Monday, September 09, 2019

false patent marking and implicit claims of Nobel connection in a supplement case

ThermoLife Int’l, L.L.C. v. NeoGenis Labs, Inc., 2019 WL 4193968, No. 18-cv-2980-HRH (D. Ariz. Sept. 4, 2019) 

ThermoLife allegedly holds a number of patents related to dietary supplement/food ingredients, including those related to “the use of amino acids in combination with nitrates to increase performance.” It allegedly “licenses the use of its patented many of the largest dietary supplement companies” and “supplies the raw materials necessary to practice its patented inventions.”

NeoGenis “sells nitric oxide test strips and dietary supplements[,]” and was allegedly “a dominant force in the beet supplementation market.” NeoGenis products allegedly competed with products that use TL’s raw materials and products produced with its patented nitrate technology. TL doesn’t currently market oxide testing strips, though it’s trying to get into that market.

NG allegedly falsely advertised “that it has developed a ‘patent pending’ method to determine ‘if you are N-O [nitric-oxide] deficient’ and/or ‘if you’re getting enough dietary nitrate through the foods that you eat’: HumanN’s nitric oxide Indicator Strips.” But the patent, while applied for in 2013, was allegedly rejected in its entirety. In addition, NG allegedly falsely advertised that its strips “can determine whether an individual is nitric oxide deficient[.]” A one time saliva test allegedly can’t do that.  NG also allegedly engaged in false patent marking because the listed six (later three) patents weren’t practiced in the marked products (the patents allegedly required a nitrite salt not present in the products, and anyway they failed to include a sufficient quantity of nitrites of any sort to practice the listed patents). Similarly, NG allegedly falsely claimed that its “licensed patents protect ‘patented Nitric Oxide technology’” and that its research was “Nobel-Prize winning.”  Finally, NG allegedly falsely claimed that its products were foods or dietary supplements.

After dismissal for want of standing, TL filed an amended complaint.

False marking: “Title 35 section 292(a) prohibits, in part, ‘mark[ing] 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.’ … Section 292(b) provides a private right of action to enforce § 292(a) to any ‘person who has suffered a competitive injury as a result of a violation of this section.’ ”
A “competitive injury” is “ ‘[a] wrongful economic loss caused by a commercial rival, such as the loss of sales due to unfair competition,’ ” but someone who’s attempted to enter the market (in intent and action) can have standing.  

TL alleged that, since at least October 2018, it had been working with someone on testing/monitoring nitric oxide over “several face-to-face meeting[s] and numerous phone conferences” and that “when the deal is reached, [it] will be competition with HumanN’s Nitric Oxide Test Strip[s].” This was too late, since TL sued in September 2018 and standing is measured at the time suit is filed and not later. [Is this correct where the issue is statutory “standing,” a la Lexmark, rather than Article III standing?]

As for the beet supplements, TL alleged that NG was still showing pictures of these products on the internet that list six patents on the products’ labels even though defendant removed three of the patents from the actual product labels, and also that that these products do not practice the three patents which are still listed on the products’ actual labels. As for the internet claims, NG argued that the claim wasn’t plausible because, when a product carries both proper and false patent markings, a plaintiff must show specifically that the falsely marked patents caused it harm, and that it definitely practiced one patent, the ‘999. However, it was still plausible injury “because a consumer might be more likely to purchase a product that lists several patents as opposed to a product that lists only one patent.”

As for the other patents: TL argued that some relevant patents required a ‘nitrite salt’ to practice the patented inventions, and alleged that the accused products didn’t contain a nitrite salt.  NG offered a Certificate of Analysis showing that the product being tested, “NEO Dry Blend BC Flavor w/ Vit C[,]” contained sodium nitrite, which it said was a nitrite salt. But even if the court took judicial notice of the certificate, it wasn’t clear that product was used in the accused products. Also, TL alleged that, regardless, it did lab tests on two of the products in two separate months and found insufficient nitrites to practice the patent. NG made a bunch of arguments about the proper chemicals and their measurement that weren’t appropriate for a motion to dismiss.  (But as for a product as to which TL didn’t allege tests, just alleged that the product didn’t practice the patents, that was too conclusory to be plausible yet.)

NG next argued that the complaint flunked Rule 9(b) because it wasn’t plausible that NG, a sophisticated business, would license patent rights from the University of Texas, presumably paying some royalties therefor, without even bothering to practice the patents. The court disagreed.

Lanham Act false advertising: There was the same problem with the N-O Indicator Strips. TL was not a competitor; a potential competitor didn’t have Lexmark standing.

Specific claims: it was plausible that claims that NG’s products use “patented Nitric Oxide technology” constituted false advertising, see above. NG argued that it never claimed it had won the Nobel Prize, just referred to the prize awarded to 1998 for discoveries concerning nitric oxide as a signaling molecule in the cardiovascular system, more than ten years before NG’s predecessor company was founded. You can see why this might be an implicit falsity claim—defendant allegedly used this website text:

[o]ur research on Nitric Oxide first began with the discovery of its unique impact on cardiovascular health. Its immense importance as a biological signaling molecule resulted in the awarding of the Nobel Prize in 1998. Realizing that the discovery of Nitric Oxide had immense potential, it didn’t take long for our interest in N-O to become our passion.

TL also alleged that NG asserted a connection to “Nobel Prize-winning research” and advertised that “the discovery of Nitric Oxide, the first gas to be identified as such, won the Nobel Prize in 1998. This discovery is what HumanN is built on.” This was sufficient to allege a false implication of connection to Nobel Prize winning research.

TL alleged that NG falsely advertised that it was “the only company that can practice ‘patented N-O platform technology.’ ” But the only alleged example didn’t say that; it said “ ‘there is not any product out there, despite dozens if not hundreds of...nitric oxide products on the market, food or supplement, that do[es] what our technology does.’ ” That’s not the same thing (and seems like puffery), so the claim was dismissed.

TL’s claim that defendant falsely advertised its products as foods or dietary supplements failed insofar as it was just alleging misbranding in violation of the FDCA, which doesn’t provide a private cause of action. It would be possible to plead a plausible claim that defendant was falsely advertising that its products were foods or dietary supplements, as those terms are defined by the FDA, but the allegations here were too conclusory.

State law claims fared exactly the same.

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