WASHINGTON — Pfizer, Procter & Gamble and Kimberly-Clark are among the companies facing a rash of lawsuits over claims that their products are protected by patents that have already expired or don't cover the items.
More than two dozen lawsuits have been filed in federal courts in Chicago, New York and eastern Texas in the past week, stemming from a U.S. appeals court ruling in December that said they could face a federal penalty of up to $500 for every item that's falsely marked.
The appeals court said its ruling would create a "cottage industry of false-marking litigation." It was right. Litigants have been bringing lawsuits over wrongly marked packages of products ranging from cough drops to painkillers to adult diapers.
"There's just been an explosion of these cases" since that ruling, said Jason White of Howrey in Chicago, who has represented companies including Solo Cup and GlaxoSmithKline in patent-marking cases. "The sort of gold rush you see can only be attributed to the pot of gold at the base of the rainbow. People are trying to queue up and get in line. It's almost a race to the courthouse."
The U.S. Court of Appeals for the Federal Circuit ruled, as part of a dispute over stilts used in construction, that companies may face a penalty of up to $500 for every item that's falsely marked. The lower court had ruled it was per instance, no matter how many items were made.
The century-old law, most recently amended in 1952, allows individuals to sue on behalf of the government and keep half of any damages imposed. It's designed to deter manufacturers from inaccurately claiming their products are protected by patents, which can deter competition and give an unfair marketing advantage.
The Federal Circuit, which specializes in patent law, said the law was specifically designed to encourage people to sue and "help control false marking."
"No one is holding a gun to these companies' heads and forcing them to put false statements on their products," said Daniel Ravicher, executive director of Public Patent Foundation in New York. "They're grasping at straws and saying, 'It's not our fault.' Well, whose fault is it?"
PubPat, a nonprofit group that focuses on patent issues, filed lawsuits against Quigley over its Cold-Eeze lozenges and Novartis over the Prevacid heartburn medicine last week. One Chicago-area man alone filed 20 suits, including ones against Pfizer over the Advil painkiller and Kimberly-Clark over Depends Underwear for Women and Good Nites Sleep Shorts.
Theoretically, winning one of these lawsuits could lead to large awards against companies that make top-selling products, like New York-based Pfizer, the world's biggest drugmaker, which was sued over expired patents listed on boxes of Advil.
If it loses the case and gets the maximum penalty, Pfizer would have to fork over $500 for each box sold, when the most expensive box of Advil available on the Web site drugstore.com is $18. Wyeth, which Pfizer bought, reported $673.3 million in Advil sales in 2008.
Ravicher said he doesn't expect windfall judgments because judges have the discretion to impose less than the $500 per item and, in cases with large numbers of products, could award "a gazillionth of a penny" on each item.
Ravicher said the spate of lawsuits may not last, and may accomplish the law's goal of ensuring companies are diligent in how they present their products, he said.
"Companies are going to get their acts together and stop their shenanigans," Ravicher said.