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When Companies Behave Like False Marking Trolls

by Orlando Lopez

When companies behave like false marking trolls, courts may treat them as trolls.  Recently, in Juniper Networks v. Shipley, the Court of Appeals for the Federal Circuit (CAFC) upheld the dismissal of a false marking suit brought by Juniper Networks against Shipley for failure to state a claim.  The patent statute allows an individual to bring a suit on behalf of the government for falsely marking an unpatented article (these suits are referred to as qui tam actions).  Ever since the CAFC clarified that a penalty could be charged per sold article, there have been a large number of false marking suits brought against corporations by individuals (the individuals bringing the suits are sometimes referred to as false marking trolls).If the suit is successful, the individual collects a portion of the penalty; however in this case, Juniper Networks brought a false marking suit against Shipley, an individual.  Juniper Networks makes and sells computer networking products.  Shipley is an alleged “hacker” that maintains a website for the “hacker community.” Shipley also filed for and obtained two patents for a “dynamic firewall.” In the “Current Projects” page of his website, Shipley named the dynamic firewall as being patented, describing it as “Dynamic IP SHIeld Technology,” using the acronym D.IP.SHI.T.  The present owner of the two patents for the “dynamic firewall” sued Juniper Networks for infringement.  In the discovery phase of the infringement suit, Juniper allegedly learned that a version of D.IP.SHI.T. operated on Shipley’s home computer starting in 1996 and was used in the website.  Additionally, in 1999, D.IP.SHI.T. was allegedly destroyed in a disk crash and was not re-created.  Juniper then brought suit for false marking in District Court. 

The District Court allowed a motion by Shipley to dismiss for failure to state a claim and allowed Juniper to revise the complaint.  Juniper filed the amended complaint alleging that Shipley falsely marked the website, any firewall or other security products operating on the website, as well as the web pages.  Holding that Juniper had not provided facts that indicated that Shipley had marked an “unpatented article,” the District Court dismissed Juniper’s suit without leave to amend the complaint.  Juniper appealed to the CAFC and the CAFC upheld the District Court’s decision.  A complaint for a false marking suit has to state sufficient details to support the claim, since false marking is an allegation of fraud.  This requirement of the complaint has been used to dismiss a number of false marking suits, but allowing for amended complaints.  Having been given the opportunity to amend, once the amended complaint was still deficient, Juniper’s false marking suit could be dismissed.  Consequently, Juniper suffered the same fate that defendants hope false marking trolls will suffer.  It does not matter that the one bringing the suit is a corporation, if they behave as false marking trolls, they deserve the same fate.

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