In a much-anticipated victory for patent owners, on June 10^th, the U.S. Court of Appeals for the Federal Circuit affirmed the Eastern District of Virginia’s dismissal of a qui tam action against Solo Cup Company, holding that Solo Cup had not acted with the required intent to deceive the public.[1] Under Section 292 of the Patent Act, the penalty for marking an “unpatented” product with a patent number, “patent,” “patent pending,” or the like, with “intent to deceive the public” is up to $500 per falsely marked product.[2] Any private party can bring a qui tam lawsuit alleging false marking and keep one half of the penalty collected.

Solo Cup manufactures, among other things, disposable cup lids, manufactured by stamping plastic in molds. Solo Cup included the following language on its molds: “This product may be covered by one or more U.S. or foreign pending or issued patents. For details, contact www.solocup.com.” on its molds. This language, along with certain patent numbers, was therefore stamped on each lid. With the advice of its counsel, Solo Cup developed a policy under which, when mold cavities needed to be replaced, expired patent numbers were removed. Wholesale replacement of the molds every time a patent expired would have been very expensive, but this system did mean that at times Solo Cup knowingly continued to use molds that stamped expired patent numbers on its lids. Pequignot, a patent attorney, sued Solo Cup, alleging that it falsely marked its products with expired patent numbers with the intent to deceive the public.

As a preliminary matter, the Federal Circuit confirmed that products covered by now-expired patents are “unpatented” within the meaning of Section 292.[3] The Court reasoned that both never-patented products and products once protected by a now-expired patent are in the public domain. In both cases, the burden of determining whether the involved patent is valid is imposed on the public. Accordingly, the Court held that the Solo Cup products at issue were unpatented within the meaning of the Patent Act, 35 U.S.C. §292.

The Court also held that, despite Solo Cup’s knowledge that at least some of the patents included in its markings were expired, Solo Cup did not act with the requisite intent to deceive the public. Instead, the Court held that “the combination of a false statement and knowledge that the statement was false creates a rebuttable presumption of intent to deceive the public, rather than irrebuttably proving such intent.”[4] Solo Cup was able to rebut the presumption of intent to deceive the public by showing that it acted in good faith reliance on the advice of counsel and out of a desire to reduce costs and business disruption. Additionally, the Court found that Solo Cup rebutted the presumption of intent to deceive by using the “may be covered” language within the marking.[5] Since it was true that some of the items were covered by patents and some were not, the Court found it “highly questionable” whether this conditional marking statement alone could ever satisfy the intent to deceive the public requirement under these facts.[6]

This most recent clarification of Section 292 is important news for all patent owners unsure of how to proceed in marking patent numbers on their products. However, additional patent marking cases are pending, and there is movement in Congress to amend the statute, so it is important to stay abreast of developments in this area. In order to avoid penalties under the false marking statute, patent owners should always exercise care in the creation, review, and maintenance of their patent markings and, if there is any question, consult with a registered patent attorney to confirm whether or not a patent number should be marked on a product.

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Please contact Neal Gerber Eisenberg Intellectual Property Practice Group partners Thomas C. McDonough (tmcdonough@ngelaw.com, 312-269-5282), James P. Muraff (jmuraff@ngelaw.com, 312-269-8034) or another member of the Group for more information.