False patent marking occurs when a person or company uses patent marking that is not valid on a product that they use, make, or sell with the intent to make others believe that the patent is valid and/or belongs to them. Violators can be fined up to $500 for each offence.
On March 15, 2011, the Federal Circuit established a standard on the issue of false patent marking. Prior to this ruling, trial courts across the nation have been applying two different standards to false marking claims. The established standard, referred to as Rule 9(b), clarifies the specifics for making claims such as the ones made in the case of BP Lubricants USA Inc. In the case of BP Lubricants USA Inc., BP's CASTROL line of products featured their patent number on product labels even after the patent had expired.
BP Lubricants USA Inc.
Thomas A. Simonian brought action against BP's CASTROL line of products, claiming that BP's patent of their unique bottle design expired in 2005. However, BP continued to label its products with the expired patent number. He argued that BP, being a large and sophisticated company, knew or should have known that the patent is expired, given the amount of experience they had in this area. Furthermore, Simonian claimed the marking of the products were meant to deceive their consumers and competitors into thinking that the bottle design of BP's CASTROL line of products is still under the protection of the patent.
The Federal Circuit ruled that the law requires the proof that it was BP's intent to deceive their consumers and competitors. However, the mere fact that the products were marked with an expired patent number is not enough to prove BP's intent to deceive their customers and competitors. The court explained that intention to deceive requires specific facts and not just the general allegations that Simonian presented.
The case clarifies the standard to apply to false marking claims, which is now applied uniformly by all trial courts. This decision favors the defendants of false marking claims by requiring specific facts to prove that the defendant intended deception with these markings. This standard solves the ambiguity at the trial court level, where different courts used different standards to determine whether or not a false patent marking violation has occurred. The standard makes it more difficult to prove that the company made a false patent marking by requiring the intent to deceive on the part of the company. Despite these changes, companies should continue to be cautious when placing patent labels on their products since taking certain actions may justify intent to deceive.
New AIA Patent Marking
The Leahy-Smith America Invents Act of 2011(AIA) has made patent compliance easier. One aspect of the AIA allows for the use of "virtual marking" which allows for companies to easily mark and update their patent markings without the expense and time usually associated with traditional methods of marking. For example, traditional methods of marking may require manufacturers to change their tooling so that new products are labeled with updated patent information. This process requires stopping the manufacturing process to make the necessary changes to their machines.
With virtual marking, a company does not have to physically change their packaging when a patent expires, they simply can go online to make these changes. This makes compliance with false patent compliance much easier in cases such as the BP CASTROL case. Having expired patent numbers on products produced after the patent's expiration can lead to costly fines if intent to deceive is proven. Companies can adopt the virtual marking system to easily avoid costly fines and litigation fees without having to interrupt their manufacturing process or creating new packaging for their products.
With the decision of the BP case, the Federal Circuit established a higher standard to prove false patent markings. As a result, the courts will be more lenient towards companies that have mistakenly labeled their products with expired patents. Furthermore, the AIA grants companies greater flexibility and more options when it comes to product labeling. The use of virtual marking makes it much easier and less costly for companies to reflect changes on their labeling. With the new standard and provisions of the AIA, companies can minimize their risk of paying costly fines for false patent markings.