False patent marking requires greater attention

February 5, 2010 | Intellectual Property News

For more than a century, the patent statutes have made it illegal to include a patent number on a product that is not actually covered by the patent. 28 U.S.C. 292 provides that the use of a patent number, or the words “patented” or something similar, on a product or in advertising for the product, is illegal if it is done with an intent to deceive the public into thinking that the product is patented when it actually is not. The same restriction applies to the use of terms such as “patent applied for” or “patent pending.”

The false marking statute of Section 292 has been largely ignored because of its weak remedies. The statute provides for a fine of not more than $500 for every offense of false marking. Although there have been very few court decisions applying the statute, most of the courts that had encountered it had concluded that the $500 cap was the maximum remedy no matter how many units had been sold with the erroneous patent number. Even a continuous and ongoing campaign to falsely mark products for years would merit no more than a $500 fine.

That is, until recently. On December 28, 2009, the Federal Circuit Court of Appeals held that the $500 total cap should not be applied in this fashion. Instead, the penalty applies to each unit of a product that is sold with the false marking. Here’s a link to the decision: http://www.cafc.uscourts.gov/opinions/09-1044.pdf.

In the wake of this precedential interpretation of the false marking statute, a cottage industry of lawsuits has sprung up, with potential plaintiffs scrutinizing patent numbers appearing on products in the hope of finding an error that might support a lawsuit. Notably, a false marking lawsuit can be filed by literally anyone, and a plaintiff need not be a competitor or someone who was actually harmed by the marking.

In a few high profile cases, the number of units sold is great and the potential damages are astronomical. In one recent case involving lids made by the Solo Cup Company, the case alleged that 21 billion lids were sold with expired patent numbers on them. If the court were to award $500 per lid, the damages would be enormous. While a maximum of $500 per unit seems unlikely in most cases, even a penny per infraction can be huge if the volumes are high enough.

Although patent numbers should always be applied carefully, in this current environment it’s wise to be especially accurate. Congress is evaluating new legislation that might cap the damages award and stem the tide of false marking litigation, but for now the use of patent numbers on products and in advertising should be carefully scrutinized to ensure the numbers are accurate and the patents are still valid and enforceable.