Decision to Deceive Mismarking Products with Bogus Patent Numbers Can Cost You

This article appeared in the Nov. 2009 Edition of Inventors DigestFalse 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.

Given the potentially large exposure for improperly marking a product as patented, it’s critical to understand what constitutes an unpatented article.

Historically, it has been common for a patentee to use so-called buffering language. Using the phrase “this device is covered by one or more of the following patents” allowed a patentee to cheaply mark a line of products with various patents held in its portfolio to increase its ability to collect damages.

This led to patentees listing an entire range of patents on commercial products, regardless of whether the claims of a particular patent actually covered that product. So long as one of the patents covered the marked product, no false marking existed.

Recent case law requires at least one claim of each patent listed to cover the marked product, rendering this practice unacceptable.

False marking may exist if a product is marked “patent pending” where no patent application has been filed or a filed patent application has since been abandoned. A product marked by an expired patent also may give rise to liability. In short, if patent rights do not protect, or no longer protect, a device, the patent number may not legally be listed on the product.

Improper patent markings alone will not subject a patent holder to liability for false marking. The mismarking must be combined with intent to deceive the public.

Traditionally, intent to deceive could not be established if a person had an honest, but mistaken, belief that a patent’s claims read on the marked product. Nevertheless, intent to deceive may be found if a person knows one or more of its patents does not cover the marked product such that a consumer will be mislead.

If a product is mismarked and the patentee knew of the mismarking, an inference arises that there was fraudulent intent.

Inferences alone, however, may not prove intent to deceive.

A recent case involving cup lids highlights the difficulty in determining whether a patent holder has intent to deceive the public.

In Pequignot v. Solo Cup Co., patent attorney Matthew Pequignot filed a lawsuit against Solo Cup, alleging the company falsely marked its paper products with patents that expired more than 10 years ago.

Solo Cup claimed it did not act with the intent to deceive the public and the court found that the company had acted reasonably.

The judge found that the only offenses were the decisions to improperly mark the products, not the mismarked products themselves. Rather than impose up to a $500 fine for each of the billions of mismarked cup lids sold, the court found that Solo Cup could only be liable for at most $1,500 – an amount corresponding to the decisions to continue improper markings on three different lines of products.

If this decision is appealed, the Federal Circuit is sure to settle the issue and clarify the requisite standards for intent and punishable offenses.

Yet the lesson of the Solo Cup litigation is clear: False marking can lead to extraordinary expense for even a legitimate patent holder.

Even if a patentee is vindicated and found not to have falsely marked a product, the litigation expenses alone can be devastating. For patentees who choose to mark their products, diligence and caution are critical to avoiding needless, and potentially costly, litigation.


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2 comments so far.

  • [Avatar for Gena777]
    November 1, 2009 06:45 pm

    True — someone could really clean up during patent litigation, and one would hope that standing is strictly enforced. The intent issue, however, is the stickler; hopefully, the Federal Circuit will clarify those standards.

  • [Avatar for Jim]
    October 28, 2009 04:20 pm

    This is a plaintiff attorney’s dream come true. Five hundred dollars for each mismarked product? Damages could easily be in the millions for many cases. I hope the courts strictly enforce standing limitions.