When you obtain a U.S. patent, you will likely consider how to notify your competitors and others. One way is to mark your patented products with patent information. "Patent marking" is generally not required but recommended, particularly in the United States where it can be essential to maximize monetary damages that can be recovered by a patent owner in a patent infringement action. For Canadian companies commercializing products in the U.S. market, patent marking should therefore be an important consideration.
While U.S. law on patent marking has been established for quite some time, recent legal developments may influence how companies approach the marking of their patented products.
Current patent marking requirements. U.S. patent law requires that a patented product be marked as patented in order for the patent owner to recover damages in a patent infringement action from the date the infringement began. If the patented product is not marked, the patentee cannot recover damages from the date the infringement started; rather, damages can be recovered only from the date the infringer was actually notified of the infringement (e.g., by a letter or by filing a patent infringement lawsuit). However, failure to mark its products will not prohibit the patentee from obtaining injunctive relief against infringers.
The law presently requires "fixing" on a patented product the word "patent" or the abbreviation "pat." together with the patent number. When this cannot be done due to the product's character, a label containing the patent marking can be fixed on the product or its packaging. What constitutes a sufficient marking therefore depends on the nature of the patented product. If there are other markings directly on the product (e.g., company or product names, part or serial numbers, dates, etc.), a patent marking elsewhere than on the product itself may be insufficient. Other factors to consider are the product's size, the burden to add a step to affix a mark on the product, and the expense for marking. Courts appear to have approved the common practice of listing multiple patent numbers with a statement that the article is covered by "one or more" of the patents, but a number of decisions require strict accuracy.
"Virtual" patent marking may become permissible. U.S. patent reform legislation currently under consideration would permit "virtual" marking by including the word "patent" or the abbreviation "pat." together with an internet address of a web page that associates the patented product with the patent number. This would remove the need to actually mark the patent number on the patented product, although it could still be done. This legislation has not yet been passed by U.S. Congress nor signed into law. Therefore, at least for the time being, patent numbers still have to be marked on patented products to meet U.S. patent marking requirements.
A company may consider already marking its patented product with an internet address (e.g., www.companyabc.com/patents or any other suitable address containing the word "patent" or the abbreviation "pat.") of a web page that associates the product with the relevant patent number(s). This may be useful, for example, if a patent covering the product expires, in which case the patent number can be removed from the web page, or if an honest mistake is discovered, in which case the patent information on the web page can be corrected (e.g., an error in a patent number can be corrected, or a patent number associated with a product can be removed if it is realized that the patent initially thought to cover the product actually does not).
Even if marked with an internet address for patent information purposes, since virtual patent marking is not sufficient to meet current U.S. patent marking requirements, a patented product should still be marked with the relevant patent number(s) at this time.
Avoid "false marking." While proper patent marking is beneficial, "false marking" is prohibited and must be avoided since it can have serious financial consequences. U.S. patent law prohibits three different types of false marking: (1) counterfeit marking, which arises when a patent mark is used without the patent owner's permission; (2) false patent marking, which arises when an unpatented product is marked as being patented; and (3) false patent pending marking, which arises when a product is marked with "patent applied for" or "patent pending" but no patent is actually being applied for.
At present, anyone may sue a company for false marking and be entitled to half of the penalty, the other half going to the U.S. government. The penalty can be a maximum of $500 per article. This can create an enormous financial exposure for the company being sued. However, courts have some discretion to avoid imposing disproportionately large penalties for inexpensive items produced in large quantities.
For a company to be guilty of false marking, the plaintiff must establish that the marking company intended to deceive the public. However, when there is proof that the marking company knew that the patent marking was false, fraudulent intent will be inferred and the marking company will bear the burden of showing that the (false) patent marking was made in good faith.
There has been a significant increase in false marking litigation since 2009 as there are now individuals and companies in the business of monitoring the market and filing legal actions to recover the penalties. These lawsuits often merely alleged that a product had been sold with the marking of an expired patent, without giving specifics about the seller's alleged intent to deceive the public.
Risk associated with false marking likely to go down. In the wake of the increase in false marking litigation, recent U.S. legal developments will likely tend to make false marking claims less frequent going forward. In particular:
- A federal court of appeals toughened the pleading standard for claiming false marking by requiring that a plaintiff state with particularity the circumstances constituting fraud or mistake. The mere fact that a product is sold and marked with an expired patent should no longer be sufficient to sustain a false marking claim.
- A federal district court judge recently found the false marking statute unconstitutional, finding it to lack sufficient control from the government as required for statutes that are criminal in nature. Although the decision has limited precedential value, the U.S. government is appealing the decision and it thus appears likely that a higher court will consider the issue soon.
- Patent reform legislation currently considered in U.S. Congress would limit false marking lawsuits by restricting who can file them. The filing of false marking claims would be restricted to (1) the U.S. government for recovery of the penalties and (2) competitively-injured parties (e.g., competitors) for recovery of only their actual damages due to the false marking.
While it looks like the risk associated with false marking will tend to decrease, companies should still be cautious when they mark their products to avoid false patent markings.
As the requirements and consequences of patent marking continue to evolve in the United States, it is important for Canadian companies commercializing products in the U.S. market to ensure that their patent marking practice evolves accordingly.
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