In Issue 5 (Q1 2010) of the IPT News, we posed the question “Will Bon Tool Open the Floodgates to Patent Marking Trolls?” Since Bon Tool, more than 350 false patent marking cases have been filed. The floodgates did not open – the dam completely burst.
Recently, the Federal Circuit issued two important decisions relating to false patent marking. On June 10, 2010, the Federal Circuit issued its opinion in Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010). The primary issue in Solo Cup was how to interpret the “for the purpose of deceiving the public” requirement of 35 U.S.C. §292 (the false marking provision of the Patent Act). Chief Judge Randall R. Rader, authoring the opinion, found that the bar was high. The opinion states: “The bar for proving deceptive intent here is particularly high, given that the false marking statute is a criminal one, despite being punishable only with a civil fine.” The Federal Circuit concluded that even if a plaintiff can establish a false statement related to patent marking and knowledge of the false statement, a defendant may rebut any presumption of intent with actual evidence that there was not a conscious desire to deceive. (“[M]ere knowledge that a marking is false is insufficient to prove intent if Solo can prove that it did not consciously desire the result that the public be deceived.”) Accordingly, the key factor will be not whether a defendant knew it was marking its product and not even whether it knew the statement was false, but whether it intended to deceive the public: a high burden of proof indeed.
In another important decision, the Federal Circuit recently issued its ruling in Stauffer v. Brooks Brothers, Inc., Nos. 2009-1428, 2009-1430, 2009-1453, 2010 WL 3397419 (Fed. Cir. Aug. 31, 2010). The key issue in that case was whether Stauffer (an individual who purchased bow ties alleged to be falsely marked) had standing to pursue false marking claims as a qui tam plaintiff. A qui tam plaintiff is one who brings a claim on behalf of the government and then splits the “penalty” with the government. Because most of the current plaintiffs bringing false marking claims are similarly situated to Stauffer, many of the cases that had been filed in 2010 were stayed pending this decision. The Federal Circuit held that Stauffer did not need to suffer an injury in fact to have standing, but only needed to allege that the United States had suffered an injury in fact. The court then found that Stauffer had standing and reversed and remanded the case. Accordingly, the case did not deal the knockout punch defendants were hoping for. However, one issue deferred by the lower court was whether Stauffer adequately pled the “intent to deceive” element required in false patent marking cases. In light of the Federal Circuit ruling in Solo Cup, Stauffer still may have an uphill battle getting past the pleading stage.
In any event, because Solo Cup established such a high burden of proof, as stays are lifted in other false marking cases, we can expect to see both pleading challenges (motions to dismiss) and dispositive motions (motions for summary judgment) relating to failure to plead or prove “intent to deceive.”