Another False Marking Case Bites The Dust

False Marking Case Dismissed With Prejudice for Failure to State a Claim under Rule 12(b)(6)

In Shizzle Pop, LLC v. Aviva Sports, Inc. et al., Judge Klausner dismissed Shizzle Pop’s claims for false patent marking, with prejudice. 10-CV-02574 (C.D. Cal., Order dated Nov. 3, 2010. D.I. 54).  Following a first successful motion to dismiss, the plaintiff was given leave to amend its complaint to plead facts that would “state with particularity the ‘intent to deceive’ element of Section 292.” Order at 1. Plaintiff filed an amended complaint, which had a number of generalized allegations based on “information and belief.” Ruling on defendants’ motion to dismiss the amended complaint, the court found that “plaintiff has lengthened its conclusory statements, but still fails to allege any facts or information that supports its ‘beliefs.’” Order at 4. The court further found that the complaint

“…contains no information supporting the belief that Defendants were acting with an intent to deceive. Further factual detail is needed to survive a motion to dismiss under Rule 9(b). For this reason, the Court grants Defendant’s motion to Dismiss for failure to state a claim with prejudice.”  Order at 4.

Congratulations to my Dorsey partner Tom Vitt and his team for a job well done!

Microsoft, and a Large Group of Powerful "Friends," Ask The Supreme Court to Eliminate the Clear and Convincing Evidence Standard for Patent Invalidity

In Microsoft Corp. v. i4i, U.S., No. 10-290, Microsoft is seeking certiorari on the question of whether the "clear and convincing" standard is appropriate in challenging patent validity in civil litigation. For most issues in civil litigation, such as the question of patent infringement, the party asserting the claim only needs to meet the lower “preponderance” standard. The question then, is why should patent validity be treated differently between private litigants, and should this always be the case?  For example, if the presumption of administrative correctness and deference to the USPTO are the justifications for the heightened evidentiary standard, why should the heightened standard apply when the prior art used to challenge a patent’s validity was not considered by the examiner during prosecution? These and other questions are being addressed by a powerful collection of amici that have submitted eleven briefs supporting Microsoft’s bid for high court review of this fundamental question of patent law.


As reported by BNA, the list of amici and their counsel include:

• 36 law, business, and economics professors, filed by Mark A. Lemley of the Stanford Law School;

• Acushnet Co., General Motors LLC, Pregis Corp., and SAP America Inc., by James W. Dabney and John F. Duffy of Fried, Frank, Harris, Shriver & Jacobson, Washington, D.C.;

• Apple Inc., by Deanne E. Maynard of Morrison & Foerster, Washington, D.C.;

• CTIA—The Wireless Association, by Michael K. Kellogg of Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, D.C.;

• Electronic Frontier Foundation, Public Knowledge, the Computer & Communications Industry Association, and the Apache Software Foundation, by Michael Barclay of the EFF, San Francisco;

• Facebook Inc., Intuit Inc., Netflix Inc., Newegg Inc., Toyota Motor Corp., and Trimble Navigation Ltd., by John D. Vandenberg of Klarquist Sparkman, Portland, Ore.;

• Google Inc., Verizon Communications Inc., Dell Computer Corp., Hewlett-Packard Co., HTC Corp., and Wal-Mart Stores Inc., by Paul D. Clement of King & Spaulding, Washington, D.C.;

• Intel Corp., by Dan L. Bagatell of Perkins Coie Brown & Bain, Phoenix;

• The Securities Industry and Financial Markets Association and the Clearing House Association, by John A. Squires of Chadbourne & Parke, New York;

• Teva Pharmaceuticals USA Inc., the Generic Pharmaceutical Association, and Cisco Systems, by Henry C. Dinger of Goodwin Procter, Boston; and

• Yahoo! Inc., by William C. Rooklidge of the Howrey law firm in Irvine, Calif.


This is clearly an issue that is worthy of attention as the outcome could represent a fundamental change in patent law.  i4i’s responsive brief is due on October 29, 2010, and a second wave of amicus briefs in support of the clear and convincing standard will likely follow.

A NEW “STANDARD” FOR INFRINGEMENT

Proof of Compliance With A Standard May Establish Infringement

In a decision that will likely impact the wireless and telecom sectors for years to come, the Federal Circuit clearly held that “a district court may rely on a an industry standard in analyzing infringement.” Fujitsu Ltd. et al. v. Netgear, Inc., 2010-1045, September 20, 2010. Rather than requiring proof infringement for each individual accused product,

“if a district court construes the claims and finds that the reach of the claims includes any device that practices a standard, this can be sufficient for a finding of infringement. We agree that claims should be compared to the accused product to determine infringement. However, if an accused product operates in accordance with a standard, then comparing the claims to that standard is the same as comparing the claims to the accused product.”

In other words, the Federal Circuit held that proof a standard compliance can be sufficient circumstantial evidence to establish infringement.



To defend against an allegation of infringement based on a practicing-the-standard theory, “an accused infringer is free to either prove that the claims do not cover all implementations of the standard or to prove that it does not practice the standard.” Further, the Federal Circuit recognized “that in many instances, an industry standard does not provide the level of specificity required to establish that practicing that standard would always result in infringement.” In some cases, “the relevant section of the standard is optional, and standards compliance alone would not establish that the accused infringer chooses to implement the optional section.” In such cases, the plaintiff cannot rely on the standard alone to establish infringement.



From a plaintiff’s perspective, the cost and complexity of proving infringement when an industry standard is involved may now be greatly reduced. Rather than proving that numerous complex devices meet every element of the claim, the patent owner now must establish that the relevant portion of the standard in question (1) always infringes the claim, i.e. “a patent covers every possible implementation of a standard,”; (2) is mandatory for compliance with the standard,  and (3) the accused device is compliant with the standard. The significant advantage for the plaintiff is that elements (1) and (2) need only be proven once, rather than for each accused product. In cases like Fujitsu, which dealt with the 802.11 wireless standard and involved a large number of accused products, this results in a significantly lower burden for the plaintiff to carry.



Fujitsu reiterates that it is not enough for a plaintiff to establish that an accused device is "capable of infringement; the patent owner must show evidence of specific evidence of direct infringement."  Thus, when a feature in the standard may be switched on and off or is optional for compliance, proof of compliance with the standard is not enough.  The plaintiff must then prove that the switchable or optional feature was actually implemented and used in the accused device.

Since there are a large number of cases pending, and likely many more coming, involving industry standards featuring devices, such as cell phones, Wi-Fi, Wi-Max and Bluetooth compliant devices, this will certainly be an issue presented time and time again in the foreseeable future.

False Marking FAQ

Over the last nine months, we have seen a significant surge of false patent marking cases.  Indeed, twenty new cases were filed in the EDTX on Friday alone!  The case law developments that have been fueling this trend have been reported here as they happened, but I just put together an FAQ on the topic that provides a high level summary of the issues and risks of false marking in one place.  Consider it a false marking 101 article.  The article is available at http://www.dorsey.com/eu_ip_businessesbeware_091610/

Federal Circuit Holds That “Any Person” Has Standing to Bring False Patent Marking Claims

But Foreshadows Possible Defenses

In Stauffer v. Brooks Brothers, Mr. Stauffer’s claims of false patent marking under 35 U.S.C. 292 were dismissed by the district court for lack of standing.  In a not-so-surprising but long awaited decision, the Federal Circuit held that “even though a relator may suffer no injury himself, a qui tam provision [i.e. 35 U.S.C. 292] operates as a statutory assignment of the Untied States’ rights, and ‘the assignee of the claim has standing to assert the injury in fact suffered in by the assignor.’” Stauffer v. Brooks Brothers, 2009-1428, -1430, -1453 (Fed. Cir., August 31, 2010). What exactly is the necessary “injury in fact” suffered by the United States? “[A] violation of that statute [35 U.S.C. 292] inherently constitutes an injury to the United States… .  Because the government would have standing to enforce its own law, Stauffer, as the government’s assignee, also has standing to enforce section 292.” Opinion at 9 (emphasis added).  To the extent that there remained much doubt, it is now clear - anyone can bring a false marking claim and no specific individualized injury is required.


What is perhaps more interesting than the issues decided in Stauffer are the issues that were mentioned, but left for another day. First, the Stauffer opinion discusses a constitutional challenge to 35 U.S.C. 292 under the “take care” clause of Article II of the Constitution that was raised by amicus Ciba Vision. After introducing this potential challenge, the opinion states:

While Ciba raises relevant points, the district court did not decide, and the parties did not appeal, the constitutionality of section 292. Thus, we will not decide its constitutionality with the issue having been raised or argued by the parties. (emphasis added)

While not clearly foreshadowing the outcome, the Federal Circuit is clearly sending out an invitation to take on this issue head on in future cases.   Given the relatively thin procedural safeguards set out in Section 292, this is certainly a live issue that has the potential to put an end to the continuously growing number of false marking cases as we know them.

Second, in the remand order, the opinion states:

We remand for the court to address the merits of the case, including Brooks Brothers’ motion to dismiss pursuant to Rule 12(b)(6) ‘on the grounds that the complaint fails to allege an ‘intent to deceive’ the public – a critical element of a section 292 claim – with sufficient specificity to meet the heightened pleading requirements for claims of fraud imposed’ by Rule 9(b).

As reported previously, a number of district courts have already dismissed cases for failing to meet the heightened pleading standard of Rule 9(b), so this issue will likely be presented to the Federal Circuit in the not-to-distant future.  If the Federal Circuit ultimately confirms that the heightened pleading standard is indeed required for false patent marking cases, the ability for "any person" to adequately plead a claim of false marking should be greatly diminished.

Secondary Considerations are Primary in the Post-KSR Obviousness Analysis

Two recent Federal Circuit cases emphasize the importance of the so-called “secondary considerations of non-obviousness” in deciding the question of patent validity.  In Transocean v. Maersk Contractors, the Federal Circuit reversed the district court’s grant of summary judgment of obviousness because the district court did not give any weight to “significant objective evidence of nonobviousness” presented by the patentee, Transocean.  The Federal Circuit held that:

The district court erred by failing to consider Transocean’s objective evidence of nonobviousness…While it is true that we have held in individual cases that objective evidence of nonobviousness did not overcome the strong prima facie case – this is a case-by case determination. [citations omitted] To be clear, a district court must always consider any objective evidence of nonobviousness presented in a case.

Opinion at 11.



Two days after deciding Transocean, the Federal Circuit decided Geo M. Martin Co. v. Alliance Machine Sys. Int’l LLC, 2009-1132, -1151 (Fed. Cir., August 20, 2010). In Geo M. Martin, the Court affirmed the district court’s JMOL holding (following a hung jury) that the asserted claims were obvious as a matter of law. In this case, the district court properly considered the “secondary considerations” of non-obviousness, but concluded that they did not overcome the strong prima facie showing of obviousness. For several points argued by the patentee, such as commercial success, failure of others, and industry praise, the Federal Circuit found insufficient evidence of a nexus between the alleged “secondary consideration” and the claimed invention. In addition, the patent owner argued that alleged copying by others also supported a finding of non-obviousness. The timing of the alleged copying, however, had the opposite impact on the Court. Rather than supporting non-obviousness, both the district court and Federal Circuit found the evidence supported acts of “simultaneous invention” and that “simultaneous inventions, made ‘within a comparatively short space of time,” are persuasive evidence that the claimed apparatus ‘was the product only of ordinary mechanical or engineering skill.’” [citations omitted] Opinion at 20. When all was said and done, “[b]alancing all of the secondary considerations, this court agrees…the [patentees] evidence of non-obviousness, even if fully considered by a jury, would fail to make a difference in this case.”  Opinion at 21.

These cases do not break significant new ground on the law of obviousness, but do provide continuing guidance as to the growing importance of secondary considerations of non-obviousness in determining patent validity.

** One final note:  Congratulations to my Dorsey & Whitney partners Tom Vitt and Sri Sankaran, who successfully represented Alliance Machine Systems in the Geo M. Martin case.

Where In The World Is The “Offer to Sell”?

It Doesn’t Matter for Liability Under 35 U.S.C. 271(a)

In Transocean v. Maersk Contractors, 2009-1556 (Fed. Cir., Aug. 18, 2010) the Federal Circuit dealt squarely with the issue of an offer to sell made outside the U.S. for use of a product in the United States. The facts were largely undisputed. A contract was entered into in Norway by two U.S. companies for the use of an oil drilling ship within the U.S. waters in the Gulf of Mexico. The ship was made outside the U.S. pursuant to the contract. The ship was later modified to be non-infringing (pursuant to an earlier order entered in a different case), so use of the actual modified ship was found not to be an act of infringement. However, the contract contemplated the unmodified design and this design was therefore the subject of the “offer to sell.”


The Federal Circuit held that:
Opinion at 19.  Thus, it is now clear: It doesn’t matter where the offer is made, only where the future sale is contemplated. If that contemplated sale is directed to the U.S., liability for infringement under 35 U.S.C. 271(a) may attach for the offer. Of course, if there is only an offer and no actual infringing sale, damages may become a difficult question. That, however, is a question for another day.

In order for an offer to sell to constitute infringement, the offer must be to sell a patented invention within the United States. The focus should not be on the location of the offer, but rather the location of the future sale that would occur pursuant to the offer.

Although not an issue squarely presented in Transocean, the language of this opinion suggests that an “offer” that is made within the United States, but contemplates performance outside the United States would not be within the scope of 35 U.S.C. 271(a).  In reaching its holding, however, the Court noted the policy considerations that underlie it holding.  The Court stated that “[a company making an offer outside the U.S.] would generate interest in its product in the U.S. to the detriment of the U.S. patent owner, the type of harm that offer to sell within the U.S. liability is meant to remedy.”  Despite this policy guidance, it would seem that, at least in some cases, an offer made in the U.S. for a sale contemplated outside the U.S. could also have a negative impact on the U.S. patent owner, yet under a fair reading of Transocean may not be actionable.