Press Release Announcing Patent Lawsuit Could Be False Advertising

This posting was written by Bill Zale, editor of CCH Advertising Law Guide.

A press release issued by a gaming machine manufacturer (IGT) stating that it had filed a patent infringement lawsuit against a competitor (Bally) to stop it from “misappropriating IGT's patented innovations in the areas of bonus gaming features” could have deceived or tended to deceive the public, for purposes of Bally's Lanham Act false advertising claim against IGT, the federal district court in Las Vegas has ruled.

When evidence exists that an advertiser intentionally misled the public, there is a presumption that the statements deceived the public, the court noted.

Disputed Validity of Patents

Bally presented sufficient evidence that IGT knew some of its patents were invalid. Thus, IGT’s publication on its website of a press release—stating that Bally infringed the allegedly invalid patents—indicated that IGT intentionally misled the public, according to the court.

IGT argued that a presumption that the public was deceived would exist only if substantial funds had been expended to disseminate the allegedly false information.

However, the U.S. Court of Appeals in San Francisco had taken the position that , regardless of the money spent, the presumption should be applied in Lanham Act false advertising cases so long as there was an intent to mislead the public and the message reached the relevant consumers or competitors,.

Bally presented evidence that IGT received numerous inquiries regarding the press release and that some of Bally’s customers had called to clarify IGT’s statements. Accordingly, Bally demonstrated a material question of fact for trial as to whether IGT’s statement deceived or tended to deceive the public, the court determined.

Injury

A customer e-mail to Bally directing it to put orders on hold because of Bally's “legal issues” could establish the injury element of Bally's false advertising claim, the court held.

IGT countered by introducing evidence implying that Bally actually breached the contract with its customer and cancelled the contract unilaterally. The parties introduced contradicting evidence upon which a reasonable juror could base a decision, the court found. Thus, at the summary judgment stage of the case, Bally had presented specific facts showing that there was a genuine issue for trial. IGT’s motion for summary judgment as to Bally’s Lanham Act claim was denied.

The March 22, 2007 decision in IGT v. Alliance Gaming Corp. will be published in CCH Advertising Law Guide and in CCH Trade Regulation Reports.