Remember How US Marshals Seized All Those 'Hoverboards' At CES In A Patent Dispute? The Company Has Now Dropped The Case

Patents

from the wait,-what? dept

Back in January, we wrote with some concern over the news that US Marshals had seized a bunch of one wheel scooters that everyone wants to call hoverboards, even though they don’t hover. The case involved a US company, Future Motion, that had gotten a lot of attention (and a utility patent and a design patent) on such single-wheel balancing scooters. Future Motion then sued a Chinese firm, Changzhou First International Trade Co., that was making a product that certainly looked similar. Changzhou was demonstrating its product at CES in Las Vegas, only to have the US Marshals raid its booth and seize all its products based on a 7 minute hearing in front a judge where Changzhou didn’t even get to present its side.

And now that Changzhou has attempted to present its side… Future Motion turned tail and ran, ran away. It flat out dropped the case once it was clear that Changzhou was going to challenge the lawsuit. In fact, Changzhou is so up in arms over this that it’s not accepting the case being closed and has asked the court to reopen the case so that it can seek attorney fees from Future Motion.

The filing by Changzhou is well worth reading. It accuses Future Motion of misleading the US Patent Office and the court, claiming that the lawsuit and the seizure were a combination attempt to stifle a competitor and get publicity for itself, and that this all helped Future Motion raise more money. It also says that Changzhou’s product, the Trotter, does not infringe on Future Motion’s patents. From the filing:

CES is the world’s largest electronics and technology show, and was a major opportunity for Changzhou to promote sales of its Trotter product. Instead, Future Motion orchestrated an effort to obtain a baseless TRO and to effect seizure of Changzhou’s products from CES. These acts caused Changzhou to lose sales and suffer public embarrassment at a critical juncture in marketing its new Trotter product. Indeed, Future Motion engaged in a significant media campaign to gain freee publicity from the fact that it wrongfully prevented Changzhou’s sales….

Moreover, Future Motion directly relied upon its baseless TRO to obtain additional financial backing for itself. On February 3, 2016, Future Motion announced that it had obtained $3.2 million in additional funding for its business…. One of the stated bases for obtaining that funding was that Future Motion “vigorously protects its Intellectual Property as it protects safety and a ride experience that cannot be replicated by knock-offs.”… Interestingly, Future Motion dropped this lawsuit against Changzhou on February 4, 2016 the next day after announcing it obtained the new funding.

It is now apparent that Future Motion’s actions were conducted with full knowledge that that the asserted patents… were non-infringed and invalid…. Future Motion undoubtedly sought the TRO and preliminary injunction with the expectation that Changzhou would not fight back in this litigation, and therefore would not discover the fatal flaws in Future Motion’s case. Unfortunately for Future Motion, Changzhou did fight back.

Changzhou filed an opposition to the preliminary injunction motion on January 29, 2016, explaining in detail that the two patents in suit were both noninfringed by Changzhou’s Trotter product and invalid in light of Future Motion’s own prior art (as well as the prior art of others), most of which was never disclosed to the United States Patent Office…. For example, with respect to Future Motion’s design patent, its “proof” of infringement consisted of a single sentence by the inventor, coupled with a few of the figures in the patent…. This was insufficient on its face, as a design patent must be construed and infringement evaluated based on all of the figures…. Further, with respect to Future Motion’s utility patent, the “proof” of infringement provided no claim construction analysis (which is required under Federal Circuit law) and relied on a conclusory claim chart…. Moreover, Future Motion baldly stated that it was aware of no anticipatory prior art to either patent, but it neglected to tell the Court about prior art disclosures of Future Motion’s own product and other similar products….

Upon reviewing Changzhou’s opposition and supporting declarations, Future Motion simply gave up, filing a voluntary notice of dismissal. Even then, Future Motion only offered to dismiss without prejudice despite the uncontroverted evidence that the patents in suit were non-infringed and invalid.

And this is why we’re supposed to have an adversarial process in court, folks. Whichever side you come down on, it’s ridiculous (1) that without even hearing the other side, the court simply ordered that the CES booth be raided and all products and other supplies be seized and (2) that the US Marshals got involved and seized the product.

Future Motion is claiming that it’s dropping the lawsuit because “it had been outgunned” and that following through on the court case would cost too much. But that’s ridiculous since it was Future Motion who filed the lawsuit in the first place. Those claims really do suggest that it filed the case for one reason only, which was to shut down a competitor, and then it also got a bunch of free publicity out of it. Maybe the company has a case, but if it wants to argue infringement it should have to make its case in court, not simply use the filing as an excuse to shut down and embarrass a competitor with no repercussions at all if the original claims were exaggerated or simply false.

Filed Under: ces, competition, hoverboard, lawsuits, patents, restraining orders, seizure, us marshals