Another False Marking Case Dismissed Sua Sponte in Light of Leahy-Smith

The court sua sponte dismissed plaintiff's qui tam false marking action for failure to state a claim following the enactment of the Leahy-Smith America Invents Act. "This dismissal is without prejudice for Plaintiff to re-file its complaint in the event Plaintiff can prove it has suffered a 'competitive injury' and it can satisfy the other requirements under the statute."

GHJ Holdings, LLC v. WMS Gaming, Inc., 2-11-cv-02761 (CACD September 27, 2011, Order) (Wright, J.)

Unsuccessful Qui Tam Plaintiff Asserting False Marking Claim Not Immune From Costs Award

Following the court's dismissal of plaintiff's qui tam false marking action, the court granted in part defendant's motion for costs. "[Plaintiff] argues it should not have to pay any costs because it was acting in the public interest by bringing the lawsuit as a qui tam relator to help the United States enforce the false marking statute; and if anything, it should only be required to pay half of any allowable costs. However, [plaintiff] did not provide -- and the Court cannot find -- any precedent holding that qui tam relators are immune from costs."

Promote Innovation LLC v Roche Diagnostics Corporation, 1-10-cv-00964 (INSD August 9, 2011, Order) (Pratt, J.)

False Marking Action Stayed Pending Legislative Action on America Invents Act

The court granted defendant's motion to stay plaintiff's qui tam false marking action "[i]n light of the possible passage of legislation." "On June 23, 2011, the House of Representatives passed H.R. 1249. The Senate passed its version of the legislation (S.23) on March 8, 2011. Both S.23 and H.R. 1249 amend the false marking statute. First, these bills permit only the United States standing to sue for the per article fine. Second, these bills permit only those who have suffered competitive injury as a result of false marking standing to sue for compensatory damages. One provision included in the House bill, but not the Senate legislation, is new subsection 292(c) which states that no civil or criminal liability will arise if one marks a product with an expired patent number, provided that the patent actually covered the product. This legislation would apply to all false marking cases pending on or after the date of enactment. In light of the possible passage of legislation, I grant Defendant’s motion to stay until further order of court."

Heathcote Holdings Corp., Inc. v. Suncast Corporation, 1-11-cv-01010 (ILND July 18, 2011, Order) (Zagel, J.)

Court Finds Product is Falsely Marked, However a Factual Dispute Regarding Intent Remains

Plaintiff's motion for summary judgment on defendant's false marking counterclaim was denied where, although the court found the product was marked falsely, there was a factual dispute regarding intent. "[Plaintiff's product] is clearly distinct from what is covered in the [patent-in-suit]. Indeed, the [patent] bears no resemblance to the [product]. . . . [T]he [product] has no projections or recesses, which are clearly required by the [patent]. As such, there is a genuine dispute of a material fact as to whether [plaintiff] intentionally deceived the public into believing that the [product] was covered by the [patent-in-suit]."

Rally Manufacturing, Inc. v. Federal-Mogul Corporation, 1-10-cv-23791 (FLSD June 21, 2011 Order) (Moore, J.)

Judge Solis compares false marking to "someone who says, 'I am not married,' when indeed, they are."

Defendant's motion to dismiss plaintiff's qui tam false marking action for failing to plead with particularity was denied. "By using the word 'patent' in its advertisements connected with the sales of its cotton candy machines, when it had no such patent, [defendant] has acted as someone who says, "I am not married," when indeed, they are."

Defendant's motion to dismiss plaintiff's qui tam false marking action as unconstitutional was denied. "This Court agrees with the government's rationale that the [False Marking Statute] is subject to control mechanisms not listed in the statute. . . . [FRCP] 24(a)(2) gives the government a controlling mechanism through its right to intervene. . . . Further, the division of the fines imposed. . . provides another control mechanism. Without notifying the government of its suit, relators cannot seek their portion of the civil penalty."

United States of America, ex rel. VendEver LLC v. Intermatic Manufacturing Ltd., 3-11-cv-00202 (TXND June 20, 2011, Order) (Solis, J.)

Second District Court Declares Qui Tam Provisions of False Marking Statute Unconstitutional

In dismissing plaintiff's false marking action, the court agreed with Unique Prod. Solutions, Ltd. v. Hy-GradeValve, Inc., ___F. Supp. 2d __, (N.D. Ohio Feb. 23, 2011) and concluded that the qui tam provisions of the false marking statute violate the Take Care clause of the U.S. Constitution. "[T]he fact that notice of all pending patent cases is provided to the PTO within one month of filing . . . does not constitute sufficient notice to the Executive Branch. This notice is not expedient enough to provide the United States with sufficient time to protect its interests, and is not directed to the Department of Justice -- the agency responsible for representing the United States’ interests in a false marking suit. . . . While the United States could prevent a section 292(b) relator from voluntarily dismissing the case upon intervention, this requires the Court to order intervention on the United States’ motion in the first instance. Although the Federal Circuit has reversed a district court for refusing to permit intervention in a false marking suit under Rule 24(a)(2), it is not clear to the Court that intervention will or must be ordered in any given case. Moreover . . . a section 292(b) relator could voluntarily dismiss a case before the United States even has the opportunity to seek intervention at all. Thus, despite the external protections available, the United States is not able to effectively exercise even a basic degree of control over a section 292(b) relator’s case."

Rogers v. TriStar Products Inc., 5-11-cv-01111 (PAED June 2, 2011, Order) (Robreno, J.)

False Marking: "The Court does not need to be notified every time a judge makes a decision in one of those cases"

"The issue involved in this case is now pending before hundreds of judges in the federal court system. The Court does not need to be notified every time a judge makes a decision in one of those cases, especially if such decisions represent no "change in the law" binding on this Court. See Local Rule 7.1 (c) & (g). The Court is well able to do its own research as needed, and filling this case's record with non-binding cases will simply clutter the file. Accordingly, the Court STRIKES the notice of supplemental authority (Doc. 58) and ORDERS that henceforward notice of supplemental authority may be filed in this case without leave of court, but only if it is authority binding on this Court or is a decision by a United States Court of Appeals."

Mudge v. Scotts Miracle-Gro Company, 3-10-cv-00402 (ILSD March 31, 2011 Order) (Gilbert, J.)

Government's Approval of False Marking Settlement Precludes Later Challenge That Settlement was "Staged" and Therefore Lacks Preclusive Effect

The court dismissed plaintiff's qui tam false marking action on the basis of the settlement of an earlier filed false marking case involving the same patents and products and rejected plaintiff's argument that the settlement "was 'staged' and lacks transparency" because the settlement terms weren't publicly available. "While it is unclear if public disclosure is required to finalize a qui tam settlement and voluntary dismissal with prejudice . . . [d]istrict courts in the Southern District of New York and Northern District of Illinois have determined that the government maintains a sufficient level of control over qui tam actions brought under Section 292(b). . . . [Plaintiff] refuses to acknowledge that the government received the settlement documents, which included the amended complaint alleging false marking of the [patents-in-suit], reviewed them, and then approved the . . . settlement. . . . The dismissal with prejudice [of the earlier-filed case] precludes this case."

Champion Laboratories, Inc. v. Parker-Hannifin Corp., et. al., 1-10-cv-02371 (CAED May 17, 2011, Order) (Wanger, J.)

Marking U.S. Products With Foreign Patent Application Numbers May Support False Marking Liability

The court denied defendant's motion for judgment on the pleadings as to plaintiff's false marking claim where defendant's product was marked with a Chinese patent application number that resulted in a differently numbered Chinese patent. In doing so, the court rejected defendant's argument that the false marking claim did not comply with the pleading requirements of FRCP 8(a). "[Plaintiff] specifically alleges that [defendant] has marked its deshedding tool with 'Patent No. 200620072629.8,' that this is not an existing US patent number, and that the tool is not covered by any patents owned by [defendant]. . . . Applying the proper standards, it is at least facially plausible that [defendant] could be liable for false marking when it marks its product as patented but the company does not own a patent that covers the product. Therefore, I find that [plaintiff] has met the pleading standards of Rule 8(a)." The court also rejected defendant's argument that the complaint failed to plead intent to deceive under the heightened pleading standard of FRCP 9(b). "This case is distinguishable from [a case] where the allegation was simply that a sophisticated business should have known when a patent expired. . . . [Plaintiff] alleges that [defendant] marked its deshedding tool with 'Patent No. 200620072629.8' when that product is not -- and has never been -- covered by any patents owned by [defendant]. Under these facts, [plaintiff] has sufficiently pled the elements of its false marking claim under Rule 9(b), and [defendant's] motion for judgment on the pleadings will be denied."

FURminator, Inc. v. Sergeant's Pet Care Products, Inc., et. al., 4-10-cv-01829 (MOED May 5, 2011, Order) (Sippel, J.)

Another Court Upholds Constitutionality of False Marking Statute

The court denied defendant's motion for judgment on the pleadings that the false marking statute was unconstitutional. "[T]the government maintains a sufficient level of control over qui tam actions brought under Section 292(b). . . . [T]he law obliges the district-court clerk to apprise the Director of the PTO -- a member of the Executive Branch -- 'of an action under' Title 35 of the U.S. Code. 35 U.S.C. § 290. . . . A qui tam action for false marking arises under Title 35, and so the Court determines that, contrary to [defendant's] argument, the Executive Branch receives notice of qui tam false-marking claims."

Simonian v. Allergan, Inc., 1-10-cv-02414 (ILND April 28, 2011, Order) (St. Eve, J.)

Marking Article Made Using Patented Method With Method Patent's Number Does Not Constitute False Marking

Defendant's motion to dismiss plaintiff's qui tam false marking case for failure to state a claim was granted. "[M]arking an article made via a patented method with the patent number of the method patent does not constitute false marking merely because the public cannot immediately tell whether the number refers to a method patent instead of an apparatus patent. Section 292 of Title 35 has never been construed to go so far. . . . Section 287(b)(4)(c), moreover, would seem to bless the very marking scheme challenged here."

San Francisco Technology Inc. v. Elkay Plastics Company, Inc., 3-11-cv-00291 (CAND April 15, 2011, Order) (Alsup, J.)

References to Patents in Website's "Terms of Use" and Online Product Manuals Do Not Constitute False Marking

The court granted defendant's motion for summary judgment of no false marking and rejected plaintiff's argument that wristwatch manuals were "unpatented articles" because "without the manual, the product is practically useless." "[Plaintiff] cites no authority in support of this position, nor can the Court identify any legal basis upon which to conclude that a patent mark on an instruction manual constitutes a patent mark on an 'unpatented article' within the meaning of § 292. . . . Though packaged together, the manuals and watches are not affixed to one another. [Plaintiff's] claims thus also fail under the 'affixed to” language of § 292. . . . The statute is not intended to create a treasure hunt for relators scouring department store shelves or corporate websites for obscure references to expired patents; it prohibits readily visible marks -- on products themselves, affixed to products, or used in advertising in connection with products -- falsely indicating that an unpatented article enjoys patent protection." Moreover, "[n]otwithstanding their mandatory language, the 'Terms of Use' are not advertising, nor are their references to the [patents] used in advertising. These pages unambiguously demonstrate that users need not access the 'Terms of Use' to purchase a watch from [defendant's] web site. Indeed, the link [defendant] provides to its 'Terms of Use' from a typical product page is at the very bottom of the page footer, in the smallest font on the page. . . . The Court therefore concludes that the patent numbers in the 'Terms of Use' are not false marking 'in advertising,' as they are not found 'in a medium or through a channel designed to promote the unpatented product to consumers.'"

Hollander v. Timex Group USA, Inc., 2-10-cv-00429 (PAED April 13, 2011, Order) (Schiller, J.)

False Marking Claim Defeated At Summary Judgment -- Employee Mistakes Do Not Constitute False Marking

The court granted defendants' motion for summary judgment of no false marking where defendants presented evidence that "[they have] over 1,000 [SKU's], that each SKU generally has its product’s applicable patent number marked on the back of the product packaging, that many of the product packages were created with older packages as templates, and that [defendants'] counsel . . . has been in poor health and not readily available for consultation. . . . [T]he false markings made by [defendants] appear to be nothing more than mistakes made by employees. . . . Assuming arguendo, that [plaintiff] met its burden that [defendants] had knowledge of the false marking on its products, [defendants'] incorrect patent markings against its own economic interest would weigh against a finding of intent to deceive the public."

Bow Jax Inc. v. Sims Vibration Laboratory Inc., et. al., 2-09-cv-00047 (WAED April 6, 2011, Order) (Peterson, J.)

Third District Court Rules False Marking Statute Is Not Unconstitutional

Defendants' motions to dismiss plaintiff's qui tam false marking action for violating the Take Care clause of the Constitution was denied. "In this Court’s view, the fact that section 292 is a criminal statute does not make a qui tam suit under section 292(b) 'a criminal action.' Indeed, if it was, the Rules of Civil Procedure would not even apply – including Rule 9(b), which the Federal Circuit specifically held in BP Lubricants USA [(Fed. Cir. Mar. 15, 2011)] applies in false marking cases. In this Court’s view, the better view of the false marking statute is that it is a criminal statute with a parallel civil enforcement mechanism."

Luka v. The Proctor and Gamble Company, et. al., 1-10-cv-02511 (ILND March 28, 2011, Order) (Kennelly, J.)

NYSD Weighs in On Constitutionality of False Marking Statute

The court granted in part defendant's motion to dismiss plaintiff's qui tam false marking action for failure to state a claim, but rejected defendant's constitutional challenge to 35 U.S.C. § 292. "The Court finds that Section 292 is constitutional because, among other reasons, 'the Executive Branch is not without the ability to assert its interests in a [Section 292] qui tam action.'. . . This Court distinguishes Unique Product Solutions, Ltd. v. Hy-Grade Valve, Inc. [(N.D. Ohio Feb. 23, 2011)], where the district court described the False Marking Statute as a 'wholesale delegation of criminal law enforcement power to private entities.' This Court is of the view that Section 292 is 'civil in form, even though it arises under a criminal statute.'"

Public Patent Foundation, Inc. v. Glaxosmithkline Consumer Healthcare, L.P., 2-09-cv-05881 (NYSD March 22, 2011, Order) (Berman, J.)

Lack of Intent to Deceive Warrants Summary Judgment of No False Marking

Defendant's motion for summary judgment on plaintiff's false marking claim was granted where defendant acquired the accused product line from a third party who previously marked the products with the subject patents and where defendant immediately segregated its inventory after learning of the false marking. "[T]here is no evidence that anyone employed by defendant -- either within or outside of [defendant's product manager's] team -- was aware that the [accused product] packaging was marked with expired or inapplicable patents. Instead, the evidence reveals that the employees responsible for reviewing the packaging took for granted that the patent markings were appropriate, and that no one outside that team verified that the information was indeed accurate. . . . On this record, no reasonable jury could conclude that defendant specifically intended to deceive the public with false patent markings."

Heathcote Holdings Corp., Inc. v. William K. Walthers, Inc., 1-09-cv-06722 (ILND March 11, 2011, Order) (Bucklo, J.)

False Marking Complaint Alleging Due Diligence, Prior Litigation, and Financing Activities Concerning Falsely Marked Products

and Patents Sufficiently Pleads Intent to Deceive

The court denied defendant's motion to dismiss plaintiff's qui tam false marking action for failure to state a claim, because allegations that defendant previously conducted due diligence activities with respect to the patents gave rise to an inference of intent to deceive. "Plaintiff has alleged a chain of assignments concerning the now-expired patents . . . before being ultimately assigned to [defendant]. This chain of assignments supports Plaintiffs assertion, based upon information and belief, that [defendant] performed due diligence on the patents it was acquiring, which would have given it a working knowledge of the expiration dates and scopes of the patents. Plaintiff further alleges that [defendant] has been accused of infringing patents . . . pertaining to [the falsely marked products]. This allegation also supports Plaintiffs assertion, based upon information and belief, that Plaintiff studied the features of its [products] in response to the litigation and knew or should have known that its products were not covered by [one of the patents-in-suit]. . . . Plaintiff asserts that [defendant] used two of the three . . . patents identified in the pleadings as collateral to secure a loan . . . . [T]he fact that [defendant] used these patents for loan collateral supports Plaintiffs assertion, made upon information and belief, that [defendant] knew or should have known the expiration dates of the relevant patents."

Brinkmeier v. Graco Children's Products Inc., 1-09-cv-00262 (DED March 7, 2011, Order) (Stark, M.J.).

Falsely Advertising Compliance With Patented Method Constitutes False Marking

Following a bench trial, the court found that plaintiff had engaged in false marking where it advertised that its fish products were produced in accordance with a patent to which plaintiff had a license, but where plaintiff did not follow the method described by that patent. "[Plaintiff] was aware that these advertisements were false in, at least one way: [plaintiff] never pre-cooled the [filtered wood] smoke down to 0º to 5º C before applying it to the tuna to be treated with [filtered wood smoke], as required by the [patent-in-suit]."

King Tuna v. Anova Food, 2-07-cv-07451 (CACD February 24, 2011, Order) (Wright, J.)

Eastern District of Texas Transfers False Marking Cases Lacking Connections to the District

The magistrate judge recommended granting defendant's motion to transfer venue of plaintiff's qui tam false marking action. "[T]he alleged actions that give rise to this lawsuit occurred in New Jersey. Plaintiff has alleged that [defendant] and its employees located in New Jersey have acted with an intent to deceive the public, creating an even stronger local interest in New Jersey. . . . Importantly, Plaintiff has no ties to this district, and [defendant] is headquartered in New Jersey. . . . On balance, even considering the additional products Plaintiff seeks to add to this case, this case has substantial factual connections to the District of New Jersey and no meaningful connection to the Eastern District of Texas."

Tex Pat, LLC v. Becton, Dickinson and Company, et. al., 5-10-cv-00123 (TXED February 22, 2011, Order) (Craven, M.J.)

Defendant's motion to transfer plaintiff's qui tam false marking action was granted. "[T]he significant majority of potential witnesses in this case are located near Rhode Island. The defendant names two witnesses that are likely to testify and are located in Seekonk, Massachusetts, which is less than 8 miles from the District of Rhode Island courthouse. The defendant is not aware of any potential witnesses located in the Eastern District of Texas or within 100 miles of the Marshall Division."

Promote Innovation LLC v. Little Kids, Inc., 2-10-cv-00135 (TXED February 23, 2011, Order) (Everingham, M.J.)

Statements on Websites and Twitter May Qualify as "Advertisement" for Purposes of False Marking Statute

Defendant's motion to stay discovery pending its motion to dismiss plaintiff's false marking claim was denied. "Taking a 'preliminary peek' at the merits [of defendant's motion to dismiss plaintiff's false marking claim], the court finds good reason to question if Defendant will prevail . . . Defendant argues that Plaintiff fails to identify 'one "paid announcement" or document that can qualify as an "advertisement," even[] under the broadest interpretation.' At best, Defendant argues, Plaintiff has alleged promotional statements or interviews, which are not 'advertisements,' as contemplated by the statute. Yet the Amended Complaint includes allegations that Defendant communicated its use of a patented water treatment technology on its website, on Twitter, on its menus . . . and more, with the knowledge that it owned no patent. These allegations may be sufficient to plead a 'uses in advertising' violation of the false marking statute."

Mamma Mia's Trattoria, Inc. v. The Original Brooklyn Water Bagel Co., Inc., 9-10-cv-81106 (FLSD February 18, 2011, Order) (Vitunac, M.J.)