United States patent law specifically provides for patent owners to “mark” patented goods to provide constructive notice to the public that their goods are patented. Constructive notice comes into play in patent infringement lawsuits as it relieves the patent owner of the requirement to prove that it notified the defendant of the alleged infringement. Clearly it is advantageous for patent owners to use marking to indicate their goods are patented, so attorneys routinely advise clients to appropriately mark their products according to the marking provisions of patent law. As a result, patent marking is virtually ubiquitous and most people are exposed to patent marking in their daily lives. However, patent owners can also be fined “not more than $500 for every such offense” for falsely marking goods as patented “for the purpose of deceiving the public.” The action is called a “Qui Tam” action, and any person, even though not personally injured by a defendant’s conduct, may assert claims on behalf of the U.S. government. Of note, Congress has introduced patent reform legislation that includes a provision that would change this law to require that false marking actions may be brought only by an entity that has suffered a competitive injury as a result of a violation of the false marking statute. The prospect for passage of these changes is, at present, uncertain.
In 2009, an appellate court decision (Forest Group Inc. v. Bon Tool Co.) made false marking a hot topic for patent owners by interpreting the statutory language “for every such offense” to mean every article sold rather than every decision to falsely mark. Since this decision, more than 800 false marking complaints have been filed in federal courts. The Bon Tool ruling has, in effect, spawned a new industry, although most of the suits having been filed by “marking trolls”— persons or organizations that simply search for instances of improperly marked articles and then file suit against that manufacturer. In some instances, the manufacturer marking the goods has never owned a patent relating to the goods. In these cases, liability based on an intent to deceive the public may be relatively easy to establish. In other circumstances, which are much more likely to occur in the normal course of business, a valid patent expires, but the patent owner does not remove the marking from subsequently-sold articles. Inappropriately marking articles after a patent has expired, combined with knowledge of the circumstances, creates a presumption of intent to deceive. The presumption is rebuttable, but the presence or absence of intent in any individual case depends on the particular facts surrounding the false marking. Critically, even if intent is not proved and liability is not established, the cost to a business accused of false marking, both in lost time and legal fees, can be substantial.
In Pequignot v. Solo Cup Co., for example, the unpatented articles were plastic cups. It was alleged that Solo had manufactured over 21 billion cups after the patent marked on the cups had expired. Solo’s policy was to remove the expired patent numbers when the molds had to be repaired or replaced and, moreover, it relied on opinion of counsel that it did not have to affirmatively remove the expired patent numbers until that time. Fortunately for Solo, the court found no intent to deceive the public even though Solo had become aware of the expired patent two years after it had expired. From this case alone, it is clear that there is a potential for disaster for business owners resulting from their failure to police their patent marking programs. Accordingly, business owners should provide internal controls and work with their patent counsel in order to take advantage of the marking provisions of the patent law and to avoid the pitfalls of false marking.