A federal judge in Nevada has denied a motion for summary judgment by defendants charged with engaging in unfair competition by issuing press releases in connection with patent litigation.
The case involves two companies that make non-lethal weapons: TASER International and Stinger Systems.
TASER is best known for its Electronic Control Device (ECD) product line that fires small probes that can attach to, and incapacitate, a subject. Stinger makes a competing ECD product.
TASER alleges that, with the approval of Stinger’s then-CEO, a California attorney (and Stinger shareholder) drafted misleading press releases for Stinger that had a negative effect on TASER’s stock value.
In 2007, TASER sued Stinger in the District of Arizona, claiming patent infringement and related claims. The case ended with a finding in 2009 that Stinger had infringed one of TASER’s ECD gun patents.
TASER alleged that a press release issued by Stinger misled consumers about the nature of this patent litigation and a protective order issued by the judge in that case, causing TASER’s stock price to drop and resulting in a $40 million loss in TASER’s market capital.
In 2008 and 2009, Stinger issued more press releases, including one about its request to have one of TASER’s patents reexamined. TASER claimed that these were also misleading.
In response to these press releases, TASER filed suit against Stinger in 2009, alleging trade libel/defamation, unfair competition, and other causes of action.
In response to defendant’s summary judgment motion, the judge concluded that she couldn’t hold as a matter of law that that the press releases were not false and misleading.
For example, one press release headline read “TASER sued for false advertising, unfair competition and injurious falsehood.” However, among other things, Stinger never actually served TASER with the lawsuit.
Parties to patent litigation often issue press releases to announce developments in such disputes, but the TASER case shows that it’s important for these to be carefully crafted (and possibly reviewed by patent counsel) to avoid charges that they’re misleading.