Sukumar v. Nautilus, Inc.

• Citation: 842 F.Supp.2d 951
• Decision Date: 10 February 2012
• Docket Number: Case No. 7:11–cv–00218.
• Court: U.S. District Court — Western District of Virginia
• Parties: Ponani SUKUMAR, and Southern California Stroke Rehabilitation Associates, Inc., Plaintiffs, v. NAUTILUS, INC., Defendant.

842 F.Supp.2d 951

Ponani SUKUMAR, and Southern California Stroke Rehabilitation Associates, Inc., Plaintiffs,

v.NAUTILUS, INC., Defendant.

Case No. 7:11–cv–00218.

United States District Court,

W.D. Virginia,

Roanoke Division.

Feb. 10, 2012.

4,257,592, 4,456,245, 4,493,485, 4,589,656, 4,733,860, 5,060,938, 5,308,303, 5,312,313, 5,374,227, 5,380,258, 5,387,170, 5,437,589, 5,499,959, 5,749,807, 5,810,696. Cited.William B. Poff, Woods Rogers PLC, Roanoke, VA, Dae Hee Cho, Lawrence Robert LaPorte, Michael Albert Tomasulo, Los Angeles, CA, for Plaintiffs.

Cynthia L. Santoni, McLean, VA, Walter Herbert Peake, III, Frith Anderson & Peake PC, Roanoke, VA, Robert Wayne Harrison, Wade Travis Anderson, Frith Anderson & Peake PC, Patrick Joseph Kearns, San Diego, CA, for Defendant.

MEMORANDUM OPINION

JAMES C. TURK, Senior District Judge.

This matter is before the Court on Plaintiffs Ponani Sukumar (“Sukumar”) and Southern California Stroke Rehabilitation Associates, Inc. (“SCSRA”)'s Motion for Partial Summary Judgment (ECF No. 80). Defendant Nautilus, Inc. (“Nautilus”) filed an Opposition (ECF No. 89), to which the Plaintiffs replied (ECF No. 91). The parties were heard on December 21, 2011, and the matter is now ripe for disposition. For the reasons set forth below, Plaintiffs' Motion (ECF No. 80) is GRANTED IN PART and DENIED IN PART.¹

I. Factual and Procedural Background

In 2004, Plaintiff Sukumar founded Plaintiff SCSRA in support of his quest to create a profit-generating, specific, specialized, customized, equipment-based protocol to assist elderly patients with medical rehabilitation. Am. Compl. ¶¶ 24–27. After an extensive search for rehabilitation equipment, Sukumar determined that no “off the shelf” product would meet his requirements. Id. ¶ 30. Sukumar found that machines manufactured by Nautilus came closest to his needs, but nonetheless needed modifications to work with his rehabilitation protocol. Id. Sukumar, an engineer with a Wharton MBA, believed he could make the required modifications himself, but after learning about Nautilus's extensive patent portfolio and examining the patent labels on certain of Nautilus's products, he was intimidated and deterred from attempting such modifications, instead determining that he would have to rely on Nautilus to acquire the technology needed for his custom machines. Id. ¶ 34. Ultimately, Sukumar paid Nautilus more than $150,000 to manufacture customized exercise equipment. Id. ¶ 31. Moreover, on more than one occasion, Sukumar unsuccessfully sought to license technology from Nautilus. Id. ¶ 36. According to Sukumar, his ongoing belief that he needed a license from Nautilus prevented him from designing and building custom machines for SCSRA. Id. ¶ 37.

The Plaintiffs originally filed a Complaint against Nautilus in the Central District of California, accusing it of falsely marking a number of products in contravention of 35 U.S.C. § 292, the federal false marking statute (“Section 292”). See Compl., Oct. 20, 2011, ECF No. 1. On Nautilus's motion (ECF No. 20), the case was subsequently transferred to this District, in part because the machines alleged to have been falsely marked were manufactured at a former Nautilus plant located in Independence, Virginia. See Ord. Re Def.'s Mot. to Transfer, May 9, 2011, ECF No. 34. On June 3, 2011, Nautilus filed a motion to stay these proceedings, in part because legislation that would affect the outcome of this case was pending in Congress. See Def.'s Mot. to Stay, June 3, 2011, ECF No. 51. The Court agreed with Nautilus, and on June 30, 2011, ordered that the proceedings be stayed. On September 16, 2011, the President signed into law the Leahy–Smith America Invents Act, thereby amending Section 292 to eliminate its qui tam provisions and institute a competitive injury requirement for private plaintiffs. That same day, the Plaintiffs filed a First Amended Complaint explicitly alleging competitive injury and adding California and Washington state law claims. Plaintiffs then filed the instant Motion for Partial Summary Judgment, asking the Court to grant summary judgment as to certain elements of its state and federal claims. Specifically, the Plaintiffs ask the Court to find, as a matter of law:

(1) Nautilus (a) improperly marked each of nine “accused machines,” thereby violating the first element of Section 292, and (b) did so with the intent to deceive, thereby violating the second element of Section 292;

(2) Nautilus (a) intended to dispose of real or personal property, to wit, the accused machines, and (b) publicly disseminated statements which were untrue or misleading and which it knew, or in the exercise of reasonable care, should have known, to be untrue or misleading, concerning the accused machines, thereby violating the California False Advertising Law;

(3) Nautilus (a) engaged in an unfair or deceptive act or practice, (b) in trade or commerce, (c) that impacted the public interest, thereby violating the first three elements of the Washington Consumer Protection Act.

II. Standard of Review

“[T]he function of a motion for summary judgment is to smoke out if there is any case, i.e., any genuine dispute as to any material fact, and, if there is no case, to conserve judicial time and energy by avoiding an unnecessary trial and by providing a speedy and efficient summary disposition.” Bland v. Norfolk & S.R.R. Co., 406 F.2d 863, 866 (4th Cir.1969). In considering a summary judgment motion, the Court views the facts, and any inferences to be drawn from those facts, in the light most favorable to the nonmoving party. See United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) (per curiam). Summary judgment is appropriate where the movant “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Moreover, summary judgment may be sought as to the entirety of a claim or defense or part of a claim or defense. Id.

A genuine issue of material fact exists where reasonable jurors could find that the nonmoving party is entitled to a verdict in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the initial burden of showing the lack of a genuine dispute as to the material facts in the case. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once a motion for summary judgment is properly made and supported, however, that burden shifts to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A moving party is entitled to summary judgment if the record as a whole could not lead a rational trier of fact to find in favor of the non-movant. Williams v. Griffin, 952 F.2d 820, 823 (4th Cir.1991).

But “[e]ven where summary judgment is appropriate on the record so far made in a case, a court may properly decline, for a variety of reasons, to grant it.” Forest Hills Early Learning Ctr., Inc. v. Lukhard, 728 F.2d 230, 245 (4th Cir.1984). Accord Andrew v. Clark, 561 F.3d 261, 271 (4th Cir.2009) (recognizing advisory committee notes affording district court discretion even where summary judgment standard is met). See also Little Six, Inc. v. United States, 280 F.3d 1371, 1373 (Fed.Cir.2002) (“In reviewing a denial of a motion for summary judgment, we give considerable deference to the trial court, and will not disturb the trial court's denial of summary judgment unless we find that the court has indeed abused its discretion.” (internal quotation marks omitted)).

III. Discussion

A. The False Marking Statute (35 U.S.C. § 292)

An entity violates Section 292 when it (1) falsely marks an unpatented article; and (2) does so for the purpose of deceiving the public. ²35 U.S.C.A. § 292(a) (West 2011). The Plaintiffs ask the Court to grant them summary judgment as to both of these elements. The Court takes up these arguments in turn.

1. Falsely Marking Unpatented Articles

Here, Plaintiffs argue that nine of the machines Nautilus manufactured at its Independence plant—six strength machines and three cardiovascular machines—are unpatented and falsely marked. For the purposes of the false marking statute, an article is “unpatented” where “the article in question is not covered by at least one claim of each patent with which the article is marked.” Clontech Laboratories, Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed.Cir.2005). Thus, the Court must examine each of the so-called “accused machines” to determine whether it is not covered by at least one claim of each patent with which it is marked. In support of their request on this element, Plaintiffs provide the declaration of an expert, Fred Smith, the declaration of their counsel, and copies of patent filings. Nautilus has not contested this evidence. In fact, at oral argument, it admitted the machines were mismarked.³See United States v. Dooley, 424 F.2d 1067, 1067–68 (5th Cir.1970) (court may consider party's concession at oral argument for purposes of summary judgment).

a. Accused Strength Machines

The first part of the Plaintiffs' false marking claim is based on six exercise machines chiefly intended to help the user increase strength and build muscle. These machines are the 2006 Nitro Plus Biceps Curl, the 2007 Nitro V–Triceps Extension, the 2008 F2 Lat Pulldown, the 2008 Studio Pec Fly, the 2009 One Triceps Press, and the 2009 XPLoad Compound Row (collectively, the “accused strength machines”). The accused strength machines all carried the same label, which was endorsed with the Nautilus name, the words “Manufactured Under U.S. Patent Numbers and Other Patents Pending,” followed by a set of 24 numbers in the format X,XXX,XXX. These numbers include 4,257,592; 4,456,245;4,493,485; 4,589,656; 4,733,860; 5,374,227; 5,749,807; and 5,810,696. Even a cursory review of the evidence reveals that none of...