Lite-Netics, LLC v. Nu Tsai Capital, LLC, No. 23-1146 (Fed. Cir. 2023)
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Lite-Netics sells string lights held by magnets to a surface such as a roof edge, as the assignee of two patents entitled “Magnetic Light Fixture.” Lite-Netics competes with HBL in the market for holiday string lights. Lite-Netics brought a patent-infringement action against HBL and also sent notices, one before filing suit and one after, to its customers (stores that sell the lights), some of which were also HBL customers, informing them of allegedly infringing competitors and stating Lite-Netics’s intent to enforce its patent rights. Lite-Netics did not name such competitors in the first notice. In the second notice, it identified HBL as an allegedly infringing competitor.
After the second notice, HBL filed counterclaims, including for state-law torts. The district court issued a preliminary injunction, barring Lite-Netics from suggesting that HBL is a patent infringer, that HBL copied Lite-Netics’s lights, or that HBL customers might be sued. The Federal Circuit vacated. The district court abused its discretion in issuing the preliminary injunction because the applicable speech-protective legal standards were not met. Federal patent law preempts state-law tort liability for a patentholder’s good faith conduct in communications asserting infringement and warning about potential litigation. HBL’s state-law claims can survive federal preemption only to the extent that they are based on a showing of bad faith in asserting infringement. Lite-Netics’s positions have not been shown, at this stage of the litigation, to be objectively baseless.
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