IP Law Daily, PATENT—D. Idaho: Dispute involving hobbyist mining equipment continues, (Jun 12, 2023)

By George Basharis, J.D.

The court found that genuine issues of material fact precluded summary judgment.

A dispute regarding patent and trademark rights for mining devices used by hobbyists to separate black sands from gold particles is headed to trial after the federal court in Idaho rejected motions for summary judgment filed by competing equipment manufacturers. Columbia River Mining filed a lawsuit against Colter Young Consulting & Design (Colter Young) for patent and trademark infringement, commercial disparagement, and tortious interference. The claims arose from alleged similarities between components claimed in a patent owned by Columbia River Mining. Both Columbia River Mining and Colter Young filed motions for summary judgment. However, the court concluded that there were genuine issues of material facts, including the similarities of components claimed in Columbia River Mining’s patent, potential customer confusion, and the misleading nature of social media posts by Colter Young concerning the dispute (Columbia River Mining Supplies, LLC v. Colter Young Consulting & Design, June 9, 2023, Choe-Groves, J.).

Columbia River Mining (Columbia) manufactures and sells hobbyist gold and iron prospecting equipment, including the Spin It Off black sand magnetic separator. The Spin It Off device uses a patented method of separating black sand from magnetic particles while leaving gold particles intact. The patent, U.S. Patent No. 9,358,550 (the ’550 patent), was developed by Columbia’s owner and operator.

Colter Young Consulting & Design sells competing gold mining and processing equipment, including the Magic Bit, Rollie Pollie, and the Dry Electro-Magnetic Separator. The Magic Bit can be inserted into a mixture of magnetic and non-magnetic particles and then operated using a drill or other rotary motor. The Dry Electro-Magnetic Separator separates magnetic particles from a mixture of magnetic and non-magnetic particles. The Rollie Pollie is a product contained inside of the separator.

In 2020, Columbia sent a cease-and-desist letter to Colter Young, accusing it of infringing the ’550 patent and requesting that it cease the manufacturing of the Magic Bit. Colter Young responded to the letter and posted it on Facebook, alleging that the letter was sent in “bad faith” and was meant “to intimidate the little guy.” However, Colter Young later deleted the post. Shortly thereafter, Columbia filed a lawsuit against Colter Young, claiming that Colter Young’s gold mining products infringed the ’550 patent. The lawsuit also included claims of trademark infringement and unfair competition under federal and common law, commercial disparagement, and tortious interference with business expectancy. Both parties filed motions for summary judgment.

Patent infringement. Columbia asserted that Colter Young directly infringed the ’550 patent, either literally or under the doctrine of equivalents. The court clarified that literal infringement is a strict-liability offense, but whether certain aspects and components of Colter Young's products, such as drill connections, handles, and non-magnetic elements, infringed on the ’550 patent, remained a disputed matter that needed to be resolved by a factfinder. Similarly, the determination of whether Colter Young’s products performed substantially the same function in substantially the same way to achieve substantially the same result, thus infringing on the ’550 patent under the doctrine of equivalents, also remained a subject of genuine dispute and could not be decided at the summary judgment stage.

Columbia further alleged that Colter Young induced infringement by posting videos that instructed others on how to make and use the accused infringing products. Unlike direct infringement, liability for inducing infringement arises only if Colter Young had knowledge of the patent and knew that the induced acts constituted patent infringement. However, whether Colter Young possessed knowledge of the ’550 patent prior to creating its competing gold mining products was a point of contention. Similarly, the court rejected summary judgment for Columbia’s claim that Colter Young contributorily infringed on the ’550 patent because, like induced infringement, contributory infringement requires knowledge of the patent or patent infringement. Additionally, disputes persisted regarding Columbia’s assertions that Colter Young infringed on the ’550 patent by exporting components of the accused products overseas, engaged in intentional, wanton, and open infringement of the ’550 patent, or concerns related to damages.

Trademark infringement. Columbia alleged that Colter Young used Columbia’s trademarks and trade dress in a manner that would likely lead to confusion regarding the origin of Columbia’s products. Additionally, it claimed that Colter Young's unauthorized use of Columbia's marks and trade dress constituted unfair competition under both state and federal laws.

The court initially addressed the matter of standing. Colter Young argued that Columbia lacked standing to assert federal trademark and unfair competition claims because the company did not suffer harm directly caused by Colter Young. However, the court rejected the argument, stating that because the two companies were direct competitors, Columbia had standing to assert the claims.

Trademark infringement, false designation of origin, and unfair competition claims under the Lanham Act require a valid trademark and a showing that a defendant’s use of the mark is likely to cause confusion. However, Colter Young, as the moving party for summary judgment, bore the burden of showing the absence of a genuine issue of material fact regarding the existence of a registered trademark. Despite Colter Young’s argument that Columbia did not have a registered trademark or that confusion was unlikely, Columbia presented several instances of customer inquiries at a trade show, where customers asked if Columbia sold one of Colter Young’s products. Consequently, because the issue of confusion remained in dispute and was an essential element of trademark infringement under the Lanham Act, the court declined to grant summary judgment. Similarly, the court determined that Colter Young did not meet its burden of demonstrating the absence of a genuine issue of material fact regarding Columbia’s claims of common law trademark infringement.

Commercial disparagement and tortious interference. Columbia’s commercial disparagement claim was based on a Facebook post made by Colter Young. Colter Young argued that the post constituted protected opinion and was not actionable as commercial disparagement, or defamation, under the Lanham Act. However, the issue of whether Colter Young’s claim in the Facebook post, stating that Columbia’s allegation of patent infringement was made in bad faith, was “substantially false or misleading” and therefore not protected opinion, remained a disputed matter.

Similarly, there were several questions regarding disputed material facts that supported Columbia’s tortious interference claim. These included the determination of whether Columbia had a valid economic expectancy, whether Colter Young was aware of Columbia’s expectancy, whether Colter Young intentionally induced the termination of Columbia’s expectancy, whether Colter Young engaged in improper purposes or means beyond the interference itself, and whether the disrupted expectancy caused damage to Columbia.

The Case is No. 1:20-cv-00384-JCG.

Attorneys: Jason Blakley (Givens Pursley LLP) for Columbia River Mining Supplies LLC. Scott David Swanson (Shaver & Swanson, LLP) for Colter Young Consulting & Design, Colter Young Consulting LLC and Colter Young.

Companies: Columbia River Mining Supplies LLC; Colter Young Consulting & Design; Colter Young Consulting LLC

Cases: Patent Trademark IdahoNews