Judge Turk Breathes New Life Into False Marking Claims
If you thought passage of the America Invents Act would end the flood of false patent marking claims, think again. In December, Judge Turk in the Western District of Virginia ruled that a false marking plaintiff could proceed under state consumer protection laws and that such claims were not preempted by the patent laws or the AIA. Sukumar v. Nautilus, Inc., Case No. 7:11CV218, 2011 U.S. Dist. LEXIS 145960 (W.D.Va. Dec. 19, 2011) found here.
Sukumar alleged that Nautilus had falsely marked a number of products in violation of 35 U.S.C. 292. After enactment of the AIA, Sukumar amended its Complaint to allege that it had suffered a competitive injury and that Nautilus acted in bad faith. Sukumar also added state-law claims of false advertising and unfair competition under California law and unfair competition under Washington law.
Nautilus moved to dismiss the state law claims as preempted by federal patent law and the AIA. While acknowledging that “the patent grant is within the exclusive purview of federal law,” Judge Turk denied the motion holding:
- The AIA contains no express preemption provision.
- There is no field preemption of state unfair competition claims that rely on a substantial question of federal patent law, relying on Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318 (Fed. Cir. 1998), overruled on other grounds, Midwest Indus. Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir. 1999).
- Neither the AIA nor its legislative history reveals any evidence that Congress intended to “impose upon the traditional authority of the states to regulate areas of consumer protection.”
- There was no direct conflict that made it physically impossible for Nautilus to comply with both federal and state law.
- Sukumar’s state-law unfair competition claims did not create an obstacle to Congress’ intent in passing the AIA
Judge Turk’s opinion contains two important limitations on state-law unfair competition claims for false marking.
First, citing Hunter Douglas, Judge Turk held that federal law would preempt Sukumar’s claims if Nautilus did not act in bad faith. In effect, Judge Turk added an element of bad faith to Sukumar’s claims by judicial fiat and allowed this new “unfair competition plus bad faith” claim to go forward. Second, Judge Turk left open the possibility of preemption if a plaintiff did not allege competitive injury.
Two days after his ruling, Judge Turk heard argument on Sukumar’s motion for partial summary judgment on liability on both its false marking claims under Sec. 292 and its unfair competition claims. Judge Turk took the motions under advisement and has not ruled as of today.
