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False Marking Cases in Marshall - Routine Cases and Wrinkles

By Michael C. Smith

"We're trying to get a handle on how we're going to proceed with theses cases" Judge Ward told the attorneys in his court repeatedly during the day as he and Judge Everingham conducted status conferences on their first sixteen "false marking" cases today, hearing argument on all pending motions as they went along, and assigning trial dates. As readers know, there have been over 500 such cases filed in 2010 since the Federal Circuit's Bon Tool opinion last December gave new life to the cause of action in 35 USC 292, and about 40% have been filed in the Eastern District of Texas.  As I've noted previously, our firm represents a number of defendants in these cases, so it was an interesting day taking notes as to how the judges will handle these cases going forward, and seeing how the commonly raised issues in these cases fared with two experienced trial judges.

As I posted earlier today, it took Judge Ward just under fifteen minutes to address the common issues in false marking cases pending in his court by ruling on the pending motions in the first three status conferences, and setting all of them for speedy trials - in almost every case trial settings in the middle of next year which were agreed to by the plaintiff and defendants (I think two defendants wanted later settings, but the rest agreed).  Later conferences fleshed out these issues somewhat, and gave attendees a solid idea of how the false marking docket in Marshall will be handled, as well as identifying some interesting "wrinkles" that some cases present, and showing how the Court will handle those (the short answer seems to be that "wrinkles" get an extra 60-90 days to get ready for trial):

• Motion to dismiss for failure to plead with sufficient specificity - all of these were denied because the judges believe that FRCP 8 applies, and the pleadings were sufficient under that standard.  In later written orders Judge Ward provided cites to the orders that he believed correctly stated the test, but he stated repeatedly at the conferences that all these rulings were subject to further guidance from the Federal Circuit.  Thus if the pending proceeding identified at one of the hearings results in a Fed Circuit holding that a higher pleading standard is appropriate, those motions can be reurged, although the plaintiffs will have an opportunity to replead to try to meet the new standard.
• Motions to transfer - four of the sixteen cases had motions to transfer argued (a fifth had a motion filed last week but briefing wasn't concluded) and Judge Ward and Judge Everingham granted one of these each in the morning, both in cases where there was one defendant, and the only witnesses identified other than the plaintiff's rep in Houston were in or very near the transferee forum.  The other two were a motion to sever and transfer by a single defendant in one case and a second motion which was filed by all defendants in a case where the product packaging and marking was made and applied to the product in the Eastern District of Texas and there was a factual dispute where the marking decisions were made - Northern District of Texas or Wisconsin.  In both those cases, the judges took the motions under advisement since these presented less straightforward applications of 1404.  Predictably, the granting of the first two motions resulted in four additional defendants in hearings after lunch telling the judges they'd be filing motions now, and those will be briefed and ruled on in the ordinary course.  But as for now, plaintiffs are 0-2 on venue rulings, with two pending, one being briefed, and four more being drafted as a result of the courts' granting of the two.
• Trial settings - Judge Ward set all of the "routine" false marking cases for trial in June of 2011, with cases presenting special situations getting August and in one case September settings.  Judge Everingham set most cases for July 2012 with a few in August.  Parties were generally given 14 days to prepare and submit scheduling and discovery orders in line with the Court's usual practices.  Trial would be on the liability issue (primarily intent to deceive), with the Court to set damages.
• Complications - what became increasingly apparent as the day wore on is that while most false marking cases are simple "expired patent" cases (as the attached chart from Docket Navigator and Gray on Claims earlier this year shows) where the primary issue will be whether there was intent to deceive, several cases presented complications, which got the cases an extra couple of months before trial.  Here are some examples.

1.   Inequitable conduct - two cases presented the issue of whether a finding that a patent is unenforceable makes marking with that patent "false marking" under the statute.  Interestingly, according to the chart above, only one percent of false marking cases deal with unenforceability issues - apparently both in the Eastern District's 200 such cases were heard today, so we can expect a ruling from one of the judges on this issue.  The second case added the additional twist that there had not been a final judgment of unenforceability, so whether the factual record developed in a prior case was sufficient to prove up unenforceability for purposes of asserting that in a false marking case - assuming that you can assert is as a ground for false marking - was also going to be an issue.  That got the case an extra two months from the ordinary case, since the judge will first have to make a finding as to whether there was in fact inequitable conduct. 
2. Parallel cases - what if there are two false marking cases against the same products?  The judge made clear that there won't be a double recovery, but declined to dismiss the Marshall case at this time the case in favor of a somewhat overlapping marking case proceeding elsewhere.
3. Scope of patent/Markman hearing, anyone? - there was one case that was not an "expired patent" case but rather raised questions of whether a patent covered the products.  The parties appeared to agree that the case would not require a claims construction (all cheered at this) and that the jury could simply decide the threshold question of whether the marked patent covered the product in the first place, then decide intent.

 

Full post as published by Eastern District of Texas Federal Court Practice on November 23, 2010 (boomark / email).