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Plaintiffs Didn't Show Bad Faith Needed for Malicious Prosecution Claim

I can’t summarize the facts any better than Chief Judge Alex Kozinski did the Ninth Circuit’s June 30 decision in Fisher Tool Co., Inc. v. Gillet Outillage:

“Defendant Gillet Outillage is a French company that makes hose clamp pliers; it owns French and U.S. patents on the pliers’ design. When Gillet discovered that plaintiffs were selling similar pliers in the United States, the company sued them for patent infringement. But the lawsuit didn’t go as well as Gillet hoped: The [Central District of California] construed the patent’s claims narrowly at a pre-trial Markman hearing, after that setback Gillet dropped the suit, which was then dismissed. Plaintiffs thereupon sued Gillet and its lawyers [and distributor], claiming that Gillet’s lawsuit was a malicious prosecution under California law and a violation of section 43(a) of the Lanham Act and various California tort laws. The district court granted summary judgment to defendants, and plaintiffs appeal.”

As to the Lanham Act claim, the Ninth Circuit found:

“At Gillet’s direction, [defendant’s lawyer] prepared letters, addressed ‘To Whom It May Concern,’ expressing [the lawyer’s] ‘strong opinion’ that plaintiffs’ pliers infringed Gillet’s patent and threatening that Gillet would sue anyone who sold plaintiffs’ pliers. Defendant Mayhew Steel Products, Inc., Gillet’s U.S. distributor, forwarded these letters to its customers. Plaintiffs claim that the letters falsely stated that their pliers infringed Gillet’s patent….”

The court found these facts did not add up to bad faith. Adopting the Federal Circuit’s treatment of the issue, the court held that “where Lanham Act claims and state tort claims are based on a defendant’s representation that someone infringed his patent, plaintiff must show that defendant’s representation was made in bad faith.”

Applying this rule to the facts, the court affirmed the district court’s dismissal:

“[P]laintiffs offer no good reason why the bad-faith requirement should apply only to the patent-older and not also to those who act in concert with him to enforce his patent rights. The purpose of the bad-faith requirement is to permit the patent-holder to assert his rights (in good faith) without fear that he might thereby violate the Lanham Act or state tort laws. And, to assert his patent rights, a patent-holder will often need help. Here, for instance, Gillet relied on its lawyers to draft the letters; it relied on its U.S. distributor to forward those letters to retailers. Because [the defendant’s distributor and lawyer] acted in concert with Gillet, the patentholder, to recover against them plaintiffs must show that they acted in bad faith,” which the court found plaintiffs failed to do.

The case cite is Fisher Tool Co., Inc. v. Gillet Outillage, 530 F.3d 1063, Nos. 06-55996 and 06-56165 (9th Cir. June 30, 2008).

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