Earlier today I spoke at the Practising Law Institute program on the America Invents Act. We had a good turnout in the room and an excellent turnout via webcast. The program was 4 hours long, and truthfully we could have gone on for at least several more hours without running out of material. For those who stayed online we ran long by about 20 minutes, and stayed talking with attendees and answering questions of live attendees for another 20 minutes. We are already talking about reprising the presentation for an audience at PLI’s New York City location on Seventh Avenue, so stay tuned.
There will be plenty of time to drill down on the particulars of the America Invents Act. The Act is dense, language choices from section to section in some places change and in other places remains the same, making you suspect that different terms must mean different things but the same term in different places has to mean the same thing, right? Our moderator, Denise Kettelberger (Faegre & Benson) said that patent attorneys should really read the Act about 10 times, which is really good advice. Every time you read it you notice something a little different, and during the presentation of others today I found myself taking notes and looking up things in the Act with new understandings. This is a major re-write of patent laws and not one that is at all simple.
That being said, I thought I might take this opportunity to provide a high level overview of the America Invents Act. What follows is discussion of 5 provisions contained in the Act. Look for an overview breakdown of additional provisions (prior user rights, supplemental examination, post-grant review, etc.) coming soon.
Seeking a writ of mandamus seems as if it is becoming a more popular avenue to pursue than it once might have been. A writ of mandamus essentially seeks an order from a higher court to direct a lower court to follow the law. They are extraordinary remedies because they come well before the case is over, which means that an ordinary appeal cannot be taken at that point; appeals are only typically allowed for final adjudications. Notwithstanding the extraordinary nature of a mandamus request, earlier today the Federal Circuit issued a writ of mandamus requiring a district court to dismiss a false marking lawsuit because the complaint did not contain allegations sufficient to allow the plaintiff to appeal. Essentially, even if each and everything in the complaint were believed the plaintiff could not possibly be entitled to a recovery. Kudos to the Federal Circuit for standing up and getting rid of a frivolous lawsuit initiated by an obviously defective complaint.
Over the last year or so a new cottage industry has risen in the patent field; namely a new type of patent troll that seeks to sue companies that are continuing to sell products containing an expired patent number. These so-called false marking cases arise from 35 USC § 292, and were given new life thanks to a Federal Circuit decision from December of 2009 — The Forest Group Inc. v. Bon Tool Co. — which quite correctly and quite literally interpreted § 292. As a result, large companies are getting sued every week, and recently Americans for Fair Patent Use sued Apple, Sprint, Verizon and Samsung in the United States District Court for the Eastern District of Texas alleging that the companies are selling products that have expired patent numbers on them, making them the latest high profile targets of this new false marking patent troll. See AFPU v. Appel complaint. One source estimates that if successful the lawsuit could cost Apple alone a total of $60 billion. See Apple Faces $60 Billion Plus Patent Lawsuit (last paragraph specifically, which modestly calculates damages based on iPhone and iPad sales).
There are two elements of a § 292 false marking claim. The plaintiff must prove that the (1) marking an unpatented article and (2) intent to deceive the public. Intent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true. A party asserting false marking must show by a preponderance of the evidence that the accused party did not have a reasonable belief that the articles were properly marked. An assertion by a party that it did not intend to deceive, standing alone, is worthless as proof of no intent to deceive where there is knowledge of falsehood.
Bounty hunters make their living by capturing fugitives from justice for a monetary reward (bounty). A more recent, modern day version of the bounty hunter is one who pursues patentees for false patent marking under 35 U.S.C. § 292. The recent Federal Circuit case of Forest Group, Inc. v. Bon Tool Co. has made such false patent marking bounty hunting lucrative by saying that each falsely marked item is an “offense” under 35 U.S.C. § 292, and thus subject to a penalty of “up to $500,” with the bounty hunter getting half of the awarded penalty and the federal government the other half. As a result, a rash of such cases (upwards of at least 100 at the moment) have been filed by such modern day bounty hunters as qui tam actions against various patentees alleged to be falsely marking their products.
In Perquignot v. Solo Cup Co., the stakes were truly mind-boggling: about $10.8 trillion in total. Approximately $5.4 trillion of that bounty would be the federal government’s share which the Federal Circuit characterized as “sufficient to pay back 42% of the country’s total national debt.” High stakes indeed! But unfortunately for the bounty hunter (Pequignot) in Perquignot, the Federal Circuit affirmed a district court grant of summary judgment that there was no “deceptive intent” on the part of the patentee (Solo Cup), thus no approximately $5.4 trillion bounty was owed.
Fig. 1 of US Patent No. 5,147,343 (now expired), previously owned by Kimberly-Clark Corp., and which pertains to Goodnites® Sleep Shorts.
The day starts out quiet enough. I wake up and scoop my contacts out of the Clear Care® contact lens solution they’re swimming in. Blinking rapidly to settle my contacts, I focus on some tiny numbers printed on the contact solution box. Patent numbers. I’ve been using the solution for years and wonder how old the patents must be. I do a quick Google search and discover that the patents have expired. Strange that expired patents would be printed on the box… My 3 year old interrupts my thoughts as she walks up to me still rubbing her eyes, complaining that her Goodnites® Sleep Shorts are soggy. Knowing that absorbent products containing hydrogels with ability to swell against pressure don’t change themselves, I quickly get her some dry pants. Doing so, I check the box and sure enough, more expired patent numbers. Next I head to the kitchen to look at my “to-do” list for the day. As I look over my list, I check my blood sugar with my nifty Accu-Chek® device. On it I find more expired patent numbers. I’ve never noticed patent numbers before, but suddenly the world seems populated with products stamped with the indicia of expired monopoly rights.
False marking is a statute in the Patent Act that imposes civil liability for intentionally marking a product as patented when it isn’t.
We’ve all come across a product marked with the phrase, “This product is covered by U.S. Patent No. (fill in the blank).” Such marking puts the world on notice that the patent holder has exclusive rights to collect monetary damages from those who infringe their patent.
While patentees are not obligated to display the patent number, the one factor they must always consider is the costly mistake of false marking.
When someone improperly marks an unpatented item as being covered by a patent with intent to deceive the public, that person is legally at risk. Anyone has the right to sue a patentee for false marking, with potential damages of $500 per occurrence.