Section 292 of the Patent Act,
v. Bon Tool
Section 43(a) provides a cause of action for various acts of unfair competition. However, the Supreme Court recently cautioned that it “does not have boundless application as a remedy for unfair trade practices….” Dastar Corp. v. Twentieth Century Fox Film Corp.,
1. Non-Competitors Lack Lanham Act Standing
Section 43(a) provides a cause of action to “any person who believes that he or she is or is likely to be damaged” by a violation.
Ltd. v. AT&T Corp.,
In contrasting between Lanham Act standing and the court’s interpretation of standing to bring a false marking claim under Section 292 of the Patent Act,
There is some Section 43(a) precedent suggesting that “competitor” could be stretched to include a relevant trade group or association. See Made in the USA Foundation
v. Phillips Foods Inc.,
2. 43(a) False Advertising Factors
Section 43(a) provides proper plaintiffs with a civil cause of action against a false or misleading description or representation of fact which “… misrepresents the nature, characteristics, qualities, or geographic origin of … goods, services, or commercial activities….”
(1) … defendant made false statements of fact about its own [or another’s] product; (2) those advertisements actually deceived or have the tendency to deceive a substantial segment of their audience; (3) such deception is material, in that it is likely to influence the purchasing decision; (4) defendant caused its falsely advertised goods to enter interstate commerce; and (5) plaintiff has been or is likely to be injured ….Id.
A federal district court applied these factors in the false patent marking context in Genlyte Th
omas Group LLC v. National Service
In addition to the five traditional Section 43(a) Skil false advertising factors, the Genlyte district court identified “bad faith” as a sixth factor for cases falling under the Federal Circuit’s jurisdiction. See id. at 757 (citing Zenith Electronics
Corp. v. Exzec Inc.,
The cited Zenith decision, requiring bad faith in the Section 43(a) context, was not a false patent marking case. Zenith involved Section 43(a) false advertising counterclaims asserted against a patentee who stated that: (1) its competitor’s products infringed certain patents; and (2) the competitor could not design around those patents. Zenith, 182 F.3d at 1342. The Federal Circuit had appellate jurisdiction over the Lanham Act counterclaims because the underlying complaint, as filed, contained patent infringement claims. Id. at 1346. The court applied Federal Circuit law, rather than the regional circuit’s law, because the two allegedly false statements “involv[e] statements as to the infringement and scope of patents.” Id. at 1347. Substantively, the court held that a patentee can be liable under Section 43(a) for false statements relating to infringement of its patents only if those statements were made in bad faith. Id. at 1354. It did not address false patent marking.
It is an open question whether the Federal Circuit would conclude that false patent marking, in the Section 43(a) context, is analogous to an “assert[ion] that a competitor is engaged in wrongful conduct with respect to the patent” and would therefore require proof of bad faith. Zenith, 182 F.3d at 1355. To date, no Federal Circuit decision has squarely addressed false patent marking claims under Section 43(a). No published opinions, apart from the Genlyte district court decision, link Section 43(a) false patent marking claims to the Zenith bad faith requirement. As a result, to date, only Genlyte suggests that a Section 43(a) plaintiff would need to plead and prove “bad faith” in the false patent marking context. Genlyte, 262 F. Supp. 2d at 757. Other courts evaluating false patent marking claims under Section 43(a) have applied the traditional five-factor Skil test, which does not require proof of bad faith. See, e.g., Rainworks Ltd. v.
3. The False Patent Marking Must Be Material to the Purchasing Decision
The third Skil test factor requires a plaintiff to prove that the false patent marking was “material” and “likely to influence the purchasing decision.” Skil, 375 F. Supp. at 783. To date, there have been no published opinions identifying appropriate proofs for this Skil factor (“Factor 3”) in the false patent marking context. Rainworks, 609 F. Supp. 2d at 740-41, exemplified this evidentiary hurdle. In Rainworks, plaintiff alleged that defendants falsely marked products as “patented.” Id. at 740. Defendants defeated a summary judgment motion by submitting declarations stating that purchasers did not see packaging materials bearing the word “patented” until after the purchase. As a result, the court found factual issues as to whether defendant’s false patent marking “likely and materially influenced purchasing decisions” (Factor 3) in violation of Section 43(a). Id. at 741.
In contrast, one unreported magistrate’s report and recommendation held that “materiality” could be presumed in 43(a) false patent marking claims because the claim was “literally false,” as opposed to merely misleading, under Factor 1 of the Section 43(a) false advertising test. See
M-3 & Associates Inc. v. Cargo Systems Inc., No. 3:99-cv-547, 2004 WL 834690 (N.D. Ind. Mar. 18, 2004). From this literal falsity finding (Factor 1), the magistrate concluded that the court could presume the resulting deception was material (Factor 3). Id. at *4. The magistrate relied upon BASF Corp. v. Old World Trading Co..,
Although there are few judicial opinions analyzing false patent marking claims brought under Section 43(a), existing precedent establishes that prospective plaintiffs face significant obstacles. It is unlikely that plaintiffs who are not traditional “competitors” of the marking defendants will have Lanham Act standing. Plaintiffs who are able to clear the standing hurdle must ultimately prove their claims under the traditional Skil factors. This includes proving that defendants’ false patent markings were material to the purchasing decision (Factor 3) and that the plaintiffs were injured, or likely to be injured, as a result (Factor 5)—a tall task in the false patent marking context.