Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-14-01205/USCOURTS-ca13-14-01205-0/pdf.json

Parties Involved:
Nautilus, Inc.
Appellee
Southern California Stroke Rehabilitation Associates, Inc.
Appellant
Ponani Sukumar
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

PONANI SUKUMAR, AN INDIVIDUAL, SOUTHERN 

CALIFORNIA STROKE REHABILITATION 

ASSOCIATES, INC., A CALIFORNIA 

CORPORATION,

Plaintiffs-Appellants

v.

NAUTILUS, INC., A WASHINGTON 

CORPORATION,

Defendant-Appellee

______________________ 

2014-1205

______________________ 

Appeal from the United States District Court for the 

Western District of Virginia in No. 7:11-cv-00218-JCT, 

Senior Judge James C. Turk.

______________________ 

Decided: May 4, 2015

______________________ 

 STEFFEN NATHANAEL JOHNSON, Winston & Strawn 

LLP, Washington, DC, argued for plaintiffs-appellants. 

Also represented by GEOFFREY P. EATON; MICHAEL A.

TOMASULO, Los Angeles, CA.

 PATRICK J. KEARNS, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, San Diego, CA, argued for defendantappellee. Also represented by ROBERT W. HARRISON. 

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2 SUKUMAR v. NAUTILUS, INC. 

______________________ 

Before PROST, Chief Judge, NEWMAN and REYNA, Circuit 

Judges.

PROST, Chief Judge. 

Ponani Sukumar and Southern California Stroke Rehabilitation Associates, Inc. (collectively, “Sukumar”) 

appeal from the district court’s grant of summary judgment for Nautilus, Inc. (“Nautilus”). The district court 

held that Sukumar had not suffered “competitive injury” 

necessary to have standing to assert a false marking 

claim. See 35 U.S.C. § 292(b). The district court also 

granted summary judgment on Sukumar’s state law 

unfair competition claims. We affirm.

I. BACKGROUND

In 1994, Sukumar began caring for his aging father 

after Sukumar’s father became ill and lost much of his 

mobility. Sukumar assisted his father with his rehabilitation, but, according to Sukumar, he noticed that the 

rehabilitation fitness machines used by his father did not 

adequately suit frail seniors. As a result, Sukumar resolved to learn more about rehabilitation for seniors, and 

he went to trade shows in the late 1990s where he met 

Nautilus representatives.

Soon afterward, in 1998 and 1999, Sukumar ordered 

Nautilus machines and asked for certain modifications to 

cater to elderly users’ needs. When Nautilus delivered 

the custom fitness machines, Sukumar was dissatisfied, 

and Sukumar filed a breach of contract action against 

Nautilus and Med-Fit Systems, Inc., the distributor of the 

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SUKUMAR v. NAUTILUS, INC. 3 

products. That case was the first of several legal actions 

between Sukumar and Nautilus.1

In 2004, Sukumar founded Southern California 

Stroke Rehabilitation Associates (“SCSRA”), the other 

plaintiff in this action. Although somewhat unclear, 

SCSRA’s business was likely to include opening and 

running the senior rehabilitation facilities in which 

Sukumar was to use modified Nautilus fitness machines. 

However, SCSRA’s operations have been quite limited. 

SCSRA has acquired over 100 Nautilus fitness machines 

and, according to Sukumar’s deposition testimony, 

SCSRA has twice attempted to negotiate a patent license 

from Nautilus. At least one of these license negotiations 

was proposed by Sukumar in settlement of litigation. 

Sukumar filed this case on October 21, 2010. As of that 

date, SCSRA had no business plan, no employees other 

than Sukumar, no office space, and no prototype designs.

On February 10, 2012, Sukumar moved for partial 

summary judgment on the issue of whether the Nautilus 

machines were falsely marked. The district court granted 

Sukumar’s motion. Specifically, the district court found 

that eight of the twenty-four patents marked on the 2006 

Nitro Plus Biceps Curl, the 2007 Nitro V-Triceps Extension, the 2008 F2 Lat Pulldown, the 2008 Studio Pec Fly, 

the 2009 One Triceps Press, and the 2009 XPLoad Compound Row did not cover the machines. In addition, eight 

of the sixteen patents marked on the 2006 Nautilus 

Commercial Series E916 Elliptical, 2006 Nautilus Commercial Series EV 916 Elliptical, and 2006 StairMaster 

StepMill 7000PT were found to not cover the machines.

1 The other legal actions are relevant because depositions and a settlement offer from those cases include 

evidence that contradicts portions of Sukumar’s testimony 

in this case.

 

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After the district court’s partial summary judgment 

decision, Sukumar became substantially more active. 

Sukumar retained John Whitman to create a business 

plan for selling fitness equipment, hired a design firm to 

create initial renderings of a fitness machine, and consulted with engineers in the industry. At least as of 

August 2013, Sukumar was in talks to acquire land for 

offices and a manufacturing facility.

In the meantime, the law concerning who could bring 

an action for false marking had changed. On September 

16, 2011, President Obama signed the America Invents 

Act (“AIA”) into law. The AIA amended 35 U.S.C. § 292 

to eliminate qui tam false marking suits and require that 

an entity suffer a “competitive injury” to bring a private 

right of action to enforce the false marking statute. 

America Invents Act, Pub. L. No. 112–29, § 16, 125 Stat. 

282, 329 (2011). Soon after, this court held in a nonprecedential opinion that this amendment applied retroactively 

to a suit pending at the time the AIA was enacted. See 

Rogers v. Tristar Prods., Inc., 559 F. App’x 1042, 1044 

(Fed. Cir. 2012).

After a period of discovery to inform issues of standing 

and causation, the district court allowed a second round of 

summary judgment motions, and the parties brought 

cross-motions for summary judgment. On December 6, 

2013, the district court granted Nautilus’ motion for 

summary judgment on all claims and denied Sukumar’s 

motion. Sukumar appeals.

II. DISCUSSION

The district court’s grant of summary judgment is reviewed de novo. Grober v. Mako Prods., Inc., 686 F.3d 

1335, 1344 (Fed. Cir. 2012); Bruckelmyer v. Ground 

Heaters, Inc., 445 F.3d 1374, 1377 (Fed. Cir. 2006). 

Summary judgment is appropriate if, viewing the evidence in the light most favorable to the non-moving party, 

the movant shows that there is no genuine dispute as to 

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SUKUMAR v. NAUTILUS, INC. 5 

any material fact and the movant is entitled to judgment 

as a matter of law. Fed. R. Civ. P. 56; Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 255 (1986). We first consider 

Sukumar’s false marking claim, followed by Sukumar’s 

state law claims.

A. False Marking Claim

Title 35 section 292(a) prohibits, in part, “mark[ing] 

upon . . . in connection with any unpatented article, the 

word ‘patent’ or any word or number importing that the 

same is patented, for the purpose of deceiving the public.” 

35 U.S.C. § 292(a). Section 292(b) provides a private right 

of action to enforce § 292(a) to any “person who has suffered a competitive injury as a result of a violation of this 

section.” 35 U.S.C. § 292(b). The district court granted 

Nautilus summary judgment on Sukumar’s false marking 

claim because it found that Sukumar had not suffered a 

competitive injury, and thus lacked standing to enforce 

§ 292(a).

1. The Competitive Injury Requirement

Section 292(b)’s “competitive injury” standing requirement was added in 2011 by the AIA. The parties do 

not dispute that Sukumar was not selling products in 

competition with Nautilus at the time this suit was filed.2 

This case thus presents the question of whether (or to 

what extent) an entity that has not entered the relevant 

market can suffer “competitive injury.” Nautilus argues 

that an entity cannot suffer competitive injury unless it 

actively sells products in the market. Sukumar contends 

that a potential competitor may suffer competitive injury 

2 A plaintiff must possess standing as of the time 

the suit was filed. See Friends of the Earth, Inc. v. 

Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 191

(2000). 

 

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6 SUKUMAR v. NAUTILUS, INC. 

if it intends to enter the market. We hold that a potential 

competitor may suffer competitive injury if it has attempted to enter the market. An attempt is made up of 

two components: (1) intent to enter the market with a 

reasonable possibility of success, and (2) an action to 

enter the market.3

This court has yet to address the meaning of “competitive injury,” so we begin with its plain meaning. Black’s 

Law Dictionary defines “competitive injury” as “[a] wrongful economic loss caused by a commercial rival, such as 

the loss of sales due to unfair competition; a disadvantage 

in a plaintiff’s ability to compete with a defendant, caused 

by the defendant’s unfair competition.” Black’s Law 

Dictionary (9th ed. 2009). This definition, while hardly 

conclusive, lends some support for Sukumar’s position. A 

potential competitor would generally not be considered a 

“commercial rival,” but a potential competitor may suffer 

“a disadvantage in [its] ability to compete” if another’s 

actions impair its ability to enter the market. Still, this 

definition does not include all potential competitors. To 

suffer a disadvantage in the “ability to compete,” an entity 

must have some present ability to compete—if only in 

part—that is disadvantaged. Therefore, Black’s Law 

Dictionary defines “competitive injury” to encompass 

some potential competitors, but only those that suffer “a 

disadvantage in [their] ability to compete.”

3 Satisfaction of this competitive injury requirement, however, does not mean that a party necessarily 

has standing under § 292(b). The statute also imposes a 

causation requirement. Standing under § 292(b) is limited to those who have suffered a competitive injury “as a 

result of a violation of [section 292(a)].” 35 U.S.C. 

§ 292(b).

 

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Because the text of the statute is inconclusive, we 

next consider the legislative history. The House of Representatives’ report on the AIA provides the most succinct 

summary of congressional intent with respect to the 

amendments to § 292. The report notes a recent “surge in 

false-marking qui tam litigation” and explains that most 

of the new suits involve a product that was originally 

properly marked, but no longer was once the patent 

expired. H.R. Rep. 112-98, 53, 2011 U.S.C.C.A.N. 67, 84. 

According to the report, “[i]t is doubtful that the Congress 

that originally enacted this section anticipated that it 

would force manufacturers to immediately remove 

marked products from commerce once the patent expired, 

given that the expense to manufacturers of doing so will 

generally greatly outweigh any conceivable harm of 

allowing such products to continue to circulate in commerce.” Id. The report concludes that 

[t]o address the recent surge in litigation, the bill 

replaces the qui tam remedy for false marking 

with a new action that allows a party that has suffered a competitive injury as a result of such 

marking to seek compensatory damages. The 

United States would be allowed to seek the $500-

per-article fine, and competitors may recover in 

relation to actual injuries that they have suffered 

as a result of false marking, but the bill would 

eliminate litigation brought by unrelated, private 

third parties.4 

4 Congress explicitly preserved the ability to seek a 

$500-per-article fine in § 292(a), but limited enforcement 

to the government. As such, the statute uses the threat of 

a government suit—rather than the previous mechanism 

of qui tam actions—to deter businesses from falsely 

marking their products.

 

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Id. 

Nautilus seizes on the language that “competitors 

may recover in relation to actual injuries that they have 

suffered as a result of false marking” to argue that only 

current market participants have standing to bring a 

false marking action. But the use of the word “competitors” just begs the question of what “competitors” means. 

In the same sentence, the report juxtaposes “competitors” 

with “unrelated, private third parties.” Entities actively 

attempting to enter the market are not “unrelated, private third parties.” As such, the legislative history is 

inconclusive.

Another source to inform the meaning of “competitive 

injury” is the term’s use in analogous areas of law. Although the phrase is not identical, “injury to competition” 

is a common concept in antitrust law. See, e.g., Razorback 

Ready Mix Concrete Co. v. Weaver, 761 F.2d 484, 488 (8th 

Cir. 1985); Midwest Underground Storage, Inc. v. Porter, 

717 F.2d 493, 498 (10th Cir. 1983). In that context, 

preventing market entry unquestionably qualifies as 

“injury to competition.” For example, the Supreme Court 

has held that injury to competition includes “creat[ing] 

barriers to entry of new competitors in the market.” 

Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 14 

(1984), abrogated in part on other grounds by Ill. Tool 

Works Inc. v. Indep. Ink, Inc., 547 U.S. 28 (2006). In 

addition, the Ninth Circuit has stated that “[v]ertical 

agreements that foreclose competitors from entering or 

competing in a market can injure competition by reducing 

the competitive threat those competitors would pose.” 

Brantley v. NBC Universal, Inc., 675 F.3d 1192, 1198 (9th 

Cir. 2012). Similarly, on another occasion the Ninth 

Circuit has reasoned that “[t]ying arrangements are 

forbidden on the theory that, if the seller has market 

power over the tying product, the seller can leverage this 

market power through tying arrangements to exclude 

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SUKUMAR v. NAUTILUS, INC. 9 

other sellers of the tied product.” Cascade Health Solutions v. PeaceHealth, 515 F.3d 883, 912 (9th Cir. 2008).

We also find persuasive Sukumar’s argument that 

“competitive injury” in § 292 must include what is arguably the most egregious type of competitive injury: the 

prevention of market entry altogether. The rule Nautilus 

proposes would exclude this important circumstance. 

Indeed, competition is certainly harmed when a market 

participant’s false marking deters a would-be competitor 

from attempting to enter the market. This was recognized as one of the original rationales for allowing qui tam

actions to remedy false marking. See Forest Grp., Inc. v. 

Bon Tool Co., 590 F.3d 1295, 1303 (Fed. Cir. 2009) (“If an 

article that is within the public domain is falsely marked, 

potential competitors may be dissuaded from entering the 

same market.”). The AIA’s removal of qui tam claims for 

false marking did not indicate disapproval of this rationale. Rather, the AIA recalibrated the enforcement 

mechanism for false marking in response to a flood of 

false marking claims that did little to achieve the original 

objective of minimizing anticompetitive conduct.

From the above review of the statutory text, legislative history, analogous areas of law, and policy rationale, 

we conclude that § 292(b) extends standing to sue for a 

violation of § 292(a) to some potential competitors. Nevertheless, it is equally clear that the amended statute 

does not confer standing upon any entity that claims a 

subjective intent to compete. Rather, § 292 limits standing to entities that have “suffered a competitive injury as 

a result of a violation of [section 292(a)].” A potential 

competitor can only suffer a competitive injury if it engages in competition. Dreaming of an idea but never attempting to put it into practice is insufficient. Otherwise, 

market entry is too speculative and, thus, competition 

cannot be harmed by the false marking. Likewise, sometimes a falsely marked product is also properly marked 

with other patents. In that case, a potential competitor 

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10 SUKUMAR v. NAUTILUS, INC. 

must show that the falsely marked patents deterred 

market entry, but that—for some reason—the properly 

marked patents did not deter market entry. Therefore, an 

injury is only a “competitive injury” if it results from 

competition, and a potential competitor is engaged in 

competition if it has attempted to enter the market, which 

includes intent to enter the market and action to enter 

the market. And, for the sake of completeness, an entity 

has standing under § 292(b) if it can demonstrate competitive injury that was caused by the alleged false marking.

2. Application to Sukumar

a. Intent to enter the market

Sukumar alleges that he developed the intent to compete with Nautilus in the mid- to late-1990s. Nautilus 

responds that Sukumar never intended to sell fitness 

machines in competition with Nautilus, and that, if 

anything, Sukumar intended to operate senior rehabilitation centers. According to Nautilus, these rehabilitation 

centers would use modified Nautilus fitness machines, 

which would make Sukumar a customer of Nautilus’, not 

a competitor.

To support his argument, Sukumar cites his declaration, which was prepared for the purposes of summary 

judgment; the summary judgment declaration of Frank 

Smith, a former Nautilus employee hired as a consultant 

by Sukumar; and some excerpts of Sukumar’s deposition 

testimony in this case. These three sources claim that, 

beginning in the late 1990s, Sukumar intended to modify 

Nautilus machines and sell the modified machines in 

competition with Nautilus.

The district court properly found that other evidence, 

including nearly all of the objective evidence, tends to 

support Nautilus. Sukumar v. Nautilus, Inc., No. 7:11-

CV-00218, 2013 WL 6408351, at *10–12 (W.D. Va. Dec. 6, 

2013). In 1998 and 1999, Sukumar placed orders for 

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SUKUMAR v. NAUTILUS, INC. 

11

custom Nautilus fitness machines with certain modifications requested by Sukumar. When Sukumar was dissatisfied with the machines Nautilus eventually delivered, 

he commenced litigation against Nautilus. There is no 

evidence that Sukumar intended to mass produce the 

designs Nautilus produced for him in competition with 

Nautilus.

Several years later, in 2004, Sukumar incorporated 

SCSRA. It is unclear what, if any, business activities 

SCSRA or Sukumar undertook with respect to the fitness 

machines market over the next half-decade apart from 

litigating against Nautilus and purchasing several modified fitness machines from a company called MedX Corporation. Both parties direct the court to a litigation 

settlement proposed by Sukumar as evidence of Sukumar’s intent during this time. In this settlement proposal, which Sukumar communicated to Nautilus in 2009, 

Sukumar attempted to negotiate a license to Nautilus 

patents. The license offer explained that Sukumar and 

Southern California Stroke Rehabilitation Associates, Inc. 

were “interested in developing and operating a series of 

rehabilitation centers that would provide physical therapy 

and other rehabilitation services to stroke victims and 

patients suffering from stroke-like symptoms.” The 

proposed patent license extended only for Sukumar “to 

make and have made for use exclusively in Sukumarowned rehabilitation centers equipment and parts that 

are covered by a claim of Nautilus’ patent rights.” 

The district court also noted that the bulk of Sukumar’s testimony confirms that Sukumar’s intent was 

always to use modified fitness machines in senior rehabilitation and spa centers. Id. at *12. At his deposition in 

this case, Sukumar spoke at length about his plans to 

devote SCSRA to open senior rehabilitation centers and 

senior spa centers. Id. In addition, the district court 

found that this testimony comports with testimony 

Sukumar has given in previous cases between the parties. 

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12 SUKUMAR v. NAUTILUS, INC. 

Id. at *11. For example, in another lawsuit Sukumar 

testified that SCSRA would have started senior rehabilitation centers were it not for Nautilus’ failure to provide 

Sukumar seven fitness machines. 

In response to this glut of evidence, Sukumar points 

to numerous activities he has undertaken since the district court found that some of Nautilus’ machines were 

falsely marked as evidence of his earlier intent to compete 

with Nautilus. As an example, Sukumar has recently 

commissioned the development of a business plan and 

design of a prototype, and engaged in discussions to 

purchase land for a manufacturing facility. However, the 

district court did not err in finding that this evidence has 

minimal probative value for several reasons. See id. at 

*11, *11 n.14, *12. First, crediting it would allow parties 

in litigation to manufacture evidence after the suit has 

been filed. Second, in this case Sukumar’s logic makes 

little sense. Sukumar says he was deterred from entering 

the market by Nautilus’ patent labels. Apparently now 

that a court has confirmed that some of the patent labels 

on some of Nautilus’ machines were inappropriate, 

Sukumar is no longer deterred, even though the vast 

majority of Nautilus’ machines—including all those 

released prior to 2006—have not been adjudicated as 

falsely marked.

In sum, we agree with the district court that Sukumar’s evidence of his intent to compete with Nautilus is 

weak. Sukumar and Frank Smith’s assertions as to 

Sukumar’s subjective intent are contradicted by Sukumar’s statements in both this case and others. The documentary evidence suggests that Sukumar intended only 

to open senior rehabilitation centers, which would not 

operate in competition with Nautilus. Still, on summary 

judgment, as did the district court, we must view the 

evidence in the light most favorable to Sukumar. Therefore, we must consider the second component of an atCase: 14-1205 Document: 42-2 Page: 12 Filed: 05/04/2015
SUKUMAR v. NAUTILUS, INC. 

13

tempt to enter the market: whether Sukumar took action

to enter the market.

b. Action to enter the market

Consistent with the district court, we conclude that, 

even if Sukumar subjectively intended to enter the market for fitness machines, he took insufficient action to 

pursue that intent. See id. at *10–12. Thus, no genuine 

issue of material fact remains—Sukumar did not attempt 

to compete with Nautilus, so Sukumar did not suffer a 

competitive injury. Sukumar possesses a Master of 

Business Administration degree and previously held a 

career as an investment banker. Sukumar has little to no 

engineering knowledge of fitness machines or business 

experience in the fitness machine market. Sukumar 

contends that, to gain familiarity with Nautilus fitness 

machines, he purchased over 100 exercise machines from 

Nautilus. But Sukumar’s alleged attempt to compete 

with Nautilus ends here. Sukumar placed the Nautilus 

machines he purchased in storage for years. And despite 

the fact that over a decade passed between when Sukumar claims he developed the intent to compete with 

Nautilus and when Sukumar filed this case, the list of 

basic steps Sukumar did not take is long:

Sukumar did not develop a business plan.

Sukumar did not attempt to design a prototype.

Sukumar did not hire any employees.

Sukumar did not gain engineering knowledge.

Sukumar did not investigate developing manufacturing capacity.

As the district court noted, the undisputed evidence 

establishes that, at the time Sukumar filed the suit, 

Sukumar had not taken sufficient action to enter the 

market for fitness machines. Id. at *10. Therefore, 

Sukumar was not engaged in competition with Nautilus 

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14 SUKUMAR v. NAUTILUS, INC. 

and did not suffer a competitive injury. Accordingly, the 

district court properly granted summary judgment for 

Nautilus because Sukumar lacks standing to bring a 

claim for false marking under § 292.

B. State Law Claims

Sukumar also appeals the district court’s grant of 

summary judgment for Nautilus on Sukumar’s unfair 

competition claims, which were brought under Washington and California law. Sukumar contends that the 

district court applied the wrong causation standard to the 

state law claims. Specifically, Sukumar argues that the 

district court required Nautilus’ false marking to be the 

sole cause of his damages, rather than an “immediate 

cause” (the standard in California) or a “but-for cause” 

(the standard in Washington).

In arguing that the district court applied the wrong 

legal standard for causation, Sukumar cites a single 

sentence from the district court’s opinion: “It simply defies 

common sense to conclude that, for more than ten years, 

Plaintiffs have not entered the market to compete with 

Nautilus and that the sole item holding them back was 

their fear of infringing patents that were falsely listed on 

the accused machines’ patent labels.” Id. Apparently 

based on the district court’s usage of the word “sole” in 

one sentence, Sukumar contends that the district court 

employed an improperly stringent causation standard 

throughout the district court’s entire twenty-eight page 

opinion.

Sukumar takes a single word of the district court’s 

opinion out of context. The district court used the word 

“sole” for emphasis in demonstrating the absurdity of 

Sukumar’s causation claim. While the district court’s 

particular word choice in that sentence may be imprecise, 

it does not negate the district court’s two-page recital of 

what even Sukumar admits is the correct law. Nor does a 

single use of the word “sole” nullify the district court’s 

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15

faithful application of the correct law throughout the rest 

of the opinion.

Furthermore, as to Sukumar’s argument that Nautilus’ false marking caused his alleged damages, we agree 

with the district court that Sukumar does not present 

sufficient evidence. For example, the district court found 

that “Sukumar has repeatedly blamed other actions of 

Nautilus—not any false patent labels—for the years of 

delay in accomplishing his business objectives and he has 

done so both in prior litigation and in his deposition in 

this case.” Id. at *11. Such actions include Nautilus’ 

alleged “unwillingness or inability to provide satisfactorily-modified equipment” to Sukumar and “oral representations by Nautilus regarding patent protection generally 

on its machines.” Id. at *11, *13. We also note that 

Sukumar never attempted to develop a capacity to enter 

the market. As discussed above, the district court properly found that Sukumar’s intent was to open senior rehabilitation and spa centers, not to compete with Nautilus. 

Id. at *11–12. Finally, at bottom, Sukumar cannot create 

a genuine issue of material fact by simply submitting a 

conclusory declaration against overwhelming evidence to 

the contrary. Moore U.S.A., Inc. v. Standard Register Co., 

229 F.3d 1091, 1112 (Fed. Cir. 2000) (“A party may not 

overcome a grant of summary judgment by merely offering conclusory statements.”). Thus, the district court did 

not err in granting summary judgment for Nautilus on 

Sukumar’s state law claims.

III. CONCLUSION

Accordingly, we affirm the district court’s grant of 

summary judgment for Nautilus on Sukumar’s false 

marking and state law claims.

AFFIRMED

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