False patent markings as the newest qui tam claim?
On March 27, 2009, Judge Brinkema ruled in Pequignot v. Solo Cup Company, 2009 U.S. Dist. LEXIS 26020 (E.D.Va. March 29, 2009), that 35 U.S.C. § 292 -- which prohibits false patent marking -- is "one of the few remaining qui tam statutes in American law." Matthew Pequignot, a licensed patent attorney, sued the Solo Cup Company ("Solo"), the well-known maker of many disposable cups, lids, plates, bowls and utensils, for falsely markings its products with two expired patents, U.S. Patent No. RE28, 797, entitled "Lid," and U.S. Patent No. 4,589,569, entitled "Lid for Drinking Cup," and for including the phrase "This product may be covered by one or more U.S. or foreign pending or issued patents" on products that were not protected by any patent or pending patent application. Solo moved to dismiss asserting that Pequignot lacked Article III standing because he failed to allege any actual or imminent injury. Solo also argued that Pequignot’s claims violated the constitutional separation of powers doctrine under Article II. Judge Brinkema rejected both arguments.
While agreeing that Pequignot lacked Article III standing as a traditional plaintiff, Judge Brinkema held that § 292(b) confers standing on him to sue as a qui tam relator. Section 292(a) provides that whoever falsely marks a product with either a patent number, the words "patent" or "patent pending," or other words or numbers implying that the product is protected by a current or pending patent when it is not, and does so with the intent of deceiving the public, "[s]hall be fined not more than $500 for every such offense." Significantly, § 292(b) provides that "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." (Emphasis added). Judge Brinkema explained that § 292(b) meets five of the six elements of a qui tam statute:
It defines a wrong to the government as the false patent marking in violation of § 292(a). It imposes a statutory penalty of up to $500 per violation. It provides that "any person may sue for the penalty," regardless of whether or not such a person is personally harmed. Finally, it allows the suing person to receive half of the recovery from the suit, with the remainder going to the government.
Id. 2009 U.S. Dist. LEXIS 26020 at *18. Judge Brinkema also noted that "the Supreme Court and those courts that have adjudicated cases under § 292 have explicitly termed a § 292(b) a qui tam statute." Id. at *18-19 (citations omitted). Accordingly, "[t]hese factors are more than sufficient to conclude that § 292(b) is indeed a qui tam statute, and therefore, that Pequignot has Article III standing, as a partial assignee of the government’s claims, to sue Solo." Id. at *26.
Judge Brinkema swept aside Solo’s argument that such a construction of § 292(b) violates Article II by impermissibly undermining the Executive Branch’s ability to control qui tam litigation:
Enforcement of the substantive provisions of § 292 is not the type of executive function whose delegation to an authority not controlled by the Executive Branch would presumptively raise serious Article II questions.
Id. at *37. Judge Brinkema appeared to rue her decision to deny the motion to dismiss, describing the survival of § 292(b) as a qui tam statute as "likely an accident of history." "The only practical impact of the qui tam provisions of § 292(b) appears to be its potential to benefit individuals, such as the plaintiff in the case at bar, who have chosen to research expired or invalid patent markings and to file lawsuits in the hope of financial gain." Id. at *42. Judge Brinkema invited Solo and other potential defendants to seek revision of it in Congress as has been done with other qui tam statutes. Until then, however, Pequignot opens the door for other qui tam plaintiffs to get into the potentially lucrative game of suing product manufacturers who continue to mark their products with expired patents.
