By Matt Acosta

The Federal Circuit finally resolved a hotly contested issue that has plagued false marking litigation under 35 U.S.C. s. 292 since the landmark decision in Piquenot v. Solo Cup Company. The issue: Are so-called qui tam plaintiffs, bringing false marking claims on behalf of the federal government, required to plead those claims with particularity under the Federal Rules of Civil Procedure? In In re BP Lubricants USA, Inc., Misc. Docket No. 960 (Fed. Cir. March 15, 2011), the Federal Circuit determined that Rule 9(b)’s heightened pleading standard does apply to false marking claims. 

Rule 9(b) of the Federal Rules of Civil Procedure requires that plaintiffs who assert claims for "fraud" plead those claims with particularity in the complaint. However, like many other false marking claims around the country, the complaint in In re BP only alleged that BP Lubricants was a "sophisticated company" that "knew or should have known" that the patent marked on their well-known CASTROL products had expired. Id. at p. 1.  The complaint also affirmatively alleged that "BP marked the CASTROL products with the patent numbers for the purpose of deceiving the public."  Id. at p. 2. The district court decided that this pleading satisfied Rule 9(b) by alleging the "who, what, when, where, and how" of the alleged false marketing.  Id. at 4.  The Federal Circuit disagreed.

First, in a question of first impression, the Federal Circuit determined that the false marking statute was a claim of "fraud" and was subject to the heightened pleading requirements of Rule 9(b).  Id. at 5-6.   Next, the appellate court held that conclusorily alleging "intent to deceive" was insufficient to satisfy Rule 9(b)’s heightened pleading standard.  Id. at 7.  In so holding, the Court explained that "[a] plaintiff is not empowered under the Rules to plead the bare elements of his cause of action, affix the label 'general allegations,' and expect his complaint to survive a motion to dismiss."  Id. (internal quotations and citations omitted).  Rather, "a complaint must in the s. 292 context provide some objective indication that the defendant was aware that the patent expired."  Id. 

In addition, a plaintiff cannot avoid the particularity requirement "through a general averment that defendants 'knew' earlier what later turned out badly."  Id. at 8 (internal quotations and citations omitted).  The Federal Circuit found the Plaintiff's arguments unpersuasive, and ultimately, granted BP Lubricants' writ of mandamus directing the district court to dismiss the complaint with leave to replead. 

The BP Lubricants decision is likely to cause many district judges to reconsider the sufficiency of plaintiffs' pleadings in the plethora of false marking cases filed around the country.  Particularly in the Eastern District of Texas, where numerous false marking cases have been filed, many judges have previously held that Rule 9(b) did not apply to false marking claims.  See Promote Innovation LLC v. Runbacks Laboratories Inc., 2:10cv00121 (E.D. Tex. July 14, 2010); Astec America Inc. v. Power-One, Inc., 2008 WL 1734833, at *12 (E.D. Tex. Apr. 11, 2008). 

It remains to be seen how false marking plaintiffs will uncover and allege underlying facts sufficient to support the intent to deceive requirement.  Additionally, it is still uncertain whether the mandamus remedy will be available in other cases now that the Rule 9(b) question has been settled.  While In re BP Lubricants takes a large step in clarifying outstanding issues related to false marking, much concerning the maintenance and ultimate disposition of these cases du jour is still unknown.

If you have any questions regarding this e-Alert, please contact Matt Acosta at 214.953.5806 or macosta@jw.com or John Jackson at 214.953.6109 or jjackson@jw.com.