United States Court of Appeals
for the Federal Circuit
__________________________
IN RE BP LUBRICANTS USA INC.,
Petitioner.
__________________________
Miscellaneous Docket No. 960
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On Petition for Writ of Mandamus to the United
States District Court for the Northern District of Illinois
in case no. 10-CV-1258, Judge Robert W. Gettleman.
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ON PETITION
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RUSSELL E. LEVINE, Kirkland & Ellis LLP, of Chicago,
Illinois, for petitioner.
JOSEPH M. VANEK, Vanek Vickers & Masini, P.C. of
Chicago, Illinois, for respondent Thomas A. Simonian.
With him on the response was JOHN P. BJORK. Of counsel
on the response were BRUCE S. SPERLING and ROBERT D.
CHEIFETZ, Sperling & Slater, P.C., of Chicago, Illinois.
Herbert C. Wamsley, Intellectual Property Owners
Association, of Washington, DC, for amicus curiae
Intellectual Property Owners Association. On the brief
were DOUGLAS K. NORMAN, Eli Lilly & Company, of
Indianapolis, Indiana, and KEVIN H. RHODES, 3M
Innovative Properties Company, of St. Paul, Minnesota.
IN RE BP LUBRICANTS 2
STEVEN FRANK, Attorney, Appellate Staff, Civil
Division, United States Department of Justice, of
Washington, DC, for amicus curiae United States. On
the brief was TONY WEST, Assistant Attorney General.
__________________________
Before LOURIE, GAJARSA, and LINN, Circuit Judges.
LINN, Circuit Judge.
ORDER
This is a petition for a writ of mandamus directing the
United States District Court for the Northern District of
Illinois to grant a motion to dismiss a complaint pursuant
to the False Marking Statute, 35 U.S.C. § 292.
Specifically, the defendant BP Lubricants USA Inc.
argues that the complaint failed to plead with
particularity the circumstances of the defendant’s alleged
intent to deceive the public in falsely marking unpatented
articles with an expired patent. The defendant’s motion,
based on this court’s Fed. R. Civ. P. 9(b) standard in
Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312,
1327 (Fed. Cir. 2009), urged that the relator’s complaint
failed to allege any underlying facts upon which a court
could reasonably infer that BP knew its patent had
expired when it was marking its products.
This court holds that Rule 9(b)’s particularity
requirement applies to false marking claims and that a
complaint alleging false marking is insufficient when it
only asserts conclusory allegations that a defendant is a
“sophisticated company” and “knew or should have
known” that the patent expired. The petition is granted
in part.
I.
3 IN RE BP LUBRICANTS
The petitioner, BP Lubricants USA Inc.,
manufactures motor oil products under the well-known
brand name CASTROL. BP’s CASTROL products are
distributed in a unique bottle design for which BP
received a design patent.
The respondent, Thomas A. Simonian, a patent
attorney, filed this qui tam relator complaint on behalf of
the United States pursuant to 35 U.S.C. § 292. Section
292 provides in relevant part:
(a) . . . . 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 that the same is
patented for the purpose of deceiving the
public . . . [s]hall 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(a)-(b).
According to the relator’s complaint, the patent
expired on February 12, 2005, and BP continued to mark
its bottles with the patent numbers after the patent
expired. The complaint also asserts mostly “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.
IN RE BP LUBRICANTS 4
The district court concluded that the complaint stated
an actionable claim and met the requirements of Fed. R.
Civ. P. 9(b), which provides:
In alleging fraud or mistake, a party must
state with particularity the circumstances
constituting fraud or mistake. Malice, in-
tent, knowledge, and other conditions of a
person’s mind may be alleged generally.
Relying on Exergen Corp. v. Wal-Mart Stores, Inc., 575
F.3d 1312, 1327 (Fed. Cir. 2009) in which this court held
that Rule 9(b) requires a plaintiff to plead in detail “the
specific who, what, when, where, and how” of the alleged
fraud, the district court held that the complaint set forth
the circumstances constituting the intent to deceive with
particularity. The court explained that in addition to
alleging that BP knew or should have known the patent
expired, it was enough under Rule 9(b) for the 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
continues to falsely mark its products (the “when”)
throughout the Northern District of Illinois and the rest of
the United States (the “where”) with the intent to deceive
its competitors and the public.
II.
A.
Because an order denying a motion to dismiss for
failure to comply with Rule 9(b) is not a final decision
within the meaning of 28 U.S.C. § 1291, BP cannot appeal
until final judgment has been entered. However, non-
appealable orders can be challenged by petitioning the
court of appeals for a writ of mandamus, as requested
5 IN RE BP LUBRICANTS
here. This court is authorized to issue a writ of
mandamus under the All Writs Act, 28 U.S.C. § 1651(a)
as “necessary or appropriate in aid of” our jurisdiction.
Mississippi Chem. Corp. v. Swift Agr. Chem., 717 F.2d
1374, 1379 (Fed. Cir. 1983). A writ of mandamus may be
employed in exceptional circumstances to correct a “clear
abuse of discretion or ‘usurpation of judicial power’” by
the trial court. Bankers Life & Cas. Co. v. Holland, 346
U.S. 379, 382 (1953).
B.
Before reaching the merits of BP’s argument that the
complaint was insufficiently pled, we must first address a
predicate question, one of first impression for this court:
whether or not Fed. R. Civ. P. Rule 9(b)’s particularity
requirement applies to false marking claims under § 292.
In all cases sounding in fraud or mistake, Rule 9(b)
requires a plaintiff to plead “with particularity the
circumstances constituting fraud or mistake.” Fed. R.
Civ. P. 9(b). The Rule acts as a safety valve to assure that
only viable claims alleging fraud or mistake are allowed
to proceed to discovery. By eliminating insufficient
pleadings at the initial stage of litigation, Rule 9(b)
prevents relators using discovery as a fishing expedition.
See Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 598
(8th Cir. 2009).
In an analogous area of the law, namely, the False
Claims Act, every regional circuit has held that a relator
must meet the requirements of Rule 9(b) when bringing
complaints on behalf of the government. * The Seventh
* See United States ex rel. Karvelas v. Melrose-
Wakefield Hosp., 360 F.3d 220, 227 (1st Cir. 2004)
(holding that Rule 9(b) applies to False Claims actions);
Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 562-63 (6th
Cir. 2003) (same); United States ex rel. Garst v. Lockheed-
IN RE BP LUBRICANTS 6
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.” Garst, 328 F.3d at 376 (7th Cir. 2003).
We see no sound reason to treat § 292 actions any
differently. Like the False Claims Act, § 292 condemns
fraudulent or false marking. Rule 9(b)’s gatekeeping
function is also necessary to assure that only viable § 292
claims reach discovery and adjudication. Permitting a
false marking complaint to proceed without meeting the
particularity requirement of Rule 9(b) would sanction
discovery and adjudication for claims that do little more
than speculate that the defendant engaged in more than
negligent action.
C.
In Exergen, this court held that a pleading that simply
avers the substantive elements of a claim sounding in
fraud or mistake, without setting forth the particularized
factual bases for the allegations, does not satisfy Rule
9(b). See Exergen, 575 F.3d at 1326-27. We further held
that although “knowledge” and “intent” may be averred
Martin Corp., 328 F.3d 374, 376 (7th Cir. 2003) (same);
United States ex rel. Clausen v. Lab Corp. of Am. Inc., 290
F.3d 1301, 1309-10 (11th Cir. 2002) (same); United States
ex. rel. Totten v. Bombardier Corp., 286 F.3d 542, 551-52
(D.C. Cir. 2002) (same); Bly-Magee v. California, 236 F.3d
1014, 1018 (9th Cir. 2001) (same); United States ex rel.
Russell v. Westinghouse Savannah River Co., 176 F.3d
776, 783-84 (4th Cir. 1999) (same); United States ex rel.
LaCorte v. SmithKline Beecham Clincal Labs., Inc., 149
F.3d 227, 234 (3d Cir. 1998) (same); United States ex rel.
Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d
899, 903 (5th Cir. 1997) (same); Gold v. Morrison-
Knudsen Corp., 68 F.3d 1475, 1476 (2d Cir. 1995) (same).
7 IN RE BP LUBRICANTS
generally and that a plaintiff may plead upon information
and belief under Rule 9(b),
our precedent, like that of several regional
circuits, requires that the pleadings allege
sufficient underlying facts from which a
court may reasonably infer that a party
acted with the requisite state of mind.
Id. at 1327. Exergen’s pleading requirements apply to all
claims under Rule 9(b), not just inequitable conduct cases.
In denying BP’s motion to dismiss, which was based
on Exergen, the district court here did not find relevant
that the complaint failed to allege any facts inferring that
BP was aware of the patent’s expiration. To the contrary,
the district court expressly relied on the relator’s general
allegation that BP knew or should have known that the
patent expired.
This is clearly incorrect. A plaintiff is not empowered
under the Rules “to plead the bare elements of his cause
of action, affix the label ‘general allegation,’ and expect
his complaint to survive a motion to dismiss.” Ashcroft v.
Iqbal, 129 S. Ct. 1937, 1954 (2009). Instead, a complaint
must in the § 292 context provide some objective
indication to reasonably infer that the defendant was
aware that the patent expired. As we 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).
IN RE BP LUBRICANTS 8
Greenstone v. Cambex Corp., 975 F.2d 22 (1st Cir.
1992) (Breyer, C.J.), a case this court relied upon in
Exergen, rejected similar generalized allegations. In
Greenstone, the plaintiff filed a complaint under the
federal securities laws asserting that the defendant
should have disclosed its leasing activities that gave rise
to a threat of a lawsuit, which the defendant later turned
out to lose. The plaintiff’s complaint included a general
averment that the defendant “knew” about certain
contractual prohibitions. Id. at 25. The court held that
these averments were insufficient under Rule 9(b), noting
“one cannot avoid the [particularity] requirement simply
through a general averment that defendants ‘knew’
earlier what later turned out badly.” Id.
Because the relator’s complaint here provided only
generalized allegations rather than specific underlying
facts from which we can reasonably infer the requisite
intent, the complaint failed to meet the requirements of
Rule 9(b).
D.
The relator asserts he met Exergen’s requirements or
asserts that Exergen is distinguishable. This court has
carefully considered these arguments, but finds them
unpersuasive.
First, relator contends that asserting in the complaint
that BP is a “sophisticated company and has experience
applying for, obtaining, and litigating patents” is enough
under Rule 9(b). This court disagrees. That bare
assertion provides no more of a basis to reasonably
distinguish a viable complaint than merely asserting the
defendant should have known the patent expired.
Conclusory allegations such as this are not entitled to an
assumption of truth at any stage in litigation. Ashcroft,
129 S. Ct. at 1952.
9 IN RE BP LUBRICANTS
Second, relator contends that a false marking
inherently shows scienter. This argument is also
unpersuasive. In Merck & Co., v. Reynolds, 130 S. Ct.
1784, 1793 (2010), the Supreme Court stated “[w]e
recognize that certain statements are such that, to show
them false, is normally to show scienter.” The Court gave
as an example one claiming “I am not married” when in
fact the person is married. Id. However, in other
contexts where the relationship between factual falsity
and state of mind is not nearly as apparent, Merck
rejected this proposition. Id. This situation clearly falls
into the latter category, requiring more than a mere
statement.
Third, relator contends that unlike the inequitable
conduct claim featured in Exergen, false marking is
“anonymous” and is not an individualized fraud. He
argues that it was not unreasonable for the district court
to allow the relator to plausibly demonstrate entitlement
to relief without identifying actual individuals who knew
the patent expired. It does not, however, follow that
Exergen’s general pleading requirements are inapplicable.
Instead, the requirements must be applied in a fashion
that relates to false marking claims. Overlooked by the
relator is that the naming of specific individuals is not the
only way to set forth facts upon which intent to deceive
can be reasonably inferred. In an amicus brief, the
United States points out that a relator can, for example,
allege that the defendant sued a third party for
infringement of the patent after the patent expired or
made multiple revisions of the marking after expiration.
None of these or similar assertions are present in the
complaint here.
Finally, relator also emphasizes that scienter in false
marking, unlike in securities fraud and inequitable
conduct, is determined through the use of a rebuttable
presumption. As the relator points out, this court in
IN RE BP LUBRICANTS 10
Pequignot v. Solo Cup Co., 608 F.3d 1356, 1362-63 (Fed.
Cir. 2010) 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.” This court
agrees that the Pequignot presumption informs the
determination of whether a false marking plaintiff has
met Rule 9(b). However, as we noted in Pequignot, “[t]he
bar for proving deceptive intent [in false marking cases] is
particularly high,” requiring that relator show “a purpose
of deceit, rather than simply knowledge that a statement
is false.” Id. at 1363. That relator pled the facts
necessary to activate the Pequignot presumption is simply
a factor in determining whether Rule 9(b) is satisfied; it
does not, standing alone, satisfy Rule 9(b)’s particularity
requirement.
III.
The only remaining question is whether the
circumstances of this case warrant this court’s issuance of
a writ of mandamus.
As noted above, this court is authorized to issue a writ
of mandamus in exceptional circumstances to correct a
“clear abuse of discretion or ‘usurpation of judicial power’”
by the trial court. Bankers Life, 346 U.S. at 382. Not all
circumstances in which a defendant will be forced to
undergo the cost of discovery and trial warrant
mandamus. To issue a writ solely for those reasons would
clearly undermine the rare nature of its form of relief and
make a large class of interlocutory orders routinely
reviewable. See Bankers Life & Cas. Co. v. Holland, 346
U.S. 379, 383 (1953) (“[I]t is established that the
extraordinary writs cannot be used as substitutes for
appeals . . . even though hardship may result from delay
and perhaps unnecessary trial.”).
11 IN RE BP LUBRICANTS
Considerations presented in this case, however,
warrant the extraordinary remedy of mandamus. Until
today, this court has not decided whether Rule 9(b)
applies to false marking cases or discussed the requisite
level of pleading required. In Schlahenhaulf v. Holder,
379 U.S. 104 (1964), the Supreme Court approved the use
of mandamus to decide a “basic and undecided” question
when the trial court similarly abused its authority in
applying the Rules. In addition, trial courts have been in
considerable disagreement on this issue, resulting in
inconsistent results across the country. Thus, deciding
this matter now presents an issue important to “proper
judicial administration[.]” LaBuy v. Howes Leather Co.,
352 U.S. 249, 259-260 (1957). The presence of these
exceptional circumstances warrants deciding this issue
before final judgment.
This court is mindful that district courts are
admonished to “freely give leave [to amend the pleadings]
when justice so requires,” Fed. R. Civ. P. 15(a)(2), and
that “[o]rdinarily, complaints dismissed under Rule 9(b)
are dismissed with leave to amend.” In re Burlington
Coat Factory Sec. Litigation, 114 F.3d 1410, 1435 (3d Cir.
1997) (Alito, J.). It is particularly appropriate to allow
leave to amend in this case because, as noted above, this
court has not previously opined on the applicability of
Rule 9(b) to false marking claims.
For the foregoing reasons, this court grants the
petition for writ of mandamus in part and directs the
district court to dismiss the complaint with leave to
amend in accordance with the pleading requirements set
forth herein.
Accordingly,
IT IS ORDERED THAT:
The petition for a writ of mandamus is granted in
part.
IN RE BP LUBRICANTS 12
FOR THE COURT
March 15, 2011 /s/ Jan Horbaly
Date Jan Horbaly
Clerk