April 13, 2017

Trust but Verify – When Speculation and Assertion Are Not Enough

By Paul E. Zarek, Ph.D., Patent Agent

In a non-precedential opinion in Gravelle v. Kaba Ilco, Co., [2016-3218] (April 12, 2017), the Federal Circuit affirmed the district court’s finding of summary judgment for Kaba on the grounds that the plaintiff (Gravelle) did not provide sufficient evidence of a “competitive injury.”

Gravelle sold key-cutting machines, including the models CodePro 4500 and RapidKey 7000, since the late 1990s. In 2008, Kaba marketed its EZ Code machine with two features (“automatic blade detection” and “automatic calibration”) as “patent pending.” However, no patent application was ever filed for either feature.  Gravelle sued Kaba in district court for monetary relief under the Patent Act’s false marking provision (35 U.S.C. § 292), the Lanham Act’s false advertising provision (15 U.S.C. § 1125), and North Carolina’s Unfair and Deceptive Practices Act (N.C. Gen. Stat. § 75-1.1 et seq).  Both Kaba and Gravelle filed motions for summary judgement.  The district court granted Kaba’s motion on all counts, denied Gravelle’s motion, and ordered Gravelle to reimburse Kaba for attorney’s fees and some expenses.  Gravelle appealed the summary judgement to Kaba and the orders to reimburse Kaba.

The crux of Gravelle’s argument for appealing the summary judgement was that he would have sold more key-cutting machines or received additional compensation for selling the rights to a key-cutting machine if Kaba didn’t falsely mark their EZ Code machine with “patent pending.”  Unfortunately for Gravelle, he did not provide any actual evidence that he suffered any economic or competitive injury as a result of the false marking.  The CAFC was not impressed with Gravelle’s lack of documentation, stating that his assertion was “too speculative and unexplained.”

The paucity of evidence similarly doomed Gravelle’s suit under the Lanham Act and state statute.  The plaintiff did not proffer any proof that any alleged economic injury, or likelihood of economic injury, was caused by Kaba’s false markings.  Given the “lack of concrete, non-speculative evidence of causation of an actual injury”, a unanimous CAFC affirmed the entry of summary judgment for Kaba on the false-marking, Lanham Act, and state law claims.

The decision in Gravelle should be a clarion call for retailers and manufacturers to keep actual records of sales or potential sales in case to establish “competitive injury.”  Assertion and speculation are not sufficient.