False Marking Statute: Potential Liability

Since January 1, 2010, hundreds of qui tam lawsuits have been filed for false patent marking, against both large and small companies. In fact, a number of companies have recently been formed for the apparent sole purpose of pursuing these lawsuits as a business.

Under Section 292 of Title 35 of the United States Code, any person may sue, on behalf of the government, an entity for falsely marking goods as "patented" when they were never or are no longer protected under a patent. The penalty of up to $500 for each falsely marked article is shared between the government and the suing party. The statute was recently "rediscovered," primarily because a court clarified the statutory penalty was for each product falsely marked. The number of qui tam lawsuits has gone up exponentially since then. In the last few weeks, the rate of filings has increased dramatically, likely due to recently introduced legislation that could limit bringing these actions to parties that have been injured, and potentially reduce the damages to a single $500 fine, rather than a penalty for each product falsely marked.

Patent marking is primarily done to serve as constructive notice to potential infringers, allowing a patentee to collect damages or enhanced damages for infringement, even if the infringer had no actual knowledge of the patent. It is fairly common for patentees to fail to remove patent markings from their products following the expiration date of the patents, particularly since calculating the expiration date is difficult and imprecise, and because the people responsible for marking products are not aware of this requirement. 

It may be prudent for you to determine whether your company is marking any products with patent numbers, and whether the patents have expired. If they have not expired, you may want to take the extra step of determining whether the product is still covered by the patent.

Calculating whether a patent has expired or if it still covers a product can be complicated, but we can help. Please contact a member of the Intellectual Property Group at Buchanan Ingersoll & Rooney if you would like to discuss how these changes may affect you or your business.