Patent Law Practice Center

Pleading Intent to Deceive in False Marking: How much is enough?

Written by Scott Daniels (partner in Westerman Hattori Daniels & Adrian and Practice Center Contributor).

It is undisputed that a qui tam claim for false patent marking under 35 U.S.C. § 292 requires, in addition to marking an unpatented article, that the marking be done with intent to deceive the public.  Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295, 1300 (Fed. Cir. 2009).  But how specifically must the qui tam plaintiff plead “intent to deceive” to comply with the Rule 9(b) requirement that allegations of fraud be made with particularity?  Unfortunately, the CAFC declined to answer that question in Stauffer v. Brooks Brothers, Inc., decided last month.  Without guidance from the CAFC, the answer appears to depend upon the court in which the complaint is filed.

At the more lenient end of the spectrum is Judge Robert W. Gettleman who in Simonian v. Oreck, Case No. 1:10-cv-01224 (N.D. Ill, August 23, 2010) denied the Defendant Oreck’s motion under Rule 12(b)(6) to dismiss because of the failure of the complaint to make more than a general allegation of deceptive intent. Judge Gettleman applied the who-how-what-when-where standard that has been used by a number of courts.  He concluded that Plaintiff Simonian’s complaint adequately stated that Oreck (the who) had deliberately falsely marked (the how), the particular product (the what), the marking was current (the when), within the District and throughout the United States (the where).  He also found that the allegations, despite their generality, created a presumption: “By alleging that defendants had knowledge of their false marking and that the marks were false creates a rebuttable presumption of deceptive intent.” (more…)

Qui Tam Plaintiffs Have Standing to Sue for False Marking under 35 U.S.C. § 292

Mayer Brown’s Partner James R. Ferguson passed along this article he wrote with colleagues Richard M. Assmus and Emily C. Melvin on the recent Stauffer v. Brooks Brothers, Inc. decision.  The article discusses how the Stauffer decision may effect the large number of false marking suits now pending in district courts.  According to the authors, “although the Stauffer decision will not stem the tide of false marking suits – as many patent owners had hoped – several options remain for defending against these actions.”

The US Court of Appeals for the Federal Circuit has ruled that qui tam plaintiffs have standing to sue for false marking under 35 U.S.C. § 292. Stauffer v. Brooks Brothers, Inc., No. 2009-1428 (Fed. Cir. Aug. 31, 2010). Issuing a blow to patent marking defendants, this ruling is sure to impact the flood of cases currently pending in district courts, many of which were stayed pending resolution of Stauffer.

Raymond Stauffer—a patent lawyer himself—brought the suit after he discovered that several bow ties he purchased from Brooks Brothers were marked with two expired US Patents. The district court dismissed Stauffer’s suit for lack of standing, holding that he had not sufficiently alleged an injury to the United States and that any allegations that the alleged false marking quelled competition were too conjectural or hypothetical to constitute injury in fact. (more…)

Oral Argument In Key False Marking Case: Stauffer V. Brooks Brothers, Inc.

Jeanne Gills (partner at Foley & Lardner and Practice Center Contributor) and Mary M. Calkins (senior counsel at Foley & Lardner) passed along this news alert discussing the August 3rd oral argument heard by the Federal Circuit in the Stauffer v. Brooks Brothers, Inc. false marking litigation….

On August 3, 2010, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit (C.J. Rader, J. Lourie, and J. Moore) heard oral argument in Stauffer v. Brooks Brothers, Inc., Nos. 09-1428 et al (Stauffer). Stauffer is the latest in a line of appeals from district court decisions in false marking suits brought under 35 U.S.C. § 292. The panel mostly focused on two standing issues: (1) the requirements for an individual plaintiff, who is not a competitor of the defendant allegedly committing false marking, to have standing to sue for damages under Section 292; and (2) whether the United States may intervene during the initial phase of a Section 292 action dealing with standing on the pleadings, rather than later during the merits phase of the action. Given the several hundred false marking cases that have been filed during the past year, including those that have been stayed pending a decision in Stauffer, the Federal Circuit’s ruling could impact whether these cases survive on jurisdictional grounds or will proceed on the merits.

Background

Section 292 prohibits marking an “unpatented article” with words indicating that the article is patented “for the purpose of deceiving the public,” and establishes a monetary fine of up to $500 per falsely marked article. The statute further provides that “[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.” (more…)

False Marking: An In-House Attorney’s Perspective

I recently had an opportunity to discuss False Marking with Brandon Baum, partner and IP litigator at Mayer Brown LLP, (see “False Marking: A Patent Litigator’s Perspective“)  and Robert Faber, partner and patent prosecutor at Ostrolenk Faber LLP (see “False Marking: A Patent Prosecutor’s Perspective“).   It was interesting to see the varying opinion’s on the issue.  Today, you’ll have a chance to learn what Valerie Calloway‘s, in-house counsel at Polymer Group, Inc. and Patent Center Contributor, insight is on the issue of false marking.

When I caught up with Calloway, I asked her the same questions that I posed to both Baum and Faber.  Here is what she had to say…..

Me: Do you think we’ll see companies begin to stop falsely marketing products in response to the suits?

VC: I believe companies will pay closer attention to this issue.

Me:  Do you believe false marking necessarily causes injury?

VC:  In some cases yes and in some cases no. It depends on the situation. (more…)

False Marking: A Patent Prosecutor’s Perspective

In a recent post titled, “False Marking: A Patent Litigator’s Perspective“, Brandon Baum, partner and IP litigator at Mayer Brown LLP, and I discussed the infamous issue of false marking and how he believes the proliferation of false marking suits are “a blip due to prior lax enforcement by patent departments, and will disappear quickly”.  Today, you’ll have a chance to read what Robert Faber, partner and patent prosecutor at Ostrolenk Faber LLP, has to say on the issue of false marking.

Without further ado, Robert Faber on False Marking….

Section 292 of the United States Patent Act (35 U.S.C. § 292) imposes a criminal penalty fine of up to $500 per false marking for falsely marking or advertising that a product is covered by an unexpired United States patent or an application for a patent, and the statute provides that whoever sues the false marking party for the penalty on behalf of the United States receives one half the penalty collected.

One reason for heightened interest in the statute is the recent Federal Circuit Court Opinion in Forest Group, Inc. V. Bon Tool Co., 590 F.3d 1295 (Fed Cir. 2009) that the penalty shall be computed based on every individual falsely marked article sold, not on a group of such articles sold in a single transaction. The penalty shall not be more than $500 for the offense of selling each copy, giving a judge discretion as to the per unit amount of the penalty and therefore the amount to be shared by the plaintiff.

(more…)