Troutman Sanders LLP: District Judge O'Grady Dismisses Fraud, Interference and Antitrust Claims in Patent Suit

By Dabney Carr

Erick Cherdak brought claims for patent infringement, patent interference under 35 U.S.C. 291 and antitrust violations against several defendants, including Apple and Nike, based on his patent for an "Athletic Shoe with Timing Device."   On motions to dismiss, Judge Liam O'Grady of the Eastern District of Virginia dismissed all the claims except the patent infringement claims. Cherdak v. Vock, et al., Case No. 1:11CV1311, 2012 U.S. Dist. LEXIS 57511 (Apr. 23, 2012) (found here).

A summary of Judge O'Grady's rulings follows:

Fraud and Inequitable Conduct

Cherdak alleged fraud and inequitable conduct based on alleged misstatements and omissions made regarding his patent during prosecution of one of the defendant's patents. The Cherdak patent, however, was before the PTO during the prosecution of the defendant's patents. The allegations of misstatements, Judge Grady ruled, amounted to nothing more than permissible attorney argument advocating the attorney's interpretation of its claims and the teachings of the prior art. While not a groundbreaking ruling, Judge O'Grady's decision will be helpful precedent to parties fighting inequitable conduct claims.

Interference

25 U.S.C. 291 permits relief to the owner of an interfering patent against another by civil action. A predicate to such a claim, however, is the existence of an interference-in-fact, which requires a showing that each of the inventions at issue is invalidating prior art to the other. Again, Judge O'Grady ruled, the Cherdak patent was before the PTO during prosecution, and the examiner considered the precise claims that Cherdak challenged but ultimately allowed the patent to issue. Judge O'Grady agreed with the PTO, and dismissed the interference claims. Judge O'Grady is probably correct that the PTO got it right, but its questionable whether it was appropriate to make that determination on a motion to dismiss.

Declaratory Judgment

Cherdak also sought a declaratory judgment that the defendants' patents were invalid, but there was no evidence that any of the defendants were interested in enforcing their patents against Cherdak. Without any affirmative enforcement-related activity, there was no declaratory judgment jurisdiction. Again, this is not a groundbreaking ruling but may prove helpful to parties contesting declaratory judgment jurisdiction.

Antitrust Violations

Cherdak alleged a Walker Process claim and an illegal tying claim against Nike and Apple. Under Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172 (1965) [enhanced version available to lexis.com subscribers], the enforcement of the patent procured by fraud, may violate § 2 of the Sherman Act. Not only had Cherdak failed to adequately plead fraud, but he alleged injury to his patent rights. The antitrust laws, Judge O'Grady held, "are directed to protecting market competition, not at protecting the inherent monopoly power and benefits provided under intellectual property laws." 

Finally, Cherdak's illegal tying claim failed because a person buying Nike's shoes need not buy Apple's sports pack. While Apple contended that its products worked best with Nike's shoes, customers were not precluded from purchasing other shoes to use with Apple's products.

Copyright © 2012, Troutman Sanders LLP

Virginia IP Law
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