The patent law provides “….Any person may sue for the penalty [of false marking], in which event one-half shall go to the person suing and the other to the use of the United States.”  35 USC 292(b).

Suits filed by members of the public for false patent marking, known as qui tam suits, were rare until a recent decision by the US Court of Appeals for the Federal Circuit.  After that decision, federal district courts have seen an influx of such suits.  Some of the cases are in appeal, and Congress is responding by suggesting an amendment to the statute that eliminates qui tam suits.

In the recent decision, The Forest Group Inc. v. Bon Tool Co., the Federal Circuit imposed large damages on the patentee for falsely marking product with expired patent numbers.  Prior to the ruling, fines imposed for false marking typically totaled the statutory $500 amount.  Courts did not interpret the statutory language “for each offense” as a per-article penalty.  With the Federal Circuit’s interpretation, filing these suits under the qui tam provision became more economically feasible.  

The qui tam  provision reflects the belief that false patent marking harms the public by misleading consumers and by deterring competition.  The Federal Circuit has also said that false marking harms the public.  However, many do not agree, and are fighting back, especially given the potential for large fines. 

Objectors claim that only those persons actually harmed by the false marking, like competitors, should be allowed to file such suits.  This objection has made its way into a recent amendment to the Patent Reform Act of 2009.  The amendment eliminates the qui tam provision and only allows those “who have suffered a competitive injury” to file false marking suits.

This move entirely guts the statute.  It essentially sends the message that the public is not harmed by falsely marking products with expired patent numbers, or by entities marking product with patent numbers that are not theirs.  If this amendment succeeds, it is only competitors who will have the ability to keep the patent holders honest in this regard.

Safeguards against misuse of the claim exist without eliminating the provision.  The statute still requires that the wrongdoer have acted “for the purpose of deceiving the public.”  Additionally, the federal district courts have flexibility in imposing penalties and can assess the wrongdoers’ actions and the deterrent effect of the penalty.

The full impact of the newly-used qui tam action is not yet known.  However, what is the impact on the public when the action is eliminated entirely?