IP Law Daily, PATENT—D. Neb.: Dismissal denied in holiday light patent dispute, (Jun 28, 2023)

By Kevin M. Finson, J.D.

Allegations that magnetic clips to be attached to holiday lights infringed patents for magnetic light fixtures survived a motion to dismiss because they were plausible at least prior to claim construction.

A seller of magnetic holiday lights stated a claim against a competitor, the federal district court in Omaha, Nebraska, has held. Although the allegations may not survive claim construction, at this early stage of the proceeding they were sufficient (Lite-Netics, LLC v. Nu Tsai Capital LLC, June 26, 2023, Buescher, B.).

Lite-Netics, LLC (Lite-Netics) was the owner of U.S. Patents Nos. 7,549,779 (the ’779 patent) and 8,128,264 (the ’264 patent), which claimed light fixture assemblies with magnetic bases that could be used to easily affix and remove holiday light strands from metal surfaces. Lite-Netics brought suit for infringement against Nu Tsai Capital, LLC (Nu Tsai), a competitor in the field of holiday lights and who sold clips that could be attached to holiday light strands in order to make them magnetic. Nu Tsai had counterclaimed for tortious interference with business relationships and defamation and obtained a temporary restraining order and preliminary injunction directing that Lite-Netics be enjoined from making public statements accusing it of infringement. The preliminary injunction was appealed and reversed by the Federal Circuit, which found that Lite-Netics’ allegations of infringement were not “objectively baseless.” After remand, Nu Tsai moved to dismiss the complaint.

Infringement. First the parties disputed whether the Federal Circuit’s order finding Lite-Netics’ allegations in the temporary restraining order portion of the case not objectively baseless controlled the disposition of the motion to dismiss. The court held it did not because the law of the case doctrine does not apply to such preliminary proceedings and because the Federal Circuit explicitly indicated it was taking no position on the issues now before the court, but only ruling on the question of First Amendment principles and the patent-preemption doctrine.

Turning to the allegations of infringement, the court held that at this early stage, without consideration of claim construction, prosecution history estoppel, or other issues, Lite-Netics had plausibly alleged infringement by tying the features of the accused products to alleged equivalents in the asserted patents. Even though these correlations might eventually be proved wrong after claim construction, at this stage they were plausible.

Indefiniteness. Nu Tsai argued that the case should be dismissed because Claim 1 of each asserted patent was indefinite. The court explained that the indefiniteness issue as applied to these particular asserted patents was inextricably intertwined with claim construction, and that it could not make such a factual determination at this stage of the proceeding. Additionally, Nu Tsai as the party challenging the validity of the asserted patents would bear the burden of proof, and the court held that Nu Tsai could not possibly have met such a burden without expert testimony and a factual record of some sort.

The court denied the motion to dismiss.

The case is No. 8:22CV314.

Attorneys: Harrison Kratochvil (Cline, Williams Law Firm) for Lite-Netics, LLC. Brian T. Mckernan (McGrath, North Law Firm) for Nu Tsai Capital LLC d/b/a Holiday Bright Lights.

Companies: Lite-Netics, LLC; Nu Tsai Capital LLC d/b/a Holiday Bright Lights

Cases: Patent NebraskaNews