Preemption Test Focuses on Conduct, Not Remedy

Since state-law unfair competition and other tort claims often accompany allegations of patent infringement, the question of whether the state claims are preempted by the patent scheme assumes importance in intellectual-property litigation. Judge Joseph J. Farnan Jr. recently addressed the question of preemption for a variety of tort claims brought in the Knova Software-Inquira patent litigation.

Intentional Interference with Prospective Economic Relationships and Unfair Competition. One aspect of the traditional test of preemption involves whether a party’s state-law claim contains an element in addition to those necessary to establish infringement. The Court here, however, was faced with a damages-based claim: Plaintiff Knova contended that because it pleaded damages recoverable solely under the state law claim, it properly alleged an element divorced from the infringement counts. Rejecting this assertion, the Court reaffirmed that the preemption test “focus[es] on the conduct of the defendant, not remedies that may be available to plaintiffs.” Accordingly, the Court found that the patent act preempted Knova’s interference and unfair competition claims.

Unjust Enrichment. Addressing a rare unjust enrichment count, the Court declined to find a preemptive effect until discovery closed. Knova argued that defendant’s allegedly infringing sale of bundled software services conferred an “incremental benefit” on defendant compensable apart from the infringement. But the Court could not discern from the complaint whether Knova simply sought a “patent-like remedy for making, using, or selling a patented product.” In the face of this uncertainty, the Court allowed the unjust enrichment claim to proceed without prejudice to raise the question of preemption after completing discovery on the other claims.

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