Plaintiff's Destruction of Evidence Warrants Terminating Sanctions and $1 Million Fine

The court sanctioned plaintiff $1 million and ordered plaintiff's counsel to pay defendants' costs and attorneys' fees for destruction of evidence. "[Plaintiff's consultant who developed the source code for the prior art software] admitted that he wiped six of the seven zip disks that were produced by [plaintiff] as purportedly containing the original source code of the [prior art software] that would invalidate [defendant's] patents. . . . Despite the Court’s inclination to take an officer of the Court at his word, a thorough review of all the evidence supports an opposite finding. This Court finds it impossible to believe that it is merely coincidence that the seventh disk happened to be wiped . . . the same day that [defendant] was scheduled to inspect it. . . . [Defendant's] contention that, virtually every piece of media ordered produced by the Court in May 2007 and July 2008 was wiped, altered, or destroyed after those orders were entered, is supported by forensic analysis. . . . This Court finds that both [plaintiff] and its counsel acted willfully in bad faith by engaging in conduct that resulted in deception of both the opposing party and the Court, the destruction of relevant evidence, the waste of judicial resources, and the undermining of the judicial process.

Rosenthal Collins Group, LLC v. Trading Technologies International, Inc., et. al., 1-05-cv-04088 (ILND February 23, 2011, Order) (Coleman, 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.)

Qui Tam Provision of False Marking Statute is Unconstitutional

The court granted defendant's motion to dismiss plaintiff's qui tam false marking claim "on the ground that the qui tam provision of 35 U.S.C. §292(b) is unconstitutional." "The Take Care Clause of Article II of the Constitution provides that the President 'shall take Care that the Laws be faithfully executed.' . . . [U]nlike the FCA, the False Marking statute lacks any of the statutory controls necessary to pass Article II Take Care Clause muster. The False Marking statute essentially represents a wholesale delegation of criminal law enforcement power to private entities with no control exercised by the Department of Justice. It is unlike any statute in the Federal Code with which this Court is familiar. Any private entity that believes someone is using an expired or invalid patent can file a criminal lawsuit in the name of the United States, without getting approval from or even notifying the Department of Justice. The case can be litigated without any control or oversight by the Department of Justice. The government has no statutory right to intervene nor does it have a right to limit the participation of the relator. The government does not have the right to stay discovery which may interfere with the government’s criminal or civil investigations. The government may not dismiss the action. Finally, the relator may settle the case and bind the government without any involvement or approval by the Department of Justice."

Unique Product Solutions, Limited v. Hy-Grade Valve, Inc., 5-10-cv-01912 (OHND February 23, 2011, Order) (Polster, J.)

In Re Seagate Does Not Dictate Standard For Pleading Willful Infringement Claim

Defendants' motion to dismiss plaintiffs' willful infringement claim for failure to state a claim was denied. "The defendants argue that the court should dismiss the plaintiffs’ willful infringement claim because the plaintiffs fail to allege 'objective recklessness' as required by [In Re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007)]. Specifically, the defendants state that '[t]he Amended Complaint does not state even a single fact that suggests "an objectively high likelihood that [the defendants’ alleged] actions constituted infringement of a valid patent" and that [the defendants] knew or should have known of this objectively defined risk, both of which are necessary elements of a willful infringement claim. . . . Although the defendants properly assert that Seagate sets forth the standard for establishing willful infringement, the defendants fail to recognize that Seagate is not controlling for purposes of pleading under Fed. R. Civ. P. 8(a). . . . Ultimately, the plaintiffs’ allegation that the defendants were aware of the plaintiffs’ five patents that the defendants allegedly had infringed and continued to infringe upon, is sufficient. . . ."

Milwaukee Electric Tool Corporation, et. al. v. Hitachi Ltd., et. al., 2-09-cv-00948 (WIED February 14, 2011, Order) (Callahan, M.J.)

Court's "Greater Familiarity With The Law Of False Marking Due To The Hundreds Of Cases Filed" Does Not Weigh Against Transfer of Venue

In granting defendant's motion to transfer venue of plaintiff's qui tam false marking action, the court disagreed with plaintiff that the Eastern District's familiarity with the governing law weighed against transfer. "This Court is aware of the high number of false marking cases filed in this Court and also notes that [plaintiff] has accounted for approximately fifty of [more than 200] cases. . . . Although this Court may have a greater familiarity with the law of false marking due to the hundreds of cases filed, the Court disagrees that this factor weighs against transfer. The false marking statute is federal law and both federal courts are equally capable of applying such federal law."

Promote Innovation LLC v. Leviton Manufacturing Co., Inc., 2-10-cv-00235 (TXED February 17, 2011, Order) (Everingham, M.J.)

Attorneys' Fees of $750,000 Were Not Excessive In Light of $50,000 Damages Award

The court granted plaintiffs' motion for attorneys' fees under 35 U.S.C. § 285 and rejected defendant's argument that more than $750,000 in fees where the jury awarded damages of $50,000 was unreasonable. "[T]here is not even a hint of [plaintiffs'] counsel having spent 'excessive time' -- of their having overtried the case. Their vigorous prosecution was necessary to counter [defendant's] vigorous defense. And their billing passed the acid test of the market: 'the best evidence of whether attorney’s fees are reasonable is whether a party has paid them'. . . ."

Meyer Intellectual Properties Limited, et. al. v. Bodum, Inc., 1-06-cv-06329 (ILND February 16, 2011, Order) (Shadur, J.)