Products marked with out-of-date claims are provoking a wave of lawsuits from consumers
What do Procter & Gamble's (PG) Oral-B toothbrushes have in common with Kimberly-Clark's (KMB) Depends Underwear for women and the painkiller Advil from Pfizer (PFE)? These products, along with Quigley's (QGLY) Cold-Eeze lozenges and Prevacid, a heartburn medicine from Novartis (NVS), are entangled in dozens of patent lawsuits filed in federal courts in Chicago, New York, and other cities. Nobody's complaining about infringement. The problem is that the patents have expired, say organizations and individuals who are suing.
The suits stem, oddly enough, from a U.S. appeals court ruling in December involving improper patent markings on construction stilts on a job site. The ruling said product vendors could face a federal penalty of up to $500 for every item falsely marked—and consumers who file such suits and win may split the damages with the U.S. government. "There's just been an explosion of these cases, says Jason C. White of the Howrey law firm in Chicago, who has represented companies in such suits.
At work is a century-old law, last amended in 1952, that lets individuals sue on behalf of the government. The law was designed to deter manufacturers from inaccurately claiming their products are protected by patents, which can squelch competition and confer an unfair marketing advantage. There's no justification for the erroneous markings, says Daniel B. Ravicher, executive director of the Public Patent Foundation in New York, a nonprofit that brought the suits against Quigley and Novartis. "No one is holding a gun to these companies' heads and forcing them to [make] false statements."
Plaintiffs who win could be well rewarded—at least in theory. In the Advil suit, for example, Pfizer would have to fork over $500 for each box sold if it were hit with the maximum penalty. But don't expect windfall judgements, says Ravicher. Judges have a lot of discretion. In cases with a large number of products, he says, they could award "a gazillionth of a penny" on each item.
That's assuming the suits make it to trial. Last May a federal judge in New York threw out a suit against Brooks Brothers over bow ties marked with patent numbers that expired in the 1950s. He found that the New Jersey patent lawyer who filed the complaints wasn't hurt by the false markings and any harm to competition was theoretical. Now Congress is considering requiring that only those who suffer a "competitive injury" be allowed to sue. That means most consumer suits—many filed by a small number of individuals—would be banned.
Chicago lawyer White says companies have a valid argument. They're required to put relevant patent numbers on products if they want to collect damages for past infringement in a lawsuit. If they fail to remove the markings through simple oversight, he says, "How does that equate to purposeful intent to deceive the public?"
With Andrew M. Harris in Chicago