Updated:  June 28, 2010. See THIS.  Federal Circuit held that Solo Cup did not have the “intent to deceive the public” required for false marking liability.  The court created a high bar for plaintiffs to overcome and the decision will put a damper on the false-marking claims.  However, some defendants may not have the same advice-of-counsel excuse that Solo Cup was able to rely upon.  The case below is still highly pertinent to businesses with patents.

Recently, hundreds of companies have been sued for false patent marking.  Federal statute creates a cause of action against a manufacturer who, with intent to deceive the public, mark unpatented products as patented. Any person may sue to collect the damages, however, half of the award goes to the Federal Government.  Damage awards may be awarded up to $500 per falsely marked article.

One of the largest of such cases is Pequignot v. Solo Cup Co. where Solo Cup Co. is being sued by a patent attorney claiming the company is misleading consumers by marking its products with expired patent numbers.  To save money on retooling and other costs, Solo Cup had continued to mark its products with patent numbers even though those patents had expired.  Pequignot sought a damage total exceeding $10 trillion based on the $500 per falsely marked article standard.

The judge ruled in Solo Cup’s favor, but the case is on appeal.  What happens on appeal will likely have great ramifications for other manufacturers.  This case is one in a series of recent cases raising false marking claims, and it highlights the potentially high stakes from falsely marking products — the maximum potential damage award against Solo was enormous. However, the court’s decision creates a high bar for plaintiffs seeking to obtain a favorable decision in such cases, at least when the defendant has acted in good faith.

This unusual case raises the question of how businesses can protect themselves from patent-marking bounty hunters.  Since federal law allows individuals to sue for false marking and reap monetary benefits, it is imperative that companies learn how to avoid false-marking liability.

First: Pay attention to the details of your patent.  When does it expire?  Stop marking the product once it does expire.

Second: Take steps to build your market base by developing a strong trademark while you have patent protection.  This will help your market dominance even after your competitors can enter your market and produce “copies” of your product.

Third: Patent your ongoing innovations.  Patent your new and improved changes to your product.  This will give you protections that will extend beyond the length of your original patent protection.