LumaSense Technologies, Inc. v. Advanced Engineering Services, LLC

Background

LumaSense alleged that it designs and develops sensing technology, including fiber optic temperature and non-dispersive infrared sensors. In 2013, LumaSense and AES entered into a Value Added Reseller Agreement. LumaSense alleged that the agreement gave AES a limited license to purchase, modify, and resell certain sensors for specified customers.

AES later sued LumaSense in Santa Clara Superior Court. In that case, AES alleged, among other things, that LumaSense misappropriated trade secrets. After LumaSense moved to require AES to identify the alleged trade secrets, AES filed a confidential disclosure statement under seal with exhibits identifying those secrets.

LumaSense alleged that the exhibits contained LumaSense’s protected intellectual property. It also alleged that AES used LumaSense’s trademarks on a product label and a certificate of compliance sent to at least one customer, and that AES copied or derived product drawings from LumaSense’s copyrighted technical drawings. LumaSense asserted claims for copyright infringement, trademark infringement, false designation of origin, and common-law unfair competition.

Motions and Arguments

AES moved to strike all four claims under California’s anti-SLAPP law. That law permits an early challenge to claims based on protected speech or petitioning activity. AES argued that LumaSense’s claims arose from AES’s filing of materials in the state-court action.

AES also moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. AES argued that its use of LumaSense’s marks and copyrighted materials was fair use, that LumaSense had not alleged harm, and that the Noerr-Pennington doctrine and California’s litigation privilege barred the claims.

Anti-SLAPP Motion

Judge Orrick denied the motion to strike. He explained that California’s anti-SLAPP law does not apply to federal causes of action, so it could not be used against LumaSense’s copyright, trademark, or false-designation claims.

The court concluded that the anti-SLAPP law could apply to LumaSense’s California unfair-competition claim, but AES had not shown that the claim was based on protected litigation activity. The complaint described AES’s alleged misuse of trademarks on documents sent to customers and alleged customer confusion and improper profits. Those allegations indicated that the claim arose from customer-facing conduct rather than from AES’s filing of documents under seal in state court. Because AES did not establish that the anti-SLAPP law applied to any claim, the court denied the motion to strike.

Motion to Dismiss

Judge Orrick also denied the motion to dismiss. He rejected AES’s argument that the claims were based exclusively on the state-court filing. The complaint alleged that AES copied materials when preparing documents before the state litigation and used LumaSense’s trademarks on documents sent to customers. The complaint also included documents that appeared to closely reproduce LumaSense’s technical drawings, including documents dated before the state-court action began.

The court declined to dismiss based on fair use or supposedly minor copying. AES raised its argument about minor copying for the first time in its reply brief, and the court stated that new arguments generally may not be introduced for the first time in a reply. The court also concluded that the complaint did not establish on its face that the copying was minor enough to justify dismissal.

The court held that LumaSense adequately alleged injury. For copyright infringement, alleged infringement of an intellectual-property right itself can constitute injury, and a plaintiff need not separately allege customer confusion. For trademark infringement, false designation of origin, and common-law unfair competition, LumaSense alleged that AES used LumaSense’s marks in ways likely to cause confusion about the source or affiliation of the products. The court found those allegations sufficient at the pleading stage.

Noerr-Pennington and Litigation Privilege

The court rejected AES’s reliance on the Noerr-Pennington doctrine, which generally protects petitioning the government from statutory liability. The court stated that the doctrine would not bar claims based on alleged infringement outside the litigation. It also concluded that the alleged state-court conduct fell within the doctrine’s “sham” exception at the pleading stage because LumaSense alleged that AES knowingly misrepresented LumaSense’s intellectual property as its own and continued doing so after LumaSense raised the issue.

The court also rejected California’s litigation privilege. It held that the privilege did not apply to LumaSense’s federal claims and that LumaSense’s California unfair-competition claim did not arise from AES’s litigation-related activity.

Disposition

The court denied AES’s motion to strike and denied AES’s motion to dismiss. The opinion addressed whether LumaSense’s complaint could proceed past these early-stage challenges; it did not enter a final judgment determining whether AES ultimately infringed LumaSense’s intellectual property.