False Marking: Federal Circuit Clarifies the “Competitive Injury” Standing Requirement Imposed by the America Invents Act

In Sukumar v. Nautilus, Inc., No. 14-1205 (Fed. Cir. May 4, 2015), the Federal Circuit affirmed the district court’s determination that the plaintiff did not suffer a “competitive injury” necessary to have standing to maintain a claim under 35 U.S.C. § 292(b).

The America Invents Act amended the false marking statute to require a “competitive injury” to bring a private right of action. The Court held that “a potential competitor may suffer competitive injury if it has attempted to enter the market” by showing an “(1) intent to enter the market with a reasonable possibility of success, and (2) an action to enter the market.”

Sukumar sought summary judgment on the issue of whether Nautilus fitness machines were falsely marked.  The Court held that the plaintiff lacked both intent and action to enter the market and therefore was neither engaged in competition nor suffered competitive injury. Relying on the record, the Court found that Sukumar only intended to use the modified fitness machines in his company’s rehabilitation centers, but found no intent to enter the market with machines in direct competition with Nautilus. Further, Sukumar’s lack of a business plan, prototype design, employee hiring, acquisition of engineering knowledge, and investigation of development of manufacturing capacity, in the Court’s view, evidenced a lack of sufficient action taken to enter the market. As a result, Sukumar lacked standing to maintain the false marking action.