False Patent Marking: Litigation and Legislation

Brian T. Yeh
Legislative Attorney

A patent holder who manufactures or sells a patented product will usually mark it with the patent number or other words that provide notice to the public that the article is patented. Such marking also permits the patent holder to recover an increased amount of damages in patent infringement lawsuits. However, marking a product with an expired patent number or inapplicable patent number is a violation of the false marking statute, Section 292 of the Patent Act. Section 292 provides that anyone who falsely marks an unpatented product with either a patent number, the words “patent,” “patent pending,” or any other words or numbers implying that the product is protected by a current or pending patent when, in fact, it is not, and does so with the intent of deceiving the public, shall “be fined not more than $500 for every such offense.”

Until late 2009, false marking lawsuits were relatively rare, and federal courts often assessed one $500 fine for the decision to falsely mark, without regard to the number of articles that had been mismarked by the defendant. Yet in December 2009, the U.S. Court of Appeals for the Federal Circuit issued Forest Group, Inc. v. Bon Tool Company, which interpreted § 292 to require a penalty of up to $500 for every article that is falsely marked. The Federal Circuit explained that this calculation is mandated by the plain language of the statute. Furthermore, the Federal Circuit identified policy considerations that support its interpretation of § 292, noting that false marking deters innovation and stifles competition in the marketplace because a falsely marked article may dissuade potential competitors from entering the same market.

The Patent Act’s false marking provision expressly allows qui tam civil actions—any member of the public may sue a false marking offender on behalf of the federal government, in which event the fine is shared evenly between the person bringing the suit and the United States. The Forest Group decision helped fuel a surge of false patent marking lawsuits nationwide, filed by so-called “whistleblower” plaintiffs who targeted defendants that sold thousands of products marked with expired patent numbers, such as plastic cups, dental floss, and mouse traps. Such product manufacturers could face considerable financial liability for false patent marking.

In an effort to curb the proliferation of false patent marking suits, the 112th Congress enacted legislation in September 2011 that amends the false marking statute in a way that eliminates qui tam false marking suits. Section 16(b) of the Leahy-Smith America Invents Act (AIA) (P.L. 112- 29) alters the Patent Act’s false marking provision by establishing that the statute may only be privately enforced by a “person who has suffered a competitive injury as a result of the violation.” The AIA also limits the available damages in such cases to those “adequate to compensate for the injury.” However, under the false marking statute as amended by the AIA, the U.S. government may continue to bring false marking suits without regard to competitive injury, and also retains the ability to recover a maximum fine of $500 per falsely marked article. In addition, the AIA eliminates liability for marking a product after the expiration of the patent that covered it.

The likely impact of the AIA’s amendments to the false marking statute is the considerable reduction of future false marking lawsuit filings. Furthermore, because the AIA provides that the “amendments made by this subsection shall apply to all cases, without exception, that are pending on … the date of the enactment of this Act,” the AIA retroactively applies to false marking cases filed before September 16, 2011 (the AIA’s enactment date), thus allowing courts to dismiss such cases unless the plaintiff can prove that it has suffered a “competitive injury as a result of the violation.”


Date of Report: December 15, 2011
Number of Pages: 11
Order Number: R41418
Price: $29.95

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Patent Reform: Issues in the Biomedical and Software Industries

Wendy H. Schacht
Specialist in Science and Technology Policy

The Leahy-Smith America Invents Act, P.L. 112-29, passed Congress following several years of legislative debate over patent reform. This attention to patent policy reflects a recognition of the increasing importance of intellectual property to U.S. innovation. Patent ownership is perceived as an incentive to the technological advancement that leads to economic growth. As such, the number of patent applications and grants has grown significantly, as have the type and breadth of inventions that can be patented.

Along with the expansion in the number and range of patents, there were growing concerns over whether the current system was working efficiently and effectively. Several studies recommended patent reform and various bills were introduced in recent congresses that would make significant alterations in current patent law. Other experts maintained that major changes in existing law were unnecessary and that, while not perfect, the patent process was adapting to technological progress.

The patent laws provide a system under which all inventions are subject to the same requirements of patentability regardless of the technical field in which they arose. However, inventors and innovative companies in different industries often hold divergent views concerning the importance of patents, reflecting varying experiences with the patent system. Innovators in the biomedical sector tend to see patent protection as a critically important way to prohibit competitors from appropriating the results of a company’s research and development efforts. Typically only a few, often one or two, patents cover a particular drug. In contrast, the nature of software development is such that inventions often are cumulative and new products generally embody numerous patentable inventions. As a result, distinct industries may react differently to the patent reform legislation enacted by Congress.


Date of Report: December 9, 2011
Number of Pages: 15
Order Number: RL33367
Price: $29.95

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U.S. National Science Foundation: An Overview

Christine M. Matthews
Specialist in Science and Technology Policy

The National Science Foundation (NSF) was created by the National Science Foundation Act of 1950, as amended (P.L.81-507). The NSF has the broad mission of supporting science and engineering in general and funding basic research across many disciplines. The agency provides support for investigator-initiated, merit-reviewed, competitively selected awards, state-of-the-art tools, and instrumentation and facilities. The majority of the research supported by the NSF is conducted at U.S. colleges and universities. Approximately 82.3% ($3,900.6 million) of NSF’s estimated FY2009 $4,742.0 million research and development (R&D) budget was awarded to U.S. colleges and universities.

On November 18, 2011, President Barack Obama signed into law the Commerce, Justice, Science, and Related Appropriations Act, FY2012, P.L. 112-55. The law provides, among other things, funding for the NSF. The law provides a total of $7,033.1 million for the NSF in FY2012, $733.9 million below the Administration’s request, and $173.2 million above the FY2011 enacted level. The Research and Related Activities (R&RA) account is funded at $5,719.0 million in FY2012, $534.5 million below the requested level and $155.1 million above the FY2011 enacted level. R&RA funds research projects, research facilities, and education and training activities. R&RA is also a source of funding for the acquisition and development of research instrumentation at U.S. colleges and universities, disaster research teams, Partnerships for Innovation, and the Science and Technology Policy Institute. In addition, the law provides $829.0 million for the Education and Human Resources (EHR) directorate and $167.1 million for the Major Research Equipment and Facilities Construction (MREFC) in FY2012.


Date of Report: December 20, 2011
Number of Pages: 12
Order Number: 95-307
Price: $29.95

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Small Business Innovation Research (SBIR) Program

Wendy H. Schacht
Specialist in Science and Technology Policy

In 1982, the Small Business Innovation Development Act (P.L. 97-219) established Small Business Innovation Research (SBIR) programs within the major federal research and development (R&D) agencies designed to increase participation of small innovative companies in federally funded R&D. Government agencies with R&D budgets of $100 million or more are required to set aside a portion of these funds to finance the SBIR activity. Through FY2009, over 112,500 awards have been made totaling more than $26.9 billion.

Reauthorized several times over the years, the SBIR program was scheduled to terminate on September 30, 2008. A companion pilot activity, the Small Business Technology Transfer (STTR) program, was scheduled to end the following year. A series of temporary extensions kept both programs in operation until the SBIR/STTR Reauthorization Act of 2011 was enacted as Title LI of the National Defense Authorization Act for Fiscal Year 2012.

In general, the new legislation reauthorizes the SBIR and STTR programs through September 30, 2017; incrementally increases the set aside for the SBIR effort to 3.2% by FY2017 and beyond; incrementally expands the set aside for the STTR activity to 0.45% in FY2016 and beyond; increases the amount of Phase I and Phase II awards; allows the National Institutes of Health, the Department of Energy, and the National Science Foundation to award up to 25% of SBIR funds to small businesses that are majority-owned by venture capital companies, hedge funds, or private equity firms and other agencies to award up to 15% of SBIR funds to such firms; creates commercialization pilot programs; and expands oversight activities, among other things. [For further information on SBIR reauthorization activity see CRS Report RS22865, The Small Business Innovation Research (SBIR) Program: Reauthorization Efforts, by Wendy H. Schacht.]


Date of Report: December 16, 2011
Number of Pages: 11
Order Number: 96-402
Price: $29.95

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Industrial Competitiveness and Technological Advancement: Debate Over Government Policy

Wendy H. Schacht
Specialist in Science and Technology Policy

There is ongoing interest in the pace of U.S. technological advancement due to its influence on U.S. economic growth, productivity, and international competitiveness. Because technology can contribute to economic growth and productivity increases, congressional attention has focused on how to augment private-sector technological development. Legislative activity over the past 25 or more years has created a policy for technology development, albeit an ad hoc one. Because of the lack of consensus on the scope and direction of a national policy, Congress has taken an incremental approach aimed at creating new mechanisms to facilitate technological advancement in particular areas and making changes and improvements as necessary.

Congressional action has mandated specific technology development programs and obligations in federal agencies. Many programs were created based upon what individual committees judged appropriate within the agencies over which they had authorization or appropriation responsibilities. However, there has been recent legislative activity directed at eliminating or significantly curtailing many of these federal efforts. Although, for the most part, this approach has not been adopted, the budgets for several programs have declined.

The proper role of the federal government in technology development and the competitiveness of U.S. industry continues to be a topic of congressional debate. Legislation affecting the research and development (R&D) environment has included both direct and indirect measures to facilitate technological innovation. In general, direct measures are those which involve budget outlays and the provision of services by government agencies. Indirect measures include financial incentives and legal changes (e.g., liability or regulatory reform; new antitrust arrangements). As the Congress develops its appropriation priorities, the manner by which the government encourages technological progress in the private sector again may be explored and/or redefined.


Date of Report: December 7, 2011
Number of Pages: 15
Order Number: RL33528
Price: $29.95

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