IP Legal Watch

Connecticut Unfair Trade Practices Preempted

Connecticut, like many other states, decades ago enacted a "mini-FTC" Act, modeled after the federal law, 15 U.S.C. § 45(a)(1), prohibiting unfair trade practices. The Connecticut version is the Connecticut Unfair Trade Practices Act ("CUTPA"). Most states that have enacted such laws have either in the statutes themselves or in case law, narrowed their applicability to discourage unfair trade practice claims in ordinary business disputes. In Connecticut…not so much. As David Belt discussed in a Connecticut Bar Journal article roughly a year ago, assertion of CUTPA claims is commonplace in business litigation in Connecticut, and Connecticut seems to have more litigation by far concerning its state unfair practice laws than any other state in the country. CUTPA is particularly attractive to plaintiffs because it permits recovery of punitive damages and attorneys’ fees.

Recent cases remind us, however, that the preemption provisions of the Copyright Law and judicial interpretation of Article 4 of the Constitution with respect to the Patent Law restrict CUTPA claims in the intellectual property arena. The garden-variety patent or copyright infringement case (to the extent there is such a thing) cannot be asserted as a CUTPA claim. In a case decided this past October, RCE Nice Bearings v. Peer Bearing Company, Judge Vanessa Bryant of the District of Connecticut dismissed the plaintiff’s CUTPA claim insofar as it relied on accusations of wrongdoing pertaining to copyright infringement. Also this fall, Judge Stefan Underhill of the District of Connecticut dismissed, without prejudice, a CUTPA claim that he found did not include sufficient allegations beyond those necessary to prove patent infringement.

Unlike the copyright and patent laws, the federal trademark and unfair competition laws do not preempt state law claims based on similar facts.  Connecticut plaintiffs in trademark infringement cases can continue to include CUTPA counts in their complaints.  Diageo (maker of Johnny Walker Black Label) did that in a complaint it filed recently against the makers of the Johnny Barker Black Label product for dogs.

Courts have discretion in copyright and patent cases to award attorneys’ fees and increase damages. Before one asserts a CUTPA or other state unfair trade practices claim in a copyright or patent infringement case, one should expect that a motion to dismiss is possible.  One should weigh the likelihood and potential benefits of additional recovery of punitive damages and attorneys’ fees under CUTPA, against the potential costs and delays of such a motion.

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