IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

In a decision that highlights the import of assigning or licensing intellectual property assets during corporate reorganization, a district court recently ruled that a plaintiff patentee was not entitled to lost profit damages based on the patent at issue in an infringement action. In Duhn Oil Tool, Inc. v. Cooper Cameron Corporation (CAED January 24, 2011) Duhn Oil Tool, Inc. filed suit against Cooper Cameron Corporation alleging patent infringement. Following discovery, the defendant filed a motion for partial summary judgment arguing that the plaintiff patentee was not entitled to lost profits damages.

In considering the defendant’s motion, the court considered the implications of corporate reorganization involving the plaintiff patentee. As a result of a stock acquisition and restructuring of operations, all of the plaintiff patentee’s operations were transferred to a non-party parent. Although the plaintiff patentee continued to operate as a business entity post-acquisition, it was no longer involved in the business operations relating to the goods and services subject to the patent at issue in the litigation.

The district court ruled for the defendant and granted partial summary judgment on grounds that, as of the date of transfer of operations, the non-party parent alone incurred business expenses, made profits and suffered losses. The court found that the plaintiff patentee had neither “assigned the patent-in-suit to [non-party parent] nor granted a license to [non-party parent].” As such, plaintiff patentee was not entitled to lost profits damages after the date of reorganization, the time at which its parent took over operations relating to the patent at issue.

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Courts continue to wage a valiant effort to create consistency and provide guidance in the numerous false marking cases launched in the aftermath of Bon Tool. Defendants accused of false marking may seek dismissal on the basis that plaintiff lacks standing. In so doing, defendants often argue that plaintiff was not in the business and suffered no competitive injury as a result of false marking.

This strategy was effectively foreclosed when the Court of Appeals for the Federal Circuit reversed and remanded the Southern District of New York’s holding in Stauffer v. Brooks Brothers. In that case, the Federal Circuit concluded that the government’s right to have its laws effectively applied provided sufficient basis for a qui tam plaintiff to bring an action on its behalf. As a result, false marking defendants now seek alternative defensive strategies, including attacks on the sufficiency of the complaint and assertion of affirmative defenses. To see the results of two such attempts, see the discussion after the jump.

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