False and Misleading Allegations of Patent Infringement Requires Showing of Objective Baselessness

Dominant Semiconductors Sdn. Bhd., v. Osram GmbH [2007-1456] (April 23, 2008) [KENNELLY, Michel, Dyk] The Federal Circuit affirmed the grant of summary judgment in favor of OSRAM GmbH (“OSRAM”) on Dominant’s claims for unfair competition, intentional interference with contractual relations, interference with prospective economic advantage, and trade libel arising from OSRAM’s communications to its customers that Dominant infringed several of its patents.
BRIEF: Dominant alleged that Osram made false and misleading infringement allegations about Dominant’s products and asserted its patent rights in bad faith. The district court granted summary judgment for Osram finding Osram’s statements were “not objectively baseless and thus were not made in bad faith.” The district court concluded that it was objectively reasonable for OSRAM to rely on an opinion by patent counsel when there was no evidence that the analysis was unreasonable on its face or contained unsupportable conclusions. The Federal Circuit said that federal patent law bars the imposition of liability for publicizing a patent in the marketplace unless the plaintiff can show that the patent holder acted in bad faith, and that Federal patent law likewise preempts state-law tort liability when a patentee in good faith communicates allegations of infringement of its patent.The Federal Circuit noted that bad faith includes separate objective and subjective components. To be objectively baseless, the infringement allegations must be such that “no reasonable litigant could reasonably expect success on the merits.” The Federal Circuit said that bad faith is not supported when the information is objectively accurate” and that “[c]ommunication of accurate information about patent rights, whether by direct notice to the potential infringers or by publicity release, does not support a finding of bad faith.” The Federal Circuit rejected Dominant’s argument that the standards of Rule 11 should apply to pre-litgation statements. The Federal Circuit rejected Dominant’s arguments directed to Osram’s subjective intent noting that subjective considerations of bad faith are irrelevant if the challenged assertions are not objectively baseless. The Federal Circuit concluded that, objective baselessness requires a determination based on the record ultimately made in the infringement proceedings and the record of the state tort action, and not on the basis of information available to the patentee at the time the allegations were made, and affirmed summary judgment for Osram.