Many companies choose to seek additional patent protection by labeling their product with a patent number. Under 35 U.S.C. §292 (a), a qui tam action may be brought against an entity that marks on "any unpatented article, the word 'patent' or any word or number importing that the same is patented for the purpose of deceiving the public." The resulting fine for violation of the statute is "not more than $500 for every such offense." Id. The Court of Appeals for the Federal Circuit ("C.A.F.C.") held in Forest Group, 590 F.3d 1295, that every falsely marked article constituted a separate offense. In many situations, this could create a potential for astronomical damages if a company, seeking patent protection, marks a mass-produced product with an expired patent number.
In Pequignot v. Solo Cup Company, the C.A.F.C. added additional insight into this situation. No. 2009-1547 (C.A.F.C. June 10, 2010). On May 4, 1976, Solo was issued a patent for a plastic drink cup lid. Upon being issued the patent, Solo created "mold cavities" that would form the lids in a thermoforming machine. The mold cavities had the patent number formed into them, such that when the lids where being formed the patent number would be imprinted onto each lid. Solo's patent for the lids expired on June 8, 1988, but Solo was not aware that it was marking its product with an expired patent number until June 2000. After seeking outside counsel, Solo determined that because it would be too costly to replace all of the mold cavities at once it would wait for each mold cavity to wear out and upon wearing out replace each mold cavity with a new mold cavity that no longer included the patent number.
In September 2007, Pequignot brought a qui tam action against Solo cup accusing Solo of falsely marking its plastic lids and some additional packaging. Pequignot sought an award of $500 per article of falsely marked product with a total of 21,757,893,672 claimed falsely marked products. The district court found for Solo Cup and the C.A.F.C. affirmed for much of the same reasoning as the lower court. Both courts found that Solo Cup did not act with the "purpose of deceiving the public" as was required under §292. The courts found that Solo Cup successfully rebutted the presumption of "purpose to deceive" by presenting evidence that they were following the guidance of legal counsel. Solo established for the court that their motiviation was not to deceive the public into thinking that they still had patent protection for the plastic lids, but their motivation to not immediately change their mold cavities was to reduce business costs and business disruption.
The decision in Pequignot v. Solo Cup leaves open the question of how long a company can rely on reducing business costs and business disruption before a court will find that the company is acting with the intent to deceive the public. In many circumstance, a mold cavity may last far longer than the life of a given patent. It is rarely going to be cost effective to stop production once a patent expires and retool the factory or replace all of the mold cavities within the production line. While the above decision allows for some leniency in determining when a company has acted with the "purpose of deceiving the public," manufacturers likely should have policy in place to track when a given patent has expired and begin to phase out mold cavities or other marking apparatus as soon as economically feasible after expiration.
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