Update On False Marking

A few weeks ago, we wrote of the false marking case of Pequignot v. Solo Cup Co. (See A Vanishing Opportunity?). We noted that the appellate judges seemed to be telegraphing their punch during oral arguments on the appeal. In particular, we referred to the suggestion, by one of the judges, that the false marking statute was criminal in nature, whereby intent must be proved “beyond a reasonable doubt.”

The C.A.F.C. recently handed down its decision in the appeal. The Court focused on the requirement that, to be actionable, false marking must be done with the intent to deceive the public. Under established precedent, “the combination of a false statement and knowledge that the statement was false creates a rebuttable presumption of intent to deceive the public, rather than irrebuttably proving such intent … Although the presumption cannot be rebutted by ‘the mere assertion by a party that it did not intend to deceive’ … mere knowledge that a marking is false is insufficient to prove intent if [the defendant] can prove that it did not consciously desire the result that the public be deceived … a party’s good faith belief is relevant to determining whether it acted with intent to deceive.”

Fine, so what is the standard of proof required of Solo? Solo had admittedly marked products with the numbers of patents which it knew were expired. Here it comes – “[t]he bar for proving deceptive intent here is particularly high, given that the false marking statute is a criminal one despite being punishable only with a civil fine … Solo’s burden of proof is to show by a preponderance of the evidence that it did not have the requisite purpose to deceive” (emphasis added). Well, we were close.

Solo had “cited the specific advice of its counsel, along with evidence as to its true intent, to reduce costs and business interruption.” So, Solo won – no liability.

As an interesting aside, we report that the “relator,” Pequignot, was seeking damages of $5.4 TRILLION, yes TRILLION! The Court noted that this sum is equal to “42% of the country’s total national debt.”

The appeal in Stauffer v. Brooks Brothers, Inc., which turns on the question of who has standing to sue for false marking, remains pending. We’ll keep you informed.