Southern Snow Manufacturing Co. v. SnoWizard Holdings, Inc.
912 F. Supp. 2d 404
E.D. La.2012Background
- Plaintiffs allege a civil RICO claim against SnoWizard, Inc. and Sciortino arising from alleged patent and trademark rights assertions, trademark litigation activity, and ETL certification practices.
- Consolidated Louisiana/state and federal trademark/patent disputes date back to 2006–2012, involving multiple related plaintiffs and SnoWizard entities.
- Plaintiffs contend SnoWizard engaged in a pattern of racketeering by fraudulently obtaining patents/trademarks, infringing marks, issuing cease-and-desist letters, and pursuing related litigation.
- SnoWizard moves to dismiss under Rule 12(b)(6), arguing no predicate acts of mail/wire fraud or extortion are pled with the requisite specificity and criminality.
- The court analyzes whether alleged fraudulent patent/ trademark actions, infringement, ETL misrepresentations, and extortion-like conduct satisfy the RICO predicate acts.
- Holding: even assuming the allegations are true, plaintiffs fail to plead cognizable predicate acts, warranting dismissal of the RICO claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can fraudulent patent/trademark assertions support mail/wire fraud? | Plaintiffs rely on Sedima and post-Bridge to permit civil RICO predicate acts from marketplace misrepresentations tied to USPTO fraud. | Fraud on the PTO cannot be the basis for mail/wire fraud; marketplace assertions premised on PTO fraud do not satisfy the predicate acts. | No; PTO fraud cannot ground mail/wire fraud predicate acts. |
| Is fraud on the USPTO alone sufficient for RICO predicate acts when plaintiffs allege marketplace injury? | Bridge allows injury to private plaintiffs without reliance on PTO deception; alleged injuries flow from patent/trademark assertions. | Semiconductor Energy Laboratory precludes PTO fraud-based predicates; injury must arise from a scheme to defraud with a proper predicate act. | No; PTO fraud cannot establish the predicate acts needed for RICO. |
| Can trademark infringement grounds support mail/wire fraud predicates in RICO? | Infringement coupled with misrepresentations to PTO can form a broader fraudulent scheme. | Patent/trademark infringement alone cannot be mail/wire fraud predicates; no case supports such predicates here. | No; ordinary infringement cannot constitute mail/wire fraud predicates. |
| Do ETL certification misrepresentations constitute RICO predicate acts? | ETL certification lapsed but stickers remained; misrepresentation to customers constitutes a fraudulent scheme. | Fraud must be pled with particularity; misstatements about certification do not meet the standard. | No; failure to plead particularized intent prevents RICO predicate act. |
| Do cease-and-desist letters and related litigation amount to extortion under RICO? | Cease-and-desist and litigation actions, plus internet postings, show threats intended to restrain competitors. | Extortion requires obtaining property or actual wrongful use of force/ fear; IP rights enforcement does not meet the extortion standard. | No; actions do not show obtaining property or coercive threats under extortion. |
Key Cases Cited
- St. Germain v. Howard, 556 F.3d 261 (5th Cir.2009) (requires pleading of two related predicate acts to state a RICO claim)
- Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (Supreme Court 2008) (injury need not rely on misrepresentations; but predicate acts still must be pled)
- Semiconductor Energy Laboratory Co. v. Samsung Electronics Co., 204 F.3d 1368 (Fed.Cir.2000) (fraud on the PTO cannot ground mail/wire fraud predicates)
- Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (CAFC 2011) (affirmative acts of egregious misconduct may be material to inequitable conduct)
- Zenith Electronics Corp. v. Exzec, Inc., 543 F.3d 657 (CAFC 2008) (misconduct in marketplace activity related to patents may be actionable in some contexts)
- Johnson Electric North America Inc. v. Mabuchi Motor America Corp., 98 F.Supp.2d 480 (S.D.N.Y.2000) (patent infringement alone not grounds for mail/wire fraud predicates)
- Abraham v. Singh, 480 F.3d 351 (5th Cir.2007) (pleading standards in RICO context)