United States Court of Appeals
for the Federal Circuit
__________________________
JUNIPER NETWORKS, INC.,
Plaintiff-Appellant,
v.
PETER M. SHIPLEY,
Defendant-Appellee.
__________________________
2010-1327
__________________________
Appeal from the United States District Court for the
Northern District of California in Case No. 09-CV-0696,
Judge Saundra Brown Armstrong.
___________________________
Decided: April 29, 2011
___________________________
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, California
COLE M. FAUVER, Robins, Kaplan, Miller & Ciresi
L.L.P., of Minneapolis, Minnesota, argued for defendant-
appellee. With him on the brief were MARTIN R. LUECK,
and BRENDA L. JOLY.
__________________________
JUNIPER NETWORKS v. SHIPLEY 2
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 (“Ship-
ley’s”) motion to dismiss Juniper Networks, Inc.’s (“Juni-
per’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 prod-
ucts to businesses, including a variety of firewall prod-
ucts. Juniper asserts that Shipley, an alleged computer
“hacker,” has maintained a website at the URL
(the “Website”) since 1995, ostensi-
bly 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 envi-
ronment connected to the internet.
In 1995 and 1996, Shipley allegedly developed soft-
ware known as “Dynamic Firewall,” which Juniper as-
serts he used in connection with the Website. On or about
December 10, 1997, Shipley allegedly provided informa-
tion on the current projects portion of his Website regard-
ing 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).
3 JUNIPER NETWORKS v. SHIPLEY
In pertinent part, the current projects portion of the
Website stated as follows:
Id. Juniper alleges that this information was provided for
commercial purposes rather than as an informal or hu-
morous description.
On September 12, 2000, the Patent and Trademark
Office (“PTO”) issued U.S. Patent No. 6,119,236 to Ship-
ley. Juniper asserts that on or about December 3, 2000,
Shipley reconfigured the current projects page to refer-
ence this patent, as follows:
Am. Compl. ¶ 32; Joly Decl. Ex. B (printout from
www.dis.org/projects.html dated Dec. 3, 2000).
JUNIPER NETWORKS v. SHIPLEY 4
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:
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 ac-
cused 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.
5 JUNIPER NETWORKS v. SHIPLEY
Shipley allegedly did not recreate the prototype or pro-
duce 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 “Pat-
ent # 6,119,236 and 6,304,975” from 1999—the date
Dynamic Firewall was allegedly destroyed—to the pre-
sent. 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 particu-
larity. 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 Web-
site 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,
JUNIPER NETWORKS v. SHIPLEY 6
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 Fire-
wall 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 “unpat-
ented” since the complaint acknowledges that the PTO
granted Shipley two patents. Id. at *9. The court con-
cluded:
[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 believ-
ing 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 Com-
plaint. 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,
7 JUNIPER NETWORKS v. SHIPLEY
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, 129 S. Ct. 1937, 1949 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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. Corin-
thian 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., No. 960, 2011 WL 873147, at *2
(Fed. Cir. Mar. 15, 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
particularity the circumstances constituting fraud or
mistake.” Id. at *1-2.
“Rule 9(b) requires a plaintiff to plead in detail ‘the
specific who, what, when, where, and how’ of the alleged
fraud.” Id. at *2 (quoting Exergen Corp. v. Wal-Mart
Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009)); see also
Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir.
2009) (“Averments of fraud must be accompanied by the
who, what, when, where, and how of the misconduct
charged.”) (quotations omitted). These pleading require-
ments “must be applied in a fashion that relates to false
JUNIPER NETWORKS v. SHIPLEY 8
marking claims.” In re BP Lubricants, 2011 WL 2873147,
at *4. A party alleging fraud must “set forth more than
the neutral facts necessary to identify the transaction.”
Kearns, 567 F.3d at 1124.
III
In relevant part, 35 U.S.C. § 292(a) states that
“[w]hoever marks upon, or affixes to, or uses in advertis-
ing in connection with any unpatented article the word
‘patent’ or any word or number importing the same is
patented, for the purpose of deceiving the pub-
lic . . . [s]hall be fined not more than $500 for every such
offense.” Thus, “[t]he two elements of a § 292 false mark-
ing claim are (1) marking an unpatented article and (2)
intent to deceive the public.” Forest Grp. Inc. v. Bon Tool
Co., 590 F.3d 1295, 1300 (Fed. Cir. 2009). “When the
statute refers to an ‘unpatented article’ the statute means
that the article in question is not covered by at least one
claim of each patent with which the article is marked.”
Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347,
1352 (Fed. Cir. 2005).
Juniper’s Amended Complaint does not state facts
showing that an “unpatented article” was marked upon,
affixed with a label, or advertised in a manner importing
that it is patented. Juniper does not allege that the
Dynamic Firewall software itself was falsely marked. See
Am. Compl. ¶ 69. Any such claim would likely be time
barred under 28 U.S.C. § 2462 and in conflict with this
court’s precedent that the mismarked article must actu-
ally exist, as the sole embodiment of Dynamic Firewall
was allegedly destroyed in 1999. See Lang v. Pac. Marine
& Supply Co., 895 F.2d 761, 765 (Fed. Cir. 1990)
(“[S]ection 292 requires that the article mismarked actu-
ally exists. In other words, the article must be completed
before section 292 will allow a claim to continue.”).
9 JUNIPER NETWORKS v. SHIPLEY
Instead, Juniper alleges that the falsely marked un-
patented article is “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.
To support this contention, Juniper notes the listing of the
Dynamic Firewall status as “functioning,” as well as the
statement “[s]hields holding captain” adjacent to the
patent marks. Juniper alleges that a person viewing
Shipley’s Website after 1999 would mistakenly believe
that Dynamic Firewall was “functioning” on the Website
to repel hacker attacks, when it could not have been.
As an initial matter, this court must consider whether
websites can qualify as “unpatented articles” within the
scope of § 292. The Patent Act includes a marking provi-
sion to give the public “a ready means of discerning the
status of intellectual property embodied in an article of
manufacture or design.” Bonito Boats, Inc. v. Thunder
Craft Boats, Inc., 489 U.S. 141, 162 (1989). False marking
can injure the public interest in full and free competition
“because the act of false marking misleads the public into
believing that a patentee controls the article in question
(as well as like articles), externalizes the risk of error in
the determination, placing it on the public rather than the
manufacturer or seller of the article, and increases the
cost to the public of ascertaining whether a patentee in
fact controls the intellectual property embodied in an
article.” Clontech, 406 F.3d at 1356-57; see also Forest
Grp., 590 F.3d at 1302-03. Because these policy concerns
apply equally to websites as to traditional articles of
manufacture or design, and because websites may both
embody intellectual property and contain identifying
markings, this court holds that websites can qualify as
unpatented articles within the scope of § 292.
Turning to the “unpatented article” at issue here, the
“functioning” and “[s]hields holding captain” statements
JUNIPER NETWORKS v. SHIPLEY 10
invoked by Juniper appear exclusively on the page enti-
tled “Current Projects.” This page purports to provide the
viewer with “a list of current projects and research un-
derway by people in the hacker scene in the San Fran-
cisco/Berkeley Bay Area and their friends.” This page
further notes that “[m]ost or all of these projects will be
released to the public upon completion.” Joly Decl. Exs.
A-C. Thus, the Website expressly categorizes Dynamic
Firewall as a “current project” that was “underway.” The
website does not indicate that Dynamic Firewall was
actively protecting the Website. Additionally, the “status”
updates focused on by Juniper are specific for each project
and change over time. Thus some projects are categorized
as “[i]n [p]rogress,” while others are categorized as “func-
tioning,” “working,” or “done.” Id. None of these disclo-
sures reasonably suggest that Dynamic Firewall was
protecting the Website. Nothing on the Website reasona-
bly suggests that any projects other than Dynamic Fire-
wall relate to the accused marks. While required to draw
all reasonable inferences in favor of the plaintiff, this
court need not indulge in unwarranted inferences. See
Metzler, 540 F.3d at 1064-65. Thus, as correctly held by
the district court, “it is beyond cavil that, when considered
in context, the reference to ‘functioning’ relates to the
progress of the project, not that the software was func-
tioning or operating on the Website.” Dismissal Order at
*8.
Juniper contends that the district court erred by not
directly addressing the “affixing” or “advertising” prongs
of § 292. With respect to the affixing prong, Juniper
argues that the Website generates web pages that show
patent number designations in the form of a label adja-
cent to the words “Dynamic Firewall.” This argument
suffers from the same fundamental problem as Juniper’s
marking argument—namely, when considered in context,
11 JUNIPER NETWORKS v. SHIPLEY
the allegedly affixed marks relate to Dynamic Firewall as
opposed to the Website, software operating on the Web-
site, or pages generated by the Website.
With respect to the advertising prong, Juniper con-
tends that the markings on the Website demonstrate the
superior security of the Website to encourage sales of
various products, including Dynamic Firewall. Even
assuming that this rises to the level of an advertisement,
which is controverted, one cannot reasonably infer that
the advertising refers to the Website, software operating
on the Website, or pages generated by the Website, as
opposed to Dynamic Firewall.
Juniper also criticizes the district court for misapply-
ing the standard under Rule 12(b)(6), arguing that its
Amended Complaint sufficiently alleges Shipley’s im-
proper marking, affixing, and advertising. To the con-
trary, as instructed by the Supreme Court, see Iqbal, 129
S. Ct. at 1950, the district court drew on its “judicial
experience and common sense” in identifying the unwar-
ranted inference at the heart of Juniper’s claim. In doing
so, the district court provided a cogent and informed
opinion and avoided the cost and burden of unnecessary
discovery.
This court has considered Juniper’s additional argu-
ments and allegations, but found them unpersuasive.
Because an “unpatented article” is an essential element
for a false marking claim under 35 U.S.C. § 292, this court
affirms the dismissal of Juniper’s Amended Complaint.
IV
The district court dismissed Juniper’s Amended Com-
plaint without leave to amend. Dismissal Order at *9.
Under Ninth Circuit law, dismissal with prejudice is only
appropriate when it is clear on de novo review “that the
JUNIPER NETWORKS v. SHIPLEY 12
complaint could not be saved by amendment.” Eminence
Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th
Cir. 2003). “Five factors are frequently used to assess the
propriety of a motion for leave to amend: (1) bad faith, (2)
undue delay, (3) prejudice to the opposing party, (4)
futility of amendment; and (5) whether plaintiff has
previously amended his complaint.” Allen v. City of
Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). The
district court in this case had previously permitted Juni-
per to amend its complaint. Dismissal Order at *1. The
district court also expressly found that no amendment
could cure the infirmities inherent in Juniper’s claim. Id.
at *9. While Juniper contends that knowledge within the
relevant community and additional language on the
Website would bolster its allegations, this court agrees
that the Website excerpts provided by Shipley are clear
and unambiguous on their face. This court finds no error
in the District Court’s determination that Juniper’s
Amended Complaint could not be saved by further
amendment.
This case differs from BP Lubricants. In BP Lubri-
cants, this court directed a trial court to dismiss the
original complaint in a false marking qui tam action but
granted leave to amend, in part because this court had
not previously opined on the applicability of Rule 9(b) to
false marking. BP Lubricants, 2011 WL 873147, at *3-5.
In contrast, the district court in this case specifically
applied the Rule 9(b) standard in dismissing Juniper’s
original Complaint and previously granted Juniper leave
to amend. Juniper, 2009 WL 1381873, at *4, *7. More-
over, as explained above, the excerpted Website language
is clear and unambiguous on its face. The district court
therefore did not err by dismissing Juniper’s Amended
Complaint without leave to amend.
13 JUNIPER NETWORKS v. SHIPLEY
V
Shipley alternatively argues that Juniper’s claim
should have been dismissed for lack of standing. Shipley
argues that neither Juniper nor the government suffered
any cognizable injury from the alleged false marking
because Shipley did not offer any falsely marked product
for sale to the public that could have caused actual injury.
“Without jurisdiction the court cannot proceed at all
in any cause.” Ex parte McCardle, 74 U.S. 506, 514
(1868). In Stauffer, 619 F.3d at 1325, decided after Ship-
ley filed his brief, this court addressed the issue of qui
tam standing under the false marking statute. The court
held that (a) “a violation of [§ 292] inherently constitutes
an injury to the United States”; (b) a qui tam plaintiff
“has standing to assert the injury” to the United States,
regardless of whether the plaintiff has suffered any
individual injury; and (c) the qui tam plaintiff’s standing
“does not depend upon the alleged injury to the United
States being proprietary, as opposed to sovereign.” Id. at
1325-26. Thus, even if the United States suffers no
proprietary injury involving diminishment of the federal
treasury, the Patent Act makes deceptive patent mis-
marking “an injury to the United States.” Id. at 1325.
Because the United States suffers an injury when the
false marking statute is violated, Juniper had standing to
assert a qui tam claim against Shipley under 35 U.S.C. §
292.
VI
For the foregoing reasons, this court affirms the dis-
trict court’s dismissal with prejudice of Shipley’s false
marking qui tam action for failure to state a claim under
Fed. R. Civ. P. 12(b)(6).
JUNIPER NETWORKS v. SHIPLEY 14
AFFIRMED
COSTS
Costs to Shipley.