America-Israel Patent Law

Who’s the Boss?

No, this isn’t a post about Tony Danza, although when I moved to Israel in 1990 it sometimes seemed that the above-named television show was the only thing on TV here.  (Now they’ve got a gazillion channels on cable…some people call that progress.)  The issue is that although it was known for well over a year that the Commissioner of the ILPTO would be out of a job on January 1, 2011, it was only late in 2010 that the job opening was posted; as shown below in the text of the advertisement (sorry, non-Hebrew-speaking readers, I haven’t gotten around to translating it), the deadline for submission of candidacies was December 16.  No word as to why the ministry in charge of this particular job waited until the last minute to post the opening. 

 

Unsurprisingly, no replacement Commissioner has been named as yet.  Which is why I got a chuckle out of a letter I saw today that the ILTPO sent to an applicant, informing the applicant that a particular patent application had been deemed refused under section 21 of the statute for lack of response to an OA.  The letter was signed by one of the administrative staff “on behalf of the Commissioner”.  So was the letter ultra vires? 

Apparently not: it seems that the Director General of the Justice Ministry, under the aegis of which the ILPTO operates as the semi-autonomous “patents authority” named himself the interim Commissioner until a new one is found.  For better or worse, this probably means there is less oversight going on at the ILPTO right now on the administrative side of things.  That’s not necessarily so bad: there haven’t been any pronouncements of new administrative policies for over two weeks, which is a welcome relief from the frenetic pace of administrative policy-making under the last Commissioner.  With regard to judicial proceeds (e.g. patent and trademark oppositions and appeals), most things can still proceed apace, as there’s still a deputy commissioner and a hearing officer, both of whom are empowered to deal with most of these matters.

Incidentally, refusals under section 21 are something of a rarity.  In the USA, if an applicant doesn’t file a satisfactory response to an OA within 6 months along with any necessary extension fees, the application automatically goes abandoned.  Here in Israel the PTO is more forgiving.  Typically, applicants get an OA with a four-month response period; then there’s a period of months in which extensions can be obtained “no questions asked” in exchange for a fee; if no response is filed by the extended period, then sometime thereafter (could be a few more months) the ILPTO will send the applicant a letter saying, “respond or we’ll refuse the application”), and only if the ILPTO still gets no response does it issue a section 21 refusal.  (For those of you who are wondering, the practitioner handling this particular file assures me that the applicant decided to abandon the application.)

A Scout is Trustworthy, Loyal…and a False Marker?

The title of this post is taken from the Boy Scout Law: “A scout is trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean and reverent”.  Sort of the description of someone you’d like as neighbor.  Or wouldn’t object to your daughter marrying.  Growing up in the USA, I was active in the Boy Scouts.  I’m proud to say I’m an Eagle Scout, as are my brothers, my dad, and as was my late grandfather.  My kids are active in the scouts here in Israel.  I thought it was a good program – I learned a lot about responsibility and how my actions (or inaction) can impact others.  Plus I got to see the east and west coasts as well as the Rocky Mountains at both ends of the continent – in New Mexico hiking at Philmont and in Canada at the World Scout Jamboree.  

I suppose some of the same things that attracted me to Scouting attracted me to the patent profession.  As I’m fond of telling people, unlike some other lawyers, we patent prep and pros people don’t take apart corporations so someone can get richer while putting others out of work, or foreclose homes on people, or break apart families. We add value for our clients.  We’re contributing to the advancement of society, even if only incrementally.  That’s something to feel good about.  

Which is probably why the spate of false-marking suits that has deluged U.S. courts in the last two years makes me want to paint the floor with the contents of my stomach.  It’s the patent world’s version of ambulance chasing, or worse.  For those of you who aren’t familiar with the phenomenon – and here in Israel, there is no legal equivalent – under U.S. law, a patentee is only entitled to recover damages for infringement that occurs after the infringer has actual notice of the patent.  That notice can be provided, for example, by letter, or by the serving of a complaint for patent infringement.  However, in the case of manufactured articles, 35 U.S.C. §287 provides that such notice may be provided by marking the patented article with the patent number.  

But there’s a flip side to that.  To discourage people from marking their products with fictitious patent numbers in an effort to discourage competition, 35 U.S.C. §292 provides, inter alia, that 

“…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 the same is patented, for the purpose of deceiving the public … Shall be fined not more than $500 for every such offense.” 

In its 2009 decision in Forest Group, Inc. v Bon Tool Co., the CAFC explained that “for every such offense” means up to $500 for each article, as opposed to $500 for each falsely marked product line.  If you sell, say, a lot of disposable cups, that’s a lot of money for which you’re potentially on the hook.  

But the kicker comes in the last part of 292:  “Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States”.  That means anyone can bring suit for false marking on behalf of the U.S. government, and potentially reap the windfall of $500 per falsely marked article, to be split with the government.  Which explains why, in the last two years, everyone and their sister seems to have brought a false marking suit.  Well, maybe not everyone.  Most of the plaintiffs in these suits are themselves patent attorneys, or companies set up as fronts for patent attorneys.  Ugh. 

Unfortunately, most if not all of these cases have been brought in instances not in which there was an attempt to deceive the public, but in which the article in question was marked with an expired patent number.  The company got a patent, marked its product, and then forgot about it.  Nothing malicious, just a failure to remember 17 years after receiving a patent to take the patent number off the product.  But the fact that the product is marked with an expired patent number is nevertheless, on its face, grounds for bringing a false marking suit.  And the U.S. court system being what it is, many manufacturers have capitulated to the false marking trolls rather than go through the expense of a trial.  Case in point: the manufacturer of Wooly Willy, one of my favorite childhood toys. 

This led to the introduction in the last Congress of legislation that would either repeal the false marking provisions or would drastically curtail the pool of people who have standing to bring such suits.  That legislation went nowhere, but rumor has it that new legislation has been introduced in the new Congress.  In the meantime, the CAFC has hinted that it’s not necessary to award anything close to $500, stating in Forest that trial courts could decide that the amount to be awarded for each item could be quite small: “In the case of inexpensive mass-produced articles, a court has the discretion to determine that a fraction of a penny per article is a proper penalty.”  

And two challenges are still pending.  The first is a constitutional challenge.  In FLMC v Wham-O, now on appeal before the CAFC, the defendant has asserted that since the false marking statute doesn’t provide that the U.S. government be notified of the filing of the false marking suit, it vitiates the requirement under Article II of the Constitution that the President “shall take Care that the Laws be faithfully executed”, and is therefore unconstitutional. 

And in BP Lubricants, a case now pending before the CAFC, the court is considering the argument that since intent to deceive the public is part of the requirement for false marking, the heightened pleading requirements of Fed. R. Civ. P. 9(b) should apply – in the words of the IPO’s amicus brief, the Court should “require claims of deceptive intent in false marking cases to be pled with specific factual support for allegations of who, what, where, how, and why sufficient to support a reasonable inference that the defendant falsely marked with a conscious desire to deceive the public”. 

Nevertheless, for now the filing of (frivolous) false marking suits continues apace.  Now, trustworthy, loyal, helpful, etc. hardly sound like the hallmarks of a deceiver, but this week, the Boy Scouts of America were named as defendants in a false marking suit.  If that sounds incongruous, it is.  

The background to this story is that many scouts are collectors of scout memorabilia – primarily embroidered patches that commemorate scout events, but other items as well: neckerchiefs, neckerchief slides, belt buckles and belts, to name a few.  The BSA itself sells most of these items; some are ordered by the BSA, others are made under the BSA's licensing program.  Many bear trademarks owned by the Boy Scouts of America. 

It turns out that back in the 1970’s, one James Craighead of Denver developed a die for forming designs on malleable material, for which he received U.S. patent no. 4204470, which expired in 1997.  Apparently, when the BSA wants leather belts imprinted with words like “2010 National Jamboree”, “Florida Sea Base” or the like, it sometimes order belts from the John R. Craighead Co., Inc.  Craighead, in turn, marks the belts with the patent number.  

Now, I doubt very much that Craighead has continued to mark its products post-1997 with the patent number with intent to deceive the public.  But I’m certain that in purchasing belts from Craighead, the BSA had no such intent whatsoever.  Moreover, since the BSA neither marked the belts nor affixed the patent number to them, and it did not display the patent number when advertising the belts, I don’t see where the first prong of the false marking test is met either.  And I’m disgusted that anyone would try to extort the Boy Scouts under the gun of a false marking suit – especially since in all likelihood the person bringing the suit only became aware of the “false marking” by being involved in scouting activities.  Has the plaintiff in this case no shame?  Even if there's some basis for the suit against the BSA – and it’s not clear there is any – in Jewish law at least there’s the concept of naval b’rshut haTorah: one’s actions are repulsive and therefore impermissible, even though strictly speaking they are within the confines of the law.  Or in plain English: just because the statute allows you to bring a false marking suit doesn't mean you should.

But this is one suit that may backfire.  As soon as I heard about it I wrote to a few colleagues, seeing if we could set up a team to help the BSA’s defense pro bono.  One of those colleagues forwarded my message to a litigator he knows, a fellow whose last name is Hatch and whose father happens to be a U.S. Senator.  If Wooly Willy wasn’t a big enough impetus to curtail or rescind the false marking statute, naming the Boy Scouts of America as a defendant just might be.

I suppose that theoretically, it's possible that the plaintiff is actually a good guy, who filed the suit in order to have it dismissed with prejudice so as to preclude others from bringing suit against the BSA.  But I'm not holding my breath.