The Stakes Have Been Raised for False Patent Markings|
In our May 2006 issue, we explained the rules regarding the use of patent markings. A patent marking is a phrase like "patent pending" or "U.S. Patent No. 7,357,193" that appears on a product or in connection with advertising. False patent marking-that is, using the phrase "patent pending" if you do not have a live patent application on file with the U.S. Patent and Trademark Office or including a patent number on your product if the patent has expired-is prohibited by statute. Section 292 of the Patent Act allows a court to award damages of up to $500 per offense for false patent marking, and some courts have held that each mismarked product is a separate offense.
Section 292 of the Patent Act states that "[a]ny person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States." This type of statute is referred to as a "qui tam" statute. The term "qui tam" means that a private citizen may sue on behalf of the federal or state government for fraud committed by a third party. In the case of patent markings, this means that private citizens may have the right to initiate a lawsuit under Section 292 of the Patent Act if they discover that someone is fraudulently using patent markings to deter competitors or create a false sense of property.
Until recently, no one but direct competitors had availed themselves of this law. In other words, the only people who sued under Section 292 of the Patent Act were competitors who had suffered actual harm as a result of the false patent markings. In the case of Pequignot v.
Solo Cup Company, 2009 U.S. Dist. LEXIS 26020 (March 27, 2009), however, a patent attorney brought a qui tam action for false markings on his coffee cup-even though he had suffered no actual damages himself. In March of this year, a federal district court judge in Virginia upheld the lawsuit brought by Pequignot. The judge noted that the statute expressly allows "any person" to sue and that it calls for the recovery to be split with the government. Solo Cup argued that the qui tam provision of the Patent Act is unconstitutional, but the judge rejected that argument.
According to Judge Brinkema, Congress could limit causes of action for false patent markings to competitors who have suffered actual injury, but the current statute is not so limited. Judge Brinkema explained that qui tam actions originated in the 13th century as a way to get private claims into royal courts, which ordinarily only heard matters relating to the Crown. She also explained that qui tam statutes allowing informers to keep part of the penalty as a "bounty" for their information served an important law enforcement function in the days when comprehensive law enforcement systems were not in existence.
As stated by Judge Brinkema, "It is likely an accident of history that [Section 292] survives as one of only a few remaining qui tam statutes in American law, given that the overwhelming majority of these statutes have been repealed." Nonetheless, until and unless Congress repeals this statute, it appears that the stakes for false patent markings have increased because anyone-not just an injured competitor-may bring suit and share in the recovery.