by: Robert Wagner, intellectual property attorney at Picadio Sneath Miller & Norton, P.C.
In Hollander v. Etymotic Research, Inc., No. 10-526, 2010 U.S. Dist. LEXIS 116619 (E.D. Pa. Nov. 1, 2010) (opinion by J. Tucker), Plaintiff sued Defendant for falsely marking certain earphones and earplugs that it sold with expired patent numbers, allegedly in violation of 35 U.S.C. § 292. The court denied Defendant’s motion to dismiss Plaintiff’s amended complaint.
Defendant marked its products with a series of patent numbers, including three patents that expired before 2008. On most of Defendant’s products, it used the following language: “[X products] are covered by one or more of the following U.S. patents: [#A, #B, #C, #D] and other patents pending.” Plaintiff alleged that this marking violated 35 U.S.C. § 292 because three of the patents had expired and that the false marking was done with the intent to deceive the public.
The main issue in this case was whether Plaintiff sufficiently pleaded Defendant’s intent to deceive under Fed. R. Civ. P. 9(b). A claim for false marking under 35 U.S.C. § 292 requires that plaintiff prove that defendant falsely marked an item with the intent to deceive the public. The court previously concluded that Plaintiff had to meet the requirements of Rule 9(b) when pleading the intent deceive and dismissed Plaintiff’s complaint for failure to do so. Plaintiff amended his complaint to add specific allegations of intent, which Defendant again challenged with a motion to dismiss.
Plaintiff’s amended complaint added allegations that Defendant received copies of the patents after they issued, which gave notice of the expiration date; reviewed its patent portfolio in order to timely pay the 4, 8, and 12 year maintenance fees on these patents; and marked new products with patent numbers after they expired. Plaintiff argued that together these showed that Defendant was aware of when the patents expired and consciously chose to mark new products with these expired patent numbers.
Defendant argued that these allegations did not meet the Rule 9(b) standard because they showed at most that it failed to remove the markings when the new products were introduced. Defendant also argued that the conditional language (“are covered by one or more of the following U.S. patents”) used on the products indicated that it had no intent to deceive.
Quoting Clontech Laboratories, Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005), the court stated that “the fact of misrepresentation coupled with proof that the party making it had knowledge of its falsity is enough to warrant drawing the inference that there was a fraudulent intent.” The court rejected Defendant’s arguments and found that the alleged facts were sufficient to meet the heightened Rule 9(b) pleading standard. The allegations supported a reasonable inference that Defendant knew the patents had expired and chose to falsely mark its products with an intent to deceive the public. With respect to the conditional language, the court found that the language could have the opposite effect suggested by Defendant—namely, that the public could be deceived into believing that all of the patents applied to the products.
In addition to challenging the amended complaint under Rule 9(b), Defendant argued that the marking of its products was not literally false because the markings on the product only claimed that the products were “covered by one or more of the [listed patents],” and the products were covered by at least one of the unexpired patents. The court first considered whether the marking of an expired patent fell within the prohibitions of the statute. Citing the recent decision in Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010), the court concluded it did, noting that “articles marked with expired patent numbers are falsely marked.” The court then looked to the Clontech decision and concluded a product must be covered by at least one claim of every patent listed in order to be properly marked—“[o]ne valid patent listed among several expired patents is not suffice to have this court hold that the markings were not false under the meaning of § 292.”
In this case, the court addressed what specificity is needed under Rule 9(b) to allege the intent to deceive the public. The tipping point for the court appeared to be when Defendant marked a new product with an expired patent number. Given the allegations that Defendant was aware of when the patent expired by virtue of having monitored the patent sufficiently to timely pay the maintenance fees, the court found that the allegations were sufficient to plead intent. In addition, the court found that using conditional language to mark a patent is not sufficient to shield a defendant from liability under 35 U.S.C. § 292. A defendant can potentially be liable for false marking unless the product is covered by at least one claim of every patent listed.
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