False Patent Claims: An Interesting Qui Tam Wrinkle

A new frontier appears to be opening up for qui tam: suits for filing false patent marks.

The relevant section of the law pertaining to patents (35 U.S.C 292) states:

(a) Whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, offered for sale, or sold by such person within the United States, or imported by the person into the United States, the name or any imitation of the name of the patentee, the patent number, or the words “patent,” “patentee,” or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public and inducing them to believe that the thing was made, offered for sale, sold, or imported into the United States by or with the consent of the patentee; or Whoever marks upon, or affixes to, or uses in advertising 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; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article the words “patent applied for,” “patent pending,” or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, 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.

Note that the law provides for qui tam suits in subsection (b), with a hefty 50% of the recovery going to the relator.

False marking “includes marking unpatented product as “patented” or marking a product as ‘patent pending’ when no patent is pending.” The tricky issues arise when manufacturers lose track of patents or continue to manufacture products bearing a patent number that has long expired.

In the now-famous/infamous case Pequignot v. Solo Cup Co., the plaintiff, Matthew Pequignot, alleged that Solo Cup falsely marked certain products with expired patent numbers and improperly marked others with conditional patent markings. Notably, Pequignot is a patent attorney, so presumably knows more about this area of the law than the average bear. Also, the case involves about 21 billion lids, each of which could potentially constitute an “offense” under the aforementioned law and carrying a $500 fine.

Solo tried to get the case dismissed on several grounds, including an argument that Pequignot lacked standing as a qui tam relator. The federal district court, however, wasn’t buying, and denied Solo’s Motion to Dismiss. In regard to Solo’s arguments that suits like Pequignot’s were not what Congress had in mind when it made qui tam suits available in false marking suits, the court noted that Congress had the opportunity to change the law, but may have decided that the benefits of allowing citizens to blow the whistle on falsely marked products outweighed the burdens.

It will be very interesting to see how the Pequignot case turns out. Given that we as a society consume so many patented products, the stakes are extremely high.

This article was sponsored by The Qui Tam Team, the epicenter for whistleblowers and people interested in the False Claims Act, Qui Tam Provisions, and Medicare and Medicaid fraud. To discuss a potential case, please call Eric Young at 1 (800) 590-4116.