With decision affecting state anti-patent statutes, the Federal Circuit unexpectedly but explicitly held that regulation of speech related to patent infringement is pre-empted by federal patent law. As a result, state tort law is not relevant unless the person asserting state law liability initially establishes that a communication was sent in bad faith.
Lite-Netics filed a lawsuit in federal district court against HBL and asserted infringement of its patents for a holiday lights technology. Before and after filing the lawsuit Lite-Netics sent notices to HBL’s customers which stated that companies were infringing its patents by selling specific holiday lights. Subsequently one notice specifically named HBL as the infringer which Lite-Netics had sued. Based upon these notices, HBL counterclaimed by asserting unfair competition and defamation under Colorado state law. The district court found that Lite-Netics had sent these notices in bad faith, and consequently HBL was likely to prevail on it state law claims. The court then granted a preliminary injunction to prevent Lite-Netics from further notifying HBL customers that (i) they could become defendants in patent infringement lawsuits, or (ii) HBL infringed Lite-Netic’s patents.
The Federal Circuit vacated the preliminary injunction and held that federal patent law preempts state law counterclaims if there is no bad faith distribution of related communications. Furthermore, under federal law bad faith requires that (i) these notices be objectively baseless, and (ii) this baselessness must be established prior to determining subjective bad faith. The court also held that objective baselessness does not necessarily result from a patent owner’s mistake in asserting patent infringement. In addition, the Federal Circuit stated that commercial speech is protected under the First Amendment, and the preliminary injunction was not properly tailored to Constitutional requirements.
Based upon this decision and its federal predecessors, as well as the Federal Trade Commission Report, there appears to be a race to two court houses: One party to federal court and the opposing part to state court. At this point an outcome may hinge upon one party side filing a lawsuit first in a respective court.
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 From Fiddler on the Roof.
 Since 2005 most states have enacted laws known as ‘anti-patent statutes.’ The asserted purpose of these statutes is prevention of frivolous patent infringement notices from patent licensing companies.
 U.S. Court of Appeals for the Federal Circuit.
 Federal appellate decisions have continuously held that state law business torts are pre-empted by federal law absent objective bad faith. These decisions also hold that the First Amendment generally prohibits prior restraints upon commercial speech, such as patent infringement notices. For example, in Globetrotter Software, Inc. et al. v. Elan Computer Group, Inc. et al., 362 F.3d 1367, 1374 (Fed. Cir. 2004), the alleged infringer filed counterclaims for state law business torts, because Globetrotter had notified Elan’s potential purchaser of Elan’s asserted patent infringement. The Federal Circuit held that federal patent law preempts state tort liability for a patent holder’s good faith patent related communications. This decision also explicitly held that bad faith must be established even if bad faith is not an element of the state law tort. Globetrotter further held that federal law governs even if these patent related communications occurred outside actual litigation.
 Federal Trade Commission Patent Assertion Entities Study 2016.