Federal Circuit Affirms Solo Cup False Marking Decision
In a widely-followed appeal of an Eastern District of Virginia case which we previously blogged about here, the Federal Circuit held today that Solo Cup did not have the “intent to deceive the public” required for false marking liability. in Pequignot v. Solo Cup Co., No. 2009-1547 (Fed. Cir. June 10, 2010) (found here). The decision affirmed Judge Brinkema’s ruling granting summary judgment in favor of Solo Cup, Pequignot v. Solo Cup Co., 646 F.Supp. 2d 790 (E.D. Va. 2009). Under the Federal Circuit’s decision, even if a patentee knowingly marks a product with an expired patent, it can avoid liability by showing by a preponderance of the evidence that it did not intend to deceive the public.
In short, Solo Cup marked certain plastic cold drink lids by stamping the lids with two patent numbers during the production process. After one of the patents expired, Solo sought advice of counsel about whether it needed to replace all of its stamping molds to remove the patent number. Based on the advice it received and the cost of replacing all of its molds, Solo developed a policy to wait to remove the expired patents when it replaced the molds. Solo’s outside counsel also advised Solo to include on its packaging the phrase “the product may be covered by one or more U.S. or foreign pending or issued patents. For details contact www.solocup.com.” Based on that advice, Solo placed the “may be covered” language on its packaging, even though it knew that some of the packaging was not patented.
Judge Brinkema granted summary judgment to Solo, finding that Solo had no intent to deceive the public. Solo’s knowledge of the falsity of the patent marking, she held, raised a rebuttable presumption of intent to deceive. Solo successfully rebutted that presumption, however, based on its good faith reliance on advice of counsel and its desire to reduce costs and avoid business disruption. Judge Brinkema likewise found that Solo had rebutted the presumption with respect to the “may be covered” language based on the advice of counsel and for logistical and financial reasons.
The Federal Circuit affirmed the finding of lack of intent to deceive.
- Agreeing with Judge Brinkema, the court held that under Clontech Labs., Inc. v. Invitrogen, 406 F.3d 1347 (Fed. Cir. 2005) the combination of a false statement and knowledge that the statement was false created a rebuttable presumption of intent to deceive, not irrebuttable proof of such intent.
- Solo’s burden of proof was to show by a preponderance of the evidence that it did not have the requisite intent to deceive.
- Where the false markings at issue are expired patents that had previously covered the marked products, the presumption is weaker.
- A good faith belief that an action is appropriate, especially when it is taken for a purpose other than deceiving the public, can negate the presumption.
Solo’s unrebutted evidence that it relied on the advice of counsel, its evidence that its true intent was to reduce costs and business disruption and its good faith step of implementing and following a policy to remove the patent numbers when molds were replaced were sufficient to rebut the presumption of deceptive intent.
As to the “may be covered” language, the Court held that “it is highly questionable” whether such a statement could be made for the purpose of deceiving the public. Regardless, the court affirmed Judge Brinkema’s decision that Solo’s evidence successfully rebutted the presumption.
The Federal Circuit did not agree with Solo on everything, however. It rejected Solo’s claim that the statute did not apply where products were previously covered by a patent. It also refused to reach Judge Brinkema’s alternative holding that even if Solo had an intent to deceive, it could have committed no more than three “offenses” within the meaning of the statute.