The Dangers of Misleading Press Releases

by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C. ()

When a patent holder sues a potential infringer, the question often comes up about what the patent holder can publicly say about the lawsuit, either to its customers or in press releases. A recent blog post by Scott Daniels in the Reexamination Alert Blog and cross-posted at IPWatchdog shows the problems one company found itself in when it issued press releases that the other side felt went too far.

Background

TASER International (which makes numerous products, such as the famous TASER stun gun) sued Stinger Systems for infringing some of TASER’s patents and for false advertising. While the false advertising claims were resolved by a joint stipulation, the court ultimately found that Stinger infringed one of TASER’s patents.

In response, Stinger filed its own lawsuit against TASER the week before TASER issued its quarterly earnings report, claiming that TASER engaged in false advertising, unfair competition, and injurious falsehood arising out of a study by the National Institute of Justice (“NIJ”) that TASER circulated. Stinger waited until the day of the earnings report to announce the lawsuit in a press release, but never actually served TASER. Later, Stinger voluntarily dismissed the lawsuit after receiving an order to show cause.

Contending that the press release and lawsuit were shams designed to harm TASER’s stock and business, TASER brought another lawsuit against Stinger—Taser International, Inc. v. Stinger Systems, Case No. 2:09-cv-289, in the United States District Court for the District of Nevada—alleging a number of claims, including violations of the Lanham Act. Judge Miranda Du issued an opinion on August 3, 2012 deciding the parties’ partial summary judgment motions on the Lanham Act claims (among other things).

In it, the Court refused to grant summary judgment in favor of Stinger on the claims related to Stinger’s press releases. The Court found that TASER had presented sufficient evidence that the allegations that the press releases were false and misleading could go to the jury.

In particular, the Court noted four issues of fact that prevented granting Stinger’s motion. First, Stinger claimed in its press release that it had served TASER with the lawsuit when it had not. Second, the press release did not adequately explain what the NIJ is and what its report contained. Third, there was evidence that suggested that Stinger “wanted to pursue misleading press releases as an avenue for devaluing TASER.” And, fourth, there were telephone recordings suggesting that the litigation was designed to be vexatious and to drive down TASER’s stock.

Take Aways

While this case is more extreme that most cases, it still serves as an important reminder that the filing of a lawsuit does not give a party a license to say anything it wants. Press releases need to foremost be truthful and provide sufficient context for the statements contained in them, especially those statements that might be viewed as impugning another.

As this case shows, courts will look sometimes look behind the statements to the motivations of the speakers in determining whether the statements are actionable or were intended to mislead others.

As tempting and satisfying as it may be to issue strong press releases, companies and individuals need to take care that the press releases do not themselves become the subject of additional litigation or distract from the legitimate claims an individual is trying to make.

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