New False Marking Bill Introduced in the House

By Donald Zuhn --

On September 29, Rep. Robert Latta (R-OH) (at right) introduced a bill in the House (H.R. 6352) that would amend Title 35 to modify the penalty for false marking, as well as make other changes to the false marking statute.  The bill, entitled the Patent Lawsuit Reform Act of 2010, was referred to the House Committee on the Judiciary after being introduced.  A press release posted on Rep. Latta's website noted that the bill is intended to address "vague language" in 35 U.S.C. § 292.  Section 292 currently provides, in part, that:

(a)  . . .  Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article the word "patent" or any word or number importing the same is patented, for the purpose of deceiving the public; or

Whoever marks upon, or affixes to, or uses in advertising in connection with any article the words "patent applied for," "patent pending," or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiv­ing the public --

Shall be fined not more than $500 for every such offense.

(b)  Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.

The text of the bill, which was made available on THOMAS earlier today, indicates that the legislation would revise the corresponding portion of section 292 as follows (with changes indicated by underlining and italics):

(a)  . . .  Whoever marks upon, or affixes to, or uses in advertising in connection with unpatented articles the word "patent" or any word or number importing the same is patented, for the purpose of deceiving the public; or

Whoever marks upon, or affixes to, or uses in advertising in connection with one or more articles the words "patent applied for," "patent pending," or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiv­ing the public --

Shall be fined not more than $500, in the aggregate, for all offenses in connection with such articles.

(b)  A person who has suffered a competitive injury as a result of a violation of this section may bring a civil action in the appropriate district court of the United States against the person violating this section for recovery of not more than $500 in damages to compensate for the injury.

The Congressman's press release states that the bill, if enacted, "would strengthen the vague language [of § 292] to revert back to the pre-Forest Group [v. Bon Tool Co.] decision and assess one $500 fine if found guilty of deceiving the public under Section 292 and not allow for the interpretation of being fined for each product on the market."  As with the bill (H.R. 4954) introduced in the House last March by Rep. Darrell Issa (R-CA) (see "False Patent Marking Bill Introduced in the House"), Rep. Latta's bill would also require an individual bringing a false patent marking suit to have suffered a competitive injury as a result of the violation.  Rep. Latta said that "this legislation is now needed to help companies fend off frivolous lawsuits and strengthen current law," adding that "[d]uring this time of economic uncertainty, companies should not have to worry about expending additional resources on lawsuits based on one court's interpretation of current law."

For additional information regarding this and other related topics, please see:
• "False Patent Marking Bill Introduced in the House," March 29, 2010
• "PUBPAT Expresses "Deep Concern" over Senate False Marking Provision," March 25, 2010
• "Qui Tam Actions in Senate Sights," March 4, 2010

Comments

[Dan Feigelson]

Hear, hear! Even though the CAFC has already laid some of the groundwork for defendants in these suits to prevail or to get off with very small fines, I hope this is enacted soon. (It's not clear from the post if this bill, like the Issa bill, would kill those suits that have already been filed - such a provision would be a necessary component for the bill to be effective.) The logic underlying the rash of false marking suits is the logical equivalent of those who say that because the law allows something, it is proper to do that thing (like build a mosque near Ground Zero). The false marking provision in its present guise is an anachronism that does nothing to advance "science and the useful arts" or to make commerce more efficient, and should have been jettisoned a long time ago. Let's let companies get on with the business of running their businesses, instead of dealing with frivolous lawsuits.

[Skeptical]

Horrible idea.

If the aim is to neuter the effect of the section, why not simply remove the section? $500 in the aggregate - $250 for the person going to the trouble of even filing - what possible effect will that have?

[jwint]

The CFAC's groundwork in moderating this situation is the proper approach. The previous statute as initially interpreted had provided no practical disincentive to false marking. False marking creates a barrier to other innovators, at least naive ones, and should be discouraged for good cause.

[Mike]

The point of false marking is that you're not supposed to mark non-patented items with a patent number. Given circumstance where "OOOPS, my patent expired," the CAFC has given reduced fines, as it should. But if you tie their hands, what happens when TROLL starts marking everything blatantly with the wrong patent number. WHY let congress handle something that is only percieved as a problem? Where is the incentive for Joe Public to call companies who continue to mark products with expired patents? The system ain't broke, people just don't want responsibility for properly marking their products.

[Sheridan Neimark]

$500 is chump change. The effect of such a legislative change would be to entirely neuter the false marking statute, and to encourage false marking and consequent misleading of the public into believing that something is protected by patent when it is not.

[Toothless Tiger]

Takes the teeth right out of the statute.

[Francis Kirkpatrick]

There have been several recent court decisions to the effect that the inclusion of a patent number in a list of patents placed on a product, when the patent has expired, is fraud. Moreover, this finding has been found to fall under a “bounty-hunter” provision of the patent laws, so that a third party not directly affected by the patent can sue and claim half the damages found. This has led to a flurry of litigation, which soon may be a cascade.
Because patents can expire or be cancelled for many reasons, the recent court decision should be overturned by legislation explicitly removing any penalty for the listing of expired patents. This is needed to prevent billions in frivolous lawsuits, and general undermining of the value of US patents, as well as providing notice to potential competitors as to what is to be avoided and what is open.
The purpose of patent marking is to give possible infringers notice that the product is patented. There is a carrot /stick to encourage such marking: if a patent covering the product is not listed, infringement cannot be found until the possible infringer is notified of the existence of the patent. Naturally, manufacturers are encouraged to list their relevant patents on the product.
Some lawsuits have focused on the situation in which the object is made by a process where it is expensive to change the marking – for example, molded into glass jars. But the problem is still there even if the list is only printed.
The court decisions go the wrong way. Even if some of the patents have expired, the marking gives others warning of the possible hazards in imitating the product, or any aspect of it. The list of claims will be examined by competitors’ attorneys, who will look at the patents, and who will be able to tell if the patent is expired, or still in force. In contrast, if there is no marking, then competitors can be sandbagged - especially if patents have odd titles, or unusual classifications, so that they will not always appear in a search. It might be argued that marking should be required, to help remove the influence of trolls.
Regrettably, it is not trivial to determine if a given patent has expired or not. The time between a patent issuance and its expiration is not fixed. There are numerous reasons – each individually reasonable – why the expiration date of a patent can be earlier or later as a result of actions by the applicant or by the Patent Office. Moreover, the US Patent Office does not post “expired” signs on patents once they expire. (This is a very reasonable position, since external events – for example, lawsuits, or failure to pay maintenance fees – can change the expiration date of patents.)
Given the inherent uncertainty in patent term, it is better to encourage patent marking on products than to discourage it. A potential competitor can learn what is still on patent and what is free to use. Both types of information are helpful to a potential competitor. In contrast, discouraging marking is actually a hindrance to competition.
Therefore, something should be done to vitiate the various lawsuits being filed by bounty hunters. Legislation to return to the previous system (no penalty for having expired patent numbers among the patents listed on a product) is attractive for its simplicity. A minor downside is encouragement to NEVER removing a patent marking from a product even when the patent is known to be abandoned. However, this will not be a major problem for competitors seeking to avoid infringement. They will have access to patent law firms, who will routinely find out which patents in a list are still active, as part of a wider, more important search as to which of the patents on the list may affect the competitor’s product.
There are various possibilities for intermediate systems – for example, a ”grace period” of several years after expiration before removal of a patent number from a product is required. However, the simplicity of “no penalty” is desirable, and it encourages patent owners to mark their patent numbers on their products. In turn, that makes it easier for potential competitors to decide if they can find a route to enter the field.

[MJR]

This proposal effectively eliminates false marking as a cause of action in any context. It would cost more to include it in a count of a complaint, and successfully brief and argue it, than the "win" of $500. It's not a disincentive to false marking at all. So folks can simply make up and list patent numbers on their products, knowing their maximum exposure is a $500 penalty?

[Skeptical]

Francis Kirkpatrick,

First, thank you for the obvious care and passion in crafting your response. While I may disagree with you, do not take my disagreements personally.

Point blank, the proposition of:

“Because patents can expire or be cancelled for many reasons, the recent court decision should be overturned by legislation explicitly removing any penalty for the listing of expired patents”

is not defensible. There is a reason for the law. Marking is not a right, it is a privilege and as such carries with it some responsibilities that cannot be shirked.

As to:

“This has led to a flurry of litigation, which soon may be a cascade.”

This will only happen in those instances where people (and I include companies in this designation) have been lax in actually following the law. I have no pity for such people. In fact, the law, as it now stands, even has a provision of intent AND a discretionary feature that allows a penalty of fractions of a penny per offense depending on the individual facts of the case. Litigation in and of itself is NOT bad.

Do not minimize the carrot portion of the marking privilege. Such constructive notice is often a windfall and more than makes up for any of the required efforts to maintain and update marking status.

I simply disagree with your statement:

“The court decisions go the wrong way.”

Your reasoning of “who will be able to tell if the patent is expired, or still in force” is belied by your statement “Regrettably, it is not trivial to determine if a given patent has expired or not.” in the very next paragraph. Keep in mind as well, just what the Mark is. The Mark is NOT an invitation to investigate the status, it IS the status. Additionally, if there is no marking, it is NOT a question of sandbagging, or purposeful confusion, as actual notice is required. You forget the very large carrot here. It is simply NOT a matter of discouraging Marking – it is holding those who use the privilege of Marking accountable for the requirements of using that privilege. It is indeed maintaining the use of “Patent” as sacrosanct, and as the various other posters here point out, keeping the term from becoming a joke and a nuisance.

The true simplicity here is simply following the law. If you followed the law, you would NEVER have to worry about anyone coming after you with a 292 suit. In this way, everyone wins.

[Pat]

He probably does not even know what the prior or suggested statute means. Hmmm, a company sells $50 million of falsely marked product and faces a $500 fine - what a strong disincentive.

[patent litigation]

It's certainly time Congress addressed false marking. Nevertheless, while I agree that false-marking bounty hunting was getting out of control, I would not necessarily characterize such patent litigation as "frivolous." After all, in this "time of economic uncertainty," companies should not be permitted to hinder innovation and potential economic advancement by others -- which is a possible consequence of erroneously marking their products. I'd like to hear the rest of Congress weigh in on this issue.
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