Hot Pocket or Hot Potato?: Parallel Infringement + Antitrust Lawsuits

by Dennis Crouch

Inline Packaging, LLC v. Graphic Packaging Intl., LLC, 962 F.3d 1015 (8th Cir. 2020)

The 8th Circuit recently decided this antitrust-patent–affirming the district court’s summary judgment in favor of the patentee finding no antitrust violations.

The setup: Graphic worked with Nestlé to redesign the susceptor sleeve package for Hot Pockets. Graphic obtained several design patents covering the design. For many years, Graphic supplied the product to Nestlé .  However, in 2014, Nestlé held an auction to competitors to bid on the supply contract.  Inline won the contract and then Graphic sued Inline for design patent infringement. That case is still pending Graphic Packaging International, LLC v. Inline Packaging, LLC, Docket No. 0:15-cv-03476 (D. Minn. Sep 03, 2015).

r/funny - Honest Slogans: Hot Pockets

Meanwhile, Inline turned-around and sued Graphic on, inter aliaWalker-Process antitrust claims. See Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172 (1965).  The particular arguments:

  1. Fraud in Inventorship: Graphic should have named at least one additional Nestlé inventor — but did not do so in order to be sole owner.
  2. Fraud in Failure to Disclose: Graphic did not provide the PTO information regarding prior sales activities that would have rendered the invention unpatentable.

The antitrust liability comes-in when a patentee misuses patents — here the argument is that a fraudulently obtained patent was then used to limit competition with both threats and actual litigation.

The district court dismissed the lawsuit on summary judgment, and the 8th Circuit has now affirmed.

Regarding inventorship, Inline never identified an actual person from Nestlé who should be considered a co-inventor or who has claimed to be a co-inventor. “On this record, we therefore affirm the district court’s dismissal of Inline’s claim of fraudulent procurement of the asserted patents based on false inventorship.” See Pro-Mold & Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d 1568 (Fed. Cir. 1996) (“When an alleged omitted co-inventor does not claim to be such, it can hardly be inequitable conduct not to identify that person to the PTO as an inventor.”).

Regarding the duty do disclose, Inline was able to avoid liability by dividing up the corporate knowledge.  Even if the prior sales by Inline were material to patentability, there was no evidence that the particular individuals (the inventor + patent attorney) knew of those prior sales.  Further, there was no due diligence duty for these two individuals to look into the company’s “similar designs created and sold in the past.”  See Brasseler, U.S.A. I, L.P. v. Stryker Sales Corp., 267 F.3d 1370 (Fed. Cir. 2001) (“a duty to investigate does not arise where there is no notice of the existence of material information”).

Without fraudulent procurement the antitrust litigation falls apart.

As indicated above, the patent infringement lawsuit is ongoing.  In that case, the defendant has raised the same issues as defenses to the infringement claims.  Currently the parties are fighting about whether issue preclusion will apply to bar the defenses in the parallel lawsuit. So far, it appears that the District Court is going allow the defenses to move forward.

8 thoughts on “Hot Pocket or Hot Potato?: Parallel Infringement + Antitrust Lawsuits

  1. 3

    OT, but I am hearing rumors of layoffs (huge) at PTO contractors meaning that the number of applications being filed has fallen off a cliff.

    1. 3.1

      Any one have the historical data of the pre-, during, and post-Spanish Flu filing records?

  2. 2

    How is Inline not going to be sanctioned for the accusation of the ‘phantom’ inventor?

  3. 1

    I would have changed the title from “Hot Pocket or Hot Potato?: Parallel Infringement + Antitrust Lawsuits” to: “File a Separate AT Suit to Delay a Patent Suit, even though it loses as usual.”

    1. 1.1

      Of course issue preclusion cannot apply inthe patent case to any 102 0r 103 prior art that was avoided in the AT-fraud case only by lack of corporate or inventor knowledge of it.

      1. 1.1.1

        This is such an easy fix. Any dummy could do it. But I suppose if the patent doesn’t do what it claims. you’re out.

        1. 1.1.1.1

          If by “easy fix” you mean change the wrapper to avoid infringement, that is not always so easy with a design patent, where the “claim” is supposed to be what is shown in the solid line drawings, but infringement is per an “ordinary observer” test.

          1. 1.1.1.1.1

            I know that fixing a problem after it is out is not going to change that the patent didn’t meet it’s promise. But because it sells product and makes money, fixing a problem necessary. With the way things are going and the fact that you pay for the license, even if it is challenged it’s making money. Now let the infringer get in . Hot Pockets fixes the problem and then gets into a price war for a while. With the problem fixed the rest is marketing strategy.

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