New York Packaging II v. Merchants Distributors & Lowes Foods: Produce Bag Patent Dismissed
New York Packaging II asserted two packaging patents covering stacks of headerless produce bags against grocery distributor Merchants Distributors and retailer Lowes Foods in the Western District of North Carolina. The case resolved in 272 days via stipulated dismissal — most claims with prejudice, but defendants’ invalidity counterclaim preserved without prejudice.
Produce-bag patent dispute ends in split-prejudice stipulated exit
Filed on 12 January 2024 in the Western District of North Carolina, this infringement action pitted New York Packaging, II, LLC — holder of US10513078B2 and US11440267B2, both covering stacks of headerless produce bags — against grocery supply chain players Merchants Distributors, LLC and Lowes Foods, LLC. The patents-in-suit relate to packaging technology used in fresh produce retail, suggesting the accused products were bags supplied or sold through the defendants’ distribution and retail network.
The case closed on 10 October 2024, 272 days after filing, via a Rule 41(a)(1)(A)(ii) stipulated dismissal. Critically, the structure of the dismissal is asymmetric: all infringement claims and most counterclaims were dropped with prejudice — meaning they cannot be refiled — while defendants’ counterclaim for declaratory judgment of patent invalidity was carved out and dismissed without prejudice, leaving that validity challenge legally alive. Each party was ordered to bear its own costs and attorney fees.
Resolution in under nine months is notably swift for a multi-defendant patent matter and suggests early negotiation or a commercial resolution off the public record. The decision to preserve the invalidity counterclaim without prejudice is unusual and commercially significant — it signals the defendants may have extracted a concession on validity as part of any arrangement, or retained optionality to challenge the patents again should enforcement resume. The absence of a fee-shifting award and the symmetrical cost allocation are consistent with a negotiated exit rather than a clear litigation winner.
Filing to Case Dismissed in 272 days
272 days — resolved faster than the median patent case in district court (~2.5 years)
Split-prejudice dismissal: what the asymmetric exit means for both parties
Rule 41(a)(1)(A)(ii) stipulated dismissal — parties agreed to end the case
FRCP 41(a)(1)(A)(ii) allows parties to jointly stipulate to dismiss without a court order. Here the stipulation was structured in two tiers: infringement claims and most counterclaims dismissed with prejudice (permanent bar on re-filing), while defendants’ invalidity counterclaim was carved out and dismissed without prejudice, preserving that specific challenge for potential future use.
Stipulated exit, no merits rulingInfringement claims closed — but patents remain exposed to validity challenge
New York Packaging II secured a with-prejudice dismissal of all infringement claims, meaning defendants cannot be sued again on those same theories in this action. However, the without-prejudice carve-out on the invalidity counterclaim means the asserted patents — US10513078B2 and US11440267B2 — have not been judicially validated. A future enforcement effort against any party could revive a fresh invalidity challenge.
Patents unvalidated; re-enforcement riskyInvalidity challenge preserved — defendants retain a future defensive weapon
Merchants Distributors and Lowes Foods secured the without-prejudice carve-out for their declaratory judgment invalidity counterclaim. This is a meaningful concession: should New York Packaging II attempt to enforce the same patents again — against these or other defendants — the invalidity arguments developed in this litigation can be re-deployed. The with-prejudice infringement dismissal also bars the plaintiff from relitigating infringement on these facts.
Invalidity arguments preservedPackaging industry: asymmetric exit raises licensing uncertainty for produce bag suppliers
The split-prejudice structure creates residual uncertainty for the produce packaging supply chain. US10513078B2 and US11440267B2 remain in force and unvalidated, meaning other distributors or retailers sourcing headerless produce bag stacks face potential exposure. The preserved invalidity counterclaim may deter aggressive re-enforcement, but does not eliminate the patents. Companies in fresh produce packaging should assess freedom to operate before the next enforcement cycle.
FTO review recommended for sectorFull party and counsel information
| Role | Name | Type | Detail |
|---|---|---|---|
| Plaintiff | New York Packaging, II, LLC | Company | Packaging IP licensor — holder of US10513078B2 and US11440267B2Search in Eureka ↗ |
| Defendant | Merchants Distributors, LLC | Company | Grocery distributor Merchants Distributors, LLC and retailer Lowes Foods, LLCSearch in Eureka ↗ |
| Co-Defendant | Lowes Foods, LLC | Company | Search in Eureka ↗ |
| Plaintiff counsel | Joseph J. Zito | Attorney | Counsel for New York Packaging, II, LLCSearch in Eureka ↗ |
| Plaintiff counsel | Morgan Hunter Rogers | Attorney | Counsel for New York Packaging, II, LLCSearch in Eureka ↗ |
| Plaintiff counsel | Nicholas H Lee | Attorney | Counsel for New York Packaging, II, LLCSearch in Eureka ↗ |
| Plaintiff law firm | Dnl Zito Castellano | Law Firm | Representing New York Packaging, II, LLCSearch in Eureka ↗ |
| Plaintiff law firm | Parker, Poe, Adams & Bernstein LLP | Law Firm | Representing New York Packaging, II, LLCSearch in Eureka ↗ |
| Defendant counsel | Richard A. Coughlin | Attorney | Counsel for Merchants Distributors, LLCSearch in Eureka ↗ |
| Defendant counsel | Sean Thomas Placey | Attorney | Counsel for Merchants Distributors, LLCSearch in Eureka ↗ |
| Defendant counsel | Stephen M. Kepper | Attorney | Counsel for Merchants Distributors, LLCSearch in Eureka ↗ |
| Defendant law firm | Fox Rothschild LLP | Law Firm | Representing Merchants Distributors, LLCSearch in Eureka ↗ |
| Defendant law firm | Intellectual Property Consulting LLC | Law Firm | Representing Merchants Distributors, LLCSearch in Eureka ↗ |
| Presiding judge | Judge N/A | Judge | North Carolina Western District CourtSearch in Eureka ↗ |
Official order — verbatim text
The stipulation’s asymmetric prejudice structure is legally precise and commercially deliberate. Dismissing infringement claims with prejudice extinguishes the plaintiff’s right to refile those specific claims — a permanent bar under res judicata principles. The explicit carve-out preserving the invalidity counterclaim without prejudice is the operative concession: defendants retain the right to challenge patent validity in any future proceeding involving US10513078B2 or US11440267B2, a meaningful deterrent against renewed enforcement. The mutual cost-bearing allocation suggests neither party obtained the outcome it originally sought.
US10513078B2 & US11440267B2 — Stacks of Headerless Produce Bags
US10513078B2 (application US14/872871) and US11440267B2 (application US16/695174) protect innovations in stacks of headerless produce bags — a packaging format widely used in grocery retail environments. Headerless bag stacks eliminate the traditional header strip used to hang or bundle produce bags, affecting how the bags are dispensed, stored, and handled at the point of sale. The patents cover the structural configuration and potentially the method of manufacturing or assembling these bag stacks, representing incremental but commercially significant IP in high-volume consumable packaging.
In the fresh produce retail sector, packaging formats are standardised across large supply chains, making patent assertions on bag architecture particularly impactful — a single patent can implicate hundreds of SKUs across multiple distributors and retailers. The involvement of both a regional distributor (Merchants Distributors) and a grocery chain (Lowes Foods) as co-defendants suggests the patents were asserted across the supply chain, a strategy that amplifies settlement pressure. Any company sourcing, distributing, or retailing headerless produce bag stacks in the US should evaluate these patents as part of standard FTO diligence.
Should you run an FTO against US10513078B2 and US11440267B2?
If your company manufactures, imports, distributes, or retails stacks of headerless produce bags in the United States, both patents remain in force and unvalidated following this dismissal. The without-prejudice invalidity carve-out signals defendants believed these patents were potentially vulnerable — but that challenge was never litigated to a merits decision. Until a court or the USPTO rules on validity, any commercial actor in this supply chain carries residual infringement risk.
PatSnap Eureka’s FTO Search Agent enables product and IP teams to map the claim scope of US10513078B2 and US11440267B2 against your specific bag stack designs, identify prior art that could support an invalidity position, and monitor for new continuation filings from New York Packaging II. Running a structured FTO now — before any demand letter arrives — is significantly cheaper than reactive litigation in the Western District of North Carolina.
Run a freedom-to-operate analysis on US10513078B2 to assess your product’s exposure
Run FTO in Eureka →Similar produce packaging patent cases in US district courts
Cases involving packaging technology patents asserted in the Western District of North Carolina and comparable federal districts, including produce bag and consumable packaging IP disputes.
What this case signals for the produce packaging IP landscape
A fast, structured exit with asymmetric prejudice terms is rarely accidental — it reflects calculated risk management on both sides.
Split-prejudice exits signal negotiated value exchange, not capitulation
When defendants secure a without-prejudice carve-out on invalidity while the plaintiff retains with-prejudice closure on infringement, it typically reflects a negotiated balance: the plaintiff avoids ongoing litigation risk, the defendants preserve a legal shield. Companies facing similar assertions should identify which counterclaims carry the most strategic leverage before settling.
Unvalidated patents post-dismissal remain live enforcement tools
US10513078B2 and US11440267B2 were never adjudicated on the merits. Other produce bag manufacturers, distributors, or retailers should treat these patents as active enforcement risks. A formal freedom-to-operate analysis is the appropriate first step before sourcing or distributing headerless produce bag stack products in the US market.
New v Merchants — key questions answered
New York Packaging, II, LLC asserted two patents: US10513078B2 (application US14/872871) and US11440267B2 (application US16/695174), both covering stacks of headerless produce bags. The case was filed in the Western District of North Carolina on 12 January 2024.
The dismissal was asymmetric. All infringement claims and most counterclaims were dismissed with prejudice under FRCP 41(a)(1)(A)(ii), permanently barring their re-filing. However, defendants’ counterclaim for declaratory judgment of patent invalidity was specifically carved out and dismissed without prejudice, preserving that challenge for potential future proceedings.
The defendants were Merchants Distributors, LLC (a grocery distributor) and Lowes Foods, LLC (a regional grocery retailer). Naming both a distributor and retailer as co-defendants is a common enforcement strategy to maximise settlement pressure across the supply chain and ensure all commercial actors handling the accused packaging products are within the litigation.
A without-prejudice dismissal of the invalidity counterclaim means the defendants did not waive their right to challenge the validity of US10513078B2 and US11440267B2 in future proceedings. If New York Packaging II attempts to enforce these patents again — against the same or different parties — defendants can reassert invalidity arguments. It functions as a retained legal shield against future enforcement.
The case was filed on 12 January 2024 and closed on 10 October 2024 — a duration of 272 days, or approximately nine months. This is notably faster than the median patent case in US district courts, which typically takes 2–3 years. The rapid resolution suggests the parties reached a negotiated arrangement before substantive discovery was completed.
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