Are New Patent Marking Lawsuits Patent Trolling... Or Anti-Patent Trolling?

from the floodgates-now-open dept

Thu, Sep 2nd 2010 3:41pm — Mike Masnick

Earlier this year, we had a long blog post about the sudden rush in patent marking lawsuits. You can read all the details there, but the quickish summary is that patent law says that you cannot falsely claim patent protection on something -- and goods that have expired patents, but still claim patent protection, fall into that category of "false marking." The law allows people to sue for $500 in cases of false marking, but a court ruling last December shook things up quite a bit, by saying that the $500 applied per product rather than (as many had assumed for years) per product line. That meant that in the famous case of Solo's plastic cup lids found on coffee cups around the world, suddenly it faced the potential not of a $500 liability but potentially a $10 trillion liability. Now, no court in the world would grant such an award, but it certainly increased the potential liability and caused lots of companies to start scrambling to get rid of any mention of expired patents on their products. And... at the same time, it led to a bunch of patent lawyers rushing around their local stores looking for just about any consumer product marked with an expired patent. Approximately 350 such lawsuits have been filed since the December ruling.

Now it appears another shoe has dropped. One of the reasons why these patent lawyers (and a few others) went around searching for products is that the law is pretty clear that:

"Any 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."

Yes. Basically, the law is setup such that, in the service of the US government, which doesn't want falsely marked goods, anyone who discovers such a false marking can so, so long as they split the proceeds 50/50 with the US government. But then... a District Court in NY put a halt to that, when a guy named Raymond Stauffer sued famed clothing retailer Brooks Brothers for selling bow ties with patents that expired decades ago. The District Court tossed out the case, agreeing with Brooks Brothers that Stauffer had no standing to bring the lawsuit. This put a bunch of those 350 other lawsuits on hold to determine if "any person" really meant "any person."

Well, open the floodgates, because the appeals court has said that any person does, in fact, mean any person, and thus Stauffer has standing to bring the lawsuit:

Now, I'll admit that I'm a bit torn about this whole situation. It's no secret that I'm not a fan of the patent system as it stands today, and how it's widely used to give monopoly privileges where none should exist. So, I definitely like the fact that there's a system in place to easily go after those who falsely claim a monopoly privilege where none exists (any longer). If you're still claiming a monopoly on something where that patent has expired, it could scare off competition and innovation building on that product -- and that's bad for innovation. So, in general, I'm inclined to support efforts that ward off false marking.

That said, it seems clear that the sudden goldrush mentality of patent attorneys suing all sorts of companies for false marking is a pure moneygrab, where there's little evidence of any real harm at times. It just seems like a way to tie up the courts in hopes of a golden lottery ticket (shared with the feds). That doesn't seem efficient or useful -- and actually has some unfortunate similarities to basic patent trolling.

Perhaps this sorts itself out, however. With the rush of cases, companies are scrambling to review all their product packaging and to remove expired patent markings as quickly as possible. After that initial scramble, the number of these lawsuits should drop pretty quickly. On top of that, the current version of the patent reform bill (which seems to get worse every time we hear about -- but may have already stalled out in Congress again) also would try to cut back on such false marking lawsuits. But, in the meantime, with this new ruling, expect a bunch more of these lawsuits to be filed.

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Filed Under: false marking, marking, patents

17 Comments

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ChurchHatesTucker (profile), 2 Sep 2010 @ 4:30pm

What's the downside?
Hell, I wish this applied to copyright claims as well.
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- Mike Masnick (profile), 2 Sep 2010 @ 4:35pm
  
  Re: What's the downside?
  Hell, I wish this applied to copyright claims as well.
  
  Well, the downside is wasting court resources on issues that aren't clearly harming anyone.
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  - Robb Topolski (profile), 2 Sep 2010 @ 5:48pm
    
    Re: Re: What's the downside?
    Overstepping copyright and patent limits doesn't harm anyone? I sing barbershop quartet music. Right now, I have to figure out if someone's old arrangement of yet another older tune (with sometimes even older lyrics) is valid or not. I can guarantee that if I ask all three parties (or their relatives), they'll tell me that I owe them money even if I legally don't.
    
    Making that illegal with a real penalty would be a real disincentive to collecting royalties where none are due. Right now the disincentive is to the asker for asking -- it's tempting just to proceed without asking and hope you don't get caught (a situation which is not desired long term -- you do want to make sure those that make the art you love can get fairly rewarded).
    
    I really like this law in the patent system. I think it would do positive things for copyright. (But ultimately both need wholesale changes.)
    
    Robb
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  - ChurchHatesTucker (profile), 3 Sep 2010 @ 7:18am
    
    Re: Re: What's the downside?
    "Well, the downside is wasting court resources on issues that aren't clearly harming anyone."
    
    We've already got that, it's just that the bulk of the penalties are stacked against the accused infringer. I see no reason not to put some real risk in claiming to own something you don't.
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- Anonymous Coward, 2 Sep 2010 @ 4:42pm
  
  Re: What's the downside?
  As if anything ever makes it into the public domain.
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rbilotta (profile), 2 Sep 2010 @ 4:35pm

The only thing about the anti-marking statute is that case law says a judge can apply as a penalty a fraction of a dollar per product. So it really depends on the Judge's discretion. If a judge decided that a plaintiff only gets $.0001 per product, it might not be worth it to sue.
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Anonymous Coward, 2 Sep 2010 @ 9:22pm

The decision here is limited to two technical questions of law...who has standing to file suit and does the USG have the right to intervene in the suit? The answers? "Anyone" and "yes".

These are however just the first step in a legal process that requires numerous additional steps before a full-fledged suit can be filed and stand any reasonable chance of succeeding. As the court made it only too clear, the "anyones" have a steep uphill battle before whatever they eventually file will be deemed to be in a form suitable for a suit to proceed.

Personally, were I the attorney who filed this case I would not find much solace in the decision. My bottle of champagne would remain on ice and unopened for a long time (if ever).

BTW, as an attorney I am not supportive in any way of actions such as this since it appears to have all the hallmarks of ambulance chasing...something that the vast, vast, vast majority in my profession eschew.

California went through something like this by a few attorneys who looked upon California Business and Professions Code Section 17220 as an eacy path to riches. It came back to haunt them in ways they never imagined, including (IIRC) proceedings before the disciplinary section of the California State Bar.
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staff, 3 Sep 2010 @ 5:15am

they call it “reform”
"On top of that, the current version of the patent reform bill (which seems to get worse every time we hear about -- but may have already stalled out in Congress again)..."

Just because they call it “reform” doesn’t mean it is. You can call a pig a cow, but it’s still a pig.

Patent reform is a fraud on America. It is patently un-American.
Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.
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Anonymous Coward, 3 Sep 2010 @ 5:19am

I personally don't see the serious harm in items mismarked with patent numbers/expired patent numbers.

Really, if I have any intention of selling a product competing with a widget marked/covered with patent 0000 the first thing I do is go look at what patent 0000 really covers. It could be any portion of the item (the manufacturing process, the design, the materials in it, or a host of other things) and you never know w/o looking it up. The next thing you look at is the date, to see when it expires and when it was filed for prior art issues.
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- Mike HYland, 7 Sep 2010 @ 1:38pm
  
  Re: Another proof of the anti-business Obama Administration
  Great link to the law firms hiding behind these so called Qui Tam (whistleblower) suits can be seen at http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202462844743 I have a small business web site client caught up in a false patent mis-marking suit filed on friday. Holdup Suspender Company holds multiple US patents for their unique suspender clips as shown at www.suspenders.com/patented.html Their original no-slip suspender clip patent was issued in 1990 (#4,901,408) has expired. They were granted and new improved design patent granted in March 2010 (D619,495 S), but have clips marked with the expired patent # on USA made suspenders in stock, on customers and at retailer stores.
  
  Darn shame they face potential closure as the very active (10 cases) Qui Tam and attorney pliantiffs in Ohio want $500 bucks per mis-marked suspender clip, their domain, and replacement of all suspenders marked with the expired patent number. They have 6 temp people filing off patent numbers this Labor Day weekend as the new replacement clip stock, with new patent #, is in limited supply. NIce move by the Obama small biz friendly administration and Eric Holder Attorney General to actually participate in suing these family run tax paying entrepenuers hopefully ranking in their life savings and forcing closure of their businesses.
  
  Amazing... from Brooks Bros. Bow Ties to Holdup Suspenders the wannabee King with no clothes jumps ugly on every USA manufacturer who are inventive enough to have patented products. **Incidently every judge in every courtroom are using court reporting equipment and computer harddrives mis-marked with expired patent numbers so they should recuse themselves ... or get some common sense.
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robster, 3 Sep 2010 @ 6:29am

where's my nearest dollar store? I have some patent/anti-patent trolling to do....
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- Anonymous Coward, 4 Sep 2010 @ 6:49am
  
  Re:
  I need to find a way to both sue someone for infringing my patent and then to sue them for not infringing.
  
  I know. I can accidentally cut myself with a saw and sue them for not implementing my patented safety mechanism.
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[ link to this | view in chronology ]
Mike Hyland, 30 Jan 2011 @ 6:44am

False (expired) patent marking cases now exceed 927
H.R. 4954 (stalled since March 2010) House bill 4954 mirrors the language being proposed in the Senate patent reform bill. This bill was referred to the House Judiciary Committee on March 25, 2010 and just sits there as hundreds of new business killing law suits get filed in Fed Courts nationwide. 600+ American Companies sued for expired patent false marking cases now active in Patent troll sympathetic Federal District Courts nationwide... click link to see the new cases added this week! House Judiciary leader Rep Darrel Issa ( R from Ca.) now has control of these Congressional bills to quash these expired patent # cases and we sure hope he immediately does this for all the sued parties so they can grow their product lines and expand their businesses with new jobs created by revising Patent Marking Laws. Congressman Darrell Issa represents the people of California�s 49th Congressional District in the United States House of Representatives, a seat he has held since 2001. The 49th District includes Camp Pendleton, the largest Marine Corps training facility in the United States. As a senior in high school, Issa enlisted in the United States Army. Through his Army service, he received an ROTC scholarship and graduated with a degree in business from Sienna Heights University in Adrian, Michigan. Upon graduation, Issa was commissioned as an Army officer, and ultimately obtained the rank of captain. He completed his active-duty military service in 1980 and turned his interests to the private sector. At the height of his career in business, Issa served as CEO of California-based Directed Electronics, a company that Issa founded and built in the mid-1990s to become the nation�s largest manufacturer of vehicle anti-theft devices, including the highly-successful patented Viper system. In 1994, Issa was named Entrepreneur of the Year by Inc. Magazine, Ernst & Young and The San Diego Union Tribune. During his leadership of Directed Electronics, Issa served as chairman of the Consumer Electronics Association, an organization of 2000 companies within the consumer technology industry that hosts the annual Consumer Electronics Show in Las Vegas. When he stepped down as CEO to serve as a Member of the U.S. House of Representatives, Directed Electronics Inc employed nearly 200 people making a selling his patent products. As a Congressman Issa has championed the cause of smart, efficient government, and has pushed legislation to balance the federal budget and promote transparency across the federal bureaucracy. Darrel Issa currently is a member of the House Judiciary Committee and the Oversight and Government Reform Committee, where he serves as the Chairman. Previously, Issa served on the House Permanent Select Committee on Intelligence, the Energy & Commerce Committee, and the Small Business Committee. As the holder of 37 patents himself, Darrel Issa has been vigilant about protecting the intellectual property rights patent holders, patent product manufacturers and other entrepreneurs to help protect America�s position at the forefront of product innovation and creativity by USA industries. He sponsored House Bill HR 4954 to stop the abusive Qui-Tam false patent marking cases threatening to destroy many US small manufacturing and sales firms like Holdup Suspender Company. The statutes should allow only an actual harmed competitor from claiming Federal court damages and restraint of trade fines on phony patent # marked products. Heck it can't be easier to verify patents .. Google has a specific patent search feature at... http://www.google.com/advanced_patent_search or 7 Million Patents via Google Patent Search API Jun 26, 2008 ... Google Patent Search The new Google Patent Search API is now available and lets you search over 7 million patents via code for free. We are campaigning to modified US Patent marking laws. See our steps to change Patent laws and quash these disastrous job killing laws suits... We need a public outcry now the GOP recovered control of the people's House in Congress. Pressure along with us the various media outlets shinning a light on these shameful destructive job killing law suits. Hopefully Rep Issa, John Conyers, and new House leadership will fast track the above bills to cure these frivolous expired patent # suits is just wishful thinking they can change their anti-business way. Holdup Suspender Company, like hundreds of other US businesses caught by these greed driven shysters and their Congressional and Justice Dept protectors, cannot survive the huge legal bills nor the multi-million dollar Fed Court judgements. Fines exceeding the gross suspender sales since the Company's founding. see http://www.falsemarking.net/district.php for upto date active cases and get real mad as these grow in 2011.
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