False patent marking may not be false advertising

Rainworks Ltd. v. Mill-Rose Co., 2009 WL 773531 (N.D. Ohio)

Rainworks makes gutter protection systems, including the Hedgehog. Rainworks has a US patent for an ornamental design for a gutter filter.

In 1997, Rainworks approached Mill-Rose about selling the Hedgehog in the US, supplying it with confidential information and samples pursuant to a confidentiality agreement. Rainworks ultimately gave an exclusive license to another defendant, AmeriSales, to sell gutter filters and other products to be sold under the GutterPiller name, provided that AmeriSales could not market using the internet. Rainworks was to own all brand names. Eventually, Rainworks terminated the agreement for failure to pay minimum royalties.

Rainworks sued a bunch of defendants for patent infringement, trademark infringement, false advertising, and related claims, including false patent marking.

Defendants sold GutterPiller protectors as patented, allegedly knowing that they weren’t covered by any patent, in violation of 35 USC § 292. This requires a showing that the false marking was for the purpose of deceiving the public. As a defendant testified at deposition, the false marking here was done in error. It was supposed to be “our registration number for the registration of our name.” (What? What would that even be? If that was the intent, how did the packages end up with the number of Rainworks’ patent?) The false markings were on the packaging, not on the product, even though it would have been feasible to mark the product itself—and marking the product itself, where feasible, is a requirement for giving notice of a real patent under 35 USC § 287. Because marking the packaging would be insufficient to give notice of a real patent, marking the packaging is equally insufficient for false marking liability under § 292, a penal statute. (Again, what? Seems to me the marking and false marking provisions are directed at very different problems.) Anyway, in light of the deposition testimony, there was a genuine issue of material fact on intent to deceive.

Rainworks then argued for patent infringement under the doctrine of patent marking estoppel—given that defendants marked some or all of their products/packages with Rainworks’ patent number, they can’t deny infringement of that patent. But some courts have been skeptical of the doctrine—it should only apply when it’s inequitable for a defendant to reverse positions. The court declined to apply estoppel here, because the patent number was only marked on packaging (oh, and the products were described as patented in defendants’ ads; that must have been an interesting deposition).

Rainworks argued that falsely advertising a product as “patented” or protected by a particular patent was false advertising under the Lanham Act and state law. The court found genuine issues of material fact on materiality—whether the claim was likely to influence a consumer purchasing decision—and harm—whether the misrepresentation was causally linked to damage to Rainworks. Among other things, the packages with the false patent number weren’t shipped to consumers until they’d ordered the product, so they may not have influenced purchasing decisions. (And the ads?) There was also evidence that Rainworks isn’t a true competitor, because it wasn’t selling in the US; no one in the US would buy from Rainworks’ website because of the prohibitive costs involved.