DCT

1:10-cv-01424

Englehardt v. Costco Wholesale Corp

Log In

I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 1:10-cv-01424, N.D. Ill., 10/01/2010
  • Venue Allegations: Venue is asserted based on the defendant, Costco, offering for sale and selling the allegedly falsely marked products within the Northern District of Illinois.
  • Core Dispute: Relator alleges that Defendant violates federal law by marking its Kirkland Signature® diaper products with expired U.S. patent numbers with the intent to deceive the public.
  • Technical Context: The technology relates to disposable absorbent articles, such as diapers, focusing on multilayer structures for fluid management and the use of superabsorbent polymers to enhance capacity and performance under pressure.
  • Key Procedural History: This is a qui tam action brought on behalf of the public under the false patent marking statute, 35 U.S.C. § 292. The complaint references the Federal Circuit's decision in Pequignot v. Solo Cup to support a rebuttable presumption of deceptive intent based on the alleged facts.

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 Issued
1992-09-15 U.S. Patent No. 5,147,343 Issued
2007-10-16 U.S. Patent No. 4,798,603 Expired
2009-09-15 U.S. Patent No. 5,147,343 Expired
2009-11-09 Alleged Manufacture Date of Exemplar Accused Product
2010-10-01 First Amended Complaint Filed

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 challenge in conventional absorbent articles, such as diapers, which struggled to both rapidly absorb liquid away from a wearer's skin and simultaneously prevent that absorbed liquid from flowing back to the skin, a phenomenon known as "flowback." (’603 Patent, col. 2:4-8).
  • The Patented Solution: The invention introduces a dedicated "transport layer" situated between the body-facing topsheet and the main absorbent core. This transport layer is engineered to be less hydrophilic than the absorbent core and to have an average pore size smaller than the topsheet but larger than the absorbent core. This structure creates a pore size gradient that encourages fluid to move in one direction—away from the skin and into the absorbent core—while inhibiting its return. (’603 Patent, Abstract; col. 3:5-14).
  • Technical Importance: This multi-layer approach with a dedicated transport layer represented an effort to improve wearer comfort and skin health by creating a drier surface against the skin.

Key Claims at a Glance

  • The complaint does not assert specific claims for infringement, as the action is for false marking with expired patents. The technology of the patent is relevant context for the products being marked.

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 addresses the issue of "gel-blocking," where superabsorbent polymers (SAPs), upon absorbing liquid, swell and block the pores within the absorbent core, preventing further fluid from reaching unused absorbent material. It also notes that many SAPs lose significant absorptive capacity when under the real-world pressures exerted by a wearer. (’343 Patent, col. 2:42-53).
  • The Patented Solution: The invention claims an absorbent composite using a specific class of SAPs that exhibit high "Absorbency Under Load" (AUL), meaning they can effectively absorb and retain fluid even while being compressed. A key aspect is the relationship between particle size and the matrix structure: at least 50% of the SAP particles are larger than the median pore size of the fiber matrix. This causes the particles to push the fibers apart as they swell, maintaining an open capillary structure for fluid transport rather than clogging it. (’343 Patent, Abstract; col. 7:41-55).
  • Technical Importance: This focus on AUL and particle/pore size relationships aimed to create thinner, more efficient diapers that could better handle multiple fluid insults without leaking, even under the dynamic pressures of use.

Key Claims at a Glance

  • The complaint does not assert specific claims for infringement. The technology is relevant context for the products being marked.

III. The Accused Instrumentality

Product Identification

  • Kirkland Signature® branded diaper products sold by Costco (Compl. ¶2, 12). The complaint provides photographs of "Couches Suprême Diapers" packaging as an exemplary product (Compl. ¶21, p. 5).

Functionality and Market Context

  • The products are described as super-absorbent diapers featuring "advanced shaping and a wraparound stretch" for a comfortable fit (Compl. ¶21, p. 5). The complaint alleges that Costco's intellectual property, including patents, adds significant value to its business and its Kirkland Signature® brand (Compl. ¶4, 26).

IV. Analysis of False Marking Allegations

The complaint alleges violation of 35 U.S.C. § 292, which prohibits marking an unpatented article with a patent number with the intent to deceive the public. The core allegations are summarized below.

Element of False Marking (35 U.S.C. § 292) Alleged Facts in Complaint Complaint Citation
Marking an "Unpatented Article" The complaint alleges that the Kirkland Signature® diapers are "unpatented" with respect to the marked patents because both the '603 and '343 Patents are expired and all rights have terminated. ¶2, 24
With the Number of a Patent The complaint provides photographic evidence showing a list of U.S. Patent numbers on the product packaging, which explicitly includes "4,798,603" and "5,147,343". The photograph shows a list of U.S. patents under the heading "Made under one or more of the following U.S. patents." ¶2, 21 (p. 6)
For the Purpose of Deceiving the Public The complaint alleges that Costco, a sophisticated entity, knew the patents were expired yet continued to mark newly manufactured products with them to deter competition and mislead the public into believing the products were covered by active patents. A photograph of product packaging includes a date stamp indicating a manufacture date of November 9, 2009, which is after the expiration dates of both patents. ¶2, 3, 5, 23, 31-32

VI. Other Allegations

  • Allegations Supporting Deceptive Intent: The complaint builds its argument for deceptive intent on a collection of factual allegations. It asserts that Costco is a "sophisticated company with extensive experience with intellectual property matters," including an in-house legal department and outside IP counsel (Compl. ¶3, 25). The complaint alleges that Costco knew the expiration dates of the patents, in part through its private label manufacturing and license agreement with Kimberly-Clark Corporation, the original assignee of the patents (Compl. ¶28-29). The central piece of evidence alleged to show non-inadvertence is a date stamp of "11-9-09" on product packaging, which is more than two years after the '603 Patent expired and two months after the '343 Patent expired (Compl. ¶23, 31). The Relator alleges these facts give rise to a rebuttable presumption of an intent to deceive (Compl. ¶32).

VII. Analyst’s Conclusion: Key Questions for the Case

This case does not concern claim construction or technical infringement but instead centers on the statutory requirements for false patent marking. The key questions for the court will likely be:

  • A central question of "intent": Can the Relator prove, by a preponderance of the evidence, that Costco's marking of products with expired patent numbers was done for the purpose of deceiving the public? The analysis may turn on whether Costco's actions are viewed as a deliberate business practice or an inadvertent administrative oversight.
  • An evidentiary question of "knowledge and timing": What evidence will be presented regarding when Costco became aware that the patents were expired and what, if any, steps it took to correct its packaging? The timing of the product's manufacture relative to the patent expiration dates, as alleged in the complaint, will be a critical factual issue.