Placement of “Patent Pending” Tag Supports Competitor’s False Marking Claim

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

The placement of “patent pending” label on the bottom of tote bags, next to the seller’s “Optari” label, could constitute false patent marking, the federal district court in Nashville has ruled.

Optari had submitted a patent application for the straps on the tote, but the patent pending mark was nowhere near the straps, the court said. Optari’s competitor, Lubber, Inc., stated a plausible false marking claim by alleging that Optari placed the patent pending mark on the bottom of the tote in an effort to lead the public into believing that the tote itself was undergoing patent review, the court determined.

The false marking statute (35 U.S.C. Sec. 292(a)) imposes liability against “[w]hoever marks upon, or affixes to, or uses in advertising in connection with any article, the words `patent applied for,’ `patent pending,’ or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public.”

Leahy-Smith America Invents Act

The above provision was unchanged by recent amendments to false marking statute, the court noted. The Leahy-Smith America Invents Act, Public Law 112-29, signed by the President September 16, 2011, eliminated a provision authorizing any person to bring a qui tam suit for statutory damages of up to $500 per violation. Now, only the United States may sue for statutory damages.

A new private suit provision (35 U.S.C. Sec. 292(b)) authorizes a private party who has suffered a competitive injury as a result of a false marking violation to bring a civil suit in a federal district court for recovery of damages adequate to compensate for the injury. The false marking amendments apply to all cases, without exception, that are pending on or commenced on or after September 16, 2011.

The court granted Lubber’s request to add the patent marking claim to its complaint asserting trademark and unfair competition claims under the Lanham Act, Tennessee Consumer Protection Act, and common law.

Constitutionality

The court rejected Optari’s argument that the false marking statute is unconstitutional.
Some courts had held the former qui tam enforcement provision unconstitutional, for example, Unique Product Solutions Ltd. v. Hygrade Valve, Inc. (ND Ohio 2011) Advertising Law Guide ¶64,196, on motion for reconsideration Advertising Law Guide ¶64,242.

However, following the Unique Product Solutions decision, several other courts had rejected constitutional challenges (citations collected in Champion Laboratories, Inc. v. Parker-Hannifin Corp. (ED Cal. 2011) Advertising Law Guide ¶64,302.

The constitutionality debate is now largely academic in light of the amendments made by the Leahy-Smith America Invents Act, according to the court.

The October 6 opinion in Lubber, Inc. v. Optari LLC will be reported at CCH Advertising Law Guide ¶64,447.

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