False Marking Claims for Products Stamped with Expired Patents

June 16, 2009

Product Manufacturers Beware: You may find yourself paying damages for simply marking your products with expired patent numbers.

In a recent string of cases, “enterprising” patent attorneys have donned their civil litigator caps and filed qui tam actions against manufacturers for selling products that are marked with expired patent numbers, despite the fact that the identified patents were once valid and enforceable. At the heart of these cases is 35 U.S.C. § 292 (“Section 292”), which states in pertinent part: “Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word ‘patent’ or any word or number importing that the same is patented for the purpose of deceiving the public . . . . Shall be fined not more than $500 for every such offense.” 35 U.S.C. § 292(a) (emphasis added). Moreover, Section 292 permits any person to “sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.” 35 U.S.C. § 292(b).

In Pequignot v. Solo Cup Company, Case No. 07-CV-00897 (E.D. Va.), Matthew Pequignot, a patent attorney, filed suit against Solo Cup Company, alleging that Solo violated Section 292 by marking its drinking cup lids (such as those utilized by Starbucks™), plastic cups, and other plastic utensils with (i) the numbers of two patents that are now expired; and (ii) the statement that “this product may be covered by one or more U.S. or foreign pending or issued patents. For details, contact: www.solocup.com.” In a potential blow to manufacturers last year, the Pequignot court denied Solo’s motion to dismiss, holding that relevant case law, Section 292’s plain language, and public policy supported the conclusion that the term “unpatented article” included items that were once protected by a valid patent, but which have now expired. The court also determined that Solo’s “may be” language can form the basis of a Section 292 claim because the “marking at issue need not explicitly state that the product is patented to constitute a false marking.” After holding that Pequignot could potentially maintain a claim pursuant to Section 292, the court explained that he must still show that Solo intended to deceive the public, which is a fact-specific inquiry.

Despite the Pequignot court’s ruling, manufacturers can take temporary solace in the fact that last month, another federal district court dismissed a nearly identical lawsuit. In Stauffer v. Brooks Brothers Inc., Case No. 08-Civ-10369 (S.D.N.Y.), Raymond Stauffer, another patent attorney, sued Brooks Brothers Inc., the men’s clothing manufacturer, and its parent company, Retail Brand Alliance, Inc., for marking Brooks Brothers’ “Original Adjustolox Tie” with three patent numbers that expired over 50 years ago. Like Solo, Brooks Brothers also filed a motion to dismiss. Unlike the Pequignot court, however, the Stauffer court granted that motion, holding that Stauffer failed to satisfy the fundamental constitutional requirement of standing because he failed to allege any facts showing injury to the public.

After the Stauffer court dismissed the Complaint, however, the U.S. Attorney for the Southern District of New York moved to intervene on behalf of the plaintiff, arguing that the plaintiff has stated an injury based upon the violation of the statute alone. In other words, the U.S. Attorney argued that the plaintiff need not allege an injury in a Section 292 qui tam case. As of this time, the U.S. Attorneys’ motion to intervene is still pending before the Court and may pave the way for significant case law to develop with respect to Section 292.

In light of this line of cases, certain organizations, including the Intellectual Property Owners Association, have called for Congress to eliminate the qui tam provision of Section 292(b); however, no bills have been proposed to date. As such, the primary consequence of this line of cases is obvious: Manufacturers of products face a new litigation threat that has potentially devastating consequences. This line of cases will continue to develop (as more will inevitably be filed and cases will work their way through the judicial system), and manufacturers should take prophylactic measures now to insulate themselves from such lawsuits. McGuireWoods LLP’s Intellectual Property team is ideally situated to counsel manufacturers with respect to taking such measures, and can protect manufacturers who unfortunately find themselves named in one of these suits.