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Oct. 29 — A maker of camouflage cloth for the government cannot seek to have design patents covering the patterns declared unenforceable or invalid when the patent holder has delivered a covenant not to sue on the basis of government sales, the U.S. District Court for the Southern District of New York ruled Oct. 28.
The textile maker said that the covenant did not make its declaratory judgment claims moot, because the patent holder's promise did not cover commercial sales.
However, the manufacturer cannot make any commercial sales without permission of the government and, until such permission is forthcoming, it cannot assert fear of legal action based on commercial sales, the court said.
Crye Precision LLC of Brooklyn, N.Y., is a producer of apparel and equipment for military use. It holds four design patents relating to the “MultiCam” camouflage pattern used on military apparel and equipment.
MultiCam is used by the U.S. military. It is also featured in prominent motion pictures, worn by characters in video games—such as “American Sniper,” “Transformers” and “Call of Duty”—and is popular among celebrities, such as Pharell Williams.
Crye licensed to Duro Textiles LLC of Fall River, Mass., a large textile dyeing and distribution company, the right to print the pattern on fabrics and sell it from 2008 to 2014, after which the license expired.
In 2010, the U.S. Army asked that the exclusive deal between Crye and Duro be ended, to ensure an uninterruptable supply of camouflage cloth, and Crye arranged to license other parties while sharing with Duro a portion of its revenue from government sales through other licensees.
In 2014, however, the U.S. Army changed its designated camouflage from MultiCam to “Scorpion W2” which, according to Crye, was made by the Army “by making very minor modifications” to MultiCam and was “virtually indistinguishable.”
Duro then chose not to renew the MultiCam licensing agreement after a disagreement over its terms.
Crye sued Duro and several other entities, alleging trade dress infringement and other claims in New York state court.
Duro had the matter removed to federal court and filed several counterclaims, alleging that the design patents were invalid and unenforceable, among other things. Crye moved for dismissal of the counterclaims under Fed. R. Civ. P. 12(b)(1) and 12(b)(6).
The court ruled that Duro's counterclaims seeking declarations of invalidity and unenforceability were moot because of a covenant that Crye had delivered to Duro promising not to sue for patent infringement for making Scorpion W2 on the instructions of the U.S. government.
Duro said that the covenant was inadequate, because it did not promise that Crye would not sue based on commercial sales of Scorpion W2. Such commercial sales could only take place with government permission, and the government has not authorized manufacturers to sell Scorpion W2 commercially.
According to the court, if the government grants such permission, Duro could refile such counterclaims.
The court's ruling was issued by Judge Denise L. Cote.
Crye was represented by Greenberg Traurig LLP, New York. Duro was represented by Cooley LLP, New York.
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