Marvellous Day sued Ace, Holiday Bright Lights, and an officer of HBL, for patent infringement, false patent marking, and false advertising under federal and state law. The court dismissed everything but the patent infringement claims (and stayed them pending reexamination). Marvellous Day owns a design patent for an LED light bulb, which it sold to HBL, which sold them to Ace. They were advertised as “always lit,” meaning that when an individual bulb is damaged or burned out the remaining lights will remain lighted and the individual bulb can be replaced without extinguishing the remaining lights, for easy replacement.
HBL then began selling similar light sets not produced by Marvellous Day, still advertised as “always lit,” but not replaceable when the bulbs are broken and burned out. Marvellous Day also alleged that Ace falsely advertised that the allegedly infringing bulbs were patented.
The court held that Marvellous Day lacked standing because it didn’t allege that it competed either with Ace or HBL. The parties operated at different levels of the distribution chain. Even assuming standing, it failed to allege materiality and causation. “It fails to offer any qualitative, quantitative, or even anecdotal evidence that might provide some basis to support its conclusory claim that the ‘always lit’ phrase is material to consumer purchasing decisions.” Arguing that “always lit” misrepresented an inherent quality or characteristic of a product was insufficient. But some “inherent” qualities could be totally irrelevant, such as what metal is used in the internal wiring of Christmas light strands. Materiality wouldn’t be presumed from that allegation. (This seems different from saying that Marvellous Day needs to plead specific evidence, a more stringent standard.)
Causation was the same. Marvellous Day never alleged that it lost sales due to defendants’ ads, and being at a different part in the chain made it unlikely, since there was no indication that it sold directly to consumers. “Any injury to Marvellous Day would be at least one step further removed, occurring only if and when its own customers decreased their orders on the basis of reduced retail demand for Marvellous Day's lights.”
This failure of the Lanham Act claims also destroyed the Illinois state law unfair competition/deceptive business practices claims.
The patent-based false advertising claims failed for those reasons and because Marvellous Day didn’t even allege falsity. The court also thought it was highly unlikely that the claim was material to consumers. And the requisite intent for the false marking claim wasn’t alleged with anything but a generalized allegation of intent to deceive, which was insufficient. There needed to be objective evidence that would allow a reasonable inference of intent to deceive.