Don’t Say Too Little, Don’t Say Too Much, Say What You Believe is “Just Right”
Of Counsel, Ladas & Parry LLP
Recently the Court of Appeals of the Federal Circuit affirmed a decision involving a patent mismarking claim under 35 USC 292 which involved the lack of deceptive intent of the patent owner in Pequignot v. Solo Cup Co. ___ F3d ___ (Fed. Cir., 2010). The case involved two primary issues: (1) whether it was actionable mismarking to continue to mark product with patent numbers once the subject patents had expired and (2) whether the general language to the effect that a product “may be covered by one or more … pending or issued patents” was actionable mismarking. While mentioning the decision on the first issue, the focus will be on the second issue for purposes of this article.
I. Basics of Modern Patent Mismarking
A. Elements
A thorough breakdown of elements of actionable mismarking was discussed by the court in Third Party Verification, Inc. v. Signaturelink, 492 F.Supp.2d 1314, 1326 (M.D. Fla., 2007), although other courts occasionally formulate the elements slightly differently. The court in Third Party Verification stated:
“A pleader may establish a prima facie case of false marking under the statute by alleging that: (1) an article was falsely marked or advertised with the word ‘patent’ or any word or number that imports that the article is patented, (2) the article so marked or advertised was an unpatented article, and (3) the marking or advertisement was made with the intent to deceive the public. Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed.Cir.2005).”
These elements effectuate the statute:
(a) … Whoever marks upon … 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.
(b) Any person may 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
It is clear that mismarking is not a strict liability offense. This qui tam statute is punitive in nature. It is the plaintiff’s burden of proof, and proof of deceptive intent is essential to a case. Knowing falsity gives rise to a presumption to deceive, but this can be rebutted by a preponderance of evidence.
B. Marking
Solo Cup marked in two fashions at issue in the case. First, they correctly marked patent numbers on products covered by patents in-force, but they continued that marking after the patents expired. Second, Solo included on its packaging the general legend: “This product may be covered by one or more U.S. or foreign pending or issued patents. For details, contact www.solocup.com”. Thus, the facts of two markings were present. The next issue was whether the marking was false.
C. Falsity of Marking –Mismarking
1. Expired Patent Numbers – Mismarking
Solo urged, but the Federal Circuit rejected, the argument that the statute’s qualification as “unpatented” meant, essentially, “never patented.” The Federal Circuit stated:
“In sum, we agree with Pequignot and the district court that articles marked with expired patent numbers are falsely marked. That conclusion alone does not, however, decide the question of liability under the statute.”
The requisite intent is not intent to mark, but intent to deceive:
“the required intent is not intent to perform an act, viz., falsely mark a product, but instead intent to deceive the public. Thus, 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 inference of a purpose of deceiving the public.”
2. “May Be Covered” Language Not False
The “may be covered by” statement, however, was literally true:
“As Solo points out, the “may be covered” language stated exactly the true situation; the contents of some of the packaging were covered by patents, and the contents of some of the packaging were not covered.”
This form of marking, therefore, could have been decided solely based on its not being false, without inquiring into intent. The court chose to discuss lack of deceptive intent in the “may be covered” context.
II. What Is Said Can Affect Truth or Falsity and Indicate Intent
A. Don’t Say Too Little (e.g. simply “Patented” or “US Patent No. 1234567”)
1. Patented and Patent Numbers
At the outset, consider “Patented” which would not be adequate under 35 USC 287 to give notice, so there is little risk of damages. If the product is “Patented” then this might be true, but it has only the psychological benefit of putting ethical competitors to the task of considering a search. If the product is not “Patented” (and probably if it was patented but the patent has expired, but not necessarily, because it is past tense) then this legend is risky.
Solo simply continued the patent numbers once the patents had expired. While once patented, and arguably the legislative history could have been more clear, the Federal Circuit was clear – once expired, it is no longer ‘true’ to place a patent number on a product after that patent expires. While the decision in Clontech Laboratories, Inc. v. Invitrogen Corp., 406 F.3d 1347 (Fed. Cir., 2005) permitted a presumption of deceptive intent from falsity plus knowledge of falsity. Solo overcame the presumption pointing out it relied on an opinion of counsel, had a logical rationale for the conclusion that marking could continue and a consistent explanation in that it was trying to save money and was planning to change marking efficiently, not intending to deceive.
2. Claim Coverage
Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir., 2009) upheld, as not clearly erroneous, a finding that the patent owner knew that there was a claim element missing from the marked (mismarked) product. The opinion is usually cited for its “per item” calculation. According to the District Court, at a key date, Forest had an opinion of knowledgeable patent counsel that its own products were not covered by the claims, lacking a claim element, and had two District Court claim interpretations. While it did not have knowledge/intent before the key date, it did have the requisite intent after that date.
It is certainly logical that if no claim of a patent reads on a product, an unqualified “Patented US Patent No. 1234567” marking is incorrect, and if done with deceptive intent, violates 35 USC 292. Similarly, if there is plainly a method claim only, simply marking “US Patent No. 1234567” on the product, when that patent does not have a claim that reads on the product, is false. So that might meet one of the elements under 292. (“The two elements of a § 292 false marking claim are (1) marking an unpatented article and (2) intent to deceive the public. See Clontech Labs. Inc. v. Invitrogen Corp. and Forest Group, supra”).
3. Method and Apparatus Claims
There is a unique doctrine (not directly applicable to 35 USC 292) that recognizes that while one can physically mark a product, one cannot physically mark a method. Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075 (Fed. Cir., 1983) is a damages case, not a mismarking case. American Medical Systems, Inc. v. Medical Engineering Corp., 6 F.3d 1523 (Fed. Cir. 1993) was also a damages case, the patent at issue having both method and apparatus claims. Indications are, however, that qualifying language can enhance or negate a mismarking situation.
B. Qualifying Language May Be Material and Negate or Enhance Intent Or Even Falsity – Make It “Just Right”
1. May Be Covered
In Solo Cup, in addition to the statement being true and noting that failure to include patent numbers limited damages under 35 USC 287, the opinion of counsel justifying “may be covered” designation included in marking with patent numbers was a factor negating deceptive intent. As with continuing to mark patent numbers, Solo had an opinion that it was acceptable to make the statements and a logical rationale in the impracticality of changing to a more precise notice as the patenting picture evolved. The Solo Cup decision logically stands for the proposition that the whole marking legend is material. “May be covered” is not necessarily mismarking and is not a violation if there was no deceptive intent.
2. Made By the Method of …, This product is the subject of …
Clontech did not actually interpret the issue of reading claims, focusing on intent:
“Assuming an article is mismarked as “patented” because the claims of the cited patent do not read on the article, the question arises whether more is required by way of proof to establish that the mismarking is for the purpose of deceiving the public. That is, should the statute be read to cause all actual mismarking to be subject to the civil fine?”
Clontech was fact based. Certain of the mismarking allegations were negated because the science involved left open some interpretation that there was claim coverage. Clontech also distinguished its facts from qualifying language: “This is not a case where the cDNA library products were marked with language stating that the products were made by the ‘methods’ of any patents. Rather, the record shows that the marking language included the statement: ‘This product is the subject of U.S. Patent No. 5,668,005.’ See, e.g., (J.A. 1263-65).” (Emphasis added)
In Clontech, the qualifying language made things worse. On two of three mismarking scenarios, the finding was reversed, but on the third, the very precise legend “This product is the subject of U.S. Patent No. 5,668,005” was mismarking and violation of 292 was affirmed.
3. For Use Under US …
Another example of qualifying language is in Amsted Industries Inc. v. Buckeye Steel Castings Co., 24 F.3d 178 (Fed. Cir. 1994) which dealt with 287 marking of a component in a combination, the court noting that for 287 purposes Amsted did not mark the component. Amsted argued that they could not mark the component because it would have been mismarking. The court stated: “A marking such as “for use under U.S. X,XXX,XXX” would have sufficed. Moreover, Amsted could have sold its plates with a requirement that its purchaser licensees mark the patented products “licensed under U.S. X,XXX,XXX.” See Devices for Medicine, 822 F.2d at 1066, 3 USPQ2d at 1292.” This fact situation involved two ‘products’ (so there was something to physically mark under 287) not a method for anything. The same logic might apply to product-method and product-combination.
Conclusion
Solo Cup and the other cases discussed herein indicate that patent mismarking cases are not based on the principle of strict liability. Indeed, they have aspects of false advertising type cases – the meaning of the message sent and the understanding intended are both relevant. Saying too little – a patent number of an expired patent – or saying too much – that a “product is subject to” a patent that does not have product claims – can indicate both a false meaning and deceptive intent. Qualifying language can provide sufficient information and explanation, whether “may be covered”, “made by the method” or “for use under”. But the qualifying language needs to be accurate, and by going too far can implicate mismarking.