Monthly Archives: November 2010

Business Can’t Hide from False Patent Marking Lawsuits: Here’s How to Predict If You Might be Sued

You don't need to be the Amazing Kreskin to predict when your company will be sued for false marking today.

The take home message:  If your company sells a product that bears a patent number, you need to read this post in its entirety.

Much has been written in recent months about false marking lawsuits, most of these in the form of “urgent legal alerts” by law firms that calmly deconstruct the appellate court rulings (this one is illustrative).  At the end of the day, these articles likely do not look very “urgent” to business people like yourself because most business people do not engage themselves with patent law generally, let alone something as arcane as false marking.  So, even though the subject excites us a patent experts, we really cannot expect you to get excited about something that does not seem to affect your ability to conduct business today.

However, if your business is a likely target of a false marking lawsuit it will cost you big bucks almost immediately.  These surprise costs could very well derail your ability to turn a profit in the near future, and could even put some struggling companies out of business.  But what if I told you that getting sued for false marking is a highly predictable event?  You might even be able to avoid finding yourself caught in the net of an “entrepreneurial” lawyer who is jumping on the opportunity to bag himself a bag of cash due to what most rational actors would find to be an unintended consequence of the government’s desire to make sure that businesses do not mislead the public or their competitors by incorrectly saying that a product is patented when it really isn’t.  In other words, after reading this article, you need no longer feel helpless against false marking plaintiffs!

Note that this article is not about what to do if you are sued for false marking or why you should be concerned–this article will let you as a business person know whether your company is likely to find itself the subject of a false marking lawsuit in the near future.  The “urgent legal alerts” referred to above handle the gory details of false marking, and need not need to be reviewed here.  But, in short, you need to recognize that federal law proscribes marking of a product with the wrong patent number.  The wronged party is the government, but the law allows a member of the public to bring a false marking lawsuit on behalf of the government.  The person bringing the lawsuit shares 50/50 in any recovery with the government.   Damages can be awarded at up to $500 per occurrence.  These lawsuits are attractive for patent lawyers seeking a new source of revenue because companies making large numbers of products can easily rack up significant potential damage awards.  Even though the false marking statute has been on the books for many years, not many cases have been brought in the past.  As a result, there is no clear legal authority for how courts to should rule on these cases, a fact which should make business people stand up and take notice.  (A more detailed explanation of false marking is found in this recent article in Inside Counsel Magazine.

How about this as a clear “what does all of this false marking stuff mean to me as a business person?” statement:  If your company sells a product that sits on a store shelf or is installed in a location where a patent number is visible, and the patent number is less than 5,000,000, the chances are pretty high that you will be sued for false marking within the next year. It really is that simple:  this list of recent false marking cases file shows that most of the patents forming the basis of the underlying claim are around 5,000,000 or less.  (Kudos to Justin Gray for publishing a list of filed false marking cases.) Continue reading