failure to disprove other possible sources of sales defeats irreparable harm in false ad/patent case

Citrix Systems, Inc. v. Workspot, Inc., 2019 WL 3858602, No.
18-588-LPS (D. Del. Aug. 16, 2019)
Citrix sued Workspot for patent infringement as well as
false advertising/unfair competition under the Lanham Act, the Delaware
Deceptive Trade Practices Act, and common law. Here, the court denied a
preliminary injunction.
Lanham Act: Four of the challenged statements characterized
Workspot’s products as being significantly faster to “roll out” or having
significantly less “time to value” than Citrix’s products – minutes versus
months. Citrix argued that this was literally false because some Citrix
products can be rolled out in minutes or hours. The court found no literal
falsity; the statements “only vaguely refer to Citrix products (leaving it to
the audience to determine which products are comparable) and use terms like ‘time
to value’ and ‘roll-out’ that have no clear and unambiguous meaning (at least
on the record developed to this point).” Citrix even admitted that these terms were
“subjective and require the customer’s input, so there is no way to quantify
Other challenged statements characterized Workspot as having
a feature velocity (the pace of adding new features) of days, as against
Citrix’s feature velocity of months or more. Citrix again argued literal falsity
because some cloud-hosted Citrix products are updated on a daily to two-weekly
basis, but admitted that at least some of its products were undisputedly on a
12-month release cycle when the statements were made, and the Citrix comparison
didn’t specify, so there wasn’t literal falsity. [Note that if the statements had
remained in the market, they could have become false without further action on
Workspot’s part if Citrix had upped the feature velocity of all its products.]
There were similar disputes about when Citrix acquired “automatic scaling.”
Anyway, there was no irreparable harm, either for the patent
infringement or the false advertising. For patent, Citrix presented no evidence
directly tying  demand for Workspot
products to the allegedly infringing features. Citrix relied on Workspot marketing
materials, which promoted allegedly infringing features of Workspot’s product. “At
best, Citrix has demonstrated that Workspot considers the touted features
important to customers. This, by itself, does not satisfy Citrix’s burden on
the causal nexus requirement.”
For false advertising, too, Citrix failed to show a causal
nexus between the allegedly false statements and the purported harm, such as evidence
that a Citrix customer has or likely would switch to Workspot because of the
allegedly false statements. Direct competition + comparative advertising + the
fact that a majority of Workspot customers are Citrix customers +
evidence that “Workspot has successfully pursued ‘Citrix refugeees’ and [has]
taken ‘Citrix technology off the table’ through its use of ‘BS’ advertisements”
wasn’t enough. None of this showed that it was the false ads, “as opposed to,
for example, better prices or better non-patented technology,” that likely
caused Citrix customers to switch to Workspot. Workspot didn’t characterize its
own advertisements as “BS;” instead, the employee Citrix quoted stated that “no
one has called BS on our [total cost of ownership] slides.”
To me, disregarding companies’ own marketing materials and internal beliefs about what drives sales is pretty extreme–and note the contradiction with how it works in trademark, where bad faith (often quite broadly defined) will be presumed to have succeeded.

from Blogger

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