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Forecast Withdraws Axxiom Patent Suit

Monday, October 17, 2011

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Blast equipment maker Forecast Sales has dropped its “False Marking” patent lawsuit against competitor Axxiom Manufacturing, saying a recent overhaul in the U.S. Patent Code has rendered the case moot.

Under the American Invents Act, signed into law with little fanfare Sept. 16, it is no longer a violation of the U.S. Patent Code to mark a product with an expired patent number—an alleged practice at the heart of the Forecast suit.

Forecast Sales, maker of the Pirate Brand of abrasive equipment and parts, said the new patent law undermined the basis for its litigation.

Forecast Sales, maker of Pirate Brand abrasive blasting parts and equipment, filed suit Oct. 29, 2010, in U.S. District Court in Indianapolis, accusing Fresno, TX-based Axxiom of false patent marking.

‘Gives Credibility, Wrongly’

The suit accused Axxiom of inappropriately promoting itself as “the exclusive manufacturer of the Schmidt® [Manufacturing] brand” when the Schmidt patents expired years—sometimes decades—before Axxiom was established.

Schmidt brand valves, made by Axxiom Manufacturing, have “always been at the front of the pack,” said company president John Pirotte.

The suit focused on four inventions originally patented by Schmidt Manufacturing Inc.: the Pipe Side Valve; Sandblasting Methods and Apparatus; Decoy, Mold and Method of Construction; and Portable Abrasive Container and Dispenser Unit. The last item was patented in 1969; the others, in the 1980s, the suit said.

The last of those patents expired in 2000, the suit said, although Axxiom continues to promote its products as Schmidt products. “The false marking gives credibility, wrongly, to Axxiom’s claims of technical superiority,” the complaint said.

The suit had sought a $500 penalty on Axxiom “for each separate part and each system of abrasive blasting equipment Axxiom has ever marked with numbers of patents that expired as much as 20 years before Axxiom first manufactured them.”

America Invents Act

The America Invents Act, passed with overwhelming bipartisan support in both the House and Senate, marks a sea change in U.S. patent law, changing the code from a “first to invent” to a “first to file” system. The United States had been the only country still using the “first to invent” system.

The new system determines priority of invention based on the earliest date a patent application is filed with a patent office. There is a limited one-year grace period related to public disclosures made by the inventor. In addition, a new post-grant review system will expand the ability to challenge the validity of granted patents.

For Forecast Sales, though, the key change related to the practice known as “false marking.” Under the new law, “The marking of a product ... with matter relating to a patent that covered that product but has expired is not a violation of this section.’’ Indeed, the law says, “marking a product with an expired patent that covered the product will not be false marking.”

It was that change that undercut Forecast Sales’ litigation, the company said.

‘Deceiving the Public’

In a prepared statement, Forecast said the new law “betrayed” consumers by eliminating civil fines “for deceiving the public with expired patent numbers on products.”

“Since 1842, deceiving the public by putting a false US patent number on unpatented products was illegal,” said Forecast Sales, a division of McCoy Investments Inc., based in Indianapolis.

“Federal judges had the power to fine violators. False marking gives a false impression to the public that a product is superior because it is ‘patented’ and scares off innovation and stifles competition.”

The change in the law “forces Forecast to dismiss the lawsuit against Axxiom,” Forecast said.

‘Spin’

Axxiom president John Pirotte said in an interview Monday (Oct. 17) that invoking the new patent law was simply “a spin” by Forecast to withdraw an action that was baseless.

“The reason the lawsuit was dismissed was because it was frivolous,” said Pirotte. “If they had not dismissed it, they were potentially subject to sanctions. … The basis for it simply wasn’t there. It was that obvious.”

Forecast said the new law “leaves competitors and the public to figure out on their own if a patent on a product is alive or dead. Companies putting expired patent numbers on their products no longer have to fear being fined by a federal judge for deceiving the public.”

Pirotte disagreed, saying, “It is really quite easy for people to determine when patents have expired.”

Valve Views

Forecast said that its Pirate Brand products for the abrasive blasting industry “are either of original design, traditional non-patented or expired-patented designs, or improvements on traditional non-patented or expired-patented designs.”

Pirotte disputed that assertion as well. “The Schmidt product line has always been at the front of the pack in terms of new valve styles and processes,” he said.

Forecast is “known to have been attempting to copy and sell these valves as Pirate Brand valves for years,” Pirotte said. ”It’s really pretty disingenuous.”

Axxiom advertising materials promote “genuine Schmidt parts” and have warned customers to “beware of knock-offs and pirates.”