Opinion ID: 2798236
Heading Depth: 4
Heading Rank: 1

Heading: Intent to enter the market

Text: 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. 7:11CV-00218, 2013 WL 6408351, at –12 (W.D. Va. Dec. 6, 2013). In 1998 and 1999, Sukumar placed orders for 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 Sukumar- owned 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 . 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. 12 SUKUMAR v. NAUTILUS, INC. Id. at . 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 ,  n.14, . 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 Suku- mar’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 atSUKUMAR v. NAUTILUS, INC. 13 tempt to enter the market: whether Sukumar took action to enter the market.