News Item
Patent marking police file lawsuits(07/30/10)
United States patent law penalizes those who mark or advertise the articles they sell with patent numbers when the articles in fact are not patented (or mark them as “patent pending” when no patent application has been filed or does not cover the article). Currently, any person may bring suit (a “qui tam” action) and collect one half of the penalty imposed (the other half goes to the government). The elements of a false marking case are marking an unpatented article with a patent number (or “patent pending”) and intent to deceive the public. A group of volunteer litigants sometimes called the “patent marking police” began to file such suits in earnest after the Federal Circuit court on December 28, 2009 issued The Forest Group, Inc. v. Bon Tool Co. decision, in which the court held that the penalty should be issued on a per article basis, rather than per decision to (falsely) mark. Since the maximum penalty was $500, half of up to $500 per article is much, much more attractive to plaintiffs than half of up to $500 per decision to mark.
The patent marking police rushed to stake claims on potentially gold-bearing ground. They filed at least 290 lawsuits since the Federal Circuit issued the Forest Group decision. Many lawsuits involved articles marked with the numbers of expired patents. The manufacturers simply failed to remove expired patents from the patent notices on the articles they sold. The Pequignot v. Solo Cup Co. case, decided on June 10, 2010, was eagerly awaited because the vast number of cup lids marked with the expired patents could have led to the imposition of correspondingly vast statutory damages. The patent marking policeman in that case, however, lost. The Federal Circuit decided that under the circumstances, Solo Cup Co. did not intend to deceive the public by continuing to make cup lids stamped with the numbers of expired patents and the words “may be covered by” those patents when the molds used to make the cup lids were very expensive and Solo Cup had an attorney’s opinion that continuing to use the molds until they were due for replacement did not lead to false marking.
Nevertheless, the patent marking police have filed at least 81 new cases so far in June and July 2010. Not all cases are Solo Cup cases in which the defendant had a good faith defense based on opinion of counsel, the patents were expired, and the manufacturer used the “may be covered by” language. False marking with patent pending notices is another area with potential for the patent marking police, but has not yet attracted much attention. Legislation has been proposed that would require a plaintiff to have suffered a “competitive injury” in order to collect damages. This legislation is not likely to be passed during this Congress, any more than other patent reform measures. A patent marking case, Stauffer v. Brooks Brothers, is on appeal and will be heard on August 3, 2010. The issue is what kind of “standing” plaintiffs must have in order to satisfy the “case or controversy” requirement of Article III of the U.S. constitution for a federal court to hear a case. In view of the uncertainty in this area, companies would be well advised to examine their patent marking policies in order to avoid having the patent marking police stake claims at their expense.
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