Prior Trademark Suit No Bar to Patent Suit, Federal Circuit Rules
The National Law Journal
A patent infringement case may proceed despite an earlier trademark case about same product, the U.S. Court of Appeals for the Federal Circuit has ruled.
On November 27, a split panel of the court reversed a dismissal of the case, Superior Industries LLC v. Thor Global Enterprises Ltd. and remanded it to the district court. The appeals court also affirmed a dismissal of the plaintiff's claims of indirect infringement of one of the patents.
Judge Michael Davis of the District of Minnesota dismissed the patent case in July 2011, on the ground that the previous trademark case created claim preclusion. But the appeals court found no preclusion, determining that the claims in the two cases constitute "separate causes of action."
The three patents assigned to Superior at issue in the case are for a "braced telescoping support strut and system" that supports a portable conveyor assembly. Portable conveyors are used to transport and stockpile rock, sand, grain and other aggregate material.
Thor Global Enterprises Ltd. filed a U.S. patent application for an "undercarriage for a telescopic frame" for a portable conveyor in July 2007. On October 1, 2007, Thor issued a press release about its new "PATENT-PENDING FB Undercarriage." Thor also distributed point-of-sale displays with the same wording to U.S. dealers.
Superior Industries LLC claims to have made up the term "fully braced," which refers to its portable conveyor undercarriage. On October 3, 2007, Superior filed an intent-to-use trademark application indicating plans to use the registered trademark "FB" for "height-adjustable bulk material belt conveyors and undercarriage assemblies."
In August 2009, Superior filed a trademark infringement action in the District of Minnesota, claiming that Thor infringed its registered "FB" trademark. An April 2010 consent judgment permanently barred Thor from using the mark in connection with its undercarriage assemblies or portable conveyors.
That June, Superior sued Thor for allegedly infringing two of its patents. Superior claimed Thor infringed by making its telescoping conveyor with the disputed technology and selling it and importing it to the United States.
With regard to one patent, Davis in his July 2011 ruling found claim preclusion because "both lawsuits arise from the same nucleus of operative factsThor's offering for sale its FB undercarriage technology in the United States." With regard to the other patent, which issued more than three months after Superior filed its trademark case, Davis held that Superior did not plead sufficient facts to show that Thor sold or offered for sale infringing products in the United States after that patent issued. Superior appealed.
Chief Judge Randall Rader wrote the opinion, joined by Senior Judge Anthony Schall. Senior Judge Haldane Robert Mayer filed a dissenting opinion.
Rader wrote that case law from the U.S. Court of Appeals for the Eighth Circuit applies to the claim preclusion in the case but Federal Circuit law applies to substantive and procedural patent law issues. He noted that "claim preclusion only applies to repetitious suits involving the same cause of action."
He also cited a 2008 Federal Circuit ruling, Acumed LLC v. Stryker Corp., to hold that "claim preclusion does not arise merely because the plaintiff was aware of independent facts that gave rise to a separate cause of action against the defendant at the time it brought suit." In Acumed, the Federal Circuit held that a previous patent infringement suit involving the same patent did not preclude a new suit on the patent concerning a different product.
"Thor has not cited any Eighth Circuit cases that suggest claim preclusion ever applies to bar litigation of a claim that arises from a different transaction or series of transactions than was at issue in a prior litigation between the same parties," Rader wrote.
Rader explained that Superior's trademark claims arose from Thor's use of the FB mark in advertising, while the patent claims relate to product sales. "In sum, Superior's claims for trademark infringement and patent infringement constitute separate causes of action."
With regard to the patent issued after Superior's trademark trademark case, Rader found that "Superior's complaint falls far short of pleading facts necessary to state a plausible claim for either induced or contributory infringement."
Mayer in his dissent asserted that Superior's patent claims "arise from the same nucleus of operative facts that gave rise to its 2009 trademark infringement action." He found that "Superior's patent and trademark claims both relate to Thor's fully-braced undercarriages for portable conveyer systems, which were advertised and allegedly offered for sale in 2007."
"Accordingly," Mayer wrote, "notwithstanding the fact that patent and trademark infringement invoke different areas of substantive law, Superior was required to bring its patent action concurrently with its trademark suit because both claims relate to the same advertising materials that Thor distributed in 2007."
Superior's lawyer, John Weyrauch, a partner at Dicke, Billig & Czaja of Minneapolis, was not available for comment. Superior did not respond to a request for comment.
Thor and its lawyer, Christopher Holland, a partner at Krieg, Keller, Sloan, Roman & Holland of San Francisco, did not respond to a request for comment.
Erik Belt, an intellectual property partner in the Boston office of McCarter & English, said that the Federal Circuit reached the right decision, but "I might have arrived at the answer by a slightly different route than the one taken by the court" Belt, who isn't involved in the case, said, "The court could have more easily have said there was no claim preclusion because different causes of action consider different circumstances and different set of facts."
Sheri Qualters can be contacted at firstname.lastname@example.org.