QUI TAM ACTION PATENT LAWSUIT AGAINST SOLO CUP

In 2007, a patent attorney from Washington, DC, brought a lawsuit against Solo Cup for

using patents on drinking cup lids that were expired. Matthew Pequignot filed a lawsuit against

Solo Cup because the patents marked on the cup lids had been expired for almost 20 years. U.S.

Patents RE28,797 and 4,589,569 were imprinted on the lids in question«all 21 billion of them

(³Best´) ! Using the qui tam provision in the False Claims Act, this would allow a judge to

award up to $500 per incident, resulting in a total judgment of over $10 trillion. To put that

amount into perspective, that is almost 75 percent of the total national debt of the United States.

Qui Tam is a dated statute, which is short for a Latin phrase meaning to sue for the king.

How this translates into United States law is that any person is able to sue for the penalty, but

that person is required to split the penalty with the United States. This seems like another

frivolous lawsuit against a major corporation, but Pequignot believes that the company is

intentionally preventing other competitors from manufacturing identical products. Solo Cup

argued in U.S. District Court that it is unconstitutional for private citizens to sue on behalf of the

U.S. Government, but in March 2009, Judge Leonie Brinkema ruled that the law is

constitutional. Judge Brinkema stated that ³It is likely an accident of history that (the law)

survives as one of the few remaining qui tam statutes in American law´ (³Best´). This

statement gives a pretty good indication as to how these lawsuits are viewed in a court of law,

and as such Judge Brinkema ruled four months later that the company did not intend to deceive

the public.

Qui tam lawsuits have become synonymous with whistleblowers in the past few decades.

A bulk of the information available on the internet in regards to qui tam deals with Medicare and

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Medicaid fraud. Fraudulent charges include charging for unperformed services, waiving

copayments, and billing multiple times for the same service (West). If the whistleblower in these

cases is successful in the suit, they are entitled to 15 to 30 percent of the total recovery in

addition to $5,000 to $10,000 per false claim (West). A recent Department of Justice statistic

shows that the average recovery in a successful qui tam suit is $8.6 million, with the

whistleblower receiving an average of almost $1.2 million (West). With payouts like these, it is

no wonder lawyers are looking under coffee lids searching for lawsuits.

In 1986, the U.S. government strengthened the statute simplifying the process for private

citizens to sue, meanwhile increasing the potential reward for the suit. Under the False Claims

Act, the plaintiff must allege that the defendant did one of three things. The first would be that

they knowingly presented, or cause to be presented, a false or fraudulent claim to an officer or

employee of the U.S. government. A second cause would be that they knowingly made, used, or

caused a false record or statement to get a false or fraudulent claim paid by the government.

Finally, the plaintiff can allege that the defendant conspired to defraud the government by getting

a false claim allowed or paid (West). Through this process, the government has recovered over

$2 billion of which $340 million has been paid to whistleblowers in the last quarter century

(West).

Solo Cup admitted that they were aware that the patents stamped on the lids were

expired, but because of the expense ($500,000 each) to create new molds and to replace them,

Solo Cup continued printing them after the patent numbers expired (³False´). The District Court

decided that since Solo Cup had no intent to deceive the public, there was in fact no violation of

the law. The court came to this standing because Solo Cup took steps to remedy the issue once

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it came to their attention. Solo Cup also set up a new policy to replace the molds and changed

the wording on the packaging of the lids (³False´).

An aspect of this case that is difficult to identify is the costs incurred by Solo Cup for the

two year legal battle. One would assume that the court costs and lawyer fees to fight this lawsuit

must be quite substantial. While Solo Cup came out victorious in this case, it is questionable if it

would have been a better investment to pay the $1 million to replace to two molds rather than

incurring the legal costs needed to fight the lawsuit. However, Solo Cup had $1.5 billion in net

sales in 2009, so maybe Pequignot had a point (Slind-Flor)? In respect to the value of the patent

held on the cup lids, $1 million seems like a drop in the bucket to ensure the company is in

compliance with patent laws.

The author of the article ³The Best Part of Waking Up: a Lawsuit in Your Cup´ does not

give a specific conclusion to the Solo Cup case, rather focuses on qui tam lawsuits in general.

The case was settled after the publication date of this article and just recently went through the

appeals court, where the appeal was denied. The author makes mention that a few more ³false

marking´ lawsuits have been filed since the Pequignot v. Solo Cup Co. became famous. It

makes reference to another case in which Raymond Stauffer attempted to sue Brooks Brothers

over expired bow tie patents, to which the judge ruled in favor of Brooks Brothers because

Stauffer failed to establish how the government suffered harm from the bow ties.

This article was vague in following a timeline for the lawsuit. The article was written

shortly before Judge Brinkema ruled in favor of Solo Cup, so the story was unable to provide an

analysis of the final ruling. The article was found on a website for the General Patent

Corporation, who claims to be ³the oldest patent enforcement firm in the U.S.´ This is sure to

cause some degree of bias on their part as their livelihood is based in the patent creation and

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enforcement field. The idea of qui tam lawsuits is intriguing, but the article lacked in providing

background information on the process of qui tam lawsuits.

This case increased my knowledge on many aspects of patent law and qui tam lawsuits.

A majority of the population has seen the patent imprint on the Solo lids, but probably never

questioned the validity of that patent. Now that the value of that patent has been put into

perspective, I am sure to pay closer attention to the patent numbers printed on items that I

purchase. Qui tam lawsuits are useful to have when fighting Medicare or Medicaid claims that

are fraudulent, but courts need to distinguish these claims from ones that are causing no

irreparable harm to society, such as an expired patent number on a coffee cup lid.

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 WORKS CITED

³False Patent Marking: an Update in View of Pequignot v. Solo Cup Co.´ Hg.org. 31 Aug. 10.

25 Sep. 10. http://www.hg.org/article.asp?id=19652

Sherman, Erik. ³Trolls Target Patent Markings with a Trillion Dollar Lawsuit.´ Bnet.com.

1 Mar. 10. 24 Sept. 10. http://www.bnet.com/blog/technology-business/trolls-target-

patent-markings-with-a-trillion-dollar-lawsuit/2723

Slind-Flor, Victoria. ³Solo Cup, Hillenbrand, Evart, Kodansha, PepsiCo: Intellectual Property.´

Bloomberg.com. 11 Jun. 10. 25 Sept. 10. http://www.bloomberg.com/news/2010-06-

11/solo-cup-hillenbrand-evart-kodansha-pepsico-intellectual-property.html

³The Best Part of Waking Up: a Lawsuit in Your Cup.´ O


 
  .

Generalpatent.com. July 09. 23 Sept. 10. http://www.generalpatent.com/best-part-

waking-lawsuit-your-cup

West, Robin Page. ³Employment Law: How a Qui Tam Whistleblower Case Works.´

Expertlaw.com. July 99. 24 Sept. 10.

http://www.expertlaw.com/library/employment/qui-tam.html

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