Intellectual Property Law

Federal Circuit Reverses $8 Million False Advertising Award in Baden v. Molten

By Michael Atkins

On Feb. 13, the Federal Circuit reversed Western District Judge Marsha Pechman’s denial of judgment as a matter of law in Baden Sports, Inc. v. Kabushiki Kaisha Molten, 541 F.Supp.2d 1151 (W.D. Wash. 2008), relating to the jury’s award of $8,054,579 for false advertising under Section 43(a) of the Lanham Act. (STL post on the jury’s award here.) Baden claimed that competing basketball maker Molten falsely advertised that its basketballs were “innovative.”

The Federal Circuit’s reversal was based on its application of Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), to this claim.

It found: “We agree with Molten that Dastar precludes Baden’s section 43(a) claim. The Supreme Court stated in Dastar that section 43(a) of the Lanham Act does not have boundless application as a remedy for unfair trade practices. Because of its inherently limited wording, section 43(a) can never be a federal codification of the overall law of unfair competition, but can only apply to certain unfair trade practices prohibited by its text. Section 43(a) of the Lanham Act does not create liability from Molten’s advertisements because those advertisements do not concern the ‘origin of goods,’ to which section 43(a)(1)(A) is directed, nor do they concern the ‘nature, characteristics, [or] qualities’ of the goods, which is what Ninth Circuit law has interpreted Section 43(a)(1)(B) to address.”

Applying Dastar to Baden’s claim under section 43(a)(1)(A), the court determined it needed to evaluate whether “Molten’s advertising refers to the ‘producer of the tangible goods,’ in which case a claim under section 43(a)(1)(A) would be proper, or whether it refers to ‘the author of’ the idea or concept behind Molten’s basketballs, in which case the claim would be foreclosed by Dastar.

“Looking at the case in this light, it is apparent that Dastar does not permit Baden to claim false advertising under section 43(a)(1)(A). Baden has not argued that someone other than Molten produces the infringing basketballs, and nothing in the record indicates that Molten is not in fact the producer of the balls. Thus, Baden’s claims are not actionable under section 43(a)(1)(A) because they do not ‘cause confusion … as to the origin’ of the basketballs.”

With regard to Baden’s section 43(a)(1)(B) claim, the court found: “[W]e must not examine whether Baden’s false advertising claims otherwise implicate the nature, characteristics, or qualities of the basketballs. Thus, we must determine whether Baden has alleged anything more than false designation of authorship. We conclude that Baden has not. No physical or functional attributes of the basketballs are implied by Molten’s advertisements. ‘Innovative’ only indicates, at most, that its manufacturer created something new, or that the product is new, irrespective of who created it. In essence, Baden’s arguments in this case amount to an attempt to avoid the holding in Dastar by framing a claim based on false attribution of authorship as a misrepresentation of the nature, characteristics, and qualities of the goods.”

The court concluded that Baden’s claims “do not go to the ‘nature, characteristics, [or] qualities’ of the goods, and are therefore not actionable under section 43(a)(1)(B). To find otherwise, i.e., to allow Baden to proceed with a false advertising claim that is fundamentally about the origin of an idea, is contrary to the Ninth Circuit’s interpretation of Dastar.”

For these reasons, the court vacated the jury’s damages award based on Baden’s false advertising claims.

Interestingly, the court added that if it had applied the law of another circuit, such as the First Circuit, the case “may well have [had] a different result.”

The case cite is Baden Sports, Inc. v. Molten USA, Inc., Nos. 2008-1216, 2008-1246 (Fed. Cir. Feb. 13, 2008).

Full post as published by Seattle Trademark Lawyer on February 19, 2009 (boomark / email).