Friday, May 1, 2020

Accusing Someone of Inadvertent Patent Infringement Is Not Libelous

By Eugene Volokh - May 01, 2020 at 08:02AM

From Sarkisian v. Rooke, decided in 2007 by Judge Thomas M. Golden (E.D. Pa.) but just posted on Westlaw:

The parties to this matter are also involved in a patent litigation before the Court (REAL v. Sarkisian, 05-cv-03573). In the patent action, plaintiff Real Estate Alliance, Limited (REAL) alleges that defendant Diane Sarkisian, a local realtor, violated two of its patents-in-suit by conducting web-based property searches…. [Sarkisian countersued on various grounds, including defamation, based] on a press release about the patent suit issued by REAL in July 2005, and a published interview given by defendant Scott Tatro, an officer of one of REAL's licensees, the company Equias Technology Development.

Sarkisian claims that Equias works in concert with REAL to extort money from realtors. Specifically, once REAL has threatened agents with a patent infringement lawsuit unless they purchase a $10,000 license, Equias moves in to offer them a sublicense at a deep discount. The alleged collusion between Equias, Tatro and REAL plays a central role in the federal counts of Sarkisian's complaint; to resolve the [defamation] counts, however, the Court primarily addresses REAL's press release, Tatro's interview, and the unspecified activities by the defendants to publicize their suit….

Sarkisian's defamation claim fails because the Court concludes that the communication contained in the REAL press release and the Tatro interview could not have a defamatory meaning…. A defamatory statement "tends to blacken a person's reputation or expose him to public hatred, contempt, or ridicule or injure him in his business or profession." Statements that are merely annoying or embarrassing are not defamatory.

Sarkisian argues that "[l]anguage which imputes fraud or want of integrity to one's business, profession, or other occupation is actionable per se" in a defamation claim. She is correct insofar as there are a number of cases in which direct or implied insults to a business have been held to be defamatory. [Such defamatory meaning had been found in] … [an] advertisement implying that a camera shop used inferior materials, inflated costs, and ruined snapshots[,] … [a] letter implying that a travel agency trafficked in stolen tickets and was under criminal investigation[,] … [and a] broadcaster's assertion that plaintiff misrepresented the quality and price of its products …. In a recent case that bears some resemblance to this one, an Eastern District court concluded that when one manufacturer of biomedical devices accused another of patent infringement, the statement might be defamatory because it could mar the plaintiff's reputation and "deter third persons from associating with [plaintiff]."

The Court concludes that REAL's press release and the related publicity could not have defamatory meaning for two reasons: first, because an average reader would not feel hatred or contempt for Sarkisian upon reading the release or related material; and second, because the release and related material does not meaningfully criticize either Sarkisian's work or her character. As to the first reason, even the most dedicated patent lawyer would have difficulty mustering "hatred" for a computer user who inadvertently violated a patent. The Court's analysis thus focuses on the second reason, and why the press release and related material does not impugn Sarkisian's professional reputation to a defamatory degree.

First, the press release does not indicate that Sarkisian is unique in her behavior. Just the opposite is true—the release equates Sarkisian's conduct with that of "real estate agents throughout the United States." Moreover, the press release claims that the "average" real estate agent might owe as much as $50,000 in fees to REAL because of consistent infringement. Although perhaps embarrassing to Sarkisian, this language is not defamatory because it suggests that the patent infringement is typical, and thus cannot reflect a special want of integrity on Sarkisian's part.

Nothing in the release suggests that Sarkisian, or any of her colleagues, would have intentionally violated REAL's patent, which makes Sarkisian's claims of an assault on her integrity weak. In addition, it is difficult to imagine that … REAL's statements could deter third parties from associating with Sarkisian. The press release notes that Sarkisian is similar to the "average" real estate agent; a customer truly deterred by REAL's claims would have to swear off not just Sarkisian, but real estate agents altogether.

Moreover, nothing in the press release and related material reflects on Sarkisian's moral fiber or on the quality of her work. Unlike the defendants in [the precedents cited above], REAL has made no statements that imply Sarkisian is unskilled, dishonest, or involved in a crime. Similarly, nothing in the release implies that Sarkisian is not a good realtor—if anything, REAL hints that she is an industry leader. Because the average reader would not come away from REAL's press release or related materials with a negative impression about Sarkisian's work or character, her defamation claim is dismissed….


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