Lynn J. Alstadt, a shareholder in the Intellectual Property Section of Buchanan Ingersoll & Rooney's Pittsburgh office, was quoted in an article published in the November 1, 2010, edition of Inside Counsel. The article, titled "False Marketing Statute Allows Anyone To Sue," discussed the growing number of false marking law suits and how a recent federal district court in New York threw out a false patent marking suit against the clothing retailer Brooks Brothers.
According to the article, "The ruling attracted a great deal of attention because false marking suits have proliferated wildly, becoming a new and growing worry for businesses around the nation. Since Jan. 1, plaintiffs have filed more than 475 false marking suits against companies in a wide variety of industries. Procter & Gamble, Monsanto, Facebook, Target, Nestle, Pfizer, Crayola, Timex, Hallmark and Clorox are among those being sued because they allegedly marked their products with incorrect or expired patent numbers. If found guilty, a defendant potentially could be slapped with millions or even billions of dollars in fines."
Alstadt weighed in on how "the tsunami of false marking litigation shows no signs of abating." "We are seeing more and more cases filed every day," Alstadt said.
The article went on to closely examine the false marking statute, which "imposes monetary penalties on anyone who intends to deceive the public by falsely marking an item as patented. The fines are up to $500 per wrongly marked item. In the case of mass market consumer items, that can add up to a lot of money — with half of it going to the government and half to the party that prosecuted the lawsuit. That's a big incentive for people to sue violators — especially if anyone can sue."
As explained, in the case of the Brooks Brothers suit, "Although the Federal Circuit reinstated [Raymond] Stauffer's lawsuit, the case may never get to trial. The Federal Circuit ordered the trial court to rule on another Brooks Brothers' motion, which seeks to dismiss the case under Rule 12(b)(6) for failing to state a plausible claim to relief. … The issue, as described by the Federal Circuit, is whether Stauffer's complaint alleges an "intent to deceive the public ... with sufficient specificity to meet the heightened pleading requirements for claims of fraud."
Alstadt discussed how the lower courts currently disagree on how to handle such Rule 12(b)(6) motions. "The courts are all over the place," he said. "Some have a strict standard, requiring relators to allege specific facts indicating the defendant intended to deceive the public. Other courts say if you just allege an intent to deceive, that’s sufficient."
Also in the article, Alstadt contributed to the sidebar supplement, "Price Problem." In it he discussed how companies being sued for false patent marking often wish to settle these suits, but find it difficult to do so. Mainly because the current wave of suits is so new, no one knows how to value them. "There is not a lot of data on what is a reasonable settlement," he said.
As noted, "Alstadt has done some digging, however. Because these are qui tam suits, the federal government must agree to any settlements. And some of the recent suits have been settled — for between $50,000 and $75,000, a Justice Department attorney informed Alstadt. … If the parties can agree on a price, the government is unlikely to object, according to Alstadt."
"The DOJ position is that if the lawyers for the parties come to some settlement, the Department will accept it so long as it is not unreasonable, like $20," he said.