False Marking

PatentLawPic284A US patentee can only recover damages for patent infringement activity that occur after the infringer is “notified of the infringement.”  35 U.S.C. 287(a). The major exception to this limit on damages is through marking of goods. Goods that are properly marked as protected by a particular patent serve as a constructive notice to the world that the item is patented. Id.

Although marking serve as a benefit, the patentee must also be wary of statutory false marking. Under 35 U.S.C. 292, false marking includes marking unpatented product as “patented” or marking a product as “patent pending” when no patent is pending. These false marking activities are only actionable if done “for the purpose of deceiving the public.”

Section 292 is a criminal provision with only a monetary penalty – usually payable to the government.  The statute also spells out a qui tam right for “any person” to sue for false marking. One-half of any damages would then be awarded to the civil plaintiff, and the US Government collects the other half. Damages are limited to “not more than $500 for every such offense.” Some courts* appear to interpret “every such offense” broadly. Thus, for example, 100,000 mislabeled cups, would be seen as 100,000 offenses. The text from Section 292 has remained remarkably fixed since the Patent Act of 1870 the primary differences being that the old statute included a minimum penalty of $100 per offense and used the word “moiety” instead of “one-half.”

Recently, a Washington DC patent attorney, Matthew Pequignot, filed at least two Section 292 lawsuits in the Eastern District of Virginia alleging false marking. These include Pequignot v. Solo Cup and Pequignot v. Gillette and P&G.

In the first case, Pequignot alleged that Solo Cup marks its paper products with patents that had expired more than ten years ago. In a motion to dismiss, Solo Cup argued that marking with an expired patent cannot be considered false marking. Furthermore, the defendant argued, it should not be held liable because the markings were written in the tentative voice: indicating that the products “may be covered” by various patents.

Holding: Judge Brinkema denied Solo Cup’s motion to dismiss, holding: (1) that, as a matter of law, listing of expired patents may constitute false marking; and (2) the use of permissive language (“may be covered”) in the marking does not create a safe harbor against liability for patent marking. In his Treatise, Don Chisum addresses this point — finding “little authority on whether continued use of a patent number of an article after expiration of the patent constitutes culpable mismarking.”

The complaint against Gillette and P&G similarly lists over thirty products being marked by those companies with expired patents or patents that do not cover the marked product.

Documents:

Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

30 thoughts on “False Marking

  1. Noise above Law said:

    “Not particularly in defense of the examples, but would nonpublication requests shield from view any application still in process?”

    I think you are right. The widefield product has been claiming “pending” since 2001. I’d think that by now it would have issued.

    the filters have been claiming “pending” since 2003 as I recall (maybe 2004 though). I’d also think that by now any pending patent would have issued.

    Perhaps they are pending in both cases. If they both have nonpublication requests, which I understand means they foresake foreign coverage, that could explain why they haven’t been published.

    Sometimes patents take a very long time to issue. Buy these products are very simple products so isn’t as if there are a mountain of things to examine in terms of various aspects of the inventions.

  2. Not particularly in defense of the examples, but would nonpublication requests shield from view any application still in process?

    I do not know how crowded the Wide Field Adapter Lens area is, but is it a possibility that the marking is legit?

    And per Bob Matthews post above, the incident count may be a singular nature (one posting) rather than a hit count.

  3. Here is another situation where there is a claim of a pending patent (been claiming this since 2004) but there is no patent that has issued nor any published application that I have been able to find.

    This particular person may selling a few hundred thousand dollars worth of this product per year…

    link to astrodon.com

  4. here is a website advertising a product and has been advertising it for many years: since 2001 as I recall when I looked it up on the Internet Archive. It says patent pending but I cannot find the patent and believe this is a textbook example of a false marking situation where there is no pending or issued patent as of today.

    link to galaxyimages.com

  5. I wonder about what constitutes an “offense” when the primary method of advertising is via a website on the internet?

    Would each website hit constitute a separate offense or would the act of placing the material on the website be construed as it being a single offense?

    With so much marketing being done over the internet, it seems that it is about time for such a case to be argued….

  6. “Am I missing something?”

    Yes. Section 292’s second paragraph is directed to “[w]hoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article …”

    Note that this is completely distinct from the marking “requirement” of Section 287(a).

  7. I thought marking had to be done on the patented article, thus using a patent number in an advertisement would not be marking. Why would improperly using a patent number in an advertisement be false marking (as compared to false advertizing). Am I missing something?

  8. I suppose it depends on what you mean by “free from legal issues that may arise.” You might be sued by someone like Pequignot, as demonstrated in the above. That hurts, whether or not you ultimately prevail.

    According to Judge Brinkema, marking with a patent number for an expired patent MIGHT be false marking under the statute. Chisum says there is little support for this, which doesn’t mean she’s wrong. Importantly, the statute requires that the marking be “for the purpose of deceiving the public.” I think this is likely to be the dispositive issue in most cases.

  9. I have a question. I am still a little confused. Can you advertise an expired patent knowing that it is expired (and you are not the inventor) for example “US Patent XXXXXXX” on printed material and/or a website and be free from legal issues that may arise? Any help would be great.

  10. The case law suggests that penalty for false marking is generally not assessed as a per product penalty, but based on the number of individual instances of false marking, with the courts looking to see if the false marking was part of one “continuous” instance of false marking or a series of several instances of false marking. For example, one batch of 1000 mismarked products marked as part of one “continuous” transaction, i.e., all marked during one production run, is one offense, not 1000 offenses, and therefore would carry a penalty of $500, not a half a million. See discussion in Matthews, Annotated Patent Digest § 34:98 Penalties for Violation (available on Westlaw), which includes the following cases:

    London v. Everett H. Dunbar Corp., 179 F. 506, 507-09 (1st Cir. 1910)(“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.”)

    Bibow v. Am. Saw & Mfg. Co., __ F. Supp. 2d __ n.1, 2007 WL 1667043, *1 n.1(D. Mass. June 11, 2007) (“Plaintiff’s claim for $200 million in damages seems to be anchored on his calculation of the number of times Defendants’ erroneous press release, or reports including the press release, might have been seen in some medium, such as an internet website. It is doubtful that the statute ever intended to create such a lucrative game of ‘gotcha!’” – granting defendant patentee summary judgment dismissing plaintiff’s false marking claim where defendant issued press releases stating that its product was patented, where at the time it only had patent applications pending, the court finding that in view of the patentee’s affidavits explaining how the error crept into the press release based on miscommunications with its advertising agency, and the plaintiff’s failure to present anything other than pure conjecture that the mismarking was done with the requisite intent to deceive, summary judgment in the patentee’s favor was proper)

    Icon Health & Fitness, Inc. v. The Nautilus Group, Inc., No. 1:02 CV 109 TC, 2006 WL 753002, *5-*7 (D. Utah March 23, 2006) (ruling, after a jury found that defendant falsely advertised its BowFlex product as being patented and made with patented technology, that defendant committed 650 punishable false-marking offenses over a period of fourteen years, and therefore fining defendant $325,000 finding that under the specific circumstances and pervasive scope of the violations that it was reasonable to assume one new act of false marking per week during the fourteen year period)

    Sadler-Cisar, Inc. v. Commercial Sales Network, Inc., 786 F. Supp. 1287, 1296 (N.D. Ohio 1991) (finding defendants falsely marked its products with an intent to deceive the public where defendants’ marked its product “patent pending” at a time that no patent application had been filed in the PTO but further ruling that the specific false marking was a continuous violation that constituted only a single offense, and therefore defendants were liable only for $500)

    Republic Molding Corp. v. Gotham Indus., Inc., 145 USPQ 642, 643-44 (S.D. Cal. 1965)(“While the penalty prescribed is for the offense of false marking, it was not intended to impose a separate penalty for each individual item marked, each advertisement printed, or each handbill distributed; yet it is equally clear that the penalty prescribed is not limited to a single or aggregate amount of ‘not more than $500.00.’ Congress intended to punish each and every wrongful act that was a complete transaction in itself if, therefore, the false markings involved are so integrally related as to constitute but a single and continuous act, only a single penalty will be imposed. [M]ultiple distinct offenses under 35 U.S.C. § 292 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.”)

  11. “Some courts* appear to interpret “every such offense” broadly. Thus, for example, 100,000 mislabeled cups, would be seen as 100,000 offenses.”

    What courts are these? I’m afraid I have yet to find a single case that would go that far. Such a result would almost certainly be incorrect. Seriously. A $500 fine for a $0.005 cup? Not even the strictest of constructionists would consider that proper.

    Broadly speaking, courts are hostile to section 292 qui tam informer actions and limit informer recovery by redefining what an “offense” is. For example, falsely marked advertisements generally get tagged per publication volume (i.e., on a periodic basis). Look at the District of Utah’s decision in Icon Fitness v. Nautilus. There, the court rejected both the maximum ($500/per) nor the minimum ($500 for the decision to mismark in the first place). The court settled on $500/week of advertising, or $325,000.

  12. What happens when an article is labeled with “patent pending”, a million are shipped and then the application goes abandoned or the patent issues? Same with marking with a valid patent number, then the patent expires. In one of the prime cases on this matter, the willful deception was met simply by the patentee having knowledge that the patent had expired.

    So, is willful deception only at the time of the marking? Or is there some sort of public notice required for this case? Does anybody have case law on this issue?

  13. “While willful infringement may not be ‘criminal’ in the ‘go to jail’ sense, I’m not sure a lot of people would consider willful infringement to be ‘moral.'”

    You’re either not reading carefully, or willfully misunderstanding. You originally complained about willful copying. That’s not the same as willful infringement. And I never suggested that anything was moral. Rather, I said that willful copying was not immoral. Again, not the same thing.

  14. Cranky GC – If I understand your comment correctly, I think you may be confused about the scope of Section 287 and its applicability to an NPE recovering damages for infringement prior to actual notice. Suggest you take a look at Wine Railway v. Enterprise Railway, 297 U.S. 387 (1936).

  15. *A non-practicing entity has no obligation to mark or give notice. I don’t know why there is a duty for practicing entities but not non-practicing entities to give notice, seems discrimination to me, but that is the law.*

    This is an incorrect statement. There is no *duty* or *requirement* to mark. Read the statute carefully. No damages can be recovered for past activity unless the infringer has notice. This applies to *all* patentees. There are a few ways you can provide notice: (1) send a letter and patent to the infringer (the PE *or* NPE way); (2) mark the goods (PE way); or (3) file an infringement suit (PE or NPE way). Mark the goods is great because it provides constructive notice, which allows one to reach back further in time to collect damages. One can still collect past damages without marking the goods provided they can prove the infringer had some other type of notice, e.g., an employee intentionally copies.

    I hope patent attorneys out there are not stating marking is a *requirement* to assert one’s patent rights. I am sure not everyone would appreciate the additional manufacturing cost this may create when filing a suit or sending a letter may stop the infringement and still meet a client’s goals. This really pisses off us in-house people who must operate under budgets.

  16. The reward for disclosure is exclusivity for a limited time. The disclosure is found in the published patent and may also be found in the product. Marking merely discloses the existence of a patent.

    While copying, building on, or designing around prior technology may lead to progress, but the the patentee is still entitled to its reward for the statutory limited time.

    While willful infringement may not be “criminal” in the “go to jail” sense, I’m not sure a lot of people would consider willful infringement to be “moral.”

    My point regarding the willful copier and the innocent independent developer (who may be wasting resources) is that BOTH are infringing and NEITHER should be rewarded or punished based on whether the patentee does or does not mark.

    Again, the punishment for not marking should not be a reward or windfall to infringers.

  17. “The larger issue, however, is why an innocent independent developer of a patented technology should be liable for infringement while one who willfully copied someone else’s technology can avoid liability based on non-marking.”

    Because “willfully copying” someone else’s technology is not a crime, nor is it immoral. In fact, the most efficient way to achieve technological progress is to “copy” others’ technology and improve upon it, or to design around it. Your “innocent independent developer” is actually wasting resources in re-inventing technology. He shouldn’t be praised for that.

    Please note that the above is not a critique of our patent system. But our patent system is not in place to stop copying. It’s in place to reward disclosure, so that MORE copying (and concomitant improving, designing around, etc.) will happen.

  18. I think practicing entitles are required to mark for two reasons. First, to strongly encourage marking (and punish non-marking). Second, because an infringer may have relied on non-marking as evidence that the invention is in the public domain.

    As to the first, a punishment could be fashioned short of rewarding infringers (who may be willful infringers).

    As to the second, an infringer which truly relied on a non-marked product could be allowed to raise a detrimental reliance defense or counterclaim. I’d want a high burden and no “head in the sand” reliance on non-marking of a product the patented status of which could be easily determined.

    The larger issue, however, is why an innocent independent developer of a patented technology should be liable for infringement while one who willfully copied someone else’s technology can avoid liability based on non-marking

  19. Judge Brinkema comes through again. She reinforces her reputation as one of the most anti-patent district judges in the entire country. According to her, no one should have any patent right of any scope.

  20. Maybe this is a place where technology now available would make it beneficial to the public to change the law. Patents are now easily publicly locatable via web search. Allowing manufacturers to keep patent numbers on their articles would benefit the public as it would enable the public to easily find the patent that describes how to make and use the article.

    Maybe the law should be changed to REQUIRE manufacturers to KEEP MARKING an article AFTER PATENT EXPIRY, since it is NOW relatively easy to find the patent, and is also relatively easy to determine if it has expired. That is QUITE DIFFERENT from the situation when the law was enacted. Anyone who cares will no longer be easily deceived by such marking. In fact, they will probably benefit, since marking makes it easy to locate the patent and check it out……

  21. Actually, I’d add Just Visiting’s point more forcefully, the statement is wrong. The correct statement is “A US patentee *who makes, sells or licenses a patented article* can only recover damages for patent infringement activity that occur after the infringer is notified of the infringement.” A non-practicing entity has no obligation to mark or give notice. I don’t know why there is a duty for practicing entities but not non-practicing entities to give notice, seems discrimination to me, but that is the law.

  22. I’ve seen solicitations from a firm or company asking the public to report mis-marked objects. I can’t remember who it was from or whether it was on the internet or in the mail, but it was quite clear what the solicitor intended to pursue.

  23. This case reminds me of an amusing patent notice I read last year, which said (paraphrased from memory) – this product may be covered by one or more patents, please check with your country’s patent office.

  24. This area of law seems to be quite open, but the prior cases always found some way for the “patentee” to avoid damages. I recall that there was a qui ta case against Sears for patent mismarking, and the court said something to the effect that the plaintiff’s share of the fine would be in the millions, but the court would find a way to prevent such a result. As I recall, that case was dismissed on other grounds (please correct me if I’m wrong), so the issue was never reached.

  25. I think you’ll find that the case law does not support this sentence: “Thus, for example, 100,000 mislabeled cups, would be seen as 100,000 offenses.”

    The case law shoes that, similar to copyright statutory damages, “per offense” will be defined based upon the circumstances.

  26. I remember qui tam suits from law school, specifically my white collar crime class. What I don’t remember is how damages may be computed in a case such as this. Maybe although the marking is illegal, there are no monetary damages? Or maybe a portion of a penny per cup, or penny per package of cups? Based on my limited recollection, I am not so sure that this may be as lucrative as Mr. Pequignot. Now, if the statute still required the $100 minimum, and the case law supported that one cup = one act of mismarking, then perhaps.

  27. “A US patentee can only recover damages for patent infringement activity that occur after the infringer is notified of the infringement.”

    Dennis, I think this statement is misleading without a few words of qualification.

  28. Interesting career choice. Patent marking bounty hunter. I’ve seen a few mis-marked items in my time, but it never occurred to me that there was money in it. Touche.

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