Opinion ID: 779906
Heading Depth: 2
Heading Rank: 3

Heading: R. Bard, 157 F.3d 1340, 1369, 48 USPQ2d 1225, 1246 (Fed.Cir.1998).

Text: 46 Consequently, patentees do not violate the rules of fair competition by making accurate representations, and are allowed to make representations that turn out to be inaccurate provided they make them in good faith. See Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700, 710, 24 USPQ2d 1173, 1180-81 (Fed.Cir.1992). Nevertheless, if the party challenging such statements under state or federal law presents clear and convincing evidence that the infringement allegations are objectively false, and that the patentee made them in bad faith, viz., with knowledge of their incorrectness or falsity, or disregard for either, the statements are actionable and are not protected by the existence of a patent. To survive summary judgment, the party challenging such statements must present affirmative evidence sufficient for a reasonable jury to conclude that the patentee acted in bad faith, in light of the burden of clear and convincing evidence that will adhere at trial. 47 In Zenith Electronics, we explained that the law regarding proof of bad faith is case-specific. In certain cases, bad faith may be clear: 48 Exactly what constitutes bad faith remains to be determined on a case by case basis. Obviously, if the patentee knows that the patent is invalid, unenforceable, or not infringed, yet represents to the marketplace that a competitor is infringing the patent, a clear case of bad faith representation is made out. 49 182 F.3d at 1354, 51 USPQ2d at 1348. 50 To show bad faith in Pingel's actions, Golan must offer clear and convincing evidence that Pingel had no reasonable basis to believe that the GP petcock infringed Pingel's patents or that Pingel knew it was enforcing an expired, and therefore unenforceable, patent. In this case, there is not clear and convincing evidence from which a reasonable jury could conclude that Pingel alleged patent infringement in bad faith or knowingly enforced an expired patent. Our review of the record reveals two separate categories of conduct which Golan asserts, either explicitly or implicitly, shows Pingel's bad faith: (1) notification of infringers without intention of initiating suit; and (2) enforcing an expired patent. 51 First, Golan points to Pingel's intent not to initiate suit as evidence of bad faith. Wayne Pingel admitted during his deposition that, at the time Pingel notified Rivera of Golan's potential infringement, Pingel did not intend to initiate suit against Rivera. 5 While this admission may or may not provide a basis from which a reasonable jury could infer bad faith toward Rivera (which is not the issue here), it clearly does not provide a sufficient basis from which a jury could reasonably infer bad faith toward Golan. Indeed, Wayne Pingel also testified that Pingel was in fact contemplating a lawsuit against Golan when Pingel sent the October 30, 1998 cease-and-desist letter. Thus, the record shows only that Pingel did not intend to initiate suit against Rivera and does not support an inference that Pingel did not intend to initiate suit against Golan. 52 While notifying infringers without intending to file suit may be an example of bad faith, see Mallinckrodt, 976 F.2d at 710, 24 USPQ2d at 1181, it is not dispositive. The decision to initiate a lawsuit often includes business-related considerations. For example, a patentee might have a good faith belief that a competitor's product infringes the patent but, for business-related reasons, determines the financial cost of enforcing the patent outweighs the recoverable damages. In such a circumstance, a patentee may elect to attempt to enforce the patent — for example by aggressively asserting its patent rights — and never intend to file suit. This conduct is authorized under the patent laws in the absence of falsity or incorrectness, or disregard for either. See Mikohn, 165 F.3d at 897, 49 USPQ2d at 1312. Indeed, such conduct is commonly the first step taken to enforce one's patent rights. Thus, even if Pingel never intended to file suit, we believe this is only a factor to consider in determining whether the enforcement of a patent is in bad faith. 53 Since the intention to file suit is only one factor in determining bad faith, and the only evidence in the record that Pingel did not intend to file suit against Golan is based on an inference, we do not believe a reasonably jury could find that Pingel acted in bad faith in light of Golan's clear and convincing evidentiary burden. 54 Second, the record shows that Pingel was, in fact, asserting infringement of an expired patent. A party that knowingly asserts an expired, and therefore unenforceable, patent results in a clear case of bad faith. See Zenith Elecs., 182 F.3d at 1354, 51 USPQ2d at 1348. However, the record shows that Pingel was told by at least one attorney that the '921 patent did not expire until April 23, 1999. It was only at some point well after the October 30, 1998 cease-and-desist letter that Pingel became aware that the advice it received from the attorney was incorrect. While the reliance on the attorney's calculation of patent term clearly does not affect the expiration of the patent, it does negate an inference that Pingel was asserting a patent it knew to be expired, and accordingly negates a finding of bad faith. 55 In further support of its decision, the district court relied upon the fact that Pingel came to a determination of Golan's infringement in consultation with his patent attorney and later consulted with two other attorneys, both of whom confirmed that the issues were close. Golan expends considerable effort pointing out that in order to rely upon an opinion of counsel, that opinion must be credible. 56 As an initial note, each case Golan cites for this proposition deals with exculpatory opinions in cases of willful infringement charges or the basis for filing a lawsuit after filing. See, e.g., SRI Int'l, Inc. v. Advanced Tech. Labs., Inc., 127 F.3d 1462, 44 USPQ2d 1422 (Fed.Cir.1997); Judin v. United States, 110 F.3d 780, 42 USPQ2d 1300 (Fed.Cir.1997); Minnesota Mining & Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., 976 F.2d 1559, 24 USPQ2d 1321 (Fed.Cir.1992); Kloster Speedsteel AB v. Crucible, Inc., 793 F.2d 1565, 230 USPQ 81 (Fed.Cir.1986). We do not believe these cases are applicable to the facts of the present case primarily because requiring Pingel to prove that reliance on the attorneys' opinions was reasonable effectively, and improperly, shifts the burden to Pingel to prove it acted in good faith. Instead, it is Golan's burden to present affirmative evidence that Pingel acted in bad faith. C.R. Bard, 157 F.3d at 1369, 48 USPQ2d at 1246. At most, the evidence shows Pingel was seeking advice from counsel in ongoing contemplation whether to actually file suit against Golan. The evidence of record relating to Pingel's reliance on attorney advice, while potentially inaccurate and questionable, does not support Golan's claim that Pingel acted in bad faith. Whether or not an opinion was `legally' correct is not the proper focus. Graco, Inc. v. Binks Mfg. Co., 60 F.3d 785, 793-94, 35 USPQ2d 1255, 1261-62 (Fed. Cir.1995) (quoting Read Corp. v. Portec, Inc., 970 F.2d 816, 830, 23 USPQ2d 1426, 1438 (Fed.Cir.1992) (holding that reliance on an attorney's oral opinion, even though it was in error, is evidence of good faith). 57 From the record before us, Pingel, in asserting patent infringement of the '921 patent, had no reason to believe an attorney would provide the wrong date of patent expiration. Additionally, each attorney stated that although Pingel's case might not be particularly strong, the issues were close. Thus, we find that the evidence does not clearly show that Pingel knew the '921 patent was invalid at the time it asserted infringement or that Pingel had no reason to believe that Golan did not infringe any of Pingel's asserted patents. 58 b. Trademark infringement allegations 59 The parties and the district court appear to have presumed that Federal Circuit law regarding bad faith governs Pingel's assertions of trademark infringement. This is not so. The law of the pertinent regional circuit governs the assertion of federally protected trademark rights. Al-Site Corp. v. VSI Int'l, Inc., 174 F.3d 1308, 1326, 50 USPQ2d 1161, 1172 (Fed.Cir.1999). 60 If, however, Pingel had not federally registered the Power-Flo mark at the time he asserted infringement, the asserted trademark rights are entirely creatures of state or common law. If that is the case, no federal statute preempts or affects the remaining state claims. Rather, Ninth Circuit law applies to the federal Lanham Act claims predicated on the assertion of state trademark rights, and state law applies entirely to the California unfair competition and business tort claims predicated on the assertion of state trademark rights. Thompson v. Haynes, 305 F.3d 1369 (Fed.Cir.2002) (In deciding non-patent issues, such as trademark, trade dress and other unfair competition issues under § 43(a) of the Lanham Act, this Court applies regional circuit law.). On remand, the district court should determine which law applies and whether Pingel's allegations of trademark infringement are actionable under that law.