On June 10, 2010, the Federal Circuit Court of Appeals issued its anticipated decision in Pequignot v. Solo Cup, affirming the district court’s grant of summary judgment in favor of Solo Cup, finding that Solo Cup’s patent markings were not made with the requisite intent to deceive the public. The significance of this decision is that the Federal Circuit: (1) confirmed that the false patent marking statute applies to expired patents; (2) confirmed that the bar for proving deceptive intent in the false marking context is high, such that a combination of a false statement and knowledge that the statement was false creates only a rebuttable presumption of intent to deceive the public, rather than irrebuttably proving such intent; and (3) provided guidance about the kinds of evidence that an accused false patent marker can rely upon to rebut the presumption of deceptive intent.
Although the decision was driven by the particular facts of the case, it appears that an accused patent marker could benefit by pointing to company policies or procedures implemented and followed to ensure that patent markings are removed after the applicable patents have expired, that the markings convey accurate information about patent coverage or any other relevant evidence to show that the markings were not intended to deceive, including good faith reliance on the advice of counsel. Such evidence, if uncontested, is sufficient to rebut the presumption that the patent marking was made with deceptive intent, and thus would defeat a false marking claim.
Analysis of the Holding – What Constitutes Evidence of Intent to Deceive?
The Federal Circuit began its analysis by agreeing with Pequignot and the district court that articles marked with expired patent numbers are falsely marked even though they were previously covered by a valid patent. Thus, the decision confirms that the false patent marking statute applies to claims that products were falsely marked with expired patents.
Moving to the question of intent to deceive, the Federal Circuit agreed with the district court, holding 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. The Federal Circuit noted that if the presumption were irrebuttable, it would be too easy to prove deceptive intent even when no such intent exists. Furthermore, that the presumption is rebuttable is consistent with the high bar that is set for proving deceptive intent in the false marking context. The false marking statute, 35 U.S.C. §292(a), requires that the false marker act “for the purpose of deceiving the public.” Therefore, simple knowledge is insufficient to prove intent if the marker can show that it did not consciously desire to deceive the public. The burden of proof of intent to deceive is a preponderance of the evidence, and thus, as the party moving for summary judgment it was Solo Cup’s burden to show by a preponderance of the evidence that it did not have the requisite intent to deceive. The Federal Circuit concluded that Solo Cup rebutted the presumption with credible evidence that its purpose was not to deceive the public with expired patent markings or “may be covered” language.
With respect to the expired patent markings, the Federal Circuit noted that without more than a marking with an expired patent that previously had covered the marked product, the presumption of intent to deceive is weaker because the marked products were once patented. The Court relied upon Solo Cup’s evidence of its good faith beliefs, and the absence of any credible contrary evidence from Pequignot, to conclude that: “Solo acted not for the purpose of deceiving the public, but in good faith reliance on the advice of counsel and out of a desire to reduce costs and business disruption.” The Federal Circuit explained what kind of evidence a false marking defendant may use to show that it lacked intent to deceive:
Here, however, Solo has raised more than blind assertions of good faith. Instead, Solo has cited the specific advice of its counsel, along with evidence as to its true intent, to reduce costs and business disruption. Moreover, the policy Solo adopted conforms with its stated purpose. Rather than continuing to manufacture mold cavities with the expired patent markings, Solo took the good faith step of replacing worn out molds with unmarked molds. Solo also provided unrebutted evidence that it implemented and followed the policy.
Pequignot failed to show any evidence that Solo Cup ignored its counsel’s advice or manifested any deceptive intent. Based on this decision, it appears that leaving the expired patent numbers on products after the patents expired, even knowingly, does not show the requisite purpose of deceiving the public.
With respect to Solo Cup’s use of the “may be covered” language, the Federal Circuit held that Solo Cup similarly rebutted the presumption that its use of the “may be covered” language demonstrates intent to deceive. The Federal Circuit agreed with Solo Cup that the “may be covered” language stated exactly the true situation; the contents of some of the packaging were covered by patents, and the contents of some of the packaging were not covered, and noted that “it is highly questionable whether such a statement could be made ‘for the purpose of deceiving the public,’ when the public would not reasonably be deceived into believing the products were definitely covered by a patent.” The Federal Circuit explained that the evidence Solo Cup proffered was sufficient to show that it did not intend to deceive the public. The “may be covered” language was added to all packaging at the suggestion of Solo Cup’s outside counsel for marking purposes, to provide notice to potential infringers of Solo Cup’s actual, valid patents, and because the alternative would have been logistically and financially inconvenient. Solo Cup did not state that any product was definitely covered by a patent, and it provided the consumer with an easy way to verify whether a specific product was covered; the consumer could simply “visit www.solocup.com.” The Federal Circuit held that such evidence rebuts the presumption of deceptive purpose, and shows Solo Cup’s good faith such that summary judgment in favor of Solo Cup was warranted.
Michael Best attorneys are familiar with recent legal developments related to false patent marking, and have experience defending claims asserted under 35 USC § 292. For more information, please contact the author of this alert or your Michael Best attorney.