Tuesday, March 31, 2009

$8 Million Award for “Innovative” Advertising Claim Reversed

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A jury award of more than $8 million against a Japanese basketball manufacturer (Molten) for falsely advertising its product design as “innovative” was reversed by the U.S. Court of Appeals for the Federal Circuit.

A competitor (Baden) brought suit alleging that Molten infringed its patent on basketball cushion technology. Baden recovered the damages award (CCH Advertising Law Guide ¶62,854) on its claim that Molten falsely advertised its basketballs in violation of Sec. 43(a) of the Lanham Act.

Molten contended that Lanham Act claims based on advertisements that falsely claim authorship of an idea are barred by the U.S. Supreme Court's decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003). Baden contended that Dastar permitted it to proceed on the ground that Molten's “innovation” advertising misrepresented the “nature, characteristics, [or] qualities” of its basketballs in violation of Lanham Act Sec. 43(a)(1)(B).

Authorship of Innovation

Baden failed to argue on appeal that Molten's innovation claims were false for any reason other than a false attribution of the authorship of that innovation, the court said. Baden's claims therefore did not go to the nature, characteristics, or qualities of the goods.

To allow Baden to proceed with a false advertising claim that was fundamentally about the origin of an idea would be contrary to the Ninth Circuit's interpretation of Dastar in Sybersound Records, Inc. v. UAV Corp. (CCH Advertising Law Guide ¶62,894), the court concluded.

The opinion in Baden Sports, Inc. v. Molten USA, Inc. appears at CCH Advertising Law Guide ¶63,320.

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