False Patent Marking After ‘BP Lubricants’

“The practical consequences of this ruling are hard to exaggerate. No longer will creative lawyering with conclusory allegations surmount the hurdle of Rule 9(b) pleading requirement in the absence of objective, cognizable facts, alleged with the particularity that Rule 9(b) demands. This decision settles a split in the district courts as to whether Rule 9(b) applies in false marking cases. It places a significantly higher burden on plaintiffs alleging false marking claims…”

For your reference, here’s what law firms are writing about False Patent Marking, in light of the March 15, 2011, Federal Circuit ruling regarding BP Lubricants:

– False Patent Marking: Federal Circuit Determines Rule 9(b) Heightened Pleading Standard Applies (by Morrison & Foerster):

“In a significant decision that may lead to the dismissal of numerous false patent marking actions, the Federal Circuit ruled yesterday that (1) the heightened pleading standard of Fed. R. Civ. P. 9(b) applies to claims for false patent marking, and (2) such claims are not adequately pleaded if they only allege that a defendant “knew or should have known” that the marked patent had expired…

The BP Lubricants decision settles the disagreement among trial courts regarding which pleading standard applies to false marking claims under Section 292. The decision helps false marking defendants by requiring application of the heightened pleading standard of Rule 9(b), under which claims must be pleaded with greater particularity. The Federal Circuit made clear that claims that merely allege that a defendant is sophisticated and “knew or should have known that its marked patent had expired are not sufficient to state a claim for false patent marking. Given the large number of false marking complaints that are pleaded in this manner, it is likely that many will be dismissed with leave to amend. Amendment of such complaints may be unavailing if the relator cannot muster sufficient facts to show an intent to deceive…” Read complete analysis»

– In re BP Lubricants – False Patent Marking Claims Must Be Pled With Particularity (by Bryan Cave LLP):

“The patent false marking statute, 35 U.S.C. § 292(a), creates a cause of action against a company or manufacturer who, for the purpose of deceiving the public, falsely marks unpatented products as patented. Damages can be awarded in an amount up to $500 per falsely marked article and any person may sue to collect the damages, with half of the proceeds going to the Federal Government.

Prior to BP Lubricants, there was a split among the district courts as to whether Federal Rule 9(b) should apply to false marking claims. A number of district courts applied Federal Rule 9(b) in granting a motion to dismiss because the plaintiffs failed to plead their false marking claim with particularity…” Read complete analysis»

– Federal Circuit Elevates Burden on False Marking Plaintiffs (by Armstrong Teasdale):

“BP Lubricants USA, Inc. (“BP”) manufactures oil products such as CASTROL, which are distributed in a patented bottle design. Thomas Simonian brought suit against BP in the United States District Court for the Northern District of Illinois alleging that BP wrongly marked its bottles with expired patent numbers. Simonian’s complaint mostly alleged “upon information and belief,” that (1) BP knew or should have known that the patent expired; (2) BP is a sophisticated company and has experience applying for, obtaining, and litigating patents; and (3) BP marked the CASTROL products with the patent numbers for the purpose of deceiving the public and its competitors into believing that something contained or embodied in the products is covered or protected by the expired patent…” Read complete analysis»

– False Marking Fastidiousness: Federal Circuit Determines That False Marking Allegations Must Be Particularly Pleaded (by Jackson Walker):

“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…” Read complete analysis»

– Federal Circuit Applies Heightened Pleading Standard Of Fed. R. Civ. P. 9(b) To False Marking Claims (by Ropes & Gray LLP):

“The Court began its analysis with the recognition that Rule 9(b) ‘acts as a safety valve to assure that only viable claims alleging fraud or mistake are allowed to proceed to discovery.’ The Court concluded that Rule 9(b)’s “gatekeeping function” is necessary in false marking actions to ‘prevent relators using discovery as a fishing expedition’ with claims ‘that do little more than speculate that the defendant engages in more than negligent action.’ The Court then confirmed that applying Rule 9(b) means that allegations of false marking, just like allegations of inequitable conduct, must comply with the requirements set forth Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009): the complaint must state the ‘who, what, when, where and how’of the alleged fraud, including ‘sufficient underlying facts from which a court may reasonably infer that a party acted with the requisite state of mind.’ Simply reiterating the elements of the claim without more is not enough…” Read complete analysis»

– The Assault On False Patent Marking Continues: Federal Circuit Grants Bp Lubricants’ Petition For A Writ Of Mandamus Holding (by Loeb & Loeb LLP):

“The responses of the false patent marking plaintiffs following the serious blow BP Lubricants visits on their pleadings will be telling. For instance, it will be interesting to see whether the plaintiffs even try to replead the intent prong of false patent marking. However, those plaintiffs may adopt a wait-and-see approach or face additional concerns.” Read complete analysis»

– Federal Circuit Cuts Back False Marking Claims (by Foley Hoag LLP):

“The issue is important because, over the past year, the number of false marking suits has increased dramatically, spurred by two recent Federal Circuit decisions. First, the Court held that a company could be liable for $500 for each falsely marked item. See Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009). Then the Court held that marking a product with an expired patent could constitute false marking. See Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010). These decisions combined to create an enormous potential liability for any company that was slow to remove a mark after a patent expired. Entrepreneurial plaintiffs lawyers envisioned large recoveries. Hundreds of false marking suits followed.

[The] decision has the potential to curtail the number of false marking cases filed nationwide, because many plaintiffs will be unable to provide specific information supporting their allegations of intent to deceive. The Court underscored that the bar for proving deceptive intent [in false marking cases] is particularly high. False marking litigation is not dead, however. In its ruling, the Court directed that the plaintiff be allowed to amend his complaint to meet the requirements of Rule 9(b)…” Read complete analysis»

– Federal Circuit Deals Significant Blow to False Patent Marking Complaints (by Andrew Oliver – Kilpatrick Townsend):

“The practical consequences of this ruling are hard to exaggerate. No longer will creative lawyering with conclusory allegations surmount the hurdle of Rule 9(b) pleading requirement in the absence of objective, cognizable facts, alleged with the particularity that Rule 9(b) demands. This decision settles a split in the district courts as to whether Rule 9(b) applies in false marking cases. It places a significantly higher burden on plaintiffs alleging false marking claims to allege facts giving rise to an inference of intent to deceive. Plaintiffs must now plead with particularity the specific facts underlying their false marking allegations to demonstrate to the court the potential of their complaint. They cannot rely merely on the “sophistication” of a company or that the defendant “knew or should have known” that a patent expired in such pleading. As the Court stated, a complaint containing only these general allegations is “not entitled to an assumption of truth at any stage of litigation[,]” and thus should not survive a motion to dismiss…” Read complete analysis»

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