Pequignot v. Solo Cup Company

Filing 207

MEMORANDUM OPINION. Before the Court are the parties' cross-motions for summary judgment. For the reasons stated in open court, as supplemented by this Memorandum Opinion, defendant's motion has been granted, and plaintiff's motion has been denied. See Memorandum Opinion for details. Signed by District Judge Leonie M. Brinkema on 8/25/2009. (rban, )

IN THE UNITED

STATES

DISTRICT COURT
OF VIRGINIA

FOR THE

II

L

EASTERN DISTRICT

Alexandria Division
MATTHEW A. PEQUIGNOT,

AUG 2 5 2009
CLERK, U.S. DISTRICT COURT
ALEXANDRIA, VIRGINIA

Plaintiff,
v.
SOLO CUP COMPANY,

) )

)
) l:07cv897 (LMB/TCB)

)
)

Defendant.

)
)

MEMORANDUM OPINION

Before the Court are the parties'

cross-motions for summary

judgment.

For the reasons stated in open court,

as supplemented

by this Memorandum Opinion,

defendant's motion has been granted,

and plaintiff's motion has been denied.
I.
A. Introduction.

Background.

Plaintiff Matthew Peguignot oui tarn action under 35 U.S.C.
Company ("Solo"),

("Pequignot")

has brought this

§ 292 against defendant Solo Cup
bowls,

a manufacturer of disposable cups,

plates,

and utensils.

Section 292 prohibits false patent marking

done "for the purpose of deceiving the public," and imposes a

maximum fine of $500 for each "offense," half of which goes to the plaintiff and half to the United States.
that Solo has violated § 292 in three manners:

Pequignot claims

1.

Solo has marked billions of plastic cold drink cup lids 28,797 (the "'797 patent"),
1988.

with Reissue Patent No.

despite

knowing that it expired on June 8,

2.

Solo has marked billions of plastic

"Traveler"

lids

for

hot drink cups with Patent No.

4,589,569

(the "'569 patent") 2003.

despite knowing that it expired on October 24,

3.

Solo has marked packages for certain cups,

bowls,

and

utensils with the phrase "This product may be covered by one
or more U.S. or foreign pending or issued patents. For

details,

contact www.solocup.com.rrl despite knowing that the

products were not covered by any pending or issued patents. Solo concedes these facts as alleged, but contends that it is not

liable under § 292 because it did not act "for the purpose of
deceiving the public." Both parties have moved for summary

judgment on two issues: deceive, and (2)

(1)

whether Solo acted with intent to for the purpose of

what constitutes an "offense"

assessing the statutory fine.2

to refer

xThis opinion will use the term "'may be covered' language"
to this phrase.

not protected by a current or pending patent with an expired

First, claim,

2The Court previously denied two motions to dismiss by Solo.
in denying a motion to dismiss for failure to state a the Court ruled that knowingly marking a product that is
or with the "may be covered" language,

marking and can violate § 292 if intent to deceive is proven. Peouianot v. Solo Cup Co.. 540 F. Supp. 2d 649 (E.D. Va. 2008) ("Pecruianot I"). Next, in denying a motion to dismiss for lack of subject matter jurisdiction, the Court held that despite not alleging any injury to himself, Pequignot has standing to pursue this suit on the United States' behalf as a oui tarn relator, and allowing him to sue does not violate the Take Care Clause of the Constitution. Peouicmot v. Solo Cup Co., No. l:08cv897, 2009 WL
874488,
II") .

patent number,

is a false

91 U.S.P.Q.

2d 1493

(E.D.

Va.

Mar.

27,

2009)

("Peguignot

-2-

B.

Drink Cup Patents.

The cup lids at issue in the

'797 and

X569 patents

are

produced by thermoforming stamping machines.
"mold base" that contains between 16 and 128

Each machine has a
"mold cavities." A

cavity contains

three parts,

one of which,

the

"inner ring,"

contains

the patent engravings.

Every time

the machine cycles -

generally every four to six seconds - each mold cavity produces a

lid.

The cavities can last 15 to 20 years,
1. The '797 Patent.

and sometimes longer.

The

'797 patent,

which applies

to certain lids

for cold

drink cups,

issued on May 4,

197 6.

Shortly afterwards,

Solo

added the patent number to the inner rings of the mold cavities
that produce these items.

The patent expired on June 8, that Solo was aware of

1988.

There is no evidence At that

the expiration until June 2000.3

time,

Steven Smith,

who had been hired in April 2000 as Solo's

Director of Product Development,
on some of Solo's lids. accordingly,

noticed the

*797 patent number

Solo lacked in-house patent counsel; an associate with

Smith contacted Robert Diehl,

Wallenstein & Wagner,
counsel,

Solo's outside intellectual property

who informed him that the number reflected an expired

3Pequignot acknowledges that claims under § 292 are subject to a five-year statute of limitations, Arcadia Mach. & Tool inc.
v. Sturm, Ruaer & Co.. 786 F.2d 1124, 1125 (Fed. Cir. 1986), and that he cannot sue based on any markings that occurred before
September 5, 2002.
-3-

patent.

A month later,

Smith e-mailed Diehl,

asking him whether

Solo should use lids.

the number if it built new mold cavities there was

for the

Diehl responded that

"[n]o need to mark the new
Smith asked,
I

cavities because

the patent has
but

expired."

*'No need
think we

to mark new cavities',

are we wrong in doing so?

just did."
to take

Diehl answered,

"When a patent expires you don't have
However, I'm going to do a little

the old number off.

research to see if

the situation is different when adding an

already expired number to a product. as long as

My gut

feel

[sic]

is

that

the patent claims would have covered the product,
I'll have a more definitive answer telling him, for "The

there isn't a problem. you soon." Diehl

e-mailed Smith the next day,

false marking of a product with a patent number does

create

liability for the offender. on

However,

it appears liability hinges

lintent to deceive the public'
the number, if possible.

Best case scenario is to
it is important that

remove

If not,

Solo not

further any unintentional

falsity in product literature

or

the like.

If you want to discuss,

please give me a call."

These e-mails the

in 2000 are the only documentary evidence of

legal advice Solo received on marking products with expired
However, according to testimony by Smith and

patent numbers.

Linda Kuczma,
Solo,

a Wallenstein & Wagner partner who also advised

Solo had regular meetings and phone calls with Wallenstein
regarding intellectual property, and discussed

& Wagner attorneys

-4-

the expired patent issue further orally.
Kuczma, shortly after

According to Smith and
in

the exchange between Smith and Diehl

2000,

Solo,

based on Wallenstein & Wagner's

advice,

developed a

policy under which it would not immediately replace the mold

cavities containing the

X797 patent.

Rather,

under the policy,
the

when cavities needed to be replaced due to wear or damage, new cavities would not include the expired patent marking.
Because the cavities can last many years, Solo continues

to use

cavities

today that imprint the expired patent numbers.4 this policy was grounded

According to deposition testimony,

in two primary factors.
was permissible under §

First,
292.

Solo's attorneys believed that it
it was commercially

Second,

difficult and costly to replace all of the cavities at once.
Solo estimates that it would have cost over $500,000 to replace

all of the inner rings - the parts containing the patent engravings -- and $1.5 million to replace the cavities in their

entirety.5

According to Solo,

these figures represent only the

costs of the replacement parts and not the potential costs of

cavities presently in use contain the expired engravings.
asserts

4The parties dispute whether or not the majority of the
that most of the molds no longer have the markings,

Solo
but

Pequignot cites a chart indicating that 1,094 out of the 1,642 cavities currently in use still have expired patent numbers. This dispute is not one of a material fact that would preclude
summary judgment.

containing the expired patent numbers and deposition testimony
concerning the cost of each replacement cavity.
-5-

5These estimates are based on the number of cavities

labor,

production downtime,

and other

factors.

Solo admits

that

it never conducted a formal cost analysis before developing its
policy. Rather, Solo indicated to its attorneys that a wholesale and

replacement of
the attorneys § 292 as

the cavities would be costly and burdensome,

concluded that such steps were not necessary under Solo took reasonable steps to replace the

long as

cavities

over

time and did not otherwise manifest

an intent

to

deceive

the public. Solo's policy is detailed in the
Smith, Diehl, and Kuczma. the policy's the '797 lids, The record

The development of
deposition testimony of also contains

considerable evidence of including: (1)

implementation,

a drawing of one of

dated April
an e-mail

30,

2001,

with the patent number scratched out;
2003 from Smith

(2)

dated June 24,

to a tooling employee, the "RE Patent"

Rajenda Chauhan,

asking him to confirm that

(i.e.,

the

'797 patent) (3)

number would not be engraved on any new tooling employees, Chauhan and

cavities;

testimony by two
that

Matthew Banach,

Smith instructed them that new cavities

could not contain the expired numbers;6
cavities were ordered or made with the
2000; (5)

(4)

testimony that no new

'797 patent since June
current mold

undisputed evidence that many of Solo's

6Chauhan testified specifically that Smith gave him these
instructions shortly after Smith joined the company in 2000,
Chauhan Dep. account that 34:8-9, corroborating Smith and the attorneys' the policy was developed at that time.
-6-

cavities

do not contain
Solo's

the patent numbers;
chief IP counsel

(6)

testimony by
that he

Douglas Eveleigh,

since 2006,

reviewed the policy shortly after he was hired and found it
permissible; and (7) an October 26, 2006 e-mail
that

from Eveleigh to
"to

Banach confirming
conserve costs."

the policy and stating

its purpose was

2.

The

'569

Patent.

The

'569 patent,
was

which covers

Solo's
1986

"Traveler"

lids

for hot

drink cups,

issued on May 20,

and expired on October 24,

2003.

Like the

'797 patent,

it was

added to

the cavities

that

produced the lids

shortly after the patent that Solo

issued.

The evidence indicates the expired markings covered by the
of

adopted the same policy for lids that it did for lids

on the Traveler

'797 patent.
Solo was

Because Smith had begun to track all
aware of the impending expiration of

Solo's patents,

the

'569 patent and took certain steps

accordingly.

On January

28,

2003,

Smith e-mailed Kuczma to confirm that

Solo would not be

adding the cavities

'569 patent number to

the new set of Traveler lid

it was ordering.

Kuczma testified that she gave Solo

advice consistent with this
the '569 patent's

e-mail.

On March 9,

2004,

soon after

expiration,

Smith sent

another e-mail,

instructing Solo employees valid,

that because the patent was no longer

"reference to it should be removed during any outer ring
and product drawings for all Traveler lids should be

retooling,"

-7-

updated

to remove any references

to

the patent.

The e-mail

further stated that at once," wore out. but that

the

"tooling does

not need to be changed all replaced when they

instead,

cavities would be a cover

The evidence also includes

sheet documenting

the agenda of an IP committee meeting on November 29, agenda included an item called "Lid markings patents,"

2004.

The

in view of expired "remove when

and the sheet included a handwritten note,

re-tool," which Kuczma testified she wrote to reflect Solo's

policy,

consistent with her advice.

According to undisputed

testimony,
'569

Solo did not order or make any new cavities with the
the patent expired.
"May be Covered" Language.

engraving after
C. Conditional

The

"may be covered"

language originated in 2004.

Kuczma

testified that she drafted the language and that
Solo's packaging at her advice and the advice of

it was added to
other

Wallenstein & Wagner attorneys,

who were concerned that Solo was

not giving notice to potential infringers pursuant to 35 U.S.C.

§

287.7

An e-mail from Smith to Solo.employees on September 14,
that the language was developed and added at this

2004 confirms
time.

Kuczma testified that she recommended that Solo place this

as such,

7Under 35 U.S.C.

the patentee may not recover damages

§ 287,

if a patented product is not marked
for any

infringement unless it can prove that the infringer had notice that the product was patented. Damages are only recoverable for
infringement occurring after the notice.
-8-

language on all

of

its packaging,

including packaging for

numerous products

that were not protected by any current patents

or pending patent applications,

because Solo had a constantly

changing patent portfolio and it was economically impractical to

mark individual packages or items with individual patent

numbers.8

She further testified that because of the language's
she believed that it was not a false marking,

conditional nature,

even if placed on unpatented products.
this action,

During the pendency of

Solo removed the language because it found that it to subject itself to

was reaping no benefits and it did not want
further lawsuits.

Solo had a procedure for handling inquiries regarding

patents through its website,

www.solocup.com.

Any such inquiries

were initially routed to Smith,
one made any inquiries

and after 2006,

to Eveleigh.

No

regarding whether any of Solo's products Pequignot did so during the course

were covered by patents until
of this litigation.9

discussions with Solo, it became apparent that the same packaging was used for all sorts of products, some of which were patented and some of which were not patented. So, it was a nightmare and economically not feasible because they had the same cartons, the same packaging for various products. So, that's why we attempted or that's why we put together the language that we did." Kuczma
Dep. 163:1-9.

8Kuczma testified that B[i]n the course of

[the attorneys']

but instead called Solo's toll-free telephone number. After indicating the nature of his inquiry, he was told by a customer service representative that he was being transferred. He then
-9-

9Pequignot did not use Solo's website to make the inquiry,

II.

Standard of Review.

Summary judgment

is appropriate when, there is no genuine

on the basis

of the

pleadings and evidence,

issue of material judgment as a matter
v. Catrett. light 477

fact and the moving party is entitled to a
of law. 317, See Fed. 322-23 R. Civ. P. 56(c);

Celotex Corp.

U.S.

(1986).

Evidence must be viewed in the

most

favorable to

the nonmoving party.

Matsushita Elec.

Indus.

Co.

v.

Zenith Radio Corp..

475 U.S.

574,

587

(1986).

The party

opposing summary judgment may not rely on mere allegations or

denials

in its pleadings.
"by

Fed.
[its]

R.

Civ.

P.

56(e).

Rather,

the

nonmoving party must,

own affidavits,

or by the

depositions,

answers to interrogatories,

and admissions on file,

designate specific facts showing that there is a genuine issue

for trial."
colorable"

Celotex.

477 U.S.

at 324.

Evidence that is
is

"merely

or "not significantly probative"

insufficient to
Liberty Lobby,

overcome a summary judgment motion.
Inc.. 477 U.S. 242, 249-50 (1986).

Anderson v.

III.
A. Intent to Deceive.

Discussion.

1.

The Clontech Standard.

Whether Solo violated § 292 depends on whether it acted "for
the purpose of deceiving the public." The key legal authority

hung up, without mentioning his name, before he could be transferred. Pequignot Dep. 287:16-289:11.
-10-

for evaluating intent to deceive under §
Federal Circuit in Clontech Laboratories,
Corn., 406 F.3d 1347 (Fed. Cir. 2005),

292

is set out by the
v. Invitrocren
stated:

Inc.

where the court

Intent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true. Seven Cases v. United States. 239 U.S. 510, 517-18, 36 S.Ct. 190, 60 L.Ed. 411 (1916). Intent to deceive, while subjective in nature, is established in law by objective criteria. Id. Thus, "objective standards" control and "the fact of misrepresentation coupled with proof that the party making it had knowledge of its falsity is enough to warrant drawing the inference that there was a fraudulent intent". See Norton v. Curtiss. 57 C.C.P.A.
1384, 433 F.2d 779, 795-96 (1970). Thus, under such

circumstances, the mere assertion by a party that it did not intend to deceive will not suffice to escape statutory liability. Such an assertion, standing alone, is worthless as proof of no intent to deceive where there is knowledge of falsehood. But in order to establish knowledge of falsity the plaintiff must show by a preponderance of the evidence that the party accused of
false marking did not have a reasonable belief articles patent). no were properly marked (i.e., that by the a covered

Absent such proof of lack of reasonable belief, the statute ensues.

liability under

Clontech.
that

406

F.3d at

1352-53.
whether

The court
[plaintiff]

further articulated
proved by a

*the standard is

preponderance of

the evidence that

[defendant]

did not have an
id. to at 1355, of

honest good faith belief and that

in marking its products," rises id. at

n[t]he question of whether conduct a question of
that,

the level

statutory deception is
facts before it, it

fact,"
of

1353.

On the
the

ruled

on one

its

products,

defendant was faith," it

liable because,

n[b]eyond blind assertions that

of

good

did not provide

"evidence
-11-

it had an objective

good faith belief
1357.

that its

.

.

products

[were]

patented."

Id.

at

Pequignot argues

that Clontech equates

knowledge of

falsity

with intent to deceive,
patented, patent,

and that when a party marks a product as
is not protected by a valid, unexpired Thus,

knowing that it

the party necessarily acts with intent to deceive.

Pequignot asserts

that Solo acted with intent to deceive because

it admits that it marked billions of products as patented, knowing that they were not covered by valid,
Pequignot's

unexpired patents.
Rather

reading of Clontech is unpersuasive.

than announcing a definition of intent to deceive, creates a standard of proof. Specifically,

Clontech

the court held that a

false marking, "warrant[s]

combined with knowledge of the falsity,

drawing the inference that there was a fraudulent

intent," and that this inference cannot be rebutted by "the mere
assertion by a party that it did not intend to deceive." 1352 (emphasis added). Contrary to Pequignot's position, Id. the at

Federal Circuit did not hold that this inference is irrebuttable.
Indeed, Pequignot's interpretation would eliminate any

distinction between intent to deceive,
knowledge of falsity,

which § 292 requires,

and

a different state of mind.10

defendant

"marks upon ... in connection with any unpatented article the word 'patent' or any word or number importing the same is patented for the purpose of deceiving the public." If Pequignot's proposed standard were correct, the phrase "for the
-12-

"Section 292 specifically imposes a fine only when the

Moreover,

to hold,

as

Pequignot suggests,

that

a party

that

knowingly made false patent markings
offering evidence that it did not

is precluded from even

intend to deceive would be is set for proving deceptive 455 F.2d 763, 768

inconsistent with the high bar intent. See Brose v. Sears,

that

Roebuck & Co.,

(5th Cir.
show that

1972)

(holding that

the plaintiff bears

the burden to
Central
P.C.. 13,

the defendant

acted with intent
v.

to deceive);

Admixture Pharmacy Servs. No. CV-00-2430-VEH,

Advanced Cardiac 4448613, at *24

Solutions. Ala.

2006 WL

(N.D.

Jan.

2006),

aff'd in relevant part, "[t]he

482

F.3d 1347

(Fed.

Cir.

2007)

(noting that

threshold for establishing a successful

Section 292
v. R.J.

claim is extremely high");
Tobacco Co.. 537

cf.

Star Scientific,
1366 (Fed. Cir.

Inc.

Reynolds

F.3d 1357,

2008)

("[T]he inference

[of deceptive intent]

must not

only be

based on sufficient evidence and be reasonable
evidence, but it must also be the single most

in light of that
reasonable

inference able to be drawn from the evidence[.]").u
Accordingly, the Court holds that under Clontech. a false

marking made with knowledge of

falsity creates

a rebuttable

purpose of deceiving the public" would instead read "with knowledge that the same is unpatented," or some other similar phrase.

"Star Scientific involved allegations of inequitable
conduct, in which intent to deceive must be proved by clear and convincing evidence, a heightened standard of proof. Nonetheless, this pronouncement on intent to deceive, although distinguishable, is informative.
-13-

presumption of

intent

to deceive.

To rebut

this presumption,

the

defendant must present more evidence than a

"mere assertion by a

party."

Whether evidence suffices

to rebut

the presumption

"turns on a fact-specific examination of conduct." Peouicmot
2.

the defendant's 654.u

I.

540

F.

Supp.

2d at

The Expired

'797 and

*569

Patents. summary judgment has

Under a proper reading of Clontech.

been granted to Solo on the

'797 and

'569 patents

for cup lids the

because the evidence in the record successfully rebuts inference that Solo acted with intent i. to deceive.

Clontech as Applied to Marking Products with

Expired Patent Numbers.

Unlike in Clontech.

the false markings of the

'797 and

'569

patents involve expired patents,
covered the products at all.

rather than patents that never

No court has addressed how the

Clontech standard applies to allegations involving only expired

hold,

"Contrary to Pequignot's assertions,
falsity with intent

in the following statement from Pecruicmot I.

this Court did not

that Clontech

equates knowledge of

to deceive:

Whether marking with a conditional statement constitutes a culpable false marking depends on whether Pequignot can demonstrate by a preponderance of the evidence that Solo intended to deceive the public- i.e.. that Solo "did not have a reasonable belief that the articles were . . . covered by a patent" or a pending patent application. Pecruicmot I. 540 F. Supp. 2d at 655-56 (quoting Clontech. 406 F.3d at 1353). This discussion of Clontech was dicta, as it was not relevant to the only issues raised in the motion to dismiss in Pecruionot I -- namely, whether marking products with expired
patents or conditional language can constitute
-14-

false marking.

patents.

As

such,

the question of what

suffices

to prove intent

to deceive under such circumstances is one of first impression.13
The Court finds that when, as here, the false markings at

issue are expired patents that had previously covered the marked
products, weaker, the Clontech presumption of intent to deceive is as well as the

because the possibility of actual deceit,

benefit to the false marker,

are diminished.

When a product is

marked with an expired patent number,

any person with basic

knowledge of the patent system can look up the patent and

determine its expiration date,

reducing the potential

for being

deceived.

Moreover,

in the case of design patents like Solo's,

marking an article with an expired patent can work to the

marker's detriment,

because public patent documents reveal all of
that are now in the

the previously patented design features

public domain,

thus creating a road map for anyone wishing to
See Smith Dep. 406:15-407:8.

legally copy the product.

Conversely,

if a product is marked with an unexpired patent that
the prospects for deceit, and potential

does not cover it at all, advantage to the marker,

are higher because it is

far more

difficult for competitors and the public to determine whether the

found where a defendant marked products with both expired patent numbers and numbers of patents that did not cover the products at all, and conceded that he made these markings to "differentiate
v.

13In a distinguishable fact pattern,

intent to deceive was

[his] product from potential copiers."
Pro Patch Svs.. Inc.. 434 F. Supp.

2d 445,

See DP Wagner Mfcr.
457 (S.D.

Tex.

Inc.

2006) .

-15-

marking is

false,

particularly if the patent is complex.14
intent exists when a

Thus,

although some presumption of deceptive

product

is knowingly marked with an expired patent,
than when a product

that

presumption is weaker

is marked with an

unexpired patent that does not cover the product.15
ii. Whether Solo Acted With an Intent to Deceive.

Because Solo admits

that

it knowingly marked its

lids with

expired patents, applies.

a weakened presumption of intent to deceive this presumption is definitively rebutted by
for the purpose of deceiving the

However,

evidence that Solo acted not public,

but in good faith reliance on the advice of counsel and
disruption.
to determining

out of a desire to reduce costs and business
A party's good faith belief is relevant

whether it acted with intent

to deceive.

See Clontech.

406 F.3d

at 1355

(holding that a plaintiff must show that a defendant

"did

14It is noteworthy that in Clontech,

the patents at issue

were for sophisticated molecular biology products.

Failure to State a Claim, asserting that marking a product with an expired patent could not be a false marking, in part because of the smaller possibility of deceit and minimal benefit to the marker. The Court disagreed. Pecruicmot I. 540 F. Supp. 2d at 654. That holding remains unchanged; if a party falsely marks an article with an expired patent with actual intent to deceive, § 292 is violated. However, at the summary judgment stage, where Solo's liability turns on whether it intended to deceive, the
absence of any reason to deceive strongly suggests that no such

15Solo made similar arguments in its Motion to Dismiss for

intent existed. See Matsushita. 475 U.S. at 596-97 (holding that the "absence of any plausible motive to engage in the conduct
charged" was "highly relevant" to determining whether summary judgment should have been granted in a civil conspiracy case).
-16-

not have an honest good faith belief in marking its products").

In addition,

good faith reliance on the advice of counsel can be

a defense to allegations of intent to deceive.
& Tool v. Sturm, Ruaer & Co, Inc.. No.

See Arcadia Mach.
1985 WL

CV84-5197MRP,

5181,
(Fed.

at *2
Cir.

(CD.

Cal.

June 25,

1985),

aff'd.

786 F.

2d 1124

1986) ,16

Solo has provided considerable "actual evidence" -- far more
than "mere assertions" -- showing that it did not intend to

deceive the public.
by Diehl, Kuczma,

It has provided unrebutted,

sworn testimony

and Smith that Solo,

pursuant to counsel's

advice and due to concern over the costs and disruption from replacing all of the mold cavities at once, formulated a policy

under which cavities with expired numbers would be replaced as they wore out or were damaged. It has provided additional

unrebutted evidence that this policy was implemented and
followed, including the sworn testimony of Banach and Chauhan,
and testimony by

numerous e-mails and updated tool drawings,

Eveleigh that he reviewed and re-approved the policy after being
hired as Solo's IP counsel in 2006.

The undisputed evidence also shows that Solo was genuinely

in those cases, the defendants' "good faith belief" and "advice of counsel" concerned whether their patents actually covered the articles in question, whereas Solo admits to knowing that its products were not covered by the patents at issue, the Court finds that the advice Solo received from its counsel is
nonetheless relevant to whether it intended to deceive.
-17-

"Although Clontech and Arcadia are distinguishable in that

concerned about the law. It was

following the advice of counsel and adhering to Smith, Solo's Director of Product Development, in 2000.
It was

who originally raised the marking issue to Diehl
Smith who followed up with Diehl a month later. who, after being informed by Diehl that there was

It was

Smith

"[n]o need to
"wrong in

mark the new cavities,"

asked Diehl whether Solo was

doing so."
personnel

It was Smith who repeatedly contacted Solo's
to confirm that they were updating the drawings

tooling
and not

ordering any new cavities with expired numbers.

There is not a

scintilla of evidence that Solo ever ignored its counsel's advice
or, more importantly, manifested any actual deceptive intent.

There is also no evidence that Solo had any desire to keep the
expired numbers on the lids for any reason other than to avoid
Kuczma's

the costs and disruption of a wholesale replacement. deposition on this point is telling:

Solo didn't come to me and say, you know, "We want a way to keep this number on our products." They didn't come to us and ask, "How can we maintain this on our products?" We were talking to them about this patent is

going to expire

[sic].

So we need to remove it from the

products. How can we do that, you know, in an organized, you know -- a sense that made -- in a way that made sense

in a business way and still within,
of the law.

you know,

the scope

Kuczma Dep.

116:20-117:5.

In sum,

all

of

the evidence in the

record shows

that Solo genuinely acted in conformity with its
the law as explained to it by its that counsel. of

understanding of

Although Pequignot argues

there are disputes

-18-

material fact that preclude summary judgment in Solo's
of

favor,
or

all

the alleged disputes are either entirely speculative,

immaterial to whether Solo acted with actual intent to deceive
the public.

For example,

Pequignot

focuses on the lack of any formal

legal memoranda or records of research memorializing the advice

given by Wallenstein & Wagner,
exactly when the advice was Kuczma,

the lack of clarity regarding
and the fact that Diehl, of any cases they

given,

and Eveleigh cannot remember the names

researched.

What is at issue,

however,

is not the quality of

Wallenstein & Wagner's advice or recordkeeping, which advice was given, or witnesses'

the manner in

ability to remember cases
On the only relevant

they researched nearly a decade ago.

question -- whether Solo intended to deceive -- these issues are

immaterial.17

Pequignot also points out that Solo did not do a

detailed analysis of the cost of replacing all of the cavities at
once. At most, this suggests that Solo's policy not to replace

the cavities immediately may not have saved much money.

The lack

of a major economic benefit is not evidence that Solo acted with
intent to deceive.

The evidence Pequignot cites to show actual intent to

patent violated § 292,

this case,

"Moreover, given the lack of virtually any case law, before
addressing whether marking a product with an expired
it is unsurprising that Wallenstein &

Wagner did not prepare detailed memoranda.
-19-

deceive is threadbare.

For example,

in 2006,

Eveleigh,

discussing a different,

newly-patented product,
xpatented'

wrote in an e(in addition

mail that "adding the word

to literature

to any marking on the product)

is nice to have as it will give

others additional notice of our patent and make them think twice
about copying the product." The unremarkable fact that Solo's IP

counsel was aware of the advantages of marking a new product with

a valid patent is irrelevant to whether Solo had an intent to
deceive when it adopted its policy regarding the '797 and '596

lids.

Similarly,

that Solo's website,

until recently,

contained

images of lids showing the expired patent numbers also is not

evidence of deceptive intent.
mention the patents,

The web pages themselves did not

the markings in the images were barely

legible,

and the unrebutted testimony is that the lids in the

images were randomly taken from Solo's inventory and not chosen
because they contained the patent markings. On these facts, [Solo] there is not "a scintilla of evidence that FMC Corp. v. Control

acted with intent

to deceive."

Solutions,

Inc..

369 F.

Supp.

2d 539,

584

(E.D.

Pa.

2005).

Solo

has successfully rebutted the Clontech presumption,
has offered nothing more than speculation in return. judgment has therefore been granted to Solo.
3. Conditional "May Be Covered" Language.

and Pequignot
Summary

For similar reasons,

summary judgment has also been granted

-20-

to Solo on the issue of whether it intended to deceive when it marked its packages with the "may be covered"
The Court has held the "may be covered"

language.
language, if

knowingly placed on an article that is not covered by a current or pending patent, is a false marking that violates § 292 if done because it "clearly suggests that the

with intent to deceive,

article is protected by the patent laws," and "potential

inventors and consumers cannot readily confirm whether the article is protected."
effect,

Peauicmot I.

540 F.

Supp.

2d at 655.
vno

In

the conditional statement
sign." Id.

"functions as a de facto

trespassing'

It is undisputed that Solo knowingly placed this language on
products that were never covered by any patents or pending

applications.

Although this makes the question of intent to
»797 and '596

deceive a closer call than in the case of the
patents,

Solo has successfully rebutted the Clontech presumption.

The evidence,
September 14,

including Kuczma's testimony and Smith's e-mail of
2004, establishes that the language was added at

the suggestion of Solo's outside counsel,
of any Solo employee or officer,

not at the initiative

and that it was added so that

Solo would arguably provide notice to potential infringers of Solo's actual, valid patents. There is also undisputed testimony

by Kuczma and Smith that the decision to place the language on
all of Solo's packaging, rather than only on packaging of

-21-

products known to be covered by valid patents

or patent

applications,

was made because the alternative was
and financial perspective. It

too difficult

from a logistical

is also

undisputed that Solo had procedures
lines to handle any inquiries,

on its website and phone
other than

and that no one,

Pequignot,

ever made any such inquiries.

Moreover,

before

Peguignot I,

no court had expressly ruled that conditional
that used here constituted a false marking under

language such as

§

292.

In short,

there

is no

evidence to support

the view that

counsel's advice about following that advice,
the public in any way.

this sort of

language,

and Solo's

was unreasonable or intended to deceive
Accordingly, when Solo marked its

packages with the conditional not act with intent
B.

"may be covered"

language,

it did

to deceive the public.

Damages and the meaning of "offense."
the Court has granted summary judgment to Solo on

Because

the intent question, "offense"

there is no need to address § 292.

the meaning of the

in the damages provision of

However,

parties have moved for a determination of
decision about this

the

issue.

Because a
the

issue could significantly effect

incentives

for crui

tarn actions

such as

this one,

the Court has
in

addressed the damages
Solo's favor.

issue and has granted summary judgment

The

false marking statute states,

in relevant part,

"Whoever

-22-

marks upon

.

.

.

any unpatented article,

the word

'patent'

or any

word or number importing that the same is patented for the

purpose of deceiving the public

.

.

.

[s]hall be fined not more

than $500 for every such offense."
added). Pequignot argues

35 U.S.C.

§ 292(a)

{emphasis

that each falsely marked article if found to

constitutes an "offense," and therefore that Solo,
have acted with intent to deceive, offenses. Solo, conversely, argues

committed billions of that an "offense" is only

committed when a party makes a distinct decision to falsely mark,
and therefore that it committed at most three offenses - two when it decided not to immediately stop marking the cold drink and Traveler lids once their patents expired,
to add the "may be covered"

and one when it decided

language to its packaging.

The Court adopts Solo's position,

which is supported by the

vast majority of case law addressing damages under § 292. seminal case on the subject, the First Circuit,

In the

interpreting an held:

earlier but similar version of the false marking statute,

[A] plaintiff, in order to recover more than a single penalty, must go further than to prove the marking of a number of unpatented articles. The proof must be

sufficiently specific as to time and circumstances to show a number of distinct offenses, and to negative the possibility that the marking of the different articles was in the course of a single and continuous act.
London v. 1910). Everett H. Dunbar Corp.. 179 F. 506, 508 (1st Cir.

In reaching this

conclusion,

the court cited the text of

the statute and its penal nature,

noting that "the statute must

-23-

be read as making the fraudulent purpose or intent public as
concerns

to deceive the

the gravamen of the offense."

Id.

It also voiced
in

that an alternative interpretation could result

disproportionate penalties,

stating:

"if we construe the statute
for imposing the penalty, or cheap

to make each distinct article the unit the result may follow that the

false marking of small

articles

in great quantities will result

in the accumulation of

an enormous sum of penalties,

entirely out of proportion to the

value of the articles
Congress press

...

It can hardly have been the intent of
fast as a printing

that penalties should accumulate as

or stamping machine might operate." Nearly all the courts

Id. issue have Conversely,

that have addressed this

followed London.

either explicitly or implicitly.18

18See A.G.
C07-5158RBL,

Design & Assocs. v. Trainman Lantern Co..
at * 3 (W.D. Wash. Jan. 23,

No.
2009)

2009 WL 168544,

(finding that a defendant that falsely marked 15,000 lanterns over three years committed only "a single continuous offense");
Forest Group, Inc. v. Bon Tool Co., No. H-05-4127, 2008 WL

2962206, at *5-6 (S.D. Tex. July 29, 2008) (finding only one false marking offense when the defendant "made only one separate, distinct decision to mark its stilts after it knew the stilts did not meet all the claims of [the patent at issue]"); Bibow v. Am. Saw & Mfa. Co.. 490 F. Supp. 2d 128, 129 n. 1 (D. Mass. 2007)

(opining that

"[i]t is doubtful that the statute ever intended to

create such a lucrative game of xgotcha!'" by imposing a fine for each time a press release was "seen in some medium"); Undersea Breathing Svs., Inc. v. Nitrox Techs., Inc.. 985 F. Supp. 752, 781 (N.D. 111. 1997) (fining the defendant $500 for a single decision to mark flyers); Sadler-Cisar Inc. v. Comm. Sales
Network, 786 F. Supp. 1287, 1296 (N.D. Ohio 1991) (holding that a

device because "continuous markings over a given time constitute a single offense"); Joy Mfg. Co. v. CGM Valve & Gauge Co.. 730 F.
Supp. 1387, 1399 (S.D. Tex. 1989)
-24-

defendant was

liable for only one offense when falsely marking a

(finding only one

false marking

Pequignot has cited only one case after 1885 in which a court without citing any authority or engaging in any legal analysis imposed a fine for each falsely marked item.
Prods.. Nov. 1996) 29, Inc. v. 1995) Birdsona. No. 1-93-CV-1701-CC, aff'd,

See Enforcer
at 20-21 (N.D. Ga.

(unpublished),

98 F.3d 1359

(Fed. Cir.

(fining defendants $50 for each flea trap product or
In light of the consistent

product packaging falsely marked).

authority to the contrary,

Enforcer Products is not persuasive.19

While conceding that London does not support his position,

Pequignot makes a number of arguments in favor of his preferred
construction. None, however, provide sufficient grounds for

deviating from the well-settled London line of cases.

First,

Pequignot maintains that the word "offense" refers to

the term "unpatented article," arguing that the use of the word
"such" before "offense," the singular "article" instead of

"articles," and the modifiers

"any" and "every" suggest that each
is its own

and every false marking of an "unpatented article" "offense." However,

the statute also expressly differentiates

was printed multiple times).

offense when the defendant marked an advertising brochure that

maximum statutory fine for each week during which the defendant committed false marking. See Icon Health & Fitness. Inc. v. The Nautilus Group. Inc.. No. 1:02CV109TC, 2006 WL 753002, at *7 (D. Utah Mar. 23, 2006); see also Brose. 455 F.2d at 766 n. 4 (suggesting that a court could limit the damages by assessing the
fine for each day or week the marking occurred).
-25-

19One court has found a middle ground, assessing the $500

between an "article"

and an "offense."

Thus,

the London court's

interpretation -- that only a marking coupled with an

intentionally deceptive decision constitutes an "offense" -- is at
least as plausible as Next, the one suggested by Pequignot. that London is not persuasive because

Pequignot argues

it was decided under a pre-1952 version of the statute that imposed a minimum penalty of $100 per offense,
current version's $500 maximum fine.

rather than the
179 F. at 507.

See London,

Under Pequignot's argument,

the concerns about disproportionate

fines that motivated the London court are no longer relevant
because a court can now limit the total damages by minimizing the
amount of the per-offense fine, which the London court could not.

This argument,

however,

is unpersuasive because courts after 1952 Moreover, the
loom

have continued to apply London and its rationale.

notwithstanding a court's discretion to reduce an award,
specter of significant,

disproportionate fines would still

large in a false marking case if Pequignot's construction were
adopted.

Pequignot also cites the evolution of the statute,

arguing

that two changes were meant to clarify that the fine should be

imposed on a per-article basis:

(1)

an 1870 revision that changed
to "shall be

the language from "shall be liable for such offense"

-26-

liable for every such offense"

(emphasis added);20 and

(2)

the

1952 change from a $100 minimum fine to a $500 maximum - a revision that, according to Pequignot, was intended to

effectively overrule London by providing courts with discretion

to fashion an appropriate per-article fine.21
nothing, other than pure speculation,

However,

there is

to indicate that either of "offense" is

these revisions had anything to do with whether an

per article or per decision.22

Moreover,

Congress has had ample
to

opportunity since London in 1910 "article,"
wrong,

to change the word "offense"

or to otherwise make it crystal-clear that London is
Against the backdrop of numerous

but has not done so.

decisions following London.
London is correct.

this is persuasive evidence that
& Hous. 464 U.S. Auth. 30, 35 v. (1983) ("It

See Norfolk Redev. Co. of Va..

Chesapeake & Potomac Tel.

is a well-established principle of statutory construction that
'[t]he common law . . . ought not to be deemed repealed, unless

20See Patent Act of 1870,

ch.

230,

§ 39,

16 Stat.
ch.

198,
§

203
5, 5

(1870) (amending statute); Patent Act of 1842, Stat. 543, 544 (1842) (original statute).

263,

21See Act of July 19,
814 (1952).

1952,

ch.

950,

§ 292,

66 Stat.

792,

regarding the 1870 revision.

"Pequignot has not cited to any legislative history

Regarding the 1952 amendment,

the

Senate report stated, in relevant part, "The minimum fine, which has been interpreted by the courts as a maximum, is replaced by a higher maximum." S. Rep. No. 82-1979 (1952), as reprinted in 1952 U.S.C.C.A.N. 2394, 2424, available at 1952 WL 3180. This legislative history reveals nothing about how courts are to
construe the term "offense."
-27-

the language of a statute be clear and explicit for this
purpose."'
(7 Cranch)

(quoting Fairfax's Devisee v.
603, 623 (1812))).

Hunter's Lessee.

11 U.S.

Pequignot also attempts to bolster his position by citing
cases interpreting other statutes as providing for separate violations or offenses per article or product.
States v. Mirama Enters.. 387 F.3d 983, 989

See,

e.g..
2004)

United

(9th Cir.

{finding that a manufacturer's failure to report a defect in
thousands of juicers constituted thousands of violations of the
Consumer Product Safety Act); United States v. Reader's Digest

Ass'n.

662

F.2d 955,

966

(3d Cir.

1981)

(holding that

each

mailing of a simulated check was a separate violation of an FTC
order under the Federal Trade Commission Act). This argument is

unavailing for two reasons.

First,

Solo has cited contrary

authority that interprets other analogous statutes as imposing

fines per decision,
& Enarav. Co.. 38 F.

not per article.
28, 29 (E.D. Mo.

See Taft v.
1889)

Stephens Lith.
in a oui

(finding,

tarn action,

only one offense of false copyright marking where the
copies); see also A.G. Design. 2009 WL

defendant printed 10,000

168544,

at *3

(noting that "counterfeiting laws do not apply to rather only to the act of illegally and that "theft of

every bill counterfeited;

producing or tendering the counterfeit bills,"
one thousand dollar bills

from a man's wallet would only

constitute a single offense of theft").

Second,

the previously

-28-

cited case law dealing specifically with § 292 itself is far more
relevant and persuasive than case law concerning other statutes.
Finally, if Pequignot's construction were adopted, § 292

would allow plaintiffs who have suffered no injury to pursue

potentially lucrative recoveries against companies like Solo that
have caused no actual injury to anyone. Given the gui tarn

posture of this litigation,
favor of

public policy concerns mitigate in
See Taft. 38 F. at 29

the construction urged by Solo.

("Plaintiff is not suing for the value of his services, injury to his property,
of the wrongs of others;

or for

but simply to make profit to himself out
and when a man comes in as an informer,

and in that attitude alone asks to have a half million dollars

put into his pocket,
his labors light,

the courts will never strain a point to make

or his recovery easy."). the Court adopts the

For all the above-stated reasons,

holding in London that an "offense" under 35 U.S.C. distinct decision by a defendant to falsely mark.

§ 292 is a Accordingly,

even if Solo were found to have acted with an intent to deceive,

it would be liable for at most three offenses of false marking.23

nonetheless enter summary judgment in his favor that Solo has falsely marked at least 21,757,893,672 articles with expired patent numbers or the "may be covered" language. Because this argument was raised for the first time in a reply brief, and because the Court finds that the number of falsely marked

finds in favor of Solo on the meaning of "offense," it should

23In his reply brief,

Pequignot asks that even if the Court

articles is irrelevant,

summary judgment on this point is denied.
-29-

IV.

Conclusion.

For the reasons discussed in this Memorandum Opinion,

as

well as

those stated in open court,

summary judgment has been
and denied to the

granted to the defendant in all respects,
plaintiff in all respects.

Entered this /4o

day of August, 2009.

Alexandria,

Virginia

United States District Judge

Leonie M. Brinkema

/s/

"^

-30-