Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Ohio: Patent application not commercial speech under Lanham Act, (Dec 9, 2014)

By Jody Coultas, J.D.

Azko Noel Surface Chemistry LLC was unable to state Lanham Act false advertising claims against a former employee and a competitor based on statements made in a patent application, the federal district court in Columbus, Ohio has held (Akzo Nobel Surface Chemistry LLC v. Stern, December 8, 2014, Marbley, A.).

Akzo produces, markets, and distributes specialty chemicals and formulations, including adjuvants, that are used in the agricultural industry. The former employee worked for Akzo as a research chemist and had access to confidential information and trade secrets developed by Akzo relating to agricultural adjuvants, until he left to work for competitor Huntsman Petrochemical LLC.

Huntsman filed a U.S. Patent Application for a “Method of Preparing Amidoamine Alkoxylates and Compositions Thereof,” which Akzo alleged infringed on the specific adjuvants formulations that the former employee developed and/or learned of while employed with Azko. Azko argued that the patent included false and misleading statements as to the creation and ownership of intellectual property in violation of the Lanham Act and Ohio Deceptive Trade Practices Act.

Filing of the patent was not the commercial advertising and promotion of a good to customers sufficient to state a Lanham Act claim, according to the court. A misleading statement violates the Lanham Act only if it is commercial speech by a commercial competitor of the plaintiff, made for the purpose of influencing consumers to buy defendant’s goods or services. The representations must be disseminated sufficiently to the relevant purchasing public to constitute “advertising” or “promotion” within that industry. Azko alleged that a potential customer inquired about Akzo’s ownership of the adjuvants after seeing the pending Huntsman patent, which it argued showed sufficient dissemination of the statement to constitute advertising. However, descriptions and explanations of a new process are not commercial advertising or promotion.

The court held that Azko failed to state a Lanham Act claim against the former employee or Huntsman. Azko argued that, by filing a patent application, Huntsman made a misrepresentation about whether Azko had the legal right to utilize its own intellectual property. Huntsman argued that claims related solely to the creation and ownership of intellectual property were not actionable under the Lanham Act, and that Azko’s argument did not go to the nature, characteristics, or qualities of the adjuvants, as required to bring an action under the Lanham Act. The court sided with Huntsman. Patents are filed to claim ownership of intellectual property. Holding that information contained in a patent application equates to misrepresentation of the details underlying the goods or service would be reaching. Such claims are better suited under copyright or patent law.

The case is No. 2:13-CV-00826.

Attorneys: Robert F. Ware (Thompson Hine LLP) for Akzo Nobel Surface Chemistry LLC. Kimberly Weber Herlihy (Vorys Sater Seymour & Pease) for Alan J. Stern, and Huntsman Petrochemical LLC.

Companies: Akzo Nobel Surface Chemistry LLC; Huntsman Petrochemical LLC

Cases: Advertising OhioNews