Pequignot v. Solo Cup (Fed. Cir. 2010)
Over the past year, hundreds of companies have been sued for false patent marking. The qui-tam style statute creates a cause of action against manufacturer who, with intent to deceive the public, mark unpatented products as patented. Any person may sue to collect the damages, however, half of the award goes to the Federal Government. Damage awards may be awarded up to $500 per falsely marked article.
35 USC 292(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 the same is patented, for the purpose of deceiving the public; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article the words "patent applied for," "patent pending," or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public - Shall be fined not more than $500 for every such offense.
Most of the pending false-marking cases have a similar factual underpinning: The product being sold is marked was covered by a patent, and the manufacturer continued to mark the products as patented even with knowledge that the patents had expired. Solo cup made two separate arguments as to why these facts are insufficient to prove false marking: (1) that a product covered by an expired patent is not "unpatented" as required by the statute; and (2) that the fact of patent expiration is insufficient to show an intent to deceive the public.
Unpatented Article: Without question, a patented article is "unpatented" once the associated patents expire.
As the district court pointed out, “[a]n article that was once protected by a now-expired patent is no different [from] an article that has never received protection from a patent. Both are in the public domain.”
The court recognized that expiry dates are often difficult to calculate:
[D]etermining the expiration date of a patent can, at times, be difficult. The date of the patent grant is shown on the first page of a patent, but its term currently also depends on the date it was filed; in 1994, the effective term of a patent changed from seventeen years commencing at issuance to twenty years from filing. Furthermore, the term depends on whether there are patent term adjustments and whether the patent owner has paid maintenance fees. Thus, as with a never-patented article, an article marked with an expired patent number imposes on the public “the cost of determining whether the involved patents are valid and enforceable.”
Solo’s products that were once covered by now-expired patents are therefore “unpatented” within the meaning of the statute.
Rebuttable Presumption of Intent to Deceive: On appeal, the Federal Circuit held that a rebuttable presumption of intent to deceive is created when a manufacturer prints expired patent numbers on its products with knowledge that the patents are expired. However, this level of evidence leaves only a "weak" the presumption of intent that can be easily rebutted.
Here, the Federal Circuit agreed that Solo Cup did indeed rebut the presumption by providing "credible evidence that its purpose was not to deceive the public." In particular, the court held that rebuttal evidence was provided by Solo Cup's "good faith reliance on the advice of counsel" (who said that Solo need-not remove the expired patent listing) and "out of a desire to reduce costs and business disruption.”
Holding: No violation.
This decision will put a damper on the false-marking claims. However, some defendants may not have the same advice-of-counsel excuse.