“False Patent Marking” Suit Plaintiffs Finally Meet Their Match: Federal Legal Reform

Please join The Legal Pulse and hundreds of American companies in a moment of jubilant silence to recognize the demise of bounty hunter-initiated “false patent marking” litigation.

After devoting numerous posts to this judicially created phenomenon as well as several educational papers, WLF couldn’t sit idly by now that Congress has put enforcement of our patent laws back into the proper hands, i.e. the U.S. government and those who have suffered an actual injury.

A section of the Leahy-Smith America Invents Act (analyzed more broadly by Eli Lilly General Counsel Robert Armitage in a new WLF Legal Backgrounder) amends § 292(b) of the federal patent act. Private qui tam “relators” will no longer be able to enforce that part of the law, which prohibits manufacturers from “falsely marking” their products as patented. Prior to 2009, few enterprising citizens patent lawyers went searching for products with expired patent numbers on them, as the damage limit (half of which went to the federal treasury) was $500. But that year, a U.S. Court of Appeals for the Federal Circuit ruling, Forest Group, held that the fine was $500 for each instance of false marking, and the floodgates for bounty hunter suits flew open. Another Federal Circuit ruling, Brooks Brothers, confirmed that the patent law itself created an injury so any citizen had standing to sue under  § 292(b). According to Foley & Lardner attorney Justin Gray, over 1,000 false marking suits were filed since January 2010, and 450 or so were still pending at the time Leahy-Smith passed. See Gray’s handy chart of those suits here.

Companies as large as frisbee maker Wham-O and plastic cup maker Solo and as small as three-person suspender maker Hold-Up Suspender Co. have targets of such qui tam suits. Some defendants fought back, with several convincing trial courts that § 292(b) was an unconstitutional delegation of law enforcement authority. But as Mr. Gray notes on his site, over 450 cases were settled, with the lawyers and the government splitting $21.5 million.

In a somewhat surprising move, given Congress’s general distaste for lawsuit abuse reform, the new patent law specifically states that only the U.S. government and “any person who has suffered a competitive injury” can sue for false patent marking.  Elsewhere in the law, Congress said that a product with an expired patent isn’t, on its face, “falsely marked.” These changes apply not only to future patent marking suits, but also any suits pending as of September 16, when President Obama signed the bill. No doubt motions to dismiss pending cases were hurtling across cyberspace and through fax machines towards federal courts just seconds after the bill’s signing.

One judge in the Eastern District of Texas didn’t even wait for a motion to dismiss.  He did away with one patent marking suit, Kilts Resources v. Unidensua sponte on September 19. Kilts Resources has 27 other patent marking suits pending in that same court alone. No doubt those suits will meet the same fate, and Kilts Resources – a “Texas Corporation” according to its complaints – will soon have to invent another line of work.

3 thoughts on ““False Patent Marking” Suit Plaintiffs Finally Meet Their Match: Federal Legal Reform

  1. Pingback: Finger on the Pulse: From Our Blogroll and Beyond « The Legal Pulse

  2. Pingback: Wham-O! There Go ‘Patent False Marking’ Suits | Cato @ Liberty

  3. Pingback: Will Illinois State AG’s Action Put an End to Unabashed Abuse of State’s False Claims Law? – The WLF Legal Pulse

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