Beware False Patent Marketing Penalties of $500 Per Offense

By George Isaacson

Shop Talk - Matchbacks

Q:"When during the circulation matchback process should you household your response (if at all)? Also, how often should you perform a matchback, and should you partially allocate it across multiple contact names?"— Larry Karkos, senior marketing manager, Hammacher Schlemmer

A: People have different points of view on matchback analytics. You're much better off executing mail/holdout tests on housefile names, as this methodology is much more  accurate, enlightening and profitable than executing matchbacks, which are designed to prove the effectiveness of prospect segments. With prospect lists, I like doing matchbacks on a quarterly basis so I can evaluate the effectiveness of prospect segments in a way that allows me to plan for the next season. The issue of analyzing performance at a household or customer level is entirely brand-centric. If individual customers within a household generate incremental demand, then performance needs to be evaluated at a customer level. If there's very little lift among individuals, then evaluation at a household level makes the most sense. — Kevin Hillstrom is president of MineThatData, a database marketing consultancy. Reach Kevin at kevinh@minethatdata.com.

A recent decision of the Federal Circuit Court of Appeals, in the case of Forest Group Inc. v. Bon Tool Co., is a warning to marketers regarding patent references in label- ing goods. Moreover, it's inspired a new wave of litigation over "false marking" — i.e., labeling products as patented that aren't, in fact, covered by active patents.
Forest Group originally sued Bon Tool for infringement of its patent on stilts used primarily in construction work, such as hanging drywall. Bon Tool counterclaimed,  alleging that Forest had falsely marked its line of stilts with a patent number that didn't cover the stilts in question. Forest's claims were dismissed for lack of infringement, but Bon Tool prevailed on  its counterclaim.

Moreover, the federal appeals court ruled the up-to-$500 per offense penalty for false marketing applies to each article falsely marked, rather than a single penalty for an entire product line. This "per article" computation has enormous potential impact. A product line bearing false patent references could easily incur penalties in the millions of dollars.

Anyone can bring a false marketing lawsuit as a so-called qui tam action and is entitled to 50 percent of the  penalty imposed.

One opportunistic plaintiff has filed more than 25 lawsuits in Chicago federal court against such companies as Pfizer, Blistex, CIBA VISION, MeadWestvaco and 3M. The complaint against Pfizer, relating to Advil products, is representative and claims the defendants are selling products imp- roperly marked with the numbers of expired patents.

—George S. Isaacson, senior partner, Brann & Isaacson (gisaacson@brannlaw.com).