Stites & Harbison, PLLC

Recent lawsuits and the courts’ rulings emphasize the need for U.S. patent owners to be vigilant in the proper use of U.S. Patent numbers on the products they market.

Many businesses routinely apply U.S. Patent numbers to their products because of a provision of the patent law that provides a financial advantage to them to warn potential patent infringers.  See 35 U.S.C. § 287.  However, a century-old provision of the patent law has recently been the basis for lawsuits against U.S. marketers who do not update their patent markings after the listed U.S. patent or patents expire.

I. BACKGROUND

False marking is prohibited by Section 292 of the Patent Act.  35 U.S.C. § 292.  That section prohibits a person from marking an “unpatented article” with words “importing that the same is patented, for the purpose of deceiving the public.”  Id.  It further provides that “any person” may sue for damages, and if damages are imposed under the statute, “the person suing is to receive one-half and the United States is to receive the other half.  Id.

As a threshold matter, Section 292 requires that an allegedly mismarked article be “unpatented.”  Historically, courts held that where a patentee marked a product with a string of patents, there was no danger of false marking if at least one of the patents marked covered the product, however language such as “one or more of the following” was encouraged.  7-20 Chisum on Patents § 20.03[7][c][vii].

More recently, courts have challenged this practice, and require that each patent marked on the product cover some feature or aspect of the product in order to avoid liability under Section 292.  See Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005) (“in order to determine if an article is “unpatented” for purposes of section 292, it must be first determined whether the claims of a patent cover the article in question.”); Astec Am., Inc. v. Power-One, Inc., 2008 U.S. Dist. LEXIS 30365 (E.D. Tex. April 11, 2008). 

In addition, the use of “one or more of the following” language has been criticized, and is currently susceptible to charges of false marking.  In Astec, the defendant used the following language; “These products are protected by one or more of the following US patents” and went on to list seventeen (17) patents.  Astec noted that while the Federal Circuit defined the meaning of “unpatented article” for the purposes of Section 292 in Clontech, it did not address a situation where “one or more” language is used.  Astec concluded that whether or not the practice of marking products with the “one or more” language constitutes false marking turns on whether the patentee implemented said marking practice with an intent to deceive the public.  Therefore, while this issue is not settled, using the “one or more” marking language is potentially vulnerable to a false marking claim if the patentee knows that patent listed on the label has no connection to the product to which it is connected.

II. RECENT LITIGATION

A recent suit in the U.S. District Court for the Eastern District of Virginia highlights serious litigation risks for false patent marking.  In Pequignot v. Solo Cup Company, 2009 U.S. Dist. LEXIS 76032 (E.D. Va. August 25, 2009), an individual patent attorney sued a major consumer product company by instituting a qui tam action under Section 292.  Under Section 292 this plaintiff was not required to show any injury from the false marking and stood to recover one half of any successful recovery.

The plaintiff alleged that Solo Cup has violated Section 292 in essentially two different ways:  (1) knowingly marking plastic products with expired patents; and (2) knowingly marking packaging for unpatented products with the phrase “This product may be covered by one or more U.S. or foreign pending or issued patents.  For details, contact www.solocup.com.”

Whether or not Solo Cup violated Section 292 ultimately depended on whether it acted “for the purpose of deceiving the public.”  Despite the fact that Solo Cup had knowingly put expired patents on two of its products, the court held that it successfully rebutted the inference that it had acted with an intent to deceive.  The expired patents were engraved on “mold cavities,” specially produced for the company’s thermoforming stamping machines.  To replace the mold cavities prematurely would have cost Solo Cup an estimated $500,000.  This and other evidence demonstrated that, rather than acting with an intent to deceive, Solo Cup acted out of the desire to avoid the costs and disruption of a wholesale replacement, and also in good faith on the advice of their legal counsel.  The court also found that Solo Cup did not act with an intent to deceive with respect to the “May Be Covered” language placed on the packaging of unpatented products.  The decision to use this language was from a “logistical and financial perspective,” and again on the advice of legal counsel.

Although Solo Cup was ultimately granted summary judgment on all counts, both parties moved the court to determine the meaning of “offense” in the damages provision of Section 292.  The false marking statute states, in relevant part, that any person found to have falsely marked “Shall be fined not more than $500 for every such offense,” half of which goes to the plaintiff and half to the United States. 35 U.S.C. § 292(a) (emphasis added).  The plaintiff argued that each falsely marked article constitutes an “offense.”  The court was not persuaded, and adopted Solo Cup’s position that an “offense” under Section 292(a) is a “distinct decision by a defendant to falsify a mark.”  Therefore, if Solo Cup had been found to have acted with an intent to deceive, it would have been liable for at most three offenses of false marking, as opposed to an offense for each of the billions of cups manufactured marked with the expired patents or offending “May Be Covered” language.

With respect to the meaning of “offense,” Pequignot followed the decision in London v. Everett H. Dunbar Corp., 179 F. 506, 508-09 (1st Cir. 1910), where the First Circuit adopted a “continuous act” test.

Though the marking of each article makes a distinct instrument for the publication of a false statement, this cannot be a proper ground for multiplying penalties…It can hardly have been the intent of Congress that penalties should accumulate as fast as a printing press or stamping machine might operate…It follows that a plaintiff, in order to recover more than a single penalty, must go further than to prove the marking of a number of unpatented articles.  The proof must be sufficiently specific as to time and circumstances to show a number of distinct offenses, and to negative the possibility that the marking of the different articles was in the course of a single and continuous act…In order to prove distinct offences, however, it was not essential that the plaintiff should be able to prove the specific date of marking.  It was sufficient if the evidence showed such divergence of time and circumstances as to make one act of marking separable and distinct from other acts of marking.  For example, proof of one act of marking in June and of a distinct and separate act of marking in July, might be sufficient to show two offenses, though the plaintiff were unable to fix the exact date in either month.

See also Vanguard Prods. Group v. Merch. Techs., Inc., 2009 U.S. Dist. LEXIS 7306 (D. Or. Jan. 16, 2009) (“evidence of one continuous course of conduct by Plaintiffs as to marking” constitutes a single offense); Forest Group, Inc. v. Bon Tool Co., 2008 U.S. Dist. LEXIS 57134 (S.D. Tex. 2008) (ruling that mismarking is a “separate, distinct decision” and rejecting plaintiff’s request to impose a penalty of $500 for each product sold with the false marking); D.O.C.C. Inc. v. Spintech Inc., 36 USPQ2d 1145, 1157 (S.D. N.Y. 1994) (“A continuing advertisement over a period of time constitutes a single offense.”);  Sadler-Cisar, Inc. v. Commercial Sales Network, Inc., 786 F. Supp. 1287, 1296 (N.D. Ohio 1991) (“continuous markings over a given time constitute a single offense.”);  Republic Molding Corp. v. Gotham Industries, Inc., 1965 U.S. Dist. LEXIS 6852 (S.D. Cal. 1965) (Multiple distinct offenses are established “if the evidence shows adequate divergence in either time or place, circumstance, or media, so as to set apart any one particular act of false marking as being separate and distinct from all other acts of false marking”).

Other decisions suggest that a court can tie the number of false marking offenses to a reasonable increment of time—finding one offense for each day, week or month false marking statements are used, for example.  Brose v. Sears, Roebuck & Co., 455 F. 2d 763, 766 n.4 (5th Cir. 1972); Icon Health & Fitness, Inc. v. Nautilus Group, Inc., 2006 Dist. LEXIS 24153 (D. Utah Mar. 23, 2006) (“Considering the breadth” of the false marking activity, the court found it “reasonable to conclude that [defendant] committed at least one new offense each week that false-marking statements were used” imposing a fine of $325,000 on Defendant for the 650 weeks such statements were used); Precision Dynamics Corp. v. American Hospital Supply Corp., 241 F. Supp. 436 (S.D. Cal. 1965) (inclusion of false patent statement in two publications constituted two offenses; reproduction in a catalogue constituted a third offense); Krieger v. Colby, 106 F. Supp. 124 (S.D. Cal 1952) (shipment on eight different days constituted eight offenses).

III. FALSE MARKING MAY VIOLATE § 43(a) OF THE LANHAM ACT

False claims of exclusivity or government approval, such as false patent and trademark designations, may constitute false advertising under Lanham Act § 43(a).  See, e.g., John Wright, Inc. v. Casper Corp., 419 F.Supp. 292, 327 (E.D. Pa. 1976) (A false suggestion that a product is patented is “a material misrepresentation of quality which tends to deceive an ordinary purchaser in the exercise of ordinary care. It therefore violates §43(a).”), aff’d in part, 587 F.2d 602 (3d Cir. 1978).  More recently, in Blank v. Pollack, 916 F. Supp. 165, 172 (N.D.N.Y. 1996), the court discussed whether or not false patent marking was within the scope of the Lanham Act's protection against false advertising.  The court noted that false statements must "misrepresent the nature, characteristics, qualities, or geographic origin of" the good in question, 15 U.S.C. § 1125(a)(1)(B), and the language of the Act is to be construed broadly in light of its remedial purpose.  So, "[i]n keeping with the broad construction of the language of the Act, the court finds that the misrepresentation that a product is patented relates to the nature and qualities of the product" and therefore "falls within the scope of the Lanham Act's false advertising protection."

A cause of action for a violation of the Lanham Act’s prohibition against false advertising does not require intentional acts.  See Parkway Baking Co. v. Freihofer Baking Co., 255 F.2d 641, 648 (3rd Cir. 1958) (“The fact that the name appeared on the wrapper because of a mistake is not a defense to an action under this section [Lanham Act § 43(a)] for there is no requirement that the falsification occur willfully and with intent to deceive.”).  Also, if a plaintiff proves that the challenged advertisement is “literally false, a court may grant relief without considering whether the buying public was misled.”  See Johnson & Johnson-Merk Consumer Pharma. Co. v. Rhone-Poulenc Roser Pharms. Inc., 19 F. 3d 125, 129 (3d Cir. 1999); Jerome Gilson, 2 Trademark Protection and Practice § 7.02[6][b][i][A] at 7–31 (2006) (“[C]ourts view literally false representations as false advertising per se.”).  Literal falsity of patent and trademark designations obviates the need to show that persons are actually deceived into purchasing the false markers’ products as a result of these false statements.  See Johnson & Johnson-Merk, 19 F. 3d at 129.

IV. CONCLUSION

Marking products with expired or unrelated patents opens the door for potential litigation for false marking.  Under Section 292 of the Patent Act, the plaintiff must ultimately prove that the false marking was done with an intent to deceive the public, however this is not a requirement for a successful false advertising claim under the Lanham Act.  Standing to gain one-half of any recovery, false marking claims are attractive to potential plaintiffs, and as a result, manufacturers should closely monitor any markings they place on their products for accuracy.