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Bentley A. Hollander v. Hospira

May 12, 2011

BENTLEY A. HOLLANDER, PLAINTIFF,
v.
HOSPIRA, INC. DEFENDANT.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff Bentley Hollander ("Hollander") filed suit against Hospira, Inc. ("Hospira") in a qui tam action on behalf of the public for false patent marking under 35 U.S.C. § 292(a). Specifically, Hollander alleges in his Amended Complaint that Hospira marked millions of medical products with seven expired and unenforceable patents and used these expired and unenforceable patents in its advertising. Hospira moves to dismiss for failure to adequately plead intent to deceive the public. For the following reasons, the Court grants Hospira's Motion to Dismiss and dismisses Hollander's Amended Complaint without prejudice.

STATEMENT OF FACTS

The following facts are taken from Hollander's Amended Complaint and are assumed to be true for purposes of this Motion to Dismiss. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995).

Hollander is an individual residing in Philadelphia, Pennsylvania. (Amd. Compl. ¶ 4.) Hospira is a Delaware corporation with its principal place of business in Lake Forest, Illinois that was incorporated as a wholly-owned subsidiary of Abbott Laboratories ("Abbott") in 2004. (Id. ¶¶ 5, 9-10.) Hospira develops, manufactures, and markets hospital products, pharmaceuticals, and medical delivery devices and had net global sales of $3.9 billion in 2009. (Id. ¶¶ 11-12, 16.)

Hospira "knows, and reasonably should know" that patents confer certain benefits until their expiration, and that any assertion of patent protection after a patent's expiration is false and misleading. (Id. ¶¶ 25-26.) Hospira also "regularly review[s] and audit[s] its own lines of products to determine whether or not they are covered and protected by valid patents." (Id. ¶ 31.) Pursuant to its spin-off from Abbott, Hospira was assigned all assets and liabilities from Abbott's hospital products business including patents 4,344,472 ("the '472 Patent"); 4,368,765 ("the '765 Patent"); 4,614,267 ("the '267 Patent"); 4,614,515 ("the '515 Patent"); and 4,757,911 ("the '911 Patent"). (Id. ¶ 23.) Hospira marks millions of products with one or more of these patents. (Id. ¶ 24.) In the course of its regular reviews, Hospira learned that the '472 Patent expired on August 17, 2001; the '765 Patent expired on December 12, 2000; the '267 Patent expired on December 23, 2003; the '515 Patent expired on November 21, 2005; and the '911 Patent expired on December 9, 2005. (Id. ¶ 39.) In short, the '472, '765, and '267 Patents expired before Hospira was incorporated and the '515 and '911 Patents expired soon after. (Id. ¶¶ 40-41.)

Since 2005, Hospira has represented through annual filings to the SEC and its investors that most of its products "are not protected by patents or other proprietary rights" and that it "seeks to launch generic pharmaceutical products either where patent protection of equivalent branded products has expired, where patents have been declared invalid or where products do not infringe the patents of others."*fn1 (Id. ¶¶ 32-35.)

Nonetheless, Hospira marketed 55 distinct articles-the products themselves or their package inserts-with the '472 Patent through July and August of 2008, at which point it discontinued this marking on 4 articles; Hospira continues to market 51 articles with the '472 Patent. (Id. ¶¶ 45-52.) Hollander alleges, upon information and belief, that Hospira continues to use the '472 Patent in its advertising. (Id. ¶ 56.) Similarly, Hospira marketed 40 distinct articles-the products themselves or their package inserts-with the '765 Patent through March 2007, at which point it discontinued this marking on 9 articles; Hospira continues to market 31 articles with the '765 Patent. (Id. ¶¶ 59-65.) Hollander alleges, upon information and belief, that Hospira continues to use the '765 Patent in its advertising. (Id. ¶ 67.) Hospira continues to market 7 distinct articles with the '267 Patent, 7 distinct articles with the '515 Patent, and 6 distinct articles with the '911 Patent; upon information and belief, Hospira also uses these patents in its advertising. (Id. ¶¶ 70-76, 79-87, 90-98.)

Since at least 2005, Hospira has manufactured Demerol, Lorazepam, and Metoprolol Tartrate, each of which is part of a product line that comprises several articles. (Id. ¶¶ 100-03.) Demerol, Lorazepam, and Metoprolol Tartrate are marked-directly or on their package inserts-with patents 5,158,554 ("the '554 Patent"), 5,171,234 ("the '234 Patent"), and 5,188,620 ("the '620 Patent"). The '234 Patent was declared unenforceable by the Federal circuit in 1998; the '554 Patent expired on October 27, 2004 and the '620 Patent expired on April 19, 2005, both for failure to pay maintenance fees. (Id. ¶¶ 106-08.) Hospira knew these patents were invalid yet it continued to mark these patents on the package inserts for Demerol, Lorazepam, and Metoprolol Tartrate and to use the patents in its advertising. (Id. ¶¶ 115-18.)

STANDARD OF REVIEW

When considering a motion to dismiss under Rule 12(b)(6), the Court accepts as true all facts alleged in the complaint and construes all reasonable inferences in favor of the plaintiff. See Murphy, 51 F.3d at 717. To state a claim upon which relief can be granted, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "Detailed factual allegations" are not required, but the plaintiff must allege facts that, when "accepted as true . . . 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In analyzing whether a complaint has met this standard, the "reviewing court [must] draw on its judicial experience and common sense." Iqbal, 129 S. Ct. at 1950. When there are well-pleaded factual allegations, the Court assumes their veracity and then determines if they plausibly give rise to an entitlement to relief. Id. A claim has facial plausibility when the pleaded factual content allows the Court to draw a reasonable inference that the defendant is liable for the misconduct alleged. See id. at 1949.

Rule 9(b) elevates the pleading requirements for allegations of fraud: "In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed. R. Civ. P. 9(b). A plaintiff meets the "particularity" standard if his Complaint points out the "who, what, when, where, and how" of the alleged fraudulent activity. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990). Fraud allegations based on "information and belief" are generally unable to satisfy the "particularity" standard, Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677, 684 (7th Cir. 1992), though "information and belief" allegations can satisfy the particularity requirement of Rule 9(b) "so long as (1) the facts constituting the fraud are not accessible to the plaintiff and (2) the plaintiff provides 'the grounds for his suspicions.'" Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 443 (7th Cir. 2011).

DISCUSSION

I. 35 U.S.C. ...


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