35 U.S.C. § 292 provides a powerful tool for enforcing patent rights against infringers who falsely mark a good as patented or patent pending when it is not actually patented or pending. § 292 provides that any person may sue for the penalty against infringers falsely marking a good as patented, where such infringers “shall be fined not more than $500 for every such offense.”
Along with the false marking element, § 292 also requires that the marking of an unpatented good is done with intent to deceive the public. Closely connected with the second § 292 element, liability for patent infringement requires that the infringer had notice of the infringement and ignored such notice.
An easy way for a valid patent owner to satisfy the notice requirement is to mark each patented good with the appropriate issued patent numbers. However, valid patent owners must take care in marking the goods so as not to open themselves up to § 292 patent infringement liability by mismarking a patented good or, conversely, by marking an unpatented and non-pending good as patented.
If you have a patent issue, or wish to register a patent, you may contact one of our patent attorneys for a free evaluation or call 866.936.7447 (International Toll Free).
With the harsher penalties under § 292 that the Federal Circuit put in place with the Forest Group ruling, it is incumbent upon patent holders not to engage in any conduct which would be seen by the courts as intended to deceive the public. Conduct constituting intent to deceive the public was clarified in the Federal Circuit’s Pequignot v. Solo Cup Company ruling.
Solo Cup Company (Solo) is a leading manufacturer of disposable eatery and was the patent owner for two patents, Patent No. 4,589,569 and Re 28,797, on plastic cup lids. Pursuant to 35 U.S.C. 287, Solo marked its patented products with the appropriate patent numbers. Solo’s marking system involved stamping the lids as they were produced by adding the appropriated patent numbers to the mold. However, over time, Solo’s patents covering these lids began to expire. At the advice of its counsel, Solo decided it would remove patent numbers from the production molds as the patents expired and additionally would both add the following statement to its packaging materials, “this product may be covered by one or more US or foreign pending or issued patents” and would directed customers to its website for more details. At this time it is likely that Solo knew that some of the products contained in the packaging were not covered by any valid patent.
In 2007, Pequignot sued Solo under § 292 alleging patent infringement and false marking of products for patents No. 4,589,569 and Re 28,797, and alleged that Solo mismarked over 21 billion products.
Pequignot’s reasoning for initiating this suit is readily apparent. Although probably not directly harmed by Solo’s mismarked goods, Pequignot took advantage of § 292’s recent treatment under the Forest Group ruling hoping that it could realize huge profits. For instance, if the court found Solo liable, Pequignot would realize an enormous damage award even if the court only awarded $1 per infringing mismarked good ($21,000,000,000 to be exact).
However, Pequignot suffered a setback at the trial court level with the court finding that Solo did not intend to deceive the public and a subsequent summary judgment ruling in favor of Solo. Pequignot then appealed the trial court’s ruling but was also stymied by the Federal Circuit. On appeal, the trial court’s findings were affirmed: Solo did not intend to deceive the public.
Importantly, the Federal Circuit’s opinion is noteworthy because its analysis of two major issues;
First, was mismarking a good that was previously patented, but had expired or become invalid, by designating it as one that “may be patented” false marking under § 292?
Yes, the court ruled that, for purposes of § 292 “an article covered by a now-expired patent is unpatented.”
Second, what is the presumption accompanying the intent to deceive element when the patent holder knowingly makes a false statement concerning a product?
The Pequignot court set a particularly high standard for proving the intent to deceive element because § 292 is a criminal statute (despite being punishable only by a civil fine). Accordingly the Pequignot standard for deceptive intent requires, “a purpose of deceit and conscious desire to deceive the public.”
Pequignot provides Internet law firms and attorneys with a number of factors weighing strongly in Solo’s favor that enabled the court to come to the finding that Solo’s actions were not intended to deceive the public. Those factors are enumerated below;
- Solo acted, in good faith, on the advice of counsel in adopting and following a patent marking policy that has sounds business foundations,
- Solo’s plan to remove expired patent numbers from molds as they replaced worn molds was reasonable and arose out of a desire to reduce costs and business disruption rather than to deceive the public,
- Solo’s “may be covered language” on its packaging is actually true in many situations; some contents of the package were covered by patents while some were not, and
- The court found it “highly questionable” that the public would be reasonably deceived into believing that the products in the packaging were definitely covered by a patent.
Commenting on Solo’s admission (admission by labeling packaging with the “may be covered” language, while it knew that some of the contents in its packaging were covered by patents which had expired), in the article, “Intent to Deceive and False Marking, a New Standard?” commentators wrote;
“The court tackled the issue of whether Solo’s intent to deceive the public had been proven by Solo’s admission that it knew some of its patents covering the goods at issue had expired and the labeling of packing with the “may be covered language” while knowing that some products inside the package were not protected. Pequignot argued that if he proved Solo’s statements were false and that they knew them to be false, an irrebuttable presumption that Solo intended to deceive the public was created. Solo argued that the presumption was a rebuttable presumption of intent to deceive the public. The court agreed with Solo.”
If you have a patent issue, or wish to register a patent, you may contact one of our patent attorneys for a free evaluation or call 866.936.7447 (International Toll Free).
a patent attorney will tell you just don't do it. Unlike other intellectual property concepts under copyright or trademark, the consequences for falsely identifying an item as patented or patent pending are pretty serious.
Posted by: A Patent Attorney | 06/15/2012 at 03:23 PM