June 2010

Solo Decision Completes the Trilogy on False Marking

3 min

Earlier this month the Federal Circuit rendered its decision in the Solo Cup case, a closely watched dispute in which the manufacturer of drinking cups faced the threat of millions of dollars in fines because its cups bore numbers for patents that had expired.  The Federal Circuit held that Solo was not liable for fines because there was insufficient evidence that Solo had an intent to deceive.  The lessons of Solo and other false marking cases nevertheless remain clear, despite the Solo court’s ruling of no liability:

  • Patentees must be diligent in removing patent markings as soon as practicable after expiration to avoid liability;
  • Solid documentation of decision-making and communications with all concerned parties is necessary; and
  • A fine for every falsely marked product can result in crippling costs for carelessness.

The Federal Circuit in Solo1  held that, under the rubric of the False Marking Statute2 , a product that would have been protected by a patent was “unpatented” once the patent had expired.  This completes the trilogy of false marking decisions beginning with Clontech’s study of intent and Forest’s analysis of “occurrence” in calculating damages.

In the Solo case, the Federal Circuit articulated its decision that “an article covered by a now-expired patent is ‘unpatented’.”3   The court reasoned that articles “once protected by now-expired patent[s]” are no different from articles that never knew patent protection as “[b]oth are in the public domain” and that the public “need not fear an infringement suit” regarding such articles.  Thus, articles that are marked as patented under an expired patent are falsely marked within the meaning of the False Marking Statute.

In Solo, the Federal Circuit also reiterated the burden-shifting evaluation of “intent to deceive the public” first outlined in Clontech.4   It is not enough that an article is falsely marked to hold the accused liable for false marking – intent to deceive is an absolute prerequisite.  First, the plaintiff must show that the article was falsely marked and that the defendant knew that fact.  This creates a rebuttable presumption of intent to deceive.  The burden then shifts to the defendant to show, through tangible evidence, that it did not intend such deception.  Evidence of a reasonable belief that its markings were not false, that it was not required to remove the markings, or that it endeavored to remove the markings as soon as practicable may be sufficient to defeat the presumption of intent.  In Solo’s case, reliance on advice of counsel, a policy of removing the expired-patent markings at an economically feasible point, and use of the term “may be covered” all served to rebut the deceptive purpose presumption.

Finally, the Solo court reminded us of the recent decision in Forest regarding the definition of “every such offense” within the False Marking Statute.  Although it held that Solo did not have the requisite intent to be liable for false marking, the court pointed out the district court’s error in evaluating “offense.”  Every falsely marked product constitutes “an offense” to which a fine of up to $500 could be applied.  The law on false marking is continuing to develop, and proposed legislative changes may alter the impact and risk profile of false marking claims.  In the meantime, every patentee must keep a watchful eye on the patent portfolio to ensure accurate marking and thorough documentation.

1 Pequignot v. Solo Cup Co., 2010 U.S. App. LEXIS 11820 (Fed. Cir. June 10, 2010).
2 35 U.S.C. § 292.
3 Solo @ 9.
4 Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347 (Fed. Cir. 2005).