Home > I.P. Freely > Random dude sues “beer-pong” cup manufacturer

Random dude sues “beer-pong” cup manufacturer

The Court of Appeals for the Federal Circuit issued its decision in Pequignot v. Solo Cup in mid-July.

The court commented on the burden of proof on the element of intent to deceive the public, and confirmed that marking with expired patents constitutes false marking under the statute.

This subject matter of this case surrounds a pretty mundane topic – plastic cup lid molds that were marked with an expired patent. Solo Cup is the defendant cup lid manufacturer based in Lake Forest, Ill., with its Canadian subsidiary office located in Scarborough, Ont. Solo cup is a dominant player in the “cup and lid market” – manufacturing lids for prominent companies such as Starbucks, DQ, Wal-Mart and many universities and colleges. Interestingly, the red plastic cups most often used in “beer pong,”  or “flip cup” are manufactured by Solo.

Court of Appeals for the Federal Circuit

An individual named Matthew Pequignot decided to sue the lid company on the basis that Solo was falsely marking their products.  Mundane a topic it may be, the case demonstrates an important legal concept; marking products with expired patents. Under the statute, a company can be charged with false marketing if it sells products with expired patents.

False marking, as defined by statute, occurs when one labels an “unpatented article” as being under patent “for the purpose of deceiving the public.” Any person may sue for the maximum of $500 for “every such offense,” of which the U.S. government would receive half.

Mr. Pequignot brought this claim against Solo for marking their plastic cup lids with patents that had expired. Who knows what motivated Mr. Pequignot to launch the lawsuit, perhaps he thought he had a slam-dunk case, or maybe he wasn’t a fan of the “flip-cup” game. Who knows.

Solo owned two patents for their drink cup lids – similar to the type you’d have on your Starbucks coffee or soft drink from any fast food joint.  The patent numbers were added to the mold of the lids. So in the manufacturing process, each lid was ‘marked’ with a patent number. (Check your lids next time to see if there is a patent number there, haha) However, when those patents expired, the molds were not changed and the lids were continually used with with an expired patent number.

Solo was aware of the predicament and sought legal advice on the best course of action. Solo was advised to remove the imprinting from the molds, but if that was not possible, Solo should “not further any unintentional falsity in the product literature or the like.”  Based on this advice, Solo decided to replace the molds due to usage and wear and tear.  Solo justified this course of action because replacing all of the molds immediately “would be costly and burdensome.” In hindsight, replacing a few molds would be far less costly and time consuming that the litigation that ensued!

Pursuant to § 292, the test for false marketing requires that a party must have marked an “unpatented article.” (i.e. placing the patent number on the product). The district court held that Solo Cup’s acts in continuing to mark articles with a patent after its expiration constituted false marking. On appeal, in its defense Solo Cup argued that products previously protected by patents that have since expired are not “unpatented articles” under the statute. They attempted to make a distinction between articles that have previously been patented, and articles that have had no patent at all. The Federal Circuit disagreed. That court stated that “articles marked with expired patent numbers are falsely marked . However, as the Federal Circuit noted, whether or not the article in question is “unpatented” does not, by itself, determine the question of liability under the statute.

What’s interesting is that the court affirmed that false marking and evidence of knowledge creates a rebuttable presumption of intent. This means that burden of proof now shifts to the defendant company to rebut that presumption of intent. If they are unable to furnish any proof to discharge their evidential burden, then the presumption stands. In addition to (1) evidence of “unpatented” articles, the statute also requires that (2) the marking party act “for the purpose of deceiving the public.”

What this means is that mere knowledge that a marking is false (i.e. patent is expired) is insufficient to prove intent if a marking party can prove that it did not consciously desire the result that the public be deceived. The company still had to prove that it did not consciously attempt to deceive the public. Rebutting the presumption requires more than a mere assertion by the party that it did not intend to deceive (proof is required, just saying “I didn’t mean to deceive the public” is not enough…) the required burden of proof is to show by a preponderance of the evidence (or on the balance of probabilities) that the party did not have the requisite purpose to deceive.

The Federal Circuit agreed with the district court that Solo Cup had not acted with an intent to deceive the public with respect to marking with expired patents. However, the court held that Solo acted “in good faith reliance on the advice of counsel and out of a desire to reduce costs and business disruption.” The following are facts that the court used in its decision:

  • The good faith reliance of Solo Cup on the advice of its counsel;
  • Undisputed evidence of logistical and financial inconvenience in changing the packaging;
  • Evidence of Solo Cup’s compliance with the policies it had in place to remove expired patent references from molds that needed to be replaced due to wear or damage; and
  • Provision of contact information by Solo Cup in its packaging, such that a consumer could verify whether a specific product was covered.

The district court held that Solo Cup had committed, at most, three offenses: two, when Solo Cup decided not to immediately stop marking each of its lids when their patents expired, and one, when it decided to add the “may be covered” language to its packaging.

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