Creative Products v. i-team North America — Patent and Trademark Claims Survive Former Distributor’s Dismissal Bid

Background

Creative Products International and related plaintiffs accused i-team North America, related companies, and several individuals of selling cleaning products that infringed two patents and used nine CPI marks without permission. The dispute grew out of a former business relationship under agreements that allowed the defendants to buy and sell CPI products.

The defendants moved to dismiss the complaint. They argued, among other things, that the prior agreements authorized their sales and use of the marks, and that patent exhaustion prevented CPI from asserting patent rights over products the defendants had been permitted to buy. CPI alleged that it revoked any permission in April 2024 and that the defendants continued selling both genuine and knockoff products afterward.

The Court’s Holding

Chief Judge Hala Y. Jarbou allowed the patent, induced-infringement, federal and state trademark, and unfair-competition claims to proceed. She dismissed shareholder-oppression and contract claims while also permitting several non-IP claims to continue.

The court rejected the defendants’ broad patent-exhaustion theory at the pleading stage. An authorized sale exhausts patent rights in the particular physical article sold; it does not give the buyer a continuing right to make new copies of the patented invention. Thus, earlier authorization to buy CPI products did not automatically defeat claims based on products sold later using the same design.

The complaint also plausibly alleged that any ongoing authorization or implied license had ended. Because the agreements did not specify a duration or termination method, the court treated the alleged authorization as terminable at will under the law invoked by the parties. CPI alleged that its April 2024 letter revoked permission. Sales of alleged knockoffs would fall outside the authorization in any event.

The induced-infringement claim survived because the complaint generally alleged the individual defendant’s knowledge of the patents, control over the accused companies, and intent that they sell the accused products. The trademark claims likewise survived: at this stage, the court could not rely on a heavily redacted letter first attached to a reply brief to contradict CPI’s allegation that permission to use its marks had been revoked.

Key Takeaways

• Patent exhaustion follows particular authorized articles; it does not create a blanket right to manufacture additional copies of a patented product.
• A course of dealing may support an implied license, but its duration and revocability depend on the parties’ agreements and applicable contract law.
• Alleged sales of knockoffs can remain infringing even when the defendant was once authorized to resell genuine goods.
• At the motion-to-dismiss stage, knowledge and intent for induced infringement may be alleged generally when surrounding facts make the inference plausible.

Why It Matters

Businesses that distribute patented and branded products should state clearly whether authorization covers only resale of genuine inventory or also manufacturing, sourcing, sublicensing, and continued use after termination. Silence on duration and termination can turn a commercial breakup into parallel patent, trademark, and contract litigation.

The ruling is preliminary and does not establish infringement. It holds that CPI pleaded enough facts to proceed to discovery, where the parties’ agreements, the revocation letter, and the origin of the accused products will receive closer scrutiny.