Another qui tam plaintiff has come away empty-handed from a potential patent law false marking claim-at least for the time being. In In re: BP Lubricants USA, Inc., the Federal Circuit granted a writ of mandamus ordering a district court to dismiss a qui tam complaint alleging false marking under 35 U.S.C. § 292 of the patent statute. The court found that the complaint failed to plead intent to deceive with the particularity required by Federal Rules of Civil Procedure 9(b), holding for the first time that Rule 9(b)'s particularity requirement applies to patent law false marking claims for items marked with expired patents. But the writ of mandamus was limited to a dismissal without prejudice, with leave to amend in accordance with certain pleading requirements that the court set-meaning suit-target BP Lubricants USA, Inc. ("BP") may still have something to worry about.
The patent at issue covered a unique bottle design used to distribute motor oil products BP manufactured under the brand named Castrol. The design patent expired in 2005, yet BP continued to mark the bottles for a number of years after expiration. In the suit for false marking brought by a qui tam patent-attorney plaintiff, the complaint asserted-mostly on information and belief-that BP knew or should have known that the patent expired because it is a sophisticated company with significant experience in applying for, obtaining and litigating patents.
BP moved to dismiss the complaint under Rule 9(b), arguing that it failed to plead with sufficient particularity the circumstances of BP's alleged intent to deceive. The district court found that the complaint met the requisite pleading standard because it alleged the essential who, how, what, when and where elements of fraud. BP then filed for relief in the Federal Circuit. BP needed to seek a writ of mandamus because the order denying its motion to dismiss did not qualify as a final order sufficient to generate standing for an ordinary appeal.
Granting the writ, the Federal Circuit specifically determined that Rule 9(b) applies to false marking cases, requiring a qui tam plaintiff under the false marking statute to plead with particularity the circumstances of the defendants' alleged intent to deceive the public by falsely marking articles with the number of an expired patent. The court began its analysis by confirming that Rule 9(b) does in fact apply to claims for false marking, analogizing such claims to causes of action under the False Claims Act (which also falls within 9(b)'s ambit). The Federal Circuit chastised the district court because the complaint failed to allege any facts inferring that BP was aware of the expiration. General allegations BP knew or should have known were insufficient under Rule 9(b). The court also reiterated its earlier decision in Pequignot v. Solo Cup Co. that Rule 9(b)'s particularity extended to not merely knowledge of falsity, but also to intent to deceive.
Our take? Clearly the BP decision, together with recent decisions challenging the constitutionality of the qui tam provisions, signal that the court is taking affirmative steps to prevent false marking litigation from getting out of control. At the same time, the court acknowledged that Rule 9(b)'s burden is not insurmountable: fact patterns that would suffice would include allegations that the defendant sued a third party for infringement of an expired patent, or made multiple revisions to the marking after expiration. Undoubtedly, aggressive qui tam realtors will continue to look for evidence that holders of large patent portfolios with deep pockets are wielding expired patents in some affirmative way, perhaps even orchestrating an event or circumstance which encourages the patent holder to make a public statement about these patents. Also, the facts at issue in BP Lubricants involved expired patents as opposed to situations where a product is marked with a live patent but the product does not actually practice that patent. This scenario presents a much broader set of potential circumstances for meeting the who, what, and where requirements of Rule 9(b). Ultimately, holders of significant patent portfolios can take comfort that the courts are not going to allow these suits to run amuck, but a well thought out and executed campaign for monitoring one's marking policy will remain the key to keeping potential false marking plaintiffs with nothing in particular to complain about.
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