Pequignot v. Solo Cup Co.: Appeals Court Issues Major "False Marking" Decision

In Pequignot v. Solo Cup Co., decided on June 10, 2010, the Court of Appeals for the Federal Circuit affirmed the grant of summary judgment of no liability by the U.S. District Court for the Eastern District of Virginia, which had ruled that Solo Cup lacked the requisite intent to deceive the public when it falsely marked some of its products as protected by U.S. patents. The court affirmed the district court's holding that false marking of a product, with knowledge of the falsity, raises a presumption of intent to deceive the public that can be rebutted by a preponderance of evidence that the accused deceiver acted in good faith.

In 2000, Solo realized that it had been placing expired patent numbers on its cup lids. In 2004, on the advice of outside counsel, Solo added wording on its packaging stating, "This product may be covered by one or more U.S. or foreign pending or issued patents.” Solo included the language on packaging for both patented and unpatented products.

In September 2007 patent attorney Matthew Pequignot brought a qui tam action against Solo Cup under 35 U.S.C. § 292, which provides that “(w)hoever 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…shall be fined not more than $500 for every such offense.” The Federal Circuit agreed with Pequignot that Solo’s products marked with expired patent numbers were falsely marked under 35 U.S.C. § 292. Finding the language of the statute unambiguous, the court saw no need to consult legislative history, presented by Solo, indicating that Congress did not intend for the statute to apply to marking with expired patent numbers. The court also rejected the district court’s statement that marking with expired patent numbers has less potential for harm, reasoning that such marking still imposes on the public the appreciable cost of finding out whether the relevant patents are enforceable.

The Federal Circuit agreed with the district court, however, on the issue of whether Solo had acted for the purpose of deceiving the public. The court approved the district court’s interpretation of Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347 (Fed. Cir. 2005) as holding that false marking with knowledge of falsity does not prove intent to deceive, but raises a rebuttable presumption of such intent. To hold otherwise would preclude accused parties from presenting evidence that they had no intent to deceive. Noting that the false marking statute is a criminal statute, the court cautioned that the bar for proving deceptive intent is “particularly high.” The court acknowledged its established preponderance of evidence standard for proving intent for false marking and reasoned that rebutting the presumption of intent should require no higher burden. Solo was able to rebut the presumption by offering evidence of its financial and logistical motivation for delaying replacement of the expired numbers. For a more detailed explanation of the case, click here.