Bar News - March 23, 2007
Intellectual Property Law
By: Paul C. Remus and Tom Druan
Noti©e of ®ights
We are all familiar with the subtle notice of rights attached to nearly every good or service available to us—the fast-talking legalese in commercials, the license agreements we all blindly agree to when downloading software, the contracts we sign with new credit cards or phone plans—but the most prevalent notices of all are the intellectual property (IP) markings found on perhaps every product in Walmart: the ™ or ® for trademarks, the © for copyrights, and the Patent # for patents.
Like any other legal notice, IP markings make things look legitimate. For example, “Acme Thingamabobs” doesn’t look half as impressive as “Acme® Thingamabobs™.” Not only will consumers equate the markings with quality and be more likely to buy the item, but they may also serve to deter potential infringers—and with good reason.
The amount of money a rights’ holder is entitled to starts accruing once an infringer is notified of the misdeed. An infringer is then liable for any damages to the rights’ holder’s market share, as well as any profits gained since notice was given. If a person is not notified about infringing upon another’s patent, the infringer does not owe the patent holder anything. However, the so-called “innocent infringement” must stop once some form of notice of infringement is provided. It follows, then, that the earlier notice is provided to infringers, the better the outcome—either the infringement stops sooner, or the damages start accruing earlier.
While a cease-and-desist letter provides “actual notice” that the rights holder is asserting IP rights, marking a product provides “constructive notice” as soon as it comes off the assembly line. With a marked product, whether or not an infringer actually knows about the marking, the presumption is it should have been known. The infringer loses a defense of innocent infringement and damages can be awarded from the very first dollar made by the infringing act. IP marking leaves no opportunity for the infringer to wait for a cease-and-desist letter before closing up shop and owing nothing.
Given the benefits of IP marking, it follows that some people might want to mark something as protected when in actuality it is not. What happens then? Under Japanese law, attaching an indication of trademark registration to an unregistered product can land a person in prison for up to three years with labor on top of a fine of up to three-million yen (about US $25,000). The United States is a little more lenient. For trademarks, false marking is generally accompanied by a slap on the wrist, unless it is used with intent to deceive. At that point, an otherwise registerable mark may be denied registration, a suit for “fraud against the Office” may be brought, and an assertion of “unclean hands” might be claimed. Under copyright law and patent law, false marking is a criminal offense punishable by a fine. The exercise equipment giant BowFlex recently found this out when it advertised “patented PowerRods” that weren’t actually patented, resulting in a $350,000 fine for 650 separate false-marking violations.
Although there are benefits of IP marking (enough for there to be laws against its abuse), there are some reasons not to mark one’s wares. Unlike copyright or trademark notices where there are few legitimate reasons for omitting marks, there are instances where it is reasonable to leave patent numbers off a product. For example, maybe the number won’t fit on a product, or maybe marking the product would make it easier for infringers to find a patent and design around the claims. This no-notice tactic comes with the cost of having to police the market closely for potential infringers so that notice can be served as quickly as possible.
Paul C. Remus is chair of the Information Technology Group of Devine, Millimet & Branch in Manchester. He can be reached at 603-669-1000 or at email@example.com.
Tom Druan is a J.D. candidate at Franklin Pierce Law Center focusing on intellectual property law.