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Court Was Wrong to Bar Communications Alleging Infringement Under State Law, Rules Federal Circuit
Patent Litigation Feature
Patent litigation is usually a federal affair, but liability for some patent-related claims can also arise under state law when such claims are made in bad faith. The bad-faith distinction is significant from a constitutional standpoint: Federal law only preempts the states from regulating infringement claims made in good faith, allowing states to target bad faith claims under certain circumstances. This distinction has arisen on multiple occasions in district court decisions denying challenges against state laws targeting bad-faith patent assertion. While those rulings have primarily turned on the preemption issue, they have also rejected arguments from frustrated plaintiffs invoking First Amendment speech protections for litigation activity ultimately found to be in bad faith. Now, the Federal Circuit has addressed the bad faith standard in a related context—this time, siding with the plaintiff. In its precedential Lite-Netics v. Nu Tsai Capital decision, the Federal Circuit held that a district judge was wrong to enjoin a plaintiff from communicating with a defendant’s customers about its alleged infringement, ruling that the court erred by concluding that these claims were made in objectively bad faith.
February 24, 2023