The Topps Company was sued on May 20, 2011, for allegedly falsely marking its Ring Pop, Baby Bottle Pop and Bazooka Joe products with expired patents. In English, this means Topps is accused of claiming these products are protected by patents when they are not.
If you don't recall the Ring Pop, a picture from one of the patents should refresh your childhood memory:
Yes, it's that candy ring you ate as a kid that made your fingers ultra sticky afterward. Topps invented it, and then patented it in the 1970s. Who knew? My favorite flavor was red—not sure what the fruit was supposed to be, but it was good.
To really understand what this action is about (or what false marking actions are about), a little background on patents is necessary. A patent is, basically, a contract between an inventor and the U.S. Government. In this contract, if the inventor proves to the government that he or she is the first to discover something, the government will give that inventor a limited time to exclusively make, use or sell that invention. In exchange, the inventor must explain to the public how to make and use that invention, so once the patent expires (generally 20 years after filing the patent), anyone can make, use and sell the invention
False marking cases are brought against companies that try to mislead the public into believing their products are still covered by patents even though those rights have lapsed. The theory is that false marking hurts small businesses, start-ups and inventors who will be deterred from competing with such products. Why compete against a patented product if you're just going to get sued for patent infringement? Ultimately, because there is less competition, the consumer will pay more for the falsely marked products.
Here, it looks like Topps marked its Ring Pop, Baby Bottle Pop and Bazooka Joe products with two patents that expired in 1990. Despite this, it appears that Topps continued to mark these products with expired patents for the next 21 years.
The penalties in false marking actions can be up to $500 per item. Generally the awards are considerably less than $500. Given the products in question are fairly inexpensive, if found guilty, Topps could end up paying just a few cents per product. That doesn't mean this is a small lawsuit. According to the complaint, between 1975 and 1995, Topps made 550 million of the candy treats. Although plaintiffs in false marking actions can only receive damages for the last six years, it looks like this suit may cover tens, if not hundreds, of millions of items. Even if the plaintiff only gets a few cents per product, the damages awards could be in the millions.
Topps does have a few potential defenses. To prevail, the plaintiff will need to show Topps intended to deceive the public. This gives Topps a number of potential outs, including what I call the “dumb defense." The “dumb defense" is where a company tries to prove that it didn't know its patents expired; therefore it could not have intended to rip the public off. This is quite a disparity in the law. “Dumb" companies that did not know their patents were dead can keep the extra money they received while deceiving the public and evil companies that did the same, but intentionally, will be penalized.
Topps may have some problems with the “dumb defense." In a 1996 court decision,in which Topps was involved, the judge noted that these same patents had expired in 1990. In view of this, it'll be difficult for Topps to say that it didn't know its patents were dead.
Topps has other potential defenses as well. Two of the more interesting are really out of the company's control. First, Congress may change the law to protect false markers (Imagine that…Congress protecting big companies, and not little guys…shocking, I know!). Second, some false markers have challenged the statute as unconstitutional. These options are certainly wild cards, but if either occurs, they'll likely be a complete defense for Topps.
Ultimately, this case will turn on Topps' intent, which, really, is difficult to determine without internal documents from Topps. If those documents show Topps intended to confuse people as to whether the products were still patented, that won't be good for Topps. If Topps' documents show this was an oversight or inadvertent mistake, that's better for Topps. And if Topps can prove to the judge or jury that it didn't intend to deceive anyone, well, Topps will win.
Also, don't feel too jealous of the plaintiff if they win as half of any award received goes to the U.S. Government.
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