In a suit involving the marketing of high-end basketballs, the U.S. Court of Appeals for the Federal Circuit narrowly construed the scope of false advertising claims allowed under § 43(a) of the Lanham Act, which the Court reiterated does not codify the entirety of unfair competition law. Baden Sports, Inc. v. Molten USA, Inc., et al., Case Nos. 2008-1216, -1246 (Fed. Cir., Feb. 13, 2009) (Lourie, J.).

Basketball manufacturer Baden sued competitor Molten for patent infringement and false advertising in the U.S District Court for the Western District of Washington. Baden’s basketballs embody its patented technology, which is marketed as containing “cushion control technology.” Molten advertised its new products as containing “dual cushion technology.” Several months after the complaint was filed, Molten stopped importing the basketballs.

On summary judgment, the court granted Baden’s infringement motion and denied Molten’s invalidity motion. Also on summary judgment, the court, relying on the 2003 Supreme Court decision in Dastar Corp. v. Twentieth Century Fox Film Corp., dismissed those false advertising claims regarding Molten’s use of the terms “proprietary” and “exclusive.” However, the court allowed the false advertising claim based on the term “innovative” to proceed to trial. The jury awarded Baden more than $8 million. After the district court denied Molten’s motions for a new trial and judgment as a matter of law, Molten appealed.

The Federal Circuit’s appellate jurisdiction was based on Baden’s cross-appeal of the district court’s denial of a modified injunction regarding the patent infringement judgment against Molten. Therefore the Federal Circuit applied regional circuit law for the non-patent claims.

The Federal Circuit began its analysis with § 43(a)(1)(A) of the Lanham Act, which provides an actionable claim for commercial misrepresentation that is likely to cause confusion “as to the origin” of goods. In Dastar, the Supreme Court explained that term “origin of goods” means the “producer of tangible goods that are offered for sale,” rather than the author of any idea. Thus, the Federal Circuit evaluated whether Molten’s advertising refers who manufactured the basketballs in issue. Because Molten’s advertising did not misrepresent the manufacturer of the balls, the court rejected Baden’s § 43(a)(1)(A) claims.

Next, the Federal Circuit considered Baden’s argument based on § 43(a)(1)(B), which creates liability for any commercial advertising that “misrepresents the nature, characteristics, qualities, or geographic origin” of goods. While acknowledging that Molten’s use of the term “innovative” may cause confusion regarding the authorship status of the basketball technology, relying on the Ninth Circuit’s 2008 decision Sybersound Record v. UAV held that section 43(a)(1)(B) of the Lanham Act does not refer to the licensing status of a good. Consequently, the Court also rejected this claim.

Practice Note: Citing cases from the First and Second Circuits, the Federal Circuit noted that the outcome of its § 43(a)(1)(B) holding may have been different under the laws of the other circuits. Thus, this case illustrates why—before filing suit—plaintiffs must carefully analyze regional circuit case law.