Liddicoat, Johnathon E; Nicol, Dianne --- "Re-evaluating False Patent Marking in Australia" [2013] JlLawInfoSci 7; (2013) 22(2) Journal of Law, Information and Science 128

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False patent marking has come to prominence in intellectual property circles due to a recent boom and bust cycle of litigation in the US. This article examines this cycle and its ancient roots from an Australian perspective. In the absence of false patent marking data in Australia, this article uses the causative legal mechanisms of the US cycle to conduct a natural experiment on Australian false patent marking provisions. This natural experiment gives insight into the likely prevalence and potential effects of false patent marking in Australia.

Consideration is also given to the harms created by false patent marking. Previous analyses discussed in this article posit that false patent marking negatively affects competitive markets and consumers. However, it is argued that from a realistic commercialisation and consumer perspective, these harms may be exaggerated.

An analysis of the utility of Australian false patent marking laws is also undertaken, based on the evidence at hand and comparative legal reasoning. This analysis indicates that deficiencies in Australia’s false patent marking provisions do exist. A call is made for further empirical research into the incidence and effects of false patent marking in Australia; it is possible that costs created by false patent marking are not being recognised. However, since no empirical or recent anecdotal data indicates false patent marking presents a serious issue, and Australian provisions comply with basal aspects of what has been described as an ‘optimal’ enforcement system, no major reforms are suggested at this stage. Minor amendments are recommended to simplify the enforcement of the current provisions and improve trust in the patent system. It is further recommended that a watching brief is kept on this area of patent practice.

Introduction

The process of marking a product as patented is known as ‘patent marking’. In Australia this is commonly achieved by marking a product with the terms, ‘patented’, ‘patented in Australia’ or ‘patented’ followed by a patent number. Patent rights holders use such marks because they can serve as notice of their patent rights, thereby preventing infringers from pleading innocent infringement.^[1]

Innocent infringement refers to a scenario in which patent rights are infringed, but the infringing actions are completed when the infringer is unaware of, and has no reason to believe, they are infringing patent rights.^[2] If innocent infringement is proven, a court may limit or refuse financial relief; that is, damages or an account of profits may be refused.^[3] When patent marking is properly achieved, a rebuttable presumption arises: it is presumed that infringers are aware of the relevant patent rights unless the contrary is established.^[4] On the other hand, when a product is marked with a patent but no patent rights actually apply to technology in the marked product — otherwise known as ‘false patent marking’ — people may incorrectly believe that the technology in the product is protected by a patent and regulate their activities in accordance with that belief.

False patent marking has recently come to prominence due to a ‘boom and bust’ cycle of litigation in the United States (US). Legal reasoning and litigation trends suggest that the boom was triggered by a change in understanding of the penalty for false patent marking.^[5] Legal reasoning and litigation trends also suggest the bust was caused by judicial interpretation heightening the pleading requirements for the action, in combination with changes to the provision brought about by the Leahy-Smith America Invents Act 2011 (the ‘AIA’).^[6] Between January 2010 and July 2011, around 1000 cases were filed in the US.^[7] At the boom’s peak, between March 2011 and April 2011, 109 cases were settled at a total estimated cost to wrongdoers of almost US$4.5 million.^[8] Prior to, and after the boom period, cases were filed far less frequently;^[9] for example, between 2007 and 2009, 21 cases were filed.^[10] By contrast, the Australian false patent marking provision under s 178(2) of the Patents Act 1990 (Cth) (the ‘Patents Act’)^[11] has not been litigated, and only one false marking case has been decided under the equivalent of what is now s 18 misleading and deceptive conduct in the Australian Consumer Law (‘ACL’).^[12]

The causes of the US boom-bust cycle form the basis for an enquiry into whether false patent marking exists in Australia, and whether it is negatively affecting Australian businesses or consumers. Conflicting evidence exists with regards to whether false patent marking is as prevalent in Australia as it would appear to be in the US (judged by the number of cases filed during the boom period). There is no indication that Australia is ever likely to be exposed to the clogging nature of the false patent marking litigation observed in the US during the boom. But the sheer volume of cases in the US does tend to suggest that false patent marking may be a common problem more globally, including in Australia.

The first part of this article examines false patent marking law in the US. It is necessary to briefly touch on certain key cases to illustrate the causes of the boom and bust. Much of the cycle is influenced by what is called a ‘qui tam’ action.^[13] ‘Qui tam’ is an abbreviation of the Latin phrase, qui tam pro domino rege quam pro se ipso in hac parte sequitur, which translates to, ‘who as well for the king as for himself sues in this matter’.^[14] It is an old common law writ that allows a private individual to prosecute offences in place of the crown and receive all, or part, of the penalty.^[15] In England qui tam actions emerged as a common law enforcement mechanism in the 14^th century.^[16] By enabling any person in the population to enforce laws on behalf of the state and receive part of the penalty, qui tam actions were seen as a practical way to enforce laws with scarce resources over quite large geographic areas.^[17] Qui tam actions were used to enforce a wide range of laws, including performance of public functions, counterfeiting, consumption of alcohol, bribery of jurors and religious observance.^[18] The plaintiff in a qui tam action is commonly referred to as a relator. Qui tam actions have a long history in the US,^[19] and continue to operate there.^[20] Between 1842 and 2011, false patent marking in the US operated as a qui tam action.^[21] Although this interesting artefact of English law was transplanted to the US,^[22] to the authors’ knowledge, it never made it to Australian shores.

The wealth of US case law provides clear guidance on the interpretation of the false patent marking provision in that jurisdiction, particularly the relevant physical and mental aspects of the offence, as well as procedural issues. In contrast, the lack of case law in Australia means that there is no judicial guidance on how to interpret s 178(2) of the Patents Act, and the rudimentary scholastic commentary from commercial law firms provides little assistance.^[23] However, the rich body of US case law provides guidance in examining how the Australian provisions might be interpreted. Importantly, identification of the legal cause of the boom and bust in the US permits a type of ‘natural experiment’ to be carried out to determine whether the scant Australian case law results from inadequacies in the Australian law, or from a genuine lack false patent marking occurring in Australia. That is, since there has been minimal litigation in Australia, if the legal causes of the boom in the US are present in Australia, then the evidence tends to indicate that false patent marking does not exist in Australia. With this in mind, the second part of this article analyses s 178(2) of the Patents Act against the backdrop of US cases. Sections 18, 29 and 33 under the ACL are also included in this analysis because they arguably provide additional causes of action and, if applicable, would offer an enhanced range of remedies.

The primary inference drawn from the natural experiment is that it cannot be concluded that false patent marking does not exist in Australia. Nevertheless, when the results of this natural experiment are evaluated from a realistic assessment of harms caused by false patent marking, cracks appear in the operation of the Australian false patent marking provisions. The third part of this paper considers the consequences of false patent marking for the wrongdoers, focusing on an economic approach to the calculation of penalties. This approach, posited by a leading legal-economic scholar, is based on the wrongdoer disgorging any benefit obtained through false marking. This part also considers other amendments for improving the operation of s 178(2). Ultimately this paper concludes that various changes should be implemented to create more effective false patent marking laws.

1 The US Experience

The cases discussed in this section have been selected because they illustrate key aspects of the boom-bust cycle pertinent to the operation of false patent marking in Australia; there are numerous other factors relevant to the cycle that are not touched upon here.^[24] The three aspects discussed are: the physical requirements of the offence; the mental requirements of the offence; and, the penalty.

Prior to the passage of the AIA, the US provision on false patent marking, 35 USC § 292, stated,

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented for the purpose of deceiving the public; or

Whoever marks upon, or affixes to, or uses in advertising in connection with any article, the words “patent applied for,” “patent pending,” or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public-

In 2005, prior to the boom, the Federal Circuit in Clontech Laboratories Inc v Invitrogen Corp (‘Clontech’)^[27] held that to succeed in a false patent marking action, two elements had to be proved. First, it had to be shown that the marked article was ‘unpatented’.^[28] That is, the article had to be shown not to be protected by the patent it was marked with — determined by interpreting the claims of the patent that the product was marked with.^[29] Secondly, it was necessary to determine whether the marking party had the relevant mental state, that is, an intention to deceive the public.^[30] In classic legal terminology these elements can be described as the actus reus and mens rea of the offence.

Until the Federal Circuit case of Pequignot v Solo Cup (‘Solo Cup’),^[31] there was no decision on whether the phrase ‘unpatented article’ was satisfied by products marked with an expired patent that previously protected them. There are strong arguments that marking articles with expired patent numbers should not constitute ‘unpatented’ because people can look up the patents on the Internet and see they are expired.^[32] Indeed, the marks may even be beneficial because they indicate where information about technological advances used in the product can be found and freely used.^[33] However, the Federal Circuit found in Solo Cup that marking an article as patented in reliance on an expired patent that previously protected it was sufficient to satisfy the physical element of false patent marking.^[34]

Prior to the decisions of Solo Cup and Clontech, the mens rea requirements that could be inferred from the physical aspects of false patent marking were not well defined. The Federal Circuit in Clontech stated that

[i]ntent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true.^[35]

[i]ntent to deceive, while subjective in nature, is established in law by objective criteria. Thus, “objective standards” control and the fact of misrepresentation coupled with proof that the party making it had knowledge of its falsity is enough to warrant drawing the inference that there was a fraudulent intent.^[36]

In Solo Cup the Federal Circuit took up this reasoning from Clontech, stating that false patent marking, combined with knowledge that the marking was incorrect, creates a rebuttable presumption of intent to deceive the public.^[37] While the defendant was able to rebut the presumption in Solo Cup,^[38] the case was important because it established clear guidance on how to address the mens rea requirement for false patent marking. The rebuttable presumption of intention to deceive eased the process for future plaintiffs in false patent marking actions.^[39]

Although Solo Cup provided clarity on the interpretation of the false patent marking provision in US patent law, the most influential development leading to the false patent marking boom was a change in the understanding of the penalty. In 2009 the Federal Circuit in Forest Group Inc v Bon Tool Company (‘Forest Group’)^[40] comprehensively interpreted the provision setting out the penalty for false patent marking: ‘shall not be fined more than $500 for every such offense’. Prior to Forest Group, a variety of approaches to determining penalties for false patent marking existed.^[41] Since the Circuit Court of Appeals case of London v Everett H Dunbar Corp (‘London’) in 1910,^[42] the orthodox approach to determining the penalty was that individual acts of continuous false patent marking constituted a ‘single offence’.^[43] However, the Court in Forest Group was presented with a slightly different penalty provision to that in London, allowing it to distinguish the earlier case in its reasoning.^[44] The Court in Forest Group gave a literal meaning to the phrase ‘every such offense,^[45] which meant that every article falsely marked could be penalised up to $500.^[46] The result of this approach to calculating penalties is significant: the reasoning in London meant that a single manufacturing run of 500 falsely marked widgets would result in a fine of up to $500, but under Forest Group, the fine could be assessed at up to $250 000.

It has been convincingly argued by many commentators that this increase in potential fines was instrumental in the proliferation of false patent marking cases.^[47] For example, data on the number of false patent marking cases filed during the boom period have been compiled by Justin Gray on his blog ‘Gray on Claims’.^[48] Gray produced this data using a commercially provided patent litigation database.^[49] Gray’s data shows that the boom in filings began in January 2010, immediately following the Federal Circuit decision of Forest Group, which was handed down on 28 December 2009.^[50]

Together with the boom in filings, a boom in settlements also occurred. As the US government received half the financial penalty, settlement data has been authoritatively recorded. This data shows that at the peak of the boom during March and April 2011, 109 cases were settled, each at an average value of around US$41 000, a total penalty of almost US$4.5 million in two months.^[51] In total, between May 2010 and December 2011, 512 complaints were settled at a total of just over US$22 million.^[52] The types of items that false patent marking claims applied to were many and varied, ranging from bow-ties,^[53] and stilts,^[54] to motor oil,^[55] and laboratory reagents.^[56] In many instances the patent marks were only false because the relevant patent(s) had expired.^[57]

Analysis of the government data shows that a side-effect of the boom was that a class of professional relators emerged. Table 1 shows the average settlement value of the top 10 companies per number of false patent marking claims settled. The table is headed by Patent Group LLC which grossed US$1.44 million and Promote Innovation LLC, which grossed US$1.85 million. This overlaps with Gray’s data which shows the number of cases filed by these companies. In Gray’s data, as of 3 August 2011, Patent Group LLC had filed 178 cases and Promote Innovation LLC, 70.^[58]

Table 1: Average settlement value for the top US companies by number of false patent marking cases settled^[59]

#	Relator	No. of Cases Settled	Total Value Rec’d by Gov’t/Relator	Total Value Paid by Defendants	Mean Settlement Value Received by Government or Relator	Mean Settlement Value Paid by Defendant
1.	Patent Group	112	1 438 987.11	$2 877 974.22	$12 848.10	$25 696.20
2.	Promote Innovation LL	53	1 853 000.00	$3 706 000.00	$34 962.26	$69 924.53
3.	San Francisco Technology LLC	44	579 325.41	$1 158 650.82	$13 166.49	$26 332.97
4.	Main Hastings LLC	40	473 250.00	$946 500.00	$11 831.25	$23 662.50
5.	Tex Pat	29	712 250.00	$1 424 500.00	$24 560.34	$49 120.69
6.	GHJ Holdings LLC	29	429 000.00	$858 000.00	$14 793.10	$29 586.21
7.	Unique Product Solutions	17	235 375.00	$470 750.00	$13 845.59	$27 691.18
8.	Patect LLC	15	343 750.00	$687 500.00	$22 916.67	$45 833.33
9.	Thomas A Simonian	13	683 750.00	$1,367,500.00	$52 596.15	$105 192.31
10.	Kilt Resources LLC	10	74 000.00	$148 000.00	$7400.00	$14 800.00

The rise of professional relators is particularly interesting because of its similarity to the historical use of qui tam actions. With significant financial gain to be made, it is perhaps not surprising than an industry of professional relators has emerged on more than one occasion.^[60] In England it became common for relators to reach settlements that were illegal,^[61] to entrap victims, and to use the threat of a qui tam action as blackmail.^[62] As a result, relators gained a poor reputation. Sir Edward Coke in his seminal books, ‘Institutes of the Laws of England’, described relators in the 17^th century as ‘viperous vermin’ and a disordered class of men.^[63] As a side note, Professor Beck, in his treatise on qui tam actions, remarks that as a result of abuses and the establishment of a more comprehensive professional police force and public prosecutors, the number of qui tam actions contained in UK legislation declined.^[64] In 1951, to almost universal support,^[65] the Common Informers Act 1951 eliminated them completely.^[66]

While describing modern false patent marking relators as viperous vermin is unduly harsh, some commentators have labelled them as ‘patent marking trolls’,^[67] opportunistically obtaining finances through litigation that often corrects no harm to society, and serves only to clog the courts.^[68]

There are two events which have been linked to the bust phase of the US litigation. The first is the Federal Circuit decision in re BP Lubricant’s USA Inc (‘BP Lubricants’).^[69] The second is the enactment of the AIA, particularly the provisions amending 35 USC § 292.

The defendant in BP Lubricants argued that the pleading requirements for false patent marking had not been met.^[70] The relevant court rules require that when alleging fraud — which includes intention to deceive the public^[71] — the plaintiff must ‘plead in detail “the specific who, what, when, where, and how” of the alleged fraud’.^[72] The relator’s pleadings in BP Lubricants stated that the defendant was a sophisticated company and knew, or should have known, that the relevant patent had expired.^[73] The Federal Circuit did not accept that this was sufficient to prove they knew the patent marks were false.^[74] Accordingly, the relator’s action failed.^[75]

The outcome of BP Lubricants meant that obtaining the required evidence to prove a plaintiff knew the marks were false became difficult, probably requiring a company whistle-blower. BP Lubricants was handed down on 15 March 2011, and the number of filings dropped almost immediately.^[76] While the decision in BP Lubricants is linked to the drop in filings, the AIA also played a role. Indeed the greatest settlement for a false patent claim, US$2,000,000, occurred after BP Lubricants had been decided.^[77]

The AIA first passed the Senate, its originating chamber, on 8 March 2011.^[78] From then onwards the sections in the AIA amending false patent marking were not altered, and they were always designed to end pending cases that did not fit the new criteria.^[79] Post-AIA, the definitions of the offence were retained in § 292(a) but the penalty altered and standing requirements changed. The relevant sections of § 292(a), (b) and (c) now state,

Shall be fined not more than $500 for every such offense. Only the United States may sue for the penalty authorized by this subsection.

In addition, the AIA specifies that in relation to 35 USC § 292, ‘[t]he amendments ... shall apply to all cases, without exception, that are pending on, or commenced on or after, the date of the enactment of this Act [Sept. 16, 2011].’^[81]

The AIA was signed into law on 16 September 2011. Between October 2011 and May 2013, nine new false patent marking suits had been filed,^[82] and only one proceeded to an order of financial relief. The retrospective effect of the false patent marking provision of the AIA also resulted in the winding up of cases already on foot that did not fit the new standing criteria, including those on appeal.^[83] Consequently, BP Lubricants, and the AIA have reduced false patent marking cases filed to numbers similar to those observed pre-Forest Group. The AIA achieved this through: limiting standing to plaintiffs who suffered competitive injury; limiting financial relief to correcting competitive injury suffered; and defining false patent marking to exclude marks that refer to expired patents that once applied to the marked product.

2 The Natural Experiment

False patent marking was introduced into Australian patent law with the passage of the Patents Act 1952 (Cth).^[84] This false patent marking provision has changed very little over the years and has never been litigated.^[85] Including recent amendments to the penalty resulting from the Intellectual Property (Raising the Bar) Act 2011 (Cth),^[86] the section now states,

(4) A prosecution must not be started for an offence against subsection (1) or (2) without the consent of the Minister, or a person authorised by the Minister.^[87]

The provision imposes a 60 penalty unit fine ($10 200),^[88] but on what basis it is to be calculated is not specified eg number of articles marked, or production runs. Nor does the provision explicitly require a mens rea element, or whether it applies to expired patents that once protected a product marked. To conduct the natural experiment, each of these issues connected to the boom of litigation in the US are analysed below.

In light of the US decision in Solo Cup it is necessary to consider whether s 178(2) would be interpreted to apply to marks that refer to an expired patent that once protected the article. The key phrase in s 178(2) is, ‘[a] person must not falsely represent that an article ... is patented in Australia...’.^[89] ‘Patented’ is not defined in the Patents Act, but ‘patented process’ and ‘patented product’ are: both definitions specifically refer to a patent that has ‘been granted and is in force’.^[90] Consequently, it seems likely that the actus reus element of false patent marking will be satisfied if a patent is marked with an expired patent that once protected it.

As demonstrated in BP Lubricants, the mental element that must be proved and the level of detail that is required in the pleadings can dramatically affect the outcome of false patent marking cases. The use of the term ‘offence’ in s 178(4) combined with the relatively low level fine (compared to other criminal offences) indicates that false patent marking is a summary offence. The Patents Act states that ‘[c]hapter 2 of the Criminal Code applies to all offences created under the Act’,^[91] therefore false marking must be proved beyond reasonable doubt.^[92] But unlike the US provision, no mental aspect is mentioned. Whether it is intended to be a strict liability offence is not clear.

The phrase ‘falsely represent’ is used in s 178(2). The term ‘represent’ is partially defined in sub-ss (3)(a) and (b), but ‘falsely’ is not. In this sense, ‘falsely’ is the adverb of ‘false’. The Macquarie dictionary defines ‘false’ to include being ‘deceitful’, as well as ‘erroneous’. ‘Deceitful’ is defined to mean knowing that a representation is not true, while ‘erroneous’ includes being mistaken.^[93] The consequence of this dual definition is that the denotation of ‘falsely represent’ encompasses the possibility of the offence being one of strict liability, that is, it need only be proven that the mark is false. But it also encompasses the possibility of it requiring a mens rea examination, that is, it must be proved the representor knew the mark was false.

law creating an offence does not specify a fault element for a physical element that consist only of conduct [as opposed to a physical element that consists of a circumstance or result], intention is the fault element for that physical element.’^[94]

This provision overlaps with the common law presumption of mens rea in all offences.^[95] However, the presumption of mens rea can be rebutted.^[96] In He Kaw Teh v R (‘He Kaw Teh’),^[97] Gibbs CJ outlined four factors that need to be assessed to determine whether the presumption is rebutted: (1) the language of the section creating the offence; (2) the subject matter of the statute; (3) the consequences for the community of an offence; and (4) the potential consequences for an accused if convicted.^[98]

In examining the language of the section describing the offence, Dawson J in He Kaw Teh discussed the use of the words ‘knowingly’ and ‘wilfully’ as indicating a subjective intent element.^[99] Such terms are not present in s 178(2) indicating it is a strict liability offence. However, Dawson J also stated the absence of such words is not determinative.^[100]

In that same case, Brennan J considered the subject matter of the statute, he stated, ‘[t]he purpose of the statute is the surest guide of the legislature’s intention as to the mental state to be implied.’^[101] The Patents Act primarily concerns an administrative regime to incentivise innovation,^[102] not to create criminal liability. On this basis, it might be argued that it was not the intention of the legislature to criminalise all acts of false patent marking, but rather to capture only those acts that intentionally extend the patent monopoly beyond permissible limits. This suggests that there should be a mens rea element to the offence. However, in discussing the subject matter of the statute in issue in He Kaw Teh, Gibbs CJ approved of a passage from the classic strict liability case of Sherras v De Rutzen.^[103] In that case, Wright J stated that the presumption of mens rea is displaced when the acts are ‘not criminal in any real sense, but are acts which in the public interest are prohibited under penalty’.^[104] False patent marking generally fits that description, there is no real possibility of physical distress, and is not within the common understanding of what a criminal act is. As a result, this line of reasoning tends to favour a strict liability interpretation.

In terms of consequences to the community arising due to the offence, some market participants may be confused about patent protection, thereby causing them to not enter a market, delay entering a market, or spend money clarifying that no patent protects a product. Alternatively, a consumer may buy a product believing a falsely marked product includes technology not available in other products. On this basis, the offence is effectively a market-based one and as such it would not normally require a fault element.^[105]

With regards to the consequences for the accused, in He Kaw Teh Gibbs CJ intimated that the more serious the penalties the less likely Parliament intended that a person who had no intention or knowledge of doing anything wrong should be found guilty.^[106] In the spectrum of penalties, $10 200 is not severe, especially when compared to other market offences such as false or misleading representations about goods,^[107] which carry pecuniary penalties of up to $1 100 000 for body corporates and up to $220 000 for persons that are not a body corporates.^[108] Moreover, it is not an indictable offence, and there is no chance of gaol time.^[109] Similarly, offenders will not suffer the type of stigma that, as Gibbs CJ noted, can occur with other criminal offences.^[110] There is also no real problem of a ‘luckless’ victim in false patent marking (ie, one who accidentally marks a product as patented);^[111] patent rights holders either write the patent claims or acquire them knowing what has been specified.

Looking more broadly to statutes with similar subject matter and language, the phrase ‘false or misleading representation’ in consumer law has been interpreted to include representations contrary to fact, meaning that such a representation can be made even if the representor does not know their representation is false.^[112] Although a strict liability regime raises the prospect of liability for wholesalers, retailers and second-hand sellers of falsely marked goods, the defence of honest and reasonable mistake of fact applies.^[113] In many scenarios it seems clear that retailers, wholesalers and second-hand sellers would generally attract this defence. It would probably also apply to patent rights holders who, after reading patent claims, honestly and reasonably apply patent marks.

In light of BP Lubricants, it is necessary to consider the consequence of a mens rea requirement on pleadings. As illustrated by US filings post BP Lubricants, if pleadings require exacting particulars of knowledge that the marks were false, then false patent marking can become very difficult to establish without a whistle-blower. If s 178(2) is interpreted to be a strict liability offence, then the respondents’ state of mind is irrelevant and regular pleading requirements apply.^[114] However, if it must be proved that a respondent knew that what they marked was false, then that is fraud and a higher level of pleadings apply in Australia.^[115]

Federal Court Rule 16.43 requires that when a ‘condition of the mind’ (which includes knowledge and fraud^[116]) is pled, the particulars of the facts upon which the party relies must be stated. Moreover, there is well established authority for the proposition that pleadings of fraud must be made ‘specifically and with particularity‘ and ‘the pleading must make plain that the person made the statement knew it to be false or was careless as to its truth or falsity’.^[117] On this basis, a scenario akin to BP Lubricants may arise. If a mens rea examination is required in Australia and it must be proved that the representor knew the mark was false, then the facts proving this element must be pled with specificity and particularity. Consequently, although the actus reus elements of false patent marking may be easy to identify, articulating sufficient particulars of how a company knew or a person knew that the marking was false, without a whistle blower, would be difficult.

In light of the pre-AIA qui tam provision in the US, it is necessary to consider the standing requirements in Australia. When false patent marking was introduced into the Patents Act 1952 (Cth), it was based on the false marking provision in the Designs Act 1906 (Cth).^[118] A notable addition to the designs law provision was that before a false patent marking prosecution could be commenced, consent from the Attorney General was required.^[119] Although consent is now required from ‘the Minister’,^[120] the reason why permission has always been a feature of the Australian action is unknown. Extrinsic materials do not shed light on the matter.

An oft forgotten, but important feature of criminal provisions, is that they can be privately prosecuted. Section 13 of the Crimes Act 1914 (Cth) states that any indictable or summary offence can be prosecuted by ‘anyone’.^[121] Indeed, technically all criminal Australian prosecutions are private.^[122] Private prosecutions have been described in a modern UK case as an important constitutional safeguard from executive partiality.^[123] It therefore seems reasonable to assume that false patent marking was designed to be prosecuted by the government and private parties, otherwise there would be no need for the Minister’s consent.

It is plausible to suggest that the reason false patent marking has not been litigated in Australia is that consent has been refused. However, communications with IP Australia indicate this is not the case: there is no record that consent from the Minister has been requested.^[124] As a result, the consent mechanism appears to be an unnecessary bureaucratic requirement.

The change in interpretation of the false patent marking penalty in Forest Group suggests that a closer look at the Australian penalty is also warranted. Section 178(2) states that the penalty for false patent marking is 60 penalty units or $10 200.^[125] However, in light of Forest Group, it is necessary to consider whether the Australian false patent marking penalty applies to each article. Section 178(2) states that ‘[a] person must not falsely represent than an article sold by him or her is patented in Australia’.^[126] The Patents Act refers to ‘an article’, as opposed to a product line or a time period, and as such it is possible to argue that the penalty applies to every falsely marked article. However, the Australian penalty is not as explicit as the US penalty, which prohibits false marking of ‘any unpatented article’ with a penalty of up to ‘$500 for every such offense’.^[127]

Apart from the explicit language in § 292(b), the Court in Forest Group had three other reasons to find that the penalty applied to every article: (1) there was no language in the statute to allow time based or product run calculation of fines;^[128] (2) the provision gave leeway for fines up to $500 per article;^[129] and (3) a fine of $500 overall would render the provision useless.^[130] The Australian provision does not explicitly contain language indicating time based or product run calculations of fines, nor is there language to indicate a fine of ‘up to’ 60 penalty units. However, what appears to be a compelling argument against a Forest Group style approach is that if the penalty is calculated on a ‘per article basis’ a company found guilty of falsely marking 10 000 articles, a relatively modest number, would be penalised $102 million. This is an incongruous amount and likely to render the interpretation of the penalty to a fine for each different type of product that is falsely marked, or possibly each production run.

It is also relevant to note that although $10 200 is substantially more than $500, from a private litigant’s point of view, it is low. This is pertinent considering that it is not immediately apparent to all private litigants that they can prosecute a criminal offence, and it would cost many times more to mount all the interpretation hurdles and prosecute the provision. Moreover, even if a prosecution is successful, the penalty goes to the government. The only benefit to the litigant is if the respondent is a competitor. It therefore seems plausible to suggest that the reason the Ministers’ consent has not been requested is that no private litigant has sufficient incentive to prosecute the provision.

There are three provisions under the ACL that could create liability for false patent marking: ss 18, 29 and 31. When any of these provisions are litigated, the context of the facts can be crucial. However, while the context of a false patent marking may determine the outcome of a case, this analysis will consider what inferences can be drawn from a patent mark by itself and whether they are misleading.

Section 18 states, ‘[a] person must not ... engage in conduct that is misleading or deceptive or is likely to mislead or deceive’.^[131] Misleading and deceptive conduct under s 18 will be found when, objectively viewed, the conduct complained of is capable of leading a person into error.^[132] Section 18 has previously been found to create liability for false patent marking. In Elconnex Pty Ltd v Gerard Industries (‘Elconnex’)^[133] the respondent marked products with ‘pat pending’ when no patent application was ever lodged. The respondent did ‘not seriously contend’ that they had not contravened s 52 of the Trade Practices Act (the precursor to s 18).^[134] Burchett J surmised that the phrase patent pending, in the context of misleading and deceptive conduct, ‘is likely to produce the impression that it has made an invention, or acquired the benefit of an invention for which a patent will issue, or at least is expected to issue’.^[135]

Section 29 is drafted to capture false or misleading representations about goods or services,^[136] and s 33 is drafted to capture misleading conduct as to the nature of goods.^[137] It is necessary to consider ss 29 and 33 because they offer additional remedies compared to s 18 (and s 178(2) under the Patents Act). The primary difference is that litigants can pursue pecuniary penalties of up to $1 100 000 for body corporates and up to $220 000 for persons that are not body corporates.^[138]

There are two subsections of s 29 that may be infringed by false patent marking: 29(1)(a) which captures false or misleading representations ‘that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use’;^[139] and 29(1)(g) which captures false or misleading representations ‘that goods or services have sponsorship, approval, performance characteristics, accessories, uses or benefits’.^[140] Under 29(1)(a) it could be argued that a false patent mark is a false or misleading representation of a particular standard or quality.^[141] Under 29(1)(g) it could be argued that false patent marking is a false or misleading representation that the marker has approval to use the patent mark.^[142]

To determine whether false patent marking falls under s 29(1)(a), there are two words that must be interpreted: ‘standard’ and ‘quality’.^[143] ‘Standard’ has been interpreted to mean ‘a definite degree of any quality viewed as a prescribed object of endeavour’.^[144] ‘Quality’ has been interpreted broadly to extend ‘beyond just the degree or grade of excellence which a thing can be said on physical examination to possess in comparison with others of a similar kind, and includes the virtues, attributes, properties and special features of the thing.’^[145] Clearly there is overlap between these two definitions, however, ‘standard’ appears to refer to an application of an object and, ‘quality’ to an objects’ stationary, non-applied physical characteristics. It is generally well known that patents are granted for innovative inventions and that they carry an ability to exclude others from using the invention. Consequently, two arguments can be raised under the term quality in s 29(1)(a): (1) that false patent marks falsely indicate an advanced technology is included in the item; and (2) that false patent marks falsely indicate that a technology does not exist in other competing products. However, for either argument to succeed it would have to be accepted that bona fide patent marks indicate an advanced technology is included in an item or that they indicate technology does not exist in other competing products; otherwise a false mark cannot be deceptive.

In reference to the first argument that patent marks indicate advanced technology, one commentator has reasoned,

[a] patent confers no government endorsement as to the quality of the invention ... A patent merely recognizes that an invention is new, useful, non-obvious, and disclosed in compliance with a number of statutory requirements.^[146]

This means that it is difficult to assign any quality or standard-based meaning to a patent mark, because a patent does not, by itself, indicate an attribute, property, or special feature. A patent may disclose a new way of making an old thing, or a new, inventive but ultimately inferior way to achieve an outcome already achieved.

With regards to the second argument under s 29(1)(a) that patent marks indicate a technology is not used in other products, although the property right enables a patent holder to exclude others from the technology, it does not mean any exclusions have actually occurred or that everyone is excluded. For example, empirical research indicates many holders of gene patents in Australia do not enforce them,^[147] or patented technology may be available through patent pools such as that used in 3G technology, or DVDs.^[148] Consequently, there appear to be reasonable arguments that false patent marking, by itself, does not contravene s 29(1)(a).

Under s 29(1)(g), arguing that false patent marking is a false or misleading representation that the marker has approval to use the patent mark, is not compelling either. In the default judgment of ACCC v Marksun Australia Pty Ltd (‘Marksun’),^[149] the Court held that using the logo, ‘Made in Australia’, when a party is not approved to use the logo, is a misleading representation.^[150] By analogy, it could be argued that a false patent mark could be a misrepresentation because without a patent it is an offence under the Patents Act to mark an article as patented. However, the approval process is quite different for using the ‘Made in Australia’ logo, and using a patent mark. The Macquarie Dictionary defines ‘approval’ to mean ‘approbation’, ‘sanction’ or ‘official permission’,^[151] all which imply that some sort of positive act is taken to give approval. Thus, there is a strong argument that false patent marking is not a misrepresentation of approval, because patent marking is not positively and specifically granted by IP Australia.

An alternative action for false patent marking is ‘misleading conduct as to the nature of goods’ under s 33 of the ACL. This cause of action has its origins in 10bis of the Paris Convention for the Protection of Industrial Property;^[152] it was designed to supplement IP protection.^[153] The section states,

a person must not ... engage in conduct that is liable to mislead the public, as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods.^[154]

It could be argued that false patent marking misleads with regards to the nature, or characteristics of goods. Previously, successful actions under this section, or its predecessor,^[155] have focussed on the characteristics of goods. The cases include: falsely marking a bicycle helmet stating it met certain standards, when it had not actually been tested;^[156] and, falsely marking a children’s car booster seat stating that it complied with a certain standard when it did not.^[157] However, unlike these actions, false patent marks do not indicate a physical characteristic. In the US case Sheldon Friedlich Marketing Corporation v Carol Wright Sales Inc (‘Sheldon Friedlich’)^[158] the Court, under a similar section, held that advertising stating a patent had been applied for, did not refer to a quality or characteristic of the product.^[159] Since a patent mark only indicates a property right, it is difficult to see how false patent marking would violate this section.

In terms of the natural experiment conducted in this article, ss 29 and 33 do not offer clear liability and s 18 offers clear liability but the remedies are very different to those in the US prior to the AIA. Successful applications under s 18 attracts a variety of remedies,^[160] the most relevant to a false patent marking applicant would be injunctions,^[161] damages,^[162] and compensatory orders.^[163] Clearly injunctions are relevant to competitors, but most false patent marking cases in the US were not litigated by competitors, rather, they were litigated by ‘professional relators’. Moreover, between October 2011 and May 2013 (post-AIA) only one false patent marking case demonstrated a proven competitive injury,^[164] indicating that damages and compensatory orders (relief synonymous with competitive injury) are not suffered or generally not sufficient to attract litigation in the US.

Section 178(2) of the Patents Act probably provides broad liability (including all expired patents) and probably operates via a strict liability mechanism. However, between the lack of clarity in the liability mechanism and the limited nature of the financial relief (probably limited to $10 200, all of which goes to the government), there would appear to be insufficient incentive for a private litigant to commence a prosecution.

One inference that can be drawn from the natural experiment is that the absence of litigation does not provide guidance on whether false patent marking is present in Australia or not. Only if false patent marking liability was easily established and offered financial incentives for private litigants could this outcome have been logically drawn. Despite this, the availability of broad liability and injunctions under s 18 does suggest that either false patent marking is not present or is not causing harm to competitive markets. However, before this conclusion can be drawn, a closer examination of the harms caused by false patent marking is required.

3 Harms and Reform

Before embarking on the exercise of determining the harm caused by false patent marking, it is pertinent to note that there is little empirical data on its effect, and no authoritative evidence.^[165] The only empirical data available is from the US case of Sheldon Friedlich. In that case, market survey evidence was adduced showing that when the phrase ‘patent applied for’ was used in advertisements for air coolers, the advertisements were less successful.^[166] The judgment stressed that the survey evidence included other variables than just the mark, such as the colour of the air cooler.^[167] Moreover, because the survey methodology was not available to the Court, it is questionable whether this evidence has any value at all.^[168]

Typically, when commentators discuss harms caused by false patent marking they focus on the harm to competition and to consumers.^[169] The classic conception of competition based harm caused by false patent marking has been summarised by Brinkema J, the first instance judge in Solo Cup, when she stated that an invention marked as patented is in effect a ‘no trespassing sign’.^[170] From a competition point of view, a greater market share could be obtained because competitors may believe the product is protected by a patent. Alternatively, a company may choose not to improve a product due to perceived transaction costs, or because it is believed that the invention is too difficult to invent around.^[171]This, in theory, creates the illusion of a patent monopoly, and may enable the false patent marking party to charge monopoly prices.

In addition, while US innocent infringement law specifies that a patent number be included to effect notice,^[172] Australian patent law does not specify that a patent number must be included when marking. The relevant Australian section states,

[i]f patented products, marked so as to indicate that they are patented in Australia, were sold or used in the patent area to a substantial extent before the date of the infringement, the defendant is to be taken to have been aware of the existence of the patent unless the contrary is established.^[173]

It therefore seems logical that the phrase ‘Patented in Australia’ would satisfy this requirement. Consequently, when false patent marking occurs in Australia, a competitor could spend thousands of dollars obtaining a patent clearance on a product marked without a patent number, only to find out a patent does not exist.

One commentator, when discussing harms caused by false patent marking, has described a theoretical scenario in which a pharmaceutical company falsely marks its drugs, which in turn deters other companies from competing with them.^[174] However, this analysis may be a little simplistic. The reality is that effectively all pharmaceuticals are, or have been patented.^[175] Moreover, a company does not simply consider making a generic pharmaceutical, see that the original drug is patented and abandon the project. Such a company knows beforehand that there is likely to be patent related issues and through a due diligence process will identify the dimensions of the protection. For a generic company, it will then be a matter of contesting the patent, working around the patent, or waiting for it to expire. If a product is falsely marked, this will be discovered by the generic company during due diligence. The only harm, in this situation, is the inefficiency for the generic company of having to work out the mark is false. However, in other markets and circumstances, such a harm might be more commonly realised. If innovators are not patent savvy, do not normally undertake freedom to operate analyses, or do not have sufficient resources to spend on patent searching or due diligence, false patent marking may foreclose a market and/or stifle innovation. This class of innovators may include cash lean companies or university-based researchers.

While data does not exist showing the utility of false marks, the number of companies who have engaged with it in the US, does tend to indicate that it has some value. Another possible advantage of false patent marking may be the short-term advantage created while competitors complete their freedom to operate or patent clearance analyses. Since the passage of the AIA, the case of Big Pond Products LLC v Team Marine USA LLC (‘Big Pond’)^[176] has proceeded, in part, to a default judgment. The judgment elucidated a clear benefit to the false patent marker.^[177] Unopposed evidence led the Court to find that false patent marking caused the plaintiff to delay the launch of their patented product by five weeks. The plaintiff was awarded damages of almost US$1 million.^[178]

From a consumer point of view it has been argued that because a patent is only awarded if technology contains an inventive step,^[179] it could indicate that there is a technological advance in an article that is unique to it.^[180] This may influence a consumer into falsely choosing one product over another, and possibly paying more for it.^[181] As discussed by Bonnie Grant, this causes two harms, one consumer based and the other economic: the customer is deceived into thinking they have obtained a superior product, and a competitor is otherwise deprived of a sale.^[182]

Whether consumers actually notice patent marks is an important question. It is possible that the consumer-based effects arise so infrequently that they are negligible. It is also possible that, in some markets, false patent marking may actually harm the marker. Indeed, as noted above, the results of the ‘quasi’ study in Sheldon Friedlich suggest that patent marking can decrease sales. Supposing that the reduction in sales in Sheldon Friedlich was due to patent marking, there are a number of reasons why this may have occurred. For example, it is well known that repairing and maintaining cutting edge technology often carries with it expensive bills. Similarly, with patents often come higher prices. Consequently, it is possible that the reduction in sales in Sheldon Friedlich were due to consumers believing that the product was too expensive or contained technology that would be difficult to maintain.

Whether the economic and consumer-based effects of false patent marking actually arise and if so, how subversive they are, is speculative. One certainty is that articles once validly marked and sold pursuant to a patent that has now expired do exist in the market. It is short-sighted to suggest that these articles should be recalled and the mark removed, because all the products are unlikely to be returned and the cost would likely outweigh any gains. This means there will always be articles in markets that are marked as patented when they do not actually have patent protection because it has expired.

The effect of false patent marking on consumers and markets is certainly an important consideration. However, there is a final aspect of patent marking that is commonly overlooked: the integrity of the patent system. The purpose of the patent system is to incentivise technological innovation by allowing applicants to gain exclusive rights to exploit their inventions. A logical but unsubstantiated assessment of patent marking is that it is probably the most common activity undertaken to communicate patent rights. While there is no data on the incidence of people accessing patent specifications, and it is expected that few do, there is nevertheless value in ensuring that patent marks on articles are accurate. Allowing parties to mark products as patented when no patent has ever existed reduces trust in the patent system.

This analysis of harms allows a few conclusions to be drawn. Significant competitive harm is only likely to be experienced by cash lean or patent inexperienced innovators. This reduces the concern of false patent marking, and may also explain the low level of litigation. However, false patent marking may still affect consumers, reduce trust in the patent system and cause inefficiencies that patent savvy innovators may internalise. Furthermore, with the exception of expired patents, there is no good reason why false patent marking should exist and therefore no reason why parties should be affected by it. As such, Australian laws prohibiting false patent marking need to be reviewed and, where necessary, reformed to reflect a modern understanding of false patent marking.

The following review and suggestions for reform builds upon the foregoing comparative analysis of false patent marking laws. Given that data on Australia false patent marking does not indicate it is having significant negative effects, the focus of the review is to provide a rational basis for fines, and improve enforcement of the current laws.

An economic perspective on setting optimal false patent marking fines has recently been provided by Professor Thomas Cotter.^[183] As Cotter mentions, the appropriate fine for false patent marking has received surprisingly little attention.^[184] Cotter accepts that negative competition and consumer outcomes can arise from false patent marking, but states that only a nominal fine should be imposed in instances where harms are unlikely to have occurred.^[185] He stresses that with regards to penalties, a balance should be reached between over deterrence and under deterrence. If penalties are excessive then firms may stop patent marking, making it more difficult for other innovators to identify patent rights, and reducing the patent holder’s ability to recover financial relief. On the other hand, if fines are too low then there is little incentive to mark correctly or instigate false patent marking litigation.^[186]

Cotter recommends looking to competition law and consumer law to identify optimal fines.^[187] In particular, he argues the highest fines should be awarded for instances in which significant consumer or competition harm has been observed and in which the culpability of the marker is highest.^[188] The objective being to disgorge any gains made by false patent marking.^[189] Such an approach would therefore include a range of considerations, such as whether the false patent marking: stifled innovation or was likely to stifle innovation; increased sales or was likely to increase sales; prevented competition or was likely to prevent competition; or delayed or was likely to delay development of products. Other factors include: how many items were falsely marked; how long for; whether the mark could be easily removed; and whether a patent number was included in the mark.^[190] Since the primary effects of false patent marking relate to competition and consumer harm, this approach appears logical. It also serves as a much more logical basis to decide fines, rather than the vacuum that currently exists.

The analysis above indicates that only s 178(2) of the Patents Act and s 18 of the ACL will create liability for false patent marking. This means that, broadly speaking, the approach to enforcement endorsed by Cotter exists in Australia. That is, Australian law provides a nominal fine through s 178(2) and the possibility of much higher fines, proportionate to injuries caused to consumers or competitors, through s 18. Whilst these basal aspects are complied with, a range of problems still exists with the regime. These problems are identified in this section and some minor legislative amendments recommended. However, in the absence of empirical data showing significant negative effects of false patent marking, major amendments that would see Australian false patent marking provisions comply with what has been described as an ‘optimal’ system, are not currently required.

The first two concerns with Australian false patent marking laws are the lack of clarity on the penalty and mental state requirement in s 178(2). The penalty in s 178(2) does not create a great incentive for private prosecutors and this incentive is only reduced with the lack of clarity. This is exemplified in Elconnex in which the applicant did not argue false patent marking under the Patents Act 1952 (Cth), even though no patent had been applied for and the finding of misleading and deceptive conduct was clear.^[191] To enhance the operation of the provision, a mens rea requirement should be specifically excluded due to the difficulty in proving intention and the onerous nature of the pleading requirements for fraud. The penalty should be clarified as a large nominal fine, consistent with Cotter’s rationale. Additionally, the Minister’s consent requirement should be removed because it is unnecessary.

In post-AIA US, it has been suggested that a public body should enforce false patent marking.^[192] The governments in Australia and the US have always had the power to enforce these laws but have not. There are three main reasons why governments should enforce false patent marking. First, private parties may not have sufficient incentive to litigate because it is difficult for them to quantify harms they suffer.^[193] Secondly, even if false patent marking causes no consumer or competitive harm, it still undermines trust in the patent system. Thirdly, if it is known that the government is willing to litigate this may deter patent marking in the future. The Commonwealth Director of Public Prosecutions currently has jurisdiction under the Director of Public Prosecutions Act 1983 (Cth),^[194] but with such a broad portfolio it seems sensible to confer jurisdiction on the Australian Competition and Consumer Commission (ACCC) which has expertise in the area and complements its s 18 ACL powers.^[195]

An additional feature of conferring jurisdiction on the ACCC would be to have it exercise its associated enforcement provisions from the Competition and Consumer Act 2010 (Cth).^[196] In particular the ACCC can require claims promoting goods to be substantiated.^[197] In the circumstances of patent marking this attribute is highly desirable because it gives the ACCC a cheap and simple mechanism to compel parties to inform the ACCC which patent(s) they believe apply to their product. For example, if a patent holder produces an article that states ‘patented in Australia’ on it, the ACCC can request the patent holder supply them with details of the patent that protects it.

Whether or not $10 200 can be considered a nominal fine is open to debate. For a large commercial company with millions of dollars of IP related expenditure it may seem minor, but for a start-up company, severe. On the other hand, the value to society of deterring false patent marking should not be overlooked. Companies should know what patent rights protect their products in each jurisdiction and mark accordingly. If there is confusion over whether a patent protects a product, it is of the patent holder’s own making. Patent rights holders acquired or articulated the bounds of their own patents, and expiry dates are normally self-evident. Consequently, a nominal fine towards the higher end of what may be considered ‘nominal’ may be a good deterrent against false patent marking that is self-inflicted and should be easily avoided. Moreover, patent holders who mark products genuinely believing patent claims protect a product, will be afforded the defence, honest and reasonable mistake of fact.

An additional problem with s 178(2) arises when patents expire. One amendment brought into effect by the AIA was that products marked with expired patent numbers that once protected the product no longer constitute false patent marking. One of the key reasons for this amendment was that using the patent number, a person could look up the US Patent Office’s website and see the patent had expired.^[198] Similarly, it provides a means to discern how the invention works.^[199] It has been argued in the US that expiration dates on patents can sometimes be hard to calculate, confusing the issue of expiry.^[200] But in Australia expiry dates are much more obvious. The bibliographic data on AusPat informs readers if a patent is expired, and if not lists the expiry date.

As analysed above, articles marked with patents that previously protected them will likely constitute false patent marking in Australia under s 178(2). However, based on the fact there is limited evidence of false patent marking negatively effecting consumers or competitive markets, and no evidence at all that expired patents that once protected products do, Australia’s false patent marking laws should be harmonised with the US’. This would exclude liability for false patent marking arising when an expired patent is applied to a product it once protected, but only in the circumstances the mark includes the Australian patent number.

Throughout this paper, the absence of empirical data on false patent marking in Australia has been highlighted. The amendments presented in this section are based on the best data available. If, in the future, empirical data shows that false patent marking has more pervasive effects on competitive markets or consumers, then it may be necessary to amend ss 29 or 33 of the ACL to create liability for false patent marking and thereby allow applicants to pursue pecuniary penalties. This would also broadly align with what Cotter would consider ‘optimal’. However, in the absence of such data these amendments, which are much more substantial, are not currently warranted.

Conclusion

The natural experiment conducted in this article, although not conclusive, generally indicates that false patent marking is not having a significant negative effect on Australian competitors or consumers. However, the analysis of Australian laws in light of the US boom-bust cycle, and what has been described as an optimal enforcement mechanism, does indicate a lack of clarity and other imperfections in the Australian provisions.

In the absence of empirical evidence demonstrating negative effects caused by false patent marking, modest amendments are recommended to improve the enforcement of the current system; namely: the penalty should be clarified as a large nominal fine; the ACCC should be given jurisdiction to enforce s 178(2) under the Patents Act; the requirement in s 178(2) that the Minister’s consent be obtained before prosecution can be commenced should be removed; and marking a product with a patent number that is now expired, but prior to expiry validly applied to the product, should not constitute false patent marking.

^[*] Corresponding author, BSc (Hons), LLB (Hons) (Mel), Research Fellow and LLM Candidate (Tas), Centre for Law and Genetics, Law Faculty, University of Tasmania. Sincere thanks to Lynden Griggs and two anonymous reviewers for helpful feedback on drafts of this paper.

^[**] PhD (Biology), LLM, Professor, Centre for Law and Genetics, Law Faculty, University of Tasmania.

^[8] These figures were calculated using US government data. See, US Department of Justice, Settlement Payments Received for Section 292 Cases - 2011,

^[9] Laura N Arneson, ‘Defining Unpatented Article: Why Labeling Products with Expired Patent Numbers Should Not Be False Marking’ (2011-2012) 95 Minnesota Law Review 650, 660; Kirsten R Rydstron, Maria N Bernier and Joseph D Fillloy, ‘Burning Down the Courthouse: Qui Tam Action under Section 292 of the False Marking Statute’ (2011) 11 Pittsburgh Journal of Technology Law and Policy 1, 1; Elizabeth Winston, ‘The Flawed Nature of the False Marking Statute’ (2009) 77 Tennessee Law Review 111, 133; Bonnie Grant, ‘Deficiencies and Proposed Recommendations to the False Marking Statute: Controlling Use of the term “Patent Pending”’ (2004) 12 Journal of Intellectual Property Law 283.

^[10] Michael R O’Neill, ‘False Patent Marking Claims: The New Threat to Business’ (2010) 22 Intellectual Property and Technology Law Journal 22, 28.

^[15] William Blackstone, Commentaries on the Laws of England (Harper & Brothers, 1850) vol 3, 161-2.

^[21] 35 USC § 292(a), as amended by America Invents Act of 2011, Pub L No 112-29, § 16, 120 Stat 284, 329.

^[24] For a more thorough account of the legal causes of the boom and bust, including the numerous US constitutional and standing issues see, Zickterman, above n 6, 190-218; Stephens, above n 6, 1007-25; Crudo, above n 6, 570-87; Granaghan, above n 6, 477-93.

^[43] Ibid 508; Forest Group Inc v Bon Tool Company, 590 F 3d 1295, 1301-2 (Fed Cir, 2009); Granaghan, above n 6, 486-8.

^[44] Forest Group Inc v Bon Tool Company, 590 F 3d 1295, 1302 (Fed Cir, 2009).

^[47] See for example, O’Neill, above n 10, 22-3; Rydstron, Bernier and Fillloy, above n 9, 3-4; Stephens, above n 6, 1011-12.

^[50] Forest Group Inc v Bon Tool Company, 590 F 3d 1295, 1296 (Fed Cir, 2009).

^[57] See for example, In re BP Lubricants USA Inc, 637 F 3d 1307, 1309 (Fed Cir, 2011); Stauffer v Brooks Brothers Inc, 619 F 3d 1321, 1322 (Fed Cir, 2010).

^[59] These figures were calculated using US government supplied data. See, US Department of Justice, above n 52; and US Department of Justice, above n 8.

^[60] Beck, above n 16, 576-9; see also, Winston, above n 9, 138-9; Craig Deutsch, ‘Restoring Truth: An Argument to Remove the Qui Tam Provision from the false Marking Statute of the Patent Act’ (2010) 11 Minnesota Journal of Law Science and Technology 829, 846-51; Granaghan, above n 6, 489-91.

^[62] Ibid 581-3; William Holdsworth, A History of English Law (Methuen & Co, 1903) vol 4, 355-6.

^[63] Edward Coke, The Third Part of the Institute of the Laws of England (W Clarke & Sons, 1628) 194.

^[64] Beck, above n 16, 592-3. Although not directly relevant to false patent marking, the reader should be aware that qui tam actions played their own part in the development of the Statute of Monopolies in 1624. Prior to the Statute of Monopolies, monarchs would award monopolies to enforce qui tam actions to certain people. The arbitrary nature of these awards frustrated the utility of qui tam actions and their general abuses (detailed in the text) influenced the drafting of the Statute of Monopolies to stop monarchs from making such awards: at 589.

^[67] See for example, Mark H Anania and Carissa L Rodrigue, ‘Combating the Rise of False Marking Trolls’ (2011) 29 Intellectual Property & Technology Law Journal 3; Donald W Rupert, ‘Trolling for Dollars: A New Threat to Patent Owners’ (2009) 21 Intellectual Property & Technology Law Journal 1; Richard M Assmus, Robert J Kriss and Jeffrey W Sarles, Watch Out for the Patent Marking Trolls (2010) Mayer Brown <http://www.mayerbrown.com/publications/watch-out-for-the-patent-marking-trolls-03-01-2010/> .

^[68] Marla Grossman and Adam Lerner, Out of balance: The False Patent Marking Landscape Post-Bon Tool and Solo Cup (2 August 2010) Institute for Policy Innovation <http://www.ipi.org/ipi_issues/detail/out-of-balance-the-false-patent-marking-landscape-post-bon-tool-and-solo-cup> Charles R Macedo, ‘Intent must be pleaded with particularity for false marking claim in use’ (2011) 7 Journal of Intellectual Property & Practice 425, 425; Zickterman, above n 6, 239-40.

^[76] Ibid; Stephens, above n 6, 1013; Justin E Gray, Decrease in New False Marking Cases Filed Post In re BP Lubricants (31 March 2011) Gray on Claims

^[79] 35 USC § 292(a), as amended by America Invents Act of 2011, Pub L No 112-29, § 16(4), 120 Stat 284, 329.

^[85] A variety of trivial changes have occurred, the penalty changed currency under the Statute Law Revision (Decimal Currency) Act 1966 (Cth) s 3, consent had to be sought from the Attorney General instead of the Minister until the Administrative Changes (Consequential Provisions) Act 1976 (Cth) s 3, the description of the penalty was changed from words to numbers under the Patents Amendment Act 1979 (Cth) sch 1 item 3, a separate fine was instituted for natural persons and corporate entities under the Statute Law (Miscellaneous Provisions) Act (No. 1) 1985 (Cth) s 3 but this was changed to one fine regardless of the incorporation in the Patents Act 1990 (Cth) s 178(2) and the Intellectual Property Amendment (Raising the Bar) Act 2011 sch 4 item 12 changed the penalty from a static financial penalty to 60 penalty units.

^[90] Ibid sch 1 (definition of ‘patented product’ and ‘patented process’).

^[93] Macquarie Concise Dictionary (Macquarie Dictionary Publishers, Online 6^th ed, 2013).

^[102] Commonwealth, Parliamentary Debates, Senate, 29 May 1990, 1271 (Robert Ray); Commonwealth, Parliamentary Debates, House of Representatives, 10 October 1990, 2565-7 (Simon Crean).

^[105] Under the ACL there are provisions for criminal prosecutions but these are reserved for the ‘most blatant, harmful or dishonest conduct’, see Stephen G Corones, The Australian Consumer Law (Lawbook, 2^nd ed, 2013) 523.

^[118] Designs Act 1906 (Cth) s 45; Report of the Committee Appointed by the Attorney-General of the Commonwealth to Consider What Alterations are Desirable in the Patent Law of the Commonwealth, House of Representatives (1952) 42.

^[123] Gouriet v Union of Post Office Workers [1977] UKHL 5; (1977) 3 All ER 70, 79. It should also be noted that with respect to all private prosecutions, federal prosecutors have power to take over the prosecution, and if required, discontinue them (Prosecution policy of the Commonwealth (2008) 14-5).

^[124] Email from Nathan Madsen, Senior Examiner of Patents, IP Australia, to Johnathon Liddicoat, 30 April 2013.

^[128] Forest Group Inc v Bon Tool Company, 590 F 3d 1295, 1302 (Fed Cir, 2009).

^[147] Dianne Nicol and John Liddicoat, ‘Do Patents Impede the Provision of Genetic Tests in Australia?’ (2013) 37 (3) Australian Health Review 281.

^[148] David Serfino, ‘Survey of Patent Pools Demonstrates Variety of Purposes and Management Structure’ (4 June 2007) Knowledge Ecology International <http://goo.gl/QMs76Z> Ted J Ebersole, Marvin C Guthrie & Jorge A Goldstein, ‘Patent pools and standard setting in diagnostic genetics’ (2005) 23 Nature Biotechnology 937, 937.

^[158] Sheldon Friedlich Marketing Corporation v Carol Wright Sales Inc, 219 USPQ 883 (SD NY, 1983).

^[164] Big Pond Products LLC v Team Marine USA LLC (ND Fla, No 4:11cv511-RH/CAS, 12 July 2012).

^[166] Sheldon Friedlich Marketing Corporation v Carol Wright Sales Inc, 219 USPQ 883, 886-7 (SD NY, 1983).

^[175] See, Christie et al, Patents Associated with High-Cost Drugs in Australia (2013) 8 PLoS One 4

^[176] Big Pond Products LLC v Team Marine USA LLC (ND Fla, No 4:11cv511-RH/CAS, 12 July 2012) slip op.

^[195] It may also be worth considering whether the ACCC should have jurisdiction with regards to other aspects of the Patents Act, however, this is beyond the scope of this paper.

Journal of Law, Information and Science

Liddicoat, Johnathon E; Nicol, Dianne --- "Re-evaluating False Patent Marking in Australia" [2013] JlLawInfoSci 7; (2013) 22(2) Journal of Law, Information and Science 128

Abstract

Introduction

1 The US Experience

2 The Natural Experiment

3 Harms and Reform

Conclusion