While shopping at the mall, you might have noticed that there often appears a list of patent numbers on product packaging. To many, this is little more than cryptic list of numbers in tiny font on the bottom of the box. However, these numbers appear for a very specific reason: to assert that the product inside is covered by the claims of the listed patent(s).
Simply put, patent markings preserve certain damages in a patent infringement lawsuit. For example, in the event that a patent owner successfully enforces the claims of a patent against an infringer, he or she can potentially recover, among other things, damages that resulted from lost sales. Without patent markings listed on the patent owner’s products, damages from lost sales are limited to those that occurred only after the accused infringer was notified of the issue. But, if the patent number was marked on the packaging of the goods, then the damages due to lost sales can be calculated back to the time the patent number was first placed on the packaging. That often increases the calculated damages, sometimes dramatically.
Marking product packaging with patent numbers, however, is not without risk. The U.S. Code states, in part, that false patent marking can include a fine of “not more than $500 for every such offense.” There are two parts to the determination of a false marking claim:
1) The patent marking must be false, and
2) The false patent marking must have been made with intent to deceive the public.
Complicating matters is the fact that the code allows for the action to be brought by any individual or party on behalf of the federal government, with the award being split between the plaintiff and the government.
In a 2009 ruling in Forest Group v. Bon Tool Company, the Federal Circuit affirmed that damages of $500 per offense were reasonable, and that the damages are to be calculated per article. For companies who sell large volumes of products, this ruling was potentially devastating.
For example, the Federal Circuit is set to hear arguments April 6 in Pequignot v. Solo Cup, a case dealing with similar false patent marking issues. In that case, Solo Cup has sold approximately 21 billion individual articles in the accused packaging. At $500 per article, the damages could potentially exceed the gross national product of almost every country in the world.
The ruling in the Bon Tool case, which drastically increased potential damage awards for false patent marking, has created exactly what the Federal Circuit’s decision predicted: “a new cottage industry” of false patent marking plaintiffs. Since Jan. 1, over 200 companies have been sued for false patent marking. In many cases, the complaint is focused on a product that is marked with a patent number that has expired.
Expired patents listed on product packaging can appear for a number of reasons. It could be a simple oversight, or the packaging was printed on a large scale and the patent expired at some point during the lengthy distribution process. It will be up to the courts to decide whether such circumstances amount to “deceptive intent,” and it could take years and millions of dollars in legal fees, settlements and/or fines before there is a clear resolution to the issue.
It should be noted that this issue might be legislated away. The Senate is debating a “Manager’s Amendment” that attempts to limit the parties who can bring a false patent marking suit to those who suffered a “competitive injury.” The proposal would have a retroactive effect, and would effectively wipe out nearly all of the pending lawsuits. However, at this time, it is unclear if and when such an amendment might be passed.
In the meantime, there are a few things you can do if you have packaging on the market listing patent numbers:
• Conduct an audit of existing packaging to determine whether any of the patent numbers are incorrect or expired;
• Ensure that future packaging is reviewed prior to printing to make sure that the listed patents cover the products in the packaging, and that the patents listed have not expired; and
• Consider removing the patent numbers from packaging going forward if the risk of a suit does not outweigh the potential rewards.
Timothy A. Johnson is patent counsel for Schick Wilkinson Sword, an Energizer Company, as well as vice president of the Connecticut Intellectual Property Lawyers Association. Any opinions or characterizations expressed in this article represent his personal viewpoint, and do not necessarily reflect the viewpoint of any colleague, association or employer.
