Legal News

Is the Patent-Marking Law Unconstitutional? A Judge Says Yes

By Dionne Searcey

A federal judge on Wednesday ruled unconstitutional a law that allows plaintiffs to sue companies for labeling products with expired patent numbers.

The decision is a bright light for dozens of companies that manufacture everything from Frisbees to mascara to paper cups — and the Original Wooly Willy — that have been targets of the lawsuits.

A federal court of appeals ruling in December 2009 said companies could be liable for up to $500 for each individual product marked with an expired number.

But the ruling by U.S. District Judge Dan Aaron Polsteris in Ohio marks the first successful constitutional challenge to the so-called false marking law, which has sparked more than 700 lawsuits in the past 15 months, mostly against drug makers and consumer-goods companies. Click here, here, here and here for earlier LB posts on patent-marking suits.

Legal experts said the ruling is almost certain to be appealed.

In his ruling Wednesday, which dismissed a case brought by Unique Product Solutions Ltd. against Hy-Grade Valve Inc. over industrial valves marked with expired patents, Judge Polsteris said the law is unconstitutional, in essence because it takes away too much power from the federal government and hands it to private entities.

The lawsuits have qui tam provisions allowing plaintiffs to share in the proceeds of any penalties or settlements paid to the Justice Department.

In his ruling, Judge Polsteris said decisions about whether to file or settle the suits "should be made by government attorneys who have no financial stake in the outcome of the litigation or settlement, not by private parties motivated solely by the prospect of financial gain."

Either the Justice Department or the plaintiff in the case has standing to file an appeal. David J. Hrina, an attorney for Unique Product Solutions, declined to comment, as did a Justice Department spokesman. In the past the department has intervened on behalf of plaintiffs in false-marking suits.

"We're happy the judge is recognizing the dangers of uncontrolled privatization of law enforcement, and hopefully this should bring an end to a large number of cases," said Greg Jones, a Mobile, Ala.-based lawyer for Hy-Valve.

Full post as published by Law Blog - WSJ.com on February 24, 2011 (boomark / email).