The Virtues of Virtual Marking in Patent Reform

Corey McCaffrey

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The world is full of reminders that we are surrounded by patented inventions.  Everyday products from coffee cup lids to cell phones bear the markings of United States patent numbers.  For example, Texas Instruments (TI) stamped the back of its popular TI-83 Plus graphing calculator with three patent numbers.  By marking its calculator, TI asserted that the TI-83 Plus embodied those patented inventions.

Patent marking under 35 U.S.C. § 287 is the act of physically labeling a product or its packaging with the identification numbers of patents that ostensibly protect the inventions embodied in the product.  Marking provides constructive notice that the listed patents protect the product for the purpose of calculating damages for patent infringement.

The difficulty with patent marking is that patenting an invention and manufacturing a product are distinct processes.  Patents are dynamic: new patents are granted, existing patents expire, and a patent’s scope may change over the course of litigation.  Manufacturing, on the other hand, is typically static: manufacturing equipment is expensive to change, and inventory is not modified after production.  Traditional patent marking entangles these different processes by requiring patentees to label static products with the numbers of dynamic patents.  Yet, patentees must change their marks when their patents expire or become invalid to avoid liability for “false marking” under 35 U.S.C. § 292.

To alleviate the current problems with traditional patent marking, Congress should permit “virtual marking,” whereby a patentee would mark products with reference to a website that provides information about the product’s patent protection.  For example, instead of marking the back of a calculator with “Pat. 5532946,” TI could mark it with “Patents: http://ti.com/patents/calculators,” a website that would display the patent numbers associated with the TI-83.  As patents issue and expire, the web address would remain the same.  Patentees could change the patent numbers listed on a website efficiently and thus avoid false marking liability.  Virtual marking would also help competitors and the public by enabling patentees to accompany the patent numbers with other useful information about the patents, such as their expiration dates.

However, without stricter requirements for compliance, virtual marking would enable patentees to inundate the public with hard-to-use virtual marking sites where useful patent information is buried or omitted.  To protect the public from abuse Congress should, at a minimum, only permit virtual marking on websites that follow specific guidelines.  To ensure compliance, Congress should also authorize the creation of a public virtual marking site that enforces these guidelines.  It would serve as a centralized product registry for patentees to list patents covering their products and for the public to search patented products registered at the site.  Thus, instead of permitting each patentee to create its own virtual marking site such as “http://ti.com/patents/calculators,” patentees should be required to use a public registry (e.g., “http://patentmarking.gov/texas-instruments/calculators”).

This Article provides an overview of patent marking law, analyzes the virtues and vices of virtual marking, and advocates for congressional action that effectively balances the needs of patentees and the public.

I. Patent Marking Law

Before damages for patent infringement will accrue, a patentee must give notice to an infringer.  Under § 287, patent marking provides constructive notice to the public.  In addition to the statutory requirements of § 287, courts have developed standards that patentees must follow such as consistent and continuous marking.  A patentee fails to meet this standard if it neglects to mark some of its manufactured articles or stops marking the articles altogether for some period of time.

To protect the public from deceptive marking, patentees who mark their products with incorrect patent numbers with intent to deceive the public may be liable for false marking under § 292.  A patentee can be fined up to $500 for each falsely marked article.  Section 292 allows enforcement via qui tam actions, whereby any individual can sue in a civil action on behalf of the United States and keep half of the penalty as a bounty.

Today, virtual marking does not satisfy the requirements of § 287, but § 4(c) of the Patent Reform Act of 2011 (S. 23, 112th Cong. (as reported by S. Comm. on the Judiciary, Feb. 3, 2011)) would amend § 287 to authorize virtual marking if it is enacted.  Unfortunately, this virtual marking amendment permits patentees to maintain their own virtual marking sites, giving patentees too much discretion over the form and content of a virtual marking site.  For example, patentees could convey constructive notice for long lists of hundreds of patents, or they could require visitors to register with identifying personal information before granting access to their sites.  Although virtual marking has many virtues, Congress should improve this virtual marking amendment to avoid the pitfalls to the public of unregulated virtual marking.

II. Virtual Marking Virtues

Virtual marking benefits patentees by separating the patent marking and manufacturing processes.  It also has the potential to help patentees avoid false marking liability and convey more accurate information to the public about: (1) pending patents, (2) expired patents, and (3) litigated patents.  The following discussion highlights the advantages of virtual marking.

1. Pending Patents—The relative timing of the patenting and release of a product is primarily a strategic business decision.  Patents take an average of three years to issue, but manufacturers often release new products while their patent applications are pending.  For example, Apple announced the first-generation iPhone in January 2007 but waited until September 2007 to file an application for what could arguably become the most valuable iPhone-related patent.  By the time this application issued as U.S. Patent No. 7,479,949 in January 2009, Apple had already sold tens of millions of iPhones with no patent marking.

Four months later, Apple sued mobile phone manufacturer High Tech Computer Corp. (HTC) for infringement of this patent and nineteen others.  Because Apple had not marked the iPhone, HTC did not have constructive notice under § 287.  For damages to accrue from the date when the application was published, the patentee must prove that the infringer had notice of the published application.  However, marking a product “patent pending” does not convey notice, and false use of the phrase “patent pending” could make the patentee liable for false marking fines.

Virtual marking provides an opportunity to convey notice about pending patent applications while avoiding false marking liability.  Imagine if Apple released the iPhone marked with a URL, which pointed to a virtual marking site that Apple updated as its pending patent applications were published.  If a published application eventually issues as a substantially identical patent, then Apple would have a better chance of recovering reasonable royalty damages for infringement accruing from the publication date.  Conversely, if Apple abandoned an application or the United States Patent and Trademark Office (USPTO) denied an application, then Apple could immediately remove the application from the site to avoid potential liability for false marking of “patent pending.”  With virtual marking, Apple could make any necessary revisions immediately without changing the manufacturing process of the physical device.

2. Expired Patents—Compared to trademarks and copyrights, patents have a relatively short shelf life; they are typically valid for twenty years following the application filing date for utility patents and for fourteen years after the filing date for design patents.  Just as manufacturers can sell products before pending patents issue, they can continue to sell products after issued patents expire.  However, if a manufacturer continues to mark its product with an expired patent number, it faces exposure to false marking liability.

For example, in Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010), attorney Matthew Pequignot filed a qui tam false marking action against Solo, hoping to collect a bounty for each of the billions of mass-produced plastic coffee cup lids marked with expired patents that Solo had sold.  Pequignot argued that Solo should be fined the maximum of $500 for each lid, or over $10 trillion in total.

The court found that Solo lacked intent to deceive the public—an element of false marking under § 292—because Solo acted on advice of counsel and because the question of whether expired patents count as false marks was an issue of first impression.  Thus, the court spared Solo from paying even a fraction of a penny for any of the falsely marked lids.

Notwithstanding the court’s leniency, Solo had knowingly manufactured lids marked with expired patent numbers to avoid the unreasonably high expense of replacing its manufacturing molds.  Had virtual marking been available to Solo, it would have helped Solo avoid claims of false marking due to expired patents.  Solo could have updated a website to reflect the patent’s expiration at virtually no cost, and no physical change to the molds would have been necessary.

3. Litigated Patents—A patent issued by the USPTO is presumptively valid, but if a court invalidates a patent, then it is unenforceable and no longer protects any product.  A product marked with an invalidated, unenforceable patent exposes the patentee to false marking liability.  Virtual marking would enable a patentee to update a website on the same day that an unfavorable decision is released—or to revert to a previous mark following a successful appeal.

A more complicated situation arises when a court merely interprets the scope of a valid patent during patent infringement litigation.  Judges typically apply the law of claim construction as a preliminary matter to determine what the patent’s claim language actually means for the purpose of the litigation.  Incidental to the infringement litigation, unfavorable claim construction sometimes results in the patent no longer protecting the patentee’s own product.  Yet, an unfavorable claim construction stands a reasonable chance of being reversed on appeal.  If the patentee ceases to mark while the appeal is pending, then it would fail to satisfy the consistent and continuous marking requirement.  However, if the patentee continues to sell the product marked with that patent number, then the patentee might be liable for false marking.  For example, in Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009), The Forest Group was fined for selling falsely marked stilts following unfavorable claim construction by two district courts.

Virtual marking presents an opportunity to relieve the tension between the patent marking and false marking statutes that arises during litigation without unfairly burdening the patentee.  Virtual marking would enable patentees to include detailed information about the status of patents involved in pending litigation.  A diligent patentee could ensure compliance with the consistent and continuous standard and eliminate any suspicion of false marking with intent to deceive.  Therefore, virtual marking would convey notice to the public that a patent’s scope may be temporarily indeterminate.

III. Virtual Marking Vices

Despite the advantages of virtual marking to both patentees and the public, unregulated virtual marking also has several pitfalls that have yet to be addressed by Congress or the courts.  If a patentee is allowed to maintain its own private virtual marking site, it could easily exploit these pitfalls to take advantage of the public.  To avoid these pitfalls, Congress should authorize a public virtual marking product registry.

Each of the following pitfalls could be avoided with a public registry.  First, patentees could list an unlimited number of patents on a website.  A public registry would allow for the limiting of patent marks to a reasonable number of patents.  Second, patentees could frequently change the marks listed without keeping adequate records.  A public registry could easily track revisions.  Third, patentees could restrict access and collect identifying personal information about members of the public who visit the site.  A public registry would allow the government to guarantee privacy and accessibility to registry website visitors.  Fourth, patentees are likely to share as little information as possible about the listed patents.  A public registry would enforce regulations requiring patentees to include additional information disclosures to the public where a patentee would not otherwise have an incentive to do so itself.

1. Virtually Infinite Marking—There is no official limit on the number of patents that patentees can list under traditional marking law.  Nevertheless, there is a de facto limit due to space constraints on physical products, whereas websites have space for an indefinite number of patents.

Consider the TI-83 Plus.  Even though TI owned many patents covering the complex electronic calculator, TI marked only three patent numbers.  With a virtual marking site, TI could have listed hundreds of patent numbers.  However, listing hundreds of patent numbers does not provide adequate notice.  Limiting virtual marking sites to a reasonable number of patent marks requires patentees to highlight the most valuable patents associated with their products.

If Congress authorized a public virtual marking product registry, it could enforce a reasonable limit by preventing patentees from adding more than a small, predetermined number of marks to the registry.  Although the exact number allowed would be arbitrary, Congress must choose some reasonable limit to avoid undue hardship to the public.

2. Consistent and Continuous Uptime—If a virtual marking site is offline when a member of the public attempts to view it, that could be a violation of the consistent and continuous standard.  Some server downtime is inevitable, but establishing and enforcing an uptime requirement for all patentees’ servers could be difficult.  If Congress authorized a public virtual marking registry, then it could establish uptime guidelines for the public registry.

Another issue is how much modification is permissible under the consistent and continuous standard.  Patentees should be permitted to modify the content of their virtual marking sites liberally, but the revisions should be recorded.  A public registry should store all past revisions, which would then be available as evidence of marking over a particular date range.  The public registry should also provide a notification system that alerts members of the public who subscribe that a particular product’s patent marks have been updated.

3. Privacy and Accessibility—Website operators can log extensive analytics about visitors to their sites, including the Internet Protocol (IP) address and geographic location of a visitor, the length of time a visitor views a page, and the specific parts of the page the visitor clicks on.  If patentees recorded this information through their private virtual marking sites, the public might be reluctant to visit their sites.  A public registry avoids these issues because it can enforce a strict privacy policy.

Accessibility is another issue; the proposed virtual marking amendment specifies that any virtual marking site must be “accessible to the public without charge for accessing the address.”  However, even many free websites still require registration.  Patentees could require members of the public to register before gaining free access to their private virtual marking sites.  There is no limit to the kind of information that patentees would be able to collect in exchange for viewing their “free” marking sites, such as names, addresses, phone numbers, birthdays, or attorney bar registration numbers.  A public registry would provide free access without registration.

4. Additional Data Requirements—A patentee has little incentive to do more than the bare minimum to comply with the requirements of § 287.  Under the virtual marking amendment, the patentee need only list patent numbers.  For the public, viewing patent numbers on a website is no better than reading them from a product label.

To maximize the benefits of virtual marking to the public, the public registry would provide means for patentees to comply with requirements to list all relevant patent information, including expiration dates and court rulings for current patents.  Expiration dates provide useful information to the public about when inventions will enter the public domain.  With respect to court rulings, if a court narrowly construes a patent, the patentee should be required to update the public registry to note the ruling within a specified time period.  Congress should also facilitate easier retrieval of information by enabling hyperlinks from patent numbers to the online copy of the patent itself, and by providing search functionality that searches the contents of the listed patents.

IV. Public Product Registries

A public virtual marking product registry maintained by the USPTO would eliminate most of the vices discussed above.  However, if running a public registry proves too expensive or too great an administrative burden, then Congress should authorize one or more private companies to maintain regulated third-party registries on behalf of the government.  For example, the Federal Communications Commission (FCC) recently approved Google’s request to manage a regulated database of “white space” in the radio frequency spectrum, which will alleviate the expense that would result if the FCC were to run the database itself.

Similarly, regulated third-party product registries might appeal to patentees willing to pay for the convenience.  Through a modified virtual marking amendment, Congress could regulate the private virtual marking industry while avoiding the expense and effort required to maintain its own public product registry.  Congress, however, would need to ensure that small patentees such as startups and private inventors are not overly burdened by fees or other added expenses imposed by third-party product registries.

Conclusion

It is time for our twenty-first century Congress to virtualize patent marking.  The virtual marking amendment is a step in the right direction, but it will lead to a host of new patent marking problems if it is enacted as currently proposed.  Ultimately, for every virtue of virtual marking, there is at least one vice that Congress must address.

The virtual marking amendment would aid manufacturers by disentangling the patent process from the manufacturing process.  However, it would also give patentees too much discretion to overwhelm the public with an excessive number of marks, make their private sites difficult to use, encroach on the public’s privacy, and provide insufficient information about their patents.  The most effective way to guarantee the success of virtual marking is through the creation of a public virtual marking product registry.  The features of a public product registry that have been proposed in this Article are not exhaustive, but they represent a good starting point for ensuring that when virtual marking becomes a reality, the public will stand to benefit as much as the patentees.

Acknowledgments

Corey McCaffrey, J.D. Candidate, Northwestern University School of Law, 2011; M. Eng., Massachusetts Institute of Technology, 2006; S.B., Massachusetts Institute of Technology, 2005.

Copyright © 2011 Northwestern University Law Review.

This Legal Workshop piece is based on the following note: Corey McCaffrey, Note, The Virtues of Virtual Marking in Patent Reform, 105 NW. U. L. REV. 367 (2011).


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