"Falsely Marked," But Intent Will Be More Difficult For Relators to Establish
As reported in earlier posts, the number of false patent marking cases exploded following the Federal Circuit’s holding in The Forest Group v. Bon Tool, 590 F. 3d 1295 (Fed. Cir. 2009) that held that every falsely marked product constitutes a separate offense subject to fine under 35 U.S.C. 292. The vast majority of the recently filed false marking cases are based on the theory that a product marked with an expired patent number is an “unpatented article.” This issue was squarely presented in Pequignot v. Solo Cup, where the district court held that this was indeed the case. Many false marking defendants have been anxiously awaiting the Federal Circuit decision in Pequignot hoping that the Federal Circuit would reverse the finding of the district court with respect to expired patents and provide an opportunity to quickly defeat or dismiss many of these cases. Those folks will now be disappointed. In its June 10, 2010 decision, the Federal Circuit unequivocally held that “articles marked with expired patent numbers are falsely marked.” (See http://cafc.bna.com/09-1547.pdf)
Of course, finding that a product is falsely marked is not the end of the inquiry. In order to be liable for false marking, the marker must act “for the purpose of deceiving the public.” Under the Federal Circuit’s holding in Clontech Labs. v. Invitrogen, this intent element can be satisfied if it is proven that the statements about marking were false and the marking party knew the statements were false. It is here where Solo prevailed and where the Federal Circuit provided some helpful guidance to those accused of false marking. First, the Federal Circuit clearly held that Clontech only establishes a presumption of intent and that such a presumption can be rebutted with evidence of good faith. Second, the burden of proof needed to rebut the Clontech presumption is only a preponderance of evidence. Finally, the court agreed that when ‘the false markings at issue are expired patents that had previously covered the marked products, the Clontech presumption of intent to deceive is weaker” and therefore easier to rebut. In this case, Solo was able to rebut the Clontech presumption by establishing that the marking at issue was made for legitimate business reasons not related to “deceiving the public” and that it had acted consistently with the advice of counsel it had received. As both the district court and Federal Circuit noted, “Pequignot has provided not a scintilla of evidence that Solo ever ignored its counsel’s advise or, more importantly manifested any actual deceptive intent.”
In addition to expired patent numbers, Solo also marked certain packaging materials used for both patented and unpatented articles using the language that the products “may be covered” and referenced a website where more specific patent information could be found. The Federal Circuit noted, in dicta, that “it is highly questionable whether such a statement could be made ‘for purposes of deceiving the public,’ when the public would not reasonably be deceived into believing the products were definitely covered by a patent.” In finding no intent to deceive the court noted that Solo proffered evidence to rebut a presumption of intent, including “provid[ing] the consumer with an easy way to verify whether a specific product was covered; the consumer could ‘contact www.solocup.com’ for details.” Thus, while the broad language was still an act of “false marking,” there was ample evidence to rebut a presumption of intent to deceive the public.
Some takeaways from Pequignot:
• Marking with expired patents is “false marking.” This case is not a silver bullet that will result in false marking cases being dismissed en mass.
• If marking is false, and known by the marker to be false, there is a rebuttable presumption of intent to deceive the public.
• The presumption of intent to deceive the public can be rebutted with a preponderance of evidence establishing good faith reasons for the marking and/or reasons mitigating bad faith
• Referring to a collection of products and patents and indicating that the product “may be covered” still results in “false marking” but for a relator to establish that a marker had the requisite intent to deceive with such equivocal language should be difficult.