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Missing the Mark? Patent Trolls are Targeting Your Products (and Your Profits)!

By: Ira Cohen, Esquire, Partner, Henkel & Cohen, P.A., Miami

In recent years, there has been an explosion of patent litigation in the federal courts based on false patent marking or mismarking claims. You or your company can either be on the cutting edge of preventative patent maintenance or be carved up as the unfortunate victim of one or more qui tam relators a/k/a "Patent Trolls." Sometimes referred to as "patent pirates" or "patent marking bounty hunters," these bellicose and resourceful Patent Trolls mercilessly prey on entrepreneurs and enterprises alike.

Commercial self-defense, then, is the name of the game. Thomas Jefferson sagely observed that "[h]onesty is the first chapter of the book of wisdom." Unwavering veracity and absolute accuracy are essential to the proper maintenance and enforcement of patents and their associated rights. Whether you are an independent inventor or a company marketing patented products, you need to know about and understand patent marking law. More crucially, perhaps, you need to take care and, if necessary, undertake measures to ensure that patent markings already in use are of unassailable precision and are scrupulously up-to-date.

Does Your Company's Products Bear Patent Markings?

Products covered by in-force Letters Patent should bear the correctly marked patent numbers. Bear in mind Albert Einstein's admonition: "[i]f you are out to describe the truth, leave elegance to the tailor." No more and no less; hitting the bulls-eye dead center is the key here.

In addition, a general legend may be included on the product's packaging to the effect that the product is covered by one (1) or more patents. If the patent(s)(is)(are) pending, that should be expressly stated as well. Similarly, if there are any foreign patents involved (pending or issued), that, too, should be made crystal clear.

Is Patent Marking Mandatory or Merely Desirable?

As Thomas Edison mused, "many of life's failures are people who did not realize how close they were to success when they gave up." Patent marking may not be mandatory, but it is "more than usually desirable," to borrow a phrase from Charles Dickens. As a threshold matter, the act of marking a product with an applicable patent number places the public on constructive notice of the patent(s). Moreover, proprietors of patents and licensees alike are well-advised to mark products in order to enhance their company's public relations image and commercial reputation, not to mention in order to gain a competitive edge. From a monetary perspective, recovery of damages in a patent infringement lawsuit entirely hinges upon marking. Succinctly stated, you cannot collect money, in court, in a patent case, if you have not marked your product(s).

Patent Mismarking or False Marking of Products

Conversely, the mismarking, or false marking, of your products, can lead to dire legal consequences for your company. Patent mismarking includes several species of fraud or falsity: (1) representing never-patented products as patented; (2) products are marked with "patent pending," when no application is before the USPTO; (3) products are marked with expired or abandoned patent number(s); (4) stating a product is subject to a patent that does not have any product claims; or (5) use of insufficient qualifying language.

In fact, the law relating to patent mismarking (Title 35, U.S. Code §292) is a quasi-criminal statute; simply put, anyone who falsely marks an unpatented product as patented, with an intent to deceive the public, can be fined "not more than $500" for each offense. To rub salt in the legal wound, in the context of a recent appellate court case, Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), the Court of Appeals for the Federal Circuit decided that damages are to be calculated on a "per article," as opposed to a "per claim," basis. The same appellate tribunal further ruled that the measure of monetary damages properly can range from a fraction of a penny all the way up to the $500 statutory ceiling.

Patent Trolls: Who Is That Trip-trapping Over the Bridge to the Courthouse?

You may well ask: Who is staying up nights keeping a watchful eye open for patent mismarking violations? Not the government. Rather, it is the Patent Trolls and their attorneys, the bane of inventors, commercial manufacturers and licensees alike. But why, you counter? What is the animus for the Troll's vigilance and vengeance? The answer, as is so often the case, has much more to do with dollars and cents, than with common sense.

The patent mismarking statute, which has remained largely unaltered since the Patent Act of 1870, is a so-called "qui tam" statute, which enables any person to bring a lawsuit for this type of violation. More crucially, it enables the plaintiff (i.e., the relator) to recover 50% of the penalty ultimately imposed by the court, with the other 50% being shared with the federal government. Then, if the fine adjudged is $500 per item, the potential aggregate award could soar to astronomical heights. There are other risks as well. For example, and quite apart from the time, aggravation, and expenditure of resources routinely associated with federal lawsuits, as in all patent litigation, under Title 35, U.S. Code §285, the court, in its discretion, "in exceptional cases may award reasonable attorney fees to the prevailing party." Avoiding the attorney's fees stinger, which can run into 5 or even 6 figures, is a laudable goal in and of itself.

Avoiding the Legal Traps & Pitfalls; Minimizing Your and Your Company's Legal Risks & Liability Exposure

In order to avoid the legal traps and pitfalls, you and your business must be proactive when it comes to your patent marking. To that end, there are a number of practical steps which you and your company can undertake promptly.

Mark all active patents on products, labels and/or packaging.
Audits should be conducted, at periodic intervals, by your attorney, to evaluate patent marking/false marking issues and concerns.
Remove all markings on products that relate to, or reflect, any abandoned or expired patents (or abandoned patent applications).
Keep track of the company's patent properties with a cost-effective and error-proof docketing system.
Identify and catalog all of the company's marked products, as well as all products that need to be marked.
New patent applications (U.S. and foreign) should be filed, as necessary and/or desirable with the appropriate Patent Office(s).
Good faith and advice of counsel defenses can be set-up and buttressed by securing appropriate attorney opinion letter(s) in a timely fashion.

As Galileo reasoned, as long ago as the Renaissance, "[a]ll truths are easy to understand once they are discovered: the point is to discover them." Speak with a qualified legal practitioner to answer your patent marking questions, to conduct a patent marking/false marking audit, or for additional legal and business information and counseling relating to patents and patent law.

 

About Henkel & Cohen

Henkel & Cohen, P.A. is a Miami, Florida boutique business litigation law firm whose partners hold the highest AV rating from Martindale-Hubbell®. For additional biographical and contact information, please visit the firm's website at www.miamibusinesslitigators.com.

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