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Marked for Trouble

March 30, 2010

The proposed Patent Reform Act now includes a section replacing the qui tam provision of the false patent marking statute (35 U.S.C. §292) with a traditional civil cause of action. This reform is no doubt a result of pressure put on Congress by patent holding organizations in response to a recent surge of qui tam §292 actions filed against them.

Initially, instead of remedying their illegal actions, patent holding organizations criticized §292 as a provision that develops “marking trolls” who make money by suing those who falsely mark. The obvious flaw in the “marking troll” argument is that it presumes that the widespread practice of false marking is acceptable (it is not, it is illegal). This criticism has now evolved to pressuring legislative action.

The purpose of marking an article as patented is to inform the public of the status of the property’s protected status, as the Supreme Court noted in Bonito Boats v. Thunder Craft Boats, 489 U.S. 141 (1989). In furthering this purpose Congress has provided patent holders the incentive of additional damages, as set forth in § 287.

Once the patent term expires, however, the article should obviously no longer be marked as patented, because doing so would mislead the public as to the articles off-patent status. Therefore, a prohibition of intentional false marking is required to fully promote the marking scheme’s policy. §292 serves this purpose, as the yin to the yang of §287 (I couldn’t resist). In promoting said policy, the qui tam provision of §292 is indispensable.

The qui tam cause of action in §292 is indispensable because without some sort of standing without a direct injury, false marking will continue unimpeded. Competitors have no incentive to bring suit because they benefit from false marking, as it keeps new competitors away. Think about it: If company A falsely marks their products as patented, competing companies will benefit too because new competitors will be dissuaded from market entry. This lack of incentive is evident based on case-law, as there are very few (if any) false marking cases brought by competitors that are not filed as counter-suits in existing litigation.

Further, there is no government-policing agency that would review the patented status of items, nor should there be.

Finally, under the proposed revisions, an individual would not be able to bring a claim because the only damages available are compensatory damages, which would be impossible to evaluate.

Therefore, to adequately ensure the correct marking of patented articles there is a need for a cause of action by one other than an injured party or the government. A qui tam provision serves just this purpose. Without the qui tam provision, manufacturers would be essentially free to destroy Congress’ statutory scheme of providing the public notice of the status of an article’s IP.


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