CONSUMERS FAIL TO MAKE THEIR MARK: Pro Se Plaintiffs Initiating Qui Tam Suits Under The False Marking Statute Face Uphill Battle

What do adjustable bow ties have in common with disposable coffee cup lids? Not much, other than the fact that they have recently been at the center of false patent marking suits brought against major corporations not by competitors, but consumers. In each case, a consumer noticed that markings on certain products referred to patents which had long since expired.

While most ordinary consumers would not attribute much significance to such a finding, these were no ordinary consumers. They were patent attorneys who, by virtue of their profession, were familiar with the false marking statute of the Patent Act. So when Matthew Pequignot sat down to his morning coffee and noticed that the lid of his cup was marked with an expired patent, he proceeded to file Pequignot v. Solo Cup Company. And when Raymond Stauffer noticed that his Brooks Brothers adjustlox bow-tie was affixed with an expired patent number, he initiated Stauffer v. Brooks Brothers, Inc.

Pequignot v. Solo Cup Company

In Pequignot, Solo Cup initially moved to dismiss for failure to state a claim. Judge Leonie M. Brinkema denied the motion, holding that marking an article with an expired patent number was tantamount to a false marking under the statute. The court found that an article once protected by an expired patent was no different than an article that had never been covered by a patent. The court next denied Solo Cup’s motion to dismiss for lack of subject matter jurisdiction, finding that although Pequignot did not have traditional standing under Article III of the Constitution, the false marking statute was a true qui tam statute, and Pequignot was entitled to recover as an assignee of the government’s claim for any harm that resulted from the false marking of products.

Pequignot’s suit was ultimately derailed on summary judgment when Solo Cup produced evidence that it had relied upon advice from counsel that it was permissible to mark the articles after the patent had expired, taking into account that it would have cost Solo Cup nearly $ 2 million to replace the equipment used to produce the marked lids. Solo Cup’s outside attorneys had advised that such expensive and burdensome steps were unnecessary so long as the equipment was replaced with non-marked substitutes as the parts wore out over time.

Last, the court determined that Pequignot’s suggested construction of the term “offense” to mean “each article” was unsupported. Judge Brinkema held that an “offense” was to be defined as a distinct decision by a defendant to falsely mark an article. Although this issue was not case dispositive, it may be subject to attack on appeal based on Federal Circuit’s recent holding in The Forest Group, Inc. v. Bon Tool Company. In that case, the Federal Circuit held that the statutory fine should be assessed on a “per article” basis as opposed to the “per decision to mark” basis favored by Judge Brinkema.

Stauffer v. Brooks Brothers, Inc.

Stauffer’s suit was deemed dead on arrival, and was dismissed for lack of standing. The hypothetical nature of the allegations found within Stauffer’s complaint proved fatal. Stauffer’s allegation that Brooks Brothers’ conduct “wrongfully quelled competition with respect to such bowtie products thereby causing harm to the economy of the United States” was rebutted by declarations and exhibits submitted by Brooks Brothers showing that the adjustolox mechanism was not made by the defendants, but instead by a third party that also sold the mechanism to Brooks Brothers competitors, which actually fostered competition. Finding the standing issue to be dispositive, the court declined to address the failure to state a claim motion.

Lessons For Business Owners

Although the false marking suits brought by Pequignot and Stauffer have to date proved to be unsuccessful (both cases are currently on appeal before the United States Court of Appeals for the Federal Circuit), the suits could have been avoided entirely with some simple preventative planning on the part of the defendants. If it is not feasible to remove an expired patent number, a company should be prepared to produce evidence to that effect. Widely available services such as the USPTO’s internet patent database, and Google’s Patent Search, make it easier than ever for a consumer to access information about almost any patent marking affixed to any product. In a struggling economy, a large corporation with some improperly marked products could provide a tempting target for an enterprising consumer. Even if the likelihood of a plaintiff winning such a suit is remote, companies should take proactive steps to avoid becoming embroiled in litigation.