Legal Briefing: Need a Job? Sue Over Patent Marking

A daily look at legal news and the business of law:

Are Patent-Marking Suits Profitable?

Ever notice those markings on your consumer goods claiming an item is patented or contains patented technology? If that patent has expired, or is "erroneous," the company that wrongly marked the goods can be sued by anyone for $500 per item -- that is, $500 for every single incorrectly marked item on every store shelf. In one suit against Solo Cup Co., reports the Wall Street Journal, that added up to 21 billion items. And the plaintiff gets to keep $250 out of every $500.

This situation is the result of two recent decisions by the U.S. Court of Appeals for the Federal Circuit: A December one that held each item triggered the $500 penalty, rather than all the items combined; and one earlier this week that held anyone had the right to sue. The statute involved bans false patent marking on the grounds that it's anti-competitive. Enforcement under that law is akin to whistleblower laws, hence the right of everyone to sue and split the penalty with the government.

Despite the apparent simplicity of turning these claims into a money-making machine, it's not that easy. Plaintiffs have to prove the company had "intent to deceive" when it plastered the erroneous patent numbers on its goods. Tougher still, at the outset of the suit, before plaintiffs can use discover to access company files, they have to allege specific facts suggesting that intent existed, reports Am Law Litigation Daily. Perhaps that's why, as the Journal notes, no jackpot victories for plaintiffs have been won yet. Still, some cases have settled and businesses everywhere are scrutinizing their product lines and cleaning up their marks. In the first quarter of this year, 132 claims were filed.

If you're interested in suing, the Journal notes that patents are easy to look up online; those starting with "4" have expired recently.

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Texas Doesn't Do Same-Sex Divorce

Although Texas doesn't allow gay people to marry, a trial judge there granted a divorce to two men who were married in Massachusetts, citing the 14th Amendment's equal protection clause. Not so fast, said the Texas appellate court, according to the ABA Journal. Who appealed the trial court's decision granting the divorce? Texas Attorney General Greg Abbott, who had intervened at trial, the Dallas Morning News reports. To recognize same-sex divorce is to recognize same-sex marriage, he argued, something voters amended the Texas constitution to prohibit.

In siding with Abbott, the Texas appellate judges refused to copy Judge Vaughn Walker, who famously held that California's constitutional ban on gay marriage violated the 14th Amendment to the federal constitution. Although the couple could get a divorce in Massachusetts, they may appeal the decision to the Texas Supreme Court.

SEC Vows to Pursue Overseas Ratings Fraud

Bloomberg reports that the Securities and Exchange Commission, uncertain of its authority, dropped an investigation of ratings fraud by Moody's Corp. in Europe. According to the SEC, a European Moody's (MCO) committee, worried about the agency's reputation, decided not to downgrade $1 billion in debt in 2007 that had inflated ratings based on a flawed model. Well, now the SEC says it's no longer confused about its authority; the Dodd-Frank financial reform act unambiguously empowers it to take on such wrongdoing, and the SEC wants raters to know it's watching.