Mikohn Gaming Corp. v. Acres Gaming, Inc., Nos. 98-1216, 98-1217, 1998 U.S. App. LEXIS 33122, at *1, 49 U.S.P.Q.2d (BNA) 1308 (Fed. Cir. Dec. 30, 1998).

FEDERAL JURISDICTION - STATE COMMON LAW - PRELIMINARY INJUNCTION - ABUSE OF DISCRETION STANDARD - NOTICE OF PATENT RIGHTS - INTENTIONAL INTERFERENCE - BAD FAITH

ISSUE & DISPOSITION

Issue

Whether the federal patent law, not state common law, applies to the grant of a preliminary injunction when it reflects circumstances specific to patent issues.

Disposition

Yes. The Federal Circuit applied the federal patent law on giving notice of patent rights in reviewing the grant by a federal district court of a preliminary injunction against commercial communications regarding Plaintiff's patent rights and Defendant's possible patent infringement.

SUMMARY

Acres Gaming, Inc. appealed against the grant of preliminary injunction by the U.S. District Court for the District of Nevada. The injunction prohibited Acres from communicating to existing and prospective customers of Mikohn Gaming Corporation about possible patent infringement by Mikohn of Acres' patent entitled "Method for Operating Network Gaming Devices." See Mikohn Gaming Corp. v. Acres Gaming, Inc., No. CV-S-97-1383-HDM (LRL) (D. Nev. Jan. 13, 1998). The U.S. Court of Appeals for the Federal Circuit vacated the injunction.

The court held that Defendant's commercial communication regarding Plaintiff's possible patent infringement was a notice of patent rights protected by the federal patent law. The state common law on torts of intentional interference with existing or prospective business relations is not applicable to Acres' giving of notice of patent rights and of its intention to enforce them. The court held that a preliminary injunction involving substantive matters unique to patent law is governed by the law and precedents of the Federal Circuit. The federal law requires a showing of bad faith for injunction against the communication of information about patent rights and possible patent infringement. "[A] threshold showing of incorrectness or falsity, or disregard for either, is required in order to find bad faith in the communication of information about the existence or pendency of patent rights." Mikohn, para 23. Because Acres' communications to existing and potential customers of Mikohn lack more than a negligible showing of bad faith under the federal law, the lower court exceeded its discretionary authority by granting a preliminary injunction against such communications by Defendant.