Promote Innovation LLC v. Medtronic, Inc., 2:10cv00233 (E.D. Tex. 2/2/11)
Judge: Chad Everingham
Holding: Motion to Dismiss Recommended DENIED
This is a false marking case in which the alleged false marking by the defendant not the routine case of an expired patent, but rather a patent which is valid and unexpired, but which had previously been held to be unenforceable. Specifically, the plaintiff noted that the patents were declared unenforceable for fraud on the Patent Office by Judge Ward in Medtronic Vascular, Inc. v. Boston Sci. Corp., Civ. No. 2:06-cv-78, 2008 U.S. Dist. LEXIS 67819 (E.D. Tex. Aug. 28, 2008). That litigation was settled on February 11, 2009, but Judge Ward declined to vacate his judgment of unenforceability. Thus, Promote alleged that since the patents were held unenforceable, it constituted false patent marking when Medtronic marked, and continued to mark, its stent products with the patents.
Judge Everingham's opinion contains a significant amount of useful information on the background of false marking litigation, much of it similar to Judge Ward's recent venue opinion. But the issue presented here was a novel one - whether an article is “unpatented,” under the meaning of 35 U.S.C. § 292, when the article is covered by a patent that is held unenforceable due to inequitable conduct. "The Federal Circuit has not directly addressed this issue," Judge Everingham noted, "however, the Federal Circuit has found two circumstances where an article is “unpatented”: (1) when the article is not covered by at least one claim of each patent with which it is marked, Clontech, 406 F.3d at 1352; and (2) where the article is marked by a now-expired patent, Pequignot, 608 F.3d at 1361." The Court concluded that the holding in Pequignot is analogous and controlling in this situation, therefore it held that as in Pequignot where an article covered by an expired, unenforceable patent was held “unpatented,” an article covered by an unenforceable patent via inequitable conduct is also “unpatented.”
Medtronic's motion to dismiss also sought dismissal on three other grounds: (1) Medtronic‟s products are not “unpatented” because Medtronic stated its products were protected by “one or more” of a number of listed patents, and some of the other listed patents are valid and enforceable; (2) the Complaint does not adequately plead that Medtronic marked its products with intent to deceive the public; (3) the false patent marking statute is unconstitutional under Article II, § 3 of the United States Constitution (the “Take Care” Clause). "Regarding these arguments," Judge Everingham wrote, "the undersigned recommends adopting the reasoning and analysis in Riley v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 753-758 (5th Cir. 2001) (en banc) (discussing how the False Claims Act (FCA), a similar qui tam statute, does not violate the “Take Care” Clause of the United States Constitution) and cited the other recent local opinions which found similar allegations of intent to deceive sufficient, at least pending further guidance from the Federal Circuit.