Truth is not always a Complete Defense: an Update on the Press release Case

Scott Daniels | August 22, 2012

Last week we reported on TASER International v. Stinger Systems et al., where Taser has accused its rival Stinger and its lawyer of various acts of unfair competition, including violation of Lanham Act, all centered around a series of press releases allegedly designed to mislead the public and thereby injure TASER.  On Monday Judge Miranda Du denied a motion by Stinger’s lawyer for summary determination, giving us a better glimpse into the dispute.

The motion essentially argued that the defendants were entitled to judgment because the statements in the press releases were accurate.  Judge Du wasn’t buying.  First, she cited the basic case law that the requirement of “falsity within the meaning of the Lanham Act, a plaintiff may show that the statement was literally false, either on its face or by necessary implication, or that the statement was literally true but likely to mislead or confuse consumers.”  (Emphasis added; citation omitted).  Thus, the “literal truth of statements contained in the releases does not defeat the Lanham Act claim.”

Judge Du summarized the relevant substance press releases:

  •  TASERs intellectual property is “in jeopardy.” (Dkt. no. 95-5.)
  • TASER’s patents “may all be invalidated if Stinger’s argument in the case prevails.” (Dkt. no. 95-5.)
  • “[T]he patents contained [in Taser’s portfolio] are extremely narrow (and in some cases even farcical) patents.” (Dkt. no. 95-5.)
  • TASER is “feeding” misinformation to the financial markets. (Dkt. no. 95-6.)
  • Analysts are urged to “look at Taser’s conduct in recent federal court cases to gain a sense of the character of Taser’s governance or lack thereof.” (Dkt. no. 95-6.)
  • Stinger announced in pleadings filed in its suit against TASER that 76% of reexaminations result in cancelled or amended patent claims. (Dkt.  [*14] no. 95-8.)
  • The Chairman of TASER’s board is accused of only knowing Stinger’s current sales pipeline if he violated security regulations and announced insider information. (Dkt. no. 95-8.)
  • “[M]any departments currently using Tasers have expressed interest in trading them in for Stingers.” (Dkt. no. 95-8.)

Judge Du then denied the summary judgment motion.  In doing so, she was less concerned with the individual allegations, than with the general impression created by the releases.  She found that “it is plainly true that a reader of the three releases at issue here would believe that TASER was on the brink of a serious collapse.”  (Emphasis added).  The Judge was also skeptical of defendants’ citation of PTO reexamination “kill-rate” statistics, a staple in press releases regarding reexamination:

They appear, on the contrary, to be based on old data, and deployed in the releases in a manner that would mislead a reader into believing that it is all but a foregone conclusion that TASER’s patents will be rendered invalid. Even were the statistics true at the time of the release, their packaging alongside claims about TASER’s inequitable conduct, quotations about Stinger’s superior products, and TASER’s poor corporate governance all support a Lanham Act unfair competition claim.

Judge Du found that a “genuine issue of material fact thus exists as to whether these  releases, taken as a whole, contain false and/or misleading information regarding the impact of the patent reexamination requests and the Stinger lawsuit on TASER’s patents and ECD product line.  It will be for a jury, not the Court, to decide whether the releases are misleading.”

Judge Du also denied two other motions and concluded with the caution to the parties “to avoid unnecessary motions.”  Accordingly, Monday’s ruling might be our last into the dispute for a long while.

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