Claim that infringing product was defendant’s “innovation” cannot support section 43(a) claimMarch 6, 2009

In a decision last month, the Federal Circuit reversed a district court's denial of judgment as a matter of law from a jury award of $8,054,579 under § 43(a) of the Lanham Act. The plaintiff held a patent on a type of basketball, and the defendant (against whom summary judgment of infringement was granted) advertised their basketball was their "innovation."The Federal Circuit reversed the district court's decision and held that the assertion of a product as being "innovative" is precluded from liability under 43(a) because the statement isn't about the "origin of the goods" or the "nature, characteristics, or qualities" of the goods. Rather, the plaintiff's main problem with the use of "innovative" in connection with the basketball was that is was a false designation of authorship and the Supreme Court's decision in Dastar Corp. v. Twentieth Century Fox Film Corp. precluded such a claim under § 43(a)(1)(A). The assertion was also not actionable under § 43(a)(1)(B) based on the Ninth Circuit's interpretation of Dastar in Sybersound Records v. UAV Corp. More on Baden Sports, Inc. v. Molten USA, Inc., after the jump.Baden manufactures inflatable sports balls, including high-end, game-quality basketballs. In 1997, Baden obtained a patent disclosing a ball with "raised seams" and a "layer of padding underneath the outer covering." Baden sells and markets those balls as containing "cushion control technology." Molten competes with Baden in the basketball business. Around 2003, Molten began selling basketballs with an inner, padded layer. Molten advertised its new basketballs as containing "dual-cushion technology." Molten's advertisements portrayed its basketball as "innovative" and describing its dual-cushion technology as combining two different cushioning layers: one layer made of foam which surrounds the core of the ball and a second layer of soft rubber seams. On February 13, 2006, Baden filed a complaint alleging that Molten's basketballs infringed its patent. In March of that year, Baden filed an amended complaint alleging Molten's advertising of its dual-cushion technology basketballs violated § 43(a) of the Lanham Act, 15 U.S.C. § 1125. In summer of 2006, after settlement discussions between the two companies failed, Molten ceased importing dual-cushion basketballs into the United States.The district court dismissed Baden's § 43(a) 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. 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" under § 43(a)(1)(B).At trial, the jury returned a verdict awarding Baden $38,031 for patent infringement and $8,054,579 for intentional false advertising under the Lanham Act. Following the trial, Molten again moved for judgment as a matter of law and for a new trial under Rule 59. The court acknowledged that although some of the testimony at trial conflated "innovative" and "proprietary," the court felt that witnesses believed the advertising to be false because Molten's product was not new.On appeal, the Federal Circuit focused on the first of three arguments advanced by Molten – that the district court erred in failing to dismiss Baden's Lanham Act claim in light of Dastar. The court agreed, holding neither of the two bases for false advertising under § 43(a) had been satisfied:

We agree with Molten that Dastar precludes Baden's section 43(a) claim . . . 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 highlighted 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 § 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 its manufacturer created something new, or that the product is new, irrespective of who created it." Moreover, at oral argument Baden's counsel confirmed Baden was alleging false advertising based exclusively on Molten's claim to have been the innovator of the cushion technology.

The Court: "So the only thing you're really saying they offended is by saying, 'We, Molten, made these innovations'?" Counsel for Baden: "That's correct. What we're saying is Baden developed this technology."

Accordingly, there was also no actionable claim under § 43(a)(1)(B). Because Baden's Lanham Act claims were not actionable under Dastar and Ninth Circuit law, the court reversed the district court's denial of judgement as a matter of law and vacated the damages award based on those claims.To read the full decision in Baden Sports, Inc. v. Molten USA, Inc., click here.