Turek v. McNeil-PPC, Inc.

Filing 57

ORDER DISMISSING CASE without prejudice, GRANTING 30 Motion to Dismiss, DENYING 25 Motion to Transfer, and DENYING 50 Motion to Stay Discovery. (Amended complaint due by 5/31/2011.) Signed by Judge William D. Stiehl on 4/29/11. (bjw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS

MORRIS TUREK,
Plaintiff/Relator,
VS.
MCNEIL-PPC, INC.,
Defendant.

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NO. 10-CV-846-WDS

MEMORANDUM & ORDER
STIEHL, District Judge:
Relator Morris Turek filed this qui tam action for false patent marking under 35 U.S.C.
§ 292. Pending before the Court are defendant McNeil-PPC, Inc.’s motions to transfer the case to
the District of New Jersey (Doc. 25), dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)
(Doc. 30), and stay discovery (Doc. 50). The Court finds that relator has failed to meet the
heightened pleading requirements of Rule 9(b) and hereby GRANTS defendant’s motion to dismiss.
This case is dismissed without prejudice. Given the dismissal, the Court DENIES without prejudice
defendant’s motion to transfer and DENIES the motion to stay discovery as moot.

FACTUAL AND PROCEDURAL BACKGROUND
Relator claims that defendant McNeil-PPC, Inc., has falsely marked three unpatented articles
with the word “patent” and with expired patent numbers to deceive its competitors and the public

into believing the articles are patented. He avers that defendant makes and sells “o.b.” brand tampons
and that certain packages of those tampons sold in 2010 were falsely marked with expired patent
numbers (Doc. 2, ¶¶ 8–13, 19–21). Relator also states, on information and belief, that defendant has
decided to mark the packages with the expired patent numbers each time it printed the packages and
that defendant knew or reasonably should have known that the patents had expired (Doc. 2, ¶¶
22–24). Defendant, relator says, is “a sophisticated business entity with extensive experience
obtaining patents” and the owner of many patents (Doc. 2, ¶ 17). Defendant has even been a party
to several lawsuits involving patents, including another false-patent-marking case (Doc. 2, ¶ 18).
Therefore, relator concludes that defendant had the “purpose of deceiving the public” when it falsely
marked the packages (Doc. 2, ¶ 25). Relator seeks injunctive relief, fines, an accounting, damages,
attorney’s fees, and costs (Doc. 2, p. 5).
Defendant moves to dismiss relator’s complaint pursuant to Federal Rule of Civil Procedure
12(b)(6). Defendant claims that the complaint fails to plead facts sufficient under Rule 8(a) for false
patent marking because relator has stated no facts that would show defendant had an intent to
deceive (Doc. 30, p. 6). Defendant also argues that the complaint fails to meet the heightened
pleading requirements of Rule 9(b) for claims of fraud (Doc. 30, p. 7).
In addition, defendant moves to transfer venue pursuant to 28 U.S.C. § 1404(a) because New
Jersey is where the conduct at issue took place and where witnesses and other sources of proof are
located (Doc. 25, p. 6). Further, neither party is located in this district. Relator is a resident of St.
Louis, Missouri, and defendant is both incorporated and maintains its principal place of business in
New Jersey (Doc. 25, p. 7).

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ANALYSIS
The false marking statute 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 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). The Federal Circuit has recently held that Rule 9(b)’s particularity
requirement applies to false marking claims brought under § 292. In re BP Lubricants USA Inc.,
2011 WL 873147, at *1 (Fed. Cir. March 15, 2011). The court held that, under Rule 9(b), “a
complaint alleging false marking is insufficient when it only asserts conclusory allegations that a
defendant is a ‘sophisticated company’ and ‘knew or should have known’ that the patent expired.”
Id.
To satisfy Rule 9(b), although knowledge and intent may be averred generally and a plaintiff
may plead upon information and belief, the complaint must contain sufficient underlying facts from
which a court may reasonably infer that the defendant acted with the requisite state of mind. Id. at
*3 (citing Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009)). To allege
the requisite intent to deceive in the § 292 context, the complaint must provide “some objective
indication to reasonably infer that the defendant was aware that the patent expired.” Id. (citing
Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005) (Proof that the party
making a misrepresentation had knowledge of its falsity “is enough to warrant drawing the inference
that there was a fraudulent intent.”)).
Regarding a rebuttable presumption of intent to deceive recognized by the Federal Circuit
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in Pequignot v. Solo Cup Co., 608 F.3d 1365 (Fed. Cir. 2010), the court in BP Lubricants found:
This court agrees that the Pequignot presumption informs the
determination of whether a false marking plaintiff has met Rule 9(b).
However, as we noted in Pequignot, “[t]he bar for proving deceptive
intent [in false marking cases] is particularly high,” requiring that
relator show “a purpose of deceit, rather than simply knowledge that
a statement is false.” That relator pled the facts necessary to activate
the Pequignot presumption is simply a factor in determining whether
Rule 9(b) is satisfied; it does not, standing alone, satisfy Rule 9(b)’s
particularity requirement.
In re BP Lubricants, 2011 WL 873147, at *4 (quoting Pequignot, 608 F.3d at 1363). A complaint
that provides “only generalized allegations rather than specific underlying facts from which [the
court can] reasonably infer the requisite intent, . . .” fails to meet the requirements of Rule 9(b). Id.
at *3. “Permitting a false marking complaint to proceed without meeting the particularity
requirement of Rule 9(b) would sanction discovery and adjudication for claims that do little more
than speculate that the defendant engaged in more than negligent action.” Id. at *2.
Comparing relator’s allegations in this complaint to those rejected as insufficient in BP
Lubricants, the Court FINDS that relator’s allegations provide no more specificity. In BP
Lubricants, the relator pled that defendant BP continued to mark its product with expired patent
numbers; that upon information and belief, BP knew or should have known that patent had expired;
that BP was a sophisticated company with experience applying for, obtaining, and litigating patents;
and that BP marked the products with the expired numbers for the purpose of deceiving the public
and competitors. Id. at *1. These statements are nearly identical to those made here. Relator’s
allegations that defendant is “a sophisticated business entity with extensive experience obtaining
patents” and that defendant has been a party to other lawsuits involving patents are restatements of
the general allegation that defendant knew or should have known that the patents expired. The
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complaint does not contain specific underlying facts from which the Court can reasonably infer the
requisite intent to deceive. Accordingly, the complaint must be dismissed without prejudice to relator
filing an amended complaint in accordance with the pleading requirements of Rule 9(b) outlined by
the Federal Circuit in BP Lubricants.
Because relator is granted leave to replead, the Court declines to address defendant’s venue
motion. The motion is denied without prejudice to refiling after relator’s amended complaint is filed.

CONCLUSION
For the foregoing reasons, defendant’s motion to dismiss is GRANTED (Doc. 30). Relator
is given leave to file an amended complaint on or before May 31, 2011. Defendant’s motion to
transfer venue is DENIED without prejudice to refiling after relator amends his complaint (Doc.
25). Defendant’s motion to stay discovery is DENIED as moot (Doc. 50).
IT IS SO ORDERED.
DATED: April 29, 2011

/s/ WILLIAM D. STIEHL
DISTRICT JUDGE

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