Standing To Assert False Marking Requires That Plaintiff At Least Attempted To Enter The Market

Sukumar v. Nautilus, Inc., ___ F.3d ___ (May 4, 2015) (PROST, Newman, Reyna) (W.D. Va.: Turk) (4 of 5 stars)

Federal Circuit affirms summary judgment that plaintiff lacked standing to pursue false marking claim, holding that the plaintiff had not suffered a "competitive injury" as required by 35 U.S.C. § 292(b). The Court also affirmed summary judgment regarding state law unfair competition claims.

False Marking: The America Invents Act limits standing to bring false marking claims to those who have suffered a "competitive injury" as a result of the alleged false marking. Interpreting this phrase for the first time, the Federal Circuit held that "a potential competitor may suffer a competitive injury if it has attempted to enter the market," and that "[a]n attempt is made up of two components: (1) intent to enter the market with a reasonable possibility of success, and (2) an action to enter the market." Slip op. at 6. Both actual and potential competitors could suffer a "competitive injury," just as in antitrust law, where an "injury to competition" includes the creation of barriers to the entry of new competitors into the market, but "a subjective intent to compete" was not alone sufficient. Id. at 8-9. Here, the plaintiff's "evidence of his intent to compete with Nautilus is weak" because the parties' prior patent licensing negotiations suggested the plaintiff "intended only to open senior rehabilitation centers, which would not operate in competition with Nautilus." Id. at 12. Moreover, at the time it filed the case, the plaintiff had not taken action to enter market because it had no business plan, prototype, employees, or engineering knowledge, and "did not investigate developing manufacturing capacity."  Id. at 13.

Unfair Competition: Summary judgment disposing of Sukumar's state law claims was appropriate because the district court applied the right legal standard, the plaintiff could not prove causation because it had previously blamed other things for causing the alleged damages, and a conclusory expert declaration was insufficient to create a fact issue.

Authors: Chris W. Dryer, Michael C. Tyler