Filewrapper®

Federal Circuit decisions address false marking statute in Solo Cup and Brooks Brothers cases

September 27, 2010
Post by Blog Staff

The Federal Circuit continues to address false marking cases. The court's recent decisions stress how important it is for patentees to monitor and update their labeling and other marking activities, particularly as patents expire.

In June, the court affirmed a summary judgment decision in favor of Solo Cup related to the company's practice of marking patents on beverage cup lids, and addressed whether each decision to mark or each article falsely marked is an act of false marking under the statute. In August, the court addressed the issue of who has standing to bring a false marking case, reversing a district court's finding of lack of standing in a false marking case brought against Brooks Brothers. The Solo Cup case demonstrates the potential damage awards against companies that sell numerous products can be very large. However, the court created a higher bar for plaintiffs seeking to cash in on the false marking statute and demonstrates the importance for a defendant to be able to show good faith actions to overcome any presumption of intent to deceive the public. The Brooks Brothers case provides a lesson on standing under 35 U.S.C. § 292. The Federal Circuit held a plaintiff has standing as a result of sufficiently alleging an injury in fact to the U.S. that was caused by Brooks Brothers' false marking of its bow ties, that may be redressed with the statutory fine created by § 292. This removes a potential barrier to false marking suits being filed in the first instance.More detail of these two cases after the jump.

Pequignot v. Solo Cup Co.Solo Cup is the owner of U.S. Patent Re. 28,797 and U.S. Patent 4,589,569 for plastic drink cup lids. The company placed these patent numbers on its molds used to make lids. The '797 patent expired in 1988 and Solo Cup was aware of its expired stats at least as early as 2000, when its attorneys advised it to remove the expired patent marking. In 2003 the '569 patent expired. Based on advice of counsel, Solo Cup decided to replace damaged or older molds with new molds not containing the expired patent number rather than replacing all molds (due to high costs associated with mold replacements).

Patent attorney Matthew Pequignot brought a qui tam action under § 292 in 2007 against Solo Cup. Qui tam actions under § 292 allow a member of the public to bring a suit (and obtain 50% of the damages – which are split with the federal government) against a defendant that falsely marks a product with a patent number with intent to deceive the public. The estimated maximum damage award, based on $500 per article on more than twenty billion articles, exceeded $10 trillion. The district court, however, granted summary judgment that Solo Cup had no intent to deceive the public by marking its products with expired patent numbers.The Federal Circuit held each cup lid marked with an expired patent number qualifies as an "unpatented article" under § 292, and thus each article sold was subject to a potential false marking penalty. However, the court agreed with the district court that Solo Cup did not intend to deceive the public by including the expired patent numbers on its products. The court held there is a rebuttable presumption of intent to deceive the public in false marking cases. If a plaintiff shows the defendant made a false statement with knowledge of its falsity (here, applying an expired patent number to a product with knowledge of its expiration), the defendant can rebut the presumption with evidence it did not intend to deceive the public. Solo Cup pointed to its advice of counsel weighing the high costs of removing the patent markings from its products and acting in good faith by adding language stating products "may be covered" by patents, which was sufficient to rebut Pequignot's evidence of intent to deceive. As a result, the district court's grant of summary judgment was affirmed and the false marking suit did not succeed under § 292. Thus, while Solo Cup prevailed, the Federal Circuit made it clear that the statutory penalty for false marking potentially applies to each article sold that was falsely marked, not just for each decision to mark a type of product.Stauffer v. Brooks Brothers

Raymond Stauffer, another patent attorney, brought a qui tam action against Brooks Brothers for sale of bow ties marked with patents that expired in 1954 and 1955. The district court granted Brooks Brothers' motion to dismiss for lack of standing (as well as denying the United States' motion to intervene) based upon a failure to allege that the U.S. suffered an injury from the alleged false marking. On appeal, the Federal Circuit reversed. The court held enactment of § 292 created an injury in fact to the U.S., such that a violation of the statute inherently constitutes an injury based on the harmful conduct of deceptive patent mismarking. The U.S. (or a citizen pursuing a qui tam action on behalf of the U.S.) will therefore not be denied standing to enforce the statute. Of interest, on remand, the court instructed the district court to consider Brooks Brothers' motion to dismiss for failure to allege intent to deceive the public with sufficient specificity. These cases make clear patentees need to be aware of the possibility for false marking cases. Even though a claim of false marking is difficult to prove at trial, the possibility of large amounts of damages (particularly for a company that manufactures large quantities of products, such as Solo Cup) can make some companies attractive targets for enterprising qui tam plaintiffs. It is important for patentees to take the time to update their labeling and other marking activities, particularly as patents expire. As a result of these cases, a number of false marking suits have been filed against a variety of defendants. This site has a sampling of the filings.To read the full decision in Pequignot v. Solo Cup Co., click here.To read the full decision in Stauffer v. Brooks Bros. Inc., click here.


Post Categories

Comments (0)
Post a Comment



Captcha Image
Return to the Filewrapper Blog

Search Posts

Purpose

The attorneys of McKee, Voorhees & Sease, P.L.C. designed this blog as an informational and educational resource about intellectual property law for our clients, other attorneys, and the public as a whole. Our goal is to provide cutting-edge information about recent developments in intellectual property law, including relevant case law updates, proposed legislation, and intellectual property law in the news.

Disclaimer

McKee, Voorhees & Sease, P.L.C. provides this blog for general informational purposes only. By using this blog, you agree that the information on this blog does not constitute legal or other professional advice and no attorney-client or other relationship is created between you and McKee, Voorhees & Sease, P.L.C. Do not consider this blog to be a substitute for obtaining legal advice from a qualified, licensed attorney. While we try to revise this blog on a regular basis, it may not reflect the most current legal developments. We consciously refrain from expressing opinions on this blog and instead, offer it as a form of information and education, however if there appears an expression of opinion, realize that those views are indicative of the individual and not of the firm as a whole.

Sign Up For Our Newsletter

Enter your name and email address to receive the latest news and updates from us and our attorneys.

Subscribe to: MVS Newsletter

Subscribe to: Filewrapper® Blog Updates

  I have read and agree to the terms and conditions of McKee, Vorhees & Sease, P.L.C.