Little Giant Ladder Systems, LLC v. Tricam Industries, Inc.

Background

Wing Enterprises, Inc., doing business as Little Giant Ladder Systems, and Tricam Industries, Inc. sell competing multi-position ladders. Little Giant alleged that Tricam’s Gorilla Ladders infringed U.S. Patent No. 10,767,416, which concerns ladders, ladder components, and related methods. Tricam denied infringement and asserted four counterclaims: declarations of non-infringement and patent invalidity, false marking under 35 U.S.C. § 292, and false advertising under 15 U.S.C. § 1125(a).

The motion concerned Counterclaims III and IV. Tricam alleged that Little Giant’s Rapid Lock ladders were not covered by the ’416 Patent, but Little Giant marked them as patented with the purpose of deceiving the public. Tricam also alleged that Little Giant’s advertising misrepresented that the Rapid Lock ladders were covered by the patent, causing Tricam to lose sales, market share, and goodwill. Little Giant argued that Tricam had not adequately pleaded deceptive intent for false marking or bad faith for false advertising.

False Marking

A false-marking claim under § 292 requires allegations that the defendant marked an unpatented article and did so with an intent to deceive the public. The court accepted, for purposes of the motion, Tricam’s allegations that the Rapid Lock ladders were not covered by the ’416 Patent. Little Giant also conceded that Tricam adequately pleaded the marking-of-an-unpatented-article element.

The court held, however, that Tricam did not plead deceptive intent with the particularity required by Federal Rule of Civil Procedure 9(b), which requires fraud-based claims to identify the circumstances of the alleged fraud in detail. Tricam’s allegations about Little Giant’s patent experience, the parties’ prior litigation, deposition testimony, the patent’s prosecution history, differences between the patent’s figures and the Rapid Lock design, and inconsistencies in advertising did not create a strong inference that Little Giant knew the patent did not cover Rapid Lock ladders and marked them intending to deceive the public. The court stated that these allegations could suggest that Little Giant was mistaken about patent coverage, but mistake alone was insufficient.

The court therefore granted Little Giant’s motion as to Counterclaim III. Because discovery might provide information about deceptive intent, the court declined to dismiss the claim with prejudice and dismissed Counterclaim III without prejudice.

False Advertising

Tricam’s Counterclaim IV alleged that Little Giant’s statements that the Rapid Lock ladders were covered by the ’416 Patent violated the false-advertising provisions of the federal Lanham Act. The court applied Rule 9(b) because the claim was based on the same alleged deception as the false-marking claim. It also applied the rule that a patentee generally must have acted in bad faith to face Lanham Act liability for marketplace statements about its patent.

Because Tricam’s allegations of deception and bad faith failed for the same reasons discussed in connection with false marking, the court held that Counterclaim IV did not satisfy Rule 9(b) or the requirement to state a plausible claim under Federal Rule of Civil Procedure 12(b)(6). The court granted Little Giant’s motion as to Counterclaim IV, but dismissed that counterclaim without prejudice because discovery might inform the issue of deceptive intent.

Disposition

Judge Susan Richard Nelson ordered that Little Giant’s motion to dismiss Counterclaims III and IV was granted in part and denied in part: it was granted in that the claims were dismissed, and denied in that the claims were dismissed without prejudice. The order separately states that Tricam’s Counterclaims III and IV were DISMISSED WITHOUT PREJUDICE. The ruling addressed pleading sufficiency and did not decide the ultimate question of whether the ’416 Patent covers the Rapid Lock ladders.