Gravelle v. Kaba is a nonprecedential case decided on April 12, 2017 on appeal from the Eastern District of North Carolina . There, defendant Kaba marked its key-cutting machines as “patent pending” for two features—although no patent application for those features was ever filed. Plaintiff Gravelle filed suit pro se, arguing that he lost sales for one machine model, and that he had to sell rights to another model much lower than its true value. The district court granted Kaba summary judgment on the false marking claim, holding that Gravelle failed to show a competitive injury. The court then granted Kaba’s motion for attorney fees because the case involved “a complete absence of a justiciable issue of either law or fact” raised in “any pleading.” Gravelle appealed.
The Federal Circuit affirmed the district court’s determination of no competitive injury under the false marking claim, affirmed the order reimbursing Kaba for fees related to a motion to compel, and vacated the order awarding attorney fees.
Section 292(a) of the Patent Act prohibits “mark[ing] upon… any article, the words ‘patent pending’ … when no application for patent has been made… for the purpose of deceiving the public.” To sue under the statute, the plaintiff must have suffered a competitive injury as a result of a violation of the marking statute. A competitive injury is “a wrongful economic loss caused by a commercial rival,” such as the loss of sales due to unfair competition, or a disadvantage in a plaintiff’s ability to compete with a defendant caused by the defendant’s unfair competition.
The district court did not err in finding no competitive injury caused by Kaba’s false marking. Although one model of Gravelle’s machines (Model A) declined during the time of the false marking, Gravelle “did not put forth sufficient evidence to connect the decline in [Model A] sales to Kaba’s false marking of its machine as ‘patent pending.’” Indeed, Gravelle admitted that the decline in sales was because Kaba purchased the rights to the Model A machines, and Gravelle was no longer permitted to sell them.
Gravelle argued that it was forced to sell the rights to one model of its machines (Model B) for $20,000 where the true value of the rights absent Kaba’s false marking was more than $8 million. The $8 million was based on Gravel’s “own estimate that he could have sold 12 units per month over 12 years.” (emphasis in original). The district court held that “Gravelle’s estimate, not backed by any other evidence, was too speculative to support” a finding that Gravelle could have sold 12 units per month over 12 years. Gravelle sold a maximum of 19 Model A machines per year even before Kaba’s false marking, and at most 35 Model B machines over five years.
None of the evidence cited by Gravelle tied “Kaba’s marking activity to any diminution in the sales of the Gravelle model or the price [paid for the rights to Model B.]” Gravelle was not “deterred from introducing or continuing to market a product similar to Kaba’s falsely marked one or from engaging in innovation in the field of Kaba’s product.” Nor did he incur “costs in designing around the features Kaba marked as subject to a pending patent.” Gravelle’s own opinion that the features were “highly desirable… and could influence a buyer’s purchasing decision,” is “too speculative” to support a causal connection that buyers actually bought the “patent pending” machines over Gravelle’s machines.
The Federal Circuit vacated the attorney fee award and remanded. The basis of the district court award of fees was the “conclusion that Gravelle’s case for causation of injury was not only insufficient to create a triable issue but actually frivolous.” The Federal Circuit disagreed. Although “Gravelle lacked sufficient evidence of injury caused by Kaba’s conduct to permit a reasonable finding of causation,… the question of whether the evidence crossed the triable-issue threshold was a closer one than the district court concluded.” The problem with Gravelle’s case is that “he did not point to enough evidence to permit a reasonable finding that” customers made purchasing decisions for the machine models at issue because of the “patent pending” features. It’s not clear that a pro se plaintiff like Gravelle “should be charged with understanding that [causation] cannot be asserted in a wholly general manner, but must be supported by evidence, whether from customers or others, concretely showing how customers would have been influenced by a marking in the specific market.”
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