Abraxis Bioscience, Inc. v. Navinta LLC, No. 09-1539 (Fed. Cir. Mar. 14, 2011) (en banc order)

Procedurally, there’s nothing to see here—the Federal Circuit simply denied petitions for rehearing by the panel and en banc.  The denial, however, is accompanied by an energetic dissent by the court’s newest member, Judge O’Malley, joined by Judge Newman (who dissented from the original panel decision).  The original panel held that the plaintiff lacked standing to sue because its attempted purchase of the patents-at-issue was ineffective until after its patent suit had been filed.  Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359 (Fed. Cir. 2010).  The Abraxis majority created a fairly formalistic rule for patent assignments, essentially requiring the entire transfer to be completed in every detail prior to bringing suit.  Judge O’Malley criticized the panel’s opinion as ignoring New York state law, which governed the contract, and instead creating a new federal common law of contracts for patents.  Judge O’Malley wrote that the panel majority had effectively preempted state contract law but without any of the indicators of a Congressional intent to preempt.  Judge Gajarsa (the author of the Abraxis opinion), joined by the other member of the original panel, Judge Linn, as well as Judge Dyk, wrote a short concurrence defending the panel’s majority opinion.

Read the original panel opinions here, and the order denying the petition for rehearing en banc and the concurring and dissenting opinions here.

In re BP Lubricants USA Inc., No. 10-m960 (Fed. Cir. Mar. 15, 2011) (Judges Linn, Lourie, and Gajarsa) (order granting petition for writ of mandamus)

This case presents an unusual procedural posture but the holding is likely to leave a mark.  First, the punch line: the Federal Circuit held for the first time that false marking must be pled with particularity under Rule 9(b) of the Federal Rules of Civil Procedure, again raising the bar for qui tam false marking plaintiffs.

This case was filed as a petition for a writ of mandamus directing the district court to grant a motion to dismiss a false marking complaint.  As is typical in these qui tam false marking actions, BP Lubricants was accused of continuing to mark its Castrol motor oil bottles with the numbers of expired patents.  Judge Linn, revisiting his opinion in Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009), wrote for the Court.  The court essentially extended the heightened pleading standard for inequitable conduct from Exergen to the false marking context.  The panel agreed with BP Lubricants that it is not sufficient to merely plead knowledge of the marking and knowledge of the falsity of the marking generally.  Rather, the plaintiff must “provide some objective indication to reasonably infer that the defendant was aware that the patent expired.”  Slip op. at 7.  Furthermore, the false marking plaintiff must plead facts from which deceptive intent to falsely mark can be inferred.

The court directed the district court to dismiss the case, with leave to amend the complaint in a manner that complies with the court’s newly-articulated pleading standard for false marking claims.

Author’s note:  I’ve been on the other side of a case with Russ Levine (of Kirkland & Ellis), the counsel for the petitioner here, and found him to be a worthy opponent.  Whatever one thinks of the case on the merits, it was a gutsy move to petition for mandamus, and my hat’s off to Russ for trying it.  Well done!

Read the order granting the petition (in part) here.

Old Reliable Wholesale, Inc. v. Cornell Corp., No. 2010-1247 (Fed. Cir. Mar. 16, 2011) (Judges Mayer, Newman, and Bryson)

This is an appeal of an award of attorneys’ fees.  Old Reliable had sued Cornell for infringing its patent on insulated roof board.  At the district court, the patent-in-suit was held invalid over an earlier Cornell product, and the Federal Circuit affirmed the invalidity ruling.  Cornell requested that the case be declared exceptional and that it be awarded attorneys’ fees.  The district court granted nearly $200,000 in attorneys’ fees and costs.

The key event for the district court was the deposition of the inventor, in which he admitted that the patent and an earlier Cornell product did “the same thing.”  The district court found that Old Reliable should have known at that point that it had no case.

Interestingly, about six months after the Federal Circuit’s decision affirming the invalidity determination of the patent-in-suit, the PTO issued a notice of intent to issue an ex parte reexamination certificate confirming the patentability of all claims.  That reexamination included the prior art products that were asserted as prior art in the district court.  The PTO withdrew the notice two weeks later, perhaps after receiving notice of the invalidity ruling by the Federal Circuit.

The Federal Circuit, in a Judge Mayer opinion, found it important that the PTO had agreed with Old Reliable’s patentability position during the reexamination proceedings.  The court examined Old Reliable’s arguments to the district court, and found that they were not objectively meritless or frivolous, even if they didn’t win in the end.  As a result, the court reversed and vacated the award of attorneys’ fees.

Read the original opinion here.