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Blenheim Group, LLC v. Jt Usa

July 26, 2011

BLENHEIM GROUP, LLC PLAINTIFF,
v.
JT USA, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Honorable Jerome B. Simandle

OPINION

SIMANDLE, District Judge:

I. INTRODUCTION

Plaintiff, Blehnheim Group, brought this action for false patent marking under 35 U.S.C. § 292 against Defendants JT USA, LLC, Kee Action Sports, LLC, JT Sports, LLC, K2 Inc., and several other as-yet-unidentified individuals and corporations. This matter is currently before the court on Defendants' motions to dismiss for failure to state a claim upon which relief may be granted, pursuant to Rule 12(b)(6), Fed. R. Civ. P. [Docket Items 21, 23.] In light of the Federal Circuit's recent opinion, In re BP Lubricants USA Inc., 537 F.3d 1307 (Fed. Cir. 2011), the Court will grant Defendants' motions to dismiss the complaint without prejudice to Plaintiff moving for leave to amend.

II. BACKGROUND

Under 35 U.S.C. § 292, any person or company which falsely uses the word "patent" with intent to deceive the public is subject to a fine of up to $500 for each such offense.*fn1 Further, the statute provides for so-called qui tam actions.*fn2 Cases involving false marking increased dramatically after the Federal Circuit Court of Appeals' decision in Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009). In Forest Group, the Federal Circuit ruled that the $500 penalty applies on a per article basis, as opposed to a single fine for each decision to falsely mark.*fn3 590 F.3d at 1301.

Defendants are involved in the marketing, distribution and sale of paintball products. As part of these activities, they sought and obtained four patents for the designs of facemasks and protective goggles, which the U.S. Patent and Trademark Office granted between the years 1985 and 1997. It is uncontested that each of these patents expired between February 12, 1999 and July 1, 2001. Plaintiff, Blenheim Group, alleges and Defendants do not contest that they continued to mark their products with the patent numbers associated with these four patents even after their expiration. (Brief in Supp. of Defs.' Mot. to Dismiss, 3.) The parties dispute, however, whether Defendants had the requisite intent to violate § 292.

After Blenheim Group filed its Complaint, Defendants filed a Motion to Dismiss under Rule 12(b)(6). The preliminary issue is whether to apply Rule 8(a) or Rule 9(b) to the assessment of the pleadings. As explained in more detail below, Rule 9(b) is the applicable standard. However, because the primary issue in this case revolves around Defendants' intent (as opposed to the circumstances of the alleged fraud), whether Rule 8(a) or Rule 9(b) applies is immaterial; both rules use the same standard to evaluate allegations of intent. See infra note 5. More precisely, Rule 9(b) borrows the Rule 8(a) standard, as articulated in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), to evaluate allegations of intent.

Thus, the dispositive question is whether Plaintiff's allegations that each Defendant is a "sophisticated company" provides sufficient factual detail to plausibly infer Defendants' intent to mark their products with expired patents. This Court holds that such an allegation, standing alone, does not supply enough factual information to meet Plaintiff's burden under Rule 8(a), and it therefore fails under Rule 9(b) as well.

III. DISCUSSION

A. Rule 8(a) or 9(b)

The Federal Circuit has identified four elements to a § 292 claim: "(1) a marking importing that an object is patented (2) falsely affixed to (3) an unpatented article (4) with intent to deceive the public." Clontech Lab. Inc. v. Invitrogen Corp., 406 F.3d 1347, 1351 (Fed. Cir. 2005) (internal quotations and citations omitted).

Until recently, there was disagreement among district courts as to whether the sufficiency of complaints brought under 35 U.S.C. § 292 should be evaluated according to the requirements of Rule 8(a) or the heightened pleading requirements of Rule 9(b). Significantly, Rule 9(b) requires that, "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Rule 9(b), Fed. R. Civ. P.

The Federal Circuit recently ruled on just this issue, holding that Rule 9(b) applies to claims brought under ยง 292. BP Lubricants USA, 537 F.3d at 1311. In a related area of law, the False Claims Act, the Federal Circuit found that "every regional circuit has held that a relator must meet the ...


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