Get rich quick schemes and casino lawsuits are nothing new, but a recent court decision has opened the door for jackpot-chasing lawyers in an obscure patent area called “false marking.”
Patent owners “mark,” or put their patent numbers, on their products for a variety of legal and competitive reasons. It’s obviously inappropriate to falsely mark your product if in fact it is not covered by a patent, or if the patent has expired.
And statute prohibits such a false marking. Included in the statute is a provision to allow an individual to bring suit for false marking in the courts – a provision largely unused until a recent court decision has made it a vehicle for jackpot rewards.
The change occurred after the court decided in Forest Group, Inc. v. Bon Tool Company that the penalty for false marking was to be applied per item sold, not just one penalty per infraction. So now in a situation where 10,000 of the same falsely marked item was sold, the penalty would be applied 10,000 times rather than once.
This ruling dramatically changed the economic calculation related to bringing a legal action, and now encourages plaintiffs who have suffered no real injury but are merely looking for a windfall. Just this year, more than 200 federal lawsuits, involving 250 defendants, have been brought against a variety of companies, often by entities created simply to bring the lawsuits. Nearly 40 actions have been filed by a single individual. This is to say, lawsuits are being brought by trial attorneys and other opportunists.
More recently a court decision in Solo Cup cast some doubt on the ease of these cases by ruling that because Solo Cup had acted in good faith, and because the cost to remove the patent mark was so expensive that the company was not liable.
A soon-to-be-released IPI paper examines the legal history at greater depth and makes recommendations to address this problem through legislation that would remove the jackpot effect of allowing anyone to sue, regardless of injury, and replacing it with a requirement that a person suffer a “competitive injury” as a result of the false mark, as has already been proposed in Congress.
Maintaining a sufficient pace of innovation in a highly competitive global marketplace is challenging enough without the extra burden of defending against an opportunist looking to get rich while suffering no harm. As currently understood, false marking lawsuits serve only to encourage greedy opportunists at the expense of common sense justice.