I recently read that on the heels of the Forest Group Inc. v. Bon Tool Co.,  decision more  than 100 plaintiffs have filed false marking suits in 2010.  I’m sure that is a scary statistic to the dozens of companies that are potentially facing false marking suits.  I had an opportunity to discuss the issue of false marking with two of our Patent Center Contributors, Brandon Baum, a partner and intellectual property litigator at Mayor Brown LLP and Robert C. Faber, partner and patent prosecutor at Ostrolenk Faber LLP.  While some of their viewpoints are similar, Baum and Faber both have a unique perspective on the topic.

Here is what Brandon Baum, the “patent litigator” , has to say on the issue…

Me: Do you think we’ll see companies begin to stop falsely marketing products in response to the suits? 

BB:  Yes, though the question presumes that companies are “falsely” marking (i.e., with intent to deceive) rather than inaccurately marking (i.e., without intent to deceive).  It will become a priority for companies’legal departments to monitor patent marking and, particularly with respect to expired patents, remove them from packaging. 

Me: Do you believe false marking necessarily causes injury?

BB:  As a general proposition, I think we would all agree that one should not mark a product as being covered by a patent when one knows it is not. I believe that Congress could reasonably believe that false marking causes injury, just like any other sort of false labeling of a product.  By analogy, if someone marks their bottle of water “from the purest mountain spring” when in fact it is filtered tap water (albeit, with fewer impurities than mountain spring water), is someone injured in fact?  Well, why not?  They wanted spring water, they got tap water.

 Whether there are impurities in it is not the question, the question is the misrepresentation and if it was done with intent to deceive, Congress has determined that it is wrongful.  This is more a case of malum prohibitum, where the injury is in the commission of the act.  Whether false marking is deserving of a qui tam statute is another question. 

Me: Some experts believe the suits are a temporary wave that will fade once corporations stop engaging in false patent marking, do you agree? 

BB:  I agree 100%.  It is a blip due to prior lax enforcement by patent departments, and it will disappear quickly (though the statute of limitations is 5 years). 

Me: There are those that believe false marking deterred competitors from launching their own products and misled consumers into thinking a falsely marked item is more innovative, do you agree?

BB:  This is theoretically possible and might have happened on the margins.  The placement of a patent number on a product is akin to the placement of a “no trespassing” sign on property; it conveys the message to the general public that the property is owned and the owner is prepared to defend it.  Some competitors might believe that it would be better to steer clear of the property than to test the merits of the boundary claim – after all, that is the intent of the statement.  While it would be difficult to prove that this occurs frequently, Congress obviously felt is was a sufficient risk that it passed the false marking statute.  Congress may opt to revisit that decision, but for now it is the law. 

Me: According to the Docket Navigator service, 84% of the false marking suits that have been filed since the Forest case, are based on allegations related to expired patent numbers.  Given that the false marking statute has an intent element, is an expired patent number good evidence that a patent holder wanted to deceive the public?

BB:   The fact that the patent number is expired is an ambiguous data point.  It could simply indicate that the product or packaging has not been updated.  But it could be evidence that the patentee intended to extend its patent protection beyond the patent term, which is a form of patent misuse.  While I personally believe the vast majority of the time it will be the former, I would not exclude the possibility of the latter.  This is where the proof of intent comes into play. 

Me: Even false marking defendants with a solid argument that they operated in good faith, still could wind up facing hefty legal bills.  Do you think the prospect of those bills will result in quick settlements that favor the false marking plaintiffs?

BB: I n any lawsuit, the cost of litigation puts pressure on both sides to settle early.  This is one of the costs of the American system, and the same argument can be made about most statutes that do not allow for fee shifting.  I don’t think the argument is any stronger with respect to patent marking than it is for any other sort of case, though it is a significant issue and it could be addressed through legislation. 

Me: How could a corporation minimize the risk of being hit with a false-marking lawsuit?

BB:  A company should consider implementing a clear, written policy for internal review of any patent marking.  Somewhat like grocery store “sweep logs” that are used to defend against slip-and-fall claims.  So long as the company regularly reviews the propriety of its patent marking, it should be safe. 

Me: What do you think about the proposed legislation pending in both the Senate and the House that will potentially protect manufacturers from false marking claims by requiring plaintiffs to show competitive injury, and by instituting compensatory, rather than statutory damages?

BB:  That is a perfectly fine way of dealing with the issue. 

Stay tuned for Robert Faber’s, the “patent prosecutor”,  Q & A on False Marking….

Tags: Brandon Baum, false labeling, False Marking, false marking lawsuits, Forest Group Inc. v. Bon Tool Co., intent to deceive, Mayer Brown LLP, Ostrolenk Faber LLP, Robert C. Faber, statutory damages, United States Patent Act

This entry was posted on Wednesday, July 7th, 2010 at 20:24 and is filed under Patent Litigation, Patent Policy, Patent Prosecution, Patent Reform. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.