IP Law Daily, PATENT—D. Neb.: TRO prevents patent owner from publicly accusing competitor of infringement, (Oct 12, 2022)

By Kevin M. Finson, J.D.

The patent owner’s allegations appeared baseless and included improper threats against its competitor’s customer.

The federal district court in Omaha, Nebraska has preliminary enjoined a seller of magnetic holiday light strands from publicly stating that its competitor was “copying” its patented product and from improperly threatening to sue its competitor’s customers for patent infringement. The patent owner’s allegations of patent infringement and potential liability of buyers appeared baseless (Lite-Netics, LLC v. Nu Tsai Capital LLC, October 7, 2022, Buescher, B.).

Lite-Netics, LLC (Lite-Netics) was the assignee of U.S. Patents Nos. 7,549,779 (the ’779 patent) and 8,128,264 (the ’264 patent), which claimed a “light fixture assembly” consisting of holiday light strands with a magnet in the base that had a pull strength of at least five pounds. Nu Tsai Capital, LLC d/b/a Holiday Bright Lights (HBL) was a seller of a magnetic clip and magnetic cord which were covered by its own patent, U.S. Patent No. 11,333,309 (the ’309 patent). Lite-Netics alleged that HBL’s products, when attached to a light strand, infringed the ’779 and ’264 patents, and sent a cease-and-desist letter to that effect. HBL responded to the letter with an explanation of why it did not believe its products infringed, and Lite-Netics then filed suit for infringement and began contacting HBL’s customers to inform them of their asserted claims and threatening that they customers may be added as defendants in the suit if they continued purchasing from HBL. HBL counterclaimed for tortious interference with a business relationship and defamation and moved for a temporary restraining order to prevent such communications to its customers.

Likelihood of success on the merits. HBL argued that the infringement allegations were false; its product was not a light fixture and consisted of two magnets, not one, neither of which had the pull strength required in the patent. Lite-Netics did not address the issue of infringement but merely argued that it was premature for the court to decide those issues. The court held that Lite-Netics did not have a reasonable belief in the truth of its allegations because it presented no argument on any of those issues and the accused products simply were not light fixtures, which is what the asserted patents claimed to cover. This factor supported a TRO.

Irreparable harm. Lite-Netics argued that there was no risk of irreparable harm because HBL had taken substantial time to request the TRO. HBL responded that it requested the TRO in response to recent contacts from its customers who were concerned about the communications from Lite-Netics. The false public allegations that Lite-Netics made—that HBL had copied their products and were infringing patents and placing their customers at risk of liability—presented a clear risk of injury to HBL’s reputation and goodwill, which could not be readily measured as monetary damages. This factor supported a TRO.

The balance of equities and public interest factors favored preventing fraud and false statements in the marketplace. Balancing all four factors, the court granted the temporary restraining order and enjoined Lite-Netics from making statements alleging copying of its products by HBL or threatening legal action against HBL’s customers.

The case is No. 8:22-CV-314.

Attorneys: Jorge Miguel Hernandez (Carstens, Allen 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