Patent Marking

This article first appeared in The Watermark Journal Vol 23 No 1 (March 2006)

Most of us are accustomed to seeing patent numbers and terms such as “patented” or “patent pending” on many products or packaging. This practice is often referred to as “patent marking”. However, the importance of correctly utilising patent marking is sometimes not so well understood.

Patent marking enables the patent owner to inform the world of the existence of a pending patent application or a granted patent associated with the marked product. In particular, patent marking is a means of putting competitors on notice of the patentee’s rights associated with the marked product, and is often considered to be a form of constructive notice.

Constructive Notice versus Actual Notice
If the patent owner fails to use constructive notice by not properly marking a product, the patent owner will have to rely solely upon “actual notice” to notify a potential infringer of their patent rights. Actual notice requires the patent owner to directly notify the infringer of the existence of the relevant patent. Constructive notice is generally considered preferable to actual notice for two reasons:

• with actual notice, it is possible that damages will only start from the date that notice is given; and
• actual notice may expose the patent owner to the risk of a pre-emptive strike (eg unjustified threats and revocation of the patent) wherein the infringer actually sues the patent owner. 

Benefits of Patent Marking
Although marking products with terms such as “patented” or “patent pending” (as well as the patent number) is not compulsory, patent marking can be extremely important and should be considered when preparing a patent strategy. A well considered patent marking strategy has the potential to provide many benefits such as reducing the likelihood of infringement and/or of similar patent applications being lodged, thereby reducing litigation costs and/or opposition costs.

Risk Management
There are also a number of risks associated with not utilising patent marking or utilising incorrect patent marking. In particular, risks such as infringement, licensing and false marking should be considered when developing a patent marking strategy.

Infringement
Marking patented products with a term such as “patent” and the corresponding patent number(s) is an important part of any patent management strategy, particularly if the patent owner wishes to maximise the damages awarded for infringement of the patent.

In Australia, under s.122(1) of the Patents Act 1990, the relief that a court may grant the patent owner for infringement includes:

• an injunction which prohibits the infringer from continuing to infringe; and
• damages or account of profits, (eg money to compensate the patent owner).

However, in Australia the patent owner may lose the ability to recover damages or an account of profits by failing to mark his or her products as required by law1. Therefore, the potential risk for a patentee is that an accused infringer may take advantage of the patent marking requirement (if available) to avoid payment of damages, particularly if the patentee has failed to mark the product as required in the particular jurisdiction. For example, if an infringer can show that, at the date of infringement, he or she was not aware and had no reason to believe that a patent for the invention existed, the court has the discretion to refuse to award damages or make an order for an account of profits2.

Licensing
Furthermore, in licensing agreements the issue of patent marking is sometimes overlooked, a fact which may ultimately be to the detriment of both the patentee and the licensee. It is important to include within any licence a clause which requires the licensee(s) to label their products appropriately. However, it is also important for the patentee to check that its licensee is correctly applying patent marking to the products at issue.

False Patent Marking
Another risk involves the incorrect usage of patent marking. It is important to utilise patent marking correctly on a product. In Australia, it is an offence to use words such as “Patented” or “Patent Pending” on products which have not been patented or are not the subject of a pending patent application, respectively3. In particular, s.178(2) of the Patents Act 1990 states: “a person must not falsely represent that an article sold by him or her is patented in Australia, or is the subject of an application for a patent in Australia”. The penalty for an offence under this provision4 is A$6000.

Furthermore, in Australia false patent marking may be considered to breach the Trade Practices Act 1974. For example, in the Elconnex case5 it was held that the use of the words “pat pend” on packaging when no patent application had been made was a breach of s.52 of the Trade Practices Act 1974.

Examples of Australian Patent Marking
In Australia, if you have filed a patent application you can mark a product with any word(s) that implies that an application has been made in Australia (eg “patent applied for” or “patent pending”).

Caution should be exercised when marking a product in relation to a provisional patent application. It is an offence to use the words “provisional patent” on a product without indicating that it is an application. That is, the words “provisional patent” are considered to indicate that patent rights have been acquired6.

Once you have actually been granted a patent, you can mark your product with terms such as “patent” or “patented” (eg “Australian patent 2000123456”).

Conclusion
Development of a patent marking strategy is an important part of new product development and should be seen as another aspect of managing your intellectual assets for the best possible return.

1. Australian Patents Act 1990 s 123
2. Australian Patents Act 1990 s 123(1)
3. Australian Patents Act 1990 ss 178(2) & (3)
4. Australian Patents Act 1990 s 178(2)
5. Elconnex Pty Ltd v Gerard Industries Pty Ltd (1991) 22 IPR 551
6. Australian Patents Act 1990 s 178(3)(a)

For further information please contact:

Watermark
www.watermark.com.au
Email: [email protected]
Tel: +61 39 819 1664