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[NJ Patent1]

I’m enjoying following this lively debate.  Full disclosure; IMO the qui tam thing was getting a bit out of hand.  But I lament the fact that it is now emasculated.  It might have been fixed.

IMO false marking has two harms; systemic/institutional and actual damages (i.e. the kind for which private action still stands).  Marking with a non-enforceable patent (expired, abandoned,  or not related to the product at all) distorts the marketplace.  Marketeers perceive a value in touting - not just “marking” - patented or patent pending.  This I know for a fact from some clients. 

What I don’t know is whether the average consumer perceives that a product touted, or even just “marked”, as patented / patent pending is somehow superior and, if so, what “premium” they are willing to pay for a patented product over a functionally similar (fungible) one that is not  .  I PRESUME that the answer to the first question is yes and that there is some (indeterminate) premium that the consumer is willing to pay.  If my presumption is correct, false marking can distort or “corrupt” the market (whatever term judge Posner would use) in a manner similar to the way securities violations distort the securities market.  So now it’s up to the DOJ to police this.  It ain’t gonna happen.  IMO we should at least have “whistle-blower” provisions that let the blower get at least a piece of any judgment.

In the case of an expired / abandoned patent, the second harm - actual damages - is IMO de minimis.  Any practitioner  here can determine the status of patent for about cost of the filing and service fees for a civil action, or less. 

If the product - or even a “trivial” part of it - is covered by a patent, any “distortion” in the market is based on consumer ignorance.  No different than touting “supports colon health!” “boosts your immune system !”  “helps lower your cholesterol!”  Like the veracity of these product claims, the “fact” of what a patent claim covers requires potentially costly analysis.  But patentee is entitled to her due

[MYK]

Congress, apparently, has decided that false marking is only a crime on paper, and that it there should never actually be any instances where it should be enforced.

Just one of a long list of great shames in the AIA.

I, respectfully, dissent.  The penalties were not proportional to any harm to consumers, at least for expired patents.  Also, this law was unnecessary as there is no reason to believe that expired patent markings affect actual purchasing habits, or affect potential competitors.  The qui tam craze was just the new cybersquatting, and, similarly, passed as the previous fad. 

Not entirely.  IIRC, we even had a post here by some manufacturer whose competitor had done just that -- falsely marked "patent pending" on a product to intimidate others from copying it.  But now the manufacturer must show some form of harm before he has standing to sue, and what if there really turns out to be an application pending?

The AIA "fixed" false-marking suits by adding a standing requirement (note: I read it before final passage;  it may have been changed again during reconciliation.  I haven't had time to go back and check).  That arguably destroys the intent of the original statute and is relatively meaningless -- now, instead of some ambulance-chaser trying to make a buck through a shakedown suit, suddenly it's competitors who will sue each other for commercial advantage.

So, now, instead of a bored attorney suing Brooks Brothers over their expired patent marking, it'll be another clothing retailer.

Instead, IMHO, Congress SHOULD have simply acknowledged that technology has changed the situation, anyone can find out when a patent expired with a few minutes of web research, and marking of an applicable patent number on a product is at worst a means of educating the public (and competitors) about the product!  Even the courts could have done this.

This would limit false-marking suits to marking an inapplicable number on the product, or falsely marking "patent pending" to try to scare off competitors, both of which IMHO should still be lawsuit-worthy.

[Isaac]

You don't think a paralegal offering freedom-to-operate opinions constitutes practicing law without a license?

Yes, doing things as you describe above would be UPL.   But certainly a lawyer can supervise, review, and sign off on research done by a paralegal. The paralegal would simply do research and fill out a worksheet provided by the attorney.   The attorney would review the worksheet and instruct the paralegal on the need to do any additional work.

[Robert K S]

anyone can find out when a patent expired with a few minutes of web research

I've said it before in this thread, but it bears repeating.  THERE IS NO SIMPLE WAY TO DETERMINE WHETHER A PATENT IS EXPIRED.  Patents may go dead early for a variety of reasons (judgment of invalidity or unenforceability, cancellation after re-examination, failure to pay maintenance fees, to name a few) and may live longer than they should for a variety of reasons (patent term adjustment, extension under § 156(e)(2) or § 156(d)(5), special extension by Congress through the passage of a public law that need not be codified and can hence be effectively "hidden" from the public, to name a few).  The statutory patent term limit is hence just a "suggestion".  There's nothing in the Constitution that says a patent can't last a hundred years, and if Congress wants to sneakily extend a patent for that long, they probably can, just so long as the extension isn't for an unlimited time.

Thus, any attorney who advises a client that "it's easy to figure out patent term" is setting himself or herself up for malpractice.  It's not easy.  It doesn't "take five minutes".  It takes legal expertise.

Moreover, dead patents are only part of the problem.  Another part of the problem is the listing of patents whose claims do not actually cover (features of) the marked product.  Such construction, too, requires legal expertise.

[DogDayPM 9er9er9er]

...  Not because it got a few lucky law firms a bit richer (did it, actually?), but because it would have resulted, in fairly short order, I believe, in a sustainable legal equilibrium resulting from better consciousness of the law and basic fairness.  ...

Confining my comments to the "expired = false" suit craze. 

Yes, it did make quite a few firms (who owned the "plaintiff" LLCs) quite a bit of money.  Justin Gray keeps a list of settlements on his blog, although I do not know whether it is exhaustive.  Some of these "plaintiff" LLCs had hundreds of cases and pulled in millions in settlement monies, even if it was just $30K at a time.  "Patent Group LLC" got about $3 million in settlements.  "Promote Innovation, LLC" totaled about $3.6 million.  There are several others in the millionaire club and many more in the high 6-figures club.

The law was simply untenable when it came to its application to expired patents on packaging.  Product shelf life means that a seller who does everything exactly 100% right (i.e., pulls patent numbers off packaging on the day of expiration) still faces legal challenges in defending his perfectly marked product.  Repetitively, if he has much of a product line at all. 

These things cost money both in legal fees and in business disruption during document production and depositions, etc.  Even if eventually (on MSJ, I suppose, if not at some earlier point(?)), the seller will be shown to have no actual legal liability.  Which is why so many sellers went ahead and paid the $30K or $40K settlements offered - as a business proposition, even if they knew they'd eventually win the case, a $40K settlement is cheaper than proving you're not liable.

[Robert K S]

The law was simply untenable when it came to its application to expired patents on packaging.  Product shelf life means that a seller who does everything exactly 100% right (i.e., pulls patent numbers off packaging on the day of expiration) still faces legal challenges in defending his perfectly marked product.

What are you talking about here?  The law didn't create any obligation to remove marks from lawfully marked products.  It applied only at the time of marking.  There was no "shelf-life" issue--ever.  Even if there was, the AIA amendments to the false marking law don't alter that part of the law.

[DogDayPM 9er9er9er]

What are you talking about here?  The law didn't create any obligation to remove marks from lawfully marked products.  It applied only at the time of marking.  There was no "shelf-life" issue--ever.  Even if there was, the AIA amendments to the false marking law don't alter that part of the law.

Sorry if it wasn't clear from the context.  The law created no obligation, as you mention.  But that would not/did not stop the plaintiff LLC's from suing companies who had properly marked product. 

Consider if you make widgets covered by manufacturing patents or lampstands covered by design patent or literally anything that is not a rapidly perishable item.  Toys.  Wrenches.  Whatever.  All the plaintiff LLC can see when they shop for lawsuits in Ace Hardware or WalMart is that this non-perishable item sitting on the shelf in front of them is stamped with a patent that expired last year or two years ago.  They don't know it was manufactured 3 years ago, prior to patent expiration.  So they fill in the blanks in their cookie-cutter complaint and file away. 

And the companies have to defend themselves.  They have to prove that their product was properly marked at the time of manufacture.  This creates costs both in legal fees and particularly in business disruption, which itself is not inconsiderable when you're talking about a large organization with 5 or 6 functional departments that must be interviewed, have documents searched and produced, possibly having employees deposed if you don't settle early enough, etc.

So the impact here was in looking forward.  A fair number of in-house counsel I spoke with said their companies looked at a future of repetitively defending properly marked product and simply made the business decision to stop marking.  That is to say, the speculative benefits of constructive notice were outweighed by the burdens in this regard.  Possibly this is just an example of corporate knee-jerk over reaction.  But it is what it is.


Addendum:  As an aside, I am really going to miss expired patents on products, which were a boon to competitive activity.  The expired patents on a competitor's product I want to close in on tell me clearly which features are public domain.  I can't speak for the small, unsophisticated companies out there (the ones yelling "patented!!!" on late night television).  Maybe they do in fact have competitors who are just unsophisticated enough to be fooled into not competing by an expired patent.  But I can say that for any company big enough to routinely interact with patent counsel, the idea that expired patents hurt competition (as alleged in all those cookie-cutter complaints) is laughably the opposite of the actual case.

[petethebody]

It applied only at the time of marking. 

Do you have any authority on this point?

[DogDayPM 9er9er9er]

It applied only at the time of marking. 

Do you have any authority on this point?

Personally, I would give RKS this point in any event.  I think it's a proper extension of the (combined) statutory and recent case law, even if it never got tested in a district court. 

Unfortunately, this point could have been tested but was not.  There were a number of cases where the complaint was filed shortly after patent expiration which would have been good candidates*, but sadly the defendants went ahead and settled when the amount got low enough to make it a better business proposition than proving the case in court. 

*I may be getting close to "outing" myself, but knowing the manufacturing, warehousing and distribution pipelines of at least one of those companies, given the date of purchase by the LLC the product almost certainly was manufactured while the patent was in force. 

[petethebody]

It applied only at the time of marking. 

Do you have any authority on this point?

Personally, I would give RKS this point in any event.  I think it's a proper extension of the (combined) statutory and recent case law, even if it never got tested in a district court. 

Unfortunately, this point could have been tested but was not.  There were a number of cases where the complaint was filed shortly after patent expiration which would have been good candidates, but sadly the defendants went ahead and settled when the amount got low enough to make it a better business proposition than proving the case in court. 

Out of deference to Dog Day PM, I will push this point no further.  However, I know the cases to which he is referring to, and they are a matter of a day or two after patent expiration.  Accordingly, unless the product in question went from materials to store shelfs in less than 24 hours, the case should have been dismissed - that is, if false marking requires marking to have occurred after expiration.

[Robert K S]

It applied only at the time of marking. 

Do you have any authority on this point?

Only the plain text of the statute.  Forbids the marking, not the letting sit on store shelves for a few years, which all kinds of products do.

Quick hypo.  If a tentmaking company had a patent on their tent door zippers expiring in 2010 but, owing to the size and shape of the zipper, the only place to put a legible "patented" mark was on cardboard box the tent was packaged in, and the company had a thousand such boxes printed off in 2009 but didn't package some tents in them until 2011 after the expiration of the zipper patent, I think in such case the tentmaking company would have a perfect defense, there being no "mark[ing] upon, or affix[ing] to, or us[ing] in advertising" the word "patented" while the patent was out of force, the "marking" having occurred in 2009 while the patent was valid, the placing of a tent in a box not being "affixing", and a box on a store shelf, without more, not being interpretable as "use in advertising".  Change the box to a cloth tag sewn into the tent after patent expiration, and the case changes a bit.  The company might have the obligation to discard surplus unsewn tags rather than sewing them into the tents, sewing the label, canvas, and zipper together being "affixing".

All academic at this point since false marking is de facto legal after AIA.

[petethebody]

But what of my real life example where a company was sued before it could have even committed false marking? 

Must they then pay expensive patent lawyes to defend against an act of fraud?  Until summary judgment?  That's tens of thousands of dollars.  These were not all mega-corps that were sued.  For instance, Wham-O was only a 3 person shop.  Such an expired-patent suit could put them under and people out of jobs. 

I understand the purpose of the statute, but don't you agree that this false marking craze got a little out of hand as it pertains solely to expired patents?

Going back, here are the settlement numbers from the DOJ:
http://www.justice.gov/civil/common/elecread/2011/FalsePatent%20Marking%20Summary%202011.pdf

[Isaac]

[qs]But what of my real life example where a company was sued before it could have even committed false marking? [/qs]

The company has a slam dunk win.  At the very least, the circumstances show that there was no credible evidence of intent to deceive the public even if there was a 30 second window in which the marking were actually false.

But the problem is one of whether the judge can be persuaded to end the case before the defendant is exposed to expensive things like document discovery, depositions, etc.   Even the slam dunk marking cases will generally survive motions to dismiss based on the competently drafted pleadings.   Discovery stuff is really expensive, and avoiding it all by settling for a few 10's of thousands of dollars may be just good business.