Federal Circuit Reemphasizes the Need to Find Intent to Deceive In False Marking Actions

In Matthew A. Pequignot v. Solo Cup Company, No. 07-CV-0897 (Fed. Cir. June 10, 2010), Solo Cup Company (Solo) manufactures various dinnerware and beverage items, including a plastic drink cup lid which was issued two patents in 1976.  While the patent was active, the company mass-produced the plastic lids from molds in the shape of the lids, which included the patent number.

Once the patents expired, the company continued to produce the lids from the molds with the patent numbers still ingrained.  Appellant, Matthew A. Pequignot (Pequignot) then brought suit against Solo under U.S.C. § 292 alleging that Solo had falsely marked its products with the expired patent numbers, knowing those patents had expired, for the purpose of deceiving the public.

At trial level, the court granted summary judgment of no liability or the false marking. Pequignot v. Solo Cup Co., 646 F. Supp. 2d 790, 795-800 (E.D. Va. 2009)  It also tried to define the definition of “offense” according to “false marking” statute of 35 U.S.C. 292.  The statute, in relevant part state:

Whoever marks upon… in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented, for the purpose of deceiving the public. 35 U.S.C. 292 (Emphasis added).

The Appellate court looked at three issues.  First, did Solo add patent numbers to an “unpatented article?”  The court found that an expired patent is now considered “unpatented,” because the item, whether before the patent is filed or after it expires, is now part of the public domain.  Thus, the court found that the plastic lids were falsely marked.

A more difficult question was whether Solo kept the expired number on the lid for the purpose of deceiving the public.  Prior to suit, Solo was aware that the numbers on the lids were expired, but had decided (with advice from outside legal counsel) that it would be financially unfeasible, yet legally permissible under 292 to remove the numbers off the metal lids until the molds wore out, afterwards which they would replace with new molds without the numbers.  Also around that time, Solo decided (again, on the advice of outside legal counsel) to include on its packaging the following language: “This product may be covered by one or more U.S. or foreign pending or issued patents.  For details, contact http://www.solocup.com.”  In particular, Pequignot believed that this statement added after the numbers had expired was indicative of deceptive intent by Solo.

The court noted that the bar for proving deceptive intent is very high here, because false marketing statue is a criminal one, despite having a civil penalty.  The court reasoned that having mere knowledge that the marking was false would not be sufficient to prove intent if Solo could prove that it did not consciously desire the result that the public be deceived.  From the facts stated above, the appellate court agreed with Solo that it successfully rebutted any presumption of deceptive intent.

The court believed that Solo made a good faith effort in getting specific advice from counsel, and that its true intent in not replacing the molds was to reduce costs and business disruption.  This belief was reinforced by Solo’s action of replacing worn out molds with unmarked molds.  With regards to the language on the packaging, the court explained that the language was completely true.  The contents of some of the package were covered by patents, and the contents of some of the packaging were not covered.  Thus, the court highly doubted the statement could be made for the purpose of deceiving the public.

Because Pequignot raised no genuine issue of material fact as to deceptive purpose, the court affirmed the lower court’s decision of summary judgment.

Finally, the court vacated the district court’s definition of “offense” under 292.  The court reasoned that although it was likely that Solo committed some violations, defining “offense” was a moot point since Solo had no intent to deceive the public.

Significance to Patent Owners

As noted below in greater detail in the Feature Comment, false patent marking lawsuits have been attracting a great deal of notice from the patent community.  One of the charges leveled against these suits is that the qui tam relator jurisdiction is improper as there is no true case or controversy necessary for Article III jurisdiction.  However, as is evident from Pequignot, the better defense is to attack the intent to deceive prong of test for finding false marking in violation of 35 U.S.C. §292.

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