That is very wrong. A particle doesn't 'know' it is being observed. However, when it interacts with other particles, the new state of both particles depends on the old states of both particles.
I get that particles don’t know anything, that’s why I put it in quotes. But then again, how do we know they don’t know anything? Could elementary particles possess a form of consciousness?
For a better explanation than I could possibly write here, see http://lesswrong.com/lw/r5/the_quantum_physics_sequence/.