Processing All Things Federal Circuit
February 21, 2023 - Last Week in the Federal Circuit

Last Week In The Federal Circuit (February 13 – 17): Shining Light On Competing Patent And State Law Claims

colorful christmas lights blog

If you’re like me, hanging holiday lights generally sucks any kind of holiday spirit right out of you. This week’s case of the week involves technology that might help. And it resolves (at least at the preliminary injunction stage) competing state tort and federal patent law claims to boot.

Case of the week:  Lite-Netics, LLC v. Nu Tsai Capital LLC, No. 23-1146

Panel: Judges Lourie, Taranto, and Stark, with Judge Taranto writing the opinion

You should read this case if: you have a matter involving state tort claims potentially overlapping federal patent claims.

Lite-Netics and Holiday Bright Lights sell competing holiday light products. Lite-Netics owns two patents to magnetic string lights designed to make it easier to hang lights from ferrous objects (think home rain gutters, assuming they’re steel and not aluminum). Lite-Netics sent cease-and-desist letters to Holiday Bright Lights asserting that Holiday’s sales of a line of magnetic string lights infringed Lite-Netics’s patent claims. Lite-Netics then sued Holiday in federal court for patent infringement. 

Before and after filing suit, Lite-Netics notified its customers about the alleged infringement. Some of those customers are also Holiday customers. After suing Holiday, Lite-Netics specifically told its customers that competitors were trying to “copy” Lite-Netics’s patented products, that Lite-Netics had sued Holiday, and that it was “also considering including any known company using or reselling the [Holiday] products as co-defendants in this lawsuit.”

Holiday responded with counterclaims, including state-law claims of tortious interference, defamation, and deceptive trade practices. It also asked for, and was granted, a preliminary injunction barring Lite-Netics from making new statements suggesting that Holiday was copying Lite-Netics’s products or infringing Lite-Netics’s patents, or that Holiday’s customers “will be burdened as additional defendants in this or any lawsuit.”

The Federal Circuit vacated that injunction. It explained that “federal patent law preempts state-law tort liability for a patentholder’s good faith conduct in communications asserting infringement of its patent and warning about potential litigation.” The Court based that rule partly on First Amendment principles, which it saw as “particularly significant when an injunction against speech is at issue.” To prevail on the merits of its state-law claims, Holiday thus would be required to show Lite-Netics’s statements were made in bad faith. And proving bad faith required, at the least, showing that Lite-Netics’s assertions of patent infringement were objectively baseless, that is, that “no reasonable litigant could realistically expect success on the merits.” 

The Federal Circuit held that Holiday had failed to show the required objective baselessness at this stage of the litigation. It noted that the parties appeared to dispute the scope of certain claim terms for literal infringement. For example, they disputed whether claims reciting “a magnet” covered an arrangement of two magnets. Yet settled precedent “lend[s] strong support” for reading the terms “a” and “an” as covering more than one of an object in open-ended comprising claims. That precedent contradicted Holiday’s argument for objective baselessness.

The Federal Circuit vacated the injunction in its entirety for this and similar reasons. It refused to consider whether the district court could have issued a more narrowly tailored injunction, such as one prohibiting statements about infringement related to only certain Holiday products or certain Lite-Netics patents; Holiday had not argued on appeal to uphold some portions of the injunction even if others were held to be an abuse of discretion.


Precedential opinions:  6

Non-precedential opinions:  9

Rule 36:  2

Longest pending case from argument: VR Optics, LLC v. Peloton Interactive, Inc., No. 21-1900 (198 days)

Shortest (non-Rule 36) pending case from argument: Davis v. McDonough, No. 22-1247 (5 days)