A federal judge in California recently rejected a constitutional challenge to the AIA’s retroactive false marking provisions in Seirus Innovative Accessories, Inc. v. Cabela’s, Inc., Case No. 09-CV-102 (S.D. Cal. Oct. 19 2011). Specifically, the court found that the retroactive application of the AIA to pending lawsuits did not violate the Takings or Due Process Clause of the United States Constitution. The court also ruled that Cabela’s, which had been sued by Seirus for patent infringement, did not establish that it “has suffered a competitive injury,” as now required under the AIA for a false marking civil claim for damages.  Thus, the court granted summary judgment to Seirus on Cabela’s false marking counterclaim.

The case is interesting because it—unlike the type of qui tam false marking suits that the AIA’s reforms were targeting and that district courts have begun dismissing —involves parties engaged in at least some level of competition. Cabela’s is a retailer of hunting, fishing, camping, and outdoor gear and uses the tagline “Experience the World’s Foremost Outfitter”®.  Seirus designs “ski and snowboarding essentials” that can be purchased at various approved retailers, not including Cabela’s.  Seirus uses the taglines, “Innovation on the Mountain since 1979,” and “Patented Designs – Premium Materials – Quality Construction.”  The three patents Seirus asserted against Cabela’s cover ski masks and related cold weather gear.

Nonetheless, the court held Cabela’s failed to offer evidence that it suffered a competitive injury resulting in damages. The AIA does not define “competitive injury,” so the court in the Seirus case referenced a Supreme Court decision addressing price discrimination under the Robinson-Patman act (Volvo Trucks N. Am., Inc. v. Reeder-Simco GMC, Inc., 546 U.S. 164, 176 (2006)). The court also found that “Cabela’s has failed to demonstrate that its [sic] in a competitive relationship with Seirus” because Seirus sells its products to distributors and retailers whereas Cabela’s is a retailer and that Cabela’s had previously conceded that it “is not in competition with Seirus.” Although the AIA now clearly requires “a competitive injury” for a false marking civil action, it is not clear that being in a “competitive relationship” or “in competition” should be required for a false marking claim. Further, while Cabela’s failed to set forth sufficient facts to show a competitive injury in this case, other companies that are not direct competitors, like Cabela’s and Seirus, may be able to do so in the future.