## Facts

- Ely-Norris Safe Co. manufactured burglar-resistant safes featuring a patented “explosion chamber” and claimed an exclusive right to make and sell safes containing that feature.
- Mosler Safe Co., a competitor, sold safes with a metal band around the door in a location similar to the explosion chamber on Ely-Norris safes.
- Ely-Norris alleged Mosler represented to purchasers that the metal band covered or closed an explosion chamber, leading the public to buy Mosler safes believing they had that feature.
- Ely-Norris sought an injunction barring Mosler from selling safes with the band and from representing that its safes contained an explosion chamber.
- The complaint admitted Mosler’s safes were clearly labeled with Mosler’s name and address and that Mosler never suggested its safes were made by Ely-Norris.
- Ely-Norris also had a separate, pending patent infringement suit concerning the explosion-chamber patent; this action was pleaded as unfair competition rather than infringement.

## Issues

1. Whether a complaint states an unfair-competition claim based on false statements about product qualities when it does not adequately allege that the misrepresentation diverted sales from the plaintiff or caused concrete business loss.
2. Whether the absence of any “passing off” or source confusion heightens the need for pleaded competitive injury in a misrepresentation-based unfair-competition theory.

## Decision

- The Supreme Court reversed the court of appeals and ordered dismissal of the bill.
- The Court held the pleaded allegations were insufficient because they did not show that Mosler’s alleged misrepresentations caused Ely-Norris a loss of business or diversion of trade.
- The Court treated the case as a narrow unfair-competition pleading question, not as a vehicle to decide broader questions about a patent holder’s ability to challenge a competitor’s false claims to possess the patented feature.

## Legal Principles

- An unfair-competition claim grounded in misrepresentations about a product’s qualities requires allegations (or facts supporting an inference) of resulting competitive injury, such as diversion of trade or business loss.
- Mere falsity and public deception, without a sufficient causal link to the plaintiff’s lost sales, does not support a private unfair-competition remedy.
- Where the defendant does not represent its goods as originating with the plaintiff (no passing off), the plaintiff must still connect the alleged deception to injury to the plaintiff’s business, not simply to consumer confusion about product attributes.
- Allegations closely tied to an asserted patent monopoly do not eliminate the need to plead the traditional elements of unfair competition in a non-infringement action.

## Conclusion

The Court required a concrete, pleaded connection between the defendant’s alleged false product claims and injury to the plaintiff’s business, holding that an unfair-competition action cannot proceed on public deception alone without adequate allegations that the deception diverted sales from the plaintiff.


Mosler Safe Co. v. Ely-Norris Safe Co., 273 U.S. 132 (1927)