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Client Alert
July 26, 2012

Virtual Patent Marking

United States law has long held that marking a product with a patent number gives the public constructive notice of a patent. If a patented product is not marked with the patent number by the patent owner, damages for infringement will be limited to the period after the patent owner gives actual notice to an infringer.

The Leahy-Smith American Invents Act (AIA) does not change these basics of patent marking, but the new law provides a new way to comply with the requirements for patent marking by allowing virtual marking. Rather than printing an actual patent number on the product, a company can display the word patent or the abbreviation "pat." together with the URL of a Web page where the actual patent number may be found. This provision of the AIA became effective on September 16, 2011.

Previously, some patent owners did not mark patent numbers on their products for fear of incurring false marking lawsuits resulting from products displaying expired patent numbers, even though not marking could reduce the possible damages awards from infringers. The AIA significantly changed the false marking statute, making it more difficult to succeed in such lawsuits. While companies may still have practical reasons to avoid patent marking, the new limitations on false marking lawsuits and the new virtual marking process together provide new reasons to consider making patent marking a standard practice for all patented products.

Below is a summary of the main points of the new virtual marking process provided by the AIA, followed by strategies for using it.

Virtual Marking
The AIA establishes the use of virtual marking as a means of providing patent information that is always current. Because companies can now include a URL on the product and display relevant information online, virtual marking will serve as constructive notice to infringers, permitting infringement damages to accrue even before an infringer is sued.

The caveat is that the patent Web page must be accessible to the public, must provide the information at no charge and must associate each patented article with its patent number(s). To view examples of companies that have adopted such a virtual marking strategy, visit the sites for Callaway Golf or Idaho Technology Inc.

The chief advantage of virtual marking is that companies are spared the expense and effort required to maintain current patent information on products. A company can quickly and easily update its patent data Web page without having to modify its product tooling or packaging.
Despite these positive changes, certain issues are not addressed by the statute and may not be resolved until the courts interpret it. For example, how specifically does the patent number have to be associated with the patented article? Can a patent owner simply put "covered by one or more of the following patents" on its Web site? Can the patent owner require users to "register" in order to use the free Web site, or keep a log of IP addresses used to access the site? Some of these questions remain unanswered.

False Marking
The AIA’s false marking provisions are a response to the large number of false marking suits filed in recent years in which plaintiffs sought awards of millions of dollars, and obtained many substantial financial settlements despite showing no evidence of economic harm to their interests. Many of these lawsuits arose after the U.S. Court of Appeals for the Federal Circuit ruled in Forest Group Inc. v. Bon Tool Co., 590 F3d 1295 (Fed. Cir. 2009) that any company engaged in false marking could be levied a fine of up to $500 per product marked with an expired patent, with the amount awarded to be evenly split between the plaintiff and the U.S. government.

In a significant change, the AIA now stipulates that only the U.S. government, rather than any member of the public, may sue for the monetary penalty authorized under the false marking statute. A private plaintiff may still allege false marking, but must prove "a competitive injury" and may only sue for damages "adequate to compensate for the injury." Also, the marking of a product with a patent that covered that product but has expired is not a “false marking.”

Strategies for Best Practices
To provide effective patent marking, a company should apply a comprehensive marking strategy across all product lines, note its patent Web page on all patented products and clearly correlate each product with a specific patent on that Web page. The page should be updated regularly as new products are introduced or reconfigured and as patents are issued or expire. If a patent is found by a court to be invalid or its claims are limited by judicial interpretation, the Web page should reflect these changes.

The burden remains on the patent holder to demonstrate that its patent marking practices were effective and appropriate. Case law on patent marking highlights that the marking must be “continuous and consistent,” suggesting that patent holders take care that their patent Web pages are current and constantly available online. Courts may begin to expect a higher degree of precision in patent marking than in the past, since maintaining a Web page is easier than maintaining the marks on actual products.

It will also be important to create and preserve records that demonstrate that the virtual marking was consistent and continuous. Companies should maintain a written log of updates to the patent Web site and preserve evidence that it was consistently operational.
A company may also wish to maintain a list of published patent applications and products covered thereby on the site. An advantage of posting a published application is that it may serve as actual notice to a competitor considering a similar product and the posting date may serve as a starting point for royalties under provisional patent rights.

If you have any questions or wish to discuss how the AIA legislation may impact you, please contact your attorney at Brinks Hofer Gilson & Lione.

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This Strategy Briefing is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. Brinks Hofer Gilson & Lione does not intend to create an attorney-client relationship by offering this information and review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention. For further information, please contact a Brinks Hofer Gilson & Lione lawyer.

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