The Court of Appeals for the Federal Circuit recently decided a false marking case brought against the Solo Cup Company (“Solo”). False marking, as defined by statute, occurs when one labels an “unpatented article” as being under patent “for the purpose of deceiving the public.” In such cases, any person may sue for the maximum of $500 for “every such offense,” of which the U.S. government would receive half. Matthew A. Pequignot (“Pequignot”), a licensed patent attorney, brought such a claim against Solo for marking their plastic cup lids with patents that had expired.
Solo owned two patents for their drink cup lids, which they added to their mold cavities after the patents were issued. This resulted in each lid being molded with an imprint of the patent numbers that covered that particular item. However, when those patents expired, the same molds were used, thereby imprinting the lids with an expired patent number. Solo became aware of this situation and inquired to outside counsel on the appropriate course of action to take. Solo was advised that the best course of action was to remove the imprinting from the molds, but if that was not possible, Solo should “not further any unintentional falsity in the product literature or the like.” Based on this advice, Solo instituted a policy of removing the expired patent numbers from their molds as they were replaced due to wear or damage. Solo reasoned that replacing all of the molds immediately “would be costly and burdensome.” Even with this procedure, Solo was later advised by outside counsel to include the following warning on its packaging: “This product may be covered by one or more U.S. or foreign pending or issued patents. For details, contact www.solocup.com.” This warning was placed on packages of both patented and unpatented lids. In September of 2007, Pequignot brought suit against Solo for false marking for both lid patents as well as the “may be covered” language of the warning. Upon Solo’s motion to dismiss, the U.S. District Court for the Eastern District of Virginia granted summary judgment in favor of Solo, holding that there was a lack of intent to deceive on the part of Solo. Pequignot appealed that decision.
The Federal Circuit was presented on appeal with three issues based on the statute for false marking. First, does an article with an expired patent satisfy the “unpatented article” language of the statute? Second, were Solo’s actions “for the purpose of deceiving the public?” Third, what constitutes an “offense?” Resolving them in order, the Federal Circuit first held that an article bearing an expired patent was indeed an “unpatented article” satisfying the statute. Then the Federal Circuit held that a purpose to deceive, and not knowledge of a false statement, was required. However, knowledge of a false statement created a rebuttable presumption of a purpose to deceive. The Federal Circuit found that, while Solo did have knowledge of its false statements, it had rebutted the presumption by showing evidence that its purpose was not to deceive, but rather was economically oriented and based on good faith reliance on counsel. Finally, having found no purpose to deceive, the last question regarding what qualified as an “offense” was found to be moot. The Federal Circuit affirmed in all regards, except the determination on the word “offense,” which it vacated.