Richardson v. Stanley Works, Inc.

Filing 32

ORDER that Dft Stanley Works, Inc.'s motion to dismiss Count II 10 is granted. FURTHER ORDERED that Count II of Pla's Complaint (Common Law Unfair Competition) is dismissed with prejudice. Signed by Judge Neil V Wake on 11/6/08.(KMG, )

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

) ) ) Plaintiff, ) ) vs. ) ) Stanley Works, Inc., a foreign corporation,) ) ) Defendant. ) ) David A. Richardson, an individual,

No. CV-08-1040-PHX-NVW ORDER

Before the court is Defendant Stanley Works, Inc.'s ("Stanley") motion to dismiss Count II of Plaintiff David A. Richardson's ("Richardson") complaint under Fed. R. Civ. P. 12(b)(6). (Doc. # 10.) Count I of the complaint alleges patent infringement under federal law, and Count II alleges unfair competition under Arizona common law. Specifically, Richardson alleges that he invented and received a design patent for a hammer that doubles as a step for performing overhead work. After receiving the patent in July of 2005, Richardson submitted a marketing brochure for his invention, called a "StepClaw," to several companies, including Stanley, who he hoped would purchase the right to mass produce the product. Stanley did not respond to his solicitation. According to the complaint, in early 2006, Stanley began selling the "FuBar," which is a demolition tool derived from the traditional hammer. Richardson alleges that the design of the FuBar is substantially similar to Richardson's StepClaw. He has attached two articles, one from IDonline.com and the other from PopSci.com, that credit Stanley employees with the

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design. Count II alleges that Richardson has been unable to license the design for the StepClaw because, by selling the FuBar, Stanley erroneously leads consumers and businesses to believe "either that: (1) Stanley is authorized to sell Richardson's design or (2) Richardson did not invent the patented design . . . ." It further alleges that Stanley engaged in unfair competition by producing his invention, or a product based on his invention, after declining his solicitation to mass produce the tool. The doctrine of unfair competition "encompasses several tort theories, such as trademark infringement, false advertising, `palming off,' and misappropriation." Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 124, 970 P.2d 954, 956 (Ct. App. 1998). However, state unfair competition laws are preempted by federal patent law when they enter "a field of regulation which the patent laws have reserved to Congress." Summit Mach. Tool Mfg. Corp. v. Victor CNC Sys., 7 F.3d 1434, 1439 (9th Cir. 1993). To avoid preemption, a state unfair competition law must contain "an element not shared by the federal law; an element which changes the nature of the action `so that it is qualitatively different from a copyright [or patent] infringement claim.'" Id. at 1439­40 (quoting Balboa Ins. Co. v. Trans Global Equities, 218 Cal. App. 3d 1327, 1340, 267 Cal. Rptr. 787 (1990)) (alteration in original). For example, federal patent law does not preempt claims of false advertising or "reverse palming off." See id. at 1442 ("State unfair competition laws which seek to prevent reverse palming off are not preempted by federal law."); Twentieth Century Fox Film Corp. v. Marvel Enters., 155 F. Supp. 2d 1, 25 (S.D.N.Y. 2001) ("[C]laims that allege a false designation of origin or false advertising `are not asserting rights equivalent to those protected by copyright and therefore do not encounter preemption[.]'"). Count II does not allege false advertising or reverse palming off, as Richardson contends. Richardson has provided no authority delineating the elements of a claim for false advertising and he fails to show that Count II alleges each element of such a claim. He focuses on Stanley's failure to credit him with the design for the FuBar, pointing to two published articles that attributed conception of the FuBar to Stanley employees. -2-

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Those articles were not authored by Stanley and therefore cannot form the basis of a false advertising claim against the company. Count II comes closer to stating a claim for reverse palming off, but is deficient in at least one very important respect. Palming off occurs where the defendant misrepresents his own goods as those of another. Reverse palming off occurs where the defendant misrepresents the goods of another as his own. Richardson's allegation is that Stanley misrepresents the FuBar as its own product when in fact Richardson owns the design patent for the tool. That allegation fails to state a claim for reverse passing off because such claims are limited to "situations of bodily appropriation." An example of bodily appropriation would be a defendant's sale of a competitor's product after physically replacing the competitor's name with its own. Summit, 7 F.3d at 1438, 1441­42 (citing Shaw v. Lindheim, 919 F.2d 1353, 1364 (9th Cir. 1990)). Count II does not allege any bodily appropriation of Richardson's product. It simply seeks damages for Stanley's sale of a product for which Richardson claims to own the design. That is nothing more than a patent claim. If Arizona law recognizes such an unfair competition claim, it is preempted because it would enable patent-like protection for unpatented articles. Id. at 1439 ("Where state law offers `patent-like protection for ideas deemed unprotected under the present federal scheme, [state law] conflicts with the strong federal policy favoring free competition in ideas.'") (alteration in original); cf. Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 34 (2003) ("[A]llowing a cause of action under § 43(a) for [representing oneself to be the originator of creative content] would create a species of mutant copyright law that limits the public's `federal right to copy and to use,' expired copyrights."). No alleged confusion among consumers or businesses resulting from Stanley's sale of the FuBar changes this conclusion. "The consumer who buys a branded product does not automatically assume that the brand-name company is the same entity that came up with the idea for the product, or designed the product--and typically does not care whether it is." Dastar, 539 U.S. at 32. It is the patent laws, not unfair competition laws, -3-

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that enable Richardson to prove to potential licensees that he owns the design for the tool. "[F]ederal patent laws prevent a state from prohibiting the copying and selling of unpatented articles and the fact that confusion may exist concerning the maker of an article does not provide grounds for an exception to this rule." Kaibab Shop v. Desert Son, Inc., 135 Ariz. 487, 489, 662 P.2d 452, 454 (Ct. App. 1982) (explaining Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964) and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234 (1964)). The common law of unfair competition aims to prevent conduct that is "contrary to honest practice in industrial or commercial matters." Fairway, 193 Ariz. at 124, 970 P.2d at 956 (quoting Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974)). The nexus of Richardson's unfair competition claim is that Stanley acted dishonestly by misappropriating his design and manufacturing a similar product for itself. "[A]n unfair competition action for misappropriation of time and effort is [only] cognizable if the claim contains an extra element which changes its nature" to something different from a patent claim. Summit, 7 F.3d at 1439. Count II of Richardson's complaint does not contain any extra element and is therefore preempted. It is apparent from Richardson's briefs that he cannot amend his Count II to escape federal preemption. Therefore, that Count will be dismissed with prejudice. IT IS THEREFORE ORDERED that Defendant Stanley Works, Inc.'s motion to dismiss Count II (Doc. # 10) is granted. IT IS FURTHER ORDERED that Count II of Plaintiff's Complaint (Common Law Unfair Competition) is dismissed with prejudice. DATED this 6th day of November, 2008.

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