PUBPAT Expresses "Deep Concern" over Senate False Marking Provision

    By Donald Zuhn --

Last week, in a letter addressed to Senate Judiciary Chairman Patrick Leahy (D-VT) and Ranking Member Jeff Sessions (R-AL), Public Patent Foundation (PUBPAT) Executive Director Daniel Ravicher expressed "deep concern" over the Committee's addition of a provision to the Senate patent reform bill (S. 515) that would eliminate qui tam false patent marking suits.  Earlier this month, the Senate Judiciary Committee released a Manager's Amendment for S. 515 that would only allow "[a] person who has suffered a competitive injury as a result of a [patent marking] violation [to] file a civil action in a district court of the United States for recovery of damages adequate to compensate for the injury" (see "Qui Tam Actions in Senate Sights").

In its letter to Senate leadership, PUBPAT contends that the new provision "would eliminate an important method of protecting the public from false and deceitful statements," and therefore, should be removed from the legislation.  The letter asserts that "[f]alsely marking an unpatented item as patented harms the public by misleading consumers, deterring competition, and depriving legitimate patentees of the marketplace distinction they deserve," and states that "[b]y offering citizens a share of recovery in suits they bring on behalf of the government against false markers, the statute provides an incentive for citizens to expend time and resources to keep manufacturers honest," while saving the government from having to bear the expense of prosecuting such actions.

Since the December 28, 2009 decision in Forest Group, Inc. v. Bon Tool Co., the number of qui tam lawsuits that have been filed has topped one hundred, including at least fifteen suits against biotech or pharma companies:

Simonian v. Allergan, Inc., March 9, 2010
Simonian v. Abbott Laboratories, March 9, 2010
Simonian v. Amgen Inc., March 9, 2010
Simonian v. Baxter Healthcare Corp., March 9, 2010
Simonian v. Astellas Pharma US, Inc., March 9, 2010
Hollander v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., March 1, 2010
Simonian v. Merck & Co., Inc., February 25, 2010
Simonian v. Novartis Pharmaceuticals Corp., February 25, 2010
Simonian v. Novartis Consumer Health, Inc., February 24, 2010
Simonian v. Novartis Consumer Health, Inc., February 24, 2010
Public Patent Foundation, Inc. v. Novartis Consumer Health, Inc., February 24, 2010
O'Neill v. Roche Diagnostics Corp., February 23, 2010
Simonian v. Pfizer, Inc., February 23, 2010
Simonian v. Merial L.L.C., February 23, 2010
Hollander v. Ranbaxy Laboratories Inc., February 23, 2010

(see "Court Report," March 14, 2010; March 7, 2010; March 1, 2010).  Referring to the large number of recent suits, the PUBPAT letter states that:

Arguments forecasting the rise of a "cottage industry" of false marking suits [citing "Pfizer, P&G Sued as Part of New 'Cottage Industry,' Bloomberg.com] are completely overblown.  While there indeed has been a surge in such suits recently, this will undoubtedly lead to a virtual extinction of the practice [of false patent marking].  Once manufacturers get the message that attempting to deceive the public with false patent markings will be punished, they will stop doing so and the need to bring such suits will disappear.  To be sure, false marking plaintiffs will work themselves out of a job very quickly.  If, however, you change the statute to disarm citizens from policing the market for false patent markings, then the harmful practice will continue unabated, to the severe detriment of the public.

The letter offers two checks to "potential windfalls" to citizen plaintiffs:  first, that the statute only applies to those who falsely mark "for the purpose of deceiving the public," and second, that district court judges have "wide discretion" to set appropriate fines for false patent marking violations.  PUBPAT also notes that half of each fine goes to the Federal government.

PUBPAT also sent a separate letter to House leadership in which Mr. Ravicher "applaud[ed a recent House] statement that 'a number of changes are essential' to the patent reform bill proposed by the Senate Judiciary Committee before the House will consider it."  In the letter, addressed to House Judiciary Chairman John Conyers, Jr. (D-MI), and Ranking Member Lamar Smith (R-TX), PUBPAT asked that the House "protect the existing qui tam provision."  The letter to House leadership was otherwise similar to the letter to Senate leadership.

In a press release issued last Friday, PUBPAT called the Senate false patent marking proposal "surprising," adding that it would "substantially eviscerate the current law against false patent marking that has been in place for over one hundred and fifty years."  The release noted that the new provision would completely eliminate false patent marking suits in some markets because in those markets "there are no competitors, and thus no one would be able to pursue a company for deceitfully marking its products as patented."

Comments

[Kevin E. Noonan]

In his letter, did Dan identify PUBPAT as a plaintiff in one of these suits? Seems like a relevant fact for legislators to know, particularly in view of the fact that the other half of any recovery goes to the qui tam plaintiff.

[Dan Feigelson]

Surprisingly, I find that I tend to agree with PubPat that the false marking provisions shouldn't be limited to competitors, but then unlike PubPat I expect that with the rash of false marking suits, courts are going to raise the bar for proving the intent prong of the provision.

A few years ago, before false marking suits became fashionable, someone asked me to look into the possibility of filing false marking suits over some of the same products that Simonian has now put in play, in all cases because the listed patents had expired. In the end it was decided not to proceed, in part because it seemed that in most cases it was simply a matter of oversight: someone had listed a patent on the label for using a chemical product, and simply forgotten to remove it, or more likely didn't realize they needed to remove it, after the patent expired. So it seems that if the courts demand proof of actual intent, and don't just infer intent b/c someone neglected to remove a listed patent, then most of these suits will evaporate anyway, without the need for a legislative fix.

Aside from that, in the vast majority of cases, someone considering copying the marked item is going to engage the services of a patent professional, who will be able to ascertain fairly quickly if the patent in question is in force or has lapsed or been declared invalid.

So it doesn't look to me like the system is broke with regard to false marking, and as the saying goes, if it ain't broke, don't fix it.

[T]

In a market without competitors, how would the public ever be deceived? Sort of a tautological argument there, eh?

[Skeptical]

T,
A market without competitors is not a market without a public. In a market with a public and a single vendor, the likelihood of deception is not only present, but likely increased as there is no competitor to be "on the lookout" - not so much for the public's benefit, directly, but rather for their own benefit.

No tautology at all, eh?

[Skeptical]

Dan,

How can anyone say that "or more likely didn't realize they needed to remove it"?

It is entirely known that patents are not forever. When someone sets up reminders to pay the mainenance fees, a reminder to change markings at the end of the natural life of the patent should also be put in place. Granted, this will not take into account product changes that drop a product out of a patent claim's coverage, but that's a different matter. I don't think "I forgot" is a valid excuse.

Kevin,

You raise a good point. And just as valid would be the publication of the forces behind the "emergency" inclusion into the Manager's Amendment of the anti-public benefit change. I suspect that someone was influenced to include this selection in the amendment.

[Kevin E. Noonan]

Dear Skeptical:

I totally agree - transparency is the key, and keeps those provisions that can't stand scrutiny from being sneaked into bills at the last minute. Like Senator Sessions' bid to exempt his banking friends from the electronic check processing patent infringement litigation he put into the last patent reform bill in the Senate, or the mercury exemption for vaccines that was in a bill passed in the last Congress. (I don't think anyone ever identified the "sponsor" of that provision.)

Some of that can be garnered from campaign contribution rolls but not all of it; maybe we need legislation that would require it, but I don't see how it could ever be enforced.

Thanks for the comment.