The false marking statute (35 U.S.C. § 292) expressly authorizes members of the public to bring an action on behalf of the U.S. government (i.e., a qui tam action) for a product falsely marked with a patent number with the intent of deceiving the public. Theoretically, the penalty for falsely marking a product can be a hefty one as the false marking statute allows the court to assess a sanction of up to $500 for every offense. The Federal Circuit in Bon Tool held in late 2009 that “offense” means on a per article basis. Ever since the Bon Tool decision, the number of false-marking lawsuits has surged because of the economic windfall that might result from mass-produced, falsely marked products. Products marked with design patent numbers are not exempt from such actions.
One recent complaint filed by Main Hastings against the Village Company in the Eastern District of Texas alleges the Village Company violated § 292 by marking a Mr. Bubble bottle with design patent no. D-408,290 (“the ‘290 patent). Specifically, Main Hastings alleges that the Village Company marked the Mr. Bubble bottle knowing that that the ‘290 patent does not cover the ornamental design of the Mr. Bubble bottle. In Exhibit B of the complaint, Main Hastings sets forth a comparative analysis between two Mr. Bubble bottles and Figure 2 of the ‘290 patent to demonstrate the alleged false marking. Included below are images from the second comparison of Exhibit B of Main Hastings’ complaint.
Main Hastings, LLC v. The Village Company, LLC is not an isolated case. A recent search has shown that, in 2010 alone, 674 false-marking lawsuits were filed in federal district court, which is a dramatic increase over previous years. This surge in false marking cases largely involves trolling plaintiffs who initiate lawsuits based on products labeled with expired patent numbers, but can also involve the more traditional false marking case where the marked product is allegedly not covered by the patent listed in the mark, like the Main Hastings case discussed above. See Simonian v. Weber-Stephen Products Co. for an example of a case involving products allegedly marked with expired design patent numbers.
A legal remedy to address this recent barrage of false-marking cases may be on the horizon. On February 23, 2011, Federal District Court Judge Dan Aaron Polster of the Northern District of Ohio found the qui tam provision of § 292 to be unconstitutional. In the opinion, Judge Polster held that, because “the government lacks sufficient control to enable the President to ‘take Care that the Laws be faithfully executed,’ . . . the False Marking statute lacks any of the statutory controls necessary to pass Article II Take Care Clause muster.” However, it remains to be seen whether Judge Polster’s opinion will be upheld on appeal, as other district court precedent has found the qui tam provision of § 292 to be constitutional based on a number of factors including the legislative history of qui tam statutes in the U.S. and the U.S. government’s ability to intervene as of right.
Congress has also taken up the issue. The U.S. Senate is now debating the Patent Reform Act of 2011 (S.23.RS) and the U.S. House of Representatives recently conducted a hearing on the issue of comprehensive patent reform and a bill corresponding to S.23.RS will likely be introduced in the House soon. S.23.RS specifically amends the qui tam provision of § 292 to require that plaintiffs show competitive injury caused by the false marking. For plaintiffs other than the U.S. government, the level of damages would change from the current “$500 per article” standard to a level that is “adequate to compensate for the injury.” S.23.RS also includes a statute of limitations provision that limits false marking cases to the earlier of 10 years after the alleged misconduct or one year after the plaintiff in such a case is informed of the misconduct. In addition to the above-noted legislation, the Patent Lawsuit Reform Act of 2011 (H.R.243), which is a stand-alone bill and not part of a larger patent reform package, was recently introduced in the U.S. House of Representatives. H.R.243 also amends the qui tam provision of § 292, but unlike S.23.RS, H.R.243 limits recovery in false-marking lawsuits to a total of $500.
However, given Congress’ inability to pass patent reform legislation in previous sessions (various forms of the Patent Reform Act have been introduced in Congress every year since 2005), it is uncertain whether legislation that addresses the current exploitation of § 292 will pass during this year’s congressional session. For more information on U.S. patent reform, the following resources from Oblon Spivak are available. Philippe Signore and Steve Kunin will be presenting on the state of U.S. patent reform at the 5th Annual Patent Law Institute on March 21 and 22, 2011, and an article based on their presentation will be published in Chapter 14 of the Institute’s Course Handbook. Additionally, updates on the progress of patent reform are frequently published on Patents Post Grant, a blog maintained by Oblon, Spivak’s Reexamination/Reissue Practice Group.