Beware the perils of false patent marking

In brief

Patent marking is a useful way of notifying the public and potential infringers that monopoly rights exist or are pending in a product. However, falsely marking a product as 'patented' or 'patent pending' is fraught with danger. Associate Claire Gregg explains.

A patent is an important commercial asset that defines a monopoly right over an invention to the exclusion of others. Marking a product as 'patented' notifies the public that rights subsist in that product and can also aid in establishing in infringement proceedings that an alleged infringer was aware (or ought to have been aware) of those rights.

Accordingly, making false assertions that a product is patented, including statements made on product packaging, in the media and online, carries a number of risks and penalties. In addition to the legal consequences outlined below, failure to correctly identify the status of a patent can cause costly delays in business transactions and erode consumer confidence.

Penalties under the Patents Act

Subsection 178(2) of the Patents Act 1990 (Cth) (the Patents Act) provides that a person must not falsely represent that an article sold by that person is patented (or the subject of a patent application) in Australia. A person will be taken to have made such a representation if the words 'patented', 'patent pending' or any other words that incorrectly imply that a patent is associated with an article. This provision has not yet been considered by the courts, so it is unclear whether an intention to mislead is required.

The penalty prescribed for breach of subsection 178(2) is 60 penalty units (currently AU$12,600). Although it is possible that this penalty could apply to each individual instance of false representation on a product, in view of the current position in the US it is more likely that this would be considered a single offence.

Unlike its US counterpart, the Patents Act does not require inclusion of the patent number or virtual marking for products. Although not a requirement in Australia, legitimate marking can be useful to notify third parties of your rights. As it can be particularly onerous for consumers or potential infringers to verify whether a 'patented' claim is legitimate, false patent marking may exclude or deter competitors from entering the market by creating an illusory risk of infringement.

Misleading or deceptive conduct

Under section 18 of the Australian Consumer Law (ACL), a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Importantly, this applies even if there was no intention to mislead or deceive.

In Elconnex Pty Ltd v Gerard Industries (1991) 32 FCR 491, the only decision to date in Australia on patent marking, the Federal Court considered whether the respondent had engaged in misleading or deceptive conduct (under the predecessor to section 18 of the ACL) for marking its products with 'pat pend', even though no patent application was ever filed in respect of these products. The Court found in the affirmative because the 'pat pend' mark was 'likely to produce the impression that it has made an invention, or acquired the benefit of an invention for which a patent will issue, or at least is expected to issue'.

The available remedies for contravention of section 18 of the ACL include damages, injunctions, and compensatory orders.

Other provisions of the ACL also arguably apply to false patent marking, such as sections 29 (false or misleading representations) and 33 (misleading conduct as to the nature etc. of goods). Contravention of section 29 or 33 of the ACL may attract a pecuniary penalty of up to AU$1.1 million for corporations and $220,000 for individuals.

How should I mark my product?

If you intend to mark your products, it is important to consider whether you have a granted patent or a pending patent application before making a representation that your product is 'patented' or has a 'patent pending'. The following provides an overview of the appropriate marking of products:

If in doubt, we recommend that you contact a patent attorney to ensure that any representations made in relation to your products are accurate.