IP Law Daily Amazon seller’s declaratory judgment claims of patent invalidity move forward
Monday, November 4, 2019

Amazon seller’s declaratory judgment claims of patent invalidity move forward

By Jody Coultas, J.D.

Claims for inequitable conduct were dismissed, however.

The federal district court in San Francisco granted, in part, patent holder Kenu, Inc.’s motion to dismiss a declaratory judgment action filed by an Amazon seller who was unable to sell his air vent cellphone mount holder on Amazon.com because Kenu contended that the product infringed its patents. Amazon removed the seller’s products in light of a legal settlement with Kenu in which Kenu alleged the product infringed its patents. Kenu also sent a letter to the seller alleging infringement and threatening to sue. The court noted that there was a sufficient case or controversy based on the letter from Kenu threatening to sue and the potential for the seller to resume selling on Amazon based on a favorable ruling. Although there were sufficient allegations of invalidity based on obviousness, there was insufficient evidence to support the seller’s claims of inequitable conduct (Dror v. Kenu, Inc., November 1, 2019, Beeler, L.).

Kenu owns U.S. Patent Nos. 9,080,714 (the ’714 patent) and 9,718,412 (the ’412 patent), and two other continuation patents, U.S. Patent Nos. 9,956,923 (the ’923 patent) and 10,315,585 (the ’585 patent). After settling a complaint form Kenu, Amazon removed the seller’s listings for the IDStore Mount. The seller contends that the IDStore Mount does not infringe on the patents, as well as that the patents were invalid and unenforceable based on purported inequitable conduct.

Subject matter jurisdiction. Because the seller established a justiciable case or controversy between the parties, the court had subject matter jurisdiction over the declaratory judgment. A letter sent by Kenu charging the seller with infringing its patents and threatening to sue him gave rise to a case or controversy. The letter threatened suit under at least the ’714 and ’412 patents, and could not show that the threat was any less sufficient to give rise to declaratory-judgment jurisdiction with respect to the related ’923 and ’585 patents. Even if the seller ultimately wants Amazon’s approval to sell his IDStore Mount, a favorable judgment here would remove one hurdle to obtaining that approval, which is sufficient for redressability. The fact that Kenu had not filed suit against the seller in the 21 months since it sent its letter did not change the circumstances.

Invalidity. The complaint sufficiently alleged the invalidity claims against Kenu, according to the court. The seller alleged that the patents are "invalid under Sections 101, 102, 103 and 112 of the Patent Act, and highlighted the obviousness claim with five specific pieces of prior art that allegedly rendered the patents obvious. This was sufficient to place Kenu on notice of the claims.

Inequitable conduct. Kenu was entitled to dismissal of the seller’s inequitable-conduct claims, according to the court. The seller alleged that David E. Yao’s declaration to the USPTO during the prosecution of the ’714 patent that he invented the adjustable mounting clip and use of gripping was fraudulent. Also, the seller alleged that Kenu fraudulently omitted a John Duran as a co-inventor on the D707 Patent, a predecessor to the patents at issue. However, the complaint was devoid of facts to support the claims. Although the seller based his claims on "information in belief" in light of the fact that "the information as to who contributed to the invention of Kenu’s patents at issue is uniquely within control of Kenu and the patents’ inventors," he was still required to present facts sufficient to support the fraud claims. The court granted the seller leave to amend.

UCL claim. The seller’s California Unfair Competition Law claim based on Kenu’s obtaining the patents by engaging in intentionally untruthful behavior was dismissed by the court. As noted, the seller failed to adequately plead the inequitable conduct claims.

This case is No. 3:19-cv-03043-LB.

Attorneys: Bruno W. Tarabichi (Tupper Mack Wells PLLC) for Idan Dror. Michael S. Kwun (Kwun Bhansali Lazarus LLP) for Kenu, Inc.

Companies: Kenu, Inc.

MainStory: TopStory Patent CaliforniaNews

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