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U.S. District Judge James Otero in Los Angeles granted summary judgment on Dec. 13 in one of the first cases to address the heightened standard for false patent-marking claims under the Leahy-Smith America Invents Act. President Obama signed the sweeping patent reforms into law on Sept. 16. Among the changes was a new requirement that companies must suffer injuries in order to sue rival firms for false patent-marking, or claiming that a product falls under a specific patent when it doesn’t. The changes were designed to curb a cottage industry of lawsuits, according to Robert Nissen of Washington’s Nissen & Associates, lead counsel for Ecore International Inc. in the case before Otero. Nissen, who teamed with Jeffrey Wexler, a partner in the Los Angeles office of San Diego’s Luce, Forward, Hamilton & Scripps, argued successfully that rival U.S. Rubber Recycling Inc. had failed to plead sufficient injuries under the act’s heightened standard for false patent-marking claims. U.S. Rubber’s attorney, Yuri Mikulka, a shareholder at Stradling Yocca Carlson & Rauth in Newport Beach, Calif., did not return a call for comment. The remarks below have been edited for length and clarity. National Law Journal: What was this case about? Robert Nissen: This case was between two competitors that make rubber underlayment for floors. U.S. Rubber brought eight claims a couple of years ago. And basically they claim that Ecore got the original patent by withholding invalidating prior art from the patent office. NLJ: What is this product? R.N.: It goes under flooring — it could be a ceramic tile or hardwood floor — and provides additional support to the flooring and also cuts down on the amount of sounds. So when you’re in a high-rise building, you don’t hear people above you walking around, as you would if it was just ceramic or tile. NLJ: Most of the initial claims were thrown out, leaving just a false-marking claim set for trial. What is this? R.N.: Its main purpose is [to ensure that] when you pick up an item and it says U.S. Patent 123, the U.S. Patent 123 really covers that item. You don’t want people afraid to compete because they think something is covered by a patent and it’s not. One of the claim terms in the patent at issue is how thick the product is. A Pennsylvania court said this patent covered 9 to 11 millimeters. U.S. Rubber claimed Ecore should not have put on its brochures sizes other than 10 millimeters. NLJ: What sizes did Ecore’s brochures claim were patented? R.N.: Two millimeters to 15 millimeters was the spread. NLJ: As you were preparing for trial, President Obama signed the Leahy-Smith America Invents Act. How did this legislation change cases like this? R.N.: It added a third element. It used to be that anyone could file suit, and you had a cottage industry where people would walk through Target and pick up the products and say, “Look, an expired patent!” and file a suit on behalf of the government, and you got half the recovery. It was basically a fine of up to $500 per occurrence. What U.S. Rubber was seeking to recover was a fine. The issue here was that a private party could no longer sue on behalf of the government. The federal government could bring these claims and recover $500 per item. Most important, [the law] applied to all pending cases. This was a big deal in Congress, a lot of discussion about this, and Congress acted and now said that a private party can only recover for competitive injury damages that it received. For a private party, statutory damages are gone. NLJ: How did this affect your case? R.N.: This is where this case appears to be the first. The law was signed by President Obama on Sept. 16. And we were scheduled to go to trial on Sept. 29. We immediately filed a motion for reconsideration. The judge reopened discovery for two weeks and allowed us to submit a new summary judgment motion exclusively addressing whether U.S. Rubber had been damaged by alleged false marking. NLJ: What was your argument? R.N.: We argued they haven’t proven they lost any sales. And second, even if they had lost sales, they hadn’t proven they lost sales by false marking. After Sept. 16, a lot of cases were dismissed around the country, but they tended to be at the motion-to-dismiss stage, where no competitor brought a lawsuit. We believed that in terms of actually ratcheting up the merits, this is the first court to decide what you have to prove to show competitive injury. Judge Otero, in his order, accepted that they lost sales, but he said that’s not enough. You’ve got to have someone somewhere say that this brochure impacted a decision not to buy U.S. Rubber’s product. And that was lacking, so he granted summary judgment. NLJ: What effect do you think it could have on other cases? R.N.: It’s really hard to say. It is only a district court. Since you can only recover your own damages, it wouldn’t make any sense to say you don’t have to prove you were damaged. We believe Judge Otero’s opinion was certainly right. So other courts will probably look at it. Contact Amanda Bronstad at [email protected].

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