Patent Reform Act Will Change the Face of Patent Litigation

by Morrison & Foerster LLP
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President Obama is expected to sign the Leahy-Smith America Invents Act on Friday, enacting it into law. The Act, the first significant overhaul of the U.S. patent system in nearly 60 years, was preceded by months of debate and speculation about which proposed reforms would finally become law. For Morrison & Foerster’s previous patent reform Client Alert, see Patent Reform Is Upon Us. The Act will have significant, immediate impacts on patent litigation. Many of its litigation-related provisions will go into effect on the date of enactment, and a few will apply retroactively. Morrison & Foerster LLP will be hosting client seminars in San Diego, Palo Alto, and San Francisco to discuss how to best navigate these changes. Click on the cities above to find out more information and register for these seminars.

The Act will likely deal the final blow to the false marking boom. Under 35 U.S.C. § 292(a) in its current form, any individual can bring a qui tam action based on products that are mismarked as covered by a patent. The current statute provides for substantial statutory fines of $500 “per offense,” which can add up to hundreds of millions of dollars for popular consumer products.

Under the Act, only the United States will be able to sue for statutory damages for false marking. Private parties will be entitled only to compensatory damages based on “competitive injury” flowing from the false marking. This transformation of false marking from a qui tam action to an ordinary civil action for damages will apply to all cases pending on, or commenced on or after, the enactment of the Act. It will, therefore, have a retroactive effect, and will likely lead to a spate of motions to dismiss filed by those accused of false marking. Future false marking actions are likely to be rare.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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