Feuds between business competitors lead to UPEPA motion in Washington state

Torchstar Corporation sells LED products through Amazon
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. Torchstar filed a lawsuit in the U.S. District Court for the Eastern District of Washington alleging that a competing seller of the same products, Hyatech, Inc., essentially copied Torchstar’s Amazon sales pages in copyright infringement. and other laws. For its part, Hyatech claimed that Torchstar’s sales pages were not eligible for copyright protection and that it was Torchstar that was trying to illegally destroy Hyatech as a competitor through the legal process. Hyatech asserted a counterclaim against Torchstar claiming that Torchstar made a false allegation of copyright infringement to Amazon, including asserting infringement resulting from product images taken by Hyatech’s own photographer. Hyatech also alleged that Torchstar did not register its copyrights with the US Copyright Office until after the litigation began.

So to back up a second, Torchstar chased Hyatech, and Hyatech counterattacked Torchstar. Nothing unusual to see here, welcome to commercial litigation. But now it gets interesting.

Instead of fighting Hyatech’s claims on the merits, Torchstar instead filed a special strike petition under Washington’s Uniform Public Expression Protection Act (UPEPA), which is Washington’s anti-SLAPP law. Torchstar argued that its report to Amazon and the initiation of litigation against Hyatech were privileged litigation communications, that Hyatech’s claim was denied for technical reasons (see below) and that Hyatech ultimately could not establish its tortious interference claim against Torchstar. All of this will be examined more closely when we dive into the court’s opinion, as found in Touchstar Corp., Hyatech, Inc., 2023 WL 137762 (EDWa., January 9, 2023), which you can read for yourself. here.

A UPEPA Special Request essentially provides a means for a litigant, in certain circumstances, to test adverse claims at a very early stage in the proceedings, where the claims against the litigant are based on communications resulting from the exercise by the litigant of his freedom of expression and similar rights on a matter of public interest. However, so-called “commercial” remarks, that is to say remarks resulting from the sale or rental of goods or services, are excluded from the scope of the UPEPA.

Torchstar’s special move was largely based on technical terrain, being that the so-called Noerr Pennington The doctrine creates immunity for activity that seeks grievance redress from the government. In other words, if a litigant asks the government for something or other, then under the Noerr Pennington doctrine, the litigant cannot be sued because of this petitioning activity.

This is the general rule of the doctrine. However, as I have repeatedly pointed out in my articles, the problem with general rules is that they are generally unenforceable. For our purposes here, one of the exceptions to the Noerr Pennington The doctrine is that it does not apply to so-called “sham petitions,” which are defined as those that are objectively without merit and attempt to abuse the legal process to interfere with a competitor’s business dealings. A similar exception is that the doctrine does not apply to communications to a third party that do not threaten legal action against that third party.

The Court held that Torchstar could not claim immunity under the Noerr Pennington doctrine for several reasons. First, Torchstar did not threaten Amazon with any litigation. Second, because Amazon is a private party, Torchstar had no constitutional right to seek grievance redress from Amazon. However, the Court left open to later resolve whether Torchstar’s claims against Hyatech were in the nature of a sham litigation. The bottom line was that Torchstar could not prove that Hyatech’s claims could be resolved in law, and so Torchstar’s UPEPA Special Petition failed.

ANALYSIS

Although this affair ultimately turned ― at least in the opinion of the court ― on the vagaries of Noerr Pennington doctrine, it should be noted that there were other substantial grounds for the court to deny Torchstar’s motion to dismiss, not the least of which was UPEPA’s commercial speech exception. That is, the purpose of UPEPA is to protect a much broader sphere of constitutional rights, principally those of freedom of speech and the right to petition, but is not meant to encompass what amounts to a purely commercial dispute between two competing sellers of goods.

Another thing to consider is that a UPEPA Special Motion is much like a Summary Judgment Motion, which usually occurs at the end of the case, after all discoveries have been made, and tests whether a party has sufficient evidence that a jury can reasonably return a verdict in his favour. What UPEPA and other anti-SLAPP laws do effectively is move summary judgment from near-conclusion to early litigation, so that cases that would have been dismissed anyway are dismissed sooner. The reason for this shift from the fourth quarter to the first quarter is to prevent litigants in the protected area of ​​activity from being freed from the costs and expenses of litigation in the meantime. This prevents abusive litigants from abusing the court system to harass parties with the litigation itself to the detriment of their protected conduct.

The bottom line here is that if a case will or will not ultimately survive a motion for summary judgment, then likewise it will or will not survive a special motion by UPEPA. But because the party against whom UPEPA’s special motion is brought will not have the option of extending the litigation, it effectively means that parties litigating in the area of ​​protected activity must put all their ducks in online from the outset of the case, and not wait for their case to slowly build up in the normal course of litigation. Thus, here the court found that Hyatech had presented sufficient evidence to be tried on the matter of sham litigation as if tested on a motion for summary judgment, and therefore Torchstar’s UPEPA special motion failed just as if the Torchstar’s motion for summary judgment would fail.

Also note here that Torchstar’s special request to UPEPA arose in connection with Hyatech’s counterclaim. UPEPA does not limit the availability of its Special Petitions only to those who initiate litigation, but these Special Petitions may be asserted against any claim, counterclaim, counterclaim, third party claim, etc., however designated or his position. occurs, as long as the motion is timely.

Finally, and to completely change the direction of this discussion, it’s worth nothing that although Torchstar’s UPEPA Special Petition ultimately failed, the filing of the petition itself likely gave Torchstar a legal advantage in that it allowed Hyatech to show their entire case in advance. of discovery that will likely occur next between these parties. This is no minor benefit and will likely reduce Torchstar’s discovery requirements considerably. The lesson here for litigants is that if a special UPEPA petition is at least disguised and unasserted for purposes of delay, that petition should generally be brought. Similarly, Torchstar now has the ability to immediately appeal the denial of its UPEPA special motion, which would not normally be available for ordinary motions to dismiss brought early in a case. Litigants should also take note of this potential benefit.