Puritan Medical Products Company LLC v. Copan Italia S.P.A.
Puritan Medical Products Company LLC v. Copan Italia S.P.A.
Opinion of the Court
HUMPHREY, J.
[¶ 1] Puritan Medical Products Company LLC appeals from a summary judgment entered in the Business and Consumer Docket ( Mulhern, J. ) in favor of Copan Italia S.p.A. on Puritan's claim that Copan violated Maine's Actions for Bad Faith Assertion of Patent Infringement statute, 14 M.R.S. §§ 8701 - 8702 (2017). Although the court granted Copan's motion for summary judgment after finding no genuine issues of material fact and determining that Copan was entitled to judgment as a matter of law, Copan filed a cross-appeal to preserve its separate argument that Puritan's claim was preempted by federal patent law. Because we conclude that Puritan's claim is preempted, we affirm the grant of summary judgment in favor of Copan on other grounds.
I. BACKGROUND
[¶ 2] Puritan and Copan both produce flocked swabs
[¶ 3] Puritan also manufactures flocked swabs. Based in Guilford, Maine, Puritan employs 250 people. In 2010, Puritan applied for patents relating to flocked swabs and began producing, marketing, and selling its flocked swabs in countries where Copan holds patents.
[¶ 4] In 2011, Copan became concerned that some of Puritan's flocked swabs infringed its European and United States patents. Copan alleged that it commissioned external and performed internal examinations of Puritan's flocked swabs to compare them to Copan's patents.
[¶ 5] In 2012, Copan filed a claim against Puritan in Germany, alleging infringement of its German utility models,
[¶ 6] In the spring of 2015, Copan learned that Puritan's flocked swabs may have been offered as part of a bid by a distributer, GE Healthcare Life Sciences, to supply the French Gendarmerie with forensic products. Copan sent letters to GE Healthcare
[¶ 7] In September 2015, Puritan filed a complaint in the Superior Court in Piscataquis County against Copan pursuant to Maine's Actions for Bad Faith Assertion of Patent Infringement statute.
See
14 M.R.S. §§ 8701 - 8702. Shortly thereafter, the case was transferred to the Business and Consumer Docket. Copan answered the complaint and asserted affirmative defenses, including that Puritan's claim was preempted by United States federal patent law.
[¶ 8] The court granted Copan's motion for summary judgment. It concluded (1) that it had jurisdiction to consider Puritan's claim because it was not preempted by federal patent law, and (2) that there were no genuine issues of material fact and Copan was entitled to summary judgment.
[¶ 9] Puritan filed an appeal from the summary judgment, and Copan filed a cross-appeal, challenging the court's conclusion that Puritan's claim was not preempted by federal law. M.R. App. P. 2 (Tower 2016).
II. DISCUSSION
[¶ 10] We review the entry of an order for summary judgment de novo for errors of law, viewing the evidence in the light most favorable to the party against whom summary judgment was entered.
See
Diviney v. Univ. of Me. Sys.
,
[¶ 11] Before we can reach Puritan's challenge to the trial court's grant of summary judgment, we must first decide whether federal patent law preempts Puritan's state law claim.
See
James v. Inhabitants of the Town of West Bath
,
[¶ 12] We begin by clarifying the legal standard for federal patent law preemption and apply it to the facts presented in the parties' statements of material facts and the supporting evidentiary materials, with disputes resolved in Puritan's favor.
See
Scott v. Androscoggin Cty. Jail
,
A. Preemption and Federal Patent Law
[¶ 13] The Supremacy Clause of the United States Constitution states that the "Constitution, and the Laws of the United States ... shall be the supreme Law of the Land." U.S. Const. art. VI, cl. 2. Federal preemption of state law takes three forms: express preemption, field preemption, and conflict preemption.
See, e.g.
,
English v. Gen. Elec. Co.
,
[¶ 14] The United States Court of Appeals for the Federal Circuit, the federal court with jurisdiction over patent law appeals, has determined that federal patent law neither fully occupies the field nor expressly preempts state patent law.
See
Ultra-Precision Mfg., Ltd. v. Ford Motor Co.
,
[¶ 15] At the heart of it, federal patent law protects a patent holder's good-faith assertion of patent infringement.
See
Globetrotter Software, Inc. v. Elan Comput. Grp., Inc.
,
[¶ 16] Relevant to the conflict preemption analysis, it is fundamental to the federal patent law's protection accorded to patent holders that state law claims "against a patent holder ... based on enforcing a patent in the marketplace[ ] are 'preempted' by federal patent laws, unless
the claimant can show that the patent holder acted in 'bad faith' in the publication or enforcement of its patent."
See
800 Adept, Inc. v. Murex Sec., Ltd.
,
[¶ 17] Because "[b]ad faith includes separate objective and subjective components,"
Dominant Semiconductors Sdn. Bhd. v. OSRAM GmbH
,
[¶ 18] In sum, federal patent law protects good faith assertions of patent infringement, and there exists "a presumption that the assertion of a duly granted patent is made in good faith."
See
Golan v. Pingel Enter.
,
B. Maine's Law
[¶ 19] In 2014, Maine's Legislature enacted 14 M.R.S. §§ 8701 - 8702, entitled Actions
for Bad Faith Assertion of Patent Infringement.
See
P.L. 2013, ch. 543 (effective Aug. 1, 2014). In doing so, Maine joined a growing number of states that have passed similar laws in an attempt to address the problems presented by patent trolls
[¶ 20] The Maine statute prohibits a person from making "a bad faith assertion of patent infringement against another person." 14 M.R.S. § 8701(2). The statute does not define the phrase "bad faith assertion" but lists factors a court may consider to determine whether a defendant has made a bad faith assertion, including certain deficiencies in the demand letter; a demand for payment of a fee within an unreasonably short period of time; actual or constructive knowledge by the patent holder that the assertion of patent infringement was meritless; and the deceptive nature of the assertion. 14 M.R.S. § 8701(3)(A). The statute also lists factors that a court may consider as evidence that a defendant did not make a bad faith assertion: the demand letter was not deficient; the defendant made a good faith effort to establish that the plaintiff infringed the patent; the defendant made a substantial investment in the use of the patent or in the production or sale of a product or item covered by the patent; and the defendant demonstrated good faith business practices in previous efforts to enforce the patent or a substantially similar patent. 14 M.R.S. § 8701(3)(B).
[¶ 21] With this understanding of the state law, our task is to determine whether its application in this case is in conflict with federal patent law.
C. Federal Preemption of Claims Alleged Pursuant to 14 M.R.S. § 8701
[¶ 22] Maine's statute does not require a plaintiff to prove that the patent holder's allegation of patent infringement was objectively baseless or made in subjective bad faith pursuant to the federal "bad faith" standard.
See
800 Adept
,
Hunter Douglas, Inc. v. Harmonic Design, Inc.
,
[¶ 23] "To survive summary judgment, [Puritan] must present affirmative evidence sufficient for a reasonable jury to conclude" that the patent holder's assertion was objectively baseless and made in subjective bad faith in order to overcome the "presumption that the assertion of a duly granted patent is made in good faith."
See
Golan
,
1. Objectively Baseless
[¶ 24] To satisfy the objectively baseless prong at the summary judgment stage, Puritan would have to present sufficient evidence that, in light of the clear and convincing standard that would adhere at a trial, would allow a fact-finder to determine that Copan was incorrect or false in its assertion of its patent.
See
Globetrotter
,
[¶ 25] Based on facts not in dispute, Puritan failed to meet its burden.
See
Contech Stormwater Solutions, Inc. v. Baysaver Techs., Inc.
,
2. Subjective Bad Faith
[¶ 26] Puritan argues that several circumstances support its claim that Copan's assertion was made in bad faith: (1) Copan's failure to produce a report of an examination comparing Puritan's swabs to Copan's patent; (2) Copan's failure to initiate patent infringement litigation against Puritan after sending its demand letter;
[¶ 27] Our determination that federal patent law preempts Puritan's claim in this case does not mean that Maine's statute is preempted as a whole.
III. CONCLUSION
[¶ 28] The trial court did not have the benefit of the precedent we now establish and granted summary judgment in favor of Copan on the merits of Puritan's state law claim after concluding that it was not preempted by federal patent law. In its preemption analysis, the court conflated the test for federal preemption with the test for federal jurisdiction.
The entry is:
Judgment affirmed.
A flocked swab is a device used for the collection of biological specimens. Contrary to the concurrence's characterization of these products as "glorified 'Q-tips,' " the flocked swabs manufactured by Copan and Puritan are used for the "collection of microbiological specimens for the transport and preservation to the laboratory for use in the medical, forensic, and nonclinical applications." See Concurring Opinion ¶ 30. Indeed, Copan's name stands for " CO llection and P reservation for AN alysis." Q-tipsâ, or generic cotton swabs, on the other hand, are advertised as "perfect for arts & crafts, manicures, makeup application, cleaning and more!" Q-TIPSâ Cotton Swabs , Q-tips, http://www.qtips.com/products/qtips-cotton-swabs/ (last visited June 28, 2018).
The parties dispute the existence and the findings of those examinations.
According to the record, a German utility model is an intellectual property right, similar to a patent in some respects, but lasting only ten years, whereas a patent's protection lasts twenty years.
Copan's letter to GE Healthcare is the "demand letter" in this case. See 14 M.R.S. § 8701(1)(A) (2017).
Copan's original answer, filed in October 2015, did not include preemption as an affirmative defense. The court granted Copan leave to amend its answer in December 2016, and Copan's amended answer included an "affirmative defense" of preemption.
The concurrence's assertion that this Court "elects to reach out [and] invoke the federal law of preemption," see Concurring Opinion ¶¶ 33, 35, 37, ignores the fact that the trial court also analyzed the preemption issue, and did so before reaching the merits of Puritan's state law claim, thus understanding that preemption is a threshold issue. Preemption was an issue before the trial court, and it was raised as an issue on appeal.
These appeals were commenced before September 1, 2017, and therefore the restyled Maine Rules of Appellate Procedure do not apply. See M.R. App. P. 1.
Conflict preemption can also occur "where it is impossible for a private party to comply with both state and federal requirements."
See
English v. Gen. Elec. Co.
,
Other state courts have acknowledged this conflict preemption in patent law.
See, e.g.
,
Xitronix Corp. v. KLA-Tencor Corp.
, No. O3-12-00206-CV,
The objectively baseless standard applies "outside the context of actual litigation" to "state-law claims based on communications alleging patent infringement."
Globetrotter Software, Inc. v. Elan Comput. Grp., Inc.
,
Patent trolls are companies, typically that do not produce any product or provide any service, that purchase patents for the sole purpose of suing other companies for patent infringement. See An Act Regarding Bad Faith Assertions of Patent Infringement: Hearing on L.D. 1660 Before the J. Standing Comm. on the Judiciary , 126th Legis. (2014) (testimony of Sen. Anne Haskell).
Courts regularly employ a case-by-case analysis in issues of conflict preemption.
See, e.g.
,
Cal. Coastal Comm'n v. Granite Rock Co.
,
Related to the objectively baseless prong, Puritan argued that its expert witness's deposition testimony that Copan had no reasonable basis for the assertions in its demand letter is evidence of bad faith. However, Copan's expert testified to the opposite. "The mere fact that [Puritan's] position is reasonable ... does not equate to a finding that [Copan's] position is objectively baseless."
See
GED Integrated Solutions, Inc. v. Durotech Int'l, Inc.
, No. 5:06CV1327,
During the pendency of this appeal, Copan filed a lawsuit against Puritan in the United States District Court for the District of Maine, alleging patent infringement and false advertising in violation of federal and state laws. See Copan Italia, S.p.A. v. Puritan Medical Products Company LLC , No. 1-18-cv-00218-JDL (D. Me. filed June 1, 2018). That pending lawsuit does not affect this case.
Contrary to the concurrence's assertion, we are not implying that 14 M.R.S. § 8701 (2017) is unconstitutional.
See
Concurring Opinion ¶ 37. Rather, we state only that Puritan's specific
claim
is preempted.
See
Boydstun Equip. Mfg., LLC v. Cottrell, Inc.
, No. 3:16-cv-790-SI,
The trial court's analysis focused on whether a state court had jurisdiction to consider the state law claim of bad faith assertion of patent infringement. The trial court stated that "[f]ederal district courts have exclusive original jurisdiction over 'all civil actions arising under the Constitution, laws, or treaties of the United States.' " (Quoting
Concurring Opinion
[¶ 29] Title 14 M.R.S. § 8701 (2017) provides critical protection for Maine businesses and jobs from abusive, bad faith claims of patent infringement. The protection offered by section 8701 is particularly important to discourage bad faith claims related to the manufacture of health care products and devices. In this field, patent litigation is used to attempt to create monopolies on particular products that some exploit to charge exorbitant prices and reap huge profits from the sale of drugs and other products that cost little to manufacture-escalating the already high cost of health care to the detriment of the public health and welfare.
[¶ 30] The dispute here involves absorbent swabs, absorbent material on the head of a thin stick, commonly available and applied to a variety of uses in forensic medicine, personal care, and health care. From the depictions in the record, the products at issue are, in reality, glorified "Q-tips." The parties are disputing whether the manner of attaching the absorbent material to the head of the stick by inserting strands of the material into the head of the stick is subject to a patent giving Copan Italia a monopoly on swabs with absorbent material attached in that manner.
[¶ 31] The Court's opinion aptly summarizes the purposes and importance of Maine's product protection law.
In 2014, Maine's Legislature enacted 14 M.R.S. §§ 8701 - 8702, entitled Actions for Bad Faith Assertion of Patent Infringement. See P.L. 2013, ch. 543 (effective Aug. 1, 2014). In doing so, Maine joined a growing number of states that have passed similar laws in an attempt to address the problems presented by patent trolls17 and bad faith assertions of patent infringement. See An Act Regarding Bad Faith Assertions of Patent Infringement: Hearing on L.D. 1660 Before the J. Standing Comm. on the Judiciary , 126th Legis. (2014) (testimony of John D. Delahanty, Esq.); Paul R. Gugliuzza, Patent Trolls and Preemption ,101 Va. L. Rev. 1579 , 1593 (2015).
Court's Opinion ¶ 19.
[¶ 32] Recognizing the importance of the protections provided to Maine businesses and jobs by this law, the trial court carefully and critically reviewed the material facts presented to it by the parties. After review, the court concluded that Puritan Medical Products Company LLC had failed to establish any dispute as to material fact that Copan Italia's assertions of patent infringement were made in bad faith. Because Puritan had not established the element of bad faith required for a section 8701 claim, the trial court granted Copan's motion for summary judgment. Because the trial court properly evaluated the materials before it and granted summary judgment, we should affirm that grant of summary judgment.
[¶ 33] Instead of affirming the trial court's grant of summary judgment, the Court elects to reach out, invoke the federal law of preemption, and hold that, considering the materials before it, the trial court erred in even reaching the merits of the section 8701 bad faith claim. The Court holds, in effect, that the section 8701 claim in this case, and, by implication, most section 8701 claims, are preempted by federal patent law.
[¶ 34] The federal law of preemption presents a question of the constitutionality of application of state law, here section 8701, as preempted by the Supremacy Clause, art. VI, cl. 2, of the United States Constitution. The Court states: "The Supremacy Clause of the United States Constitution states that the 'Constitution, and the Laws of the United States ... shall be the supreme Law of the Land.' U.S. Const. art. VI, cl. 2. Federal preemption of state law takes three forms: express preemption, field preemption, and conflict preemption." Court's Opinion ¶ 13 (citing
English v. Gen. Elec. Co.
,
[¶ 35] The Court's approach puts the cart before the horse, reaching out to address preemption before addressing the merits of the trial court's ruling in favor of Copan. Had the trial court found that Puritan had established a dispute as to material fact regarding the bad faith issue under the Maine law, the trial court would then have had to address the issue of federal preemption before it proceeded to address the merits of the bad faith claim. Some preemption opinions cited by the Court at paragraphs 14-15 appear to require just such an analysis of the validity of the bad faith claim before deciding the preemption issue.
See
Ultra-Precision Mfg., Ltd. v. Ford Motor Co.
,
[¶ 36] Federal precedent establishes that the constitutional preemption issue should be reached only when there is no alternative, independent grounds to dispose of this case.
See
Columbia Venture, LLC v. Dewberry & Davis, LLC
,
[¶ 37] Having granted Copan's motion for summary judgment, the trial court was not required to consider whether the Supremacy Clause applied to preempt the section 8701 action. We should not be suggesting otherwise. Reaching the preemption issue before analyzing the merits of the trial court's judgment implies that the important business protection adopted in the bad faith assertion of patent infringement law, section 8701, is unconstitutional because it is preempted. While the Court, in footnote 15, suggests that a section 8701 claim may not always be preempted, the standards the Court sets to reach the merits of any State claim appear virtually unattainable.
[¶ 38] Our review of a claim that a statute, such as section 8701, is unconstitutional must begin with a presumption that the law is constitutional.
Godbout v. WLB Holding, Inc.,
[¶ 39] Because the trial court rejected Puritan's claim by its grant of Copan's motion for summary judgment, we should avoid addressing the constitutional preemption issue by affirming that grant of summary judgment. We should not issue an opinion undermining the validity of the important protection for Maine businesses and jobs provided by section 8701.
[¶ 40] I would affirm the trial court's decision granting Copan's motion for summary judgment without addressing the preemption issue.
Patent trolls are described in the Court's footnote 11.
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