Is banking the new cottage industry for false patent marking lawsuits?

Iowa Banking Law Iowa Intellectual Property Dickinson Law Firm Des Moines, Iowa

Posted on 02/04/2011 at 11:16 AM by The Newsroom

According to news reports and recent lawsuits, the banking industry may be the new cottage industry for lawsuits related to patent marking.  A longstanding provision in the federal patent statute (35 U.S.C. § 292) establishes penalties for falsely marking a product as patented with deceptive intent.  Having a patent on a product essentially gives the patent holder a monopoly on the product for a period of time, but this monopoly ends when the patent expires, is found unenforceable, or is invalidated.  Continuing to mark a product as patented when it is not amounts to mislabeling the product, and companies that engage in this practice may be sued for 'false marking.'   A movement that started with goods manufacturers has now set its sights on the banking industry.  In mid-January, Main Hastings, LLC of Texas sued several banks - including Citigroup Inc., J.P. Morgan Chase & Co., and HSBC USA, Inc. - for allegedly listing on their websites expired patents tied to automated telephone technology.  The allegations include listing patents that expired as long ago as 1989 and as recently as last October.  Patent marking is a 'darned if you do/darned if you don't' scenario.  Federal statute prohibits the recovery of compensatory damages by the patent holder if a product is not marked and someone infringes the patent.  If patent infringement is found and the product was not marked, the patent holder is limited to collecting damages only after the infringer was put on notice.  The flip side is that if the product is marked with the patent number and the marking is not removed when the patent expires, is invalidated or is unenforceable, one could be sued for false marking and be subject to penalties.  Many questions remain about what is 'deceptive intent,' what is an 'instance' of false marking to determine damages, and what are the bases for rebutting a presumption of false marking.  In the meantime, here are some steps to avoid false marking liability:

  • Review your bank's marking practices and know when your bank's patents expire.

  • If multiple patents are listed on a product, make sure the product is covered by at least one claim of all patents listed.

  • Stop marking a product with a patent within a justifiable period of time after the patent expires.

  • Do not use conditional language such as 'may be protected by one or more of the following patents.'

  • If your bank is a patent licensee, obtain consent from the patent owner.

Legal counsel should be consulted if a company decides to mark its products or has questions regarding discontinuing its patent marking.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.


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