Infringement Allegations and Objective Baselessness: Dominant Semiconductors Sdn. Bhd. v. OSRAM GMBH, et al., 2008 U.S. App. LEXIS 8727 (Fed. Cir. April 23, 2008)
In Dominant Semiconductors Sdn. Bhd. v. OSRAM GMBH, et al., OSRAM's outside patent counsel wrote an opinion letter, stating his opinion that several of Dominant's LED products were infringing OSRAM patents. Thereafter, OSRAM filed a complaint against Dominant before the United States International Trade Commission (ITC), alleging that Dominant LED products infringed OSRAM patents. Shortly after filing its answer to OSRAM's complaint before the ITC, Dominant filed an action against OSRAM, asserting claims for unfair competition under the Lanham Act and for unfair competition, trade libel, and interference with contractual relations and prospective economic advantage under California statutory and common law. Underlying Dominant's claims was its contention that OSRAM made false and misleading infringement allegations about Dominant's products and asserted its patent rights in bad faith. In granting OSRAM summary judgment, the district court found that it was objectively reasonable for OSRAM to rely on an opinion by patent counsel when there was no evidence that the analysis was unreasonable on its face or contained unsupportable conclusions. On appeal to United States Court of appeals for the Federal Circuit, the court held that federal patent law barred the imposition of liability for publicizing a patent in the marketplace unless the plaintiff could show that the patent holder acted in bad faith. The court held that the bad faith standard could not be satisfied in the absence of a showing that the claims asserted were objectively baseless. Dominant argued for a new standard for objective baselessness: the same one applied in the context of requests for sanctions under Federal Rule of Civil Procedure 11. The court rejected Dominant’s argument, and in affirming, held that Dominant produced no evidence of objective baselessness at all--in other words, it produced no evidence that the patent counsel’s claims of infringement were factually unsound.