DCT
1:10-cv-01424
Englehardt v. Costco Wholesale Corp
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Edward T. Englehardt (Illinois)
- Defendant: Costco Wholesale Corporation (Washington)
- Plaintiff’s Counsel: Eugene M. Cummings, P.C.
- Case Identification: 1:10-cv-01424, N.D. Ill., 03/03/2010
- Venue Allegations: Venue is alleged to be proper in the Northern District of Illinois because the Defendant’s allegedly falsely marked products were and are offered for sale and sold within the district.
- Core Dispute: Plaintiff alleges in a qui tam action that Defendant violated federal law by marking its Kirkland Signature® branded diapers with expired patent numbers with the intent to deceive the public and deter competition.
- Technical Context: The technology at issue relates to disposable absorbent articles, specifically diapers, a mature and high-volume consumer goods market.
- Key Procedural History: The complaint initiates a qui tam action on behalf of the public under the false patent marking statute, 35 U.S.C. § 292. No other procedural events are mentioned in the complaint.
Case Timeline
| Date | Event |
|---|---|
| 1987-10-16 | U.S. Patent No. 4,798,603 Priority Date |
| 1988-04-21 | U.S. Patent No. 5,147,343 Priority Date |
| 1989-01-17 | U.S. Patent No. 4,798,603 Issue Date |
| 1992-09-15 | U.S. Patent No. 5,147,343 Issue Date |
| 2007-10-16 | U.S. Patent No. 4,798,603 Expiration Date |
| 2009-09-15 | U.S. Patent No. 5,147,343 Expiration Date |
| 2009-11-09 | Alleged Manufacture Date of Exemplary Accused Product Packaging |
| 2010-03-03 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 4,798,603 - “Absorbent Article Having a Hydrophobic Transport Layer,” issued January 17, 1989
- The Invention Explained:
- Problem Addressed: The patent describes a deficiency in conventional absorbent articles, such as diapers, which were not sufficiently able to both rapidly conduct fluid into an absorbent core and inhibit the subsequent "flowback" of that liquid against the wearer's skin (ʼ603 Patent, col. 2:3-8).
- The Patented Solution: The invention introduces a "liquid permeable transport layer" positioned between the topsheet and the absorbent body. This transport layer is specifically engineered to be less hydrophilic than the absorbent body and to have an average pore size smaller than the topsheet. This structure creates a capillary gradient that is designed to pull fluid away from the skin and into the core, while resisting its return, thereby keeping the wearer drier (ʼ603 Patent, Abstract; col. 2:13-28).
- Technical Importance: This layered design, which managed fluid transfer through engineered material properties like hydrophilicity and pore size, represented an effort to improve diaper comfort and reduce skin wetness (ʼ603 Patent, col. 2:29-34).
U.S. Patent No. 5,147,343 - “Absorbent Products Containing Hydrogels with Ability to Swell Against Pressure,” issued September 15, 1992
- The Invention Explained:
- Problem Addressed: The patent notes that prior superabsorbent polymers (SAPs) did not perform well when under compression, such as when a baby sits or moves. The fluid absorption capability was diminished "under actual pressures exerted by the body during use" (ʼ343 Patent, col. 2:55-59).
- The Patented Solution: The invention discloses an absorbent composite comprising a porous fiber matrix and a superabsorbent material that exhibits a high "Absorbency Under Load" (AUL). AUL quantifies the material's ability to absorb fluid while under a significant restraining force. The invention also teaches specific relationships between the SAP particle size and the fiber matrix pore size to prevent "gel-blocking," where swollen SAP particles obstruct fluid flow within the diaper core (ʼ343 Patent, Abstract; col. 7:20-29).
- Technical Importance: By focusing on performance under pressure (AUL), the technology aimed to create thinner, more efficient diapers that were less prone to leaking during real-world use, a key driver of consumer satisfaction (ʼ343 Patent, col. 6:55-58).
III. The Accused Instrumentality
- Product Identification: Kirkland Signature® branded diapers and their packaging (Compl. ¶¶ 8, 18).
- Functionality and Market Context: The products are described as "super-absorbent" diapers with features for fit and comfort, such as "advanced shaping" and a "breathable" outer cover (Compl. ¶19). The packaging for these diapers is the direct object of the false marking allegation, as it is alleged to bear the numbers of the expired patents (Compl. ¶29). The complaint provides a photograph of the diaper packaging that displays a list of U.S. patent numbers, including the two expired patents at issue (Compl. p. 5). This visual evidence also includes a date stamp of "11-9-09," which the complaint alleges is the date of manufacture (Compl. ¶21).
IV. Analysis of False Marking Allegations
The complaint does not allege patent infringement but rather false patent marking under 35 U.S.C. § 292. The core of such a claim is that the defendant marked an unpatented article with the intent to deceive the public.
| Element of False Marking (35 U.S.C. § 292) | Allegations in Complaint | Complaint Citation |
|---|---|---|
| Marking an Unpatented Article | Defendant marks the packaging of its Kirkland Signature® branded diapers with a list of U.S. patents that includes U.S. Patent Nos. 4,798,603 and 5,147,343. | ¶¶ 2, 18, 19 |
| — Article is "Unpatented" | The '603 Patent expired in October 2007 and the '343 Patent expired in September 2009. The complaint alleges that a product marked with an expired patent is not currently protected by that patent and is therefore "unpatented" for the purposes of the statute. | ¶¶ 2, 16, 17, 23 |
| — Marking Occurred Post-Expiration | An exemplary package of the accused diapers bears a manufacturing date stamp of "11-9-09," which is subsequent to the expiration dates of both the '603 and '343 Patents. | ¶¶ 21, 22 |
| Intent to Deceive the Public | Defendant is alleged to be a "sophisticated company" with experience in obtaining and litigating patents, and therefore "knows, or reasonably should know" that the patents are expired and of the legal requirements of the marking statute. | ¶¶ 24, 28 |
| The marking is alleged to be intentional and for the purpose of "deceiving the public into believing that something...is covered by or protected by the Expired Patents," thereby attempting to "prevent competitors from making and selling the same or similar diapers." | ¶¶ 30, 31, 32 |
- Identified Points of Contention:
- Evidentiary Question (Intent): The central issue in false marking cases is proving the defendant's "intent to deceive." The complaint relies on circumstantial evidence, primarily the Defendant's alleged sophistication in patent matters (Compl. ¶24). A key question for the court will be whether the continued marking, by itself, is sufficient to infer deceptive intent, or if it could be attributed to a non-deceptive cause such as administrative oversight or inventory management of pre-printed packaging.
- Legal Question (Harm): The complaint alleges the marking is likely to deter competitors (Compl. ¶32). The statute provides for a penalty per offense, but the litigation may explore what level of proof, if any, is needed to demonstrate that the marking had an actual or potential anti-competitive effect in the marketplace.
V. Other Allegations
- Deceptive Intent: The complaint builds its case for deceptive intent not on direct evidence, but on a collection of inferences. It alleges that as a "sophisticated company" with patent experience, Costco "knows, or should know" that patents expire and that marking products with expired patent numbers is improper (Compl. ¶¶ 24, 26, 28). The complaint further alleges that the specific purpose of this marking was to "prevent competitors from making and selling the same or similar diapers" and to mislead the public about the product's protected status, thereby gaining a competitive advantage (Compl. ¶¶ 2, 30, 31).
VI. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of intent: Can the plaintiff establish that Costco’s marking of its diaper packaging with expired patent numbers was done with the specific "intent of deceiving the public," as required by the statute, or will the defendant be able to demonstrate that the continued marking was a result of mistake or administrative inertia rather than a deliberate attempt to mislead?
- A key evidentiary question will be one of causation and proof: What evidence, beyond the mere fact of the marking itself, will the plaintiff need to produce to support the allegation that the inclusion of two expired patents in a long list of patent numbers on a consumer product package was for the purpose of deterring sophisticated competitors?