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From Antitrust Law Daily, December 10, 2018

Key-cutting machine designer cannot reassert patent marking, false advertising claims against rival

By Thomas Long, J.D.

A designer of an electronic key cutting machine was barred by the doctrine of claim preclusion from reasserting claims that a competitor falsely marketed and promoted its own key cutting machines as having "patent pending" features, in violation of the Patent Act’s false-marking provision, 35 U.S.C. §292; the false advertising provision of the Lanham Act, 15 U.S.C. §1125(a); and North Carolina’s Unfair and Deceptive Practices Act (UDPA), the U.S. Court of Appeals for the Federal Circuit has held. The designer alleged the same facts and asserted the same causes of action as in an earlier lawsuit. That suit had been dismissed for failure to establish a competitive injury resulting from the alleged false marking, and the Federal Circuit had affirmed that dismissal. Although the designer named additional defendants in his new complaint, they were privies of the primary defendant, the competitor. The designer also added a claim under the Canadian Competition Act that was not included in the previous complaint, but that claim was precluded under the rule against claim splitting (Gravelle v. Kaba Ilco Corp., December 10, 2018, per curiam).

Machine designer Gordon Gravelle, doing business as CodePro Manufacturing, created and sold two electronic key cutting machines, the CodePro 4500 and the RapidKey 7000. In a prior lawsuit, Gravelle and CodePro asserted that competitor Kaba Ilco Corp. falsely labeled two features on its machine as "patent pending," but never filed an application for a patent for those two features, purportedly resulting in diverted sales away from CodePro. In an April 12, 2017, decision, the Federal Circuit affirmed the district court’s dismissal of the suit for failure to establish a competitive injury caused by the alleged false marking. However, the district court’s award of attorney fees to Kaba was vacated, and the case was remanded for further proceedings on that issue.

On remand, Gravelle filed a motion pursuant to Federal Rule of Civil Procedure 60(b) seeking relief from the orders granting Kaba summary judgment and attorney fees. While that motion was pending, he initiated another lawsuit against Kaba. The district court subsequently denied the Rule 60(b) motion in the earlier lawsuit. In the new suit, the district court interpreted Gravelle’s claims liberally, given his status as a pro se litigant, and interpreted his complaint as (1) seeking relief from the prior orders pursuant to Rule 60; (2) asserting claims under the UDPA, the Patent Act, and the Lanham Act; and (3) asserting a claim under the Competition Act of Canada. The district court dismissed the complaint, holding that it did not assert a valid Rule 60 claim, and that any claim under the UDPA, Patent Act, Lanham Act, or Canadian Competition Act was barred by claim preclusion. Gravelle appealed to the Federal Circuit, which affirmed the district court’s ruling.

Rule 60 claim. Rule 60 provides means for obtaining relief from a judgment or order, under limited circumstances. Gravelle alleged that Kaba engaged in fraud on the district court by in its answer and motion for summary judgment by denying all allegations of false marking. He also asserted that Kaba prevented him from getting information that would have helped his case, by failing to provide contact information for certain employees. These allegations did not support relief under Rule 60, the appellate court said. In the Fourth Circuit—the district court’s home circuit—a judgment may be set aside for fraud on the court only where "corruption of the judicial process itself" has occurred. The allegation that Kaba lied about false marking did not support relief from the judgment because judgment was entered against Gravelle due to failure to prove that he sustained an injury, not a failure to establish that false marking occurred. The allegation about Kaba’s withholding of contact information was a discovery dispute that had to be resolved during the initial trial rather than an independent action. Neither allegation constituted fraud on the court, which ordinarily involved such acts as bribery of a judge or juror, or a conspiracy between an attorney and a witness to render perjured testimony, the Federal Circuit explained.

UDPA, Patent Act, and Lanham Act claims. The appellate court held that Gravelle’s claims under the UDPA, Patent Act, and Lanham Act were barred by claim preclusion because there was a final judgment on the merits in the prior lawsuit. The causes of action were identical. Gravelle alleged the same facts and asserted the same statutory provisions. Although Gravelle named two additional defendants not named previously, the district court correctly determined that they were privies of Kaba. Accordingly, dismissal of these three claims was affirmed. The Canadian Competition Act claim also was properly dismissed as precluded under the rule against claim splitting, the court stated.

This case is No. 2018-1937.

Attorneys: Gordon Gravelle, pro se.

Companies: CodePro Key Corp.; Kaba Ilco Corp.

MainStory: TopStory Advertising FedCirNews StateUnfairTradePractices

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