False Patent Marking Complaints Require Who, What, Where and When

The Federal Circuit Court of Appeals in In re BP Lubricants USA, Inc., Misc. Dkt. No. 960 (Fed. Cir. March 15, 2011) (available here) held that plaintiffs who assert false patent marking claims under 35 U.S.C. §292 must allege, in their complaint, the who, what, where, when and how defendant falsely marks or advertises its products. See Ashcroft v. Igbal, 129 S. Ct. 1937, 1954 (2009) and Fed. R. Civ. P. 9(b)(requiring particular facts to support allegations of fraud).

Recently, a large number of false patent marking claim lawsuits have been filed by members of the public seeking false patent marking penalty damages which are split with the government. As a reaction, trial courts have inconsistently applied Rule 9(b)’s particularity requirement to the allegation sin the complaint. With BP Lubricants USA Inc., the Federal Circuit has clearly held that Rule 9(b) requires that plaintiff allege “the specific who, what, when, where, and how” of the false marking as set forth in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009).

The False Marking Statute provides:

(a) Whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, offered for sale, or sold by such person within the United States, or imported by the person into the United States, the name or any imitation of the name of the patentee, the patent number, or the words “patent,” “patentee,” or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public and inducing them to believe that the thing was made, offered for sale, sold, or imported into the United States by or with the consent of the patentee; or Whoever marks upon, or affixes to, or uses in advertising 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 public; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article the words “patent applied for,” “patent pending,” or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public – Shall be fined not more than $500 for every such offense. (b) Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.

35 U.S.C. 292.

BP moved to dismiss the complaint for failure to plead with particularity the circumstances of BP’s intent to deceive the public in falsely marking unpatented articles with an expired patent. The trial court and the Federal Circuit indicated that it was enough under Rule 9(b) for the plaintiff-relator to allege that BP (the “who”) had deliberately and falsely marked (the “how”) at least one line of its motor oil products (the “what”) with an expired patent and continued to falsely mark its products (the “when”) throughout the U. S. (the “where”) with the intent to deceive. Slip Opn. pg. 4.

The Court supported its decision by discussing the Federal False Claims Act, 31 U.S.C. sec. 3729-3733, where every regional circuit had held that a relator must comply with Rule 9(b) when bringing complaints on behalf of the government. Opn. pg. 5. “The Seventh Circuit explained that false claims complaints must meet the requirements of Rule 9(b) because the False Claims Act condemns fraud ‘but not negligent errors or omissions.’” Opn. pg. 6, citing United States ex rel. Garst v. Lockheed-Martin Corp., 328 F.3d 374, 376 (7th Cir. 2003).

A complaint must in the § 292 context provide some objective indication to reasonably infer that the defendant was aware that the patent expired. As explained in Clontech Labs, Inc. v. Invitrogen Corp., 406 F.3d 1347 (Fed. Cir. 2005): “Intent to deceive, while subjective in nature, is established in law by objective criteria. Thus, ‘objective standards’ control and ‘the fact of misrepresentation coupled with proof that the party making it had knowledge of its falsity is enough to warrant drawing the inference that there was a fraudulent intent.’” 406 F.3d at 1352. (citations omitted).

The Court also confirmed its earlier holding in Pequignot v. Solo Cup Co., 608 F.3d 1356, 1362-63 (Fed. Cir. 2010) which held that “the combination of a false statement and knowledge that the statement was false creates a rebuttable presumption of intent to deceive the public, rather than irrebuttably proving such intent.” Slip Opn. pg. 10.

As a consequence, more false patent marking claim complaints will not survive motions to dismiss.

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