August 10, 2010Client Alert

False Patent Marking – Case Law Update: Threshold “Standing” Inquiry Dooms False Marking Claims Asserted By Plaintiffs Who Do Not Allege a Concrete or Particularized Injury-In-Fact

The false patent marking statute (35 USC § 292) provides that “any person” can bring suit for false marking. The plaintiffs in false patent marking cases allege that the defendant violated the false patent marking statute by marking a product with an expired patent or with a patent that does not cover the marked product with intent to deceive the public. The vast majority of false marking plaintiffs allege that the false marking caused some general injury to the market or public. However, two recent district court decisions confirm that where the plaintiff fails to allege an injury from the violation of law that is concrete, such as an actual injury to a competitor, to the market, or to some aspect of the United States economy, the plaintiff’s claim will be dismissed for lack of standing.

Constitutional standing requires the plaintiff to show the existence of an injury-in-fact, that the injury resulted from the defendant’s violation of law, and that there is a likelihood that the requested relief will remedy the alleged injury. On the heels of earlier decisions in Pequignot v. Solo Cup and Simonian v. Cisco Systems, Inc., which determined that the heightened pleading requirement of Federal Rule of Civil Procedure 9(b) applies to false patent marking claims, courts are also focusing on whether the plaintiff has sufficiently alleged a “concrete injury-in-fact” rather than a mere allegation of a violation of the laws of the United States.

United States of America, et al. v. WHAM-O, Inc.

In United States of America and FLFMC, LLC v. WHAM-O, the U. S. District Court for the Western District of Pennsylvania granted a motion to dismiss because FLFMC, the private plaintiff who initiated the case, failed to sufficiently allege a concrete injury-in-fact. The court determined that the plaintiff’s alleged injury of a violation of the false marking statute did not rise to the level of a “quantifiable, concrete injury.” According to the court, merely alleging a violation of the laws of the United States, absent a specifically alleged injury-in fact (i.e., an actual or proprietary injury, such as those incurred in contract or property law), is insufficient to maintain a private party’s claim of false patent marking under § 292.

The court in WHAM-O likened the sovereign interest of the United States regarding the violation of its laws to that of a personal injury to a party, which cannot be assigned to another party. Under this analogy, the court determined that FLFMC lacked standing to sue for the false patent marking claim because the allegation of a violation of the laws of the United States, without more, is an injury that only the government could pursue.

Shizzle Pop, LLC, v. Aviva Sports, Inc.

Like the Pennsylvania District Court in WHAM-O, the District Court for the Central District of California granted a motion to dismiss in Shizzle Pop, LLC, v. Aviva Sports, Inc., because Shizzle Pop failed to allege a cognizable, “concrete, particularized injury.” The court in Shizzle Pop went a step further by stating that even if the plaintiff’s claim survived on the standing issue, the claim would have been dismissed in any event. The Court concluded that Shizzle Pop’s general allegations that the Defendant marked its products with the intent to deceive the public in violation of the false marking statute was a mere recitation of the elements, and therefore failed to meet the pleading requirements of Rules 8 or 9(b). The court reasoned that Shizzle Pop’s claim merely stated a legal conclusion, in violation of Federal Rule of Civil Procedure 8. The court also noted that because claims under the false patent marking statute are based in fraud, the particularity of the circumstances surrounding the fraud must be alleged to satisfy Federal Rule of Civil Procedure 9(b).
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