In an interesting case of ancillary legal wrangling, DuPont has filed a declaratory judgment (DJ) action asking an Oregon federal court to declare that the company’s press release and customer letters about its patent infringement suit against Heraeus Precious Metals (Heraeus) does not violate unfair competition laws.

The DuPont DJ complaint describes a dispute arising from a press release and customer letters the company disseminated shortly after suing Heraeus for infringement of U.S. Patent No. 8,158,504 (‘504 Patent) in Portland, Oregon in June 2012 (see the complaint here).  The ‘504 Patent is entitled “Conductive compositions and processes for use in the manufacture of semiconductor devices – organic medium components.”

DuPont also sued Heraeus back in September 2011 in Delaware for infringement of U.S. Patent No. 7,767,254, entitled “Paste for solar cell electrode and solar cell” (see the complaint here).

According to the DJ complaint, the press release at issue, dated July 19, 2012, stated:

The company recently filed two lawsuits against PV metallization paste supplier Heraeus and one against its customer Solar World, for infringing on DuPont patents for DuPont Solamet PV metallization pastes.

The customer letters said that:

DuPont Microcircuit Materials has recently filed two lawsuits in the U.S. against PV paste supplier Heraeus for infringing on its patents for Solamet photovoltaic metallization pastes and one against its customer SolarWorld for using “infringing” materials.

Both the press release and the letters editorialized as follows:

Intellectual Property (IP) theft [] is widespread and the issue seems to be growing in the current climate of [this] industry.  [IP theft] has the potential to threaten the [PV] industry broadly at a critical time in its development.

According to the DJ complaint, in the Oregon patent infringement suit Heraeus filed a counterclaim against DuPont for unfair competition, asserting that the statements in the press release and customer letters were false and misleading. 

The counterclaim was subsequently dismissed, but the DJ complaint says that Heraeus’s counsel recently told DuPont that Heraeus intended to assert an unfair competition claim in the Delaware court.

This is not the first time ancillary litigation has erupted over PR in connection with a green patent infringement suit.  Several years ago, Nichia sued its LED rival Seoul Semiconductor for false advertising when Seoul disseminated press releases saying it had “substantially prevailed” in its litigation with Nichia, when in fact, it was found to have infringed four Nichia design patents.

SunEarth (owned and operated by the Solaray Corporation since 1992) has been marketing and selling solar thermal collectors and related components under the SUNEARTH brand since 1978.

In 2009, SunEarth filed an application with the U.S. Patent and Trademark Office (USPTO) seeking federal trademark protection for the SUNEARTH word mark. 

The USPTO suspended action on the application in view of an earlier filed application owned by Ningbo Solar Electric Power (Ningbo) for the SUN-EARTH (and Design) mark:

Through a predecessor company, Ningbo had been using its SUN-EARTH design mark in China since 1978 and began using the mark in the U.S. in 2004.

A U.S. trademark application filed in 2006 for the SUN-EARTH design mark went abandoned for failure to file a Statement of Use.

In 2008, Ningbo filed a second application to register the SUN-EARTH design mark.  This was the application cited against SunEarth. 

The USPTO granted Ningbo’s second application and issued it as U.S. Trademark Registration No. 3,886,941 (‘941 Registration) on December 7, 2010.  Ningbo changed its name to Sun-Earth Solar Power (SESP) in 2010.

After filing a proceeding in the USPTO Trademark Trial and Appeal Board to cancel the ‘941 Registration and trying to negotiate a settlement with Ningbo, SunEarth sued for trademark infringement, cancellation of the registration, and other claims in the Northern District of California in October 2011.

The court recently granted a preliminary injunction against SESP, prohibiting it from using the SUN-EARTH name or mark in the United States.

According to the Order Granting Plaintiff’s Motion for a Preliminary Injunction, although SESP has a presumption of ownership of the SUN-EARTH mark due to its federal registration, SunEarth “[is] likely to be able to prove a protectable ownership interest in the trade name and mark that is senior to that of [SESP].” 

The Court based this on its determination that SunEarth was likely to have been using the SUNEARTH mark in the United States before SESP entered the U.S. market in 2007:

Plaintiffs are likely to be able to establish legally sufficient market penetration over their trade name and mark prior to 2007.

The court also noted that SunEarth had produced some evidence of actual consumer confusion:

In addition to several instances of confusion by trade show organizers, Plaintiffs have proffered more than ten examples of actual customer confusion . . .

This case is a good illustration of the “first to use” system of trademark priority in the United States. 

A federal trademark registration creates a presumption of trademark ownership.  However, that presumption can be rebutted by showing a similar trademark was used by someone else in interstate commerce within the United States before the registered trademark.

This case also highlights the difficulties foreign based clean tech companies may face in protecting their green brands when they decide to enter the U.S. market.  We’re likely to see more of these types of cases, particularly from Chinese companies.

David Gibbs is a contributor to Green Patent Blog.  David is currently in his third and final year at Thomas Jefferson School of Law in San Diego.  He received his undergraduate degree in Geology from the University of California, Berkeley.

 

An interesting case right here in San Diego is highlighting the disparities between the EPA’s estimated automobile mileage data and the actual road figures and whether car owners can adjust their driving habits to bridge the gap (see the Law.com article here).

The case involves allegations of false advertising and deceptive claims by Honda about its Civic Hybrid.  The plaintiff, Gaetano Paduano, sued Honda in San Diego County Superior Court in 2005 after he became disappointed with the gas mileage of his 2004 Civic Hybrid (he was getting 23-30 mpg while the EPA number was 48).  In response to his inquiries, a Honda employee told him he would have to drastically change his driving habits to boost the mpg.

Paduano brought state and federal warranty claims and California state false advertising and deceptive practices claims relating to statements in Honda’s Civic Hybrid brochures about driving habits and fuel efficiency.  The brochure tells drivers that they do not have to do “anything special” to get “terrific gas mileage” and instructs them to:

Just drive the Hybrid like you would a conventional car and save on fuel bills.

In 2006, the trial court ruled that Honda was entitled to summary judgment and dismissed all of Paduano’s claims.  The court held that the representations in Honda’s brochure complied with the federal regulations on fuel economy advertising disclosures and that the state deceptive advertising claims were preempted by the Energy Policy and Conservation Act, the federal law that regulates disclosure of fuel estimates.

Last month, California’s 4th District Court of Appeal affirmed the portion of the summary judgment ruling regarding Paduano’s breach of warranty claims, but reversed as to the deceptive practices and misleading advertising claims, ruling that Paduano could go forward on the latter.

In a 2-1 opinion (paduano_opinion.pdf), the appeals court held that Paduano had put forth enough evidence (and Honda had presented no evidence to the contrary) that a jury could find that the statements in the Honda brochure could mislead a reasonable consumer.

Specifically, a Honda representative told Paduano that “you cannot drive in a normal manner in order to get the mileage” – the “normal manner” being accelerating and stopping with the flow of traffic and “accelerating as by law you’re supposed to [do] to get on the highway.”   The record showed that one Honda employee had concluded that “you can’t do any of those [usual] things” if you want to “obtain better gas mileage.”

The court found this evidence contradicted the statements in the brochure that a driver need not do “anything special” to achieve superior gas mileage and called into question Honda’s claim that a consumer just has to drive the Hybrid like he would a conventional car:

There is thus evidence that “getting terrific gas mileage” might not be accomplished as easily as Honda suggests to consumers in its brochure.

So Paduano’s case can go to trial in what could further damage Honda’s green cred.  Another dissatisified Civic Hybrid owner brought a class action suit in 2007, alleging that the car maker misled consumers by inflating mpg claims.

Thanks to Stu Soffer for bringing this case to my attention.

In a previous post, I wrote about a lawsuit between California biofuel processor design company Greenline Industries (Greenline) and Agri-Process Innovations (API), an Arkansas engineering firm. 

That suit, pending in federal court in Oakland, California, involves copyrighted processor designs as well as accusations of stealing trade secrets, breaching a processor installation agreement and engaging in false advertising.

In June API moved for the California case to be transferred to Arkansas, where it had previously sued Greenline over the same issues.  Shortly thereafter, in the Arkansas suit, Greenline moved for the case to be transferred to California.

In the event that two lawsuits involving the same parties and same issues are filed in different jurisdictions, federal courts apply a first-to-file rule to to determine where the suit will proceed. 

In a recent order (greenlineorder.pdf), Judge Claudia Wilken found that, because API sued in Arkansas before Greenline filed its California complaint, the Arkansas suit has priority for purposes of the first-to-file rule.  However, Judge Wilken denied API’s motion to transfer and deferred to the Arkansas court to decide the appropriate forum for the case on Greenline’s pending motion there.

Given the dueling venue motions (and the cost in attorney time they require), it’s clear that the parties think they have much to gain from fighting their battle on friendly home turf.

DG Cogen Partners, LLC (Cogen) is a California-based installer and operator of energy efficient power systems, including cogeneration systems.  Hess Microgen (Hess) designs, manufactures and sells cogeneration units, including the Hess Microgen 200 Packaged Cogeneration System (Microgen 200), which runs on engines made by Daewoo Heavy Industries America (Daewoo) (now Doosan Infracore America).

Cogeneration technology, also known as combined heat and power (CHP), uses fuel (usually natural gas) to produce electricity and, unlike traditional power systems, recycles and uses the heat released in the process.  By some estimates, if the energy lost in the form of waste heat were harnessed it could provide one-fifth of the country’s energy needs.

Earlier this month, Cogen sued Hess, Daewoo, Doosan Infracore America and Advanced Power Distributors (APD) in federal court in San Francisco for damages Cogen allegedly suffered due to a fleet of faulty cogeneration units.  The complaint (cogencomplaint.pdf) alleges, among other things, false advertising, unfair competition, breach of contract, breach of warranty and fraud.

In 2004, Cogen purchased a fleet of Hess cogeneration units, including Microgen 200s, from a third party, becoming the assignee of the third party’s purchase agreement with Hess.   According to the complaint, Hess agreed to provide long-term maintenance for the units as required. 

Cogen alleges that, prior to and at the time of its purchase, Hess misrepresented the capabilities of the cogeneration units through statements, technical documents and advertising and failed to disclose flaws in the products.  In particular, Cogen says Hess stated that the units contained “rich burn” engines that generated high thermal output when the engines were actually “lean burn,” which provide lower output and require more steps to meet regulatory compliance.

The complaint further alleges that the units subsequently failed completely or did not generate electricity at the rated capacity.  After repeated notifications and requests for Hess to remedy the problems, instead of repairing or replacing the units, Hess recommended that Cogen contact Daewoo to replace the engines.  Daewoo, through its distributor APD, retrofitted the cogeneration units with new engine heads, but Cogen alleges that the replacements did not correct the operational problems.

Cogen has asked for damages to compensate for its lost revenue, the purchase price of the units and retrofit parts, the cost of service and maintenance and other business losses. 

If the allegations in Cogen’s complaint are true, it would be a shame.  Energy efficiency technology, particularly recycling waste heat by congeneration, is too important to be compromised by false claims, faulty equipment and shoddy service.

Greenline Industries (Greenline), based in Larkspur, California, designs processors that convert feedstocks such as seed oils and animal fats into biodiesel fuels.  Greenline’s proprietary technology provides waterless systems to clean the fuel, allowing producers to avoid the time and money associated with introducing water into the process and later separating it out.  Greenline also enjoys an exclusive worldwide license to continuous flow technology, which greatly increases its processors’ production capacity. 

In 2006, Greenline and Arkansas engineering firm Agri-Process Innovations (API) created a venture, now called AP Fabrications (APF), for the purpose of installing Greenline biodiesel plants.  In 2007, Greenline gave up its ownership rights in the venture, and API became the sole owner of APF.

Last month Greenline sued API and APF in federal court in Oakland, California for anticipatory breach of contract, misappropriation of trade secrets, false advertising and a declaratory judgment that Greenline owns the copyrights in its processor designs.  Greenline alleges that its vendor agreement with APF provided that Greenline would be exclusively responsible for the design of biodiesel processing units while APF’s role was limited to installation of the units.  Greenline also contends that the agreement allowed API to sell the processors but required that they be marketed as “Greenline Industries” plants.

The trigger for the lawsuit was a May 5, 2008 letter in which API and APF told Greenline they were terminating the vendor agreement and demanded compensation for (unspecified) intellectual property rights created by API and used by Greenline.  Greenline alleges this repudiation of the agreement constitutes anticipatory breach of contract.  

According to the complaint, API also claims rights to Greenline’s technology through statements on its web site that API designs the processing units.  These and other statements implying ownership of the processing techniques, as well as claims of responsibility for the design of specific processing plants, form the basis for Greenline’s claims of false advertising.

While the anticipatory breach and false advertising claims seem reasonably well-founded, it’s hard to see how API/APF’s actions constitute misappropriation of trade secrets, considering that the only allegations of theft of intellectual property in the complaint are the May 5 letter and the statements on API’s web site. 

The Uniform Trade Secrets Act (upon which many state trade secrets laws are modeled) defines misappropriation as acquisition of a trade secret by someone who knows or should know it was acquired by improper means or disclosure of a trade secret that was improperly acquired.  The facts of the complaint suggest that any acquisition or disclosure of Greenline’s proprietary information by API or APF occurred pursuant to the vendor agreement, which was in force until last month.  Simply making misrepresentions of ownership of a particular proprietary technology to third parties would not seem to rise to the level of misappropriation.

The other striking thing about this dispute is the extremely short time period between API/APF’s letter to Greenline terminating the agreement (May 5, 2008) and the date Greenline filed the lawsuit (the complaint is dated May 12, 2008).  This rapid turnaround suggests either that tensions were brewing for a while or the two sides made little attempt to resolve the dispute before resorting to litigation.

Back in January of 2006, Japanese LED manufacturer Nichia sued Seoul Semiconductor (Seoul) for infringement of four of Nichia’s design patents (design patents differ from ordinary patents in that they protect only the ornamental features or configuration of a device; a design patent generally contains only drawings and minimal written text). The asserted patents included D503,388, and the accused device was Seoul’s 902 series LED, which is used in liquid crystal display (LCD) back light units in consumer products such as cell phones. In November of last year, a jury found that the Seoul device infringed all four design patents and that the infringement was willful.

In the days immediately following the verdict, Seoul put out a series of press releases that stretched the bounds of spin. One was entitled “Seoul Semiconductor Has Substantially Prevailed at U.S. Design Case” and stated: “Seoul Semiconductor vindicated that, after almost two years of litigation, the sales of its side view LED 902 are actually non-infringing and that it has substantially prevailed in this litigation.” Two of the press releases were uploaded to the NEXIS online information service.

Last month Nichia sued Seoul for false advertising and unfair competition in connection with the press releases. The complaint, filed in Los Angeles, asks the court to stop dissemination of the press releases and any other false or misleading statements about the infringement suit or the infringing devices. Nichia also requested that the court order Seoul to put out a corrective press release admitting the prior statements were wrong and that its products are infringing. To prove false advertising, the plaintiff must show that the challenged statement is either literally false or, though literally true, is likely to mislead consumers. It’s hard to imagine the court won’t find Seoul’s statements at least misleading. 

There appears to be no end in sight to the bad blood between these two companies: Nichia has also sued Seoul for defamation in Korea for the false statements, Nichia has brought another patent suit against Seoul in Korea, alleging that Seoul’s Z-Power LED P9 Series white LED products infringe one of Nichia’s Korean patents; and Seoul has sued Nichia in the Eastern District of Texas for infringement of a patent covering a semiconductor layer.