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Whistleblower Suits Against Companies Falsely Claiming Patents Rise

Since a Federal District Court ruling last December, a certain type of whistleblower suit has surged with more than 130 filed in the last four months. The court's decision has allowed the fines for companies found guilty of "false marking" patent claims on product labels to increase from the previously set $500 per offence, to thousands or millions, depending on the number of units sold.

The National Law Journal reports false marking is the practice of labeling a product with a patent number that is expired, or does not apply to the product label it is on. This practice, according to attorneys for plaintiffs, is misleading to the public. The Public Patent Foundation at Cardozo School of Law has five pending suits based on the whistleblower statute, including one against the company that produces the product Cold-EEZE cold-remedy lozenges. According to the Foundation, the packaging shows expired patent numbers listed on the products. The foundation filed the cases because "there's a whole basket of public harms that are caused by this lying by companies," said executive director Daniel Ravicher.

The whistleblower suits are unusual because they allow those bring the suit to retain one half of any damages awarded by the court against the defendants. Those defending companies say the so-called whistleblowers are merely bounty-hunters, out to make a buck at a company's expense.

However you may view the increase in these suits, as actions on behalf of consumers, or nuisance suits against honest businesses, the boom may soon be curtailed. According to The Journal, two upcoming cases in the federal courts could seriously affect the number of cases filed. One case may result in the removal of the right to sue from whistleblowers, and limit it to those actually damaged by the false marking, such as direct competitors. A second may change the way a court determines a company's intent to deceive consumers.

Currently, the Senate is considering legislation that would include limiting false marking suits to competitors as well.

In the meantime, good advice to companies from Wisconsin attorney Justin Gray: a quick Google patent database, or U.S. Patent Office search, will tell you if your patent is current or not. Good advice to consumers, judge a product on its merits not on company claims, even those right on the label.

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