Federal Circuit Requires High Particularity Standard for False Marking Claims
California – In In re BP Lubricants USA Inc., the Federal Circuit Court of Appeals held that a false marking claim must satisfy the particularity standard of Fed.R.Civ.P. 9(b), which requires that complaints alleging fraud or mistake “state with particularity the circumstances constituting fraud or mistake.”
A complaint containing only “conclusory allegations that a defendant is a ‘sophisticated company’ and ‘knew or should have known’ that the patent expired” was ruled to be insufficient to meet that standard. Granting in part Petitioner BP Lubricants USA, Inc.’s request for mandamus, the Court ordered the district court to dismiss relator’s complaint with leave to amend.
Petitioner BP distributed products using a bottle design for which they had received a design patent. BP was alleged to have continued to mark its bottles with the patent numbers, even after its expiration in 2005, despite being a “sophisticated company” that had “experience applying for, obtaining, and litigating patents,” for the purpose of deceiving the public.
The purpose of the Rule 9(b) standard is to weed out frivolous claims. To survive dismissal, a plaintiff must show “some objective indication to reasonably infer that the defendant was aware that the patent expired.” If this awareness is established, the combination of actual misrepresentation and awareness of the falsity of the representation would be enough to infer the required “intent to deceive” element of the crime.
The Court found that relator’s argument that BP was a “sophisticated company” that “should have known” of the patent’s expiration was not enough to reasonably infer that BP had actual awareness. In addition, the mere fact that the mark on the bottles was false and misrepresentative was insufficient to show the Petitioner’s possessed intent to deceive, the relationship between factual falsity and state of mind not being strong enough.
Addressing the relator’s concerns that the anonymous nature of false marking meant that specific individuals could not always be named to show deceptive intent, the Court stated that there were other types of evidence from which deceptive intent can be reasonable inferred. For example, evidence that Petitioner had sued third parties for infringement after the expiration of the patent or had revised its markings after patent expiration would in the Court’s eyes be sufficient.
Lastly, the Court addressed its earlier ruling in Pequignot v. Solo Cup, 608 F.3d 1356, 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.” While the Pequignot presumption can be an important factor in meeting the Rule 9(b) pleading standard, the Court ruled that by itself it is not enough.
This case marks the first time the Federal Circuit has ruled conclusively on whether false marking is subject to the pleading standards of Rule 9(b). In determining that the heightened standard of Rule 9(b) is necessary, courts will now have an easier time dismissing false marking cases deemed to be frivolous.
Posted in: Patent Infringement