House of Representatives Proposes to Fend Off Lawsuits Alleging False Marking
In 2010, many lawsuits have been filed alleging that companies are deceiving the public by falsely marking their products with patents that have expired or no longer cover their articles. As reported in the Spring 2010 Ostrolenk Faber Newsletter, the Court of Appeals for the Federal Circuit (“Federal Circuit”) recently held in Forest Group, Inc. v. Bon Tool Co. that damages of “not more than $500.00 for every such offense” applied per falsely marked article. This provided a great incentive for would-be plaintiffs to file false marking lawsuits. For example, and in view of this decision, as little as a hundred falsely marked articles could result in damages as high as $50,000.00. As expected, the practical result was a sharp spike in the number of lawsuits filed alleging false marking.
In response, legislation has now been proposed in the House of Representatives (HR 6352, the “House Bill”) to amend the federal false marking statute in order to reduce the incentives and ability to bring a false marking lawsuit. In particular, the House Bill proposes to amend the patent statute to remove damages of $500 for “every such offense” and change the law to “$500, in the aggregate, for all offenses in connection with such articles.” In other words, the bill proposes to limit the total available damages for falsely marking articles to $500. In addition, the House Bill proposes to tighten the standards for a plaintiff to prove standing to bring a false marking lawsuit. The House Bill requires a plaintiff to show that the plaintiff suffered a competitive injury as a result of a violation of the patent marking statute.
In summary, the bill aims not only to limit the amount of money that can be won at trial, but also the number of people who have standing to bring suit in the first place.
The House bill is welcomed by many who are concerned over the rise of litigation following the Federal Circuit’s Forest Group, Inc. v. Bon Tool Co. decision. Whether the House Bill will be signed into federal law remains a question, but it is reasonable to predict that eventually the House Bill or a similar bill will be passed. Check back with the Ostrolenk Faber website for further developments in connection with this and other intellectual property matters.
Click Here for a full copy of the HR 6352.