Monday, June 29, 2015

False patent marking isn't material to business customers

Pactiv, LLC v. Multisorb Technologies, Inc., 63 F.Supp.3d 832 (N.D. Ill. 2014)
Pactiv and Multisorb compete to sell oxygen absorbers—“packets of chemicals that react with moisture to absorb oxygen when placed inside food containers,” keeping food fresher longer. The parties have sued each other for patent infringement, and Multisorb also counterclaimed for tortious interference and unfair competition and false advertising in violation of the Lanham Act. Pactiv’s patent claims are currently stayed pending re-examination before the PTO.  The court found that prosecution history estoppel barred Multisorb from pursuing its doctrine of equivalents-based patent claim, and therefore Multisorb lost its patent infringement counterclaim.
The remaining counterclaims arose from a failed business arrangement with Pactiv. Multisorb agreed to manufacture and sell oxygen absorber packets to Pactiv for use in its fresh meat packaging system, the ActiveTech System. The ActiveTech System is comprised of the ActiveTech Product (the oxygen absorber packet), a “case ready” packaging system, and Pactiv’s methods for packaging products. Shortly after the companies entered into a supply agreement, Pactiv received a patent on a packaging system and a method for sealing and preserving raw meat in a low or reduced oxygen environment. At Pactiv’s request, Multisorb marked the oxygen absorber it supplied with a stamp indicating that the product was protected under the patent.
Over ten years later, in 2008, the parties’ business relationship soured after Multisorb began selling oxygen absorbers to Wal-Mart and Wal-Mart vendors directly, taking business from Pactiv. Pactiv switched to Dessicare to make a new oxygen absorber, continuing to mark the Dessicare absorber with the Pactiv patent number.
Multisorb charged Pactiv with initiating “sham litigation” against Multisorb with the intention of interfering with its prospective business relationships. Internal Pactiv documents indicated that suing Multisorb had business reasons more than IP-related reasons, and that Pactiv desired to “tie [Multisorb] up” and force it to spend money.  But sham litigation relates to antitrust claims, not tortious interference.  And anyway Multisorb couldn’t prove sham litigation; even assuming Pactiv’s statements indicated bad faith, the court couldn’t find that Pactiv lacked a reasonable chance of success on the merits. Though its patents were recently declared invalid in reexamination (a decision under appeal to the Federal Circuit), there was nothing in the record to show that Pactiv would have known of the invalidity at the time it sued.  Thus, the tortious interference claim failed: “the mere filing of a lawsuit cannot serve as a basis for a tortious interference claim when there has been no showing that the litigant knew or should have known the case was meritless or otherwise unjustified.”
As for false marking, Multisorb failed to show that Pactiv intended to deceive the public by marking the oxygen absorber with its patent number.  At best, the evidence showed mere negligence: Pactiv “did not recall any discussions as to what patent number to put on the Desiccare oxygen absorber” and Pactiv “did not have a formal process in place to approve product covers.”
As for Multisorb’s Lanham Act counterclaim, Multisorb argued that Pactiv misled customers by telling them that the ActivTech System was protected by a patent when, in fact, it was not. However, Multisorb failed to show deceptiveness or materiality.  “[N]one of the customers deposed in this case indicated that they cared the least bit whether the ActiveTech System was patent protected.”  The Executive VP/COO of one meatpacking company testified that the existence of patents didn’t influence his decision to use Pactiv’s system; the GM of another meatpacking company “testified similarly that patents play no role in its purchasing decisions.”  Another customer witness didn’t recall any discussion of patents relating to the system with Pactiv.  A final customer witness testified that patent protection “didn’t really affect our decision-making process,” and indicated that the validity of the patent wouldn’t have altered its buying process.

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