“objectively baseless” patent infringement claims can represent tortious interference/defamation

Lite-Netics, LLC v. Nu Tsai Capital LLC, NO. 8:22CV314, 2022
WL 15523245 (D. Neb. Oct. 27, 2022)

A uncommon tortious interference/enterprise defamation case that
leads to a preliminary injunction (transformed from a TRO), primarily based on claims of
patent infringement made to plaintiff’s clients.

The events promote “magnetic mild strands used to light up
properties and companies through the holidays” and associated merchandise, equivalent to
magnetic clips that convert plastic mild sockets to magnetic ones.

one related patent diagram and photograph from opinion

Lite-Netics sued defendant HBL for direct and contributory
patent infringement; HBL counterclaimed for Lanham Act false promoting and
state unfair competitors/misleading commerce practrices, in addition to tortious
interference with enterprise relations and potential enterprise relations and defamation
and “dangerous religion patent infringement communications underneath Colorado regulation.”

Solely tortious interference and defamation had been at problem
right here, primarily based on Lite-Netics’ accusations of HBL’s misconduct. HBL argued that,
primarily based on the events’ communications, Lite-Netics ought to have recognized early on
that there was no infringement (per the evaluation carried out by the
district courtroom, which additionally discovered that the accused designs didn’t infringe).

Regardless of that, Lite-Netics’s counsel despatched a number of letters to
HBL’s shoppers and clients “alerting” them of actions allegedly infringing
Lite-Netics’s patents, although Lite-Netics argued that it was contacting its personal
clients “after its clients requested how HBL might promote the identical product as
Lite-Netics’s patented product.” Though early letters didn’t title HBL, after
Lite-Netics sued, its communications to HBL’s shoppers and clients accused HBL
by title of infringing the its patents and threatened to sue HBL resellers; Lite-Netics
contended that it was contacting its personal high clients to inform them that it
had taken motion to guard its rights and that it was unaware of any enterprise
relationship they could have had with HBL, although it didn’t have exclusivity
agreements with the shoppers.

Tortious interference in Nebraska (as elsewhere) requires
(1) the existence of a legitimate enterprise relationship or expectancy, (2) information
by the interferer of the connection or expectancy, (3) an unjustified
intentional act of interference on the a part of the interferer, (4) proof that
the interference brought about the hurt sustained, and (5) harm to the get together whose
relationship or expectancy was disrupted.

“State tort claims primarily based on imposing a patent, together with
for tortious interference, are preempted by federal patent legal guidelines, except the
claimant can present that the patent holder acted in dangerous religion.” This requires
that infringement claims be objectively baseless. The courtroom discovered this commonplace
glad given the prior artwork and the variations between HBL’s merchandise and the

Lite-Netics’ information of HBL’s enterprise relationships might
be inferred from the shortage of exclusivity in its relationships with its personal
clients, and the truth that “one doesn’t ordinarily threaten one’s personal
clients with a lawsuit,” as its communications appeared to do. The courtroom additionally
discovered Lite-Netics’s assertions that it didn’t know these corporations had been HBL’s
clients to be “quite disingenuous when retailers routinely supply comparable
merchandise from varied distributors. Additionally, all Lite-Netics must do to
confirm whether or not one among its clients was additionally promoting merchandise from one other
vendor is verify the retailer’s web site or stroll into its retailer.”

The accusations brought about HBL issue with its clients. The
threats to sue clients had been additionally, individually, improper as a result of the
infringement allegations had been objectively baseless.

Related logic led to HBL’s probably success on the deserves of
its defamation declare. The litigation privilege didn’t lengthen to creating baseless
claims about infringement. Baseless claims, which the courtroom thought Lite-Netics
ought to have recognized to be baseless, had been in dangerous religion.

Misplaced popularity and goodwill additionally constituted irreparable
hurt, and HBL didn’t unduly delay—it sought reduction in the identical month during which
Lite-Netics accused it by title; the sooner communications didn’t title it, and
the events had been additionally at the moment nonetheless in direct communication with every
different “apparently pursuing negotiations, even when with out a lot hope of success.”

The damage was additionally not merely speculative, given an
affidavit that frightened clients have known as asking whether or not HBL will have the ability to
meet provide commitments for the accused merchandise and the way the litigation would
have an effect on their orders and shipments, and provided that HBL’s accused product was
additionally patented and entitled to its personal safety. As well as, “the timing of
Lite-Netics’s communications to HBL’s clients on the top of the gross sales
season for retailers to be buying shares of vacation lights is fairly
prone to exacerbate the affect on HBL’s popularity and goodwill, as clients
could fairly be anticipated to decide on a distinct vendor if they’ve questions
about HBL’s capacity to carry out and if they’re unaware that Lite-Netics’s
risk so as to add them to this lawsuit is an empty one underneath the relevant regulation.”
The courtroom additionally pointed to a declaration from an Ace Ironmongery shop supervisor
which defined “the affect of Lite-Netics’s communications to clients on his
personal enterprise choices and the issues in regards to the affect of these
communications on his personal clients,” and likewise that “these issues on his half
had been alleviated by the Court docket’s entry of a TRO.” This was greater than mere

With that out of the best way, the stability of equities and the
public curiosity additionally favored a preliminary injunction.

Lite-Netics was restrained from making statements “suggesting
‘copying’ by HBL, suggesting HBL clients shall be burdened as further
defendants on this or any lawsuit, or suggesting that HBL is a patent
infringer.” Lite-Netics was ordered to ship the courtroom’s order to “all individuals
who prior to now have acquired {the marketplace} communications recognized above.”