In 2009, PubPat filed one of thousands of suits brought in the last few years against companies charged with marking their products with expired or incorrect patent numbers.
In this case, the complaint charged McNeil-PPC, the company that manufactures Tylenol, of marking some products with expired patents and others with patent numbers that do not even cover the marked products.
However, the America Invents Act, which was passed on September 16, contained a provision amending Section 292(a) of the patent law to stipulate that only the US government may sue for the penalty of $500 per falsely marked article and only those that have suffered a competitive injury may sue for damages.
Furthermore, the new law said that expired patent markings no longer count as violations of the law.
After the law was passed, McNeil moved to have the suit dismissed since PubPat could not meet the new competitive injury standing requirement.
While PubPat has openly objected to the new false marking statute, the complaint, filed last week in the US District Court for the Southern District of New York, notes that the organisation is in this case objecting only to the retroactive effect of the changes.
The last section of the new false marking provision makes the effective date applicable to “all cases, without exception, that are pending on, or commenced on or after, the date of the enactment of this Act”.
PubPat argues that this provision violates the due process clause of the Fifth Amendment to the US Constitution, which prohibits the government from depriving anyone of life, liberty or property without due process of the law.
Although case law has established that property rights can be stripped if there is a legitimate legislative purpose for doing so, PubPat’s complaint argues that no such purpose exists in the case of the false marking statute.
The complaint said: “The America Invents Act cites no legitimate purpose for its retroactive application of the substantive changes to the false marking statute to pending cases. In fact, it cites no purpose at all; it is completely silent as to why the substantive changes are to be applied retroactively.”
The complaint’s author, Daniel Ravicher of PubPat, points to arguments made by members of Congress who objected to the retroactivity of the provisions during debate over the legislation, and blames the ultimate passage of the provision on lobbying efforts.
“Without being overly cynical, the only honest explanation for the America Invents Act's retroactive elimination of qui tam false marking suits is that it was the result of lobbying efforts by corporations like McNeil who wished to deliberately eliminate the rights of private parties like PUBPAT to continue to pursue pending qui tam cases for false patent marking.”
The term qui tam refers to the ability of a third party to bring a suit on behalf of the government in order to protect the public interest. The old law granted a qui tam right to the public, and split any fines awarded between the third party and the government.
The latest lawsuit prompted Greg Aharonian, author of the Internet Patent News Service newsletter, to ask Ravicher what legitimate public interest is served by suing over false patent markings, since most members of the public aren’t even aware such markings exist.
Ravicher said that he would not have filed the suits if the company had been merely marking products with expired patents, but because “they touted it in their advertising, on radio and the Internet. ‘Tylenol is patented’”, he felt the potential harm to the public warranted the suit.
McNeil-PPC did not return Managing IP’s requests for comment.
Ravicher also said he agrees that “some (perhaps many) false marking cases have either no evidence of intent and/or no aspect of sizeable public harm”.
In July this year, a Duke University law professor sent letters to two senators urging them not to make the repeal of the false marking provision retroactive, since it might result in more litigation against the US government for just compensation.
Click here to read all of Managing IP’s coverage of false marking litigation.
