New Patent Case Filed in DRI

A new patent case was filed in the federal District Court in Rhode Island last week. In its Complaint, Ira Green Inc. of Providence alleges that JL Darling Corp. of Tacoma, Washington, has sold products that falsely claim they are covered by patents, in violation of the federal Patent Act.

Both companies manufacture and sell weatherproof paper, and products such as books and notepads comprised of weatherproof sheets. Ira Green alleges that JL Darling is misleading the public by claiming its books and notepads are covered by a U.S. patent, when that patent does not cover the books and notepads in question.

The "false marking" provisions of the federal patent law make it illegal to put a patent number on a product that is not in fact covered by that patent "for the purpose of deceiving the public." The penalty is a fine of not more than $500. The statute also allows private individuals to bring "qui tam" suits against an alleged offender. If successful, the private plaintiff gets part of the fine and the government gets the other part.

For many years, the provision was not used very often, as it was interpreted to mean that a continuous false marking--such as the entire production run of a product--is a "single offense." So the fines were rarely worth the bother of filing a lawsuit. But in December 2009, the Federal Circuit Court of Appeals changed this interpretation and ruled that each wrongly marked item could be viewed as a separate offense under the statute. This ruling opened the floodgates for these "false marking" cases. In 2010, over 670 false marking cases were filed in the federal courts. Through the first quarter of 2011, an additional 199 cases were filed.

These false marking cases have been subject to question recently. In March, a federal court in Ohio reaffirmed a ruling declaring the provisions allowing a private individual to bring suit unconstitutional. Around the same time, the Federal Circuit held in In re BP Lubricants USA Inc. that conclusory allegations that a defendant is a sophisticated company, and "knew or should have known" that a patent had expired are insufficient, and that a complaint must "provide some objective indication to reasonably infer that the defendant was aware that the patent expired." Together, these two judicial limitations have substantially slowed down the filing of new false marking cases, as only 26 cases were filed in total in the federal courts in April and May 2011.

Whether or not the Ira Green complaint can overcome these limitations remains to be seen.