Monday, May 7, 2012

The Old False Marking Statute Is Dead -- Really, Truly Dead

Prior to the recent amendments to the U.S. Patent Act, it became common for anyone to bring a claim in federal court accusing a manufacturer of mislabeling based on false patent marking. Former section 292 of the Patent Act allowed anyone to sue for up to $500 per item when a patent number was falsely applied to a product, or on advertising for a product. Numerous lawsuits erupted claiming $500 for hundreds of thousands of items bearing false patent numbers. But this is now behind us with the recent patent amendments contained in the America Invents Act. The present section 292 no longer allows anyone to bring a claim for false patent marking. Now, only a plaintiff who suffers a competitive injury caused by the false marking is permitted to sue.

Congress made the amendment retroactive to pending cases, and the retroactive application is made clear in the Federal Circuit's new decision in Rogers v. Tristar Products, dismissing a pending false patent marking claim. In Rogers, the plaintiff sought $500 per falsely marked item but conceded that he was not a competitor to Tristar Products and did not suffer a competitive injury. He argued, nonetheless, that the amendments to section 292 should not be made retroactive because, to do so, constitutes a governmental taking of his litigation rights in violation of the Fifth Amendment. The Federal Circuit quickly disposed of Roger's argument, pointing out that a litigant does not have a vested right in a statutory-based claim until entry of final judgment. Statutory amendments can be made retroactive so as to negatively impact pending litigation. The Federal Circuit observed that Congress had a real good reason to make the section 292 amendments retroactive: to protect companies from having to expend resources to defend themselves from claims that they intentionally sought to harm consumers.
"By making the False Marking Act amendments retroactive, Congress was in significant part attempting to reduce the litigation expenditures in the large number of complaints filed but not yet subject to final judgment. 
* * * 
This was a legitimate justification * * *."
Recalling that the former false marking statute prohibited the fraudulent use of false patent markings, the Federal Circuit's new Rogers decision confirms Congressional elimination of an important tool preventing fraud on consumers.

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