“COMPLAINT FOR FALSE PATENT MARKING” – Have you Received One? If Not, You Might Soon!

March 7, 2010

By Kurt R. Karst –      

We’re food and drug attorneys, not patent attorneys.  So, when the Federal Circuit issued its decision in Forest Group, Inc. v. Bon Tool Co. in late December 2009 concerning the false marking of spring-loaded parallelogram stilts, we didn’t pay any attention to the decision.  (It’s not a Paragraph IV, Orange Book listing, or patent term extension case.)  We’re paying attention now, however!  The decision affects the FDA-regulated industry. 

Over the past several weeks, scores of qui tam actions have been filed against myriad companies – including several drug, device, and cosmetic companies – alleging so-called “false marking” in violation of 35 U.S.C. § 292.  (For a docket list, go to the Gray On Claims Blog.)  This statutory provision provides that:

(a) Whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, offered for sale, or sold by such person within the United States, or imported by the person into the United States, the name or any imitation of the name of the patentee, the patent number, or the words "patent," "patentee," or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public and inducing them to believe that the thing was made, offered for sale, sold, or imported into the United States by or with the consent of the patentee; or Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article the word "patent" or any word or number importing the same is patented, for the purpose of deceiving the public; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article the words "patent applied for," "patent pending," or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public – Shall be fined not more than $500 for every such offense.

(b) 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.

In other words, it is a violation of 35 U.S.C. § 292 to intentionally mark an item in commerce with a patent number that has expired or that does not protect the item.  Although not a requirement, the FDA-regulated industry regularly places patent information on its product labels and labeling.

In Forest Group, Inc. v. Bon Tool Co., the Federal Circuit ruled that the $500 maximum penalty attaches to each individual article that is falsely marked; however, the Court noted that that “[t]his does not mean that a court must fine those guilty of false marking $500 per article marked. . . .  By allowing a range of penalties, the statute provides district courts the discretion to strike a balance between encouraging enforcement of an important public policy and imposing disproportionately large penalties for small, inexpensive items produced in large quantities.”  The Federal Circuit’s decision  overturned the U.S. District Court for the Southern District of Texas’ (Houston Division) decision that each “offense” is the single decision to falsely mark.  The Federal Circuit commented that:

[The] proposed statutory construction—that the statute imposes a single $500 fine for each decision to falsely mark—would render the statute completely ineffective. Penalizing those who falsely mark a mere $500 per continuous act of marking, which act could span years and countless articles, would be insufficient to deter in nearly all cases. Congress’ interest in preventing false marking was so great that it enacted a statute which sought to encourage third parties to bring qui tam suits to enforce the statute.

Enter the bounty hunters . . . . 

Complaints have been filed against the likes of Novartis, Merck, and L’Oreal for allegedly falsely marking HYPO-TEARS, CLARITIN, and mascara products with labels that bear an expired patent.  If each allegedly falsely marked item distributed is an “offense” subject to a maximum $500 fine, then the monetary damages could be astronomical. 

Although the Federal Circuit is set to hear oral argument soon in Pequignot v. Solo Cup, which concerns the question of intent to falsely mark under 35 U.S.C. § 292, and, as reported by our fellow bloggers over at Patent Docs, the U.S. Senate is considering an amendment to patent reform legislation that would appear to quash the qui tam lawsuits, at this point, the complaints will likely continue to pour in against the FDA-regulated industry.  Firms should review their product labels for expired patent information. 

Categories: Drug Development