A Washington lawyer's novel strategy of suing companies for allegedly falsely marking products as patented has raised legal questions about whether noncompetitors should have standing to bring such cases to recover fines for themselves and the government.

Matthew A. Pequignot, a partner at Washington-based intellectual property boutique Pequignot + Myers, filed two false patent marking lawsuits as a plaintiff in the Eastern District of Virginia. One of those was against disposable product maker Solo Cup Co. last September, and the other against Gillette and its parent company, The Procter & Gamble Co., in January. Pequignot v. Gillette, No. 1:08-cv-00049 (E.D. Va.); Pequignot v. Solo Cup Co., No. 1:07-cv-00897 (E.D. Va.).

Pequignot's lawsuits claim that the companies are marking products or packaging with expired patent numbers.

Solo allegedly uses expired patent numbers on numerous cups, lids and plastic utensils or packaging. Gillette allegedly uses them on more than three dozen razors, razor blade cartridges, antiperspirant and deodorant products or packages.

Both cases are based on the sole claim of false patent marking. The cases allege that such marketing "at least has the potential" to "discourage or deter" competitors, and that the "wrongfully and illegally advertised patent monopolies" have helped the defendant companies maintain market power.

'SOPHISTICATED COMPANIES'

Pequignot's court papers also argue that the defendants are sophisticated companies with enough patent experience to know "that patents expire and do not have an indefinite duration."

Pequignot asked the court to award a $500 civil monetary fine per offense, or to set a different amount.

The false marking statute allows "any person to sue for the penalty" of up to $500 per offense and share half of the recovery with the U.S. government.

Pequignot said he's only aware of one other case filed by a noncompetitor, brought by nonprofit group against a nutritional supplement company.

But that case didn't generate case law because it ended with a default judgment for the plaintiff. Patients not Patents Inc. v. Medimpex United Inc., No. 1:05CV01644 (D.D.C.).

Pequignot declined to discuss exactly why he's bringing the case, but he contends that Solo's actions harm the public.

"They're making it the burden of the public to figure out if they have rights when they don't," Pequignot said. "It costs the public money, it costs their competitors money and it deters inventorship."

GOVERNMENT ENTERS FRAY

U.S. District Judge Leonie M. Brinkema denied Solo's first motion to dismiss for failure to state a claim, and held a hearing last month on the company's motion to dismiss for lack of subject matter jurisdiction.

Brinkema also ordered the U.S. Attorney's Office for the Eastern District of Virginia to weigh in on the defendant's latest motion to dismiss because the government would receive half of any fines awarded if the plaintiff wins and it "has an interest in enforcing the false marking statute."

The U.S. Attorney's Office for the Eastern District of Virginia, which did not return calls seeking comment, asked the court last month for more time to consider whether to intervene.

Gillette's case has not been served, according to court records, and the company did not return a call for comment.

Jason White, Solo's lead counsel on the false marking case and a litigator at Chicago's Brinks Hofer Gilson & Lione, declined to discuss the case because it is pending.

Solo's most recent motion to dismiss argued that Pequignot lacks standing because he hasn't been injured. The motion also claims the statute doesn't authorize private parties to file false patent marking lawsuit on behalf of the U.S. government.

According to the Solo's papers, there's no evidence that the executive branch of the government "is even aware of this case, much less any purported injury due to alleged false marking."

Solo argues that allowing the case to proceed would violate the separation of powers doctrine in the U.S. Constitution by making the plaintiff an assignee of the government without the safeguards of the False Claims Act, which requires the filer to inform the government about the case, give the government time to decide whether to intervene, and limit the powers of the plaintiff if the government declines to intervene.

"Indeed, allowing the plaintiff in this case, or any other similarly situated plaintiff, to proceed without the oversight or even knowledge of the U.S., would be inviting the abuses previously seen in conjunction with the False Claims Act," wrote Solo's lawyers.

Pequignot disputed the notion that he hasn't been injured by Solo's action. He also said that the qui tam statues don't require harm to the plaintiff filing the case.

'BIZARRE AND NOVEL'

Intellectual property lawyer Scott Watkins, who is of counsel to Washington-based Steptoe & Johnson LLP, called Pequignot's cases a "cross between bizarre and novel."

True false marking cases -- where a company intended to deceive the market about the existence of a patent or patent application -- are rare, Watkins said.

Watkins also noted that since Solo had lawful patents that expired, it would be hard to prove that the company acted with intent to commit fraud.

"I question how that is any deceitful act," Watkins said. "If you see the patent number [on the company's products] you can go to the U.S. patent office's Web site and see it's expired. Based on the public record, no one could be deceived by these actions."

IMPRECISE LANGUAGE?

Blaney Harper, an intellectual property partner in Jones Day's Washington office, said that Pequignot is essentially exploiting imprecise language in the statute.

"I would think the court would take notice of the fact that this was not what the statute was [intended for,] regardless of its language," Harper said.

Reuben Guttman, a senior counsel and litigator in the Washington office of Wilmington, Del.-based Grant & Eisenhofer, said that the statute's language authorizing a member of the public to bring a case appears to give Pequignot standing.

Guttman also questioned Solo's attempt to "pigeonhole" the case as a qui tam action, which are cases are brought on behalf of the government and a plaintiff, because the government hasn't been injured or defrauded

"They've tried to box the plaintiff in," Guttman said.

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