New Industry Springs Up Overnight: Filing Patent Marking Suits Over False Patent Claims

from the patent-marking dept

A few years back, we wrote about some lawsuits that were filed against companies who were still listing expired patents on their products, implying that those products were still protected by the patents. The practice of claiming patent coverage over something that isn’t patented is known as “patent marking,” and it’s become very popular lately. AdamR alerted us to the news that Activision was recently sued for patent marking, in listing out patents on certain games that don’t cover what’s in those games. But that’s just the tip of the iceberg.

Joe Mullin points us to the news that, in just the past few months, it looks like a bunch of lawyers have started going around filing patent marking lawsuits. In at least some of these cases, totally different groups of lawyers have sued the exact same companies over the same patents.

What’s going on?

Well, as we noted a few years back, there had been a few such cases filed under the law covering patent marking, and as they made there way through the courts, there was a question of how the penalties should be calculated. The law notes that anyone found to have been patent marking “Shall be fined not more than $500 for every such offense.” But, if you were selling products — say Solo plastic cup lids (which one such case is about) — is that $500 fine for all the lids (considering all the cups with the marking together to be a “single offense”) or does each cup lid constitute a separate offense? Clearly, the difference matters in a big way.

Without going into all the details, an appeals court ruled, at the end of last year, that the $500 should apply to each item, rather than to the product as a whole — massively increasing the liability for false marking. This particular ruling, the Forest Group ruling, applied to construction stilts, and greatly increased the liability — but in some of the other cases, the difference is even more striking. As some have noted, with Solo cups lids, there are supposedly 21 billion (with a b) cup lids with the allegedly falsely marked patent out there, meaning that a ruling like the one in Forest Group, if applied to Solo, turns a $500 liability into a $10 trillion liability.

That’s real money.

And here’s the next part of the law that makes things tricky. Unlike many court cases, anyone is allowed to bring a patent marking case. Yes, anyone. You just have to split the award with the US government. As the law notes:

Any 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.

So, with the Forest Group ruling last year, suddenly a bunch of lawyers realized that there could be good money in finding anyone with a falsely marked patent — especially if it’s on a consumer product of which there are tons in the market. Hence the sudden rush of patent marking cases, including duplicate suits against the same companies over the same patents.

There are some concerns, obviously, that this is a dangerous situation, with a bunch of lawyers basically scouring the country for anything marked with a patent that might be expired or doesn’t cover the product in question. In fact, I’ve seen some start calling them “patent marking trolls,” playing off of the “patent troll” concept. But, at the same time, as with copyfraud, falsely claiming a gov’t granted monopoly right over something that is not protected is a pretty serious problem — and a law that makes it profitable to punish such an abuse seems like it should be a good thing. Now, if there were only a similar setup for copyrights…

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Comments on “New Industry Springs Up Overnight: Filing Patent Marking Suits Over False Patent Claims”

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48 Comments
AdamR (profile) says:

Yeah Baby!

Time to head to the supermarket, big box warehouse, and close out store and start looking into multi-package items with patents.

“but in some of the other cases, the difference is even more striking. As some have noted, with Solo cups lids, there are supposedly 21 billion (with a b) cup lids with the allegedly falsely marked patent out there, meaning that a ruling like the one in Forest Group, if applied to Solo, turns a $500 liability into a $10 trillion liability.”

When now have the plot for the next Austin Powers Movie, cue up the Dr. Evil pinky to lip and his laugh.

Devonavar (user link) says:

Two major problems here

1 – Products last a lot longer than their patents. Do products marked with the patent suddenly become “infringing” (for lack of a better word) when the patent expires? What about old stock that shows up in the retail stream after the patent has expired? I would imagine that retooling a “marking device” is not cheap either… What about people still using (or reselling) versions of old software?

2 – The “per infringement” ruling is terrible in my non-lawyerly opinion. It essentially means that liability is determined by they type of the thing that is patented, not the degree of infringement. So, Solo gets in trouble for trillions, and the maker of some sort of specialized one-of-a-kind (but expensive) device is liable for … $500. I would like to think that, if $500 flat really is not the appropriate way of assigning liability (and maybe that flat number needs increasing), it should at least be tied to some kind of *actual* infringment numbers. Perhaps, one is liable for the number of years since the patent expired, multiplied some kind of quantification of “market penetration”. Yes, I realize that is vague, but some effort could certainly be put into finding a fairer way of determining this liability.

Chuck Norris' Enemy (deceased) (profile) says:

No more than $500

“Shall be fined not more than $500 for every such offense.”
You would hope that since the ruling makes a cap on the fine per item that reasonable fines can be assessed by the judge. He doesn’t have to use $500 per printing he could use $0.0001 rendering the Solo cup lid instance to a more reasonable $2.1 million.

someone who actually knows what he's talking about says:

Re: No more than $500

exactly. in mike’s “OMG PANIC!!!” post, he fails to mention that the federal circuit recently ruled on this exact issue. it’s definitely “up to” $500 per item, and the court is perfectly okay with fining nominal amounts per item.

sometimes the patented version only costs a few more cents per batch, so at most, the false marking fee is rarely going to exceed the difference.

besides, the lawsuit is called a “qui tam” action, and on all qui tam actions, the judge often rules that the government gets to keep a fat portion of the judgment… and this is perfectly legal.

other than mike’s “OMG PANIC THESE DAMAGES ARE MASSIVE!!” tone in this article, there’s nothing wrong… claiming you have IP rights when you don’t should be punishable.

Mike Masnick (profile) says:

Re: Re: No more than $500

exactly. in mike’s “OMG PANIC!!!”

Er, there was no “OMG PANIC” but considering you still won’t admit you were wrong in our last discussion, I’m not surprised that you’d keep lying.

he fails to mention that the federal circuit recently ruled on this exact issue. it’s definitely “up to” $500 per item, and the court is perfectly okay with fining nominal amounts per item.

I quoted the statute, which accurately states “no more than $500.” I assume that most of my readers are smart enough to understand that means “up to.”

I didn’t realize that I had to spell out everything.

Mike Masnick (profile) says:

Re: Re: Re:2 No more than $500

here’s your panic mode language: “if applied to Solo, turns a $500 liability into a $10 trillion liability.”

that’s just false.

No, it’s correct. I’m talking about the *liability* which is the *potential*, not the actual award. The point is that theoretically it could go that high, which is how you define your liability.

Look, I know you’re a lawyer and clueless on economics and business, but when you figure out your potential liability, this is correct.

Mike Masnick (profile) says:

Re: Re: Re:4 No more than $500

SWAKWHTA: seriously, why must you toss out a schoolyard insult in every comment?

Many of us are trying to have a serious discussion, and you come here throwing around childish insults, and when you are caught being wrong you throw a tantrum, scream insults in response and never admit you were wrong. It’s really amazing for someone who wants us to believe he’s actually a responsible adult.

the probability of them awarding $500 per unit is virtually 0

Indeed. But it is the potential liability, which is what I writing about. From a risk assessment standpoint, it was the operative number for demonstrating how the risk went from tiny to very large.

someone who actually knows what he's talking about says:

Re: Re: Re:5 No more than $500

risk assessments run on expected value. always. didn’t you take stats in your mba program? have you ever been to vegas?

by your logic, every person owning property should be in super-panic-mode always, because someone could die on your property and the wrongful death suit would be astronomical. or people should be in uber-panic-mode when they download some tv show from the pirate bay. and casinos? they should NEVER have no limit games or jackpots…

but instead, people don’t panic because the probability of someone dying on your property is incredibly low, and the probability of getting sued by the studios is even lower than that. and even if the statutory damages are $150k per infringement, the probability that $150k will actually be awarded for non-commercial infringement is … even smaller than that. and casinos keep the expected value of every bet slightly less than the value of the bet. multiply this by billions or trillions of iterations per day, and even if you pay out jackpots, you’re still profiting wildly.

Mike Masnick (profile) says:

Re: Re: Re:6 No more than $500

risk assessments run on expected value. always. didn’t you take stats in your mba program? have you ever been to vegas?

Didn’t just take stats, I taught it. So, of course I know what expected value is, but you seem very confused again (since you are not a business person, perhaps this is to be expected — but since you keep insisting that I should never comment on legal issues, I find it hilarious that you think a wikipedia education means it’s okay for you to tell me how business works).

Anyway, you are wrong. Expected value is one of the things you look at in making risk assessment, but another is the range of likely outcomes, and that includes figuring out what the *largest* possible liability is in indicating your base liability.

by your logic, every person owning property should be in super-panic-mode always

Uh, no. Again, I don’t see why you think I said anyone should panic. I didn’t. You seem to have read into my post some level of panic suggestion that simply isn’t there.

because someone could die on your property and the wrongful death suit would be astronomical. or people should be in uber-panic-mode when they download some tv show from the pirate bay. and casinos? they should NEVER have no limit games or jackpots…

Uh, no. Again, you read way too much into the post and you (again) simply can’t admit that you are wrong. I used the $10 trillion — completely accurately — to demonstrate what a massive change this is, in terms of how it changes the potential liability. It was the accurate number, and it was used by the *LAWYERS* in the paper that this story was based on. They were the ones who noted this is the top liability.

but instead, people don’t panic because the probability of someone dying on your property is incredibly low, and the probability of getting sued by the studios is even lower than that. and even if the statutory damages are $150k per infringement, the probability that $150k will actually be awarded for non-commercial infringement is … even smaller than that. and casinos keep the expected value of every bet slightly less than the value of the bet. multiply this by billions or trillions of iterations per day, and even if you pay out jackpots, you’re still profiting wildly.

Indeed. But no one said anyone actually expected the $10 trillion award. We just used it to demonstrate how this massively increased the liability — which explains the sudden rush of lawsuits.

I mean, come on. This is really basic stuff, but in your mad rush to insult me, you got it wrong again.

And you still haven’t admitted you were wrong on all those previous stories. Please, for basic common human decency, just say it: “Mike, I falsely accused you of mixing up units and revenue when you did not.” I’ve now asked you almost a dozen times to admit you were wrong — just as I admitted I was wrong on the “money changing hands” issue with the Amazon/Microsoft story.

Why is it that you can’t just admit you were wrong?

someone who actually knows what he's talking about says:

Re: Re: Re:7 No more than $500

no one else is emphasizing the billion/trillion but you, because the federal circuit actually remanded to assess what the proper damages per unit would be.

as for admissions of wrongness, you still haven’t admitted that you don’t understand what incorporation by reference is, and that you falsely reported that burying contract terms 2843092 steps away is legal.

Mike Masnick (profile) says:

Re: Re: Re:8 No more than $500

no one else is emphasizing the billion/trillion but you, because the federal circuit actually remanded to assess what the proper damages per unit would be.

Again, the numbers came straight from the Gray & Wegner.

And, I didn’t “emphasize” them. I mentioned them — the same way that Gray & Wegner did to point out how this changes the liability equation.

as for admissions of wrongness, you still haven’t admitted that you don’t understand what incorporation by reference is, and that you falsely reported that burying contract terms 2843092 steps away is legal.

Again, I do no what incorporation by reference is and I already backed up the contract issue, which you disagree with. On both of those issues, they are differences of interpretation, not facts.

But on FACTUAL stuff, when you showed me wrong, I apologized. When I proved you wrong, you called me incompetent, dense, ignorant, started screaming and refused to apologize.

Be an adult. Admit you were wrong. We disagree in interpretation on the contract issue — though, you DID falsely state I said a judge said something, even though I said no such thing. But, on factual stuff, I’m willing to admit when I am wrong. What’s hilarious to me is that you apparently cannot. I mean, you FLAT OUT falsely said I got confused about units and revenue, and I pointed out the numbers, which proved I had not. You were flat out 100% factually wrong. And you still can’t admit it.

I’m amazed.

Let’s try this again. You can even just cut and paste: “Mike, I’m sorry, you were right. I thought you got confused, but you did not.”

someone who actually knows what he's talking about says:

Re: Re: Re:9 No more than $500

I do no what incorporation by reference is and I already backed up the contract issue

the two are mutually exclusive. this is not interpretation. this is you not knowing what you’re talking about while you’re calling me pathological.

Mike Masnick (profile) says:

Re: Re: Re:10 No more than $500


the two are mutually exclusive. this is not interpretation. this is you not knowing what you’re talking about while you’re calling me pathological.

Ok. Since you seem to have trouble understanding when I am talking about separate thing and are now FALSELY (again) confusing issues I have spoken about, I am going to break these into distinct statements:

1. Contrary to what you claimed, I did not first bring up the $10 trillion. Gray and Wegner did. Please admit you were wrong.

2. I do know what incorporation by reference is. Please admit you were wrong.

3. I did back up the issue of how that setup was legal with a series of cases — which Thomas O’Toole also pointed out showed how similar scenarios were legal. Please admit you were wrong.

4. Yes, it is interpretation. Obviously different legal minds disagree or there wouldn’t be lawsuits. Please admit you were wrong.

5. You claimed I said a judge said something which I did not. Every single person on that thread other than you read the post and agreed that I never said the judge said what you claimed I said. Please admit you were wrong.

6. You falsely claimed that I confused units and revenue. I presented the numbers to show that I had not. This one is not even debatable. The numbers show 100% that you were wrong. Please admit that you were wrong.

7. When I call you pathological, it is about your constant refusal to even acknowledge point #6, where there is simply no room for debate. None at all. Instead, you have done two things: ignored it each time I brought it up, or resorted to screaming insults (dense, incompetent, etc.) in all capital letters.

8. When you *have* caught me being wrong — such as in the Amazon/Microsoft post, I have quickly and courteously admitted my mistake, corrected it and apologized. What I can’t figure out is why you refuse to do the same. That’s what I find pathological.

I will, once again, try to help out. Feel free to cut and paste: “Mike, I’m sorry, you were right. I thought you got confused, but you did not.”

Cypheros says:

Re: No more than $500

When was the last time you saw *anyone* in government pass up the opportunity to steal/imbezzle/filch/tax/bilk the American People (and American Business, for that matter) out of as much money as possible?

The US Government gets half of the proceeds. No way they will go less than the $500 max unless there is a super compelling reason for them to.

LostSailor (profile) says:

Clarification Please

But, at the same time, as with copyfraud, falsely claiming a gov’t granted monopoly right over something that is not protected is a pretty serious problem — and a law that makes it profitable to punish such an abuse seems like it should be a good thing. Now, if there were only a similar setup for copyrights…

Mike, could you please clarify? Are you saying that when copyright (and patent) supporters like the RIAA go after infringement and win big awards, that’s an abuse of the legal system and they shouldn’t do it. But when anyone goes after “patent markers” and “copyfraud” then excess damages are not an abuse of the system and are a good thing?

In other words, it’s laudable if you approve of the cause, but lamentable and abusive if you don’t?

Just want to make sure I understand.

LostSailor (profile) says:

Re: Re: Clarification Please

Thanks, but what about the second part of the question: If it’s fine to applaud punishment for those who falsely abuse copyright and patent enforcement, shouldn’t the same applause be applied to punishment for correct enforcement of infringement?

In other words, if $10 billion dollars for patent marking is okay, why aren’t the awards in the Tetelbaum and Thomas-Rassert cases? Isn’t abuse of the legal system abuse, no matter who is doing it?

Dark Helmet (profile) says:

Re: Re: Re: Clarification Please

“In other words, if $10 billion dollars for patent marking is okay, why aren’t the awards in the Tetelbaum and Thomas-Rassert cases? Isn’t abuse of the legal system abuse, no matter who is doing it?”

Perhaps I missed it, but I didn’t see any backing of the $10 billion dollars by Mike. I sure as hell think that’s ridiculous….almost as ridiculous as $500 for the whole thing.

But regardless, I don’t understand what your problem is:

“In other words, if $10 billion dollars for patent marking is okay, why aren’t the awards in the Tetelbaum and Thomas-Rassert cases? Isn’t abuse of the legal system abuse, no matter who is doing it?”

Maybe I’m missing your angle here, but what did Thomas-Rassert do to “abuse the legal system”? She got dragged to court, then refused to settle. In the first option, your talking about the initiating litigant having no standing, and likely KNOWING they have no standing. How are the two even remotely related?

LostSailor (profile) says:

Re: Re: Re:2 Clarification Please

I’ve seen numerous statements around here that the RIAA abuses the legal system by going suing infringers. I never said that Thomas-Rassert abused the system.

Though her fairly clearly lying in testimony and Tettlebaum’s admission on the stand of lying in testimony could be considered abusive of the legal system.

The comment below seems to capture the essence: infringement=no big deal and generally shouldn’t be prosecuted; false assertion of IP protection=evil and should be forcefully prosecuted.

Or, to paraphrase George Orwell, all rights are equal, but some rights are more equal than others.

Mike Masnick (profile) says:

Re: Re: Re: Clarification Please

In other words, if $10 billion dollars for patent marking is okay, why aren’t the awards in the Tetelbaum and Thomas-Rassert cases? Isn’t abuse of the legal system abuse, no matter who is doing it?

Uh, no. First, I never said that $10 billion was okay for patent marking. What I’ve said all along is that any punishment should fit the “crime.” And I would argue that false marking is significantly worse than infringement, in that it’s a blatant removal of rights from individuals.

Mike Masnick (profile) says:

Re: Clarification Please

Mike, could you please clarify? Are you saying that when copyright (and patent) supporters like the RIAA go after infringement and win big awards, that’s an abuse of the legal system and they shouldn’t do it. But when anyone goes after “patent markers” and “copyfraud” then excess damages are not an abuse of the system and are a good thing?

No, I was saying that there should be real punishment for claiming a monopoly right over something you don’t have a monopoly right over. I believe the text was clear.

LostSailor (profile) says:

Re: Re: Clarification Please

Wow! Then we agree! Falsely asserting copyright (or patent, though that’s not my area) should indeed be punished. And knowingly asserting a non-existent right should be punished more.

By the same token, knowing infringement of a valid copyright should also be punished, though I doubt you’ll agree there.

Mike Masnick (profile) says:

Re: Re: Re: Clarification Please

Wow! Then we agree! Falsely asserting copyright (or patent, though that’s not my area) should indeed be punished. And knowingly asserting a non-existent right should be punished more.

By the same token, knowing infringement of a valid copyright should also be punished, though I doubt you’ll agree there.

My standard is pretty straightforward: does the punishment lead to promoting the progress. In the case of false marking, I believe such punishment does promote progress. In terms of many copyright infringement lawsuits, I believe it does not.

LostSailor (profile) says:

Re: Re: Re:2 Clarification Please

Well, lawsuits over IP don’t, in and of themselves, promote “progress” on either side. But the effect of the results of the lawsuits do, I think, in both cases.

In the first, it certainly strengthens the public domain. In the second it strengthens the mechanism of copyright that leads to progress by reinforcing the assurance creators have that their rights will be protected.

I’m generally not in favor of lawsuits, since the process can too often be abused, but when they are on solid factual ground, they are often sadly necessary.

anymouse (profile) says:

How about adding a hypocritical clause to the law...

Lets see….

I suggest that if the company being sued for ‘patent marking’ or ‘false copyright claims’ has at any time in their history sued anyone over any of the patents/copyrights in question, then the damages awarded should be multiplied by a factor of 10 (bonus factor, if they use the same lawyers to defend that they used in the earlier suits, then the damages are multiplied by 20).

It’s only fair right? I mean if ‘looking’ at a patent can result in 3x the damages for ‘willful infringement’ then there should be a similar clause for ‘hypocritical ignorance’ that applies to the responsible industries.

Excess damages awarded to a billion dollar company at the expense of an individual or small group of individuals = BAD

Excess damages awarded to an individual or a small group of individuals at the expense of those billion dollar companies = GOOD

It’s not too hard to understand hyprocracy is it? Live by the sword, die by the sword. And no I don’t feel bad being a hypocrit about hypocritical companies.

Trish says:

I agree that companies should be punished for lying to the public by marking stuff with patents under false pretenses, but what if it’s an honest mistake made by some clueless company? I think this is not a good thing that lawyers can just make a ton of cash using the system while siphoning money out of the economy. companies could close, people lose their job because of one lawsuit involving a line or two of text on a cup lid. that seems harsh. Like you said, the punishment needs to fit the crime, 500$ per 1-penny item seems a little unfair to me. On the other hand, companies might learn to make DAMN sure their patent marks are up-to-date and correct …

Anonymous Coward says:

Re: Re:

“but what if it’s an honest mistake made by some clueless company?”

Then the clueless company needs to invest more in ensuring that they don’t do stuff that’s harmful for society.

What if some clueless company accidentally spilled cyanide all over the oceans, but it just so happens to be cheaper to dispose of it wrongly than to dispose of it correctly? Should that company not be punished? They should absolutely be punished, they should have invested more resources in ensuring that they didn’t harm society before they started dealing with cyanide.

Ignorance is no excuse to law. If I broke a law and got in trouble I can’t later claim ignorance and suddenly get away with it. If the law worked that way then we’ll all be breaking laws and getting away with it.

Anonymous Coward says:

Re: Re: Re:

and besides, since patent holders have no sympathy for inventors that innovate without doing an extensive, expensive patent search first, I have no sympathy for a company that falsely claims patent privileges on something they no longer have privileges on, especially being that ensuring you do in fact have privileges on something is far easier than ensuring that no one else does and especially since patents themselves are a crime to humanity.

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