Patent Infringement Finding Does Not Equal Lanham Act Violation

A recent Federal Circuit case highlights the contrast between claims of patent infringement and violation of the Lanham Act.

In Baden Sports, Inc. v. Molten USA, Inc., Baden Sports patented a padded basketball that it marketed as containing “cushion control technology.” It sued Molten USA in the Western District of Washington for patent infringement arising out of Molten’s sales of basketballs containing “dual-cushion technology.”

Baden later amended its complaint to add claims that Molten’s advertising of its dual-cushion basketballs violated Section 43 of the Lanham Act, in particular because Molten’s ads for its basketballs had used the terms “proprietary,” “exclusive,” and “innovative.” The district court granted Baden's motion for summary judgment on its patent infringement claims.

The district court dismissed Baden’s Section 43 claims relating to Molten’s use of “proprietary” and “exclusive” because those terms suggested that Molten had invented the technology and were precluded by the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp. It allowed the claims concerning Molten's use of the term “innovative” to go to trial, however, reasoning that it could relate to the “nature, characteristics, or qualities of the basketballs themselves.”

At trial, the jury found in Baden’s favor on the false advertising claim. It awarded Baden a relatively modest $38,031 for patent infringement and a whopping $8,054,579 for intentional false advertising. Molten moved for a JMOL and a new trial; both were denied.

Because this was a patent case, the Federal Circuit caught the appeal, but applied the law of the 9th Circuit on non-patent issues. It analyzed the Section 43(a) issues in two stages, and concluded that “Section 43(a) of the Lanham Act does not create liability from Molten’s advertisements because those advertisements do not concern the ‘origin of goods,’ to which section 43(a)(1)(A) is directed, nor do they concern the ‘nature, characteristics, [or] qualities’ of the goods, which is what Ninth Circuit law has interpreted Section 43(a)(1)(B) to address.”

The Federal Circuit pointed out that there was nothing in the record to show that Molten’s advertising suggested that Molten was not the source of the infringing basketballs that it was marketing. Accordingly, there was no claim under Section 43(a)(1)(A).

As for Molten’s claim that its basketballs were “innovative,” the Federal Circuit noted that “[n]o physical or functional attributes of the basketballs are implied by Molten’s advertisements. ‘Innovative’ only indicates, at most, that is manufacturer created something new, or that the product is new, irrespective of who created it.” Accordingly, there was no claim under Section 43(a)(1)(B) either.

The court noted that there were a number of other arguments that could have been advanced in support of Baden’s false advertising claims, but that the arguments had not been pursued at trial.

Takeaway: Be careful how you present Lanham Act claims arising out of patent infringement allegations. An patent infringer is not automatically liable for Lanham Act false advertising; such a finding will require its own set of carefully-developed proofs.