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San Francisco Technology, Inc. v. Glad Products Co.

July 19, 2010

SAN FRANCISCO TECHNOLOGY, INC., PLAINTIFF,
v.
THE GLAD PRODUCTS COMPANY, BAJER DESIGN & MARKETING INC., BAYER CORPORATION, BRIGHT IMAGE CORPORATION, CHURCH & DWIGHT CO. INC., COLGATE-PALMOLIVE COMPANY, COMBE INCORPORATED, THE DIAL CORPORATION, EXERGEN CORPORATION, GLAXOSMITHKLINE LLC, HI-TECH PHARMACAL CO. INC., JOHNSON PRODUCTS COMPANY INC., MAYBELLINE LLC, MCNEILPPC INC., MEDTECH PRODUCTS INC., PLAYTEX PRODUCTS INC., RECKITT BENCKISER INC., ROCHE DIAGNOSTICS CORPORATION, SOFTSHEEN-CARSON LLC, SUN PRODUCTS CORPORATION, SUNSTAR AMERICAS INC., DEFENDANTS.



The opinion of the court was delivered by: Jeremy Fogel United States District Judge

ORDER RE PENDING MOTIONS Re: Docket Nos. 76, 78, 83, 94, 127, 142, 144, 147, 155, 156, 159, 162, 165, 166, 168, 170, 175, 177, 178, 179, 180, 193, 194, 280

I. BACKGROUND

Plaintiff San Francisco Technology Inc. ("Plaintiff") is a Delaware corporation with its principal place of business in San Jose, California. Complaint ¶ 2. Plaintiff makes no allegations with respect to the type of business it practices. Defendants are twenty-one wholly-unrelated companies that make and sell wholly-unrelated products, they include: The Glad Products Company ("Glad"), Bajer Design & Marketing Inc. ("Bajer"), Bayer Corporation ("Bayer"), Bright Image Corporation*fn1, Church & Dwight Co. Inc. ("Church & Dwight"), Colgate-Palmolive Company ("Colgate"), Combe Incorporated ("Combe"), The Dial Corporation ("Dial"), Exergen Corporation ("Exergen"), GlaxoSmithKline LLC ("GSK"), Hi-Tech Pharmacal Co. Inc. ("Hi-Tech"), Johnson Products Company Inc. ("Johnson Products"), Maybelline LLC ("Maybelline"), McNeil-PPC Inc. ("McNeil"), Medtech Products Inc. ("Medtech"), Playtex Products Inc. ("Playtex"), Reckitt Benckiser Inc. ("Reckitt"), Roche Diagnostics Corporation ("Roche"), SoftSheen-Carson LLC ("SoftSheen"), Sun Products Corporation ("Sun Products"), and Sunstar Americas Inc. ("Sunstar"). Plaintiff alleges that each of the twenty-one Defendants makes and sells products that it has marked with one or more expired patents. These products range from collapsible laundry hampers (Bajer) to lighting products (Bright Image) to toothpaste (Church & Dwight and Colgate) to mascara (Maybelline) to fabric softener (Sun Products).

Plaintiff also claims, upon information and belief, that Defendants "marked [their] products with patents to induce the public to believe that each such product is protected by each patent listed and with knowledge that nothing is protected by an expired patent." Id. ¶¶ 53, 57, 61, 66, 70, 74, 78, 82, 86, 94, 98, 102, 107, 111, 115, 120, 124, 128, 132, 136. Finally, Plaintiff alleges that Defendants marked their products with expired patents with the intent to deceive the public. Id.

Plaintiff filed the instant action on March 5, 2010, alleging that each Defendant has violated 35 U.S.C. § 292 by marking its own products with expired patent numbers. Plaintiff does not claim to be in competition with any Defendant. Instead, it brings this action as a qui tam proceeding to recover civil fines on behalf of the United States government. Defendants have filed in excess of twenty separate motions. Almost all of the motions fall into one of four categories: (1) motions to dismiss for lack of standing; (2) motions to dismiss for failure to state a claim with the required particularity; (3) motions to sever and to transfer venue; and (4) motions to stay pending a decision by the Federal Circuit in Stauffer v. Brooks Brothers, Inc., 615 F.Supp.2d 248 (S.D.N.Y. 2009).*fn2 On May 28 and June 22, 2010, the Court entered stipulated orders between Plaintiff and seven of the Defendants -- Glad, Bajer, Colgate, Combe, Dial, Johnson Products, and Reckitt Benckiser -- staying all proceedings until the Federal Circuit issues a final decision in Stauffer. See Dkt. Nos. 189, 238. Accordingly, this order addresses only those motions filed by Defendants that have not so stipulated.

II. MOTIONS TO STAY

A. Legal Standard

The power to grant a stay in pending litigation is incidental to the power inherent in every court to control the disposition of the cases on its docket. Landis v. North American Co., 299 U.S. 248, 254-55, 57 S.Ct. 163, 81, L.Ed. 153 (1936). In an exercise of that discretion, the Court must weigh "the competing interests which will be affected by the granting or refusal to grant a stay." Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005), citing CMAX Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). "Among those competing interests are the possible damage which may result from the granting of a stay, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay." Id. "The proponent of a stay bears the burden of establishing its need." Clinton v. Jones, 520 U.S. 681, 708, 117 S.Ct. 1636, 137 L.Ed.2d 945 (1997). "'If there is even a fair possibility that the stay... will work damage to some one else,' the party seeking the stay 'must make out a clear case of hardship or inequity" in being required to go forward. Lockyer, 398 F.3d at 1112, quoting Landis, 299 U.S. at 255. "Only in rare circumstances will a litigant in one cause be compelled to stand aside while a litigant in another settles the rule of law that will define the rights of both. Id. at 1109-10, quoting Landis, 299 U.S. at 255.

B. Discussion

Bayer, Church & Dwight, Exergen, GSK, Hi-Tech, Maybelline, McNeil, Medtech, SoftSheen, Sun Products, and Sunstar move to dismiss the instant action on the basis of Plaintiff's lack of standing under Article III of the United States Constitution. Defendants contend that Plaintiff has not alleged that it has suffered an injury-in-fact sufficient to confer standing. The same Defendants also move to stay the instant action either in the first instance or in the alternative pending the Federal Circuit's decision in Stauffer.

District courts have reached different conclusions with respect to the identical standing inquiry presented here. In Pequignot v. Solo Cup Co., the court held that a private, non-competitor plaintiff suing under 35 U.S.C. § 292 ordinarily would lack Article III standing, but for the qui tam*fn3 nature of the statute. 640 F.Supp.2d 714, 718-724 (E.D. Va. 2009) (Pequignot I). The court reasoned that the plaintiff's status as a qui tam relator made him "a partial assignee of the government's claims" and conferred standing upon him. Id. at 724. In Stauffer, the district court reached the opposite conclusion, concluding that the lack of an actual injury to the plaintiff, the government, or the public at large required dismissal of the action. Stauffer, 615 F.Supp.2d at 255 ("[T]he complaint fails to allege with any specificity an actual injury to any individual competitor, to the market..., or to any aspect of the United States economy. That some competitor might somehow be injured at some point, or that some component of the United States economy might suffer some harm through defendants' conduct, is purely speculative and plainly insufficient to support standing."), citing Summers v. Earth Island Inst., --- U.S. ----, 129 S.Ct. 1142, 1151-52, 173 L.Ed.2d 1 (2009) (citations omitted) (finding "some day" harms "without any description of concrete plans, or indeed any specification of when the some day will be-do not support a finding of the 'actual or imminent' injury that our cases require"); Lujan v. Defenders of Wildlife, 504 U.S. 555, 566, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (citations omitted) ("Standing is not 'an ingenious academic exercise in the conceivable'... [but] requires... perceptible harm." ).

As Judge Seeborg concluded in a nearly identical case brought by Plaintiff in this district against fourteen different defendants, "there appears to be little dispute that if the Federal Circuit affirms the decision in Stauffer there likely will be no way to distinguish it or to otherwise avoid its application to this case. Conversely, should Stauffer be reversed, that likely will preclude any further argument that SF Tech lacks standing here." San Francisco Technology, Inc. v. Adobe Systems Incorporated, et al., No. 10-01652 RS, 2010 WL 1640397, at *3 (N.D. Cal. Apr. 19, 2010). On this basis, as well as Plaintiff's failure to identify any particular prejudice it would suffer from a stay, Judge Seeborg stayed the action. Id. ("As SF Tech points out, it is not the general rule that a stay will be granted simply because some appellate decision is pending that may have some bearing on the case at hand. In this instance, however, a stay pending a decision in the Stauffer appeal appears warranted.").

Subsequent to Judge Seeborg's order in Adobe, the Federal Circuit affirmed the district court's decision in Pequignot I. Pequignot v. Solo Cup, - F.3d -, 2010 WL 2346649, at *8 (Fed. Cir. June 10, 2010) (Pequignot II) (affirming the court's grant of summary judgment in favor of defendant based upon Plaintiff's failure to "raise a genuine issue of material fact as to a deceptive purpose."). However, notwithstanding the district court's express determination that plaintiff had standing to bring a qui tam action, the standing issue was not raised in the Pequignot appeal. Not surprisingly, as Judge Seeborg had predicted, the Federal Circuit's opinion in Pequignot did not mention the standing issue, let alone "include a direct holding disposing of the standing issue one way or the other." Adobe, 2010 WL 1640397, at *3 n. 5 (staying the action pending a ruling by the Federal Circuit in Stauffer, rather than Pequignot I). Plaintiff claims that the Federal Circuit held affirmatively that the district court had subject matter jurisdiction. Opposition to Motions to Stay at 1, citing Pequignot II, 2010 WL 2346649, at *4. This is not so. Plaintiff confuses Article III subject matter jurisdiction with the Federal Circuit's conclusion that it had appellate jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). Pequignot II, 2010 WL 2346649, at *4 ("Pequignot timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).").*fn4

Moreover, despite its view of Pequignot II, Plaintiff concedes that "the Federal Circuit will more squarely address the standing question in the appeal of Stauffer v. Brooks Brothers." Opposition to Motions to Stay at 1. In fact, knowing that a decision in Pequignot II was forthcoming, Plaintiff stipulated to a stay pending the Federal Circuit's disposition in Stauffer as to seven of the defendants in the instant action.*fn5 Plaintiff does not argue that it will suffer any particular prejudice if the action is stayed. On June 21, 2010, the Federal Circuit announced that it will hear oral arguments in Stauffer on August 3, 2010. The Federal Circuit's published statistics indicate that the median time between oral argument and issuance of an opinion is less than two months. Declaration of Jason White in Support of GSK's Motion to Stay, Ex. 1 (Federal Circuit Caseload Analysis FY 2008 - FY 2009). "A mere delay in any eventual monetary recovery is not sufficient to require going forward where the threshold issue of standing can be conclusively resolved by waiting for the Federal Circuit to rule." Adobe, 2010 WL 1640397, at *4. Accordingly, because a stay will promote judicial economy, prevent unnecessary expenditure of resources and cause no prejudice to Plaintiff, the Court will grant the instant motions to stay with respect to any Defendant against whom the instant claims are not transferred, see infra V, and except for the motion brought by Exergen, see infra III, and terminate without prejudice the pending motions to dismiss.*fn6 The motions to dismiss may be renewed as appropriate after the Federal Circuit issues a decision in Stauffer.

III. EXERGEN'S MOTION TO DISMISS

A. Legal Standard

Because Article III standing "pertain[s] to a federal court's subject-matter jurisdiction under Article III, [it is] properly raised in a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1)...". White v. Leem, 227 F.3d 1214, 1242 (9th Cir. 2002). "A Rule 12(b)(1) jurisdictional attack may be facial or factual." Safe Air For Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004) (citation omitted). With a factual Rule 12(b)(1) attack, a court may look beyond the complaint to matters of public record without having to convert the motion into one for summary judgment. See id. It need not presume the truthfulness of the plaintiff's allegations. White, 227 F.3d at 1242, citing Gemtel Corp. v. Community Redevelopment Agency, 23 F.3d 1542, 1544 n.1 (9th Cir. 1994).

B. Discussion

Exergen argues that even if Stauffer ultimately supports Plaintiff's position with respect to standing, an earlier false marking suit that is inclusive of Plaintiff's claims was filed against it in Delaware by a different qui tam relator, Jennifer L. Brinkmeier, thus depriving Plaintiff of standing to sue Exergen here. Exergen reasons that Plaintiff's sole claim to standing is as an assignee of a false marking claim originally accruing to the United States government and that the earlier lawsuit filed in Delaware effected an assignment of that claim to Brinkmeier. Plaintiff disagrees claiming that Plaintiff and Brinkmeier sued Exergen for different markings.

Brinkmeier's action alleges that Exergen marks its products, including its temporal artery thermometers, with the following expired U.S. Patent Numbers: 4,636,091, 5,012,813; 5,199,436; 5,653,238; and 6,047,205. Kent Decl., Ex. A (Complaint) ¶¶ 11-15, 36-37. Plaintiff alleges that Exergen marks its Comfort Scanner thermometer with four of the same expired patent numbers. Complaint ¶ 84 (alleging that "U.S. Patents Nos. 4,636,091, 5,012,813, 5,199,436, and 5,653,238 expired no later than 6/28/2005, 12/7/2008, 2/20/2008, 12/7/2008, respectively."). While Plaintiff acknowledges that the technology of the products at issue in the two cases likely is the same, it contends that the packaging of the Comfort Scanner thermometer sold at Walgreens is different. The Court notes that Exergen's CEO, Francesco Pompei, admits that there is special packaging for the Comfort Scanner thermometer sold by Walgreens. Pompei Decl. ¶ 6 ("The Exergen Temporal Artery Thermometer that is the subject of this lawsuit is known as the 'Comfort Scanner,' which is a TAT-2000C model thermometer specially branded and packaged for sale at Walgreen's stores."). However, Brinkmeier's complaint, while more general than Plaintiff's with respect to packaging, in no way excludes the marks or packaging that are the subject of the instant suit. Having examined both complaints, the Court concludes the claims asserted by Plaintiff against Exergen are within the scope of those alleged by Brinkmeier in her earlier-filed action. For this reason, it appears that even assuming standing generally, the claims of the United States government previously were assigned to Brinkmeier depriving Plaintiff of standing to assert them here.

IV. MOTIONS TO SEVER

Almost all of the Defendants move to sever the claims against them pursuant to Fed. R. Civ. P. 21 based upon their assertion that their joinder in a single action is improper. A plaintiff may join persons in one action as defendants if:

(A) Any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or ...


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