The U.S. Court of Appeals for the Federal Circuit recently held that communications publicizing a patent in the marketplace as well as communications alleging infringement sent to the patentee's sales and distribution partners did not violate state-law business torts because the alleged infringer did not show that the patentee's actions were "objectively baseless." Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH, Case No. 07-1456 (Fed. Cir., April 23, 2008) Kennelly, J.).
The patentee, OSRAM, sent an e-mail to its sales and distribution partners stating that the products of the alleged infringer, Dominant, possibly infringed its patents. Included with the e-mail was a letter from OSRAM's outside counsel opining that Dominant's products were infringing OSRAM's patents. The e-mail suggested that the recipients might wish to show the letter to their customers. Later, OSRAM filed a complaint in the International Trade Commission (ITC) against Dominant asserting that its products infringed; infringement was later found in this action. Shortly after filing the ITC complaint, OSRAM issued two press releases: one describing the infringement allegations in the ITC action and the other announcing that one of OSRAM's distributors promised not to import any of the allegedly infringing products.
After the ITC complaint was filed, another lawsuit was initiated for the communications regarding the patents in which Dominant asserted, among others, the following business torts all under state law: unfair competition, trade libel, interference with contractual relations and interference with prospective economic advantage. The district court granted OSRAM's summary judgment motion, finding that the e-mail and the two press releases were not objectively baseless and thus were not made in bad faith.
The Federal Circuit affirmed the grant of summary judgment reasoning that federal patent law preempts state-law tort claims for publicizing a patent in the marketplace (e.g., the two press releases) or communicating infringement allegations to Dominant (e.g. , OSRAM's e-mail to sales and distribution partners) unless Dominant shows that OSRAM acted in bad faith. The Court further stated that bad faith includes separate objective and subjective components and requires a showing that the asserted claims are "objectively baseless" which requires that "no reasonable litigant could reasonably expect success on the merits." The Court ruled that OSRAM satisfied its burden of production because infringement was found in the ITC action and thus the earlier claims of infringement by OSRAM could not have been objectively baseless. In contrast, Dominant failed to produce any evidence of objective baselessness and its argument that the analysis by OSRAM's outside counsel was unsound, while relevant to the issue of subjective baselessness, was irrelevant to objective baselessness.
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