Thursday, February 25, 2010

Make easy money suing false markers

As any economist can tell you, the classic public policy rationale for the patent system is that, in order to encourage the progress of the useful arts, our government provides inventors with a limited term monopoly on their inventions in exchange for a detailed explanation of what exactly they've invented. In that manner, others can learn from the inventor. Fundamentally, it's a trade-off: monopolies are bad, but new inventions are good. The patent system tries to strike a balance -- the granted monopoly is quite short, and the inventor is granted narrow rights over the very particular thing that they invented. But, it's such a great, no-brainer trade off that our founders chose to enshrine it in our Constitution.

But, did you know that it is illegal to claim that you have a patent on a product, when you actually don't? This makes sense. If you falsely claim to have a monopoly, you scare off other inventors and in general shave a little bit off the public welfare. The crime itself is called "false marking" and any citizen is free to bring suit against false marketers in our federal district court system. Whatever proceeds the plaintiff receives are split evenly with the United States government. How interesting and bizarre!

If you follow patent news, or read Bryan Beel's excellent IP blog, then you may have heard about Thomas A. Simonian and a few other aspiring citizens who have started suing the pants off a number of companies. Why? Well, according to Justin Gray, the Federal Circuit's recent ruling in Forest Group v. Bon Tool showed that the plaintiff can be awarded damages based on the number of infringing acts. That is, if you make widgets and falsely market them as patented, you might have to pay damages on a per widget basis. Wow.

I have a few questions. Can we all start to do this? It will be interesting to see if Mr. Simonian makes any money. I wonder if his representation is working on contingency? What happens if there's a settlement instead of damages awarded? Is that even possible?

Interestingly, although the concept of suing people willy-nilly is repulsive to most, it seems like these entrepreneurial souls are doing the public a favor. Certainly their PR would be better than other non-practicing entities.

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