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June 23, 2010Client Alert

False Patent Marking Complaint Must Plead Intent to Deceive with Particularity

On June 17, 2010, the United States District Court for the Northern District of Illinois issued a memorandum opinion in Simonian v. Cisco Systems, Inc. dismissing a false patent marking complaint because it failed to satisfy the heightened pleading requirement of Federal Rule of Civil Procedure 9(b). The takeaway from this decision is that Rule 9(b) applies to false patent marking claims. In order to survive a motion to dismiss, the plaintiff must allege: (1) the circumstances surrounding the alleged false marking; and (2) the specific facts upon which he bases the allegation that the defendant had knowledge of the mismarking or its intent to deceive the public.

Simonian filed suit alleging that Cisco violated the false marking statute by marking its products with expired patents. Cisco moved to dismiss the Complaint on various grounds, including because Simonian failed to allege sufficient facts under Rule 9(b) to support his claims. In addressing Cisco’s argument, the Court noted that false marking is only actionable where the plaintiff can show that there is an intent to deceive the public. Therefore, the Court concluded that a claim brought under 35 U.S.C. § 292 is a fraud based claim. Thus, just as with any fraud based claim, a false patent marking claim is subject to the heightened pleading requirement of Rule 9(b).

In analyzing Simonian’s complaint for compliance with Rule 9(b), the Court first considered whether he adequately alleged the circumstances surrounding the alleged false marking. Simonian’s complaint identified: (i) the product Cisco allegedly mismarked; (ii) the allegedly expired patents; (iii) the dates the patents expired, and (iv) the date the product was manufactured. The Court concluded that this was sufficient to state with particularity the circumstances constituting the alleged fraud or mistake.

The Court next considered whether Simonian adequately alleged the intent to deceive element, noting that Rule 9(b) allows intent or other conditions of a person’s mind to be alleged generally, but that the pleadings must allege sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind. The Court also acknowledged that allegations made based upon information and belief may satisfy Rule 9(b) if essential information is uniquely within another party’s control, but emphasized that this is only true if the pleadings allege specific facts upon which the belief is reasonably based. Simonian alleged that “upon information and belief” Cisco is “a sophisticated company and has many decades of experience applying for, obtaining and/or litigating patents.” The Court concluded that Simonian did not allege any specific facts upon which he based his allegations about Cisco’s knowledge of the mismarking or its intent to deceive the public. Therefore, Simonian failed to satisfy the heightened pleading requirement of Rule 9(b). The Court granted Cisco’s motion to dismiss permitting Simonian to file a motion for leave to file an amended complaint if he can cure the deficiency.

Michael Best attorneys are familiar with recent legal developments related to false patent marking, and have experience defending claims asserted under 35 USC § 292. For more information, please contact the author of this alert or your Michael Best attorney.

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