On September 16, 2011, the Leahy-Smith America Invents Act (the "Act") was signed into law. The Act makes several substantial amendments to 35 U.S.C. §292, which is the section that pertains to falsely marking products with patent information such as marking a product "patent pending" or "patented", for example. Whether you are a manufacturer, importer, distributor or retailer, these changes will effect your company. The three biggest changes brought about by the Act are (i) the elimination of qui tam provisions (which means that only the United States may sue for civil fines); (ii) the elimination of liability for "false marking" that occurs from an expired patent; and (iii) the addition of the "competitive injury" element regarding any civil actions concerning "false marking" claims.

Changes Effect All Pending Cases

It is important to note at the outset that these changes took effect as of September 16, 2011 and apply to all matters, whether currently pending or commenced after September 16, 2011. This means that if your company is currently defending a false marking action, you may be able to dismiss any private claims currently pending against you.

Elimination of Qui Tam Provisions

Perhaps the biggest change relates to the elimination of the qui tam provisions in false marking claims which means that the quasi private right of action for individuals is no longer available. The "old" §292 stated "[a]ny 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". The current §292 states that [o]nly the United States may sue for the penalty authorized by this subsection". In essence, the incentive for private individuals to bring about claims for false marking is gone and, in this author's opinion, so are these types of false marking cases.

Expired Patents with Marking, Not a Violation

Another major change relates to marked products where the patent has expired. The current §292 specifically states that a product that was marked with patent information and the "relating patent that covered that product but has expired is not a violation of this section". Many of our clients, especially our manufacturing clients, found this to be the most frustrating part of the patent marking problem. When you manufacture, sell or advertise a product during the period where the patent is valid and that patent subsequently expired, according to the "old" §292, you were technically falsely marking your product. This is no longer the case.

"Competitive Injury" Claims

Although the Act will undoubtedly limit an organization's exposure to false marking claims, there are still certain situations where you may find yourself on the short side of a false marking claim. The Act specifically permits a person who suffers a "competitive injury" as a result of the false marking to bring a civil action for "damages adequate to compensate for the injury". Competitive injury can generally be defined as harm to a person or organization's ability to compete with the person or organization that falsely marked the product. Although this section keeps the door open for liability concerning false marking lawsuits from a person or organization, the "competitive injury" element will increase the burden on plaintiffs bringing these types of claims as they will have to properly plead and prove that the marking effected their ability to compete.

Repleading False Marking Claims

A few courts have recently dealt with the issue of whether or not to allow a plaintiff to amend their complaint to add competitive injury claims. Generally, courts have allowed plaintiffs to replead claims to conform to a change in the applicable law, provided that the alleged facts of the case are not changed. If you are currently pursuing claims against another organization relating to false marking, you should immediately move to amend your complaint if the "competitive injury" component in your pleadings is lacking. If you are a defendant in a similar action, expect your opponent to make the motion.

Caution Still Required

Although the Act will reduce the amount of false marking cases brought, you still need to be cautious with your patent marking, in that, (a) the United States still can pursue false marking claims against your organization; and (b) if a competitor can show that your marking caused competitive injury [which they will always allege], you may be subject to substantial damage awards.