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Newt LLC v. Nestle Usa Inc et al

March 28, 2011

NEWT LLC
v.
NESTLE USA INC ET AL



Order Form (01/2005) Case: 1:09-cv-04792 Document #: 58 Filed: 03/28/11 Page 1 of 3 PageID #:294

Name of Assigned Judge or Magistrate Judge Sharon Johnson Coleman Sitting Judge if Other than Assigned Judge

CASE TITLE

DOCKET ENTRY TEXT

Defendants' motion to dismiss pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction [34] is denied. Defendants' motion to dismiss [22] plaintiff's complaint pursuant to Rule 12(b)(6) and Rule 9(b) for failing to state a claim is granted. The first amended complaint is dismissed without prejudice.

O[ For further details see text below.] Notices mailed by Judicial staff.

STATEMENT

Defendants Nestl© USA, Inc., et al., move to dismiss pursuant to Rule 12(b)(1) for lack of standing and Rule 12(b)(6) on the basis that plaintiff NEWT LLC fails to state a claim because the complaint does not allege with the requisite Rule 9(b) particularity false patent marking. For the reasons that follow, the motion is granted.

Background

NEWT brought the instant qui tam lawsuit as relator on behalf of the government under section 292 of the Patent Act, which provides a statutory penalty for false patent marking. See 35 U.S.C. § 292. The first amended complaint alleges that Graphic Packaging International Inc. ("GPI") is the owner of the patents in issue and the manufacturer of microwaveable sleeves and trays for heating and crisping food. NEWT alleges that GPI sold its sleeves and trays that were knowingly marked with expired patents to Nestl© USA, Inc., Safeway, Inc., H.J. Heinz Company, and the Schwan Food Company (collectively "customer defendants").

Legal Standard

Section 292 states in pertinent part, that "whoever marks upon, or affixes to, or uses in advertising in 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. [s]hall be fined not more than $500 for every such offense." 35 U.S.C. § 292.

Federal Rule of Civil Procedure 12(b)(1) provides for dismissal of a case on the basis of lack of subject matter jurisdiction. The question of standing to sue is a jurisdictional one. Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed. Cir. 1995). The requirements of standing are: (1) an injury in fact; (2) causation; and (3) redressibility. See, e.g., RK Co. v. See, 622 F. 3d 846, 851 (7th Cir. 2010).

In order to withstand a motion to dismiss pursuant to Rule 12(b)(6), a complaint must provide a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a). The pleader must show that it is plausible, rather than merely speculative, that he is entitled to relief. INEOS Polymers, Inc. v. BASF Catalysts, 553 F. 3d 491, 497 (7th Cir. 2009). For fraud-based claims, such as false patent marking under section 292, the heightened pleading requirements of Rule 9(b) apply. In re BP Lubricants USA Inc., 2011 U.S. App. LEXIS 5015 (Fed. Cir. Mar. 15, 2011). Rule 9(b) requires that a plaintiff set forth with particularity the activities underlying the alleged fraud, including the dates, times, places, and the identity of those involved. See Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 509 (7th Cir. 2007). The allegations must state, essentially the first sentence of a newspaper story: "the who, what, when, where, and how" of the conduct alleged. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990).

When deciding a motion to dismiss the Court accepts well-pleaded allegations of the complaint as true, (Tamayo v. Blagojevich, 526 F. 3d 1074, 1081 (7th Cir. 2008)), and draws all reasonable inferences in favor of the nonmoving party. ...


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