2010: The Year of the False Marking Suit
If you manufacture, advertise, or sell products using a patent number, you may already be aware of the explosion of "false patent marking" suits. In less than a year, more than 500 of these suits have been filed in courts across the United States by both local and foreign entities. No industry appears to be exempt; companies as diverse as Blistex, Bank of America, FedEx, Hewlett-Packard, Facebook, Target, ConAgra, and Motorola have all been targets of false marking suits. Unfortunately, there is no evidence that would indicate that this trend will be short-lived. The purpose of this article is to identify the elements of a false marking claim and provide some suggestions for risk mitigation.
Under federal law, false marking consists of two primary elements:
(1) the false claim of patent protection in a product; and
(2) the intent to deceive the public.
A false claim of patent protection can occur in three ways:
(1) marking a product as patent protected when not authorized to do so by the owner of the patent;
(2) marking an unpatented product with the word "patent" or with a word or number implying that the product is patented; or
(3) marking a product as "patent applied for," "patent pending" or any other words or numbers that falsely imply that the product is subject to a pending patent application.
Any private citizen has standing to bring suit for false patent marking, regardless of whether such person has actually suffered an injury as a result of false marking. Any damages awarded under such a suit would be shared equally between the person bringing the suit and the United States government. The statutory penalty for false patent marking is a fine of up to $500 for each product that is falsely marked, thus creating a potentially lucrative incentive to bring suit.
The false marking law applies to anyone who "marks upon, or affixes to, or uses in advertising," the false patent information. Thus, liability for false marking is not limited to manufacturers of goods, but can also apply to third parties such as retailers, suppliers, dealers, and distributors. Persons or entities who deal in goods that have patent markings should consider taking the following actions to assess and limit their risks associated with a false patent marking suit:
• If you are a patent owner or licensee, maintain and regularly refer to detailed records of your patents, including records related to expiration, transfer of ownership, payment of maintenance fees, rulings of validity and enforceability, and any other issues that may affect your ability to reference such patents on your products and product packaging.
• Conduct proper due diligence to ensure that the patents referenced on your products, packaging, and advertising actually cover the products being sold. Consider obtaining an opinion as to the scope of your patent if you are unsure of its applicability to a certain product. An opinion can be used as an important tool for rebutting a claim that you intended to deceive the public through false marking.
• Routinely evaluate and reevaluate your products to determine whether any material changes to such products have changed the applicability of the patents to such products.
• Review the terms of any contract to which you are a party to ensure that you, and the other party, are complying with the parameters related to the claims of patent protection. If you are currently negotiating a contract with a third party for the license of a patent or the manufacture or sale of patented products, consider getting appropriate representations, warranties, and indemnities to protect you in the event that the other party’s actions make you the target of a false patent marking claim.
It may be difficult (operationally and financially), and time consuming to replace molds, product packaging, and marketing materials that contain expired or inappropriate patent numbers. However, it is better to identify and address the issue before becoming the subject of a false marking claim. If you have any questions regarding false marking suits, please do not hesitate to contact any member of the Koley Jessen Intellectual Property Practice Group.