Blenheim Group, LLC v. Clark Recreation, Ltd. et al
Filing
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MEMORANDUM Opinion and Order Signed by the Honorable Robert M. Dow, Jr on 11/4/2011. Mailed notice(tbk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BLENHEIM GROUP, LLC,
Plaintiff,
v.
GOLF GIFTS & GALLERY, INC., ET AL.
Defendants.
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Case No.: 1:11-CV-899
Judge Robert M. Dow, Jr.
MEMORANDUM OPINION AND ORDER
Plaintiff Blenheim Group, LLC filed this qui tam action against Defendants Clark
Recreation Ltd., JEF Manufacturing, Golf Gifts & Gallery, Inc., and John Doe, alleging
violations of the false marking statute, 35 U.S.C. § 292.1 Defendant Golf Gifts has filed a
motion to dismiss the complaint [26] either for failure to state a claim or because § 292 is
unconstitutional. Plaintiff has not responded to the motion. For the reasons set forth below, the
Court grants Defendant’s motion to dismiss [26] and dismisses Plaintiff’s complaint without
prejudice. Plaintiff may file an amended complaint consistent with this opinion by November
23, 2011.
I.
Background2
According to the allegations in the complaint, Golf Gifts manufactures, sells, and
advertises various products, including the “Electric Putting Partner.” Plaintiff alleges “upon
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Defendant Clark Recreation was dismissed from the case on January 5, 2011, and Defendants JEF
Manufacturing and John Doe have never been served. Thus, the Court need only address Count III,
which pertains to Golf Gifts. The remaining counts have the same allegations but pertain to the dismissed
or unserved Defendants.
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For purposes of Defendant’s motion to dismiss, the Court assumes as true all well-pleaded allegations
set forth in the complaint. See, e.g., Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th
Cir. 2007).
information and belief” that the Electric Putting Partner bears U.S. Patent Nos. 3,030,113 (the
“1962 patent”) and 200650 (the “1965 patent”). Plaintiff also alleges “upon information and
belief” that these two patents are expired.
II.
Legal Standard for Rule 12(b)(6) Motions to Dismiss
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the
sufficiency of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d
1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first
must comply with Rule 8(a) by providing “a short and plain statement of the claim showing that
the pleader is entitled to relief” (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given “fair
notice of what the * * * claim is and the grounds upon which it rests.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief
above the “speculative level,” assuming that all of the allegations in the complaint are true.
E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly,
550 U.S. at 555, 569 n.14). “[O]nce a claim has been stated adequately, it may be supported by
showing any set of facts consistent with the allegations in the complaint.” Twombly, 550 U.S. at
562. The Court accepts as true all of the well-pleaded facts alleged by the plaintiff and all
reasonable inferences that can be drawn therefrom. See Barnes v. Briley, 420 F.3d 673, 677 (7th
Cir. 2005).
III.
Analysis
Plaintiff filed this qui tam action under the false marking statute, which prohibits the use
of expired patents in advertising a product. 35 U.S.C. § 292 provides in relevant part:
(a) * * * * Whoever marks upon, or affixes to, or uses in advertising in connection
with any unpatented article, the word “patent” or any word or number importing
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that the same is patented for the purpose of deceiving the public * * * [s]hall be
fined not more than $500 for every such offense.
(b) Any person may sue for the penalty, in which event one-half shall go to the
person suing and the other to the use of the United States.
35 U.S.C. § 292(a), (b). In order to establish that a defendant intended to “deceiv[e] the public,”
as required by section 292(a), a plaintiff must show by a preponderance of the evidence that the
defendant “did not have a reasonable belief that the articles were properly marked (i.e., covered
by a patent).” Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352–53 (Fed. Cir. 2005).
“[T]he combination of a false statement and knowledge that the statement was false creates a
rebuttable presumption of intent to deceive the public.” Pequignot v. Solo Cup, 608 F.3d 1356,
1362–63 (Fed. Cir. 2010).
False marking claims under § 292 are subject to Rule 9(b)’s heightened pleading
standard. In re BP Lubricants USA, Inc., 637 F.3d 1307, 1310–11 (Fed. Cir. 2011) (“Permitting
a false marking complaint to proceed without meeting the particularity requirements of Rule 9(b)
would sanction discovery and adjudication for claims that do little more than speculate that the
defendant engage in more than negligent action.”). Rule 9(b) requires a plaintiff to “state with
particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b); see also
Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007) (fraud must be pled
with particularity by providing the who, what, when, where, and how). Although knowledge and
intent may be alleged generally, the complaint must allege “sufficient underlying facts from
which a court may reasonably infer that a party acted with the requisite state of mind.” Exergen
Corp. v. Wal–Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009).
As applied in false marking suits, Rule 9(b) requires the relator to allege that the
defendant marked an unpatented item as patented with the intent to deceive the public. See
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Pequignot v. Solo Cup Co., 608 F.3d 1356, 1361–62 (Fed. Cir. 2010); Forest Grp., Inc. v. Bon
Tool Co., 590 F.3d 1295, 1300 (Fed. Cir. 2009). Settled law holds that “the combination of a
false statement and knowledge that the statement was false creates a rebuttable presumption of
intent to deceive the public.” Pequignot, 608 F.3d at 1362–63. Accordingly, to properly allege
deceptive intent, a complaint must “provide some objective indication to reasonably infer that the
defendant was aware that the patent expired” yet continued to mark the patent on its products.
BP Lubricants, 637 F.3d at 1311. The Federal Circuit has identified two non-exclusive examples
that would satisfy this requirement: “[A] relator can, for example, allege that the defendant sued
a third party for infringement of the patent after the patent expired or made multiple revisions of
the marking after expiration.” Id. at 1312.
In BP Lubricants, the plaintiff filed a § 292 action alleging that BP Lubricants USA had
marked the bottles for its CASTROL motor oil products with the numbers of expired patents.
The complaint alleged “upon information and belief” that “(1) BP knew or should have known
that the patent expired; (2) BP is a sophisticated company that has experience applying for,
obtaining, and litigating patents; and (3) BP marked the CASTROL products with the patent
numbers for the purpose of deceiving the public.” 637 F.3d at 1309. The Federal Circuit held
that these allegations did not meet the requirements of Rule 9(b), explaining that the plaintiff’s
“bare assertion [that BP is a sophisticated company] provides no more of a basis to reasonably
distinguish a viable complaint than merely asserting the defendant should have known the patent
[had] expired. Conclusory allegations such as this are not entitled to an assumption of truth at
any stage in litigation.” Id. at 1312 (citing Ashcroft, 129 S.Ct. at 1952) (finding that district court
was “clearly incorrect” when it relied on the relator’s general allegation that BP knew or should
have known that the patent expired).
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The allegations in Plaintiff’s complaint are nearly identical to the statements that the
Federal Circuit rejected in BP Lubricants. Plaintiff alleges: “Upon information and belief, Golf
Gifts & Gallery, Inc. * * * is a sophisticated company with extensive experience manufacturing
and/or marketing patented devices for sale to the general public.” The complaint further alleges
“upon information and belief” that Golf Gifts “knew or should have known” that the 1962 and
1965 patents were “expired and/or that it never held rights to such patent[s].” These allegations,
like those in BP, provide no reasonable basis for inferring that Golf Gifts was aware that the
1962 and 1965 patents had expired. Because Plaintiff has provided only generalized allegations,
rather than specific underlying facts from which the court can reasonably infer the requisite
intent, the complaint fails to meet the pleading requirements and will be dismissed.3
IV.
Conclusion
For these reasons, the Court grants Defendant Golf Gift’s motion to dismiss [26]. The
dismissal is without prejudice at this time. Plaintiff is given until November 23, 2011, to replead
if it believes that it can cure the deficiencies identified above. Should Plaintiff choose not to
replead or be unable to cure the deficiencies, the case will be dismissed with prejudice. See
Bausch v. Stryker Corp., 630 F.3d 546, 562 (7th Cir. 2010) (“Generally, if a district court
dismisses for failure to state a claim, the court should give the party one opportunity to try to
cure the problem, even if the court is skeptical about the prospects for success”); Waypoint
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Defendant also argues that § 292 is unconstitutional because it violates the Take Care Clause of article
two, section three of the Constitution (requiring the President to “take Care that the Laws be faithfully
executed * * *.”). It is unnecessary to address this issue at this time. See Koger v. Bryan, 523 F.3d 789,
801 (7th Cir. 2009) (“[F]ederal courts are supposed to do what they can to avoid making constitutional
decisions, and strive doubly to avoid making unnecessary constitutional decisions.”) (quoting ISI Int'l,
Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 552 (7th Cir. 2001)). Judicial restraint is particularly
appropriate under these circumstances because the Federal Circuit has heard oral argument on the
constitutionality of § 292 in FLMC, LLC v. Wham–O, Inc., No. 2011–1067 (Fed. Cir.) (argued July 7,
2011), and a decision on this issue likely is forthcoming.
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Aviation Services, Inc. v. Sandel Avionics, Inc., 469 F.3d 1071, 1073 (7th Cir. 2006) (“dismissals
under Rule 12(b)(6) logically are with prejudice”).
Dated: November 4, 2011
______________________________
Robert M. Dow, Jr.
United States District Judge
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