Three simple steps to protect your business reputation

A paper cup manufacturer sued for merely printing a patent number on its packaging? It happened last year when a Washington D.C. patent attorney sued the Solo Cup Company claiming that it was misleading the public by marking its products with expired patent numbers. Under a lesser-known statute, the attorney was able to file a lawsuit and seek millions of dollars in damages on behalf of the government – and keep half for himself.

While a judge eventually ruled in favor of Solo Cup, the case is now on appeal. This case highlights a legal concern for businesses in Colorado and across the country. With the economic downturn, some individuals and companies are looking for opportunities to increase revenue. In the case of Solo Cup, a patent attorney turned “bounty hunter” found an opportunity in this little known patent statute as a means to win millions of dollars.

The statute – 35 U.S.C. § 292 – authorizes anyone to bring a qui tam action against a patent owner. The term “qui tam” is short for the Latin phrase: qui tam pro domino rege quam pro se ipso in hac parte sequitur, which basically means “he who sues for the king and himself.” Similarly, this authorizes anyone to sue a patent owner for false marking with the intent to deceive on behalf of the U.S. government and themselves. False marking is defined in three parts:

• False marking is considered as affixing any word or number onto an unpatented product that implies that it is patented.
• False marking includes affixing any word(s) onto an article that imply a patent application has been filed at the United States Patent and Trademark Office (USPTO) when no such application exists.
• False marking, according to the statute, is not only falsely marking a product, but also involves any false advertising that implies the product is patented or a patent is pending at the USPTO.

As an example, I bought a simple toy for my daughters about two years ago. The packaging had a U.S. patent number printed on its side. I found it incredible that such as simple toy could have a patent. I typed the patent number into the USPTO database and quickly realized that while the toy company did indeed own the patent, the patent was for the company’s coloring products and was not related to the toy in any way. This simple error could potentially leave that toy company open to financial and reputation damage – a scary thought for any business with products on the market.

Owners of patented products – whether it is small businesses or large corporations – should follow a few steps to ensure that the patent number printed on their products actually covers the patent, thereby safeguarding their business from potential suit:

• Conduct a patent review. Companies should check patent numbers marked on products to determine if a) the patent is expired, b) the patent number is correctly marked on the product (with no typos), c) the patent and products are not confused (e.g., a company owns numerous patents and places a patent number for a chemical process on a medical device).
• Double-check patents’ scope of protection. Changing the product could mean that the patent does not cover the newer, updated product. In addition, convincing the USPTO to allow a patent sometimes involves amendments to the patent application and, in some unfortunate cases, this could mean that the patent actually does not cover the original product or its later versions.
• Maintain an organized register with large portfolios of patents. As was probably the case with my daughters’ toy, businesses with a large portfolio of patents, confuse numbers and misprint patent numbers on the product or packaging. Many patent-related issues can be easily avoided with an ongoing, organized system.

Following these steps will help Colorado businesses protect their products and business from financial or reputation damage.

{pagebreak:Page 1} 

Categories: Company Perspectives, Finance