False marking misleadingness theory rejected; only explicit falsity counts

Public Patent Foundation, Inc. v. Quigley Corp., 2011 WL 3055382 (S.D.N.Y.)

PPF sued defendant (now known as Prophase) for false patent marking. The complaint alleged that defendant sells Cold-Eeze zinc gluconate glycine products to retail stores and on the internet, and promotes them through internet ads. The lozenges include labels that state, DEVELOPED UNDER PATENTS: 4,684,528 4,758,439. The former expired in 2005 and the latter no later than 2007. PPF alleged that the patent marking deceived the public into believing that something in the lozenges was protected by the listed patents. In addition, from 2005 to at least June 2008, defendant’s website said “The Cold-Eeze® patented, proprietary zinc gluconate glycine formula is believed to work by interfering with the cold virus.” PPF alleged that defendant, a sophisticated company, knew or should have known that the patents had expired, and that it made these statements for the purpose of deceiving the public.

Rule 9(b) applies to false marking claims. Though intent, knowledge, and other mental states may be alleged generally, a plaintiff has to provide specific underlying facts from which a court can reasonably infer the requisite intent.

False marking requires (1) advertising or use of the word 'patented' in connection with a device that is not patented; and (2) intent to deceive." Inadvertence or mistake is insufficient.

The court first found that the packaging stating “DEVELOPED UNDER PATENTS: 4,684,528 4,758,439” was not within the scope of the false marking statute because the statement was true. PPF argued that the claim was nonetheless misleading. Since the law bars the use of "any word or number importing" that an unpatented article is patented, this statement was actionable. But the court rejected the concept of misleadingness in false marking. It stated the true situation, and being “developed under” a patent “is different from (and does not imply) that something is ‘protected by’ a patent.” (Nice to know the court has figured out when claims do and don’t imply other claims. I hope it spreads the word!)

The website statements, however, referred to the formula as “patented.” This adequately alleged use of the word in connection with an unpatented device. PPF pointed to defendant’s public SEC filings. From 2005 to 2008, defendant’s 10-Ks expressly acknowledged that the patents expired in August 2004/June 2005 (except in Japan). The court took judicial notice of the contents of the filings, not their truth. These statements, coupled with the apparent fact of misrepresentation were sufficient to warrant an inference of fraudulent intent. Defendant could rebut that inference with credible evidence that it didn’t consciously desire public deception, but later.