Federal Judiciary

Motion to Dismiss Recommended Denied in False Marking Case

By Michael C. Smith

Promote Innovation LLC v. Ranbaxy Laboratories Inc., 2:10cv00121 (July 14, 2010)

Judge: Chad Everingham

Holding: Motion to Dismiss recommended DENIED; leave to amend pleading granted

Still haven't gotten around to bring my grandfather's pencil sharpener with all the expired patents on it to the office, but here's the photo from my last false marking post.

As readers know, a lot of false marking cases have been filed across the country since the Federal Circuit's Bon Tools decision last December, including in the Eastern District. Most have been met with motions to dismiss raising several issues, including standing and sufficiency of pleadings, and Judge Everingham's order from Wednesday is one of the first addressing one of these motions.

In this case, the plaintiff argued that the plaintiff Promote Innovation LLC?s (?Promote?) complaint for false patent marking should be dismissed because (1) Promote lacks standing; (2) the failure to remove an expired patent from a product is not false marking; (3) Promote?s complaint fails to properly plead intent; and (4) Promote fails to properly plead that the alleged false marking was used in advertising. 

To summarize, Judge Everingham concluded that Promote?s complaint stated a claim upon which relief may be granted because it alleges that the defendant marked its products with expired patents, pleads intent with sufficient specificity, and asserts that the alleged false mark was placed on the products. But he held that the complaint fails to plead an injury in fact, and thus does not allege that Promote has standing.  He therefore recommended denying the motion to dismiss, and instead granting leave for the plaintiff to amend its pleading within seven days to clearly allege an injury in fact, and if it did not do so, recommended dismissal.

With respect to the standing claim, Ranbaxy claimed that the plaintiff lacked standing because it had not alleged that the federal government had suffered an injury in fact.  Judge Everingham agreed, but gave the plaintiff an opportunity to replead to attempt to cure the defect.

Judge Everingham next rejected Ranbaxy's argument that the plaintiff's complaint must be dismissed for failure to state a claim because, according to Ranbaxy, marking a product with an expired patent is not a violation of § 292, noting that the Federal Circuit recently addressed and rejected Ranbaxy?s argument in Pequignot v. Solo Cup Co..

Next up was Ranbaxy's charge that the plaintiff failed to sufficiently plead intent to deceive the public.  Judge Everingham observed that "[i]t is unclear whether Rule 9(b)?s heightened pleading standard applies to false marking claims, citing and quoting authorities on both sides of the issue, but "[a]fter considering the cases cited above, the undersigned is persuaded by Judge Love?s analysis in Astec America [Inc. v. Power-One, Inc., 2008 WL 1734833, at *12 (E.D. Tex. Apr. 11, 2008) (limiting Rule 9(b) to allegations of fraud and mistake)]".

Finally, Ranbaxy claimed that the complaint failed to plead that the alleged false marking was used in advertising.  Judge Everingham noted that Section 292(a) states that ?[w]hoever marks upon, or affixes to, or uses in advertising? a patent number on an unpatented article is liable for false marking." (emphasis added by court) and accordingly held that the plaintiff was not required to allege any use in advertising?an alleged false marking on the product itself is sufficient.

From Docket Navigator.

Full post as published by Eastern District of Texas Federal Court Practice on July 16, 2010 (boomark / email).