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Bentley A. Hollander v. Ortho-Mcneil-Janssen Pharmaceuticals

April 4, 2011

BENTLEY A. HOLLANDER,
PLAINTIFF,
v.
ORTHO-MCNEIL-JANSSEN PHARMACEUTICALS, INC. DEFENDANT.



The opinion of the court was delivered by: Buckwalter, S. J.

MEMORANDUM

Presently before the Court is the Motion of Defendant Ortho-McNeil-Janssen Pharmaceuticals, Inc. ("Ortho") to Dismiss the Amended Complaint of Plaintiff Bentley A. Hollander pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court denies the Motion to Dismiss.

I. FACTUAL AND PROCEDURAL BACKGROUND

On March 1, 2010, Plaintiff/Relator Bentley A. Hollander, a resident of Philadelphia, Pennsylvania, commenced this qui tam action on behalf of the United States against Defendant Ortho, a pharmaceutical company headquartered in New Jersey, for violations of the federal false marking statute, 35 U.S.C. § 292(a). According to the facts set forth in the Amended Complaint, Defendant Ortho is a sophisticated global healthcare products business with annual sales of hundreds of millions of dollars. (Am. Compl. ¶¶ 9, 11.) The company manufactures and sells products throughout the United States and "claims to own or have licenses under a substantial number of patents issued and pending." (Id. ¶¶ 10, 13.)

Plaintiff alleges that Defendant Ortho has injured the sovereign interests of the United States and discouraged competition by "repeatedly and knowingly" marking units of its prescription drug products with expired patents.*fn1 (Id. ¶ 2.) Plaintiff further asserts that Defendant has engaged in such false marking with "the purpose of deceiving the public into believing that the products were covered by valid patents when, in fact, such patents had expired." (Id.) Based on these allegations, Plaintiff brings forty-one counts of false marking against Defendant (id. ¶¶ 105-350) and seeks up to a $500 fine per violation, one half of which is to be paid to the United States pursuant 25 U.S.C. § 292(b). (Id. at Prayer for Relief.)

On May 18, 2010, Defendant moved to stay the case pending resolution of two cases in the Federal Circuit, or in the alternative, to dismiss based on Plaintiff's insufficient standing and failure to state a claim. On October 21, 2010, this Court denied the Motion to Stay and granted the Motion to Dismiss without prejudice, finding that Plaintiff had standing to bring the claim but had failed to state a claim upon which relief could be granted. Hollander v. Ortho-McNeil-Janssen Pharms., Inc., No. CIV.A.10-00836, 2010 WL 4159256 (E.D. Pa. Oct. 21, 2010).

Plaintiff filed an Amended Complaint on November 22, 2010. On December 9, 2010, Defendant moved to dismiss the Amended Complaint for failure to state a claim. Plaintiff filed a Response in Opposition on December 30, 2010, and Defendant filed a Reply on January 10, 2011. Plaintiff filed a Sur-Reply on January 18, 2011, and Defendant filed a Notice of Supplemental Authority on March 21, 2011. The Court now considers Defendant's Motion.

II. DISCUSSION

To state a false marking claim under § 292, a plaintiff must show "(1) a marking importing that the article is patented (2) falsely affixed to (3) an unpatented article (4) with the intent to deceive the public." Brinkmeier v. Graco Children's Prods., 684 F. Supp. 2d 548, 551 (D. Del. 2010) (citing Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005); Juniper Networks v. Shipley, No. CIV.A.09-0696, 2009 WL 1381873, at *3 (N.D. Cal. May 14, 2009)). Plaintiff avers that Defendant has intentionally marked the aforementioned prescription drug products with patent numbers Defendant knew to be expired. He further alleges that Defendant has done so "for the purpose of deceiving the public in order to achieve commercial gain, to enable false advertising, to quell competition, and to deceive generic drug manufacturers into thinking that the drug continues to be covered by a patent in order to decrease competition." (Am. Compl. ¶ 8.) Defendant moves to dismiss the Amended Complaint for failure to sufficiently allege the deceptive intent element of § 292.

A. Standard of Review

Under Rule 12(b)(6), a defendant bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6); see alsoHedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). Federal Rule of Civil Procedure 8 does not call for detailed factual allegations; rather, it requires a short and plain statement of the claim showing that the pleader is entitled to relief. FED. R. CIV. P. 8; Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008). Further, the court must "accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff." Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006).

The Supreme Court has made clear, however, that "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Instead, the plaintiff must offer "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. To do so, the plaintiff must show "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556-57); see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (adopting Iqbal's standards).

In the recent case of In re BP Lubricants USA Inc., No. CIV.A.960, 2011 WL 873147 (Fed. Cir. Mar. 15, 2011), the Federal Circuit ruled that § 292's required showing of deceptive intent invokes the heightened pleading requirements of Federal Rule of Civil Procedure 9(b). Id.; accord Hollander v. Etymotic Research, Inc., 726 F. Supp. 2d 543, 551 (E.D. Pa. July 14, 2010); Brinkmeier v. BIC Corp., 733 F. Supp. 2d 552, 563 (D. Del. 2010). "Rule 9(b) may be satisfied by describing the circumstances of the alleged fraud with precise allegations of date, time, or place, or by using some means of injecting precision and some measure of substantiation into the allegations of fraud." Hollander v. Ranbaxy Labs. Inc., No. CIV.A.10-793, 2011 WL 248449, at *3 (E.D. Pa. Jan. 24, 2011) (citing Bd. of Trs. of Teamsters Local 863 Pension Fund v. Foodtown, Inc., 296 F.3d 164, 172 n.10 (3d Cir. 2002)). "Stated another way, the plaintiff must plead the who, what, when, where, and how of the fraud." Id. (citing Institutional Investors Grp. v. Avava, Inc., 564 F.3d 242, 253 (3d Cir. 2009); Bonavitacola Elec. Constr. v. Boro Developers, Inc., No. CIV.A.01-5508, 2003 WL 329145, at *6 (E.D. Pa. Feb. 12, 2003)).

In the context of false marking claims, courts have noted that "a relaxed Rule 9(b) standard may apply when 'essential information lies uniquely within another party's control.'" BIC, 733 F. Supp. 2d at 559 (quoting Exergen v. Wal-mart Stores, Inc., 575 F.3d 1312, 1330-31 (Fed. Cir. 2009); In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1418 (3d Cir. 1997)). As a result, "a plaintiff may plead based upon information and belief, 'but only if the pleading sets forth specific facts upon which the belief is reasonably based.'" Id. "[B]oilerplate and conclusory allegations will not suffice." BIC, 733 F. Supp. ...


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