In Re BP Lubricants USA, Inc.: The Federal Circuit Makes Bringing A False Marking Suit A Little Harder

In an issue of first impression, the U.S. Court of Appeals for the Federal Circuit considered whether Fed. R. Civ. P. Rule 9(b)’s particularity requirement applies to false marking claims under §292. In In re BP Lubricants USA, Inc., 97 U.S.P.Q.2d 2025 (Fed. Cir. 2011), the Federal Circuit found that Rule 9(b)’s particularity requirement does apply to false marking claims and that a complaint alleging only conclusory allegations of intent is insufficient. This decision will certainly impact pending false marking cases, many of which may be dismissed after this decision for failure to comply with Rule 9(b).

BACKGROUND

BP Lubricants USA Inc. (“BP”) manufactures motor oil products and distributes them in a unique bottle for which BP received a design patent.  This patent expired on February 12, 2005, however BP continued to mark its bottles with the patent number. Thomas A. Simonian (“Simonian”), a patent attorney, filed a qui tam false patent marking suit against BP on behalf of the United States.

In the complaint, Simonian alleges that “BP knew or should have known that the patent expired” and that “BP is a sophisticated company and has experience applying for, and obtaining and litigating patents.”  The district court held that these allegations met the requirements of Rule 9(b).

BP argued that the intent to deceive element was insufficiently pled in the complaint and brought a motion to dismiss in the District Court.  The District Court denied BP’s motion to dismiss finding that the general allegations of the complaint were sufficient.

Does Fed. R. Civ. P. Rule 9(b) particularity requirement apply to false marking claims?

Before addressing the merits of BP’s argument that the complaint was insufficiently pled, the Federal Circuit considered whether Fed. R. Civ. P. Rule 9(b)’s particularity requirement applies to false marking claims.  The Federal Circuit found that because §292 “condemns fraudulent or false marking” and Rule 9(b) requires fraud to be pled with particularity, there is no reason to treat false marking claims any differently from other fraud-based claims.

Whether the Complaint Has been Pled with Particularity?

In considering whether the complaint was pled with sufficient particularity, the Federal Circuit noted that the complaint failed to allege any facts that showed that BP was aware of the patent’s expiration.  In fact, the Court noted that the District Court relied on the general statement that “BP knew or should have known” of the patent’s expiration.  The Court noted that this “bare allegation” was clearly not sufficient to survive a motion to dismiss.  Instead, for a false marking case, the plaintiff must provide some allegation from which one could infer that the defendant had knowledge that the patent expired.  Here, the plaintiff had not done so.

The Federal Circuit issued a writ of mandamus, directing the District Court to dismiss the complaint with leave to amend to correct the pleading requirements.

Conclusion

Although there has been a recent surge in false marking suits following the Federal Circuit’s decision in Stauffer v. Brooks Brothers, 2010 WL 3397419 (Fed. Cir. Aug. 31, 2010), this latest Federal Circuit decision will certainly result in many false marking cases being dismissed.  This decision requires particularly pleading facts relating to the Defendant’s knowledge that the patent in question had expired.  It is no longer sufficient to plead that the Defendant “should have known.”

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Jeff Zuber

Sarah S. Brooks

Also See:

Gunn, et al., v. Minton: Supreme Court Denies Federal Jurisdiction for Patent-Related Malpractice Suit

Hall v. Bed Bath & Beyond: Federal Circuit Rejects District Court’s Pleading Standards for Design Patent Infringement

Arkema v. Honeywell Intl.: Federal Circuit Explains MedImmune Standard for Declaratory Judgment Jurisdiction Involving Indirect Patent Infringement

America Invents Act: First-to-File Priority for Patent Applications Begins March 16

Edwards Lifesciences v. Corevalve: Federal Circuit Sides Strongly with Prevailing Plaintiffs Seeking Injunctions