District Court Allows False Marking to be Re-pleaded as Consumer Protection Claim

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The Leahy-Smith America Invents Act bars suits for false marking of patent rights except those brought by the federal government or in which a competitor can establish competitive injury. Now a district court in Virginia has allowed a claim arising from a false patent marking to be re-pleaded as consumer protection claims under California and Washington state law. The court in Sukumar v. Nautilus, Inc. denied defendant's motion to dismiss the state law claims on preemption grounds, holding that federal patent law, as amended by the America Invents Act, did not preempt the plaintiff's consumer protection claims. Other competitors may resort to this route as claims under the patent laws are cut off.

Plaintiffs Ponani Sukumar and Southern California Stroke Rehabilitation Associates, Inc. originally filed a complaint against defendant Nautilus Inc. accusing it of falsely marking a number of products (representing unpatented items as covered by a patent, with the intent to deceive the public) in violation of 35 U.S.C. § 292. After President Barack Obama signed into law the America Invents Act, which, among other things, amended Section 292, plaintiffs amended their complaint, modifying their false marking claim to allege explicitly that they suffered a competitive injury as a result of Nautilus's alleged false marking, and that defendants acted in bad faith. Plaintiffs also added three additional state law claims: false advertising in violation of California law, unfair competition in violation of California law, and unfair competition in violation of Washington law. Nautilus responded with a Partial Motion to Dismiss, arguing that federal patent law preempted the state law claims.

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