On March 15, the Court of Appeals for the Federal Circuit significantly altered the landscape for Patent False Marking lawsuits. In particular, the Federal Circuit decided, in In re BP Lubricants USA, Inc., that a complaint alleging Patent False Marking must be pled with sufficient facts to support the accusations, as required by Rule 9 of the Federal Rules of Civil Procedure. According to the ruling, the typical conclusory and unsupported statements included in most False Patent Marking complaints are insufficient. This may lead to dismissal of many of those cases.
In light of the U.S. District Court for the Northern District of Illinois’ refusal to dismiss a False Patent Marking lawsuit on the basis that the complaint did not include sufficient factual allegations, BP Lubricants petitioned the Federal Circuit for a writ of mandamus directing the District Court to dismiss the lawsuit. The plaintiff in that lawsuit, Thomas A. Simonian, filed the qui tam complaint alleging BP Lubricants marked bottles with the patent number of a design patent that expired February 12, 2005, thus giving rise to a False Patent Marking claim. However, the complaint 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. But, the complaint failed to provide any factual basis to support its conclusory allegations. Nonetheless, the Northern District of Illinois denied BP’s motion to dismiss, holding that the complaint did set forth sufficient facts under the Rule 9 pleading requirements and the “information and belief” allegations were proper.
In its March 15 decision, the Federal Circuit held that the particularity requirement of Rule 9 applies to False Patent Marking claims, since the False Patent Marking Statute requires intent to deceive the public. The Federal Circuit explained that the standards under Rule 9 are required to prevent “discovery and adjudication for claims that do little more than speculate that the defendant engaged in more than negligent action,” which, unfortunately, has been the crux of the recent spate of False Patent Marking lawsuits.
After determining that the Rule 9 pleading standard applies, the Federal Circuit reversed the District Court’s ruling and held that "a complaint must in the §292 context provide some objective indication to reasonably infer that the defendant was aware that the patent expired." The District Court’s reliance on the “general allegation that BP knew or should have known that the patent expired” was “clearly incorrect.” The Federal Circuit further disagreed with the Plaintiff’s allegations that BP Lubricant’s sophistication and experience in applying for, obtaining, and litigating patents were sufficient to show deceptive intent under the Rule 9 pleading requirements. Other arguments raised by the Plaintiff and rejected by the Federal Circuit included: (1) False Patent Marking inherently shows intent; (2) False Patent Marking is “anonymous” and does not require identification of actual individuals with knowledge that a product was falsely marked; and (3) False Patent Marking is entitled to a rebuttable presumption of intent.
The In re BP Lubricants decision resolves the “considerable disagreement” among the district courts regarding the pleading requirements for False Patent Marking lawsuits, that has resulted in inconsistent results across the country. In view of the heightened pleading requirement for False Patent Marking mandated by the Federal Circuit, the number of lawsuits alleging False Patent Marking may appreciably decrease.