IP Law Daily, TRADE SECRETST—N.D. Ohio: Noerr-Pennington doctrine precludes state tort liability for cease and desist letters, (Jul 27, 2022)

By Kevin M. Finson, J.D.

A cease and desist letter could not possibly constitute a violation of state tort law because the letter threatened an objectively reasonable suit.

A trade secrets plaintiff was immune from intentional interference with business relationships and defamation claims arising out of its cease-and-desist letters related to the suit, the federal district court in Cleveland has held. Allowing tort law liability for the sending of an objectively reasonable cease and desist letter related to a non-sham lawsuit would violate the First Amendment (Aerodyne Environmental, Inc. v. Keirton, Inc., July 22, 2022, Calabrese, J.).

Aerodyne Environmental, Inc. (Aerodyne) alleged that its former business partner, Keirton, Inc. misappropriated its trade secrets by copying Aerodyne’s proprietary designs for cyclone dust collectors, which Aerodyne had previously shared with Keirton with a view towards manufacturing such dust collectors for Keirton to integrate into its cannabis and hemp trimmer products. Subsequent to the filing of the trade secrets suit, Aerodyne became aware that three other companies, MacDonald Steel, Ltd., Envirotech Air, Inc., and SIDMAC worked as fabricators for Keirton allegedly manufacturing products based on the misappropriated design. Aerodyne sent cease and desist letters to all three companies notifying them of the litigation and informing them that Aerodyne intended to join them to the proceedings if they did not cease using the proprietary design. Keirton counterclaimed, alleging that the cease and desist letters sent to its fabricators constituted intentional interference with business relations and defamation under Ohio tort law and a violation of the Canadian Trademarks Act. Aerodyne moved to dismiss the counterclaims.

Immunity. Aerodyne argued that it was immune from suit over the contents of the cease and desist letters under the Noerr-Pennington doctrine, which the court described as protecting pre-litigation activities unless the threatened lawsuit was a mere sham. The court held that the threatened suit was not a mere sham; in fact, the letters were sent while litigation was pending and were legitimately sent to make the fabricators aware of their potential liability to suit.

Keirton argued that Aerodyne had been unable to prove likelihood of success on the merits at the temporary restraining order stage and sent the letters only out of a bad-faith desire to harm Keirton’s business relationships. The court explained that while the suit might eventually prove to be without merit after all the evidence was in, as it was still ongoing there was no basis to find the claims were not objectively reasonable, regardless of the results of a temporary restraining order hearing concluded prior to discovery or the subjective reasons Aerodyne may have sent the letters. Allowing tort liability for cease and desist letters in this context would unacceptably chill prospective petitioners from engaging in the sort of pre-litigation statements protected by the First Amendment.

The court granted Aerodyne’s motion to dismiss Keirton’s counterclaims.

The Case is No. 1:22-cv-00118-JPC.

Attorneys: Eleina K. Thomas (Gertsburg Licata Co., LPA) for Aerodyne Environmental, Inc. Cassandra Spector (Buchalter) for Keirton, Inc.

Companies: Aerodyne Environmental, Inc.; Keirton, Inc.

Cases: TradeSecrets OhioNews