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Bentley A. Hollander v. B. Braun Medical

April 12, 2011

BENTLEY A. HOLLANDER
v.
B. BRAUN MEDICAL, INC.



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

The plaintiff, Bentley A. Hollander, filed this qui tam relator suit on behalf of the United States against defendant B. Braun Medical, Inc., for violations of the False Marking Statute, 35 U.S.C. § 292. The defendant filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). In his opposition to the motion, the plaintiff attached a proposed amended complaint.*fn1 The Court invited supplemental briefing on the Federal Circuit's recent decision, In re BP Lubricants USA Inc., 2011 U.S. App. LEXIS 5015 (Fed. Cir. Mar. 15, 2011), and held oral argument on April 8, 2011. For the following reasons, the Court will grant in part and deny in part the motion to dismiss the amended complaint.

I. Facts as Alleged in the Amended Complaint*fn2

Defendant B. Braun Medical, Inc. ("Braun") is a global healthcare products company, which specializes in the manufacture of intravenous (IV) therapy medications and solutions. Many of the defendant's IV solutions are distributed in sterile containers that bear the trade name "Excel." The defendant's product literature and labeling information identify "Excel" as a registered trademark of Braun, and refer to U.S. Patent No. 4,803,102 ("102 Patent"), which was issued on February 7, 1987, and which expired on October 27, 2007. The defendant has also marked certain products with U.S. Patent No. 4,491,589 ("589 Patent"), which was issued on January 1, 1985, and which expired on April 29, 2003. Am. Compl. ¶¶ 9, 19-22, 813-14.

As a highly sophisticated business entity, the defendant has extensive experience applying for, procuring, and publishing its patents. The defendant also employs patent attorneys who manage its intellectual property and monitor the expiration dates of its patents. The defendant actively litigates to protect its patent rights, and has prevailed in patent infringement suits in the past. As a consequence, the defendant knows when each of its patents expires. Am. Compl. ¶¶ 9, 13-14, 16-17.

Although the '589 and '102 Patents expired in 2003 and 2007, respectively, the defendant has continued to mark its products with the expired patents. The defendant has also updated its product packaging since the patents in question expired, and in some instances, since the present suit was filed, but has failed to remove the expired patent numbers from the packaging. Am. Compl. ¶¶ 26-28

The defendant specifically knew the expiration dates of the '102 and '589 Patents because it was not the assignee of those patents. Instead, the defendant paid licensing fees for the use of the patents and accordingly monitored their expiration dates. The defendant has also cited to the '102 Patent in several of its own patents filed with the United States Patent and Trademark Office ("USPTO"), including one patent that was filed after the '102 Patent had expired. As a consequence, the defendant was familiar with the '102 Patent's expiration date. Am. Compl. ¶¶ 22-25.

The plaintiff asserts eighty-five counts against the defendant based on its alleged false marking of the '102 and '589 Patents. Only two of the counts, LXXII and LXXIII, relate to the '589 Patent, and the remaining eighty-three counts assert false marking of the '102 Patent. Each of the counts is substantively identical, although the allegations relating to the defendant's product packaging updates vary in detail between the counts.

II. Analysis

A. Applicable Law

The False Marking Statute, 35 U.S.C. § 292, prohibits the false marking of a product with a patent "for the purpose of deceiving the public." To state a claim for false marking under § 292, a plaintiff must establish (1) the marking of an unpatented article; (2) with the intent to deceive the public. Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295, 1300 (Fed. Cir. 2009).

Neither party disputes the first element - the marking of an unpatented article.*fn3 Instead, the parties disagree over whether the requisite "intent to deceive" is present. An inference of intent to deceive can be drawn where a plaintiff shows "the fact of misrepresentation coupled with proof that the party making it had knowledge of its falsity." Clontech Labs, Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352-53 (Fed. Cir. 2005). The combination of a false statement and knowledge that the statement was false creates a rebuttable presumption of intent to deceive. Pequignot v. Solo Cup Co., 608 F.3d 1356, 1362-63 (Fed. Cir. 2010).

In a recent decision, the Court of Appeals for the Federal Circuit held that the heightened pleading standard set forth in Federal Rule of Civil Procedure 9(b) applies to false marking claims. In re BP Lubricants USA Inc., 2011 U.S. App. LEXIS 5015 (Fed. Cir. March 15, 2011). To establish intent to deceive under § 292, a plaintiff must plead facts supporting an inference of a "purpose of deceit, rather than simply knowledge that a statement is false." Id. at *10 (citations omitted). These facts must be pled with particularity, which means that a plaintiff must allege "the specific who, what, when, where, and how" of the alleged fraud. See id. at *4 (citing Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed. Cir. 2009)). In BP Lubricants, the Federal Circuit rejected as conclusory the plaintiff's allegations that the defendant was a "sophisticated company and ha[d] experience applying for, obtaining, and litigating patents." Id. at *10. The Court noted that this "bare assertion" provided "no more of a basis to reasonably distinguish a viable complaint than merely asserting the defendant should have known the patent expired." Id.

The Federal Circuit also outlined examples of allegations that might permit a court to draw an inference of intent to deceive. For instance, a plaintiff can "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." Id. at *12.

B. Whether the Plaintiff has Pled Intent to Deceive The defendant argues that the plaintiff has failed to plead with particularity as required by Rule 9(b). According to the defendant, the amended complaint contains the same sort of allegations relating to the defendant's "sophistication" that the Federal Circuit rejected as conclusory in BP Lubricants. In opposition, the plaintiff argues that allegations of multiple product packaging updates, some of which occurred after the defendant was put on notice of its expired patents ...


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