Juniper Networks Inc. v. Shipley

Decision Date29 April 2011
Docket NumberNo. 2010–1327.,2010–1327.
Citation643 F.3d 1346,98 U.S.P.Q.2d 1491
PartiesJUNIPER NETWORKS, INC., Plaintiff–Appellant,v.Peter M. SHIPLEY, Defendant–Appellee.
CourtU.S. Court of Appeals — Federal Circuit

OPINION TEXT STARTS HERE

Richard L. Rainey, Covington & Burling, LLP, of Washington, DC, argued for plaintiff-appellant. On the brief were Jonathan S. Kagan, Morgan Chu, David C. McPhie, and Rebecca L. Clifford, Irell & Manella LLP, of Los Angeles, CA.Cole M. Fauver, Robins, Kaplan, Miller & Ciresi L.L.P., of Minneapolis, MN, argued for defendant-appellee. With him on the brief were Martin R. Lueck, and Brenda L. Joly.Before RADER, Chief Judge, NEWMAN, and LINN, Circuit Judges.RADER, Chief Judge.

The United States District Court for the Northern District of California granted Peter M. Shipley's (Shipley's) motion to dismiss Juniper Networks, Inc.'s (“Juniper's”) false marking qui tam action for failure to state a claim. Juniper Networks v. Shipley, No. 09–0696, 2010 WL 986809, at *10 (N.D.Cal. Mar. 17, 2010) (“ Dismissal Order). Because Juniper's Amended Complaint does not reasonably allege an “unpatented article within the meaning of 35 U.S.C. § 292, this court affirms.

I

Juniper makes and sells computer networking products to businesses, including a variety of firewall products. Juniper asserts that Shipley, an alleged computer “hacker,” has maintained a website at the URL (the “Website”) since 1995, ostensibly for the “hacker community.” Am. Compl. ¶¶ 9, 12 (May 19, 2009). Juniper further alleges that Shipley has maintained the Website at his home on a network environment connected to the internet.

In 1995 and 1996, Shipley allegedly developed software known as “Dynamic Firewall,” which Juniper asserts he used in connection with the Website. On or about December 10, 1997, Shipley allegedly provided information on the current projects portion of his Website regarding Dynamic Firewall, along with a series of other current projects under development by people in the hacker scene in the San Francisco/Berkeley Bay Area and their friends.” Id. at ¶ 18; Joly Decl. Ex. C (printout from www. dis. org/ projects. html dated Dec. 21, 2007).

In pertinent part, the current projects portion of the Website stated as follows:

Current

Projects

Here is a list of current projects and research currently underway by people in the hacker scene in the San Francisco/Berkeley Bay Area and their friends. Most or all of these projects will be released to the public upon completion.

....

Dynamic Firewall [ Dover ] * * * Patent Pending * * *

“Shields holding captain ...”.

“D.IP.SHI.T” D ynamic IP SH ield T echnology A selfmodifying active firewall/packet filter designated to act as a LAN auto-defense and offense monitor/tool. This is an idea I came up with a few years ago.

Status: basic log file monitoring functioning [sic], now implementing core rulesets

Id. Juniper alleges that this information was provided for commercial purposes rather than as an informal or humorous description.

On September 12, 2000, the Patent and Trademark Office (“PTO”) issued U.S. Patent No. 6,119,236 to Shipley. Juniper asserts that on or about December 3, 2000, Shipley reconfigured the current projects page to reference this patent, as follows:

Dynamic Firewall [ Dover ] * * * Patent # 6,119,236 * * *

“Shields holding captain ...”.

“D.IP.SHI.T” D ynamic IP S hield T echnology A selfmodifying active firewall/packet filter designated to act as a LAN auto-defense and offense monitor/tool. This is an idea I came up with a few years ago.

Status: functioning ...

Am. Compl. ¶ 32; Joly Decl. Ex. B (printout from www. dis. org/ projects. html dated Dec. 3, 2000).

On October 16, 2001, the PTO issued U.S. Patent No. 6,304,975 to Shipley. Juniper alleges that on or about October 29, 2001, Shipley again reconfigured the Website such that it listed both patents:

Dynamic Firewall [Dover] * * * Patent # 6,119,236 and 6,304,975 * * *

“Shields holding captain ...”.

“D.IP.SHI.T” D ynamic IP S hield T echnology A selfmodifying active firewall/packet filter designated to act as a LAN auto-defense and offense monitor/tool. This is an idea I came up with a few years ago.

Status: functioning ...

Am. Compl. ¶ 38; Joly Decl. Ex. A (printout from www. dis. org/ projects. html dated Oct. 29, 2001). Juniper alleges that Shipley continues to include these patent markings on the Website.

Another portion of the Website allegedly offers paid consulting services through a company Shipley founded called Network Security Associates. These services include programming projects and network security auditing.

Juniper filed this false marking case after the current owner of U.S. Patent Nos. 6,119,236 and 6,304,975 accused Juniper of infringing those patents in a separate lawsuit. See Enhanced Sec. Research, LLC v. Juniper Networks, Inc., No. 09–871, 2010 WL 2898298, at *1 (D.Del. July 20, 2010). Relying on information obtained during the discovery phase of that suit, Juniper alleges that an embodiment of “Dynamic Firewall” purportedly operated on Shipley's home network beginning in 1996, and that Shipley used that embodiment of “Dynamic Firewall” as a component of the Website. Juniper further alleges that “Dynamic Firewall” was destroyed in 1999 due to a hard drive crash in a computer in Shipley's home. Shipley allegedly did not recreate the prototype or produce another product embodying the invention.

Shortly after learning that the only embodiment of “Dynamic Firewall” was destroyed in 1999, Juniper brought this lawsuit accusing Shipley of false marking under 35 U.S.C. § 292. In its original complaint, filed February 17, 2009 (“Compl.”), Juniper accused Shipley of falsely marking “the Website and any firewall or other security products or services operating thereon” with the words “Patent Pending,” “Patent # 6,119,236,” and “Patent # 6,119,236 and 6,304,975” from 1999—the date Dynamic Firewall was allegedly destroyed—to the present. Compl. ¶¶ 29–30.

Shipley thereafter filed a motion to dismiss Juniper's complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6). The district court granted Shipley's motion on three independent grounds. Juniper Networks v. Shipley, No. 09–0696, 2009 WL 1381873, at *7 (N.D.Cal. May 14, 2009). First, the district court held that Juniper did not allege conduct within the scope of the statute, reasoning that Juniper did not plead any nexus between Shipley's marking, affixing, or using of a patent and the advertising of the product. Id. at *3. Second, the district court held that Juniper did not allege intent to deceive with particularity. Id. at *4. Finally, the district court held that the applicable five year statute of limitations barred Juniper's claim. Id. at *4–7. The court provided Juniper leave to amend. Id. at *7.

Juniper subsequently filed its Amended Complaint. Among other changes, Juniper revised its false marking allegation to accuse Shipley of falsely marking “the Website and any firewall or other security products or services operating thereon, as well as web pages generated by the Website.” Am. Compl. ¶ 69. In the decision on appeal, the district court dismissed Juniper's Amended Complaint for failure to state a claim—without leave to amend again. Dismissal Order at *10. The district court held that Juniper had not pled facts showing that Shipley had marked an “unpatented article within the meaning of § 292(a) because, “when considered in context,” the “marking” on the website referred to the Dynamic Firewall project, not that the software was functioning or operating on the Website. Id. at *8. The district court further found that even if the “marking” could be imputed to Shipley's Website generally, Juniper did not allege facts establishing that the Dynamic Firewall was “unpatented” since the complaint acknowledges that the PTO granted Shipley two patents. Id. at *9. The court concluded:

[W]hat Juniper is complaining about is not that the public was deceived by a false patent marking; but rather that the public was misled into believing that his Website was running on software that no longer exists.... Because no amendment can cure the infirmities inherent in Juniper's claim, the Court grants Shipley's motion and dismisses the amended complaint without leave to amend.

Id.

Juniper appeals the dismissal of its Amended Complaint. This court has jurisdiction under 28 U.S.C. § 1295(a)(1).

II

This court reviews dismissal for failure to state a claim upon which relief can be granted under the law of the regional circuit. McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1355–56 (Fed.Cir.2007). Our sister circuit, the United States Court of Appeals for the Ninth Circuit, reviews dismissals for failure to state a claim without deference. Davis v. Pac. Capital Bank, N.A., 550 F.3d 915, 916 (9th Cir.2008).

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “Determining whether a complaint states a plausible claim for relief [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 1950. [W]hile the court assumes that the facts in a complaint are true, it is not required to indulge in unwarranted inferences in order to save a complaint from dismissal.” Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1064–65 (9th Cir.2008).

A false marking claim requires an intent to deceive the public, see Stauffer v. Brooks Brothers, Inc., 619 F.3d 1321, 1328 (Fed.Cir.2010), and sounds in fraud, In re BP Lubricants USA Inc., 637 F.3d 1307, 1309–11 (Fed.Cir.2011). As such, false marking claims must satisfy the heightened pleading standard of Fed.R.Civ.P. 9(b), which provides that “a party must state with...

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