic for patent infringement, false advertising and false association under the Lanham Act, unfair competition and certain deceptive trade practices under Utah state law, and copyright infringement. Seismic secured summary judgment, which the court of appeals affirms. Patent discussion omitted.

The false advertising-related claims centered on representations made by Seismic in a Design Manual that it sent to prospective clients. Its 90 pages included the statements “Produce capacity of over 5000 BRBs per year” and “These patented methods have now been tested and qualified for use on projects in accordance with governing building codes (AISC 341).” The Design Manual further included a report from the University of Utah, testing five of Seismic’s BRBs and concluding that three of those BRBs satisfied AISC 341-10 requirements and two did not. SME argued that these statements were false and that Seismic used SME’s “persona,” including proprietary technical drawings and a similar logo, in the Design Manual. (It didn’t bring a conventional infringement claim.) SME further alleged that it lost business to Seismic because of these misrepresentations.

The copyright claims alleged that Seismic used several of SME’s copyrighted technical drawings of BRB designs in the Design Manual. The district court granted summary judgment to Seismic, concluding that SME had “not presented sufficient evidence of a causal connection” between the alleged copyright infringement and alleged profits; SME sought only disgorgement. (The court of appeals could have pulled a Davis v. Gap move and remanded to assess damages, but there doesn’t seem to be a licensing market here, making that much less attractive.)

Even if there was Lanham Act standing, there was no genuine issue of material fact on injury. No reasonable jury could find a causal connection between misrepresentations by Seismic and SME’s injuries. SME only showed that the Design Manual was sent to several potential customers and that Seismic successfully bid on projects that involved those customers while SME also (unsuccessfully) submitted competing bids on most of those projects. “SME Steel did not present any evidence that the Design Manual—let alone the handful of representations alleged to be misleading within this ninety-page document—played any role in SME Steel’s loss of bids.”

SME argued that it was entitled to a presumption of injury because the parties compete in a sparsely populated market. Under Tenth Circuit law, where “the plaintiff and defendant are the only two significant participants” in a two-player market, “injury may be presumed if the plaintiff shows the defendant made literally false statements or made statements that were literally true but were likely to mislead or confuse customers.” But the two key alleged misrepresentations weren’t shown to be literally false.

“Produce capacity of over 5000 BRBs per year” on its face refers to future capacity. SME argued that this was false because Seismic Bracing uses third-party fabrication shops and did not have such a manufacturing capacity itself. But “produce” can have multiple definitions and may be defined as “to make available for public exhibition or dissemination: such as ... to oversee the making of.” Thus the claim was “ambiguous, precluding literal falsity.”

What about the “tested and qualified” claim given that two of Seismic’s five tested BRBs failed testing? Again, the statement that Seismic’s “patented methods have now been tested and qualified for use on projects in accordance with governing building codes (AISC 341)” was ambiguous, “as the statement could have referred to the BRBs that satisfied the testing requirements, not all of Seismic’s BRBs.”

What about using intent to deceive to presume deception and thus injury? Some Circuits have said so, but, even assuming that the Tenth Circuit would agree, no reasonable jury could conclude that Seismic acted with intent to deceive. Mere awareness of what factors a potential customer might consider important in buying a BRB did not create a genuine dispute.

False association: The district court analysis here was deeply confused. The Federal Circuit noted that “it is not clear what the basis for SME Steel’s false association claim is. SME Steel concedes that ‘this case does not involve a mark,’ but instead, it appears to contend that it has a particular corporate persona, akin to an individual celebrity, and Seismic Bracing appropriated that persona in its Design Manual.” Nonetheless, the Federal Circuit proceeded to affirm the district court’s likely confusion analysis rather than just saying no. It didn’t mention the weirdest parts of that analysis flowing from the conceptual mismatch, just holding that, “[g]iven the admitted care that customers will exercise in reviewing materials related to the bids and selecting BRBs, as well as the absence of evidence of actual confusion, we agree that no reasonable jury could conclude that there was a likelihood of confusion.”

Copyright: SME didn’t show a causal connection between the alleged infringement and any subsequent purchases of Seismic’s BRBs. To show indirect profits, the copyright holder bears “the initial burden to show a nexus between [the alleged] infringement and making of a profit,” and [t]hat showing must go beyond speculation.” That didn’t happen.