Federal Circuit deals blow to false patent marking suits

Companies who sell patented products frequently mark the product with the patent number.  Patent marking provides several benefits, such as triggering an ability to accrue damages for patent infringement even if the infringer did not actually know about the patent. 

However, incorrectly marking a product can create liability.  Anyone who falsely marks an unpatented product with a patent number for the purpose of deceiving the public violates Section 292 of the Patent Act and risks liability.  In recent years, following court decisions stating that (a) expired patents create liability, and (b) private plaintiffs can enforce the false marking law and recover up to $500 per improperly marked product, a wave of lawsuits followed.

Private false marking suits are typically based on the simple premise that (a) a product is labeled with a patent number, (b) the patent is expired, and (c) the product seller knew or should have known of the error.

This week, the Federal Circuit held that such a simple premise is not enough.  In In re BP Lubricants USA, Inc., the Court held that private false marking complaints must “state with particularity the circumstances constituting fraud or mistake.”  The Court noted that fraud cases generally require the plaintiff to plead in detail “the specific who, what, when, where, and how” of the alleged fraud.  In the patent context, the Court explained that the complaint must “provide some objective indication to reasonably infer that the defendant was aware that the patent expired.”  In other words, mere allegations are not enough — supporting facts are required. 

The Court’s decision is likely to curtail many false marking suits in the future.  Unless a plaintiff can describe the underlying facts from which a court can infer that the seller intended to falsely mark the product, a false marking complaint will likely not pass the test of In re BP Lubricants.