Thursday, June 01, 2006

Pesky (pesty?) pleading with particularity

Pestube Systems, Inc. v. Hometeam Pest Defense, LLC., 2006 WL 1441014 (D.Ariz.)

Plaintiff alleged patent, false advertising, unfair competition, and unjust enrichment claims. The Lanham Act false advertising claim is based on defendant’s use of a pest control system called “Tubes in the Wall.” (Insert obligatory Snakes on a Plane reference here.) Plaintiff alleges that defendant knowingly or recklessly made material false or misleading statements about its system that deceived or have the tendency to deceive a substantial segment of the audience. Defendant argued that plaintiff failed to state a claim, or in the alternative failed to plead with the necessary particularity.

The court agreed that, even under FRCP 8(a)’s liberal standard, merely reciting the elements of the cause of action without identifying allegedly false claims was not enough to enable the defendant to prepare an adequate responsive pleading or Rule 12(b) motion. Without knowing the statements plaintiff claims were false, defendant can’t argue truth, or puffery, or anything else.

The court went on to join what in my count is the minority and hold that plaintiff also had to satisfy Rule 9(b)’s particularity requirements, because its Lanham Act and unfair competition claims were essentially fraud claims. Given that a plaintiff can succeed under the Lanham Act without showing intent, whether the claim is for trademark infringement or for another form of false advertising, I find this result odd, but I’m far from a procedure maven.

The Lanham Act and common law portions of the complaint were dismissed with leave to amend. Claims of false patent marking survived. (Random question: Can any patent types tell me whether marking a newly manufactured item with an expired patent number violates the false marking provision?)

4 comments:

Andrew said...

Prof. Tushnet,

I am a patent lawyer and since no one has responded to the question in your closing parenthetical for more than a year, I'll give it a shot.

35 USC 292 makes it a crime to affix a patent number to an unpatented article, in order to prevent the public from being deceived.

In Pestube Systems, the plaintiff's complaint alleges, inter alia, that defendant's product is not patented and that by affixing a patent number to its unpatented product, it is violating Section 292, and also engaging in unfair competition.

I don't know whether Section 292 provides a private right of action, but the unfair competition claim seems reasonable under the 12(b)(6) standard.

Does this satisfy your curiosity?

Thank you,
Andrew A. Schwartz
Wachtell, Lipton, Rosen & Katz

Rebecca Tushnet said...

Thanks for the response -- from your description, I take it that there's no opinion from the court yet interpreting 292 in the context of expired patents? I would think that the unfair competition claim makes sense -- it's easier under some state laws, but even a Lanham Act claim could work if the patent marking would lead a reasonable consumer to believe that the product was only available from that single seller.

Andrew said...

First, it looks like there is indeed a private right of action pursuant to 292(b), whereby the private claimant splits the penalty ($500 per offense) with the government.

Second, good point about the Lanham Act claim.

Third, I don't know whether there is caselaw under 292 where the product is labeled with an actual expired patent number.

It seems to me, though, that affixing an expired patent number to an unrelated product is just as deceptive as affixing a randomly generated seven-digit number.

If the situation is that the manufacturer of a patented article whose patent term has expired continues nonetheless to affix the now-expired patent number to the article (I suspect this scenario is what piqued your interest), it likewise seems deceptive to me, because it represents to the customer that, at the time of its manufacture (including the affixing of the patent number), the article was under patent protection, so the manufacturer should be liable under 292.

But if a manufacturer on the last day of the patent term churns out thousands of patented widgets and affixes each with a patent number, then sells them all the next day, that would not seem to violate 292. It would, however, violate 292 for the manufacturer to represent in advertising circulated after the conclusion of the term that the widgets are still patented.

So, for example, I can sell on eBay a telegraph machine that had been patented in the 1800s and still has the patent number affixed thereto without fear of anyone incurring 292 liability. The manufacturer is immune because she affixed the patent number during the patent term, and I'm immune because I didn't affix the number at all (and because I did not represent in my eBay description that machine "is patented".).

Rebecca Tushnet said...

Thanks for this very helpful analysis -- I like your example, too, which illustrates exactly why affixation is the important time for analysis of the manufacturer's liability.