In 2004, shortly after being sued by Osram GmbH (Osram) in the International Trade Commission (ITC) for infringement of ten LED patents, Malaysian LED maker Dominant Semiconductors (Dominant) hauled Osram into court in northern California, accusing the Siemens subsidiary of trade libel and unfair competition.  Dominant claimed that Osram made false and misleading statements in press releases and correspondence to customers and distributors about Dominant’s alleged infringement of the LED patents. 

One of the communications at issue was a 2003 e-mail prior to the infringement lawsuit that attached a patent attorney analysis concluding that Dominant’s white LEDs infringed several Osram patents and warning Osram’s distributors that importation of the LEDs into the U.S. could be barred.  There were also two 2004 press releases after Osram filed suit describing the suit and the infringement allegations and announcing that one if its U.S. distributors had agreed to stop importing the allegedly infringement LEDs. 

The ITC infringement case and the California libel suit both proceeded for about a year until, in May of 2005, the ITC found that Dominant infringed one of the asserted Osram patents (on appeal three more patents were found to be infringed), and, in June of 2005, the California court cleared Osram of libel and unfair competition and disposed of the case. 

Last month, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) affirmed the California court’s summary judgment ruling that Osram could not be held liable for the communications because its statements were not objectively baseless and therefore were not made in bad faith.  Patent law court decisions protect a patent holder from liability for publicizing information about its patents so long as the patent holder does not act in bad faith. 

To prove bad faith on the part of Osram, Dominant had to show that Osram’s claims of infringement were objectively baseless, that is, the infringement allegations had no reasonable chance of succeeding in court.  Of course, Dominant had an uphill battle because Osram’s infringement allegations did succeed in the ITC, which had found infringement one month before the California court disposed of the libel charges. 

Dominant argued that the infringement analysis conducted by Osram’s patent attorney was improper and unreliable and, therefore, the infringement claims in Osram’s communications were objectively baseless.  The Federal Circuit concluded that, while Dominant’s contentions might bear on Osram’s subjective intent, they could not show objective baselessness in view of the ITC’s determination that Dominant’s LEDs were infringing.  In essence, Dominant’s loss in the infringement suit doomed it in the libel suit.

Oddly, this isn’t the first case this year in which one LED manufacturer accused another of making false and misleading statements regarding patent infringement charges.  In March, Nichia sued Seoul Semiconductor (Seoul) for false advertising for publishing press releases in which Seoul allegedly mischaracterized a patent infringement verdict finding Seoul infringed several of Nichia’s LED design patents. (read my previous post on the case)

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