Should False Marking Claims be Stayed Pending a Decision in Stauffer? Depends on the Court

Defendant's motion to stay plaintiff's qui tam false marking case pending the Federal Circuit's resolution of Stauffer v. Brooks Brothers, Inc., Nos. 2009-1428, 2009-1430, 2009-1453, was denied. "[Plaintiff's] standing to bring a qui tam action under the FCA does not appear to be in serious dispute. . . . The Court finds that the plain language of the FCA provides for qui tam actions whether or not the qui tam plaintiff has personally sustained an injury-in-fact. . . . Plaintiff has alleged that the injuries prohibited by the FCA have occurred and it is unclear why their status as a non-competitor would affect their qui tam standing."

Patent Compliance Group Inc v. North States Industries Inc., 3-10-cv-00405 (TXND August 27, 2010, Order) (Furgeson, J.).

Defendants' motion to stay pending the Federal Circuit's resolution of Stauffer v. Brooks Brothers, Inc., Nos. 2009-1428, 2009-1430, 2b09-1453, was granted. "It is undisputed that the precise issue that is now before this Court - whether a private party has Article III standing to bring a false marking claim under § 292 of the Patent Act when that private party has suffered no injury - is now before the Federal Circuit in Stauffer. . . . [Plaintiff] has failed to articulate any prejudice that it will suffer if the case is stayed. Significantly, [plaintiff] does not allege any injury to itself or any other entity resulting from Defendants' conduct."

Accord Patents, LLC v. Gravity Defyer Corporation et al., 1-10-cv-00642 (GAND August 27, 2010, Order) (Batten, J.)

In False Marking Cases, When a Judge Closes a Door, Somewhere She Opens A Window

Although a few False Marking cases have recently been dismissed for failure to plead facts supporting intent to deceive, some plaintiffs have undoubtedly noticed a small window of hope in those same orders. Judge Robinson stated in Brinkmeier v. BIC Corporation et al., 1-09-cv-00860 (DED August 25, 2010, Memorandum Opinion) that the “plaintiff has provided no indication there was litigation on any of these patents that would imply a working knowledge of the patents, conscious knowledge of the scope and expiration date." This leaves a false marking plaintiff to wonder if there IS some indication of prior litigation, is that enough to sufficiently state facts from which one can infer intent?

A handful of the currently pending False Marking cases involve allegations of prior litigation. At least eleven false marking complaints state that one or more patents at issue have been found invalid or unenforceable. While four of those have either settled or been voluntarily dismissed, seven remain. The plaintiffs that might benefit are Promote Innovation, LLC, Atico International USA, Inc., and oddly enough, Brinkmeier (Brinkmeier v. Exergen Corporation).

Failure to Plead Facts Supporting Intent to Deceive Sinks More False Marking Cases

Defendants' motion to dismiss plaintiff's false marking claims was granted because plaintiff failed to sufficiently plead intent to deceive. "[I]n [another of the court's cases] the allegations were that defendant had continued marking a nationally known product of which this Court could take judicial notice with two expired patents, one of which was alleged to have expired a number of years ago. Defendant was alleged to have decades of experience applying for and prosecuting patents. Thus, I found that plaintiff sufficiently alleged intent. Plaintiff [in this case] makes similar conclusory allegations with regard to intent here but without the specific facts noted above. In this case, I find that the complaint does not sufficiently state facts from which I can infer intent."

Simonian v. Global Instruments, Ltd. et al., 1-10-cv-01293 (ILND August 26, 2010, Order) (Bucklo, J.)

Defendant's motion to dismiss plaintiff's false marking action for failure to state a claim was granted. "To the extent that plaintiff is arguing that [defendant] had knowledge that the patents were expired because the packaging of these products was updated following patent expiration, this argument fails to prove [defendant] had intent to deceive the public. . . . Also, plaintiff has provided no indication there was litigation on any of these patents that would imply a working knowledge of the patents, conscious knowledge of the scope and expiration date."

Brinkmeier v. BIC Corporation et al., 1-09-cv-00860 (DED August 25, 2010, Memorandum Opinion) (Robinson, J.)

Plaintiff's Marking of Packaging Instead of Products Precludes Pre-Suit Damages

The court granted defendant's motion to limit damages in part because plaintiff marked its product's packaging and not the product itself. "[N]o reasonable jury could find that [plaintiff's] choice to mark the product packaging rather than its patented products comports with the marking statute. While [plaintiff] need not have alleged that marking the patented products is physically impossible, it has failed to identify a fact issue with respect to any limitation, physical or otherwise, that presents a reasonable consideration warranting the marking of the product packaging instead."

Belden Technologies Inc. et al v. Superior Essex Inc. et al., 1-08-cv-00063 (DED August 24, 2010, Memorandum Opinion) (Robinson, J.)

Reasonable Royalty Damages for Indirect Infringement not Limited to "Specific Acts of Infringement"

Defendant's motion to limit damages for plaintiff's claims of indirect infringement to "specific acts of infringement that [plaintiff] proves at trial” was denied as premature. "The principle on which [defendant] relies is applicable to a claim of indirect infringement where the plaintiff seeks to establish damages under a 'lost profits' theory. See Standard Haven Products, Inc. v. Gencor Industries, Inc., 953 F.2d 1360, 1374 (Fed. Cir. 1992) (holding where plaintiff sought to establish 'lost profits' as remedy for claim of indirect infringement, amount of lost profits could only be based on six of ten sales of accused device, because plaintiff did not establish remaining four sales resulted in act of direct infringement by purchaser). The principle, however, does not apply to a claim of indirect infringement where the plaintiff seeks to establish damages under a 'reasonable royalty' theory."

Tyco Healthcare Group LP d/b/a Vnus Medical Technologies v. biolitec, Inc. et al., 3-08-cv-03129 (CAND August 23, 2010, Order) (Chesney, J.)

Simonian v. Bunn-O-Matic stayed until the Federal Circuit issues its opinion in Stauffer v. Brooks

The court deferred ruling on defendant's motion to dismiss plaintiff's qui tam false marking claim for lack of standing and stayed the case pending the Federal Circuit's resolution of Stauffer v. Brooks Brothers, Inc., 615 F. Supp. 2d 248 (S.D.N.Y. 2009).

"The Federal Circuit opinion in Stauffer will be the first one that is directly on point to the standing issue in this case. In earlier Federal Circuit opinions . . . the court sidestepped any direct address of qui tam standing, choosing to focus on the substantive issues; however, in Stauffer, standing is the only issue on appeal, and therefore, it must be addressed. Given that the Stauffer decision will be binding on this court, and that the case is already fully briefed before the Court of Appeals for the Federal Circuit with oral arguments less than one week away, an order staying the case pending a decision in Stauffer will not cause undue delay."

Simonian v. Bunn-O-Matic Corporation, 1-10-cv-01203 (ILND August 23, 2010, Memorandum Opinion and Order) (Zagel, J)

Nine Year Delay Does Not Trigger Laches But Does Preclude Award of Prejudgment Interest

Defendant's motion for prejudgment interest was denied for undue delay. "[Plaintiff] argues that [defendant] is not entitled to prejudgment interest because it delayed bringing this lawsuit for nearly a decade and did so as a counterclaim only after [plaintiff] brought suit against [defendant]. . . . As detailed in the Court’s Opinion on [plaintiff's] laches motion [defendant] unreasonably delayed bringing this suit for nine years. Although in the end the Court concluded that the delay did not result in any prejudice to [plaintiff], the delay was nevertheless undue and provides a justification for withholding prejudgment interest."

Humanscale Corp. v. CompX International Inc. et al., 3-09-cv-00086 (VAED August 23, 2010, Memorandum & Opinion) (Spencer, J.)